China Mobile Pakistan: Making quick inroads into Pakistan’s cellular market

“Our direction is clear: we are currently focusing on scales,” says Jun.

ISLAMABAD: (Published in The Express Tribune)  “We are eying the number two position by 2014 at the most,” China Mobile Pakistan CEO Fan Yun Jun, sporting a Pakistan-China friendship badge on the lapel of his coat, tells The Express Tribune at the company’s headquarters in Islamabad.

 

In Pakistan since 2007, China Mobile’s Zong was the last player to join cellular mobile operators (CMOs) in the country. It is currently ranked fourth based on the size of its customer base with more than 17 million subscribers.

Zong recorded 50% growth in its subscriber base in 2011, and it is likely to achieve similar growth this year, according to the company. Owing to its strategy, which focuses on expanding the company’s subscriber base and cheaper calling rates, Zong has gained close to a million subscribers in the July-September quarter alone.

And while naysayers claim the company cannot survive for long based on its average revenue per user (ARPU) – currently the lowest in the industry – its optimistic CEO does not yet consider it a problem. “We in no hurry to increase our calling rates,” Jun says. “We are enjoying this position – offering the lowest calling rates in the industry.”

However, Jun does acknowledge that the company will have to raise its cellular tariffs at some point in the future. But he refuses to disclose how many consumers it wants to achieve before taking that decision.

“We are not bothered about the number at this moment,” Jun says. “We have been rated as number one in customer service and value perception and number two in the network quality. So, by the time we increase our prices, customers will have realised the value of our services and will be happy to pay higher,” he explains.

“Our direction is clear: we are currently focusing on scales,” he continues. Scales is tech-speak for what refers roughly to the size of a company’s subscriber base.

A greater return on investment may be the motivation behind this strategy. “The telecom industry is all about scales,” says Sajid Mehamood, Zong’s chief commercial officer. “It means that even if a company’s ARPU is low, its returns will still be good,” he explains to The Express Tribune.

Venturing forth

The company may not be willing to increase calling rates just yet, but it is venturing into other areas to increase its revenues. In November 2012, Zong launched Timepey (on time), its own brand of mobile banking services, joining other operators already in the industry

Timepey looks set to get a significant initial boost from a contract for the disbursement of Army salaries. The contract is one of the major benefits it stands to gain because of its partnership with Askari Bank, which is owned by the Army Welfare Trust.

A greener company

Meanwhile, Zong is also using a combination of alternate energy sources to adjust its rising fuel costs – one of the major headaches cellular operators are currently grappling with.

“We want to increase revenue, but reduce costs at the same time,” Jun explains. “All CMOs are making efforts to use alternative energy sources [in this regard].”

Zong has provided more than 400 solar panel sets at its sites countrywide, according to Jun. Zong has also launched a pilot project on one of their sites that will run on biogas. Additionally, Jun reveals, the company is using intelligent controllers to reduce energy consumption.

Another technology introduced by the company is the multicarrier power amplifier, which has helped the company increase its energy efficiency by a great deal. “We have introduced this solution here and transferred about 70 to 80 sites on this technology. It saves us between 42-51% in energy consumption,” Jun says.

Possible merger plans?

Zong is currently working on several joint ventures with Warid Telecom. The latter is said to be in talks with all telecom operators for a possible merger. If the two operators go for it, Zong might not have to wait until 2014 to become the industry’s second largest player.

Jun, however, smartly evades the question, “Warid is an important partner and we are doing lots of joint projects. If a merger can benefit both companies, we can think about it.” At the moment, he says the company is more inclined towards infrastructure sharing – which accounts for 50% of their expansion plan.

Published in The Express Tribune, December 28^th, 2012.