Telecom Cellular Sector

In the name of Allah, Most Beneficent, Most Merciful

RESEARCH REPORT

Of

On
Telecom cellular Sector of
Pakistan
Submitted to
Mrs. Nosheen Sarwat

Submitted by
M. Zuhair Altaf MBC-08-36
Omer Hanif MBC-08-16
Ramiz ur Rehman MBC-08-31
Usman Arshad MBC-08-32
Usman Aslam MBC-08-46
Aun Ali Khosa MBC-08-54

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Telecom Cellular Sector

Getting practical knowledge is one of the major

aims of MBA program. Institute of Management Sciences,
Bahauddin Zakariya University, Multan has followed policy of
assigning different practical assignments to its students so a
touch of real working environment can be given to the
students apart from classroom studies at widen their
perspective.
Economic Environment of Business is one of the
core subjects of MBA (1), which gives an insight into the
theoretical concepts and their application in practical world.
Therefore study of the subject is imperfect without observing
in real working environment.
In this context, respectable, instructor Mrs.
Nosheen Sarwat has assigned us to study the ecomomic and
social impacts of Telecom Cellular on Pakistan.

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Telecom Cellular Sector

We have the only pearl of our eyes to admire the

blessing of the compassionate and omnipotent because the
words are bound, knowledge is limited and time is short to
express his dignity. All thanks are due only to Almighty
ALLAH, most gracious, the most merciful, who gave us the
strength and we did this job. Our special praises are for
Holy Prophet Muhammad (SAW) who is, for even
humanity as a whole.
It is a matter of great honor and pleasure for us to
express our ineffable gratitude and profound indebtedness to
our venerable supervisor Mrs. Nosheen Sarwat for her
kind supervision, valuable suggestions and sympathetic
attitude throughout our research. We are much impressed of
her intellectual activities, inexhaustible energy to steer forth
the student. Her sympathetic and sincerest attitude is highly
qualified experience.
This research report includes economic and social
analysis of telecom cellular sector of Pakistan. Special
Thanks to all of our friends and all those who have helped us
in collecting the data.

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Telecom Cellular Sector

TABLE OF CONTENTS

• History of Telecom cellular sector

• Cellular Companies
• Economies of telecom cellular sector
o Revenue
o Subscribers’ growth and penetrations
o Regional Comparison
o Market share
o Coverage
o Financials
o Average revenue user
o Investment
o Taxes on cellular sector
o Imports
• Related Industries
o The state of Pakistan hand set market- an analysis
o Mobile Phone Repair Industry of Pakistan
• Recent Social Impacts
o Telecom and technology mega trends for Pakistan
o Late night calling packages and Pakistani youth
o Which one is best post paid or pre paid?
o Cell phone users in Pakistan prefer style over features
o Mobile web and mobile advertising in Pakistan
o An Insight into the Mind of Mobile Phone users

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Telecom Cellular Sector

Top Reasons for Selecting a Mobile Provider

o
• Group Discussion
• Bibliography

History of Telecom cellular sector

Since the inception of Pakistan, basic telecom services were being provided by a
monopolist, previously called as Telephone and Telegraph department (T&T).
The department was being run by the government and played multiple roles as
regulator, policy maker, operator and service provider in the country. The T& T
department was later converted into a corporation. Although the corporation was
earning huge profits from the services, it was re-investing the same profits into
the sector for the provision of more telecom service but the investment was not
enough. Further, with the technological advancement, more and more telecom
services were becoming available but there was not enough money available
with the corporation to install new telecom systems for the provision of modern
services. Resultantly, a digital divide prevailed in Pakistan keeping it behind its
neighbors and other comparable countries in terms of telecom access.

Cellular mobile services in Pakistan commenced in 90s when two cellular mobile
telephone licenses were awarded to Paktel and Pak Com (Instaphone) for
provision of cellular mobile telephony in Pakistan. Currently there are six cellular
players in the market.

Pakistan Telecommunication Company Ltd has emerged as a successful Forbes

2000 conglomerate with over $1 billion in sales in 2005. In addition, there are
over 60 million landlines in the country. As a result, Pakistan won the prestigious
Government Leadership award of GSM Association in 2006. By March 2009,
Pakistan had 91 million mobile subscribers out of 161 million population possess
mobile phones - 25 million more subscribers than reported in the same period
2008.

According to the PC World, a total of 6.37 billion text messages were sent
through messaging systems across Asia Pacific over the 2008/2009 Christmas
and New Year period. Pakistan was amongst the top five ranker with one of the
highest SMS traffic with 763 million messages.

Although tremendous growth has taken place in the Pakistan telecom sector but
most of it can be attributed to the cellular growth. Fixed line is still awaiting a take
off. Similarly Value Added Services have grown but are still a drop in the bucket.
Now that the competition has been introduced in the telecom cellular sector
some very positive impact have been observed on the growth of the sector in a

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Telecom Cellular Sector

short span of time which is expected to continue to grow for at least next five
years.

Cellular Companies
Mobilink
In Pakistan, the Pakistan Mobile communications Ltd
(“Mobilink”) started its operations in 1994 and, until early 2001, had a market
share of 40%. In April 2001, OTH took over management control of the company.
As the market leader, Mobilink serves more than 31.5 million subscribers,
representing a market share of 38.5% (as of March 2008).

Mobilink GSM (PMCL), a subsidiary of Orascom Telecom, started its operations

in 1994, and has become the market leader both in terms of growth as well as
having the largest customer subscriber base in Pakistan - a base of over 28
million and growing. We pride ourselves on being the first cellular service
provider to operate on a 100% digital GSM technology in Pakistan that also
provides state-of-the-art communication solutions to its customers.

Mobilink offers exclusively designed tariff plans that cater to the communication
needs of a diverse group of people, from individuals to businessmen to corporate
and multinationals. To achieve this objective, it offers both postpaid (Indigo) and
prepaid (JAZZ) solutions to its customers. Compared to its competitors, both the
postpaid (Indigo) and prepaid (JAZZ) brands are the largest brands of their kind
in the Pakistan cellular industry.

In addition to providing advanced voice communication services that makes the

lives of millions that much easy, they also offer a host of value-added-services to
their customers. At the same time, Mobilink places high importance to its
coverage, which is why they cover in 10,000+ cities and towns nationwide as well
as over 130 countries on international roaming service.

Ufone
The company commenced its operations under the brand name of Ufone from
Islamabad on January 29 2001. During the year, as a consequence of PTCL’s
privatization, its shares were acquired by Emirates Telecommunication
Corporation (Etisalat). Being part of PTCL, the management of Ufone has also
been handed over to Etisalat. During the years, Ufone continued on the path to
success.

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Telecom Cellular Sector

The Company further expanded its coverage and has added new cities and
highways. Ufone has network coverage in more than 5885 locations and across
all major highways of the country. Ufone expanded its coverage and has added
new cities and highways to its coverage network. As mobile users in the country
have been growing at a very rapid pace, Ufone has maintained itself as the 3rd
largest cellular operator in Pakistan with a market share of nearly 21%.

Warid
Warid is a Pakistani telecommunication company based in
Lahore, Pakistan. Warid Telecom is a joint venture between Abu Dhabi Group &
SingTel Group. Abu Dhabi Group entered into a strategic alliance with Singapore
Telecom. Subsequent to this transaction in July 2007, telecom giant SingTel
acquired 30% percent equity stake in Warid Telecom, Pakistan, for US$758
million. This partnership is part of a strategy to support Warid Telecom’s
continued growth and to enhance its market position.

Warid Pakistan provides both post-paid and pre-paid connection plans. The post-
paid plan is branded and marketed across the country under the name Zahi Post-
paid, which means leader or royalty. The pre-paid segment is branded and
marketed as Zem Pre-Paid. It is ranked as the fourth largest operator in Pakistan.
Warid Pakistan claims it has the largest "post-paid" subscriber base in Pakistan.

Telenor
Telenor Pakistan is a Pakistani GSM cellular service
provider, and is a subsidiary of Telenor, Norway. Telenor Pakistan is 100% owned
by Telenor ASA and adds on to its operations in Asia together with Thailand,
Malaysia and Bangladesh.

Telenor Pakistan launched its operations in March 2005 as the single largest
direct European investment in Pakistan, setting precedence for further foreign
investments in the telecom sector. The company has crossed many milestones
and grown in a number of directions, making Telenor Pakistan a leading telecom
operator of the country.

Telenor covers a total of coverage area in more than 3000 cities, towns and
highways throughout Pakistan, making it the 2nd largest GSM service provider in
Pakistan with a share of 21%.

Telenor is the fastest growing mobile network in the country, with coverage
reaching deep into many of the remotest areas of Pakistan. Telenor is keeping

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Telecom Cellular Sector

ahead by investing heavily in infrastructure expansion. With USD2 billion already

invested, Telenor have extended agreements with our vendors for network
expansion and services until 2009. The agreements, with a potential to result in
USD750 million worth of orders from Telenor Pakistan, are some of the biggest of
their kind in the industry.

CM Pak (Zong)
China Mobile is the world's largest telecom operator. Having
a customer base of over 300 million customers, its network routes 700 million
text messages every day and handles 250 million calls every hour.

China Mobile is perhaps the only cellular network that provides uninterrupted,
reliable coverage through tunnels, on highways, inside sky scrapper elevators as
well on top of Mount Everest.

ZONG is the first International brand of China Mobile being launched in Pakistan.
The company is often cited as CM Pak (Zong). CMPak has invested more than
US$ 700 million in the telecom sector in Pakistan and an additional US$ 800
million will be invested till the end of year 2008. It is fifth largest company but with
fastest growth in 2008.

Instaphone
Instaphone is the pioneer of cellular industry in Pakistan. Initially the company
was owned by Millicom International; later on Arfeen Group acquired it. The
company under the renewed license is planning to role out a countrywide CDMA
mobile network and would be the only CDMA mobile operator in Pakistan to
launch first 3G services in Pakistan. It is ranked at sixth number in terms of
market share.

Economics of telecom cellular sector

Pakistan's service sector accounts for about 53.3% of GDP. Services sector of
Pakistan’s economy, telecom being part of it, is the largest contributor in
the composition of GDP and in 2007-08, its contribution to the real GDP of
the country was reported at 73% compared to 58% in 2006-07. Telecom cellular
sector is an engine to Pakistan Telecom sector and 70% of GDP Contribution of
Telecom sector to services comes from cellular sector.

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Telecom Cellular Sector

Telecom Revenues
Telecom revenues growth remained slow in 2007-08. During the year, telecom
grew by 18% and reached 278.5 billion while this growth was reported 21% in
2006-07. Cellular sector has increased from 56% in 2006-07 to 65% in 2008.
Fixed line sector has shown negative growth in revenues. Cellular Mobile
revenues increased by 37% in 2007-08 and reached RS. 182billion.

Subscribers Growth and Penetration

Cellular Mobile
sector has shown
an impressive
growth over the
years. Pakistan
has been one of
the fastest
growing mobile
markets among
the emerging
telecom markets.
Subscription of
subscribers
remained
impressive for
another year and
all companies together added more than 25 million subscribers to their networks.
Total subscribers crossed 88 million at the end of 2007-08. During the year 2007-
08, Telenor added about 7.4 million subscribers as compared to 7.1 million in
2006-07. Mobilink comes second with the addition of 5.7 million subscribers
during the same period. Warid telecom succeeded to add another 4.8 million
subscribers this year. Ufone added 4.0 million subscribers in 2007-08 as
compared to its addition of 6.5 million in previous year. CMPak (Zong) entered
the cellular market with aggressive marketing and infrastructure roll out. Its
growth was negative previous year but in 2008 it has added 2.9 million
subscribers in last few months.

Cellular Mobile penetration in Pakistan reached 54.7% at the end of 2007-08,

which is 15.3 percentage points higher than the last year. In August, it was at its
peak of about 55.6%.

Despite impressive addition of cellular subscribers by operators during 2007-08,

Cellular Mobile market could not maintain its growth patterns of the last 3-4

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Telecom Cellular Sector

years. Generally, the growth of subscribers has declined considerably in 2007-

08, which is evident in table. Total subscribers growth has been reported 40% in
2007-08, which has declined from 82% in the year 2006-07. Growth of cellular
subscribers has declined by all major companies. Mobilink growth declined from
53% to 22% while Telenor growth has declined from 199% in 2006-07 to 69% in
2007-08. CMPak (Zong) has entered the market recently and has shown positive
growth.

Cellular Mobile Penetration in all provinces has increased in last one year. The

province of Punjab toped in numbers though its total teledensity is second to

Sindh. Total subscribers in Punjab at the end of June 2008 reached 52 million
compared to 37 million in 2006-07. Growth of cellular subscribers remained
highest in the province of Balochistan where subscription grew by 57% in 2007-
08 with total cellular subscribers approaching 2.2 million compared to 1.4 million
in 2006-07. When compared with 2006-07 and 2007- 08, Cellular Mobile
penetration has increased by 36.8 percentage points in Punjab and its total
teledensity climbed to 58.0% at the end of 2007- 08, which was 42.4% in 2006-
07. A significant improvement in Balochistan has been noted where its cellular
Mobile teledensity ha reached 27% in 2007-08 which was just 17% at the end of
2006-07. This improvement is due to the special attention of regulator and
Government of Pakistan for this province in telecom sector in last year.

Regional comparison

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Telecom Cellular Sector

Growth of cellular mobile sector in Pakistan has placed Pakistan among

emerging East Asian economies like Malaysia and Singapore. Cellular Mobile
penetration of Pakistan
surpassed all its South
Asian counterparts. Pakistan
Cellular Mobile penetration
in 2007-08 was over
54.7%which is 34.4
percentage points higher
than India and 31
percentage higher than
Bangladesh.

This tremendous growth is

attributed to many internal and external factors starting from deregulation down
to implementation of Mobile Number Portability. The Government and Regulator
are facilitating the sector and making every effort to provide mobile access to
every corner of the country. Today almost 91% of population of Pakistan is
covered with mobile, fixed and WLL networks. All operators are expending their
networks to number of cities/towns/villages. By 2007-08 more than 9,369 cities/
towns and villages have mobile networks coverage by one or all operators.

Market Share
Market share of operators is considered an important tool to gauge the level of
competition in any sector of the economy. Marker shares of Cellular Mobile
Operators indicate that market is moving toward perfect competition where the

share of major operators are declining and new entrants are able to grab more
share in the market. During the year 2007- 08, Telenor has emerged as fastest
growing operator who has improved its market share from 17% in 2006-07 to
above 21% slightly higher than Ufone who also has 21% market share. On the
other hand, the leading mobile operator, Mobilink is loosing its Significant Marker
Power place rapidly and its share has declined by about 5 percentage points and

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Telecom Cellular Sector

reached 36% in 2007-08 compare to 41% in 2006-07. CMPak (Zong) is also

growing very fast and it has added 2.9 million subscribers, which is an impressive
number and one could hoped that in future it will grab more market share. CM
Pak has added more subscribers in last few months and it has continued its
aggressive media campaign along with infrastructure rollout which helping it to
grab more market share in short span of time.

Coverage
Low Average
Revenue Per User
(ARPU) and tough
competition in
cellular mobile
market of
Pakistan
compelled all operators to expand the network rapidly so that they can add more
subscribers on their network to improve their revenue. Currently more than 91%
of the population has access to cellular mobile service all across Pakistan though
the access is more in thickly populated localities. Some areas of Balochitsan and
NWFP remained uncovered due to disturbances in those areas; rest of the
country is almost covered by now. To expand the infrastructure, operators are
rapidly installing new cell sites all across the country.
During the year 2007-08 all operators have added around 8,000 new cell sites,
which is an impressive figure
because it takes huge
investments to install the cell
sites. Ufone has added the
highest number of cell sites in
2007-08 and that addition was
1,827 new cell sites during
2007-08. With addition of these,
Ufone total cell sites have
reached to 3,471. Next was
Mobilink who added 1,817 cell
sites, its total sites stand at
7,339 which is the highest
among all. Total Cell sites in
Pakistan reached 21,518 which
were only 13, 752 in 2006-07.
In terms cell sites growth, Ufone
growth was 111% while CM Pak growth remained 100%.

Despite aggressive cellular subscriber growth, franchises increased normally at

3%. During the year 2007-08, total cellular operators franchises increased to
1,679 which were 1,619 the pervious year. One reason for this slow growth could

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Telecom Cellular Sector

be the closure of some franchises by PTA being involved in unauthorized sale of

SIMs which was causing problem of law and order in the country. Other reason
could be that expansion is going on unpopulated areas where the operators
already allotted franchises.

Financials
Financial health of the cellular mobile industry seems to be volatile and most of
the operators are operating in loss though their revenues have increased
significantly over the last few years. The only operator, Ufone has reported profit
of Rs. 1.3 billion in 2006-07 who is not dependent on off shore loans and rapid
infrastructure roll out. Most of the operators are engaged in rolling out
infrastructure and operators have to spend a huge amount on import of
machinery and equipments. Depreciation of Pakistani currency has further
exacerbated the financial position of the industry. Particularly those operators
who are engaged in rapid infrastructure rollout and dependent on foreign loans
from off shore sources have to bear loss due depreciation of currency.
Depreciation of local currency has increased the cost of doing business
considerably. Moreover, low tariffs and increased tax rates could also be
responsible factors for low profit margins in the industry. However, the revenue
growth seems quite comfortable of all operators though it lower as compared to
previous years. In the year 2007-08, revenue grew by 35% compare to 48% last
year. Among the operators, Telenor is the most efficient operator in terms of
revenue generation who has increased about 97% revenue in 2007-08 compared
to previous year and reported Rs. 45 billion revenues in the fiscal year 2007-08.
Mobilink earned about Rs. 80 billion revenues, which is 24%.

Average Revenue per User

Average Revenue per User (ARPU) is
an important tool to measure the
financial health of any telecom sector.
The emerging markets of cellular
mobile segments in South Asia are
considered the low ARPU markets. In
Pakistan ARPU has declined
significantly over the years. In the year
2003-04, ARPU in Pakistan was US$ 9
which has declined to only US$ 3.1 in
2007-08. However, the cellular mobile
operators in Pakistan succeeded to
maintain ARPU in 2007-08 at the level
of previous year and reported only 3%
further decline. ARPU for Instaphone phone declined by 57. CMPak (Zong)’s
ARPU has declined by 52% in 2007-08 which is due to its large expansion and

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Telecom Cellular Sector

low level of subscribers. Mobilink's ARPU declined to US$ 3.5 compare to to US$
3.8 in the year 2006-07. Similarly, the Telenor's ARPU declined by only 3% and
reached to US$ 3.9 compare to its US$ 4 in 2006-07.

Investment
In this competitive
market, operators are
bound to increase the
investment to get
more share of
subscribers. In last 5
years, cellular mobile
operators have
invested over US$
8.4 billion in Pakistan
which has created
large number of
employment opportunities all across the country. During 2007-08, Cellular
players invested over US$ 2.3 billion, which is 12% lower than the previous year.
One reason for this decline could be that operators have already covered the
urban areas and are not investing to as much in the rural areas, which are less
lucrative from business point of view. Moreover, substantial taxes could be
another reason to stop investors from further expansion. During the year 2007-
08, Mobilink invested over US$ 919 million while Telenor invested over US$ 565
million. CMPak (Zong) is another operator who started expanding lately and
invested over US$ 200 million in last few months. Warid and Ufone invested US$
480 and US$ 232 million respectively during the year 2007-08.

Taxes on Cellular Mobile

In the current budget, government has increased the rate of GST on telecom
sector significantly and analysts are of the view that it may have an advance
impact on telecom usage and resultantly, the GST collection may drop
considerably from the sector. So far, the Government revenue from telecom
sector in terms of taxes is increasing continuously since 2004-05 after the
liberalization of the sector. During the year 2007-08 mobile segments contributed
more than Rs. 79 billion to national exchequer in the form of taxes, which is 25%
higher than the last year. Cellular Mobile sector contributes more than 80%
telecom tax collection. This Tax collection continued to rise over the years and
was recorded at Rs. 44.6 billion in 2007-08. In terms of GST sector has
contributed about Rs. 37 billion, which is 30% more than of the last year.
However, the growth of the GST collection from cellular mobile sector has
declined from 50% in 2006-07 to 30% in the year 2007-08. The main reason for
this decline in GST collection growth rate could be low tariffs, closure of over 10
million SIMs and increased rates of GST. However, the complete impact of

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Telecom Cellular Sector

increased GST will be

captured in next years
because the rate has been
increased at the end of year.
Activation tax is charged @
Rs. 500/- per new
connection and it has been
the major demand of the
industry to remove this tax
because operators are
unable to pass on this tax to
consumers due to
competition in the market. Activation tax collection has increased from Rs. 17.57
billion in 2006-07 to Rs. 19.18 billion in 2007-08 which is 11% higher than the
previous year. Among the operators, Mobilink is contributing about one fourth of
the total activation tax, which has market share in subscribers over 37%. Telenor
contribution was reported around 28% whose market share in total subscription
is 21%. Ufone share in activation tax was reported 16% while it has market share
in total subscribers is similar to that of Telenor. It indicates that Ufone addition is
lower than the Telenor.

Withholding tax is an advance income tax, which may be adjusted at the end of
the year. Cellular Mobile sector contributes a huge sum of amount in the form of
withholding tax to FBR. During the year 2007-08, cellular mobile companies
deposited over Rs. 23.2 billion, which is 33% higher than the last year. Mobilink
has deposited over Rs. 10.1 billion in this head, which is 44% of total WHT
deposited to FBR in 2007-08. Telenor's share in total WHT was 25% who
deposited over Rs. 5.8 billion during 2007-08.

Imports
Imports for
telecom sector
in 2007-08 have
declined
marginally and
stood at
US$1.33 billion,
which are 4% of
the total imports.
Imports of
cellular Mobile
handsets
reduced significantly by about 33% during the year 2007-08, which indicates
saturation of the market while imports of the telecom equipment has increased by
31% in the same period. To discourage imports of cellular mobile handsets the

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Telecom Cellular Sector

government has imposed a duty of RS. 500 per mobile hand set in the budget of
2007-08. The competitive environment has compelled all operators to import
machinery and equipment to expand their infrastructure.

Related Industries

The State of Pakistan’s Handset Market – An Analysis

Handset market has played the most pivotal role in the overall growth of
Pakistan’s telecom industry. The 2008 was a difficult period for telecom industry
in general with plenty of political uncertainty, negative economic indicators, ever
rising inflation & unfavorable budget policies played their role in restraining the
growth pattern of previous years.

The hardest hit area in this declining growth pattern has been the handset market
of Pakistan. Till Dec, 2007, the growth of handset market was excellent with
around 1 Million handsets were being sold on monthly basis. However in 2008
the figures came down to 600 K units per month.

Handset Market - Current Scenario

Pakistan’s handset market is primarily a low-end market with majority of volume
comes from low-end mobile phones. Another important aspect is that our handset
market is extremely price sensitive just like any other handset market of a
developing country.

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Telecom Cellular Sector

To comprehend the local market dynamics, below is the price segmentation

analysis along with the market share each price segment comprised upon.

If we look at the figure of how the current market stands with respect to market
share of each handset manufacturer, Nokia still has a sizeable lead though their
market share has been deteriorating steadily (from 65% in 2006 to 48% at the
end of July, 08). The progress of Samsung has been phenomenal from 8%
market share in 2006 to the current 30% with indication of further progression in
2009. LG is the second biggest gainer (approx 17% share for a player who has
just been active since 2 years) with most of the success came from its 2
successful models LG KG195 & KG270. Sony Ericsson & Motorola represent 2
of the biggest loosers in the handset market with only 5% & 1% share in the total
pie.

Since in Pakistan most still think Sony Ericsson is the second major player in the
Pakistan’s handset market which isn’t correct any more. Pakistan is primarily a
low end market with approx 63%-65% volume generates from phones worth less
than 3k and in Sony Ericsson local product portfolio there is not even a single SE
model in this price range, strangely enough their majority of portfolio compete in
a price segment (High-end) which is just a mere 5% of the total handset market.

Motorola is just vanishing in Pakistan, the disaster of their F-3 model started a
vicious slide from which they never recovered with the future seems more bleak.

The Koreans are playing their cards really well with the success of both Samsung
& LG they are really flying high. Especially the success of Samsung is very
impressive with a very strong portfolio (the most balance portfolio in the industry
covering all price segments with good products). This success in Pakistan has
come down from the global success Samsung Mobile has been enjoying from the
start of 2007. Their flagship model SGH C-160 targeting the low-end category is
making waves in the most lucrative (volume vise) price segment in Pakistan’s

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Telecom Cellular Sector

handset market. With more emphasis on R&D & product development the future
looks bright for this giant conglomerate.

LG has also succeeded really well through getting direct benefit from the
absence of any substantial products by SE. But the question mark on the product
quality is hurting the brand to grow exponentially.

Nokia, the global leader in the world is still the player to beat in Pakistan’s
handset market with the resounding success of Nokia 1200 & 1208; this global
giant has so much to offer in-terms of quality products. In Pakistan, Nokia plays a
major role in 3 main price categories (Low-end, Low Mid & High) which
comprised upon 82% of the total market.

Mobile Phone Repair Industry of Pakistan

The huge influx of imported mobile phones in Pakistan has spawned a whole
industry around mobile phone repair work. The trend of mobile repair as a small
business in Pakistan has taken off rapidly in the last few years. One reason for
this could be the increase in handset prices caused by higher duty on handsets
and falling value of Rupee. Most of these “repair technicians” lack formal training
and have most likely picked up mobile repairing skills on the job.

The small mobile repair shops have opened up everywhere. In Lahore, markets
like Hafeez centre and Hall road are among the most popular for mobile repair
work. There are signs outside these shops which claim that they can repair and
unlock phones from anywhere in the world. These shops charge around 300 to

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Telecom Cellular Sector

500 Rs to unlock a phone, depending on the model and difficulty involved. These
shops are equipped with tools, hardware and Internet access.. On the high-end,
mobile phone retail networks like MobileZone have their own technical facilities to
service their customers and the phones under warranty.

In May 2008, Nokia started NOKIA CARE centers in Pakistan, located in Lahore
and Karachi. Nokia’s official outlet provides services like warranty claims and
mobile repair. This specific service is the only one by a global retail brand in
Pakistan (at the moment), providing their customers with top notch repair lab,
complete with quality control standards and good customer services. But apart
from Nokia, markets are loaded with other brands such as Motorola, Samsung,
Sony Ericsson, Blackberry etc for which there are no such quality repair facilities.

The perception of general public is that once mobile gets into a repair shop its
value decreases instantly. Usually 80% of the second hand mobile phones are
repaired because of technical issues and then sold again in the market. Above
all, it is clear that the quality in repairing these hand sets is below standard. The
tools employed are usually not specifically designed to do that work. The physical
environment of the repair unit is open with dust and pollution.

Recent Social Impacts

Telecom And Technology Mega trends For Pakistan

Twelve recent, noticeable telecom and technology trends from Pakistan.

 Popular: iPhone 3G, Book your number by Zong, Mobile Internet

with USB modems
 Success Stories: Zong brand launch, Telenor strategy
 Survivors: Ptcl, Warid
 On the defensive: Mobilink
 Wrong Turns: Tax increase on telecom, charging for customer service call
 Defying the odds: Entrepreneurship continues to thrive and inspire
 Becoming mainstream: Social networking
 Getting noticed: bloggers and Internet users by Google
 Shift in business model: User generated content threatens traditional
media
 Challenges: economy, energy & power shortage, political instability
 On track: WiMAX with second commercial rollout
 Policy issues: Enforcement of new SIM registration policy, when to rollout
3G

Late Night Calling Packages and Pakistani Youth

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Telecom Cellular Sector

These days there is a rush of packages out in the market from the mobile service
providers, targeting different market segments and offering all kinds of discounts
depending on who you call or when you call.

Off-peak timings have always been used by service providers to create interest
and to lure customers. There was a time not too long ago when the Internet
access used to be free at night. Nowadays the mobile service providers are
trying to shift customers from PC to mobile phones usage. This is true for voice,
data and even Internet. There has been a subsequent change in the Internet and
data usage via mobile phones since the GPRS rates have gone down, for
example you can send hundreds of text messages per day to any network in the
country.

The bigger trend is on the heavily discounted late night time calling packages,
which are in effect usually from 11pm at night to 7am in the morning. In these
hours a single call costs you a total of 3 to 6 rupees an hour. All big names of the
telecom sector are competing with each other. Some examples include Warid
(infinite craze, zem nites), Mobilink (Raat Shuru Baat Shuru), Djuice (jaagtay
raho package), Zong and Ufone.

The most controversial idea behind these packages is the timing: from 11pm in
the night till 7am in the morning. These packages are purely targeting the
younger generation. A large percent of the people think these kind of activities
are hurting our youth and blame the telecom companies for this trend.

The times are gone when parents used to keep a close watch over their children
and monitor their every single activity. Now a days the youth is much mature and
have more exposure and more understanding of things. The parents perceive
things quite differently from the youth though and the negative or positive aspects
are seen differently. The responsibility falls over to children of how better they
understand the life around them. Certain priorities must be set according to the
age and these priorities should never be compromised. It’s not a disastrous
marketing strategy or a false move by the telecom companies, its just how we
think about it. Staying up at nights and fight through long working days will
definitely affect your health, education and professional life. Staying up nights
when the days are free makes sense. So its all about prioritizing your goals in a
certain way so that not your sleep or professional life is disturbed.

Cell phones nowadays have become symbol of independence – for our youth
that mobile phone helps them to develop their own language and social groups
away from the prying eyes of their parents. It has become Status Symbol or what
people say Fashion statement - It is a way that people wear their phone in a
style, color, cost and features and feel that a phone can enhance their looks.
Although mobile phones have long been a part of the business community, they

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are quietly becoming entrenched in personal lives. Cell phones play a crucial role
in relationships among a group of young people, Mobile phones also influence
the trend toward relaxing the traditional amount of contact permitted before
marriage. Cell phone is also in the use of people who are working 24/7
environment and always remain on the go.

It is privacy and not mobility that matters. Most youth have cell phone
conversations in their bedroom. Lets have a look on few needs of new breed
(Youth) that have been forcing them to get addicted to this cell phone night
packages, the need to make their identity and to build “social and emotional ties”.
The shrinking size of present day families explain why the youth today feel the
need to communicate with virtual brothers and sisters.

Youngsters have been using cell phones to form friendships and social groups
away from their families, feeling that these phones give them privacy that they
would not otherwise have. As cell phone use becomes even more widespread,
communication between parents and their kids may become even more
impersonal.

The saying “romance is in the air” appears to be true. In today’s world, it is

mobile phones which are carrying the messages of love. Youngsters are using
mobile phones to maintain personal and romantic relationships.

Grabbing our new generation, these free night packages services provided by
Cellular Companies have become a great pleasure/encouragement to people like
who aren’t responsible at all, it seems they are announced to spoil the future of
our youth, just give it a thought which kind a people avail these services and
what they do? Whole night they spent in useless, ungraceful conversation it’s all
beyond morals.

The immature generation has become addicted to avail these kind a packages.
These kind portable platform providers are taking away our youth from family/
Cultural/ Traditional/ Religious values, they don’t even care about their health
though they know how these RF radiation would be harmful as for as continuous
use is concerned.

The Cellular Companies should make some standards so they can provide such
services which can be of use to make the youths future bright and should
consider the social impact before announcing any such service, they should offer
some M-Learning (Mobile Learning) services they are behind the race of
announcing free night packages, low rates for one special number.

No doubt most of the parents are equally responsible for this attitude in our new
generation, in previous era what kind of environment we have had at homes —-
sitting together in TV-Lounges , One time/place to sit and eat together no
friends/outings in late night, but this fast life where people are to avail luxurious

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lifestyle parents themselves arrange separate rooms equipped with individual TV,
personal Computer with high speed Internet connection and a latest model of any
famous brand of Mobile handset though its of no use to them at around certain
age , yup parents are equally responsible they should be responsible they should
keep eye on their children’s activities, what kind a friends they are making how
they are progressing academically how they are spending time.

The generation gap between parents and children’s is not the main issue
because its more than the gap, its about basics of raising good children. True
that bad habits or friendships existed before this direct and private source of
communication too but its all starts right from your basic education that our youth
is getting at Home. So the message goes to parents: make your kids to avail
good morals and talk to them on every matter to give them better understandings
of what is right and what is wrong.

Which one Is Best For You: Postpay Or Prepaid?

According to different market surveys and analysis of the customer preferences,
prepaid and postpaid are perceived to be very different. Cost is the main factor.
Students for example would not go postpaid because of their limited budget.
Apart from that, postpaid packages have always been status symbols in the eye
of customers. It is common knowledge that prepaid users are being catered with
juicy rates and over night packages where you can call for as low as 4 to 5
rupees an hour. Post paid packages are still not as competitive and attractive as
compared with prepaid. So how do people choose between prepaid and
postpaid?

It remains a fact that demographics (age, gender, income, disabilities, mobility,

educational attainment, employment status, and even location) play an important
role in choosing prepaid and post paid packages. But look carefully and there are
some big differences which go beyond cost and status.

Some post paid packages such as Warid Telecom provide a good deal and are
within reach of common public. The package line rent amount is same as the free
minutes cost every month. For example a Zahi package with a line rent of 150
gives you 150 free minutes. The zoom packages are also availiable on Zahi.
There are five Friends & Family (FNF) number selections who you can call for
24/7 at 0.82 rupees a minute. But calls on other mobile networks and landline
numbers can cost 5-6 rupees/min. Recently Zahi has launched the card billing
system, through this you can charge your postpaid balance from the zem prepaid
card. This makes the billing quiet easier for the postpaid customers. Other than
Warid telecom, Mobilink, Ufone, and Persona post paid (Telenor’s postpaid) have
less recognition and market share. But in prepaid Ufone, Telenor and djuice have
made their mark. Mobilink is expensive for both post paid and prepaid but it has
first-move advantage and subscribers who don’t want to experiment with mobile

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number portability stick with it. Zong- the china mobile company is just prepaid as
yet. Perhaps they have calculated that its not worth going for postpaid segment.

There are actually some disadvantages of going with postpaid, these include:

a) Bill payment is not as easy for postpaid as prepaid (again, it varies by the
mobile operator and area).

b) International calls are not as easy to make on postpaid as on prepaid. For

example Warid demands a security (Rs. 4000) for enabling international calls.
Get a prepaid line and call as long as you have balance.

c) Service gets disconnected when 90% credit limit is reached and it takes quite
an effort to get the service replaced. Time varies by operator and horrible
customer service stories are common. This was discussed at Telecom Grid
Pakistan forum.

Cell Phone Users in Pakistan Prefer Style Over Features

Report from The Nation. A latest study conducted by Nokia pointed out that the
people in Pakistan prefer style more than the need of being connected. The
study says that the new devices combined with a attractive fold design with quick
cover keys is bringing out substance to style, which is more acceptable in
Pakistan as compared to other markets in the region of Asia and Asia Pacific.
The study said that for innovation-conscious users ‘we need to offer intelligent
and entertaining multimedia functionality in an easy to use, ultra slim package’.
Users in Pakistan had surpassed others in the demand for innovation in
technology.

The cell phone users in Pakistan were involved more in style, which was beyond
their expectations. The users in Pakistan needed style and design more than
other features.

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Nokia was considering of doubling its investment in Pakistan looking at the

response. Youngsters demanded innovation in multimedia computer that brings
the complete experience to a sleeker body. Nokia has created a very eye-
catching device using premium materials to enclose world-class features and
experiences.

Nokia had introduced a trimmer fold model to its Nokia N-series line up, a new
multimedia computer that brings the complete experience to a sleeker body, with
little compromise.

Rise In Popularity Of Mobile Web And Mobile Advertising

In Pakistan
The analytics data from mKhoj, a mobile advertising company, shows that the
number of impressions (views of advertisement) from Pakistan took an 80% jump
in September and in the previous month, the impressions showed 300% growth.
Pakistanis have always been big time fans of mobile games, ring tones and other
fun downloads, a trend consistent with the mobile users worldwide. Now the
public is moving from WAP suites to surfing the web and portals on mobiles. The
unlimited data plans and EDGE service are contributors to this trend.

As long as the marketers follow an ethics guideline and provide relevant ads, the
mobile advertising will take off and become mainstream.

Here is a summary of the trends which point to growth of mobile advertising:

 89 million user base

 Near 100,000 mobile data users (estimate)
 Good EDGE services (in terms of options and coverage) by mobile
operators
 More wireless broadband services - such as Zong USB Internet
 Growth of smart phones as a percentage of overall handsets
 Preference to browse web on the phone
 Acceptance of mobile ads - as shown by ad impressions
 Emergence of local mobile ad players such as mKhoj

Pakistan’s traffic for AdMob (a company for mobile advertising) ranks number 18
in the world. Given the limited number of mobile data users in Pakistan. In
September 2008 the requests recorded from Pakistan were 28.9 millions, up 3.5
times from September of 2007. Note that this is data is only from one ad provider
and the actual number is likely to be higher. However this is a very good indicator
of mobile web trend in Pakistan and shows that the mobile web usage in
Pakistan has taken off.

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An Insight into the Mind of Mobile Phone users - The

battle of Needs & Aspirations!
The mindset of our local mobile phone user is very unique & complex. Influences
of socio-economic & demographic factors, peer pressures & life style etc are the
main driving force through which the consumer ends up owning a particular
model for his/her communication needs.

“A professional looking guy is standing nearby you, he is pretty calm & collected
but needlessly try to show of his latest PDA, few seconds forward than he pulls
out his phone stylus & tap here & there on the screen than put the phone in his
pocket while giving a good gaze to all the near by guys boasting a smirking
proudly smile“.

To further explore this mindset, let’s look closely, the phenomenal growth in
mobile penetration have created a very unique socio cultural psyche. Just
imagine from a 12 year old kiddy to a 60 year old man are all playing with the
small communication device known as mobile phone. A rough estimate suggests
that in Pakistan the usage span of a new cell phone is mere 3 months (means
majority of local users upgrade their cell phone within 3 months time).

Pakistan’s mobile user into 2 main categories (2 basic types of users) have
summed up as follows

1. Those who are driven by their needs (read 3 core phone functionalities)

2. Those who are driven by their aspirations (Users who can easily suffice
their communication requirement through a say Rs. 10k mobile phone but
instead they choose to carry a cell phones worth Rs. 40K or more)

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In every mobile phone user’s mind there is a battle going around, a battle
between their needs & aspirations. Some own phones to suffice their
communication needs while some own phones to meet their aspirational urges.

Now look at the mobile phone user preference chart while making actual
decision, the data is a study & I have used extrapolation for analysis purposes as
it enable us to understand the psyche of local consumer. Also take a look at the
chart depicting local consumer purchasing pattern.

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Many professionals/ executives have come across who take their hands on any
new business phone which hits the market, to few of them even the question was
asked that why you are carrying a blackberry/ PDA or a latest Nokia E-series
phone…. the only answer I got in reply was we need to check our emails 24/7 &
that’s about it (surprisingly no words about PIM, one of the major feature of any
business phone since majority of them doesn’t exactly know what this Personal
Information Management really stand for). Majority of them have cell phones
which can be met in exact requirement in half of the price they want to spend.

The main reason lies in the consumer mindset (the aspirational value attached to
carrying a business phone) since the consumer tend to believe that how he/ she
will look professional (top executives) if they are not carrying a BlackBerry or a
PDA phone.

And this is not just a local phenomenon; even mobile users of developed
countries tend to be manipulated by their desires & aspiration rather looking to
their actual communication needs. Hence this battle between needs & aspiration
will continue.

Top Reasons for Selecting a Mobile Provider in Pakistan

In interesting study (based on a sample size of 1812, ages 18-60, lower income
groups) from LIRNEAsia mobile phone users were asked the main reasons for
selecting their primary mobile company. The study clearly shows that coverage is
more important in rural areas, tariff is less important. Here’s the comparison of urban
and rural trends.

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Group Discussion
Business in Pakistan revolves around Cellular companies, print media and
electronic media. 50 % space on newspaper is occupied by ads from different

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cellular companies and after every five minutes you are to watch ads of same
cellular companies on electronic media.

In Pakistan cellular industry has shown rapid growth, especially in last few years.
As per PTA stats, there are 91 million mobile users in the country, which were
only couple of millions some years ago.

Every company is trying to beat its competitor and efforts are clearly seen to beat
each other in this corporate battle. Where these cellular companies brought tons
of investment into country, and played constructive role in bettering lifestyles, at
same time this battle between cellular companies has actively spoiled our youth.
Every single boy and girl has a mobile phone and they are found texting and
talking on their cell phone all the times.

Night Packages:

These days every company is providing very inexpensive (or even free) calls at
night. These calls are like Rs. 5 and, hence are affordable for even an average
teen. They talk all night long with their (girl/boy) friends. Use their pocket money
to buy credits. At times, even they cheat their parents, and use mobile without
their permission. Many boys and girls also talk to their so called lovers. Which
can be basically termed as a teen crush?

Sms Craze:

Messaging, messaging and messaging is what the teens do these days. It’s a
symbol of being cool. The one who got more messages is considered the cool
one. Teens forward jokes, romantic lines, riddles and even immoral adult
messages. SMS Craze in teens can be judged by the typing speed and their
accuracy to type messages on little dial pad. They just thumb the mobile and
don’t stop.

Wap/EDGE:

Now days you don’t need to turn on your pc on to use internet. Internet is just a
click away thanks to wap/EDGE enabled mobiles. This service is good for the
people who really need it. But teens normally use it to waste their time. First are
the messengers which don’t let teens sleep at night, then comes the facebook
and other social websites to keep them awake.

Un registered Sim cards:

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The last thing which is the biggest menace is the un-registered sim cards. It gives
you the passport to do all the wrong things because no one can catch you. We
can bet that every single teen has a un-registered sim card. Our government tries
so hard to block them but our teens are much smarter. You can talk to anyone,
black mail them, do what ever you want.

MMS/Videos

There are hundreds of examples, where MMS and Videos of their lovers were
captured by teenagers and what happens next is a topic that we are feeling is not
good to touch… but one can imagine the seriousness of the issue.

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