Sponsored News?

You know the competition is getting bloodier when the commercial press cannot keep maintain its nuetrality. Consider a 'news analysis' carried by Daily Times (29th August 2006) below. Despite the fact that the contents of the article are generally true in the larger sense, what is amusing is the 'analyst', (who by the way, considers CDMA's EvDO as e-video - giving the impression that at least part of the contents were dictated over phone where such an amusing errors is possible) has taken a very negative view of one of the major player (Wateen/Warid) in the article. Ture, organizational excellence is not very common in Pakistan especially in an exploding sector where at least in the short term growing is more important than growing efficiently. Buy why single out one player when it comes to pointing out financial efficiency of a player when it is still in the deployement phase!

Who will be No 1 in telecoms?
By Sharif Ahmad,
News Analysis, Daily Times
29th August, 2006
[Actual Clip here]

KARACHI: The major mobile operators are aggressively fighting for market share with every day bringing a bewildering new set of ‘packages’ and ‘offers’ to confused potontial consumers. But two things are clearly emerging from this chaos - the consumer is a major beneficiary,and connectivity is progressing at a breakneck speed. The clear market leader is Mobilink followed by Ufone, Telenor, Warid, Paktel and Instaphone. Among these, Warid Telecom has launched a media campaign offering rates that are aimed at creating a new price war in the industry. Desperate to create an impact, Warid seems to be a victim of its own hype. It has a relative poor quality of service and has slipped behind Mobilink, Ufone and Telenor. After the new $600 million expansion of Ufone awarded to Huawei, it is clear that PTCL is throwing its full weight behind its mobile subsidiary. Warid has the lowest arpu (average per unit) among the mobile leaders t under $4 and a bare 5 per cent of the market. Mobilink has 63 percent, Ufone 25 percent with Telenor at 7 percent. Mobilink is fueled by vibrant marketing and a first mover advantage and is therefore way ahead of the pack. Telenor is not to be taken lightly. It is building a stable and reliable network that should take it to second position over the next six months. Its new campaign “Talkshawk” has caught on. Telenor has the advantage of being equity financed while Warid has borrowed up to the hilt.

What appears even more disturbing for Warid is the huge financial roll out of its sister company Wateen in projects whose financial plans seem dubious. Wateen is laying out a fiber backbone at a cost of $100 mn (the fourth company to doo). PTCL already has excess capacity on its long haul fiber. Mobilink has almost completed its backbone and has a submarine fiber link to its sister company TWA which will be the next national media provider after PTCL. Multinet, a subsidiary of Malaysia Telecom, is rolling out a similar network. Since PTCL and Mobilink have their own captive business and Telenor apparently is planning to join with Multinet it looks like Warid will be in solo flight.

In order to create more hype, Wateen is acquiring 3.5 ghz of wireless frequency for launching Wimax broadband (a futurist technology with limited use in Pakistan). The Customer Premise Equipment (CPE) of Wimax is not yet institutionalized and does not as yet have wide scale deployment in developed economies. The CPE of Wimax is not rationalized and is far too expensive for Pakistan, which already has plenty of broadband access through e-video (CDMA), internet over cable and DSL. Wateen is also trying fiber connectivity to the last mile.

They are dabbling in hybrid fiber coaxial networks to provide triple play (a complex technology) of which they have no experience. Recently they bid unsuccessfully in Islamabad for a 200 km core fiber network which has been awarded to a competitor, Worldcall Telecom.

In the emerging scenario, it seems the Wateen / Warid management is in danger of losing its direction. Having paid $290 mn for a mobile license and still unable to get market share they have abandoned their core business. Excess capacity and confused objectives are a recipe for disaster, says one analyst.

When the market consolidates, three clear players will emerge. Instaphone are at the bottom of the league and may end up looking for a buyout as they do not have the money for rollout or the mobile license fees. Paktel, after the failure of its owner company Milicom to find a buyer, also looks destined to fight for survival. Warid and Wateen are up to their necks in red ink and it is a matter of time before the Sheikhs of Abu Dhabi realize their local management is a disaster. Three clear leaders – Telenor, Ufone and Mobilink will survive and it will be interesting to see the strategies they deploy in the fight for number one position.