Internship Report on Ufone

E X E C U T I V E

S UMMARY

3

untapped potential for telecom growth and an attractive investment

environment. Recently Business Monitor International (BMI) ranked

Pakistan as a key destination for telecom growth. The BMI rankings

take into account a number of factors including industry situation,

growth potential, competitive landscape and economy and political

risks etc.

The Pakistan market reached the 90 million subscriber mark in

September 2008, almost double from 2006 numbers. The growth

slowed after that and at the end of November 2008 the total mobile

subscriber number was 90.5 million.

Pakistan needs to increase telecom research and development work

within the country. China and India are in the process of becoming

world major R&D centers for technology and telecommunication. Two

top Chinese telecom equipment firms have announced their plans to

collaborate with Pakistan: Huawei is working with UET Lahore and ZTE

will setup R&D center in Islamabad. The goal of the policy makers

should be to increase the rate of transfer of technology from abroad,

broaden the pool of local skilled workforce and accelerate the local

production of telecom equipment and handset parts etc.

PTCL was established to operate cellular telephony. The company

commenced its operations, under the brand name of Ufone, from

Islamabad on January 29, 2001. Ufone continued on the path to

success. The Company further expanded its coverage and has added

new cities and highways. Ufone has network coverage in more than

5442 locations and across all major highways of the country. Ufone, a

wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL),

is now under the control of ETISALAT group of UAE. It has 21% of

subscriber share and added the most lines (2.4 million) from 2006-07.

For those in Pakistan it is the one company where they can easily

invest locally. Ufone is maintaining its subscriber's base in market.

However the company needs a big push from its owners ETISALAT in

shape of more investment to increase and enhance its network and its

quality.

3

1 INTRODUCTION

1.1 COMPANY PROFILE

Pakistan Telecom Mobile Ltd, operating under the brand name of

'Ufone' a wholly-owned subsidiary of PTCL commenced its operations

on 29th January 2001 as a GSM 900 service provider. Since the outset

it has expanded its coverage and customer base at a rapid pace and

established itself as one of the leading cellular service providers in

Pakistan. Ufone is now considered to be one of the most active,

aggressive and innovative players in the mobile sector of Pakistan.

The growth of cellular sector in Pakistan can also be attributable to

good governance and conducive policies of the government of Pakistan

In connection with that in April 2006 Emirates Telecommunication

Corporation, which is commonly known as Etisalat, has assumed

management control of Pakistan Telecommunication Corporation Ltd –

part of the $2.6bn deal to buy a 26% stake. The successful

privatization of PTCL, and consequently Ufone, is hailed as ushering in

a new era for telecommunications in Pakistan.

As mobile users in the country have reached 88 million at a very rapid

pace, Ufone has a subscriber base of nearly 17.5 million and a market

share of nearly 21%. Ufone has seen a subscriber growth of over 10

million since July 2007 onto its network. Subsequently the growth in

subscriber base caused a healthy trend in its revenues and margins.

Ufone has always played a pivotal role in the development of cellular

market in Pakistan. For most part it has been a step ahead in

introducing innovative products to the market. Ufone was pioneer in

launching the GPRS services and Multi-media Messaging Service (MMS)

in Pakistan, including the lead in introducing GPRS international

roaming and prepaid international roaming for these services in the

Pakistani market. Currently Ufone has expanded its product portfolio to

include Black Berry handsets and providing one of the largest EDGE

networks in the country today.

Ufone understands the need to communicate effectively and efficiently

at all levels of society, which is why various products are catering for

the needs of the Pakistan corporate market. It offers services such as

3

mobile office, Virtual Private Network (VPN), and a lot more to

revolutionized communication.

Ufone provides International Roaming facility with more than 215

international operators across 124 countries. Ufone has GPRS roaming

agreements with more than 100 international operators and also

provides prepaid roaming facility to more than 15 destinations across

the country.

5

2 COMPANY ANALYSIS

2.1OPERATIONAL ANALYSIS

Ufone's operational performance has been very encouraging. Despite

the stiff competition in Pakistan telecom market which has led to

reduction of prices to bare minimum level, due to its aggressive

policies and exercising strict control over expenses the Company

managed to improve its revenue and after-tax profit by 87% and 54%

respectively, as compared to last year.

Future Plans keeping in view the growth potential of the cellular

industry there is no option but to be aggressive in order to remain a

potent force in the cellular industry. In order to extend cellular network

Ufone has finalized a huge network expansion contract amounting to

about USD 550 million, which will enhance the subscribers' capacity by

10 million. This is the largest ever expansion project of Ufone.

A strong focus of Ufone is on maintaining high quality of service, which

is always a benchmark of Ufone, increasing usage and exploring new

revenue streams on value added services, market visibility through

various market initiatives to fulfill subscribers' satisfaction and demand

and above all to increase the value of investment for the shareholders.

Moreover, efficient working of the workforce in the organization makes

it possible to lead the market and maintain competitive edge over the

competitors. The organizational operations can be clarified by studying

the nature of Ufone's organizational structure and hierarchy.

2.1.1Organizational Structure

The organizational Structure at Ufone is Lean or Horizontal structure.

One of the organizational functions of Ufone in relation to its hierarchy

is, the company is having Decentralized structure. The flow of

communication becomes easy and simple in such structure. It is

divided into different departments and every department has its head

and all are interconnected.

The concept of Departmentalization is effectively in practice at Ufone.

There are different departments which are working within their

functional units to contribute towards the success of organization and

to achieve the over all goal of the Organization. Ufone has 8

3

departments that are working efficiently and all are interacting with

each other to make it a much better company by satisfying its

customers demand.

The structure of Ufone comprises of Board of directors who are being

reported by CEO, Chief Executive Officer.

CEO is a great supervision to the 8 Major operations of the company.

These operations are divided into departments that are:

2.1.2Finance Department

The head of finance department is designated as CFO – Chief Financial

Officer or Vice president of financial head. There are further 4 subheads

in Finance Department:

CNC

The department is responsible for Credit exposure for Ufone

postpaid connection. The department maintains the record of all

postpaid subscribers in order to ensure the subscribers validity.

Budgeting and Planning

The department is working over the budgets, the planning of

budget and its reports to the authorities. This head provides the

annual budget to be spent. The function of this head is also to

forecast any opportunities or threats towards the organization.

The reporting of the budget is being done on the monthly basis

to the head of financial officer to keep the record of the budgets.

Relationship with banks are also being maintained in order to get

help in the need time.

Accounts

The accounting head is responsible for the book keeping of the

records. The internal audits are done to ensure the stream lined

working of the processes as well as external audit by the

Accountancy firms.

Revenue Assurance

There are Revenue Assurance policies & procedures being made

by the personnel. This assurance head also Liaise with other

departments, obtain, analyze and reconcile reports to ensure

prevention of revenue leakage. The sub-head also ensure error

free billing operations, deployment of key revenue assurance

applications/solutions, fraud management.

7

2.1.3Marketing Department

The head of marketing department is designated as CMO- Chief

Marketing Officer or Vice President of Marketing Head. The department

has further 3 subheads working in specialized manner according to the

skills and abilities of the employees.

Brands

There are basically two products of the Ufone which serves as

the brands of the company. This sub-head is responsible for the

execution of the Brand Activities. Ufone is performing the

promotional activities in Brands sub-head, including advertising

over Electronic media and print media. The promotional

strategies are made by the sub-head to get the implementation.

Marketing Strategy and Analysis

The sub-head is working in order to formularize the marketing

strategy according to the market requirement and consumer

preferences. The analysis about the market trend is done and the

strategies are made in relevance. Moreover, competitors are

biggest source of reacting towards the marketing activities.

Ufone is having a proactive marketing concept in context of

competition.

VAS – Value Added Services

VAS sub-head is responsible for proficient functioning of

conveniences provided to the customers, these VAS are Virtual Private

Network, Call Management, Missed Call Notification, Phonebook Saver and a

host of Infotainment and Entertainment services.

2.1.4Information Technology Department

While being a part of information technology and telecommunications, Ufone

is having a major department of Information technology. The head of

information technology is termed as CIO- Chief Information officers. IT

department is working with the division of further 2 sub-heads.

Billing

The billing department is responsible for aggregating CDRs and

preparation of the postpaid billing for customer from system.

IT Development

Any kind of IT development required by the company in billing or

CRM (Customer Relationship Management) module is done by IT

development team.

2.1.5Customer Operations Department

3

One of the departments to preserve the existing consumers, Ufone is

having a department of Customer operations; the head of this

department is designated as VP COPs – Vice president Customer

Operations. The department is having 2 further sub heads.

Customer Care

Ufone provides customer care through Customer Care Center

located in all key cities, across the country. Ufone's customer

care representatives are more helpful. They will not only resolve

Consumers issues but also guide them into customizing Ufone,

according to their needs. Customers care is offered to through

o Call Centre

Cal centre representatives are providing services, 24 hours

a day. The customers can contact the Ufone Call Center to

get answers to all their queries. Some of them include:

 Bill enquiry (credit limit, expiry date etc.)

 Reporting of lost phone

 Number blocking in case of lost or stolen SIMs

 Connection status (active / inactive)

 Tariff

 Products information

 Ufone Sales & Service Center information

 Nearest dealer information

 Ufone coverage areas

 Emergency number information

 International roaming information

 Value added services information

 Missed call alerts

 Call forwarding

 Conference call

 FNF Activation / Changes

 Post Pay Reward Redemption

o Business Centre

The business centre of Ufone are offering various services to

their customers, they are basically company owned centre,

the business centre offers the SIM issuance and other

customer related issues, retention of customers and handling

requests for Mobile number portability.

Govt. Relations

9

PTA – Pakistan Telecom Authority is the regulatory authority in

Pakistan concerning the network operators as well as

telecommunication practices. Ufone is also abiding the rules that

are being made by PTA. The relationship with PTA is also being

maintained as PTA is Govt. regulation.

2.1.6Engineering Department

The engineering department is Backbone of the company. The head of

the department is termed as CTO - Chief Technical Officers or Vice

president. The Engineering department is divided into 4 sub-heads

BSS – Business Support System

The subhead is responsible for Radio Planning and network

optimization.

NSS – Network Switching Subsystem

The Network Switching Subsystem, at Ufone refers to as the GSM

core network, usually refers to the circuit-switched core network,

which is being used by ufone GSM services such as voice calls,

SMS, and Circuit Switched Data calls.

There is also an overlay architecture on the GSM core network to

provide packet-switched data services and is known as the GPRS

core network. This allows mobile phones to have access to

services such as WAP, MMS, and Internet access.

All mobile phones manufactured today have both circuit and

packet based services, so Ufone as a network Operator that is

having a GPRS network in addition to the standard GSM core

network.

IN – Intelligence Network

The Intelligent network's main purpose is to take care of

charging of prepaid customers and has the balance updates of

each of the customer.

2.1.7Sales Department

The sales department at Ufone is headed by Vice president Sales. The

department is being divided into 3 main sub-heads.

Corporate Sales

the division of the sales department is handling the sales for

executives or corporate clients. These clients are having postpaid

products with billing system.

3

Franchises & Retail Outlets

this division is handling franchises and retail outlets with a

network of more than 365 franchises and 25 company-owned

customer service centers along with a distribution network of

150,000 outlets nationwide.

Sales operations

Sales operations at the company have been set up to provide the

customers, quality services all under one roof so consumers can

walk in to any Ufone Sales & Service Center for services like:

Mobile Number Portability

Connection purchase

Bill payment

SIM Activation

Number blocking in case of lost or stolen SIMs

Transfer of subscription

Changing access levels

Number change

Address change

SIM replacement

Product / package change

Activation of VAS

Connection closure

Handset & other mobile accessories

PIN / PUK code number inquiry

GPRS

IR activation

Missed Call Notification

Call Forwarding

Conference Call

FNF Activation / Changes

Post Pay Reward Redemption

2.1.8Human Resource Department

Human Resource department is being headed by the HR executive

designated as Chief of Human resource department. The department is

working for the personnel in the organization. There are 3 main sub-heads in

the department

Recruitment and Compensation Benefits

Ufone has this policy of not mentioning the name of the company

in a job advertisement. Usually hiring takes place through

11

outsourcing with a help of a third party. Final selection takes

place after the candidate has been interviewed by the Manager

of the department who requires the new employee and then the

HR Manager.

A very effective way to retain an employee is to give him

compensation and benefits. At Ufone following benefits are

given: Medical Facility to employee and his/her parents and Paid

Vacations, Gratuity, Provident fund etc.

Training

Training & Development involves improving the knowledge, skills

and abilities of the individuals. A continuous training is

conducted inside Ufone to improve the performance of the

employee. There are two types of trainings conducted at Ufone:

In-house Training and External Training.

HR Operations

HR operations at Ufone include the working over all Human

resource Functions that are

o Orientation

o Human Resource Planning

o HR hiring / recruitment

o Selection Process

o Compensation and benefits

o Training and Development

o Human Resource Information system

Strategic Planning Department

o This department directly reports to Chief Executive officer.

o Ufone views strategy as an overall approach and plan. This

department monitors the executions of strategic plans and

goals across the business. So, Strategic Planning at

company is the overall Planning that facilitates the good

management of a process. Ufone strategic planning is

providing the big picture of company's operations and long

term goals.

3

o Forecasting the opportunities

o Building Synergies

o Long-term Planning

o Implementation of Strategic Plans

13

2.2 HUMAN RESOURCE ANALYSIS

Currently there are over 1500 permanent employees working in Ufone

nationwide. On the entry level the HR Department is mostly taking

MBA graduates. According to Ufone their belief is that "Their people are

their greatest asset". The HR team takes great pride in acknowledging

the contribution of each employee. Ufone focuses a lot on HR

Developmen nt and for that the HR team ensures:

Staff of Ufone consists of world class Professionals and Ufone

ensures that the right systems are in place to encourage people

to develop to their full potential

Collaborative and mutually supportive work environment is

created that encourages people to grow

Team of professionals is built which delivers expertise by

participating in business decisions

Performance Management and Reward Systems are developed

which underlies the Business strategy of Ufone

A clearly defined Recruitment & Selection policy is defined

The need for Training & Development of employees is assessed

Compensation & Benefit plan is developed which ensures that

employees are motivated



Ufone is basically equal employment opportunity organization. Almost

70% of its employees are male and 30% are female. The job

description of each and every employee is predefined. Performance

appraisal is done on annual basis. Average age of Ufone employee is

32 years. This shows that they prefer young and energetic people for

their middle and lower level management. High profile well

experienced persons are considered for top level management.

Average Salary is 12000 for a Ufone employee.

2.2.1Management

In Ufone the hierarchy is very lean, in general the whole setup is

centralized all the matters are to be reported to the head office and all

the policies and targets are approved at the higher level. But at the

branch level the structure is decentralized.

2.2.2Personnel

There are about 150 employees who are working in the Ufone Head

Office and 2500 employees serving nationwide. All of them are very

devoted as they are given a wonderful learning environment to work,

pay offered to them is also very attractive and ample chance of

progress motivates them to work more. The job analysis is done on

3

targets assigned and daily routines. The employees are indeed very

satisfied and motivated.

2.2.3Recruitment & Selection

Recruitment is the process of gathering a pool of candidates for an

organizational vacancy. Selection is the process of short listing only the

qualified candidates who are fit for the job. In terms of recruitment and

selection it is important to consider carrying out a thorough job

analysis to determine the level of skills/technical abilities,

competencies, flexibility of the employee required etc. And HR at Ufone

follows these criteria. Ufone policy of recruitment is very simple, if at

any time there is a vacancy, due to retirement, resignation, if

employees opted for the golden handshake or the death of an

employee, the management of the branch will inform the head office

about the vacancy. The head office will place an advertisement in all

major newspaper with the all necessary information required to be

furnished by the applicant.

Ufone has this policy of not mentioning the name of the company in a

job advertisement. Usually hiring takes place through outsourcing with

a help of a third party. Ufone mostly hires employees through Pioneer

Services and Sydiat Haider Associates. Final selection takes place

after the candidate has been interviewed by the Manager of the

department who requires the new employee and then the HR Manager.

On the joining day, the employee has to submit the following

documents to the HR Department:

Joining Report

Copies of educational and professional degrees/certificates

Reference Letter

Three copies of recent passport size photographs

2.2.4Training & Development

Training & Development involves improving the knowledge, skills and

abilities of the individuals. A continuous training is conducted inside

Ufone to improve the performance of the employee. There are two

types of trainings conducted at Ufone:

In-house Training: In-house training is customized training

which is only for Ufone employees.

External Training: External training is carried out through

trainers in training institutes.

2.2.5Compensation & Benefits

A very effective way to retain an employee is to give him

compensation and benefits. At Ufone following benefits are given:

15

Medical Facility to employee and his/her parents

Paid Vacations

2.2.6Orientation

A newly hired employee is oriented so that he can get an idea about

the organizational setup so that he may feel at home. At Ufone

orientation plan covers the following points:

Visits to different department of the company

Company's Policies, Rules and Regulations

2.2.7Human Resource Information System (HRIS)

At Ufone profiles of all the employees containing data relating their

payroll, leaves, benefits etc is saved in a database known as HRIS.

Ufone uses a locally procured HRIS which is to be upgraded using

Enterprise Resource Planning (ERP).

2.2.8Human Resource Planning

Planning provides a guideline to accomplish an activity. At Ufone the

HR team plans everything so that the outcomes and results can be

perceived before the plan is actually implemented. This makes the

planning more accurate and efficient; it also saves time and money.

3

2.3MARKETING ANALYSIS

Ufone is having 2nd largest number of subscribers. Ufone has been

attracting the masses since the time of its origination. Ufone is also

known for its quick marketing.

MARKETING MIX

I have analyzed the marketing mix of the Ufone. Marketing mix

includes the analysis of the firm's product, pricing, promotion and

placement. Ufone's marketing mix can be

2.3.1PRODUCT

Ufone understands the value of words and the need to communicate

effectively and efficiently at all levels of society, which is why

company's primary focus is on U. Ufone offers, Prepay & Postpay

services in the Telecom sector.

Ufone Prepay

Ufone prepay is the product segmented for the

youngsters. They are segmented on the basis of

their age and status. They recharge through the

prepaid cards whenever they feel comfortable to

load the cards.

Ufone Postpay

Ufone Postpay is created for the executives and

business class people, who require making calls

within the country or internationally for the

business purposes. Business executives enjoy the

benefits and value added services connected with Postpay product of

Ufone

Ufone For Everyone

The telecom market's growing rate in Pakistan is

higher than any Asian country. Ufone offers lower

rates and better network then other already

established cellular companies. All living standards

have been captured by Ufone, like Students, Labor and Businessmen,

etc.

Ufone aims to provide with wider coverage, superior connectivity, clear

signals & voice quality to their valued customers.

17

U-Circle

Prepay provides an easy way to call Friends & Family. Ufone is making

it easy for its consumers to call friends & family with U Circle. Now the

consumers can talk more for less with the most economical rates to

call their Ufone Circle.

U Share

Ufone Prepay customers can now share their balance with

each other through a simple SMS in 3 easy steps.

Mobile Number Portability

Ufone welcomes consumers to bring their mobile number to the best

service. Through Mobile Number Portability (MNP), mobile phone

subscribers can retain their mobile phone numbers when they change

mobile operators. Therefore a 0300-xxxxxx or 0345-xxxxxxx can be a

Ufone customer in the MNP regime.

2.3.2PRICING

As compare to other telecommunication companies, Ufone offers its

services with lower and affordable rates. The price of product matters

in the market but low price with high density service is not an easy

task to accomplish. For the satisfaction of valued consumer Ufone

merged the low Price and high density services with wide network.

Both, the Prepay & Postpay tariff are being defined as follows:

Call Charges Prepay Tariff

Ufone Prepay

Tariff (Rs.) Per

Minute

Within Ufone

Community

To Other

Networks* To PTCL

Outgoing Call

rates / Peak

Hours

(7am - 10pm)

2.50/- 2.50/- 2.50/-

Outgoing Call

rates / Off Peak

(10pm -7am

1.50/- 2.50/- 2.50/-

19 3

Ufone Postpay provides you with matchless call plans to suit your

lifestyle and connectivity drive. Use your Ufone Postpay for business or

leisure and stay connected all the time.

Call Charges Postpay Tariff

Ufone postpay Tariff (Rs.) Postpa

y ZLR

Postpa

y Ease

Postpa

y Value

Postp

ay

Extra

Monthly Line Rent 0 199 399 999

Outgoing Call Charges (per 30 seconds)

Ufone to Ufone 0.90 0.60 0.50 0.40

Ufone to Other Mobile

Operators 1.15 1.10 1.10 0.90

Ufone to PTCL & WLL

Network 1.00 0.80 0.70 0.60

SMS Charges

Ufone to Ufone 0.50 0.50 0.50 0.50

Ufone to Other Mobile

Operators 1 1 1 1

Free offers

Free Minutes 0 200 400 1000

Free SMS 0 25 50 100

Security Deposit

Local & Nationwide 750 1,000 1,500 2,500

International Dialing 2,500 2,500 3,000 5,000

International Roaming 15,000 15,000 15,000 15,00

0

Highlights of Recent Earning Report

For the first quarter 2006-07 ending October 30, 2006 Ufone profit before

tax was Rs.7.7 billion with net Profit of Rs.5.1 billion, which is 7% lower than

that of the corresponding quarter of last year. For the full year 2005-06 after

3

tax profit was Rs 20.78 billion which was 22% less than previous year's profit.

Dividend of Rs 3 per share was awarded which corresponds to an impressive

dividend yield of 12.3%.

Pricing Strategy

Pricing strategy plays very important role to acquire market share

where giant competitors are already working and moving ahead.

Ufone has implemented low pricing strategies to reach its objectives.

Pakistan's mostly population contains on Middle class and working

class people. In this view the low pricing strategy of Ufone gets

attention of many customers. In the early age of Ufone launched, they

decide their logo by the people opinions that boost its products. An

advertising campaign launched showing Bakra Market that relates to

middle class of Pakistan.

2.3.3PROMOTION

For the promotion of product, print media, electronic media, billboards,

broachers and leaflets has been utilized for the awareness of various

customers.

Time to time, Ufone promotes its services / schemes to their users and

general public via using various type of promotion channels. Through

the advertisements people get awareness about the product and are

able to choose the best one for fulfill their requirement in Mobile

Telecommunication.

Electronic media

Ufone is making use of electronic media

through Television advertisements. Ufone is

having its great deal of advertisement on

television, to aware its consumers about the

latest product offerings. The interesting part

is that Ufone is sticking with its humorous

appeal and is doing really good in it. Ufone

is famous for its own style of humorous

advertisements which are truly becoming the talk of the town. Ufone is

motivated with providing best ads to people with quick service.

Advertising campaign is special and impressive than other cellular

companies, like concept, models, colors scheme and visualizing. The

21

advertisement of post pay has been very much attractive for the

business class customers with the slogan of endless possibilities.

Print Media

Ufone is actively providing its advertisements in print form

as well. They are using various ways as a means of

promoting the brand. Ufone's advertsisments can be seen

in newspapers and magazines. Ufone is vigorous in

attracting people and making them upo date about any

new information through print media as well.

Billboards

Billboards (Including skyscrapers) are the

key sources for the promotion of Ufone.

Ufone is also in practice with placing

billboards to the prominent areas, which are having the most contact

of the people. These billboards are the reminders of the brand through

which people get attracted. New packages or any updates about the

product features are displayed. Different kind of advertisement can be

seen on Television and billboards. Ufone is also a co-sponsor of Cricket

World Cup 2007. Moreover, the shops title boards are also being

sponsored by Ufone over all Pakistan. Now retail stores and shops have

also "adopted" the mobile brands. People are seeing fabric stores, toy

stores and even doctor's offices displaying the phone company brand

signboards.

SMS Marketing

Ufone is not only making a use of electronic media as its promotional

activities. But Ufone is also doing marketing of its new packages, their

updates, any new offerings through SMS. Ufone is committed to retain

its existing customers to get switched to other network operator.

Through SMS marketing, Ufone is making its consumers aware, with

new items launched and easy way to exercise those facilities by Ufone.

Internet Marketing

3

There are users who are active

users. They are in continues

contact with www i.e web.

These users try to find the

solutions through internet.

Ufone website

(www.ufone.com) contains

bunch of information about the

product, services, coverage,

placement, and value added

services. Website is playing a

leading and significant role for the promotion of product. Ufone is

promoting its brand through cyber marketing in which they have

placed their brand's slogans and latest reviews. For example they have

placed banner ads on various sites. The renowned community

FACEBOOK is also having its advertisements on the right pane of the

window.

Call operators of customer service department are professional and

proficient to resolve consumer problems and they are 24 hours

available to respond customer's query.

2.3.4PLACEMENT

Ufone added 4.0 million subscribers in 2007-08

as compared to its addition of 6.5 million in

previous year. 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. Ufone is the network operator

which Operates with a network of more than 365 franchises and 25

company-owned customer service centers along with a distribution

network of 150,000 outlets nationwide.

Ufone is covering over 5442 key destinations. Ufone is the ultimate

means to stay connected wherever business takes consumers allowing

seamless roaming through the network providing the best nationwide

coverage.

Ufone, being one of the leading cellular service providers has recently

launched its service in many new cities. Keeping up with its pace it is

rapidly expanding its network.

23

Ufone keeps on adding new cities with same superior network that

continues to expand. Ufone covers all major cities of Pakistan now

consumers can enjoy comprehensive coverage in areas like the GT

Road, Super Highway & Motorway etc. So wherever they are in

Pakistan, Ufone keeps them connected.

Ufone's Network Up gradation

Under the agreement, Huawei will provide its future-oriented EnerG

GSM solution to expand Ufone's network to cover over 1,500 cities,

towns, villages and all major highways in the country. The network also

allows Ufone subscribers to enjoy high-speed wireless data service.

The GSM contract for Ufone also include Huawei's new

generation GSM dual density BTS that feature high

integrated and receiving sensitivity to improve the network

performance and lower the cost of network construction

and O&M expenditure. In addition, Huawei will provide

Mobile Softswitch solution based on the advanced R4 architecture to

satisfy Ufone's network expansion requirements, enables the telecom

service provider to evolve into 3G smoothly

2.3.5Market Segmentation

Ufone is segmenting the market according demographic segmentation,

i.e. on the basis of age groups. Ufone has segmented its product on the

basis of its features.

Ufone Prepay is segmented for the youngsters, whit attractive

packages to their requirements

Ufone Postpay is segmented for the people of mature age,

having their own business, belongs to business class or people

who are senior executives of the organizations

2.3.6Target Market

Ufone has the target market concerning youth in the nation. This target

market of youngsters comprises of the 40% population. Ufone is having

focused advertising towards the target market simultaneously focused

brand building over the market segment of youth.

Ufone is targeting the emerging segments of middle class in the

population to increase the number of subscribers as well as the

revenue generation from these subscribers

3

Ufone has also targeted the corporate class, for which Ufone is

customizing the packages in order to preserve the existing small but

profitable corporate of SME market segment.

2.3.7Market Dominance

Ufone is having a concept of Market dominance. Ufone is a measuring

the strength of its brand, product, service, and firm, relative to

competitive offerings. For being competitive in the market and while

following the strategies based on market dominance, Ufone has

become the LEADER, instead of follower or challenger of new offerings.

While being a leader of the various offerings, it has maintained the

marketing of its product within shortest span of time. This maintenance

has been done in order to make people aware about the latest

offerings of the Ufone.

2.3.8Market Differentiation

Due to aggressive competition in Pakistan mobile companies, the

operator needs to differentiate their product from others in order to

attract more and more customers. Ufone with its basic or core product

which is becoming homogenous with the other's products is struggling

to introduce the differentiating offers for the consumers.

In the telecom industry, for differentiating the product means to bring

and implement some new and innovative technology. Technological

improvements at Ufone are continuous process. These practices of

bringing something new to the society at Ufone are emerging in the

context of GPRS and 3G services. Ufone is not only emerging

technologies but also maintaining a technological dominance for the

services it is providing.

Ufone is coming up with innovative products and becoming pioneer

towards the new arenas. Ufone is launching innovative packages and

products for enhancing its revenues. The basic focus of Ufone is to

enhance its VAS- value added services. Ufone is providing as much as

convenience to its consumers as they expect. Some of the value added

services offered by Ufone are

Missed Call Notification

Phonebook Saver

My Ufone Account Services

Infotainment

Urdu Info Services

Trivia Quiz

25

Pocket Data Services

Virtual Private Network

Call Features

Messaging Services

U-Share

3

3 ENVIRONMENTAL ANALYSIS

3.1 INDUSTRY AND MARKET ANALYSIS

Cellular Mobile segment of the industry is considered an engine of

growth for telecom sector in Pakistan. Cellular Mobile sector continued

to add 2.1 million subscribers per month during the year 2007-08.

Cellular mobile operators continued their Aggressive marketing and

network expansion. Competition among operators became more

intensive with aggressive entry of CM Pak, a China Mobile subsidiary in

Pakistan. CM Pak with their brand Zong and Telenor have added

significant Subscribers very rapidly. Several cellular operators offered

various Value Added Services at lower rates to attract more customers.

The sector exhibited slow growth than year before. Cellular Mobile

teledensity jumped from 39% in 2006-07 to 54.7% in 2007-08.

Collective Revenues of the sector have grew by 35% in the year 2007-

08 against a record growth of 48% in the year 2006-07. Cellular

subscribers grew by about 40% in the year 200708, as against 82% in

2006 -07 and more than 100% during 2005-06. Main reason for its slow

growth could be the rising inflation which affects the affordability,

higher taxes, saturation of the urban markets and low tariffs. Regulator

remained vigilant in resolving all sector related issues. The most

significant development was the shift from 7 to 8 digit numbering plan,

which was completed during 2007-08. It was a huge task and PTA took

it as a challenge. Not only all cellular MSC but also all fixed line

switches have been enabled for 8 digits. It is consider as a great

success of the regulator for implementing it in short span of time.

Verification of unauthorized SIMs was another herculean task where

tremendous progress has been made. In collaboration with NADRA and

mobile operators, PTA has devised a comprehensive mechanism to

verify the SIMS. It was observed that approximately 7 million SIMS

have not been registered properly who were warned by PTA and

operators were directed to register immediately otherwise face

disconnection. PTA launched a media campaign in this regard along

with strong warning has been issued to unregistered user if they failed

to register their connections, it will be blocked. Besides, PTA ordered

closure of various Franchises who were not implementing the proper

procedure for issuance of cellular mobile SIMs. PTA continued its IMEI

27

system where it blocked number of mobile handsets stolen or reported

theft by users.

3

3.1.1Major Product Lines Market Segment

MOBILINK

Mobilink is having two major products which have catered the market

of consumers. Each of the products is having its distinct services in

according to the segmentation of consumers.

Indigo

Mobilink indigo is one of product of Mobilink Orascom Telecom

Company, this product line has been launched to attract the

executives of the companies, in order to facilitate them

according to their business requirements. Indigo offer the

business consumers to Enjoy value that remains unrivalled with

an enhanced indigo lifestyle that better delivers on thier

businesses and personal communication needs. Mobilink indigo

has provided their consumers with postpaid experience, with

several of distinctive facilities. Indigo is providing holistic

coverage with international roaming for the business executives

and superiors. Freedom plans are also one of the benefits to the

consumers as discounted airtimes to pursue the business

communication at the right time. Like all other products, the

Mobilink indigo is also providing instant customer care.

Jazz

Another product of Mobilink is JAZZ. The product is

segmented to cater the young profiles in the country.

Mobilink's mostly sold product is JAZZ. As it is giving the

youngsters the joy and colour to their lives according tot

their requirement. Jazz is providing a bouquet of benefits in

the form of full services, attractive call rates and network

reliability, jazz liberates its jazz subscribers from the

shackles of silence, so that the consumers can better

express themselves. The product offers the prepaid

perspectives but the nature can be changed to postpaid as

well. Due to large sales of the product, its being used by the

subscribers of different ages.

TELENOR

Another international telecom giant in Pakistan industry is Telenor.

Telenor is offering three products to its subscribers.

29

Persona

Telenor is offering a great product deal for the business

managers and executives. The professional lives of the

subscribers are benefitted with the Persona cellular connection.

Persona is Postpaid connection and is giving the consumers with

instant connectivity, simple and uncomplicated billing and a host

of value added services with EDGE for the first time in Pakistan

and international roaming for the excutives in almost 125

countries.

Djuice

Djuice is another telenor's product, this product is Telenor's

international youth brand and was first launched in Norway. Since

then, it has rocked youth in Sweden, Ukraine, Hungary &

Bangladesh. Pakistan is the addition to the djuice family, having

launched in March 2005. Since then, djiuce is attracting youth

with different services innovative in nature.

TalkShawk

Telenor Talkshawk is the most famous among the telenor

products, the product is prepaid connection with various

conveniences. The talkShawk Connection of product is Prepaid

connection for its subscribers.The smartest package to call any

network, anytime with amazing call rates, freedom to recharge

through Easyload.

WARID TELECOM

Waridtel is providing the products to its subscribers distinguishing

them in consumers and corporate users. For consumers Waridtel has

segemented the pdocts in two product lines.

Consumer Postpaid:

Postpaid product is offered to consumers with various servives

and facilities. It offers the comsumers to make the payment of

bill conveniently thorugh emails or scratchcards. There are

various postpaid tariffs to meet the requirements of the

consumers.

Consumer: Zem

Zem is the prepaid product of the warid tel, it offers the

subscribers to enjoy a prepaid convenience that is backed up by

the promise of service, service & more service. Not only it is

3

simple to use but it also offers a host of revolutionary products &

features that will forever change the way consumers

communicate.

Warid Corporate

Warid Corporate product is Exciting‚ efficient and time saving

solutions are available to meet all corporate needs‚ facilitating

the flow of communication of valuable corporate/individual

clients. Warid gives consumers the access and flexibility they

need wherever they go. It provides Wireless Broadband

promoting connectivity everywhere, Enterprise SMS, corporate

clients can send bulk messages to their customers for

promotional activity, Warid Mobile Email (WME)

UFONE

Ufone is offering the products which are categorized on the basis of

their connection nature. There are basically two products of the Ufone

which are facilitating the consumers.

Ufone Prepaid

Ufone Prepaid is consumers brand, vibrant, innovative and

unique, with an identity that's entirely its own.

Ufone prepaid is attracting the youth of Pakistan. Ufone

recognizes the need of consumers to stay in touch with friends

and family which is why Prepaid scratch cards are available in

four denominations to suit their budget; so consumers can

charge their phone easily with their pocket.

Ufone offers value added services; sending the MMS to various

contacts, There's Voice mail for when subscribers are unable to

attend their calls, ofcourse consumers need to keep in touch with

friends all the time and calling isn't always convenient, that's

where SMS's come in; so consumers can put their thumbs to

good use. Consumers can download all sorts of cool picture

messages, wallpapers, ring tones, logos and what not from the

Ufone website onto your cell phone.

Ufone Postpaid

31

An endless possibility of Ufone Postpay is a connection that

connects with customers determination to conquer all odds.

Ufone Postpaid is a brand that keeps up with consumers,

understanding their drive for victory in the business arena and

your sense of belonging in your personal life. So the

segmentation is based on the business superiors and high

profiles. On the road to success, Ufone Postpaid is a brand for

those who expect more from life, from themselves and from their

phones, so turn your mobile communication into the unique

experience you always wanted. Ufone aims at providing

consumers with the most superior mobile phone services, widest

quality network & best customer services for consumers on their

journey to success. Ufone Postpaid is designed to suit your life

style & communication drive.

3.1.2Growth Rate for the Entire Industry

The growth rate of the Pakistan's cellular industry can be measured

through the number of subscribers in Pakistan. The growth of these

subscribers can be analyzed through the provincial subscribers.

Subscribers

Growth and

Penetration

3

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 subscr-ibers in 2007-08 as compared to its

addition of 6.5 million in previous year1. CMPak entered the cellular

market with aggressive marketing and infrastructure roll out. Its growth

was negative previous year but this year it 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.

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 years. Generally, the growth of subscribers has declined

considerably in 2007-08, which is evident in Table - 7. 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 registered from 53% to 22% while Telenor

growth has declined from 199% in 2006-07 to 69% in 2007-08. CMPak

has entered the market recently and has shown positive growth.

33

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 Sector subscribers remained highest in the province

of Baluchitsan where subscription grew by 57% in 2007- 08 with total

cellular subscribers approaching 2.2 million compared to 1.4 million in

2006-072. 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 Baluchistan has been

noted where its cellular Mobile teledensity has 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.

3

3.2 COMPETITOR ANALYSIS

3.2.1MAJOR COMPETITORS

Ufone is facing competition from 4 network operators operating within

Pakistan, among which, warid and telenor and multinational

organization.

MOBILINK

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 31 million and growing. Mobilink pride

ourselves on being the first cellular service provider to operate on a

100% digital GSM technology in Pakistan that also provides state-ofthe-

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,

we offer both postpaid (Indigo) and prepaid (JAZZ) solutions to our

customers. Compared to our 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, we also offer a host of

value-added-services to our prized customers. At the same time,

Mobilink places high importance to its coverage, which is why we cover

you in 10,000+ cities and towns nationwide as well as over 130

countries on international roaming service. In other words, we speak

your language, everywhere.

Strengths Weakness

35

Market Leader (Market share)

Largest Network Coverage

Strong Brand (Jazz)

High %age of high end

customers

Low network dependency on 3rd

Party (own backhaul fibre & LDI)

On net advantage

Can charge price premium

Strong media presence

Financial muscle through strong

top line

Experienced & dynamic team

Most exposed to loss of customers

Weak customer care

Billing issues & hidden charges

Technical issues due to mix of old &

new infrastructure and multiple

vendors

Slow process due to OT

Internal bureaucracy

Unsustainable opex structure



Opportunities Threats

Opportunities Threats

TELENOR

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 covered several milestones over the past twenty eight months

and grown in a number of directions, Telenor have grown to become a leading

telecom operator in the country. In fiscal year 2006, Telenor achieved nearly 200%

growth in our subscriber base – the highest in the industry by a wide margin.

Telenor are the fastest growing mobile network in the country, with coverage

reaching deep into many of the remotest areas of Pakistan. In the most difficult

terrains of the country, from the hilly northern areas to the sprawling deserts in the

south, at times we are the only operator connecting the previously unconnected.

Strengths Weakness

Extensive rural market presence

Geared for 3G

(Substantial high end customer base)

Presence in international financial

market

(No hurdle in International borrowing)

Able to hire cream resources from

mkt

Use of MVNO to increase revenue

New Revenue streams

(Mobile advertisements/ mobile

commerce etc.)

Industry reaching maturity

Higher probability of churn in the

industry

Customer loyalty low in the

industry

MNP major loser in industry

Price war can hit more

Global Operator

Aggressive rollout of network

Brand consistency

Strong retail network

Employee loyalty (HR)

Quick reaction to competitors

100% equity financed operation

Long term vision for profitability

Strong & effective marketing

Strong vendors (Nokia siemens)

Maintaining substantial growth

in revenue

Top management "Non-Pakistani"

Single Vendor

High Capex & Opex cost

ZTE equipment in northern area

(untapped market)

3

Geared to Challenge No. 1

position

Employer of Choice

3G part of their business case

Geo/socio/economic factors

Religious elements opposition

Irrational behavior of industry (Zong)

Opportunities Threats

Opportunities Threats

WARID TELECOM

Warid Pakistan launched its services in May 2005.

Within 80 days of launch Warid Pakistan claims to have

attracted more than 1 million users. According to

Pakistan Telecommunication Authority, currently

Warid Telecom has 16.15 million subscribers as of

September 2008. It is ranked as the fourth largest

operator in Pakistan. Warid Pakistan claims it has the largest "postpaid"

subscriber base in Pakistan.

On June 30th, 2007, Singapore Telecommunications Limited (SingTel)

and Warid Telecom announced that they have entered into a definitive

agreement subsequent to which SingTel will acquire a 30 per cent

equity stake in Warid Telecom for an estimated $758 million — valuing

the company at an enterprise value of $2.9 billion.

Strengths Weakness

Opportunities Threats

37

Singtel – International partner

Price perception

Postpaid base

Government links/influence

Affinity partners (BAL)

Owned Backbone Infra

Ericsson Network infra – limited

presence of Hauwai

Dis-organized team

High Bad debts

Weak distribution structure

Low brand image

Current network footprint

Limited telecom experienced

management

Blackberry to attract high end

market

Synergies with group companies

(BAL /Wateen / Wincom)

Singtel buyout of major stake in

company

Brand revamping

Bidding for 3G license

Market reaching maturity

Socio/economic indicator

PTA regulations

HR (FnF)

ZONG

3

Zong is the first International brand of China

Mobile being launched in Pakistan. It is meant to

empower and liberate the people of Pakistan in

every nook and corner of the country. It will

become a part of their hearts, their minds and

bring about a change in their lives that every one desired but few

thought would be possible.

The core essence of ZONG is to allow people to communicate at will,

without worrying about tariffs, network coverage, capacity issues or

congestion. ZONG will be supported by ground breaking

communications, trend setting customer service and an unmatched

product offering which will redefine rules of the game and establish

ZONG as a serious contender for the number one spot.

Strengths Weakness

Opportunities Threats

39

China mobile financial strength

Clear strategy to achieve market

share

Long term vision for profitability

Decent brand

China – Influence on government

Perception of china "Cheap"

Lack of international management

experience

Time of entry – 5th operator

Issues with distribution structure

Lack of Onnet volume

3G makes sense for business

Use of MVNO to add to revenues

stream

Buy out of operator "Insta"

Youth market

Unable to meet customer expectation

Market reaching maturity

Socio/economic indicator

Industry can strongly react

PTA regulations

Team development

3.2.2COMPETITORS 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 reached 36% in

2007-08 compare to 41% in 2006-07. CMPak 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.

3.3 TECHNOLOGICAL ANALYSIS

Telecommunication sector in Pakistan

The telecommunications sector at the global level is passing through

rapid technological developments and an increasingly liberal policy

environment. The same holds true for Pakistan where the sector has

been exposed to reforms witnessing a significant expansion of both

fixed and mobile networks and striking improvements in quality.

3

Pakistan may be categorized among those Asian economies which

have partially privatized the state owned telecom sector while

deferring the introduction of full scale competition to a future time.

There exists a service competition rather than network competition. To

inculcate and strengthen the concept of a market driven economy, the

government of Pakistan established an independent regulator with the

name of Pakistan Telecommunications Authority (PTA) in 1996.

Afterwards a lot of achievements had been made in Pakistan telecom

sector.

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 sector some very positive impact have been

observed on the growth of the sector in a short span of time which is

expected to continue to grow for at least next five years if the daring

investors influx continue as in the last 3 years. The growth of Pakistan

telecom sector with the usage of technology can be seen in the sectors

of

Mobile Sector

Fixed Line Sector

Wireless Local Loop Sector

Payphone Services

Internet Services

3.3.1Technological Problem

Electricity – A technical disturbance

Power crisis is leaving worst financial impacts on telecom sector like

any other business domain of the country. With increasing competition,

decaying service prices, investment pressure for 3G rollout, emergence

of new players and growing operational expenses, power shortage in

the country has fanned the fire in shaking telecom investors. An

immediate and effective re-evaluation of business strategy should be

carried out in order to lessen the effects of this dilemma. With

considerable geographic spread and a populous rural track, telecom

companies are working vigorously to expand their network reach to far

flung areas of the country. The current business scenario, where the

rise in cost of primary and uninterrupted power supply has amplified

41

enormously telecom companies must tie their hands together to share

their infrastructure to minimize the expenses.

Estimates, suggest that there are more than twenty thousand telecom

towers in he country that worth millions of dollars. Market study

predicts that at least 20% telecom towers are erected with no

competitor's presence, which can be shared amongst the cellular

operators. Telecom infrastructure sharing can not only shave the fat off

an operator's capex but also opex costs as well, can be vital in coming

days. All operators' under the umbrella of government must unite to

gain the benefits of network sharing.

3.3.2Innovation

The implementation of latest technology

Pakistan Telecom has a lot more to achieve, the industry may further

expand and lower tariffs can also be achieved. The present players

have many chances to take lead, as consumers are more well-aware

about their purchase decision concepts such as connectivity, coverage,

voice quality and value added services and will only go for the best

packages available. Broadband in the last mile, Value added products

and content development are rather barely explored markets and offer

a great deal to an aggressive investor. 3G services in major cities

would take a slow start but will catch on fairly well and will be a major

contributor in satisfying consumer's needs provided these are offered

at affordable cost with easy access, availability, reliability and with

abundant content.

Our Industry already has LL (Local Loop), WLL (Wireless Local Loop),

LDI (Long distance and International), and ISP (Internet Service

Provider) players and WiMax; 3G cellular systems are expected be a

part of this Industry soon. Many actions have been started to make 3G

services casual in society.

The recent focus of the industry is the proliferation of broadband

services at affordable rates throughout the nation. The latest

technology of 3G mobile communications (mobile broadband) has been

earmarked and PTA will soon be inviting applications for 3G spectrum

auction. This technology will increase operating capacity and revenues

by using HSPA technology; at the same time it will also provide

superior and high speed broadband services, video telephony, internet,

video streaming, high quality mobile TV and a number of value added

3

services. The players are focusing on mass advertisement, offering

expanding coverage, customer services and unique and attractive

packages.

Recommendations

3G - the major force for broadband penetration. The following are some

of the recommendation for the growth of 3G broadband market in

Pakistan.

1. Government should provide tax holiday to the wireless operators

for the implementation of 3G services in Pakistan.

2. The expected 3G license cost should be kept at a reasonable rate

to spur growth in the broadband segment and should not be

used as a vehicle for earning additional revenues for

government.

3. USF should also encompass the broadband services and should

help the operators in their expansion in semi urban areas and

later on in the rural areas of Pakistan.

4. Subsidies should be given on the computers, Customer premises

equipment and other hardware. Steps should be taken to

encourage local manufacturing of such items.

5. Local content developers should be given special incentives and

outside purchase of such content should be discouraged.

6. Regulation of pricing for maintaining businesses profitable

3G licensing

Existing cellular industry is one of the most competitive industries

and it is recommended that no new entrant is offered licenses in 2g

or 3g market. As 3G is a natural evolution for GSM and the

broadband market is its infancy with limited market size. It is

recommended that (1 x 5 Mhz) spectrum is allocated to each

operator and auction of remaining 5MHz at a higher price to

interested operator for additional spectrum. This is help in

developing the broadband market with significant coverage for 3g

services.

43

R&D Fund

The R&D fund is not being used for sectors benefit and it is

recommended that either the R&D fund is abolished or reduced to a

logical level with considering historical utilization with respect to

growth in cellular industry. The scope and utilization of the R and D

fund needs to focus on:

1. Establish of local manufacturing of handsets

2. Subsidy on alternate uses of energy and local development

3. Training and development of human resources for call centers

and research and telecom education

4. Development of local content and software development.

3

4 DEPARTMENT WORK PERFORMED

I did my internship at Ufone in Strategic Planning & Program

Management Office (PMO) Department. The department directly

reports to the Chief Executive Officer (CEO) and major responsibilities

of the department are as following:

Defines the organization's corporate goals and objectives.

Collects and evaluates internal and external information that

may affect the organization's present and future state.

Develops the organization's long range (strategic) and shortrange

(operating) plans

Identification & development of Synergies

Development & implementation of Strategic Initiatives at

business level

Overview the implementation of the Strategic plan & other

initiatives through the PMO division.

Major Tasks

The work I have done in the PMO department was related with

analyzing the strategies of the company. The department – Strategic

Planning And PMO is concerned with planning for the strategies, the

future perspectives and managing the business operations.

4.1 Reports and Presentations

The activities I performed in the department were concerned with

making reports and presentations. I had been assigned a task to make

a report on the

 Tariffs comparison of the network operators in telecom

industry.

 Pricing comparison of the network operators in telecom

industry.

 Coverage Comparison of the industry

While making different strategies in order to gain maximum market

share, it is immensely important to examine the existing situation of

the company to head towards the lead. So the internees were given

such projects to provide the picture of market state according to their

45

understanding. The reports were not only to provide a minor help to

the supervisors but also to aware the internees about the state of

telecom industry in various aspects. The reports were not much

complex and complicated. It was required to provide a 4 or 5 pages

report within 5 days.

4.1.1Tariffs comparison of Industry

My first report to the supervisors was, drawing the comparison

between the network operators on the basis of their tariffs. Each

network operator is providing a unique and attractive form of tariffs

differentiated from each other. So I gathered the information from the

websites of the network operators. I have also gained a great help from

the annual reports of Pakistan Telecom Authority.

UFONE

Ufone has introduced ULoan where it has offered a facility to customers

to avail a loan in order to make an important call if and when they run

out of credit. Uloan facility is available only for voice calls. The loan

amount will be deducted from the next recharge e.g. UTop Up & Card

Recharge. Only customers with a balance less than Rs .2.50+tax can

avail the ULoan service. Recently, Ufone has enhanced Uloan amount

to Rs. 5.00+tax. It has launched "Paanch ka Pandrah package". In this

promotion, each 5 minutes call gave the next 10 minutes absolutely

free. In this offer, there are no daily charges and customer will be

charged @ Rs. 1.125/30 seconds for Ufone to Ufone and 1.25/30

second for all other fixed and mobile networks. Ufone has recently

launched another promotion in which its prepaid subscribers can now

call five friends and family numbers absolutely free from midnight to 7

am by just paying a nominal daily charge of Rs.1.99 (excluding 15%

GST). Ufone also launched unlimited SMS (up to 5,000 SMS) offer to its

subscribers at Rs.150 to all networks with 30 days validity. Through

this promotion, Ufone subscribers can share their thoughts, exchange

jokes and chit chat with their friends. Ufone, in line with other

operators, has launched another package "Uwon" in which its

subscribers can call to any other Ufone number at Rs.1.00 per minute.

Off-net tariffs of Uwon package are Rs.1.60 per minute.

MOBILINK

Mobilink, an SMP operator has reduced its tariffs for different packages.

Recently, Mobilink has also introduced Jazz One package in which its

subscribers can call at very attractive rates. Mobilink has reduced offnet

tariffs of Jazz Budget, Jazz Octane and Jazz Ladies First packages in

3

February 2008. For Jazz Octane package, on-net tariff has been

reduced from Rs. 2.50 to Rs. 2.40 per minute whereas off-net tariff is

reduced from Rs.2.99 to Rs. 2.50 per minute. Similarly, off-net tariff for

Jazz Ladies First package has also been reduced from Rs. 2.99 to Rs.

2.50 per minute respectively. Moreover, Mobilink introduced "Apna Jazz

Connection ON Karein" promotion which was specifically made for

those who did not get the chance to experience lowered Jazz tariffs.

Mobilink posted an unconditional Rs. 30 worth of balance for those who

did not used Jazz connection since

For SMS , Mobilink has offered three different SMS packages (only from

Mobilink to Mobilink) to its prepaid customers where it has offered

unlimited SMSes for one month for Rs. 100, 500 SMS in 15 days for Rs.

50 and 100 SMSes for Rs. 15 in 7 days. Mobilink also introduced Club

Red promot ion for its subscribers who wanted red carpet treatment.

Under this offer, Jazz subscribers who crossed the monthly usage

threshold of Rs. 1,000 got 50% discount on all calls to Mobilink

numbers for the remaining days of the month. China Mobile launched

three prepaid packages in April 2008.

CM PAK

CM Pak is offering one free number in which subscriber can make free

on-net calls (from 12 am to 7 am) for a lifetime. Up to 10 family

members can be added in free package. Happy Hours has been offered

in 12 Aanay Package which can be modified once everyday. Charges

for modification of Happy Hours are Rs. 5. It has also introduced 8

Aanay ( 50 paisas) offer in which its subscriber can call to other

networks at Rs. 1.40 (for the first minute) and Rs. 1.00 per minute

(from second minute onwards). CM Pak offered 1,000 SMS per day with

charge of Rs. 3.00 to its prepaid customers irrespective of the network.

TELENOR

Telenor launched a value-added service (VAS) by the name of 'Telenor

Auto Advance'. This unique service allowed Telenor prepaid customers

to continue the call even after their balance exhausts. The service was

activated free of charge for all Telenor prepaid customers. Telenor Auto

Advance Service can be extremely useful in emergency situations

where one call can make the difference. Subscribers on the move, far

from a recharge location or simply out of cash can benefit from this

service. Under the service, when a subscriber reaches the end of his

balance, the call will continue without disconnection and the balance

47

will be adjusted in next recharge. Telenor Auto Advance is only

available for voice calls at the moment. Recently, Telenor also launched

Ask Telenor and Tele Doctor 1911. Telenor launched free unlimited onnet

calls offer (from 11 am to 2 pm) for limited time period. Service

activation charges for the said promotion were Rs. 49 (exclude tax).

Telenor received overwhelming response on this promotion. Recently

Telenor has launched SMS Fulltime offer for its prepaid customers in

which its subscribers can send up to 10,000 On-net SMS with charge of

Rs. 99/-. Telenor's Djuice subscribers can now make free calls (from

1am to 6am) at 5 friends and family numbers with daily charge of Rs.

3.99. It may be noted that call setup charge of Rs. 0.05 per call is also

applicable for these free calls.

WARID

Recently, Warid Telecom has launched Pakistan Package wherein its

subscribers can avail 50 free on-net minutes and 500 SMS/MMS for Rs.

15.00 per day. Warid also launched SMS craze in which its subscribers

can send 2000 free SMS/MMS (on-net as well off-net) at Rs. 150/-.

Sunday craze is another promotion by Warid in which subscribers can

make unlimited free calls on Sundays from 8 am to 12 pm at a weekly

subscription of Rs. 15/-. In infinite craze, Warid subscribers can make

free calls from 12 am to 7 am to one Warid number and unlimited

SMS/MMS from 12 am to 7 am across Pakistan with daily charge of Rs.

10/-. In the period of last few months. Warid has also offered number of

value added service to its prepaid customers that counts, Zem Talky,

Zem committee,

4.1.2Pricing comparison of network Operators

The second report I had submitted was to compare the pricing of the

different network operators on the basis of Calls rates, Value Added

services, Quality provided over Voice calls and SMS. I have made a

Pricing Strategy Matrix also, in order to position all network operators.

3

The following table shows Prepay calling rates per minute at peak time for

different mobile operators

We can see that Ufone has priced its calling rates of same, other and

fixed line networks, somewhere between the highest and the lowest

rates in the industry. However, as far as the rates for the international

calls are concerned they are the lowest in the industry.

Pricing Versus Quality

Below is the summary of

the Quality of Service

Survey conducted by

PTA.

Voice Call

Ufone has a very high

voice call service quality

Calls

Same Network Off

Network

Fixed Line

Network International

Ufone

Prepay 2.50 2.50 2.50 19.54

Public Demand 1.98 1.98 1.98

Mobilink

Jazz Budget 1.80 1.98 1.98 23

Jazz Easy 2.10 2.50 2.50 23

Jazz Octane 2.40 2.50 2.50 23

Jazz Ladies 2.50 2.50 2.50 23

Telenor

Djuice 2.82 3.44 3.44 Not available

Talk Shawk 2.3 2.3 2.3 Not available

Network

Accessibility

(%)

Service

Accessibility

(%)

Call

Completion

Ratio

(%)

Mobilink 99.8 98.9 97.2

Ufone 99.4 97.2 95.9

Telenor 99.1 98.2 93.3

49

in terms of network and service accessibility. However, it needs to

improve its call completion ratio.

SMS

Ufone has one of the highest sms service

accessibility.

Pricing for Value added Services

The table below shows pricing for value added services of different

mobile operators. These prices are inclusive of 21% GST. The prices

highlighted in blue depict the lowest and the prices in red depict the

maximum for each category in the market.

Service

Accessibility (%)

Mobilink 100

Ufone 99.9

Telenor 100

VAS Mobilink Ufone Telenor

To Same Network 1.00 0.50 1.00

To Other Network 1.50 1.00 1.00

International SMS 5.00 1.50 5.00

MMS Activation

Charges (Rs.) Not Available Free Free

MMS Per Incoming /

Outgoing Message 6.00

5.00

5.00

GPRS Per MB 18.00 15.00 15.00

Balance Inquiry Free 0.50 Free

3

Pricing Strategies Matrix

I have placed the major network operators in the Pricing Stratgy Matrix

on the basis of the pricing information. Also about Ufone calls rates,

sms rates and quality we can conclude that:

Ufone has priced its sms rates low and provides a high sms

service quality to penetrate the market.

Due to high quality of service Ufone has priced its call rates at

cost plus premium price.

4.1.3Coverage comparison of the industry

Another finding about the coverage of the mobile network operators in

the industry was being assigned. I had completed this report on the

basis of showing the graphical representation of market share by each

company, the number of cell sites they have covered, number of

franchises over all the country, and the population covered in the rural

areas.

51

Economy Penetration

UFONE

TELENOR

Skimming Premium

WARID

JAZZ

Low QUALITY High

Low

P

R

I

C

E

S

Market Share:

The market share of mobilink

was the highest during the year

07-08. Telenor and Ufone

showed the same maret share

by 21%. Warid had a market

share of 18% and Zong had 4%.

Franchises:

The Grsph is showing the

number of stores or farnchises

existed by each company. The

major stores are of Mobilink

followed by Ufone.

Cell Sites

During the year 2007-2008,

the cell sites by each

operator is shown in the

graph

Coverage

The population covered in the

rural areas concerning the

cities, towns and villages are

shown in the graph. The

value is in thousand (000).

3

4.2 Industry Issues

With annual growth around 100% for some years now, the mobile

telephone market in Pakistan has been experiencing a period of strong

and sustained development. However, Pakistan is suffering important

economic turbulences which will have a direct impact on foreign

operators in the country.

Some of the reasons are:

The decline in Rupee value against the US Dollar, the decrease in

the interconnect charges and lower priced tariffs have resulted in

an overall decrease of ARPU in US Dollar terms.

The ongoing economic and political turmoil along with the

worsening of security conditions in Pakistan have caused an

increased outflow of capital from the country, causing the Rupee

value to decline a further 13% against US Dollar in the third

quarter.

In light of the worsening economic conditions and the lack of

prudent policies, the international rating agencies like S&P and

Moody's have recently downgraded Pakistan's sovereign rating.

In the period of 2007-2008 the mobile sector has been characterized

by:

Falling ARPU

Steady subscriber and revenue growth although a slight

decrease in growth has been appreciated from the previous year.

Intense competition by new international players coming to the

market recently.

Network deployment in the regions to increase addressable

market as a measure against falling ARPUs.

Mobile services, despite high costs, still grow rapidly. Subscriber

numbers increased from 68,000 in 1996 to 3.3 million by end-2003;

since then the subscriber base has surged to reach 80 million in early

2007 and surpass 95 million in 2008. Penetration had reached the 58%

mark, but judging by the commercial activity in the market there was

still room for expansion. While progress has been made in the

regulatory area, some rigidity in policies had been slowing growth.

53



3

5 IDENTIFICATION OF MAIN PROBLEMS

The main problem in the current era faced by the telecom industry in

Pakistan is increased taxes imposed by government. The companies

existing in telecom sector are facing major decline due to the fact.

In the budget, government had 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. 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 increased GST will be captured in next years because the rate has

been increased at the end of year.

5.1 Activation Tax

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.

5.2Withholding

tax

55

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

5.3 Investment

In this competitive market, operators are bound to increase the

investment to get more shares 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. During theyear 2007-08,

Mobilink invested over US$ 919 million while Telenor invested over US$

565 million. CMPak 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.

5.4 Devaluation of Currency

Devaluation 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.

Devaluation 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% higher

than the last year.

57 3

6 FINDINGS

I observed a trend of aggressive marketing and advertisement by the

mobile operators in Pakistan. They proudly announce 50 paisa, 3 paisa,

1 paisa call rates. Trying to one-up other competitors, the

advertisements emphasize the lowest possible rate to grab the

consumer attention.

In reality the low rates being advertised come up with many

conditions. To figure it out one has to read the fine print carefully that

usually marked with * (asterisk). I think this is unfair to the consumers

and we need to criticize this trend which some may characterize as

deceptive marketing.

Pakistan has remarkable growth in telecommunication industry. It is

found that 75% population of Pakistan has mobile phones and the

counting is increasing day by day. PTA recorded customers are about

88 million. This is huge craze in mobile industry.

Since I am working on this project, I found some irregularities:

6.1 Network Connectivity Problem

People are worried about cellular service they often complaint that

cellular operators are not willing to enhance their services. Caller feels

disturbance, busy network, and unauthorized call ending.

6.2 Dirty SMS

Cellular operators provide bundle SMS / MMS offers which results huge

load on networks. Bundle offers also cause dirty and unethical jokes

and SMS.

6.3 Rough/Unreal Ideas in Advertising

Many cellular service companies are using rough ideas for TV

advertisement. Specially prepaid products are not belonging to

realities. The imagination is not attractive and not belongs to human.

6.4 Too Much Advertisement

Cellular companies are having bombardment of advertisement on TV

channels. People are fading up with this type of unnecessary

advertisements.

3

6.5 Advertising Budget

Companies are spending Millions dollars for in favor of advertising but

they don't pay attention for the improvement in network or service.

Although Ufone's Management has signed Rupees 550 million contract

to spend its operation in interior areas and villages of Pakistan but

there is still more amount required to provide better service for

customers.

59

7 RECOMMENDATIONS

7.1 Installation of equipment with professional

engineers

Cellular companies must understand the worth of their presence in the

market. If there is a growth, there is immense competition. Cellular

companies should pay attention on the service which is providing to

customers. They just spend on their network growth but don't realize

the value of service. Advanced Technological equipment should be

installed with professional engineers this will benefit the consumers.

7.2 Call Rates & SMS Bundle offer

Companies should minimize the call rates instead of SMS rates. Low

SMS rates causing dirty and non-sense jokes which is building

unsecured society. Adults are wasting their time in sending and

receiving unnecessary messages on mobile phone.

7.3 Attractive Advertising

After having comments on advertising campaigns with different living

standards, I observed that companies are not efficient in advertising.

Mostly cellular advertisers are using rough and unreal ideas which are

not changing consumer's perception towards any cellular service.

Marketers should convince in polite way instead of Bhangra style.

Companies should implement the effective advertising strategies

which affect the consumer and easily deliver message.

7.4 Control on Advertising and Budget

Too much advertising lost its importance; companies should control the

spots of advertising. They should avoid too much repetition of ad.

People faded up and don't want to watch ads. They should educate the

people and give proper complete message against call rates and other

value added services.

Companies spend much money on advertising campaigns; they should

control it and pay attention on service.

3

8 CONCLUSION

Telecom industry is most growing industry of Pakistan still huge

investment required for coverage. The market also has strong

competition after the entrance of China Mobile Company as player.

Competitors are hiring professionals to entertain the consumer which is

resulting technological implementation and value added services.

Ufone is a place where one can live his dreams and pursue a career

that reflects his skills and passions. People in Ufone give flexibility for

change, the opportunity to learn, and providing career options with

endless possibilities The managers at Ufone believes that all

employees have a right to offer input and be involved in helping their

organization grow.

All departments are working together and they wants to create a work

environment in which employees can improve their minds,

continuously learn, gain professional growth and feel inspired by

similarly motivated individuals. The Ufone takes pride in providing the

best possible working environment. They take a constant interest in

ones progress by conducting evaluations and offering the support and

resources one needs.

I reveal some complications in "Findings". It has been analyzed that

people are concerned about call rates they do not prefer any particular

company. Consumer searches good service with lowest call rates,

although companies are minimizing call rates this will result more

growth in the market and to meet the customer needs by satisfying

them.

61

9 REFERENCES

The information has been gathered through the various sources

including

Ufone – Department of Strategic Planning

Pakistan Telecommunication Authority – Annual Reports

2007-2008

www.ufone.com


www.telecompk.net


www.pta.gov.pk .


www.propakistani.com


www.financialdaily.com