Pakistan’s corporate sector is the personification of mediocrity: it’s rent-seeking, lazy and uninnovative. Whether you take the usual target, autos, which have managed to freeze in time with respect to technology or go for textiles that every five years ask the government for incentives to achieve the same target, it’s more or less the same story. The results of that are obvious for everyone to see, and in the end, it’s the consumer who loses out.
However, one industry has managed to go against the tide and truly transformed the life of an average Pakistani in ways that only science fiction novels predicted. Ever since the opening up of the telecom sector and the subsequent entry of a couple of foreign players, the country reaped dividends of increased connectivity with the costs of that declining even faster.
Yet, so much ground still needs to be covered. One just has to go a little beyond the major cities to find that 4G on top of their mobile screens disappear. In fact, we have the highest coverage gap in the region at 20%, as per a GSMA report. Mettis Global recently interviewed Irfan Wahab Khan, the CEO of Telenor Pakistan where he has been serving since 2004, to learn more about the company’s recent financial performance, transition from voice to data and the overall digitization strategy. .
While the company has been growing its subscriber base every subsequent period, it faces a bumpy ride when it comes to income. In the first quarter of 2021, Telenor Pakistan’s total revenues fell to NOK1.4 billion from NOK1.555bn even as the topline edged slightly up in rupee terms. Its average revenue per user further declined, as has been the case since hitting the peak in 2018.
The transcripts below present his responses.
With fast-tracked digital adoption last year, in your opinion, what new is expected in the digital space and what will be the focus area for Telenor Pakistan?
IW: The increased dependence on data and connectivity since last year has rapidly caused significant growth in e-education, e-commerce, financial and health services, to name a few. We have strengthened digital distribution capabilities, forged new strategic partnerships, and introduced new features to the My Telenor App that allow people to work together as a community. Being one of our main areas of focus, tech will continue to have a considerable impact on the economy in years to come. Businesses of the future will operate with a greater tech influence, such as real-time monitoring, smart factories and high dependence on data analytics.
Earlier this year, Telenor released its Tech Trends 2021 report which predicts that there will be greater implementation of user-friendly security solutions in 2021, governments will use the momentum of 2020 to pave the way for a green recovery using Artificial Intelligence. The report also foresees an escalating number of new and creative methods of remote, digital learning to emerge from the rapidly advancing virtual learning sphere.
Our focus will be to continue leveraging partnerships and latest technologies to contribute to the Digital Pakistan vision. In this regard, we are strengthening our presence in the EdTech, gaming and entertainment area in partnership with tech giants like, Netflix, Spotify and GameLoft and start-ups like EdKasa and MUSE.
Overall, in my opinion the most important thing to come out of the pandemic, as far technology is concerned, is innovation, be it in medicine, education or telecommunication. Digital technologies are creating major new opportunities for employees and companies, in both advanced and developing economies. This is changing the fundamental nature of work. Understanding these shifts can help policy makers, business leaders, and individuals move forward.
What is Telenor Pakistan doing to address the mobile and digital inclusion gap in the country?
IW: Digital inclusion has long been a cornerstone of our responsible business conduct, the impact of the pandemic has heightened the importance of reducing inequalities when it comes to mobile services and connectivity. The ability of people to access essential services, stay safe online, and acquire the skills necessary to succeed in the new normal are more imperative than ever before. We have a wide range of initiatives aimed at reducing the connectivity gap, building digital skills, and promoting diversity and inclusion.
We have invested our efforts in creating more impact, enterprising innovation led possibilities and empowering Pakistanis. I believe our key services – mobile connectivity and internet – are the great equalisers of our day. Widespread and affordable access to digital services is a game-changer for millions. We have made strides in our foremost sector of agricultural through services such as Khushaal Zamindaar due to which millions of farmers are resolving longstanding challenges; we’ve revolutionised financial services and its access through Easypaisa; and leveraged mobile connectivity to give children their right to identity through the Digital Birth Registration. Earlier this year, in partnership with the World Bank for the Girls Learn Women Earn initiative we trained over 1000 women on digital skills to grow their businesses.
Telenor Pakistan has also zeroed in its focus on growing the EdTech ecosystem, under Telenor Velocity, we have collaborated with EdTech start-ups to provide curriculum, STEM and skill-based education for school, college and university students. A fundamental pillar of our responsible business approach is the inclusion of the digitally excluded and our commitment to ensuring digital access for all.
What steps are you taking to improve average revenue per user (ARPU)?
IW: Overall, the ARPU is directly linked to the consumers’ buying power. It is completely natural that consumers optimise spending when under economic constraints. Alternatively, from a user’s perspective, this is a positive development because of the high levels of competition among operators. With Pakistan being one of the most affordable markets in the world for voice or data tariffs, the user gets a lot of value. The telecom sector is a great example of a competitive, deregulated and well-performing market. But the cost of doing business is also going up. Our approach is to give value to our customers through personalised digital, financial and entertainment services so that they can spend more through our networks. To achieve that, we are focused on innovation.
B2B services have become an area of interest for many organisations and Telenor is no exception. Can you walk us through the business division’s current initiatives/solutions and where is it headed?
IW: A long-time frontrunner in creating opportunities with B2B services for SMEs, Telenor Pakistan is not only catering to existing business needs but also anticipating the more sophisticated demands of the business of the future. We are offering our business customers a number of solutions, such as the Telenor Smart Office for SMEs, offering businesses 24/7 availability for their customers.
Furthermore, we have introduced Bizmine, an analytical framework that empowers startups to reach their full potential, using market research and targeted customer outreach campaigns. We have also been playing a very active role in the B2B domain through hotel management solutions like S-Tel in partnership with Serena Hotels and by leveraging IoT to offer innovate services.
Auxo Fleet, powered by Telenor Pakistan, is a complete end-to-end fleet & asset management solution which uses advanced Telematics to provide valuable insights for businesses. Currently, Auxo Fleet has an active base of over 5,000 vehicles. Moreover, Telenor Velocity is playing its part in facilitating startups that are ready to bring their product to the masses and focus on growth and expansion. Moreover, Telenor Velocity offers equity free support to growth stage startups in the areas of analytics, APIs access, pricing, product development, access to our customer base. Along with this we offer them the opportunity to scale their products/solutions on our digital assets such as the My Telenor.
With increased focus on B2B we will continue generating innovative solutions that address the gap and need of the business customer.
What is your strategy to shift focus from voice to data given the need for rapid digitalisation and the part data plays towards it?
IW: Voice remains a popular choice in Pakistan for a variety of factors, ranging from smartphone penetration to digital literacy. However, the big shift to data is still a priority as the whole world adopts digitalisation now more than ever. To make that shift possible, we are focusing on the digitalisation of customer journeys to enhance their customer experience. Telenor Pakistan has always been at the forefront of innovation. Our focus is to adopt emerging technologies and deliver the most personalised, holistic customer experience. So, in addition to offering minutes and megabytes, our aim is to provide moments to the people.
At the onset of COVID-19 related challenges, we saw a big shift in traffic pattern, where traffic moved from business districts to residential areas, from urban centers to suburban and rural geographies. Telenor Pakistan was able to cope with this traffic shift efficiently after a bold transformation program to modernise its network, operating model & organisation based around tools and process in 2018, which are now paying dividends in these unprecedented times. Seeing the changes in consumer behavior in rural and urban areas we adapted to ensure ease and accessibility to our customers during this pandemic.
We strengthened our digital distribution capabilities at an accelerated speed, however, even before the pandemic 8.6 million of our subscriber base was recharging their mobile balance through various digital channels. Due to all our digitalisation efforts and the lockdown acting as a catalyst we saw a significant shift of customers to digital channels and we expect to see that continue.
In order to meet the demands of today – the coexistence of voice and data – we will continue investing in optimising our network with technologies which are cutting edge and future proof.
What are some of the roadblocks currently impacting our journey towards a digital society? What are some key policy suggestions in your view?
IW: Connectivity is a necessity in this day and age; it should be treated like that too! We continue to work with the government and policymakers to facilitate the expansion of networks and services on our journey towards a digital society. The recent developments with the right of way policy, tax relief, and granting of industry status have been a very welcome step in the right direction and boost ease of doing business in the country. The key is implementation and I look forward to seeing these steps being executed.
Similarly, with the upcoming spectrum auction, we hope to see the government and regulator follow global best practices and fair terms with a focus on long-term societal benefits instead of prioritising short-term financial gains.
Analogically speaking, all of us are integral parts of a mechanism that is driving our common vision to provide value for the citizens and bring about progress and prosperity in the country. By working together, the operators and government can go much further in providing the people of Pakistan a digital society with ease, access to quality services, and opportunities to thrive