Silence from Telcos – Is Everything Alright?

Cellular companies of Pakistan are facing some tough time inside, as reported by an inside official of a cellular company. They are apparently facing bunch of problems in parallel. These problems are making Think Tanks to decisively operate their minds and bring the lost glory of mobile phone companies.

Mobilink is worst hit of current situation, as opinioned by an telecom analyst that I spoke with. He was actually backed by some facts and the ground realities to support his voice. He said that Mobilink is planning to reshape their policies and strategies to tackle the situation created. That is maybe the reason that Mobilink has gone in passive mode in terms of announcing new Value Added Services and/or any packages (that they used to do every other week). It merits mentioning that latest major activity from Mobilink was back in June’s first week. (however, they launched couple of CSR campagns that included launch of Zeb and Hanya’s album and a Movie that they sponsored). Mobilink is specifically running corporate advertisements on TV channels to keep itself alive, otherwise there is nothing new from them for last couple of months.

Same is the case with Ufone, besides couple of new Value Added Services; they are advertising Uwon for last 6 weeks now. Warid and Telenor are also the effectives. I was eagerly waiting for August 14th, 2008 where I was expecting any special offer from cellular companies or the PTCL regarding our Independence Day, but the day ended with nothing much than just a deceiving package from Warid and the patriotic advertisements.

This quietness by cellular companies can be termed as the bread limit of their tariff plans that they have reached. But the decrement in Sales is still a question mark (given that we have not reached the saturation level in terms of cellular subscribers)

There can be possibly at least 3 major reasons that have pulled down the growth and to some extent the revenues’ graph for cellular companies substantially.

1 – Severe Regulatory Campaign: We have seen Pakistan Telecommunication very active in recent months, after the pressure was exerted from Senate’s Standing Committee to cap sale of illegal SIMs. These actions by PTA (which includes warning to cellular companies, blocking of illegal SIMs, raid on Franchises and Retail Shops) have affected the sale and consequently the growth of companies’ subscribers.

2 – Increased Taxes on Telecom Services: Cellular companies are also not happy with the increment in taxes on Telecom services. Increases taxes have taken up the pricing by almost 6 percent, which has brought down the calling ratio by at least 8-9 percent. Increment in taxes on Mobile Phones has also hindered the way to healthy revenues for cellular companies

3 – Emergence of Zong: Introduction of a new cellular company always works a speed breaker for already operating companies. Zong, which actually did well with their launch acted as hand break on cellular companies’ speed. However, this impact may not last long, but when it was coupled with other two factors; Zong appeared as a negative effect on other cellular companies.

As discussed above, policy makers have joined their head, to think out what possible goodies they can do for their investors in order to hike their revenues and stock values. For the purpose, downsizing can be one of the options in their minds…!

These tightening revnues may cause telcos to use other illegal means of genrating revenues, such as using illegal voice termination (by the way Garmeen Phone of Telenor has done this in Bangladesh). Along with Upcoming 3G license auction is going to cause them spend more money to maintain their name in the market.