Interview: Rashid Khan, CEO, Mobilink

In its latest edition, Aurora Magazine published an interview with Rashid Khan, CEO, Mobilink.

Conversation primarily focuses on Mobilink’s strategy for ongoing market trends, competition and future policies.

We are presenting this interview (probably the first ever after Rashid Khan’s current appointment) for our readers with a special thanks to Aurora Magazine of Dawn Group.

A: When you moved into your current role, what objectives did you set for yourself?
Rashid Khan:
The environment presented a number of challenges; there was the global recession and the price of oil was $50 per barrel.

On the local front we had challenges with respect to the security situation, political instability and load shedding. All of this affected us and we have had to make some fundamental changes. We were used to experiencing exponential growth in the telecom sector – we had year on year growth of 100% – and the penetration in Pakistan is quite high. When the growth slowed down, we had to revamp the business by taking these ground realities into account.

A: What were some of those fundamental changes?
Rashid Khan:
Let’s take the example of load shedding which was a huge problem for us. No network is designed to handle 10-12 hours of load shedding. We had to invest by putting in battery operated generators (and two generators in some case); so that was one set of issues.

Then there was the problem of affordability; with so many inflationary pressures, would customers spend on basic necessities or on communication needs? To counter this we introduced bundle packages and tried to incentivize customers so that cellular services would become more affordable.

A: You also came in at a time when competition had increased.
Rashid Khan:
You are absolutely right. A few months before I took up the CEO’s position, Zong was launched as the fifth operator, and I don’t think this market can sustain five operators in the long term, so that was a challenge as well. Each operator has to find its own niche or market share.

We had to invest in terms of quality of service; we also had to be competitive in terms of rates and build our brands. We extended our customer care across the country and set up a large number of offices and Jazz service points so that we could take customer service closer to our customers.

A: How has Mobilink as an organization changed/evolved since you took over?
Rashid Khan:
I think Mobilink as an organization has shifted gears. Although we are still growing – we have added two million subscribers in the last six to eight months and our market penetration is about 60% now – though the pace of growth has slowed down. So we have had to focus on the quality of the service, on adding users and also on providing better value added services.

A: Has finding the right kind of HR been a problem for Mobilink?
Rashid Khan:
For Islamabad in general that is true. In Lahore and Karachi, obviously because of the population base and the characteristics of those cities, it is not such a big problem.

We have gone to institutions like the Lahore University of Management Sciences (LUMS) and the Institute of Business Administration (IBA) and hired people directly from there; we have incentivized them well. We conducted a large number of training sessions there and even professors from MIT and the Harvard Business School came over for those sessions.

A: Does Mobilink have a management training programme?
Rashid Khan:
Yes, we do. Two years ago, Orascom Telecom – our 100% shareholder – picked up quite a good team of people from each of the subsidiaries in the different countries. These people spent three to six months in each of the subsidiaries and at Orascom’s headquarters in Cairo. The training programme was associated with the London Business School and has been very useful. Now that those team members are back, they are adding a lot of value to Mobilink.

A: What is Mobilink’s USP particularly since telecom brands are becoming increasingly commoditized in the price war?
Rashid Khan:
The price war has certainly taken its toll. Yet a few paisas here and there is not going to make a great difference; customers are not going to use the cheapest network, they want value for their money. This means good quality of service and a brand they can associate with themselves. These are areas we have invested in heavily.

A: At one point people chose Mobilink because it had the largest network but over the years, because of the competition that perception has been eroded.
Rashid Khan:
To some extent, yes. We have the largest network and the largest footprint as well. Even if you talk only about Islamabad, all the five operators have their services here but it is the quality of service that sets us apart. I think customers are able to make that differentiation.

A: Mobilink does a great deal of Pakistan-centric advertising. Why is this important?
Rashid Khan:
As the largest private sector company in Pakistan we have a corporate social responsibility. We feel that we owe it to society and the environment we operate in.

This is not just restricted to advertising; we are very practical about this. When the Swat IDP issue came to the fore, we had a choice to simply donate some money to the Government; instead we established a full-fledged camp and invested one million dollars. Another exciting area is women’s literacy.

At the recent GSM World Congress in Barcelona the Cherie Blair Foundation and the GSM Association published a report on women and mobile phones that contained a feature on an SMS literacy programme that was piloted in Pakistan with UNESCO and Bunyad. This is the first time that SMS has been used as a literacy tool for women anywhere in the world. Our contribution was recognized in the report.

A: CSR has become such a buzzword that sometimes you get the impression that companies do it because it is expected of them. Has Mobilink been able to rise above that?
Rashid Khan:
We are the only company in Pakistan that established an IDP camp on our own, and it was not simply to get our picture in the papers. Obviously, we got help from the UN and the government of NWFP, but our team members were the foundation of the project.

We have the Mobilink Foundation where team members are expected to volunteer. So it’s not just about allocating some funds in order to gain recognition. It is the involvement of the team members and they take a lot of pride in their work.

A: Is Mobilink considering data and mobile internet usage as an alternative revenue stream, and if so is it necessary to make data usage on mobiles more affordable?
Rashid Khan: Yes, it is necessary. The penetration is currently quite low so it is expensive, but as this evolves matters will improve.

The Pakistan Telecommunication Authority (PTA) is encouraging operators into that area and based on this Mobilink has invested in internet service provision.

We have a wireless service in Karachi. We believe that the internet, mobile telephony and fixed telephony are already converging. We have a network of 8000 cell sites, 6500 kilometres of fibre optic cable and access to a submarine cable through Orascom.

We have all the ingredients that make broadband or the internet successful. Of course, some work is required in the area of localized content. Most of the content is currently in English so unless we have the content developed in Urdu or the regional languages the penetration will be low, and to this end we are encouraging local content providers. It will take some time but we do see potential in this area. Mobilink is shifting from cellular and is moving towards providing total telecommunication solutions.

A: In the future, is Mobilink going to focus on a particular segment of the market?
Rashid Khan:
Not really. What we need to provide are segmented solutions. Be it the rural market or the urban, voice is the common denominator for all these segments, but in addition to this there could be applications as simple as listening to music by dialling 555 or it could be a sophisticated BlackBerry application that helps you get around a new city.

A: There has been talk of consolidation in the telecom sector. Were it to happen, how would it affect Mobilink’s market leadership position and what would your strategy be in this situation?
Rashid Khan:
We are the leader and we will continue to be. Our shareholders believe that this market has a lot of potential, so we continue to invest.

This year we will be investing $250 million in Pakistan which brings our total investment to $3.5 billion, the highest investment of all telecom operators. So even if there is some consolidation, which may happen according to some rumors going around, we will continue to maintain leadership.

We have enough investment not only in cellular technology but also in affiliated technology, such as broadband. We have the confidence of our customers, we provide services that they like and we will continue to maintain that.

A: Do you think the consolidation is inevitable?
Rashid Khan:
I think the market forces will determine that. We believe that there are too many players. Based on the low prices and high operating expenses, it’s a natural evolution.

A: What are the most pressing issues for telecom operators?
Rashid Khan
: Overall the PTA as well as the Ministry of IT and Telecom have been very supportive. They have laid a solid foundation for its growth and I must compliment them. But the taxes in Pakistan are probably the highest of any other country. Last year, the activation tax was reduced from 500 to 250 rupees and the GST was reduced from 21 to 19.5%, and this helped us a lot, especially considering the overall economic environment.

A: What is your vision for Mobilink in the next three to five years?
Rashid Khan:
To be the leading telecom service provider in Pakistan. Currently we are leading in the cellular technology but there is the fixed line area.

The Mobilink team got together about eight years ago and made it a corporate vision to provide total telecommunications solutions. We are on our way to achieving this.