European Telecom Vendors Facing Tough time in Pakistan

With no signs of 3G to happen anytime soon, European Telecom vendors, following the global trend, are going through the toughest possible time in Pakistan, tell us sources from industry.

It won’t be out of place to mention that a telecom vendor is the entity responsible for manufacturing and deploying the infrastructure behind a telecom operator (Examples: Huawei, Ericsson). The telecom operator is responsible for day-to-day operations of its network and sales and marketing of its services (Examples: Mobilink, Telenor).

The decreasing ARPUs in Pakistani telecom market as well as the recent global progress of Chinese vendors (Huawei and ZTE) have seriously affected the European telecom Vendors (Ericsson, NSN and Alcatel-Lucent) in Pakistan. This has resulted in gradual shift of business from them to the Chinese vendors, as obvious from recent telecom contracts in the country.

Although this is a global trend (also happening in Europe, Africa and Asia), but in Pakistan, the European vendors are feeling it more severely.

Analysts opine that this is mainly because Pakistan telecom market is amongst the lowest ARPU markets in the world as well as the Chinese enjoy a more friendly relationship status with Pakistani Government and several other institutions and departments.

All this, they say, is coupled with the unfortunate fact that Pakistani business culture is more supportive of the Chinese business practices as compared with the European business norms.

Ericsson, for example is globally number 1 telecom vendor but in Pakistan, its presence is limited to Warid and Zong and in recent years it’s facing a very tough time in maintaining this market share and hasn’t been able to gain any major contracts recently.

Same is the case with NSN (Nokia Siemens Network), which has been left with only one contract in hand, i.e. with Telenor Pakistan. Industry sources tell us that at this point of time a bidding process is underway by Telenor Pakistan, which will end in December and might result in loss of complete Telenor Pakistan business by NSN.

So just in case, if NSN fails to get this contract, they won’t have any other solid business in Pakistan or a reason to operate in the country.

Witnessing recent examples of NSN operations shut down in Afghanistan, Syria and Jordan, one can predict a sorry future for NSN in Pakistan too. This has resulted in downsizing as well as departure of some key figures from NSN (e.g., their sub-region Head Mr. Veqar ul Islam resigned earlier this year).

Alcatel-Lucent’s business is also on the decline in Pakistan (following the global trend).

Impact on Industry

This situation has resulted in to a scenario, where the void left by the closure of 2 North American vendors (Nortel and Motorola) in recent years, is being filled by the Chinese Vendors i.e., the operators have been opting for Chinese vendors to swap the installed legacy infrastructure of Nortel and Motorola.

Although the cellular operators contest that it’s necessary for them to opt for lower cost solutions in order to keep their businesses profitable (considering the ever decreasing ARPUs in Pakistan).

Industry sources, during private interviews, told us that the this trend has a negative effect on Pakistan’s HR resources in two ways, one is the downsizing and minimal hiring by European Vendors and 2nd is the unfair and unprofessional HR practices by Chinese vendors (there have been a few cases reported by us previously regarding this), as well as this is evident from the highest churn rate of Chinese employer’s workforce, as the people working in these companies are not satisfied with their pays, benefits, working environment and career growth.

In an ideal situation, there can be regulation in Pakistan, which can ensure fair chances of business for all the vendors, which will result in healthy competition and would subsequently benefit and further flourish the HR resource and telecom industry in Pakistan, but sadly our industry regulator PTA as well as other entities e.g., Ministry of IT and Ministry of Labor etc have never bothered to consider or review the telecom industry proceedings.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK