We, here at ProPakistani, have always advocated the diversification of revenue streams and digitalization of telecom operators. It seemed like a survival strategy for telecom companies in Pakistan that were fast losing their conventional (voice and SMS) revenue share to data services.
It became more critical, at the time, as data services were priced in a manner that cannibalization of voice and SMS revenue started to negatively impact the telecom industry.
So while the market lacked diversification, a price-war hampered the industry such that it almost broke the operators and left them with no option but to resort to intensive lay-offs, outsourcing and other price-cutting measures.
3G/4G users started to pick up and everyone thought digitalization could future-proof them from shrinking revenues and ultimately the ROIs.
This was a time when VEON (previously the VimpelCom) made a major shift in strategy and asked Jazz to become a different thing altogether, i.e. a ‘digital company‘ instead of a conventional carrier.
So instead of diversifying and establishing a new revenue stream, Jazz was asked to bank entirely on VEON and become a digital entity. So much that Jazz was pushed to limits to adopt VEON with almost no control over the product, as it was neither conceived nor developed by a local team.
While Jazz delivered what it was tasked with — that is to get countless numbers of app installs in Pakistan — the local team was not even allowed to make the smallest of changes for localization of the platform on their own. Instead they had to go through a tedious process of getting things done at the group level (and from abroad).
How VEON Became a Baggage
This essentially means that Jazz had to sell a toy that was neither built by it nor was it made for the market where it was to be sold.
This is probably why VEON achieved millions of downloads in Pakistan — in record-breaking time — but could not retain even a handful of the users. It lost most of the users a few months after its launch as they had no reason to use the platform.
Jazz was pretty much on the backfoot as it had burnt all ships in favor of VEON, a platform that had all the potential but didn’t come with enough features and localization to attract the local audience.
It was a dead-end. Neither Jazz could withdraw from VEON — simply because of the push from its headquarters — nor could it market VEON aggressively, mainly because the product development was not in their hands.
Outsiders (such as media) was told that VEON will be re-re-launched in Q1 2018, which was delayed at least twice with an anticipated re-re-launch in Q4 2018, but now we are hearing that this might not happen and Jazz is likely to off-load a baggage that it never should have carried in the first place.
Future of VEON
From what we have heard, VEON headquarters is now considering to shut down the platform. This will mean that Jazz will keep working as it used to while completely withdrawing from the VEON platform.
According to an email from Ursula Burns, Executive Chairman of VEON, to group management, a copy of which is available with ProPakistani, the company is considering to discontinue the VEON platform in totality.
While the proposal is yet to get a nod from the board of directors, the top management has decided to discuss options and feasibility for rolling-back VEON.
Ursula, in the email, said that future investments in VEON platform are unlikely to be justified and hence it is being proposed to the board of directors to shut down the platform.
If approved, the digital teams in Amsterdam and London (from where the platform was being planned and developed) will become redundant.
Ursula maintained that teams will be asked for the feedback and after due consultation, the proposal will be finalized and presented to the board of directors.
If approved, Jazz will wind up VEON operations by Q2 2019, Ursula communicated the top management.
The Way Forward
With VEON platform out of sight, Jazz will be ready to focus aggressively on its core business again. We have argued in the past that becoming a digital company is in no way harmful for a telecom carrier, but a telecom carrier must remain a connectivity provider before anything else.
With a massive margin in the market, Jazz can tap its share to become the primary internet connection provider for millions of Pakistanis. With almost non-existent FTTH (fiber to the home) network in Pakistan, the potential for wireless telecom operators is even greater.
If Jazz can become the primary internet provider of home and business users — which is very much possible — the current ARPUs can be increased by multiple-folds.
On top of this, it can, of course, keep adding more services that can be offered to consumers and businesses in the country.
Jazz Tube, Jazz Discount Bazar and Jazz E-Sell — a cookie cutter solution for e-commerce stores — are good examples of how Jazz can keep adding products to its portfolio to diversify the revenue streams while sticking to its core business of providing connectivity to the masses.