MBA project report on Telenor Pakistan

7/23/2019 MBA project report on Telenor Pakistan

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Final Project

Company:

Submitted to:

Sir Arif Vaseer.

Submitted by:

(Group Members)

Shafaat Ahmed.

Majid Khan.

M.Faraz Afzal.

Course:

Strategic Marketing.

Discipline:

MBA(1.5)


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Company Introduction

Telenor Pakistan

Telenor Pakistan is 100% owned by Telenor ASA of Norway and adds on to its operations in

Asia together with Thailand, Malaysia and Bangladesh. Telenor Pakistan launched its

operations in March 2005 as the single largest direct European investment in Pakistan, setting

precedence for further foreign investments in the telecom sector. The company has crossed

many milestones and grown in a number of directions, making Telenor Pakistan a leading

telecom operator of the country.

They are the fastest growing mobile network in the country, with coverage reaching deep into

many of the remotest areas of Pakistan. In the most difficult terrains of the country, from the

hilly northern areas to the sprawling deserts in the south, at times we are the only operator

connecting the previously unconnected. They are keeping ahead by investing heavily in

infrastructure expansion. The agreements, with a potential to result in USD750 million worth

of orders from Telenor Pakistan, are some of the biggest of their kind in the industry.

They are spread across Pakistan, creating 2,500 direct and 25,000-plus indirect employment

opportunities. They have a network of 23 company-owned sales and service centers, more

than 200 franchisees and some 100,000 retail outlets Telenor ASA is an international

provider of high quality telecommunications, data and media communication services. It

ranks as worlds 6th largest mobile operator above 170 million subscribers in its mobile

operations. Telenor Pakistan is 100% owned by Telenor ASA and adds on to its operations in

Asia together with Thailand, Malaysia and Bangladesh.

Telenor has a subscriber base of 24 million as of July 2010 (PTA figures).


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Industry Analysis

Telecom sector is playing a pivotal role in the economy of Pakistan in terms of providing

employment, contribution to national exchequer through taxes and attracting foreign

investment in the country. Pakistan's telecom sector remained the largest recipient of the FDI

during the last few years capturing more than one fourth of total FDI. During the last 5 years,

Pakistan attracted over US$ 19 billion FDI, of which 34% was in telecom sector. In the 2009,

the telecom sector received over US$ 815 million FDI, which is 22% of the total FDI in

Pakistan.(Source: State Bank of Pakistan)

The telecommunication sector of Pakistan was awarded the status of industry in 2005 and

since then it has been one of the fastest growing sectors of Pakistan. As the

telecommunication sector involves many sub sectors such as Cellular services sector, Mobile

phones, Internet service providers, Fixed Land lines and Broadband services. This report

focuses on the cellular services.

Pakistan is quite eminent from various factors such as the mobile density reaching 64.16 in,

2009-10 and the number of mobile subscribers reaching 100 million. (Source: PakistanTelecommunication Authority, Telecom Indicators 2010).

Although tremendous growth has taken place in the Pakistan telecom sector but most of it can

be attributed to the cellular growth. Fixed line is still awaiting a takeoff. Similarly Value

Added Services have grown but are still a drop in the bucket. Now that the competition has

been introduced in the telecom sector some very positive impact has been observed on the

growth of the sector in a short span of time. The annual report PTA for the year 2008-2009

has shown growth of 17% in revenue for the cellular industry overall reflecting that the

industry is involved in a healthy competition and its strategy to increase customer base as

well as revenues through value added services and call minutes has worked so far.

.
http://www.blurtit.com/q808692.htmlhttp://www.blurtit.com/q808692.html


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Competitor Analysis

1. Who are existing and potential competitors?

Business Market Definition

Telenor Pakistan is a wholly-owned subsidiary of Telenor ASA. On 14 April 2004, Telenor

was awarded a GSM license to build and operate a mobile network in Pakistan. On 15 March

2005, a full multimedia platform for commercial mobile services was launched under the

name of Telenor Pakistan. Telenor has a subscriber base of 24 million as of July 2010 (PTA

figures). As in 2010 the mobile penetration and number of inhabitants in Pakistan were 58%

and 170 million, respectively according to official estimates Customers types etc.

2. What strategic groups can be identified?Competition is fierce; obviously the competitive rivalry will be at the highest level. The very

high level of competitive rivalry among the major players of the cell phone sector is clearly

observable. A look at the advertisement campaigns of the rivals and you can see how intense

the competition is. It looks like a battle for supremacy going on between the rivals. All means

of attracting new and potential switching customers are being used by all the competitors to

gain as much market share as they can. Exit barriers, industry growth, product differences,

brand identity, and diversity of rivals are the main reasons of very high competitive rivalry in

this case. As in July 2010, Telenor Pakistan had a market share of approximately 24%. In

addition to Telenor Pakistan, there are five other mobile operators in Pakistan: Mobilink,

Ufone, Warid, Zong .Based on PTA numbers as at July 2010, Mobilink was the largest

mobile operator in Pakistan with a market share of approximately 32%, Ufone had a market

share of approximately 20%, Warid had a market share of approximately 17%, and Zong had

a market share of approximately 7%.


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3. What are their sales, share and profits?Heres a brief description of the top mobile companies in Pakistan.

At the top MOBILINK, the Pakistani unit of Egypt-based telecom companyOrascom. It has been operating in Pakistan since 1994. They have 32 Million

Subscribers at the end of September 2010.

UFONE, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd(PTCL), is now under the control of Etisalat group of UAE. They have 20 21

Million subscribers by the end of 2010. For those in Pakistan it is the onecompany where they can easily invest locally.

WARID, owned by the Abu Dhabi group of the United Arab Emirates andsister of Wateen group is number 4 with 17% market share by 2010 PTA

Report.

PAKTEL was the latest target of foreign acquisition. After it got acquired byChina Mobile it was rebranded as Zong and launched one of the most

successful and aggressive campaigns. Within a matter of few months, Zonghas achieved a 7% market share by 2010.

(Source PTA Annual Report 2010)


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4. What are the growth trends?Every one of the 5 cellular players has had some interesting particulars. The attention

for Warid has not been in the good quality light. The Abu Dhabi Group-backed

company has not maintained to get its affairs inside order and while optimism appears

abound on its performances, the information have yet to give any credibility to the

cause. After the 2009 report of an acquisition by Telenor, the 2010 story that remains

alive because of date is an acquisition through another competitor. Even through

another attempt to re-package its product selection and market using a new

advertising movement, figures released by PTA for lively subscribers for Warid

exhibits a drop when as opposed to last year. The best estimate nowadays places the

company to take over 14 million subscribers by way of it keen on 2011. Zong, on the

other hand, has done the opposed of Warid. Rapid expansion of coverage with a 50%

increase inside cell places in the preceding two years, and a much targeted effort

toward align its manufactured goods portfolio towards an exacting market section, has

allowed the China Mobile piece to thrust up the subscriber numbers. It is estimated on

the way to close the year at immediately around eight million subscribers. Even on the

branding and promoting front, Zong has taken strides in the direction of a more

professional approach and move toward, portraying a good quality understanding of

the bazaar segment that they wish on the road to target with their offerings. Creation

of worth in this challenging economic condition remains the type to success for now;

Zong has maintained to draw this inedible quite reasonably.


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Market\Submarket Analysis

1) How attractive is the market or industry and its submarkets?The mobile density has reached 64.08 in Financial Year 2009-10 showing growth of 3.5%

since Financial Year 2008-09. The number of mobile subscribers reaches 100 million

subscribers in September 2010. In terms of subscribers, plus putting sideways the dispute

over the metrics used for the calculations, Mobilink has ended the year 2010 at No.1 with

approximately 32 million subscribers this demonstrates a superior effort on account of a

difficult couple of years for the company in the face of weighty competition. Telenor is at

No.2 within the order of 24 million subscribers, supplementing the optimistic trend that the

business has shown since its doorway to the bazaar over 5 years ago. Ufone has round out the

top 3, and has finished at 20-21 million subscribers. The overall outcome for the industry has

been improved than other sectors, with any great impact of the fiscal or financial pressures

not quite booming in the results. The major proof of this fact is the PTAs declaration in

September on the bridging of 100 million mobile customers in Pakistan. (Source: Pakistan

Telecommunication Authority, Telecom Indicators 2010)

(Source: PTA Annual Report 2009-10)


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Market Potential

Telecommunications has become one of the most important infrastructures that are very

essential to the socio-economic well-being of any nation. The globalization of world

economy has further amplified the importance of telecommunications to the economy. The

telecommunication sector is one of the fastest-growing. Telecommunications is at a

crossroads, local telephone companies threatened by wireless communication. Voice over IP

challenges established structures of pricing and taxation.

Market share of operators is considered an important tool to gauge the level of competition in

any sector of the economy. During the year 2007-08, telenor has emerged as fastest growing

operator who has improved its market share from 17% in 2006-07 to above 21% slightly

higher than ufone who also has 21% market share. On the other hand the leading mobile

operator mobilink is losing its significant market power place rapidly and its share has

declined by about 5 percentage points and reached 36% in 2007-08 compare to 41% in 2006-

07. CMPak is also growing very fast and it has added 2.9 million subscribers, which is an

impressive number and one could hoped that in future it will grab more market share. Warid

dropped its share in relation to previous reported period although the company had beengaining the subscribers i-e from 17% to 18%.


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2) What industry trends are significant to strategy?

Market Trends

A market trend is a putative tendency of a financial market to move in a particular direction

over time.These trends are classified as secular for long time frames, primary for medium

time frames, and secondary lasting short times.


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E-Banking:

Banking transactions made over internet or mobile (known as E-Banking or Mobile Banking)

are rapidly getting very common amongst businesses entities and masses in Pakistan. This

was reflected in a recent report prepared by State Bank of Pakistan, which read that E-

Banking has grown as high as 32 percent growth last year this significant growth in e-

banking is due to massive use of internet, especially high speed internet in Pakistan. Telenor

mobile banking (easy paisa) done a business of Rs. 17 Billion through 10 Million transactions

and it become the countrys biggest financial services network. Along with come the factors

such as increasing number of free launce workers in the country who work for overseascompanies tend to use E-Banking instead of paper banking. Furthermore, those who are

living abroad are also increasingly interacting with their bank accounts back in Pakistan from

internet. On the same note, We see that E-Banking is already given good feedback, along

with total number of credit and debit card holders reach 6.7 million, there is a dire need of E-

Commerce infrastructure layout in the country, and that too in quick time.

Competition to Cooperation:

No company is an island. At least thats what todays businesses are discovering as more and

more of them join forces to save operating and advertising costs. The cooperation trend is

sweeping through almost every industry, from communication to food to health care .the

good news for corporations; corporation will lead to better competitive stance. it is another

tool of compete more successfully.

For example: Wateen and Telenor customers can pay there Wateen bills and utility bills

from easy paisa.


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Education/Literacy:

The Literacy rate improved in Pakistan in last couple of years In 2009, literacy rate in

Pakistan was 57%., some sources show slightly lower and others show slightly higher

numbers, but all show numbers somewhere in 50s. This shows a tremendous increase of

40.7%. When it comes to women, their literacy rate in 2009 reached 45%. Women had

overall increase of 36.8%.It shows that there is more trend of getting education among the

people. So people are becoming more aware about the environment so business people should

consider this trend that has ultimate effect on their businesses.

For Example: If the literacy rate of a country is high then the people should be well aware

from the products offered by industries and they can enjoy the benefits of every product.

More Trend towards Fast Food trend.

Fast food influences our lives as well as our culture since the last few decades. Especially it

affects the most on younger generation like high school students and teenagers. The

relationship between fast food culture and teenagers is inseparable. In Pakistan there is fast

growing trend of fast food or hostelling so there is more competition as well as more

opportunities in this industry.

For example: Ufone and Warid are giving information about the new deals of different

restaurants like McDonalds and KFC. They offer free deals for their customers so they can

enjoy benefits of the fast food.

Customer oriented policy:

The capture and analysis of customer information about product/service use, needs, wants,

desires and behavior is mission-critical to the enterprise. Companies in todays environment

always try to think according to customer perception and try to develop their product and

services according to the requirement and want of the customer.

For example:ZONG has offered a new customer oriented package in the market M9. In

this package customer can design their own mobile usage plan


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.

3) What are the alternative distribution channels and their relativestrength?

From middle mass to extreme:

Manufacturers, hospitals, shopping malls and magazines all are profiteers of the shift from

the mass middle to extreme. In both business and society, the nations moving away from

middle size, middle quality, and middle price. MAKRO METRO is the example of this in

Pakistan

From technological complexity to technological Transparency:

Tomorrows technology will be so efficient that we wont even notice its there. This is thetrend toward transparency invisible technology thats so simple to use its taken for granted

spurning confusing gadgetry, consumers want products that use technology effortlessly.

Advancement in technology:

Increase in products better services advance channels to access customers etc are positive

signs of improved and advance technology.

Trend of twitter

Characteristics

1. A place where companies build brands2. Do research3. Send information to customers4. Conduct e-commerce5. Create communitiesfor users


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How twitter will affect telecom industry

According to LinkedIn Research network/ Harris Poll that evaluates advertisers' impressions

of Twitter, just under half of advertisers (45 percent) say that Twitter is in its infancy and its

use will grow exponentially over the next few years. This differs from the consumeraudience's impression: over two-thirds (69 percent) say they don't know enough about

Twitter to have an opinion.

Other survey results reveal that, among those who have an opinion regarding Twitter,

advertisers and consumers have moderate opinions about Twitter's effectiveness for

promoting products and ideas. Of advertisers surveyed, only 8 percent say Twitter is very

effective for promoting products and ideas, while 50 percent believe it's somewhat effective.

Consumer figures are similar:

Advertisers (%) Adults (%)

Very effective 8 8Somewhat effective 50 42Not that effective 24 31Not at all effective 8 19Note: Percentages might not add up to 100 due to

rounding.

Source: Harris Interactive Poll, 2009

(Source: Harris Interactive Poll, 2009)

Now, the telecom sector can use twitter advertisement to promote their new Packages, Rates,

information of the company and can have opinion of the customer on that ad by giving the

option of tweet in it. By this they can have all sort of information that customer are willing to

have in their service. This will be the fastest ways for having information from the customer

for implementing new strategies in the company by providing the CUSTOMER BASED

PRODUCT to the customer.

Twitter is still in early stage of developing but plenty of large corporations like

Starbucks (SBUX) are already using it as a marketing tool. Twitter will probably evolve into

both a community of individuals and a community of companies that provide goods and

services for those individuals

.
http://www.time.com/time/business/article/0,8599,1899604,00.htmlhttp://www.time.com/time/business/article/0,8599,1899604,00.htmlhttp://www.time.com/time/business/article/0,8599,1899604,00.htmlhttp://www.time.com/time/business/article/0,8599,1899604,00.html


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24/7 Wall St. has come up with 10 ways in which Twitter will permanently change American

business within the next two to three years, based on an examination of Twitter's model, the

way that corporations and small businesses are currently using the service and some of the

logical extensions of how companies will use Twitter in the future. (Source: Future of Twitter

Article)

Micro blogging platform Twitter has 32 million users, an increase from about 2 million a year

ago, according to research mentioned in the Wall Street Journal. Some Internet measurement

services show that figures increasing 50% to 100% month over month. The company could

certainly have 50 million visitors by the end of the year. (Source: Future of Twitter Article)

As the twitter develops in future with more and more users it will help the businesses to

gather information from the customer for useful ways.

4) What are the current and future key success factors?PEST Analysis of Pakistan Telecom Sector:

PEST analysis looks at the external business environment and is an appropriate strategic tool

for understanding the big picture of the environment in which business operates, enabling the

company to take advantage of the opportunities and minimize the threats faced by business

activities. It measures the market potential and situation, particularly indicating growth or

decline, and thereby market attractiveness, business potential, and suitability of access

market potential andfitin other words. Its four perspectives gives a logical structure in order

to ensure that the market can see a longer horizon of time, and be able to clarify strategic

opportunities and threats that the organizations faces.
http://247wallst.com/http://247wallst.com/


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Political Factors:

The government plays an important role in the operation, manufacturing products and

services in term of regulations. Following are some of the factors

Due to the unpredictable political and governmental changes rules and regulation arechanged quite frequently. Currently government has increased the taxes in the

telecommunication sector that will also a harder in the smooth operation of telecom

operation.

Before WTO implementation for deregulation of different sectors of the economy.Pakistan government had taken the step to regulate the telecom sector by the authority

of PTA. There are two types of Regulators held by PTA; the first is called the

Economy Wide Competition Regulator as the Monopoly Control Authority. Also the

political governmental rules cannot be completely applicable in this sector due to the

regulation authority of PTA.

Now a days Pakistani environment is instable due to political clashes among politicalparties. Inside country war and drown attacks in north frontier areas. This political

instability has led to uncertain environment in the country, which is a threat for any

business including all the companies of the Pakistani Telecom Sector.

Environment of telecom is investor friendly and have great potential to gain profit.Pakistan is quite eminent from various factors such as the mobile density reaching

64.16 in, 2009-10 and the number of mobile subscribers reaching 100 million.

Due to huge budget deficit and low growth of economy government has increased thetaxes in telecom sector. Pre-paid customers were charged 10 per cent withholding tax

on every new load, which was deducted in advance. The customers were also paying

16 per cent sales tax on every call. However, the 18 percent governments increased

the sales tax from 16 per cent to 21 per cent for mobile users by declaring the mobile

phone a luxury item.


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Economic Factors:

Marketers should consider long term and short term state of a trading market. Inflation is

controlling by state bank and under strict eyes but unemployment rate is going up and up with

the increase of level of poverty. Despite slow down in economy, telecom sector continued to

grow positively in terms of subscription, revenue and tele-density.

Tele density of the country jumped to 64% in 2009-10 showing a growth of over theprevious year. During the year 2008-09 the sector's financial health could not be

improved in accordance with the expectations owing to heavy taxes and falling

exchange rates, which placed unprecedented burden on the operators' import bills.

Despite these difficulties, the sectors revenue grew by 19% in 2008-09 which pose

confidence in Government and regulators' policies. (Source : PTA Annual Report

2008-2009)

Owing to economic slowdown, saturation in the market and global financial crisis, thetotal investment in the telecom sector during 2008-09 reduced by nearly 47%. During

the current year, a total of US$ 1.6 billion worth of investment has been made by all

the operators, of which the cellular mobile share is about 75%. The WLL has

marginally increased investment from US$ 52.8 million in 2007-08 to US$ 82.11

million in 2008-09.

Socio-Cultural Factors:

The socio cultural environment summarizes demand and tastes, which vary with

fashion and Disposable income, provide opportunities and threats to telecom

companies. As Pakistan is an Islamic country and people are very strict in case of

Islam anything against the philosophy of Islam on either print or electronic media are

treated as against Pakistan. Most of the people dislike anything extra-ordinary or 19

something which sabotage their culture or subculture. Pakistani society is largely

multilingual and multicultural.


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The Pakistani people are more social and want to remain in contact with other people.This will influence the demand for the product.

Increasing globalization has amplified the influence of "Western culture" in Pakistan.The lifestyle of Pakistani people is changing rapidly. People are more conscious about

status pat most all people purchase multimedia mobile phones. And also there is trend

for Black berry sets by youth which will help in enhancing their product and services.

The total population of Pakistan is approximately 169,248,500. The population isincreasing rapidly which increase the number of cellular usage and help in projecting

high profits.

In metropolitan cities women are doing work along with their other responsibilitiesbut other than metropolitan cities it is difficult for women to convince their parents

and spouses for work.

Technological Factors:

Advances in technology can have a major impact on business success. Technological change

impacts socio cultural attitudes as well as on economy.

Companies have technology with which they can compete in the Pakistan and nowcompanies are investing in their infrastructure to not only expand coverage but also to

upgrade their existing systems.

The current focus in cellular industry is coverage and establishing franchises whichhas a positive effect on the telecom industry.

Introduction of CDMA technology in the Mobile SIMS which is also an opportunityfor the mobile companies.

The latest technology of 3G mobile communications has been earmarked and PTAwill soon be inviting applications for 3G spectrum auction. This technology will

increase operating capacity and revenues by using HSPA technology.

Companies have technology with which they can compete in the Pakistan and nowcompanies are investing in their infrastructure to not only expand but also to upgrade

their existing structure.


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Porters five forces model

The model identifies five key structural features that determine the strength of competitive

forces within the industry. The telecommunication sector of Pakistan is rapidly changing

customer expectations are high and fast evolving, and product life cycles are short in terms of

new packages and services.

Threat of new Entrants

Determinants Defining Question Assess the power of Buyers

Circle one of the following.

1 = low, 5 = high, or N/A if it

doesnt apply to your industry.

Economies of Scale and

experience

Does successful entry require that

companies have significant economies of

scale or experience

5

Brand Identity Do new companies need to spend heavily

on brand identification?

5

Product Differentiation Do new entrants need to differentiate by

spending heavily on advertising, customer

services or product differences to overcome

existing customer loyalty?

4

Switching Costs Does the buyer have to pay to switch from

one supplier product to another?

2

Capital Required Does the new company need to invest large

financial resources?

5

Access to Distribution Does the new comer have access to

distribution channel for product or

services?

4


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Cost advantage Established companies have cost

advantages over new rivals.

4

Government policies Government policies can help to preserve

or limit competition.4

Expected Retaliation If industry leaders retaliate more for new

entrants then threat for new entrants will be

high.

5

It is not easy to enter in this sector because it requires huge investments. As setup cost are in

billions of dollars so threat of a new entry is very low. Market is saturated there are already

huge competition among existing competitors so threat of new entry is low. De-regulation of

the telecom sector brought about a sudden drop in tariffs as the intense. Competition from the

new entrants it encourage the new investor to invest in this sector. Threat of new entry is low.

Bargaining Power of suppliers:



1 = low, 5 = high, or N/A if

it doesnt apply to your

industry.

Concentration Are your supplier are fragmented or

highly concentrated?

2

Presences of

Substitute inputs

Are there any substitutes for your

supplier products?

1

Product

Differentiation

Is the suppliers product or service

commodity?

2


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Switching Cost How costly is it for you to switch

from suppliers product?

2

Importance Relative

to Customer

Is your industry an important

customer the supplier group?4

Forward Integration Can the supplier produce the product

you make?

1

Impact on Quality/

Performance

Is your supplier product essential to

the quality or performance of your

business?

4

The bargaining power of suppliers is very low in Pakistan because of the nature of inputs

required. Switching cost is very low because almost every cellular company providing same

rates with the same quality so a customer will easy switched to another connection. The

primary suppliers to the long-distance telecommunications industry would include fiber

optics providers, hardware suppliers and employees. The suppliers possess minimal leverage.

Many of the hardware and fiber optics providers have been integrated either through

acquisitions, alliances or cooperatives. The labor force is unionized and there are periodic

labor disruptions within the organizations. Many of the jobs available do not require

"extraordinary" skills and therefore most of their labor force may be easily acquired or

replaced. The Bargaining power of suppliers in telecom industry is very low.


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Bargaining Power of buyers




doesnt apply to your industry.

Concentration Buyer is fragmented because to industry

covers all Demographic segments.

3

Product Cost versus

Total Purchases

Does your product buyers purchase

represent a significant fraction of the

buyers cost? If so, buyer bargaining

power is typically high.

4

Product

Differentiation

Product is standard or undifferentiated

bargaining power is high.

4

Switching Costs If buyer faces few switching cost there

bargaining power is high.

5

Profits Profits within the industry for buyers are

if high then buyers power is high.

5

Backward

Integration

Can they make what you make

themselves?

1

Impact on Quality

Performance

Is the product you offer important to the

quality of the buyers product or

services?

4

Buyers Information Does the buyer have complete

information on the product he may

purchase?

5


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Telecommunications industry consumers possess significant leverage. Perhaps their most

threatening capability is the ability to switch to an alternative provider at little or no cost. If a

long-distance company is too "pricey" they will quickly loose clients, market share andrevenue. The bargaining power of buyers is very high because cost of switching from one

company to other is very low. Buyers are extremely well informed as to prices offered by

alternative providers. Marketing for long-distance service is intense. Frequent telemarketing,

TV advertising, celebrity endorsements, billboards, radio and bulk mail inform consumers of

the various long-distance rates and services that are available. There are many attractive

substitutes provided by the companies so that buyers have power to change their network

whenever they want. The bargaining power of buyers is very high

Threat of substitute products/services



1 = low, 5 = high, or N/A if

it doesnt apply to your

industry.

Price performance Does the substitute offer a better

price performance?

3

Switching Cost Is it costly for buyer to switch to the

substitute product?

2


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Consumers have the option to e-mail, utilize wireless communication (cellular phones and 2-

way radio), switch to an alternative provider in the form of dial-around numbers or phone

cards, and use postal service. In 2010 the numbers of mobile subscribers have reached to 100million according to the PTA reports. Buyer inclination to substitute and price-performance

trade off are the most important to consider in determining the threat of substitutes.

Governments have also given wireless local loop licenses to different companies like PTCL

wireless local loop, world call Wateen etc they are also planning to offer many services. The

cost of switching to an alternative provider, if any, is relatively low and often times

insignificant. Threat of substitute is high.

Industry competitors




doesnt apply to your

industry.

Industry growth How slowly or quickly is the industry

growing? Intense fight among rivals

for market share

5

Fixed Cost Does your business have a high fixed

cost?

5

Product

Differentiation

Is your product commodity? The

closer the product is to being a

commodity the higher intensity of

rivalry.

3

Switching Costs How costly is it for your buyer to

switch between providers?

2


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Intermittent

Overcapacity

How frequently is there a problem of

excess capacity in your industry?

3

Brand Identity Is branding critical for your Rivals

success? Brand identification by buyer

reduces the threat of rivals.

4

Concentration and

balance

Are there a large number of firms of

equal size and power, all chasing after

the same customer?

5

This describes the intensity of competition between existing firms in an industry. Highly

competitive industries generally earn low returns because the cost of competition is high. A

highly competitive market might result from: The telecommunications industry is a very

competitive environment. The major competitors are extremely large in terms of assets,

product distribution and brand name recognition like in Pakistan Mobilink have maximum

market share that is 32% (PTA source). Few strong competitors are successfully acquiring

consumers from Mobilnk market. There is no cost to switch to an alternative, therefore the

primary incentive for acquiring and retaining clients is to offer the lowest price. Telenor is on

2nd number in the market share having 24% Ufone is almost 20% and Zong having 7%. and

Warid having 17%.Competition is fierce within this industry and the providers primary

efforts are focused on minimizing cost in order to offer the lowest priced service.

Customer Analysis1.Who are the major segments?

The number of mobile subscribers reaches 100 million mark with mobile penetration of

60.4%.In the following 100 million subscribers 15% to 20% are GPRS/EDGE users that are

the 15 to 20 million people who have access to internet on their devices. Pakistani broadband

internet subscribers crossed one million mark in the country by totaling 1.052 million

broadband subscribers in October 2010, up from 994,911 subscribers in September 2010,

according to the recent most data by Pakistan Telecommunication Authority (PTA).The

remaining chunk is the users of cellular services. They are using cell phone services of callingand texting. There are many packages available for the SMS and Calling


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Company Analysis Telenor

Telenor Pakistan is a wholly-owned subsidiary of Telenor ASA. On 14 April 2004, Telenor

was awarded a GSM license to build and operate a mobile network in Pakistan. On 15 March

2005, a full multimedia platform for commercial mobile services was launched under thename of Telenor Pakistan. Telenor has a subscriber base of 24 million as of July 2010(PTA

figures).

Telenor started its mobile-banking services with 2,500 outlets in October 2009. After a year

or so there are now a total of 12,000 mobile-banking points, outnumbering the total number

of bank branches and post offices in the country. Telenor Easy paisa promises empowerment

and convenience to the masses in carrying out financial transactions whether they live in the

urban area or rural communities of Pakistan. In 15 months Telenor easy paisa transferred Rs.

17 Billion against 10 million transactions.

Telenor Pakistan has won the High Tax Payer Award of Excellence from Pakistan Customs

for the year 2010-11. This is third time Telenor has won highest tax payer award.

Telenor Pakistan has pledged Rs. 100 Million in funding and telecommunication services,

towards relief and rehabilitation of flood affected. The amount will be used to facilitate

immediate relief efforts and longer term rehabilitation initiatives by Pakistan Red CrescentSociety.

Telenor Mission

Telenor is a customer focused business mobile service operator/telecommunications

Company that seeks competitive advantage in quality and valued added service in both

prepaid and postpaid categories through state of the art technology. Telenor relies on building

trusting relationships with customers, owners, employees and society in general

To achieve their mission statements objectives they have segmented their market on the basis

of different dimensions such as their djuice package is for the youth and Telenor talkshawk is

very low rate calling package. So they are customer focused mobile service operator. But in

terms customer relationships their customers are not fully served. Their customer care center

performances are not up to the mark.


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Vision

vision is simple: We're here to help

We exist to help our customers get the full benefit of communications services in their daily

lives.

The key to achieving this vision is a mindset where every one of us works together: Making it

easy to buy and use our services. Delivering on our promises being respectful of differences

Inspiring people to find new ways.

4-Ps

ProductTelenor provide products of two types

Prepaid Telenor prepay product is segmented for the youngster. They are

segmented on the basis of their age and status. They can recharge

through cards and Easy load whenever they feel comfortable. Telenor

offering Djuice and Talkshawk packages for their prepaid customerthey can select one of these services according to their needs.

Postpaid Telenor postpaid is designed for the business class and executives, who

require making Calls within the country or internationally for business

purposes. Business executives enjoy the benefits and value added

services connected with Telenor postpaid services. Telenor is offering

packages in Persona for their business class customers. They have

many packages according to their needs.


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Price As Telenor is targeting many customers so according to the customer demand

and prices offered by the competitors Telenor have different packages in their

pricing.

For Prepaid customers they have two major packages Djuice and Talkshawk.Different tariff rates are offered for the need of different targeted customers.

Customer can choose their package according to their need.

For Postpaid customers Telenor have Persona package. In this package theyprovide different rates as followed by the line rent that is fixed. Customers can

enjoy free minutes and SMS in different packages and select one of the

packages according to their need.

Promotion For the promotion of the product, print media, electronic media, billboards,

broachers and leaflets has been utilized for the awareness of various

customers. Time to time Telenor promote its products/services schemes to

their users and general public via using various types of promotion channels.

Through promotion customers get awareness of the product and can choose

best one for fulfill their requirement in Mobile Telecommunication.

Print Media Telenor is using print media for the advertisement of new packages

that are changing day by day due to heavy competition in the market.

Electronic Media Television is the major source for the advertising on the electronic

media. Huge amount is being applied on the advertisement throughtelevision. Aggressive advertisement is running the market so that is

why huge money is applied for television ads.

Billboards As per the market need and introducing new package to the customer

before the competitors billboards are also hired for the advertisement

purposes.


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Placement Market share of Telenor becomes 24% from 17% following the year 2007 to

2010. Its total cell size is also increasing from 3471. Telenor is the network

operator which operates with a network more than 356 Franchises and

company owned customer services centre along with the distribution network

of 143600 outlets nationwide. Telenor is covering 5442key destinations.

Telenor is the ultimate means to stay connected wherever business takes

customers allowing seamless roaming through the network providing the best

nationwide coverage.

Up gradation through easy paisa Telenor upgrade its function the easy paisa shops it is better

than the others customers can easy pay their bills through

Telenor easy paisa shops. And also can transfer their fix

amount of money from city to city in matter of a minute.

Telenor starts its work with Tameer bank.

Internal and External Analysis:1) What are the companys internal strengths and weaknesses and

external opportunities?

Strengths and Weaknesses of Telenor


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Strengths

Telenors Mobile Banking services (Easy Paisa) biggest financial services Network ofPakistan. Telenor mobile banking (easy paisa) done a business of Rs. 17 Billion

through 10 Million transactions. First one to bring the concept of "Mobile TV" in Pakistan. Customized packages available for every market segment e.g. Djuice for price

conscious class, smart calls for routine users, telenor persona for upper middle and

elite class.

State of art technology e.g. they are up with the latest networking underground fiberoptical network.

Widest network coverage. The first ones to provide free roaming facility during hajj program.

Weaknesses

Pakistan has no institute that provides formal education in this field regardingnetworking and other core technical competencies so they are required to have a

major chunk of their employees trained from foreign institutions.

Poor call center performance. Customer service center is not up to the commitmentand most of the customers' calls are not served.

Comparatively high prices in Telenor persona (postpaid) as compared to Warid andUfone.

Poor visual quality of Telenor mobile TV, as there is a buffering problem and stillsare received instead of the proper videos Franchise distribution system is not up to the

mark. This is the problem with almost every telecom company in Pakistan. Lack

quality in record keeping at franchises and other distribution networks.


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Competitor Analysis

A brief description of the Competitors of Telenor Pakistan:

At First MOBILINK, the Pakistani unit of Egypt-based telecom company Orascom. It has

been operating in Pakistan since 1994. They have 32 Million Subscribers at the end of

September 2010. UFONE, a wholly owned subsidiary of Pakistan Telecommunication Co.

Ltd (PTCL), is now under the control of Etisalat group of UAE. They have 20 21 Million

subscribers by the end of 2010. For those in Pakistan it is the one company where they can

easily invest locally. WARID, owned by the Abu Dhabi group of the United Arab Emirates

and sister of Wateen group is number 4 with 17% market share by 2010 PTA Report.

PAKTEL was the latest target of foreign acquisition. After it got acquired by China Mobile itwas rebranded as Zong and launched one of the most successful and aggressive campaigns.

Within a matter of few months, Zong has achieved a 7% market share by 2010.

CPM

IFE

Strengths Weight Rating

Weighted

Score

Exponential Growth 0.4 4 1.6

Strong international Brand image 0.4 3 1.2

Access to infrastructure 0.2 2 0.4

1 3.2

Weaknesses Weight Rating

Weighted

Score

Low revenue per user (ARPU) 0.45 4 1.8

Customer retention 0.3 5 1.5

No research and development programs 0.25 1 0.25

1 3.55

6.75


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EFE

Opportunities Weight Rating

Weighted

Score

Huge market size 0.35 1 0.35Data services has shown an upward trend 0.4 3 1.2

Making technology accessible to all (e.g. broadband) 0.25 4 1

1 2.55

Threats Weight Rating

Weighted

Score

Recession in economy 0.3 2 0.6

Inconsistent and adhoc decisions from regulatoryauthorities. 0.4 3 1.2

Adverse shifts in trade policies of government 0.3 1 0.3

1 2.1

4.65


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SWOT ANALYSIS OF TELECOM INDUSTRY

Strengths Weaknesses

Exponential growth. Skilled Human Resource at low-cost. Access to Infrastructureoptical

network and satellite links.

Favourable policies (to some extent)and regulator.

Strong international brand names

Quality of Service. Low revenue per user (ARPU). Customer retention. No clear strategic direction. Poor organizational structure. No research and development

programs.

Employee skill inconsistency. Very low employee morale

Opportunities Threats

Huge market size. Data services has shown an upward trend Local handset manufacturing. Making technology accessible to all

(e.g. broadband). Adopt latest technologies. Removal of international trade barriers.

Recession in economy. Inconsistent and adhoc decisions

from regulatory authorities. Adverse shifts in trade policies of

government.

Competitors Strengths Weight Rating

Weighted

Score

Mobilink (They have Largest coverage and market share

in the industry) 0.25 1 0.25

Ufone (They have Cheap Sms Packages and largest SMSgenerator in Pakistan) 0.35 3 1.05

Warid (Their Post-paid packages are better than of

Telenor) 0.2

Zong(Data services are very cheap and growing their

market share with new packages such as M9. 0.2 4 0.8

1 2.1


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2. What are their motivation and unmeet needs?Market Segmentation and positioning

Segmentation is the process of dividing the total market for a good or service into several

smaller, internally homogenous groups. Since Telenor is a customer oriented and quality

driven company, it segments its market on the basis of various different dimensions.

Market dominated by low-end, low-ARPU customers (largely Untapped) Relatively large emerging middle class segment (Basic in Telenor Terminology) Strong youth culture with needs similar to other markets. Private postpaid almost non-existent. Small but profitable (high ARPU) Corporate/SME segment. Women a largely untapped segment.

Market Segmentation & Product Positioning Analysis

Market

Segment

Today Future 4 years

Estimate

Existing

Products

Profitability

%

Youth/students

25% 27% Djuice,Talkshawk

29%

Women 10% 20% TalkShawk 21%

FinanciallyConstraint

40% 23% TalkShawk,Telenor Azadi

20%

Corporate/SME

25% 30% Post Paid -Packages

30%

Segmentation Strategy

Telenor is using multiple segmentation strategy and developing separate marketing program

for each segment because different customers are looking for different benefits from different

services they purchase. Estimating the market potential of each segment includes asking how

many prospects with how much purchase power there is for each particular want.


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Market to Segment

Regarding Pakistan different markets are segmented by Telenor on the basis of:

1. Geographic

2. Demographic

3. Psychographic

4. Behavioral

Geographic (Area wise)

In Pakistan Telenor is segmenting the whole country region wise. There are different regions

in Pakistan. Telenor is providing service especially in Northern Areas and in rural areas ofSindh, Balochistan and Punjab where others are not providing services.

Demographic (Life style)

Age:

Telenor knows that needs and wants of customers changes as they go through life. So, with

change in age Telenor introduces different services. The main segmented market is the young

people of age 15-30.

Pre paid-mostlyStudents, youngsters and middle class

Post paid-Business Class, Industrialists

Pre paid:

Talkshawk

Talkshawk Her Second for 15-22 yrs

Talkshawk 30 Second for 20-27 yrs

Talkshawk Her Minute From 25- onward

Djuice

Djuice From 15-24

Djuice Jaagtay raho from 18-24


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Post paid:

Persona

This Post paid service targets the Business Class mainly. There are four different plans

which vary with the amount of monthly line rent.

Persona From 32-55

Income:

Telenor also segments the customers on the basis of income level. Different packages are

there for people of different income level

Pre paid:

Talkshawk

Talkshawk per Second for Students

Talkshawk 30 Second For Students and Job people (low income)

Talkshawk per Minute For Job people

Djuice

Djuice For SMS lovers Students

Djuice Jaagtay raho For SMS lovers & who like to talk them in night

Psycho graphically (Personality)

Psychographic segmentation goes beyond demographic. Telenor doing segmentation on the

basis of customers mind set. Telenor is segmenting the customers as they are giving different

packages for different personality. There are seven packages of Telenor on the basis of

different call & sms rates.


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Behavioral

Telenor is segmenting the customers according to their behavior, mind set and thinking.

Different people have different behavior; different mindset different thinking Telenor is

segmenting behaviorally by offering different package in pre paid and different plans in post

paid. Singers are liked by people the singing culture is being promoted in our country so they

hire singers for their promotions to hit customers mind.

Objectives.

INCREASE ROI INCREASE MARKET SHARE BUILD MORE BRAND IMAGE MAXIMIZE PROFIT INCREASE REVENUE PER USER

Target Market

As we are going to launch 3G technology in the market for by using early in Strategy somainly our Target market is existing users of internet or broadband. During the past two years

rapid growth had been seen in the internet usage in Pakistan. There are 15 to 20 millionpeople who are using GPRS/Internet on their mobile devices. It also includes the users ofBlackberry which is already offered by the Telenor and other competitors. Therefore most ofthe users already have 3G enabled handsets. Pakistani Internet Service Providers crossed onemillion mark for broadband internet subscribers in the country by totaling 1.052 millionbroadband subscribers in October 2010, up from 994,911 subscribers in September 2010,according to the recent most data provided by Pakistan Telecommunication Authority (PTA)3G technologies will bring the fastest wireless internet technology in the country whichdelivers improved and faster data to support a suit of multimedia and rich cellular callapplications.

Positioning

It will be positioned for everyone using internet and mobile internet. They can make videocall and other rich cellular call applications on their mobile phones. The 3G USB is a portabledevice which will provide fast speed internet on the go so we will position it by 3G forLife. 3G mobile services will not affect general consumers because most of the hand sets are3G enabled and the consumer did not need to purchase new handsets.


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Strategy Development

What is their strategy development process and steps?

Marketing Strategies

To deliver Increased Profitable Growth To strengthen our performance culture across the globe To make a strong competitive advantage. To provide a superior Customer Experience

To ensure best practice benchmarking across the group To improve our performance management.

Price Strategy

As we are going to be first in the market so we can use the high prices because costof 3G technology is high and we have to overcome that cost in the introduction phaseof product life cycle.Promotional strategy

For the promotion of the product, print media, electronic media, billboards,broachers and leaflets has been utilized for the awareness of variouscustomers. Time to time Telenor promote its products/services schemes totheir users and general public via using various types of promotion channels.Through promotion customers get awareness of the product and can choosebest one for fulfill their requirement in Mobile Telecommunication.

Print Media Telenor is using print media for the advertisement of new packages

that are changing day by day due to heavy competition in the market. Electronic Media

Television is the major source for the advertising on the electronicmedia. Huge amount is being applied on the advertisement throughtelevision. Aggressive advertisement is running the market so that iswhy huge money is applied for television ads.

Billboards As per the market need and introducing new package to the customer

before the competitors billboards are also hired for the advertisementpurposes.

Social Networking Websites As now a days trend of social networking websites had becoming

more and more popular so they are the best way to target the youth andgiving them latest information about the packages and services.


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Recommendations

They should launch new mobile phones on contract They should launch APPLE and BLACK BERRY with connection packages as it is

happening all over the world.

It will increase their market share Services will be improved by this new technology They should introduce a new plan that makes their services not to be jammed at

occasions like EID etc.

Also took some responsibility for some social work They should also promote their wireless internet USBs. so people should be aware of

their value added services

They should hire skilled and knowledgeable employees at their franchises.


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References

Accessed Growth Trends in Telecom Sector from theURL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=706&scid=150&Itemid=1

Accessed Telecom Indicators from theURL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=1413&Itemid=687

Accessed Annual Report2008-2009 fromURL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590

Accessed Telecom Sector Showing Positive TrendsPTA Annual Report 2008-09

From the URL http://telecomnewspk.com/2010/01/telecom-sector-showing-positive-trend-pta-annual-report-2008-09/

Accessed Source Future of twitter from

URL:http://www.time.com/time/business/article/0,8599,1901196,00.html#ixzz12XknVPUQ

Accessed Source: Harris Interactive Poll, 2009

URL:http://www.clickz.com/clickz/column/1703011/more-twitter-advertising-opportunities

http://www.paktelecom.net/pakistan-telecom-news/ptcl/market-potential-of-mobile-operators-versus-wireless-operators-in-pakistan/

http://telecompk.net/2009/08/20/swot-analysis-pakistan-telecom-industry/http://propakistani.pk/2011/01/21/easypaisa-transferred-rs-17-billion-10-million-transactions/

http://www.telenor.com.pk/about/history.php

http://propakistani.pk/2010/08/06/mobile-internet-users-increasing-tremendously-in-pakistan/
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MBA project report on Telenor Pakistan

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