Pakistan’s fastest growing network with a customer base going beyond 19 million. Zong is working to push this figure further by investing more into their network quality and adding almost a thousand new sites every year. Dr. Fan Yunjun, Chairman and CEO of China Mobile Pakistan speaks exclusively with IBEX on telecom sector of Pakistan.
Fan Yunjun, currently the Chairman & CEO of China Mobile Pakistan Limited (Zong) has taken over this position in 2011. Previously he was Vice President of China Mobile Group Beiking. He is Ph.D in Telecommunications from Beijing University of Posts and Telecommunications.
He is also Councilor, China Association of Science and Technology, Councilor China Communication Association, Member of Technology Consulting Committee of China Mobile, Member of China Central Youth Union of Enterprise and Director of Council, Beijing Association of Telecommunication and Information
Please tell us the background of Zong?
Zong was established in Pakistan after the acquisition of CMPak in 2007. Initially, the company was being run by Millicom and the new brand of Zong was launched in the year 2008. Since then, the company has expanded into Pakistan’s fastest growing network with a customer base going beyond 19 million. Zong is working to push this figure further by investing more into their network quality and adding almost a thousand new sites every year. In major cities, Zong is rated number 2 in terms of network coverage. The company also has a strong focus on customer satisfaction which is an outcome of its motivated employee base. In order to maintain this, China Mobile invested 2 billion dollars in Pakistan during the last five years and the company is seeking to invest in more call centers. Zong has also been named one of the top 5 best employers of Pakistan.
In your opinion, what issues does the cellular industry face in Pakistan?
Despite the fact that Pakistan is an extremely advanced country in terms of tele-density, the average cellular use of a customer is extremely low compared to developed countries. In U.S., the average customer usage is 50 to 60 dollars a month, Europe has 50 dollars a month, and China is 12 dollars a month whereas in Pakistan the average customer usage is only 2 dollars a month. Stacking this against high taxes levied in Pakistan, it makes it tricky for companies to balance profits.
Keeping consumer behavior aside, administrative expenses such as the constant power cuts and the law and order situation also makes it difficult for a foreign company to operate. Using generators increases the company cost up to 80% and similarly, spending on security of BTL sites, increases the cost by nearly 70%.
Is China mobile satisfied with the decision to invest in Pakistan?
Pakistan and China have been allies for a long time. A country like Pakistan, hospitable in culture and with an abundant pool of human resources is a dynamic market however, from a profit- making point of view, the company is at loss. We are hoping to develop a long term commitment in the region and are continuously trying to improve its efficiencies and keeping the stakeholders happy.
The Telecom industry is considered a fundamental aspect for economic growth. For example, if 10% broadband usage increases in a country, it contributes to about 1.4% increase in the GDP. This is an important sector, for which all members of the telecom industry should invest more for overall economic health.
Did CMPak adopt a low price strategy to penetrate the market?
No it didn’t. The Pakistani Telecom industry already had 6 mobile operators, 14 local loop and 14 LDI operators. Owing to an already saturated market, the company’s decreased prices were not part of a strategy rather a situation. Secondly, when consumer behavior in the telecom sector was studied, it was observed that people have little extra money to spend on cellular usage. Operators therefore are forced to reduce prices in order to keep up with customer usage. It is the number of players in the market coupled with consumer behavior which has given birth to price wars in the Industry.
China Mobile is not a price focused company; we want to be the best in delivering value. We are trying to be constantly innovative with regards to Value Added Services (VAS), increase our reach, build our brand through high quality network and step by step improve our service.
What areas should be the primary focus for development of a brand other than price?
Apart from the price factor, there are multiple angles from which a brand needs to develop in a market. Coverage level in Pakistan is not satisfactory. While there are still vast expanses of land with no cellular coverage the company is looking to fulfill not only that gap, but also improving both voice and message quality of their services. I believe the company should shift its focus to untapped areas now as compared to improving quality in already developed areas.
Zong can also develop some new business avenues in VAS. Broadband penetration in Pakistan is low while smart phones are getting more popular. Internet penetration can be increased with the help of mobile operators. Multiple Apps and Urdu language content can also be developed and is viewed as a lucrative business opportunity.
In terms of coverage, Which areas are you going to target in the future?
We can divide the regions in four categories; urban, sub-urban, semi rural and rural area. Remote areas of Pakistan still lack coverage from any operator. As for urban areas, the quality of services needs to be constantly improved and sustained and services like broadband developed and provided. All four provinces still need to be focused for coverage expansion. Most of Balochistan still has no coverage due to the security situation.
How do you compare Zong with other operators?
We still have shortcomings and are constantly working on them. We are finding new solutions to increase our coverage and working aggressively towards increasing the market share. In terms of revenue, we are far behind countries like China, Japan and U.S. We are also working to increase the revenue numbers by providing services other than calls and messaging.
Zong as a brand is improving day by day. We conduct 3rd party brand surveys quarterly and are among the top 3 telecom brands of Pakistan. With a systematic structure, we can lay a strong foundation of Zong as a telecom operator by providing much better quality services. Reports of an improved brand image reach us every quarter.
Why is China Mobile still unable to get an LDI License?
We are trying hard with our team to follow-up with all the stakeholders involved in getting the license. Hopefully, we will be able to get the license soon. Both options of getting a new license or buying it from an existing operator can be considered.
How do you rate Pakistan’s telecom policy and what suggestions would you like to give to PTA?
The policies so far have been good and productive. It reflects from the number of operators that have entered the market in last couple of years and the amount of Foreign Direct Investment (FDI) received. In the last decade, Pakistan was one of the fastest growing telecom countries in the world. The new initiative of verification of user upon sim purchase is also very constructive.
As far as the future is concerned, we cannot lay on the success the telecom sector has already achieved; we need to keep altering the policies according to the fluctuating market situations in order to maintain industry growth. We should review our policy now to increase the FDI further and how can the operators be provided long term commitment so that they are comfortable to invest more. Mobile, local loop and fixed line operators are separate in Pakistan whereas around the world the phenomenon has changed and companies are now providing full service by getting just one license.
What has been the response of the mobile financial services?
The feedback is very encouraging. Our transaction numbers are increasing and we are working on how can we further improve our product and build a stronger agent network. Similar services are also offered by other networks making it a highly competitive market. Now no one has first mover’s advantage, everyone is heading towards the same direction and it depends on the operational excellency of a company to grow and gain customer trust.
Where do you see the telecom sector heading in the next 3 to 4 years?
Keeping in mind the profitability, there is no room for more operators in Pakistan’s telecom sector, but considering the population of Pakistan, there is still room for more investment by the existing operators especially in ventures other than calls and messaging. Our market share is about 15%. We are working aggressively to reach 20% in the near future. We do not want to compete with other operators. Our prime focus is always on our customers and guaranteeing their satisfaction. To grow, we have to invest more in Pakistan in the coming years. The initial market of Pakistan was not very competitive. By having multiple players is a positive step which is forcing companies to think differently and constantly innovate.