ISLAMABAD:
Having just finished its second year of positive cash flows in Pakistan, Telenor Group – the Oslo-based telecommunications giant – plans on growing its bottom line in the country by diversifying its revenue sources, according to the group’s global President and CEO, Jon Fredrik Baksaas.
In an exclusive interview with The Express Tribune, Baksaas laid out Telenor’s overall growth strategy and spoke about how Pakistan fits into the company’s bottom line.
“There are 25 million people using Telenor’s services in Pakistan,” said Baksaas. “Taking them to the next digital level is important.”
Telenor’s other Asian businesses, particularly in Malaysia and Thailand, have grown their revenues by offering more higher-end services. But Baksaas says that the same route may not necessarily be suitable for Pakistan.
“The marketplace is always local and we are always looking to fulfil local needs,” he said.
Telenor’s growth in Pakistan thus far seems to have come largely from growing its subscriber base. Its average revenue per user (ARPU) – a key metric of a telecommunications’ company’s financial performance – have remained relatively stagnant at around Rs240 ($2.76) per user per month. The company earns about three times that amount on average from its post-paid customers, but over 99% of its users are on prepaid plans.
The company has begun to diversify its revenue streams through services that Telenor executives feel will have resonance across a wide swath of the Pakistani population.
“The most important services [from our perspective] are the ones that are most easily understandable, such as mobile money transfers, which is a brilliant innovation,” said Baksaas, referring to easyPaisa, a mobile banking system developed jointly between Telenor Pakistan and Tameer Microfinance Bank (now majority-owned by Telenor Pakistan).
Telenor appears to view the venture as a happy marriage between increasing its bottom line and engaging in socially responsible corporate activities.
“Low penetration rates for bank accounts plays an important role in justifying such schemes,” said Baksaas. “We are adding new features and if we can add 10% to 20% in two to three years [to the banking services penetration ratio], we would have made a significant contribution to general economic development.”
Telenor’s Pakistan subsidiary earned about Rs73.9 billion ($859 million) in revenues during 2010, a 7% increase over the previous year. Its operating profit that year was only Rs31 million, though its operating income for the first quarter of 2011 was Rs1.4 billion ($16.2 million).
The company has not yet decided on whether or not it plans to list on the Karachi Stock Exchange. None of the five mobile telecommunication services providers are listed on the stock exchange, though Ufone, Telenor’s closest rival, is a subsidiary of Pakistan Telecommunications Company Ltd (PTCL), which is a listed entity.
Yet Telenor seems committed to stay on in Pakistan. “There are no more new markets left,” said Baksaas, implying that the company – and its global rivals – have to make the best of their presence in their existing markets. As the second-largest player in the Pakistani market, Telenor has built a strong platform to continue its growth in the country.
Published in The Express Tribune, July 7th, 2011.
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