Warid Telecom to launch services in Pakistan in 2005 first half
Pakistan Times Business & Commerce Desk

ISLAMABAD: Chief Operating Officer of Warid Telecom, Hamid Farooq has said his group will launch its first phase in first half of 2005 with an investment of $ 140 million to $ 150 million to handle 1.5 million customers.

In an interview with an Islamabad-based English Daily, Mr. Hamid Farooq, who is an MBA from Knightsbridge University, London Campus, Copenhagen, Denmark and having 10 years experience with Mobilink as Executive Vice President and Chief Financial Officer said Pakistan has tremendous growth potential in telecom sector with great opportunities for investment in this growing lucrative industry.

He said the low tele-density in Pakistan in comparison to other Asian economies, government policies and current leadership are other encouraging factors. Warid Telecom is owned by the Abu Dhabi Group which has recently been granted licence to launch its services in telecom sector in Pakistan. Following is the text of the interview:

Q: Ownership details of Warid Telecom?

H F: Warid Telecom is owned by the Abu Dhabi Group, which is led by His Highness Sheikh Nahayan Mabarak Al Nahayan. Apart from having substantial shareholding in Bank Alfalah and United Bank Limited, Abu Dhabi Group also has other international investments in the Finance, Hospitality, Property, Oil exploration and supplies, and automobile related industries.

Q: Why are the objectives of Abu Dhabi Group choosing Pakistan telecom sector for such a huge investment?

H F: The tremendous growth potential and market dynamics of Pakistan Telecom sector and extensive development and privatization taking place with a lot of unmet demand in the telecom sector has given a chance to the group to invest in the lucrative industry. With a current population of 140 million, the outlook for the future, too, is bright. The group is already running two successful banking ventures in Pakistan.

Q: What is the investment plans of Warid Telecom (after the US $ 291m license fee) in the coming five years?

H F: Although the license fee cost went beyond anybody’s expectations and we have already paid US $ 145 million to the Government of Pakistan as fifty percent of US$291 million license fee. The remaining fifty percent is to be paid over the next 10 years, yet this would not affect our plan to invest in the network and other service facilities. For phase I we have plans to invest over US $ 150 million. This investment would help us launch our services in the desired manner. The amount will be consumed by IT, customer care, billing and other operational expenditures including setting up of offices etc. This brings our total initial investment to US $ 450 million. The low tele-density in Pakistan in comparison to other Asian economies and government policies and current leadership are other encouraging factors. Our group would even consider other potential areas of investment in Pakistan.

Q: You view on the growing competition in the cellular industry?

H F: All the players will be competing with one another each having its own strength and weaknesses. The market positioning will be extremely dynamic. Under these circumstances quality of service, marketing strategies, pricing, promotions and brand loyalties all will interplay and also have their individual impact. Collectively whoever masters this set of strategies and is able to develop a synergy will be our greatest competitor. In my opinion, the market is large enough for all of us to have our share and survive.

Q: How many companies the Telecom market in Pakistan can take?

H F: In my opinion, the market can take 4-5 operators. The reason for this is the potential that exists for growth. Pakistan has a very low tele density. With pricing coming down, affordability would go up. Also from a luxury item mobile have become a “need” and a “business tool”. Keeping the untapped population figures and economic factors in mind we believe that the number of the telecom companies is not very high, however if you only focus on the per capita income level, six operators do look as a high number especially when the PTA is also aggressively promoting WLL.

Q: How do you think the LDI and WLL licenses will be competing with cellular industry?

H F: WLL is good when it comes to expanding the telephony services to the far-flung areas, where fixed telephony doesn’t exist. But WLL may pose a threat to cellular and fixed telephony operators operating in large cities and urban areas. We have also procured license for WLL in almost all the regions in the 3.5Ghz band, however the WLL operators are not expected to erode our business as the threat (if any) is not very significant. As wireless local loop offers limited mobility, so it can never be a substitute of a phone. Secondly, the availability of GSM handsets is far cheaper than the WLL handset in Pakistan.

Despite that I personally think that the PTA should not have issued WLL licenses for mega cities and key urban areas as the objective of WLL is to expand telephone service to distant and far flung areas.

Q: The deal signed with Ericsson- Pakistan, will there be any role of Ericsson-Pakistan after the completion of project?

H F: Warid Telecom plans to build a network to handle 1.5 million customers with an investment of US $140 million to US $ 150 million in the first phase of its launch. The signing ceremony finalizing the strategic alliance agreement held in Lahore recently is for Ericsson to provide Warid Telecom a complete “turnkey state of the art” GSM network solution, which encompasses the supply of core and Radio network equipment, network design, rollout as well as professional services like full operations and maintenance. The network will be GSM / GPRS based and its coverage build out will commence immediately.

Q: Something about the Management’s past experience in Warid Telecom? About your personal profile?

H F: In the field of telecommunications, Warid is a new entrant. However we have been able to attract rich human resource capital from Pakistan and abroad covering a broad spectrum of telcos both from the vendors and operators sides.

Q: How do you see and what do you think about the future of telecom industry in Pakistan?

H F: Telecom market is progressing forward with high pace towards more and more technologically enhanced solutions based upon NGN, 3G, UMTS, IP/MPLS, ATM etc., with data market to grow exponentially as compared to the voice market. In today’s market in our country, the primary need is basic voice telephony and SMS (Short Messaging Service). There is immense demand for this and a lot of potential is still there to be tapped.

Q: Do you expect in the rise of the penetration of cell phone rate that is quite low about little less than 3%?

H F: We find Telecom market in Pakistan vibrant and promising with modest and even estimates for foreign direct investment of several billion US $ in the next five years. Our vision is the penetration should rise from 3% to 18% in the next 5-6 years.

Q: Will Tariff be the only weapon for an operator to attract subscriber?

H F: In my opinion, the market can easily take 4-5 operators. With pricing coming down, affordability would go up. Also from a luxury item mobile have become a “need” and a “business tool”. Apart from tariff good coverage and highest standards of quality will be the decisive factor to attract subscribers.

Q: When is the expected launch time frame?

H F: Warid telecom is expected to launch our services in the first half of 2005.

Q: What would be the focus of Warid Quality/Coverage/ Services/Price?

H F: Warid plans to follow the internationally recognized quality of service benchmarks in maintenance of its GSM network. The coverage will be definitely extensive and in line with our USO “Universal Service Obligations”. In terms of services we would like to maintain our edge in bringing the most advanced and innovative features to our valued customers and will maintain our edge in being the trendsetters. The price of the services will be determined by the market forces.

Q: How could we develop the culture of infrastructure sharing?

H F: The government has encouraged infrastructure sharing in the new telecom policy. In this spirit we did approach one or two existing operators to seek their input about this idea. However, they consider infrastructure sharing as a marketing advantage to their competitors, which they wouldn’t want to happen. This is understandable.

I think once the new entrants launched and acquired reasonable level of infrastructure ability and subscriber base, operators will consider infrastructure sharing on commercial terms. Sharing is also good for environment. Why should we have towers emerging from rooftops everywhere in the city while one tower could be enough for 3-4 operators.●