Tele-Zong or Zong-Nor, it’s not far

572

If Telenor-China Mobile scenario is taken into account then both must realize how the associated reputation will be dealt with.

China Mobile needs to buy something out of their homeland; this was the statement from their chairman Mr. Wang Jianzhou.

When two people get married, either of them or sometimes both of them adopt each other’s qualities and habits. If Telenor and Zong go for such a relation, and that is inevitable according to a school of thought, then which brand is going to dominate is a question.

Telenor enjoys a better reputation than Zong since its birth in Pakistan. From the start they have been focusing on quality, targeting the youth and for sure their prime targets were the remote areas where it started to penetrate in the first phase contrary to Warid or rest of the companies. This is why we soon started to get calls from the Telenor numbers that shows their acceptability.

On the other hand, apart from very few people, I hardly get calls from a Zong number. It’s been quite a time since China Mobile (CM) acquired Paktel in Pakistan and named it Zong and according to Chairman CM, Mr. Wang Jianzhou, “the Pakistani operation, Zong, is performing well”.

Well before CM had purchased Paktel officially, there were views from certain people that the new born child will have typical Chinese attitude and now SIMs and Chinese phones would be available on footpaths, roadside shops or the Sunday bazaar just like other Chinese products are available.

Yes, Zong did manipulate with price and just recently it was held responsible by Competition Commission of Pakistan (CCP). But mind it, Ufone was also involved and CCP also warned them on the same grounds. Again, it was Ufone to introduce the cheap handset for the first time along with the SIM and later Zong followed it. So in this case, that Chinese attitude was shown by Ufone.

But it doesn’t means Zong is in some better condition; the quality of network is really questionable. Even if you have the tower nearby, it is not guaranteed that you will get the signals. Most of the people you would find complaining the same thing. Zong inherited couple of hundred of thousands of customers from Paktel and an under used network. Later they added cell sites and as per their stats cell sites are 4500 in numbers but they have not added the customers in the same proportions. That means they have plenty of space available and still there are signaling and quality issues. People at Zong term it as network expansion phase but this excuse cannot be justified after this long time.

I would rather say to them, this was a notion of past when it was believed that networks remain effected when ever expansion is going on. If we go by this belief then Zong should keep giving unacceptable quality of services until the network is completed. And if that remains the case how many customers they will capture?

If we go by this belief then Zong should keep giving unacceptable quality of services until the network is completed. And if that remains the case how many customers they will capture?

Propaganda from rival companies and customer’s personal experience will keep making hard for them to claim a good customer base. And like I have said earlier, it would be rare to receive a call from Zong number.

Zong needs to look into these things, a seamless technology does not let these small issues arise, and they should choose that option which is feasible in all the way. Cheap network solution from ZTE is not the ultimate answer.

CM has a reputation of being a wealthy company, within China they are putting lots of money on their own home built 3G standard. They are the people who have erected the towers on Mount Everest. Why it is happening here in Pakistan.

They must repaint themselves; if that requires lots of time then Telenor is the quick remedy.

After their long awaited marriage, Zong could possibly hide under the blanket of Telenor which so far has a reasonable and sophisticated image. Or it could go other way around. But that has to be seen if there is a deal.

If CM is in hurry to buy anything good, why Telenor Pakistan is? I believe, Jon Fredrik Baksaas, CEO Telenor, needs ready cash and peace of mind to fight his next big battle in India. Just like Naguib Sawiris, Chairman Orascom did at the end of 2008 when he announced to cut the expenses aggressively because he wanted to spend money in Korea and Canada. As a result, besides other operations all over the world, offices in Pakistan have reduced their operational expenses to 20-40% in most of the cases.

In India Telenor (UniNor) has already announced that it will make losses during the first 5 years amounting to 15,500 corore (IND Ruppee) and the loss in first fiscal year will be 1,400 corore (IND Ruppee).

Despite of losses Telenor has assured its share holder to remain calm as the company will make profits after 5 years based on its 2G operations. According to the group, they are happy with the 7.25% of bonus share which they are getting by just buying 60% shares for 6,120 corore (IND Ruppee). Apart from this they are foreseeing a low operational cost by implementing a first of its kind operational procedures. Telenor will not erect towers; rather, they will rely on leased towers which it plans to rent them as well. Contrary to a centralized policy, they plan to create 11 decentralized decision making hubs. In just 5 years the group eyes some 9 percent market share out 750 million projected customer base by focusing on the churned customer.

But the situation does not look that calm. Company needs more strength and more money because its entire focus is on Asia and particularly India where it will not enjoy a strong position right from the start due to an already tough competition from existing operators as well as new entrants.

According to CEO Telenor Global, Jon Fredrik Baksaas, “The Indian business model is different. This is the cheapest network that we will deploy”.

No matter how cheapest the roll out is, it has a cost. Telenor strongly needs the money to materialize its Indian dream. It has already reduced its capital expenditure by 30%. It is securing enough finances to support the individual operations in different countries. In Bangladesh, a market where stock exchange market is viewed with suspicion since a brutal 1996 crash, it recently raised $71Mn from the local investors.

In Russia, it has safeguarded itself by making a strange deal of its kind. Its fight with Alfa Group (Moscow based shareholder) is over and both have agreed to shift the head office of Vimpelcom to Netherland.

It leaves only Pakistan to take care of. Indians will never like Telenor to continue its operations in Pakistan. Already they have imposed several conditions, which Telenor has acknowledged as there is no other option.

In the past, Orascom had to change their course in Indian market because they never wanted to disturb their earning child in Pakistan. Same way Telenor would never like to disturb its Indian market where it is relying too much, they will definitely get rid of risky situation.

In the past, Orascom had to change their course in Indian market because they never wanted to disturb their earning child in Pakistan. Same way Telenor would never like to disturb its Indian market where it is relying too much, they will definitely get rid of risky situation.

Despite of media reports about the expected merger of Telenor and China Mobile (CM), the Group has been denying its intentions to sell the company partially. Though it has not denied its talks with China Mobile nor has it confirmed but recent statements from the Chairman of CM again starts the show.

As the statistics show, China Mobile is already desperate to increase its global presence.

Back home it control some 3 quarters of the cellular market but at the same time it is facing tough competition from the local rivals. New customers are being added from the rural areas which are causing a reduced ARPU. In the 3G domain it has a target to spend some $8.6 Billion on its TD-SCDMA network which is a new and untested standard. New customers are reluctant to adopt the 3G services due to the very same fear. It has gained just over 1.2 million 3G users so far and it is far short of targeted consumers of 10 million by the end of this year.

Their appetite for more dominance around the world in order to maintain the status of largest company of the world is taking highest priority. Telenor is the ideal deal for them; both the companies need to join hands.

If Telenor-China Mobile scenario is taken into account then both must realize how the associated reputation will be dealt with.

LEAVE A REPLY

Please enter your comment!
Please enter your name here