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I have chosen 'Telenor Pakistan' for doing this assignment as I have worked in Telenor for 3 years as an Engineer and I am quiet familiar with the current External as well as internal environment of Telenor Pakistan. Telenor Pakistan is part of the TELENOR GROUP which is a Norway based company which is among the top 10 mobile operators in the world dealing in Telecommunications, Data services & media services in 13 countries with over 0.165 Billion subscribers and about 0.04 Million employees working across the globe. Telenor Pakistan is one of the leading Telecom Operators in Pakistan. Its operations & services started in Pakistan in March 2005. Telenor Pakistan is leading in terms of fast growing Telecom Operators in Pakistan with its coverage extending from the extreme remote mountainous regions to the deserts. With over 6000 Cell sites across Pakistan and with more than 0.019388 Billion subscribers & a market share of 21.8%, Telenor is currently ranked 2nd among the six Telecom Operators in Pakistan. Telenor Pakistan plans to invest 1000 Million US$1 in Pakistan by the end of year 2013.
The Political condition in Pakistan is worsening day by day as after 9/11 Pakistan opted to be an ally of NATO Forces which resulted in rise of terrorist attacks on Civilians, Government institutions as well as on Multinational Companies. Telenor Pakistan being a Multinational faces a significant amount of security threat in this uncertain environment. The current Political situation also resulted in strict policies by the Telecommunications regulatory body in Pakistan i.e. PTA (Pakistan Telecommunication Authority) & by Government regarding the Non-Registered SIM Cards so that the unregistered SIM-Cards may not be used for any illegal activities by Miscreants who are acting as anti state agents. In total the 6 Mobile operators collectively lost around 0.0105 Billion unregistered SIM-Cards as a result of blocking & termination of services for these SIM-Cards. The Taxation policies have also impacted the overall profitability of Telenor with a total percentage of Taxes soaring high at 31% inclusive of the 10% tax which the subscribers have to pay on each Scratch Card. The economic conditions of Pakistan are also not very impressive which in turn have direct impact on Telenor Pakistan; the most important factor is of FOREX rate which currently fluctuates around 1US$=84 Pakistani Rupees as compared to 1US$=62 Pakistani Rupees recorded on 31st March 08, the value of Pakistani rupee has degraded more the 25% in only 18 months time which in turn depreciates the profit for Telenor Pakistan. The inflation has caused soaring prices in Minimum wages, Fuel, construction materials which includes cement, concrete & steel prices. The inflation has rate has risen by overall 10.66% which in turn is affecting Telenor Pakistan's operations. Pakistan is ranked 6th in terms of Population with over 145.5 Million people and more the 30% of its population in Urban Areas acting as gold mine of opportunities for Telenor Pakistan, so over 40% of the total Population is yet to gain access to the services provided by Telecom companies.. Telenor has shown commitment to contribute to the local society by starting different projects such as providing health and educational services for children with disabilities, donating in natural calamities, providing technical education to unskilled workers and many other initiatives. Telenor is also working on alternate energy sources such as solar energy to replace the Electricity and Generators which add up to the carbon emissions. Technologically Telenor is well prepared specially for the upcoming 3G  as PTA (Pakistan Telecommunications Authority) wishes only to auction 3 licenses for 3G in Pakistan by the end of year 2009. Telenor's existing equipment is compatible with 3G after slight modifications. Telenor has also entered into M-commerce enabling the subscribers to pay their Utility bills such as Electricity, gas & water bills through their mobile phones. Telenor has also acquired 51% shares of Tameer Microfinance Bank back which will enable it to offer more of its financial services to its customers.
Telenor is facing a tough competition in a market where 5 other mobile operators are offering Telecom services as well as data services & also from various WLL (Wireless Local Loop) & Fixed-Line companies who are providing traditional Landline, Wireless services as well as Broadband ban services in Pakistan. The threat of new entrants in the current scenario is not possible as the Cellular Market. Consumer power is worth mentioning as the subscribers have lot of choices, they can easily switch to other operators especially after MNP (Mobile number Portability) was introduced by PTA through which users can change their operator but will have the same number. Telenor is having a lot of choices in case of Vendors who are providing all sorts of equipments so Vendors don't really create any issues. We shall discuss the 5 forces in detail as we move further.
As I mentioned earlier the political situation in Pakistan is very volatile, we can get a clear idea from the very fact that in year 2008 alone Pakistan was a target of 61 suicide attacks which killed more than 800 innocent people, the current PPP (Pakistan Peoples Party) is facing a lot of criticism due to rise in inflation and poverty in Pakistan. These conditions are negatively impacting the Telecom sector in Pakistan and to be specific Telenor Pakistan. The first set back was when PTA (Pakistan Telecommunications Authority) decided to block all unregistered or illegal SIM Cards and introduced a new SIM verification system in Feb 2009 which resulted in blockage of more than 0.0105 Billion SIM cards of all operators. There were also some rumors in Newspapers back in July 09 that Telenor Pakistan will be quitting after selling a majority of its shares to the Operator Zong which is owned 100% by China, the reason for these rumors were the worsening security conditions in Pakistan. Another reason which analysts assume is that Telenor Group decided to invest in India back in March 09 when it announced 33.5 %ownership interest in Unitech Wireless but these rumors faded away when Telenor announced to invest more than US $2500 million on development of its 3G operation in Pakistan. Telenor Pakistan had to face some lobbying for a short time back in 2005 during its early operations from the government owned Operator UFONE which was initially owned by PTCL (Pakistan Telecommunication Limited) but after UFONE's acquisition by ETISALAT which is UAE based Telecom Company, the lobbying ended4.
The economic conditions in Pakistan are quiet challenging for Telenor with the FOREX rate fluctuating around 1US$=84 Pakistani Rupees as compared to 1US$=62 Pakistani Rupees recorded on 31st March 08, the value of Pakistani rupee has degraded more the 25% in only 18 months time which in turn depreciates the profit for Telenor Pakistan and overall profit of Telenor Group. The government has imposed huge taxation on the telecom companies with a total percentage of Taxes soaring high at 31% which is inclusive of the 10% tax which the subscribers have to pay on each Scratch Card5 of any amount. But negotiations are underway b/w PTA & the Government to reduce the taxation which include cement, concrete & steel prices and rise in tariffs of Electricity & other utilities. The inflation rate has risen by overall 10.66% in 2009 which in turn is affecting Telenor's operations in Pakistan. As we know that Telenor has more than 6000 sites all over Pakistan and is still planning to expand its coverage. Costs on each site include cost of infrastructure i.e. Steel Tower structures & their foundations, electrical works which include Transformers, Generators and battery backup's e.t.c. Each site is being constructed on leased land or on buildings which is also an additional cost. All these costs are rising due to inflation. The customers are also facing the heat of inflation as their purchasing power is also being affected which is visible from the fact that ARPU (Average revenue per user) has dropped to 3.04 US$(2009) from 3.12 US$(2008).
As I have mentioned earlier in the introduction that the population of Pakistan is over 145.5 Million people with 30% of its population in Urban Areas the rest in rural & remote areas. Over 40% of the total Population is yet to gain access to the services provided by Telecom companies acting as gold mine of opportunities for Telenor Pakistan. Around 97% of Pakistan's population is composed of Muslims; this went against Telenor back in the year 2006 when Danish Newspapers published images of Prophet Muhammad (PBUH). Violent demonstrations across Pakistan resulted as the ILL INFORMED people held the Norwegian Government responsible for helping Denmark in publishing the cartoons. Many offices of Telenor across Pakistan were burned to ground by angry protestors, Telenor was boycotted and customers started switching to other Networks. The demonstrations ended after the Norwegian Government officially apologized to the Muslim World though it reassured that Norwegian government had nothing to do with the controversy.Currently Literacy rate of Pakistan is around 51% which is growing and as a result awareness is also increasing about the advanced services provided by Telecom companies which in-turn increases the usage of many VAS (value added services) generating revenues for the company though cell phone usage is not an issue even for an illiterate person but this usage is only limited to Texts or calls. Telenor has targeted each segment in the market as per its buying power for e.g. introducing special discounted Pre-Paid products for Students & low income earners or Post-paid packages for Businessmen & the corporate sector. Telenor has shown commitment to contribute to the local society by starting different projects such as providing health and educational services for children with disabilities, donating in natural calamities, providing technical education to unskilled workers and many other initiatives which have helped Telenor Pakistan to gain Goodwill in the local society. Telenor has started many projects one such project is KHUDDAR PAKISTAN which is being introduced to help the Disabled people for securing jobs in Telenor Pakistan. Other projects Emergency Response program, DUA, Naya Qadam and Apna PCO are being developed to help in Natural Disasters helping out poor & orphan children by providing them food, shelter & education in collaboration with SOS children village. Another notable service namely TeleKisan has been started for Farmers across Pakistan which is encouraging. Another encouraging fact for mobile operators is that the government has reduced custom duty for handsets being imported by 65% which will help in increase of Subscribers base5. The inflation has caused soaring prices in Minimum wages, Fuel, construction materials through which farmers can call on some specific hotlines to listen to current weather forecasts, agricultural news and latest updates, prices of pesticides and seeds e.t.c.
These steps have helped Telenor to win a good will amongst the local community hence increasing its subscriber base.
Telenor is actively working on the development of the upcoming 3G project. PTA has announced to auction in total 3 licenses for 3G in 2010. Telenor's current equipment is already compatible with 3G with slight alterations. Around 3.2Million users of 3G are expected in year 2010 so it's a big opportunity for Telenor to make a maximum out of the 3G license. With the introduction of 3G the users will be able to access different VAS (value added services) such as high speed wireless broadband services, mobile video, M-commerce & online gaming e.t.c. The introduction of 3G will also help Telenor to compete with existing fixed broadband & wireless broadband technologies companies such as WiMax, DSL e.t.c. Telenor has recently signed a contract with Multinet which is a Malaysian based company, for laying Fibre Optic cable across Pakistan to support Long haul transmission without the use of repeaters. This fibre optic transmission network will help to reduce Lease line costs which Telenor is paying to PTCL as Telenor is using PTCL's fibre optic network. Telenor has also introduced M-commerce enabling the subscribers to pay their Utility bills such as Electricity, gas & water bills through their mobile phones. Telenor has also acquired 51% shares of Tameer Microfinance Bank back which will enable it to offer more of its financial services to its customers and after the introduction of 3G Telenor will be able to provide more financial services. Telenor is also working on solar powered sites which will be more cost effective as compared to the sites which are powered by Electricity & Generators. Moreover work is being done on Paper recycling as well as Battery Recycling. All these measures will help to reduce the Carbon emissions and will result in a greener environment. Telenor is also working on 'Sites Sharing' which will help reduce the infrastructure cost as well as the visual pollution caused due to excessive number of tower structures. In site sharing Telenor will be able to use the infrastructure such as the Tower structure and land of other Mobile operators.
Telenor faces a tough competition with 5 other mobile operators in Market striving hard to increase their market share. The 4 mobile operators are providing Voice as well as data services with Instaphone only providing voice services. The intense competition is quiet visible from the Advertisements seen on local Media where all the operators are advertising about Low Call rates and different Value added services targeting different segments of market. Apart from these operators Telenor also faces competition from various WLL (Wireless Local Loop) & Fixed-Line companies who are providing traditional Landline, Wireless services as well as Broadband band services. So Telenor can be well ahead if it maintains its brand image and through innovations in different Value added services.Threat of substitutes is significantly high for Telenor. Telenor basically offers voice & data services & in addition to its arsenal are the financial services it is offering through M-Commerce. The 5 other Telecom operators, 9 WLL & fixed line companies act as substitutes for Telenor. To avoid customer churn Telenor has to improve its service and make it more efficient. Improvement in Marketing strategies, Customer services or Technological up gradations may help to retain the customers.
The buyer power is also very high since the option of a high number of substitutes is open to the customers especially after PTA introduced MNP (mobile number portability) through which customers can retain their Numbers after changing the Operator after paying a very low cost. To avoid customer churn Telenor must maintain a high quality Network.
The supplier Power is relatively low because Telenor is having a huge choice of suppliers. The supplier market for Telecom sector is saturated whether they are Subcontractors, Multinational Vendors or raw material providers. We just take an example of the 3G contract bidding for which many leading Telecom equipment Vendors like NSN (Nokia Siemens Network), Huawei, Ericsson & Motorola offered their services.
Threat of new entrants in terms of new operators is very low since the current Market is already saturated. No new operator entry is possible in the current market situation
until a merger occurs between any of the existing operators which will result in opening of a new license. So it is less likely that a new operator will invest in this market.
Person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies. In case of Telenor Pakistan we can consider two types of stakeholders, internal and external. The internal stakeholders may include the Owners & Employees & the external stakeholders include Customers, Suppliers, Society (Local community) and Government of Pakistan. I shall explain some of these stakeholders, their expectations, interests and how Telenor Pakistan is meeting their expectation through its policy which includes its corporate social responsibility & how Telenor develops its strategy keeping in view its stake holders.
Employees play a vital role in operations of any organization as they are the driving force of the organization & carry out the activities of an organization firsthand. Without the employees commitment to goals of an organization the organization cannot succeed. Employees are directly affected by the decisions or culture of the organization whether in terms of Motivation or productivity which shows their importance. The success of the company depends on how well its employees are working, how much are they motivated. Telenor understands the importance of its employees very well & takes them into consideration before taking any important decision by taking their feedbacks. Employees can directly communicate their ideas to the management. Employees are given constant trainings whether they are in-house training sessions or external trainings. Special funds are allocated for carrying out higher studies while working in Telenor. The employees are being hired without any type of discrimination of sex, race and religion e.t.c. They are given pay incentives as of the current market rate & bonuses on achievement of specified targets. Telenor is also working hard on providing better health and safety conditions to its employees. All these steps boost the morale of employees which in turn results in happy customer due to good quality of customer service. So far Telenor has been considered as the Most Preferred Employer in Pakistan.
Telenor is committed to provide its customers with high quality service in competitive prices. Customers expect high quality products & services which provide the best value for their money. Telenor's commitment can be seen from its Visions and values which tales into account the ease with which the customers can use its products or making the services offered more user friendly keeping in view the fact that more than 35% population of Pakistan is illiterate. Innovation in new products and services also helps to gain confidence of customers. If a failure occurs in achieving customer satisfaction or customer expectations, it can result in Customer churn to other mobile operators. An unethical measure can result in customer dissatisfaction for example if a specific service has some hidden charges and customers are not prompted of these charges then they may be annoyed and may switch to other Operators. In addition customer feed back is also important which is being achieved through specific hotlines routed to Customer Services Representative.
Telenor is well aware of the concerns of local society and knows that its business can have a direct impact on them. Customers and employees are also part of this society. As I have already mentioned in Sociological part of pestle that Telenor has shown commitment to contribute to the local society by starting different projects such as providing health and educational services for children with disabilities, donating in natural calamities, providing technical education to unskilled workers training disabled people for securing jobs and many other initiatives which have helped Telenor Pakistan to gain Goodwill in the local society. Telenor is also working to cut down Carbon Emissions which can be seen from its deployment of Solar Powered sites e.t.c. Telenor is also an official partner of various community welfare organizations such as TEVTA, PRCS, IHDF, DWA & SOS children villages.
There are various suppliers of Telenor which can be categorized into Telecom Equipment Vendors, transport services providers, security services companies & various other suppliers. They also have high stakes as their business is based directly on demand from Telenor. Therefore they expect Telenor to make unbiased decisions in terms of selecting Supplier companies creating an environment of healthy competition & fair trade. Telenor also expects the same commitment from its suppliers to follow the codes of conduct especially in terms of illegal activities such as Child labor. NSN (Nokia Siemens Network) is one of major the suppliers or vendor of Telecom equipment and services to Telenor & also the official partner of Telenor Pakistan. Major business decisions taken by Telenor impact NSN for example if Telenor wants to expand its Network using NSNs equipment, NSN will be having more business opportunities.
Pakistani Government is also a major stake holder of Telenor. The government expects Telenor to pay its taxes & abide by the rules and regulations which have been implemented by the Government. Take an example of the decision of Government to block all illegal sim cards & if Telenor doesn't proceed with it then it may face heavy fines. So it is important that Telenor considers the rules & regulation made by the government before implementing any new strategies in relation to its business.The government is also interested in the employment opportunities created by Telenor and impact of its business on the Environment.
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