The telecom sector in Pakistan has grown exponentially over the past 16 years. The journey that started from the essential voice and SMS services has transformed into a data revolution. Indeed, it would not have been possible without people like Aamir Ibrahim who became part of it at the start of his career.
Today, he runs the largest cellular company as the President and CEO of Jazz. His success motivates hundreds and thousands; however, he still aims high and strives hard to spread this revolution’s fruits among fellow Pakistanis.
Despite the success, there are still issues to address. Let’s talk to him and find out what does he see sitting at the top.
Jazz seems to have taken more interest lately in grooming the young entrepreneurs. Which areas need serious attention?
That is true. Jazz accelerator is supporting National Incubation Centre through our R&D fund. The idea was to play our role in creating an ecosystem where people have an avenue, handholding, resource, and managerial acumen. We have an abundance of ideas, but we need to materialize them.
The first step is to provide them extra without taking anything away with the ‘Jazz accelerator’ to exploit the adjacencies around telecom and IT. We will try to gravitate the ideas coming out of this particular center more towards technology.
We are not looking to provide them with air-conditioned rooms, notebooks, and Wi-Fi connectivity – which is the easy part – the real benefit of this exercise would be when our managers sit with the ‘to-be entrepreneurs’ to further refine their ideas. If we want to bring something out of this, we have to spend time with them, and you know, time is the most precious resource.
Transfering real-world knowledge to them is our commitment. It’s possible because we are running a successful business in Pakistan for the last 22 years. Today, we have a real insight into the mobile usage pattern and the likes and dislikes of 50 million subscribers. We can impart this practical knowledge to the incubators.
I do not want to take the credit away from other incubators, but many of them perform in an academic environment; however, at Jazz, we are more focusing on the practical side of the training and the businesses’ real demand.
You were an advocate of digitization when you re-joined Mobilink in 2015. How far have you come in pursuance of your goal?
Honestly, we have progressed at the desired speed, neither as an organization nor as an industry. Companies in Pakistan have less clarity about how should a digital organization work.
My stated mandate is “I want to get away from a legacy telecom operator to being a future technology company.” Merely providing 3G/4G services wouldn’t bring a digital revolution.
In actuality, it would mean dealing with our customers digitally and without a conventional call center that mainly revolves around physical support.
A very prominent example for explaining the concept is ‘Whatsapp.’ With digital support messengers like this, customers shouldn’t need a calling system to address their problems. Currently, at Jazz, our telecom products and tariffs are very complex that need to be simplified through digitization.
You are undergoing a merger; how easier it is to bring simplicity?
I think simplicity is an excellent ‘ideal’, and it does not mean easy. One needs to take some painful decisions to make it happen. The problem at hand is the burgeoning number of individual services that we offer to consumers. We have made product portfolios and tariffs too complicated. The customer line has been segregated into smaller groups for which our call centers are getting bigger to cater to rising needs. We need to work and simplify; rather than having 15 different offers, it is better to have 5. It will not hurt the number of subscribers but attract more.
Regarding the merger, we have become a 50 million customer base, which is enticing and challenging at the same time. The next challenge for us is to seamlessly provide 3G service to Warid customers and 4G service to Mobilink customers.
You are an advocate of not selling data cheaply, but Jazz is slashing its data rates. Why?
I never emphasize making data an expensive commodity; preferably, a wise decision would be to sell it at more affordable rates. When someone crosses the barrier, the product suffers instead.
Pakistan enjoys the lowest data prices globally, but the technical equipment we import has a price tag on par with any other country in the world, which is expensive.
Similarly, the telecom license price is enormous. We, cellular operators, spent $400 million on it in 2016, and coupled with the rollout cost, the investment becomes gigantic. And when you degrade the data rates, it would become hard to provide world-class service quality.
The second part of the question was about slashing the rates. Most of the data sold in Pakistan is through bundles, and when it expires, the customer has to pay the standard tariff, which is a little on the higher side. Passing on the burden to a customer would be unfair. Therefore, we adjusted our “Pay As You Go” rates to make them more affordable and matchable with the bundle offers. By doing so, we have dealt with the ‘bill shock’ phenomenon.
When you talk about high import cost and taxes, can’t all the operators work together to reduce the CapEx, for example, tower sharing?
I think it was an issue of competitive advantage once. If a company having 8000 towers provided coverage access to a company with 1000 towers, the former would lose the coverage benefit. Every industry learns and undergoes maturity. Today, operators are of equal size in most ways, and there is no exclusive edge for anyone from the coverage point of view. In Pakistan, more than 20% of towers are being shared, which is a good sign.
Jazz always prefers to benefit from a shared tower wherever we expand our coverage because we do not want to add another tower in the environment. Another advantage is that you save a lot of time and capital that you would usually spend on erecting a new structure. Instead, we can put those resources on delivering and improving the services. I would say maturity is rising in the industry.
Cellular towers consume a lot of energy. Can operators save cost and conserve energy through solar technology?
Cellular towers consume energy, and it is a global phenomenon. We consume more energy than any other industry. However, $5-6 billion worth of mobile industry provides approximately $3 billion back to the government in the shape of various heads. So you can see the amount that goes back as a contribution is quite significant in contrast to what we consume.
Usually, we have a lifecycle of equipment that falls between 6-7 years, and whenever a network swap happens, the newer equipment is always energy efficient. As we talked about earlier, indeed, tower sharing has the benefits of conserving energy.
Solar is still a little bit of a weak logistic and financial case in Pakistan. A solar-equipped site requires a more significant area, which is only possible in the countryside, but in cities where we have the concentration of sites, we do not have the luxury of space.
3G/4G speed in Pakistan does not match with the international standards; why?
It is a very relative term and has different standards the world over. We can enjoy a similar high speed, but Pakistan’s data rates are the lowest in the world, as I mentioned earlier. How can we expect to provide the fastest speed at the lowest prices? Theoretically speaking, the speed that our companies are offering, considering the package prices, is outstanding.
When you add more customers, infrastructure needs to be upgraded accordingly. However, if you sell 100 GBs for less than PKR 100, it is not a very business-friendly case in favor of the highest speed.
I believe speed is not the issue at this moment; it is the consistency. If a consumer is getting a steady 4-5 Mbps, he would be a satisfied customer.
Even after 3G and 4G, we have not seen a significant happening in the e-commerce and mobile financial industry. Why?
I think the boom is yet to come in Pakistan. Mobile financial services have progressed a lot. Bill payments and money transfers are being made through phones. The third component, the mobile wallet concept, is still missing. A life without ATM is still to come.
Customers of different financial services, such as Mobicash and Omni, have to seamlessly interact with each other to share the money with ease.
I think the trend goes like that Pakistan gets the innovation slightly after its neighbors. I can see that many e-commerce companies perform well in the neighboring countries, but groups like Amazon will come to Pakistan sooner or later. We are successfully experimenting with Black Fridays, and groups like Daraz and TCS are making efforts.
Technically speaking, e-commerce has three significant components. 1st is the Catalogue, i-e, the marketplace which we have developed very well. Kaymu is one such example. 2nd is fulfillment, i-e, ensuring that what you have displayed in the catalog is available in your warehouse.
Amazon is successful because they maintain an inventory in their warehouses, which are huge. In Pakistan, there is no such capability of managing an E-commerce warehouse. To some extent, TCS is doing something in this area, but it is mostly absent.
3rd component and the major one is the payment solution. We are trying to make JazzCash the defacto wallet for making digital payments in Pakistan to deal with the situation. However, the online payment solution is the weakest area in Pakistan until now. It is the seamless integration of these three elements that can give rise to the e-commerce boom.
In short, we have the marketplace; fulfillment is a weaker area to address, and we are working on the payment solutions.
What does the industry expect from the government in 2017?
Look, the industry needs to survive. We need to give returns to the shareholders. Ironically, either the government or the banks are our shareholders who take our profits away in excessive taxes and interest, respectively. The shareholders who have invested in our company are getting nothing in return. There should be a field where everybody, including the investor, consumer, and government, should enjoy. Unfortunately, the investor has not benefited here. It would require much support from the government. Taxes in Pakistan are one of the highest in the world. In Pakistan, there are lesser taxes on luxuries but higher on essential commodities.
How justified it is that a 14% withholding tax is imposed on a segment of our society that earns less than PKR 14,000 a month.
As I mentioned earlier, that half of what telcos earn goes to the government.
Although we respect the FBR and government’s version, tax collection in Pakistan is meager, but putting all the burden on us is not justice.
The interview was initially published in the January edition 2017 of MORE magazine.