Telecom sector in Pakistan has groomed tremendously over the past 16 years. From the basic voice and SMS services to the data revolution today, the industry has evolved tremendously and become a point of pride for the country. This 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 (new name of Mobilink and Warid). His success motivates hundreds and thousands; however, he still aims high and strives hard to spread the fruits of this revolution among fellow Pakistanis. Where Telecom sector stands in 2017, let’s find out below.
Jazz seems to have taken more interest lately in grooming the young entrepreneurs. Which areas in your opinion need serious attention?
Aamir Ibrahim: 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 the abundance of ideas, but we need to handhold and channelize.
As a part of the first step, we can provide them extra without taking anything away in the shape of Jazz accelerator. It is to exploit the adjacencies around telecom and IT. We will try to gravitate the ideas coming out of this particular center more towards technology.
Secondly, our aim is not just providing them with air-conditioned rooms, printers, notebooks and Wi-Fi connectivity which are relatively easier to do. The real benefit through this exercise would be when our managers sit with the ‘to-be entrepreneurs’ for further refining their ideas. I think that would be the real advantage and an actual commitment from the organization. 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.
Third Commitment on our part would be to transfer the real world knowledge. For example, we are running a good business in Pakistan since the last 22 years, and today we have a real insight into the mobile usage pattern and the likes and dislikes of 50 million subscribers. This practical knowledge can be imparted to the incubators.
I do not want to take the credit away from other incubators, but many of them are performing under academic environment; however, we are more focusing on the practical side of the training, the real demand of the businesses.
You were an advocate of digitization when you re-joined Mobilink in 2015. How far have you come in pursuance of your goal?
Aamir Ibrahim: Honestly, we have not progressed at the desired speed. Neither as an organization nor as an industry.
Companies in Pakistan are confused about the meaning of a complete digitization or 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 does not make you digital.
In actual, it would mean to deal our customers digitally by giving them a complete digital journey to access services without any physical contact. We will be a real digital company when the need to reach a customer support guy or calling a support center will go down significantly.
A very prominent example for explaining the concept is ‘Whatsapp.’ Customers do not need to call their support center; there wouldn’t be a need to do so because of product simplicity. At the moment, our telecom products and tariffs are very complex, and the area I want to excel is digitization through simplicity, and we are working aggressively on it.
You are undergoing a merger, how easier it is to bring simplicity?
Aamir Ibrahim: I think simplicity is a great ‘ideal’ and it does not mean easy. To create simplicity you have to take some painful decisions. 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 that 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 customer and 4G service to Mobilink customers.
You are an advocate of not selling data cheaply, but Mobilink is slashing its data rates. Why?
Aamir Ibrahim: I never emphasized to make data expensive rather it should not be sold below cost which is never a wise decision. What happens when someone crosses the barrier is that the product suffers eventually and hence the customer experience.
Pakistan stands among the countries in the world where the data prices are the cheapest. However, we import equipment at a cost which is on par with any other country in the world. Similarly, we have to pay a huge price for the licenses. It was not different in 2016 when a cellular operator spent $400 million on a license. In such a scenario when you degrade the rates, it would be arduous to touch a global benchmark quality.
The second part of the question was about slashing the rates. Most of the data sold in Pakistan is through the bundles, and when it expires, the customer has to pay normal 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 for making it 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 for reducing the CapEx, for example, tower sharing?
Aamir Ibrahim: 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 of the 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 take benefit of 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 the maturity is rising in the industry.
Cellular towers consume much energy. Can operators save cost and conserve energy through solar technology?
Aamir Ibrahim: 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 is providing approximately $3 billion back to the government in shape of various heads. While we look at consuming national resources, the amount that goes back as a contribution is quite significant.
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 earlier, certainly the tower sharing has its own benefits of conserving energy.
Solar is still a little bit of weak logistic and financial case in Pakistan. A solar equipped site requires a bigger 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?
Aamir Ibrahim: It is a very relative term and has different standards the world over. We can enjoy a similar high speed, but as I mentioned earlier, data rates in Pakistan are the lowest in the world. 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 very good.
When you add more customers, infrastructure needs to be upgraded accordingly. However, if you are selling 100 GBs for less than PKR 100, then it is not a very business friendly case in favor of 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?
Aamir Ibrahim: I think the boom is yet to come in Pakistan. Mobile financial services have progressed a lot. Bill payments and money transfers are being done 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 so they can 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 are performing well in the neighboring countries but sooner or later groups like Amazon will come to Pakistan. We are successfully experimenting with Black Fridays and groups like Daraz and TCS are making efforts.
Technically speaking, e-commerce has 3 major 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 payment solution. For dealing with the situation, we are trying to make JazzCash the defacto wallet for making digital payments in Pakistan. 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 industry expect from the government in 2017?
Aamir Ibrahim: 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 the form of 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 the commodities which are essential.
How justified it is that 14% withholding tax is imposed on a segment of our society which 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 that tax collection in Pakistan is very low but putting all the burden on us is not justice as well.
The interview was originally published in January edition 2017 of MORE magazine.