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Goodbye Telenor

Col (r) Ikram Ullah Khan

Col (r) Ikram Ullah Khan 

Telenor Pakistan, launched 18 years ago when it entered Pakistani market in 2005 and managed to amass around 45 million customers, has finally decided to leave Pakistan after selling its 100pc stakes to Pakistan Telecommunication Company (PTCL).

The decision seems to carry rhyme and reason. Reports suggest that after experiencing a failed business in Pakistan, the company was feeling ambivalence about continuing its business in the country. Finally, after much procrastination, it decided to restructure its Asian business, shifting it to Thailand and Malaysia in a quest for greener pastures where it sees a friendly and profitable business climate and where the prospects of a thriving business seem much brighter than Pakistan. 

According to Telenor Company, the main reason for packing up its business in Pakistan is the worst average revenue per user (ARPU) as it had been the case with India, thereby compelling the company to wind up its business from India in 2017. In Pakistan again, this was a big concern for the company considering that other subsidiaries of the Telenor group in countries like Malaysia, Thailand and Bangladesh were doing much better. Here in Pakistan, average revenue per user (ARPU) was worst affected when Telenor adopted the same strategy of targeting the low-income rural population, particularly in far-flung areas as it did in India in order to quickly build a large consumer base, a strategy which failed to yield the desired results. 

Seeing its strategy failing, and in order to offset the loss the company was incurring, Telenor restructured its operation to focus on low-income consumers who demanded voice and SMS services. But as luck would have it, with the rise of 3G/4G services and WhatsApp, Telenor began losing its base in voice and SMS services too, and eventually decided to exit Pakistan as it did in India.

It’s quite strange that the company didn’t learn any lesson from its earlier failed strategy and chose to continue with the same strategy in Pakistan that had ended up in fiasco in India. 

Experiencing a continuous business loss, the company, finally decided to sell it off. Citing the reason for selling the group’s unit to PTCL and leaving Pakistan, the Telenor CEO Sigve Brekke daid: “We tried to do a merger in Pakistan but we didn’t manage to get that, and when we saw this wasn’t happening, the second-best alternative was to arrange a sale. It was a combination of not getting the structure in place, and value. So we found a sale was better for our shareholders”. 

According to Telecom business experts, there are additional factors too which are responsible for Telenor’s exit from Pakistan. One of the factors is that Telenor and other telecommunication companies faced hostile business environment like challenges related to spectrum/range of operation and license fee rationalization, etc.

For instance, Telenor encountered difficulties with license renewal fees which the government refused to solve. The issue was contested in the Supreme Court but was decided against the company. Besides, the worsening macroeconomic conditions played a decisive role in putting a dampener on the company’s operations. These challenges coupled with an increased cost of capital resulting from ever-surging interest rate, inordinate taxation and a perennial volatile and unpredictable political climate, made it increasingly unsustainable for Telenor to continue its operation in Pakistan. 

All of this culminated in Telenor announcing its decision to leave Pakistan in November 2022. However, it took a complete year for Telenor to find a buyer. Finally, PTCL jumped into the fray and bought it by default. Now, it remains to be seen how worthy PTCL proves itself to be in operating and providing quality and uninterrupted Telenor service to its large number of customers. Seeing the unsatisfactory service of Ufone which operates under the direct oversight of PTCL, it would be unwise on the part of the customers/consumers to pin hopes on PTCL-owned Telenor to deliver to the entire satisfaction of the customers. 

Telecom industry experts are of the view that the prevailing business environment led not only Telenor Pakistan but Qatar and Oman telecom too who invested in World Call and Witribe, to exit the Pakistani market. The decision of Qatar and Oman telecom to close their business and depart from Pakistan hasn’t come as a bolt from the blue. The simmering issue was lingering on for quite sometime with the warning by both the entities to leave Pakistani market due to unfriendly business environment prevailing around culminating in the sordid episode when Telenor Pakistan sold out its stakes to the PTCL. It may also be recalled that a few years ago, Warid had also exited the Pakistani market lamenting the unfriendly business environment gripping the telecom industry. 

The unceremonious exit of Telenor from Pakistani market after selling its 100% shares to PTCL under forced circumstances is being viewed by many as an expression of no trust in government’s telecom policies which needs to be considered. The general public as well the elite class alike, particularly those coming from far-flung areas like Chitral and GB who are the main beneficiaries of Telenor service in the absence of any other alternate reliable facility, have shown lot of resentment and are seen giving vent to their pent-up anger. 

Lastly, it may be mentioned here that the Telenor service in the mountainous areas of Pakistan is not less than a blessing for the people of the area. With the change of ownership, the Telenor customers are most likely to experience a poor service and may also be deprived of a smooth and dependable service. Resultantly, they may encounter the risk to remain disconnected from their near and dear ones living not only in different cities of Pakistan but also outside Pakistan if PTCL fails to deliver. PTCL needs to pull up its socks and ensure that the Telenor customers do not face problem due to unsatisfactory performance.

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