Hilde M. Tonne on one of Pakistan’s rare success stories.
Norway’s Telenor group has 153 million subscribers in 13 countries across Europe and Asia. The telecommunications giant has been in Pakistan since 2005 and, having invested $2.3 billion, is presently the country’s second largest phone company. The Pakistani market has thrown up unique challenges and pioneering innovations for the company. During her recent visit to Islamabad we spoke with Telenor Group’s executive vice president and head of group for industrial development, Hilde M. Tonne, about this and more. Excerpts:
How’s Telenor different from other telecom companies operating in Pakistan?
Being the second largest telecom operator in Pakistan, Telenor Pakistan provides a diverse range of both GSM and non-GSM brand architecture to its customers. As one of the largest data networks in Pakistan, it offers EDGE connectivity across the country and continues to make technological upgrades. What we consider our biggest strength in Pakistan is our innovation. Telenor Pakistan has introduced many industry firsts: branchless banking services, health services, mobile TV, SMS email, mobile picture sharing, human-assisted SMS customer service. This is what we are looking to leverage to differentiate ourselves in this highly competitive industry.
How has or can the telecom sector contribute to Pakistan’s socioeconomic development?
The telecom industry has made a major and transformational contribution in the socioeconomic development of Pakistan. During the last seven years, industry wide, more than $12 billion has been invested in infrastructure and new technologies. Today, over 125 million people in Pakistan use these services. Socially speaking, the way people communicate has been completely transformed. Telecom infrastructure, with around 34,000 sites, provides coverage to the majority of the population making it possible for people to remain connected all the time. The telecom industry also makes a significant contribution to the national exchequer every year: during 2011-2012 alone, the contribution stood at Rs. 133 billion. We are one of the largest European foreign-direct investors in Pakistan, having invested around $2.3 billion. We have a subscriber base of 32 million; we have created over 2,800 direct and 25,000-plus indirect jobs in the country. Telenor has contributed over Rs. 121 billion in various forms of direct and indirect taxes to Pakistan’s economy since its launch in 2005. The most important role of telecom services is of fostering an environment for people to connect and socialize, building infrastructure for new markets, and providing opportunities on the Internet for trading goods. Branchless banking services are bringing financial inclusion to the people of Pakistan. Studies have suggested that a 10 percent increase in mobile penetration results in a 1 percent increase in GDP.
With texting and social networks and video calls, do people still talk on the phone?
The next spurt of telecom growth worldwide is expected from data rather than voice, and we will see a global shift toward data and content services over time. Voice will remain our major source of revenue and at the core of the business model, but data is definitely the next logical step. Approximately 2.5 billion people are utilizing voice and SMS services today in the world; this is a huge number of people with access to mobile handsets. Smartphones will soon become affordable for everyone. And if we can offer connectivity to the Internet and can be part of developing local content in different markets, you will see close to 5 billion people on the Internet in the next two to three years. I truly believe that Internet growth in Pakistan will be something to watch out for provided that a robust regulatory system is in place and the environment is conducive for business growth. With 30 million Internet users in the country and half of them accessing it through mobile phones, data and content services offer unlimited potential. We also believe that data and content services will be a useful catalyst for sustainably changing lives and supporting socioeconomic development.
What sort of corporate social responsibility initiatives have you undertaken in Pakistan?
We have focused on the disabled, education, health, emergency response, and employee volunteerism. Khuddar Pakistan, launched in July 2009, is Telenor Pakistan’s flagship CSR initiative. It focuses on integrating people with disabilities into the company. Now Telenor Pakistan is entering the second phase of this program, Open Mind Pakistan, which is a training program launched in August. Qualified candidates among the disabled will undergo comprehensive three-month training after which they will be given nine-month internships. Another very interesting program is Telenor Hamqadam, our employee volunteerism program. Since 2011, Hamqadam has been engaging staff to volunteer toward our focus areas to give back to the community. To date, over 50,000 community-service hours have been clocked by our staff under this program.
What service upgrades can we expect from your company?
Telenor Pakistan is currently undergoing network modernization. By the end of this year, it will have the most modern and state-of-the-art GSM network in Pakistan that is future-proof and 3G/4G-ready. Two thirds of our GSM network is serving Pakistan’s rural customers, especially in Azad Jammu and Kashmir and Gilgit-Baltistan.
Besides telecom, do you have other services in your global portfolio?
We have cable and satellite television in the Nordics. And then we have add-on services in a central production unit, Digital Services, where we partner up with the likes of Google and Facebook. These are initiatives we do centrally in the group so we can help out our companies in different markets. Financial services are a huge area and one that Pakistan has spearheaded for us. What Telenor Pakistan has done with Easypaisa is highly interesting. Easypaisa is Pakistan’s first entry into formal branchless banking in collaboration with Tameer Microfinance Bank. It is providing financial access to everyone, across the country, and it is also a success story within the Telenor Group. As the largest mobile money service in Pakistan with over 35,000 Easypaisa shops spread across 750 towns and cities, Easypaisa is serving close to 6 million customers per month—and this number is growing. If you look at building societies and services, the following can be said: 15 percent in Pakistan have basic banking services and mobile penetration is 70 percent; this gives us room to uplift people from basic services of 15 percent up to 50-60 percent very quickly through Easypaisa. That would be a very solid development for the country. This is also paving the way for the same kind of solutions for financial services in Thailand, Serbia, and in many different parts of the world where we operate.
Given everything, are you optimistic about the business climate in Pakistan?
It has been a highly competitive market for many years. We started out at No. 4 and today we are No. 2 in terms of subscribers. While our approach is customer centric and we will continue to diversify in new areas like financial services, what’s important to consider here is that the regulatory environment and business ecosystem needs to complement the way people use telecom services in the country. A progressive regulatory environment and a healthy business environment are integral for the telecom industry to continue to perform and contribute toward society. While we recognize that competition is good for the customer, we must also be rational and move toward establishing quality standards for telecom services.
From our Oct. 18 & 25, 2013, issue.