. .

An interview with Mumtaz H Syed, Chief Executive

PAGE Report
Jul 03 - 09, 2000

Most of what we have heard of Pakistani entrepreneurship for the past many years has been depressing. Recessions in the economy, sick industrial units, and lackluster performance have been the buzzwords. Not all although it seems has been bad.

WorldCALL Telecommunications Group ("WTG") has defied all such paradigms, and has certainly been an exception. During a short span of three years the group has grown to become one of the largest telecom establishments in the country. Having made its first mark as a payphone company, WorldCALL Payphones Ltd. ("WPL"), the group now boasts of a host of other telecom businesses. Amongst these are international calling cards, internet, wireless payphones, and the list is growing.

Chief Executive, WorldCALL Wireless Limited, Mr. Mumtaz H. Syed in an exclusive interview to PAGE in his Lahore office talked about the group, its vision for the future, and what has made it one of the most successful and financially sound companies in the telecommunications sector.

So much is the company's appetite for growth and public confidence in its future prospects that when the company made a public offering of 10 million shares in March 2000 at Rs. 15 per share (premium of Rs.5/-) it was heavily oversubscribed. The company's share now trades at all the three bourses.

Prior to their public offering the company made Pre-IPO placement of 13 million shares, arranged and advised by First Capital Securities Corporation Ltd., with institutional and retail investors. Well known financial institutions have underwritten the public issue at the offer price, which shows the widespread confidence that the financial sector reposed in the company.

Mr. Mumtaz said that the company has been operating for the past three years in the payphone industry and has displayed phenomenal growth in revenues and profits. The profit after tax increased from Rs.8.2 million in 1998 to Rs.53 million in 1999, a whopping increase of 546%. The company's growth and profitability were even more impressive when viewed in the background of the depressed economic scenario of the country. For the past two years most business were experiencing decreasing sales revenues and profits.

The company's system of pre-paid cash collection strengthens the cash flows and nullifies the bad debts and delays in collection of receivables.

Another innovative project that has been recently launched is the WorldCALL Business Partner Program. This is a unique income generating opportunity for small business and shopkeepers. They can become business partner with WPL by allowing the company to install payphones at their shops. The company is well managed and professionally run hence is capable of attaining the revenue and profitability target.

Pakistan has a huge untapped demand for telecommunication services. Since the company operates in both the supervised and standalone segments of payphone industry, therefore, it will benefit maximum from the opportunity of available market. Such is the interest in telecom that telecom company shares have, on average, performed better than the market.

Continuing Mr. Mumtaz talked about their international pre-paid calling service, under the brand name Hello®. WorldCALL Phonecards Limited provides the international dialing facility under an operation and maintenance contract signed with Pakistan Telecommunication Company Limited ("PTCL"). The company was incorporated as a private limited company on August 28, 1998 and was later converted into a public limited company on March 11, 1999.

WorldCALL Phonecards Limited was the first of the three companies that were short-listed by PTCL for award of the contract to successfully conclude negotiations with PTCL and sign the contract. Similarly, the company also took lead in selection of most suitable technology, IN-platform supplier, preparation of technical and operational plans, approval of in-platforms from PTCL/PTA, and its finally countrywide launch on March 25, 1999. The IN-platform supplier is Unitel Communications, UK that is one of the major suppliers of the Intelligent Network Technology to a number of European telecom service providers. Unitel Communications is owned by NTL, UK, the largest cable TV providers and also one of the large sized institutional investors.

The pre-paid calling card service, though quite prevalent in developed countries, is a new concept in Pakistan. The service offered a number of benefits to the people of Pakistan by providing easy, convenient and cost effective access to international dialing facility at their homes and offices. Now people can make international calls through any digital telephone without the need of having an international dialing connection.

However, despite the unique and attractive features, the service requires card users to interact with automated voice response system that requires educating the public about its usage. With this point of view, the company launched a unique and aggressive advertising company that targeted towards a cross section of potential customers during the pre-launch, launch and post-launch periods. The success of marketing plans has resulted in a market share of over 70% with high degree of brand recognition by the company's customers.

WorldCALL has also applied for a Cable TV License. Initially the service will be launched in Lahore and later expanded into major cities of Pakistan. The minimum expected market size for Pakistan is 3 million subscribers and it is growing at 10% per annum. At the moment the company is negotiating with various equipment suppliers.

Salmaan Taseer, Chairman of the WPL, in his report to share holders on the operational results and audited accounts for the financial year ending on June 30, 1999 said, "...the year under review has been excellent. Your company has experienced tremendous growth in terms of sales, profits and market share. The sale gained an extraordinary growth of 181% and was over 163 million as compared to Rs.58 million in last year. This has been due to the efficient operations management and aggressive marketing strategy of your company. Your company is emphasizing on lowering operational costs and healthy revenue per payphone. The company has installed 2,000 payphones in 1998-99, which has increased total number of payphones to 3,891. The phones are covering 52 cities, towns and villages. For the next year we have set the target of crossing 7,000 payphones. This would be achieved by opening new branches all over Pakistan. Further WorldCALL Payphones Limited plans to go public and increase its capital base to finance the further aggressive expansion".

WPL has followed an aggressive policy of sales and expansion in its operation since its incorporation. The company has a presence in all the four provinces of the country covering above 120 cities and towns in Pakistan with a total of over 7000 of payphones by May 2000.

As if all this were not enough WTG has recently set up WorldCALL Telecommunication Lanka (Pvt) Limited in Sri Lanka, which will provide payphone services and pre-paid calling card services.

WorldCALL Telecommunication Group is a Joint Venture between WorldCALL Telecommunication Group, Pakistan and Hayleys Group, Sri Lanka. Hayleys Group is one of the largest business groups in Sri Lanka with diversified business interest within and outside Sri Lanka. The consolidated revenues of the Group are in excess of Sri Lanka Rupees 12 billion.