ADVENT OF CHINA MOBILE & PAKISTAN'S CELLULAR SECTOR COMPETITION
A NEW ERA OF CELLULAR COMPETITION HAS BEGUN
MULAZIM ALI KHOKHAR,
Mar 03 - 09, 2008
Paktel a subsidiary of Millicom Pakistan B.V. was recently acquired by China Mobile (Hong Kong) Limited, a Mobile Company with limited liability incorporated in 1997 in Hong Kong. The China Mobile won the deal by acquiring 88.86% shareholding from Millicom for a cost of US$460mn.
The China Mobile Company (A+ with stable outlook at Fitch Ratings Network) is worth RMB342bn of total equity about US $48bn (Renminbi is Chinese currency). She enjoys the share capital of RMB2.13bn ($298.48mn) and the Capital Reserves of RBM340bn ($47.5bn). China Mobile's investment is US$ 704 million during 2006-07 in Pakistan for expansion of CMPak networks.
ACHIEVEMENT OF CHINA MOBILE
She has many distinctions attached with her name like:
* Leading mobile services provider in China,
* World's largest unified, contiguous all-digital mobile network,
* World's biggest mobile subscriber base,
* Selected as one of the "FT Global 500" by Financial Times,
* Chosen as "The World's 2000 Biggest Public Companies" by Forbes,
* Currently, the Company's corporate credit rating is A/Outlook Stable by Standard and Poor's and A2/Positive Outlook by Moody's (respectively equivalent to China's sovereign credit rating).
SECTOR COMPETITIVE ANALYSIS
Pakistan's cellular density has reached 52.8% with total cellular subscriber base of 79 million, sharing GDP by 2% and earning huge investment ($4.12bn last year). There are many big names participating in the market name Mobilink, Telenor, Warid and now China Mobile Company.
Mobilink holds almost 40% of the total market share with 31 millions subscribers; Ufone stands second with 21% (16 million) and Telenor is 3rd one with 20% (15 million) subscribers. Here, China Mobile holds only 3% of total market share with only 2.3 million subscribers
But when we analyze the growth rate of the companies in the last 7 months ending January FY08, we get to know that CMPak has been the fastest with 130% of the growth rate. [See table # 1]
Telenor and Warid have achieved the 7 month growth of 43.44% and 26% respectively. Mobilink and Ufone failed in sustaining their growth rates (standing at 16.71% and 17.33% respectively) due to aggressive strategies of the incoming cellular companies. Its only Instaphone with negative growth rates of negative 3.86%; this is due to her outdated technology and availability of new enhanced once with easy reach of the customers.
The Tele density of 50%, at first look, shows that it's quite mature market in Pakistan to start a business; but
* The advent of HiFi technology,
* The fact of high youngsters to population ratio of more than 50%
* Average subscriber increase rate of 2.3mn per year,
* Very favorable investment policies,
All these make the business in Pakistan very attractive.
Today mobiles phone and connections both are very cheaper here in Pakistan and the trend is on of holding two or more connections to profit out of different packages of different companies. In this heavy competition he who is active and attractive wins the most of the market share.
So far the most useful and attractive competitive strategies have been:
* The technology (GSM including MMS and Tele TV and internet and other such facilities on phone),
* The lowest call and SMS rates, remarkably creating higher affordability and enhanced customer base,
* Connectivity (easier and faster connectivity),
* Availability in the areas and
Many other psychological and friendly appeals like friends and family packages creating a lot of room for the companies to grow bigger and bigger and mark significant profits.
China Mobile intends to become the largest cellular operators in Pakistan for this they focus on rural areas as their prime strategy for their expansion in the business in Pakistan. They have planned to invest in the areas with network capacity of 20 million customers.
China Mobile Pakistan has introduced very attractive packages like;
* "talk free" with per second call charging and 175 minutes for Rs. 75 only,
* "Party time" with 600 free SMS for Rs.50 only,
* "Power Package" with talk time of 3 hours (7:00 pm to 10:00 pm) non-stop with Paktel for 50 paisas.
These and some other packages make CMPak very attractive in the market and she has started gaining the momentum to grab the leading market share in the near future.
Chinese business is known (in general perception) as low rates low quality goods provider but China Mobile Company is recognized as a high-tech cellular service provider in the world with large resources, high technology and expertise,.
Referring to their expansion plans and competitive strategies we can safely predict that they will certainly hit the market shares of the existing companies. Further extending our analysis to the vision of the company along with soft perception of Pakistanis about Chinese, we can say that if they strongly endure their expansion plan in rural areas and continue to provide low-rates high quality service then surely they can become the market leaders.
% of Total
CAGR (Jul-Jan FY08)
July-Jan FY08 Growth