MOBILINK PAKISTAN

S.M.ABBAS ZAIDI,
Research Analyst
, PAGE
Oct 05 - 11, 2009

Mobilink GSM (PMCL), a subsidiary of Orascom Telecom, started its operations in 1994 in Pakistan. It is the market leader in terms of both growth as well as subscribers' base, which has numbered 31 million, and is growing.

Mobilink is the first cellular service provider to operate on a 100% digital GSM technology in Pakistan. It also provides state-of-the-art communication solutions to its customers. Mobilink offers exclusively designed tariff plans that cater to the communication needs of a diverse group of people, from individuals to businessmen to corporate and multinationals. It offers postpaid (Indigo) and prepaid (JAZZ) solutions to its customers. Compared to its competitors, both the postpaid (Indigo) and prepaid (JAZZ) brands are the largest brands of their kinds in the Pakistan's cellular industry.

FINANCIAL PERFORMANCE

Mobilink declared US$1,208 million revenue and EBITDA of US$492 million for 2008. In local currency, revenues in 2008 were up 12% PKR 86 billion while EBITDA reached PKR 29.5 billion, up 2.5% over 2007.

The decline in price per minute coupled with the depreciation of Pakistani Rupee resulted in an overall decrease of ARPU in terms of US dollars.

During 2008, Mobilink invested USD 537 million in its infrastructure, as compared to USD 520 million in 2007. The primary target was to enhance the capacity, network quality, and coverage. During the year, Mobilink added 1,487 new cell sites to its network, taking the total number of the cell sites to 7,915.

FINANCIAL DATA 2007 2008 CHANGE%
Revenues (US$ 000) 1263901 1207520 -4.4
EBITDA (US$ 000) 554905 491664 -11.4
EBITDA Margin 43.9 40.7 -3.2
Capex (US$ m) 520 537 3.3
OPERATIONAL DATA
INDICATORS DEC-07 SEP-08 DEC-08
Subscribers 30,612,630 31,359,049 28,479,600
Pre paid 30,111,756 30,840,735 27,971,755
Post paid 500,874 518,313 507,845
Market share 39.8 34.8 31.7
ARPU (US$) 3 month 3.8 2.8 3
MOU (YTD) 149 169 172
Chum (3 month) 5.20% 9.50% 11.80%

NETWORK

During last 15 years, Mobilink set up one of the largest cellular networks in the country. Currently, it is covering more than 10,000+ cities and towns. This has involved an investment of more than US$ 1 billion. Mobilink has 66 switches and more than 6,300 cell sites and the number keeps growing at a rapid pace. It also has deployed around 5,000 km of optical cable.

MOBILINK NETWORK

Years of Business 15
Cities 10,000+
Investment USD 1 Bn+
Switches 66
Cell Sites 6,300
Optical Cable Deployment 5,000 KM
Switches Nokia-Siemens, Alcatel, Huawei
Radio Base Stations Motorola and Alcatel
Intelligent Networks Siemens
Microwave Equipment NEC and Alcatel
Operating Frequency 900/1800 MHz
SMSC Logica CMG
Source: Mobilink

MARKET SHARE

Market share is an authentic parameter that shows how some companies lose their share in relation to others. Mobilink has been leading the market since long. However, its share in the market has been dropping drastically for last couple of years. Mobilink lost its share up to 10 percent since 2007. Mobilink whose share during 1Q07 was around 42%, came down to 31% during 2Q09.

There were many reasons to which we can attribute this trend. There was decline in customer satisfaction, aggressive competition, and market saturation. Perhaps this is one reason why Mobilink is trying to diversify through link dot net. Today the company owns 31% of total subscribers in the market followed by Telenor and Ufone, which shared the equal percentage of 21% in Dec 08.

Ufone is maintaining its share for almost a year now, however Telenor has been growing its subscribers' base. Warid is gaining market share, which it lost.

MARKET SHARES OF MOBILE COMPANIES (%)

COMPANIES DEC - 08
Mobilink 31.7
Ufone 21.5
Telenor 21.6
Warid 18.8
Zong 6.1
Instaphone 0.4
Source: PTA

WAY FORWARD

In order to extend cellular network to new cities, towns and highways and to enhance its current installed capacities in existing cities, Mobilink should have a strong focus on maintaining high quality of service and exploring new avenues on value added services. It can redecorate its market visibility through various market initiatives and by fulfilling subscriber's satisfaction and demand, and above all by increasing the value of investment for the shareholders.