GOOD NEWS FROM TELECOM FRONT
Apr 12 - 18, 2010
A few news items appearing these days in the newspapers heralds an era of economic synergies that can transform Pakistan's ailing economy into a model, fast-growing economy. The catastrophic events that took place during the last 2-3 years have sapped the vigor out of the economy and strength it showed during the period 2004-07.
The resilience and buoyancy yet being intact, the recent developments on the economic front bode well for the future economic growth of this country.
The first news relates to Wateen's going public with an IPO of Rs1.1 billion plus a greenshoe option of up to Rs0.9 billion. The move is going to enhance the company paid-up capital to Rs5.275 billion or to Rs6.175 billion in case the greenshoe option is exercised.
The subscription that offers sale of shares at par value of Rs10 per share will open for public on 20th of this month and will close on 21st. With the provisional listing on Karachi stock exchange, the forward trading of the scrip has commenced from April 08.
Wateen Telecom Limited is the technology segment of Abu Dhabi group which is arguably the biggest foreign investor in Pakistan. Arif Habib Limited is the adviser and arranger of the issue with National Bank of Pakistan as the joint adviser and arranger. The issue has been underwritten by fourteen banks and financial institutions including NBP, HBL, ABL, MCB Bank and Faysal Bank. Wateen, the only bulk and retail net service provider had total assets of Rs27.780 billion as at 31st December 2009. Its paid-up capital on the said date stood at Rs4.175 billion with total equity (net of losses) at Rs3.059 billion.
It was felt since long that the telecom sector growth was not reflected on country's capital market as the presence of this sector in stock market was limited to fixed-line operators alone. Despite some government incentives, the sector representatives avoided listing on country's stock exchanges. The listing of Wateen will encourage other market players to follow suit and affirm their presence in country's capital market.
The telecom and IT sector has already developed innovative and commercially viable synergies with the business and financial sectors, particularly the banks. Its latest partnership with yet another giant force of the financial sector - the stock market- will broaden its horizon in an economic era that has been threatened by the recessionary forces which in turn have throttled telecom sector growth.
This and such other public issues will broaden sectors' investor base with participation coming from the common public. The foreign investors will also be attracted and the slow portfolio investment recovery will be replaced by a faster restoration of yesteryear portfolio investment levels.
PORTFOLIO INVESTMENT LAST FIVE YEARS (IN MILLION DOLLARS)
PARTICULARS FY06 FY07 FY08 FY09 FY10 (JUL-FEB) Equity Investment 351.5 1570.4 19.3 (409.8) 343.5 Debt Securities - 250 - (100.6) - Total Portfolio Investment 351.5 1820.4 19.3 (510.4) 343.5
The second encouraging news relates to MCB Bank's nomination - jointly with Fundamo, the specialist mobile financial services provider - for international GSMA award for being the best bank to launch and promote mobile money service in Pakistan. Other related nominations included T cash-South Korea, Smart Money-Philippines, and M-PESA-Kenya. Although the 15th annual conference of Mobile World Congress held in Barcelona, Spain has concluded on Feb-16 2010 and the award won by safaricom Limited M-PESA of Kenya, the nomination alone is a huge achievement both for MCB Bank and Pakistan. The winner scheme M-PESA was launched in 2007. MCB scheme which was launched in mid 2009 is comparatively new. MCB already has a number of international awards under its belt and given the dynamism and entrepreneurship it has shown, it can be expected to win this covetous award anytime in the future.
MCB Bank, with a deposit base of Rs367.581 billion and total assets of Rs511.742 billion has been an active force to develop telecom and financial sector synergies with a view to generating cost-effective and time-saving financial service delivery systems. It launched its mobile banking service in July 2009. The service, besides handling of account balance enquiries and generation of mini bank statements, provided such facilities as payment of utility bills, recharging of prepaid mobile connections and account to account transfer of funds. More customer services have been and are being added to the original scheme which can be studied in detail on bank's website under the sub-heading "virtual banking".
Another notable partnership between the two sectors has been generated by the Telenor-Tameer combine. The scheme is popularly known as "easypaisa". Telenor, a Norway based European telecom company is operating in Pakistan since 2005. It has brought into the country an FDI of more than $2 billion. Tameer Microfinance Bank, a private sector entity formed by a group of bankers, also started its operations in 2005. It, however, subsequently sold 51 per cent of its shares to Telenor. The launch of easypaisa brought in its fold such facilities for its customers (and non-customers too) as deposit of utility bills and transfer of funds by visiting any of its 5,500 plus outlets that include all Telenor sales and service points and branches of Tameer Microfinance Bank. The latest product added to the scheme is a mobile account that can be opened only by the users of Telenor mobile services. The extended range of services now includes domestic and international money transfers. The opening and operation of mobile accounts is subject to certain SBP conditions; for example, a maximum balance of Rs.60,000 can be maintained in a mobile account. This, perhaps, is intended to block a direct competition between the banks and the telecom sector. The easypaisa scheme has drawn national and international appreciation. The tariff is, however, quite high and needs to be rationalized and brought in line with the banking sector tariff.
State Bank of Pakistan has been doing excellent job in bringing financial and telecom sectors together by framing rules of the business and by developing electronic systems to facilitate cost-effective and time-saving financial transactions. Payment Systems and Electronic Fund Transfer Act 2007 sets rules for domestic and international transfer of money by financial institutions. The RTGS -Real Time Gross Settlement- concept embodied in SBP-developed PRISM (Pakistan's Real-time Inter-bank Settlement Mechanism) is yet another example of inter-sector-synergy development duly supported by the relevant regulatory authority.