Project on Mobilink

Mobilink in Different Market Structures

History of Cellular

he need to increase the public safety was key to the

genesis of today’s rapidly growing wireless

communication industry. In1920s’ police departments in

Detroit, Michigan and Bayonne. New Jersey and the

Connecticut State Police were among the first who sought to

use in their patrol cars, the technology that had improved

the safety of oceangoing vessels – radiotelephone service.

T

The United States involvement in World War 2 created an

urgent need for FM technology to take the place of

Amplitude Modulated (AM) technology for higher quality,

two-way mobile radio communications on the battlefield. The

strategic value of wireless communication on the mobile and

portable communication on the battlefield spurred

Shaheed Zulfiqar Ali Bhutto Institute of Science &

Technology, Islamabad

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http://www.ntcpk.com/mobilink.htm


companies like AT&T, Motorola and General Electric to focus

on refining prominently among the products developed

during the war years and carried over into peacetime use.

Although there was a form of mobile telephone service

available in the late 1940s, its capacity was limited – with

few radio channels available to carry calls, and cities like

New York limited to 12 simultaneous callers.

In 1947, AT&T engineers decided to stretch the limited

number of radio frequencies available for mobile service by

scattering multiple low-power transmitters throughout a

metropolitan area, and “handing off” calls from transmitter

to transmitter as customers moved around in their vehicles.

This was the birth of wireless technology.

But there was ahead of its time. It took 20 years to develop

sophisticated call “hand off” technology. In 1973, Motorola

introduced its revolutionary new Dyna TAC mobile phone, a

conveniently sized radiotelephone set. At the same time,

European countries also started using cellular phones with

different systems.

Today, wireless competition has accelerated to the point that

more than 3 billion people can now choose between 339

service providers around the globe.



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INTRODUCTION:

Industrial development of a country is not possible without

having a modern telecom infrastructure in place. Countries

that have weaker telecom, infrastructure, using the latest

technology can today quickly step in to the future. Recent

industry figures confirm that cellular has become a primary

tool not just for business everywhere, but also that it has

become a mass-market service. There were over 200 million

cellular phones in use worldwide by the end of 2000. Cellular

service is soaring in Asia. By the end of 2005 there were

more cellular phones in Asia than in Europe. Key thing is that

wireless is easy to deploy and it is much more versatile and

reliable for Pakistani business to compete in the world

markets on equal footing, it is important to provide it with

excellent coverage and dependable communication system.

The number of fixed-line services in Pakistan has increased

five fold since 1990. However, whilst the majority of working

lines are in urban areas, 70% of Pakistan's population lives in

rural areas. Efforts by the government of Pakistan to

promote the development, modernization and diversification

of its telephone infrastructure over the last decade have met

with mixed success.

Nevertheless, recent strong growth in the mobile market has

created a much more positive general outlook in the



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industry. Mobile subscriber numbers have surged from less

than 2 million at end-2002, to around 11 million by mid-2005

and the growth has the feel of sustained development.

Significantly, two new mobile operators were licensed in

2004, joining the existing four operators, to create a very

busy market.

There is still plenty of room for further expansion.

Since the 1980s, considerable effort was made to upgrade

Pakistan’s telecommunications system. The nation’s Sixth

Five-Year Plan called for a public-sector investment of Rs10.1

billion to improve and expand the telephone and telex

systems.

MOBILINK IN PAKISTAN:

Pakistan Mobile Communication Limited (Mobilink) is the first

GSM Operator in Pakistan and since the launch of its services

in 1994, has Been at the fore front of Pakistan’s cellular

service industry. With its Cutting edge technologies, national

infrastructure and superior quality Customer service,

Mobilink, a wholly owned subsidiary of Orascom

Telecom, has achieved the status of “market leader” with a

customer Base in excess of 31 million subscribers.

To date, the company has invested over US$2.5 billion in its

infrastructure, Network rollout and the largest franchise,



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retail and customer services Network across the Nation. The

company plans to invest an additional

US $500 million in 2008, to meet the growing demands of its

customers. Mobilink has also progressed from voice to

carrier-class nationwide Services by completing its own

6,500-kilometer fiber optic backbone Network across

Pakistan. It now plans to provide high-speed data

Connectivity in Pakistan through WiMax services. During the

last few Years, the company has aggressively expanded its

coverage, achieving Cell sites in excess of 6,500, over

200,000 retail outlets and coverage in More than 8,000

cities, towns and villages. With a systematic roll-out

Plan for the future, Mobilink is determined to maintain its

market Leadership in all areas to ensure that it continues to

reshape lives of Pakistanis everywhere by “connecting the

unconnected”. Additionally, the positive role of the

Government has been a catalyst in The phenomenal growth

of the cellular market in Pakistan. The Phenomenal growth

and the success of the mobile sector in 2006 – 07 Can be

seen with the estimated revenue figures of Rs 133 billion in

the Industry growing by a soaring 48% from 2005 - 06, with

Mobilink Contributing nearly fifty percent to it. OT took over

management control of the company in April 2001 and

changed the overall market dynamics through its aggressive



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marketing strategy and expertise. In less than two years

time Mobilink achieved an exceptional growth of almost

672% and attained market leadership. Mobilink was the first

mobile service provider in Pakistan to operate a 100% GSM

technology as both existing operators employed AMPS

technology.

MONOPOLY OF MOBILINK:

Before Mobilink there were two companies already in the

market but with different technology. Prior launching of GSM

service in Pakistan, Mobilink obtain the assurance from Govt

of Pakistan that no further GSM licenses will be granted for

the period of ten years in order to get the maximum time to

yield the benefits of penetration, stability, infrastructure and

monopoly.



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CELLULAR SUBSCRIBERS IN PAKISTAN

YEAR INSTA MOBILINK PAKTEL TOTAL GROWTH

%

1995-96 20,950 16,385 30,703 68,038 …

1996-97 43,029 52,600 39,398 135,027 98.4

1997-98 53,184 82,912 60000 196,096 45.2

1998-99 108,058 87,556 70000 265,612 35.4

1999-2000 112,000 114,272 80,221 306,493 15.4

Mobilink’s monopoly were from 1994 to 2000, In this period

Mobilink’s growth is increased in 1st five years then

decresced because of political instability, war with India in

1999, and Atomic explosions in 1998. In the period of 1998-

99 the Mobilink’s growth were decrease to record 20%.



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TECHNOLOGY DIFFERENCE:

Meaning of AMPS – "Advanced Mobile Phone Service", is an

analog technology that uses an 800MHz cellular band.

Developed at Bell Labs and transferred to the regional Bell

operating companies at the time of the divestiture in 1984,

AMPS was put on the market in the 1980’s and is the

worldwide cellular standard. (By: Diane Shired)

The GSM was formed in 1982, to discuss how to make

wireless technology work across geographic borders.

Meaning of GSM is "Global System for Mobile

Communications", it a digital cellular phone technology

based on a specified standard for how data is sent over a



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wireless network. Mobilink is the first cellular company with

GSM technology in Pakistan.

MONOPOLISTIC STRUCTURE:

Pakistan' has gone through a monopolistic telecom & IT

vendor's age.

Overall, the thrust of market strategies for 2004 was on

acquisitions. Three factors contributed to this:

1. The upfront cost of acquiring a connection went down

significantly - opening up a whole new segment of the

market. The cost of acquiring a cellular connection went

down from Rs. 3000 to Rs. 1000

2. Mobilink increased its coverage to several new cities

across Pakistan – once again opening up new regions

with pent-up demand. The share of the top-5 city gross

sales in Mobilink sales went down from 67% to 61%1

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3. There was a sense of urgency to capitalize on these

opportunities as the operators with newly awarded

licenses geared up to start operations. There was a

clear imperative to grab customer base – to sweep the

market – before the new players enter the field. Both

Mobilink and Ufone pursued this strategy with varying

degrees of success. For Mobilink this meant going from

2 Million subscribers at the end of 2003 to a projected

4.5 Million subscribes at the end of 2004.

Mobilink’s consolidated revenues, however, averaged around

$934.6 million, an increase from $921.5 million in the year-

ago quarter. Average revenue per user (ARPU) declined to

$2.8 for the third quarter from $3.5 for the same period last

year. The company spent $406 million for the first nine

months of 2008, up from $353 million in the same period of

last year. Similarly, the company’s market share dropped to

34.8%, it was 36.4% last year.

TOTAL REVENUES BY CELLULAR COMPANIES

(Rs. MILLIONS)

Company2004-05 2005-06 2006-07 2007-08



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Mobilink34,456 54,065 64,654 79,936

Ufone8,599 16,098 21,867 27,455.2

CM Pak2,400 3,329 2,897 25,85.3

InstaPhone2,693 1,539 472 259.7

Telenor565 6,338 22,837 45,081.2

Warid

Telecom168 8,527 20,405 26,804.7

Total48,881 89,896 133,132 182,080.9

MARKET SHARE:

In this fiercely competitive arena, Mobilink set itself the

target of reaching 7 Million subscribers and retaining a

market share of 54% by the end of 2005.

While the market share target is lower than current share of

61%, the share of each competitor in the market will remain

relatively small – since that there are more players to go

around. Taking Mobilink’s share as a given, there are two



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http://www.propakistani.com/category/telenor/

http://www.propakistani.com/category/mobilink/



possibilities for the competitive field: Either all four players

will manage similar levels of acquisitions, or one clear

competitor will emerge taking the lion’s share of

competition’s acquisitions.

From our perspective, the former scenario is clearly

preferable, since in this scenario all the competition will

neutralize each other to some extent and they will have to

fight on multiple fronts. In this scenario no one will gain a

share large enough to threaten Mobilink’s leadership

position. Given that U-fone and Paktel have a head start with

established brands, distribution, and coverage in more cities,

they are likely to acquire more subscribers than Warid and

Telenor. On the other hand these last two will be more

aggressive in their strategies but will be hampered by the

fact that their operations will roll-out in Q2 and their initial

coverage will necessarily be limited to major cities. Given

this, and given the current base Ufone already has, we see

the end-2005 market position as looking like this:



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PEOPLE RESPONSE TO MOBILINK’S INCENTIVES:

“People respond to incentives. The rest is commentary”

Mobilink has launched two products i.e. JAZZ and INDIGO

(prepaid and postpaid). In monopolistic competition mobilink

introduce many packages in the market. Some of the

packages are;

Jazz octane

SMS package

Ladies first

Free connections

Free balances

Low calls Rates nationwide

Low calls rate on international roaming

Urdu Power tools



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Mobilink Pco

An amazing prepaid service with two pre-paid packages i.e.

Jazz Easy, Jazz Max. The benefits of pre-paid products are:

No daily charges

Low outgoing rates

180 days validity of Jazz scratch cards

FEATURES OF JAZZ

ANALYSIS:

Demand of mobile phones has been increased during the

past four years rapidly. In 2004-05 the total number



Outgoing calls (24 hours) Rs. 3.50

Incoming Calls Free

Sms to any mobilink number (per sms)

outgoing

Rs.1.00

Sms to any other network (per sms)

outgoing

Rs.1.50

International Sms (per sms) outgoing Rs. 5.00

Voice mail and CLI Free

Daily charges Free

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subscribers were 12.7 million which increased to 34.4

millions in 2005-06 and similarly in 2006-07 36.45 million as

compared to 0.3 millions in year 1999-2000. The reason for

this increase advent of new mobile companies in Pakistan

which create competition in Telecom industry.

When we compare the figures of Mobilink year 1999-2000

with 2006-07 we will find that the mobilink had monopoly

due to certain reasons; (provided other factors remain

constant such as expensive mobile sets, lack of information)

Being a only GSM company having protection from

government. It has a high price rate per minute.

High subscriber’s identification module (SIM) rates (i.e. Rs.

3000 minimum in 2002).

Both caller and receiver had to pay for a call.

Roaming charges.

High taxes imposed by the government.

Similarly high rates of other services i.e. sms, etc.

Above reasons shows that mobilink was not providing

services to its efficient scales as compare with today it mean

moblink had created dead weight loss.

After monopoly,

After the expiry of patent Pakistan mobile phone industry



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Was open for new entrant and many farms arrived such as

Ufone in 2001, Telenor & Warid in 2004 and CMPAK in 2007

which created competition in the mobile market and because

of this competition prices (for their services) goes down

drastically during past five years , every company started to

provide free roaming services and SIMs rate also declined .

Due to this competition number of subscribers raised 4.4

million (provided other factor remains constant such as

mobile sets decreases their rates and rise of media

campaigns )

Market Power:

In spite of this competition Mobilink’s price is slightly higher

than other connections. Due to following reasons

1. Vast Network throughout the Pakistan.

2. Signal Quality

3. Fashion, Trend

4. HUM BOLAY MOHABBAT KE ZABAN (Different

languages)



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Project on Mobilink

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