BUSSINESS POLICY AND STRATEGY

Analysis of warid telecom

Submitted to: Sir Muhammad shafique

FACULTY OF MANAGEMENT SCIENCES

INTERNATIONAL

ISLAMIC UNIVERSITY ISLAMABAD

1.What is, if any, the ‘business strategy’ of Warid Telecom in Pakistan and

how are they actualizing it?

Vision:

“Be a part of largest post paid cellular base in Pakistan”

Warid Mission and Purpose:

“Our aim is to be perceived not only as a telecommunication operator of voice

services, but also as a universal provider of comprehensive communications services

for both residential and business customers.Warid's corporate identity seeks to reflect

the changes in telecom sector in relation to helping customers keep pace with rapidly

changing technology in the field of communication, through maximum network

coverage and clear connectivity that we have committed to provide”

Warid Business Strategy in Pakistan:

Warid Telecom is owned by the Abu Dhabi Group led by His Highness Sheikh Nahayan

Mabarak Al Nahayan Minister Higher Education and Scientific Researcher in UAE.

Warid Telecom started its operation in May 2005 from Pakistan.Warid Telecom

International LLC, purchased a license for operating a nationwide mobile telephony

network, (WLL) and long distance international (LDI) for $291 million US dollars.

Within 80 days of launch Warid attracted more then 1 million users.Currently the

network has around 7.6 million subscribers.In Warid business strategy three things are:

Competitiveness :differentiated in value added aspects

Cost Leadership: by providing less price service/product

Rapid Response of company :when need identify they response to it

Customer care by providing quality service: The pre-paid segment is

branded and marketed as Zem Pre-Paid. Zahi-Post-paid and Zem Pre-paid

user enjoy various value added services (VAS), such as SMS, MMS, GPRS,

64K SIM and a host of other features. However International Roaming is only

available to its Zahi(post-paid) users.

External Analysis of Warid:

In Pakistan’s telecom sector Liberalizing and deregulation start.Goverment issue license

to Warid. In 2004 mobile licenses to two new companies were awarded through open

bidding against auction bidding price of US$291 million each. Warid is one of them.

Warid try to come with innovative ideas. Like Warid comes in the market with the low

prices. They target the low class people. Warid take initiative of introducing “30 sec

billing” as opposed to per minute billing. It has a pricing strategy that is comparable and

give reasonable return to their shareholders. There major target was the customers that

are new mobile users, the rest have churned from other service providers.Warid telecom

is the First LDI operator who has started the build up of nation wide fiber optic network.

It is likely that this will result in increased capacity in the marketplace and will bring the

tariffs further down. Other factors that Warid was concentrated on are: 1) Advertising

2) Market assessment 3)Price packaging. The Warid came with the challenge in mind of

how to differentiate themselves from others and to expand the horizon of telecom in

Pakistan, by ensuring a high standard of network quality and customer service. Warid

differentiating factor are their customer care and support, which is currently secondary in

the cellular market in Pakistan.Mobilink has strong network throughout Pakistan so warid

has major threat from it before implementation of MNP (mobile number portability).

Warid and Telenor are tough competitors.

Internal Analysis of Warid:

Warid is providing low prices to their customers.Initial strategy they have to get more

customer then generate revenue.Following issues are:

Warid have to pay for USD (Universal Service Organization) and

USF(Universal Service Fund).

Strategic Alliance Warid had issue to use existing network.As in Pakistan lot

of unbundling(The network is not one person custody there are primary and

secondary exchanges),So warid start negotions to hire network on the basis of

no profit no loss.They negotiated with Ericsson and hired there network.

finalizing the strategic alliance agreement held in Lahore recently is for

Ericsson to provide Warid Telecom a complete “turnkey state of the art” GSM

network solution, which encompasses the supply of core and Radio network

equipment, network design, rollout as well as professional services like full

operations and maintenance. The network will be GSM / GPRS based and its

coverage build out will commence immediately. Warid is strategic alliance

with Ericsson and Nokia for Pakistan and in Bangladesh with Motorola.

Service of warid with passage of time is not providing good quality.Network

capacity is not improving

Management Style and approach is emphsising on outcome based(revenue

and profit) not on quality.

Warid Setting Enterprise Direction(Porters (1980) Generic Strategies):

Cost leadership of Warid is applied by offering lowest cost packages to its customers at

minimum possible level,They have attracted 7.5 million customers besause of this

strategy.Now they are trying to get more profit after investing a lot they cant low prices further.

Diffrentiation by Warid implimented by showing cultural integration as it is owned by UAE

group so people are more valuing it as Muslims.Warid is offering special discounts offers on

calls of Arab states.This aspect diffrentiate Warid from other companies.It has provided billing

updation system which is not given by any other company.

Market Segmentation(Focused) by Warid by catering needs of people.Thay created image

by tag line “we care” for everybody they will provide best quality service.They given post paid

packages for middle class Zem and for elite bussiness class they introduce Zehi.Thats showing

division of market by Warid into distinct parts.

Porters five forces Warid Telecom model :Daiagram showing How Warid doing bussiness in

telecom industry.

2. The major dynamics of strategy in the industry they are competing

in Pakistan?

Before the liberalization of telecommunication sector, the telecommunication service was

available at higher costs and the quality was poor. This was mainly due to lack of

competition as no additional choices were available to customers. When mobile cellular

services were launched in the country the people responded chaotically. These services

commenced in the 1990s when Government of Pakistan awarded two cellular Mobile

Telephone Licenses to Paktel and Instaphone for provision of cellular mobile telephone

in Pakistan. In 2004 mobile licenses to two new companies Warid and Telenor were

awarded through open bidding against auction bidding. . In past telecommunication was

luxurious and Mobillink had monopoly catering elite class, Ufone present in market as its

competitor. So it was very difficult to position in the market. But the tremendous growth

potential and market dynamics of Pakistan Telecom sector and extensive development

and privatization taking place with a lot of unmet demand in the telecom sector has given

a chance to Warid to come in the profitable industry. To achieve optimal cost structure

and focus on Core business Warid’s strategy is to outsource typical network activities

like Network Design, Site Acquisition, Civil Work, Installation, Integration,

Commissioning, Operation and Optimization of the Network. In telecom Industry these

four major dynamics are emphasized:

1. Quality: In telecommunication services customer analyze quality. The company

working on guide lines of total quality management. Warid providing quality to their

customers so they capture 16% of market share from 2005 to 2006.

2. Coverage: Telecommunication Company providing coverage according to needs of

customers. Warid giving coverage to some areas in Pakistan because of bad network

system. Mobilink is strong company as its network system throughout Pakistan is best.

3. Services: Warid as compared to its competitors providing services but certain

issues of improvement and up gradation needed in this regard.

4. Price: Customer either he belong to any class even elite class see what is price

offering by specific telecommunication. Warid came in the market with the low price

strategy. This helps them to gain the market share by attracting new customer and users

of other companies. Mobilink is the market leader but because of high price, Warid

attracts more customers. Other Market Dynamics are:

Cultural aspect: The Mobilink was mainly targeting elite class.Ufone is offering

medium price ranges. When Telenor came in the market it faces the difficulty of

positioning itself. Because of the contempt of prophet hood in Norway and Telenor is

Norwegian company. So culture plays the important role for the Warid as it is Dubai

Company.

Globalization: According to the research around 15% of Warid's mobile traffic is

international. The international gateway - provided by a submarine cable and dual

satellite connectivity from earth stations.Globaly Warid is not much successful.

Innovation Continues to be the Key to Success: Warid major dynamics while

competing are its low prices, customer target, product innovation and new technology

introduction.According to telecom analysts entrance of Telenor and Warid intensified

competition in Pakistan mobile market significantly. Both Mobilink and Ufone were 

slow to respond with the result that Warid and Telenor made substantial gains

in market share. This shows the growth potential of Pakistan’s mobile market. For Warid

market positioning is extremely dynamic. The quality of service, marketing strategies,

pricing, and promotions all interplay and have their individual impact.

Warid plans to follow the internationally recognized quality of service benchmarks in

maintenance of its GSM network. The most important thing for the telecommunication

services is to gain market share. This can only be done through unique and innovative

product offering. The major dynamic in the Warid strategy is to provide product

innovation. In terms of services Warid is maintaining edge in bringing the most advanced

and innovative features to customers and in being the trend setters. Warid bundled

package, which includes a Nokia handset, is popular because people don't have to pay for

a new phone at once. Warid is also offering international mobile calls rates that are 40%

to 50% below the Pakistani standard, through their own international gateway and

infrastructure.

Updation of phone billing:Warid is the first company that comes with innovative

idea in phone billling. Warid provide balance update after every call and text message.

The user don’t have to dial any number to know his balance.

Attract rich human resource capital: In the field of telecommunications, Warid is a

new entrant. However we have been able to attract rich human resource capital from

Pakistan and abroad covering a broad spectrum of telecoms both from the vendors and

operators sides.

Strategic partnership: Warid has chosen Ericson as business partner, which is

providing them with complete GSM network. Warid is also coming with 3G technology

with help of Ericson. On the other hand Warid also had done strategic partnership with

Nokia mobile company in 2005. Nokia will provide the Warid with mobile phones,

which will be provided to customer in bundled package, which includes a Nokia handset.

3. How are they competitively positioned in their domain of business in

Pakistan in the long run?

Pakistan’s mobile cellular industry has witnessed phases of dramatic changes over the

years. Mobilink in Pakistan’s telecom sector that introduced GSM technology gave

mobile users a choice to switch over from AMPS to GSM. Major changes in the

mobile industry however, took place with the introduction of fourth mobile operator

Ufone by the incumbent PTCL in 2001 and introduction of CPP regime. A healthy

competition resulting in the decline of mobile service prices, increased coverage and

better quality of service.

With pricing coming down, affordability would go up. Also from a luxury item

mobile have become a “need” and a “business tool”. Apart from tariff good coverage

and highest standards of quality will be the decisive factor to attract subscribers.

Warid gained pool of customers from market by saying “we care” but when they

analyse that they have attracted many customers then they are saying “be heard”.

This showing that they are not customer focused and they are working for profit it

seems they are thinking “who cares –after getting lot of customers from market”

Today warid can not low prices more because thay have to take revenue and invest

in other new things ,so Warid came on operation point.

As Telecom market is on its boom in Pakistan in this scenario Warid is on operation

point it seems that it is about to sell, as they are not working for improvement.

Mobile Companies in Pakistan :

At the top is Mobilink, the Pakistani unit of Egypt-based telecom company Orascom.

Subscriber share was around 46% at the end of 2006.Ufone, a wholly owned subsidiary of

Pakistan Telecommunication Co. Ltd (PTCL),  is now under the control of Etisalat group of

UAE. It has 21% of subscriber share. Norway’s Telenor, a recent entrant with about a billion

US dollar investment in Pakistan has been doing well, based on its recent earning report. It has

about 14% of the market share. Telenor stock is listed in the Oslo stock market (TEL) and

Nasdaq NY (TELN).Paktel, the company which has been in the news as it got acquired by

China Mobile has 3% of market share and plenty of eyes are on it.Presently, Mobilink is the

market leader with 61.04 percent market share before Warid, followed by 20.78 percent share

of Ufone. Instaphone and Paktel have 5% and 7.0% market shares, respectively. Telenor, the

was new entrant in the market has a share of 6.20 percent with subscriber base of 653,170 in

just 2 months. Another new entrant (Warid) has opened its account on May 23, 2005 and

capture market soon. Having invested in the 15-year license, Warid wanted to quickly establish

itself as provider of the best quality network in Pakistan and aimed to offer best-in class

services and coverage to subscribers at competitive prices. Also acquire new licenses for GSM,

LDI (Long Distance International) .It will also provide best Quality service in long run using

latest technology.

Key Success Factors for Warid (so far) is:

Build the brand

grow the subscriber base

Speed to market to gain competitive edge

Ensure quality of the network performance and operations

Operate in most cost effective and efficient manner.

To achieve this Warid relies on long-term partnership and trust with its vendor

Ericsson to provide these services Warid has given Ericsson the task to Operate and

Manage Warid’s network in Pakistan covering the following scope: NOC Operations,

Alarm Surveillance and Fault Rectification, Field Operations, Site Maintenance, Network

Optimization and Tuning.

. Warid Telecom at Launch

(May’05)

Number of Cities: 28

. Number of Cell Sites: 460

. RAN capacity: 1.5 million

. Core Capacity: 1.5 million

. Number of MSCs: 04

. Warid Telecom in (Dec’06):

Number of Cities: 140

. Number of Cell Sites: 1,250

. RAN capacity: 6.5 million

. Core Capacity: 7.5 million

. Number of MSCs: 18

. Network is running at full capacity of 6.5 Million

subscribers

Warid Telecom in present

(Mar’07):

. Number of Cities: 175

. Number of Cell Sites: 2,255

. RAN capacity: 10 million

. Core Capacity: 15 million

. Number of MSCs: 28

Warid Telecom in future (2010):

Warid Telecom International will service 50

Million Subscribers by 2010

Conclusion:

So far looking at the Warid strategies, we have come to conclusion that

To survive in the long run Warid is doing strategic partnership with Nokia and

Ericson. It’s like that they can’t manage their network by their own. Its seems they

can’t do research of market so they are taking help from international companies that

are already functioning in the Pakistan.

Warid is increasing its customer base, but not considering quality of their network. So

it will create problems for them in the future.Customer complaints are not fulfilled by

the Warid. There is no rapid response to the need of the customers.Warid is not very

successful globally. It is functioning in Bangladesh and Uganda, these are developing

countries. And Warid is not very successful in both of the country.Warid is now

unable to continue its cost leadership strategy. Its can’t low its prices any more.

At the operational point Warid is not good. It seems it is going to be sold.

So in the long run it is difficult for the Warid to survive. Changing of its corporate

slogan gave the idea that it is not any more customer oriented company.

ANNEXURE: