Telenor plans to introduce 4G into 80 % of Pakistan: CEO Irfan -

At Telenor, we’re driven by a powerful vision: empower societies. It’s why we exist. Connected societies are empowered societies. Chief Executive Officer of Telenor Pakistan Ltd. Irfan Wahab Khan.

GVS: What brought Telenor to Pakistan? What were the company’s expectations when they came here?

Wahab: Telenor entered Pakistan and obtained the license in 2004 and we formally launched in March 2005. Telenor Group has been the traditional incumbent player in Norway with a legacy of over 150 years. Pakistan at the time was a market of merely 5 million subscribers and the mobile phone was still seen as a status symbol.

The huge potential for growth in the country presented an opportunity and Telenor decided to enter Pakistan. The decision to start operations was in part also influenced by Telenor’s experience in Bangladesh, which was the first Asian market Telenor ventured into, and it turned out to be a great experience.

In 2003, Pakistan had also introduced a very forward-looking policy, where it deregulated the telecom market; PTCL fixed line was deregulated and the LDI operators and international carriers came in.

The government introduced a predictable and futuristic framework and that is important for any industry, especially for European companies that look for stability of policy. They look at how the policy is spelled out and whether it offers a roadmap for the future. That was a very important contributing factor for Telenor to come to Pakistan.

GVS: What are the reasons that Telenor came out of India, unlike Pakistan – given that you are still here and investing here?

Wahab: The reason for exiting India was based on a view that the significant investments needed to secure Telenor India’s future business on a standalone basis – in the prevailing competitive and regulatory landscape – would not have given an acceptable level of return.

GVS: In 2015, the PMLN government instituted a new telecom policy, was that a continuation of the 2003 policy?

Wahab: Pakistan telecom sector has been making strides and we were the frontrunners in the region. In my opinion we failed to capitalize on this and lost a good few years 2009 onwards; by then, the technology market had changed enough with a need for a new telecom policy.

The then government missed that boat and it was only by 2014 that we introduced 3G and 4G technologies in Pakistan. We wasted 4-5 years and the policy introduced later on was more or less a continuation. In hindsight, I think we could have done a few things better.

GVS: On the other hand, do you think that the 4G policy has been introduced on time?

Wahab: Even though 3G was late, 4G was right on time. They both came at the same time together, which has now laid the foundations for a Digital Pakistan, increased mobile data uptake, setting up groundwork for a digital economy where we can transform; use our mobile phone not only for entertainment and social use, but also for health, education, agriculture and commerce. So now we have crossed 50 million data users as an industry and that’s really a solid platform to grow from.

GVS: Are most of those data users, using 3G or 4G?

Wahab: We have a much higher number of subscriptions for 3G which constitutes 75% of all mobile broadband users, but 4G uptake is also picking up at an encouraging rate.

GVS: Telenor has announced it is planning to introduce 4G into 80 percent of the country this year. How far are you on that?

Wahab: We launched 4G services later in 2016 and by the end of last year around one-third of our network had been converted to 4G. During this time we focused a lot on creating an ecosystem for 4G which involved content services, sophisticated digital products and introduction of affordable 4G complaint handsets.

With that in place, we set out an aggressive target for us for 2018 – converting 80 percent of our network to 4G which contains approximately 11,000 sites in total. So far we are very much on track and we are hopeful to surpass the target we set for ourselves.

It is very important to understand that while the 4G supply is being created; demand-wise we don’t see 80 percent users of 4G yet, because some barriers still exist and as part of our ambition, we’re continuously working to overcome them.

GVS: Is pricing of data packages not a major hindrance to uptake?

Wahab: No, not at all. Data and voice pricing packages are probably the cheapest globally so it’s not a barrier. The barrier, especially when it comes to data, is primarily handsets.

Another factor hindering uptake is the perception of the people regarding their need to use data. This however also presents a huge opportunity where we think we can build awareness on how internet can empower the lives of common man.

GVS: What is the purpose behind all the 4G ads on TV these days?

Wahab: The whole idea is to create awareness and highlight the benefits of latest technologies, to enhance productivity and to add value. Our brand philosophy ‘Jo Har Pakistani Chahay’ is about connecting people to what matters most to them and that is possible through use of data.

Our journey has been very interesting; we have been moving from Minutes, the use of voice, which started in 2004, to Megabytes which is through use of data with the introduction of 3G and 4G in 2014.

Now with the 4G coverage, increased penetration of smartphones and availability of digital services, mobile phones have integrated into to people’s lifestyle and are providing cherished and valuable Moments to them.

In line with our brand philosophy we provide these Moments to all strata of the society – students have higher access to learning, farmers are ever closer to valuable information and access to market, once unbanked people are now utilizing services of Pakistan’s largest banking service Easypaisa, and so on.

GVS: Moving away from the data and voice markets, what are the other markets that you are entering?

Wahab: As part of that journey, from minutes to megabytes to moments, we have started taking some positions. There are a number of other areas we are entered, like Easypaisa and m-Agriculture. First and foremost, we are entering into financial services. Over 80 percent of Pakistanis still don’t have access to traditional banking systems.

That was a huge opportunity and hence, Easypaisa was born as the first mobile money service in Pakistan. Within a span of 7-8 years, it has become the second-largest global mobile money service, in terms of volume and number of users, which makes us very proud. Over 22 million customers are using these services every month, and they have transacted 12 billion dollars since its inception in 2009.

Pakistan telecom sector has been making strides and we were the frontrunners in the region. In my opinion we failed to capitalize on this and lost a good few years 2009 onwards; by then, the technology market had changed enough with a need for a new telecom policy.

On one hand it’s the 22 million people on a monthly basis entering the folds of financial services, but on the other Easypaisa is channelling money into formal channel thereby helping the economy. These customers are generally at the bottom of the pyramid and Easypaisa has brought them the convenience of over-the-counter financial services.

Along with that, we are also focusing on mobile wallet accounts, which eradicate the need of even visiting a retailer in most cases. Most of Easypaisa’s volume is driven by people who need to send money back home.

For example, if a person is employed in an urban city with their family living in a village, which is quite common in Pakistan, Easypaisa provides a quick and hassle-free way of sending money back home. Our ultimate ambition is to further build on this and we have recently partnered with Ant Financial, an affiliate of Alibaba Group, for higher penetration of digital payment solutions and eventually building a cashless economy.

GVS: Another area you mentioned Telenor was working on is e-agriculture with farmers.

Wahab: Yes, in the last couple of years we have started working in agriculture. Agriculture is 20 percent of Pakistan’s GDP and more than 50 percent of our workforce is employed directly or indirectly in the agriculture sector. It is also a fact that people in Pakistan have more access to mobile phones than they have to clean drinking water, so how can you not leverage this as an opportunity?

Our crop yields in Punjab, which is the heartland of agriculture, lag significantly behind the neighbouring country – which has the same land, same soil and same weather. We haven’t really transformed and are still using traditional cultivation methods. We should be using latest technologies to give farmers access to information like type of seeds to use, advisory on what type of crops to grow, market pricing and even the accurate weather information specific to their location.

The farmer can now dial 7272 (Saath Do, Saath Do) and get access to IVR (Interactive Voice Response) service called ‘Khushhal Zamindar’. The service already has over 5 million monthly active farmers, who have subscribed.

Under the Connected Agriculture Platform Punjab (CAPP) in partnership with Government of Punjab, we have developed 9 apps for the farmers enabling them to get interest-free loans to farmers through Easypaisa, information on weather, market price, crop advisory and so on.

In all this we are working with a number of partners including the agricultural department and international donor agencies. Under the ‘Khushhal Zamindar’ program, the farmer texts to subscribe once, thereafter daily it’s a free IVR call, either inbound or outbound. Our traditional business model is based on subscriptions – you subscribe every month and we make money.

But here we are trying to make money through advertisement or by building to a scale where advertisers like fertilizer manufacturers would pay us to be on that platform. That is the monetization model but the intention is to give a service which is close to our vision – empowerment of Pakistanis. And that is exactly what we intend to do leveraging on the benefits of communication technology.

Now with the 4G coverage, increased penetration of smartphones and availability of digital services, mobile phones have integrated into to people’s lifestyle and are providing cherished and valuable Moments to them.

We are now trying to expand the program by adding more regional languages. For example, it not only comes with Urdu, but also with Seraiki, Potahari, Punjabi etc. Recently, we launched our operation in Gilgit-Baltistan as well, and as part of our expansion plans, we are introducing the service in KPK and other parts of Pakistan.

Khushhal Aangan is another program we have recently launched, it is an extension of Khushaal Zamindar but developed specifically for female farmers. Research showed that more than 70% of women in Pakistan are associated with agriculture and that they needed help to understand how to take care of livestock, which is often part of their duties.

Currently, Khushhal Aangan has over 100,000 subscribers and in addition to other services, we are also giving them information about nutrition for their children and families. We are working with a number of partners, like GSMA, which is a mobile body that operates around the world.

We are also working with other development partners; we have done some projects with USAID, for example, with peach farmers in Swat. But, we are very clear that we are not experts in agriculture. Our key strength is the platform we can build, where we can connect the supply side and the demand side by leveraging technology.

GVS: Any other fields that you are venturing into or are these two the major ones right now?

Wahab: These two are the major ones right now but we’re also venturing into other fields like Data as a Service (DaaS), as we all know the power of data. We have also introduced Internet of Things (IoT) in Pakistan and working actively to develop (Machine to Machine) M2M products. We have employed IoT in our 345 Campus, which is a smart building.

We are getting a lot of information through sensors. We have sensors to control lighting, heating and cooling through chiller beams. The sensors detect how many people are present in a particular zone; they transmit the information back to the control room, which then adjusts the temperature.

Additionally, we are working with power suppliers to collect data through smart meters which tell us the consumption of a particular customer, whether it’s an industry, business or household. This helps the electricity company plan more efficiently, accounting for any leakages through real-time monitoring of the load, which is being consumed.

IoT means machines are connected to machines or your handheld device. There are smart cars that can send you signal, if your driver is driving and you want to know the driver’s behaviour for example, or you want to know the location of your car at any moment, or its fuel consumption, you can simply monitor through your smartphone.

You can even ring-fence the car, if you don’t want your driver to be out of the certain geographic region, you’ll get a message when the car goes outside the defined boundaries.

GVS: Do all these things need 4G? Is that an important requirement?

Wahab: IOT, especially, is a low bandwidth data. A meter has to send information; your refrigerator has to tell you that the milk has finished and you don’t necessarily need 4G for that, it is only needed for heavy downloads. There are a number of apps for agriculture and your experience on them improves with 4G, but many of those apps also work on 3G.

However, if we go into more advanced services – like autonomous cars, that are not available here as of yet but have been introduced in other markets, latency really plays an important role. Here, high-speed internet would be a better option as you cannot afford any delays, hiccups or latency issues.

GVS: 60 percent of Pakistan is rural, is it difficult to enter into those areas? To what extent has the Universal Services Fund (USF) contributed to making it easier?

Wahab: I think it can certainly play a bigger role. Pakistan is a large country but we still have a lot of areas which are not yet covered. There are different estimates, but one could easily say that between 10-20 percent of the population is not covered and geographically it is a much bigger percentage.

For commercial entities, a lot of these areas are not business viable and that’s why we have the USF to enter these markets through subsidies. Telecom operators deposit a percentage of their revenue towards USF which is utilized for these subsidies. So that’s only one side but even within viable areas, there are pockets where USF can play a role.

There has been a huge contribution by the companies over the years, however, not all money is being spent and we feel that a lot more can be done through that fund. One huge area for spending this money should be fiber penetration.

As we go towards 4G and increased bandwidth, we need more fiber everywhere. You need fiber for smart cities; you need fiber to connect telecenters, hospitals, schools and educational institutions. Fiber penetration in Pakistan is quite low right now and that is certainly an area to focus on.

GVS: The Ministry of IT is very proud that it has lain over 9000 kilometers during the PML-N government.

Wahab: Telecom Ministry has really done well during the last 5 years and increased penetration of digital services, smartphones, and vision of a Digital Pakistan has certainly been on their agenda.

A fiber network of 9,000 KM is certainly impressive but having said that, it is a fact that Pakistan is a big country and this constitutes only a small percentage, in comparison to where we want to be. But I’m hopeful with the right drive, we shall get there.

GVS: If Pakistan is still only in single-digit fiber coverage there still seems to be a huge potential in voice and data still there.

Wahab: True. But I also think that the potential varies in different industries. There is no point in building highways if we don’t have any traffic for them. So those services are like traffic, even with 80 percent network coverage, if only 15 percent of people using 4G, there remains a huge gap between demand and supply. That’s why we really need to focus on educating people and create awareness around them.

GVS: What are the major problems Telcos face in Pakistan? What could be done, where could the government get more involved? Are there any non-government issues as well?

Wahab: There are regulatory challenges and there are industry issues. I’ll start with the industry issues; just like any other industry, there is a lot of transformation and disruption that is happening. One of the challenges that the telecom industry overall is facing, is disruption through WhatsApp, Facebook and Apps like Viber, and other OTT services.

Consumers are moving away from the traditional telecom services towards those and the challenge with them is that they are not regulated, they are not registered here; they have not spent millions of dollars to get their license approved in Pakistan; they don’t pay any taxes. It’s not really a level playing field.

As I mentioned, we have been busy ourselves in moving towards the banking industry through Easypaisa, so there’s a lot of disruption happening in the traditional telco industry. Disruption is unavoidable, which means that we really need to keep our eyes on the ball and keep looking to expand our horizon and into other services and not just focusing on laying fiber and the voice/data market.

When it comes to the government and regulations, I think we need to do more. Yes, we have moved the needle in telecoms but the world is moving faster than us and that has been a challenge. If you look at the original markets, we were very proud that we are leading, but not anymore.

The bigger issue is to find ways to leverage technology for the country. There are some specific issues facing telecoms, like the spectrum fee which is being charged. If we look at this regionally Pakistan has the highest spectrum fee.

If you standardize with any purchase parity, we stand out amongst the two or three highly priced spectrum countries in the world. In addition, the consumer taxation, which is one of the highest in the world, remains one of the issues of telecom sector which has been impacting the growth and penetration of telecom services in the country.

GVS: Isn’t it the job of the government to get the maximum price for it?

Wahab: The government has actually tried in the previous years to bring more companies into the telecom industry and they invited foreign investors in the past. But that did not happen as basic telecom market is nearing saturation and foreign investors don’t see much potential. Telenor has high stakes in Pakistan.

We have already invested $3.5billion, so we cannot simply step out. At the same time, we expect a return on heavy investment that we have made. Telenor Pakistan is part of an international group that has access to many different markets. And when it comes to the investment decision, there will always be the question, ‘which country or business unit offers the best return on investment’.

Each time that we have bought a license, the money came in as FDI. We have not raised any local debt. The latest deal we are making with Ali Pay, our Chinese partner, is going to be FDI as well, another $184.5m into the country. There is a lot of investment that telcos, especially Telenor, have brought in. We still feel that we could have done more for the country if there was a better rationalization of spectrum prices as well as taxation.

Going forward to build a digital economy, we need more spectrum. However, it should not be a question of short-term gains. I can comfortably say that if spectrum prices were more reasonable, companies could have invested a lot more into coverage and into the network.

The last 4G spectrum we bought was 2×10 MHz we paid close to $400 million for the spectrum. Now for argument’s sake, had it been half of that, I would have invested the remaining money into the actual network, scaling up the network, building the network and covering more areas. Which we still will do but the pace will be slower and the business case carefully scrutinized.

GVS: What do you want from the new government?

Wahab: I would say a very comprehensive vision for a Digital Pakistan. We believe that the biggest opportunity for the country is to be digitalized. We cannot fix our education system by working on brick and mortar models or training teachers. But we can actually transform by giving tablets or courses like Khan Academy to children, especially if they are in deep rural Sindh or in the mountains of KPK.

That’s where we need to really focus on, which is not only true for educators but for all key sectors of the economy. What we are missing collectively is the vision, the drive and the understanding for a Digital Pakistan, and what it takes. Whether its entrepreneurship, startups or e-government services.

You go to places like UK, UAE, and Singapore, and they are doing fantastic things in terms of making everything paperless and conducting transactions from the comfort of their homes. For example, if you have to make any transaction with the government like a property transaction. You should be able to do it online, without too many steps.

What we are missing collectively is the vision, the drive and the understanding for a Digital Pakistan, and what it takes. Whether its entrepreneurship, startups or e-government services.

You need to build a safe and reliable electronic property database records. Citizens have to be in control of what they want. Today if you have to go to a bank to raise money, it’s almost impossible unless you’re employed by a large organization. Because the collateral information (property papers) that is needed is not considered safe or secure, it takes you three months if you’re lucky perhaps, but for others, maybe years.

We need to move towards a cashless society because the cost of cash distribution is huge. The whole economy can be documented through technology. Our biggest issue is taxpayers or the lack of them, but by going electronic we can solve a big problem.

In a digital Pakistan, if you want to get your I.D. card made or your passport made it should be done online – any interaction should be seamless, digital and self-empowering for customers or citizens.

GVS: Isn’t it difficult to achieve the level of digitalization you are talking about given the illiteracy levels?

Wahab: That’s what we thought years ago. Three years ago, I personally thought that it’s a barrier, if you go anywhere in Pakistan you’ll find that most people are illiterate. However, they are numerically very literate; they’re even more literate than you and I because some of our customers check their leftover balance after every call.

In rural areas, people know how to use WhatsApp and send voice recordings, even when they don’t know how to write. Yes, you need a system – I’m not saying that it’s not an issue, but it’s also not a real barrier in my view.

GVS: Telenor is doing a lot of CSR related work. Where are your priorities in CSR? What is your driving philosophy?

Wahab: At Telenor, we’re driven by a powerful vision: empower societies. We aligned our agendas directly with that of the UN Sustainable Development Goals. Our business already supports all these goals, but yielding greater impact will require us to better focus our priorities.

An assessment of our activities revealed one goal in particular where our contribution delivers the most impact: Reduced Inequalities. This is because for the disempowered, the mobile internet can be a way out of poverty and the means to better education, health, economic development and security.

From the access we provide to the services we deliver and enable, reducing inequality is what Telenor does best. Telenor Pakistan contributes to society through selected social investments in focus areas: Digital Health, Digital Learning, Inclusion and Emergency Response.

Under Digital Learning, Telenor Pakistan has rehabilitated 44 schools in 4 flood affected districts, started a Safe Internet school outreach program and targeted primary schools in various districts for digital learning initiatives. We have launched Digital Birth Registration, in partnership with UNICEF. I was surprised to know two-thirds of births in Pakistan are not registered.

The state does not even know about their existence for many years. Without this knowledge, how do you plan education, healthcare and other civic services? It also creates a number of social issues, for example, early forced marriages because no one knows how the age of the girl.

Hence we thought of creating a simple system to ease the process of birth registration. Right now, we are working with five districts and with the district governments, we created an App where they send an SMS with the particulars that gets linked with the parents’ CNICs through the district office and then further with NADRA.

So far, we have registered close to 100,000 births this year alone and our mission is much bigger. This is another real example of empowering Pakistan. Under its diverse and inclusive initiative, Telenor Pakistan has created dignified opportunities for people with disabilities; with the purpose of becoming the most disabled-friendly organization in Pakistan in terms of employment, service, and community support.

We are also running a program called Naya Aghaz aimed to offer employment opportunities to women on career breaks. We have made cash and in-kind contributed to the society from time to time and reached out to millions of people through our early warning disaster warning system. We are committed to creating value for the Pakistani society.

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Telenor plans to introduce 4G into 80 % of Pakistan: CEO Irfan