PAKISTAN: China Mobile competition to benefit cell phone users

China Mobile to expand coverage area several thousand miles, increasing subscriber capacity to 20 million

Monday, February 25, 2008

By Aamir Shafaat Khan

Karachi --- The cellphone operators are confident that the entry of China Mobile in the local market would not harm their business as they focus more on the sales volume rather than profit margin making them highly competitive.

They felt that the new company might not be able to offer new products as far as the tariff packages are concerned.

The consumers, on the other hand, see coming of China Mobile as a welcome addition to the local cellphone market, which could bring them some new incentives from the producers as a result of ensuing competition.

China Mobile has already invested $500 million in Pakistan and has plans to invest more. The company plans to increase coverage area by several thousand miles, including highways with the capacity of 20m subscribers.

The Chinese company had acquired Paktel for over $460 million enterprise value last year. On May 4, 2007, China Mobile unveiled its new company -- CMPak Limited.

The Director Marketing, CMPak Limited, Salman Wasay told Dawn that the company planned to invest $800 million in 2008 under network expansion.

"By the end of this year or middle of next year, the company aims to grab a market share of 20-25 per cent," he said, adding that currently, it has over two million subscribers out of total market of 77 million cellphone users.

There is a huge potential to expand the business because keeping aside the number of cellphone users, who have two Sims, the actual number of cellphone users having one Sim, ranges between 50-55 million, Mr Wasay said.

He claimed that besides, offering incentive packages and tariff cuts, the company excels actually in quality of service. China Mobile is known for value-added service, he added.

Meanwhile, a source in Ufone said that it would be hard for the Chinese company to attract the people as customers having enough liquidity have already been covered by the existing players, while people in the lower income bracket are more concerned in meeting their daily necessities first and then think about having a cellphone.

He added that tariffs were coming down and the Chinese company could not afford to sell its product under price.

He said that the Ufone, having 16 million customers' base, has invested $1 billion since 2001 in network expansion and plans to invest $150 million more in expanding its coverage this year.

Sources in the Warid Telecom said the company had been going ahead with its expansion plans in various phases and there was no threat from the massive network expansion by the China Mobile.

Warid has invested $1.2 billion in its network expansion since 2005 and has now around 14 million subscribers.

The Manager, Public Relations, Mobilink, Omar Manzur, however, did not give a clear answer whether the company, being a leader in Pakistan, feels any threat from China Mobile's entry in a big way.

However, he said the company had been thriving in a competitive environment and had successfully maintained its position as the market leader. The company has invested $2.5 billion to-date in developing infrastructure and plans to invest an additional $500 million in 2008. It has over 30 million subscribers.

The company has been conscious of meeting its customers' needs and has been aggressively adding one million subscribers to its network every month.

The Director, Corporate Communication, Telenor Pakistan, Syed Hasanat Masood, responding to a questionnaire sent to him through e-mail, said: "We don't comment on the business moves made by any company as we also have our own investment and expansion plans like the Chinese company."

He said his company had already invested $1.8bn by the end of 2007 and it had 15b customers.