37986589 Mobilink Intrnshp Report

8/8/2019 37986589 Mobilink Intrnshp Report

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Inte rnship Report for Mobilink

Sub mitted By: Usman

Ali BBA-6(B)

01-1110 52-094

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Table of Cont ents

1 E X ECUTIVESUMM ARY.................................................................................... ....

........................ 3

2

IN TRODUCTION ...................................................................................................... .................... 5

2.1 CEN T R AL BACKGROUNDINFORMATION................................................................................................ .......................... .5

2.2 COMPANYBACKGROUND.................................................... ................................................................................... .6

3 CO MPANYANALYSIS.........................................................................................

.......... ................ 8

3.1 OPERATIONANALYSIS................................................................... ....................................................................... .8

3.1.1

Ne twor k.......................................................................................................................................... ......... 8

3.1.2 Operational

Department s......................................................................................................................... 9

3.1.3 S ubscribers and Market

Shar e................................................................................................... .............10

3.2 F I NANCIALANALYSIS................................................................ ........................................

.................................. 113.2.1 Operational

Re s ult s........................................................................................................................... ......11

3.2.2 Balance She et Result s.................................................................................................... ........................ 12

3.2.3 Ratio

Analysis................................................................................................................................... ..... 12

3.3 HU M AN RESOURCE


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ASSESSMENT.................................... ....................................................................................... .14

3.4 MARKETINGANALYSIS........................................................ ................................................................................. 15

3.4.1 ElectronicMedi a............................................................................................................................... ..... 15

3.4.2 Print

Medi a............................................................................................................................. ................. 16

3.4.3 Advertising Agency and Brand

Ambassador s............................................................................ ............ 16

4 ENV IRONM ENTALANA LYSIS................................................................................ ........

.............. 184.1 I N D U S T R Y A N D MARKETANALYSIS................................... ....................................................................................... .18

4.1.1 MajorProduct Lines MarketSegmen t..................................................................................... ............... 18

4.1.2 Growth Rate ofEntire

I ndustry......................................................................................... ...................... 20

4.2 COMPETITORANALYSIS.......................................................... ............................................................................. .21

4.2.1 MajorC ompe titors............................................................................................................................... ....21

4.2.2 Their MarketShares..................................................................................................................... ........... 23

4.2.3 Their Goa ls and

Strategie s................................................................................................................. .....24

4.3 TECHNOLOGYANALYSIS............................................. ......................................................................................... .26

4.3.1 Technical Metho ds ThatAffect the I n d ustry.......................................................................................... .2. 6

4.3.2

I nnova tion............................................................................................................................ ................... 27

5 DE P A R TMENT WORKED DURINGINTERNSH IP............................................................... ............... 28


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5.1 A CT I VITI E S DO NE W I T H IN CA S H MANAGEMENTDEPA R T MEN T............................ ............................................................... .28

5.1.1 DailyActiv ities................................................................................................................. ....................... 28

5.1.2 OccasionalAct i vities............................................................................................................... ................ 29

5.1.3 Month End

Activit ies............................................................................................................................... 30

5.2 TA S KS PERFORMED DURINGINTERNSHIP............................................. ....................................................................... 31

5.2.1 Daily

Activ ities................................................................................................................. ....................... 31

5.2.2 Occasional

Act iviti es............................................................................................................... ................ 32

5.2.3 Month End

Activit ies............................................................................................................................... 33

6 IDEN T IFIC A TI O N OF A M AIN PROBLEM ANDF INDINGS ................................................ ................. 34

6.1 J O B R O T A TI O N ANDADVANCEMENT..................................... .................................................................................... .34

7

CONC LUSION..................................................................................................................... ........ 34

8

R E CO MMENDATION.................................................................................... .............................. 35

9

APP ENDI X........................................................................................

........................ ................ 36

9.1 WEBRESOURCES............................................ ................................................................................................ .36

9.2

REPORTS.................................................... .....................................................

.............................................. 36


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9.3 OR G A N IZ A T I O N AL STRUCTURE(EXT RAC T).................................................... .............................................................. .37

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Table of Illustrations

Figures

F I G URE 1: C O M P A R A T IVE F I G URES OF C OV E R A GE & C E LLSITE S......................................................... ............. 9

F IGURE 2: PRI N T A D VE R TISEMENTS OFMOBILIN K..................................................... ............................... .16

F IGURE 3: PRODUCTS O FFE R ED B Y D IFFERENT MOBILECOMPANIE S.............................................................. ..19

F IGURE 4: G ROWTH R A TES I N MOBILE I NDUST R Y 2005 -JULY200 8.................................. ........................... 20

F IGURE 5: S EG M EN T A TION OF TO T AL SUBSCRIBERS IN JULY

08 ................................................................. .... .23F IGURE 6: S EG M EN T A TION OF TO T AL SUBSCRIBERS IN D E C EMBER

07 ................................................... .......... .23

Tables

TABLE 1: AN O VE R V IEW OF MOBILIN K S N ETWOR K...................................................... .............................. 8

TABLE 2: N UMBER OF MOBILINK SUBSCRIBERS FROM 2005- J U L Y2 00 8.......................................... .............. .10

TABLE 3: MARKET SHARES OF MOBILINKFROM 2005-2 00 7................................................. .................... 10

TABLE 4: PROFIT C OM P ARISON BETWEEN 2007 &200 6.............................................. ........................... 11

TABLE 5: B A L ANCE S H EET C O M P ARISON BETWEEN 2007 &2006 .............................. ............................... .12

TABLE 6: C UR R E N T R A TIO C OM P ARISON BETWEEN 2006 &200 7....................................................... ........ 12

TABLE 7: F IXED ASSETS TURN O VER C O M P ARISON BETWEEN 2006 &2007 ........................................ ........... .13

TABLE 8: D EBT R A T IO C O M P ARISON BETWEEN 2006 &2007 .................................................. ................ .13

TABLE 9: R ETURN ON C OMMON EQUITY C OM P ARISON BETWEEN 2006 &200 7......................... ...................... 13

TABLE 10: DESIGNATIONS OF MOBI L INKSEM PLOYEES........................................................ ...................... .14

TABLE 11: LI S T OF B R AND AMBAS S ADORS OFMOBILIN K........................................................ ................... .17


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1 Executive Summary

The mob ile industry of Pakistan has seen phenomenal growth in recent

yea rs. The total mob ile subs cribers in 2007 we re mo re than 63 mi llion, agrowth of mo re than

80% from the previous yea r. The telecom sector of Pakistan wasderegulated in

2003, and mobi le indus trybeing a part has seen phenomenal growth ever

since. Many analysts believe that Pakis tan is one of the faste st growing

telecom markets in the world.

Currently there are six diverse compan ies making the mobi le industry of

Pakistan, Mobil ink being one of them. Other compan ies include Ufone,

Telenor, Warid, Zong and Ins taphone. Mobilink enjoys being the mar ket

leader with a 36% market sha re as of July, 2008.

Pakistan Mo bile Communications Limit ed (PMCL) launched its operations inAugust

1994, under the brand name of Mobilink. Initially it was a joint ventu re

between Motorola and the Saif Group. Later on in April 2000, Orascom

Telecom bought 38. 6%stake in PMCL, later inc reasing it to 68.6 9%. In April

2001, Ora scom Telecom took over management cont rol of the company and

as of Decem ber 31st, 2007, Ora scom Telecom owns 100% of the sha re

capital of Mobilin k. Mobilink offers both postpaid (Indigo) and prepaid (JAZZ)

solutions to theircus tomers.

Mobilink was awa rded a 15-year license in July 1992 to establish and

operate a digital cellular telecommunic ation system using the GSM 900

standa rd. Mobilink has been growi ng its network ever sinc e, provi ding

2G, 2.5G, GPRS and EDGE compatib ility. Mobilink is committed in

providing the best network to theircu stomers, which in recent times

has expanded to mo re than 9000 cities and reaches over 66% of the

total population and 99% of the urban population as of Decem ber 31st,

2007.

Pakistan Mob ile Communications Limited (PMCL) or Mobilink is currently

headed by Preside nt and CEO Zouhair A. Khaliq. Mobilinks headquarter is

loc ated in Islamabad and has eight different depar tments. All major

decisions regarding Mobilink are taken centrally inIslamabad. To assist with

the operations, operational departments are further located in all four regions,

inclu ding north, south and AJK.

Mobilinks finances are as strong as its operations and customer base. For

the year end ed December, 2007, the total profit after taxation was

mo re than Rs 4bn. Furthe rmo re Mob ilinks fixed assets have shown a rise


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in 2007, so have the long termliabilities and sha reholder equit y.

Mobilink being the market lea der is also able to attract the most

tal ented professionals. Its current employee force consists of mo re than

4500 unique individ ual. Mobilink hiring takes place through its websi te and

is know for offeri ng

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competi tive pac kages to its employ ees. Furthe rmo re, it traini ng and

app raisal p rogram sarean essential part of the HRdepartment.

Attracti ng cus tomers is a tough job and that is why the marketing

department ofMobil ink develops a num ber of mar ketin g campaigns

to attract customers. Furthe rmo re it also takes the help of a leadingadvertising agency of Pakistan and uses brand ambass ador s from various

walks of life to promote its produc ts and services.

The mobile industry provi des three major product lines, which include the

consumer packages, value added services and corporate packages. The

consumer pac kages inc lude the postpaid and prepaid pac kages; the

value add ed services provide entertainment, information and a lot mo re to

their subs criber, while the corporate packages have been int roduced to

cater to the needs of large businesses and corporate clients.

The mob ile industry of Pakistan has witnessed phenomenal growth periods

over the yea rs. As of July 2008, the growth rate of the en tire ind us try was

mo re than 40%. The re are four major compe titors of Mobilink. Ufone is the

closest with a mar ket sha re of 21% in July 2008, followed by Telenor with

20%, Warid by 18% and Zong by

5%.

I did my eight weeks internship at the cash managem ent department

within Mobil ink Treasur y. Some of the work that I did during my internship

inc ludes mak ing the cash position, making transfer letters, makingencashment and inte rnational payments and working to open new accounts

of Mobil ink.

The main problem that I identi fied during my inte rnsh ipperiod was the lack

of job rotation within the depar tment and not keeping up with the

polic ies of job advancements. Some of the suggestions in this respect were

the int roduction ofcomp ulsory job rota tion within department, introduci ng

job speci fic train ing to employ ees and adhering to the criteria laid out

by the HR department for job advancements in comp lete faith.

Lastly I would say that Mob ilink became the market leader by

introducing new products and services that took full advan tage of new

technolog ies over the yea rs and I hope that it will tend to do so in

the coming fut ure and provi de stiff competi tion to any challenger that

poses a threat to its leadership in the mar ket.


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2 Introduction

2.1 Central Backg round Informati on

The telecom sector of Pakistan has seen phenomenal growth over thepast few yea rs. According to the Pakis tan Telecommunic ation Authority

(PTA), the total mobi le pho ne subscribers in 2007 we re mo re than 63

million, a growth of mo rethan

80% from the previous years. During 2006-07, the mob ile sector generated

Rs 133 billion in revenues, an increase of 48% from the previous years and

contributed Rs

63 billion to the national excheq uer in terms of taxes and regu latory

fees. The telecom sector contribut ed 2% to the GDP in 200 5-06 and

recei v

ed mo re than $1.8 billion in foreign

d

irect

investment

(FDI) in 2006-07

, which is 35.6% of the total FDI in that period. Furt hermore, the telecom

sector has also created over one million in jobs, since its deregulation,

mak ing Pakistan one of the worlds fastest growing telecom ma rkets.

The Pakistan Telecommu nication Ordinance 1994 establis hed the primary

regu latory framew ork for the telecommunication industry including the

estab lishment of an authori ty. Thereafter, Teleco mmunication (Re-

Organization) Act no XVII was promulgated in 1996 that

aimed to reorganize the telecom sector of Pakistan. Under Telecom

Reorganization Act 1996, Pakis tan Telecommunication Authority (PTA) was

established in January 1997 to regulate the establishment, operation andmaintenance of telecommunication systems, and the provision of telecom

services. The telecom sector was deregulated in 200 31.

Currently there are six mobi le operators operating in Pakistan, which

inclu de Mobil ink, Ufone, Telenor, Warid, Zong and Instaphone.

Mobilink started its operations in 1994 as the first

GSM cel lular mobi le service in Pakis tan, started by Motorola Inc. Later it was

sold to Ora scom, an Egypt-based multi-national compan y. Mobilink is the

largest cel lular service provider in Pakistan. Another company, PakistanTeleco mmu nication Mobile Limited (PTML) is a who lly own ed subsi diary of

PTCL, establis hed to operate cellu lar telephon y. The company

commenced its operations, under the brand name of Ufone from

Islamabad on January 29 2001. Later, as a consequ ence of PTCLs

privatization, 26% of its sha res were acqui red by Emirates

Telecommunication Corpo ration (Etisalat).

Being part of PTCL, the ma nage ment of

Ufo ne had alsobeen handed over to Etisalat.

Telen or Pakistan is 100% owned by Telenor ASA and adds on to its


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oper ations in Asia. Telen or Pakistan launched its operations in Ma rch 2005

as the single largest direct European investment in Pakistan, setti ng

precedence for furt her foreign inves tments in the telecom secto r.

In 2004, Warid Telecom Inte rnational

LLC,

1Daily Times July 27,2007

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purchased a license for operating a nationwide mob ile telephony netw ork,

(WLL) and long distance inte rnational (LDI) for $291 million US dollars and

was the first ventu re of Warid Telecom Inte rnational LLC. Warid Pakis tan

launched its services in May 2005. On June 30th, 2007, Singapo re

Telecommu nications Limited (Sing Tel) and Warid Telecom announced that

they had ente red into a defi nitive agreement subseq uent to which

Sing Tel will acqui re a 30% equity sta ke in Warid Telecom for an estimated

$758 million.

China Mob ile Pakistan (CMPak) is a 100% subs idiary of China Mobile. The

pio neerin g overs eas set up of China Mo bile came through acquisi tion of a

license from Millicom to operate a GSM network in Pakistan. Millicom had

initially bought Pakt el in 2003 from Cable & Wireless. Paktel was the first

ever company granted license to carry out cellular phone services in

Pakistan. Currently CMPak is operating in Pakis tan under the brand name

of Zong. Instaphone is another telecommunication company in Pakistan.Instaphone was one of the pioneers of cellular industry in Pakistan.

Initia lly the company was own ed by Millicom Inte rnational; later on Arfeen

Group acquired it. Currently, the license of Ins taphone has been

terminated due to nonpayment of license fee to PTA. The company undera

renew ed license is planning to role out a countrywi de CDMA mob ile network

and wou ld be the only CDMA mob ile opera tor in Pakistan to launch first 3G

services in Pakistan.

2.2 Company Background

Pakistan Mob ile Communications Limited (PMCL) operates the leading GSMnetworkin Pakis tan and provides a range of prepaid and postpaid

voice and data telecommunication services to both individual and

corporate subscribers, under the brand name Mobilin k. Mobilink launched

its operations in August 1994 after it was foun ded in 1990 as a joint

vent ure between Moto rola and the Saif Group and awarded a license for

mob ile teleco mmunication system and services in July 199 2. Later on in April

2000, Ora scom Telecom bou ght 38. 6% sta ke in PMCL, which it later in

Febru ary 2001 inc reased to 68.69% by purchasing Moto rolas sha re in PMCL

and becoming the major sha rehold er of the compan y. In April 2001,

Orascom Telecom took over management cont rol of the compan y. As of

December 31st, 2007, Ora scom Telecom indirectly owns 100% of the

sha re capital of Mobilink through direct stakes held by wholly owned

subsi diaries of OTH. By December 2007, Mobilink had achie ved 39.8% in

mar ket sha re, making it the market leader in the mobi le sector of

Pakista n2 and had a customer base of mo re than 32 mi llion by July

20083.

Mobilink offers exclusi vely designed tariff plans that cater to the


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commu nication needs of a diverse group of peo ple, from individuals to

businessmen to corpo rat es

2Orasc om Telecom AnnualReport 2007

3PTAWebsite

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and multinationals. To achie ve this objective, Mobilink offer both postpaid(Indigo)

and prepaid (JAZZ) solu tions to theircustomer s.

Mobilink was also the first cel lular service provider to operate on a 100%digital GSM technology in Pakis tan and also provides sta te-of-the-art

commu nication solutions to its customers. Mobilinks network is the most

extensive in Pakistan, connecting mo re than 9000 cities across Pakistan, as

well as over 120 countr ies on international roaming service. Furthe rmo re it

reaches over 66% of the total population and 99%of the urban

pop ulation as of December 31st, 2007. Mobilink is also dev eloping its own

optic fiber backbone, to provi deits customers with highest level of voice

and data qua lity with mo re reliabilit y4 and has invested mo re than

$2.5 billion in its

netw orks.

Mobilink Vision

"To be the leadin gTeleco mmunication Services Provider in Pakis tan by offeringinnovative Communication solu tions for our Custome rswhile exceeding

Sharehold erval ue & Employee Expec tations".

Mobilin k's ValuesTotal Cust omer Satisfa ctio n

Custome rsareat theheart of our success. They have placed their trustand confide nce inus. In retu rn, we strive to anticipate theirneeds and

deliver service, quality and value beyond theirexpec tations.

Business Exc elle nce

We strive for excellence in all that we do. We aspireto the higheststanda rds and raise the bar for ourselves everyda y. This commitment to

delivering worl d-cl ass qua lity translates into unma tched service and val uefor our cust omers and all stakeholders.

Trust & Integ rityAtMobilink, we takepride inpracticing the highest ethical standa rds in anopen and honest envi ronm ent, and by honoring our commitments. We takepersonal responsibility for ouractions, and treat everyone fairly, and with

trust and respect.

Respe ct for People

Our relationships drive our business. We respect and esteem our employ eesand all sta kehold ers. We believe in team work, empowe rment and hono r.

Cor porat eSocial Respo nsibil ity

As the mar ket leader, we recogni zeand fulfill our responsi bility tow ards ourcountry and the envi ronm ent we operate in. We contribute to worthy

causes and are dedicated to thedevelopment and progress of the society


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4M obilink CEO Speaks About 2008 Plans(www.telecompk.net)

8
http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/http://telecompk.net/2007/12/26/mobilink-ceo-speaks-about-2008-plans/


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3 Company Analysis

3.1 Operation Analysis

3.1.1Net work

Mobilink was awa rded a 15-year license in July 1992 to establish and

operate a dig ital cel lular telecommunic ation system using the GSM 900

standa rd and to offer telecommunication services in Pakistan. Befo re that,

all previous operations we re using the AMPS technolog y. Since then

Mobilink has been growi ng its network, provi ding 2G, 2.5G, GPRS and EDGE

compati bility. Mobilink was the first operator to start rolling out theEnhanced Data Rates for Global Evolution (EDGE) in Pakistan. In addi tion,

Mobilink also launched its BlackBe rry service in Decem ber 2005 through its

GPRS platfo rm.Furthe rmo re, Mobilinks license was renewed on July 6th, 2007

for a further period of 15 year s5.

Mobilink is committed in provi ding the best network to their customers,

which in recent times has expanded to mo re than 9000 cities and reaches

over 66% of the total pop ulation and 99% of the urban population as of

Decem ber31st, 20076

.

Table 1: An Overview of

Mobilin ks Networ k7



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7Mobilink

Website

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Not only is Mobilinks network very mode rn and technologically advance,

but it is also very compe titive, when com pared to other mobi le networks.

Figure 1: Comparative Figures of Coverage & Cell Site s8

8Orasc om Telecom Investor Presentation November 2007

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3.1.2 Operat ional

Depar tments

Mobilink is headed by President and CEO Zouhair A. Kha liq, who reports

directly to the Chai rman and CEO of Ora scom Telecom Naguib Sawi ris.

Furthe rmo re the operations of Mobilink are divided into eight different

departments, which are as follows:

1. Human Resou rce

2. Administration and Security

3. Sales

4. Marketing

5. Customer Services

6. Corp orate Affairs

7. Technical

8. Finance

Furthe rmo re, these departments are further divided into sub depa rtments to

ease operations within Mobilink. Also all major decisions are taken

cent rally, in Islamabad. These decisions for example inclu de, the financing

required by Mobilink (local and fo reign), decisions rega rding import of goods

etc.

Furthe rmo re, to assist the operations of Mobilink, which inc lude mo re

than 500 franchises and 16 Cus tomer Services Centers, operational

departments are located in all the four main regions:

1. North2. South

3. Central

4. AJK

3.1.3 Su bscribers and MarketShare

Mobilink had a great advantage for years as being the only GSM mobi le

operator in Pakistan, however with theent rance of Ufone in 2001 and later on

by Telenor, Warid and Zong, the compe tition in the mobi le sec tor is

heating up. However the sub scri ber base Mobilink has remained steadyand growing as seen in the table below:

Table 2: Number of Mobilink Subscribers from2005-July 200 89

Year 2005 2006 2007 July-2008Subscribers 7,469,085 17,205,555 26,466,451 32,056,336% Change - 130.3 53.8 21.1

Although the num ber of subscribers has increased over the years, the same

cannot be said about the mar ket sha re of Mobilink, which has gradually


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decreased over the

9PTAWebsite

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yea r. However, although the mar ket sha res of Mobilink might have

dec reased over the yea rs, but it still remains the market lea der in the

mob ile secto r. The market sha res ofMobilinkareas follows:

Table 3: Market Shares of Mobilinkfrom 2005-2 00 710

Years 2005 2006 2007Mar ket Sha re 51.4% 46.3% 39.8%Change - (5.1%) (6.5%)

3.2 Financ ial Analysis

No company can remain in business if it cannot sustain and grow its

profits and telecom companies are no exemption. IfMobilink wants to remain

themarket leader in the mobi le industry and wants to satis fy its customers, it

itself needs to remain a profitab le compan y.

Mobilink is a private limite d company and due to this reason, its

financial statements are not made public. Howe ver it does provi de its

financial information to diffe rent financial institutions and compan ies that

have invested in Mobilink, examples inc lude com panies that have bought

TFCsissued by Mobil ink.

An extra ct of the Balance Sheet and Income Statement for the year 2007,

can be seen inthe app endix.

3.2.1 Operat ional

Resu lts

Table 4: Profit Comparison between2007 &2006

Description Decem ber2007 Decem ber2006In Pak

Revenu e 70,914,424,384 55,871,865,120

10Orasc om Telecom Annual Reports 200 6-20 07


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Profit Befo re Inte rest & 15,603,089,144 12,545,001,838Profit Befo re Taxation 6,976,257,786 7,372,726,009Profit After Taxation 4,151,660,417 4,100,392,601

As major portion of Mobilink is on prepaid basis, inclu dingSIM sales,securities and balance recha rges the revenues for Mobilink have increased

from Decem ber 2006 to December 2007, this inc rease is because of the

large inc rease in the consumer base of Mobilink in 2007. The increase in

revenue has led to an inc rease in the profit befo re inte rest and tax, and

although the cos ts of services and selling and administrative cha rges in

2007 haveinc reased from the past year, the inc reased revenue helped in

off setting the inc rease in the expenses.

Another problem in the profit and loss statement of Mo bilink is the

inc reased financial cha rges or interest charges for the 2007. In the mid

of 2006, Mobilink issued a TFC mo re than Rs 3 billion, and the interest of

which is paid semi annuall y. Furthe rmo re, most of Mobilinks growth is

financed through long term loans, which have also increased in 2007,

increased the financial charges.

The increase in financial cha rges and provision of taxes in 2007, ultimately

lead to profit after taxation, which when comp ared to the profit of 2006, to

not increase by much. The inc rease is only 1.25% from the previous yea r.

3.2.2 Balance Sh eet

Results

Table 5: Balance Sheet Comparisonbetween 2007 &2006

Description Decem ber2007 Decem ber2006

In PakFixed Assets 138,159,488,742 104,896,145,585Current Assets 16,313,779,738 18,193,085,605Current Liabil ities 51,742,026,278 50,934,936,367Sha reholders Equity 23,523,324,157 16,329,320,280Long Term Liab ilities 79,207,928,045 55,824,974,543

As the above table sho ws, there has been a significant inc rease in the fixed

assets of Mobilink in 2007; this has been due to the increase in the

property, plant and equipment, longterm deposits and other receivables and

license fee. However, the current assets ha ve dec reased, but not by much.


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This small dec rease is mainly due to thedec rease in stocks in trade.

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The current liab ilities have also increased in 2007, again by not by

much. This inc rease in current liabilities is associated with the increase in

short term financing and the current portion of long termfinancing.

The inc rease in sha reholders equity is associated with the increase

in the sha rehold ers equity and the increase in the accumulated profits,while the increase in the long term liabilities is associated with the

large inc rease in long term financing and the license fee payable, which

was made due, to the renewal ofMobilinks license.

3.2.3 Ra tio

Analys is

3.2.3. 1Current

Ratio

Table 6: Current Ra tio Comparisonbetween 2006 &2007

2007 20060.31:1 0.35:1

Current ratio is a liquidity ratio that me asures how eas ily a company can pay

off its current liabilities usi ng its current assets. For Mobilinkalthough most of

its revenues are on a prepaid basis but still the current assets fall short to

pay off the current liabilities in both 2006 and 2007. Furthermore the

current ratio has fallen in 2007, which again shows that the re arenteno ugh liquid assets to pay off the current liabilities and may affect

Mob ilinks solv ency inthe short term.

3.2.3. 2Fix ed AssetsTurno ver

Fixed Asset Turnover, an asset ma nage ment ratio, shows how effectively a

company uses its fixed assets. That is using its assets to generate sales.

Most of Mobilinks assets are fixed, major of which include cell sites and

other equipme nt. As the figures show, the ratio has dec reased in 2007, from

0.53 to 0.51.

Although the dec rease is very small, the maj or reasons associated are

the large inc rease in the fixed assets and the small inc rease in sales. The

fixed assets rose by

29.3%, while the revenue rose by 26.3%. The major reason for the small

increase in the sales could be associated to the rather small inc rease in the

total subscribers in

2007, as compa red to


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2006.

2007 20060.51 0.53

Table 7: Fixed Assets Turnover Comparison between 2006 & 2007

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3.2.3. 3Debt Ratio2007 200684.7% 86.7%

Table 8: Debt Ra tioComparison between

2006 &2007

The Debt Ratio measu res the percentage of funds provi ded by sou rces

other than equ ity. For Mo bilink, most of its growth is funded through

long and short term financing, and even thou gh Mobilink has expanded its

operations dur ing 2007, but still the debt ratio fell in 2007, but only by 2%,

which is mainly because of the large inc rease in the total assets, when

compa red to long term liabilities. The rise and fall of current liabilities and

currents assets respectively is not much.

3.2.3. 4Return on Comm onEqu ity

Table 9: Return on Common Equity Comparisonbetween 2006 &2007

2007 200617.6% 25.1%

Return on common equity, a profitab ility ratio, measu res the extent to

which the sha rehold ers of a company are getting retu rns on their

investments. The ratio for Mobil ink has dec reased significantly in 2007, adecrease of 7.5%. This dec rease can be associated to the small income

availa ble to the sha rehold er. Most of the net income has to be pa id

out in financial charges, which leaves less or the sha rehold ers, which

in 2007, expan ded their investment in the com pany.

3.3 Human Resource Asses sment

Mobilink, the largest cellular company of Pakistan, is made of a team of

over 4500 of unique individuals. They are the best minds in the industry

today, being exposed to thebest practices and an enabling environment.

Employees at Mob ilink are treated as a big family, where their growth

is as impor tant as Mo bilinks. Capab ility buildingprograms equip employees

with all the skills and techniq ues needed for them to realize their ambitions,

while diversity and wellness initiatives help employ ees further reach new

heights and achieve theirgoals.

Mobilinks hiring takes place through its website which is being powe red

with a partnership withRozee .pk, one of Pakistans premier website. This

website provi des updated information on job openings, as and when they

hap pen. Furthe rmo re the website is divi ded into three sections, all provi ding

info rmation accordingl y:


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Internship Candidates

Entry Level Can didates

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Exper iencedCand idates

All employees at Mobilink aredesignated accordingly, which is as follows:

Table 10: Designatio nsof Mobilin ks Employees

Grade /Employee Post Desi gnation DescriptionAssociate A-2 (Junior Associate) Entry Level/Fresh

CandidatesA-1(Senior Associa te) Min 2 yrs. Experience

Requi redSpecia list S-2(Ju nior Specialist) Min 4 yrs. Experience

Requi redS-1(SeniorSpecialist/ Asst.

Min of 5-6 yrs. Experie nce

Re ui red

Manager M-2 ManagerM-1 Senior Manager/ HOD of

Sub De artmentsDirector Departmental Head

Furthe rmo re Mobilink employees receive a number of fringe benefits which

inc lude gratuity funds, post paid mobi le packages,

credit ca rds and discounted memberships with Citi Bank,

employee loans, blackbe rry handsets, transport facili ties for ladies, health

club and Jinnah Stad ium memberships etc.

Training of employees is taken an integral part of the HR department ofMobilink. Trainin g Calenda rs are publish ed for employ ees, informing

them about traini ng dates and their descriptions. These train ing sessions

take place both wi thin and outside the city. Employees are even sent

abroad for training. These inc lude ma nagers and directors within

Mobilink, to polish and enhance the management and leade rship skills

furthe r.

Apprai sal of employees is as impor tant as train ing for any organization and

Mobilink is no exemption. Mid Year and Yearly appraisal are conducted by

line managers of each employee. Input from the employee being appraisedis also taken to enhance the benefits of the app raisal activit ies. This input

includes both theirjob objectives and responsi bilities but also suggestions on

what line managers could do mo re for support.

3.4 Mar keting Analysis

In todays contemporary business world, mar keting plays an important

role. Mobil ink thathas a number of competitors in the mob ile industry, need

to use their marketing plan and strategies effectively to attract cus tomer

loyalt y.


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The mar ketin g department at Mobilink anticipates, and satisf ies the

customers communication needs. This includes consumer behavior resea rch

and transla ting this resea rch into services and pricing plans. The

Mar keting team also helps in identi fying new business opportunit ies

and develops plans to expl oit those profitabl y.It also designs and

implements brand strateg ies and communication plans.

The maj or ways in which Mob ilink mar kets itself and its produc ts are

through the follo wing ways:

Elect ronic

Print

3.4.1 Ele ctronicMe dia

The major way in which today s organizations promote its products andservices is through television, not only because its economical but also

because the visual and audio aids helpinpromoting its product.

Mobilink uses an agg ressive advertising campaign on television to

promote its products. These advertisements, while commu nicate an

image of mode rnity and newness, still tend to show the heritage of

Pakistan. The heritage of Pakis tan and its people sign ifies Mobilink, as being

the favorite cel lular company of Pakistan.

Mobilink has also for years, has tried to create different perso nalities for its

brands: Indigo and Jazz, to distinguish them from other compet ing brands.Mobilinks Indigo brand relied heavily on two factors towa rd establis hing

its brand equity: brand ambass adors that exud ed style and sophistication,

and a unique classy look that pe rmeate all forms of its Indigo brand

communication. It also played on the aspirations of young bus iness

professionals through theatmo sphereand the locales ofIndig os ads.

On the other hand, the Jazz brand creates an image of fun, catering mo re

to the youngsters and teens of the count ry. Not only that, it has also

over the years created an image of bond among the members of the Jazz

members, achieved due to the lowest rates and packages that Jazz has tooffer. With Jazz advertisements, its all about having ashow and te ll tab leau.

Other ways, in which Mobilink is mar ket ing its products, is through its

website and radi o. The website of Mobilink is built in a way to provi de updated

information about its products, with dedicated pages for both its brands,

Indigo and Jazz. Furthermore, the website also contains a gallery featu re,

from where users can view a wide array ofprint and tele vision advertisem ent,

created by Mob ilink over the years. The use of Radio has also been used to

promote the pac kages of Mobilink. Advertise ment on radio, mostly inf orm

listeners on thenew pac kages and their details.


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3.4.2 PrintMedia

Print advertisements are another major way in which Mob ilink advertises its

product to the masses. Print media advertisements are printed in major

English and Urdu newspapers across Pakis tan. The mes sages of these

advertisements are mainly of new pac kages that Mob ilink may int roduceover time.

Figure 2: Print Advertisemen tsofMobilin k11

3.4.3 Advertising Agency and BrandAmbassado rs

Mobilink uses the services of Inte rnational Advertisin g (Pvt) Limited (IAL)

SAATCHI & SAATCHI. IAL was established in 1966. IAL clients inclu de PIA,

P&G, Devan Mushtaq Motor Company (DMMC), PSO, Engro Foods Limi ted,

National Foods and Sony Erics sonetc. Furthe rmo re, it became the first

agency to aff iliate itself with an international agenc y- SAATCHI &

SAATCHI, a top player in the global advertis ing arena 12.

Furthe rmo re, Mobilink uses its brand ambassadors to promote its produc ts

in both the elect ronic and print me dia. These brand ambass ador s come

from the fields of acting, mode ling, singing and cric ket and are few of the

most famous and talented stars of Pakistan. The brand ambass adors areas

follows:

Table 11: List of BrandAmba ssadors ofMobilink

Name Profession Brand Being Promo ted

Iman Ali Mod el Jazz


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11 www .br ands ynar io.com

12 IAL SAATCHI & SAATCHI website (www.ialideas.com)

18
http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.brandsynario.com/http://www.ialideas.com/http://www.ialideas.com/http://www.ialideas.com/http://www.ialideas.com/http://www.ialideas.com/http://www.ialideas.com/http://www.ialideas.com/http://www.ialideas.com/http://www.brandsynario.com/http://www.ialideas.com/


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Wasim Akram Cricketer JazzVane eza Ahm ed Mod el IndigoZainab Qayum Mod el IndigoShan Actor/Model IndigoStrings Sing ers MobilinkWorld

Furthe rmo re, stars like Sha hid Afridi, Shoaib Malik, Sha keel, Behroze

Sabzwaari, Sunita Ma rshall and Sam ina Pirzada have also appea red in Mobilink

advertisements, from time totime.

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4 Environm ental Ana lysis

4.1 Industry and Mar ket Analysis

4.1.1 Major Product Lines Mar ket

Segment

Mobile Industry has been very effective in introducing new and innovative

produc ts and services over the years. The major product lines can be

segm ented into, three categories, which areas follows:

1. Consumer Packages

2. Value Added Services

3. Corp orate Packages and Services

These product lines have a range of different services, catering to different

market segment.

4.1.1. 1Consumer

Packages

The consumer pac kages of the mobi le Industry inclu de the prepaid and

postpaid packages being providedby the different cel lular providers of

Pakistan.

Prepaid pac kages, due to their natu re is the most common type of

pac kage being used today by millions of Pakis tanis. Prepaid packagesprovide a sense ofaffo rdability, whereby consumers have theoption of only

recha rging their accounts, when needed. This affo rdability has led to a

mas sive inc rease in the prepaid sub scriber base, with everyone from

housewives to teenagers; to electricians to small shop owners all using

prepaid pac kages. The main user segm ents of prepaid packages inclu de

the lower, middle and middle upper class of the count ry. Furthe rmo re,

a number ofpeople use prepaid pac kages as a second number, which also

include people from theupper class..

Mobile compan ies today have used imm ense popularity of prepa idpackages to int roduce pac kages that are targeted to different segm ent.

These inc lude Telenors Djuice, targeted towards teenagers and young

individuals and Mobilinks Ladies First, targeted towa rds house wives.

Furthe rmo re, pac kages that bill at 1min, 30 second and per second have

also beenint roduced by mobile companies.

Postpaid pac kages were introduced, keeping in mind, the

businessmen andexecutives. Postpaid packages, due to their natu re

provided the benefits ofconnectivity 24/7, without the fuss of scratch

cards and recharge of accounts. Furthe rmo re, as compe tition rose in the


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mobile industry and new entran ts came; post paid pac kages we re made

mo re affo rdable. The work of Warid in this conce rn is an example, creating

postpaid pac kages as affordab le as prepaid ones. The main market

seg ments, towa rdswhich thepost paid pac kages aretarge ted, inc lude small

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and medium busin essmen, industrialists, bu reaucrat sand peo ple of the upper

class. However with the affo rdability ofpostpaid pac kages, people from the

middle class have also been seen usi ngpo stpaid pac kages.

4.1.1. 2Value AddedServ ices

Value Added Services have become an essential tool for gen erating

revenues for mobi le companies tod ay. Starting in the early years, from

wal lpaper and ringtones download, today mobi le companies provide a ran ge

of ser vices to their cust omers.

Some of the popular services include, religion services, mu sic services,

which inc ludes song dedication, voice and timed messages, sports and

cric ket services, food and recipe services, WAP/GPRS/ED GE, themes,

wal lpapers, games and ringtones dow nloads, credit sha re, MMS,

voice mail, email, missed call alert, conference call, mob ile TV, web2sms

and many mo re.

Value added services have been designed by compan ies, so that the re are

services for every segment of theirusers and that these services comp letely

satis fythem, as and when needed.

4.1.1. 3Cor porate Packages andServicesCellular providers in Pakis tan are also provi ding corporate clients with

services cate red to them. Corporate clients due to their hu ge

oper ations have special requirements. Mobile packages and

tariffs; secu re email and instant web

connectivity, be ing some of themost impor tant issues.

Today mobile companies provi de BlackBe rry solutions, Mob ilink and Warid

being forefront in this technology, furthe rmore to add to this

innov ative service, companies today are provi ding SMS marketing featu re,

SMS ma nage ment faci lity, fax mail, Wireless connectivity through EDGE, private numbering plans, closed user groups and mobi le email to their

corporate clients.

All above featu res and many mo re have helped corporate clients to

manage their operations effectively and efficient ly.

Figure 3: Products Offered By DifferentMobile Companies


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4.1.2 Growth Rate of EntireInd ustry

The mobile industry has seen phenomenal growth over the years. Today

there are five major compe titors competing for their subs criber base,

increasing the services provi ded, reducing their call rate and havi ng

agg ressive mar keting campaigns. Simply put, compe tition isheat ing up in

the mob ile indust ry.

In July 2008, according to Pakistan Telecommu nication Authority (PTA),

the total sub scriber base inthe mob ile ind us try reached to mo re

than 89 mi llion to

89,325,296. This was an inc rease of 41. 4% from December 2007. Althou gh

this isphenomenal growth, analys tsbelieve that it mo uld be even higher, if

taxes would have not inc reased, in the financial bud get.

The mobile industry has seen phenomenal growth over the yea rs, asseenbe low:

4.2 Competit or Analysis

4.2.1 MajorComp et itors

4.2.1. 1Ufon

e

Pakistan Teleco mmunication Mobile Limited (PTML) is a who lly own ed

subsi diary of PTCL, estab lished to oper ate cel lular telephon y. The

company commenced its operations, under the brand name of Ufone,

from Islamabad on January 29, 2001. Since its inception, Ufone changed the

image of mob ile pho nes from a luxury only affo rdable by the elite, to a

necessity affo rdable by the common man. Ufo nes primary focus always

remai ned on their valua ble cus tomers, introducing ser vices over time to


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fulfill their need and demands. Ufones slogan has always remained Its all

about U.

As a conse quence of PTCLs privatization in 2006, 26%of its sha res were

acqu ired by Emirates Telecommunic ation Corpo ration (Etisalat ). Being

part of PTCL, the ma nage ment of Ufo ne has also been handed over toEtisala t. Now, under the ma nage ment of Etisalat, Ufone tends to

concent rate on cus tomer needs and benefits and its management is even

mo re dete rmined than ever to be the leading cel lular player in the market,

because Ufone has been known for provi ding superb propositions and

quality service to its customers and tends to keep that reputation in the

futu re.

Ufo ne has maintai ned itself as the 2nd largest cellular operator in Pakistan

with a sub scri berbase of over 18 million in July 2008, according to PTA and a

market sha re of 21% during the time period. Currently, Ufone has network

coverage in mo rethan

750 cities, towns and across all major highways of the countr y. It also

provides international roaming to mo re than 195 live opera tors across 119

countries.

Currently Ufone is under the agreement with Huaw ei, which will provi de its

futu re- oriented EnerG GSM solution to expand Ufone's network to cover

over 2200 cities, towns, villages and all major highways in the count ry. The

network also allows Ufone sub scribers to enjoy high-speed wireless da ta

service and enables the telecom service provider to evolve into 3G

smoo thly.

4.2.1. 2Telen

or

Telen or Pakistan is 100% owned by Telenor ASA and adds on to its oper ations

in Asia together with Tha iland, Malaysia and Banglades h. Telenor acqui red

the license for providing GSM services in Pakistan in April 2004, and had

launched its services comme rcially in Islamabad, Rawalpindi and Kara chi

on Ma rch 15, 2005 and on Ma rch 23, 2005 Tele nor started its services in

Laho re, Faisala bad and Hydera bad.

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Telen ors inves tment in Pakis tan is the single largest direct Europeaninvestment in

Pakistan.

By the end of July 2008, the total subs cribers of Telenor excee ded 18 mi llion,with a market sha re of 20%. Telen ors network covers mo re than 3000

cities, towns and highwa ys throughout Pakista n. Furthe rmo re, Telenor

Pakistan has mo re than 5,000 cell mast s throughout Pakistan, making it the

2nd largest network in Pakistan and 3rd in termsofcustomer base.

Telen or has a strategic alliance with Nokia Siemens Networks for

expansion in Pakistan. With USD 1 billion already invested, Telenor has

extende d agreeme nts with its vendo rs, inclu ding Nokia Sem ens for network

expansion and services unti l

2009. The agreements will result in USD750 million worth of orders fromTelenor

Pakistan.

4.2.1. 3Wari

d

Warid Telecom is a joint ventu re betw een Abu Dhabi Group & SingTelGroup. In

2004, Warid Telecom Inte rnational LLC, purchased a license for

oper ating a nationwide mob ile telephony netw ork, (WLL) and long distance

international (LDI) for $291 million US dollars and was the first ventu re of

Warid Telecom Inte rnational LLC. Warid Pakistan launched its ser vices in

May 2005 and is based inLaho re.

Abu Dhabi Group is one of the largest bus iness groups in the Middle East

and the sin gle largest foreign investor in Pakistan. Abu Dha bi Group ente red

into a strategic alliance with Singapo re Telecom. Subsequent to this

transaction in July 2007, telecom giant Sing Tel acqui red 30% percent equity

stakein Warid Telecom, Pakistan, for US$758 million- valu ing the company at

an enterprise val ue of $2.9 billion. This partnership is part of a strategy to

support Warid Telecoms contin ued growth and to enhance its mar ketposition.

In July 2008, Warids total subs cribers were mo re than 15 million

sub scri bers and enjoyed 4th position in the market with a mar ket sha re of

18%. In June 2008, Warid Telecom anno unced it would invest $1.5 billion by

end of this year and $2.5 billion by end of 2009 toexpand and mode rnize its

network in Pakis tan.

4.2.1. 4Zon

g


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China Mob ile Pakistan (CMPak) is a 100% subs idiary of China Mobile. The

pio neerin g overs eas set up of China Mo bile came through acquisi tion of a

license from Millicom to operate a GSM network in Pakistan. With

ambitious plans to cater to the fastest growi ng Pakistani mar ket and to win

over the ever deman ding Pakistani customer, CMPak's edge comes from

the experience and expertise of running the world's largest telecomservice and the commitment they ma ke to setting quality and customer

relations standa rds. ZONG is the first Inte rnational brand of China Mob ile

being launched in Pakistan.

On 22nd January 2007, Millicom Inte rnational Cellular S.A. announced that

it would sell its 88.86 percent sta ke in Paktel Ltd. to China Mo bile for

$284. On 4th May

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2007, Paktel was renamed to CMPak and then, on 16th May 2007, China

Mobile announced that it had upped its stake in CMPak to 100%. It later

rebranded branded Paktel toZong.

In July 2008, the total subs cribers of Zong were mo re than 4 million and

enjoyed 5th position in the mar ket with 5% sha re in the mar ket. So far

CMPak has invested mo re than US$ 700 million in the telecom sector in

Pakistan and an additional US$ 800 mi llion willbe invested till the end of year

2008.

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4.2.2 Their MarketShares

According to official figures in July 2008, the re we re a total of 89m

subscribers (89,325,296) in the mobi le indust ry, Ufone had 18 mi llion(18,368,074) subscribers and was second in mar ket sha re to Mobilink,

followed closely by Telenor with

18,329,428 sub scri bers, a difference of just 38,646 sub scri bers. Thisdifference was

3,312,712 sub scri bers at the end of 2007. Warid was forth with 15

million (15,774,299) subs cribers. Warid has also lost to Telenor in terms of

mar ket sha re since 2006, when it was third in the ind us try. In July 2008,

Zong had 4 million (4,446,024) subscribers and was fifth overall.

Instaphone had only 351,135 sub scribers during thistime.

Figure 5: Segmentation of Total

Subscr ibers in July 08

In 2007, Ufo ne still remained second (14,014,044) in terms of mob ile

subscribers and Telenor thi rd (10,701,332 ), followed closely by Warid

(10,620,386 ), which remai ned forth. Zong was fifth (1,024,563) and

Ins taphone sixth (333,081). The total subscribers in 2007 we re 63 million

(63,159,857).

Figure 6: Segmentation of Total Subscr ibers

inDecemb er07

4.2.3 Their Goals andStra tegi es

4.2.3. 1Ufon

e

Ufone is one of the major competitors of Mobilink and has sus tained a good

mar ket sha re over the years. It has rema ined second ove rall for a

number of years. However just recently, Telenor, which had gained third

position in 2006, inthe indust ry, is giving strong competition to Ufo ne and

even achie ved second posi tion in the first quarter of 2007.

The main goal of Ufone is to provide its customers with the most effective

and efficient manner of communication. The main goal of Ufone has always

been ofproviding its cus tomers with the state of the art services at the

most simplest rates in theindust ry. Itsgoals have always revoloved around U


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(its customers), which can be seen in its punch line orslogan its all about U.

Furthe rmo re, by accomp lishing its goal, Ufone would be able to sus tain its

market sha re in the industry and remain in the second posi tion and defend its

position from compe titors like Teleno r.

The main strate gies of Ufo ne to accomplish their goals surround aroundprovi ding services that fulfill the needs of the society at all levels of the

societ y. Ufo ne was

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the first mob ile company to stop charging for incoming calls, first to int roduce

GPRS, first to start bundle SMSpac kages and recently its call rates have

greatly reduced and have become even simple r. Furthe rmo re its

commitment can also been seen from the fact that its slogan of its all about

u has not changed over the years.

4.2.3. 2Telen

or

Telen or since its inception in 2005, has been an aggressive company, trying

to gain market sha re from other competitors, first it took the third

position from Warid(another company that started in 2005) in 2007 and is

now giving stiff competi tion to Ufone (cu rren tly secon d13) and is favorite in

gai ning the posi tion from its rival compan y.

The main goal of Telenor is to help its customers get the full

benefit of communications services in their daily lives. This is alsoreflected in their vision, which is were here to help. The main goal of

Telenor is to provi de services, which take use of the latest technologies and

are also new to the industry, thus provi ding their cus tomers with the full

benefits of communications, which other comp anies are not able to

provide. Tele nor s slogan or punch line also reiterates their goal which is

the smart call. Hencefo rth, by accomplis hing its vision, Tele nor would be

able to take the second position in the industry and can then provide

compe tition to the mar ket lead er-Mobil ink.

The strate gies used by Telenor to achieve its goals is by beingc reative,that is provi ding new and mode rn services, that take advantages of new

technolo gies but are also easy to unders tand and use. Some of the

creati ve products introduced by Telen or over the years inclu de: Eas yLoad,

SmartSha re, mobi leTV, largest network of EDGE, PicSha re, inte rnational

pac kages like Djuice and many mo re. All these services are very

creative, never been introduced before and helping all its customers

around Pakistan.

4.2.3. 3Wari

dWarid started its operations in May 2005, and enjoyed a good mar ket sha re

in the indust ry, however it has lost its subscribers to its competitors in

recent years, leading to its loss of position in the indust ry. The main goal of

Warid is to maintain and strength en its current market sha re and increase

to positions, which it ea rlier held in the indust ry.

The major strategy used by Warid is to create a sense of confi dence

among its customers that it is the best network for their lives. That is it

provides the best calling and sms rates, inc luding the value added

services. Its slogan, life ka network also provides emphasis to thispoint.


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Warid had earl ier efficiently promoted its postpaid pac kages as affo rdable

as its prepaid pac kages, a strategy that inc reased its postpaid customers

signifi cantly in

13As of July 2008 (PTAfigu res)

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the mob ile industry, at a time when overa ll po st paid connections we re

decreasing. Currently its agreeme nt with SingTel will also provide emphasis

to its goals and associated strate gies.

4.2.3. 4Zon

gZong, a recent entrant in the mob ile industry is a subsi diary of China Mobile.

Zongs incep tion was the result of the takeover of Paktel by China Mobile in

2007. Being a new entrant in the mob ile ind us try, its goal is to gain market

sha re, currently Zong is a small part of the industry, but howeverit aims

to inc rease its mar ket sha re reach above 10%by 2010.

The main strategy of Zong in this conce rn is to allow people to communicate

at will, without worrying about tariffs, network coverage, capacity issues or

congestion. Its slogan Say it All,provi de the emphasis to their str ateg y.

Currently Zong is providing pac kages with the lowest call rates. Furthe rmo reit has also int roduced featu res, which we re not present earlier. These

include change of happy hours, chan ging SMS pac kages and inte rnet

packages on the discretion of its customers.

4.3 Technology Analysis

4.3.1 Technical Methods That Affect theInd ustry

Mobile networks are one of the most technical aspects of any mob ile

company and the technology changes affecting the networks have changed

considerable, since the first mob ile company Pakt el was int roduced in

Pakistan.

Paktels networks ran on Advanced Mobile Phone System (AMPS ). AMPS

was the analog mob ile phone system standa rd developed by Bell Labs.

AMPS were a first- gen eration cel lular technology that usedsepa rate

frequenci es, or "chann els", foreach conve rsation. AMPS used

consi derably mo re comput ing power in order to select frequencies; however

cell cen ters coul dflexibly assign chann els to handsets based on signal


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streng th, allowing the same frequency to be re-u sed in various locations

without interfe rence. However it suffered from some weaknesses

when

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compa red to today's digital technolo gies. Since it is an analog standa rd, it

was very suscep tible to static and noise and had no protection from

eavesd ropp ing using a scanne r.

However with the introduction of Mobilink in 1992, Pakistans mobile

industry ente red into the second generation of mobi le netw orks withGSM. GSM (Global System for Mobile Communic ations) is the most popular

standa rd for mob ile phones in the world. Its promoter, the GSM Association,

estimates that 82% of the global mobi le market uses the standa rd. Its

ubiquity ma kes inte rnational roaming very common between mobi le phone

operato rs, enabling subscribers to use their pho nes in many par ts of the

world. GSM differs from its predeces sors in that both signal ing and speech

chann els, which are digital, and thus is consi dered a second generation (2G)

mobile phone system. This has also meant that da ta commu nication was

easy to build into the system. GSM also pionee red the short message

service (SMS), which is now supported on other mobi le standa rds as well.

Most GSM networks operate in the 900 MHz or 1800 MHzbands.

Currently all mob ile networks of Pakistan have ente red the 2.5G. Mob ile

networks ente red the 2.5G, by imp lementi ng the General Packet Radio

Service (GPRS ). It is a packet orient ed mob ile data service availa ble to users

of GSM. GPRS can be used for services such as Wireless Application

Protocol (WAP) access, Short Message Service (SMS), Multimedia

Mes saging Service (MMS), and for internet

communication services such as ema il and World Wide Web access. Later

on, Enhanced Da ta rates for Global Evolu tion (EDGE) was int roduced,EDGE is an upgrade that provides a potential three-fo ld inc rease in

capacity of GSM/GPRS networks. Although EDGE is a 3G technology, but it

is conside red a part of 2.5G technolog ies, howe ver sometimes separ ately

referred to a s 2.75G.

Currently the Pakistan Telecommu nication Authority is planning to

launch 3G licenses in Pakis tan, star ting from the end of 2008. 3G

networks enable network opera tors to offer users a wider range of mo re

advanced services while achie ving greater network capacity through

improved spectral efficien cy. Services include wide-a rea wireless voicetelephony, video calls, and broadband wireless data, all in a mobi le

envi ronm ent. Addi tional featu res also inc lude HSPA (High Sp eed Packet

Access) da ta transmission capab ilities able to deliverspeeds up to 14.4 Mbit/s

on the down link and 5.8M bit/s on the uplink. Furthe rmo re 3G networks

offer a greater degree of security than 2G predece ssors.

4.3.2Innovat ion

The mob ile industry of Pakistan is consid ered by many as the most

innovative indust ry of Pakis tan. Innovation means introducing new things or


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methods, and the mobi le industry has kept this promise by introducing new

and innov ative services for years.

In recent years, most of the innovative services have been introduced byTele nor;

these services being innov ative tookthe Pakistani mar ket by storm andhave

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become part of our daily lives. Examples of these services include

Easyload and Sma rtsha re. Although Telenor is seen as the most innov ative

company right now, we cannot diminish the contributions of other

competitors to the Pakistani mob ile indust ry. Some of the innov ative

services introduced by the different service provi ders areas follows:

Int rodu ction of dyn amic SIMs by Ufone

Int rodu ction ofGPRS capabi lities of Ufone

Int rodu ction of voice cont rolled ser vices by

Mobilink Introduction of Bundle SMSpackages

by Ufone Int rodu ction of voice SMS by Telenor

Int rodu ction of emergency credit buying by Mobilink

Int rodu ction of dedicated website for dow nloads by

Warid Int rodu ction ofcredit sha re by Tele nor

Int rodu ction of BlackBe rry services by

MobilinkInt rodu ction of mobile television by

Telenor Int rodu ction of caller tunes by

Mobi linkInt rodu ction ofbackup of cont act

lists by Ufone

These and many mo re services have helped make the mobi le industry

what it is today. With innovations, being the hallmarkof the mob ile

indust ry of Pakis tan, futu reprospec ts arebright. Also with swap of mobi le

opera tors becomi ng very easy using Mo bileNumber Portability (MNP),and

compe tition based on tariffs, innovation becomes a must to create a

competitive advan tage. Furthermore, int roduction of

3G ser vices in the years to come would also increase the innovative

service provi ded by the mobi le operators. Future innovation would take

advan tage of the current network capab ilities and additional benef its of 3G

networks, including the high speed data transfer services.

5 De partment Worked During Inte rnship

I did my 8 weeks inte rnship at the cash managem ent section of the

treasury department of Mobilink. The cash management section is one of

the three sections of the treasury department. The organizational

str uctu re ext ract of the finance department can be seen in the appendix of


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the report.

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The importance of cash managem ent is immense for a company, including

Mobilink. Ifat any time a company fails to payoff an obligation when it is due,

because of the lack of cash, the company is insol vent and insolven cy is the

primary reason firms go bankrupt. Efficientcash management means mo re

than just preventing bankrupt cy. It improves the profitab ility and reduces the

risk to which the firm is exposed.

At Mobilink, the main responsibilities of the cash management sections

include the collection, concent ration, and disbursement of cash. It includes

its effor ts of timely collection of income from its major sales cen ters and

franchises. Revenu es attained from inte rnational roaming partners are

needed to be encashed efficiently as well. Furthe rmo re, paying off the

liabilities gener ated through daily oper ations and financing activit ies and

final ly developi ng short-te rm investment strate gies for Mobilink. Some of

the activi ties done within cash management areas follows.

5.1 Act ivities Done Wit hin Cash Management Department

5.1.1 Daily

Acti vit ies

5.1.1. 1Opening CashPosi tion

The opening cash posi tion is created daily and con tains the follow ingsections:

1. Cash in han d: Contains the closing balances of all the maj or

franchises and sales cent res of Mobilink. It is added to identi fy the

amount of money that would come into the bank accounts of

Mobilink. There are mo re than 500 maj or franchises and busi ness

cent res in this list.

2. Deta ils: The details con tain the major bank accounts of Mobilink.

These include the major current and saving accounts in which

major col lection comes. There are mo re than 40 such different

accounts. Furthe rmo re some accounts are for specific purposes, for

examp le MCB account is used to pay commissions for the franchises

and NBP-Mirpur is used to pay the taxes in AJK. Furthe rmo redifferentsaving accounts pay different inte rest rates, Askari Bank with the

highest of 13.6 5%.

Other categories include the DSRA (Debt Servicing Reser ve

Account s); these are used for debt servic ing of long term loans.

These are saving accounts, with the purpose of collecting money till

the repayment amount is achieved, after which, as a part of

stand ing instructions, the following collections are transfe rred to

main saving or current accounts. Cash Margin Acco unts, these are

lien marked accounts for specific purposes like credit cards and

different guarantees. Overdra ft Accounts , these includes the


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num ber of accounts, with which Mobilink has ove rdraft facili ties.

Fixed Depos it Accounts , theses are the accounts with which

Mo bilink has some fixed deposits, if any. Short Term Loan

Account s, theses are the accounts used when Mob ilink wants any

short term loans. Foreign

Currency Acco unt s, there is only one fo reign currency account of

Mobilink, which is with CitiBank and is used for off sho re mar ketin g

expenses and inte rnational rece ipts. Sinking Fund Accoun ts,

maintained by Mo bilink, contains funds

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that are set aside to pay the license fee, pa id out to PTA andUtility

Account s,to pay utility bills of Mobilink aretheother types ofaccounts.

3. Liab ilit ies: In this section, major liabilities for the month are recorded

in the follo wing ca tegor ies: taxes, commissions, pay roll, andrepayment of loans, roaming partners payments, payments against

Form M and Link Direct Inte rnatio nal (LDI), a subs idiary of

Mobilink paym ents. The liabilities are updated as needed, with

amounts; bank used for paying off and date ofpayment.

4. Cheque Float: In che que float, the major liab ilities of different

vendors are reco rded. They are divided into three diffe rent

regions, which inclu de Islamabad, Karachi and Laho re. The

intimi dation of the cheq ues released comes from the accounts

payable department, while the clearance coming from daily bank

statements. Allpayments of vendors aremade from CitiBank.

5. LC and ICs: This section includes the Import Contract (IC) and

Letter of Credit (LC) payments that have to be paid out for the

foreign transactions that take place with Mobilink. The intimation

comes from the Trade department ofMobi link Treasu ry.

6. The Main and Forecast summary: The Main Summary includes

both the revenues and liabilities of Mobilink on a given day, while

and the Forecast Summary is made for the current & followi ng month.

5.1.1.2Cash

Transfers

The cash transfer take place every day and inclu des the tra nsfer of

col lections and payment from and to different banks. The major collection of

funds takes place inAllied Bank Limit ed, Habib Bank Limit ed, Stand ard

Charte red Bank and United Bank Limited. These banks receive the most

col lection on daily basis but pay less interest, thus all col lections from

these banks are transfe rred to a bank that pays mo re inte rest, currently

transfe rring to Askari Bank, as it pays a better inte rest rate of 13.6 5%. . Also

transfer of collection funds from other banks can takeplace as and when

requ ired by Mobil ink. Furthermore all transfer of funds forpay ing off liabilities

take place from ACBL to the bank requ ired. These transfers for paying off

liabilities takeplace as requi red, and arenot usually on dailybasis.

5.1.2 OccasionalAc tivi ties

5.1.2. 1Encashme

nt

Occasionally, inte rnational roami ng income is received by Mo bilink from

other cel lular opera tors around the world. However as these receipts


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are in foreign currencies and are thus needed to be encashed, on an

intimi dation from the bank. Furthe rmo re according to the SBP Foreign

Exchange Policy, companies can only keep 35% of the total foreign

exchange earned in their foreign currency accounts, the remaining 65%

needs to be convert edto PKR.

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5.1.2. 2 Internat ional

Payments

Furthe rmo re occasiona lly Mob ilink has to pay for international roaming

cha rges to international cel lular opera tors or other inte rnational

payments, like payi ng for training activities for Mobilink employ ees.

Payments can either be made by debiting the foreign currency accountmaintained with CitiBank or by debiting the PKRaccount and obtai ning

foreign currency exchange rate against that amount and paying off the

liab ility.

5.1.2. 3Account

Ope ning

As needed, the department will open new accounts with banks as neede d,

which could be for speci fic reason, for example the new HSBC ove rdra ft

account or just to facilitate the vendors or franchises of Mobilink.

Furthe rmo re requirements with current banki ng accounts are changed asand wh en requ ired, including the interest rate offe red, lien mar ked and

ove rdra ft facili ties. Document required for account ope ning areas follows:

1. Account openi ng form duly signed by the CEO

2. Request let ter on com pany letter head

3. NTN Certificate

4. Certif icate of Incorpo ration

5. Memo randum and Article of Association

6. CNIC and Passport of all Board of Director sand Signa tories

7. Signatu recards signed by all signatories and stamped8. Form 29

9. List ofboa rd of directors

10.Board resolution

5.1.2. 4Cre dit

Cards

Mobilink provides corporate AMEX card to direc tors and above. Activit ies

rega rding credit card app lications, their payments and limits enhancement

etc arehan dled by the depa rtment.

5.1.3 Month EndActiv ities

5.1.3. 1Interest IncomeSheet

The inte rest income is calculated for those accounts that either pay

interest semi annually or on the 1st of each month. There are total 8 banks

in this list, including Bank Alfalah and NIB. Furthermore this inclu des the

TDRs boo ked by Mobilink. All this information is pa ssed onwa rds to the

accounts department of Mobi link.


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5.1.3.2OD

Sheet

Mobilink takes on ove rdra ft faci lities daily from different banks, which gets

off set from the collection, howe ver sometimes it is not offset and rema ins

outstanding. On the out stand ing amount, inte rest paym ents are to be paid

and arecalculated at the

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month end and passed on to the accounts payable department. Howe ver the

actual payments are made on quarterly basis wh ile accrual is calculated on

mont hlybasis.

5.1.3. 3Calculat ion of Cash FlowStat emen

t

Cash Flow Statement consis ts of three maj orpar ts:

1. Cap ex (Capital Expend itu res)

2. Opex (Operating Exp enditu res)

3. Financial Cha rges

Revenu e info rmation is received from the revenue monitoring department

(Finance Operations) bifurcating the total revenue earned form

postpaid andprepaid connections. Average revenue earned is 7-8 Billion

PKR. Furthe rmo re info rmation rega rding financial cha rges is taken fromthe financing depar tment of MobilinkTreasur y.

5.2 TasksPerformed During Internship

5.2.1 Daily

Acti vit ies

5.2.1. 1Crea ting Opening CashPos ition

Updating the balances of the major current and saving accountsmaintained by Mobil ink, these inc lude accounts ma intained in CITI, DB

ACBL, ABL, HBL, SCB, UBL, MCB, NBP, NIB, FBL and RBS. Furt hermore

balances are also taken of accounts from whom any payment may be due,

to assess the funds, to be transfe rred on the next da y. Some accounts areto

be adjusted like SCB account is to be adjusted to the lien marked amount.

Updating the che que float, this inclu des add ing new cheques released on

that da y. The information of the new cheques released, is received from the

accounts payable department and then using the DB direct & CITI banks

website to see the cheques that have been clea red from the CITIs currentaccounts maintained in Islamabad, Lahore and Kara chi. Furthe rmo re,

updating the cash in hand section as and when information is recei ved. The

info rmation is received from the operations department within the finance

department, and as the info rmation of mo re than 500 franchises and sales

cen ters is not easy to get daily, the info rmation is only updated 2 or 3

times a week.

5.2.1.2Cash

Transfers

After calculating the amount of liability to be paid out from various banks


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on the follo wing day, transfer letters areprepa red to tra nsfer funds to the

bank in which they are requi red. Furthe rmore, all major collections, that

comes from four major banks, which includes Allied Bank, United

Bank, Hab ib Bank and Stand ard Charte red, is transfe rred to Askari Bank

daily. The instructions for fund transfers are

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on the same day pay order basis and all instr uctions to the banks are

forw arded through fax and thenconfirmed.

5.2.1. 3Ot her

Activ ities

Filing the phot ocopies of the transfer letters that were faxed daily wasanother task that I perfo rmed. Furthe rmo re original transfer let ters were

also needed to be sent out to the respective banks and also updating the

payments file daily were some ofthe other tasks perf ormed dai ly.

5.2.2 OccasionalAc tivi ties

5.2.2. 1Encashmen

ts

As soon as Citi bank provi des us with a not ification on an encashment, a

conversion rate is asked, to convert the 65% of the total amount to Pakistani

rup ee. When the bank provides us with the deta il, an inwa rd remitta nce

rate sheet is made, which sho ws the total remitt ed amount, the 35% and the

65% a mount of the amount, in both foreign currency and Pakistani rupee.

Furthe rmo re a letter to Citibank is also made, issuing them the

authority to convert and transfer the 65% of the encashment into the

account and also transfe rring the 35% of the amount to the dollar account

of Mobilink.

Lastly a Form R is made to notify the SBP that 65%of the total amount hasbeen converted to Pakis tani rupee, as stated by the foreign exchange

ordinance of Pakistan and lastly all the above letters are attached, with

the orig inal not ification letter and then sent to Citibank to go through with

the transaction. As part of my internship, I had to ma ke all these let ters and

then send them to the bank.

5.2.2. 2 Internat ional

Payments

As stated earlier, inte rnational payments are made ei ther on inte rnational

roami ng charges or inte rnational charges made by the different departmentsof Mobilink.

As soon as our depar tment receives the Payment Authorization Form (PAF),

which is used for inter department expe nditu res and app rovals, with the

comple tion form and the ori ginal invoice, a payment order and a purchase

requisition or the original invoice for non depa rtmental expend itures, the

depar t

Documents

37986589 Mobilink Intrnshp Report