IPO very much on the cards, says Jazz CEO Aamir Ibrahim

KARACHI: Jazz CEO Aamir Ibrahim has said going public is “very much on the cards” with further clarity emerging in the next 12 months, remarks that come as the company – primarily known as a household name in the telecom business – pivots towards a service co with multiple revenue streams that complement each other.

“Preparing for an Initial Public Offering (IPO) typically takes 6 to 12 months. You look at the right time,” Ibrahim told Business Recorder in a recent interview on the sidelines of an event in Karachi.

Many see the upcoming move of Farrukh H. Khan, the PSX boss, to Jazz as CFO as a step in that direction amid speculation that the telecom company is readying itself for the IPO.

“Nothing is set in stone, but an IPO is very much on the cards. There are multiple businesses so we have to see what asset we take to the IPO,” said Ibrahim.

IPOs in Pakistan are a rare occurrence and less than 20 companies – both on the main and GEM boards – have chosen to list at the Pakistan Stock Exchange (PSX) in the last five years, a disappointing figure for the near $350-billion economy.

Despite the new listings, total number of companies at the PSX has fallen from 531 to 524 over the same period. Another issue at the PSX is the lack of liquidity where less than 300,000 accounts engage in the trading process.

Ibrahim’s comments come on the heels of Jazz securing the largest private sector syndicated credit facility of up to Rs75 billion, a 10-year arrangement that gives a preview of things to come for the telecom operator.

“Raising such an amount from the PSX would not have been easy. There is buoyancy in the capital market right now but it’s still small.”

Pakistan’s largest private sector IPO is still the one conducted by Air Link back in 2021 and despite the recent rally, PSX’s market capitalisation still stands at a paltry $37 billion (around 10% of GDP).

Jazz’s financing has materialised when the telecom operator is looking at growth opportunities in several sectors including financial services, software development, data centers & cloud solutions, and entertainment.

Its Tamasha app – the video entertainment platform – has 18 million monthly active users and the cricket season helps keep the audience engaged longer. Jazz Cash, the financial services arm, saw transactions worth Rs5.8 trillion in 2023, has a user base of over 44 million with 16.2 million active monthly users, and an overall market share of 64%, according to public figures.

In Pakistan, there are massive opportunities in finance, education, health, entertainment. We want to be a horizontal enabler: Aamir Ibrahim

Ibrahim said the nature of the telecom business is such that all operators typically spend between 15-20% of their revenue back into growing their network.

“We enhance capacity, go to new cities, upgrade our equipment, and add billing system features. This is where the capex is made.”

But for Jazz – the entity that is the biggest contributor to its parent Veon’s revenue (30.3%) among six international markets – an amount of Rs75 billion is not just for its telecom business.

“In Pakistan, there are massive opportunities in finance, education, health, entertainment. We want to be a horizontal enabler.”

Jazz is betting on its financing, entertainment businesses just as much on its cloud platform Garaj.

Veon, in its annual report for 2023 published days ago, called it Pakistan’s largest onshore cloud, adding that “Jazz has plans to significantly expand its datacentre offerings and capacity”.

Ibrahim said there are some “exciting sleepless nights” ahead.

“More than 70 million people rely on our telecom business. And we are betting further with our three business lines. There is huge demand for the cloud service offering.

“We are one of the biggest consumers of data centres and cloud, and now we are in a position to offer it to the outside world.

“Telecommunication is our core businesses, but these three assets will shape the future for us.”

While Ibrahim sounded confident and bullish on Pakistan as a market for growth, there were causes for concern.

The federal budget, touted much by Islamabad as the start of a reform programme, has been criticised by all segments of society and businesses.

Many also called it as having been dictated by the International Monetary Fund (IMF) as Pakistan prepared for yet another bailout, and protests have become more frequent.

“Our reaction to the budget was negative. It showed the lack of understanding on how important the telecommunication sector is. Some of the measures taken by the Federal Board of Revenue do not reflect the importance of it as an essential or emergency service.

“To tax it or to use it as a collection agent, and to help convert non-filers to filers is just unfortunate.”

Ibrahim said Jazz employs 5,000 people and all of them have also been negatively impacted by higher taxation on the salaried class.

“We are willing to work (together), but for that we need to have a discussion.”

Copyright Business Recorder, 2024