'Telenor will create a digital ecosystem in Pakistan,' says President and CEO, Telenor Group

Sigve Brekke, the President & CEO of Telenor Group since August 2015 visited Pakistan last month. Mr Brekke has been with the Telenor Group for nearly two decades, having served in various leadership positions. Prior to joining Telenor, he served as the State Secretary (Deputy Minister) of Defence, Norway (1993). Mr Brekke has a Master's in Public Administration from John F. Kennedy School of Government at the Harvard University. His visit to Pakistan also marked leadership transition at Telenor Pakistan, which had, just days earlier, purchased more spectrum. Due to his schedule, BR Research could only have a brief interaction with Mr Brekke. What follows is his response to many of our queries on email.

<B>BR Research: Phenomena where modern technology and traditional transactions are coming together to provide a unique offering, such as online shopping and sharing economy, are on the rise in developing countries such as Pakistan. Digital communication services have enabled their ascent. But it seems that "connectivity", which almost qualifies as a basic need now for a lot of people, is becoming increasingly commoditized. Do you feel that connectivity providers such as Telenor may need to tweak their business models to stay relevant in the future?</B>

<B>Sigve Brekke:</B> As one of the most innovative telecom operators in the region, Telenor is becoming more than a connectivity provider by introducing groundbreaking services and products as per the evolving needs and preferences of its customers. Our ambition is to pass on the benefits of telecommunication services to as many people in as many industries as possible. We are more of a digital solutions provider catering to the broader needs of today's Internet-savvy customers.

That is why we are focusing more on creating an overall digital ecosystem in the country; from increasing the penetration of Internet both in urban and rural areas to introducing affordable 3G-enabled handsets, to encouraging mobile apps development to supporting existing technology start-ups through our accelerator program to providing financial services, to the unbanked segment of the society, to documenting the economy by making more and more people access financial services.

<B>BRR: How do you view Pakistan's telecom market, including its regulatory environment, relative to Telenor's other business units? Also, from a sponsor perspective, has this market grown more or less attractive in recent years?</B>

<B>SB:</B> Pakistan is a dynamic market, an important emerging market in the region, which is well-positioned for continued growth. As many governments in Asia are developing frameworks to enable the rapid digitalisation of the economy and society, it is important that the Ministry of Information Technology and Pakistan Telecommunication Authority continue ensuring a robust environment so that operators can provide world class ICT-based services to the people of Pakistan.
A positive example was the new forward-looking Telecom Policy which was approved in December 2015. It now needs to be implemented. Likewise, with the patronage and support of the State Bank of Pakistan, Pakistan's mobile money industry has played a key role in increasing financial inclusion and has been able to introduce some groundbreaking services, led by Easypaisa.

<B>BRR: What is Telenor Pakistan's future strategy going to be to cope with increased competition?</B>

<B>SB:</B> First of all, I have to say that I am pleased with Telenor Pakistan's performance and the way it has succeeded for many years and coped with increased competition. It has been a highly competitive market for many years; we started out at number 5, and today we are number 2 in terms of subscribers.

While we recognize that competition is good for the customer, we must also be rational and move towards establishing quality standards for telecommunication services. We must provide the best services that are high quality and provide excellent value. We need to differentiate our offerings by understanding the customer better and by delivering services that they need and can use easily.

Understanding customer needs is extremely important for us, and this is evident from our innovative products and services. We have brought numerous industry-first offerings in all our markets, which have kept us ahead of the competition. We are the first movers of IoT in Pakistan, promoting products and solutions that significantly increase the output from everyday life, from both home and business perspectives. We have been working on digitising education, health, governance and agriculture in the country. We have been patronising young entrepreneurial talent in the country in various fields including fashion, technology, start-up support & development, and more.

<B>BRR: Will 'Voice' continue to be the major revenue earner? What other areas do you see that can drive ARPU in the next few years?</B>

<B>SB:</B> The next spurt of telecom growth world-wide is expected from data rather than voice, and we are already witnessing a global shift towards data and content services. In case of Pakistan, there is still a huge market for voice. Tele-density in terms of mobile phone users stands roughly at 55 percent, and a lot of people are still adopting mobile phones. I believe voice will continue to contribute towards ARPU for now. But we anticipate a shift in this trend sooner rather than later, and data is definitely the next logical step.

Globally, 4.7 billion people are using mobile phone services today, which is a huge number of people that have access to the mobile handset. With the prices of mobile handsets coming down over the next few years, the smartphone will become an affordable device for everyone. The average man in rural Bangladesh, rural Pakistan and Thailand will be able to use the smartphone. And if we can offer connectivity to the Internet and can be part of developing local content in different markets, you will see close to 4 billion people on the Internet in the next 2-3 years. I truly believe that Internet growth in Pakistan will be something to watch out for provided a robust regulatory system is in place and the environment is conducive for business growth.

<B>BRR: How does Telenor Pakistan's recent bid to purchase an additional 10MHz spectrum in the 850MHz band fit into Telenor's larger picture of investment in Pakistan?</B>

<B>SB:</B> Telenor Pakistan has been at the forefront of empowering societies since its inception and has been introducing innovative products and services for the people of Pakistan. Internet is the driver of growth for the economy and we believe in bringing its benefits to all. Addition of the 850MHz band spectrum will enable us to cater these growing needs of our customers and we will be able to further expand internet access to the masses. Telenor Pakistan fully endorses Government of Pakistan's vision to bring Pakistan at par with the developed nations in ICT sector.

<B>BRR: As a business case, how successful has investment in Easypaisa turned out to be? And what can we expect from Telenor after its recent 100 percent acquisition of Tameer Microfinance Bank?</B>

<B>SB:</B> One of the core elements of our vision to empower societies is financial inclusion. Pakistan has one of largest unbanked and under-banked population in the region with merely 14 percent of people having access to formal financial services. So we brought Easypaisa jointly with Tameer Microfinance Bank, the first of its kind mobile money/branchless banking solution in Pakistan. As it filled the gaping void of banking services, Easypaisa became so wildly popular that it was adopted immediately by millions.

Today, Easypaisa has the largest financial footprint in Pakistan with over 75,000 Easypaisa shops in more than 800 cities across Pakistan. Easypaisa has received two GSMA awards, including the "Best Mobile Money Service in the World" at the Mobile World Congress. Recently, Tameer Microfinance Bank was acquired by the Telenor Group which speaks volumes of the initiative's significance.

But what is more important for us is that we are serving over 20 million customers every month, who, a few years ago, were either unbanked or under-banked. The number of people benefiting and the amount of money being added into the formal channel is a tremendous contribution, one we are particularly proud of.

<B>BRR: Telecom operators here have been vocal on challenging issues, such as high taxes on service usage and on equipment import, connectivity bottlenecks, network shutdowns, etc. Based on your experience in other Asian markets, what could be the best course to move forward?</B>

<B>SB:</B> As you have correctly pointed out, there are also challenges, and one of them is taxation. We must keep in mind that affordability is a significant barrier for accessing mobile services, particularly in rural areas. Pakistan's telecom sector is one of the highest taxed telecom sectors in the world with one of the lowest consumer tariffs. Realising the ambition of building a Digital Pakistan requires tax policies that encourage investments and a predictable fiscal environment that supports digital growth.

As you also mentioned, the suspension of mobile services is a concern because of the impact on the ability of people to communicate, access vital services, and conduct uninhibited economic activity. While we believe the protection of national security and public safety are legitimate aims, we encourage a close dialogue with the industry to minimise customer impact from service disruption.
Over time, there have been areas that required immediate attention and improvement and we have been raising any concerns we've had with the government.

When that is said, no matter which market we operate in, we face different challenges and Pakistan is no exception. The government and regulators in Pakistan have been extremely helpful in paving the way for penetration of telecom services in the country. Pakistan's tele-density and growing number of mobile broadband subscribers is a testament of the support the regulatory regime has provided over the years. The country witnessed a successful NGMS spectrum auction two years back and we are pleased to participate in the recent spectrum auction for the 850MHz technology-neutral spectrum. Pakistan's ICT sector has witnessed an impressive growth over the years, and going forward, we believe that with a consultative approach it can touch newest heights of success.