Irfan Wahab Khan is the new Chief Executive Officer of Telenor Pakistan and a Board Member of Tameer Microfinance Bank. He has been with Telenor Pakistan since its inception in 2004, and has previously served as its Deputy CEO and Chief Marketing Officer. Irfan has over 20 years of experience in mobile telecommunication in a variety of leadership roles working in USA, UK, Norway, Pakistan, Thailand, Saudi Arabia and the Philippines. He has also served in various positions within Telenor Group, both in Asia and Europe. He was also elected as Vice Chairman for GSM North American Alliance.
Irfan holds a Master of Science degree in Mobile communication from University of Westminster London, BMP and AMP from INSEAD France, Marketing Management from London Business School and Financial Management from Harvard Business School USA. BR Research recently sat down with the new CEO to find out his vision for Telenor Pakistan and his take on opportunities and challenges for the sector. Following are some edited excerpts from that encounter:
<B>BR Research: You are the first Pakistani CEO of Telenor Pakistan. What does that mean for Telenor Pakistan's strategic direction?</B>
<B>Irfan Wahab Khan:</B> First of all, it is an honour for me to be the first Pakistani CEO of the company. Overall, Telenor Pakistan is progressing really well towards its strategic ambitions. Therefore, except for some refinements and incremental improvements, there won't be a significant change in strategy.
Telenor Pakistan is currently pursuing a three-pronged strategy. One, we are up-scaling existing services infrastructure to bring at par with the best technological innovations in the world. Two, we are pacing up our efforts to promote digital and financial services like e-commerce to supplement our digital ecosystem, leading to a digital revolution in the country. And three, we are exploring newer horizons to engage with our customers, newer fronts to provide ease and access and launch more sustainable initiatives for socio-economic well-being, under our CSR programmes.
<B>BRR: Over two years after the launch of the 3G services, how is the situation on the ARPU front?</B>
<B>IWK:</B> Telenor Pakistan is the leading 3G operator in Pakistan. We have the largest number of 3G sites in Pakistan. We are present not just in large cities but also in every nook and corner. Via our 2G and 3G networks, we are covering 85 percent of population. We may be number two in terms of 3G subscriptions, but in terms of active data customers using Facebook, we are number one. We have expanded and consolidated our digital ecosystem with induction of affordable smart handsets in order to increase broadband penetration across different economic tiers of the society.
We have seen improvement in ARPU as technological uptake has increased over the years. Data revenues are growing, but they have not yet completely offset the imminent decrease in ARPU that is coming from 'Voice'. Voice is still the king. The country only has 25 percent smartphones penetration, which has doubled recently, but it is still low.
For ARPU growth, the challenge is that Pakistan is one of the cheapest markets in terms of data pricing. That is great news from a consumer viewpoint, but from an investment viewpoint, it puts a lot of pressure. People's appetite to consume data is increasing, they are demanding more, and operators have to keep enhancing their capacity.
<B>BRR: Despite challenges, there must be some reason behind Telenor recently investing on 4G.</B>
<B>IWK:</B> The reason for continued investment is the size of the Pakistani market and the growth opportunities thereof. Telecom is a long-term business. Players have come and gone in this market. You need to keep on investing to stay relevant. You have to build a state-of-the-art network and invest in great customer experience and then you can monetize. The business model has to be long-term.
We are excited about Telenor 4G, which was launched in selected areas of Lahore, Karachi, Islamabad, Multan, Peshawar, and Swat in August 2016. Now it is available in 10 cities and we are rolling it out on a daily basis. We will not confine ourselves to just tier-1 cities. This will be an ongoing thing for some time to come, as is the case with 3G.
<B>BRR: Speaking of a long-term business model, do you feel that Telco's like Telenor will need to adjust their business model given that broadband is becoming a commodity with all the action taking place on social media and technology platforms such as Uber and Amazon?</B>
<B>IWK:</B> On a philosophical level, I agree with you that because the broadband network has to be there as a foundation stone, it can be taken for granted. Our business model has to see how can we become and stay relevant to our customers' needs. We at Telenor Pakistan would like to be innovators' best friend. We cannot offer all the services ourselves, we acknowledge that. This is the age of reaching out and collaborating with others, to play your role and build the ecosystem.
We are already providing digital services, to stay relevant to our customers. We have Easypay service for those who want to purchase things online. We have a network of around 75,000 shops that help us extend our payment footprint to even remote areas. Our partnership with Careem is another example of our digital focus, where we are providing Wi-Fi devices in the cars, payment integration, and even data analytics to help Careem come up with customised solutions for its customers. To Telenor customers, we provide, via MyTelenor, about 27GB of storage space on the cloud, free of cost, so that they can have a seamless digital experience.
We do such things because we see ourselves as enablers of the digital economy. These services may not yield us many revenues, but they help us deliver on customer expectations. We have been delivering Sms and voice for years. And in the last two and a half years since 3G, we have been really pushing data. Moving from minutes to megabytes, now we are talking about moments: moments where you can share some pictures that are based out of your cloud storage; moments where you can pay your bill via your phone; moments where you call your loved one online; moments where you can enjoy a nice song on streaming on the way to work.
<B>BRR: You mentioned earlier that 'Voice' continues to be a major revenue earner, albeit in a decline. Do you see room for expansion in 2G?</B>
<B>IWK:</B> In real penetration terms, we are currently looking at some 80 million unique customers using mobile services across all networks. There are at least 100 million more people that need to be connected in the future. And that is a huge task. We have come a long way, but our job is not done yet. Despite the focus on 3G and 4G, we have not forgotten 2G, as we are rolling out many 2G sites every year. We have rolled out 700-800 new 2G sites last year, and a similar magnitude will be achieved this year. Most of these new sites also have 3G connectivity. In total, we have crossed 10,000 sites, and that is a huge number.
<B>BRR: Do you agree that taxes on telecom services are hurting adoption of mobile broadband?</B>
<B>IWK:</B> The taxes on telecom sector are disproportionate to other services sectors. There are multiple overlapping taxes. Rs 36 tax per Rs 100 re-charge is a veritable impediment in broadband uptake across different economic tiers. Even spectrum fee is a form of tax. Reduction in taxes will increase penetration and in turn generate more revenue for the government. All those aspects need to be solved to unleash the digital economy.
<B>BRR: Why has the cellular sector been unable to nudge the government on the tax issue despite being one of the largest taxpayers in the country?</B>
<B>IWK:</B> Sitting in the industry, we can see that if telecom taxes are rationalised, there will be an overall benefit to the economy. It is not just what you can earn tomorrow morning, but about what kind of opportunities you can generate for future generations.
<B>BRR: How do you plan to scale Easypaisa service?</B>
<B>IWK:</B>Banking the un-banked is Easypaisa's raison d'être. We are focusing to reach out to communities based in diverse geographical locations across Pakistan. Our focus lies in increasing technology uptake so that more people can benefit from mobile financial services. We are expanding our digital ecosystem by adding more affordable digital gadgetry to encourage digital uptake in order to bring more people in the fold of technological advancement.
Over years, we have been able to build our household brand and our distribution reach. We have now about 75,000 Easypaisa retailers. Easypaisa has evolved into a comprehensive financial solution providing a number of convenient and accessible leading edge solutions, ranging from mobile money, car insurance, to escrow payment system for promotion of ecommerce and more. This will attract more and more people to benefit from these products and services.
<B>BRR: It has been noticed that branchless banking agents, who are the entry point for under-banked and un-banked people, generally encourage folks to perform OTC transactions instead of opening mobile wallets because OTC generates more business for the agents. How do you view this situation?</B>
<B>IWK:</B> I agree with you that a tension exists in the system. And it is quite natural. What we are doing about it, to create more awareness for mobile wallets, so that there is a consumer pull. We are making sure that more cash-in and cash-out points are available for Easypaisa users. Now there are cash-dispensing machines and IBFT facility as well on our mobile wallet.
I feel that over time, the dependency on digital retail channels will increase. We are already witnessing a huge growth in mobile wallets. The future is digital money, and retailers are starting to see that. We already have close to 30,000 biometric devices with our retailer network.
<B>BRR: Let's discuss the wholesale side of the business. How do things look on the optic fiber connectivity (OFC) front?</B>
<B>IWK:</B> Optic fiber connectivity (OFC) is a great challenge. We do have our own OFC network and are not dependent entirely on PTCL's network or others. When we started out in Pakistan, we had to go where the fiber was, basically in major cities. More expansion meant we were going to places where there was no fiber, so we had to lay our own fiber. We have been doing it for some time now. A cellular operator can pay to utilise an OFC network, but laying down such a network requires an altogether different focus.
The challenge is twofold. One is the international connectivity, where the government has to truly liberalise landing stations. Currently, all the undersea fiber connectivity is landing on the network of one large player and one small player. Result is that while bandwidth prices are coming down globally, in Pakistan they still remain high. Secondly, through government initiatives like USF, a lot more can be done to bring fiber optic connectivity to un-served tehsils and small towns so that everyone can benefit from broadband services.
<B>BRR: You mentioned USF. It's been a decade since USF Co was formed to undertake telecom development work in un-served and under-served areas. What is your impression of the USF in the pursuit of its mandate?</B>
<B>IWK:</B> We feel that there are better ways for telecom development in under-served and un-served areas. There is no one better qualified to roll out telecom infrastructure than the operators themselves. There could be a better model where there are additional obligations on licensed operators to roll out voice and data to those areas instead of asking 1.5 percent of revenue contribution every year.
We have confidence in ourselves that under a rollout-obligation model, we can do it better, cheaper, and faster. Telenor Pakistan is already in many remote areas where there is no other operator. But still there are areas in Pakistan where there is not even basic coverage. I think we need to have a discussion on this issue and set some objectives.
<B>BRR: There are too many youth in the country but too few jobs in the formal sector to absorb them. How do you see ICTs lending a hand in addressing that imbalance and boosting entrepreneurship in Pakistan?</B>
<B>IWK:</B> I see so much promise in ICTs to create opportunities for unemployed youth. Pakistan's start-up outlook is much more promising. There is a healthy trend of digital entrepreneurship in sight. Telenor Pakistan conducts a superb start-up support and acceleration programme, 'Telenor Velocity'. It helps young entrepreneurs launch their product in the market, find target users and grow their companies. The programme has been a resounding success among entrepreneurs and the increasing bulk of applications every year prove its impact and credibility.
We firmly believe that all we need to do is guide youth in the right direction by leveraging technology. A little support from the government and the society, and the ICT-based innovation will bring economic boom and multifarious opportunities in the country.
<B>BRR: Let's talk about Telenor Pakistan's CSR initiatives. How important is the sustainability of these projects and how do you choose one intervention over the other?</B>
<B>IWK:</B> Our CSR initiatives are not based on charity. They are based on how and where we can leverage technology the most and drive maximum impact. We are part of an ecosystem where we must collaborate with like-minded stakeholders. Sustainability of the CSR initiatives is of primary importance. We at Telenor Pakistan especially consider this aspect at length in order to provide perpetual benefit to the communities.
We realise that smart digital solutions are the best way to lasting and sustainable social projects. This is the reason why most of our CSR initiatives are digitally-integrated and made to be highly adaptable for both high- and low-end mobile devices. Some of the examples include m-Education, m-Agri, m-Administration, m-Government etc. Adopting and integrating the latest available technologies, Telenor Pakistan will continue to develop smart and sustainable solutions that have the power to transform societies.
Among our digital CSR initiatives, 'Mobiles for Birth Registration' stands out. Telenor Pakistan and UNICEF Pakistan, in close collaboration with provincial governments in Punjab and Sindh, jointly initiated this to mediate child's right to identity through mobile birth registrations. Given the fact that over 60 million children are unregistered in Pakistan, the project proved instrumental in increasing demand for registrations in the pilot areas as birth registrations grew by over 200 percent.
Besides designing sustainable models for the projects, we do engage with the communities and train them to involve and operate the projects, so that we can spare resources and focus in order to expand our CSR footprint to more geographical regions. Besides CSR, we are also looking to spread our values spanning corporate governance, diversity, and inclusion to local businesses. As a good corporate citizen, we would like to create more awareness of a different thought process.
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