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BR Research

Interview with the CEO, Telenor Pakistan

“Leadership is important during events that threaten business continuity” Irfan Wahab Khan is the CEO of ...
Published December 14, 2020
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“Leadership is important during events that threaten business continuity”

Irfan Wahab Khan is the CEO of Telenor Pakistan. He is also the Chairman of Telenor Microfinance Bank. He has also served as President for OICCI during 2018-19. Khan has more than two decades of experience with leading telco’s across North America, Europe and Asia. He was among the first members who launched Telenor Pakistan back in 2004. Since 2009, he has served in various capacities with Telenor: as Group VP, Devices (Norway) and VP, Head of Asia Distribution (Thailand). Khan has a Masters degree in Mobile and Personal Communications from University of Westminster, London, UK. He also has qualifications in Financial Management from Harvard Business School, executive diploma in Marketing from London Business School and Business Management from INSEAD.

BR Research recently had a discussion with the Telenor Pakistan CEO on the opportunities and challenges in the ICT space in the context of Covid-19. Selected excerpts are produced below:

BR Research: We have been hearing that Covid-19 has been a catalyst for digitalisation in Pakistan. But when we look at objective indicators, especially concerning those in the digital payments domain, we don’t see a remarkable acceleration in pre-Covid growth rates. How do things look from your vantage point?

Irfan Wahab Khan: We have seen that Covid-19 has broken a few mental barriers when it comes to digitalisation. Some of the indicators that we have looked at seem promising than before. For instance, transactions falling under digital financial services were averaging 170,000 to 180,000 per day in the pre-Covid times for the whole industry. These transactions have now grown up to 700,000 transactions per day, a manifold increase. Similarly, about 25 percent of our customers used to digitally top-up their mobile balances – this has jumped to 36 percent after Covid-19. Also, between Easypaisa and JazzCash, the electronic cash that is used by customers every month has exceeded Rs100 billion during the pandemic.

We feel that if we had been on the longer-run growth rates of the pre-Covid times, it would have taken us three to four years to reach these levels. We still have a long way to go, but the progress in the last two quarters has been encouraging from the digitalisation standpoint.

BRR: To cope with the challenges of operating in the times of coronavirus, what kind of steps did Telenor Pakistan take?

IWK: On our back-end, we are proud that we were able to move, within three days, from a physical setup to everything online, making things touch free. These virtual operations spanned network operations, network maintenance, remote planning, distribution, etc. But we understand that we are not a true reflection of the economy in the digitalization context, for being a technology company we were ready because of our investments. For other businesses, it might not have been the case. But as with other sectors and firms, our first challenge was to protect our own employees, partners, sales force, field staff, security, etc. As a gesture, we made sure that we provided health kits – masks, sanitizers, etc. – to all our people so they stayed healthy and safe.

The real challenge, however, was that we had to make sure that our services were there, uninterrupted, for ICT is the driver of other sectors. In some places, we noticed migration as some people had left urban areas during the initial lockdown in late March and early April to move back to the villages. Similarly, kids were not going to school and adults to their place of work, while people stayed home. All of that changed the patterns of network traffic and data consumption in Pakistan, which then necessitated the need for network upgrade as well.

We all worked hard to provide continuous service, for which we had the government’s support in that they classified telecoms as an essential service. Another problem that arose was how to enable our customers to recharge their mobile top-ups when small merchant shops and stores were closed during the lockdowns. In the pre-Covid times, about 5 million of our customers used to top-up their mobile balance every day. As a response to this challenge, we penetrated further into non-traditional channels like pharmacies and grocery stores for this purpose. We also encouraged customers to use digital channels – through online/mobile banking and Easypaisa. We have also launched the Direct to Retail model, which helps the top-up to be sent over the air.

Entering more of a stable phase after the lockdowns, we started to make sure that our people were free of fatigue and stress of working from home. There were legitimate challenges to tele working, including connectivity, joint-family systems and responsibilities at home, after-hours work requirements, and blurring of line between work and life. So we tried to ensure that tele-working remained a smooth process so that employee wellbeing and health weren’t affected. Besides, we also made available support services, including psychological support and counselling sessions, to ensure mental health of our employees. In addition, we used our tools like the Intranet where people could connect with each other beyond their transactional work. We have also encouraged our people to take an extra day off. We have also facilitated them with some meal vouchers where they can go out with their families.

I think we have done rather well to acknowledge the challenges and create a sense of community within our organisation. The employees have noticed not only our bigger interventions but also seemingly smaller ones that I outlined earlier. Still, we are unable to gauge the longer-term impact of tele-working and the anxiety and the stress it can create.

BRR: The pandemic is global and Telenor Group also has global presence. At the group level, what lessons were learnt regarding business continuity?

IWK: At the outset, none of our business continuity plans had predicted or accounted for a pandemic-like situation. And frankly, no other company did either. But the primary lesson, as a matter of reflection, remains the same: you need to be resilient enough to withstand something like this. From the Group, we benefitted learning in the sense that some of the other markets – such as Malaysia – had started going into quarantines earlier, around February. We benefitted from their early experience and by the time the coronavirus really started spreading in Pakistan in March, we were physically and mentally ready for different scenarios.

From the technology viewpoint, we were able to rapidly move to zero-touch operations because of our prior learnings in Pakistan. We hadn’t experienced an epidemic in Pakistan before, but we had a lot of experience working amidst crises like natural disasters, security incidents, political unrest, etc. This experience, in a way, helped us prepare in terms of preparing for disaster recovery, having multiple locations, etc. The operational challenges meant that we were running some kind of a BCP (business continuity planning) scenario at least once or twice a year.

I would like to add here that the pandemic has illustrated the importance of leadership during events that threaten business continuity. A leader has to be transparent and be willing to lead from the front during a crisis. In the early days and weeks of the pandemic, you may recall that there was a lot of misinformation but not many sources of reliable information. And this wasn’t just the case for social media but also from the government that wasn’t proactive in this regard. Our employees and partners were looking towards the leadership for guidance, to provide the right and transparent information. We, as an organisation, have learnt that the primary tool to reduce uncertainty during a crisis is to communicate transparently.

BRR: You mentioned tele-working a while ago. Anecdotally speaking, there is an apparent rise in the incidence of tele-working in Pakistan amid the pandemic. How do you see the opportunity in this regard, considering that stable Internet connectivity is still a challenge?

IWK: There is no denial about the fact that Pakistan has some way to go when it comes to stable Internet connectivity. We know that more than 95 percent of Internet users in Pakistan are accessing the Internet through their mobile phones. We, unfortunately, do not have a decent penetration of fixed broadband connections at homes. When it comes to mobile broadband, as an industry, we see a lot of gaps in terms of what can be done or should be done. It’s a food for thought, for the government and the industry, to see how we can fix this problem.

Still, Pakistan’s IT exports sector was able to capitalize on some back-office IT work opportunities (during this period) at the expense of India and the Philippines. And there is no doubt that the role of tele-working is going to increase in Pakistan, while acknowledging that its prevalence here depends on social values, psychological issues, infrastructure limitations, etc. Tele-working is important also because we have about two million people entering the labour market every year – what are we going to do with those people, given that the public sector won’t be able to absorb them? The country needs a plan to up-skill its youth so they can become part of the knowledge economy.

A recent European study showed that 700,000 jobs remained vacant in the EU because they couldn’t find people with the right competences. Most of those jobs are in the ICT space such as AI, machine learning, data analytics, etc. If someone has the skills to provide those services, let me tell you it doesn’t matter if that person is based in Madrid or Mardan, their services will be taken up. But are we really ready? We may be the fourth-largest freelancing country in the world, but our youth is only earning $4 an hour, on average, if you look on a large scale. Whereas higher-end skills command around $40 an hour. So how can we move from $4 to $40? How can we guide people? Apart from a few institutions, others are not churning people with valuable skillsets, and the industry is also to blame.

BRR: So what kind of a role can Telenor play in developing the country’s digital ecosystem?

IWK: No one company can do this alone, but we are trying to do our best to help develop the digital ecosystem. We have a digital accelerator called Velocity, which brings start-ups on board. We give them what they don’t have: the scale. We provide them opportunities to leverage our network of 47 million customers, our data analytics capabilities and our wide distribution network. We do a lot of mentoring and we have had many success stories over the past few years.

Apart from that, we are also working on the skill-set improvement. As we speak, we are training about a thousand students on various digital skills. We have a strong focus on building capabilities of female entrepreneurs. We have also been partnering with like-minded organisations working in the digital ecosystem, to actually do megathons and trainings.

BRR: Pivoting to the sector fundamentals, is the telecoms sector entering a mature lifecycle resulting in CAPEX cuts? Or are there any other reasons for this?

IWK: We are part of the broader economy and when you look at the headwinds, especially on the macroeconomic front, our consumers tend to spend less, prioritizing other expenses. Another issue is the devaluation of the Rupee over last few years that has impacted capital spending. Then there are pending policy issues that have made things uncertain. Businesses want policy and regulatory predictability, so that they can forecast the lay of the land for next five years. While it is possible to provide such certainty, it is not there in Pakistan yet.

Earlier, we discussed the need for better connectivity, but when you look at spectrum, which is the heart of the mobile and wireless sectors, our country is saving on the spectrum for nothing. The spectrum has been priced so high that its deployment has not been to an optimum level. Some bands have gone unsold, because the policy favoured short-term money rather than long-term economic contribution via broadband development. Pakistan has deployed just about a third of the spectrum that it potentially can, far lagging international best practices. Rest of the spectrum is just wasting. During Covid, about 24 countries have released additional spectrum free of cost to meet bandwidth needs.

Therefore, in light of the above, I won’t say that the industry is maturing. We are in a different phase of growth given the regulatory challenges. And the technology cycle is a bit different than other sectors.

BRR: There is some effort to bring in predictability – for instance, a Rolling Spectrum Strategy (2020-23) was approved by the government last month. Would it help provide a more technical lens rather than a fiscal lens when it comes to spectrum management?

IWK: I certainly hope so. They have approved it in-principle for now. A consultant is being hired who will provide recommendations in the next six months. I would reiterate that we need to make the spectrum pricing reasonable, in line with our own economic conditions and buying power of consumers. We cannot compare with countries that have different dynamics. So unless the price is reasonable and the terms and conditions are fair, it would be hard to utilize the country’s potential in Digitization. I hope that it will be reasonable.

BRR: Do you have appetite for more spectrum at this stage?

IWK: We will definitely evaluate what is on offer, based on the spectrum pricing and the terms and conditions. It’s hard to comment without knowing about those two things.

BRR: What is the update on litigation against the relevant government authority on the matter of pending renewal of Telenor Pakistan license?

IWK: The matter is subjudice before the courts, so I won’t be able to comment. But I will point out that the license-renewal episode goes on to show that we are stuck in the issues of the past. This situation hampers us from looking into the future.

BRR: What is your strategy to arrest the decline in average revenue per user (ARPU) per month?

IWK: Overall, the declining ARPU is linked with the buying power. When consumers are under economic pressure, it is only natural that they will optimise. Alternatively, from a user’s standpoint, this is good because there is a lot of competition among operators. Pakistan is one of the cheapest markets in the world when it comes to voice or data tariffs. The user is getting a lot of value, and this sector is a great example of a well-performing sector that is deregulated and competitive. But the cost of doing business is also going up.

From our perspective, we would like to give value to our customers through digital, financial and entertainment services so that they can spend more through our networks. And for that, we are doing a lot of innovation.

BRR: It has been observed that ARPU can ameliorate if an operator has bigger scale, e.g. through an acquisition. If another opportunity presents itself for further consolidation in the sector, will Telenor be interested?

IWK: There is no doubt that the Pakistani market is not a four-player market. And consolidation has happened in a lot of markets overseas. And in many of those markets, there are no more than three players. So, we also think that three-player is the right size for Pakistani market. It’s too early to comment regarding our interest, but if an opportunity arises, we will assess it.

BRR: In the end, what are some of the key policy suggestions from your end to improve ease of doing business in these times?

IWK: We don’t seek anything more than a level-playing field and a predictable and enabling environment. We have a huge opportunity to create value for the country by using the ICT space. The policymakers need to think strategically and reconsider what is more important. ICT as a sector is poised to play a bigger role, especially when it comes to export revenues, employment generation, public sector governance, efficiency improvements, etc. Now the key is how do we facilitate this sector, how do we remove irritants like heavy taxes on mobile broadband users, how do we ensure that spectrum is released at a reasonable price, and how do we balance between short-term gains and long-term benefits for the economy.

© Copyright Business Recorder, 2020


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