PTCL group will have its own financial institution to offer branchless banking services: SEVP-Commercial

BR Research recently sat down with Mr Naveed Saeed, Senior Executive Vice-President-Commercial at PTCL, for an insightful and detailed discussion on the evolving ICT landscape in Pakistan. Following are the excerpts from his interview...
BR Research: What does it really mean when PTCL says 'Hello to the future'?
Naveed Saeed: PTCL has undergone massive transition since it has been taken over by Etisalat in 2006. Now, it's a transformed company with a new outlook, new culture, new management, and new focus, and has become more customer-friendly and customer-centric. It has moved on to the next level, and launched new services for both the wireless and wire line segments. Today, PTCL's portfolio includes services like Smart TV and EVO, and products like Smartphones and tablets. This essentially takes us into the futuristic direction.
Thanks to the large platform and network available with PTCL, our capacities to design, host, store and manage multiple services are immense. So, we are actually telling our customers to say "Hello to the future" with PTCL. This reflects our brand philosophy and our future direction in the business.
BRR: But the bread and butter for PTCL still remain its Voice business, whose revenues are on a constant decline for many years now.
NS: PTCL's voice revenue is still quite substantial, and we are trying to protect and maintain our share of voice in this hyper-price-sensitive market. We have seen shrinkage in our fixed line subscriptions, but that has ceased now, and the current subscribers are from the business community and households. We feel that Voice will eventually become a value-added service because the growth that we are having from the broadband services is expected to outgrow Voice revenues in the coming years.
We are expanding accordingly. Today, we have close to 800,000 DSL users, over 200,000 EVDO users, and these numbers are growing. These are high revenue and high margin customers, so it makes more business sense for us to sell one broadband connection rather than running after 3 or 4 PSTN connections.
BRR: So, what is the strategy in action at PTCL, to diversify the revenue mix away from Voice to other emerging segments?
NS: The strategy is to make the PSTN connection a prerequisite for a customer to avail broadband services. For the future, we are contemplating to offer double play services, rather than giving the PSTN connection alone. That's the model, and then we'll gradually go for triple play (voice, data and video), and then quad play which includes surveillance, too. Our "PTCL Jadoo campaign" is a step in that direction, which offers a PSTN connection, bundled with DSL broadband, IPTV, wifi hotspot and EVO backup.
Our business is to specialise in certain domains and provide customised solutions in every single one of them. Through unified connectivity platforms, we are moving towards cloud services where businesses would have dumb terminals and computers at their end, and their data storage would be happening at our end. That's the dimension we are moving towards where businesses get rid of their data warehouses and telephone terminals, and depend on us from emails to phone calls (VoIP) to broadband to mobility. We have the capacity to offer all these services under one umbrella.
BRR: How well-poised is PTCL to take advantage of the evolving data-age in Pakistan?
NS: Globally, data connectivity platforms, which are more efficient and accessible, are being used for Voice services, too. Smartphones and tablets, coupled with a plethora of applications, have given a boom to this data age. The Pakistani telecom market, which has hit saturation point in the Voice segment, is going in that direction; therefore, growth will be driven by the data market. PTCL is extremely well-positioned to take advantage of that because we are backed up by the fiber optic, backhaul, long haul infrastructure, and under-sea cable infrastructures. We have data centers, landing stations, internet gateways, IPTV services and unified communication platforms.
On the business side, the per capita data consumption is going to be far bigger than that in Voice, because there is so much that can be extracted from data services. Commerce, logistics, trading, and banking - all of them have to eventually move on to the data platforms. This has already started in Pakistan. For instance, we have connected over a thousand branches of National Bank of Pakistan, and given them a total new network and centralised connectivity.
So, whether one likes it or not, Voice is going to take a back seat, and data is going to be the primary driver for connectivity and business growth. Customised iPads for various business functions have been launched in the West. For instance, Industrial iPads have been marketed in the US for inventory management, logistics, etc. I believe that Pakistanis are going to be early adopters in this data age. We have been gearing up for that by launching customised, 3G-enabled Smartphones and tablets. We are offering the device as well as data connectivity in a price that is unmatchable, and the market uptake has been really good. We are contemplating to launch another tablet device soon.
BRR: Since you are marketing customised Smartphones too, what is your take on the dynamics of the Smartphone market in Pakistan. Will the device usage increase in the foreseeable future?
NS: The mobile network operators have the ability to identify the exact profile of the Smartphone users on their respective networks. That's one of the bases that the MNOs are ambitious about the upcoming 3G spectrum auction. The size of the Smartphone market is estimated to be between five to six million users in Pakistan. This market will eventually outgrow the dumb phone market because a smart phone is capable to communicate with platforms like Android and Apple's iOS, which are very versatile compared to conventional STK platforms.
Mobile applications and the 3G-enabled data experience are worthwhile only on a Smartphone. After the 3G spectrum auction, the circulation of smartphones is bound to increase. MNOs would be pushing themselves to protect their 'Smartphone category' of high-end users.
BRR: How do you see the future of tablet computers in Pakistan?
NS: The uptake is already happening. We recently gave a presentation to CM Punjab, who is now contemplating to adopt the tablet model after distributing laptops to students. PTCL is trying to evolve applications that can potentially transform the way education is provided. We are envisaging a scenario where education is provided through tablet computers.
This model would offer a complete academic environment on a single device. Students wouldn't have to buy books, because they will be available on an e-Reader on the tablet. We are trying to develop a column where they can write notes and highlight important points. The teacher would immediately learn about the class attendance as students walking into the class would automatically be registered. Class work, quizzes, home assignments and final exams would be disseminated through these tablets and submitted back through the same.
This model has received immense attention in India, where the government is soon going to make it mandatory for all the schools. Tablets costing less than $50 are on offer in India. I have a feeling, if we adopt this model we are going to leap much ahead because we are less structured than India. We at PTCL are convinced that we have to bring this service to the community.
BRR: Pakistan's is over a hundred million mobile-user market. Why is it that not a single mobile manufacturing company is found in Pakistan?
NS: That is really ironic because the mobile handsets market in Pakistan is still very large, as roughly one million new cellular subscribers are being added to the tally every month. This is a big market where roughly one million handsets are required by just the new subscribers. Add to this the upgrades and replacement of handsets and we are looking at a demand of at least two million new handsets per month. If we take the average price at $50, which is a very conservative price, then that's at least $100 million in foreign exchange lost every month.
The mobile handset manufacturers should have come to Pakistan long ago. Hundreds of millions of dollars are unnecessarily going out of the country on handset purchases. At least some brands, if not the top brands, should have been here.
BRR: Being a wireless broadband service provider, how would PTCL compete with the soon-to-enter 3G operators who will be offering high-speed mobile broadband?
NS: We are in no way threatened because our primal business is wire line and our support is wireless. Thanks to its optic fiber network, PTCL can offer upto 100MB broadband to its users, and a host of other services including IPTV, surveillance, etc. We are selling our dongles, and we will continue that after the 3G rollout. Today, our wireless footprint, spreading over 200 cities, is at par with any GSM operator.
BRR: How do you foresee the appetite and uptake of 3G-enabled services in the low ARPU segments?
NS: We have already seen very high usage of internet services from rural areas, and interestingly the per capita data usage is actually higher in smaller cities compared to large cities. This is perhaps because of greater quest for knowledge due to lesser access to the information highways among the dwellers of these areas. So, the uptake would happen. There was a stage when many in Pakistan did not know how to use SMS. Yet today, Pakistanis are one of the most SMS savvy nations in the world.
This service is going to affect everyone in society. The content is there, the platforms are there, the applications are there, the push is there, and the will and desire are there.
BRR: Any progress vis-à-vis stepping into the branchless banking market?
NS: The Etisalat group is very much interested in this market. Though it is still evolving, we, as a group, feel that we can really benefit out of the huge market of commerce, remittances, banking and financial transactions and cross-border commerce by leveraging the outreach of Ufone and PTCL. We are looking at having our own financial institution to be able to offer branchless banking services. Ideally, we are best suited to lay the platforms, connect all the banks and the MNOs.
Brief Bio: As SEVP-Commercial at PTCL, Naveed Saeed is responsible for all the revenue streams of the Company. Saeed has a rich profile in the telecom sector spanning over a period of nineteen years. He has previously held leadership positions in telecom firms such as Warid Telecom, IMTCL (Thuraya project), Mobilink, Instaphone, Pakcom Limited and Paktel Limited (now China Mobile Company).
All information and data used are from reliable source(s) and subjected to extensive research after diligent and reasonable efforts to determine the soundness of the source(s). This analysis is not for the benefit of or discredit to any person, scrip or tradable instrument. The content(s) of this analysis shall not be construed as an advice or recommendation to trade. No relationship of client will be created between Business Recorder and user of this information. Professional advice must be taken by the reader before making investment/trading decisions. BR disclaims any liability for investment(s) made or liability accrued on basis of this analysis. The content(s) including all opinion(s), statement(s) and information are subject to change without prior notice and/or intimation.