Royal flush

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Bashir Tahir, Warid Telecom International CEO, claims the company is targeting a 25% market share in Bangladesh inside 18 months of operation.

Warid Telecom is the third largest cellular operator in Pakistan with 9.7 million subscribers and 16.6% market share as of April 2007. (Getty Images)

Warid Telecom International hit the headlines recently with the announcement of the sale of a 30% shareholding of its Pakistani operations to Singapore telco SingTel for a reported US$750 million in a deal that values the overall Pakistan operator at US$2.9 billion, according to Warid.

Boasting a network of 11 million subscribers, Warid is ranked third in Pakistan's sprawling telecoms market that services a total population of 160 million.

The development seems a natural progression of SingTel's strategy to gain entry into markets with high growth potential. With mobile penetration currently estimated at 35% in Pakistan, the move completes the Singapore company's presence in the Indian subcontinent.

Commenting on the deal, SingTel CEO Chua Sock Koong said: "SingTel has made substantial investments in markets with high growth potential in South Asia, such as India and Bangladesh. Warid Telecom in Pakistan is a natural fit."

Warid Telecom International's CEO Bashir Ahmad Tahir explains how the deal is valuable to his organisation and reveals to CommsMEA that such a move was not taken lightly.

"Prior to the SingTel deal, we had approaches from Vodafone, MTN, MTC Group and Malaysia Telecom. However, what made the SingTel offer more attractive than the others was the company's major presence in the Indian market," explains Tahir.

Warid stands to benefit from the deal as it offers the company enhanced access to the wider subcontinent through SingTel's 31% holding in India's Bharti Airtel.

"We believe that it is only a matter of time before the borders of India and Pakistan open up," suggests Tahir. "When this happens we will be able to leverage our operations in Bangladesh and Pakistan to tie up with SingTel's network," he adds.

He goes on to detail Warid's ambitions to link its existing fibre optic network in Pakistan, as well as its planned fibre deployment in Bangladesh, to Bharti Airtel's giving Warid access to a combined market of approximately 1.4 billion inhabitants. Tahir also notes that mobile penetration should reach 50% in Pakistan within the next five years.

Another bonus for the company is the preferred interconnection arrangements and roaming agreements it will benefit from as a result of the Bharti Airtel network, giving Warid increased access to SingTel's 110 million subscribers across the globe.

"Finally the deal will benefit us through our vendor relations, as with an increase in the numbers for bulk orders we can achieve increased synergies," Tahir states.

Sourcing the bulk of its financing from a consortium of nine core investors, including Sheikh Nahayan Mabarak Al Nahayan, Warid entered Pakistan in 2004, having paid a licence fee of US$291 million to become one of the country's six mobile operators.

Upon Warid's market entry, Pakistan had close to 7% market penetration across the mobile and fixed-line segments, despite the presence of four separate licensees prior to its market entry.

"At that time many people thought the price was too steep given the presence of other companies in the market, although our board was forward thinking enough to see the potential of such an investment," notes Tahir.

"The main motivations for the Abu Dhabi Group's strategy in the telecoms market is the need for communications in developing nations," he adds.

Tahir also maintains Warid's success has been built on the Abu Dhabi Group's belief that customer service is key to maintaining a healthy bottom line, and has been quick to introduce customer service innovations.

Warid set about investing significant amounts of capital in its infrastructure in Pakistan in order to offer the highest quality of service, in much the same way that parent company Abu Dhabi Group entered the country's banking sector.

"We did not want to enter the market with services that would be typical of the emerging world. It was our mission to offer the best services available to the market," recalls Tahir.

With a 900MHz-1,800MHz licence, Warid launched services using its 2G network in May 2005 when the competition was "sleeping", as Tahir likes to describe it.

"Effectively, we were the fifth entrant into the market but we like to believe that our fresh perspective on the market enabled us to outpace our competitors," comments Tahir.

The company maintains that its mobile network rollout at launch covered a "record-breaking" 28 cities at its launch, representing 20% of Pakistan's population, with the company achieving a subscriber base of 1 million inside its first 80 days of operations.

An important part of this market entry strategy was to ensure that Warid subscribers would have coverage in the interconnecting motorways between Pakistan's cities.

"Paying attention to the finer details, such as providing coverage on the road for commuters, is key to our track-record of speedy market entries," says Tahir. He also maintains that Warid's emphasis on high levels of customer services has thus far motivated its pairing with Ericsson.

"When entering a new market it is crucial, particularly as a relatively late entrant, to offer the latest value-added services available," says Tahir. Warid leveraged this approach in order to achieve a healthy segmentation of the Pakistan telecoms market with the operator counting the majority of the country's post-paid subscribers on its network.

"In Pakistan, we focussed quite intensively on the post-paid segment as our competitors are heavily reliant on the prepaid market," Tahir explains.

At present post-paid customers account for approximately 15% of subscribers on Warid's network, with Tahir noting this number surpasses the number of post-paid subscribers of all its rivals combined.

"Targeting this segment yields greater returns and enabled us to become cash-positive in 17 months," asserts Tahir.

"Obviously there is a greater credit risk involved with targeting this segment of the market but at the time of taking this decision we felt that our [the Abu Dhabi Group's] experience in the banking sector equipped us with the necessary knowledge and resources to successfully implement this strategy," he adds.

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