Abu Dhabi-owned telco Warid to spend $470m on network upgrades

Pakistan's Warid Telecom, wholly owned by privately-held Abu Dhabi Group, has seen subscriber base slump
Abu Dhabi-owned telco Warid to spend $470m on network upgrades
By Reuters
Fri 17 Oct 2014 01:12 AM

Pakistan's Warid Telecom, wholly owned by privately-held Abu Dhabi Group, will invest $470 million over five years to bolster its network, following a failed attempt by its owners to sell the mobile operator this year.

Warid Telecom has seen its mobile subscriber base slump from 17.9 million in 2008-9 to 13.1 million in May 2014, according to data from Pakistan's telecom regulator.

That is barely half the subscribers of No.4. player, Etisalat unit Pakistan Telecommunications Co (PTCL), which has 24.6 million, and Warid's decline partly coincided with owner ADG's failed attempt to sell the company.

ADG scrapped a sale of Warid to PTCL in March, and is now committed to the firm, Tariq Gulzar, Warid's chief financial officer, told Reuters in a telephone interview.

"Our total capital expenditure (for) the next five years will be about $470 million. A lot of this is going towards technical investment in terms of upgrading to the newer technology, from 2.5 to 4G," said Gulzar.

"Over the last 2-3 years, when we were going through the M&A process, we were a little dormant, we were holding back on those investments which we're now going through."

The investment plan began in July 2014, the start of Warid's financial year.

"This will be financed by the operations and partly by the shareholders - we're not going for any external financing," said Gulzar.

Warid Telecom and China Mobile, which operates under the Zong brand, are in the process of launching 4G, or long-term evolution (LTE), networks.

These offer Internet speeds potentially multiple times that of 3G, which Pakistan's three other operators - market leaders Mobilink and Telenor, plus PTCL - opted for, following a long-delayed spectrum auction in April that raised $1.1 billion for the government.

Warid did not need to participate in the auction because its licence is technology-neutral.

"Warid always had enough spectrum available to launch 4G/LTE service," said Gulzar.

"We have one of the largest post-paid (contract) bases. We have a large youth base. These are the two segments that are very data-centric, so we don't have the luxury of losing these."

Customers on monthly, or post-paid, contracts typically spend more on telecoms and are less likely to switch provider.

Warid is testing 4G in 3-4 major cities and will commercially launch in the next few weeks, said Gulzar.

He warned a lack of 4G-enabled handsets may slow the take-up of the technology, but said that as high-tech phones became more widely available it would help Warid win new customers.

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