China Mobile Pakistan making quick inroads into Pakistan’s cellular market

In Pakistan since 2007, China Mobile’s Zong was the last player to join cellular mobile operators (CMOs) in the country. It is currently ranked fourth based on the size of its customer base with more than 17 million subscribers.

Zong recorded 50% growth in its subscriber base in 2011, and it is likely to achieve similar growth this year, according to the company. Owing to its strategy, which focuses on expanding the company’s subscriber base and cheaper calling rates, Zong has gained close to a million subscribers in the July-September quarter alone.

And while naysayers claim the company cannot survive for long based on its average revenue per user (ARPU) – currently the lowest in the industry – its optimistic CEO does not yet consider it a problem. “We in no hurry to increase our calling rates,” Jun says. “We are enjoying this position – offering the lowest calling rates in the industry.”

However, Jun does acknowledge that the company will have to raise its cellular tariffs at some point in the future. But he refuses to disclose how many consumers it wants to achieve before taking that decision.

“We are not bothered about the number at this moment,” Jun says. “We have been rated as number one in customer service and value perception and number two in the network quality. So, by the time we increase our prices, customers will have realised the value of our services and will be happy to pay higher,” he explains.

“Our direction is clear: we are currently focusing on scales,” he continues. Scales is tech-speak for what refers roughly to the size of a company’s subscriber base.

A greater return on investment may be the motivation behind this strategy. “The telecom industry is all about scales,” says Sajid Mehamood, Zong’s chief commercial officer. “It means that even if a company’s ARPU is low, its returns will still be good,” he explains to The Express Tribune.