Zong CEO hints at one other attainable merger

Zong, Ufone, Mobilink, Warid and Telenor
Zong CEO Liu Dianfeng hinted at one other attainable merger within the nation’s vibrant telecom sector, saying that Pakistan ought to ideally have three mobile cellular operators.

Sharing his views on China Cell Pakistan Restricted’s (Zong) future plans, Liu stated that it was troublesome to generate earnings in Pakistan given the dimensions of the market and variety of gamers.

Zong declares over $300m funding throughout 2016

He was referring to the present lot of 5 gamers – Zong, Ufone, Mobilink, Warid and Telenor – that compete on tariffs to seize market share.

“It’s troublesome to make earnings in Pakistan’s market and the return on investments is available in totally different outlines,” Liu instructed. “Perhaps, sooner or later, we are able to consider shopping for an operator.”

The corporate, which is the third largest cellular service operator within the nation, is at the moment enduring low margins and is burdened by heavy taxation like all CMOs. Pakistan’s telecom sector faces heavier taxation than its regional counterparts, hindering prospects of progress regardless of the arrival of 3G, 4G providers.

Liu stated the mother or father firm’s funding $three billion, which incorporates $1 billion for 3G and 4G spectrum licences in 2014, has nonetheless not managed to show issues round.

Earlier this 12 months, the corporate additionally introduced one other $400 million funding to improve its current infrastructure, thereby including extra 3G and 4G websites to its community.

“At the moment, we’ve 5,000 3G and a pair of,700 4G websites, with a subscription base of 6 million and 0.6 million, respectively. In 2016, we may have a further 2,000 4G websites.

“On the identical time, 95% of our 2G websites will likely be upgraded to 3G and greater than 60% will likely be upgraded to 4G,” he stated.

“To develop a 4G market and putting in these websites is a giant problem particularly when the federal government is constantly burdening the business with heavy taxation, the current instance of which is the taxation proposal on smartphone handsets.”

Liu stated the corporate’s most important goal for the subsequent six years could be to shift half of the whole subscriber base to 4G, and 75% to 3G networks. He additionally expressed his keenness to introduce low value smartphone handsets in Pakistan.

The administration of Zong, like all different telcos, is uneasy with taxation points whereas coping with federal and provincial governments. This has squeezed their income margins, and in accordance with Liu, in 2015 the corporate paid 41% taxes to the nation’s kitty.

Within the first quarter of 2016, the scenario has change into even worse as the corporate has paid 44% of its revenues to the federal government in form of taxes.

“The federal government has the proper to tax providers, however the telecom sector is already affected by a saturated market,” he stated.

“It’s troublesome for 5 operators to be worthwhile on this area, to draw extra overseas funding and supply aid the subscriber.”

At the moment 20% of firm’s revenues come from knowledge bundles and the remaining from voice site visitors, which has witnessed a decline in 2015.

Liu stated that by 2017, they’ve plans to additional enhance its knowledge share as much as 30%. “Although the info site visitors mannequin in Pakistan is gradual however we should push this, nobody can ignore the web, it’s a enterprise for us and we should settle for this.”

“Nobody is aware of what will occur, however we do know that our knowledge revenues will proceed to rise”, he stated.