Brief introduction/ Background to the case Industry Summary

Pakistan's economy remained under a great stress during financial year 2011 (July-Dec), mostly due to unexpected floods that spoiled one-fourth of the country's agriculture land and increase in oil prices. The dent to private public infrastructure, effect of supply disturbance, energy scarcity and price increases hit the economy. However, an unanticipated good performance by the services sector gave sustainability to GDP growth and the government successfully managed growing macroeconomic imbalances in the economy. State Bank of Pakistan sustained tight monetary policy to hold the inflationary impact and the only optimistic activity as a result to the floods was the vigor of external sector, where great inflow of aid and remittance played helpful role to economic revival. Government of Pakistan took noticeable steps to hold the fiscal deficit which remained under stress due to subsidies on energy and petroleum throughout the first half of the FY 2010-11. In comparison with the Pakistan economic condition the growth of telecom sector remained strong and positive. Telecom regulator continued to smooth the progress of the sector in regulatory issues and kept competition in the sector. TELEDENSITY

In comparison with the Pakistan economic condition the expansion of telecom sector remained strong and positive. The total teledensity increase kept fluctuating between highs and lows till the year end. Total teledensity counting mobile, fixed and WLL services placed at 65.2%. The teledensity expansion in the first half of the year (Jan to

June 10) was 0.9% while in the second half of the year (July-Dec10) the expansion was 1.7%, showing more steadiness and flexibility as compared to 1 half of the year. entire teledensity of the country increased by more than 2.67% in the last one year.

Company History/ Background

ABOUT ORASCOM

Orascom Telecom Holding S.A.E. ("Orascom Telecom") or ("OTH") was established in 1998 and has developed to become a chief player in the telecommunication market. OTH is measured among the biggest and most diverse network operators in the Middle East, Africa, and South Asia, and has achieved in early 2008 a license to operate mobile services in North Korea. Orascom Telecom is a wellknown mobile telecommunications company operating in six developing markets having a population under license of 430 million with an standard penetration of mobile telephony across all markets of about 40%. OTH operates GSM networks in Algeria (Djezzy), Pakistan (Mobilink), Egypt (Mobinil), Tunisia (Tunisiana), Bangladesh (Banglalink) and Zimbabwe (Telecel Zimbabwe). OTH had exceeded 74 million users as of March 2008. In Pakistan, the Pakistan Mobile communications Ltd (Mobilink) began its operations in 1994 and, until early 2001, had a market share of 40%. In April 2001, OTH had taken over management control of the company. As the market leader, Mobilink serves more than 31.6 million users, coveriing a market share of 38.5% (as of March 2008).

OTH has placed itself as a leader in the county for its varied GSM operations with a variety of GSM support and Internet sevices. One of OTH's major plan is to produce its own subsidiaries that are non GSM which act as a major support for its local GSM operations. OTH has attained this by allocation sufficient financial, technical and management resources for strengthening its subsidiaries. It consists of network support along with installation of gsm systems, handset purchase, equipment purchase, distribution firms, internet services and value added services. OTH is devoted to offer the excellent quialty services to its consumers, increasing share holder wealth and energetic work environment for its approximately 20,000 employees.

OTH attained a tough presence in the GSM Association (the world's leading wireless industry representative body) only five years after its beginning. OTH's Chairman and CEO, Mr. Naguib Sawiris, was chosen to join the GSM Association's CEO Board in 2002. OTH's stocks are bought and sold on the Cairo and Alexandria Stock Exchange (CASE), (under the symbol ORTE.CA, ORAT EY) and on the London Stock Exchange . Orascom Telecom designs and construct complete infrastructure of communication. As its business is communication so it provides the world with best ways of saying what people wants to say. When the world has got voice it can change itself for betterment of future.Today, Orascom Telecom work in seven countries and facilitate more than 30 million people to say their wish, doubts, aspiration and feelings. Their families of more than 15 thousand employees struggle everyday to make sure that the world will listen to the people's voices

ORASCOM Vision To become one of the worlds top telecom services provider offering the best quality services to our consumers, wealth to shareholders and a active, challenging and enjoyable environment for our employees. ORASCOM Mission statement Our mission is to fulfill every communication desires of the upcoming potential markets which we serve. It is our conviction that there is workable economic model to serve developing markets while utilizing reasonable quality. We are in a competition to serve the major number of consumers, covering the most densely inhabited countries in the world. Its our belief that by positioning ourselves as the main source of communication services, we are influencing the outlook of the markets we serve.

MOBILINK

Mobilink, a subsidiary of the Orascom Telecom Holding, is Pakistans top cellular and Blackberry service provider.having more than 31.6 million subscribers, Mobilink holds market leadership through advanced, incorporated technology, the greatest brands and the biggest portfolio of value added services in the industry, a broadband carrier division offering next generation internet technology along with the countrys biggest voice and data network including over 8,000 cell sites. Housing Pakistans biggest distribution and contact centre networks and an unmatched 6,500 kilometers fiber optic support, Mobilink has by now invested over US $3.3 billion in the country to date and gives continuous countrywide connectivity, matchless customer services and international roaming in over 140 countries. The company is also the official celluar collaboration with the Pakistan Cricket Board. As a dependable

corporate citizen, Mobilink also provides a variety of socially inclusive products and services devoted to improve access to information. Through Mobilink Foundation, the company supports education, health and environmental plans and encourages sustainable business practices. Mobilink offers diverse tariff plans that serve to the communication demands of a different group of people including common person to business men. It offers both postpaid (indigo) and prepaid (jazz) services. As compare to competitors the postpaid and prepaid services of mobilink are the biggest brands in cellular industry Along with providing highly developed voice communication services that makes the lives of millions that much easy, it also provides a host of value-added-services to its valued customers. At the same time, Mobilink gives high significance to its coverage, which is why it covers 10,000+ cities and towns nationwide along with 140 countries on international roaming service. Simply it speaks the language of people everywhere.

MOBILINKS VISION

To be the leading Telecommunication Services Provider in Pakistan by providing inventive Communication solutions for our consumers while greater Shareholder value & Employee Expectations ".

MOBILINKS VALUES TOTAL CUSTOMER SATISFACTION Customer are the core component of their success as they have put their trust on mobilink .it constantly struggles to indentify the emerging needs of customers and make endless efforts to satisfy their needs at its best which would surely be beyond the expectations of customers BUSINESS EXCELLENCE It always strives to make excellence in every business operations looking for the best standards and increasing the quality in every aspect of performance .it is committed to deliver best quality through supreme services and increased value for customers and share TRUST & INTEGRITY Mobilink is proud of being the most ethical company in telecom sector having high ethical standards in an honest environment. It honors its commitment and take responsibility of whatever it does and treat everyone with equality and fairness.. RESPECT FOR PEOPLE It gives maximum respect and reverence to its employees and stake holders and always believes in teamwork, delegation and respect. CORPORATE SOCIAL RESPONSIBILITY It always honors its responsibility towards society and environment in which it works .it always makes contribution in social causes and development programs for society .

PRODUCTS

Mobilink provides both Pre-paid and Post-paid services. They have specific tariff plans that are completely designed to cater to the communication requirements of a varied group of people, taking into consideration irregular users to businessmen. To attain this objective, they provide both postpaid (Indigo) and the prepaid (JAZZ) services to their consumers.

Jazz Jazz is an wonderful prepaid service that gives liberty from monthly bills and gives total control over the customers cellular expenses. The user can choose in advance when and how much he would like spend. He can load a scratch card at any time he wants to and begin talking. Jazz is easy, easy and lots of fun. In addition to offering higher voice communication services, they also provide a number of value added services to their prized subscribers.

Indigo Indigo is placed on family platform, providing a wide variety of products fulfilling to diverse needs. It consists of a variety of packages depending upon the consumption levels such as indigo initial and indigo 400 supplementary packages merge postpaid life style with economical rates. Call and organize is a hybrid product that gives prepaid handiness and postpaid control and is suitable for highend prepaid users.

VALUE ADDED SERVICES GPRS Mobilink Mustt Services SMS Messaging Power Tools Chat Services Dedication Services Power Tools Mail Services Info Services IVR Ring tones/Logos On Call Services Missed Call Alerts

Current status / Organization Mobile penetration Mobile penetration, which comprises main part of the teledensity of the country, stands at 66% at the end of December 2011.if we the existing penetration with parallel period of the year 2010, there is 3.1% increase. though, assessment of cellular mobile penetration with previous quarter, 1.5% drop is observed. Drop in mobile penetration is largely credited to decline in user base of Warid in the previous three quarters due to churn. The increase of mobile penetration across the nation is skewed towards Sindh and Punjab provinces where the penetration is over 80% and 66% correspondingly. nevertheless in Balochistan and KPK, it is below 50%. The penetration is jumped to grow in future, due to rural

expansion the operators are working upon. on the other hand, the cost of rural expansion may overshadow the profits of acquiring the low end rural users. The impact of launch of 3G services seems to be unimportant as the services will go during the Technology Adoption Lifecycle. Subscriber mix Mobile users in Pakistan reached 112.8 million at the end of December 2011 showing a growth drive as compared to preceding quarters of the year 2011. The subscribers raised by 2.3% in the previous quarter as compared to 1.3% increase in the quarter ending September 2011. Warid kept losing its users throughout the whole year but remaining operators gained superior number of subscribers. Zong performed outstanding and added over 5 million subscribers followed by Telenor which added 3.4 million users. Mobilink and Ufone had sluggish pace with 2.4 million and 1 million additions respectively. Zong is working very uncompromisingly in the market and the inspiring growth drive is insightful of the support of China Mobile - the world's biggest mobile operator. Telenor is also on the rise at a steady pace, and focused to increase postpaid users. A shortcoming pressure is felt on general growth of the sector due to the jamming of unregistered SIMs and ruling out the sale of handsets with dual or no IMEI number. It is, consequently, said that the market will regulate with numbers once the jamming of unregistered SIMs is ended

Market share Mobile market over the years has turn out to be more steady due to strong competition.Market shares are now more impartial among the

five operators with almost trivial changes over the year. Mobilink had led the market for a extended period but other operators are now capturing its market share such as Zong and Telenor. Warid also reduced market share in the reported period from 17% (Dec 2010) to 14% (Dec 2011). At the ending of December 2011, Mobilink had a market share of 30% followed by Telenor with 24%, Ufone with 19%, Warid with 14% and Zong with 12%. Zong is the only speedy rate operator that captured 4% market throughout the year 2011.

Mobile revenues Cellular mobile revenue shows 12.2% increase throughout first half of the FY2012. Quarter wise study shows a constant increase in the mobile revenues with extraordinary growth from March to June 2011 i.e. approximately 7% which return to normal in the subsequent quarters. This strange increase in revenue was largely due to enhanced revenues of Mobilink and Telenor through the said period. even though Zong showed outstanding growth in terms of subscribers but the profits growth was steady over 2011. Network Expansion Network expansion is time and again termed to be the major indicator of a mobile operator's growth. Number of cell sites is a measure that portrays the occurrence of the operator network around the country. on the other hand, with infrastructure distribution getting popular between the operators, erecting cell sites have become financially unviable for operators particularly in the areas where there is previously a network available. Infrastructure sharing is also a optimistic move towards environmental responsive telecom networks. throughout the reported period of six months (July-Dec 2011) a total of 1,384 cell sites have been added to the existing network by all operators. In the previous period

the addition was 886 cell sites from Jan June 2011. The operators are still focusing on the regions that do not have network entre or where the network has been broken due to floods.

Traffic SMS by large is the main data service in the rising markets around the world. Since most of Pakistani mobile subscribers can simply communicate via text messaging, so, a great number of services including Banking services, money transfer and information services are sent via SMS. The operators have been introducing massive messaging offers and SMS buckets to their users which ended up in intense reliance of subscribers on SMS service. Telemarketing is one sector which has amplified the SMS usage many times and looking at its attractiveness, PTA introduced procedures for misuse of services. During the first two quarter of FY2012, a total of 133.9 billion SMS were recorded by cellular mobile networks of Pakistan screening a constant increasing trend. According to Portio Research which is a UK based telecom research company, the intense texting Pakistani market has got 6th position in terms of SMS traffic in Asia-Pacific, only behind China, the Philippines, Indonesia, India and Japan, in 2010. The study says that on regular, a Pakistani user sends or receives around five SMS per day

Market & Competition Operators Comments Inception Technology Major shareholders Inception

1994 GSM 900/1800 Orascom 2001

Technology Major shareholders Inception Technology Major shareholders inception Technology Major shareholders inception Technology Major shareholders inception Technology Major shareholders

GSM 900/1800 PTCL (100%) 2006 GSM 900/1800 The Abu Dhabi Group (100%) 2005 GSM 900/1800 Telenor (100%) 1991 GSM 900/1800 CDMA China Mobile 1991 AIMS CDMA Wateen Group

Case focus (Problem or Opportunity) Supporting information (or Research) available Strategy options available Merits/ De-merits of each option Proposed solution/ Conclusion Risks/ Opportunities for the future