Monday, June 06, 2011

Pakistan - The lack of success of China Mobile under the Zong brand

[cnbc] Ramble around Islamabad and you'll find the word Zong plastered on walls everywhere, and prominently displayed on signboards near the city's most popular Chinese restaurants.

But Islamabad's familiarity with Zong, the brand name for China Mobile's overseas operations, need not be interpreted as a sign of success for the Chinese mobile phone service in this crowded capital city, or anywhere else in Pakistan.

China Mobile has been struggling to build a Pakistani business since buying the domestic carrier Paktel, today known as CMPak and the brand name Zong, in early 2007 – four years after Pakistan opened its telecom market to international competition.

The acquisition marked a proud beginning for the Chinese carrier's global expansion, which continues today. China Mobile paid $560 million for what was then Pakistan's fifth-largest mobile operator.

But today, Zong is still in fifth place – at the bottom of the heap among mobile carriers in Pakistan, where the mobile phone penetration rate has stabilized at about 60 percent.

Zong's user base has increased from less than 1.5 million in 2007 to 6.92 million by the end of 2009, but its major competitors have picked up far more customers, according to the Pakistan Telecom Administration (PTA).

Among the 97.6 million Pakistanis with mobile phones in 2009, PTA says nearly one-third were serviced by Mobilink, a subsidiary of Egypt's Orascom. The Pakistani subsidiary of Norway's Telenor counted 22.5 million customers, while Warid Telecom had 18.8 million users and Ufone 18.5 million.

Neither is Zong getting the kinds of revenues enjoyed by its competitors. Among all carriers, PTA says, average revenues per user are about $2.50 per month. But a Zong user generates only an average $1.50 for the Chinese company.

Wrong Key Fumble for China Mobile in Pakistan

No comments: