Wednesday, August 15, 2007

Telenor Pakistan Plants a Flag on the Tip of the M-remittance Iceberg

Telenor Pakistan announced a partnership this week with ezetop Ltd (of Ireland) to offer a new “International Recharge” service for its customers. The service allows people working overseas to send phone credits to friends and family back in Pakistan.

From the available details, Telenor Pakistan’s new service is a bit cumbersome compared to mobile phone-based remittance services in more advanced telecommunications markets like the Philippines. To use Telenor’s service, overseas workers must visit an “ezetop distribution partner,” buy a voucher and send the voucher details back to relatives in Pakistan. But Telenor Pakistan’s service is a start, and they will likely improve the process in time to capitalize on m-banking services as they spread through Pakistan and other developing countries.

Pakistan has seen astonishing growth in mobile subscriptions in recent years. There are now 63 million subscribers in Pakistan, up from just 3 million in 2004. However, with a population over 150 million, there is ample room for growth. In an upcoming report on financing options for handset buyers in emerging markets, Vital Wave Consulting estimates Pakistan’s total addressable market for first-time subscribers at around 24 million.

Telenor Pakistan has mirrored the industry’s growth, jumping from 3.8 million subscribers in July ‘06 to over 9 million in March ’07 (or 16% of the Pakistani mobile market). Though aimed at current mobile phone users, Telenor’s International Recharge service could also help drive new subscriptions and mobile handset sales. Many potential buyers in Pakistan’s near-term addressable market are poor, speak a minority language, and live in remote areas; it can be very difficult to reach them via traditional media. Marketing to the economic buyer (overseas workers) rather than the end user could be a cost-effective way to extend mobile communications to new users (family or friends in Pakistan). Handset manufacturers could also join carriers to enable purchases of handsets, in addition to phone time. Telenor Pakistan, its partners and emulators would be tapping into a sizeable opportunity. Worldwide, remittances from overseas workers total more than $250 billion annually – vital income for millions of emerging-market families.

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