MARYLOU MCCORMACK: How has the pandemic impacted the telecommunications sector?
IRFAN WAHAB KHAN: In general, the pandemic has supported our business. Certain segments were affected; for example, international roaming because there were fewer travellers, but that was compensated by people working online, from home, online classes... And of course digitisation was accelerated.

MM: What do you mean by digitisation?
IWK: Telecom is not just one sector, it is a sector of sectors; health, education, commerce, agriculture, citizen services, government services – they all need to be digital. The same is true for payments and this means moving from a cash to a digital economy with more and more businesses adapting to technology. Before Covid-19, on a typical day close to five million Telenor customers used to go to mom and pop shops to top up their phone balance, although this could have been conveniently done through mobile wallets or digital banking. This shift has now started to happen. Similarly, in terms of how we operate, many things were done manually, but now we can do them remotely. This is the broader context of digitisation.

MM: How have Telenor adapted their products, services and business operations to reflect the new post Covid-19 reality?
IWK: I would like to take a step back and look at how different crises have shaped businesses. In the forties, when women started entering the workforce, home appliances were introduced. In the early 2000s, when SARs hit Asia-Pacific, it became the basis of e-commerce and mobile payment adoption in East Asia. With the global financial meltdown of 2008, a lot of people became unemployed and a shared economy was created, with companies like AirBnB and Uber coming to the fore. Only the future will tell what the highlights of this pandemic will be, but we can already see the adaptation to technology. Those companies which invested in technology during this crisis have come out stronger because of shifts in customer behaviour. Early in the pandemic, people moved from cities to rural areas, so we enhanced capacity in those areas and we also enabled a lot of digital payment channels.

MM: How will the budget impact voice and data connectivity rates?
IWK: It is a mixed budget and some incentives were given. A new tax has been imposed and we are trying to figure out how to implement it. This is a tax whereby 75 paisas will be imposed after the first five minutes. This is going to significantly increase the cost and the taxes and will be a technical nightmare because our billing system does not allow us to do this. There are a lot of bundles and many people are not on a standard rack rate, they are on packages. So it is very hard to start charging with this logic. That is the first challenge. Secondly, the price of long distance calls will go up. That is not good because telecom is already a heavily taxed sector. We foresee a loss in the voice business which is ongoing, but at this point data usage is compensating for this and is likely to continue.

MM: How has the pandemic impacted digital payments?
IWK: Pakistan is a cash economy. The size of retail is six to seven trillion rupees and only 20% of the population is banked. Through initiatives like Easypaisa, we are trying to bring in more financial inclusion. There are almost 20 million Easypaisa users and eight million of them use our app on a regular basis (multiple times a month) and in 2020, our customers generated a throughput of Rs 1.5 trillion. During the peak of the pandemic, our customers transferred Rs 50 billion in cash to e-cash every month to pay bills, buy products, top up mobiles and send money. The volumes of e-commerce have gone up by close to 80% and the value by almost 33% as per the State Bank of Pakistan’s figures. So there has been good traction, but on the back of a base which is relatively low in a country of 220 million people and a largely cash based economy. However, we have seen good innovation. With Easypaisa we did about 1,200 new partnerships; there are many benefits; convenience is the first and foremost.

MM: What is your response to experts who say that mobile wallets remain largely inactive and those that are active are mainly used to transfer money or remittances?
IWK: Yes, there are a lot of accounts that are open but not active – you need to have a use case, or a reason to use. If I only pay bills, I will do this once a month and unless I can use it at my kiryana and buy bread and eggs, which are a daily necessity, that adaptation will not happen. The challenge is that the retail universe has not adapted yet mainly because of the cost and a lack of awareness and adaptability. Retailers feel that cash is easier to handle and many have concerns about paying taxes. You also need other companies, start-ups and FMCGs to work together, because no single company can create this ecosystem alone.

MM: Experts mention the correlation between digital penetration and GDP growth for some time now, but do government policies reflect this understanding?
IWK: I have no doubts that new value creation in any economy, not only in Pakistan, will largely be done through digitisation, even in traditional sectors. In Pakistan, estimates suggest that about 70% of the new GDP contribution should come on the back of digital; it could be e-health, e-education, e-commerce or e-agriculture. However, we are missing a holistic vision and policy from the government’s side. Excellent initiatives are happening in silos, but there is no clarity in terms of a national strategy. We need comprehensive converged policies and regulators, because so many players are involved. Then we need to set goals and to do this we need to engage with start-ups, academia, the public sector and NGOs to see how to leverage this. Technology is the big equaliser but we need to work together at the national level to reap the dividends.

MM: When will 5G come to Pakistan?
IWK: First we need to ask if we are fully availing the potential of 4G and the answer is no. If we look at Pakistan from the spectrum allocation viewpoint (which is the lifeline of our industry) and as a mobile-first nation (most people first experience the internet on their mobile phone), only one fourth of the spectrum has been made available for commercial purposes – despite the fact that we have the same amount of airwaves available as other countries. We are saving them for no good reason. Even Afghanistan and Bangladesh have deployed twice as much spectrum as Pakistan. That to me is a fundamental issue. We try to create an artificial scarcity, so we can get upfront money at the auctions without thinking that the spectrum can be deployed for the larger national good. It will create economic activity, which means more taxation and the size of the pie will increase. We need to do a few things before thinking about 5G; right now even 4G smartphone penetration in Pakistan is less than 50%.

MM: What is your outlook for the telecom industry and Telenor in 2021 and beyond?
IWK: Pakistan’s vaccination drive is still a long way from providing herd immunity and we should not lower our guard. As a business we are hoping that the potential of the sector is realised through government policies, a national action plan and a digital national emergency whereby the government expresses the ambition of providing the internet to everyone. Telenor’s ambition is to provide connectivity to every Pakistani. Today we cover 85% of our population through our network; then there is the universal service programme funded by the telecom industry to provide coverage to areas that are non-viable for business. Our journey in Pakistan started in 2004-5 with the delivery of basic voice connectivity (minutes) and for the last four or five years we have been focusing on delivering data connectivity (megabytes). From minutes and megabytes, we are moving on to delivering moments and this means defining use cases for digitisation, whether it is paying bills online, working from home, studying from home, a farmer trying to get the best price for his produce or someone trying to buy a product online. n

Marylou McCormack is a former member of Aurora’s editorial team. marylouandrew@gmail.com. For feedback: aurora@dawn.com