When an average Pakistani is asked about what they remember about telecom companies from the 2010s, most of them would recount the iconic Ufone television ads. But what most people do not remember is what other telcos were doing at that point in time.
Other than trying to beat the Ufone ads with their own “diss-track-TVCs”, these companies were employing another business strategy of ‘divide and conquer’.
Despite having their names out in the open, companies were operating by the means of brands. Djuice by Telenor, Indigo and Jazz by Mobilink and Glow by Warid are just some of the examples of Pakistani telecoms diversifying their brand names. These brands were often designed in a way to provide different demographics of consumers with an alternative option. With packages and plans more curated to that demographic’s needs and wants.
However, since the last 6-7 years, none of the telcos have initiated this type of brand diversification. Some have disappeared, while others merged into their companies’ single brand name sims. But all of a sudden, one telecom company in Pakistan has taken a new step. Reminiscent of the old age business tactic, Ufone 4G’s company PTML (Pakistan Telecom Mobile Limited), has decided to launch a brand called “Onic Pakistan”.
A company that, except for its one attempt called Uth, never dabbled much into the mix of different brands to begin with, has decided to give it a go much later. With a new digital telco brand Onic, Ufone (Formally PTML) has stepped into what is going to be uncharted territory for them. But what is a digital telco brand? What is Onic? How is it different from other brands? And who is its target audience?
What are Digital Telcos?
For a layman, the definition would be pretty hard to understand, and the reason is that there is no one definition in particular. A telecom brand that has, in essence co-opted digital solutions to stay ahead of the curve is loosely categorised as a digital telco. Here is how it all started.
Over the last 20 years, telcos have seen a massive rise and fall in their revenues and profits. What was once the newest and most innovative business in the late 90s, became outright obsolete by 2020.
So much so that the growth of telecom brands is currently sitting at an all time low. The core telco revenue streams such as voice and SMS are being replaced by digital and OTT (Over The Top) services, these services include household tech ecosystems and streaming services.
Meanwhile the profit margins on mobile data continues to narrow on the back of downward price pressures and competition. A simple example of this is that as a consumer, you would not take a single second to jump onto a whatsapp call if the cost of the voice call goes beyond a certain margin. Similarly one would jump to WiFi if their “mobile data” is expensive or slow.
So this is where the problem lies. Pricing cannot be up to speed with the rising cost of doing business and a weakening rupee; hence the telco is forced to take the hit. As of February 2023, average revenue per user for a telco in Pakistan came to $0.8/month. Meaning that every individual who uses a mobile phone provides less than a dollar in profit to their telecom company. The same statistic ARPU stands at almost $3/month for India and $30/month for USA.
So the incentive to branch out into a different revenue stream makes sense for Pakistani telcos. But this is not just a problem for Pakistan.
According to a recent report by Kearney, the average revenue growth across global telcos has also continued to decline. From 4 percent average growth between 2011 and 2016, to 0.2 percent between 2016 and 2022. Simultaneously, telcos’ efficiency initiatives have started yielding diminishing returns after years of progress. And meanwhile, these initiatives leave the telcos with a looming Capital Expenditure (CapEx) disaster, driven by rapid data consumption growth and eventual migration to 5G, demanding expensive infrastructure and yet no clear commercially viable use cases.
As margins continue to be squeezed, the more circumspect telcos started embracing digital businesses as a saving grace. This meant that they would indulge into a wide variety of digital businesses. What were these businesses? They range from things that were entirely in a telco’s domain to things that… just got the cash rolling.
For example; Digital telcos often bundle telecom services with other digital offerings, such as streaming content, cloud storage, or smart home services. These telcos also form partnerships with digital ecosystem players and content providers like OTT (Over The Top) platforms and IoT (Internet of Things) service providers. A lot of these services give them a penetration and are easy to do because of their access to user data.
Other than that, these companies employ data analytics, automation and AI to make agile operations, improving and automating the user experience. So where you’d spend hours to get a response on your email, a digital chatbot will solve your query right away with its integrated manual. These brands also tend to make use of up and coming technologies like 5G computing and network slicing. These technologies upgrade their services and take them a notch above the traditional telco. This falls in line with improving the technology on the back of which their voice and data services would also flourish.
Some of these latter services have already been adopted by traditional telcos, that don’t portray themselves as transitioning towards being digital telcos, nor have they announced a new brand. Calling yourself digital, hence, is akin to being aboard the ship of the digital revolution, making it a lot more about brand optics.
Where did Onic Come from?
In an attempt to privatise PTCL, the state in 2005 sold 26% of its stake in PTCL to UAE telecom e& (previously known as etisalat). Being a wholly owned subsidiary of PTCL, PTML was hence also as much under e&’s influence.
Upon rebranding itself as e& from Etisalat last year, one of the key objectives of the group was to become a technology companies group, rather than just being a Telecom group. In the process they have introduced their ventures e& life, e& enterprise and e& capital over the years. e& has been making strategic investments in tech companies. e& life, for example, is categorised as a financial super app meant to revolutionise the fintech space.
The UAE state-backed e& not only has the access to a virtually bottomless balance sheet in the form of the UAE government, but also to some of the biggest telecom brands of the Middle East, and North Africa, and through them an unlimited access to user data.
In the same stint of revolution and modernisation, e& entered into a partnership with a Singapore based Startup, Circles. A startup founded by a Pakistani amongst others, Circles offers digitisation services to telcos. Circles’ understanding with e& is to “empower its network of Mobile Network Operators (MNOs) and other operators based in the region to launch digital telco brands that deliver delightful digital experiences for the digitally savvy generation.”
In this newer understanding, all the portfolio telco companies under e& are making, or expected to be making similar headways in the future. What is interesting to note here is that, e& despite being a mere 26% stakeholder in PTCL, and subsequently PTML, is ready to serve up its direct deal with Circles Life to PTML.
However, being a “part” of e&, these steps are being taken by PTML and Onic is a manifestation of the e& goal. As per the spokesperson of PTML, “e& Int’l is an established global player in this domain, therefore, their collaboration with PTML will usher in a world-class user experience to our segment of data savvy urban customers.”
What is Onic?
When Onic first started marketing itself mere weeks ago, it rang alarm bells across the board. People started to think that a new company had been given a licence to operate as a telco in Pakistan. The rumour became so widespread that the Pakistan Telecommunication Authority (PTA) had to do a press release in which it had to clarify that Onic was not a new company, but a “new digital product, to cater for digital segment of the market who prefer convenient digital engagement instead of traditional service delivery”.
The Press Release clearly suggests that Onic is another Ufone “product”. And that is exactly what it would have been perceived as, provided that no new licences were issued. However, according to the Linkedin header of one executive employee at Onic, they were “Building Pakistan’s First MVNO (Mobile Virtual Network Operator)”, on the back of which tech blogs dug into Onic. When asked about the entity’s legal status, the spokesperson from PTML confirmed that Onic was indeed just another brand of PTML, much like “Ufone 4G ”, and not an MVNO. Therefore Onic is to PTML, what Indigo was to Mobilink.
It is important to note here that an MVNO is required to obtain a licence worth $5 Million from the PTA, an obligation that a “brand” or a “product” is devoid of. This rang alarm bells for a lot of people when they saw Onic being called an MVNO on the internet.
What is an MVNO? According to the International Telecommunication Union (ITU), “it is an operator that offers mobile services but does not own its own radio frequency. Usually, this operator has its own network code and in many cases issues its own SIM card. The Mobile VNO can be a mobile service provider or a value-added service provider.” This means that it could be an entirely different ecosystem altogether using an MNO’s (Mobile Network Operator) spectrum of cellular mobile services.
This gives rise to another pertinent question. How does a regulator differentiate between the two? This takes us in a different direction albeit an important one. It turns out that it is as confusing as differentiating between a digital telco and a non digital telco.
The definition of what an MVNO is, is not even consistent across countries. The PTA obligates an MVNO to sign an agreement with an MNO (Mobile Network Operator) before starting operations, but can the MNO own the MVNO? Commercially, it makes no sense.
Why would a company that already owns a spectrum of cellular mobile services and has its own licensed radio frequency go through the tardy process of registering a new entity, obtaining an expensive licence to do the same under a different name. Especially when they could already do that under their own company. The licences do not belong to Ufone, they belong to PTML. So just like Ufone, Onic is another brand of PTML.
Often, whenever the other telcos would release their new “brands” in the market, it had the same design language, the same colours, or sometimes a watermark of the company or a sister brand, making it obvious as to where they were coming from. Glow, for example, was officially called, “Glow by Warid”.
By giving no indication to where it is coming from, Onic avails a distinction upon the much older Ufone, something that only a new entrant would have been able to achieve.
In Onic’s defence, this could be entirely a move by PTML to redefine themselves, leaving all the negative equity of the past behind them. Ufone, afterall, was the last in Pakistan to obtain 4G capability, a fact that does not espouse the greatest amount of trust in the younger user.
Is there a use case of regulating the amount of “brands” a single telco can have? Yes. Is the regulator or the Competition Commission ahead of the telcos in this respect? No. If it ever comes to one telco enjoying an unprecedentedly large share of the consumer pie, the government is sure to react, but will it preempt this? History does not suggest so.
Who is Onic’s Target Audience?
Like a university student from a small town, on the face of it, Onic looks nothing like its “family”. The brand’s logos exude more sparklets than the historically state-owned PTML has ever done. An ad campaign strictly limited to digital platforms and social media apps, as of yet, Onic is proudly “digital”. Starting off with a teaser billboard campaign, Onic hired top models and celebrities before people even found out about it being a telco. The company has done mass-grabbing comical videos, no TVCs or sponsorships, it wouldn’t be a surprise if Onic were to sponsor MUNs in universities before it sponsors a soap opera on Prime Time Television.
All of the flashy and edgy design could mean only one thing, and that is that Onic is trying to acquire the allegiances of the younger audience, the Gen-Z. An age demographic that is the largest in terms of phone users. According to PTA, 77% of smartphone users in Pakistan are between the ages of 21-30. The technologically literate, TikTok and Instagram addicted generation has the internet down there with water and oxygen in their Maslow’s hierarchy of needs.
Talking to Profit on the subject, PTML spokesperson, Amir Pasha said that, “Onic’s customers predominantly are digital natives, who are avid smartphone and digital apps users. They consume a lot of data and are deeply immersed in a digital lifestyle that extends to both work and leisure activities. They are also distinct due to their higher service expectations. Therefore, Onic promises an improved digital experience to enable this unique segment and to drive the vision for Digital Pakistan.”
How is Onic different?
Perhaps the most important question that arises here is, how is Onic different? As per Onic’s website, it is said to provide its founders (founding customers) Off-net liberty, Home delivery, Hassle free onboarding, Swift assist, Fast activation, Carried data and a sign-on to founder benefits. As commendable as these steps are, all of them seem to be catered towards, user experience and onboarding. And even though user experience is one aspect of a customer’s needs, it is not their entire need.
When asked about this, an Onic spokesperson said that, “Unlike traditional telco brands, Onic operates entirely in the digital realm without any physical outlets. It offers a comprehensive range of services through its Digital App. For instance, customers can order SIM cards and have them delivered at a time and place of their convenience.
Additionally, Onic provides the convenience of e-SIM functionality. Onic aims to bring services directly to the customer’s time and place of convenience, eliminating the need for visiting physical stores while also offering hassle-free digital recharge options”
Sounds like just a bunch of corporate talk, right? Other telcos, including Onic’s sister brand no less, Ufone, do all this already. Both Jazz and Telenor sims can be ordered online. Ufone itself offers an e-sim. And all biometrically issued SIMs since the last 5 years are Pre-activated. It is difficult to comprehend how much faster can Onic’s “Fast activation” then be, that it defies chronology itself.
When it comes to being native on digital platforms, all Jazz, Telenor and Zong have Jazzworld, My Telenor and My Zong apps respectively, where a range of services, including subscriptions, recharge and packages are available. Infact, Telenor and Jazz, both of which are Digital Bank and EMI (Electronic Money Institution) Licence holders respectively, don’t just bring an in-app recharge option for their user, but in essence, an entire bank.
When asked about the technological advancements in Onic for the provision of better telecommunication services of voice, SMS and data, Pasha said, “Onic uses a state of the art IT platform for optimum quality, efficient service delivery and alliances with digital platforms”.
Onic denied delving into any OTT and IoT service provision in the future, something that digital telcos across the world aim to do. Infact Tamasha, Pakistan’s largest OTT and streaming service is a part of Jazz’s arsenal of digital service apps. So in a way, Jazz tends to be a step ahead in embracing the digital revolution. If anything, the other telecom brands offer a range of digital services, while simultaneously having a physical presence.
Finding the pricing sweet spot
One thing that the younger customer does not have a lot of is disposable income. If Onic is to be their secondary sim, it needs to make a lot of financial sense.
Comparing Onic’s prices, it was found that not all telcos were more expensive than Onic. Onic currently offers 3 hybrid plans for its “digital natives”, all of which are on the heavier side of mobile data volume. Its smallest plan offers 30 GB internet and additionally 5000 All-network minutes along with SMSs. The other 2 plans have 100 GB and 200 GB with the same amount of voice minutes and SMSs.
Compared to that 30 GB offer, Telenor 4G, offers similar deals that are at least 20% cheaper in the form of its easycards. Telenor’s Easycard 850, offers 24 GB in data and 5400 minutes (5000 On-net and 400 off-net) in Rs 850. Compared to this offer, Onic’s plan is just at par. However, Telenor’s monthly extreme, which offers 50 GB in 1100, takes the lead in both voice minutes and mobile data. With 50 GB data and 8100 minutes (7500 On-net), the offer is at least 20% cheaper than Onic in its per GB cost.
Similarly, Ufone 4G, PTML’s other brand, also offers good hybrid deals. However, Ufone’s Super Card Gold at Rs 1199, with 30 GB data and 8100 minutes (7500 On-net) stands just a touch more expensive than Onic. Intuitively, both Jazz and Zong have more expensive plans with Jazz’s Monthly Premium Plus giving 20 GB and 3500 minutes in Rs 1250, and Zong’s Monthly Super giving 30 GB and 5400 minutes in 1299.
The only major difference that Onic is able to create is the 5000 all-network minutes that it offers, as opposed to the hassle of On-net and Off-net minutes.
In voice calls, companies differentiate between on-network and off-network calls. If the caller and the recipient of the call are using the same telecommunications network providers, it is On-network (on-net), whereas if the caller and the receiver are using different telecom networks, it is an Off-network (off-net) call.This means that while with other networks, the consumer has to be mindful of what network’s number they are about to dial, and whether they have enough minutes left to call that particular network, Onic’s customers can call anyone without bothering with the receiver’s network or their remaining quotas. For some, this counts as a blessing but for others, who have had their friends and family to move to one brand, the higher on-net minutes prove to be a better deal.
Regardless of the first plan, Onic was found significantly cheaper than the competition, in high volume data packages. It offers 100 GBs and 200 GBs along with 5000 all network minutes for Rs 1290, and Rs 1990 per month respectively. Other brands do not offer this volume of monthly data however, they only do so in the case of MBB devices (Mobile Broadband). Even for MBBs a 200 GBs Zong Package costs Rs 3300, while a 100 GBs Jazz package costs Rs 2400.
Just a flash in the pan?
So is Onic as revolutionary as it would have the people believe? Not really. It seems like a compact, better worded, and better marketed version of Ufone. Whether to use Onic or not, invokes the same debate as a good UI/UX fintech digital wallet does. Is it important to have one if you already use a traditional one? Not really. But it is 100% the customer’s choice to opt between the seemingly cooler or the traditional looking product.
Onic is definitely positioning itself as a market leader in offering high volume data packages at a reasonable price, but what other things does it have under the belt? As of now, the brand’s team refuses to comment on their future ideas.