Jazz amasses $1 billion in revenues on back of its digital operator strategy

ISLAMABAD: Pakistan’s largest telecom company, Jazz, has broken a two-year streak of underwhelming financial results, recording $1 billion in revenue for the first nine months of 2024. The telecom industry has faced significant challenges, with currency depreciation in 2022 and 2023 creating a fundamental mismatch between dollar-indexed operating costs and rupee-dominated revenue streams.

Pakistan’s relative economic stability in 2024 and Jazz’s aggressive pivot to the ServiceCo model have dramatically transformed its financial performance. The company’s nine-month revenue in dollar terms increased by 25% year-on-year, with EBITDA rising 20% during the same period.

Behind the numbers

Pakistan remains the largest market for Veon Group (Jazz’s parent), with 71.6 million customers out of its total 154.2 million mobile customers. In the third quarter of 2024, Jazz demonstrated remarkable growth, with revenue increasing 22.6% year-on-year in rupee terms and 28.5% in dollar terms, reaching Rs. 99.9 billion ($359 million). The company’s EBITDA reached Rs. 41.4 billion ($149 million), soaring 14.7% in rupee terms and 20.2% in dollar terms. 

This growth reflects an increasing proportion of non-telecom services, including substantial investments in digital verticals such as fintech, entertainment, and enterprise services. Digital financial services like JazzCash have been particularly resilient, augmenting revenues by 85% year-on-year. Through cross-selling strategies, Jazz achieved lower customer acquisition costs and more efficient distribution, driving its impressive financial performance despite various cost pressures.

By the end of 3Q24, JazzCash had 19.2 million monthly active users and issued 118,000 digital loans daily. Its Gross Transaction Value swelled to Rs. 8.4 trillion ($30.2 billion), registering a growth of 59.4% YoY and 13.6% QoQ in rupee terms and 67.1% YoY and 13.5% QoQ in dollar terms, while its revenue from the lending segment compounded to 2.5x YoY in rupee terms and 2.6x YoY in dollar terms. 

This was made possible with the help of its extensive retail distribution network which involves 296,000 active merchants and 127,000 active agents. MMBL, largest domestic digital bank sanctioned 20% of its loans digitally, where average size of its extended loans stood at more than Rs. 314,600 ($1,130). Moreover, its Gross Loan Portfolio has accrued to Rs. 55.9 billion ($200.7 million). 

Pakistan remains the poster child of Veon’s digital operator journey with direct digital revenues now reaching 26% of total revenues growing 27.2% year-on-year. 

Interestingly, capex by the telco increased 99% year-on-year as Jazz continued to expand and upgrade its 4G network. However, this increase was to compensate for an inability to import equipment last year due to restrictions. 

The underdog segments

Jazz also created waves in the local OTT space as during 3Q24, Tamasha, the country’s largest home-grown streaming platform expanded its footprint in regions like India and Sub-Saharan Africa by telecasting sports events like Pakistan’s cricket matches and Paris Olympics, which enabled the platform to gather 10.6 million monthly active users and accumulate Rs. 146 million ($0.5 million) in advertising revenue by partnering with more than 50 local and international advertisers.

Furthermore, the SIM care and lifestyle apps like SIMOSA and ROX, which are marketed to the younger and tech savvy audience have also played a key role in the company’s 4G multiplay strategy. 

SIMOSA has managed to accumulate 15.4 million monthly active users and sits at the top of the pyramid for lifestyle apps on Google Play Store. It recently allowed non-Jazz users to utilize its services which led to a registration spree of more than 200,000. On the other hand, ROX was launched recently in February 2024. However, it has quickly amassed a community of 465,000 monthly active users. Moreover, it boasts an ARPU of Rs. 1,410 ($5.0) in comparison to Jazz’s ARPU of Rs. 971 ($3.5).

The dividends of the 4G multiplay strategy

The company’s digital subscriber has outnumbered its traditional telecom customer base as it has 49.4 million 4G users, which utilize its digital services out of its total 71.6 million customers, representing a 4G penetration of 69%.

Its multiplay users, which are about 30% of the monthly active customers, generate an ARPU 3.5x more than that of voice-only customers. 

The company is betting on its digital subscriber base to continue to expand. Hence, the Jazz has invested a sum of Rs. 33 billion ($118.5 million) in order to augment its operations in banking, financial services, cloud computing, data centers, digital healthcare, entertainment, and connectivity.  The company has also spent a massive Rs. 41 billion ($147.2 million) on expanding the coverage of its high-speed mobile broadband to remote regions of the country.

The year 2024, for Jazz, is marked by an evolution from a traditional mobile operator into a forward-leaning conglomerate with dedicated Strategic Business Units. The journey from a cellular operator to an IT powerhouse has started on the right footings for the telecom giant, yet it is to be seen if the momentum can be carried forward.