PESTLE: A case study of Ufone

1. Politics:

Any political party that comes into power has certain policies and a vision on how they want

to certain sectors to perform or develop, telecom sector (in general) is no different and is

impacted by the government and the subsequent policy changes. Telecom sector, over the

years, has seen an exponential growth even through the years of political stability, due to

somewhat consistent policies of the different governments, mainly as this sector (in terms of

taxation direct/indirect) has served as a source of revenue generation for then governments.

To show exactly how much the telecom sector has grown from the mid-1990s till 2019 some

statistics are given as follows:

 Source: Pakistan Telecommunication Authority (PTA)

Some of the key steps taken by different governments and the key initiatives that are in

process, and being taken by the current government are as follows:

 Launch of 3G/4G (2014)

o And the efforts being made for the testing and launching of the 5G

technology.

 Telecommunication Policy 2015

 Device Identification, Registration and Blocking System (DIRBS) in May,2018.

 Current government’s allotment of permits to the mobile manufacturing

companies to set up their manufacturing plants.

 Somewhat indirect positive impacts can also be expected from the encouraging of

the entrepreneurial environment by the current government’s policies.

 Current government’s focus on bringing foreign investments through making

policies that are encouraging for the foreign investors.

 One of the negatives is, regardless of the telecom sector being one of the most

outperforming sectors in country, the heavy taxation policies of the government

regarding this sector (Mentioned by HR Manager, in his interview with us).

 2. Economic Factors:

 Over-all economy of the country has been in a poor state for the past decade, with the

fiscal deficits souring all-time highs.

 Depreciation of rupee against the dollar (highs of PKR 163 to 1$ US)

 Fluctuating exchange rates (as have been experienced in the past year and a half)

 High inflation rates (current 6.50) projected to shoot up to 7.30 in the year 2020.

 Overall decrease in the FDI (foreign direct investment) due to the unstable politico-

economic conditions of the country.

 As of 2018, the unemployment rate of the country was at an alarming 5.6 percent

(Pakistan Bureau of Statistics).

 Currently Ufone is the smallest market share holder in terms of number of consumers

i.e. only 14 percent of the market share.

Above discussed statistics, micro and macro-economic factors are some of the plausible

explanations of the performance indicators displayed by Ufone in specific and Telecom sector in

general. Different statistical comparisons in this regard are as follows:

 As per the current financial reports, a 4.5% year on year growth in revenue had been

experienced by PTCL Group, with its current revenue amounting to 98 billion PKR.

Ufone, for its part showed a revenue growth of 6% on a year on year basis. UBank, a

micro-finance banking solution (a PTCL subsidiary) has been a huge success,

showing a whopping 50% YOY increase in revenue.

o However, due to unprecedented devaluation of Pakistani Rupee against the

US Dollar, and the subsequent increase in inflation rates has resulted in a

decrease in the operating profit and the net profit by significantly large

margins of 15% and 32% in respective order.

Overall in the aspect of revenue generation, telecom sector in general (including Ufone)

has shown a consistency in returns on investment, as per the statistics compiled by the

PTA.
3. Social Factors:

 According to UNDP, About 64% of the total population of Pakistan is under 30 years

of age. Of which 29 percent of the population is between the age of 15 and 29 years.

Youth has been the targeted market for the telecom sector in general and Ufone in

particular. Over the years different internet and Calls/SMS packages have been

designed and brought into market that specifically adhere to the needs of the youth.

 With the entrepreneurial cultural progressing in the country, this is an area of

opportunity for Ufone to link itself with the emerging business by catering for their

internet/data requirements.

 Different CSR activities and creative ad campaigns that are socially inclusive and

culturally relevant has always been a strong point of the Ufone business model.

o In 2016,as a humanitarian initiative, Ufone launched different campaigns

under the banner of Ufone Ramazan 2016. The initiatives launched under this

campaign were as follows:

 Operation Eid Child,

 Deewar-e-Mehrbani

 Khaana Ghar
 Concepts and the applications of these initiatives were headed by capable

individuals on their personal resources and capabilities.

o Emergency Alert System (EAS) in collaboration with Punjab Police, and its

collaboration with The Diabetic Centre (TDC) to design and implement an

employee centric health and awareness initiative; helped Ufone bag two

awards in 5th Corporate Social Responsibility Award.

o Innovation and Employee Engagement were the two fields in which Ufone

was selected for the awards by the panel.

 Within the Organization, and the HR department in particular, as discussed in our

interview with Mr. Nouman Ahmed (HR Manager Ufone), he gave great importance

to the management of the diversity in employment practice and job satisfaction as the

key components of the internal culture of the organization.

4. Technology

 In terms, of technology Ufone is in par with its competitors.

o Both 3G/4G spectrums have been made available by the Ufone for its

consumers

o In our interview, on a question regarding the launch of 5G technology, we

were expressly told that the company was in process of testing of said

technology and examining the socio-cultural, political and the security aspects

of the use of such technology.

 o One major concern, as pointed out in the interview, was the significant

investments that were required for the acquisition of the latest technologies

e.g. the cost of acquisition of a 4G spectrum was around 1.8 billion US $.

o In this regard, the company official was of the view, that the government’s

policy makers should facilitate Ufone and other companies specifically during

the acquisitioning of such technologies.

5. Legal

 During our interview, it was indicated to us that the current legal system, and the way

licensing and other organizational activities are regulated needs to be simplified and

made more business friendly.

 Acquisitional costs, and licensing fees need to be lowered down

 With the improvements in technology, and more and more people shifting towards

internet literacy and usage, our laws required sensitization with the technology.

 Also on a question regarding the launch of 5G technology, we were told about the

potential misuse of the technology, lack of proper resources and the effective

guidelines for the usage of technology under the law are an obstacle towards

implementing of the modern technology in Pakistan.

 DRIBS was an initiative taken by the PTA in May, 2018. This can be seen as a ray of

hope towards fair and just use of technology.

6. Environmental Factors

 Environmental factors can be divided into external and internal environment.

o Internal Environment: refers to the organizational culture and the way things

work within an organization. As per the interview the keys for a good internal

working environment in Ufone were:

 Diversity

 Job Satisfaction

 Competitive Remuneration

 Health/Emergency Benefits

 Pro-learning environment

 Trainings/Skill development programs.

o External Environment:

 Pakistan, being among the list of countries to be adversely affected by

the climate change, severe water scarcity, and natural calamities; it is

an opportunity and a responsibility of Ufone to promote and

implement environment friendly policies both within the organization,

but also inculcate it as a theme of its CSR activities.