![Untitled-3 [Recovered].png](https://static.wixstatic.com/media/5ec188_8f85cee8a56d4a6399a5806827a7eac6~mv2.png/v1/fill/w_76,h_78,al_c,q_85,usm_0.66_1.00_0.01,enc_avif,quality_auto/Untitled-3%20%5BRecovered%5D.png)
Zunaira Ali
Should PTCL pursue its decision to install “fiber optic cables” to improve its network communications and subsequently increase their profitability?
​
Pakistan Telecommunication Company Limited (PTCL) is the largest ICT network provider in Pakistan and with time, PTCL started offering digital telecommunication services to customers. The company’s product portfolio includes Broadband and wireless CharJi internet, Smart TV service, over-the-top applications like Smart Link App, and Touch App and provides access to world digital services i.e. Netflix, iflix and icflix.
To expand and improve its network communication, PTCL has started providing the largest network fibre and submarine cables in Pakistan. This new offering may attract new customers while retaining existing customers seeking better connectivity. This will impact PTCL’s financial outlook in terms of operating costs and capital expenses along with profits.
Methodology Employed:
​
In Primary Research, semi-structured interviews were carried out to gather insight into the company's financial position after the introduction of fiber cables and the in-between effect of Covid-19 lockdown on PTCL.
It brings forth marketing strategies for fiber optic cables with the investments and other cost implications linked with it. Later, interviews conducted with the finance manager, marketing manager and EVP telecom greatly aided in analyzing PTCL’s product potential in the market.
A questionnaire was filled out by PTCL users that provided feedback regarding the usage of its new fiber optic product, the speed of network connection and their satisfaction with the company's helpline services.
The high number of responses considerably provided high validity of data. Lastly, a focus group interview was conducted with PTCL’s loyal customers which provided further insight into PTCL’s product and services.
​
Secondary Research aided in analyzing the forecasted sales and income statement of the company by comparing the company's annual of past 3 years. It also assisted in understanding PTCL’s marketing strategies to sell their new fiber optic product in the existing market.
Main Results and Findings:
Questionnaire Findings:
To understand customer perceptions and experiences of using PTCL’s fiber optic cables, a questionnaire was distributed. According to results in fig-1, 50% of customers are aware of PTCL’s new fiber optic cables, whereas 28.7% people are unaware.
Fig-2 shows that only 48.8% respondents have PTCL’s product available in their region, but 51.2% of respondents claimed that they do not have access
In fig-3, 63.7% of respondents don’t use fibre optic cables, while around 36.3% of respondents have opted for it.
Fig-4 shows that 59.4% of people believe they have experienced ‘better customer services’ during cable installation, while 26.1% stated their experience was ‘the worst’ and 14.5% stated that the services were ‘excellent’.
As seen in gig-5, 44.2% of people didn’t observe any improvement in network signals before and after the cable installation, whereas 55.8% denied any improvements.
SWOT:-6es
PTCl’s prices are affordable and network quality and helpline services are satisfactory, giving them a competitive advantage in the industry. PTCL’s marketing strategy to provide telephone and Smart-TV connections are aimed at grasping potential consumers.
PTCL offers a variety of customer packages like student cards, helping to engage low-income groups. According to the questionnaire, 55.8% of customers did not experience any improvement in their network connection after the installation of fibre optic cables. Moreover, the lack of availability of fibre optics in many areas leads to greater customer dissatisfaction.
Customers who look to register complaints tend to face a lack of online help support from PTCL’s staff. PTCL can increase the availability in rural areas across Pakistan where other networks are unavailable, helping them get a first-move advantage. Nayatel is the main competitor in the market and appeals to customers mainly due to its efficient network quality and faster online help services.
Ansoff Matrix
Table.1 shows PTCL’s growth strategy of introducing fibre optic cables.
Ansoff matrix can be used to analyze PTCL’s growth strategies and identify the risk involved. The strategy employed by PTCL is ‘Product Development’ which means they are introducing Fiber optic cables (a new product) to the existing costumes (existing market). Therefore, this strategy contains a low-to-medium risk element.
Porter’s 5-Force Analysis
To measure the level of competitiveness faced by PTCL in the industry, Porter's 5-force model can be used. In urban cities as a result of high competition, PTCL’s customers have the high bargaining power to switch to other competitors like Nayatel. However, in rural or northern areas of Pakistan where only PTCL is available, customers have no bargaining power as they have limited choice, providing an edge to PTCL.
Moreover, PTCL suppliers of fibre optic cables are limited in number because of the product's uniqueness and quality needed by the company and this leads to the higher bargaining power of suppliers over PTCL. PTCL’s current competition is mainly offered by Naytel. This company’s increasing popularity among customers can be seen as a great threat to PTCL’s market position.
Also, Nayatel’s faster network quality as compared to PTCL can also be seen as an awakening point for the company to improve their product line. Furthermore, there are no major substitutes posing a threat to PTCL. The threat of new entrants includes the upcoming networking company Transworld, and many users are satisfied with its services according to information gained from the focus group interview.
Interview With Focus Groups
The customers were unsatisfied with the product stating it was inefficient at providing good connectivity. Some of the users did not get access to their new product and some did not find any improvement in network connection after using their fibre optic connection. Furthermore, they were also unsatisfied with the customer services being provided on helpline services.
Current Profit and Loss statement:
Based on secondary research, a profit and loss statement has been constructed to analyze the financial performance of PTCL.
Based on the above income statement, profitability ratios have been calculated in table-2.
Sales forecast
Based on the interviews, focus group and questionnaire a sales forecast was constructed to show the impact of fibre optic cable services being offered to customers.
​Based on the sales forecast a forecast income statement was constructed for the year 2020
​Based on the forecasted income statement, the forecasted profitability ratios are calculated in table-4.
Conclusion & Recommendation
​
The analysis shows that PTCL’s fibre optic project is facing many challenges in terms of poor connectivity, inadequate helpline services and growing competition. As evident from the survey and focus group, most customers were dissatisfied with the overall experience, however, many customers were satisfied with the new services.
This means that PTCL needs to improve the quality of its helpline services along with ensuring better connectivity to existing customers. This will help to increase the customer base as PTCL is the main service provider in the country and has the infrastructure to provide better service than it currently is. This would be a low-to-medium risk strategy for PTCL with minimal increases in overhead costs. The forecasted figures show that sales revenue is expected to rise by 5%, while NPM will increase by 4.6%, meaning improved profitability.
It is recommended that PTCL should proceed with the expansion strategy of installing fibre optic cable network, however, with the following considerations:
Firstly, in order to gain brand loyalty PTCL needs to improve the quality of helpline services which may require staff to be trained to meet international customer support service standards.
Secondly, PTCL should promote their new product by contacting its current customer-base to increase awareness. PTCL should also use social media platforms such as facebook, and Instagram to highlight the benefits of using fibre optics.
Thirdly, PTCL should ensure the provision of its fibre optic network to northern regions of Pakistan where competitors are not present.
​
The report could have benefited from the use of a forecasted cash flow statement to assess future cash surplus or shortages faced by PTCL This would have aided the overall findings Moreover, the BCG matrix would have helped in analyzing PTCL’s product portfolio in terms of market growth and share. Furthermore, interviews conducted with the focus group may contain participant bias, limiting its reliability.