Brand Revamping Paktel Acquisition by China Mobile

Abstract

China Mobile Communications has made its first cross-border acquisition, buying Paktel in Pakistan at an enterprise value of $460 million. It will pay Millicom of Sweden - which owns 88.86% of Paktel – a cash consideration of $284 million. The deal has been concluded in almost record time since Millicom announced it in November last year. China Mobile Communications owns 75% of NYSE and HK-listed China Mobile. China is the world’s largest cell phone market measured in terms of number of users and China Mobile is at the forefront of that revolution with the world’s largest mobile subscriber base. It provides mobile telecommunications and related services in 31 provinces in main land China. Paktel was established in 1990, this company first obtained the license to provide mobile phone service in Pakistan. Paktel had 1.56 million mobile phone subscribers by October 2006, an increase of 69 percent from December 2005. China Mobile Communications is the largest mobile phone operator in the world. This is the first entrance of any Chinese mobile company in the Pakistani market. Beijing is encouraging its leading business organizations to expand their businesses. As a result, China Mobile is expanding its operations and Paktel is its first successful acquisition. Pakistan’s mobile market is highly competitive. Last year, the number of mobile phone users was amounted to 46 million but it is only 30% of the total population. With the population of over 160 million but with low mobile phone penetration standing at just 12.8 percent in 2005, offers tremendous growth potential. FOCUS AREA Pakistan cellular market is highly competitive with 3 major operators dominating the market share i.e. Mobilink, Telenor and Warid. But like most of the South Asian country Pakistan has huge population, which makes it attractive for the mobile operators. And though the market is highly competitive but mobile phone users are currently only 30% of almost 160 million populations it has. Our focus in this paper would be the competitive positioning of China Mobil and the answer to the following question: ’How could China Mobile stand out in an intense competitive environment through effective brand management philosophy?’ The answer to this question will lead us to the understanding and building of a complete new strategic brand management process for China Mobile. This would involve the design and implementation of marketing programs and activities to build, measure and manage brand equity. China mobile would have the following two options for the branding decision initially: x xi  Restore and Enhance the Image of Paktel. Or  Launch a new brand While restoring the current Paktel seems to be a relatively feasible idea and new brand has greater risk associated with it, somehow this is going to be interesting debate addressed initially in the paper. Though Paktel has this advantage of being known by the people somehow the associations with this brand are negative and the word failure is still in the minds of the consumers. Hence while there is a risk associated with launching a new brand, there is also the risk of failure again if Paktel is revamped. Therefore at some point the picking up of brand from a decline and launching a new one seems to be equally riskier. Somehow the decision would be further addressed in the paper based on the pros and cons of both. STRATEGIC BRAND MANAGEMENT FOR CHINA MOBILE No matter what the brand decision is considered in the paper and option we suggest for China Mobile, the main focus area would be the strategic brand management process. This would starts with identifying core brand values and competitive positioning, brand marketing programs, brand performance to growing and sustaining brand equity.The brand selected initially has to pass to the basic test of 10 C’s test of branding in order to provide the platform for becoming a strong brand. The 10 C’s are competent, credible, clear, compelling, consistent, constant, confident, connected, committed and current. Details about this test would be included in the paper.