Problems for Jazz and Warid Before Merger

Problems for Jazz and Warid Before Merger

The merger news was announced in November 2015, and after deep inspection of the decision, PTA finally approved it in 2016. Jazz at that time already had a huge subscriber base and Warid Telcom was doing good business but lacked funding to keep up with other telecommunication companies and survive in the market. Jazz, which operated as a subsidiary of Mobilink, was able to acquire only the 3G Spectrum at an auction held by Pakistan Telecommunication Authority in 2014 for a total cost of $300.9 million (Pakistantoday). Warid, on the other hand, was able to obtain the 4G/LTE license only. Jazz boasted to have the best high speed internet services which were limited only to 2G/EDGE and 3G spectrum, where as, Warid provided its somewhat smaller customer base with 2G and 4G services. The problem was that Jazz’s already existing huge customer base was deprived of a better and faster mobile data spectrum (4G). On the other hand, Warid faced a problem of limited 4G service users since for customers to take advantage of the said service, they needed to have 4G/LTE enabled handsets, which existed only among a small proportion of Warid customers. Warid repeatedly had to let its subscriber base know that they needed 4G enabled mobile phones to enjoy the services, while also going through the hassle of selling 4G enabled smartphones at their outlets. The merger allowed Jazz to officially launch 4G/LTE services for its deprived customer base while Warid customers could make use of the 3G services offered by Jazz.  

Another problem faced by Warid as a cellular operator was that it had a very narrow spectrum. Narrow spectrum problem implies carrying of voice and text information in a narrow band of frequencies. (searchmobilecomputing.techtarget). The merger of Jazz and Warid allowed for an advantageous option of shifting all Warid user’s voice and text data on Mobilink’s spectrum while taking advantage of Warid’s spectrum only for the 4G/LTE services. (slideshare)

Reasons of Merger

According to an official press release the idea behind the merger was that a combined number of 50 million plus customers of Jazz and Warid in Pakistan would get to experience “high speed mobile telecommunications and a best in class digital mobile network”. The press release also mentions that that the merged organization of Jazz and Warid would be a market leader in the provision of 2G/EDGE, 3G and 4G/LTE services in the country. The merged entity would be able to provide a much superior quality of data and voice coverage throughout the country and finally a wider array of products and services (www.waridtel.com).

Jazz and Warid’s motives for merger have been divided in to three categories which will be discussed below.

Managerial          

The merged operations of Jazz and Warid under the name of Jazz offered a great set of advantages from a managerial perspective. The merger allowed an opportunity to solve the above mentioned problems that the two entities faced on their own without bothering the customers too much. Managers were provided with a chance of marketing the cellular company Jazz as the leading high speed mobile data network provider. A single entity Jazz representing the functionality of both Jazz and Warid potentially would be a larger and a revamped mobile network company having the largest market share in the industry, which is a vital key performance indicator.