Instaphone receives strategic investment – what next?

Share this Article

Author:

image Instaphone will soon announce that it has been able to raise the strategic investment needed to bring the firm out of hiatus. The investing party is still under wraps though.

Instaphone has had quite a rocky year. After the fledgling teleco was unable to raise investment from previous negotiations, the drama concluded with PTA canceling Instaphone’s license for failure to make its payments against license fees. This seemed to have been a final nail in the coffin, because any investor would then have to pay off Instaphone’s debts and license fees before investing in anything else.

News of this investment now is a bit surprising then. But what would it be able to do with the funds now? Here’s a brief strategic analysis of Instaphone and its options.

The interesting thing about Instaphone is their very loyal set of core customer-base who have vehemently refused to switch operators even at the worst of times. This is quite an asset to have. The bad thing is that this core consumer-base is still pretty small to matter as significant market-share, and that these loyalists are mostly price-conscious consumers which made Instaphone appeal to them to begin with.

Part of this investment will have to be written off from the start to pay back debts. This is no small number and writing off such a large amount from investment can limit options quite a bit.

After that, very heavy investment is required in infrastructure expansion – Instaphone was trying to leapfrog GSM technology and upgrades its old AMPS based infrastructure to HSDPA / CDMA. Part of this network rollout is complete but more will be needed before the (re)launch.

After that, lets not forget the big branding efforts they will have to do to remind consumers that they still live – most likely it might be a a brand-name change like Zong to keep the company fresh and promising.

These are a lot of pressures on investment, and here’s what I think Instaphone might do to compete.

1- Services, services, services. Instaphone’s infrastructure would have one of the best chances of implementing finally compelling services. E.g. they are the only teleco right now with the equipment to introduce DVB-H – i.e. true mobile TV that doesn’t use GPRS or cell networks to distribute cable-tv…. this allows them to make mobile tv cost effective and could spurn adoption. Over time though – the value is that services can complement each other if they are driven by a larger product strategic roadmap… if only they would think that far though.

2- Community, community, community. Their core customers share strong common interests and excitement in the company. They can offer VAS that specifically target interaction between consumers (mobile social networks; community buy & sell apps; community voting apps etc), or they could figure out ways of bringing the community into a part of their operations, which can in turn trigger word-of-mouth promotion and marketing for them. These activities would save massive marketing expense, but If only they’d think that far though.

3- Time to Market efficiency. This isnt particularly something Instaphone will have to do more than an advantage they have – whenever the government aims to roll out 3G licenses (and if) Instaphone will have a head-start in infrastructure readiness.

4- Supply-chain efficiencies. Most operators use 3-4 vendors for their infrastructure to ensure there is enough competition and threat to the vendors that they behave and provide consistent quality services. The tradeoff of this is that there are even more cost efficiencies that a firm can realize by working with just 1-2 vendors and buying in bulk. More than the upfront costs, there will be savings in not having redundant software, integration costs, multiple SOPs for network rings and more.

5- True mobile broadband. This is a no-brainer – PCI cards to run DSL quality net on the go. Enough said.

Where do you think Instaphone could see the biggest opportunity for its business in the environment today? Whats there for a teleco beyond the usual suspects (3g etc.)?

Facebook comments:

11 Comments

  • The unconfirmed investment is reportedly from a Russia telecom group. One reported enabler for such a deal is the fact that the company has been able to negotiate with PTA that, provided the PTA license dues are cleared, it can swap its existing 800 Mhz frequencies with the 1800 Mhz GSM frequencies if required.

  • It honestly baffles me that some company even a Russian company (as Tee Emm says) will be interested in investing a dead cow like Instaphone and that too by writing off its huge debt first from the very investment!

    Anyway, one Russian company which comes in mind is the one behind Dialog, and I don’t think they are in such a happy position in Pakistan that they would consider doing so…

    Anyway as the author indicated most probably high speed data services can save the Instaphone’s life but I am not counting on them. After seeing stepper motors still generating signals for Instaphone in 1987 Ericsson machines on Daman-e-Koh Islamabad, it will require more than news to convince me that Instaphone is coming back. Oh yes another interesting fact on the busy new year night, there were only 12 circuit of Instaphone busy, if thats the loyal customer base of Instaphone, I will really suggest to stop counting them.

  • Having spoken first hand to the ppl looking after the deal and advising the sale, the news is that Instaphone will be bought by Altimo which is the telecom arm of a Russian company called Alpha Group.

    I seriously doubt that PTA will be waiving off the License fees since its a major source of revenue for the govt. $291 million isn’t a small amount and given the revenue shortfalls that the govt recently saw…the result of which was taxation on handsets and increase in the GST…its is just improbable.

    And the Russians have enough cash to take over the debt. 30billion dollars market cap. anyone? http://www.altimo.org/

    Lastly, HSDPA and CDMA are two separate things…HSDPA deploys on a WCDMS/UMTS third gen network and not on the plain CDMA (aka CDMA2000) network. So it depends what they were expanding the network for, if at all they were doing at!

  • stranger things have happened. this is just another acquistion. why does that generate negative energy; please try living off some thing positive..

  • AoA! Instaphone is the Best in da Market right now still… If any doubt discuss it wiff me:))) i’ll surely answer yuh.
    Its far more better than yateem telecom, and decoits like warid n Telenor LMFAO:) m not talkin abt Mobilink cz Mobilink still got some respect from their customerz!
    Ppl who using Instaphone are in Heaven Like meh.. its still givin u 24Hrs Free on-net calls, and comparatively much cheeper off-net and Long distance calls like international calls of 99Paisas/min not 30 secs roflz:)
    >>>>> As far as the investments are concerned where will get them frm when ur country is moving towards disaster:)??? REPLY PLZ!

  • wat do u mean movin towards disaster..zardari is ur defacto head of state..gentlemen we are actually experiencing disaster :-) n tht also first hand..

  • if that news are true its good sign for instaphone customers but instaphone is recently running by ARFFIN group that why am doubtfull that there is no change coz this group is have TYPICAL PAKISTANI SAITH SOCH joo ajay rakh loo kissi ko dena kuch nahin any way if there is any change its good

  • Arfeenz Ka Pyao

    The Arfeen Band of Brothers are sucj rascals that even the CIA doesn’t know what they are upto

  • hi,
    Well i think instaphone should roll out their CDMA network as soon as possible and then have to focus on post paid customers try to focus on packages like they have one now Rs. 300/month free insta to insta call anytime these kind of packages can make a difference and then have to focus on internet on their CDMA EVDO 1x network.

  • Would be interesting to know their revival USP if they would make a come back.

  • i love to take insta phone if it will back and tyhe above news is true because insta care for there customers warid and telenor are big thieves i will take the highest post paid package if insta phone returns i love u insta phone

Leave a Reply


*

Recent Posts

  • Events General Mobile Apps Container Run a continuation of politically motivated apps

    Container Run a continuation of politically motivated apps

    First we had Angry Imran which brought smiles and some short lived fun for us during the election campaign. Then came Gullu Butt following the incident of Model Town Lahore, which stayed on top of charts (Pakistan play store) for quite some while. Also Gullu Butt made an update with having the famous “Aam Khaiyga” quote form Aamir Liaqat in which a character resembling Aamir Liaqt throws mangoes and the Gullu Butt character tries to catch them. Gullu butt currently has more than 100,000 Installs

    And now during this extremely politically tense situation which had the whole nation on its toes on 14th August we have another app continuing the …

    Read more →
  • Announcements Featured Startup General Meritaleem.com aims to help student make better decision regarding their future.

    Meritaleem.com aims to help student make better decision regarding their future.

    MeriTaleem.com aims to solve an age old problem for our students, where to go next?

    If you have just completed your primary school which college to pick, if you have completed your college which university to pick. There has always been lack of information or rather consolidated information regarding these questions. The best source till now has always been relatives and friends (mostly of your parents). So some uncle did CA and made a good living you should talk to him and decide, or daughter of my sister completed her medical and is practicing follow that career.

    The fact that online presence of our existing universities are limited and not …

    Read more →
  • General Mobile Apps Eccentria Technologies launches an app which shoots to the top of the charts

    Eccentria Technologies launches an app which shoots to the top of the charts

    Whoa!! this was quick so Eccentia technologies launched an app a few days ago called “Ajj Kia Pakaen” or what to cook today and today it has reached the top of charts for Pakistani Stores on iTunes and google play store.

    “Ajj Kia Pakaen” is the most common question asked at every house hold in the morning. The ladies of the family have a hard time deciding what to cook for the day. The app has a fun interface and is simple to use, you fire it up, and it gives you an option of what to cook for the day, if you like the option you can check the …

    Read more →
  • Coffee Session General Marketing/Adv Rise of facebook marketing in Pakistan

    Rise of facebook marketing in Pakistan

     

    Until a few years back we used to have closed groups and forums, which gathered the like minded people and anyone targeting the online audience would tap into that forum and market his/her services. So PakGamers , PakPassion initially even PakWheels used to be driven by members talking about what they loved, people used to create marketing and sales opportunities from within those discussions (so you could get a good router cheap or a gaming PC etc).
    The advent of facebook changed all that, most of the forum goers moved to the new social media. It also made a very attractive market place for some one who does not …

    Read more →
  • General Getting back

    Getting back

    I  have been out of blogging for a long long long time, a lot of things happening on personal front (including a little startup I have ben doing my self). However during my absence I met a lot of people who had followed GreenWhite at its peak, read the articles regularly.

    I had hope there would be some one else who would come ahead and cover everything going on and around us in the local tech world. There are some guys doing a great job, but for some reason I still could not find one source where I can go and read about everything, so my routine usually is to …

    Read more →
  • General Mobile Apps Software & I.T. GeniTeam launches official app for Pakistan Idol

    GeniTeam launches official app for Pakistan Idol

    GeniITeam has successfully launched an official app for PakistanIdol. This is one of the first collaboration between a reality game show and a local app development company. I am sure a lot more would follow. Previously we have seen seenreport becoming the basis of mostly all channels citizen reporting system (Like Geo Dost). This is a healthy sign and with the advent of 3G round the corner it should become a business generator for our local firms.

    App allows you to follow the contestants that you like, promote them, comment on live feedback on an episode. It offers official content from the show since it is developed with partnership with …

    Read more →
  • General 10Pearls and National Geographic Release A Geography Challenge App

    10Pearls and National Geographic Release A Geography Challenge App

    10Pearls, one of the leading Pakistani IT companies, has recently added another feather to its cap. This time, in partnership with National Geographic, 10Pearls has released the new and improved GeoBee Challenge App – an interactive app to challenge and grow the geographic knowledge of the users.

    Each year thousands of schools in the United States participate in the National Geographic Bee using materials prepared by the National Geographic Society. The competition is designed to encourage geography in the classroom, ignite student interest in the world around them, and increase public awareness about geography. Schools with students in grades four through eight are eligible for this entertaining and challenging test …

    Read more →
  • General 10Pearls Spins Off Game Plan8

    10Pearls Spins Off Game Plan8

    It’s heartening to see that Pakistani IT companies have now started to diversify themselves into non traditional areas, and are competing with global players in areas such as gaming. We have received information that 10Pearls, one of the leading  mobile and enterprise web development services companies in Pakistan, has spun-off a separate entity focused solely on developing and publishing casual mobile games.  The new entity, Game Plan8, will focus on creating 2D and 3D games for the iOS, Google Android, Kindle, Facebook and other platforms. Details can be seen on the company’s official press release at http://www.prweb.com/releases/2013/12/prweb11428177.htm

     …

    Read more →
  • General Telecom CCP Gives Guidelines Against Telecom Companies’ Deceptive Marketing

    CCP Gives Guidelines Against Telecom Companies’ Deceptive Marketing

    If only were there two things when it comes to the law, firstly the fear of breaking it and by passing the legal authority, and secondly, implementation of the law given full dedication, there would have been less competency and dishonesty in business and society. However, keeping good faith, the Competition Commission of Pakistan (CCP) has put forward “Deceptive Marketing Guidelines” which will maintain the Section 10 of the Competition Act, 2010. In order to enforce this part of the law and stop anti-competitive conduct on part of the telecom companies in advertising, the guidelines have been shared with Pakistan Telecommunication Authority (PTA) and other concerned telecommunication sector members, in …

    Read more →