Instaphone receives strategic investment – what next?
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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.)?
2:04 pm
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.
10:07 am
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.
2:05 pm
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!
10:39 pm
stranger things have happened. this is just another acquistion. why does that generate negative energy; please try living off some thing positive..
11:07 pm
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!
10:49 am
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..
12:35 pm
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
2:34 pm
The Arfeen Band of Brothers are sucj rascals that even the CIA doesn’t know what they are upto
12:06 am
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.
12:32 am
Would be interesting to know their revival USP if they would make a come back.
6:51 pm
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