Zong B

LCA060
ZONG PAKISTAN: IN SEARCH OF PROFITS IN A ‘FREE’ WORLD (B)

After due deliberations and strategic assessments, the top management at Zong, decided to roll with Option 3.
WhatsApp was made free across the entire network in mid-November 2017.
Special focus was placed in mobilising the sales, distribution, and communication arms of the organisation to
push this promotion. Special ATLa / BTLb campaigns were rolled out to increase awareness and adoption.
Communication collaterals focused on “free connectivity across all networks” (see Exhibit 1). Facebook agreed
to partially subsidise the communication spend.
The WhatsApp offer immediately started showing results and daily internet users at Zong began to increase (see
Table A below). Similarly, Zong’s 4G subscriber base started growing at an accelerated rate (see Exhibit 2). In
6 months, data traffic grew by more than 50%, which was unprecedented.
Table A
Zong Avg Daily Internet Users (Mn)

3.79 3.99 4.21
3.46
2.95
1.93 2.08
Source: Company Documents.
Service trial picked up, and wider audiences experienced the utility of fast internet connectivity in real life. New
use cases emerged as the adoption increased. While WhatsApp was mainly used for instant messaging and
audio/video calls, new to internet users (especially those from lower SEC) adopted voice messaging as a
convenient way of communication over WhatsApp.
Within a few months, it became obvious that Jazz was pulling the plug on VEON. Zong’s top team felt that the
mass-scale adoption of VEON was made difficult on account of a timely, more lucrative, and consumer-friendly
a
ATL stands for Above the Line
b
BTL stands for Below the Line
This case was prepared by Muntazir Mehdi, Deputy Director Digital Channels, Zong and Dr Ehsan ul Haque, Professor at the Lahore
University of Management Sciences (LUMS). It is intended to be used for class discussion rather than to illustrate either effective or ineffective
handling of the situation. Some non-public data has been disguised and some business details have been simplified. This material may not be
quoted, photocopied, digitally or physically redistributed in any form without the prior consent of Lahore University of Management Sciences.
© 2020 Suleman Dawood School of Business, Lahore University of Management Sciences
This document is authorized for use only in Muhammad Kamil Shahbazker's Managerial Policy Fall 2023 at Institute of Business Administration (IBA) - Karachi from Sep 2023 to Mar 2024.
Zong Pakistan: In Search of Profits in a ‘Free’ World (B) LCA060
Zong offer, which leveraged the existing behaviour of the consumers. Besides, wider 4G coverage of Zong also
helped.
In response to the swiftly rising popularity of Zong’s offer, other competitors also came up with their own versions
of OTT offerings. For instance, in March 2018, Telenor launched Free WhatsApp with a weekly FUP of 100
MBs.
THE MONETISATION QUESTION
While the WhatsApp campaign helped Zong successfully undermine Jazz’s competitive threat and achieve its
key goal of maintaining 4G leadership, a few problems started to emerge with time. Zong expected some
cannibalization of its voice and SMS revenues, however, subscribers started using the WhatsApp platform for
their infotainment needs as well. Video and file-sharing traffic surged on Zong’s network. As a result, while the
overall revenues & internet traffic climbed, a critical KPI, 4G ARPU (Average Revenue per User per month)
number showed a worrisome decline (see Table B).
Table B
Zong 4G Subscriber Base - ARPU

210 210.4 210.3 209.6
208.3
206.8
205.1
Internal forecasts showed that this trend might lead to an overall revenue loss in the coming quarters. Given this,
Moied asked his marketing team to develop options based on the forecasted consumption behaviour of Zong’s
subscribers under various alternatives. The challenge for the team was to attract and retain maximum number of
subscribers, preferably converting them to loyal users while improving the ARPU. The options being debated
were as follows:
1. Continue with the offer as is.
2. Revise the promotion offer to include only a 30-day validity bundle (internal research showed that this
provided better retention irrespective of price points), and charge Rs 15 per month while maintaining the
FUP of 4 GBs.
3. Terminate the offer.
Zong Pakistan: In Search of Profits in a ‘Free’ World (B) LCA060
Exhibit 1: Zong Free WhatsApp Campaign Collateral
Exhibit 2: Monthly 4G Subscriber Growth
4G Penetration as Percentage of Brand’s Subscribers

Month
Jazz (%) Zong (%) Telenor (%)
Sep-17 2.6 16.2 2.4
Oct-17 2.9 16.2 2.8
Nov-17 3.3 16.2 3.3
Dec-17 3.6 16.4 3.8
Jan-18 4.1 16.6 4.5
Feb-18 4.7 18.9 5.1
Mar-18 5.7 20.5 5.7
Apr-18 6.6 21.8 6.3
May-18 7.3 22.9 6.7
Source: PTA Reports.

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LCA060

ZONG PAKISTAN: IN SEARCH OF PROFITS IN A ‘FREE’ WORLD (B)

Zong Avg Daily Internet Users (Mn)

Source: Company Documents.

© 2020 Suleman Dawood School of Business, Lahore University of Management Sciences

THE MONETISATION QUESTION

Zong 4G Subscriber Base - ARPU

Source: Company Documents.

1. Continue with the offer as is.

3. Terminate the offer.

Exhibit 1: Zong Free WhatsApp Campaign Collateral

Source: Company Documents.

Exhibit 2: Monthly 4G Subscriber Growth

4G Penetration as Percentage of Brand’s Subscribers

Source: PTA Reports.

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