News From Telecom World

Archive for the ‘Bangladesh’ Category

Yeah, Aktel is now offering 7.5% bonus for BDT 51,101 and 201. You may ask why 51 or 101 instead of 50 or 100? The answer is very simple, the bonus is for electronic recharge only. If you recharge from scratch card, you will not be able to enjoy it. Its an indication that Aktel wants its subs to move from scratch card recharge to electronic recharge. Quite naturally, question arises- WHY?

Well, the answer is very straight forward. Electronic recharge is much cheaper for the company. It ensures more margin for the company and more control over the distribution channel. That’s why Aktel is trying to move towards this new direction.

But Aktel may face challenge in the Chittagong and Noakhali region where it has the strongest presence because scratch card (especially BDT 20) is quite popular there. Scratch card allows a lot of flexibility (like can be stored for later use, can be taken anywhere etc.) for which it surely has a loyal customer base.

What is encouraging for Aktel is that Grameenphone and Banglalink has already done it, their maximum subs do their recharge by electronic means. So let’s hope Aktel will be able to achieve the same in short times.

First, it was Warid who introduced 89 paisa/minute call rate to any operator. Then in September 2008, Aktel introduced 68 paisa/minute call rate to any operator. Teletalk followed their footsteps by introducing 66 paisa/minute call rate in 2009. Now it is Banglalink’s turn to follow the other three operators who already have offered flat tariff to their subscribers. Today (6th November, 2009) Bannglalink just launched their 87 paisa/minute flat tariff plan.

Looks like its becoming a trend in the Bangladeshi market, to introduce flat call rate and allow the subscribers to call any operator’s number without worrying much about the differential charges. As more and more operators are adopting it we can safely assume that the financial impact of this tariff is quite positive. In fact, if we analyze the financials of the two operators- Banglalink & Aktel, we can easily see that AMPU of Aktel is lower than Banglalink but their ARPU is much higher. Yes, there might be some other factors but flat tariff is got to be a major factor behind Aktel’s higher ARPU.

As Banglalink has finally introduced flat tariff, it seems they have got the message and has acted accordingly. Question is when Grameenphone is gonna realize it?

Aktel is leading the way for Bangladeshi mobile operators to increase tariff. They were the first to raise the FnF tariff from 25 paisa per minute to 40 paisa per minute in 2008. Following their footsteps, Banglalink and Grameenphone increased their FnF tariff to 45 paisa and 49 paisa respectively. Now Aktel is active in another front, they have increased tariff of their NORMAL tariff plan.

Aktel has 3 different tariff plans for the subscribers which is flexible and can be changed twice within 15 days by sending SMS (charge applicable). Among the three, NORMAL tariff plan is the oldest one (the other 2 was introduced within the last 1 year). Most of the old Aktel subscribers (who bought their SIM before 2008) are subscribed to NORMAL plan. This is also true for the subscribers of Chittagong-Noakhali region where Aktel is holding a dominant position. Now subscribers of this tariff plan have to bear almost double call rate during the time slot of 4 PM to 12 AM.

For more, visit http://aktel.com/?module=176

There is Tk. 800 tax on every newly sold SIM in Bangladesh. By adding the production cost, import tax and distribution cost with it total cost becomes something around Tk. 1200 for every SIM. But still time and again Bangladeshi Mobile Operators are introducing new campaigns to sell their connection as low as Tk. 150. Which means a subsidy of more than Tk. 1000 for each SIM sold. Grameenphone did it, Banglalink is doing it and Aktel, Warid, Teletalk are doing it all the time- selling new connection way lower than their cost. But question arises, why they are doing it?

I am sure that there is no real business case behind it. There is only one thing that can explain it is the ‘KPI factor’. All the big bosses of Bangladeshi mobile companies surely have some KPI. And a major part of that KPI is related to achieving or maintaining certain market share. So when they see their market share dropping, they launch one or two new sales campaign and try to gain some ‘EASY’ subscribers. Of course, most of the customers acquired through this process are multiple SIM users. They buy new SIM at a lower rate just for the fun of it. After using the initial bonus (freebies) they keep their newly purchased SIM in the pocket (or drawyer) and wait for a CRM campaign.

Though the company suffers a huge financial loss, the bosses achieve the desired market share, after all its KPI that matters. I think it is the fault of the ‘KPI setters’ who don’t recognize that subscriber market share is no longer relevant in a market like Bangladesh. They should set their KPI based on REVENUE MARKET SHARE instead.

Mobile operators Banglalink and AKTEL are in talks for a possible merger in an aggressive bid to grab a substantial market share of Bangladesh’s 46 million market, giving a hint that the number of operators will come down in the already saturated six-operator market.

The merger issue was disclosed by Orascom Telecom Holdings Chairman Naguib Sawiris recently, when he talked with journalists on the sidelines of the World Economic Forum in Jordan, according to media reports.

Sawiris said mobile operators would benefit from merger because “in long term the smaller companies won’t be able to compete”.

“But right now our feeling is that more consolidation has to happen in the market on the subsidiary level, like we’re doing in Bangladesh. We’re in discussions now with Telekom Malaysia to combine our operations,” he said.

Orascom Telecom Holdings is the owning company of local Banglalink, which is yet to break even after holding the market’s second largest position with 10.90 million customers as of April 2009.

Banglalink’s probable consolidation partner AKTEL has the third position in the market with 8.83 million subscribers as of April.

Telekom Malaysia International has 70 percent stake and Japanese NTT DoCoMo the rest in AKTEL.

If the expected merger happens, the new operator’s market share will be around 45 percent in terms of accumulated customers of 19.73 million.

At present, the top three operators — Grameenphone, Banglalink and AKTEL — hold more than 90 percent market share. Norwegian Telenor’s majority shareholding company Grameenphone is in the number one position with 46 percent market share and 21.02 million customers as of April 2009.

Sawiris’ recent disclosure about merger matches the hint he had given to the journalists during his visit to Dhaka last year.

In a press meet in Dhaka he was asked about the possibility of acquisition and merger in Bangladesh’s cellphone market. He said: “Frankly speaking you have six operators, but we see only three.”

He however said: “Most competitors don’t want to sell unless they have built some value. And that’s why we don’t see someone wants to sell its stake right now. But I believe six is a crowd.”

Talking to The Daily Star, a Banglalink official said it could happen as Sawiris told the press. “There is something going on. But we are not fully aware of the development.”

AKTEL officials echoed the same, saying they also heard about the issue but Telekom Malaysia International is yet to give any hint to the AKTEL office.

Talks of merger, acquisition or a new partnership in the telecom industry surfaced over the last few years, as most operators have failed to gain profitability.

Only Grameenphone now enjoys break-even. AKTEL remained profitable until the end of 2007. But then the company became a losing concern even after having a new partnership with Japanese NTT DoCoMo at the end of 2008.

Top officials of the leading mobile phone operators are already anticipating that a merger or acquisition will take place. However such talks were centring around the bottom three operators earlier.

So any merger among the leading operators will change the market’s characteristics and fuel competition, experts said.

“We had mentioned earlier that for the six operators in this market it would be difficult to sustain. So it comes as no surprise that the two companies now are in discussions. Whether there will be a merger or not remains to be seen,” Oddvar Hesjedal, chief executive officer of Grameenphone, told The Daily Star yesterday.

He said: “If it becomes a reality, Grameenphone will do its best to be a worthy competitor. We are confident that we will remain as the number one operator in Bangladesh in the years to come.”

Warid Telecom, the fourth largest operator, said recently it was on the lookout for a partner to raise fresh capital for investment in the next phase of its operations.

Source: Daily Star

Only GrameenPhone out of the six cell-phone operators in the country is making profit, while others are just surviving, Warid Telecom chief executive officer (CEO) Muneer Farooqui said on Sunday (10 May ‘09).

“We are not even at the break even point,” he said at a press briefing at Hotel Sheraton marking the second founding anniversary of Warid Telecom in Bangladesh.

Warid CEO said they have aggressive plan and want to triple their subscriber numbers, if the environment of the country remains favorable.

He, however, mentioned that Tk 800 tax per SIM is a big challenge for the telecom sector in the country.
“Under the prevailing tight economic conditions, such taxes act as an impediment in ensuring financial viability of our company,” he said.

But Farooqui hailed the decision of the Parliamentary Standing Committee on Telecommunication Ministry for reviewing the SIM tax is like a ray of hope. “This decision, if made, will be a blessing and boon for the telecom industry in general, and Warid Telecom, in particular,” he said.

Launched in May 2007, Warid Telecom has deployed over 1700 base stations with presence in all 64 districts. The company has 2.5 million active customers as it invested US$ 600 million already and has planned to invest more.

Warid so far deposited Tk 650 crore as direct and indirect taxes to the national exchequer and provided job opportunities for some 4,000 local people through direct and indirect channels.

Source: Bangladesh Today

The government has finally paid heed to struggling TeleTalk’s cry for development fund.

A Tk 2,000 crore will soon be allocated for the state mobile phone operator to reach out its network to additional 55 lakh customers in the next couple of years.

“The fund will be spent for adding 55 lakh customers to our network. Of the planned customer acquisition, 15 lakh would be 3G customers,” said Md Mojibur Rahman, managing director of TeleTalk Bangladesh Limited.

TeleTalk has been in severe financial constraints since its inception in 2005, with having only 10 lakh subscriber capacity.

At the beginning, the public limited company had to go for a Tk 273 crore expansion project, now being developed by the European Nokia-Siemens Networks and Huawei of China to reach 1.8 million new customers by 2009.

The government announced Tk 49,000 crore projects last week to develop the state-run telecom operators struggling to compete with the private sector ones because of the lack of latest technology support.

A Digital Bangladesh is the aim of these projects, as Post and Telecommunication Minister Rajiuddin Ahmed Raju told the media last week.

Besides the funds for TeleTalk, Tk 200 crore will be earmarked for IT, Tk 600 crore for WiMAX, Tk 1,500 crore for setting up next generation network and optical fibre. However, the execution of all the projects is subject to availability of easy loans from Japan International Cooperation Agency.

Officials said the government has sought Tk 2,000 crore from the Chinese government. The Economic Relations Division is getting ready to negotiate with the Chinese government soon.

As of now, TeleTalk has already established its network foothold in 64 districts, 402 upazilas and most of the highways.

The government initiated the mobile project through the formerly BTTB (Bangladesh Telegraph and Telephone Board) aiming to minimise any monopoly, said to be created by private sector operators.

However, the company keeps struggling with its limited capacity despite market demands.

In its latest move, the government announced another plan to bring TeleTalk under Bangladesh Telecommunications Company Ltd (BTCL) as a subsidiary company.

TeleTalk has only 0.98 million customers as of March 2009. Grameenphone is the market leader with having 21.05 million customers, followed by Banglalink’s 10.83 million and AKTEL’s 8.76 million during the same period. Bangladesh’s six mobile operators now serve more than 45 million customers.

Source: Daily Star



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