competetive analysis of telecom sector of bangladesh

Telecom sector of Bangladesh

Presented By

Sourav Paul ID: 37 52D

Contact : +8801671590670Mail: [email protected]

Industry overview

Internal Analysis

External analysis

Key findings

Competitive scoring

Sugession for investors.

Presentation Roadmap

Industry overview

57%19%

16%

7% 1%

Demand for Smartphones based on Operating System

Android phone

Feature phone

iOS phone

Windows phone

Firefox phone

53%

14%

12%

21%

Demand for Smartphones Based on Brand

SymphonySamsungWaltonOthers

Source: LightCastleBD.com

4.5 crore subscribers

50% by 2020

Competitive market

3G technologyInstallment

facilities

DeviceApplication

Network

1.5 crore sets imported

Mobile Financial Service IndustryBank-led MFS

Operates under scheduled bank

Operator-led MFS

Controls most of the mobile money value

chain

24%

54%

22%Mobile Subscriber

MFSSubscriber

Source: BTRC & Bangladesh Bank Website

34.8 million

No. of MFS Subscriber

4.04 million

No. of Daily Avg. Transaction

608.05 Crore (BDT)

Average Daily Transaction

MFS subscriber growth rate is 2.7% monthly

Financial Product & Services Under M-Commerce

Bill Payment

• DESCO• WASA• GAS• PDB• Insurance

Payment

Ticket Purchase• Bus• Train• Cricket

Match• Movie• Lottery

Case Payment

• Traffic Case

• Motorbike or Car case.

Airtime Top-Up

• For all the operators at present.

Distribution Channel

80%

MFS Opera-tor

13%

MNO7%

Revenue from Selling USSD Gateway

Revenue from Selling ticket & Bill Payment

Industry Overview: Telecom Network Operators

2004

-200

5

123%20

06-2

008

60%

2009

-201

3

20%Growth in Subscriber Base

Mar

ket P

enet

ratio

n

Pres

ent G

row

th R

ate 10%

85%

Expensive License

Fee

Low Profitability

Limited License

Merger or Acquisitio

n

140%+Growth only

in Data

Expensive Network

Equipment

Source: BTCL 2016

Decreasing

Industry Overview• Infrastructure for technical

management.• New technology innovation.• Network up gradation.

SpecializationEricsson : network modification.Huawei : Low cost product.Alcatel & Nokia: Small share.

40%

52%

8%

Market shareEricsson

Huawei

Nokia & Alcatel Lucent

Cost leadership Quality product

Life Cycle of the Industry

Change Makers• Chinese

manufacturers.• Innovators.

Demand for Change• Push Strategy• Demand for better

quality.• Free transfer of

Knowledge.

Recent Trend• Smart watches• Google glass• VR headsets

Continuous improvement is must

to sustain.

Current Scenario & Market Growth

Jan-13

Mar-13

May-13

Jul-13

Sep-13

Nov-13

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

Jan-16

Mar-16

020406080

100120140

10 20.4 32 44.0175

96.15115

121.33

Number of Total Transactions in Million

0

4000

8000

12000

16000

20000

24154714

69368323.79999999999

11136.312969.51

15928.43

18241.51Total Value of Transactions(BDT in Crore)

Source: Bangladesh Bank Website

MFS Industry Lifecycle in Bangladesh

Very potential market.So is it the one to invest????

Industry Life Cycle

Maturity in Voice• Market is almost saturated in the “Voice” service

Growth stage in Data• With 3G/4G technologies being introduced, demand for Data is set in increase

exponentially

Merger/Acquisition• Airtel and Robi are being merged under the “Robi” brand.

Citycell/Teletalk• Incompatibility of Technology between GSM and CDMA is making it hard for Citycell

to survive• Teletalk, despite major advantages, could not capitalize due to poor marketing.

Condition of company fairly depending on maturity

Key PartnersTechnology alliances

Commercial partners

Key ActivitiesPayments network managementTransaction processingValue – added services

Value Proposition

Connectivity

Platform for card programs and cashless payments

Convenience, security, rewards associated with card payments

After – sales services, customer convenience

Customer Relationships

Same side network and effects

Cross side network and effects

Customer Segments Internet users

Advertisers and marketers

Developers

Channels

Sponsorships

TV ads, tradeshows, conferences

Key Resources

Payment products platform

Cost Structure

PersonnelNetwork, EDP and communicationsBrand promotionR & D

Revenue Streams

Services revenues

Data processing revenues

International revenues

Handset

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments

- Mobile Network operators

- Banks- Distributors- Agents

Providing USSD gateway for the MFSs Partnering with Banks

- Bill Payments- Ticket Purchase

(train/bus/movie/ cricket match)

- Mobile top-up- Balance transfer- Cash-in- Cash-out- Remittance- Insurance payments- Traffic case payments- Mobile banking- Merchant payments- SMS Banking

- Customer Care Center

- Agents

- Mobile phone

users- Households- Merchant- Small

enterprises- Retail sectors Key Resources Channel

- Technological setup

- Subscribers- Agents- Distributors

- Mobile phone- Agents- ATMs- Banks

Cost Structure Revenue Streams- People recruitment- Training- Marketing- Product design & Network built-out- Technology solution purchase or in-house development- Maintenance fees- Transmission cost

- USSD gateway charge- SMS charge- charge on per transaction- accounts opening charge- Charge on buying tickets- Utility bills pay charge- Revenue share from MFS providers / Banks

MFS

Key Partners

Equipment SuppliersSim

ManufacturersFiber Optic Cable ServiceProviders

Technology Support

Key ActivitiesSatisfying customer

needsProviding network for

communicationProviding internet

servicesEnsuring quality in the

supply chain

Value PropositionStrong networkWide CoverageSmooth channel

of communication VAS including

Healthcare and Utility bill paying service.


Personal interaction at call centers and customer cares.

B2C relationship through product offers

B2C communication through one sided messages

Social media

Customer Segments

Mass population

Convenience seekers

Health conscious

Key Resources Skilled people Equipment

Manufacturers Marketing resources Stakeholders

Channels Call center E-accounts Website Social media

Cost Structure Establishment cost including infrastructure and related amenities Product innovation, manufacturing and selling Operation of customer cares, call centers, websites etc. Marketing costs

Revenue Streams Value based pricing Cost based pricing Zero sum game

Operators

Business Canvas ModelKey Partners

Machinery and equipment supplier Logistic support provider Legal Consultants

Key Activities

InnovationsDelivering know-how Equipment leasing

Value Proposition

Infrastructure technical support

Sustainability


Post Sales service

Timely delivery

On demand service

Customer Segments

Telecoms operators

Government Key ResourcesTechnological knowledge Technological experience Capital Global Acceptability

Channels

B2B Marketing Direct Communication

Cost StructureProcurement of Materials is the most expensive.Business works on Credit so a large Working capital is requiredMore spending on innovation and developing new products.Shipment of machineries from country to country.Certain period maintenance cost.

Revenue Streams

Industry works on Tenders so timely quality delivery is important

Bulk Buying is the norm

Driving forces(Handset)

Emerging Buyers• Lower income to

middle income• Young

generation large in population

Globalization• Latest trends• New

innovations

Changing Lifestyle• Social

networking sites• Payment method

Driving forces of the Industry

Strong Network• GP, BL and Robi are the market leaders in this aspect.• Teletalk has strong 3G network• Growth in Data segment needs to be catered by 3G/4G services.

Strong Financial Position• Industry requires large investments in infrastructure.• Citycell is failing due to lack of capital.

License• License are expensive and limited. • Citycell failed to acquire 3G license

Marketing• Teletalk, despite its strong network in 3G, is failing to attract customers

Driving Forces

Drivers of

Change

Diversified need of

customer

Digital commerce

Value added

service of MNO

Changing payment methods

Driving Forces(Equipment)Cost

Network quality.

Service time period.

Manpower.

Experience in foreign countries.

Young generation’s knowledge transfer.

Large Population and wide spread demography.

VRIN analysis

Valuable Rare InimitableNon –

substitutable

R & D Yes No No Yes

Production Yes No No Yes

Marketing – Brand Image

Yes No Yes Yes

Customer Service Yes Yes No Yes

Resource Valuation: VRIN Analysis

• High Tech Infrastructure

• Wide spread Network

Value

• Costly for banks to install their own system

Rarity

• Costly & practically not feasible

Inimitability

• No non-substitutable resource.

Non-substitutable

Already established market players

&Investment needs to make a

operator first.

VRIN analysis

• Strong Network (quality and coverage) and License of GP, BL and Robi

• Strong Brand Value of GP• Quality of Human

Resources

Valuable

• License for 2G/3G are limited

• No one has a strong enough 3G network yet.

Rare

• Network Coverage of GP• Customer base.• Network coverage can be

imitated but amount of time is a factor.

Inimitable

• Voice or data service is yet to find a stable and affordable substitute

Non-Substitutable

Grameen-Phone

These dimensions will vary from organization to

organization.But time length of presence and commitment to performance is

the defining issue.

SWOT

StrengthsLarge customer baseIncreasing disposable incomeLarge number of service providersHigh technological advancement

WeaknessesHighly competitiveSaturated marketIntensive R & D required

Opportunities

Rural market penetrationGrowing number of diversificationRising 3G uptake

ThreatsLow barriers to enterUnorganized sectorNeed to look for each social class

Growing home demand and more

options for customization.

SWOT

Strengths• Technological

Infrastructure• Rich

distribution & sales network

Weaknesses• Depends on cooperation of

banks• Govt. regulation

Opportunities• Rural market

penetration• Acceptance of new

technology by user• New products &

services• growing demand

Threats• growing competition and lower

profitabilityProfit may be a deceiving indicator because of existing strong rivalry.

SWOT

Ever growing market.

Financial soundness of the major operators.

Skilled human resource. Stronger than ever communication channels.

S Complicated and confusing promotional activities.

Tax evasion.

Room for improvement in value added services.

W Strong economic growth.

Better interconnectivity agreement.

Strong demand for 3G services.

Declining prices for handsets.

Major growth in MFS and Data

O Rigid government policies.

Devaluation of taka.

Non-co-operation of government and fixed PSTN

Competitive market.

T

Already well established players&

Large scale of initial investment

SWOT(OT)

• A large domestic market.• Educated worker in home

country.• Bangladeshi Government’s

vision 2020 is to make a digital Bangladesh.

• A lot is to be yet done here.

• Possibility of disruptive technology.

• Possibility of market saturation by low quality less costly product

• Unfavorable Government policies. Present bureaucratic situation.

• Major political unrest and change of

THE BIG PLAYERS(Handset)

Symphony47%

Samsung29%

Walton12%

Microsoft7%Micromax

6%

Market Share

Source: Market Monitor program for Q1 2014

The Big Players(MFS)

bKash58%

DBBL Mobile Bank-

ing19%

Ucash8%

Others12%

MyCash3%

MFS Operators

GP43%

Banglalink24%

Robi

21%

Air-tel8%

Teletalk3%

CityCell1%

MNO

STRATEGIC GROUP MAPPING

SymphonyWalton

Samsung

Micromax

Lava

Oppo

Strawberry

Microsoft

HTC

Perceived Quality

Price

STRATEGIC GROUP MAPPING

SymphonyWalton

Samsung

Micromax

LavaOppoStrawberry

Microsoft

HTC

Features

Price

0 10 20 30 40 50 600.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

GP

Banglalink

Robi

Airtel

C.CellT.Talk

Strategic Group Mapping (MFS)

Number of Subscriber in million

Mob

ile F

inan

cial

Ser

vice

Strategic Group Mapping

Source: Teletalk Annual Report 2013-14

Coverage

Reve

nue

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0 0.2 0.4 0.6 0.8 1 1.2

Strategic Group Map

Grameenphone

Robi Axiata

Banglalink

Airtel

Teletalk

Coverage

Revenue


Coverage

Pric

e

00.10.20.30.40.50.60.70.80.9

1

0 0.2 0.4 0.6 0.8 1 1.2

Strategic Group Map

Grameenphone

Robi

Banglalink

Citycell

Airtel

Teletalk

Coverage

Price

How Apple is using GVC

Recent Strategic MovesLe

ader • Aggressive

pricing strategy• product

differentiation• country-wide

distribution network and customer service center

• pro active, anticipative and responsive marketing

Cha

lleng

er • Frontal Attack : vast infrastructural and financial resources

• Bypass attack : capitalized on the high-end range of smart phones.

• Encirclement Attack : With a product line with varying quality and price range as low as Tk 7,500 to highest level of Tk 80,000

Follo

wer• Imitator Strategy:

copies some features from some existing popular models,

• Follower Strategy : named one of it’s latest models as Primo S3 which is similar to Samsung’s Galaxy S3.

• Adaptor: some models are improved versions of some other existing models of leading brands.

PRICE WARSApple Iphone 4s 3,5 inch LCD, ios

Tk 39900

Samsung Galaxy s34 Inch Amoled Display, Android Jellybean

Tk 33000

Nokia Lumia 8305 inch LCD, Microsoft Windows Phone 8.1

Tk 36800

Walton Primo RX25 inch LCD, Android Kitkat

Tk 14990

Symphony Xplorer H505Inch, Android KitKat

Tk10500Source: Lightcastel Partners

Recent Strategic Moves

Acquisition of 3G license• Citycell failed to

acquire one

Merger/Acquisition• Robi and Airtel is

merging soon, pending regulatory requirements.

• A number of major players entered into the market through acquisition of already established businesses.

GP decided to use

Ericsson’s hardware

for its network

Strategic Moves

Ericsson: New targeted areas like cloud, IP networks, TV and media.

Free installation of High quality equipment for GP in Chittagong.

Huawei:serves additional set of customers and areas beyond the traditional service provider market.

Nokia• Programmable World.• Connecting Software.• Nearly all the people

carrying billions of devices can be connected with software

INDUSTRY PROSPECTS AND OVERALL ATTRACTIVENESS(Handset)

Factors for attractiveness

No hassle of landlines

Affordable

Substitute for PC

Substitute for cameras

Fashion object

Factors for unattractiveness

Mergers like Airtel and Robi

Special problems and issues

Health concerns

Road hazards

Identity theft

Source: Businessoutlookbd.com; lightcastlebd.com

Key Components to Success(MFS)

Key Components to Success

Strong Value Proposition

Strong Mobile Infrastructure

Effective Cooperation

between Bank & MNO

Optimal Regulatory

System

Enhanced Security

Wide Agent Network

Overall Attractiveness

Regulation• Sub-optimal

regulations

Bank-MNO Coordination• Lack of

coordination between bank and Mobile operator

Security• Lack of proper

secure system

Key findings(Handset)

Smart phones are taking over

Maximum use of Global

Value Chain

Massive growth

potential

Bangladesh’s growing economy

working as an

accelerator

Promoting Digitalizatio

n

Industry attractiveness(Operators)

• Very competitive market– Limited growth in subscriber base– Data usage is growing at 150%+ but revenue per

customer is still very low.• Limited license• Strong Competition giving rise to need for

Merger/Acquisition

• Industry level: (Handset)

Technical support providers. Telecoms.

Triple Triangle Framework

MesoColla

bora

tor Competitor

Customer

Mass population.Different demography.

very minimal.

• Industry level:(Equipment)


MesoColla

bora

tor Competitor

Customer

Any disruptive Technology

Telecom. as they are servicing company.Also the equipment manufacturer.

Telecoms and Government projects

• Industry level: (Telecom)

Technical support providers. Regulatory bodies.


MesoColla

bora

tor Competitor

Customer

Mass population.

VOIP services (Viver, WhatsApp)

• Industry level: (MFS)


MesoColla

bora

tor Competitor

Customer

Acceptor organizations. Small organizations

who are promoting different purchase through mobile transferred cash

Own operator users.

Bkash Ucash But from a different perspectives.

• Macro-level Analysis: (Equipment)


MacroGlob

aliza

tion Technology

State & Security

Very welcoming and local demand is high

LTE: (Long Term Evolution) 10 times more speed of Data than 3G.• 422 operators in 143

countries(2015) • 1 billion by the end of

year 2016.

3.6 billion by 2020 estimated LTE user.

• Macro-level Analysis: (Handset)


MacroGlob

aliza

tion

Technology

State & Security

Less restriction in market entry. Welcoming environment.

• Many brands are evolving.• Knowledge sharing is open.• Wide variety of choice.

Less chance of disruptive technology.

Very strong infrastructure in sourcing.

• Macro-level Analysis: (Telecom)


MacroGlob

aliza

tion Technology

State & Security

High restriction in market entry. Business environment is competitive.

• VOIPs are getting popular.• Other competitive offers are

transparent Very good experienced facilities

are present. These are costly. No local provider.

Competitive ScoringSector Infrastructure

(out of 5)Operators(out of 5)

MFS(out of 5)

Handset(out of 5)

Market readiness(Demand)

4 5 3 5

Customer base 2 3 3 5

Competition 3 1 1 2

Supporting Industry

2 2 1 4

Entry Barrier 3 1 1 5

14 12 9 21

Risk return matrix

Risk

Return High Low

High TelecomInfrastructure.

Handset.

low MFS.

Suggestion for new investorsOperators

Go for Acquisition

Buy out small players like Citycell.

Invest only if you have very large capital

Profitability is low in the industry, so be ready to wait decades before hitting breakeven.

Large global competition.

Perceived quality depends on international exposure.

Less options from supporting industry.

Already established contract with major player.

Entry and exit barrier is high.

Large initial investment.

Suggestion for new investors(Infrastructure)

Suggestion for new investors(MFS)

Largely dependent on Operators.

Nearly impossible without own operator facility.

Large initial investment.

Most of the margin is dedicated to distribution team.

If already an operator opting for it is a good diversification strategy but not a singly profitable industry.

Suggestion for new investorsHandset.

Most promising among all

Easy customization option from China.

Larger home demand.

Entry and exit barrier is low.

Comparatively lower investment.