“Analysis of Customer Satisfaction on Grameenphone Ltd.”
Grameenphone limited is now the foremost telecommunications service provider in Bangladesh with 34.412 million subscribers as of July 2011. In the recent business world, especially in telecommunication sector, long-term customer retention, i.e., attaining sustainable marker share is a crucial issue. Project is about analyzing the present status of Customer Satisfaction level of Grameenphone and the future prediction of the product& service based on organization’s aptitude and customer expectations. Grameenphone has come a long way. It is a joint venture enterprise between Telenor (55.8%), the largest telecommunications service provider in Norway with mobile phone operations in 12 other countries, and Grameen Telecom Corporation (34.2%), a non-profit sister concern of the internationally acclaimed micro-credit pioneer Grameen Bank. The other 10% shares belong to General Public & other Institutions.
Grameenphone is seeing the Bangladeshi market as a great opportunity to do business. Grameenphone has launched the largest Initial Public Offering (IPO) in Bangladesh. It expects to raise US$70.4 million dollars through the IPO sale of 69.44 million shares. As a part of continuous market development strategy, Grameenphone needs a comprehensive study on the telecom sector and cellular industry that will help in better understanding the industry in which it is operating. The company, 55.8% owned by Telenor of Norway, has raised the same amount from institutional investors. The money will be spent on network expansion and developing its information technology infrastructure.
The company has so far invested more than BDT 10,700 crore (USD 1.6 billion) to build the network infrastructure since its inception in 1997. The population coverage of Grameenphone network was increased from 55% to 95% during the year. And Grameenphone will continue
to make the network quality and capacity improvements through the country and also improve coverage in major highways and important public access buildings. The entire Grameenphone network is also EDGE/GPRS enabled, allowing access to high-speed Internet and data services from anywhere within the coverage area. There are currently more than 3 million EDGE/GPRS users in the Grameenphone network.
1.2. Problem Statement:
This project will be titled as “Analysis of Customer Satisfaction: A Study on Grameenphone Ltd.”In the current business world, particularly in telecommunication sector, long-term customer maintenance, i.e., attaining sustainable marker share is a vital issue. This project is about analyzing the present status of Customer satisfaction. Since my responsibility in Grameenphone Center (GPC) as an Executive (Customer Manager) is to serve the subscribers face to face, under this topic I will try to give exact reflection of overall customer service way of GP.
Analyzing the present status of customer satisfaction level & the future prospects of the product based on the organization’s capability and customer’s expectation.
The research will be aimed at fulfilling the following specific objectives:
· To describe the Service that Grameenphone provides for its customers.
· To compare the service offered by the Grameenphone with regards to their customer’s expectation.
· To find out the problems behind the service offered by the Service provider (Grameenphone) with regards to the customers’ expectation.
· To find out the overall satisfaction level of Grameenphone subscribers.
1.3. Scope of the study:
The scope of this report is limited to the overall description of the company, the industry it is existing, the way customers are served and customer’s expectation of service level. Though Grameenphone is the industry leader but still it is in its growth stage in Bangladesh; it still has to go a long way to be the industry leader in Bangladesh. This report provides a close analytical look at the subscribers’ service satisfaction level that GP is providing recently and usages with a closer to view subscribers’ expected services from GP. This report will help to gather knowledge about the services provided by Grameenphone. To remain in leading position in Telecommunication market, this research is very needful because customer is the core concentration of marketing. Their satisfaction will bring Grameenphone’s success and help to reach the goal.
Business research used in this report is of descriptive nature. Through this descriptive research this report seeks to determine the answers to who, what, where and how questions of the cellular industry of Bangladesh. To prepare the report, research design and methods of this study is described as follows:
· Data source:
Data for this report has been extracted from primary sources as well as secondary sources.
Primary Data will be collected though questionnaire survey which will be done on postpaid users of Grameenphone and direct interview will be done with corporate employees of Grameenphone Limited.
Majority of the data will be collected from Annual Report, Informal discussions mainly with my supervisor, published articles on telecommunication sectors, journals, brochures, Grameenphone official web sites.
· Sample Size:
The sample size of will be 100 for this project purpose.
· Questionnaire design:
The questionnaire will be designed in such a way so that the view of respondents articulated properly regarding each and every issue.
· Data Collection:
Annual Report, Informal discussions mainly with my supervisor, published articles, journal, and brochures, Company websites
· Organization part information will be provided in a descriptive manner
· Data will be analyzed by the software called SPSS
· I’ll conduct correlation, regression analysis and ANOVA to find whether the hypothesis gets proved or disproved.
1.5. Limitations of the study:
· Time constraint is a big factor could be a big issue, as I have to do this report along with my regular office work
· Data availability could be another big issue here because company might not want to disclose all the confidential information regarding their managerial strategies and plans.
· The sample population will be limited in terms of proportion and composition.Data collection is restricted within Dhaka city only, which may fail to represent the factual scenario of the relationship between measured variables.
2. Name and Location of the Company
Grameenphone Ltd (hereinafter referred to as “GP”/”Grameenphone”/”the company”/”the parent company”) is now the foremost telecommunications service provider in Bangladesh. It is a joint venture enterprise between Telenor (55.8%), the largest telecommunications service provider in Norway with mobile phone operations in 12 other countries, and Grameen Telecom Corporation (34.2% ), a non-profit sister concern of the internationally acclaimed micro-credit pioneer Grameen Bank. The other 10% shares belong to general Public & other Institutions.
Grameenphone is a public limited company incorporated in Bangladesh in 1996 under the Companies Act 1994 with its registered address at Celebration Point, Road 113/A, Gulshan, Dhaka, Bangladesh. In July 2010, the registered office of the company was shifted to GPHOUSE, Bashundhara, Baridhara, Dhaka 1229. GP was initially registered as a private limited company and subsequently converted into a public limited company on 25 June 2007. During November 2009, GP listed its shares with both Dhaka and Chittagong Stock Exchanges. In 2010, Grameenphone formed a wholly owned subsidiary namely Grameenphone IT Ltd (hereinafter referred to as “GPIT”/ “the subsidiary company”), to provide IT services to itself and also to external customers. GPIT launched its commercial operation from 1 April 2010.
3. Historical Background of the Company
The Telecom market in Bangladesh has differentiated characteristics of very low Tele-density, inefficiency and totally controlled by capitalization. BTTB (Bangladesh Telephone and Telegraph Board) is proved to be incapable of providing sufficient interconnections to meet the demand of mobile services providers. The state owned BTTB has been the monopoly telephone service provider. The zest of improving the efficiency and ability of BTTB, the government initiated a restructuring program in telecom sector to corporatize BTTB.
3.1. Achieving Licenses:
The granting of service license to Bangladesh Telecom Authority in 1989 paved the way for mobile service in Bangladesh. Pacific Bangladesh Telecom Limited (PBTL, now Citycell) operating under CDMA technology was offered a cellular license in Bangladesh in 1993. In 1996, Bangladesh was preparing to auction off private cell phone licenses to four companies. So October 10 in 1996, at the request of Dr. Muhammad Yunus (Grameen Bank’s founder) completely independent of Grameen Bank, a not-for-profit private company called Grameen Telecom was formed as private limited company. Grameen Telecom, in turn, created a for-profit company called Grameenphone, found a foreign partner, and put in a bid; Grameenphone received one of the four licenses.
3.2. Launching Grameenphone service:
In the midst of lack of communication means, Grameenphone launched its service on the Independence Day of Bangladesh with an effective and user-friendly mobile phone network.They started their operation from March 26, 1997 with only 72 employees. They converted to public limited company on June 25; 1997.Grameenphone put a positive impact on the lifestyle of the people of Bangladesh.
Grameenphone was the first company to introduce GSM technology in Bangladesh when it launched its services in March 1997. Since its inception, Grameenphone remains committed to providing the best service to its customers, as well as launching innovative new products and services.The Village Phone Program started in 1997 that provided a good income-earning opportunity to more than 210,000 mostly women Village Phone operators living in rural areas. Grameenphone makes its profits by serving wealthier urban customers. But from the point of view of the Grameen family and its strong anti-poverty mission, the for-profit, urban-only Grameen Phone exists for only one reason: To fund, with its profits, the extension of cell phones into rural Bangladesh in order to provide entrepreneurial opportunity to Grameen Bank members through Village Phone. As Dr. Yunus puts it, “Grameen Phone is merely what we need to do Grameen Telecom’s Village Phone.”
3.3. Journey of Grameenphone:
After a successful launching, Grameenphone introduced it services in the second largest city of Bangladesh, Chittagong In June 1998. Cell to cell coverage in the Dhaka-Chittagong corridor also enabled Grameenphone to introduce its service in a number of other districts along the way.
In 1999, Grameenphone expanded its business and started its’ business in Khulna. A good number of other districts came under their coverage because of cell to cell coverage between Dhaka and Khulna. Grameenphone was also the pioneer to introduce the pre-paid service in September 1999. They introduce the EASY pre-paid service in the local market. Besides, it established the first 24-hour Call Center, introduced value-added services such as Voice Mail Service (VMS), Short Message Service (SMS), fax and data transmission services, and many other products and services.
In 2000 Grameenphone started its services in Sylhet, Barisal and Rajshahi and brought all six divisional headquarters under the coverage of its network. The service in Barisal region was happening after the microwave link between Khulna and Chittagong was completed. After six years of operation, in August 2003 Grameenphone has more than one million subscribers. And from November 2005 Grameenphone continues to being the largest telecommunication operator of Bangladesh with more than 5 million subscribers. Grameenphone Ltd is continuing its operations with a success in 2006. In November it has just reached the mark of 10 million customers.
In 2008, Grameenphone has been listed in Bangladesh capital market after completing the largest initial public offering (IPO) ever in the country’s history. Trading of Grameenphone shares began in both Dhaka and Chittagong Stock Exchanges on 16 November 2009. The share of BDT 10 each was offered with premium at BDT 70 and on 30 December 2009 the trading price closed at BDT 187.5 in the Dhaka Stock Exchange & the present Market price is BDT148.20 (as on 08 June 2011).
AT A GLANCE
4. Name and Characteristics offounder
Grameenphone is a joint venture company comprising of:
Telenor – A state-owned telecommunication company from Norway. It has a long history of successful cooperation with other operators in Russia, Hungary, Montenegro, Ireland, Bangladesh, Greece, Germany, Germany, Australia, Malaysia etc.
Grameen Telecom – A sister concern of Grameen Bank. It was established by Grameen Bank to organize and assist those Grameen bank borrowers who wish to retail telephone services in the rural areas.
Marubeni Corporation – A leading investment and trading company from Japan. The company owns 9.5% of GP.
Gonofone DevelopmentCorporation – A New York-based telecommunication development company having investments in many companies in USA, Russia and other parts of Europe.Gonofone Development Corp. owns 4.5% of GP
5. Existing Share-holders
Grameenphone is the largest mobile phone company in Bangladesh. The shareholders of Grameenphone add their exclusive, in-depth experience in both telecommunications and development. Telenor holds 55.8 per cent of Grameenphone, with Grameen Telecom Corporation owning the remaining 34.2 per cent. The rest of the shares belong to General Public & other Institutions. Telenor has played a pioneering role in development of cellular communications in Bangladesh.
The international shareholder brings technological and business management expertise while the local shareholder provides an existence throughout Bangladesh and a deep understanding of its economy. Both are dedicated to Bangladesh and its struggle for economic progress and have a deep commitment to Grameenphone and its mission to provide affordable telephony to the entire population of Bangladesh.
6. Vision, Mission, Objectives and Strategy
6.1. Company’s Vision:
Grameenphone’s vision is “We exist to help our customers get the full benefit of communications services in their daily lives. We’re here to help”. That means Grameenphone Ltd always there to help the customers get the full assistance of communications services in their daily lives. They want to make it simple for the customers to get what and when they want it.
6.2. Company’s Mission:
The mission of Grameenphone is to be the only reliable means of communication that brings the people of Bangladesh close to their loved ones and important things in their lives through unparalleled network, relevant innovations & services. They are providing a total communication solution to its customers. To do this, the service advance of Grameenphone has extensively developed over the last few years. Grameenphone subscribers now enjoy all the modern data communication and content services. Mobile office, internet access, MMS and modern music and download services are available through the nationwide EDGE enabled network.
6.3. Company’s Objectives:
· To contribute to the economic development of Bangladesh where telecommunications can play a critical role.
The Company has developed its strategies so that it earns healthy returns for its shareholders and at the same time, contributes to genuine development of the country. This is why Grameenphone, in collaboration with Grameen Bank and Grameen Telecom, is aiming to place one phone in each village to contribute significantly to the economic benefit of the poor. It is on the way to get a total uprising in the telecommunication field. By accomplishing the success factors, Grameenphone would like to be recognized as a consistent, honest and committed company to its valued subscribers and stakeholders.
6.4. Company’s strategy:
Grameenphone Limited’s strategy was to effectively become the second national operator in Bangladesh. Instead of focusing on a high-end, niche market; it pursued a low tariff strategy designed to compete directly with BTTB.
Continuous to grow subscriber base:
Grameenphone’s strategy is to grow their subscriber base, while seeking to limit declines in APPM, by increasing the availability of their products and services throughout the Bangladesh and by aiming to improve customer retention.
Focusing on high value customer:
Grameenphone strive to provide superior network coverage, connectivity, quality and reliability, as well as to continue their product and service innovations through continued investment in their network and products. They are focusing on high value customer segment which they expect will grow as Bangladesh population becomes more affluent with their value-added services, in particular Internet access and BlackBerry. They intend to increase their focus on high value business segment customers, given the high usage of voice and non voice services by these customers.
Achieve capital and operational efficiencies to improve profit margins and cash flow generation:
Grameenphone’s strategy is to continue to exercise strong discipline over their operating costs and capital expenditure to achieve improved efficiency and productivity in their operations and leverage their existing capacity. They have also plan to reduce their operation and maintenance expense by, among other things, using solar power, controlling service agreement pricing and lobbying to reduce the SIM tax.
Increased Brand Awareness and reinforce brand values:
Grameenphone intend to support their brand by undertaking brand refreshment exercises from time to time. They have planned to increase brand awareness through various point of sales promotions.
Increased revenue from non voice services:
Grameenphone is offering a wide-range of non voice services, including SMS, MMS, games, information services, content download, ring back tones, Internet access and BlackBerry services. They plan to continue increasing their revenue from non voice services, developing additional services and further expanding their presence as one of the largest provider of internet access in Bangladesh.
Continue to expand their comprehensive distribution network:
Grameenphone new distribution model is to push sales to retailers by distributing their SIM cards, electronic recharge systems and scratch cards through a network of nearly 100 third-party distributors. Their objectives under this new distribution model are to improve their product availability throughout the country with the establishment of more points of sales, improve inventory management, accelerate distribution of product, provide better support to their customer base, create a strong channel of communication between Grameenphone and subscribers and obtain better market data to allow them to be more dynamic and responsive to the market.
6.5. Company’s Value:
Make it Easy:
Grameenphone believes that they are sensible. Everything they create is easy to appreciate and use as they never fail to remember that they are trying to make their customers’ lives easier.
Grameenphone believes that they are imaginative. They convey energy and thoughts to their work. Grameenphone wants to be a collaborator in the progress of our society. They are passionate about our business, customers and country.
Everything Grameenphone set out to do should work. If it does not, they are there to put things right. They are about delivery, not over promising – actions not words.
Grameenphone shows acknowledgement and admiration the local culture. They are courteous and professional in regard to all interactions, both internally and externally. They are open, helpful and friendly.
7. Organizational Structure
Grameenphone has now more than 5000 employees. Grameenphone is divided into several departments namely technical, sales & marketing, customer relations, administration, human resource, finance and IT. Recently management has brought a change in the organizational structure in view of need of time. Management and organization structure of Grameenphone Ltd. are given in the following –
Board of Directors
|Nurjahan BegumHilde Tonne
Per Erik Hylland
Md. Ashraful Hassan
Dr. Jamaluddin Ahmed FCA
Table-1:Board of Directors
|Tore Johnsen, Chief Executive OfficerRaihanShamsi, Deputy CEO & Chief Financial Officer
Tanveer Mohammad, Chief Technology Officer
ArnfinnGroven, Chief People Officer
Kazi Monirul Kabir, Chief Communications Officer
ArildKaale, Chief Marketing Officer
Mahmud Hossain, Chief Corporate Affairs Officer
Table-2: Management Team
Organogram & Management
* Not a member of the Management Team
** Deputy CEO has a special role on Stakeholder Relation of the Company. Stakeholder Relation team of Corporate Affairs has a dotted reporting to Deputy CEO.
8. Operating Coverage
Grameenphone has the leading network with the widest coverage in the country. The Grameenphone network now covers over 99 percent of the population and over 87 percent of the land area with the remaining areas mostly falling under the Sundarbans and the Chittagong Hill Tract areas where mobile phone coverage is not allowed. Presently Grameenphone has covered 462 upazillas of 64 districts.
The company has so far invested more than BDT 10,700 core (USD 1.6 billion) to build the network infrastructure since its inception in 1997. It has invested over BDT 3,100 core (USD
450 million) during the first three quarters of 2007 while BDT 2,100 core (USD 310 million) was invested in 2006 alone. Since its inception in March 1997, Grameenphone has built the largest cellular network in the country with over 10,000 base stations in more than 5700 locations. A record 4181 new base stations were put into operation around the country during the year, crossing the 10,000 base station milestones in the process. In addition, the entire Grameenphone network is EDGE/GPRS enabled, allowing its customers to access high-speed Internet from anywhere within the coverage area.
9. Grameenphone’s Different Divisions and Department
In recent times management has brought a change in the organizational structure in view of need of time. Currently Grameenphone has 11 divisions and 5 departments to run its operations smoothly. The divisions are:
· Commercial Division
· Finance Division
· People & Organization Division
· MD’s Division
· Communications Division
· Corporate Affairs Division
· Technical Division
The departments are independent from any divisions. The names of 5 departments are:
· Administration Department
· Revenue Assurance and Fraud Management Department
· Information Department
· Internal Audit Department
9.1. Commercial Division:
Commercial Division is the link between the customers and the company. People in this division are mainly serving the clients. They are escalating the relationship of Grameenphone with its valued customers. This division can be subdivided as following major parts-
Structure of Commercial Division
Commercial Division is a combination of former Sales, Marketing & Customer Service Division. A significant amount of employees are working in this Division. Scope of work of some important departments are described as below —
Product Management Voice
· Manage product development and product life cycle management for all tangible products (SIM, SC and Device) to enable growth in core service business (voice, data, VAS)
- SIM and Device Product roadmap. Manage balanced portfolio of product according to segmentation model, prepare forecast and ensure availability.
- Ensure strategic alliance with Global team and different external partners.
- Management of SIM and device configuration, testing, certification, and distribution channel.
· Campaign Management & Execution
· Conceptualize and design campaigns
· Right feedback to product management on campaign
· Ensuring timely execution
· Activity Control
· Consistency of message across touch point& Threading activities under a single theme
Customer Lifecycle Management
· Design and prioritize campaigns, Manage channel execution,
· Customer types focus & Develop and manage loyalty program
· Gather structured/unstructured information from different sources, process it and pass it to relevant parties
· Customer expectation and satisfaction management
· Managing end to end Stealth Marketing Process to bring in targeted revenue
· Manage campaign alignment activities and forums to ensure we do not go to the same sub with multiple campaigns
· Participate in the commercial roadmap process to align other divisions with upcoming commercial campaigns/activities
· Making stealth marketing process future-proof and capable of handling market dynamics
· Customer expectation and satisfaction management
· Running projects to identify gaps in consistency among service channels and touch points
· Service assurance, usability, Product and process simplification
· Ensure Service Level & Customer Satisfaction
· Customer feedback is shared, recognized & implemented throughout the organization
· Follow-up & incorporate feedback into product design and informing customers who made suggestions
· Ensure Best quality services from Health Line (789), Study line etc.
Business Sales, Regions
· Maintain proactive, regular on site customer management & new acquisition for highly profitable Business clients in the Regions.
· Responsible and manage people development issue of the assigned team including leadership expectation of GP.
· Assist in developing DS channel strategy and coordinate product, segment and other teams to attain departmental objectives.
• Responsible for retaining and driving business from High Value Key Accounts of Direct Sales comprising of top financial institutions, NGOs and MNCs.
• Maintain proactive, regular on site customer management & new acquisition for highly profitable Business clients in Dhaka.
• Act as a communication consultant to the clients and provide need based customize solutions.
9.2. Finance Division:
The Finance Division consists of almost 300 employees in its various departments. The Division encompasses all financial activities – both internal and external. Department of finance is an integral part of finance division. The main role of this department is defined in under:
· Attends to financial planning and control and
· Budget and budgetary control
· Provide management information and development of system and method
· Ensure proper internal control over the company
· Analysis of financial statement for future action
· Information flow for inter-department and external using
· Co-ordination with external organization and internal department.
· Responsible to lender, Telenor and Bangladesh Bank related to financing issues
· Liaison with foreign lenders, sponsors, bankers and regulators
· Evaluation new investment proposal as project or programs
· Prepare business case
· Advice management and investment committee and re-rank the investment options
· Maintain and develop internal control structure aiming at the Sarbanes Oxley Act 2002 (Section 404)
· Check compliance of financial and procurement policies
· Compliance with tax related issues and Review policies and procedure in place and pass suggestion for continuous improvement
Payroll and Taxation:
This is a very sensitive and important segment in finance department. This department compiles the Companies Act and rules regulations of the Government. This is also working as legal advisory of tax, VAT and other external affairs. There is several sections based on work volume and criteria of the extended works. The main role of this department defines as under:
· Preparation of payroll statement and bank advice
· Preparation of salary perquisite and return submission and preparation accounts and financial statement for tax and audit
· Ensure tax deduction and issuing certificate individuals and ensure treasury deposits for tax, VAT and deduction at source
· VAT return and revenue statement preparation and preparation VAT report periodically and annually
· Supervision Provident fund and ensure investment of fund and supervising welfare fund and ensure internal using
· Internal audit co-ordination and external audit finalization and Quarterly report to NBR (National Board of Revenue) regarding connection and handsets
9.3. People and Organization Department:
People and organization Department, a significant department of Administration Division plays very essential role in the total functioning of Grameenphone. Employee recruitment, selection, transfer, promotion, training, performance appraisal – all these are conducted by this division. The informal structure of HR according to its functions can be classified into three main categories they are:
· Human Resource Management (HRM)
· Human Resource Development (HRD)
· Human Resource management Information system (HR- MIS)
Human Resources Development functions aim to increase the quality of the human resources especially through training. Different divisions send their personnel requirement to HR department. Then HRD sets target, prepare recruitment planning and go for the recruitment process. When an employee is recruited a separate employee file is opened comprising of all information of the particular employee which is regularly upgraded by HRD. HR Management also deals with some personnel functions likes how cause, termination, Dismissal, discharge, and resignation. It also issues circular as & when required, conduct department inquiry, and all other functions related to HR.
9.4. Regulatory and Corporate Affairs Division:
This division looks after the regulatory and interconnection issues. It is responsible for maintaining close relationship with BTRC, MOPT, PSTN operators and mobile operators for matters related to interconnection with fixed and mobile operators, and interconnection & Revenue Sharing Agreement. This division is also responsible for maintaining relationships with Ministries, the National Parliamentary Telecom Committee, Government agencies like the Board of Investment (BOI), the National Board of Revenue (NBR), and law-enforcing agencies.
9.5. Technical Division:
The Technical Division can be considered as the brain of this organization. Most of the people in the technical division are from the engineering and technological educational background. This division is divided into three departments-
People working in planning department build the technology. They are accountable for planning the network and equipment, taking decision about new expansion, enhancement and up-gradation and closely monitoring network performance. This department has three parts: switch planning, radio planning and transmission planning.
The people of implementation department are responsible for the construction and acquisition of base station room, antenna pipe, and power supply etc., installation of new base station hardware, start-up and pilot operation of base station. It is also divided to three units: site acquisition, civil works and roll-out.
Operations department is responsible for smooth operations and maintenance of the network. Their main tasks are operation, maintenance and overall management of the networks, fault detection and fault handling of networks. This department always closely monitors the network performance.
Grameenphone IT Ltd. is the leading fastest growing IT Company registered with the Registrar of the Joint Stock Companies and Firms of Bangladesh under the Companies Act 1994. It is a 100% subsidiary company of Grameenphone Ltd. which is the largest mobile operator company in Bangladesh with more than 30 million subscribers.
As a leading IT company, we are proving end to end solutions for Bank, Financial Institute, FMCG, Pharmaceuticals and Telecom Industry. We bring to you a team of talented individuals dedicated to creativity, service and efficiency. We are purely devoted to bringing clients noticeable transformations in their operational efficiency and we strive to provide inventive end-to-end IT solutions which are unsurpassed in value and quality. We look forward to demonstrating the exceptional skills and initiatives this country has to offer.
We aspire to leading Bangladesh into the global IT arena and would like to invite you to join the revolution. As hardworking and persistent people, we have proven capabilities in driving initiatives to surge forward a nation’s technological development. With a diverse array of IT experience, we bring to you the promise of change, the change that will take your organization into the future.
10. Industry Analysis
In the past three decades, due to significant liberalization and privatization, the entire telecommunications industry has become a dynamic environment with huge growth potential subject to new opportunities as well as threats. In recent years, in some Asian countries the number of mobile subscribers even passed the number of fixed-line subscribers. Hence, lately the strategic behavior of telecommunications companies has attracted so much attention, both in the academic literature and in the popular press. In Bangladesh the scenario is not much different. At present the socioeconomic profile of Bangladesh provides a great opportunity for the mobile industry to expand as the regulation in the mobile services is becoming more relaxed. Although the number of mobile operators is still limited to a few (five private mobile operators and one state-owned operator), aggressive competition has forced the incumbent telecommunications companies or mobile operators to reconfigure their strategy and business to sustain or improve their competitive advantage.
In order to create a stronger framework and encourage further investment and monitor and regulate the expanding telecommunications sector, in 2001 the Government of Bangladesh enacted a new telecommunications law, BTA. The BTRC is an independent commission and commenced functioning from January 31, 2002.
Under the BTA, the BTRC has the power to issue, renew, suspend and cancel licenses for establishing and operating telecommunications systems, providing telecommunications services and using radio apparatus and radio frequencies. The power is to be exercised in accordance with the objectives of the BTRC in sections 29 of the strengthens the social and economic welfare of Bangladesh; ensuring access to reliable, reasonably priced and modern telecommunications services for the greatest number of people; and encouraging the introduction of new services and creating a favorable investment climate. The BTA also requires the BTRC to maintain and promote competitions between service providers. In addition, the national telecommunications policy 1998 emphasizes the need to increase teledensity rates and expand and upgrade network coverage throughout Bangladesh, in particular by promoting greater private participation in the provision of basic telecommunications services. Bangladesh telecom (Pvt.) Ltd. (“Bangladesh Telecom”) was granted a 20-year license in 1990 covering trunked radio, cellular radio (both mobile and fixed-lines, i.e. including wireless local loop), and paging and riverine radio communications networks by BTTB. This license refers to a short agreement entered into on July 26,1989, under which Bangladesh Telecom received an exclusive right to provide telecommunications services for a period of five years.
The part of the license authorizing cellular radio telephony (fixed line and mobile) was transferred in 1993 with the consent of BTTB to Hutchison Bangladesh Telecom Ltd. (“Hutchison Telecom”) being a joint venture between Bangladesh Telecom and Hutchison Telecom. Hutchison Telecom subsequently changed its name to Pacific Bangladesh Telecom Ltd. (“Citycell”) in 1996.
The mobile phone operations decisions were never being influenced by any International agreement but held up as an independent entity for making market to grow. Self learning and liberalizing the mobile phone sector shaped up in a chronological strategy for Bangladesh. From 1993 till 1996 the mobile phone services were monopolized by one company; Pacific Bangladesh Telecom Ltd. which didn’t let the customer benefitted, however, with the commissioning of mobile phone service by Grameen Phone Limited and Robiin 1997, the situation started to improve in terms of price reduction and quality. The later period could be said Grameen phone Ltd. golden period, but the arrival of Banglalink in (2005) the mobile phone market brought immense price competition. The intensity of competition came as a blessing for the customers. This change in trend forced every player to adjust their price policy and quality.With significant reductions in tariff levels, Bangladesh is now one of the world’s fastest growing telecommunications markets with a tele-density of approximately 30 percent. This growth has supported the economic growth of the Bangladesh economy and Bangladeshi consumers have received substantial benefits. Recently, there has been more regulatory reform activity with the promulgation of the International long Distance Telecommunications Services (‘ILDTS’) Policy in 2007 and the corporatization of the BTTB to form the Bangladesh Telecommunications Company Limited (‘BTCL’). It also makes significant new policies in relation to interconnection – including voice and data, quality of service and retail tariff-ing.
The GSM standard, operating in the 900MHz and the 1800MHz frequency bands, is the predominant technology standard used for mobile telecommunications services in Bangladesh.
Table-3 source: Information Telecom & Media
The Bangladesh Mobile Telecommunications services industry has experienced significant growth in recent years. The total number of mobile telecommunications subscribers in Bangladesh increased from 4.2 million as of December 31, 2004 to 78.075 million as of July 2011, representing a compound annual growth rate of approximately 81.1%. Grameenphone Limited believe this increase had been driven by various factors, including –
· An increase in the geographic coverage for mobile telecommunications services by each of the major operators in Bangladesh
· Continuing declines in the prices of mobile handsets
· An increase in affordability of mobile telecommunications services due to continuing declines in per minute prices and increasing availability of lower cost pricing plans.
The mobile telecommunications industry in Bangladesh is currently led by three major GSM operators: Grameenphone, Banglalink and Robi. Grameenphone has the largest market share with a subscriber market share of 44.1% as of July 2011. Banglalink, a subsidiary of Orascom, has the second largest market share by number of subscribers. Robi, 70.0% owned by Axiata (formerly TM International), has the third largest market share by number of subscribers. Warid, founded by the Abu Dhabi Group, entered the market in 2007 and has gained the fourth largest market share by number of subscribers. Citycell, a subsidiary of SingTel, the Singapore-based telecommunications company, has the fifth largest market share by number of subscribers, and is the sole mobile operator to use a CDMA system. Teletalk owned by the Government has the lowest market share. The following table summarizes market shares of mobile telecommunications operators in Bangladesh:
|Market Share, 2011
Table-4, Source: BTRC
Increasing competition among the major private telecommunication companies in Bangladesh is pushing them to undertake various strategic and tactical measures to attract new customers while retaining the existing customers. In this emerging market both prepaid and post-paid subscribers are not exhibiting strong loyalties or commitment to any particular service provider as they have options of switching to other service provider(s) for more convenient and suitable service offerings. Hence, the major private telecommunication companies have a stake high enough to consider how to create a loyal customer base that will not be eroded even in the face of fierce competition. Therefore, the major private telecommunication companies must realize the emergence of studying and understanding various antecedents (viz. service quality, switching cost, trust, and customer satisfaction) of the subscribers’ relationship commitment to figure out ways to create a loyal customer base.
10.1 Market Position:
Telecom industry in Bangladesh is intensely competitive. Consumer demand in Bangladesh makes the mobile market one of the fastest growing markets in the world. According to Bangladesh Telecommunication Regulatory Commission (BTRC) the total number of subscribers in the telecom industry of Bangladesh is 78.075 million as of July 2011. Grameenphone is the leading provider of domestic access and domestic services with nearly 44.1 percent of subscriber connections. Importantly, the geographic reach of the Grameenphone network is greater than 98 percent.
Table-5, Source: BTRC
10.2 Porter’s Five Force Model:
Before getting into a market, every company should have an assessment of the market environment, how that market could react in different circumstances. Porter’s (1998) five forces model has the ability to determine the competitiveness of a market. According to Porter (1998), the collective strength of five major forces determines the ultimate profit potential of an industry. But whatever the collective strength is, the strategy should be formulated in such way that the company can defend itself against these forces or influence them in its favor. And knowledge of these contending forces provides the pathway of the right strategic action (Porter 1998, p21-22). Porter’s five forces are as follows:-
· Barriers of Entry
· Bargaining Power of customer
· Bargaining Power of Supplier
· Available substitutes
· Level of existing rivalries
10.2.1 Barriers of Entry:
Many foreign investors are now interested to do business in telecom sector in Bangladesh which reveals that Bangladesh has become a significant hub for telecoms. All the current players are either partially or fully foreign owned – 55.80% of Grameenphone is owned by Telenor from Norway; Telecom Malaysia owns around 70% of Robiand Banglalink is 100% owned by Egyptian Orascom Telecom. Singapore Telecom (Singtel) has entered the market by acquiring 45% share in Pacific Bangladesh Telecom. Warid Telecom of Abu Dhabi has got the license and has already started their operation. And now the US giant Vodafone is investing in the mobile telecom sector of Bangladesh by acquiring significant share of Robi. A PSTN company named World Tel Ltd. whose license had been suspended, got back its license with 7.5 MHz frequency in the GSM-1800 MHz band for operation in the central zone. As the frequency is GSM, we expect World Tel may enter the mobile telecommunication market. With its insignificance license fees, revenue sharing fees and lower investment cost compared to the incumbent mobile operators, World Tel may challenge our market share.This plethora of foreign investors shows that the threat of new entrants is very high. However, the barrier to entry and exit are also high. High setup cost and high level of sunk cost acts as a screening for small investors from crowding the sector.
10.2.2 Bargaining power of customer:
In the beginning, the mobile market was a controlled by seller. When Pacific Telecom first introduced their brand Citycell, the startup connection used to sell for more than Tk.100,000. The airtime was over Tk.16 per minute. However, with the increase in competition, buyers gained more power. Currently, the market is mainly dominated by buyers. The prices have come down a lot. The low level of product differentiation and very low cost of startup connections have led the buyers to switch operators very frequently. In Bangladesh Telecom industry, there are already 6 giant companies trying to find their niche. Companies are undertaking various promotional and product strategies to reduce churn. It has been clearly noticed that, as the market is growing, proportionally all the companies are getting new subscribers depending their nationwide coverage. So it is assumed that, even if the bargaining power of the customer seem to be high, due to the high growth rate of the market, each company is somehow getting benefited. Their market share is increasing, keeping pace with the growth rate of the market. The middlemen played a major role in the determining the buyer power. Previously all the companies used external dealers to ensure the smooth flow of their distribution. The commission paid to dealers was very high. However, the dealers paid a very low level of commission to retailers, as a result controlling the market to a great extent. Grameenphone is the first company to deal with this situation. They have started their own distribution network. This has not only reduced cost in the form of dealer commission but also increased satisfaction of retailers. Thus, in a market with strong buyer power, a self-owned distribution network can only help GP in maintaining its market leader position.
10.2.3 Bargaining power of supplier:
Bargaining power of the suppliers is low in the market as there are a lot of telecom related suppliers available. More over some giant Swedish and Finish multinational companies have already established their business in the market. Since the numbers of mobile phone companies are limited the suppliers cannot switch frequently or pressurize the buyers. On the other hand suppliers like Ericsson, Nokia, Siemens and Motorola are pretty big player themselves and have specialized sales units. Thus, there was always a good understanding between the suppliers and buyers. This situation is now tipped a little bit in the favor of the mobile phone companies by the entry of the Chinese company Huawei. They are offering to supply at lower rates than the previous suppliers. As a result, companies now have the option to go for cheaper suppliers.
10.2.4 Available substitutes:
The presence of 6 competitors in the market makes high availability of substitutes and competitions. But with a lower price strategy or may be an innovative new service, this threat could be altered says the BTRC Chairman. Bangladesh has a growing economy. Per capita income is very low, but this could not hinder people’s mobile consumption. But since the income level is low, so tendency of switching seems to be ignorable. And finding have already given the idea about how the market is growing. Mobile industry is a technology based industry and like any other technology has the danger of becoming obsolete by new technology. Thus, the threat of potential substitutes is always there. Currently, the biggest substitute of mobiles is land phone. The land phone market, until very recently, had been a government monopoly. Private land phone licenses were issued in 2005 and the PSTN (land phone) companies are yet to capture a significant portion of the market. Moreover, it was found that people keep mobile phones even if they have land phone connection. Thus, the threat from land phones is not that high. Another threat to the mobile phone industry is the expansion of broadband technology. People, especially youngsters, are finding it cheaper to chat online with their friends rather than talking. Broadband provides with quite a few advantages over mobile phones: chance to communicate with more than one person, cheaper rate are a few examples. However, lack of proper infrastructure is acting as a barrier to expansion of broadband countrywide. Thus, it is yet to materialize as a real threat to the mobile industry.
10.2.5 Level of existing rivalries:
The mobile telecom industry is intensely competitive. Even a few years back the industry was not as strong as it is now. Initially, Citycell enjoyed total monopoly in this sector. After the entry of Grameenphone and Aktel (which is now Roby), the industry condition had changed. Citycell lost its place as a monopoly player as Grameenphone took over most of the market share and Roby took the second position. The scenario further changed with the entry of Orascom Telecom, the mobile giant from the Middle East. They entered the market by acquiring 100% shares of Sheba Telecom and re-launching the brand as Banglalink.
Aggressive marketing and promotion were one of their main entry strategies and it worked. The airtime rates and connection prices came down because of the competition. This was an awakening call for the other operators. Grameenphone and Roby, who were silently enjoying their market positions, suddenly became aggressive as well. There was a huge increase in promotional activities of all mobile operators. The prices also started climbing downhill. Companies focused on segment marketing as well as mass marketing. GP launched its youth brand Djuice to cater to the needs of young generation. Citycell came up with their Aalap Super and Aalap Super Plus providing free airtime whole night. Robi, which was known as Aktel also came up with new offers like Aktel JOY that catered to the need of couples. Overall, the industry became a hubbub of activities.
The following table is showing the summary of Porter’s five force analysis at a glance-
|Barriers of Entry
|Bargaining Power of customer
|Bargaining Power of Supplier
|Level of existing rivalries:
10.3 Company’s comparative conditions:
There are six mobile telephone operators in Bangladesh at the moment. Among them one is Government owned telephone operator: Bangladesh Telegraph and Telephone Board (BTTB) and the other five are privately owned companies namely Grameenphone Ltd., Axiata (Bangladesh) Limited, Orascom Telecom Bangladesh Ltd., Pacific Bangladesh Telecom Ltd. (PBTL) and Warid Telecom Bangladesh Ltd.
10.3.1 Grameenphone Limited:
Grameenphone Limited, the number one and leading mobile phone company in the area of telecommunications in Bangladesh. Of Six mobile operators, Grameenphone Limited managed to grab 44.1% of the market share only by providing cost-effective & best service available in the market of mobile telecommunication. Grameenphone Limited has made its expansion not only in the urban areas, but also it stretched its network in the rural areas for the economic empowerment of the rural people. It has the largest network, the widest coverage, the biggest subscriber base and more value added services than any other mobile phone operators in Bangladesh. Grameenphone Limited has a very strong competitive position in the telephone industry in the country.
10.3.2 Orascom Telecom Bangladesh Limited:<