Bangladesh: ready to rocket?

07 Dec 2017

With a strong and self-sufficient agricultural industry, rising education levels, and an established population of emigrants sending money back home, Bangladesh enjoys average annual GDP growth of about 7 percent. With over one third of its 160m people aged 15-34, it is set to overtake both Malaysia and Thailand to become the world’s 23rd largest economy by 2050, according to professional services firm PWC.

The country’s recent social and economic growth has been fueled in part by digital technologies and this digital dividend is expected to benefit further from improved mobile connectivity. “4G is key to the future of Bangladesh,” says Mahtab Uddin Ahmed, CEO of mobile operator Robi Axiata. “There’s no conventional short-term 4G business case for us today, but Robi’s strategic goal (and Bangladesh’s continued economic emergence) depend on it.” Ahmed says 4G--set to launch in December 2017--underpins their strategy to transform from a traditional telco to a digital company.

Massive merger

Robi became Bangladesh’s second largest mobile operator with over 32.2 million subscribers via a 2016 merger between Airtel and Axiata as part of an investment venture between Bharti Airtel of India, Axiata Group of Malaysia, and NTT Docomo of Japan. The merger was the largest ever undertaken in Bangladesh.

Ahmed describes the merger as “a [successful] test of the country’s economic, regulatory and legal development.” “Our network, now shared by two different brands, has become national for both,” says Ahmed, “and the network integration enhanced our national 3G coverage by more than 30%.”

“The network and operations integration between the two former business was complex - each had different equipment vendors, technologies and spectrum,” says Ahmed. “The previously separate teams had different ways of managing their networks, with different models of what was managed in-house and what was outsourced. But thanks to the support of our vendors, and a decision we made to manage the integration on region-by-region basis, we limited customer loss to around 10% of our combined base and have already won those back with strong marketing plans.”

“The merger and the economies of scale it delivered has created a base platform from which we can digitize our business,” he says. “That is where the long term benefits and value of the merger and the business will be found.”

Going digital

“We’re delivering on the early economic and service benefits of the merger, but we need to become a digital company,” says Ahmed. “Today, digital acumen has become key.” Consultants have rated Robi’s digital capabilities today at 4.1 out of 10 and have suggested the business needs to improve this to at least 7.2/10 by 2020.

“One of the big challenges is that our traditional telco culture will not help us to become a digital company,” says Ahmed. “We must reinvent ourselves as a total digital company - this means simplifying and digitizing our internal processes.”

Enhanced services

It’s no easy task. “Over the next 4-5 years, we must keep our costs flat and grow our revenue by close to double digits to deliver the margin we want. Given that inflation is currently running at between 6-7%, the scale of the goal becomes clear.”

As for converged services, triple play is difficult in Bangladesh without a broadcast license, but Ahmed believes he can partner to offer IPTV and fixed-line fiber services. “We have strong 3G internet today, 4G on the way, and plans for new home solutions to deliver over 4G,” he says. “For Robi, 4G is the basis of our becoming a digital company.”

This article first appeared in Telecom Asia Vision 2018

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