WELCOME
DYNAMICS SHAPING THE MOBILE
TELECOM INDUSTRY
(A comparative case study on Bangladesh and the Netherlands)
by
Amit Biswas (Bangladesh)
Maastricht School of Management
MBA28
PRESENTATION OUTLINE
WHY ?
MOTIVATION
PROBLEM DEFINITION
LITERATURE REVIEW
RESEARCH QUESTIONS
SIGNIFICANCE
HOW ?
CONCEPTUAL FRAMEWORK
RESEARCH METHODOLOGY
METHODS OF DATA
COLLECTION & ANALYSIS
RELIABILITY OF DATA
WHAT ?
FINDINGS & DISCUSSION
1
PRESENTATION OUTLINE
WHY ?
HOW ?
CONCLUSION, RECOMMENDATIONS
WHAT ?
AND FUTURE RESEARCH
2
WHY THIS RESEARCH ?
Motivation
Work experience
Trends & Challenges
Understand market dynamics
Slowed revenue growth
New International expansion
3
Literature Review – Mobile Telecom Sector
BANGLADESH
Six mobile operators with 93.788 mn active subscribers
On average 8% growth in new customers every month
Slowed revenue growth in mobile telecom industry
High SIM tax & Ambiguity in regulative authority
Shift towards value-added-service (e.g. 3G, data services)
Source: AT Capital Research, 2010; BTRC, 2012; Cellular-news, 2012
4
Literature Review – Mobile Telecom Sector
NETHERLANDS
Three mobile operators with 20.1 mn active subscribers
Slowed new customer acquisition in mobile telecom
industry
Slowed revenue growth in mobile telecom industry
Liberal rules and regulations in mobile telecom sector
Strategic partnership with VOIP service providers
Source: OECD, 1999; Totel Pty Ltd, 2012; Wireless Intelligence, 2012, Morris, 2012
5
Literature Review - Proposed strategies
For Bangladesh
For Netherlands
Innovative marketing and
product & service offering
Innovative product &
service
Removal of SIM Tax
Smart piping
Consolidation
Consolidation
Adaption of new techniques
Focus on M-Commerce &
Data related services
Fair, Transparent renewal
policies
Efficient piping
Partnering with VOIP
New revenue generating
opportunities
Source: AT Capital Research, 2010; The Economist Intelligence Unit, 2010; The Economist Newspaper, 2006
6
Literature Review – Similar Study
HIGH
Competition
PORTER FIVE
FORCES MODEL FOR MOBILE VIRTUAL NETOWRK
OPERATORS IN INDONESIA
Profit
by Sirat et al.
Telecommunication Regulation Research Center, Indonesia
LOW
7
Problem Definition
Subscriber
New
growth
Subscriber
Trend
Growth
- Bangladesh
Trend
Mobile
– Netherlands
telecom
(in
sector
mn) (in mn)
Decline
slowed
ARPU
–Netherlands
Bangladesh
(in
Declining
ARPU
– The
(inEuro)
Euro)
“
100
20.2
€ 2.50
32
90
20.0
30
€80
2.00
70
19.8
28
60
€
1.50
19.6
50
26
40
19.4
€30
1.00
24
20
19.2
€ 10
0.50
22
19.0
0
20.0
29.66
€ 2.00
28.72
€ 1.87
19.8
€ 1.86
28.14
19.9
28.15
€ 1.77
19.9
€ 1.65
€ 1.69
27.85
Q1
Q1 2012
2012
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Q4
Q4
Q42011
2011
2011
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Q3
Q3
Q32011
2011
2011
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Q2
Q2
Q2
2011
2011
2011
Nov-09
Sep-09
Jul-09
May-09
Mar-09
Q1Q1Q1
2011
2011
2011
Jan-09
Nov-08
Sep-08
Jul-08
May-08
Q4
Q4
Q4
2010
2010
2010
Mar-08
Jan-08
Nov-07
Sep-07
€20
18.8
0.00
Jul-07
May-07
Forces behind slowed revenue growth in the
19.4
mobile telecom
Industry in the respective countries
24.07
19.3
”
Source: Wireless Intelligence, 2012
8
Major Research Questions
Explain & Compare the dynamics shaping
mobile telecom industry in both Bangladesh
and the Netherlands.
9
Minor Research Questions
What are the forces that influence this industry in the respective countries?
Why both the country’s mobile telecom sectors is experiencing slowed revenue growth?
What are the challenges faced by the mobile operators in the respective countries?
Are the existing regulations favourable towards growth?
What are the changing trends in the mobile telecom sector in respective countries?
What are the complementary industries in the mobile telecom sector in respective
countries?
How the prevailing challenges faced by mobile operators in the respective countries can
be resolved?
10
Significance of the Research
Understand forces influencing respective countries
Tackle prevailing challenges
Formulate future strategies
Formulate reciprocal strategies for expansion in
international territories
Stepping stone for future studies
11
HOW WAS THE RESEARCH
CONDUCTED ?
Conceptual framework
Threat of New
Entrants
Bargaining power of
Buyers
Threat of Substitutes
Bargaining power of
Supplier
Complementors
Adapted model of Porter: Porter’s Six Forces Model
12
Why Porter’s Six Forces Model ?
Shows most common sources of local environmental
threats
Defines and characterizes the degree of threat and
determines the competitive environment
Sales
Sales
COMPLEMENTORS
Forecasts the average level of performance of the firms
DVD
DVD PLAYER
For evaluating industries which relies on technology
Source: Prof. Adam
Source:
Brandenburger
Hesterly, 2012
and Barry Nalebuff
13
Research Methods
Qualitative
Quantitative
Mixed
approach
Articles
Recent publications
by telecom research
agencies
Reports by mobile
operators
Reports by
government
regulatory authorities
Data from Wireless
Intelligence
Annual and Quarterly
reports of mobile
operators
Both
Deductive
&
Inductive
Research methods
E-interview
14
Reliability & Validity of the data
Qualitative
Quantitative
Data will be collected
from credible sources
governing mobile
telecom industry
Wireless Intelligence
is the definitive
source of mobile
operator data,
analysis and
forecasts, delivering
the most accurate and
complete set of
industry metrics
available.
Structured einterview of experts
from mobile telecom
industry will be
collected.
Mixed
approach
15 I Pages
WHAT WERE THE
FINDINGS ?
Demographic Comparison
Info
Bangladesh
Netherlands
Comparison
Area
Population
143,998 sq km
161,083,804
41,543 sq km
16,730,632
3.5
9.6
80
Info
Age Structure
38
Median Age
Population
growth rate
Literacy
Unemployment
rate
80
Bangladesh
0-14 years: 34.3%
55
15-64 years: 61.1%
65 years and over: 4.7%
23.3 years
20
1.579% (2011 est.)
Netherlands
60
530-14 years: 17%
15-64 years: 67.4% 44
40
65 years and over: 15.6%
41.1 years
14
0.452% (2011 est.)
56.80%
99%
9.30%
7%
Source: www.geert-hofstede.com
Source: www.cia.gov
16
Threat of New Entrants
Bangladesh
The Netherlands
THREAT OF NEW ENTRANTS
High
LEVEL:
LEVEL:
Low
High SIM Tax
High Licence renewal fees
Limited spectrum availability
High
Low
Rules and regulations are
favourable towards new entrants
Spectrum auction
17
Bargaining power of the buyers
Bangladesh
The Netherlands
BARGAINING POWER OF BUYERS
High
LEVEL:
Low
Similar products and services
Lower switching cost
Multiple SIM syndrome
LEVEL:
High
Low
Similar products and services
Affordable switching cost
18
Rivalry among the competitors
Between Bangladesh and the Netherlands
HerfindahlARPU
Growth-Bangladesh
- Netherlands
Q1 2011ARPU
Q2Growth
2011
Q3
2011
Q4 2011
Q1 2012
Q2 2012
Hirschman Index
1.87
1.86
30
1.9
28.72
28.15
28.14
27.85
1.85
Bangladesh
2,936.00 2,948.00 2,928.00
2,885.00 2,869.00 2,856.00
28
1.77
1.8
1.75
26
1.69
The
Netherlands
3,737.00
3,729.00
3,707.00
3,703.00
3,703.00 24.07
3,690.00
1.7
1.65
24
1.65
1.6
22
Effective Call Rate (in Euro)
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
1.55
Effective Call Rate (in Euro)
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
201.5
KPN
0.19
0.18
Q1Q12011
2011
Q2
Q22011
2011 0.20
Q3
Q30.20
2011
2011
Q4
Q42011
2011 0.19 Q1 2012
Grameenphone
0.01
0.01
0.01
0.01
0.01
T-Mobile
0.18
0.18
0.18
0.18
Source: Wireless
Intelligence, 2012 0.180.01
Banglalink
0.01
0.01
0.01
0.01
High
RIVALRY AMONG EXISTING
COMPETITORS
LEVEL
Vodafone
Robi
Low
0.180.01
0.170.01
0.16
0.01
0.16
0.01
0.16
0.01
Source:
Intelligence,
Source:Wireless
BTRC, 2012
Wireless
Intelligence,2012
2012
19
Threat of substitutes
Operators
Prepaid SIM
Preloaded
Amount
Call Rate (BDT)
Grameenphone
Banglalink
BDT 149
BDT 149
BDT 150 talk
time, 150 SMS
170 talk time,
and 150MB
500 free SMS
internet
BDT 0.79/mins BDT 0.89/mins
Robi
BDT 138
25 talk time, 500
free SMS, 20MB
internet
BDT 0.88/mins
Non-Conventional Substitutes
Operators
Prepaid SIM
Preloaded
Amount
LEVEL
Call Rate
(BDT)
Low
KPN
T-Mobile
€ 10.00
€ 7.95
Free Calls70and
€ 10 Talktime,
units of
200 MB internet
SMS/MMS/Mins/M
Messaging
usage
B
€ 0.30/mins to
Mobile
€ 0.30/mins to
€ 0.30/mins to
Mobile
fixed line
Vodafone
€ 7.50
€ 10 Talktime,
€ 0.30/mins to
Mobile
€ 0.30/mins to
fixed line
High
20
Bargaining power of suppliers
Between Bangladesh and the Netherlands
“……
I really don’t
think they are
adversely affecting
the
“ The Ericsson,
Nokia-Siemens,
Alcatel-Lucent
gave a profit
operators’
performance…..
doesn’t
havepressure
any significant
warning. So,
they are also under
severe
not only
on the
from their ownimpact
industry,
theymarket.”
also
seeSUPPLIERS
the Chinese are
BARGAINING
POWER
OF
coming in. ..”
--Raihan
HeadManagement
of Customer Acquisition,
Mr. AnilIslam,
Kutty,Former
Innovation
Consultant
Airtel Bangladesh Limited
High
LEVEL
Low
21
Influence of complementors
Bangladesh
The Netherlands
Influence of complementors
Positive
Positive
LEVEL:
LEVEL:
Negative
Content Provider & Smartphones
Call Centers
Mobile Banking
Negative
RFID Industry (SIM NFC)
IT Industry (Cloud Computing)
Content Provider(Spotify, Dizzler)
22
CONCLUSION
Forces Influencing mobile telecom industry (RQ-1)
Bangladesh
The Netherlands
Government Policies
Government Policies
Power of the customers
Power of the customers
High competition
High competition
Positive influence of
complementors
Positive influence of
complementors
Affordable substitute
Non-conventional substitutes
Less challenge from new
entrants
High threat from new entrants
23
Reasons behind slowed growth rate (RQ-2)
Bangladesh
The Netherlands
High SIM Tax
Biased regulation
Multiple SIM Syndrome
Lack of policies protecting
existing mobile operators
Lack of set procedure for
license renewal and fees
Undifferentiated P&S
Undifferentiated P&S
High level of threat from
VOIP applications
Detrimental competition
Intense competition
24
Challenges faced by mobile operators (RQ-3)
In Bangladesh
In Netherlands
25
Existing regulations and influence on growth (RQ-4)
In The
In Bangladesh
Netherlands
mobile
mobile
telecom
telecom
industry
industry
“In
“..Many
general,
a times
European
it becomes
Commission
an impediment
and OPTAtohave
the growth
been quite
of
strong…..on that perspective
the Industry…”
the regulation has been
unfavorable”
- Raihan Islam,
Former Head of Acquisition, Airtel Bangladesh Limited
- Anil Kutty, Innovation Management Consultant
“..the current regulations are mostly unfavorable to mobile
“The regulation is really
operators”
a disadvantage for the existing
mobile operators because they favor the new entrants”
- Omar Rasman Nizam,
- Karan
-Manager
Oberoi, –Product
Segments
Innovation
& Regional
Manager,
Planning,
T-Mobile
Robi
26
Emerging Trends (RQ-5)
Smart
VOIP applications
Phones
Smart phones
Increase Data
Advanced mobile
usages
banking
Outsourcing
Chinese suppliers
Tie-up with
advanced content
Mobile banking
Providers
In-house app
Network sharing
development
27
Complementors (RQ-6)
Bangladesh
The Netherlands
Mobile manufacturing industry
RFID Industry
Digital Content Industry
IT Industry
Call Center Industry
M-Commerce Industry
Music streaming service
industry
28
Comparison of dynamics shaping mobile telecom
industry (Major RQ)
Porter’s Six Forces
THREAT OF NEW ENTRANTS
The Netherlands
Bangladesh
LOW
HIGH
BARGAINING POWER OF BUYERS
HIGH
HIGH
BARGAINING POWER OF SUPPLIERS
LOW
LOW
THREAT OF SUBSTITUTES
HIGH
HIGH
RIVALRY AMONG EXISTING
COMPETITORS
HIGH
HIGH
INFLUENCE OF COMPLEMENTORS
POSITIVE
POSITIVE
EXPECTED OF
COMPETITIVENESS
MIXED
MIXED
EXPECTED LEVEL OF
PROFIT
AVERAGE
AVERAGE
29
RECOMMENDATIONS
Recommendations (RQ-7)
In Bangladesh mobile telecom industry
Challenges
1. Rigid government regulation
2. Lowest effective call rate
3. Growing Churn rate
4. Declining ARPU
5. Intractability of customers
Strategies
Government should consider removing SIM Tax.
Transparent and participatory renewal process with
nominal fees
Government should focus developing long term plans
in order to encourage operators to invest more.
Consolidation among the existing players
Innovative customer engagement & win-back
campaigns
Network infrastructure sharing among the rivals
Adaptation of future technologies (e.g. 3G, LTE, DTH
etc)
Zonal based pricing strategy
Development VAS eco-system with content provider
Tie-up with non-conventional competitors
Government should take initiative upgrade existing
national identification system
31
Recommendations (RQ-7)
In The Netherlands mobile telecom industry
Challenges
Strategies
1. Biased regulation towards
new entrants
Government should try to protect the existing players to ensure ROI while
encouraging new entrants to enter the market
2. High level of threat from
VOIP based applications
Partnering with VOIP based internet telephony companies to offer
innovative services
Develop in-house applications and platform using own IT & network
capabilities
Partnering with handset manufacturer to offer innovative & unique services
3. Declining effective call rate
4. Increasing Churn rate
5. Declining ARPU
Invest on new technologies such 4G, LTE in order to offer bouquet of
services, instead of traditional voice, SMS based services
Target the right segment (high ARPU customers) in order to ensure
sustainable profitability
Innovative product and service offerings while ensuring optimal network
usage
Network infrastructure sharing among the rivals
Consolidation among the existing players
Explore new revenue streams utilizing existing IT capabilities.
Converge with content providers
30
Theoretical recommendations
Industry specific model development
Include “Complementors” in Porter’s original model
Incorporate PESTEL model
Incorporate model for internal analysis (e.g. VRIO )
Redesign for analyzing dynamic market
32
Future Research
Further refinement by incorporating other models
Porter’s national diamond model for international
expansion.
Research on complementary industries.
On benefits of partnering with non-conventional
competitors
On formulation of most suitable regulations for
Respective countries.
33
Summing up….
34
35
THANK YOU !!