Launch of Mobile in bangladesh- IB by paramesh

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Launch of Mobile Handsets in Asia

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Guess? Where to launch

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Recent News Chinese Cellphone Handset Manufacturer Eyes Bangladesh Market

Handset maker Micromax last week announced its foray into Bangladesh and said it will launch 12 cellular phone models priced between 2,000 and 16,000

Axiata (Bangladesh) Ltd has rebranded itself with a new look by introducing Robi, the new brand name for the company, to take its products to the mostly untapped rural market.

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• Demographics– Legal System Based on English

Common Law– Population Density (2007E) 952

per sq. km– Area 147,570 sq. km

• Literacy Rate of ages 15 and above– Male: 53.9%– Female: 31.8%

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Economic Indicators

• GDP per capita average annual growth rate (%), 1990-2009 = 3.4

• Average annual rate of inflation (%), 1990-2009 = 4

• Population– - 2011 estimate -142.3 million (8th)

• Density – 1,099.3/km2 (9th) – 2,917.6/sq mi

GDP (PPP) 2010 estimate - Total $258.608 billion - Per capita $1,572

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Existing conditions

• serious overpopulation, • widespread poverty• Tropical zone

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Telecom conditions• Telephone density is

less than 1 per 100 persons.

• Mobile cellular density is 13 per 100 per person.

• There are 376 Internet hosts with 10 ISP’s and 450,000 internet users as of the year 2006.

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Why bangla• According to BIS Shrapnel research, – Bangladesh’s mobile handset market is dominated by first-

time users (nearly 85%), as the country is still in its immaturity in terms of mobile phone usage.

– Further, 80% of the handset market is dominated by ultra-low to low-end handsets, available for less than US$68, due to the country’s low per capita income levels.

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• Bangladesh is a country which is densely populated and also is a flat and easily extends able coverage.

• The infrastructure and Tele-density is low which on the other hand made the market a perfect place for telecom business.

• The demand is very high and the consumer base is very large but the investment is low because of the topographic layout.

• The government has a receptive foreign investment policy with no restrictions on repatriation of profit.

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Favourable conditions• Despite Bangladesh is a big market, liberal government policies to encourage the foreign

investor to invest in the country are very attractive. Some of them are given below.– Tax exemption – 5 to 7 years depending on the area of investment.– Duty – for export oriented industry, the import duty is 0% and for other industry it is 5%.– Tax law – In case of bilateral agreement, double taxation could be avoided.– Exemption of income tax up to 3 years for expatriate person.– Remittance – The investor can transfer the whole profit and dividend to his

native land.– Ownership – 100% self owning is allowed and also joint venture is encouraged.

• Cheap skilled labor is the significant competency of Bangladesh ICT industry. The labor force is easily trainable and has the capability to learn quickly

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Why telecom• Bangladesh has become a significant hub for

telecoms. – It has been forecasted that the average revenue

from telecoms sector will be Tk1500crore2 a year.– Even though the current infrastructure is not much

developed but it is suitable for foreign investment.– expecting 194.990mn subscribers by 2015,

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What existing players are working at• According to Mr Shah ,a researcher– foreign operators, in collaboration with local

partners, have been working with the infrastructure to remove entry barriers and make mobile telephony more affordable and widen the base of mobile subscribers.

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Political Factors

• Political environment in Bangladesh is always unstable.

• Frequent changes of government and policymakers' reluctance or incapability to implement or design progress oriented policies is a major drawback for the telecom industry, an industry that is constantly changing in terms of technology.

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Economic Factors• In context of customers' buying power, in many ways

Bangladesh is a poor country. • With a low GDP per capita and a majority of the population

under poverty level, to much of the population, a mobile phone and a network subscription is a luxury. – However, the emergence and rapid spread of pay phone stalls

utilizing mobile phones, has eased usage somewhat for these customers.

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Social factors(Social factors include health consciousness, population growth rate, age

distribution, career attitudes, and emphasis on safety.)

• The telecom industry has definitely made an impact on the job market of the country, taking in thousands of employees and creating new career opportunities everyday.

• The overuse of mobile phones has often triggered arguments regarding safety, but the Bangladesh market does not regard it as a threat.

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Technological Factors• Sadly Bangladesh does not have an infrastructure that

allows for research and development of large scale. – While Bangladesh's policies and government processes

hamper fast technological change, the telecom industry has in many ways influenced the both the public and private sector to invest and bring in new technology such as WiMax and submarine cable, although limitations have not allowed these technologies to flourish.

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Environmental factor• Due to the environmental facts(tropical zone),

the foreign entrants should adjust their equipments according to demand of the environment

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Operators handset co.

• Airtel Bangla

• Banglalink

• Citycell

• Grameenphone

• Robi

• TeleTalk

• Nokia• Siemens• Samsung• motorola• China phones• All other popular

brands

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Porters national diamond. Factors Conditions Notes

Factor conditions Goood Cheap and skilled labor,Good communicationinfrastructure, low Teledensity

Demand condition High unsaturated ruralmarket.Mobile cellular density is 13 per 100 persons

Supporting industries low Grameenphone,Ericcson??

Government Policies Very liberal Easy licensing, Tax freetime, less interference

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BCG matrix• (relating mobile phone industry to the matrix). • As market growth potential for mobile phone industry has

become low because of possible market saturation, so firm's of the industry are in either cash cow or dog quadrants.

• companies like GP, Banglalink, Citycell are in cash cow quadrant. – They have done their initial investment, infrastructure development

is completed, and now their target is revenue generation.

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So Our way of doing business here.

• JV with grameenphone• Manufacture mobile handsets in bangladesh

itself and sell through a established telecom operator company which facilitates us to target rural market.

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“Grameenphone”a largest cellular operator in the Bangladesh

To act as selling company for our products.

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Our products & STPProduct 1 Product2

Models “Villaphone” “NetFone”

SegmentationRural, urbanmarket,tech-educated ,illiterate,

Target Rural ,village people,illiterates,

Educated youth(age 18 to 34) and Netizens,

Positioning easily operated phone for people with zero education

Specially designed for Net browsing

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4P’s Product 1- “Villaphone” Product 2 “NetFone”

Product •Ease of use for uneducated•Interactive Voice guided colour key pad,local language•FM•No high end features to confuse villagers.•With free grameenphone sim

•Qwerty keypad•GPRS/EDGE/Wi-fi/3G enabled,•Designed for easy use of net in phone.•Design for easy connect to pc. •With free grameenphone sim bundled with VAS.

Price Below 1000 On par with competitor prices

Place Rural – thru “Community information centres” (Grameen rural centres)

Urban – thru “Grameen phone centres”

Promotion Village phone agents, Combined Media advertisement with grameenphone

strategy Cost leadership and focus in rural areas Differentiation and focus in urban areas

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About Our partner company- Grameenphone –a market leader

• (GP) – is the leading telecommunications service

provider in Bangladesh. – With more than 32 million subscribers (as of June

2011)

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• The goal of Grameenphone is to provide affordable telephony to the entire population of Bangladesh.

• Grameenphone has built the largest cellular network in the country with over 10,000 base stations in more than 5700 locations.

• The entire Grameenphone network is also EDGE/GPRS enabled, allowing access to dial-up quality speed Internet and data services from anywhere within the coverage area.

– There are currently nearly 3 million EDGE/GPRS users in the Grameenphone network.

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• Presently, nearly 98% of the country's population is within the coverage area of the Grameenphone network.

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of GP

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• Inspired by the Grameen Bank microcredit model Mr. Iqbal Quadir formed a consortium with Telenor and Grameen Bank to establish Grameenphone.

• GP is a joint venture enterprise between Telenor and Grameen Telecom Corporation,

– GTC is a non-profit sister concern of the internationally acclaimed microfinance organization and community development bank Grameen Bank.

– Telenor is the largest telecommunications company in Norway, owns

55.8% shares of Grameenphone, – Grameen Telecom owns 34.2% and the remaining 10% is publicly held.

Its way of formation and how it is advantage to us.???

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DISTRIBUTION through??

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2. Their “Community Information Centers” OUR would-be RURAL OUTLETS

Here we sell our handsets & train them how to use it

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• Community Information Center (CIC) is aimed at providing internet access and other communications services to rural areas.

• Grameenphone provides GSM/EDGE/GPRS infrastructure and technical support.

• other partners Grameen Telecom Corporation and Society for Economic and Basic Advancement (SEBA), are involved in selecting and training entrepreneurs to run the village centers.

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Their Village Phone programme - a source of potential sales agents for our company

• With the help of Grameenphone, Grameen Telecom operates the national Village Phone programme, alongside its own parent Grameen Bank and the International Finance Corporation (IFC), acting as the sole provider of telecommunications services to a number of rural areas.

• Most Village Phone participants are women living in remote areas. (our

potential sales agents)

• Village Phone works as an owner-operated GSM payphone whereby a borrower takes a BDT 12,000 (USD 200) loan from Grameen Bank to subscribe to GP (Grameenphone) and is then trained on how to operate it and how to charge others to use it at a profit.

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• As in September 2006, there are more than 255,000 Village Phones in operation in 55,000 villages around Bangladesh.

• It is the sole provider of telecommunications services to a number of rural areas.

We are the only ONE provider of telecom to rural areas

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• By the end of 2006, there were more than two hundred seventy-eight thousand village phone ladies who have together taken loans amounting to Tk. 2,397.10 million.

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VRIO• these unique Sales & distribution Network

especially in rural market are valuable, rare, unimitable and organised which gives us sustainable competitive advantage over others.

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2. GrameenPhone Centers –our would-be urban outlets

A gpc at Gulshan, Dhaka. A franchised gpc at Tejgaon, Dhaka.

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Grameenphone Centers

• A grameenphone center (GPC) serves as a "one stop solution" for customers, with all telecommunications products and services, under a single roof.

• A grameenphone center also sells phones from vendors like Nokia, Samsung, Motorola, Sagem and Benq. EDGE/GPRS modems and accessories such chargers and headphones are also sold at GPCs.

• As of September, 2007, there are 76 GPCs and they are strategically located at all major locations of the country is operated by Grameenphone. As of late most of the newly opened gpc's are franchised. Most of these franchised outlets are in non-metropolitan areas.

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• The GPCs also provide the flexiload service without charging extra for small denominations unlike many retailers in the country.

– Thus making the gpc's an ideal place for many for such a service.

• Every once a while, the GPCs tie up with handset manufactures and start a nationwide marketing scheme by selling the specific vendors products at a price lower than the market's or in bundle with a grameenphone connection loaded with free minutes.

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(GP VAS to offer with our Netfone)

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Porters 5 forcesFive forces Five forces Strength(roughly)

Entry Barriers Low

Bargaining power ofcustomer

low

Bargaining power ofsuppliers

moderate

Availability of substitute moderate

Existing competitivepressure

high

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Competitors• As with many other Asia-Pacific countries,

– the Bangladesh mobile handset market is predominantly captured by global handset giant Nokia (approximately 52% market share) followed by Siemens.

– the success of these two vendors can be attributed to excellent handset quality, ease of use, an efficient sales and distribution network, dedicated after-sales service, and regular launches of low-priced handsets to meet market demand.

So to compete them ,to take technological collaboration of Swedish company Ericsson which is existing in bangla as telecom infrastructure provider to network

operators.

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Risk/threat - greymarket

• sales of mobile handsets has increased at a phenomenal pace.

• However,

– nearly 70% of mobile handsets available in the local market have been entering through informal channels, depriving the Government and importers of a huge amount of revenue each year.

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Govt measures to greymarket effects• In a serious bid to turn around this drastic situation, the

Bangladesh Government reduced the tax on mobile handset imports from US$22.50 to only US$4.50 in mid 2005.

• this initiative has revived the situation to a certain extent, the effect on the grey market has not been as significant as was expected by distributors and importers.

• the grey market is currently holding around 40% market share, but they are hopeful this will diminish over the coming months.

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