MOBILE TELETALK REPORT

Report on Telecommunication Industry of Bangladesh (A Study on Teletalk Bangladesh Limited).

HISTORY OF TELECOMMUNICATION INDUSTRY IN BANGLADESH 1.0 Introduction The Telegraph branch under the Posts and Telegraph Department was created in 1853 in British India and was regulated afterward under the Telegraph act of 1885. Pakistan Telegraph and Telephone Department was constructed in 1962. After the independence of the People’s Republic of Bangladesh in 1971, Bangladesh Telegraph and Telephone department was set up under the Ministry of Posts and Telecommunications. This was converted into a corporate body named ‘Telegraph and Telephone Board’ by promulgation of Telegraph and Telephone Board Ordinance, 1975. On 24th February, 1979; Telegraph and Telephone Board was converted to “Bangladesh Telegraph and Telephone Board (BTTB)” as a Government Board.

2.0 Gradual Advancement of the Telecom Sector in Bangladesh 2.1.1

At the time of Independence

 Full Government Monopoly  Few analog exchanges  Some CB (Central Battery) exchanges  National transmission with physical lines, VHF radios, and 2 number Microwave (M/W) routes  Overseas communication through low capacity High Frequency (HF) system  Services provided mainly - telegraph & telephony 2.1.2

Developments in BTTB from 1973-85

 Standard ‘A’ Earth Station at Betbunia, Rangamati  First digital International Trunk Automatic Exchange (ITX) at Moghbazar, Dhaka  First digital Trunk Automatic Exchange (TAX) at 4 towns namely Dhaka, Chittagong, Khulna and Bogra  Standard ‘B’ Earth Station at Talibabad, Gazipur  Analog microwave routes at 9 districts  VHF analog multi-access radio telephone to connect remote important subscribers and rural Public Call Offices (PCOs).

2.1.3

Developments in BTTB from 1986-95

     

First digital telephone subscribers: 26000 lines in Dhaka in 1989 First digital PDH (140 Mbps) Microwave at 17 district towns Telecom Staff College at Gazipur UHF radio links to inter-connecting upazillas to district.

Standard ‘A’ Earth Station at Mahakhali, Dhaka.

New ITX (digital) at Mahakhali, Dhaka

 Digital Exchanges at 5 cities : Dhaka, Chittagong, Khulna, Rajshahi and Sylhet  Digital radio multi access subscribers system (DRMASS): Dhaka, Chittagong and Moulavibazar.

2.1.4

Developments of other operators

 At the end of government monopoly, license was given to private telecom operators: multi-operator environment begins.  License awarded to two private operators in 1989 to operate PSTN system in the upazilla level throughout the country.  License awarded to one operator to provide paging and radio trucking services in the country.  License awarded in 1990 to one operator to launch mobile phone services.

2.1.5

Other Developments in Telecom sector

 Government adopted the Telecommunication Act 2001  Bangladesh Telecommunication Regulatory Commission (BTRC) formed in 2001  Government adopted ICT policy and high powered ICT task force formed  Addition of around 30 lacs mobile subscribers  Mobile phone service in public sector launched (Teletalk Bangladesh Ltd.)  License awarded to several private operators to operate land phone throughout the country.

2.1.6

Comparison of Transformations of Technologies in Bangladesh Telecom Sector Table-1 Transformations of Technologies in Bangladesh Telecom Sector

Past Future Analog – Digital Digital – NGN Electro Mechanical switch - Circuit Circuit Switch- Soft Switch Switch Physical Line – Microwave Star Network

Microwave – OFC Ring Network

Narrow band HF – Satellite Telephone base

Broad band Satellite – Submarine cable Data base

Monopoly operation Operators set up base

Competitive operation Customers choice base

2.2 Regulatory Scenario of Telecom Sector In Bangladesh The state-owned enterprise, Bangladesh Telegraph & Telephone Board (BTTB), enjoyed a complete monopoly in telecom sector and was playing the dual role of operator-cumregulator.

In mid nineties, the Ministry of Post & Telecommunication (MOPT) gradually took away the regulatory responsibility on to its hand. The government adopted the “National Telecom Policy 1998” and under its guideline formulated “The Telecommunication Act 2001”. The “Bangladesh Telecommunication Regulatory Commission (BTRC)” has started its operation since 31st January 2003.

2.3 Formation of Bangladesh Telecommunication Regulatory Commission (BTRC) With a view to ensuring a level playing field for all operators in a multi-operator environment, the government in pursuance of the Bangladesh Telecom Act 2001 formed Bangladesh Telecommunication Regulatory Commission (BTRC).

Bangladesh Telecommunication Regulatory Commission (BTRC) is an independent Commission established under the Bangladesh Telecommunication Act, 2001 (Act no. 18 of 2001) published by Parliament in the Bangladesh Gazette, Extraordinary issue of 16 th April, 2001. The BTRC started functioning from the 31st January, 2002.

2.5 Mobile Telecommunication in Bangladesh In 1989 an agreement was signed between BTB and Bangladesh Telecom Limited (BTL) to provide cellular mobile, Riverine telecom, Trunking & Paging.

In early 1990, the license holder BTL signed joint venture agreement with Hutchison Telecom Ltd. to form Hutchison Bangladesh Telecom Limited (HBTL) for Cellular Mobile Operation in Bangladesh. That license was later cancelled after political change in late 90s.

So no interconnection was provided by BTTB. HBTL appealed against that in high court.

The first mobile-to-mobile communication started in 1991 with three Base Stations (BTS) at Mogbazar, Uttara & Narayangonj.

In 1993 high court gave a verdict for HBTL and at the same time HBTL was acquired by Pacific group with its new name Pacific Bangladesh Telecom Ltd. (PBTL).

In September 1993, first full-fledged mobile communication (with PSTN connectivity) started in Bangladesh with AMPS (Advanced Mobile Phone System) technology.

In 1996, three other companies (GP, Robi, Banglalink) were given license to operate GSM system in Bangladesh. Two became operative in 1997 and the other in early 1998.

In 2004, BTTB was given license as a GSM Operator which was later transferred to Teletalk Bangladesh Limited. BTRC granted the operator License on 01.09.2004 and also allotted GSM 900 MHz (2 x 5.2 MHz) and later 1800 MHz (2 x 5.4 MHz approximately) frequency.

In December 2005, Warid Telecom was given license as the fifth GSM operator in Bangladesh.

At the advent of mobile telecommunications in the country, private mobile operators, especially CityCell got the monopoly in the mobile market and with that opportunity they sucked the blood from the people of the country. During that time four private mobile

operators captured such market to serve people but they could not yet fulfill the public demand of availing the service at lowest possible cost.

Since the demand for mobile phone at the most competitive price was still on hike, the necessity of operating mobile telephone service through public operator was highly felt. Then Government was trying to introduce mobile telephone through BTTB, a public sector organization, as it has the longest experience in the telecom sector, possessing the largest telecom backbone network in the country as well as being the owner of the largest number of telecom installation and infrastructure. All these experience, backbone network, installation and infrastructure are important and valuable resources for any telecom organization.

But till 2004 the fulfillment of that dream of commercial introduction of mobile telephone services through the public sector didn’t come into reality. BTTB initiated a project of supply, installation & commissioning of 10 Lac mobile telephones and finally in the first stage Executive Committee of National Economic Council (ECNEC) approved that project for only 2.5 Lac subscribers. The project will be implemented by BTTB, whereas operation and maintenance will be accomplished by a newly formed public limited company, this was the pre-condition of approving the said project by the Government.

Though the introduction of only 2.5 Lac mobiles through the public sector was numerically very small compared to the million of mobile telephones being operated by other private operators, yet it has opened the gateway of public voice, has started protecting the public interest directly and indirectly and has played a vital role to influence on other mobile operators to act in a way to fulfill public demand.

Short History in Tabular Format Year 1989 1990 1993 1996 2004 2004 2005

Events BTTB and BTL launched cellular mobile, riverine telecom, trunking & paging.

BTL merged with Hutchison and HBTL started cellular mobile operation.

HBTL acquired by citycell.

GP, ROBI & BANGLALINK got GSM license BTTB GSM license transferred to Teletalk.

BTRC allotted GSM 900 MHz (2 x 5.2 MHz) and later 1800 MHz (2 x 5.4 MHz approximately) frequency to Teletalk.

Warid Telecom obtained license as 5th GSM operator

2.6 Telecom Infrastructure in Bangladesh 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. It has been forecasted that the average revenue from telecoms sector will be Tk 1500crore2 a year.

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. Even though the current infrastructure is not much developed but it is suitable for foreign investment.

Bangladesh has a huge potential in Wi-Max and submarine cable which is a new technology in the country and has attracted the foreign telecom operators. Many foreign telecom operators are coming to Bangladesh to explore the potentiality of the technology. Some interested international telecom operators who want to start a business in Bangladesh are UKbased Orange Telecom, South Korean SK Telecom and UAE’s Etisalat.

The government is encouraging private sector to invest more in the industry as they think that the industry is playing a vital role in developing the socioeconomic structure of the country.

And to ensure that, the government has taken several attempt. Giving private sector the license for fixed line telephone is one of those attempts. Due to the environmental facts, the foreign entrants should adjust their equipments according to demand of the environment.

2.7 Trend in Telecom Market in Bangladesh Bangladesh’s mobile phone market has achieved exceptional growth since the beginning of 2004, registering a massive 100% growth in its subscriber base during 2004, and 137% during 2005. This trend is forecast to continue over the coming years.

Recent growth in the Bangladesh mobile market can be attributed to factors such as the deregulation of the telecommunication sector, low levels of Tele-density, inadequate fixed phone infrastructure, high competition of two new operators and, particularly, massive foreign direct investment (FDI) by telecom giants like Telenor, Telekom Malaysia (TM), Orascom, SingTel, and most recently by UAE-based Warid Telecom. Expert explains that 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.

2.8 Telecom Operators in Bangladesh There are two types of telecom operator in Bangladesh. Like Operator in Fixed Line and Operator in Cellular Mobile. These are given below; 2.8.1 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

Operator in Fixed Line Telecommunication M/s. Bangladesh Telegraph & Telephone Board.

M/s. Bashundhara Communication & Networks Limited.

M/s. Ranks Telecom Limited.

M/s. Bangla Phone Limited.

M/s. Jalalabad Telecom Limited.

M/s. Westec Limited (Bay Phone).

M/s. Tele Barta Limited.

M/s. Dominox Technologies Limited.

M/s. GEP Telecom Limited.

M/s. One Tel Communication Limited.

M/s. Dhaka Telephone Company Limited.

M/s. Square Informatix Limited.

M/s. National Telecom Limited.

14.

15.

16.

17.

M/s. Peoples Telecommunication and Information Service Limited.

M/s. S. A. Telecom System Limited.

M/s. Nextel Telecom Limited.

M/s. Integrated Services Limited (ISL).

2.8.2

Operators in Cellular Mobile Telecommunication

1.

2.

3.

4.

5.

6.

M/s. TeleTalk Bangladesh Limited.

M/s. Grameen Phone Limited.

M/s. Robi Axiata Limited.

M/s. Pacific Bangladesh Telecom Limited/ CityCell.

M/s. Sheba Telecom (Pvt.) Limited / Banglalink.

M/s Warid Telecom international LLC.

The rivals and brief company profile of these rivals Grameen phone Grameenphone is a GSM (global system of mobile communication)-based cellular operator in Bangladesh. It has started operations on March 26, 1997. It is partly owned by Telenor (62%) and Grameen Telecom (38%). Grameenphone is the largest and the fastest growing cellular telephone network in Bangladesh. At the end of 2008, it had about 5200 BTS (Base Tower Stations) around the country. Grameenphone’s stated goal is to provide cost-effective and quality cellular services in Bangladesh. According to GP the logo symbolizes trust, reliability, quality and constant progress.

The name of present CEO of GrameenPhone is Odver Heszedal.

The name Grameenphone was kept as part of the new identity because the name Grameenphone carries with it all of the heritage, success and values of the companies past, added the then CEO of Grameenphone Erik Aas. Hawaii, and Ericsson provides technological support to GrameenPhone. The tower range of GP exists 5-7 km. The technology used by Grameenphone is 1G (First Generation) which is supportable to 2G (Second Generation).

Banglalink With a slogan of “making it difference”- banglalink started operations in February 2005.

Previously, it was known as Sheba Telecom Pvt. Ltd that had been providing GSM (global system of mobile communication) services in Bangladesh since 1998. Orascom Telecom bought 100% share of Sheba Telecom in 2004 and gave its new name as banglalink.

Banglalink, is the second largest cellular service provider in Bangladesh. It is a wholly owned subsidiary of Orascom Telecom. In August, 2006, banglalink became the first company to provide free incoming calls from BTTB for both postpaid and prepaid connections.

The name of present CEO (Chief Executive Officer) of banglalink is Ahmed Abu Domer.

The logo of the company is designed on keeping the national animal i.e. Royal Bangle Tiger in mind, which symbolize to the faster growth. banglalink serves their customers with more than 700 CCP(Customer Care Point). Till now banglalink has invested 6,324 cores BDT. for the development of network and infrastructure.

Nokia-Siemens network & Hawaii provides technological support to banglalink. The tower range of banglalink exists 5-9 km. in case sometime it varies to about 13-15 km. The technology used by banglalink is 1G (First Generation) which is supportable to 2G (Second Generation).

Robi Telekom Malaysia International Bangladesh (TMIB) Limited is a joint venture between Telekom Malaysia Sdn. Bhd. (70%) and NTT DoCoMo (30%).

It is the third largest mobile phone operator in Bangladesh in terms of revenue and subscribers. In early 2008 Aktel slipped from the second position to the third after facing fierce competition from banglalink.

Robi launched its operations on the 15 November, 1997 in Dhaka and on 26 March, 1998 in Chittagong. Its founding chairman is Late Mr. Zahiruddin Khan, an ex-commerce minister.

Robi was formed as a joint-venture between Telekom Malaysia and A.K. Khan Company. All along through its insception it was ranked as No.2 mobile operator and was placed far behind the industry leader GrameenPhone in terms of revenue and no. of subscribers.

Citycell Citycell (Pacific Bangladesh Telecom Limited) is the first mobile communications company of Bangladesh. It is the only CDMA (Code division multiple access) network operator in the country. Citycell is currently own by Singtel with 45% stake and the rest 55% owned by Pacific Group and Far East Telecom.

Michel Seymour is the present CEO of Citycell.

Hawaii, Ericsson & Motorola provides technological support to Citycell. The tower range of Citycell exists to 5-6 km. in case sometime it varies to about 9 km. (Max.) The technology used by Citycell is CDMA1X (Code division multiple access). Citycell is consolidating its position in wireless data by launching their Zoom EV-DO (evaluation data optimize) for the broadband wireless internet service. Although CDMA1X technology is the latest technology citycell could not flourishing the companies market position although it was the first company to launch Mobile cellular phones.

Teletalk Teletalk Bangladesh Limited is a public limited company, registered under the Registrar of the Joint stock companies of Bangladesh. Total shares owned by the Government of the Peoples Republic of Bangladesh. They continue to grow and engage their customers through their clear commitment to offering high quality products and services as well as leading customer retention and loyalty programmers. Teletalk continues to be a part of the revolution that’s connecting millions of Bangladeshi people and around the world.

Teletalk Bangladesh limited was established keeping a specific role in mind. Teletalk has forged ahead and strengthened its path over the years and achieved some feats truly to be proud of, as the only Bangladeshi mobile operator and the only operator with 100% native technical and engineering human resource base, Teletalk thrives to become the true people’s phone – “Amader Phone”.

Warid Warid Telecom International Ltd. is a GSM-based cellular operator in Bangladesh. Warid is the sixth mobile phone carrier to enter the Bangladesh market. It is currently struggling but is trying to find a way out.

Warid officially launched their commercial services in Bangladesh on the May 10, 2007 with a GSM Mobile Cellular network covering 64 districts of the country and encompassing 70% of the mobile phone using population- the single largest launch the country has ever seen.

In December 2005, Warid Telecom International LLC paid $50 million dollars (US) to obtain a GSM license from the BTRC and became the sixth mobile phone operator in Bangladesh.

Warid is adopting Wi-Max which will definitely supported by the 3G (NGN) network The present CEO of WARID Mr. Munir Farooqui.

2.9 Mobile Subscriber in Bangladesh The number of mobile subscribers in Bangladesh crossed 65 million in September this year, telecom regulator said.

The active mobile subscriber base in the country reached 65.14 million at the end of September as the six mobile operators added 1.67 million subscribers in the month, , according to the Bangladesh Telecommunication Regulatory Commission statistics. The number of active subscribers was 63.46 million at the end of August after the subscriber base crossed 60million -mark for the first time in July. Although the number of subscribers had passed 65 million, the number of people using mobile phone would be less as many of the subscribers use services of multiple operators, mobile operators said.

Grameenphone subscriber base reached 28.65 million at the end of September as it added 0.73 million clients in the month.

Banglalink added around 0.56 million clients to take its subscriber base to around 18.11 million while the total number of Robi subscribers reached to 11.71 million enlisting some 0.23 million new clients.

Teletalk added around 0.06 million subscribers in September to take its client base to 1.18 million in the month after the company lost subscribers for three consecutive months, June to August, as many of the clients had switched to other operators.

Warid Telecom added 0.16 million subscribers taking the total number to 3.58 million while the lone CDMA operator CityCell lost around 0.07 million customers taking its subscriber base to around 1.91 million.

The total number of mobile subscribers was 34.37 million at the end of 2007, 44.64 million in 2008 and 52.43 million in 2009.

Total Grameen Phone Ltd (GP) subscribers in Bangladesh: From total 65.14 million mobile subscribers, Grameen phone users are 28.65 million (44%).

So it is the market leading mobile phone company in Bangladesh.

Grameen Phone Subscribers

Others - 21.2 millon 56%

GP - 28.65 million 44%

Figure 1: Chart of Total GP Subscribers in Bd. Total Orascom Telecom Bangladesh Limited (Banglalink) subscribers in Bangladesh: Banglalink users are 28% from total mobile subscribers in Bangladesh.

Banglalink Subscribers Banglalink - 18.11 million 28%

Others 47.03 million 72%

Figure 2: Chart of Total Banglalink Subscribers in Bd. Total Robi Axiata Limited (Robi) subscribers in Bangladesh:

Robi users are 18% in total mobile users in Bangladesh.

Robi Subscribers

Robi - 11.71 million 18%

Others - 53.43 million 82%

Figure 3: Chart of Total Robi Subscribers in Bd. Total PBTL (Citycell) subscribers in Bangladesh: The CDMA operators are only 4% in total mobile subscribers in Bangladesh.

Citycell Subscribers

Citycell 1.91 million 3%

Others 63.23 million 97%

Figure 4: Chart of Total Citycell Subscribers in Bd. Total Teletalk Bangladesh Ltd. (Teletalk) subscribers in Bangladesh: From total mobile subscribers in Bangladesh, 2% subscribers are using Teletalk.

Teletalk Subscribers

Teletalk - 1.18 million 2%

Others63.96 million 98%

Figure 5: Chart of Total Teletalk Subscribers in Bd. Total Warid Telecom International L.L.C (Warid) subscribers in Bangladesh: At present 5% subscribers in total mobile operators are using Warid in Bangladesh.

Figure 6: Chart of Total Warid Subscribers in Bd. 2.10 Bangladesh Mobile Operators Market Share Below is a table that reflects the current competition of the market. Number of subscribers for the Mobile Phone operators is shown below: Operators Grameen Phone Ltd. (GP)

Sep,2007 15.14

Sep,2008 20.82

Sep,2009 21.98

Sep,2010 28.654

Robi Axiata Limited

6.70

7.63

10.56

11.707

Sheba Telecom (Banglalink) PBTL (Citycell)

Ltd. 6.02

10.14

12.13

18.107

1.74

1.97

1.907

Teletalk

Ltd. 0.68

0.9

1.07

1.183

Bangladesh

1.32

(Teletalk) Warid Telecom International 1.56 3.86 L.L.C (Warid) Total 31.42 45.09 Table 1: Bangladesh Mobile Operator’s Market share (BTRC 2010) *subscribers in millions

2.69

3.581

50.4

65.142

Subscribers Subscribers 65.14 45.09

50.4

31.42

2007

2008

2009

2010

Figure 7: Chart of Total subscribers (in million) Here ‘Figure 7’shows that Subscribers of total telecommunication industry are increasing year by year. We can see that Total subscribers were 31.42 million in 2007 and after that it increased at 65.14 million.

BRIEF INTRODUCTION TO TELETALK 3.1 Launching Teletalk Bangladesh Limited (TBL), jointly sponsored by the Ministry of Post & Telecommunication (MOPT) and Bangladesh Telegraph & Telephone Board (BTTB), came into being on 26th December 2004 with an authorized capital of Tk.20 billion.

3.2 Company Formation The Project Concept Paper (PCP) of BBTB’s mobile project was approved with the condition of forming a public limited company within six months after the implementation of the project. As per such provisions, the company is in full control of providing services to the subscriber. The name Teletalk Bangladesh Limited was chosen by policy makers on 23 rd December’2004 and Logo was also approved on the same day.

3.3 Emergence As A Public Company

Teletalk Bangladesh Limited (TBL) is formed as Public limited company under the Companies Act 1994 on 26th December 2004. It was incorporated as a 100% Government owned company having: 1. An authorized capital of Tk. 2,000,00,00,000.00 (Taka two thousand crore); 2. Cost of each Share at Tk. 1,000.00 (Taka one thousand); and 3. Paid up capital of Tk. 22,000.00 (Twenty two thousand).

3.4 Membership of World GSM Association It is almost mandatory to become a member of World GSM Association for a mobile operator. BTTB applied for that after receiving Operator License as well as operating frequency from BTRC. To become a member was imperative because in order to ensure security of SIMs, certain security algorithms are needed and World GSM Association is the lawful authority to issue those security algorithms. Without security it is not advisable to manufacture SIM. However Associate Membership was granted by World GSM Association in October, 2004 to BTTB and BTTB applied for the said security algorithms then after. In September, 2005 TeleTalk Bangladesh Ltd. obtained Membership of World GSM Association.

3.5 Board of Directors of Teletalk The company has a board of directors formed by ex-officious of the Government. The board is headed by Secretary, Ministry of Post & Telecommunication as the Chairman. There are 10(ten) members of the board, including Managing Director, 5 (Five) top executives of BTTB and 4(four) high officials of the Government.

3.6 Operating License of Teletalk The company has obtained the Cellular Mobile Phone Operator License from Bangladesh Telecom Regulatory Commission (BTRC) on 1 September, 2004 for a period of 15 years.

Then the License was issued in the name of BTTB. 3.7 Soft Launching of Teletalk On December 29, 2004 through the conversation between honorable President and Prime Minister of Government of the peoples republic of Bangladesh “soft launching of Teletalk Bangladesh Ltd.� was proclaimed and the long waited dream of BTTB mobile phone to the nation came into being. The system of the Company has to operate within the GSM 900 and GSM 1800 bands as per slots allocated by BTRC. 3.8 Commercial Launching of Teletalk Teletalk, staffed by experienced Telecom Engineers of BTTB have been committed to high accessibility, premium quality, large coverage and low price. Teletalk launched its much expected Mobile Telecom service on commercial basis on 31st March, 2005.

Being a new entrant, Teletalk started the distribution of its SIM among the people through different selected outlets of BTTB exchange building with the help of BASIC bank. Teletalk was not much aware about the huge hidden demand of Teletalk mobiles among the public,

which resulted an unprecedented scenario during the distribution process in the first phase.

People became frenzy to get a Teletalk SIM. People stood in queue to get a Teletalk SIM from mid-night to dusk but failed. BBC commented in this huge cry as “Mobile Telephone riot in Bangladesh”. Subsequently Teletalk was compelled to call applications from the public through Internet and deliver SIMs to only 10% of applicants through lottery.

As historic evidence in the country, may be in the modern world, to get a mobile SIM through lottery. It proves the public’s rejection of private sector and unparallel faith on public sector despite of much criticism against it.

Distribution of Teletalk SIM via internet created a new era, Government owned company Teletalk utilized IT & initiated e-Governance.

3.9 The Attractiveness of Teletalk Service The most remarkable success of Teletalk is the slump in its tariff structure. With the announcement of Teletalk tariff structure the long lasting oligopoly between other private mobile operators were shattered. Healthy competition came into the mobile market both in terms of SIM price and usage rate. The competitive features for Teletalk SIM are: 1.

2.

Teletalk mobile connections enjoy BTTB’s PSTN incoming & outgoing facility.

Every connection has ISD & EISD calling features.

3.

Require no extra charges for calling to BTTB’s PSTN telephones.

4.

No charges for incoming calls from BTTB’s PSTN telephones.

5.

Same per minute rate regardless of distance, make calls anywhere anytime without fear of high cost.

6.

Low incremental per minute cost allows customers to make large number of calls.

7.

Getting infinite period of activation while charged.

8.

Negligible monthly cost for people who mainly receive calls.

3.10 Services offered by Teletalk Teletalk offers to its valued subscriber the following connection facilities with affordable cost.  Prepaid Connection.  Post-paid Connection.  PCO (Public Call Office) Connection.  Corporate Connection.

All types of connection require the following documents: 1.

2 (two) passport size photograph 2.

Paper for identity (photocopy of Identity card/Passport/any other identification document).

3.11 • • • •

The Objectives of Teletalk To provide mobile telephone service to the people from the public sector To ensure fair competition between public and private sectors and thereby to safeguard public interest To meet a portion of unmitigated high demand of mobile telephone To create a new source of revenue for the Government.

3.12 Vision and Mission 3.12.1 Vision The vision of Teletalk is to ensure optimum customer satisfaction by providing basic and different value added services at an affordable price at every nook and corner of the country to all sorts of people.

3.12.2 Mission The mission of Teletalk is to innovate and constantly find new ways to enhance their services to their customer’s current needs and desires for the future.

3.13

Present Status of Teletalk

Teletalk started its commercial operation on 31st March, 2005 with sky-scrapping expectation of people. So far Teletalk covers 64 geographical district and 204 upazilla and growth centre through the installation of 462 BTS out of its 632 BTS in the original project. The Company has country-wide strong telecom network covering the district headquarters, major upazillas and highways. It has 20 Customer care canters throughout the country.

The slump in price made mobile phone affordable even for the low-income group of people, which being the vision for Teletalk. Using a mobile phone soon became a necessity; it’s no more a luxury.

3.14 Teletalk Network Expansion Project In order to survive and proceed in a fiercely competitive market, the company needs to remain dynamic in its operations. In this context, regular and continuous expansion and up gradation of existing network elements are mandatory. As such, Teletalk, has taken Endeavour to expand its network and subscribers’ base using funds from its own revenue.

The first-phase of network expansion programme at a cost of equivalent to Taka 2,101 million (including a foreign currency component equivalent to Tk.1, 415 million) financed fully from its own resources has since been completed. This has resulted in a capacity increase of 0.60 million subscribers and given significant rise of revenue.

With a view to remain always competitive and to furtherance its market share, the Company has been in the pace of its activities to pursue new expansion programmes one after another, which would continuously expand its subscriber base. The company is also investing in procurement of new Value Added Services (VAS) systems for increasing the qualitative value of its network in order to ensure seamless and even better services to its subscribers.

The second phase of network expansion programme at a project cost of equivalent to Taka 5,330 million (including a foreign currency component equivalent to Tk,2,730 million) financed from its own resources and partially by local banks has since taken off to yield a further capacity increase of 1.8 million of subscribers. At the initial stage, the pace of activities was somehow slow due to the Bangladesh Bank’s regulatory measures; but with timely solution of the problem, that complicacy has been successfully overcome. However, after completion of the on-going expansion programme, the total number of subscribers is expected to exceed 3.00 million.

3.15 Teletalk Implementation and Expansion Project (Implementation of 3G and expansion of 2.5G technology) It may be mentioned that, the Government would soon allow the mobile telephone operators to upgrade to 3G technology. Teletalk has already necessary measures and started doing the preliminary jobs so that it can very it can very quickly adopt the advanced technology as soon as the regulatory authority permits.

It is a pleasure to mention that the Board of Directors in its 58 th meeting held on 24 December, 2009 has accorded approved to the project ‘Implementation of 3G and expansion of 2.5G Technology’ at an estimated cost of US$259.82 million (equivalent to Tk.18, 187,362,000) to be financed by the Eximbank of China under Preferential Buyers’ Credit on 80:20 debt: equity ratio. The loan amount of US$211 million would be disbursed through the Government of Bangladesh.

No objection from the Finance Division of the Ministry of Finance has been obtained.

Discussions with the high power delegation from the Chinese Eximbank and CMEC have also been finalized ad they have expressed their willingness to invest in the project. If successfully completed, this will increase 5.5 million new subscribers in the Teletalk’s network (4.00 million for 2.5G and 1.5 million for 3G).

Teletalk is to get a head start over the private networks with its 3G network and will launch its services before the other networks are granted a license. The regulator, the BTRC will issue licenses on demand, but Teletalk will get priority. It is said by the Telecommunication Minister Rajiuddin Ahmed Rajuon at a press conference on 8 November, 2010.

3.16 Teletalk Future Plan In last year 2009 the Company received a proposal from M/S. Viettel Corporation, the stateowned mobile phone operator of Vietnam, for their initial investment of US$300 million in phases, under certain terms and conditions, in Teletalk with a view to have a partnership with a portion of shareholding. Upon approval of the Board of Directors, some basic information of the Company was also provided to them to assist their feasibility study. They have submitted their report to the Government which is under consideration of the Government.

SERVICES OF TELETALK 4.1 Products List of Teletalk Teletalk offers to its valued subscriber the following connection facilities with affordable cost. These are given below;

 Prepaid Connection.  Post-paid Connection.  PCO (Public Call Office) Connection.  Corporate Connection.

Features of these services are described below; 4.2 Prepaid Services BIJOY Features: • •

1 second pulse.

Connection Charge: Tk. 166

•

Bonus Talk-Time: Tk. 266 (minute)

•

FnF numbers, [Teletalk numbers at only Tk. 0.25/min & Other operators at Tk. 0.65/min]

•

GPRS & ISD call facility

•

Migration facility from other prepaid packages

•

Any new SIM or re-activated SIM (closed since 01 August 2010) will enjoy Bijoy facilities

•

Value Added Services available

SHADHEEN 66 Features: • •

Connection charge: Tk. 399, Initial talk time Tk. 200 and SMS Tk. 100.

1st Minute pulse.

•

FnF numbers, [Teletalk numbers at only Tk. 0.25/min & Other operators at Tk. 0.55/min]

•

GPRS facility

•

Incoming Bonus facility

•

TK 0.49 initiation charge for each call in 1st minute

•

Value Added Services available

SHADHEEN Features:

• •

Connection charge: Tk. 399, Initial talk time Tk. 100 and SMS Tk. 100.

1st pulse for first 30 sec and 15 sec pulse onwards

•

FnF numbers, [2 Teletalk numbers at only Tk. 0.25/min, 2 Other operators at Tk. 0.90/min]

•

GPRS facility

•

Value Added Services available

•

Validity 100 days after any recharge.

•

Incoming Bonus Facility

STANDARD Features: • •

1st minute 30 sec pulse and 15 sec pulse from the second minute onwards FnF applicable for 3 numbers [Teletalk Tk. 0.75/min and other operators Tk. 1.25/min]

•

GPRS facility

•

Life long validity

•

Value Added Services available

4.3 Postpaid Services RAJANIGANDHA Features: • •

Connection : Tk. 790.00 Credit Limit : Tk. 1000.00

•

1 Sec pulse

•

Line Rate: Tk. 100.00, but for a call volume above Tk. 300/month line rent will be waived.

•

FnF applicable for 5 numbers [Teletalk Tk. 0.25/min and other operators Tk. 0.80/min].

•

Monthly bill will be exempted 5%, 7% & 10% according to usage of Tk. 1001-2000, Tk. 2001- 3000 & Tk. 3001 and above respectively

•

GPRS facility

SHAPLA Features: • •

Connection : Tk. 290.00 Security deposit: Tk. 700.00, Credit Limit: Tk. 1000

•

Minimum monthly bill Tk. 700, It will be waived if no use in full month (Billing Cycle)

•

1 Sec pulse

4.4 Corporate Services TBL has always been keen on introducing new and different services for its valued customers. Corporate Service is one of them. This Package is especially arranged for those customers who have their own enterprise/company/service organization etc and they are interested to take this special opportunity to avail catered services from TBL. Corporate Facilities Are: • One Second Pulse • Low call rates and simple tariff plan • FnF • No GPRS registration fee • GPRS unlimited available on Prepaid & Postpaid • No use no bill • No financial liability for the organization because the package is prepaid • Call Conference available. [Number of caller 3 persons at a time] • SIM price is negotiable.

Corporate Packages: Teletalk provides its customers with various types of packages like• Teletalk Executive [Prepaid] • Teletalk Executive [Postpaid] • Professional [Prepaid] Product Description: Teletalk Executive [Prepaid] Package Type : Prepaid Minimum Connection

:

10

Price Per SIM

:

Tk. 399.00

Talk Time

:

Tk. 400.00

Migration Fee [Teletalk to Teletalk]

:

Free

GPRS [unlimited]

:

Tk. 600.00

Product Description: Teletalk Executive [Postpaid] Package Type : Postpaid Minimum Connection

:

10

Price Per SIM

:

Tk. 399.00

Migration Fee [Teletalk to Teletalk]

:

Free

GPRS [unlimited]

:

Tk. 600.00

Product Description: Professional Package [Prepaid] Package Type : Prepaid

Minimum Connection

:

100

Price Per SIM

:

Tk. 250.00

Talk Time

:

Tk. 50.00

Migration Fee [Teletalk to Teletalk]

:

Tk. 50.00

Corporate Customer Care Service: The corporate client will have the access to corporate customer care through a special hot number [267 from any Teletalk Numbers] which will be one point solution for all sorts TBL network service related problem.

4.5 Rate Plan of Teletalk Teletalk is offering attractive packages for the customers with very competitive rates. These carefully designed packages offer a range of tariff, properties and benefits to satisfy the needs of the customers.

Rate plan of Teletalk is given below;

Packages

Prepaid

Call Categories Teletalk to Teletalk [8am-5pm] Teletalk to Teletalk [5pm-12am] Teletalk to Teletalk [12am-8am] Teletalk to Others [8am-5pm] Teletalk to Others [5pm-12am] Teletalk to Others [12am-8am] Teletalk to Overseas [8am-5pm] Teletalk to Overseas [5pm-12am] Teletalk to Overseas [12am-8am] FnF Teletalk to Teletalk FnF Teletalk to Others SMS

Shadheen

Voice SMS GPRS

Postpaid Standard

Tk. 0.66 Tk. 1.40 [24hr]

Shapla

Standard

Tk. 0.90 Tk. 0.80 [24hr]

Rajanigandh a Tk. 0.80

Tk. 0.80

Tk. 0.80

Tk. 0.60

Tk. 0.25

Tk. 0.25

Tk. 0.66 Tk. 1.90 [24hr]

Tk. 0.90 Tk. 0.99 [24hr]

Tk. 0.99

Tk. 0.99

Tk. 0.99

Tk. 0.99

Tk. 0.99

ISD/EIS D

ISD/EISD

ISD/EIS D

ISD/EISD

ISD/EIS D

ISD/EISD

Tk. 1.00 ISD/EISD

ISD/EIS D

ISD/EIS D

Shapla Tk. 0.80 [24hr]

Tk. 1.00 [24hr]

ISD/EISD [24hr]

Tk. 0.25

Tk. 0.75

N/A

Tk. 0.25

Tk. 0.25

N/A

Tk. 0.55

Tk. 1.25

N/A

Tk. 0.80

Tk. 0.80

N/A

Tk. 0.66 Tk. 1.00 on net Tk. 2.00 0.16/KB Tk. 0.02/KB or Tk. 800.00/Month [unlimited] or 666/Month [unlimited]

4.6 Value Added Services Teletalk offers a wide range of services to its customers. Following are an outline of the services presently available with Teletalk:

1. GPRS GPRS stand for General Packet Radio Service. GPRS is a type of cellular mobile service by which we can transfer data. This can be compared with the fixed phone dial-up internet service. We can use our PC or the mobile set itself to get the internet service.

GPRS offers up to 115 kbps which is faster than fixed phone dial-up service.

Teletalk offers internet browsing facility for both post-paid and pre-paid subscribers. One can use this facility by using data-cable in computer also. Handsets with GPRS option enable this facility. Through Teletalk GPRS, the subscribers can use the facilities like browsing, email, internet chatting, data transfer etc.

How to subscribe and use GPRS on the phone: • To activate GPRS service. Write 'reg' and send SMS to 111.

• To register monthly unlimited use, write unl or daily unlimited use, write dunl and send SMS to 111.

It’ll be activated within 72hrs and the subscribers will be notified. The daily unlimited service spans from 12PM to 12PM next day upon activation. Only SMS Charge applicable.

Configuring your mobile handset for using GPRS: Port (optional)

Service Type

APN

IP

No Use No Pay

Wap

192.168.145.101

Monthly/Daily Unlimited

Gprsunl

192.168.145.101

9201 9201

Charges and Rates of using GPRS service: Service Type

Charges in BDT

No Use No Pay

0.02/KB + VAT

No Use No Pay [Shadheen66 Package]

0.016/KB + VAT

Monthly Unlimited

800.00 + VAT

Monthly Unlimited [Shadheen66 Package]

666.00 + VAT

Daily Unlimited

50.00 + VAT

2. Push-pull services Push Pull service is like ordinary SMS, one can receive answer to a question s/he asks. By using this push-pull service, one can have the latest updates of important cricket matches.

Besides, other important information like weather forecast, prayer time, quotes, horoscopes and especially sehri-iftar timing during ramadhan are also available.

3. SMS An SMS of 160 characters each available both in English and Bangla.

4. ISD and EISD Every subscriber of Teletalk gets the opportunity of Economic ISD or EISD in 55 countries @ reduced rate per minute. Under this facility, the subscriber should dial 012, then country code, then area code and finally the desired number – instead of dialing access code 00.

5. DESA Load shedding push-pull service First time in Bangladesh, Teletalk with co-operation from DESA has instituted a service for consumers to obtain evening load shedding schedule through SMS. With minimal charging of Taka 1.00 per SMS, this service is a welcomed addition to the citizens of Dhaka Metropolitan area that comes under auspices of DESA services.

6. Mobile Applications through GPRS Teletalk has also introduced in collaboration with various content providers some Java Mobile applications. Not able among them are “Cricket Update” and “Bangla SMS”.

7. Voice SMS Teletalk has introduced "Voice SMS" service for it customers to send voice message.

8. Other unique services Teletalk has instituted some other unique value added services to accommodate growing customer needs as well as to be in the top edge of current mobile telephony advancements.

4.7 International Roaming Service Traditional GSM Roaming is defined as the ability for a cellular customer to automatically make and receive voice calls, send and receive data, or access other services, including home data services, when traveling outside the geographical coverage area of the home network, by means of using a visited network. This can be done by using a communication terminal or else just by using the subscriber identity in the visited network.

Currently Teletalk is providing International Roaming service to 54 operators in 38 countries for Postpaid and to 12 operators in 11 countries for Prepaid to its valued subscribers.

Requirements for International Roaming Service: • • • • • • •

International Credit Card ( VISA and Master card) with at least 6 (Six ) months validity International Passport (Photocopy) Subscriber needs to fill up an International Roaming form provided by TBL. Auto Debit Form (optional - needed only if you want to authorize Teletalk to auto debit your account. Only needed for postpaid roaming).

Two Passport size Photographs.

Security Deposit: BDT 10,000.00 (for postpaid) BDT 0.00 (for prepaid).

Credit limit: International Roaming Security Deposit + existing postpaid credit limit (for postpaid).

International Postpaid Roaming Service: Teletalk offers International postpaid roaming service for its subscribers. Postpaid subscribers can enjoy this facility.

Key Features of Teletalk International Postpaid Roaming: • • No Use, No Pay - NO Monthly Access Fee • • Can avail both voice and SMS service • • Fully refundable Security Deposit • • Free Ownership Transfer (if required for IR subscription) • • Instant International roaming Service Activation • • Free Monthly Itemized Bill • • Friendly and Trained IR Help line Professionals with Dedicated IR Customer Management Team • • Direct Communication with each IR subscriber for individual queries and complaints.

4.8 Payment Method of Teletalk Payment Method of Teletalk is quit different for the Prepaid and Postpaid user. These methods are given below; Payment System of Prepaid Users: Beside Scratch Card Teletalk brings the TeleCharge which is a very convenient recharging system for the valued prepaid users. By using this system users can recharge their balance as they require ranging from Tk. 10 to Tk. 5000. TeleCharge facility is available at the nearest shop.

Payment System of postpaid users: Customer can pay their bill at Bank Booths or any Customer Care Center of Teletalk or pay

by Scratch Card [Tk. 30.00, Tk. 100.00 & Tk. 300.00 available at your nearest shop].

Pay by Scratch Card: Type *154* PIN [13 digit] # Then Dial or rite XXXXXXXXXXXXX [PIN code] and send SMS to 154.

Balance Query: Write BILL and send SMS to 155.

4.9 Corporate social Responsibility of Teletalk Teletalk believes in the empowerment of the people as well as the power inherent in all of them to collectively enforce positive change in their own lives. As a company still in its early years, Teletalk Bangladesh Limited still engaged itself in several CSR activities.

Notables among them during the financial year have been described below:

1 Teletalk has established a short code SMS helpline for children with . disability/diseases The “666 – Helpline for Children” was established with a view to create a specialized fund for children with dire need of financial assistance. All SMS sent to this number will be charged and the amount will be retained in a special fund. This fund will be used for rehabilitation / treatment of the children.

2 Children’s art initiative .

Teletalk has created an unique outlet to acknowledge and encourage children’s art. With association from “Talent Promotion Initiative” Teletalk has arranged a children’s art competition, where children have engaged in a day long painting competition with Bangladeshi seasonal themes. Teletalk Bangladesh Limited then published a special “Billboard Calendar” based on selected pictures from the competitions.

3 Blanket Distribution Program .

In Rangpur district Teletalk distributed 500 (Five Hundred) pieces of Blankets to the distressed people in the winter through Anjuman Mofidul Islam.

4 Medical Treatment for Bushra: .

Teletalk initiated a helping program for Bushra – a patient of blood cancer. One can send SMS for Bushra to help raise fund for medical treatment. For a girl of 3 year old needing bone marrow transplantation, Teletalk’s unique way of extending help as well as including the community at large was appreciated.

5 Blood Donation Program: . Teletalk has sponsored and directly participated in voluntary blood donation program.

ORCA (Old Rajshahi Cadet Association) had organized a blood donation program which was sponsored by Teletalk.

ANALYSIS OF TELETALK 5.1. Standing of Teletalk for SWOT Analysis 5.1.1

Strengths of Teletalk

The main strength of Teletalk is the confidence of its subscribers in the government institution. On the other hand it’s being the part of government, is probably the biggest weakness from the operational perspective of Teletalk.

At a time when people were desperately searching the way out to get rid of the oligopoly of a few operators, Teletalk started its operation with big bang of response. People became frenzy to get a Teletalk SIM. Another good reason for that craze was its flexibility in connectivity with the other operators. It’s the only SIM, having a versatility of connections with ISD,

Economy ISD service facilities along with both incoming and outgoing connectivity to all of the SIM’s with any of the land phones.

The major strengths that Teletalk have can be summarized as follows;  TBL use the frequency of BTCL which is covered all around the country.  TBL resume its functionality with the countrywide telecommunication network and infrastructure of BTTB.  TBL is getting continuous direct & indirect support of BTTB expert of relevant field.  TBL was awarded with highly competent and experienced executives from BTTB.  High rate of retention of senior executives being Government Gazette officers.  Having GSM technology of both 900/1800 MHz frequencies.  Innovative products & Services.  Competitive tariff and charges.  TBL is going to get first 3G licenses.

5.1.2

Weaknesses confronting Teletalk

The biggest weakness of Teletalk is its premature entrance in a mature market. Though Teletalk was not fully ready with its full technical capabilities and stable network, political and other pressures of the market forced it to launch commercial service at least 6 (six) months before it should have started, so the person started comparing its performance with the services of Grameen, Banglalink and Robi in terms of coverage and other facilities. Since those operators had already a very mature network with very wide coverage, Teletalk started getting bad names from day one.

Another major set-back was that, Teletalk had stepped into a developed market with a few numbers of BTSs and the progress of development of network was far below the expectation of subscribers. Moreover, the interconnection with other mobile operator was delayed and they are till not up to the mark. Due mostly to non-cooperation by the incumbent operators, it became a nightmare for the Teletalk subscribers to use a Teletalk mobile.

Other weakness areas of Teletalk can be summarized below:  Its internal organizational structure is not professional.  Being a Government organization, TBL can not take prompt decision regarding policy formulation, procurement decisions and other such things.  Poor customer service.  Problems in recruiting experienced executives in higher positions.  Late entrant in highly competitive market.

5.1.3

Opportunities provided to Teletalk

The major opportunities that Teletalk have can be summarized as follows:  Being a Government organization, public has full confidence & expectation on it.  It gets all types of support from Government regulatory commission.

 Great opportunity to expand market by present network system which adopts the Wi-Max technology.  Growing middle class population in the country.  New product and marketing strategy.

5.1.4

Threats confronting Teletalk

The major areas of threat confronting Teletalk have can be summarized as follows:       

Wider coverage of competitive operators.

Aggressive network expansion of other operators.

Changes of Government tax structure.

Devaluation of BDT to mismatch the profit margin.

Other potential GSM companies.

No support by international operators.

Probability of price cuts by other competitors.

5.2

External Factors Evaluation (EFE) Matrix

TBL- Key External Factors

Opportunities : Being a Govt. Organization, Getting public confidence It gets all types of support from Government regulatory commission.

It is the Government’s political commitment.

Threat : TBL emerges its activities in a matured/developed market.

All of its competitors are foreign aided based company.

So their equity/assets/cash capitals are so high.

TOTAL

Weight (0.0-1.0)

Rating (1-4)

Weighted Score (Weight * Rating)

0.25

3

0.75

0.25

3

0.75

0.15

2

0.30

0.15

4

0.60

0.20

3

0.60 3.00

Total weighted of score 4.0 = Organization response is outstanding to threats & weakness.

Total weighted of score 1.0 = Organization’s strategies not capitalizing on opportunities or avoiding threats.

TBL has a total weighted score of 3.00 indicating that the firm is above average in its effort to pursue strategies that capitalize on external opportunities and avoid threats.

5.3 5.3.1

Financial Statements of Teletalk

Teletalk Bangladesh Ltd. was incorporated as a public limited company on 26 th December 2004 with an authorized capital of BDT 20,000,000,000 divided into 20,000,000 ordinary shares of Tk. 1,000 each. The company is wholly owned by the Government of Peoples Republic of Bangladesh through the representation from various ministries, department and BTTB. The Financial statement contents the Balance sheet, Income statement (Profit & Loss statement) and the Cash flow statement at the said period of the company.

5.3.2 The principal activities of the company are to promote and develop telecommunication and ancillary services, to promote and undertake programs or activities to extend wireless and cellular mobile telephone services, to enable the people to resell telephone services on a commercial basis and also to develop a network that would meet the telecommunication needs of the subscribers and to provide access to similar service at a most competitive price.

5.3.3 The financial statements have been prepared on going concern basis under the historical cost convention on generally accepted accounting principles in accordance with Bangladesh Financial Reporting Standards (BFRS) and Bangladesh Accounting Standards (BAS), Companies Art, 1994 and other applicable laws and regulations.

5.3.4 All property, plant and equipment are stated at cost less accumulated depreciation. Cost includes expenditure directly attributable to the acquisition and installation of the assets. Any repairs and maintenance expenses are charged to the income statement during the period when these are incurred.

5.3.5 The company has been experiencing operating losses during last few years, working capital deficiencies and adverse key financial ratios. However, the Company does not anticipate any adverse situation that may affect the going concern status of the Company.

5.3.6 Capital work In progress consists of acquisition cost of network plant and machinery and capital components and related installation cost till the date of using network service. In case of import of components, capital work in progress is recognized when their shipment is confirmed by the supplier.

5.3.7 Depreciation on all fixed and floating assets, including plant and equipment, has been charged on straight-line method considering the economic and technical lives of the same.

Full year’s depreciation is charged on assets during the year of acquisition irrespective of their date of acquisition and no depreciation will be charged on assets during the year of disposal.

Depreciation rates used are as follows; Name of the Assets Switching equipment Base station Transmission equipment Office equipment Computers Furniture and fixtures Transport vehicles

Depreciation Assets 10% - 20% 15% - 20% 20% 20% 20% 20% 20%

5.3.8 Intangible assets are stated at the cost less accumulated amortization using the straightline method. Intangible assets include cost of acquisition of operating software’s and

accounting and inventory software. These are being amortized over a period of three years from the year acquisition irrespective of its date of acquisition and no amortization will be charged on assets during the year of disposal.

5.3.9 Deferred expenses representing project implementation cost, documentation fees and training expenses has been charged in these financial statements with a view to write off in 4 years commencing from the year of incurrence of such expenses.

5.3.10 Inventories of the TBL consists of three cards, SIM Cards Scratch Cards Cash Cards

Those are measured at lower of cost and net realizable value. Cost is determined using weighted average method.

5.3.11 Stocks of service handsets for employees are valued at original cost. These are charged expenses at the time of issued for employees.

5.3.12 Sundry debtors consist of receivable from distributors, dealers, inter-operators and unrealized bills for network revenue which are recognized at the balance sheet date.

However, proper age analysis of all debts is being done and the unrealized bills are never allowed to exceed the respective security deposit.

Specific provisions for debtors are made in the financial statements in respect of any receivable remaining outstanding for more than 12 months as of the balance sheet date.

5.3.13 There is two types of Tax are imposed by the Government on Teletalk Bangladesh Ltd. These are given below; Current tax Provision for current income tax has been made as per prevailing income tax law on the accounting profit made by the company. Due to loss no provision has been made for current tax expenses during the year.

Deferred tax The company deferred tax arises due to temporary difference taxable for the events or transaction recognized in the income statements. A temporary difference is the difference between the tax base of an asset or liability and its carrying amount in the financial statements. Deferred tax asset or liability is the amount of income tax payable or recoverable in future periods recognized in the current period. The deferred tax asset/income or liability/expense does not create a legal liability/recoverability to and from the income tax authority.

5.3.14 The Company neither maintains any provident fund nor any gratuity scheme for its employees. However, the officers on lien from BTTB (currently BTCL), although drawing monthly salary and allowances and other benefits from the company, are continuing with the provident fund of BTTB, as per terms of the memo issued by the Ministry of Posts & Telecommunication. No provision for such accrued liabilities for termination benefit to employees has been made in these financial statements in absence of any agreement with BTTB. 5.4 Teletalk Revenue Collection Feature Revenue of Teletalk is collected from two ways. Like Network Revenue and Hardware Revenue. These are given below; Network revenue Pre-paid revenue Prepaid network revenue is recognized (exclusive of VAT) as per actual usage of prepaid (scratch) cards recorded in the network. The unused portion of the prepaid cards remains as unearned revenue and recognized as liability of the company.

Postpaid revenue Postpaid network revenue is recognized on accrual basis and recorded as income (exclusive of VAT) on delivery of the bill to subscribers on a monthly basis.

Interconnection revenue Interconnection revenue consists of charges imposed to other cellular operators for receiving calls from their subscriber’s cellular numbers. These are recognized as per invoices raised on a monthly basis.

Roaming revenue Roaming revenue consists of charges imposed to other cellular operators outside Bangladesh for using the network of the company in the country. Ti recognized as per invoices raised on a monthly basis.

Backbone revenue Backbone revenue includes charges imposed to different parties for using the company’s network facilities and is recognized on the basis of issuance of invoice.

Hardware revenue Handset revenue Handset revenue is recognized at the time of sale of subscribers’ set.

Connection revenue

Connection revenue is recognized as income when SIM cards are sold and delivered to the subscribers.

SIM replacement revenue This represents charges realized from subscribers in case of replacement of new SIM cards and recognized as income when received.

Customer support revenue The amount of charges received from subscribers for rendering various services provided to them, and it is recognized on collection basis.

The calculation of total Revenue of Teletalk Bangladesh Limited is given the next page; Total revenue of Teletalk Particulars Network revenue Traffic revenue Interconnection revenue Roaming revenue

30 June,2009

30 June,2008

30 June,2007

1,603,585,080 231,457,709 4,184,727 1,839,227,516

1,141,113,057 304,912,925 12,811,800 1,458,837,782

720,616,801 177,607,636 697,969 898,922,406

58,125,724 2,031,500 85,927

101,094,371 1,483,900 26,595 70,570

60,243,151

102,675,436

72,941,951 7,239,768

60,716,455 2.413,593

(361,930)

(111,978)

79,819,789

63,018,070

965,650 22,600

184,500 -

6,063,866 1,288,214

91,026

8,340,330 1,607,241,053 1,607.24

275,526 1,064,891,438 1,064.891

Hardware revenue Sale of SIM cards 52,488,948 Replacement of SIM cards 6,563,863 Sale of mobile sets Customers support 85,250 revenue 59,138,061 Interest on Bank Accounts Interest on fixed deposits 51,382,442 Interest on short term 7,359,080 deposits Bank charges & (253,657) commission 58,487,865 Other Income Sale of tender document 3,259,000 Profit from sell of mobile 600,000 set Enlistment fees (1,323,600) Foreign exchange gain 160,515 Miscellaneous 2,695,915 Total revenue 1,959,549,357 (Figures are in million 1,961.19 Taka)

Revenue of Teletalk Revenue of Teletalk

1,064.89 2007

1,607.24

1,961.19

2008

2009

Figure 8: Chart of Total revenue of Teletalk.

From the above chart I can say that the revenue of the Teletalk is increasing year by year. In 2007 the total revenue was 1,064.89 million which has now increased at 1,961.19 million in 2010.

Growth rate of Revenue Particulars 2007 Total Revenue 1,064.89 ( Figures in million) Growth rate -

2008 1,607.24

2009 1,961.19

50%

22%

Here the growth rate of revenue is increasing year by year. That means we can easily say that TBL is a growing company.

5.5 Teletalk Financial performances During the year ended on 30 June, 2009, the company has registered a gross revenue of more than Tk. 1,961 million from its operating activities (2007-08; Tk. 1,607.24 million).

A brief result is shown hereunder: Particulars Total Revenue Total Expense EBITDA Depreciation Amortization Net Profit/ before tax

30 June,2009 1,961.19 1,548.30 412.89 and 1,715.47 Loss (1,302.58)

30 June,2008 1,607.24 1,755.30 (148.06) 1,010.53

30 June, 2007 1,064.891 898.80 166.091 635.51

(1,158.59)

(469.419)

From the above financial performance I can say that although the company is in lose position but the expenses of the company are decreasing from the previous year and as well as the EBITDA is also positive in 2009 which was negative in the previous year.

Total Expenses and Depreciation calculation are shown in Appendix part.

5.6 Ratio Analysis of Teletalk SHORT TERM LIQUIDITY RATIO 1. Current Ratio = Current Asset / Current Liabilities 2009 =1,391,250,507/2,894,937,263

2008 =1,250,858,307/2,299,045,863

2007 =1,795,985,423/1,599,169,486

= 0.480

= 0.544

= 1.123

This ratio is used to test a company’s liquidity (also referred to as its current or working capital position) by deriving the proportion of current assets available to cover current liabilities. The higher the current ratio, the better will be the company’s liquidity position.

Here, the ratio is decreasing because their liabilities have been increased than the current asset, because they have trying to expand their network by using more capital.

2. Acid Test Ratio(Quick Ratio) = (Current Asset – Inventory) / Current Liabilities 2009 =1,361,090,606/2,894,937,263

2008 =1,205,244,037/2,299,045,863

2007 =1,748,022,551/1,599,169,486

= 0.471

= 0.524

= 1.093

The Quick ratio is more conservative than the current ratio because it excludes inventory, which are more difficult to turn into cash. Therefore the higher ratio means a more liquid current position. Here this trend is also decreasing because of their increased liabilities.

PROFITABILITY (OPERATING PERFORMANCE) RATIO 1. Gross Profit Margin = Gross Profit / Sales 2009 = 898,249,088/1,959,549,357

2008 = 320,035,343/1,607,241,053

2007 = 410,323,202/1,064,891,438

= 0.458 = 45.8%

= 0.199 = 19.9%

= 0.385 = 38.5%

It is the amount of Profit generated by the company as a percent of the sales generated. The objective of margin analysis is to detect consistency or positive / negative trends in a company’s earnings. Positive profit margin analysis translates into positive investment’s

quality or growth. Here the margin is positive and as well as it has increased form the last year.

Gross Profit Margin Gross Profit Margin

45.80%

38.50% 19.90% 2007

2008

2009

Figure 9: Chart of Gross Profit Margin Ratio 2. Operating Profit Margin = Operating Profit or Loss / Net sales or Revenue 2009 =(1,363,766,032)/1,959,549,35 7

2008 =(1,246,752,109)/1,607,241,05 3

2007 =(532,708,631)/1,064,891,438

= - 0.695 = - 69.5%

= - 0.7757 = - 77.57%

= -0.5 = - 50%

As I have said earlier that the higher margin is better. Here The Company has been performing negative (loss) in this case. But from the three years ratio I can say, the amount of loss has been decreasing from the earlier year. And it’s a positive side of the company that they are trying to cover their loss.

ASSET UTILIZATION RATIO 1. Sales to Working Capital = Sales / Working capital 2009 2008 2007 = 1,959,549,357/ = 1,607,241,053/ =1,064,891,438/196,815,937 (608,749,493) (749,141,693) = -3.218

= -2.145

= 5.41

This ratio refers the amount of sales by using the working capital. Here the amounts of working capital are negative because their Current Liabilities are higher than the current assets 2. Sales to Fixed Asset = Sales / Fixed Asset (Property, Plant and Equipment) 2009 2008 2007 =1,959549,357/8,126,332,501 =1,607,241,053/7,677,113,485 =1,064,891,438/4,738,929,500 = 0.2411 times

= 0.209 times

= 0.2247 times

This ratio is rough measure of the productivity of a company’s fixed asset with respect to generating sales. That means the higher the yearly turnover, the better. From the above calculation I can say the Fixed Asset Turnover has increased from the previous year.

Saes to Fixed Asset Saes to Fixed Asset 0.2411 0.2247 0.209

2007

2008

2009

Figure 10: Chart of Sales to Fixed Asset Ratio LONG TERM SOLVANCY RATIO 1. Debt – Equity Ratio = Long-term Liability / (Long-term Liability + Equity) 2009 = 558,625,073/3,097,351,053

2008 = 763,207,827/4,401,540,468

2007 = 4,890,210,966/3,7166,438,918

= 0.170 = 17.0%

= 0.173 = 17.3%

= 1.31 = 131%

Long term debt is divided by the long term debt and share holder’s equity. It can be said that the low debt and high equity levels in this ratio indicate the investment quality. From the above calculation I can say the investment quality of the company is improving day by day as the trend or long term liabilities are decreasing.

Debt-Equity Ratio Debt-Equity Ratio

1.31

2007

0.173

0.17

2008

2009

Figure 11: Chart of Debt-Equity Ratio 2. Total Debt to Total Equity Ratio = (Current Liabilities +Long-term Liabilities) / (Equity capital + Liabilities) 2009 =3,953,562,336/5,992,288316

2008 =3,062,253,690/5,700,586,331

2007 =6,489,380,452/5,315,608,405

= 0.576 = 57.6%

= 0.595 = 59.5%

= 1.220 = 122.0%

Total Debt to Total Equity ratio compares a company’s total liabilities to its total shareholders equity. This is a measurement of how much suppliers, lenders and creditors have committed to the company versus what the shareholders have committed. Here, the trend is decreasing that means long-term liabilities are decreasing against the shareholder’s equity.

Total Debt to Total Equity Ratio Total Debt to Total Equity Ratio

1.22 0.595

0.576

2008

2009

2007

Figure 12: Chart of Total Debt to Total Equity Ratio PLANNED GROWTH OF TELETALK IN PACE WITH OTHER OPERATORS 6.1 Growth of Mobile subscriber in Bangladesh The growth of mobile subscribers from 1997 to 2010 is shown in the following table: Operator

1997

98

99

2000

01

02

03

04

05

06

07

08

09

GP

18

30

60

192

471

775

1,1 41

2,38 8

5,5 40

6,66 0

15, 140

20, 820

GP (Growth ) Robi

-

67 %

100 %

219 %

146 %

64%

47 %

109 %

132 %

20%

131 %

37 %

21, 28,6 98 54 0 5% 30%

38

80

161

401

1,09 7

2,0 72

2,45 9

6,7 00

7,6 30

-

111 %

100 %

149 %

173 %

89 %

18%

172 %

14 %

70

113

186

369

1,0 26

1,94 3

6,0 20

10, 140

Banglali nk (Growth ) CityCell

-

62%

65 %

98%

178 %

89%

209 %

41

91

179

296

439

503

CityCell (Growth

-

122 %

96 %

66%

48 %

14%

1,3 20 162 %

Robi (Growth ) Banglali nk

2010

10, 56 0 38 %

11,7 07

18,1 07

68 %

12, 13 0 19 %

1,7 40 31 %

1,9 70 13 %

1,90 7 -

11%

49%

) Teletalk Teletalk (Growth ) Warid Warid (Growth ) Total Mobile subscrib ers Total (Growth )

191

218

680

900

1,0 70 18 %

1,18 3 10%

-

14%

211 %

32 %

1,5 60 -

3,8 60 147 %

2,6 90 -

3,58 1 33%

18

30

60

230

662

1140

190 7

4150

926 8

11,7 83

31, 420

45, 090

50, 40 0

65,1 42

-

67 %

100 %

283 %

188 %

72%

67 %

118 %

123 %

27%

166 %

43 %

11 %

29%

Table 6.1 – Mobile subscribers from 1997- 2010 (no. of subscribers in thousands) It is found that a total growth of around 100% was achieved. Considering the total population of Bangladesh and considering the people under poverty level, people under the age of 12 years etc., I may expect a maximum no. of mobile subscribers will be more than 12 (twelve) crores after five years from now.

6.2 Market Share of Teletalk The number of mobile subscribers in Bangladesh crossed 65 million in September this year, telecom regulator said. The active mobile subscriber base in the country reached 65.14 million at the end of September as the six mobile operators added 1.67 million subscribers in the month, according to the Bangladesh Telecommunication Regulatory Commission statistics.

Although the number of subscribers had passed 65 million, the number of people using mobile phone would be less as many of the subscribers use services of multiple operators, mobile operators said. The total number of mobile subscribers was 34.37 million at the end of 2007, 44.64 million in 2008 and 52.43 million in 2009.

The firm's performance relative to competitors can be measured by the proportion of the market that the firm is able to capture. This proportion is referred to as the firm's market share and is calculated as follows: Market Share in 2010 = = (1.18 / 65.14) * 100 = 0.0185148 = 1.9% In the same way,

(TBL's Market / Total Market) * 100

Market Share in 2009 = 2.2% Market Share in 2008 = 2% Market Share in 2007 = 2.1% 6.3 Mobile Growth vs. Teletalk Market Share Depending on the previous growth rate of the subscribers, Considering an even minimum growth rate of 30% for 2011, 20% for 2012 and 2013, 10% for 2014 and 5% for 2015, I have found the number of subscribers will be 140,833,000 in 2015. Now, to remain in the market Teletalk Bangladesh Ltd. has to gradually increase its market share. It is shown with a targeted market share of 12% after five years; Teletalk will have the number of subscribers of 16,899,000 Year Expected Growth Expected mobile subscribers Teletalk expected Market Share Expected Teletalk Subscribers

2011 30% 84,684 3%

2012 20% 101,612 5%

2013 20% 121,934 7%

2014 10% 134,127 10%

2015 5% 140,833 12%

2,540

5,080

8,535

13,412

16,899

Table 6.2 – Mobile growth vs. Teletalk Market share (no. of Subscribers in Thousands) 6.4 Reasons to Increase Market Share Market share often is associated with profitability and thus many firms seek to increase their sales relative to competitors. Here are some specific reasons that a firm may seek to increase its market share: • • • •

Economies of scale: higher volume can be instrumental in developing a cost advantage.

Sales growth in a stagnant industry: when the industry is not growing, the firm still can grow its sales by increasing its market share.

Reputation: market leaders have power that they can use to their advantage.

Increased bargaining power: a larger player has an advantage in negotiations with suppliers and channel members.

6.5 Suggestions Regarding Increasing Market Share of Teletalk As the major market share of mobile sector is already captured by the private operators but the insertion of such a small market share in this sector has not discouraged the Government, which has proven in the 1st year performance of Teletalk rather encouraged Government to invest more capital in this sector. So it is necessary to formulating and implementing a project of investment to capture at least 10% of market shares in this sector. And for that Government should take some steps like: •

Government should take foreign loan or grant, surplus credit loan from different foreign based vendors etc.

• • •

The source of funding may be collected from curtailment of other sources of government bad or non-returnable investment, Private Company should invest more and more in this company.

Government may treat this sector as a service sector which will pay more benefit for the economy and the social development of the country.

FINDINGS AND CONCLUSION 7.1 Findings of the Report Positive Findings We tried to study about the present situation of the company and as well as the probable expansion program of Teletalk Bangladesh Limited. Though the financial statements of the company are not so rich, we have tried to analysis the different ratio and find out the net profit or loss by using these statements. The positive findings of this report are given below; 1. Teletalk was launched as the sole public sector mobile telecom company.

2. Teletalk has considerably fulfilled its customer expectation by drastically reducing tariff.

3. Reduction of tariff has created stiff competition among the mobile operators.

4. Teletalk has already covered most of the population and will be able to cover the whole country as soon as possible. Simultaneously it will also increase its capacity coverage.

5. Teletalk is earning a substantial amount of revenue per month and is contributing to the government fund by paying income tax and VAT. 6. The second phase of network expansion programme at a project cost of equivalent of Chittagong area and since now has been able to lead in its Chittagong Hill Tracts.

More than one-fourth of the company’s total revenue comes from the subscribers of that area. This programme will increase 1.8 million of subscribers.

7. Teletalk is to get a head start over the private networks with its 3G network and will launch its services before the other networks are granted a license. The regulator, the BTRC will issue licenses on demand, but Teletalk will get priority.

8. After successfully completed the project “Implementation of 3G and expansion of 2.5G Technology”, it will increase 5.5 million new subscribers in the Teletalk’s network (4.00 million for 2.5G and 1.5 million for 3G).

9. Total Expense of the Company was 1755.30 million in 2008 and it has been decreasing next to the year 2009 at 1548.30 million.

10. Total Revenue of the company has been increased more than Tk. 1,961 million from its operating activities, which was 1,607.24 million in the previous year.

11. The EBITDA of the year was Tk. 412.89 million which reveals improvement of the overall operational activities in comparison to the previous year.

12. Gross Profit of the company has been increased to 45.8% from 19.9%.

13. Sales to Fixed Asset Ratio of Teletalk have been increased 2411 times to 209 times.

It is to be mentioned here that even with strong competition in mobile market, it is still a lucrative market to invest. Otherwise, “M/S. Viettel Corporation” would not have decided to invest money (US$300) in it. Only requirement is to act in time and in a prudent way. Being

the only government operator, as all other five operators being private multinational, it’s a challenge for Teletalk to establish itself.

Negative Findings The biggest weakness of Teletalk was its premature entrance in a mature market. Though people had managed a Teletalk SIM with tremendous enthusiasm and great expectation but they immediately compare the services of it with other experienced and renowned existing operators. Comparing the difference of stepping a new operator into a developed market and that into a developing market must be kept in mind. So the instant criticism of Teletalk, network coverage from its subscriber is its first set back.

7.2 Recommendation “Teletalk” must raise its level up to the status of other big operators in terms of number of subscribers and Quality of Service. Although, Teletalk has got some advantages of 100% Bangladeshi company, but still I don’t expect subscribers will compromise with quality of service in the days to come.

The recommendations based on the above study are as follows: 1. Teletalk should mitigate the prospective customers demand through enhancing its network and increasing its system capacity. All efforts should be given to catch the present market.

2. Teletalk should try to retain its present customers and at the same time it must increase more subscribers.

3. Marketing steps should be taken to make post-paid connections for attracting valued customers.

4. Whole country coverage with Upazila/growth centre and national highways and gradually all populated area should be done.

5. More attractive features should be developed to draw new connections as well as attracting other operators’ customers.

7.3 Conclusion The telecom sector is one of the biggest earners of cash revenue. Before the entrance of Teletalk, BTTB was playing the vital role of cash cow for the Government in the telecom sector. By the insertion of mobile phone through TeleTalk, a public sector company, Government can greatly increase the revenue from this sector and play fruitful role for socioeconomic development.

Government decision to own a Mobile Company is to ensure fair competition between public and private companies. After the emergence of Teletalk, rates & tariffs in the market have been reduced tremendously. Moreover all the mobile operators are now continuously trying to provide more value added quality services at cheaper rate.

The mobile company “Teletalk” is owned by the people of Bangladesh which has become esteemed mobile phone company for Bangladeshi people. Teletalk is directly contributing to the economy of the country and keeping all the hard earned money in the country.

Teletalk once again seeks co-operation not only from Government but also from private mobile operators to ensure success and development of the country.

7.4 Abbreviations of the Report TBL- Teletalk Bangladesh Limited BTL- Bangladesh Teleom Limited BTTB- Bangladesh Telegraph and Telephone Board BFRS- Bangladesh Financial Reporting Standards BAS- Bangladesh Accounting Standards BTRC- Bangladesh Telecommunication Regulatory Commission ITX- International Trunk Automatic Exchange TAX- Trunk Automatic Exchange PCO- Public Call Office DRMASS- Digital Radio Multi Access Subscribers System MPOT- Ministry of Post & Telecom HBTL- Hutchison Bangladesh Telecom Limited PBTL- Pacific Bangladesh Telecom Limited AMPS- Advanced Mobile Phone System FDI- Foreign Direct Investment BTS- Base Tower Station TMIB- Telekom Malaysia International Bangladesh CDMA- Code Division Multiple Access.

7.5 References 1.

2.

3.

4.

5.

6.

7.

BTTB Data book. www.teletalk.com.bd www.google.com www.grameenphone.com www.btrc.gov.bd Annual reports of Teletalk Bangladesh Limited Book of ‘Financial Management’ by M. Shahjahan Mina

8. Book of ‘Fundamentals of Financial Management’ by Brigham & Houstom 9. Research Methodology by C. R. Kothari 7.6 Appendix Calculation of Total Expense of Teletalk Calculation of Total Depreciation and Amortization

Particulars 30 June,2009 Operating Expense Direct cost of network revenue 680,316,219 Direct cost of hardware 321,442,269 revenue 1001,758,488 Network Operating Expense BTS rental charges 46,136,257 BTS electricity Bill 95,128,672 Rental chare of optical fiber network Maintenance expenses 7,921,194 149,186,123 General and administrative expense Salary and allowances 95,981,868 Printing and stationary 16,242,540 Repair and maintenance 4,075,804 expenses Office rent 27,965,248 Car rental expenses 9,014,385 Telephone, fax 561,367 Distribution of hand sets 3,330,697 Travelling expense 3,633,899 Security guard expense 4,993,312 Utilities 4,781,257 Entertainment 1,254,218 Legal fees 226,598 Office expenses 1,905,545 Board meeting fees 336,625 Audit fee 156,750 Membership fee 1,062,385 Fuel and lubricant 12,277,264 GSM association fee 2,538,796 Employee training exp.

1,612,400 AGM expenses 105,500 Recruiting expenses Postage and courier 615,163 Insurance premium Miscellaneous 956,853 193,628,474 Selling and distribution expenses Advertisement 60,472,606 Distribution expense Business promotions 16,399,615 Sales commission 126,119,393 202,991,614 Provision for doubtful debts 739,493 Total Expenses 1,548,304,192

30 June,2008

30 June, 2007

641,462,815 557,582,774

373,133,731 218,140,908

1,199,045,589

591,274,639

37,405,605 93,691,810 22,929,117

13,972,538 34,283,159 5,290,210

6,319,374 160,345,906

1,187,334 54,733,241

82,827,882 17,020,358 3,156,452

32,635,340 3,330,007 1,292,154

21,456,716 7,888,060 482,391 4,480,581 3,468,464 5,035,174 3,829,037 1,080,218 482,500 1,354,207 161,750 156,750 32,925 7,408,326 2,737,750 80,000 263,375 364,800 1,499,751 741,959 166,009,426

8,641,135 2,569,439 677,974 1,794,253 1,986,788 1,139,883 884,963 625,526 50,000 921,072 66,625 125,400 38,071 2,549,721 4,031,513 136,021 24,000 706,777 11,118 324,759 64,562,539

111,366,611 12,232 5,716,051 104,406,126 221,501,020

48,275,133 47,826 6,421,074 111,588,636 166,332,669

8,405,802 1,775,307,743

Figures are in million Tk

1,755.30

21,890,961 898,794,0 49 898.80

1,548.30

Depreciation and Amortization Depreciation on property, plant and equipment Amortization on intangible asset Amortization on preliminary expenses Amortization on deferred expenses Total Depreciation and Amortization

30 June,2009 1,424,555,742

30 June,2008 777,068,233

30 June, 2007 559,625,115

149539,750 -

103,719,872 624,965

24,335,878 624,966

141,373,924 1,715,469,416

129,112,228 1,010,525,298

50,926,463 635,512,422