WELCOME
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Transcript of WELCOME
321WELCOME
DYNAMICS SHAPING THE MOBILE TELECOM
INDUSTRY(A comparative case study on Bangladesh and the Netherlands)
byAmit Biswas (Bangladesh)
Maastricht School of ManagementMBA28
PRESENTATION OUTLINE
WHY ?
HOW ?
WHAT ?
MOTIVATIONPROBLEM DEFINITIONLITERATURE REVIEW
RESEARCH QUESTIONS
SIGNIFICANCECONCEPTUAL FRAMEWORKRESEARCH
METHODOLOGYMETHODS OF DATA
COLLECTION & ANALYSIS
RELIABILITY OF DATA
FINDINGS & DISCUSSION
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PRESENTATION OUTLINE
WHY ?
HOW ?
WHAT ?CONCLUSION, RECOMMENDATIONS
AND FUTURE RESEARCH
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WHY THIS RESEARCH ?
Motivation
Trends & Challenges
New International expansion
Work experience
Slowed revenue growth
Understand market dynamics
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Literature Review – Mobile Telecom Sector
BANGLADESHSix mobile operators with 93.788 mn active
subscribers
On average 8% growth in new customers every month
Slowed revenue growth in mobile telecom industry
High SIM tax & Ambiguity in regulative authority
Shift towards value-added-service (e.g. 3G, data services)
Source: AT Capital Research, 2010; BTRC, 2012; Cellular-news, 2012
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Literature Review – Mobile Telecom Sector
NETHERLANDSThree mobile operators with 20.1 mn active
subscribers
Slowed new customer acquisition in mobile telecom industry
Slowed revenue growth in mobile telecom industry
Liberal rules and regulations in mobile telecom sector
Strategic partnership with VOIP service providers
Source: OECD, 1999; Totel Pty Ltd, 2012; Wireless Intelligence, 2012, Morris, 2012
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Literature Review - Proposed strategies
Source: AT Capital Research, 2010; The Economist Intelligence Unit, 2010; The Economist Newspaper, 2006 6
Innovative marketing andproduct & service offering
Removal of SIM Tax
Consolidation
Adaption of new techniques
Focus on M-Commerce &Data related services
Fair, Transparent renewal
policies
Innovative product & service
Smart piping
Consolidation
Efficient piping
Partnering with VOIP
New revenue generatingopportunities
For Bangladesh For Netherlands
Literature Review – Similar Study
PORTER FIVE FORCES MODEL FOR MOBILE VIRTUAL NETOWRK OPERATORS IN INDONESIA
by Sirat et al.Telecommunication Regulation Research Center, Indonesia
Competition
Profit LOW
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HIGH
Problem Definition
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Subscriber growth Trend - Bangladesh Mobile telecom sector (in mn)
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012€ 0.00
€ 0.50
€ 1.00
€ 1.50
€ 2.00
€ 2.50
€ 2.00€ 1.86 € 1.87 € 1.77 € 1.69 € 1.65
Decline slowed ARPU – Bangladesh (in Euro)
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 201218.8
19.0
19.2
19.4
19.6
19.8
20.0
20.2
19.319.4
19.8
20.019.9
19.9
New Subscriber Growth Trend – Netherlands (in mn)
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 201220
22
24
26
28
30
3229.66
28.14 28.72 28.1527.85
24.07
Declining ARPU – The Netherlands (in Euro)
Source: Wireless Intelligence, 2012
Forces behind slowed revenue growth in the mobile telecom Industry in the respective countries“
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Major Research Questions
Explain & Compare the dynamics shaping
mobile telecom industry in both Bangladesh
and the Netherlands.
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Minor Research QuestionsWhat are the forces that influence this industry in the respective countries?
Why both the country’s mobile telecom sectors is experiencing slowed revenue growth?
What are the challenges faced by the mobile operators in the respective countries?
Are the existing regulations favourable towards growth?
What are the changing trends in the mobile telecom sector in respective countries?
What are the complementary industries in the mobile telecom sector in respective countries?
How the prevailing challenges faced by mobile operators in the respective countries can be resolved?
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Significance of the Research
Understand forces influencing respective countries
Tackle prevailing challenges
Formulate future strategies
Formulate reciprocal strategies for expansion in international territories
Stepping stone for future studies
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HOW WAS THE RESEARCHCONDUCTED ?
Conceptual framework
Bargaining power of Supplier
Bargaining power of Buyers
Threat of Substitutes
Complementors
Threat of New Entrants
Adapted model of Porter: Porter’s Six Forces Model12
Why Porter’s Six Forces Model ?
COMPLEMENTORS
DVD DVD PLAYER
Sales
Sales
Source: Prof. Adam Brandenburger and Barry Nalebuff
Shows most common sources of local environmental threats
Defines and characterizes the degree of threat and determines the competitive
environment
Forecasts the average level of performance of the firms
For evaluating industries which relies on technology
Source: Hesterly, 201213
Research Methods
QualitativeQuantitativ
eMixed
approachArticles
Recent publications by
telecom research agencies
Reports by mobile
operators
Reports by government regulatory authorities
E-interview
Data from Wireless
Intelligence
Annual and Quarterly reports of
mobile operators
Both Deductive
&InductiveResearch methods
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Reliability & Validity of the data
QualitativeQuantitativ
eMixed
approach
Data will be collected from
credible sources governing
mobile telecom industry
Structured e-interview of experts from
mobile telecom industry will be
collected.
Wireless Intelligence is the definitive
source of mobile operator data, analysis and
forecasts, delivering the most accurate and complete set of industry
metrics available.
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WHAT WERE THE FINDINGS ?
Demographic Comparison
Info Bangladesh NetherlandsCompariso
nArea 143,998 sq km 41,543 sq km 3.5
Population 161,083,804 16,730,632 9.6
Info Bangladesh Netherlands
Age Structure
0-14 years: 34.3% 0-14 years: 17%15-64 years: 61.1% 15-64 years: 67.4%
65 years and over: 4.7% 65 years and over: 15.6%Median Age 23.3 years 41.1 yearsPopulation growth rate
1.579% (2011 est.) 0.452% (2011 est.)
Literacy 56.80% 99%Unemployme
nt rate 9.30% 7%
Source: www.cia.gov
80
38
20
80
55
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60 53
4044
Source: www.geert-hofstede.com
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Threat of New Entrants
THREAT OF NEW ENTRANTS
Bangladesh The Netherlands
LEVEL:High
LowLEVEL:
High
Low
High SIM TaxHigh Licence renewal fees
Limited spectrum availability
Rules and regulations are favourable towards new
entrantsSpectrum auction
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Bargaining power of the buyers
BARGAINING POWER OF BUYERS
Bangladesh The Netherlands
LEVEL:High
LowLEVEL:
High
Low
Similar products and services
Lower switching costMultiple SIM syndrome
Similar products and services
Affordable switching cost
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Rivalry among the competitors
RIVALRY AMONG EXISTING COMPETITORS
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Between Bangladesh and the Netherlands
Source: BTRC, 2012Source: Wireless Intelligence, 2012
Herfindahl-Hirschman
Index
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Bangladesh2,936.0
02,948.00 2,928.00 2,885.00 2,869.00
2,856.00
The Netherlands
3,737.00
3,729.00 3,707.00 3,703.00 3,703.003,690.0
0
Effective Call Rate (in Euro)
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Grameenphone 0.01 0.01 0.01 0.01 0.01
Banglalink 0.01 0.01 0.01 0.01 0.01
Robi 0.01 0.01 0.01 0.01 0.01
Effective Call Rate (in Euro)
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
KPN 0.20 0.20 0.19 0.19 0.18
T-Mobile 0.18 0.18 0.18 0.18 0.18
Vodafone 0.18 0.17 0.16 0.16 0.16
Source: Wireless Intelligence, 2012
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 20121.5
1.551.6
1.651.7
1.751.8
1.851.9 1.86 1.87
1.77 1.69000000000
0011.65
ARPU Growth-Bangladesh
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 201220
22
24
26
28
3028.14 28.72 28.15 27.85
24.07
ARPU Growth - Netherlands
LEVELHigh
Low
Source: Wireless Intelligence, 2012
Threat of substitutes
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Free Calls and
Messaging
LEVELHigh
Low
Operators KPN T-Mobile VodafonePrepaid
SIM€ 10.00 € 7.95 € 7.50
Preloaded Amount
€ 10 Talktime, 200 MB
internet usage
70 units of SMS/MMS/Mins/
MB€ 10 Talktime,
Call Rate (BDT)
€ 0.30/mins to Mobile
€ 0.30/mins to fixed line
€ 0.30/mins to Mobile
€ 0.30/mins to Mobile
€ 0.30/mins to fixed line
OperatorsGrameenph
oneBanglalink Robi
Prepaid SIM BDT 149 BDT 149 BDT 138
Preloaded Amount
BDT 150 talk time, 150 SMS and 150MB internet
170 talk time, 500 free SMS
25 talk time, 500 free SMS, 20MB internet
Call Rate (BDT)
BDT 0.79/mins
BDT 0.89/mins
BDT 0.88/mins
Non-Conventional Substitutes
Bargaining power of suppliers
BARGAINING POWER OF SUPPLIERS
Between Bangladesh and the Netherlands
LEVELHigh
Low
“…… I really don’t think they are adversely affecting the operators’ performance….. doesn’t
have any significant impact on the market.”
- Raihan Islam, Former Head of Customer Acquisition,
Airtel Bangladesh Limited
“ The Ericsson, Nokia-Siemens, Alcatel-Lucent gave a profit warning. So, they are also under
severe pressure not only from their own industry, they also see the Chinese are coming
in. ..”- Mr. Anil Kutty, Innovation Management
Consultant
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Influence of complementors
Bangladesh The Netherlands
LEVEL:Positive
NegativeLEVEL:
Positive
Negative
Content Provider & SmartphonesCall Centers
Mobile Banking
RFID Industry (SIM NFC)IT Industry (Cloud
Computing)Content Provider(Spotify,
Dizzler)
Influence of complementors
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CONCLUSION
Forces Influencing mobile telecom industry (RQ-1)
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Bangladesh The Netherlands
Government Policies
Power of the customers
High competition
Affordable substitute
Less challenge from new entrants
Positive influence of complementors
Government Policies
Power of the customers
High competition
Non-conventional substitutes
High threat from new entrants
Positive influence of complementors
Reasons behind slowed growth rate (RQ-2)Bangladesh The Netherlands
High SIM Tax
Multiple SIM Syndrome
Lack of set procedure for license renewal and fees
Undifferentiated P&S
Detrimental competition
Biased regulation
Lack of policies protecting existing mobile operators
Undifferentiated P&S
Intense competition
High level of threat from VOIP applications
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Challenges faced by mobile operators (RQ-3)In Bangladesh In Netherlands
1. Rigid govt. regulations
2. Lowest effective call
rate3. Growing Churn rate
4. Declining ARPU
5. Intractability of the
customer
1. Biased regulation towards new entrants 2. High level of threat from VOIP
based applications
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3. Declining effective call rate4. Growing Churn rate
5. Declining ARPU
Existing regulations and influence on growth (RQ-4)
In Bangladesh mobile telecom industry
“..Many a times it becomes an impediment to the growth of the Industry…”
- Raihan Islam, Former Head of Acquisition, Airtel
Bangladesh Limited
“..the current regulations are mostly unfavorable to mobile operators”
- Omar Rasman Nizam, -Manager – Segments & Regional Planning,
Robi
In The Netherlands mobile telecom industry“In general, European Commission and OPTA have
been quite strong…..on that perspective the regulation has been unfavorable”
- Anil Kutty, Innovation Management Consultant
“The regulation is really a disadvantage for the existing mobile operators because they favor the
new entrants”
- Karan Oberoi, Product Innovation Manager, T-Mobile
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Emerging Trends (RQ-5)
Smart Phones
Increase Data usages
Outsourcing
Mobile banking
Network sharing
VOIP applications
Smart phones
Advanced mobile banking
Chinese suppliers
Tie-up with advanced contentProvidersIn-house app development
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Complementors (RQ-6)Bangladesh The Netherlands
Mobile manufacturing industry
Digital Content Industry
Call Center Industry
M-Commerce Industry
RFID Industry
IT Industry
Music streaming serviceindustry
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Comparison of dynamics shaping mobile telecom industry (Major RQ)
BangladeshThe
NetherlandsPorter’s Six Forces
THREAT OF NEW ENTRANTS
BARGAINING POWER OF BUYERS
BARGAINING POWER OF SUPPLIERS
THREAT OF SUBSTITUTES
RIVALRY AMONG EXISTING COMPETITORS
INFLUENCE OF COMPLEMENTORS
EXPECTED OF COMPETITIVENESS
EXPECTED LEVEL OF PROFIT
LOW
LOW LOW
HIGH
HIGH HIGH
HIGH HIGH
HIGH HIGH
POSITIVE POSITIVE
MIXED MIXED
AVERAGE AVERAGE
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RECOMMENDATIONS
Recommendations (RQ-7)
Challenges Strategies
1. Rigid government regulation
Government should consider removing SIM Tax.Transparent and participatory renewal process with nominal feesGovernment should focus developing long term plans in order to encourage operators to invest more.
2. Lowest effective call rate Consolidation among the existing playersInnovative customer engagement & win-back campaignsNetwork infrastructure sharing among the rivalsAdaptation of future technologies (e.g. 3G, LTE, DTH etc)Zonal based pricing strategyDevelopment VAS eco-system with content providerTie-up with non-conventional competitors
3. Growing Churn rate
4. Declining ARPU
5. Intractability of customers
Government should take initiative upgrade existing national identification system
In Bangladesh mobile telecom industry
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Recommendations (RQ-7)In The Netherlands mobile telecom industry
Challenges Strategies
1. Biased regulation towards new entrants
Government should try to protect the existing players to ensure ROI while encouraging new entrants to enter the market
2. High level of threat from VOIP based applications
Partnering with VOIP based internet telephony companies to offer innovative servicesDevelop in-house applications and platform using own IT & network capabilities Partnering with handset manufacturer to offer innovative & unique services
3. Declining effective call rate
Invest on new technologies such 4G, LTE in order to offer bouquet of services, instead of traditional voice, SMS based servicesTarget the right segment (high ARPU customers) in order to ensure sustainable profitabilityInnovative product and service offerings while ensuring optimal network usageNetwork infrastructure sharing among the rivalsConsolidation among the existing playersExplore new revenue streams utilizing existing IT capabilities.Converge with content providers
4. Increasing Churn rate
5. Declining ARPU
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Theoretical recommendations
Industry specific model development
Include “Complementors” in Porter’s original model
Incorporate PESTEL model
Incorporate model for internal analysis (e.g. VRIO )
Redesign for analyzing dynamic market
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Future Research
Further refinement by incorporating other models
Porter’s national diamond model for international expansion.
Research on complementary industries.
On benefits of partnering with non-conventional competitors
On formulation of most suitable regulations for Respective countries.
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Summing up….
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THANK YOU !!