Potters Five Forces on Banglalink

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banglalink - making a difference

Banglalink is the second largest cellular service provider in Bangladesh. As of May, 2008, banglalink has a subscriber base of 8.99 million. It is a wholly owned subsidiary of Orascom Telecom. banglalink had 1.03 million connections until December, 2005. The number of banglalink users increased by more than 253 per cent and stood at 3.64 million at the end of 2006, making it the fastest growing operator in the world of that year. In August, 2006, banglalink became the first company to provide free incoming calls from BTTB for both postpaid and prepaid connections.

History
Sheba Telecom (Pvt.) Ltd. was granted license in 1989 to operate in the rural areas of 199 upazilas and later they were also allowed to extend to cellular mobile radio-telephone services.In July, 2004, it was reported that Orascom Telecom is set to purchase through a hush-hush deal the Malaysian stakes in Sheba Telecom, as it had failed to tap the business potentials in Bangladesh mainly due to a chronic feud between its Malaysian and Bangladeshi partners. An agreement was reached with Orascom worth $25 million was finalized in secret. The pact has been kept secret for legal reasons, considering financial fallout and because of the feud.The main reason for the undercover dealing was because the existing joint venture agreement between the Bangladeshi and the Malaysian partners dictates that if any party sells its Sheba shares, the other party will enjoy the first right to buy that. Integrated Services Ltd (ISL), the Bangladeshi partner, was being 'officially' shown as purchasing the shares held by Technology Resources Industries (TRI) of Malaysia for $15 million. ISL then paid another $10 million to Standard Chartered Bank to settle Sheba's liabilities. Sheba had a base 59,000 users, of whom 49,000 were regular when it was sold. In September, 2004, Orascom Telecom Holdings purchased 100% of the shares of Sheba Telecom (Pvt.) Limited (“Sheba”). It was acquired for US$ 60 million and re-branded and launched its services under “banglalink” in February, 2005. banglalink’s license is a nationwide 15-year GSM license and will expire in November, 2011. In March, 2008, Sheba Telecom (Pvt.) Limited changed its name as Orascom Telecom Bangladesh Limited, matching its parent company name.

Numbering Scheme
Banglalink uses the following numbering scheme:
+880 19 N1N2N3N4N5N6N7N8
Where, 880 is the ISD code for Bangladesh and is needed only in case of dialling from outside Bangladesh. 19 is the access code for banglalink as allocated by the Government of Bangladesh. Omitting +880 will require to use 0 in place of it instead to represent local call, hence 019 is the general access code. N1N2N3N4N5N6N7N8 is the subscriber number.

Performance
World operator rank by connection - 103rd
World operator rank by revenue - 127th
Market Share - ≈21%
Market penetration - ≈5%
ARPU Total (Prepaid & Postpaid) - ≈US$ 2.8
Revenue - ≈US$ 68mln
OPEX - ≈US$ 67mln
EBITDA - ≈US$ 422,000
EBITDA Margin - ≈0.6%

Porters Five Forces
Porter's Five Forces is a framework for business analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Business Organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall business profitability. An "unattractive" business is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive business would be one approaching "pure competition", in which available profits for all firms are driven down to zero. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally,...
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