The Telecom Market in Bangladesh

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How would you characterize the telecom market in Bangladesh?

The Telecom market is the highest growing industry in Bangladesh. Because of topographic layout, suitable infrastructure, Government support and high demand makes the industry very attractive. Therefore the Telecom market in Bangladesh can be analyzed by six distinctive core dimensions. They are –

Current market structure

Market size

Large demand for communication in Bangladesh makes the telecom industry as one of the fastest growing industry in the world. According to July, 2008 the total phone users of the country reached 4.5 crore, among them only 2.5 percent customers own land phones. This indicates high demand for mobile phone, not for PSTN connection.

Market type

The telecom market in Bangladesh is oligopoly in nature. It can be divided into two industries: PSTN or landline industry and Mobile phone industry; where Mobile phone industry is clearly an oligopoly with the market leader –Grameen Phone. Until 2005, the landline industry was the monopoly where the sole monopolist was BTCL. After that, the industry turned into an oligopoly with the market leader BTCL. As BTCL is losing its power, the industry might be again turned into the monopolistically competitive market, as each company has the differentiated product.

Labor Source: The statistics shows that 2000 ICT related graduates are passing each year. And also a huge number of non-IT graduates are also working in this field. Bangladesh labor cost in ICT sector is very low and the range of salary is from USD 75 – USD 1200 per months. It also reveals that the skill level of these graduates is satisfactory. Cheap skilled labor is the significant competency of Bangladesh ICT industry.

Infrastructure in Bangladesh

Flat topographic layout makes Bangladesh a suitable place for easier telecommunication. It makes the investment lower against very high demand with a large consumer base. Even though the current infrastructure is not much developed but it is suitable for foreign investment. Moreover average revenue of Tk. 1500 crore a year (forecasted) makes the investment more attractive.

Beside this, Bangladesh has a huge potential in WiMax and submarine cable which is a new technology in the country and has attracted the foreign telecom operators. All these are pushing Bangladesh towards a developed communication system.

Market concentration

The total number of PSTN Phone Subscribers has reached 1371.999 thousand at the end of February 2009. In contrast, the total number of Mobile Phone Active Subscribers has reached 45.21 million at the same time frame. This also indicates high demand for mobile phones than land lines The HHI (Herfindahl-Hirschman Index) for PSTN is 4274.78 and top four concentration (C4) is 85%. Both of them indicate that the landline market is not much competitive yet. But the scenario is just opposite, if BTCL is excluded from the list-considering only the private companies in the PSTN industry.

|PSTN Phone subscribers |Mobile Phone subscribers | |Operators |Subscribers (in |Operators |Subscribers (in | | |Thousands) | |millions) | |BTCL |872.409 |Grameen Phone Ltd. (GP) |20.94 | |Ranks Telecom Ltd. |158.865 | | | |Telebarta Ltd. |56.424 |TMIB (Aktel) |8.59 | |Jalalabad Telecom Ltd. |5.053 | | | |Onetel Communication Ltd....
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