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Telecommunication Sector in Bangladesh

By suvraafrin Sep 04, 2011 4928 Words
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Telecommunication Business in Bangladesh
The telecommunications sector in Bangladesh is characterized by very low tele-density, inefficiency, and under-capitalization. BTTB did not have sufficient interconnection capacity to meet the demands of the mobile service providers. Historically, the state-owned BTTB has been the monopoly telephone service provider.

In a bid to improve the efficiency and ability of the BTTB, Bangladesh initiated a restructuring program in the telecom sector to corporatism BTTB. This plan is yet to materialize because of resistance from the BTTB employees.

However, the government allowed private sector participation in the mainline sector by awarding mainline telecom licenses to two private operators in 1989 (Bangladesh Rural Telecom Authority (BRTA) and Sheba Telecom Pvt. Ltd. The advent of mobile phone technology has given a unique opportunity for countries to have an alternative source for telecom service. The relatively lower start-up costs, easy accessibility, and suitability of any geographic location for a mobile network helped mobile telephony to become popular quickly.

Bangladesh is the pioneer among LDCs, opening its mobile phone sector for private and foreign investment in 1989. Pacific Telecom launched the country's first mobile phone service. Subsequently, three more mobile phone licenses were issued, in 1996, 2004 and 2005.

The opening up of the mobile phone sector by Bangladesh was done independently, not as part of an international agreement. Liberalization of trade and investment independently, without any binding from any international agreements, is known as Unilateral-Liberalization.

The telecommunication sector of Bangladesh has changed dramatically within 2 years. The incentives both from government and private sectors have helped to grow this sector. In Bangladesh telecommunication sector are basically divided into two parts & these are- 1. Public Sector

2. Private Sector.

• Public sector
[pic]
Bangladesh Telegraph and Telephone (T&T) Department was created under the Ministry of Posts & Telecommunications after the independence of Bangladesh in 1971 to run the telecommunication services on a commercial basis. In 1976 Bangladesh T&T Department was converted into a corporate body. Today 'BTTB' provides land-line telephone services in the urban areas, domestic long-distance and international services. Though the Bangladesh government has given out nationwide PSTN licenses the lucrative Dhaka market (which account for majority of the nationwide market) is still under the monopoly of BTTB. In 2004 BTTB forayed in to the mobile telephony market of Bangladesh by launching a subsidiary company called Teletalk. BTTB provides dial-up Internet access in all 64 districts of the country, making it the most-accessible Internet service provider in the country. It also handles the .bd domain. Of the public-sector outlay for communications totaling Tk.23, 784 million (USD 1 = Tk. 40), 91% has been earmarked for the BTTB. The financial outlay would be used to install and expand digital exchanges, install national and international trunk lines, innovative programmers like data communication network and information technology. As of January 2008 total subscriber of BTTB was 0.872 million. • Private sector

The Government has opened the telecommunications market to the private sector. The Government acknowledges the private sector's increasing resolve and ability to meet the growth demands of the country, as well as the fact that the private sector now becomes a much stronger force in telecommunications development. The Government will provide all assistance to make the private sector more vibrant and robust in keeping with their anticipated role in the coming years.

There are 5 private mobile phone operators in Bangladesh. These are:

[pic] [pic] 1. Grameenphone Ltd. & Djuice

[pic] 2. Banglalink

[pic] 3. Aktel

[pic] 4. Citycell

[pic] 5.Warid Telecom
Private Sector’s Mobile Phone Subscribers
The total number of Mobile Phone Subscribers has reached 36.55 million at the end of February 2008. The Mobile Phone subscribers are shown below:
|Operators |Subscribers | |Grameen Phone Ltd. (GP) |17.20 | | Aktel |7.36 | | Banglalink |7.88 | |Citycell |1.51 | |Warid Telecom International (Warid) |2.60 | |Total |36.55 |

Objective of the Private Sector Telecommunication Business
• Want to achieve an attractive amount of profit.
• Maintain a healthy average gross margin.
• Develop a business model that is favorable to expansion. • Some special services added such as data services, access to Internet (including electronic mail), voice mail, MMS - all at an affordable cost without compromising performance to reach the customer. • The freedom for exchange of information is recognized as an important element of human rights and efforts are to be made to provide people with greater access to all information’s, except the ones that are considered harmful to the society, prejudicial to national interest and security. • Access to and delivery of a full range of modern, sophisticated, efficient and cost effective services of both basic as well as value added service(VAS) in telecommunications are to be provided to as many people as is economically and socially justifiable to ensure universal access. • Creation of an environment of competition in the field of telecommunications enhancing rapid development in volume, efficiency and accessibility, shall be ensured to make telecom services available within the affordable limit of the general users. • Research and development activities to facilitate the absorption of new technology and to upgrade the facilities and services in telecommunications are to be encouraged and the regional cooperation in telecommunication sector is to be enhanced through common development and operational strategies and network standards continuous updating of information on new and latest technology and transfer of the same for the benefit of the users, shall be encouraged. • Human resource development being in tandem with the need of the telecommunications sector, standards and qualifications for different categories of personnel of all operators are to be set based on their services. • Protection of the users' interests shall be ensured regarding the services provided, facilities offered, technology used and prices charged. • They are required to keep abreast of trends in demand, establish or expand the services, upgrade the infrastructures and introduce the new ones on the basis of the most advantageous technical and economic approach.

Mission
Customer satisfaction is the paramount missions of the telecommunication business. This will endeavor to meet the highest standards of excellence through superb customer service and consistent product delivery in a friendly and comforting environment. This sector seeks fair and responsible profit and ensures continued growth and development. Responsible profit will fairly compensate owners and investors for their risk, and reward employees for their hard work, loyalty and commitment. Employee welfare, participation, and training are equally important to the success. Every single telecom organizations employee will be treated fairly, with dignity and the utmost respect. It is their responsibility to provide employees with a friendly, comfortable and challenging work environment with opportunities for growth and development. The mission of the telecommunication business builds a strong economic basement for our country. So, that it can meet the demand of current era ensuring placement both locally as well as globally.

Keys to Success
• Locations: visibility, convenient access. • Office design: visually attractive, relaxed atmosphere, fast and efficient operations. • Package: differentiation, competitive & new package. • Quality controls: genetically modified consistency, clean presentation. • Service: cheerful, professional, articulate and informative. • Marketing: positive image, educational, word-of-mouth advertising. • Employee retention: training, ongoing education, recognition programs.

SWOT Analysis

SWOT analysis is a careful evaluation of an organization’s internal strengths and weakness and external opportunities and threats.

In SWOT analysis, the best strategy is accomplish organizations mission by a) Exploiting an organization’s opportunities and strengths b) Neutralizing it’s threats and
c) Avoiding and correcting its weakness.

Strengths:

Organization’s Strengths are the skills or capabilities that enable an organization to conceive and implement its strategies. In telecommunication business strength is –

▪ Capital:

Most of the telecommunications companies in Bangladesh are now joining with large foreign investor and others are directly foreign investor comes into the market. All of these foreign companies are well established in many countries, capital is a big strength for these companies in Bangladesh.

For Example:

Grameenphone joined with Telenor, Sheba bought by Orascom and Dhabi come Bangladesh by named Warid Telecom.

▪ Office Management:

All the Companies have huge amount of capital and they offer attractive salary to the employee. That’s why highly skilled people are comes to work. So, strong office management and highly skilled marketing executive are important strength for them.

▪ Policies:

They have skilled marketing executive. They build policies that can attract customer and build customer relation to retain customers.

For Example:

GP and AKTEL give some extra benefit who are long time using their service. And also offer for reactive those customer who are inactive.

▪ Goodwill:

Some companies are giving their service for a long time in Bangladesh. Customer know them very well and rely on there service. Other companies who are new and directly invested by foreign investor, they also have goodwill in working many other countries.

For example:

GP have built strong belief on customer mind that they have strong network system & this is their one kind of goodwill .

▪ Internet Service:

Now a day’s internet has become an important part of our life. We are depending on internet on various sectors. Most of mobile companies are now giving broadband internet, mobile internet and WAP service. And others are going give the facilities.

For Example: GP, AKTEL, Citycell and Warid Telecom giving WAP and Internet service.

▪ Equipment:

All operators have huge amount of capital. They are using upgraded and high powerful expensive equipment. So, they can give a quality service to the customers and satisfy them.

▪ Experience:

Some of operators are working long time in Bangladesh. So, they know what kind of sales promotion and new offer should take. Others have experience in working in many other countries. They can implement their experience in our country.

For Example:

GP, AKTEL and Citycell have working in our country for a long time and Orascom and Dhabi has experience in working many other countries. Weaknesses:
Attributes of the organization that is harmful to achieving the objective. There have some weaknesses also telecommunication sector. These are:

▪ Network Coverage:

Though huge amount of investment and high performance equipments are using by all companies, but no one can give full network coverage. There are no competitions on those areas where all competitors are not available.

For Example:

AKTEL network is only available in Sent Martine.

▪ Value added Services:

Now days all operators are competing each other by only call rate, FnF etc. That’s why some value added services like mobile TV; MMS from one operator to another is still not given by them.

▪ Weak network:

Some companies are fully concentrated on sales promotion and billing. They are not giving attention to upgrading the network system. Some of them have huge existing network system so changing the whole system is big pressure for them, because it is very much expensive. So, customers are bored by unclear sound and busy network & for this reason they are changing the operator.

For example:

Banglalink user are facing problem with unclear sound and they have to try many times to find a connection.

▪ Dependency:

All mobile operators are now depending on foreign investment. No one is self dependent and do their business alone. Opportunities:
External conditions that is helpful to achieving the objective. Organizational opportunities are areas that may generate higher performance. In telecommunication business their opportunity is — ▪ Potential Customer:

The number of potential customer is much more than the existing customer. So, they have the big opportunity to attract those potential customers to serve them.

▪ Entering in Share Bazaar:

Two large companies GP and AKTEL are entering to share bazaar and some will come in future. So, they don’t have to depend on foreign invest in future.

▪ Technological up gradation:

Mobile operators have the opportunity to upgrade network and offer new facilities also reducing maintaining cost.

Threats:

Organizational threats are the areas that increase the difficulty of an organization performing at a higher level. In Telecommunication business their threats are given below —

▪ Natural Disaster:

Weather condition is not stable in our country. Any disaster can arise any time and break network system. Mobile operation is dependent on electricity and companies have no strong backup system. If any disaster happens and power supply stopped for more then a day, they will fail to continue their service.

▪ Competition:

Competition between mobile operators can become a threat for them, because some companies not going for profit to attract more customer by giving various competitive offer. Others also can take same strategy. As a result they may not become profitable company if they retain the strategy.

The s-t-p concept of telecommunication business in Bangladesh Building the right relationships with the right customers is the main intention of the S-T-P Concept .And the first part is— Market segmentation ( s ) :

The telecommunication business in Bangladesh has segmented their market in many ways & these are: • Income basis.

• Business solution.

• Gender basis.

• Couple.

• Young generation.

• Sme business.

Income basis:

It is the most important segmentation of telecommunication business in Bangladesh. In Bangladesh there are five private mobile companies. All the companies use this segmentation. And for this segmentation every mobile company has divided it into two parts. They are: 1.Prepaid ; 2. Postpaid

1. Prepaid:

Prepaid is a system where we pay for our phone calls in advance. Prepaid gives us the freedom to use our mobile within our budget. It is an excellent way to speak our language.

For example:

Banglalink Prepaid has network mobility feature which helps a subscriber to move around where Banglalink has its coverage.

Key Feature of Banglalink Pre-Paid
• No monthly subscription fee
• One country one rate
• 30 days extra incoming facility once the validity is over and then 90 days grace period on scratch card and e-fill (applicable for those customers who recharged account before February 23rd 2007) • Lifetime validity applies for all the prepaid customers who recharged after February 23rd 2007 . Users:

Usually upper level to lower level people & mainly students are using these types of packages. 2. Postpaid:
Post paid is a system where the customer pays his or her phone call bill later. Here, for example we can use “AKTEL”. Just some of the features that the customers will be enjoying from AKTEL Postpaid (Signature or Signature JOY) include: • Extended FnF service with the option of 1 BTTB number! • Postpaid to Prepaid balance transfer – only AKTEL offers this unique service. • No line rent for airtime usage above TK 500!*

• International Roaming – the widest range of roaming partners as well as SMS roaming ensures greater freedom. • Unlimited GPRS subscription –internet, email, and much more. • Accidental death insurance for 1 lac Taka at absolutely no cost. (For conditions, call 123) • Exceptional Customer Care service

• * VAT, BTTB charges, line rent and other subscription fees are not included in airtime Users:
Usually businessperson uses these types of packages.
• Business solution:

For example we can use “Grameen phone”.

[pic] Business Solution package

Business Solution is a complete, quality business communications service from Grameen phone – designed especially for the business community in Bangladesh. Their Business Solutions team is help to provide the business people with customized telecommunication solutions through consultation with them.

• Gender basis:

Here, Banglalink can give us a very good example.

[pic] Ladies first (Banglalink)

Banglalink ladies, first! is the only telecom package that caters to communication needs of women of Bangladesh. Ladies, first! Revolves around the concept of community based communication where women need to talk to certain numbers mostly, to maintain a perfect balance between professional and personal priorities. Hence ladies, first! offers 1second pulse, 4 FnF. So, that customer can talk at even lower rates to desired numbers.

• Couple basis:

“Aktel joy” is the best example for the couple.

“Aktel joy” is a unique package of two prepaid connections that keeps dearest one to stay near. For people, to whom staying connected to the dearest one is most important, for them it is the right choice. The two connections are paired with each other and it has the lowest call rate between the Partners. Having similar rate plan like AKTEL POWER it also has the highest number of FnF (5 Nos) to any operators. In short, AKTEL JOY brings joy by letting the dear ones stay closer. Connection Price: Tk.400/- (Two SIMs)

• Young generation:

[pic] Djuice mainly targeted young generation

Djuice is the latest brand for young generation. It is an exceptional package of Grameen phone. Dujice mainly offer for young generation. It offers low call rate. Free sms, fast internet system and so on. It creates a passion in young generation. It arrange concert, sponsor the anti-drug concert and always related with the antidrug activities. It also arranges a reality show named “the rock star” in “channel i” it has an extra card. If anyone purchases a djuice sim, then he or she gets an extra card. By use this card anyone can get discount from the djuice outlet. For example, if anyone gets one ticket from star Cineplex in bashundhara city he or she will get one free ticket. Now, dujice reduces their call rate. They offer two fnf in .25 tk call rate. Their sms rate is also low. They offer .50tk sms rate which is one of the low sms rate among all the mobile company. Above all, djuice has some individuality that attracts young generation. Among all the mobile company no one can create such a brand like djuice.

• Sme business:

In this segmentation we can use Banglalink enterprise SME.

[pic]

Banglalink enterprise SME is now with more attractive tariffs and the complete package customized to suit the needs of the small and medium enterprises.

The salient features of Banglalink enterprise SME are
• lowest call rates
• 1 second pulse
• 4 FnF numbers
• 20% bonus on incoming
• 50 free SMS with every new banglalink SME connection Target Marketing ( T ) :
The process of evaluating each market segments attractiveness & selecting one or more segments to enter is called target marketing. After segmentation all the mobile company targets all those sectors which they are segmented into upper level, middle level & also lower level people. Market Positioning ( P ) :

Arranging for a product to occupy a clear, distinctive & desirable place relative to competing products in the minds of target consumers is called market positioning. In this business private sectors position are— ➢ Networking System:

[pic] A typical tower of network technology system

The first mobile company in Bangladesh was Citycell & the 2nd mobile company was GP. But as GP was the 2nd mobile company, they are more popular than Citycell. They are started their activities with very good networking system. For this reason they capture most of the customer within a very short time including the rural areas & create a high position all of their customer mind. That’s why all the people from urban to rural areas use Grammen phone.

➢ Advertising:

Now days most of the telecommunication company are focusing in advertisement to capture more customer. They give good advertisement to attract the consumer and they are successful in this position.

For example:

[pic] Good jingle and long duration policy of B-link

Banglalink making their advertisement with good jingle and long duration, which makes the advertisement more attractive for their consumer.

➢ Low call rate:

For retaining the competitive position, all the telecommunication company need to set up low price rate. Among all the private telecommunication company, AKTEL give the lowest call rate. They give 1.00 taka minute call rate for all the operators. Their F&F rate is 30 paisa and they give five F&F number. Warid also give low call rate. In their postpaid package zahi, they give 30 F&F number which is occurs first time in Bangladesh. In their prepaid package zem, they give five F&F & their F&F call rate is 25 paisa. Grammen also give low call rate. But compare to the other telecommunication company GP’s call rate is high. Because their most of the customers are loyal and their market share is high. So that, if they do not give low call rate they are even not face loss.

Marketing Mix Strategy of telecommunication business
Marketing mix strategy is the combination of 4ps. They are Product, Price, Promotion, and Place. Product: Product is the total package that fulfills consumer’s need. This sector has to fulfill the needs of a person like --- • Variety:

Here, various types of package are the product of all the mobile company. There are many types of packages.

✓ For Grammen, they have postpaid package; prepaid package like smile, djuice and so on. They also give a package for businessperson which is called business solution.

✓ For Banglalink, they offer prepaid package like Desh, desh rong, ladies first and so on.

✓ For AKTEL, their package is AKTEL power, exceed, AKTEL joy and so on.

✓ For Warid, they have postpaid package zahi and prepaid package zem.

✓ For Citycell, they are only give CDMA system in Bangladesh and their package is Citycell one; Hello 1, 2, 3 and so on.

• Brand name:

In our country, there are some packages which become a brand for us. Such as, Djuice is a brand name of telecommunication sector in Bangladesh.

• Packaging:

Sometimes mobile companies are doing packaging. Such as, some days ago Grammen gives a offer to it’s customer that if anyone purchase a smile sim then he or she get a nokia 1100i mobile set with a 50 taka free talktime, 50 free sms, 7 free ringtones and 7 free welcome tunes. And the total price of this package is 2499 taka. Banglalink was also giving this type of packages. Their offer was-if anyone purchases a Banglalink sim, then he or she get 6 Banglalink scratch card free, 1 mobile set free and 1000 free sms.

Offering this type of packages, mobile companies are doing packaging.

Price: Pricing strategies usually change as the product passes through its life cycle.

In telecommunication business if any new company is in introductory stage then they may use market penetration & market skimming for their pricing strategies.

For example:

Banglalink and Warid were using market penetration when they were entering in telecommunication business market. In this situation, Banglalink and Warid face loss but they are still doing this because they want to capture the market and need more market share.

On the other hand, Grammen phone and Citycell was using market skimming when they were entering the market. At first, GP’s call rate was 7.00 per minute. But now they reduce their call rate and that is now 25 paisa per minute in F&F number & tk.1.30 all the other number.

Place: Place is where the product will be explain. In telecommunication business we are showing the place following the way:

Producer--------------( wholesaler--------------( retailer-----------( consumer

At first producer sale sim to the wholesaler, then the wholesaler sale the sim to the retailer then the consumer can buy the sim. Through this channel, this sim’s are distributed in most of the telecom stores.

[pic] Warid telecom stores

Scratch cards are also distributed in same way .So that customer can get their service easily.

Promotion

Advertising:

The telecommunication business usually does their promotional activities by advertising, because advertising is a good way to communicating with customers. For advertising they use different types of celebrity, different types of story, good jingle etc.

[pic][pic]

Advertisement of AKTEL Advertisement of Warid Telecom

Personal selling:

The telecommunication business also practices personal selling. Sometimes the sales peoples of any mobile company do these types of selling. They come to the customers and sell SIM.

Sales promotion:

Sales promotion means any short time incentives. Almost all mobile companies are doing sales promotion.

For Example:

AKTEL gives an offer that if the customers register their AKTEL SIM within 31st march 2008 then the customers can call 1tk min in any operator.

Some features which we get in the private telecommunication sector

o SMS (Short Messaging Service)

SMS is fun, convenient and a private way to communicate with someone without actually talking to them.

o International SMS

Warid international SMS allows us to send and receive SMSs to/and from hundreds of countries.

o Caller Line Identification (CLI)
See the name and number of the person calling us on our handset screen - know our caller name without picking up the phone. o Call Waiting/Call Hold
Don’t miss out on second calls when we are talking another person. With call waiting/call hold, handle a second incoming call (or make an outgoing call) while already on the phone with someone else. o Conference Call

Possible to talk more than one friend at the same time. The conference call feature allows us to be connected to up to 5 persons simultaneously. o Call Divert

In case we are busy in a meeting, or traveling outside of coverage, divert the calls to another number the voicemail, where messages for us can be left.

Strategic Analysis of telecommunication business

BCG Growth Share Matrix:
A portfolio planning method that evaluates a company’s strategic business units in terms of their market growth rate and relative market share. Strategic business unit (SBU) is classified as stars, cash cow, question marks & dog. Star: Stars are high growth, high share business or products. Cash Cow: Cash cows are low growth, high share business or products. Dog: Dogs are low growth, low share business and products.

Question Mark: Question marks are low share business units in high growth markets.

Using the BCG Matrix we can define telecommunication business, Strategic business unit (SBU) in following way:

Grameen Phone :

In GP their market share & also market growth is in high rate. So, this is called star situation. GP often need heavy investment to finance their rapid growth. Eventually, their growth will slow down & they will turn into cash cows. So, it is necessary to hold their position in high, both of market share & growth rate.

Citycell :

In Citycell Phone Company their market growth rate is low but their market share is in high position. So, this situation is called cash cows. Citycell Phone Company is in harvest position that means, they are stable in their growth rate. So it is necessary to increase their market growth rate & also produce a lot of cash to hold their market share.

Banglalink & Aktel :

Banglalink & Aktel both of these company creates low share business units in growth markets. So , Banglalink & Aktel are in questions marks situation. Here, both of this company management has to think hard about which questions marks it should try to build into stars & which should be phased.

| | [pic] | |[pic] | | | |Questions [pic] | |Stars ( Hold ) |Marks | | |( Build ) | | | | | | | |[pic] |[pic] | | | | |Cash Cows (Harvest) |Dog ( Divest) |

High

Market

Growth

Rate

Low

High Low

Relative Market Share

BCG Share Growth Matrix

Warid Telecom :

Because of new company, lacking of promotional activities like – advertisement, publicity etc Warid Telecom share is in low position & also market growth is in low rate.This is the position of dog. It is necessary to maintain their business strategy both of market rate & market share. Otherwise, they will be always in divesting situation. The Product Life Cycle (PLC) of telecommunication business

The course of a product’s sales & profits over its lifetime is called the PLC. It involves 5 distinct stages:

1. Introduction stage,

2. Growth stage,
3. Maturity stage &
4. Decline stage.
In telecommunication business we are showing their PLC in the following way: [pic]

In figure a typical PLC of telecommunication business

1. Introduction stage:

In PLC , introduction stage is the period of slow sales growth. Because Warid Telecom newly start their business in Bangladesh so, as a new business company Warid Telecom is in introduction stage. This is their slow sales growth period. As a result, their profits are not so much existing in this stage.

2. Growth stage:

This stage is a period of rapid marketing acceptance and increasing profits. In this stage, our countries another two telecommunications company “Banglalink” & “Aktel” is hardly trying to rapid their market acceptance for their consumer and also trying to increase their profits.

3. Maturity stage:

Maturity stage is the period of achieving most potential buyers and also the profits. In this stage, the availability telecommunication company in Bangladesh is Grameen Phone. GP achieve most of the potential buyers with their good servicing, good networking and some other good activities. In this stage GP creates a strong position than another telecommunication company.

4. Decline stage:

This is the period when sales fall and profits drop .Citycell Company is available in this decline stage. Their sales decline for many reasons, including technological problem, poor promotional activities, increase competition, bad networking system etc. But at present Citycell Company hardly try to overcome in this situation and takes some necessary steps to overcome in this decline stage.

Developing countries prefer to retain ownership and control over strategic sectors such as energy, water and telecommunications. For this reason, the Government of Bangladesh will achieve a more vigorous development through intensified private sector participation, encouraged by the enabling environment created by the Government; a more proactive telecommunications industry responsive to users' needs and creation of an environment with healthier competition & more significant multi-operator participation, all of which accelerate the reality of universal service.

References :

1.http://en.wikipedia.org/wiki/Warid_Telecom

2.Bangladesh Telecommunication Regulatory Commission

3."http://en.wikipedia.org/wiki/Bangladesh_Telecommunication_Regulatory_Commission"

4. Wikimedia Foundation, Inc.

5. 2008, Bangladesh Telecommunication Regulatory Commission

6. Jean-Marie Dilhac, From tele-communicare to Telecommunications.

7.International Telecommunication Union

8.The Daily Star , Thursday, March 20, 2008

9. http://en.wikipedia.org/wiki/Djuice"

10. http://en.wikipedia.org/wiki/Citycell"

[pic]

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