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Merger and acquisition (M&A) will be a dominating factor for cell phone operators to survive in Bangladesh as at least two operators will perish within the next three years.
"Six will not survive in this intense competition as merger and acquisition will hit," GrameenPhone (GP) Chief Executive Officer (CEO) Eirk Aas told a select group of newsmen Monday while expressing his views on the entry of sixth cell phone operator.
The United Arab Emirate (UAE)-based Warid Telecom is likely to join the fray, in which already four other private and the lone state-owned cell companies are operating.
"But maximum four operators will survive in Bangladesh's highly growing mobile market within the next three years," added Aas, who is leading the country's largest private cell phone operator with 6.0 million users.
He said the cell phone operators would face basic challenges in the foreseeable future in the areas of offering cheap connection and competitive tariff due to further consolidation of price war.
Under such a situation, the global phenomenon of merger and acquisition will catch on the local cell phone market.
Citing examples of Hong Kong and Malaysia, Aas said merger and acquisition were obvious in those markets for sustaining profitability and quality services.
Cell phone operators in Malaysia and Hong Kong were losing out on profits before the merger and acquisition, he added.
When asked, Aas, however, refused to comment prematurely which of the local operator/s might be forced into merger and acquisition by the biggies in the industry.
He also avoided commenting whether GP was interested to participate in this game after coming out successful in the tough price war of 2005 to retain its market share of almost 62 per cent.
The GP faced tough challenge from banglalink and AKTEL in the eventful year of 2005 that will go down in history as a memorable one due to price war and introduction of Subscriber Identification Module (SIM) tax by the government.
Despite imposition of SIM tax at the rate of Tk 900 and challenge of price war, the GP grew by almost 100 per cent and increased its customer base to 5.5 million from 2.4 million users in the same year.
The Norway-based operator's main aim will be to retain and build on its present clientele in 2006 by improving service and offering various other facilities.
Among others, these include network strengthening that guarantees conversation without calls being terminated while driving in Dhaka-Chittagong highway.
GP is likely to invest US $ 300 million to strengthen its network facility and customer cares. It invested same amount of money in the last year.
Aas criticised the government decision to impose ban on night-time-free-talk offer and said continuation of SIM tax and fresh subscribers' registration are not business-friendly at all.
Connecting people is the only solution to overcome the challenges that is undermining the cell phone growth, he observed.
He also observed that additional 10 million subscribers might come under cell phone network if the government withdrew SIM tax. But in case SIM tax remains, merely 3.0 to 4.0 million new users may come under the cell network in 2006, he added.
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