SingTel fuels price war in Bangladesh cellphone market
With the entry of Singapore Telecommunications (SingTel), arguably Asia's largest mobile-phone operator, into the fast-growing Bangladesh cellphone market earlier this month, a price war is in the offing.
SingTel has announced its acquisition of a 45 per cent stake in Pacific Bangladesh Telecom with an investment of US$118 million.
Under the agreement, SingTel has an option to buy a further 15 per cent of Pacific Bangladesh, the country's oldest cellphone operator, under the brand name City Cell for US$65 million more. The option could be exercised between April and June 2007.
SingTel will have three members on Pacific Bangladesh's board.
Pacific Bangladesh vice-chairman Faisal Morshed Khan, who signed the deal, said in Dhaka that SingTel would also invest US$150 million to expand City Cell's network to 3.5 million more prospective subscribers.
Despite the fact that Pacific Bangladesh is the country's longest-established cellphone operator, Grameen Phone leads the market with more than 3.5 million subscribers, followed by AKTel, Banglalink and City Cell, which has only 350,000 subscribers.
Mr Khan quoted SingTel chief executive Lee Hsien Yang as saying that SingTel could make a significant contribution to the development of the telecommunications market in Bangladesh.
He was hopeful that with the partnership of SingTel, City Cell could become the No1 operator in the country in the next 24 to 36 months.
Industry analysts, however, believe that with Grameen and AKTel commanding such big leads and with Banglalink marketing itself aggressively, reaching the top could be difficult. But they said a price war was imminent.
A Bangladesh Telecommunications Regulatory Commission source said: 'SingTel will change the scenario.'
Industry insiders said cellphones were no longer considered luxury items and as rates fell, sales were likely to pick up fast.
The cellphone market in Bangladesh is in its infancy, having just reached six million subscribers after growing at an annual compound rate of 132 per cent for the past five years.
With a population of about 140 million and only 800,000 land phone lines, Bangladesh has great potential for growth in the cellphone market.
Analysts predicted the market was likely to double to about 12 million within 12 months.
Besides SingTel, several other big players are operating in the market, including Nortel, Orascom and Telephone Malaysia.
Industry sources said both Nortel of Norway and SingTel were big players in their respective regions, boasting subscriber bases of 60 million and 65 million, respectively.
Egypt's Orascom, which bought Sheba Telecom late last year, formally entered the market in February under the brand name Banglalink.
Orascom, a heavy-hitter in Africa, the Middle East and Pakistan, has more than 14 million users.
Grameen, AKTel and Banglalink have already announced intentions to invest about US$200 million each to expand and consolidate their networks in the country. With SingTel's entry, the sector should see investments of about US$800 million this year.