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Mobile price war looms in Bangladesh

SingTel's entry through stake in PBTL promises to shake up fast-growing market

Bangladeshi telecommunications players are bracing for a price war following the entry of Singapore Telecommunications (SingTel) into the country's fast-growing mobile phone market earlier this month.

SingTel has announced an acquisition of a 45 per cent stake in Pacific Bangladesh Telecom Ltd (PBTL) for US$118 million. Under the agreement, SingTel has an option to buy another 15 per cent of the country's oldest mobile phone operator, which operates under the brand name of City Cell, for an additional US$65 million. The option could be exercised between April and June 2007.

PBTL vice-chairman Faisal Morshed Khan, who signed the deal with SingTel, said that the Singaporean giant also would invest US$150 million to expand City Cell's 12-year-old network to cover another 3.5 million prospective subscribers.

Despite being the oldest mobile operator, City Cell, which has 350,000 subscribers, trails GrameenPhone (GP), with more than 3.5 million subscribers. GP, which is 60 per cent owned by Nortel, is followed by AKTel, with 1.7 million subscribers.

Mr Khan hopes that with SingTel, his company can become the No1 operator in the country in the next two to three years.

However, industry analysts believe that with GP and AKTel enjoying a big lead, Mr Khan's task could be a daunting one.

Still, analysts believe that SingTel's entry points to a ruthless price war.

'SingTel will change the scenario,' said an official of the Bangladesh Telecommunications Regulatory Commission.

Industry analysts point out that with mobile phones no longer considered a luxury, sales are likely to surge in the event of price cuts.

The mobile phone market has just exceeded the six-million mark even after an annual compound growth rate of 132 per cent for the past five years.

But with a population of about 140 million and only 800,000 fixed-line phones, Bangladesh has a great growth potential. Industry analysts forecast that the market is likely to double to about 12 million in the next 12 months.

GP, AKTel and the smaller Banglalink have already announced their intention to invest an average of US$200 million each to expand networks. With SingTel's entry, the sector is looking at an investment of about US$800 million this year.