Bangladesh Gets New "Number Two" Mobile Operator

Many would argue that six leading mobile operators in any market is not a sustainable and stable market structure. Many also would argue that a monopoly is unappetizing, and an oligopoly (two providers, for example) equally bad for innovation and consumer welfare.

The global issue is what number of providers tends to promote both long-term innovation, consumer welfare and investment. Some believe the number is “three.” Other, including many regulators, believe “four” is the right number.

Technology changes (Wi-Fi as a major enabler) and competitive market dynamics (especially entry by new providers from “outside” telecom) might complicate the analysis.

New options--such as using a hybrid platform (Wi-Fi first)--will allow a wider range of providers to try and carve out niches in existing markets or possibly even create new markets.

source: Green Watch

Some existing or would-be mobile service providers believe content, and a content-focused mobile strategy, could create sustainable new businesses.

But the bottom line, in many markets, is simply that there are too many providers to allow sustainable investment, as profits are too low. That, in turn, leads to mergers that reduce the number of leading providers.

Axiata Group Berhad (Axiata) and Bharti Airtel will merge their telecom operations in Bangladesh, creating a new mobile operation with 40 million customers and number-two market share in the market, trailing only Grameenphone.

Upon completion, Axiata will hold 68.3 per cent controlling stake in the combined entity, while Bharti will hold 25 per cent. The remaining 6.7 per cent will be held by the existing shareholder, NTT Docomo of Japan.

The proposed transaction is subject to conditions precedent including receiving applicable approvals from relevant authorities and is expected to complete in the first half of 2016, according to a statement from Bharti Airtel.

Airtel Bangladesh has a subscriber base of nine million while Robi Axiata has 28 million subscribers.

Robi Axiata is currently the third largest telecom operator in Bangladesh, followed by Airtel. There had been six operators in Bangladesh. There will be five, after the merger.