The global telecom sector has undergone a number of transformations in the last couple of years. While fixed line services have witnessed a decline in number of subscribers globally, wireless services are struggling with increase in prices. Though there has been saturation in the number of mobile subscribers in many developed economies, the subscriber base in Bangladesh has steadily increased in the last couple of years. The competition for mobile subscribers and their wallet shares has become fiercer among mobile operators.
Rapid technological advancements in the telecom sector has compelled many telecom companies globally to invest in upgrading their infrastructure and equipment, so that they could increase their subscriber base by offering new services. Though many companies have invested significantly in infrastructure upgrades, the returns for investors have not always been that attractive.
According to an analysis by PwC, between 2016 and 2018, total investor returns for 40 leading global telecom companies slowed down to 10 percent. According to the analysis, the stock markets in those economies generated 29 percent returns for investors during the same period.
Mobile network operators in Bangladesh have been consistently adding to their subscriber base. According to data published by the Bangladesh Telecommunication Regulatory Commission (BTRC), there were more than 164 million subscribers in Bangladesh in October 2019.
However, mobile operators in Bangladesh are facing significant challenges in keeping up with regulatory guidelines, additional taxes and penalties. At the same time, their revenue growth rate and average revenue per user (ARPU) have been declining. Under such circumstances, the mobile network operators in Bangladesh must think about creating value for all stakeholders, including investors, regulators and customers, by defining and executing their business strategies in the coming days.
According to data published by the World Bank Group, Bangladesh has recorded GDP growth of 7.9 percent in 2018. Along with contributing to such high economic growth, many businesses are digitising their operations by implementing enterprise-wide solutions. Many start-ups have started offering digital products and services to their customers. Disruptive services and products, such as ride-sharing facilities that can be availed only through smartphone-based digital interfaces, are growing fast. Government agencies are also adopting various measures to digitise their operations and their modes of interaction with the citizens. For example, a2i, a wholly owned programme run by the Information and Communication Technology (ICT) division of the Bangladesh government, has started several initiatives in the area of e-governance and innovation.
Providing and accessing these digitisation initiatives require reliable and fast data services from mobile network operators. Hence, it is also important for mobile network operators to focus on accelerating digital inclusion and enabling provision of more digitised services within the country.
One of the ways mobile operators in Bangladesh can create more value for stakeholders is by diversifying digitally into other adjacent services. Many mobile operators around the world have already started providing services in the sectors of finance, healthcare, home security, identity and security operations, and media and content.
Many mobile operators in developed economies, such as Verizon in USA, have started acquiring companies from different sectors to build operational capabilities. In Bangladesh, leading telecom operators are also participating in some of these innovative areas, either through assisting start-up companies or through their home-grown initiatives. It remains to be seen how these services contribute to the financial performance of the mobile operators and impact the overall phenomenon of digital inclusion in the country.
Investment in new infrastructure is the other method mobile operators can adopt to create more value for stakeholders. 5G is said to be the next evolution in telecom technology. Mobile operators need to invest in installing equipment to roll out 5G services.
In the past, rollout of communication technologies such as 3G and 4G was licensed and supervised by the BTRC. According to media reports, the BTRC plans to roll out 5G services in Bangladesh by 2021.
The 5G technology is expected to offer very high internet and data interchange speed to users. And while retail consumers are expected to experience these improvements through faster video downloads and increased buffering speed, there are ample opportunities for the larger population to benefit from 5G technology. With the right kind of planning and execution, 5G can bring unique benefits to the population of Bangladesh.
Improvements in telecom technologies will also help in expansion of the online labour pool in Bangladesh. According to a study conducted by the Oxford Internet Institute in 2017, Bangladesh is the second largest supplier of online labour in the world. Bangladesh supplies approximately 16 percent of global online labour requirements. With the availability of high-speed 5G internet connection, workers in Bangladesh will be able to undertake more complex set of job assignments, which require superior internet bandwidth. With the successful implementation of 5G technology across the country, the population of the country’s online labour pool will also increase, and their earnings in foreign currency will fuel the growth of Bangladesh’s economy.
Finally, mobile network operators and the telecom regulator must collaborate to create an effective telecom ecosystem within the country. Among its many duties, the telecom regulator in Bangladesh is responsible for regulating the sector to ensure that the economic and social objectives of each group of stakeholders are met.
Apart from upholding the regulatory framework of the telecom sector, an effective regulator should also encourage the market participants to innovate and create new products and services. Such innovations may lead to the establishment of a new business model. It should assess such aspiring business models objectively and create a suitable environment for them to operate.
Mobile network operators in Bangladesh need to assess their business situation and make strategic choices to create more value for stakeholders. A clear strategy aligned with the growth potential of digital Bangladesh will help in achieving that goal.
The writer is partner at PwC. The views expressed here are personal.