Costly rebranding cuts into Robi's net profit

High costs of rebranding and subscriber acquisition have cut deeply into the net profits of Robi, a new name for AKTEL.
Axiata Bangladesh, the owning company of Robi, has reported a 91 percent decline in net profits to Tk 6.2 crore in the first quarter of 2010, compared to the previous quarter.
In its latest financial report released on Thursday, Robi said profit after tax was impacted by the high rebranding and subscriber acquisition costs.
"An aggressive acquisition drive did see short-term pressure on profitability in the quarter," Axiata said.
However, the profitability increased to Tk 6.2 crore in the January-March period from Tk 2.1 crore in the same period a year earlier.
Axiata has rebranded AKTEL into Robi in March. Initially a joint venture between Telekom Malaysia and the local AK Khan Group, AKTEL launched services in Bangladesh in 1997.
Later, the company was renamed Axiata (Bangladesh) Ltd after Japanese NTT DoCoMo bought AK Khan's 30 percent share in 2008.
According to the financial report, the rebranding campaign increased Axiata's operating costs by 12.3 percentage points in the first quarter.
Against its total earnings, Robi counted 61.6 percent in operating costs in the last quarter of 2009. The figure increased to 73.9 percent in January-March 2010.
The company's revenue earnings declined by 2 percent to Tk 593.6 crore in the first quarter, compared to the previous quarter.
Robi's subscriber acquisition increased to 1.32 crore at the end of March from 1.1 crore at the end of December 2009.
In the six-operator market, Robi stands third after Grameenphone, the market leader with 2.39 crore customers, and Banglalink that roped in 1.4 crore customers as of March.
Robi's monthly income from prepaid customers came down to Tk 188 at the end of March from Tk 299 in December last year. It declined due to Robi's foray into the marginal subscriber base, the report said.
The postpaid monthly ARPU declined to Tk 584 in March from Tk 654 in December 2009, mainly because of the withdrawal of call set-up charges.