Industry Identification

Being the second largest mobile network operator in the Bangladeshi telecommunication
industry, Robi secured a significant market share after merging with Airtel. Robi competes in the
market with rivals like Grameen Phone, Banglalink and Teletalk. All these companies closely
competing with each other in providing similar services cater to people across all parts of the
country. The companies share services tied to mobile operating network services, voice calls,
internet data services, 3G and 4G services, few of many that are primarily dominant in
Bangladesh market. The switching cost is relatively very low therefore customers have the
advantage to easily make transition to other mobile operator of their liking, given they no longer
are satisfied with their current operator. Profitability mostly hinges on higher customer retention
rate at this point.

Industry Life Cycle Analysis

While analyzing the industry life cycle for Robi Axiata Limited, we must factor in aspects that
discusses market size and the timeframe.

The telecommunication industry has reached to a poised maturity stage for a while now. The
market is currently dominated by four key players in the industry: GP, Robi, Banglalink and
lastly, Teletalk, where GP being the market leader bagged almost 46% of the market share in
terms of active subscriptions. Robi, currently in pursuit of becoming the market leader has
garnered 30% of the share. The rest are assumed by Banglalink and Teletalk having 22% and 2%
market share respectively.

Bangladesh telecom industry is highly competitive and densely due to its oligopoly nature. The
industry went through several transition for the last few years, which includes the merger of Robi
and Airtel, and the downfall of Citycell reaching to the point of its liquidation. While there are
number of macro-economic factors driving a transformation in telecom industry, a growing GDP
may also hit the list for causing the industry to grow rapidly. As the facts speak for itself, this
industry contributed $12.7 billion to the GDP of Bangladesh in 2017. 1

1
https://www.lightcastlebd.com/insights/2019/07/transformation-in-the-telecommunications-industry
Bangladesh holds 9th position in the global largest mobile market and continues to show a steep
growth rate. This position is attributed to its number of unique subscribers, which accounted for
51% of the total population in Bangladesh in 2019, according to one study. 2 Currently the total
number of subscribers is projected to be 176 million as of June, 2021. 3

Now, all these data only reinforce how massive this industry has become over the years, from
which we can also safely make inferences of where this industry will be in the coming years. The
transition from 3G to 4G and then the incorporation of 5G will bring about a revolution to the
whole telecom landscape. Keeping in mind all the facts and data, increasing government
regulations, demand for state-of-the-art cutting-edge technology to build a more solid
infrastructure in order to support already increasing scalability, and to host the growing internet-
hungry consumers, greatly magnified the barriers to entry. More so the market reached to a
saturated state where growth is extremely low. As a result, companies are actively engaging in
mergers to stay afloat in the competition while facing a dynamic and consolidated industry.
Customers have multiple options to choose from and able to switch to any operator if satisfaction
is not met. Sales mostly relies on repeat purchase or replacement. All these characterizations
provide strong evidence toward a mature stage. Lastly, although the market is reaching toward
optimal saturation, the real industry penetration is still a few more than half the population,
indicating room for potential growth before finally reaching declining stage. 4

Competitive Forces Analysis

Rivalry Among Existing Competitions: Robi operates in the telecom industry that hosts a
dynamic competition among rivals with each and every competitor striving to capture and retain
significant market share by providing unrivaled services. However, the standardization is too
high and product differentiation is quite difficult at this point. Every company is trying to
streamline profits by providing services with low rate, therefore, resulting in an intense rivalry
among competitors.

2
https://www.lightcastlebd.com/insights/2019/07/transformation-in-the-telecommunications-industry

3
https://www.amtob.org.bd/home/industrystatics

4
http://www.eblsecurities.com/AM_Resources/AM_ResearchReports/SectorReport/Bangladesh
%20Telecommunication%20Industry-A%20Comprehensive%20Review%202019.pdf
Threat of Entry: Bangladesh mobile telecom industry is already dominated by six major
companies operating within an oligopoly market. Setting up large infrastructure with intense
resources and capital to support a new venture in this industry is quite difficult. Most companies
operating have already established significant brand name and achieved economies of scale.
Additionally, it is difficult to enter the market with certain restrictions imposed by BTRC.

Threat of
Entry
(Low)

Bargaining Rivalry Bargaining

Power of Among Power of
Existing
Suppliers Competitions Buyers
(Low) (High) (High)

Threat of
Substitutes
(Low)

Bargaining Power of Suppliers:

Generally, the bargaining power in this industry depends on individual brand name and its
strategic positioning. In case of Robi, it benefits from vertical integration as the company’s
suppliers are sister concern of Robi itself with its distinctive identity. So, the bargaining power in
this segment is quite low.
Bargaining Power of Buyers:
Bargaining power of buyers are evidently very high as customers can switch to using different
mobile operator if they are deprived of good service or simply get services with lower rate.
Every company is trying to retain customers by offering cheaper rate.

Threat of Substitutes:

The mobile telecom industry is run by advanced high technology where emergence of substitute
for mobile financial operator is solely subject to innovation and proves to be a long shot. Most
substitutes existing currently for example – Telephone, Broadband, Modem are already in
declining phase. Therefore, very little substitutes exist for and the threat is very low.

PESTEL Analysis

Political:

Government brought the whole telecom industry under few stringent regulations in order to
prevent monopoly and to protect the interests of the consumers. Recent such mentionable
regulations are SMP regulation, segregating the tower industry that are pivotal to mobile
operating carriers, and lastly MNP service regulations.

Economic: The telecom industry underwent massive economic boosts as the industry contributes
a large chunk to the total GDP of Bangladesh. Other macro-economic boosts help the industry to
grow and opens doors to new opportunity which can be capitalized to increase revenue.

Social: Currently the world is moving at a speed of light with technological boom one after
another. In this globally integrated new world order powered by technology itself, people are
more socially aware and proactive. So are the corporations as the societal demands greatly
impact the corporate strategies. Robi has recently taken initiative to foster internet speed that has
been a prime societal need for the context of our country. Robi has recently been awarded with
the Innovation Leadership award for addressing intricate Covid related issues.

Technology: The advent of 5G network is on the way toward infusing with the Bangladesh
telecom industry. With the current innovative infrastructure, Robi looks forward to integrate its
tech with 5G modeling, which is already undergoing several trial and testing. The company also
bases their digital services in their innovation lab where new ideas are incubated, and launched to
run successful campaigns.

Environmental: Robi’s attempts in developing a sustainable green eco-system are truly

commendable. The company has been awarded with Green Telecom award for greatly reducing
its carbon emission and footprint.

Legal: In any industry there are rules and regulations that every companies operating subjected
to follow. One of such many policies that Robi has to adhere to are regulatory provisions,
copyright and trading policies, and monetary policies that greatly affect the company’s overall
business strategies.