Citycell – A Story of Failure

Assessment: Term Paper

Name: Sanzeed Islam Sazeed

ID: 2031287
Course Name: Strategic Management
Course Code: MBA 550
Section: 3
Session: Autumn 2021
Date of Submission: 13 December 2021

Submitted to: Dr. Md. Nazmul Hossain

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Letter of Transmittal

December 13, 2021

Dr. Md. Nazmul Hossain

Masters of Business Administration (MBA)

Independent University of Bangladesh, Dhaka,

Subject: Submission of Term Paper

Dear Sir,

I am pleased to present to you my term project, which involved doing this report on Citycell
Bangladesh. I focused mainly on the consequences of citycell’s failure story. As well as how the
management tacle the problems which eventually does not turn around. This report is to describe my
observation, research, learning, and recommendation based on the knowledge and the experiences
gained during the course under your supervision.

I have tried to cover all the requirements according to the guideline you provided us for this project. If
you have any inquiry or need for clarification regarding this project, please let us know. Thank you for
your time, guidance, and for providing us with this opportunity to learn.

Sincerely,
Sanzeed Islam Sazeed
2031287

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Table of Content
Contents

Introduction................................................................................................................................................4
Brief history of Citycell.............................................................................................................................5
Why did Citycell fail?................................................................................................................................7
What could have been done to prevent this failure?..............................................................................9
What could have done to prevent this failure?.....................................................................................13
Lessons Learned.......................................................................................................................................14
Conclusion................................................................................................................................................14
Bibliography.............................................................................................................................................15

Introduction

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Citycell (Pacific Bangladesh Telecom Limited) is Bangladesh’s pioneering mobile communications

company and the only CDMA mobile operator in the country. Citycell is a customer-driven organization
whose mission is to deliver the latest in advanced telecommunication services to Bangladesh. The
company offers a full array of fixed and mobile services for consumers and businesses that are focused
on the unique needs of the Bangladeshi community. Citycell’s growth strategy is to integrate superior
customer service, highest standard technology and choice of packages at affordable rates. The company
operates a 24-hour call centre with well-trained operators to respond to customer queries. Citycell’s
customer service are open 7 days a week to ensure customers can access Citycell at any convenient time.

Citycell is focused on innovation and creating new ways for customers to stay in touch and to do
business. Citycell is offering a wide range of competitive pre-paid and post-paid mobile packages as
well as Value Added Services such as SMS and information based services. PBTL is also the only
operator in Bangladesh supporting two mobile technologies – AMPS and CDMA, while providing, in
addition, Cellular and Fixed wireless services.

Citycell is the good company of telecom services, they always want to serve their best. That is why, they
have very strong and effective training department to train the best training to their employees. At
CITYCELL the top-level management believes that their primary competitive advantage comes from
their employees. In the ever-changing mobile industry, all of they must continuously upgrade their skills
and knowledge in order to maintain this competitive advantage. Their training programs are based on the
job natures and the performance of the employees. Their goal is to attract, retain and motivate the very
best and to do that they support training, development and business education.

In 1989, Bangladesh Telecom Limited (BTL) was licensed for cellular, paging, and other wireless
communication networks. Hutchison Bangladesh Telecom Limited (HBTL) was established in 1990 as a
joint venture between Hutchison Whampoa Limited and Bangladesh Telecom Limited. In 1996, HBTL
was renamed Pacific Bangladesh Telecom Limited (PBTL). The same year, the “Citycell Digital” brand
was launched its cellular service. This is how Citycell started its journey in the telecom industry.
Initially, they came up with some postpaid packages for High-End users. Citycell later launched its
prepaid service.

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Brief history of Citycell

Date Event
Bangladesh Telecom Limited (BTL) was awarded a license to operate cellular,
1989
paging, and other wireless communication networks.

Hutchison Bangladesh Telecom Limited (HBTL) was incorporated in Bangladesh as

Apr-90
a joint venture between BTL and Hutchison Telecommunications (Bangladesh)
Limited.

Aug-93 1st cellular operation in the South Asian sub-continent

Aug-93 HBTL began commercial operation in Dhaka using the AMPS mobile technology.
Dec-93 Pacific Motors Limited acquired the entire 50% shareholding of HBTL.
HBTL was renamed Pacific Bangladesh Telecom Limited (PBTL) and launched the
Feb-96
brand name “Citycell Digital” to market its cellular products.

Mar-97 1st to extend coverage to Chittagong.

Apr-97 Citycell began commercial operation in Chittagong.
Mar-99 1st to adopt CDMA technology. CDMA technology was first introduced by Citycell.
Jan-01 1st to set-up a communications backbone to Chittagong.
Apr-01 Dhaka-Chittagong microwave is launched.
Citycell introduced the 15-second pulse rate in the cellular industry of Bangladesh.
Nov-01

Jan-02 Citycell commences operations in the Sylhet zone.

Value Added Services (VAS), such as 24 hour billing information, news, services,
Jan-02
sports, etc., are introduced.

Mar-02 First operator in Bangladesh to offer off-peak rates.

First operator in Bangladesh to offer prepaid services with two-way PSTN
July-02
(Bangladesh Telegraph and Telephone Board) connectivity.

Citycell extends coverage to Rangpur, Dinajpur, & Syedpur, the northern districts of
Sep-02
Bangladesh.

Oct-02 Short Message Service (SMS) is introduced.

Jan-03 Citycell launched its services in the major northern business city of Bogra.

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Feb-03 First operator in Bangladesh to introduce the One2One post-paid package.

Citycell reaches a coverage level of 40 districts out of a total of 64 (61 districts
Jun-03
eligible).

Jun-03 Network capacity is increased to 240,000.

Citycell introduces “Amar Phone”, a postpaid mobile-to-mobile package offering the
Aug-03
lowest outgoing rate per minute in Bangladesh.

Sep-03 First operator in Bangladesh to introduce IDD and NWD for prepaid subscribers.
Citycell reaches a coverage level of 51 districts out of a total of 64 (61 districts
Oct-03
eligible).

Citycell’s 24-hour customer call center opens. Network capacity is increased to

Nov-03
280,000.

Mar-04 Citycell opens its customer service centres 7 days a week countrywide.
June-04 Citycell launches RIM based handsets.
Citycell introduces, “Alaap Call me”, a pre-paid Bangladesh Telegraph and
Mar-05
Telephone Board both-way connectivity package with the unique “Call2Cash” feature
to earn (talk-time) credits upon receiving Citycell calls.

Singtel acquires 45% equity stake in Citycell. Has a call option to acquire another
June-05
15% by 2007.

Launched Virtual Card (V-Card): SMS based discount coupon first time in
Dec-05
Bangladesh with 326 merchants in Dhaka, Chittagong, Rajshahi, Khulna, Sylhet, and
Cox's Bazar. (3rd December)
Launched UTK Menu "FREEDOM": Most of the VAS keywords, short codes, and
service calling numbers have been integrated in the RIM Cards and can be accessed
from the UTK enabled handsets. The respective VAS can be availed in a Click-n-Go
manner.(15th December)

Introduced Trump Card; a discount card for the loyal and high end customers which
Jan-06
is accepted at more than 325 outlets in Dhaka, Chittagong, Rajshahi, Khulna, Sylhet,
Kuakata and Cox’s. Bazaar.

Oct-06 Launched myCitycell Gift Shop, a Voice SMS and music Messaging service.

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Feb-07 Citycell extends coverage to 61 districts with more than 470 Thanas of the country.

July-07 Launched “myCitycell ZOOM” wireless internet service

 Citycell re-launches its brand with a new promise, unveiling a new vision
Nov- 07 and revitalized look.

 Electronic recharge system e top-up launched on pre-paid with 900

Feb-08 retailers nationwide.

 Citycell (Pacific Bangladesh Telecom Limited) becomes a Public Limited

Mar-08 Company.

May- 08  Citycell launched Music Box, first mobile music service in Bangladesh.

May-08  Citycell commences network in Chittagong Hill Tracts with test transmission
in Bandarban.

Aug-08  Citycell achieves network coverage in all 64 Districts of Bangladesh

Why did Citycell fail?

In 2010, Mehboob Chowdhury was appointed CEO of Citycell. Before that, he had ten years of
experience in the telecom industry. He was the Director of Sales and Marketing at Grameenphone and
later worked as the Chief Commercial Officer at Banglalink. Moreover, David Lee wasn’t appointed as
the chief operating officer of Citycell, even though he had experience in working for a leading mobile
phone operator in Pakistan. By then, citycell had already launched their Internet Dongle in the market
under the name Zoom Ultra. Through this, customers could browse the internet on personal computers
under prepaid and postpaid plans. At that time Zoom Ultra was providing 512KBPS speed to the
customers. In 2011, Citycell reached its highest number of subscribers. The revenue of Citycell in that
particular year was 347.02 crore BDT. Until then, almost everything was going well with Citycell. But,
then the company started collapsing. Citycell was limited to their CDMA technology in 2012, while
others were rushing to GSM technology. Citycell had a 10MHz Spectrum in 600MHz CDMA Band.
They needed 1800MHz Band and more 5MHz Spectrum to come to GSM. BTRC offered Citycell to
shift from CDMA to GSM technology, which would cost the company 200 million dollars. When it
came to moving to Citycell’s GSM, they were very reluctant to shift to the new technology and stayed

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back with CDMA. As a result, the number of their customers was decreasing day by day. Consequently,
in 2012, the revenue of Citycell decreased to Tk 267.64 crore. In 2013, when 3G technology came,
Citycell was allowed to bid for 3G services. Again, this time they were not very serious about adopting
the new technology. They failed to realize how 3G service was going to create a revolution in the
telecommunication industry. Since then, Citycell has been falling further behind. By 2015, the number
of their subscribers had dropped to 7 lakhs and their revenue had come down to Tk 134.79 crore.
Gradually, investors began to lose interest in Citycell. Lastly, the lack of sufficient investment to run
was alarming. Government debts continued to increase. At the same time, Citycell has been burdened
with electricity bills, advertising costs, and hundreds of crores more to other banks in the country. In
2016, Citycell’s debts increased to Tk 477.5 crore. On August 29 of that year, the government instructed
the company to pay their dues in two installments within two months and allowed them to continue their
operations.

But, due to failure to pay the debts on time, Citycell was temporarily shut down on October 20. After
paying some of the debts, Citycell went to the Appellate Division with the application and on November
3rd of that year, it was instructed to open the Frequency of the operator immediately, subject to
conditions. After two days, the company went to court again without getting the frequency back.
Meanwhile, they paid BDT 144 crore of their due payment. After that, even though their frequency was
limited, the Appellate Division ordered BTRC to close the frequency again if Citycell did not pay
another Tk 100 crore by November 19. But failing to pay, Citycell’s Frequency was shut down again on
November 20 and their license was revoked. Until then, SingTel’s share in Citycell was 44.54%,
Pacific Motors’ 37.95%, and Far East Telecom’s 17.51%.

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It can be said that the reason behind Citycell’s failure was due to strong leadership, customers changing
preference, and not being able to adopt new technology timely. With the availability of GSM and 3G
technology the demand for media, Web Browsing, Conference Calls were increasing. Citycell wasn’t
offering any smart features like this on their smartphones. On the other hand, many network issues occur
due to the poor Bandwidth of CDMA technology, so Citycell’s signal reception was weak. Due to these
issues, CDMA Technology wasn’t a convenient option for the consumers and they started to switch for
other operators.

What could have been done to prevent this failure?

Pacific Bangladesh Telecom Limited, doing business as Citycell (Bengali: সিটিসিল), was the
oldest mobile operator of Bangladesh. It was shut down due to failure of paying dues as ordered
by the Bangladesh Telecommunication Regulatory Commission (BTRC) in 2016.

On 20 October 2016, the Bangladesh Telecommunication Regulatory Commission suspended

the spectrum allocation of Citycell due to huge amount of dues. But on 3 November 2016, the
Supreme Court of Bangladesh directed the BTRC to reinstate its spectrum and on 6 November
2016, BTRC returned the suspended spectrum to Citycell. Citycell has been fined BDT 1.5
billion (150 crore) by the Bangladesh Telecommunication Regulatory Commission for its
involvement in illegal VoIP or international call termination.

Citycell's involvement in illegal VoIP, was discovered in May 2007 during a raid in the
company's Mohakhali office by the BTRC. Mohammad Abdul Kaium from Jagannath
University had investigated what was the reason behind failure of citycell and found out its
weak networking and using illegal VoIP that is not valid for Mobile operators of Bangladesh.
But this is the result of the many scenarios of the failure, the actual failure started from the year

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of 2012.

In the year of 2011 Citycell was in the peak of success in terms of subscribers and revenue.
They did not switch to GSM from CDMA. From 2012 when everyone was adapting GSM
technology Citycell was limited to CDMA technology only. It couldn't survive a long time in
the competitive telecom market due to some mismanagement & for adopting the wrong
decision. Understanding customer's actual need & demand was the most important part to
survive in the market.

Therefore, recognizing their need & to make their company more profitable except citycell all
other telecom company applied for 3G license in order to combine wireless communication with
multimedia such as the internet. The new technology was able to handle music, video, images
and other media formats, and provide a wide range of services including web browsing,

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conference calls, and e-commerce. However, citycell didn't introduce 3G network service at that
time while other operator had already entered into 3G network. It creates customer
dissatisfaction & persuaded them to switch to another telecom operator. CDMA could not offer
international roaming whereas it was a great demand of the market.

Gradually the company was losing its mass subscribers due to failure to meet the demand of the
consumer.

Even after getting offer from BTRC, to shift from CDMA to GSM but Citycell management
could not manage and was negligent about the shift. It was one of the biggest mistake of the
management.

It was difficult to survive for CDMA set with high call rates since consumers were always
looking for cheap call rates. Citycell introduced an extensive variety of
offers and bundles to its subscribers. Sadly, general
subscribers in Bangladesh favored GSM to CDMA. In this
way, from the earliest starting point, the organization was not
reacting to target users.

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Handset issues were likewise an issue: to utilize the CDMA network, subscribers needed to
utilize a CDMA-empowered handset. But unfortunately, CDMA handsets with smartphone
attributes were not available in the market. Lack of investment as investor started to lose interest
on management of citycell, as they were not convincing enough and not updated with the
newest technologies of the market. Moreover, lack of visionary leadership, institutional
corruption and failure to bring investment have got Bangladesh’ first mobile-operator in huge
trouble and resulted total shut down.

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What could have done to prevent this failure?

 In 2012, when the regulator renewed its license, the company should have switched from
CDMA to GSM for only a Tk 2 billion fee.

 CDMA allows wider coverage than GSM. They had the technology for rolling out 3G,
long before the licenses were awarded. The company also was qualified to bid for 3G
services, and should have participated in the bidding.

 The company should have upgrade technology under supervision of efficient leadership.
Which would also help to attract investors. Attracting investors could be a good option to
prevent this failure.

 Increasing service offerings by creating innovative, unique and cost-effective various

products to customers. Also Citycell could have increase loyalty by focused customer
retention program.

 Should have gone for fixed phone services, when the demand was there, had adversely
affected the company.

 Citycell could have made better utilization of their partner like SingTel, but could not use
the opportunity and resulted failure.

Lessons Learned

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550.3

 Always stay updated with the technology and adapt change of the market to survive
in the long learn.

 As a management vision is more important than short term missions. The world is
evolving and if we fail to adopt along then failure is inevitable,

 Utilize the opportunity and the resources, in this case Citycell could not made the
most out of Singtel.

 The corruption should be uprooted from the bottom because corruption is one of the biggest
hindrance for a company.

Conclusion
Mobile phones were no longer used purely for phone calls. They were taken on a convergent
form, where the users access the internet, take photos and sending emails from all their mobile
handsets. One group in particularly that has heavily adopted this technology is youth.

Mobile operators were adaptive to the new segment of the market whereas Citycell could not
focus their attention on the evolving need of the market.

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