TELENOR IN BANGLADESH:DOING GOOD AND DOING WELL? BANGLADESH : COUNTRY OVERVIEW THE TELECOMMUNICATION SECTOR IN BANGLADESH

1. TELENOR
IN
BANGLADESH

2. TELENOR IN BANGLADESH:DOING
GOOD AND DOING WELL?
• A Norwegian telecommunication company
• CEO of Telenor, Tormod Hermansen
• Ambassoder of Bangladesh, Mr. Tore Toreng, presents an
opportunity to him for doing business in BANGLADESH.
• A unique opportunity for "doing well and doing good."
 How doing good?
• Telenor would be first to do business here.
 How doing well?
• It could also modernize the telecommunication
infrastructure and bring telephony to remote rural location
with the help of Grameen bank run by Professor
Mohammad Yunus.

3. BANGLADESH : COUNTRY
OVERVIEW
• Located in south Asia on the northern littoral of the Bay of
Bengal.
• Coastline 600 km.
• Riverine country with deltaic plain having highly fertile
alluvial soil, full of rivers and thus vulnerable to natural
calamities such as floods, cyclones, tornadoes, tides, etc.
• Densily populated agriculture country in the world having
population of 120 million with annual growth of 2%.
• Per capita GDP is US $ 233

4. Contd...
• Agriculture accounted for - 37%
• Manufacturing-11%
• Services-40%
• Urban population-20%
• Illiterate-53%
• Below poverty line-47%
• HDI rank-144th
• Poorly developed infrastructures
• GDP rate-4.6%

5.  Around 77% of Bangladesh's population is living in rural
areas. The majority of those living in rural areas are poor
and they fight
against all sorts of odds, social, political or natural
calamities like floods, cyclones, etc.
 About 60 million of poor people of the world are living in
Bangladesh.
Geography
Area: 143,998 sq. km. (55,813 sq. miles).
Cities: Capital–Dhaka (pop. 7 million).
Other cities – Chittagong (2.8 million),
Khulna (1.8 million),
Rajshahi (1 million).
Terrain: Mainly flat alluvial plain,
with hills in the northeast and southeast.
Climate: Semitropical, monsoon.
People
Nationality: Bangladeshi(s); Population: 120
million; Annual growth rate: 2.1%.
Ethnic groups: Bengali 98%, tribal groups,
non-Bengali Muslims.
Religions: Muslim 83%; Hindu 16%;
Christian, Buddhist, others 1%.
Languages: Bangla (official, also known as
Bengali), English

6. Economy
GDP (1995): US$28.2 billion; Annual
growth rate (1995): 4.4%; Per capita GDP
(1995): US$233
Agriculture (37% of GDP): Products–rice,
jute, tea, sugar, and wheat.
Industry (17% of GDP): Types–garments
and knitwear, jute goods, frozen fish and
seafood, textiles,
fertilizer, sugar, tea, leather, ship breaking
for scrap, pharmaceuticals, ceramic
tableware, newsprint.
Trade (1995): Merchandise exports–US$3.1
billion: garments and knitwear, frozen fish,
jute and jute
goods, leather and leather products, tea,
urea fertilizer, ceramic tableware.
Merchandise imports–
US$5.9 billion: capital goods, food grains,
petroleum, textiles, chemicals, and
vegetable oils.

7. THE TELECOMMUNICATION
SECTOR IN BANGLADESH
• Regulatory body Ministry of Posts and
Telecommunication (MOPT)
• In 1976, it created the Bangladesh Telegraph
and Telephone Department which in 1979
evolved into a corporate entity: the Bangladesh
Telegraph and Telephone Board (BTTB).
• It runs countriy's communication services on a
commercial basis.
• It was governed by seven members.
• It had monopoly rights.

8.  Its status as a state-run monopoly was justified by the
government on two grounds: first, the government
argued that only a state-run monopoly would have the
resources to develop a telecommunications
infrastructure, given the high start-up investment and
expenses in maintaining services; and second, the
government believed that a monopoly enterprise
could achieve economies of scale that would allow it
to offer better services at low costs.

9. Telenor’s four main business areas:
 Telenor Networks :which managed infrastructure within
telecommunications and data communication (telephony,
data,broadband)
 Telenor Mobile: which provided mobile services
operations within voice, data, Internet, content services and
electronic commerce.
 Telenor Plus: which was responsible for sales and
distribution of the group's communications, entertainment
and information services
 Telenor Business Solutions: which developed, sold and
implemented the group’s communication and IT solutions.

10. Decision to enter Bangladesh
 Discussions started with management team
 Separate feasibility study was undertaken for urban and
rural markets
Urban Market:
 Worst case scenario: only 100,000 potential subscribers
existed
 Best case scenario : 6,000,000 potential subscribers
existed (More then the entire population of Norway)

11. Positives:
 No other mobile operators present
 Opportunities for growth and profitability in Urban market
Drawbacks:
 High level of corruption
 Political concerns due to government instability
 No regulatory regime existed in the sector
 Debt collection could be problematic
 Whether Bangladeshi government would allow Telenor to
expatriate profits to pay Dividends to Norwegian
shareholders

12. Rural Market:
Best case scenario: 100,000 to 150,000 subscribers with one or
two telephones in each village
Positives:
 Local Partnership with professor Yunus and The Grameen
Bank
 Recognizing the infeasibility of doing business solely in Rural
market, The Grameen Bank proposed a solution to Telenor.
Drawbacks:
 Rural market by itself could not be commercially viable
 Expensive, due to lack of telecommunications infrastructure

13. Dilemma
 Hermansen believed Bangladesh to be a significant
business opportunity for Telenor.
 On one hand there was significant opportunity and
possibility of gaining “first-mover” advantages, but on the
other end the business risk was extremely high
 Telenor had not previously conducted business in a
developing country or in Asia, and Bangladesh seemed
worlds away from Norway.
 Bangladesh’s uncertain economic, political, and legal
environment

14.  Telenor has the opportunity to "do well and do good" in
Bangladesh.
 It could help its financial bottom line by being a first-
mover in the Bangladesh mobile telephone market and
establish a successful operation through partnership with
the world-renowned Grameen Bank.
 However, in order to capitalize on this opportunity,
Telenor has to agree to the social cause of providing
telephone connectivity for the rural poor by offering
mobile services in the villages, which was unlikely to be
profitable.
 Should Telenor undertake this venture?

15. The Key Challenge
Hemansen wondered:
 Whether the CSR notion of “doing well and doing good”
could be a platform for brand differentiation and whether
this could be sustained to globally achieve long term
business profitability.
 Was Bangladesh the right strategic direction for telenor?
 Should Telenor submit its bid for telecom license in
Bangladesh?
 And how should the Telenor’s Bangladesh operations be
organized with Grameen Bank and Grameen Telecom?

16. T H A N K Y O U