Robi’s transition as a digital operator with 4G services in Bangladesh

ROBI CEO Mahtab Uddin AhmedThe launch of 4G services from December 2017 will help fuel continued economic growth in Bangladesh. For Robi, the country’s second largest mobile operator, 4G will underpin a longer term strategy to transform from a traditional telco to a digital company, writes Joe Kelly.

After several decades of relative political stability, a strong and self-sufficient agricultural industry, rising education levels, and an established population of emigrants sending money back home, Bangladesh is firmly emerging. With a population of more than 160 million people, Bangladesh has enjoyed average annual GDP growth of about 7 percent in recent years. With millennials aged between 15 and 34 making up more than one-third of the population, the nation is set to overtake both Malaysia and Thailand to become the world’s 23rd largest economy by 2050, according to professional services firm PWC.

Despite a historically limited footprint for mobile voice services in the country, 44.72 percent of Bangladesh’s people already read online. The country’s more recent social and economic growth has been fueled in part by digital technologies, and this digital dividend is expected to benefit further from 4G.

Mahtab Uddin Ahmed, CEO of ROBI: “4G will be key to the future of Bangladesh and to the future of Robi. There’s no conventional short-term business case for us in 4G in Bangladesh today, but ROBI’s strategic goal, and Bangladesh’s continued economic emergence, depend on it.”

A merger for national success

Robi became Bangladesh’s second largest mobile operator with over 32.2 million subscribers in 2016 through a merger between Airtel and Axiata as part of an investment venture between Bharti Airtel of India, Axiata Group of Malaysia, and NTT Docomo of Japan. The merger was the largest ever undertaken in Bangladesh.

“In many ways, the merger was a test of the country’s economic, regulatory, and legal development. Not everything went the way we expected, but future mergers in Bangladesh will benefit from the lessons that were learned,” says Ahmed.

Ahmed defines the merger as a success so far the company has achieved the level of direct cost optimization we expected from the agreement. The telco integrated its two networks and expanded reach for all customers into what were previously dark areas without the need for additional capital investment.

The merger helped Robi to grow subscriber base, when usually between one- and two-thirds of end users walk away during such an integration process. The mobile network, now shared by two different brands, has become national for both.

“Our customers are more satisfied because many have seen their bills reduce as we move many from off-net to on-net services and their experience also improved. But this is just the start,” he says.

The merger and the economies of scale it delivered have created a base platform from which Robi can digitalize the business. “That’s where the long term benefits and value of the merger and the business will be found.”

From analogue telco to digital business

“We’re delivering on the early economic and service benefits of the merger, but just being a pure telecoms company, I don’t think there is a way for us to survive. We need to become a digital company,” Ahmed warns.

Consultants have rated Robi’s digital capabilities today at 4.1 out of 10 and have suggested the business needs to improve this to at least 7.2 out of 10 by 2020.

“One of the big challenges is that our traditional telco culture will not help us to become a digital company,” Ahmed says. “We need to transform from the top. In the past, business acumen was the key criterion for choosing leadership. Today, business acumen is a given, but digital acumen has become key.”

Infrastructure optimization

The network and operations integration between the two former businesses was complex: Each had different equipment vendors, technologies, and spectrum. The previously separate teams had different ways of managing their networks, with different models of what was managed in-house and what was outsourced. “But thanks to the support of our vendors and a decision we made to manage the integration on region by region basis,” explains Ahmed, “We limited customer losses to around 10 percent of our combined base, and we have already won those back with strong marketing plans, plus more, within just six weeks.

Brand strategy – one or two?

Another challenge was whether to operate with one or do different brands, “In the end, we went against conventional wisdom and decided to retain both brands. Given the performance of each since the integration was complete, that looks like a good decision today. Each brand was strengthened,” Ahmed says.

Strengthening the brand came in part from customers seeing value from the merged operations. The network integration enhanced our national 3G coverage by more than 30 percent. In other words, with no increase in capital investment, the merger allowed two regional players to become national players.

Pragmatic approach cost to management

“With the cost savings now being realized, we also need to recognise that we cannot cost cut our way to profitable, future growth. We need to reinvent ourselves as a total digital company. This means simplifying and digitalizing our internal processes. This will drive further reductions in the cost to serve. Accuracy of what we will improve and the agility of the organisation will also improve,” he says.

It’s a massive task. “Over the next four to five years, we need to keep our costs flat and grow our revenue by close to double digits to deliver the margin we want. Given that inflation is currently running at between 6 and 7 percent, the scale of the goal becomes clear.”

Product and services

“In parallel, we need new products and services and we need to offer converged services,” says Ahmed. Triple play is difficult because in Bangladesh, Robi would need a broadcast license that it doesn’t have to integrate television in its packages but Ahmed thinks he can partner to offer IPTV and fixed line fiber services. “But we have strong 3G Internet today, 4G on the way, and plans for new home solutions to deliver over 4G. Of course, there is no conventional business case for 4G in Bangladesh today. But for Robi, 4G is the basis of our becoming a digital company and for Bangladesh to become a true digital society.

Joe Kelly is vice president of corporate communications at Huawei