SWOT ANALYSIS OF Grameenphone Telecom

The no.1 mobile network operator in Bangladesh, Grameenphone Limited, has been dominating the Bangladeshi telecommunication market for a long time. The company has leveraged the strengths of its parent company to create a customer-centric brand that caters the maximum number of subscribers in the industry. Its premium pricing strategy, negligence to follow regulations often creates obstacles to further growth. But it has been consistently introducing innovative digital products and services to overcome those issues and grab all the market opportunities. The following SWOT analysis will provide the reader a broader understanding of the company’s strategies and future prospects.

SWOT ANALYSIS OF Grameenphone Telecom

Strengths of Grameenphone Ltd

Wide and strong network coverage: Grameenphone has a very wide network infrastructure in Bangladesh that covers 99.6% of the total population. [1] Its powerful network signal reaches the remotest areas of the country. Thus, the operator has grabbed the maximum number of subscribers in the market. With the flow time, demand from this huge subscribers base will increase as the usage and standard of living is upgrading day by day.

Support of the sponsor companies: Telenor, the largest telecommunication service provider of Norway and Grameen Telecom are the two sponsor companies of GP. Telenor has a presence in 12 countries for almost so many years and its expertise in the global market and humungous financial support are the biggest strengths of Grameenphone. [1]

Brand value: Through its innovative marketing campaigns and superior service GP has created a customer-centric brand over the years. Consumers believe that paying more for its services really worth it. It has been made possible because of the brand image and positioning GP has created in consumers’ mindsets. [2]

Diversified product portfolio: Along with the basic functions GP has extended its business to multiple sectors. It has a fully operated OTT platform, FinTech service, B2B products and services, device selling etc. the company brings new products or services and uses its strong distribution network to penetrate the market. This diversified business principle gives more strengths to the company for the distant future. [2]

Weaknesses of Grameenphone Ltd:

Premium pricing strategy: The services and products of GP are a bit costlier than the other operators of the market. Even though it provides more convenient and superior services, a big chunk of the market goes after the more affordable options. Also, sometimes subscribers refrain from using some of the services due to its costliness.

Lacks differentiation: The service quality of the mobile network operators is almost homogenous both in terms of internet speed and the strength of network signal. Although GP innovates new products and services, the core business lacks differentiation. This is also the reason why the company needs to spend a huge amount on its marketing activities.

Not following all rules and regulations: Despite being the largest player in the market, GP often does not follow all the regulations of the government and BTRC. Disputes between NBR and GP were often raised as it did not pay all the VATs and Taxes on time. Later, BTRC legally enforced the company to pay the due tax in order to continue its operations. Such cases hampered the goodwill of the company. [3]

Dependent on Risky sub-marine cable network system: The submarine cable network system used by Bangladeshi network operators is not up to the mark. Very often these cables get cut off for different uncertain reasons. This disruption makes the internet slower. This less-developed system causes huge losses for GP, in other words, it cripples the whole industry at that time. [4]

Opportunities for Grameenphone Ltd

Post-pandemic consumer behavior: The covid-19 pandemic also forced some revolutionary changes in the technological field. People have grown a habit of consuming more internet and spending more on online entertainment, education, shopping, etc. this new consumer behavior has brought huge potential for GP’s Bioscope, GPAY, and GP Music.

Growing purchasing power of consumers: The income is increasing, so is people’s spending for a better lifestyle. It is expected that the GDP per capita will be US$3,253 in 2026 in Bangladesh. [6] Rapid urbanization, employment opportunities overseas, online-based jobs will increase both the purchasing power and internet consumption rate. GP needs to leverage this for future growth.

Growing population along with a large number of young and middle-aged group population: The country has a population of 164.7 million and is expected to grow by 1.04%. 35.8% of them reside in urban areas and the annual rate of change in urbanization is 3.19%. [7] This rapid urbanization and growth of youths will create a digital culture and communication. GP has the potential to utilize this opportunity for long-term growth.

Threats for Grameenphone Ltd

Cheaper and more convenient alternatives: Bangladesh ranked 133rd out of 138 countries in a mobile internet speed test. [8] Also, the network signal is not powerful rather costly. These factors make people use broadband data, IP calling app, IP messaging app as alternatives. If GP fails to stand out in the market, these alternatives will prevail over the company.

Over-control by the government: The government of Bangladesh often interferes in the operations of Telcom operators as a mass controlling measure. Whenever any political issues come up, the government enforces the operators to stop providing services for days. Such practice causes huge losses for companies like GP.

Less penetration in public sector services: Grameenphone does not get the opportunity to cater the public sector related services as those are only assigned to state-owned operator Teletalk. In education, health, immigration, any type of registration only Teletalk can be used, which creates a monopoly in the public sector and is a threat for private companies.

High Taxation and adverse regulations: The government imposed a 45% corporate income tax on telecommunication companies. This rate is 40% for other industries. Besides, BDT100 for every SIM and 5.5% of the revenue must be paid by the companies till 2030. [9] These regulations reduce the margin and hamper the growth of mobile network operators including GP.

Recommendations for Grameenphone

The market competitors are strong in the Telecommunication sector and they’re providing almost homogenous services at a more affordable price. So, if GP wants to lengthen its domination, it needs to improvise in terms of its service quality e.g. Internet Speed, Talk-time Rate, internet price, etc., and change its pricing strategy to capture a broader market. The company also should invest more in its OTT platform Bioscope and MFS service GPAY. The pandemic and post-pandemic periods would be the right time to boost up these two businesses as consumers are now shifting to and depending on these types of services from the traditional ones. Shortly, differentiation and diversification would be the key to its future success.

References:

  1. Our Story – The official website of GP
    https://www.grameenphone.com/about/discover-gp/about-grameenphone/our-story
  2. The annual report 2020 of Grameenphone Limited
    https://cdn01.grameenphone.com/sites/default/files/investor_relations/annual_report/GP_Annual%20Report_2020.pdf
  3. GP agrees to pay Tk 200cr to BTRC – The Daily Star
    https://www.thedailystar.net/business/telecom/grameenphone-gp-agrees-pay-taka-200cr-to-btrc-1827034
  4. Submarine Cable Network in Bangladesh – The Daily Sun
    https://www.daily-sun.com/printversion/details/534163/Submarine-Cable-Network-in-Bangladesh
  5. Everyone in Bangladesh now has a mobile connection – Dhaka Tribune
    https://www.dhakatribune.com/business/2021/01/12/everyone-in-bangladesh-now-has-a-mobile-connection
  6. Bangladesh keeps outrunning India in per capita GDP race – The Daily Star
    https://www.thedailystar.net/business/economy/industries/news/bangladesh-keeps-outrunning-india-capita-gdp-race-2197991
  7. World Bank
    https://data.worldbank.org/indicator/SP.POP.TOTL?locations=BD
  8. Mobile data speed: Bangladesh only ahead of Afghanistan in South Asia – The Daily Star
    https://www.thedailystar.net/business/news/mobile-data-speed-bangladesh-only-ahead-afghanistan-south-asia-1985365
  9. Bangladesh Telecommunication Industry: A Comprehensive Review – EBL Securities Ltd.
    http://www.eblsecurities.com/AM_Resources/AM_ResearchReports/SectorReport/Bangladesh%20Telecommunication%20Industry-A%20Comprehensive%20Review%202019.pdf