TeleTalk Eyes Tk 32cr Profit Next Year

State-run mobile operator TeleTalk


State-run mobile operator TeleTalk has set a target to earn Tk 32 crore in net profit in the current fiscal year, adding 18 lakh new customers to its network.
The TeleTalk board set the target at a time when the overall mobile market witnessed a downward trend in earnings.
Industry insiders expressed doubt over TeleTalk's net profit target and termed it ambitious.
But Iqbal Mahmud, chairman of TeleTalk, said yesterday: "This is not whimsical. The profit target has been set based on good calculations."
If TeleTalk's chairman has made correct calculations, the mobile operator will be the third to touch the break-even point in the six-operator mobile market followed by market leader Grameenphone and Aktel.
At present, all operators, except Grameenphone, are incurring losses in the market. A price war and increasing operating costs are mainly to blame for the losses.
Grameenphone's operating profit dropped 57 percent in the first half of the year, compared to the same period a year ago.
The market's second largest player Banglalink has recently spelled out risks to an early plan to reach the break-even point by year-end and blamed the government for not executing its tax reduction plan on SIM cards.
Aktel ran into massive losses at the end of 2007. The company's net profit showed a negative trend in its financial report, although it was profitable until June 2007.
"Profit after tax (PAT) declined due to a hike in finance costs and depreciation in line with aggressive network expansion," said the company's financial report.
TeleTalk had depreciation of Tk 119 crore last fiscal year. "We had massive depreciation last year, but we are hopeful of earning profit this year," said Mahmud.
TeleTalk is the country's smallest operator by subscribers with around 2.31 percent market share. It started operations in 2005 amid high hope, but failed to compete with the five other operators due to lack of quality services and poor marketing strategy.
Until July 2008, the company has been able to add only 0.93 million customers in two and a half years since its entry to the market.
In a recent development, the company's board approved a Tk 573 crore network expansion project.
Under the project, first-phase work went to European Nokia-Siemens Networks and Chinese Huawei to expand its network for Tk 273 crore.
The TeleTalk board chairman said the company would add 18 lakh new customers in the current fiscal year as part of the first phase work.
The company plans to add another 30 lakh customers to its network by awarding second-phase network expansion work, he said.
Along with executing its network expansion programme, TeleTalk will adopt 3G (3rd generation) technology.
3G is a technology that includes capabilities and features such as enhanced multimedia (voice, data, video, and remote control), usability on all popular modes (cellular telephone, email, paging, fax, videoconferencing and Web browsing) and broad bandwidth and high speed.
The telecom regulator has announced that it will issue three 3G licences early next year.
Grameenphone is the market leader in the mobile telecommunication sector with around 20.83 million subscribers. Orascom Telecom Bangladesh, which operates Banglalink, is the second with around 10 million subscribers as of July 2007.
Telecom Malaysia International Bangladesh, which operates AKTEL, and Warid Telecom International are the third and fourth market players with around 7.98 million and around 3.48 million subscribers respectively. The country's oldest and lone CDMA operator Citycell's customers reached 1.67 million in July 2008.

TeleTalk Tk 573cr Expansion Project Starts

State-run mobile operator TeleTalk finally gave the go-ahead for its much-talked-about Tk 573 crore network expansion project as the company last week awarded two of its existing vendors the first phase of the scheme.

According to the decision of the company's board meeting, the Tk273crore first phase work went to European Nokia-Seimens Network and Chinese Huawei.

The board in principle also decided to go for open tender process for awarding the second phase of the project, which is aimed to reach 1.8 million new customers by 2009.

"After a long verifying process of checking whether the claimed price for the work is rational or not, we have approved the project at our last board meeting," said Iqbal Mahmud, chairman of the TeleTalk board yesterday.

Plans to strengthen TeleTalk were first discussed more than two years ago with the operator finally approving the Tk573 crore network expansion project in February this year.

Soon after this, the company's board changed and several members of the new board expressed concerns over the budget allocated for the expansion project.

In February, the company's board decided that the company's existing vendors -- Huawei and Nokia-Seimens should do the initial network expansion works of Tk273 crore. The rest of the work was to be awarded through an open bidding process.

However, the board's decision to let company's existing vendors do the work soon ran into controversy as telecom industry experts began to question the allegedly high cost estimates by the TeleTalk board. Some rival vendors also alleged that the mobile operator bypassed the Purchase and Procurement Regulation (PPR) by awarding the mega project to these vendors.

A scrutiny committee has already examined the network expansion project.

The TeleTalk board chairman said, "We have maintained all legal procedures as far as the network expansion project goes. Whatever we do we do for TeleTalk's development and also for welfare of the nation."

He said TeleTalk is not bound to follow PPR, adding that the company does not use government fund and has its own purchase policy, under which it maintains all purchase as per the company law.

TeleTalk is the country's smallest operator in terms of subscribers with around 2.31 per cent market share. It started operations in 2005 with high hopes, but failed to compete with the five other multinational operators due to lack of quality services and poor marketing strategy.

Till June 2008, the company has been able to add only 1.07million customers in two years since its entry into the market.

The five-year long TeleTalk's mega project styled Strategic Expansion Plan was initially discuss in 2006. The Nokia-Seimens and Huawei will go for core network expansion works of the project.

According to the company's final approval Nokia-Seimens and Huawei will engage to expand its earlier network sites. Under this initial phase, Nokia-Seimens and Huawei will undertake work worth Tk184crore and Tk90crore, respectively.