Bangladesh’s oldest mobile-phone operator Citycell in doldrums for ‘strategic mistakes’, say experts

Citycell is bracing for closure due to some ‘strategic mistakes’ it made, according to industry pundits.

They say lack of visionary leadership, institutional corruption and failure to bring investment have got  Bangladesh’ first mobile-operator in huge trouble.

Former Citycell top-level executives agreed.

The telecoms regulator BTRC says they will shut down the company any time.

Its chief Shahjahan Mahmood said they will notify subscribers to switch over to other operators within Aug 16.
 

The country’s lone CDMA operator, which has already faced a massive exodus of its subscribers, owes the government over Tk 4.75 billion in dues.

Citycell, however, is still hoping to pull itself back and has asked for some time to clear the arrears.

Speaking to bdnews24.com on Tuesday, CEO Mehboob Chowdhury acknowledged of strategic mistakes. “Not going for GSM was a major mistake.”

He came out clean that despite the regulatory nod for switching to GSM, it is his company which has failed to make it happen. “Frequency was not allotted as we could not complete formalities.”

Chowdhury, however, said that they will switch to GSM once the government’s dues are cleared. “But the BTRC is not clearing the issue of frequency. We were supposed to be given 10 MHz, but they want to give us 6.5 or 6.8.”

In 2012, when the regulator renewed its license, the company was allowed to switch from CDMA to GSM for only a Tk 2 billion fee.

Citycell’s telecoms operations license—issued in 1989— cleared it for fixed phones as well, but it never walked on that path and the CEO claims that the decision did not hurt its business.

The company also was qualified to bid for 3G services, but did not take part as it failed to come up with the $20 million earnest money.

A former top-level Citycell executive says that the company never bothered to upgrade technology. He also blamed inefficient leadership.

“It could not attract investment and institutional corruption is largely responsible for it,” he told bdnews24.com on condition of anonymity.   
 

Mehboob Chowdhury

Another former executive said that Citycell started plummeting after Mehboob Chowdhury took over.

ICT think-tank LIRNEasia’s Senior Policy Fellow Abu Saeed Khan says the company had everything except for strategic visions.

“CDMA allows wider coverage than GSM. They had the technology for rolling out 3G, long before the licenses were awarded, but did nothing with it.”

He also said that not going for fixed phone services, when the demand was there, had adversely affected the company.

“The most unfortunate thing is they have a partner like SingTel, but could not use the opportunity,” said Khan, the former secretary-general of the Association of Mobile Telecom Operators of Bangladesh (AMTOB).

When Chowdhury joined in 2010 as the CEO, Citycell had a subscriber base of 2.3 million. The latest BTRC figure says it has come down to 700,000 in June— less than one percent of total subscribers in Bangladesh.

“It’s true that we have not been able to bring investment, but we are trying. An American company is interested,” said Chowdhury, who declined to name the potential US investor.

There have been talk of new investments in Citycell since Chowdhury was appointed to lead the company.

Asked when it might finally happen, he replied, “I hope we will be able to zero in on that by the end of this month.”

Chowdhury seemed confident about bringing investment for a company, which the regulator says will shut down any time.

“We might not have subscriber, but this is a good investment, because the 4G auctions are coming up. The company can turn around with 4G services.”

But on the imminent need of clearing the almost Tk 5 billion dues, CityCell has to wait for investments.

“I hope we will be able to pay the arrears as soon as new investments come in,” said the CEO.

Chowdhury, however, said he can’t be held liable for the more than 1.7 million drop in subscribers after he took charge of Citycell.

“My track record does not suggest I am inefficient. As the chief commercial officer of Banglalink in 2004, how did I build a 1 million subscriber base within ten months?”

Chowdhury claimed the decision for not to go for GSM was not his.

He also brushed off allegations of institutional corruption.

“Those who are saying this do not know anything.

“Investments made in this company are approved by the government. Investors verify everything before putting in their money.”

Singapore-based SingTel Asia Pacific Investments Pte Limited holds a majority share of 45 percent in Citycell.

BNP leader and former foreign minister M Morshed Khan’s Pacific Motors has 37.95 percent while Far East Telecom Limited owns a 17.51 percent stake.

Its parent company Pacific Bangladesh Telecom Limited got licence for telecom services in 1989.

CEO Chowdhury hopes the government will cooperate with them. “Some incentives are necessary to invest in this competitive market.”

He came down hard on the BTRC’s Aug 16 deadline for subscribers to switch from Citycell.

“The BTRC chairman told me that he has not instructed to shutdown Citycell.

“The regulator assured us that it will not be closed down. We have informed them of new investments and they have told us they will consider it,” said Chowdhury.

In 1989, a license to operate telecom services in the county was issued to Bangladesh Telecom Ltd (BTL).

Investments from Hong Kong-based Hutchison Telecommunication Ltd came the next year, which was then re-christened as Hutchison Bangladesh Telecom Ltd (HBTL).

In 1993, the then foreign minister M Morshed Khan-owned Pacific Motors, SingTel and Far East Telecom brought HBTL's shares.

The company was renamed as Pacific Bangladesh Telecom Ltd, with the brand name of Citycell.