The Revival of Citycell

The arrival of Singtel changed everything almost overnight. Michael Seymour, CEO of the revived Citycell pictured left (person on the left).

Minimum charges:
Citycell at one time, under Singtel leadership, were giving away free calls. YES free calls. But Telenor got the most of this and soon used its own influence to convince the regulator that this was a bad thing (something along the lines of depriving Bangladesh revenue, as if gp's VOiP was a good thing).

Regulator pinned the call rates at Tk 0.25 per minute. Grameenphone rejoiced. Citycell hit back with setting all their calls at the lowest possible rate.

Citycell now has the lowest rates than anyone in the market. If they hit the consumer base, they know their bottom lines are lower than gp because of CDMA technology. They can offer Tk 0.25 rates without worrying about the construction of a new 10 acre headquarters (unlike GP).

Minimum/shared expenditures
No multiple headquarters, no expensive sales channels. Citycell is buckling up a lot faster than any other operator. In 2007, Citycell reduced losses by 75%. Grameenphone in 2007 had record layoffs and a 32% dip in profits. (GP's marketshare went from ~60% to ~46%).

Infrastructure sharing contracts with Warid (although confusing, because Warid uses GSM, but I guess they will use the same base stations) futher reduced costs. GP continues to build new buildings and headquarters.

Citycell went ahead and took the pre-paid mess out of their hands by letting a bank handle that mess. It wants to be a mobile operator. Cutting extraneous weight where ever possible is a good thing.

Focus not diversification
GP continues to diversify its cell phone business. Diversification comes at the expense of making new enemies as it muscles its way into different target markets. Pretty soon they will have more competition than they can deal with. Its easy to be number 1, but tougher to stay at number 1. And it is not going to be smooth sailing as GP thinks it will monopolize all markets that it enters. In the best case scenario they will lose their mobile market or lose both.

Citycell's strategy has been the opposite. They focused on cellphones and the basics of cutting their rates. While Grameenphone wants its retail centers to be multi-functional, they are losing track of their mobile business and Citycell is keen to pick up. At this point, GP has made too many competitors from the various market it decides to enter to succeed in even one. Citycell's focus has been more successful in gaining market share.

Citycell and its shortcomings

Citycell is the first mobile operator in South Asia. Very rich history and even a richer history of robbing clients whenever possible. They have failed miserably, being second last in the list of mobile operators in Bangladesh. Why?

Grameenphone
Grameenphone basically did what Banglalink is doing to Grameenphone. Cutting rates. In the mid nineties, Citycell refused to budge on rates and did it less quickly.

Lack of partnership
Singtel came a little too late in the partnership with Pacific Telecom (owned by Morshed Khan). Pacific Telecom did not have the expertise or the resources to fight a growing and experienced Telenor. Singtel's partnership was new as Singtel itself did not have CDMA framework.

Changes in market
This is the sort of thing Grameenphone is experiencing right now. Citycell struggled to the changing market as they were used to being a monopolist but suddenly finds out it was harder to cope with the growing presence of Grameenphone.

CDMA2000 1x
CDMA allows more efficient use of mobile frequencies than GSM. The reason to go with CDMA rather than GSM was a foresight that future frequencies would be more costly to acquire from the regulator. And yes the decision was right. But Grameenphone was already gobbling up more frequency than they needed at really cheap prices.

Citycell did not push the regulator, due the lack of foreign expertise/bribes/favors (yes Singtel came a little too late). Grameenphone got the lions share, but Citycell, even by using a more superiror technology did not take advantage of it. Pacific Telecom was more interested in maintaining the short-term bottom line rather than acquiring long-term customers. But this soon changed when Singtel stepped in.

Reliance Communications of India is their second largest mobile phone company. They use CDMA. Reliance went ahead to abuse the strengths of CDMA.

Lack of a Business Solutions
Grameenphone does this part very well. They push business solutions because businesses are less finicky about changing operators. (But this may soon change as Grameenphone keeps stepping on/into other businesses). Citycell did not push business solutions even with nothing to lose with their superior CDMA network.

GP even went ahead to get the Blackberry as a fashion statement. (its the most overpriced phone in the market). But Citycell just sat around with nothing.