Bangladesh News

Vodafone, the world’s leading mobile telecom group, is in talks to buy a 30 per cent stake in AKTEL, Bangladesh’s third largest mobile network, from the local owner A.K Khan and Co, in a deal that could be worth more than US $300m.

Speaking at an open meeting with the Bangladesh Telecommunications Regulatory Commission, Gavin Darby, chief executive officer of Vodafone Americas, Africa, China and India said: “I met Mr. Khan (Salahuddin Kasem Khan) chairman of A. K. Khan and Company yesterday (Tuesday). Mr. Khan is considering selling his AKTEL’s shares. So in the short time, that is the opportunity that we are looking at in Bangladesh mobile market.”

In recent months AKTEL has been struggling to maintain its position in the extremely competitive Bangladeshi market. In December it lost its position as the country’s second largest operator to banglalink, and saw subscriber numbers fall from 6.70 million in September 2007 to 6.40 million in December 2007.

The company is 70 per cent owned by Telekom Malaysia and 30 percent owned by A.K. Khan and Co.

Yusof Annuar Yaacob, chief executive officer of Telekom Malaysia International, has previously said his company was keen to work with Vodafone in Bangladesh and valued AKTEL as worth “in excess of US$1 billion.”

Yesterday he stressed that TM had no intention of selling its stake in AKTEL: “However, I am unable to comment on actions or decisions that are made by our other shareholders”.

Salahuddin Kashem Khan chairman of A K Khan and Co Ltd refused to make any comments on the company’s plans for its AKTEL stake. However he said it was very good for Bangladesh that Vodafone came to explore the market. “If Vodafone comes into Bangladesh, it will be good for the country,” he said.

With six mobile operators already competing in Bangladesh Vodafone is unlikely to be granted a new licence and yesterday it made clear this was not its preferred way of entering the market.

“Six mobile operators is a very good number in a market like Bangladesh—- it’s a large number relative to other markets. In terms of where or what the opportunity is (for us)—- I think therefore we be within one of the existing six,” Darby said.

Darby said Vodafone saw opportunities in Bangladesh and would like to introduce its cheap handsets that cost less than $25, around Tk1750. The initial cost of handsets is still seen as one of the major barriers to increasing the number of mobile users in Bangladesh.

In the same meeting, the telecom regulator BTRC said it would welcome Vodafone’s partnership with Telekom Malaysia. “There is no bar if any shareholder intends to handover its share to another one,” said Major General (retd) Manzurul Alam, chairman of Bangladesh Telecommunication Regulatory Commission (BTRC).

At present there are six mobile operators in Bangladesh. The market leader is Grameenphone, followed by banglalink, AKTel, Warid, Citycell and state run Teletalk. All use the GSM standard apart from CDMA based Citycell.

Sabrine El. Hossamy, a spokesperson of Orascom Telecom Holdings Ltd, the Egyptian group that owns banglalink, recently told The Daily Star that “Orascom telecom does not intend to sell her banglalink operation”.

The government has ruled out selling Teletalk, while officials at Warid and Grameenphone said they were not looking to sell stakes to other operators.

If Vodafone does enter the market it will likely increase the already tough competition as the UK based group will attempt to revive AKTEL’S fortunes and regain market share. This may force the other operators to look for mergers in order to retain profitability.

Several officials at the major mobile companies have already complained that six operators is too many and forecast that the number will fall to three or four in coming years.

Talking to journalist BTRC chairman admitted that Vodafone expressed their interest to buy Aktel 30 percent local shares owned by A.K Khan and company.

He said from the regulator’s side there was not a problem in owners selling shares to each other. However the newcomer should meet one or two conditions, he said, without specifying what these were.

“Our experience is not very good. Reputed companies tend to bypass law of the land,” said Alam, adding that any newcomer should maintain the same international standards that they maintain in other parts of the world.