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Contents
Introduction ................................................................................................................................................. 2
Merger and Acquisition .............................................................................................................................. 3
Bangladesh Mobile Telecom Market......................................................................................................... 4
Current Mobile Telecom Market Structure ............................................................................................. 5
Pre-merger and post-merger analysis using Herfindalhl-Hirschman (HHI) ........................................ 6
Conclusion ................................................................................................................................................... 7
References .................................................................................................................................................... 8
Introduction
Merger and acquisition is most popular topic in business in todays world. The concept of
globalization made it easy for creating business across the border. Companies all around the world
merging with other companies or taking over it creating new market and expanding their frontier.
In the pre globalization era, international business was bounded to trading. Big companies from
developed world used to export to other countries. Those were mostly those goods in which they
are efficient. On the other hand they used to import products in which they have no longer any
competitive advantage.
However, globalization helped these big MNCs to open their production plant and expand their
business in new market. For example apple design their product in USA but produce in China in
same quality to minimize the cost. Besides KFC serving their fried chicken from USA to
Bangladesh all around the world. The most appropriate example of globalization would be The
Coca-Cola Company. Coca-Cola is now serving in almost 190 countries of the world.
Merger and acquisition is the quickest way to enter in market. This is much easy and reliable then
green field investment. But if the merger or acquisition happens in concentrated market it could
be harmful for consumer. Industry with few seller have more control on price and they can
overcharge on customer. So, government should make policies in this area to reduce unethical
business practices.
larger partner willing to provide the necessary investment. In this scenario the acquisition is
sometimes referred to as a friendly or agreed acquisition. Alternatively, the acquisition may be
hostile. In this case the target is opposed to the acquisition. Hostile acquisitions are sometimes
referred to as hostile takeovers.
SUBSCRIBER
56.204
32.368
27.795
10.510
0.867
4.211
131.956
% of Market Share
42.59%
24.53%
21.06%
7.97%
0.66%
3.19%
100%
In current market share percentage GP is the market leader followed by Banaglalink and Robi.
Airtel and Teletalk has few market share and Citycell market share is very insignificant.
In Bangladesh total population is about 160 million and there is six telecom service provider in
this small amount of people. So market is very competitive especially among the top three player.
Currently Robi and Airtel are proposing to merge which been advanced to final stage. Public
hearing been done. However Robi got 21.06 % and Airtel got 7.97% market share. If they marge
total market share will be 29.03%. The company name will be Robi.
Pre-merger situation
Company
GP
Banglalink
Robi
Airtel
Citycell
Teletalk
Total
Market Share
42.59%
24.53%
21.06%
7.97%
0.66%
3.19%
100%
HHI
1814
602
444
64
0.44
10
2934.44
Market Share
42.59%
24.53%
29.03%
0.66%
3.19%
100%
HHI
1814
602
843
0.44
10
3269.44
Post-merger situation
Company
GP
Banglalink
Robi
Citycell
Teletalk
Total
Concentration
Change in HHI
Government Action
Not concentrated
Any amount
No action
Moderately concentrated
100 or more
Possible challenge
Highly concentrated
50 or more
Challenge
In the calculation we see that the post-merger HHI is more than 1800 and the change is by
335, which indicates that the market will be highly concentrated if the merger is happen and
government will be challenge by it.
6
The government should consider that fact that if Robi and Airtel merge the 96.15% market will be
controlled by GP, Banglalink and Robi. This merger will push Robi as 2nd market leader. As they
will be controlling the market monopoly in telecom market could come again.
Conclusion
Till now the merger is yet to complete. There are lot of calculations still need to make by the
government and other parties who look after the interest of consumers. If the merger happens it
might not bring good in telecom industry.
References
1. BTRC (2016) Mobile Phone Subscribers in Bangladesh January, 2016, Available at:
http://www.btrc.gov.bd/content/mobile-phone-subscribers-bangladesh-january-2016
(Accessed: 2nd March, 2016).
2. Dr. Aref Chowdhury (2016) 'Robi Airtel Merger: An opportunity to ponder ', The Daily
Star, 1st February, p. 4.
3. Muhammad Zahidul Islam (2015) 'Robi-Airtel merger another step closer to reality ', The
Daily Star, 29th September, p. 4.
4. Star Business Report (2016) 'Robi, Airtel ink merger deal ', The Daily Star, 29th January,
p. 4.