Implications of Airtel-Robi merger

If Airtel-Robi initiative succeeds, the merged entity would hold 39.8 MHz spectrum power and the number of subscribers will reach 38,650 million. The operator's average monthly deficit will stand at Tk 406.7 million. Spectrum would be worth $1.08 per customer. Thus, the unified entity will not be able to achieve the market share equal to GP. However, the number of 3G BTS network will be at 6,500 which will increase the network coverage. GP and Banglalink shareholders' formats of shares are shown in the figure below. It can be seen from Figure 1 that Telenor has the share from both the operators. As a result, market competition policy and strategic planning to determine the effect of a merger both in the formal and informal operators could arise latently. It may hamper fair competition to some extent.

The Bangladesh Telecommunica-tion Regulatory Commission (BTRC) will have to ensure, under the law, competition in the market to protect  the interests of the customers. Moreover, on the basis of economic compatibility, Telenor has 33 per cent of power and 43 per cent of the voting power over Vimpelcom.
COMPETITION BETWEEN OPERATORS: The current unexpected discount in telecommunication services may bring short-term benefits to consumers although due to lack of fair competition in this field, the benefits may not be long-term - and the signs are becoming clear. The small operators are under financial crisis due to uneven competition of decreasing prices. As a result, they are unable to survive in the market. Having less than 1.0 per cent of receivers, CityCell could not contribute to the competitive market of telecommunication for the last two years. For a poor financial state, CityCell has been under duress to run their business and may eventually vanish from the market. Airtel is also experiencing financial crisis like CityCell and may disappear from the market. The merger initiative of Robi-Airtel implies this situation. Teletalk is the only public mobile operator in the country. In spite of having enough spectrum (25.22 MHz) in hand, Teletalk is not a participant in this competition.
Banglalink is playing a vital role in creating a competitive market in telecommunication services. It has the second largest clientele and is the third largest in capital earning for the last five years in addition to being positioned in the third place in 2015. On the other hand, its total deficit is increasing. Hence, conditions of this operator are also bad. The fate of this operator may be the same as that of Airtel and may meet the same fate as of  CityCell or may fight to survive by merging with another like Airtel. Therefore, despite having clients of six operators to choose from, Robi is the only surviving strength in comparison to GP.
In the future, the survival possibility of any other operator is low. As a result of the clear imbalance in the capabilities of Robi and GP, an uneven competition may take place in the telecommunication sector. And this may lead to a monopoly environment in the future.
 GP holds the status of the lone significant market power operator which is not a sign of healthy marketplace. Therefore, in order to create proper competition in the market, the regulatory bodies and strategic decision-making institutions should capacitate the public operator as well as other private operators. Currently, merger can be an interim solution but for the long term, in order to ensure a balanced market, capacity building and strategic motivation are required along with network sharing. In addition, the operators, which have significant market power, must be brought under special regulation.
COMPETITION AND CLIENTS' INTEREST: The telecommunication sector may appear to be competitive. But, in reality, because of  unique supremacy of one entity, other operators are not thriving. Almost 50 per cent of the market is under the control of GP which is creating obstacles to the desired fair competition as well as threatening the existence of a long-term level playing field.
Telecom is a technology and investment-based sector. Since changes in technology are highly likely (e.g. 2G, 3G, 4G etc.), continuous investment is also essential. This is also a significant part of competition. Therefore, to survive in this sector the operators need to continuously invest in large amounts on one hand, and on the other, they must steadily increase efficiency along with effectiveness in order to be actively stable in the market.  Finally, if the investing organisations can earn as per expectations, then they will become interested to make further investment. But no operator except GP is in such a position. On the other hand, the demand of the clients is increasing for cheaper rate against standard service, prioritised mobile network coverage, uncut connections, wider value- added services, roaming network coverage and other similar facilities. To provide these services to consumers, a competitive, resilient and long- lasting market system must be ensured first.
A significant market power operator gets financial benefits even at a lower price offer to the client due to higher market share and lower service production rate. However, the operators which have a low segment of market share cannot survive by providing services at a competitive lower rate. This is a threat for resilient and stable marketplace. If this uneven competition stays long in telecommunication sector, then market would become unstable.
 GP is now in a position from where it can create a monopoly situation. There is no other strong operator in the market which can engage GP in an effective competition.  
MERGER AND CLIENTS' INTEREST: Mergers are common in a competitive market. The merger of Robi and Airtel apparently makes good business sense.
However, to maintain a level playing field and ensure the interest of customers, the regulatory bodies should bring significant market power operators under legislative control. At the same time, the public operator, Teletalk, should be strengthened, even by providing subsidy.

The writer is Professor and Dean, the Faculty of Engineering, Daffodil International University.
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