North South University

Individual Term Paper on

Citycell: A Failure Story

Course Title: Business Research Methodology

Course Code: BUS 535
Section: 01

Submitted To
Dr. Md. Nazmul Hossain
Associate Professor
Adjunct Faculty at NSU
Submitted By
Md. Seyam
Id: 2025262660

Date of submission: 12 August 2021

1|Page
Table of Contents
Executive summary: ...................................................................................................................................... 3
Origin to the report: ...................................................................................................................................... 3
Limitation: ..................................................................................................................................................... 3
Methods of collecting data: .......................................................................................................................... 4
Introduction: ................................................................................................................................................. 4
A brief story of Citycell: ................................................................................................................................. 4
Objective: .................................................................................................................................................. 4
Ownership structure: ................................................................................................................................ 5
Industry classification: .............................................................................................................................. 5
Key features: ............................................................................................................................................. 5
CDMA: ....................................................................................................................................................... 6
RIM: ........................................................................................................................................................... 6
Story of Citycell: ........................................................................................................................................ 6
Why did Citycell fail? ..................................................................................................................................... 8
Reluctant to adapt technologies in time: ................................................................................................. 8
Disinclination to the endorsement of 3G network: .................................................................................. 8
Lack of prudence and proper leadership: ................................................................................................. 8
Not acknowledging customers need and demands:................................................................................. 8
Network problem:..................................................................................................................................... 8
Contradiction between RIM and SIM: ...................................................................................................... 9
Lack of strategic decisions: ....................................................................................................................... 9
Didn’t take proper advantages of opportunities: ..................................................................................... 9
Mismanagement: ...................................................................................................................................... 9
Shortage of capital: ................................................................................................................................... 9
Segmented service: ................................................................................................................................... 9
Insufficient marketing strategy: ................................................................................................................ 9
High call rate: .......................................................................................................................................... 10
Illegal VOIP involvement: ........................................................................................................................ 10
Lost investors: ......................................................................................................................................... 10
Bank debts: ............................................................................................................................................. 10
What could have been done to prevent this failure? ................................................................................. 10

2|Page
Lesson learned: ........................................................................................................................................... 11
Conclusion: .................................................................................................................................................. 12
References: ................................................................................................................................................. 12

Executive summary:

Citycell is the first mobile telecommunication facilities providing company in Bangladesh. Their
mission was to deliver the latest telecommunication service to Bangladesh. They got their license
of operating the business on 1996. At the very beginning, they were having 5 lakhs subscriber.
They got success in the beginning, being the first telecommunication provider company. They
tried very hard after that to continue that success, because the main competitors had started
coming into the market. Citycell‟s strongest side was its customer service and relationship. So
their slogan was „Because We Care‟. Therefore, after having three big competitors, all the
employees were working very hard to get their objectives. Because it is going to is a big hit in
the market. Their business was doing well, until they had made some prominent mistakes.

Origin to the report:

The report was assigned to us by the course instructor of „Business research methodology‟ of
North South University and proposed to submit in 12 August 2021. It is given to know the real
life situation so that we can increase our knowledge beside the theory in the book.

Limitation:

- Lack of time to prepare the report

- Was only dependent on the online resources

3|Page
Methods of collecting data:

- Given resources from the instructor

- Observations
- Analysis of the information

Introduction:

Citycell began its operation in 1989 and was the only Code Division Multiple Access mobile
telecommunication service provider in Bangladesh. However, within a short time, it faced fierce
competition from other operators who offered better technology and customer services. Rapid
technology advances put Citycell under constant pressure to upgrade their infrastructure at
significant cost or risk losing their market share. This study highlights how Citycell neglected to
implement a successful strategy to survive in a competitive market.

A brief story of Citycell:

Citycell is the pioneer telecommunication company in Bangladesh and South Asia and the only
CDMA network operator in the country. In 1996, Citycell received their license to start business
operations. Their growth strategy was to integrate superior customer service, higher standards of
technology and a choice of packages. They were the first who provided. They operated 24 hours
call center service by with well-trained operators to satisfy their customers‟ needs.

Objective:

Citycell was a customer driven organization. Their mission was to provide latest
telecommunication service to Bangladesh. The company offers a fixed mobile service to the
consumers and focused on to the unique needs to the community. They focused on innovation
and creating new ways for customers to stay in touch and to do business. They were offering a
wide range of competitive prepaid and postpaid mobile packages as well as Value Added
Services such as – SMS and information based services.

4|Page
Ownership Structure:

Citycell is a privately owned company with majority of foreign ownership. The owner list of the
company is given below:
 Sing Tel Asia Pacific Investments Pvt. Ltd. – 45%
 Pacific Motors Limited – 31.43%
 Far East Telecom Limited – 23.57%

Industry Classification:
Citycell was a service oriented company. They also provided product and services. In that time
the main competitors of Citycell were:

1. Grameen Phone
2. Banglalink
3. Aktel
4. Teletalk

Key Features:

1. Simplest mobile package in the market

2. Best FnF call rates to other operators

3. Attractive call rates to CITYCELL numbers

4. Competitive call rates to other operators

5. Supports high speed wireless data

6. Full access to all Value Added Services (VAS) such as Hello Tunes etc

7. BTCL and ISD incoming and outgoing facility

5|Page
CDMA:

CDMA means code deviation multiple accesses. The main advantage of CDMA was that cell
phone signals worked better at that time. Citycell was the only company providing CDMA
service in the country.

RIM:

Rim (removable user identity module) card, citycell‟s RIM card came in 32k memory capacity
that gives more space to store data.

Story of Citycell:

If someone tries to recall Bangladesh‟s first mobile company then it will be definitely Citycell
rather than any other company. But the question was always about that why and how Citycell
actually sank?

In 1989, Bangladesh Telecommunication Limited (BTL) was issued the license for operating
cellular, paging and all other wireless communication networks. Later in the consecutive year
1990, Hutchison-Bangladesh Telecommunication Limited was consolidated as a joined venture
of Hutchison Whampoa Limited (HWL) of Hong Kong and Bangladesh telecommunication
limited. Bangladesh Board of Telegraph and Telephone issued the license for cellular, paging
and wireless connection for HBTL in March of the same year. In 1993, HBTL inaugurated their
commercial operation by using the Advanced Mobile Phone Service (AMPS) technology.
Concurrently, this was the second biggest cellular operator of South Asia after Sri Lanka‟s
“Celltel”. By the end of that year, Pacific Motors procured 50% share of BTL. In 1996, HBTL
changed their name to Pacific Bangladesh Telecom Limited (PBTL) and later that year,
“Citycell”- the digital brand name was launched in the market in order to trade their cellular
service. And eventually, this is how Citycell had an emergence in the telecom industry of
Bangladesh.

Citycell introduced some postpaid packages to their high–end customers. And later they bring
some packages also but the call rate was too high. Each min 10taka outgoing and 7.50 taka in

6|Page
incoming call rate. They had created a monopoly market, as there was no other mobile company
in Bangladesh at that time.

In 2005, Citycell got financial and technological support, as PBTL signed a partnership with
SingTel. This incentivized Citycell to stiffen its position in the market and enabled the operator
to launch affordable and innovative packages to the customers. In the meantime, Bangladesh was
having other mobile operator company as well. In 2005, when others had started using GSM
technology, Citycell was still satisfied with the CDMA technology.

The main difference between CDMA and GSM is that, there is a SIM card slot in GSM. But for
CDMA there was no SIM card slot and a having a certain SIM card number for each handset.
For which consumers were not able to use different SIM card at a time and not able to switch
their phone anytime. After that, Citycell started losing its customers.

To meet with the market Citycell introduced some CDMA handset like; Huawei, Samsung,
Alcatel, ZTE etc. Besides, they brought some attractive and affordable call packages for the
users as well. Like alap call me plan, alap super plan, hello 0123 plan, Citycell voice data plan.
They also launched Citycell zoom ultra-plan in the market, by which customers can connect with
the internet through various prepaid and postpaid plans. In addition, their download speed was
512kb/sec.

In 2010 Mehbub Chowdhury joined as a director. He had an experience of 10 years in telecom

industry in prior to that. In 2011 citycell was at its highest peak with a revenue of 347.02 crore
taka. But they were still limited with the CDMA technology. Citycell were having 800MHZ
band‟s 10MHZ spectrum. To convert into GSM technology they were needed 5MHZ spectrum
of 1800 MHZ band. BTRC offered them to convert into GSM by spending USD 200 million.
However, they didn‟t take this seriously. As a result, their numbers of consumers felled
consecutively. With that their revenue decreased to 267.64 crore taka in the year 2012. In a nut
shell from their inception in 1996 till 2011 everything was perfect for the brand but to their very
misfortune, sales and subscriptions started to fall after that.

7|Page
Why did Citycell fail?
Reluctant to adapt technologies in time:

When customers were attracted to the new technology, adopting GSM, Citycell was still
satisfied with its CDMA technology. BTRC offered them with good opportunity. Even many
researchers, consultant and news media suggests them to convert into GSM but Citycell didn‟t
pay attention to that.

Disinclination to the endorsement of 3G network:

In 2013 BTRC allowed Citycell to bid for the advent of 3G network. But Citycell showed
unwillingness to that as well. They don‟t even realize that 3g technology was going to make an
revolutionary change in telecommunication industry.

Lack of prudence and proper leadership:

In 2010 when Mehbub chowdhury joined as the director of the company, the company was at its
peak at the beginning. But after that they failed badly because of their lack of proper leadership.
If he had taken proper decisions at that time, they may be the best leading company in current
time.

Not acknowledging customers need and demands:

Citycell focused on the high-end customers only. Their call rates and packages were too much
expensive comparative to the others. They didn‟t understand the customer and market demands.
As a result, they started losing their valuable customers.

Network problem:

City cell refused to go in GSM technology. As they were using 800MHZ band there was some
network problems. Customers were facing problems using Citycell.

8|Page
Contradiction between RIM and SIM:

When Citycell was only focused into CDMA, the customers had to use the RIM card, while
others operator were providing SIM card, which was very useful than to RIM card. So people
were attracted to the other GSM providing Telecommunication Company.

Lack of strategic decisions:

The pioneer company mislead because of their lack of proper strategic decisions. They didn‟t go
with the trend, as a result they fall apart from the market.

Didn’t take proper advantages of opportunities:

SingTel, one of the biggest companies gave Citycell financial and technological support. But
Citycell was not able to take advantage of that opportunity.

Mismanagement:

There was lack of communication between the employees and with the customers as well in the
company. So they didn‟t know about the market demand. They failed to keep pace with other
companies.

Shortage of Capital:

For their limited CDMA services, customers were attracted to other operators, and as they stared
losing the customers their revenue decreased. As they had to face with the bank debts, investors
lose interest and there was a shortage of capital. So they didn‟t run their business properly.

Segmented Service:

They only targeted the high-end customers with the package „Alap Classic”, which was one of
their biggest mistakes. They need to target the whole market, not underestimating others.

Insufficient Marketing Strategy:

Researchers, consultants, news providers suggest Citycell to take initiative steps. However,
Citycell ignored them all and there was insufficient marketing strategy.

9|Page
High call rate:

Citycell‟s call rate was high at that time comparatively. Other operators were offering cheap call
rate. As a result, consumers were attracted to the others.

Illegal VOIP involvement:

Citycell fined 150 crore taka for VOIP involvements. They were already in debt and government
also tried to stopped their activities. It was an addition to accelerate that process.

Lost investors:

They lost their investors, because all their bad reputations and other failures. So investors
stopped investing in Citycell.

Bank debts:

In 2016 Citycell‟s debt was 477.5 crore taka. 29th of august government gave permission to them
to pay their dues (electricity bill, advertisement bill, other debts from banks)
in two installments, and after that they can start their activities. But they can‟t pay that due to
lack of capital and investors. So as a result, 20th November government stopped their activities
permanently.

What could have been done to prevent this failure?

 When GSM and 3G technologies were incentivizing users with media, web browsing and
conference of high Internet speed, Citycell CDMA handsets weren‟t even accomplished
with Smart features. When Citycell had the most market share than all other Telco
companies in the local market, they could‟ve bid for the 3G networks and later on
switched to GSM technology from CDMA.
 Because of having less frequency and bandwidth, which used to cause network issues,
Citycell phones were also not convenient to use in remote areas of the country. Citycell
could‟ve invested more money to construct adequate numbers of towers with an
appropriate spectrum so that remote parts of the country could also comfortably use
Citycell handsets.

10 | P a g e
  When BTRC conducted an official raid in Citycell Head-office at Pacific Center in
Mohakhali, they discovered the operator‟s illegal involvement in VoIP. The operator was
fined about Tk.150 Crore for that which could easily be evitable if they wouldn‟t have
got themselves engaged with illegal VoIP or international call termination.
 They should have done a proper market research to forecast about the coming future.
 When there was proper opportunity with the collaboration of SingTel they must have
used the opportunity. By using their financial and technical technologies.
 They should have researched on the market properly to know the need and demand of the
customers.
 Moreover an organization is always needed a efficient leader who can take proper
decisions. If Mr. Mehbub Chowdhury was capable of adaptability and decision-making in
proper time, Citycell might be the one of the strongest leading telecom company.

Lesson learned:

- An organization is always has to do the market research to know the reality.

- They should launch their product according to the market demand.
- Must have used the opportunities in time.
- Should accept the technology and the technology in trend within the proper time.
- No need to do any illegal actions.
- All institution must have a qualified and experienced leader, who can take proper
decisions in time and make proper marketing strategy.
- They should cooperate with all the business parties to maintain a proper management.
- Should launch product not only for some segmented customers, but for everyone.
- Should maintain government‟s rules, regulation and indications.

11 | P a g e
Conclusion:
The flourishment of any industry requires combined effort and co-operation from several parties.
It is worth mentioning that Citycell was unsuccessful in having the contemporary market insights
and was shortsighted to not being able to leverage the global value of SingTel Telecom
Company. If only they could‟ve taken the right decision at the right time and bring advancement
to their technologies, this trailblazer Telecom Company wouldn‟t have to be out of business this
abruptly.

References:

https://gaznobay.com/the-rise-fall-of-the-telecom-trailblazer-company-citycell

https://banglagolpo9.blogspot.com/2018/07/the-reasons-behind-citycells-
failure.html?fbclid=IwAR1LfSJTcBtsfXkgdXi-
xClhFlO_Xbf4xqsrHtT2w6gkBZu7ra0065JbRPY

https://bdnews24.com/business/2016/08/03/bangladeshs-oldest-mobile-phone-operator-citycell-
in-doldrums-for-strategic-mistakes-say-experts

https://pdfslide.net/documents/term-paper-on-citycell.html

https://www.assignmentpoint.com/science/eee/citycell.html

https://www.youtube.com/watch?v=3koFSAw6s-4

https://www.thedailystar.net/business/citycell-switched-1302028

12 | P a g e