12 June 2013

Dr. A. K. M. Saiful Majid

Professor
Institute of Business Administration
University of Dhaka
Dhaka -1000

Dear Sir:

Subject: Report Submission

Here is the report on Enterprise Analysis that you asked us to carry out as a requirement for the course
named Business Strategy (W650). We have decided to work on Qubee, a Wimax based internet service
provider.

We carried out all the report work and finally came up with this report in light of what we have learned
from your lectures during the entire course of this semester. We are grateful to you for giving us the
opportunity to work on this problem. If you have any further query regarding this report, please feel
free to inform us.

Sincerely yours,

Momotaz Mahin Khan 131 46 (D)

Mir Zahidur Reza 160 46 (D)

ACKNOWLEDGEMENT

There are some people who gave us various information and suggestion for preparing our term
paper without whose assistance it could be possible for us to do this report accurately. We
want to thank all of them for their kind support & help.

First of all, we would like to thank Almighty Allah for giving us the strength to prepare
this project properly.

We also like to thank our honorable Sir Dr. A.K.M. Saiful Majid for supporting us to
complete the project.

Thanks to all of our group members for fully participating in making this report.

Special thanks to Abdul Rahman, Executive Officer, Consumer Division. We would like to
show our sincere gratitude to those employees who shared valuable information about
Qubee.

TABLE OF CONTENTS:
Executive summary

Introduction
Origin of the report
Objectives of the report
Methodology
Limitations of the Study
Financial Markets and its Structure ........................................................................................... 5
Money Market ......................................................................................................................... 5
Capital market ........................................................................................................................ 5
Foreign Exchange Market ....................................................................................................... 6
Structure of Financial Sector in Bangladesh........................................................................... 7
An Overview of NBFI Industry in Bangladesh............................................................................ 8
Basic differences between Banks and NBFIs......................................................................... 9
Role of Bangladesh Bank...................................................................................................... 10
The emergence Non-Bank Financial Institutions (NBFIs)...................................................... 12
List of Non-Bank Financial Institutions in Bangladesh......................................................... 13
Brief Introduction of the Financial Institutions in Bangladesh.............................................. 15
Statistics regarding Financial Institutions as of December 2011.......................................... 24
Challenging Issues for Financial Institutions ........................................................................... 25
Banks Entry in Non-Bank Financial Activity........................................................................ 25
Sources of Funds .................................................................................................................. 25
Cost of Funds........................................................................................................................ 27
Investment in High Risk Portfolio.......................................................................................... 28
Product Diversification .......................................................................................................... 29
Competition with Banks........................................................................................................ 29
Lack of Human Resources .................................................................................................... 30

Weak Legal System............................................................................................................... 30

Lack of an established Secondary Market............................................................................ 30
Common Products offered by NBFIs......................................................................................... 31
Industry Analysis ..................................................................................................................... 33
The Industry Life Cycle Model.................................................................................................. 33
Porters Five Forces Model........................................................................................................ 36
Rivalry among Competing Firms........................................................................................... 37
The Competitive Structure ................................................................................................. 37
Demand Conditions........................................................................................................... 39
Exit Barriers ...................................................................................................................... 39
Threat of New Entrants......................................................................................................... 40
Bargaining Power of Buyers ................................................................................................. 40
Bargaining Power of Suppliers.............................................................................................. 41
Threat of Substitute products................................................................................................ 42ii
PESTEL Analysis ...................................................................................................................... 43
Political Situation in Bangladesh and its impact on NBFI..................................................... 43
Political parties.................................................................................................................. 44
Caretaker Government ...................................................................................................... 45
Shahbagh Protest .............................................................................................................. 45
Political Violence and its impact on Non-bank financial institutes .................................... 46
Corruption.......................................................................................................................... 47
Quotes from National Business Leaders regarding present political situation ................. 49
Economic Analysis................................................................................................................ 51
GDP Growth....................................................................................................................... 51
Bangladesh GDP per capita .............................................................................................. 52
Inflation ............................................................................................................................. 54
Foreign reserve.................................................................................................................. 55
Social factors that may affect Non-Bank Financial Institutions............................................ 57
Technological Impact on NBFIs ............................................................................................. 58

Legal Impact on NBFIs.......................................................................................................... 60

Tax Structure..................................................................................................................... 62
Environmental Issues in Financial Industry ......................................................................... 64
Levels of Strategy Making for companies of this industry........................................................ 66
SWOT analysis of Industry:...................................................................................................... 67
Potential Strength.................................................................................................................. 67
Weakness:............................................................................................................................. 67
Potential Market opportunities:............................................................................................. 67
External threats: ................................................................................................................... 67
Other Strategic Issues............................................................................................................... 68
Alliances:............................................................................................................................... 68
Mergers and Acquisition:....................................................................................................... 68
Integration- Vertical/Horizontal ............................................................................................ 69
OFFENSIVE AND DEFENSIVE STRATEGIES......................................................................... 69
Brick-and-Click Strategies................................................................................................. 70
First-MOVER ADVANTAGES ................................................................................................. 70
Ethical Issues........................................................................................................................ 72
Recommendations..................................................................................................................... 74
Conclusion ................................................................................................................................ 78
Bibliography ............................................................................................................................. 79
Appendix.......................................................................................................................................
Interview Questionnaire............................................................................................................

Introduction:

Augere Wireless Broadband Bangladesh Limited, also known as QUBEE, is Bangladesh's largest
telecommunication company in international long distance, enterprise data and internet
services. Part of the QUBEE along with its global subsidiaries is a leading global provider of the
new world of communications. With a reported target of 6 cities and 40 towns, QUBEE has
major plans for the expansion of its WIMAX services in Bangladesh. We conduct sales-support
strategy for WiMAX.

Qubee is a new and exciting company from Augere providing fast and reliable broadband
internet services to residential and business customers across Bangladesh. Qubee believes that
everyone should be able to enjoy trouble-free access to the internet and the world of
opportunities that it brings. Their aim is to make a magical internet experience available to
everyone, every day, without exception.

Qubee is the creation of a group of global telecoms professionals who saw that a new
technology called WiMAX could really change the internet experience for millions of people
worldwide. WiMAX means that people dont need telephone lines or cable to get connected: all
peoples need is to live close enough to a transmitter to receive the internet wirelessly. Qubee
is busy building a network of base stations to offer their brand of internet access right across
Bangladesh. Theyre starting in Dhaka, but quickly plan to do the same in cities nationwide.
Qubee has gathered a highly talented team right here in Bangladesh to build a company thats
determined to improve the internet experience for millions of people not just here, but
ultimately all over the world.

Origin of the report

This industry report on Qubee is prepared for Dr. A. K. M. Saiful Majid, honorable Professor of
Institute of Business Administration, Dhaka University.

Objectives of the report

Broad Objective:
The report Qubee A WiMAX based Internet Provider has been prepared with a view to
analyzing the growth factors of the Internet service providing industry in Bangladesh and its
performance over the last few years.

Specific Objectives:

To understand the strategic practices of Qubee in Bangladesh

To understand the functioning of WiMAX Providers

To comprehend the learning in the classroom and bridging the gap between real life
situation and theories

Methodology:

The study was conducted using both primary and secondary data. Primary data were collected
from interviewing different personnel from Qubee. The entire workforce serving in Qubee was
population for the study. Secondary data were collected from different sources, journals and
web sites Qubee and Internet based portals.

These issues are mainly concerned with the development of Qubee as well as their role in
strengthening Information sector of Bangladesh. this paper studies the activities of Qubee on
the basis of the secondary data obtained from different sources like Websites, Financial

reports, daily newspapers, etc. We have faced difficulties in analyzing data due to inconsistency
and insufficiency.

Data source:

In our research, we used both primary data and secondary data. So, the sources of data are two
types.

Primary Sources
To conduct the research we have collected the primary data through our talking with
respondent persons.

Secondary Sources
For the organization part of our report we have used the following data sources:

The Websites of different Internet Providers

The Annual Reports of Qubee

Several reports published by different renowned institution like Bangladesh

Telecommunication Company Ltd., Statistical Bureau of Bangladesh etc.

Limitations of the Study

Major limitation of this study is insufficiency of accessible data, the main sources of which are
the annual reports of the competitors. In annual reports, companies usually give stress on the
information that generate affirmative intuition about the company and present the information
in their own way, which may become a chief limitation in illustrating the precise scenario of
authenticity. Moreover, though there has been an ample amount of researches regarding
internet providers, not many references are provided.

Overview of Internet Providers in Bangladesh:

Evolution of Internet Usage:

Starting in the early 1990s, Bangladesh had dialup access to e-mail using the Bulletin Board
Systems (BBSs) of a few local providers, but the number of users did not total more than 500.
Users were charged by the kilobyte and email was transferred from the BBS service providers to
the rest of the world by international dialup using UUCP.

In June 1996 the first VSAT base data circuit in the country was commissioned and the
Bangladesh Telegraph and Telephone Board (BTTB) granted licenses to two Internet Service
Providers (ISPs). In subsequent years more liberal government policies led to a rapid expansion
of the industry, resulting in over 180 registered ISP's by 2005. ISPs are currently regulated by
the Bangladesh Telecommunication Regulatory Commission (BTRC) through the Bangladesh
Telecommunications Act.

In May 2006 Bangladesh inaugurated new submarine optic fiber connectivity as part of the 16
country consortium SEA-ME-WE 4 project. The landing station is in Cox's Bazar, the southern
city near the Bay of Bengal. In July 2008 the Submarine Cable Project was transformed into the
company Bangladesh Submarine Cable Company Limited (BSCCL), which is now responsible for
all services related to the submarine cable.

Between June and August 2012 international Internet service in Bangladesh was slowed
following a cable cut on the eastern leg of the SEA-ME-WE 4 optical fiber cable and the fact that
Bangladesh does not have an alternative submarine cable or other high-speed international
connections. In 2014 the new SEA-ME-WE 5 cable is expected to provide an alternative
operating at 100 Gbit/s, roughly 10 times faster than the current connection.

Users and Usage in Bangladesh:

The number of Internet subscriptions in Bangladesh grew from 186,000 in 2000 to 617,300 in
2009. However, only 0.4% of the population used the Internet in 2009 giving Bangladesh one of
the lowest usage percentages in the world, ahead of only North Korea, Myanmar, and Sierra
Leone. This limited Internet penetration is due to many factors, including: high costs, little local
content, limited or poor service quality, lack of infrastructure with the last mile often limited to
dial-up, too many providers competing in a relatively small market, and low literacy rates.

By 2011 however, the number of Internet users in Bangladesh had seen phenomenal growth of
over 900% bringing the total number of users to 5,501,609 (3.5% of the total population) mainly
due to wide availability of mobile Internet access. In April 2010, Akhtaruzzaman Manju,
president of Internet Service Providers' Association of Bangladesh, said "we've estimated that
nearly 10 million people in the country are using 800,000 Internet connections on sharing
basis", adding the number of Internet users in the country is increasing roughly 15-16 percent a
year. This increased Internet penetration will result in a 2.6 per cent contribution to the
countrys GDP by 2020, while creating 129 thousand more jobs by the same year the research
added.

The main obstacle to using the Internet in Bangladesh is its distribution. The Internet is still an
urban privilege because telephone connections are more concentrated in urban areas,
particularly in and around Dhaka. Mobile operators are providing substantial services in and
outside urban areas using EDGE/GPRS or EVDO.

Service Quality:

The Internets speed in Bangladesh is among the slowest in the world. As of August 2012,
Bangladesh ranked 174th out of 176 countries on the Household Download Index by Net Index.

Internet connectivity with acceptable quality and reliability is generally quite expensive in
Bangladesh. Since connecting to the SEA-ME-WE 4 cable in 2006, the country has seen Internet
bandwidth prices drop significantly. In 2008, the Bangladesh Telecommunication Regulatory
Commission (BTRC) slashed wholesale Internet bandwidth prices drastically, from BDT 80,000
(approximately USD 1,125) per Mbit/s to BDT 18,000 (approximately USD 250) per Mbit/s. In
2009, after complaints that retail prices were still too high for slow, unreliable connections, the
BTRC indicated that they were going to begin monitoring ISPs to ensure that retail prices
reflected the reduced wholesale prices.

The government sees information and communication technologies (ICTs) as a key driver of
socioeconomic development. This is reflected in the government's "Digital Bangladesh" plan as
well as the National Information and Communication Technology Policy. Bangladesh is slowly
moving up in the world-wide ICT rankings, rising from 130th in 2009 to 113th in 2012 in the
"networked readiness index". But, while its ITC ranking has improved, Bangladesh still lags
behind other low-income countries of its stature. Progress is limited due to deficiencies in the
regulatory framework and infrastructure development. And ICT leaders are concerned that the
annual budget does not support the government's ICT goals.

Internet services:

National Internet Exchanges (NIXs) and International Internet Gateways (IIGs)

All ISPs and equivalent service providers in Bangladesh exchange traffic via two systems, the
National Internet Exchange (NIX) and International Internet Gateways (IIGs). The IIGs provide
global Internet connectivity, while all domestic Internet traffic is routed via the NIX to minimize
usage of international bandwidth. The NIX consists of two exchange points known as the
Bangladesh Internet Exchange (BDIX) established in August 2004 and operated by the
Sustainable Development Networking Programme and the Peering Society of Bangladesh and
the Bangladesh Society of Internet Exchange (BSIX) established in May 2004. In June 2012 the

BTRC announced plans to issue an unrestricted number of additional NIX licenses. There are
two IIGs in service operated by, Mango Teleservices Limited and the government owned
Bangladesh Telecommunications Company Limited (BTCL).

There are concerns that, with a limited number of NIX operators, only two IIG operators, and
with BSCCL holding a monopoly as the only operator of the SEA-ME-WE fiber optic cables,
limited competition will keep the cost of raw bandwidth high.

Internet Service Providers (ISPs)

In 2005 there were more than 180 ISPs operating in the country. ISP's are regulated by the
Bangladesh Telecommunication Regulatory Commission (BTRC). In 2011 there were 111
licensed ISPs providing services nationwide and 84 ISPs providing services in the central zone.

Mobile operators

Because fixed line penetration rates are and are expected to remain low, most Bangladeshis'
first experience with the Internet is likely to be via mobile services. An estimated 90% of
Bangladesh's Internet users got their access using mobile services in 2010. Out of the six mobile
operators, one of them Teletalk offers 3G services, others offer EDGE or GPRS GSM Internet
service. The sole CDMA operator, Citycell, offers EVDO.

Broadband

Broadband Internet and e-commerce in Bangladesh is slowly progressing. In 2009 there were
50,000 fixed broadband Internet subscribers. Though broadband Internet access is available,
the charges for high speed connections are higher than in other south Asian countries, though
this is changing. In Bangladesh Broadband is legally defined as 128/128 kbit/s, which is not in

line with the ITU's definition and many broadband Internet services may not be considered true
broadband internationally.

WiMAX:

Three companies, BanglaLion Communications Ltd., Brac Bdmail Network Ltd., and Augere
Wireless Broadband Bangladesh Ltd., won licenses to operate WiMAX in Bangladesh in
September 2008. The three firms purchased the licenses at auction for 2.15 billion BDT (31
million USD) from the Bangladesh Telecommunication Regulatory Commission under an
agreement that pays 27.50% of revenue to the government. Brac Bdmail declined to start the
service. BanglaLion and Augere (branded as Qubee) launched commercial WiMax services by
the end of 2009. From October 2011 Access Telecom (BD) Ltd. and Tackyon started giving fixed
WiMax services to their clients.

Cyber cafs and Local Service Providers (LSPs):

Expensive and slow connections available from individual homes has created a demand for
cyber cafs with higher than average bandwidth. The number of cyber cafs was estimated to
be roughly 800 in 2009, unchanged from 2005. Cyber cafs were first regulated by the BTRC in
2009, but fewer than 150 had obtained the required license by the end of 2011.

Many cyber cafs have expanded as Local Service Providers (LSPs) as a way to make use of their
idle (out of business hours) bandwidth. Because the root problem of scarce bandwidth remains,
LSP subscribers continue to suffer from slow connections and inadequate bandwidth (96-128
kbit/s on average). A general complaint of customers and internet users is that such
subscriptions are good for nothing except for surfing rich-text and images over the web. The
younger internet users in the urban areas have started to familiarize themselves with other
more data demanding internet applications and usage. But, Streaming applications fail to work

over low bandwidth. Games, voice, video-conferencing and the like also suffer from latency
issues. Further, these LSPs are known to forcefully cache web resources (transparent proxies)
and to aggressively block traffic related to the following applications in order to save
bandwidth: Windows update, TeamViewer and similar remote assistance applications, Torrent
trackers and other P2P ports/patterns, voice/video applications which mostly make use of P2P
architecture, online gaming and just about anything else except WWW. Some LSPs generally
block all ports except HTTP/HTTPS. Bandwidth/latency benchmarking sites including
SpeedTest.net are blocked to stop customers from complaining about their share of bandwidth.

Despite these limitations, LSPs seem to do quite well by keeping the majority of the customers
happy with local FTP servers, mostly filled with pirated movies, software, games, TV-series, and
the like.