Bangladesh Mobile Market Provides Opportunity For Our Company

Why this “basket case” looks like a brilliant investment Bangladesh mobile market provides opportunity for our company
Bangladesh is probably the last place that comes to mind when “sane” investors think of where to put their money.

Because about the only time this country is ever in the news is when half of it is under water during the monsoon floods. Or when it’s being rocked by political protests….

The mainstream media loves focussing on gloom and doom. And that’s why we don’t hear much about Bangladesh these days. Because there has been a huge turnaround for the better in this country.

Its economy has grown by an annual average of 5.7% since 2000. And it’s picking-up speed…

The IMF predicts that it will hit 7% by 2010. And that could continue for the next two decades…

And its share market is one of the best performing in the world over the last year. It’s up by 17% despite the global market turmoil. The FTSE is down by 13% over the period.

The investment opportunities in this country are huge.

And we could soon get a slice of this growth story. Because one company that we are already invested in has plans to invest in one of the most exciting opportunities out there – mobile telecoms.

Lousy politics have held this country back…

When the British withdrew from India in 1947, Bangladesh formed the eastern part of Pakistan. But tensions grew between the Urdu-speaking West of the new country and the Bengali speaking east. So, in 1971, Bengali East Pakistan broke away to become the new country of Bangladesh.

Independence didn’t solve the country’s problems though. Since then Bangladesh has been plagued by coups, industrial and political strikes, and corruption…

The country’s political system has been paralysed for two decades by a bitter feud between the two main political parties. One of them is led by the daughter of the country’s first prime minister. The other by the widow of a former military junta leader.

Neither of them offered much of an alternative to the country’s problems.

After years of political squabbling, yet another chaotic parliamentary election was scheduled for early 2007.

Instead, the country’s president declared a state of emergency and postponed the election. He then installed a caretaker government led by a widely respected technocrat, Dr Fakhruddin Ahmed.

But there has been a dramatic turnaround…

That was probably the best thing to have happened to the country since independence.

Ahmed spent more than 20 years with the World Bank. And he served as Governor of Bangladesh’s Central Bank from 2001 to 2005.The financial reforms he instituted at that time helped stabilise the economy.

Since taking over the government he has begun a huge crackdown on corruption. Some of the country’s leading public figures have been arrested. Including the two feuding female party leaders.

The turnaround has been dramatic. Just two years ago, the BBC described Bangladesh as a potential failed state. Now it’s catching the attention of adventurous investors.

The economy is already growing fast. And that’s despite the inefficient state-owned enterprises, delays in exploiting energy resources, insufficient power supplies and slow implementation of economic reforms.

The economy is already growing fast. And that’s despite the bottlenecks. The country still been slow to exploit its energy resources. That’s led to power shortages.

And it’s been slow to implement economic reforms. There are still plenty of inefficient state-owned enterprises

But the government predicts that the economy will grow by an average 7% each year until 2025.

That sounds ambitious. But the country has huge potential as an energy exporter. This is a potential powerhouse…

Experts believe that the country holds huge natural gas reserves off-shore. Big gas reserves have already been found in the Indian and Burmese territorial waters in the Bay of Bengal. Bangladesh’s territorial waters are sandwiched between them.

So the big international energy companies are moving in. Chevron/Unocal, Total and Cairn Energy are in there. So are the Chinese and Koreans.

In January the government put 28 gas exploration blocks up for offer. Now it looks set to offer seven of those to US company ConocoPhillips and one to London-listed Tullow Oil.

There is plenty more to come from this country on the energy front.

And Bangladesh also has about two billion tonnes of high-quality coal. I have talked about why coal is a good investment in this newsletter before. Demand for the black stuff is rising fast. And so are prices.

But the Chinese are the only foreigners with significant coal operations in the country right now.

That probably won’t come as a surprise to you as a PH reader. We’ve seen how the Chinese have become masters at spotting opportunities where most investors fear to tread.

Right now though, economic growth is being driven by garment exports and Bangladeshis working abroad. Bangladeshi worker are vital to the Gulf economies. And they keep Malaysia’s factories going. And of course, you’ll find them in just about every curry house kitchen here in the UK as well…

They’re a big part of the economy. In 2005-2006 alone they sent home about $4.8 billion.

Add in the country’s potential as an energy exporter and the government’s growth targets look realistic…

The country could be set for a two-decade boom.

A backdoor play on this exciting economy

I have been looking hard for ways to buy into Bangladesh’s turnaround. Because the best time to get in on an opportunity like this is before mainstream investors catch-on. That positions you to ride the upside once the big money begins to come in.

But the options are still limited.

So our company’s plan to move into the mobile telephony market is brilliant news.

You see, the country’s fixed-line network is an absolute joke. There is less than one line for every hundred people.

So you see the same thing here that you see in other developing countries. People turn to mobile phone networks for a quick connection. And it’s definitely not too late to ride this trend.

Bangladesh has a population of 154 million. But it only has about 44 million mobile phone subscribers. That’s a penetration rate of only 25 per cent.

This is still a poor country with low average monthly income but the potential here is huge. And foreign investors have recognised that.

The country has six mobile operators. And the biggest of them, Grameenphone now has 20.30 million subscribers. It is majority-owned by Norway’s Telenor.

The second biggest mobile operator Banglalink, is owned by the Egyptian telecoms giant, Orascom. And the third biggest, Aktel, is owned by Telekom Malaysia. Each of the big three has more than seven millions customers.

The locally-owned mobile telecoms firms lag behind. They don’t have the skills and resources to compete with the international players.

But our company already has experience operating mobile networks in the developing world. It is the biggest player in Russia. And it operates in smaller ex-Soviet countries as well. It’s starting-up operations in India. It now plans to enter China…

So Bangladesh is a natural fit into its regional expansion strategy.

Of course, nothing is a done deal yet. The company has announced plans to enter the market. And it may buy one of the local players. That would give us a backdoor entry into this growth story.

In the meantime, we continue to look for other ways in.

A key frontier market…

There is obviously a lot more to this country than floods, strikes and good food. In fact, Bangladesh is definitely one of the most exciting of the frontier markets.

And democracy hasn’t been put on the back-burner either. Parliamentary elections are scheduled for this December.

Henry Kissinger once dismissed this country as a basket case. It could turn out to be a big profit opportunity for us though.

But Bangladesh is just one of the frontier markets that Profit Hunter readers are invested in. These are the smaller, less developed, emerging markets. Places that investors are just beginning to look at…

And we have found profit opportunities in some very unlikely places… In fact, one of the very biggest of them lies in another region that was condemned as a basket case for decades. Right now though, it’s become the world’s latest economic hotspot. This is an incredible opportunity and you can read all about it here.

Regards,

Manraaj Singh
Editor
Profit Hunter P.S. If you enjoyed this article then we encourage you to sign up for Profit Hunter. Track down exciting opportunities in the worlds’ emerging markets and always stay ahead of the curve.

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Bangladesh Mobile Market Provides Opportunity For Our Company

Why This "Basket Case" Looks Like A Brilliant Investment