Subject: Strategic Management

REPORT

ON

ANALYSIS OF NCELL AND NTC

TELECOMMUNICATION COMPANIES

Submitted To:

Prof.Dr.Puskar Bajracharya

Submitted By: 
Birendra Bista
Subani Pant
Rakshya Khanal
Kundan Poudel
MBA 3rd semester

Global College International

Old Baneshwor, Kathmandu
TABLE OF CONTENT

CHAPTER ONE: INTRODUCTION

CHAPTER TWO: MARKET ANALYSIS

CHAPTER THREE: SWOT ANALYSIS

CHAPTER FOUR: MACRO ENVIRONMENT ANALYSIS

CHAPTER FIVE: COMPETITIVE ANALYSIS

 CHAPTER ONE

INTRODUCTION

NTC (Nepal Telecom Corporation)

In Nepal, operating any form of telecommunication service dates back to B.S. 1973. But formally
telecom service was provided mainly after the establishment of MOHAN AKASHWANI in B.S.
2005.Later as per the plan formulated in First National Five year plan (2012-2017),
Telecommunication Department was established in B.S.2016. To modernize the telecommunications
services and to expand the services, during third five-year plan (2023-2028), Telecommunication
Department was converted into Telecommunications Development Board in B.S.2026. After the
enactment of Communications Corporation Act 2028, it was formally established as a fully owned
Government Corporation called Nepal Telecommunications Corporation in B.S. 2032 for the purpose
of providing telecommunications services. After serving the nation for 29 years with great pride and a
sense of accomplishment, Nepal Telecommunication Corporation was transformed into Nepal
Doorsanchar Company Limited (NDCL) from Baisakh 1, 2061. Nepal Doorsanchar Company Limited
is a company registered under the Company Act 2053. However, the company is known to the general
public by the brand name "Nepal Telecom" as its registered trademark. The central office of Nepal
telecom is located at bhadrakali plaza, Kathmandu. It has branches, exchange and other office in 184
locations within the country

Mission:

"Nepal Telecom as a progressive, customer spirited and consumer responsive Entity is committed to
provide nation-wide reliable telecommunication service to serve as an impetus to the social, political
and economic development of the Country"

Vision:

"Vision of Nepal Telecom is to remain a dominant player in telecommunication sector in the Country
while also extending reliable and cost effective services to all"

NCELL

NCELL is the first private operator of mobile communication services in the GSM standard in
Nepal. NCELL was established as Spice Nepal Private Limited in 2004. Its first service was launched
under the Mero Mobile brand on September 17, 2005. Spice Nepal Private Limited was acquired by
TeliaSonera(Swedish Telecommunication company) in October 2008 and the famous Mero Mobile
brand became NCELL. The NCELL brand is committed to bring the people under the common brand
image of the TeliaSonera companies.

TeliaSonera has supported NCELL to continue expanding coverage, enhancing quality and bringing
new, efficient and easy-to-use services to the people of Nepal. NCELL is working towards connecting
everyone in Nepal through NCELL network, providing high quality, modern and cost effective
services and creating value for customers and partners.

NCELL will focus on innovation, raise the standards of the telecommunication services and make the
mobile market more competitive for the benefit of customers. NCELL is committed to for developing
country’s economy and infrastructure, building best-in-class networks and bringing people in the
remotest areas of Nepal within the reach of communication.
On 21 December 2015, TeliaSonera announced its exit from NCELL, selling its 60.4 percent of the
shares to Malaysian telecommunications group Axiata.

Mission:

"To provide network access and telecommunication services"

Vision:

"To contribute to a world with better opportunities"

 CHAPTER TWO

MARKET ANALYSIS

Market Share of Telephone operator

market share
1%

NTC
NCELL
41% STPL
Others
57%

Source:nta.gov.np

S. No. Operators 2075 2076

Bhadra Ashwin Kartik Mangshir Poush Magh Falgun Chaitra Baishakh Jestha Ashad Shrawan

1 NDCL 20,455,618 20,692,554 20,895,107 21,098,085 21,294,789 21,278,167 21,705,374 21,945,807 22,207,809 22,464,465 22,696,248 22,940,593

2 NCELL 16,534,164 16,403,882 16,354,006 16,341,558 16,376,908 16,395,946 16,427,047 16,489,945 16,549,592 16,594,488 16,637,038 16,690,988

Glimpse of telephone subscribers in one year

Source:nta.gov.np

25000000

20000000
SUBSCRIBERS

15000000

10000000 NTC
Column1
5000000

0
Bhadra Ashwin kartik Mangshir Poush Magh
MONTHS
 CHAPTER THREE

SWOT ANALYSIS

SWOT ANALYSIS of NCELL

Strength:

 Strong brand name:

-Strong advertisements and promotions of NCELL are one of its biggest strengths.
-Almost every Nepalese is aware of this brand.
- Especially the NCELL have highlighted the purple color in the market.
- Thus, currently NCELL has become a well established telecommunication organization in
Nepal.
 Strong distribution network:
- NCELL’s Network services are distributed all over Nepal
- More than hundreds of customer care centers
- 3G coverage at 54 major cities in Nepal.
 Human Resource:
- High skilled human resources who are technologically equipped
- More than 500 employees are working at NCELL
 Largest market share:
- Largest telecom service provider (GSM), having 43% market share.
- Has more than 80 lakhs customers.
- Leading ISP in Nepal.
 Product Cost:
- Cheapest SIM cards provided in Nepal.
- Attracting more customers with their product cost.

Weakness:

 High advertising cost:

-Significant increase in the advertising budget.
 Low signal strength:
-Large number of call drops.
-poor quality of connection

Opportunities:

 Large domestic market:

-There is a huge market development opportunity in urban region of Nepal.
-It has only 43% market share which can be expanded for being a market leader.
 Untapped rural areas:
-many rural areas can be benefited through low cost product (SIM cards and other
telecommunication services) of NCELL. Thus, NCELL has the opportunity to expand their
business at a larger rural area.
 Creation of new business opportunities:
- With its entrance in ISP, NCELL has an advantage of expanding its business into other
business ventures as well.
Threats:

 High competition:
-competition from: NTC, UTL, etc
- NTC and NCELL have entered into a business war, as NTC is giving tough competition to
NCELL SIM cards and internet services.
 Customers demand:
-Demand of more quality products and services and features such as high internet up to 4G at
low prices.
 Political issue:
-Recently the government demanded the NCELL Axiata to pay Rs.39.06 billion tax within a
week which could be a major drawback to their company.
 New Entrants:
- Since the market is less exploited and there is a high scope and market untapped, there are
probable chances of new entrants

SWOT ANALYSIS of NTC:

Strength:

 Economies of scale:
-Easier to create economies of scale thereby increasing return on investment.
 Active management team
 Manipulate price:
-NTC has loyal customer base even though the comparative prices are higher for its services,
customers are ready to pay for it.
 Strong brand:
-People have trust and are loyal to the company.
 Sustainable business modeling

Weakness:

 Low signal strength:

-Large number of call drops and low quality of connections.
 Late adoption of new technology:
 High over head cost:
-NTC is compiled with large number of staffs.
-NTC is facing a hard time to recruit and assign the employees at right place at time.
 Low quality customer care service:
-NTC often takes days to cater customer and their needs.
-Branch offices do not give priority for the maintenance of customer satisfaction.

Opportunities:

 Technological advancement:
-The telecom firms can use such technology in their operations to improve the overall
performance and customer satisfaction.
-This provides the firm a competitive advantage in the market.
 Expansion of Territory
 -Still huge amount of people are there who are far from any or some of the
telecommunication services. This is one of NTC’s opportunities to reach the customer and
expand its business.
 Creation of new business opportunities:
-Example: Hydropower, human resource, import and export.

Threats:

 Competition:
-Private telecom services entering the market with new technologies.
 Shrinking economy:
-Due to shrinking economy the new telecom companies are not able to enter the market and
the existing ones are unable to expand.
 Increasing rules and regulations
-Due to the frequent change in the government and change in the rules and regulations,
telecom industry is not able to take risk, explore new technology and market.
 Health related problems-
 According to studies, there are also many health related diseases like cancer which is caused
due to the excessive use of mobile phones.
 CHAPTER FOUR

MACRO ENVIRONMENT ANALYSIS

Macro Environment analysis

In any market or industry competition takes place. NCELL and NTC are the two big companies that
are competing in the telecommunication industry in order to become number one in the field of
telecommunication industry of Nepal. They have been investing in promotional activities to a great
extent in order to attract the customers. NCELL has made almost all the Medias like news publication
companies, FM, TV, various regional Medias as the advertising partner in Nepal. Similarly, NTC as
well use effective means of promotion that has made it the market leader. They sponsor most of the
national and international sports and cultural program. Nepal Telecom use to be one of the leading
government telecommunications in Nepal. The rise of the private telecommunication in Nepalese
market, such as NCELL is now penetrating the market. Somehow they are doing best on their
promotion activities and other internal factors but still they are being affected by the different external
factor. Some of them are listed below

Political /legal analysis

NTA is the regulating body of telecommunication sector in the country. Since the largest
telecommunication house, NTC is state owned body; NTA always makes laws in favor of NTC. Due
to this factor, private sector like NCELL is facing the trouble of game of politics. The most relevant
example is the price factor. Although NCELL is trying to reduce the service tariff, it is unable to
reduce due to the restrictions made by NTA. Apart from that, unclear rules and regulations and the
less reactive bureaucrats is also the political problem for NCELL. For example there was a news
sometime before, due to the unclear government policy, NCELL is forced to keep its highly precious
machines in the duty office Tatopani since 4 months.

Economical analysis

Although the economy in the world is shrinking, but the disposable income of the people in Nepal is
increasing. The inflow of remittance in the country is directly helping in this prospect. The number of
people using the cellular mobile phone is increasing day by day. Furthermore, the inflow of Chinese
mobile phones at the low cost is also helping people to enjoy the services of mobile technology.
Hence in Nepal, the economic environment seems to be favorable.

Socio-Cultural analysis

NTC and NCELL widespread reach will assist in the socio-economic development of the urban as
well as rural areas, as telecommunications is one of the most important infrastructures required for
development. Accordingly in the era of globalization, it is felt that milestones and achievements of the
past are not adequate enough to catch up with the global trend in the development of
telecommunication sector and the growth of telecommunication services in the country will be guided
by Technology, Declining equipment prices, market growth due to increase in standard of life and
finally by healthy competition.

Technological analysis
Technology in the communication sector is a crucial aspect. New technologies are been developing
day by day. Nepal Telecom is also adopting the new technologies to be updated with the trend. The
new services like 4G services are been used by Nepal Telecom after the NCELL has used.

Environment analysis

With the obvious information that our country is very much diversified geographically, it has vast
difference in its tropical points where Kanchan Kali is situated at lowest point of 70 meters above the
sea level and highest point of 8848 meters at Mount Everest.  There is certainly a big problem to build
the towers for network and in the installation of machines to run the service. Due to this hitch,
mountains act as a barrier for smooth flow of radio frequency. Hence, NTC and NCELL has to build
more number of towers to capture further coverage, which directly induces to rise of operating cost.
 CHAPTER FIVE

COMPETITIVE ANALYSIS

Competitive Analysis

The competitive analysis is a statement of the business strategy and how it relates to the competition.
The purpose of the competitive analysis is to determine the strengths and weaknesses of the
competitors within the business organization’s market, strategies that will provide with a distinct
advantage, the barriers that can be developed in order to prevent competition from entering the
market, and any weaknesses that can be exploited within the product development cycle.

Porter’s Five Force Model of competitive analysis

Michael E. Porter of Harvard Business School in 1979 developed the framework through which the
company or industry can analyze its competitive environment. Porter’s five forces model determines
the competitive status with the analysis of five competitive forces which are:  Threats of new entrant,
bargaining power of customers, bargaining power of customers, Threat of substitute and Level of
rivalry. NCELL and NTC competitive analysis is also done by analysis the five force model suggested
by Michael E. Porter.

1. Entry of Competitors:

It represents how easy or difficult is the situation for new entrants to startup the similar company in
the industry. To compete, which barriers do exist, a huge investment is required.

Moreover, there is neck to neck competition between the two major brands (NTC and NCELL), it will
cost very high for new players to gain the attraction of customers. And from the customer view point,
it will cost a lot to switch a brand to another. It will be hassle to change the contact number time and
again. Hence the customers are reluctant to switch to other service providers.

2. Bargaining Power of Buyers:

Bargaining power of buyers refers to the strength of the buyer’s position. In context of the
telecommunication buyers are weak because they do not have significant influence over product and
the price because the customer has only 2 choices either NCELL or NTC. The nearest and largest
competitor NTC is not able to fulfill the customer’s demand. But on the other hand, NCELL is
supplying abundant sim cards. In this sense, the bargaining power of customer is a bit weak.

3. Bargaining Power of Suppliers:

The Suppliers in the telecommunication industry for the mobile operation are the firms manufacturing
and distributing SIM cards, recharge cards, and technologies for activating and providing the service.
NCELL and NT select the suppliers from global bidding process. So supplier bargaining power plays
the less important role and sometimes the availability of suppliers forces the companies to have a
limited choice and act as the strength of the suppliers.

4. Rivalry among the Existing Players:

NTC enjoyed the monopoly power for almost thirty years. But now with gradual entry of few private
sectors, the competition has been intense among them to take over the market. Two big giants in
telecommunication industry in Nepal namely NTC and Ncell are competing with each other with very
severe rivalry in terms of price, product differentiation and promotion. New schemes and features are
added to their services in order to attract and retain the customers and as well as to counter the
promotion strategy of rival company. This can be observe in the case of the reducing cost of
international and national call rates by both of the firms

5. Threat of Substitutes:

The threat of substitute products occurs when the demand of a product is affected by the price or
service provided by the substitute product changes. NTC has a threat of NCELL because of the
cheaper price and easy availability of SIM cards of NCELL and value added services and schemes
like one hour free talk-time, free SMS etc… has attracted the mobile users. But simultaneously, NTC
is coming with the same strategy of NCELL but in more advance way that makes threats to NCELL

Key Success Factor and Ranking(competitive profile matrix)

Network quality, network coverage, new service, infrastructure, aggressive marketing, branding and
employee performance were considered as the key success factor for competitor analysis in this
industry. Weight was assigned on the basis of relative importance of these factors in the industry.
Relative weight of NCELL and NTC.

Key Success Factor Weight NCELL NTC

Rating Weight Rating Weight
1. Network Quality 0.30 7 2.1 6 1.8
2. Network Coverage 0.20 7 1.4 8 1.6
3. New Service 0.20 7 1.4 8 1.6
4. Infrastructure 0.15 7 1.5 8 1.2
development
6. Aggressive Marketing 0.10 9 0.9 7 0.7
7. Branding 0.03 8 0.24 7 0.21
8. Employee performance 0.02 7 0.14 5 0.10
Total 1.00 7.68 7.41

After analyzing above CPM matrix, the mainly competitions in telecommunication industry are NTC
and NCELL. Nepal Telecom is better in network coverage (rating 8 out of 10), new service (rating 7
out of 10), and infrastructure (8 out of 10). NCELL is better in Network quality (7 out of 10),
aggressive marketing (9 out of 10), branding (8 out of 10) and employee performance (7 out of 10).
The overall weight of NCELL is slightly higher than NTC.

Based on the competitor analysis, NCELL has competitive advantage on network quality, aggressive
marketing, branding and rebranding and employee performance. Similarly NTC has competitive
advantage on network coverage, new services and infrastructure development.