Why Citycell Failed: From Pioneer to Failure

why citycell failed

Citycell was the first and oldest mobile operator in Bangladesh. It was the only mobile operator to use CDMA and EVDO technology. As of 2011, Citycell’s total number of subscribers was 1.9 million. However Citycell’s subscriber base gradually kept declining and at one point they were forced to shut down. But what was the actual reason for the failure of one of the pioneers of the mobile operator sector in Bangladesh? And why were they forced to stop their services?

In 1989, Bangladesh Telecom Limited (BTL) was licensed for cellular, paging, and other wireless communication networks. Hutchison Bangladesh Telecom Limited (HBTL) was established in 1990 as a joint venture between Hutchison Whampoa Limited and Bangladesh Telecom Limited. In March of that year, the Bangladesh Telegraph and Telephone Board (BTTB) issued HBTL licenses for cellular, paging, and wireless communication. In 1993, HBTL started its commercial operation in Dhaka using AMPS mobile technology. At that time, it was the second cellular operator in South Asia after Celltell in Sri Lanka. Nearing the end of the year, Pacific Motors bought 50% shares of BTL. In 1996, HBTL was renamed Pacific Bangladesh Telecom Limited (PBTL). The same year, the “Citycell Digital” brand was launched its cellular service. This is how Citycell started its journey in the telecom industry. Initially, they came up with some postpaid packages for High-End users. Citycell later launched its prepaid service.

However, at first, the call rate of Citycell was very high. They used to charge 10 BDT per minute for calls. Even customers had to pay for receiving calls. The rate of the incoming call per minute was 8.50 BDT/minute. Back in the time, only Citycell was providing telecom services in Bangladesh. In 1999, they upgraded their AMPS technology to CDMA-1 technology. In June 2005, Asia’s leading communications solution provider PBTL partnered with SingTel. Which helps Citycell to take a stronger position in the telecommunications industry. With financial and technical support from SingTel, Citycell was able to provide innovative products and services to customers at affordable prices. In 2005, they upgraded their CDMA-1 technology to CDMA 1X technology. While other operators were offering their services on GSM technology, Citycell was satisfied with their CDMA.

The main difference between GSM and CMDA is that GSM handsets have SIM card slots, but CDMA has a fixed SIM card number fixed for a handset. That is why one cannot run multiple SIMs on one mobile if they want. Due to this, the number of Citycell users was less than the rest of the operators. Citycell had launched CDMA phones in the market of several well-known brands like Huawei, ZTE, Samsung. Along with these devices the company was able to succeed in attracting customers with several attractive prepaid plans. Notable among these is the Alap Call Me plan that launched in 2005. Credits would be added to an individual’s balance only if that person received a call from another Citycell user through the plan.

Citicell Alap Super Package
Citicell Alap Super Package

That year they came up with another plan called Alap Super. Subscribers to this plan could call other Citycell users for free at Night Hour. One year later, Citycell launched their Hello 0123 plan. Under this plan, users could call a Citycell number free of cost, while charging BDT 1/minute on two selected Citycell numbers. Meanwhile, the company was charging 2 BDT/minute to all Citycell numbers and 3 BDT/minute to any operator. Citycell’s postpaid plan was branded as Citycell One. Postpaid users were getting the benefit of the 30-seconds pulse on 4 FNF numbers. Moreover, at the Dhaka International Trade Fair in 2009, Citycell introduced another postpaid plan called Voice-Data, through which customers could talk to any operator at a very low cost.

In 2010, Mehboob Chowdhury was appointed CEO of Citycell. Before that, he had ten years of experience in the telecom industry. He was the Director of Sales and Marketing at Grameenphone and later worked as the Chief Commercial Officer at Banglalink. Moreover, David Lee wasn’t appointed as the chief operating officer of Citycell, even though he had experience in working for a leading mobile phone operator in Pakistan. By then, citycell had already launched their Internet Dongle in the market under the name Zoom Ultra. Through this, customers could browse the internet on personal computers under prepaid and postpaid plans. At that time Zoom Ultra was providing 512KBPS speed to the customers. In 2011, Citycell reached its highest number of subscribers. The revenue of Citycell in that particular year was 347.02 crore BDT. Until then, almost everything was going well with Citycell. But, then the company started collapsing. Citycell was limited to their CDMA technology in 2012, while others were rushing to GSM technology. Citycell had a 10MHz Spectrum in 600MHz CDMA Band. They needed 1800MHz Band and more 5MHz Spectrum to come to GSM. BTRC offered Citycell to shift from CDMA to GSM technology, which would cost the company 200 million dollars. When it came to moving to Citycell’s GSM, they were very reluctant to shift to the new technology and stayed back with CDMA. As a result, the number of their customers was decreasing day by day. Consequently, in 2012, the revenue of Citycell decreased to Tk 267.64 crore. In 2013, when 3G technology came, Citycell was allowed to bid for 3G services. Again, this time they were not very serious about adopting the new technology.

They failed to realize how 3G service was going to create a revolution in the telecommunication industry. Since then, Citycell has been falling further behind. By 2015, the number of their subscribers had dropped to 7 lakh and their revenue had come down to Tk 134.79 crore. Gradually, investors began to lose interest in Citycell. Lastly, the lack of sufficient investment to run was alarming. Government debts continued to increase. At the same time, Citycell has been burdened with electricity bills, advertising costs, and hundreds of crores more to other banks in the country. In 2016, Citycell’s debts increased to Tk 477.5 crore. On August 29 of that year, the government instructed the company to pay their dues in two installments within two months and allowed them to continue their operations.

But, due to failure to pay the debts on time, Citycell was temporarily shut down on October 20. After paying some of the debts, Citycell went to the Appellate Division with the application and on November 3rd of that year, it was instructed to open the Frequency of the operator immediately, subject to conditions. After two days, the company went to court again without getting the frequency back. Meanwhile, they paid BDT 144 crore of their due payment. After that, even though their frequency was limited, the Appellate Division ordered BTRC to close the frequency again if Citycell did not pay another Tk 100 crore by November 19. But failing to pay, Citycell’s Frequency was shut down again on November 20 and their license was revoked. Until then, SingTel’s share in Citycell was 44.5%, Pacific Motors’ 37.95%, and Far East Telecom’s 17.51%


The revocation of Citycell’s license had a huge impact on the country’s economy, starting with the telecommunications sector. According to Bangladesh Bank, Citycell borrowed about BDT 1,500 crore from various commercial banks and financial institutions. Among them, several banks and financial institutions were the guarantors of BDT 1,200 crore. Since Citycell was in a financial crisis and was unable to repay the loan on time, the banks had to pay the penalty as the guarantor of Citycell’s loan. Among them, AB Bank paid 600 crores, Citybank 145 crores, Prime Bank 25 crores, and several other financial institutions had to pay fines as well. Citycell’s customers have suffered a lot since the license was revoked. Many people faced complications to switch operators because of the biometric registration process. Citycell’s employees were more severely affected. The company had not been paying their employees for more than a year and were frightened by their job security. Many were already laid off due to the company’s weak financials. Before shutting down the operation the company only had about 430 employees and only 2% market share.

It can be said that the reason behind Citycell’s failure was due to strong leadership, customers changing preference, and not being able to adopt new technology timely. With the availability of GSM and 3G technology the demand for media, Web Browsing, Conference Calls were increasing. Citycell wasn’t offering any smart features like this on their smartphones. On the other hand, many network issues occur due to the poor Bandwidth of CDMA technology, so Citycell’s signal reception was weak. Due to these issues, CDMA Technology wasn’t a convenient option for the consumers and they started to switch for other operators. As GSM Technology gained more and more popularity around the world as the standard, it had been too late for Citycell to change their technology. Moreover, their looming debt and dues were piling up that they couldn’t afford the move. CEO Mehbob Chowdhury himself “It was our biggest mistake to move to GSM technology”.

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