Exploring capital expenditure planning process and tracking
in Robi Axiata Limited
Robi Axiata is the second largest mobile phone operator in Bangladesh in terms of revenue and over time it is steadily increasing the number of its subscribers. In order to do so, Robi is consistently increasing investment to get an ideal return from invested capital. In which areas investment should be made requires great carefulness. Based on the analysis Integrated Planning Finance or Oikotan team with the collaboration of Market Operation and Technology team deploy Capital Expenditures (CAPEX) for Robi Axiata Limited. Before the formation of Oikotan, capex distribution process was different from now which can be found in this report briefly. Oikotan is formed as control policy. Under this policy Market Operation or Technology solely cannot make any decision to set up any BTS site or do capital expenditure without the valuation done by IPF or Oikotan team. Valuations include Net Present Value (NPV), Internal Rate of Return (IRR) and qualitative issues (strategic, operational continuity) etc. which was not done earlier by finance team. Therefore, CAPEX deployed in some areas, where no profit being accumulated and the CAPEX was being tied down in loss generating project. My experience of being intern in Oikotan or IPF team enlightened me as how with small units of employee hard tasks can be solved wisely. This has also taught me that a right decision can be really beneficial for a company’s survival in the market as a successful brand. After the changes made on capex distribution system everything is tracked properly. From the very beginning of budget requirement generation to business plan or case execution Oikotan plays the most vital role to ensure all the things are going through the right track with efficient tracking.
Robi Axiata Limited is one of the leading mobile telecom operators in Bangladesh. It is the second largest mobile phone operator in Bangladesh in terms of revenue as of March 2015. Robi network provides nationwide coverage to nearly 99% of the population with more than 11,200 BTS. Robi Axiata Limited, formerly known as AKTEL, is a joint venture between Axiata Group Berhad of Malaysia (91.59%) and NTT DoCoMo Inc. of Japan (8.41%). With its strong network and seamless connectivity, Robi is empowering more than 26 million people across the country.
Robi, the most dynamic and rapidly-growing telecommunications operator in Bangladesh, is developing its services to meet increasing customer needs – ranging from voice and high speed Internet services to tailor-made telecommunications solutions. It was formerly known as Telekom Malaysia International (Bangladesh) which commenced operations in Bangladesh in 1997 with the brand name “AKTEL”. On 28 March 2010, the service name was rebranded as „Robi‟ which means Sun in Bengali.
Robi draws from the international expertise of Axiata and NTT DoCoMo Inc. Services support 2G and 3.5G voice, 3.5G Data/GPRS/EDGE service with high speed internet connectivity. The company has the widest International Roaming coverage in Bangladesh connecting 600 operators across more than 200 countries. Its GSM service is based on a robust network architecture and cutting edge technology. Robi‟s customer centric solution includes value added services (VAS), quality customer care, digital network security and flexible tariffs.
Robi is committed to provide best data and voice quality and will continue to ensure that its customers are able to enjoy the best experience through leading edge technology and innovative products and services. As a subsidiary of Axiata Berhad Malaysia , Robi draws on leading edge technology to provide its service in Bangladesh, covering almost 100% of the population. Since its inception in 1996, Axiata Group and its predecessor Telekom Malaysia has invested around BDT 11,000 crore in the form of equity till 2012. Moreover the company has contributed almost BDT 10,000 crore to the Bangladesh Exchequer in the same period.
Finance: Finance division is the heart of any business as it is responsible for budgeting. Robi Axiata Limited‟s finance division is accountable for financing of different proposals, business partnering as well as new product development. Finance division insures financial accounting, maintaining compliances etc. Corporate finance and supply chain management is another vital part of this division.
Market Operation: Assuring monthly targeted sales set by top management is the responsibility of Market operation division. The division works to build up brand name, make effective market communication, sales of corporate & business products maintaining customer center etc. This division participates in making pricing strategy for new products.
Robi Axiata Limited : Capital expenditure planning & tracking
Human Resources (People & Corporate): Robi is one of the top telecom operators in Bangladesh with over 2000 employees. People & Corporate or Human resource division mainly work for the recruitment of new people, providing training for existing employees, distribute salary to employees account, motivation creation among employees, organizational development and maintaining good relations among all the employees as well.
Corporate Strategy: This division is responsible for the planning of organizational growth. Main responsibilities of this division includes managing business strategy, new business development, business planning (BP) for projects, performance management, risk management, quality management etc. The division is divided into two departments.
- Corporate Management & Strategy Planning (CMSP) &
- New Business Development.
Corporate Regulatory Affairs & Legal: This division is also known as CRL. It look after approval of all the CSR activities, analysis of making sponsorship or event management, maintaining relations with media, managing legal issues with govt. & so on.
Administration: Administration division is there to control the business facility design, management of overall employee, security staffs & personnel for safety & maintenance issue. In addition, maintaining alternative ways for emergency reason is also a part of administrative job.
Technology: IT solution for all the divisions & departments of Robi is provided by Technology. Major tasks of this division is to maintain regional IT operation along with establishment of BTS, technology compliance, central network monitoring, providing essential hardware & software support to employees, customer centres etc. Controlling intradivision & intra-organization communication is also an important task of this division.
Internal Audit: Internal audit division of Robi is accountable to ensure worth of operations, verifying or investigating fraudulent activities, financial reports reliability finding, safe guarding of assets in accordance with laws & regulations.
Enterprise Program Management: EPMO or Enterprise program management works closely with the CXOs for the development of different management programs. Corporate Strategy division and EPMO together define business goals, objectives and policies for business. Ethics office deals with complaints and infrastructure division deals with the establishments of Robi and their maintenance.
It requires enough time to go through all the parts of finance division deeply which is not possible in this short period of time. I got the opportunity to work under one of the most important wings of finance division which was called Integrated Planning Finance (Oikotan/IPF). Finance division consists of the followingSupply
To keep accuracy of product, contract, pricing and invoicing information SCM or Supply Chain Management works closely with suppliers and customers. As a result improve operations and reduce costs. Communicates about the objectives and needs to managers & key personnel in procurement, logistics & distribution; to reduce costs and achieve utmost efficiency negotiate contracts with parties; generate exact routing information to ensure delivery time; precisely calculate total supply chain costs of proposed new projects etc.
Financial Accounting Management and Reporting
Financial management and accounting support services of Robi are given by this division. This consists of assistance with account structure, fund control, cost center, general ledger, variance analysis, transfer and correction, cost allocation, interagency transaction, regulatory and supervision of financial reports as well as accounts etc.
Revenue Assurance division looks after on a series of activities that are useful to make sure that the business process, the organizational formation, controls and the information system related to revenue cycle (pricing, billing, consumption and collections) works together efficiently and effectively to protect revenues and maximize the margin.
Financial Compliance, Insurance and Process Management
Financial Compliance, Insurance and Process Management support in the supervision of all aspect including: inherent risk assessment, conflict of interest, developing and implementing testing programs to evaluate the satisfactoriness of Robi policies and procedures, performing compliance testing and assisting with the development of compliance training programs etc.
Integrated planning division is liable to ensure that appropriate planning systems and processes are in a good harmony. It involves integration of all resourcing, scheduling, contracting, technical logistical support, manpower, adherence to rules & regulation, risk assessment etc. To uphold company’s policies and procedures develop and maintain all departments and projects financial information through the collaboration with each other. It also oversees operation of the company’s Project Management Office. This include assistance or training for project managers and making sure information about staff links to the company’s ERP system etc.
Media buying department facilitate and execute Robi Media Buying operations and media related outdoor/ event activities in order to help establish and maintain an effective media buying process for Robi. They are responsible for monitoring media budget allocation & identification of budget variance, bridge with business partnering for all related operations; assist in negotiation with different media partners (Electronic, Press and Web) in order to generate savings; coordinate in negotiating fee/commission structure for all creative and media agencies and liaise with relevant departments /stakeholders to review agreement with creative and media agencies; supervise execution of all media and media related outdoor procurement activities etc.
The key works of corporate finance division are as follows:
- Financial planning, management and control with the purpose of ensuring effective and efficient financial management of the Company.
- Through efficient policy and financial strategy ensure smooth taxation management.
- Build up affiliation with various regulatory and financial institutions to facilitate necessary accomplishments.
- To facilitate the revenue growths ensure revenue recognitions and payment settlement timely.
- Make sure effective import process that enables the company execution of expansion program timely.
- Make confirm that the vendor payment is done effectively and efficiently.
- Generate required return from business plan or projects, exchange rate fixing, wacc calculation etc.
This report describes Robi Axiata Limited’s capital expenditure planning process, execution & tracking of it. BTS investment decision which is a capital expenditure is a major decision for any telecom industry. This decision need to be made more wisely with proper analysis. A long process involves in this decision making. Because of any emergency need predetermined budget sometimes required to change though yearly budget is prepared in advance for investment. New investment occurs mainly for two reasons- to improve present network quality or to increase the coverage area. Whatever the reason is the investment decision cannot be approved without a proper investigation, survey and analysis. Market Operation,
Finance and Technology work hard to come up with the ultimate decision. After the formation of Oikotan team more emphasis is given to the financial analysis part which was missing earlier. As a result some decisions were made to deploy capex which returned to Robi as a loss project later though it was seemed as a profitable project. For better efficiency Oikotan do the planning of budget requirement, distribution, business plan execution etc.
Because of the tracking done by Oikotan time to time how much budget is approved for a business case, how much of the amount is utilized, remaining amount is clearly visible now. Before the business case approval prioritization is done by Oikotan through valuation analysis which includes NPV, IRR and qualitative issues (strategic, operational continuity) etc. This valuation ranks business cases according to the return on investment of Robi and based on that result priority is given for quick execution. The importance of this team can be realized from the description given above. The growth of a company depends on the return generated from the investment and in Robi Oikotan plays this role successfully.
Description of the project:
Exploring Robi Axiata Limited‟s capital expenditure planning process & tracking through SAP operation.
- To get an idea about capital expenditure structure of Robi Axiata Limited.
- To know how to prioritize budget requirement, approval and allocation.
- To know the effectiveness of budget distribution policy.
- To know how to track capital expenditure through SAP (ERP Software) operation.
- To identify the factors affecting business plan execution.
- To know about the lease line process for settlement of projects/sites.
- To know how capital/ operating expenditure affect revenue and profitability of the company.
- To relate the theoretical learning with the real life situation (Business plan execution).
- Practical observation from revenue analysis, business plan execution and status tracking.
- Study of capital expenditure process of Robi Axiata Limited.
- Most of the data were collected through formal interview of the company Officials includes –
- Whole process of generating budget requirement, prioritization & allocation from S. M. Ziyad Ahmed (General Manager, Integrated planning finance).
- Lease line process and business plan execution from Mahfuzul Huq (Manager, Integrated planning finance).
- Purchase requisition and Purchase order tracking through SAP operation from Aporajita Roy Chowdhury (Specialist, Integrated planning finance).
- Budget distribution process from Shafiq Karim (Service provider, Integrated planning finance).
- Projected sites status & site wise profitability from Ishtiaque Uddin Chowdhury (General Manager, Integrated planning finance).
Investment in BTS:
Base Transceiver Station which is also called BTS is the main part of any telecommunication infrastructure. The improved and better quality of network service is ensured by the increasing number of BTS in the surrounding areas. So, the investment decision in BTS gets the highest priority in the case of expanding decision made by the company. The number of customers and revenue pattern of any telecom company will vary depending on investment decisions. Robi Axiata Limited also makes this decision in such way that can make sure its growth in terms of revenue pattern an number of customer as well.
Major parts of a BTS site are:
BTS- Cannot be shared with other operators
Tower, Shelter, Battery, Generator, Rectifier etc. – Can be shared with others if needed. In every year budget for the BTS investment in the upcoming year is fixed. In the upcoming year the budget amount will be more than the previous year if Robi wants to extend the network more aggressively or else it will keep on an average almost similar amount for the BTS investment.
Two major reasons behind BTS investment are:
- increase the new area of network coverage
- increase the capacity of network coverage
Increased demand for the development of network coverage is generally recognized by the Market Operation (MO) Division. They find out weak network coverage from their surveys reflecting customer satisfaction, complains from regional offices and customers etc. MO division concerns the technical department about the increasing number of complains if it is beyond then certain limit and then asks to take required steps. Technical department itself identifies the demand for improving the capacity of the current network coverage. The planning department of technical division goes for an analysis after the demand for new BTS is generated and makes a proposal to the Finance transformation Office (FTO) for the approval of the project or BTS considering the cost and revenue from that site.
Factors that influence investment decision are:
Proposed area for BTS investment may have vast number of people and also may seem worthwhile for future profit generating from that area. If there are large numbers of potential customers who are out of network in the proposed BTS location, then the investment decision should be made. Age group of the customers is also a significant factor. Another major criterion for evaluation for investment of new BTS is Per capita income of the people. The proposed area for BTS may have great number of target customers but the problem arises when it is found that, they are not capable to spend a portion of their income for mobile usage. This is where the investment decision will be a loss project. If there are large number of schools, colleges, universities, offices, shopping malls, masques etc. then the place will need a strong network. As the number of users is huge, the investment decision should be made. It can accelerate the number of new users if satisfactory network and services are provided in that region. If the situation is not like this then alternate decision can be taken for a small number of users. If there are few number of competitors in that proposed area then to grab the potential market considering the other factors investment decision should be taken.
Providing better service and network is the effective way to grab the competitor‟s customers as well as market share. If the competition is high there then this investment decision can be taken. Before making any investment decision problems should be identified and according to the problems steps should be taken. Verifying existing network quality is another important factor to determine whether increase of the current BTS capacity is needed or not.
After considering the above stated criteria, analysis of all the direct, indirect cost, revenue, tax etc. related to the project are gone through to find out the Net Present Value and Internal Rate of Return. This valuation gives idea of profitability of the project. The projects are approved only when results are satisfactory and further process is done. Otherwise the project is terminated and asked to take alternate decision there except BTS investment. It does mean nothing to engage such a big amount in a project if the project ultimately fails to generate profit, which is the prior requirement of investment.
Alternatives of BTS investment
When the investment decision for new BTS does not seem profitable but still development of network condition required there to overcome the threat of losing customers‟ alternate decisions can be made –
IBS: IBS means Inside Building Solution. It is also known as micro BTS. Investment in IBS can be an alternate solution at fewer amounts. IBS has the power to increase the network capacity. If we compare the power is lower than a BTS but higher than a Repeater. This solution can expand the network capacity at Indoor and in some cases at outdoor also.
Repeater: Repeater is the alternate choice of investing in BTS. The capability of a repeater to extend the network is lower than BTS and IBS. At indoor it only can make sure the strong network support. The capacity of repeater is limited to a floor of a building sometimes. Only the network problems inside a building can be solved by this. It grabs the signal from the nearby BTS and passes it to the other BTS where network condition is weak.
Site sharing: Site sharing can be the choice when it is not possible to set up a whole BTS site for the improvement of network. To install a BTS an operator can take the rent of other operator‟s BTS site. Where network is weak and whole site investment is not profitable there site sharing can be solution to solve the problem at lower investment. Leased line can be taken for this purpose.
Distribution of CAPEX:
Capital Expenditure which is also called CAPEX are expenditures that are build to create future benefit for the company. Capital expenditure is made when a business spends money to buy fixed assets including equipment or to add value to a fixed asset with a useful life.
Mostly it is spent on buying/ importing of equipment, physical goods, high-powered electrical towers that can bring future return for a company.
According to S. M. Ziyad Ahmed (General Manager, IPF) Robi Axiata Limited locks down the CAPEX needed for the next year on each year. Budgetary data is collected from all departments regarding various projects, investments and business cases. The Integrated
Planning department is responsible for the CAPEX distribution. Along with the budgetary requests this team also receives a large number of business proposals from various departments and external bodies. These business proposals/ cases may be on installing a new
BTS tower in a rural area or buying laptops for official use. Integrated Planning team is now considering on company‟s 3G rollout plan because of market demand.
The decision to distribute CAPEX was before made by the Market Operations and Technology Department. It is very essential for a company to make sure that, the capital is distributed to business cases where there is potential return. Earlier market operations department was involved in collecting information regarding the market demand of the particular area then the radio and network planning department of the technology division conducted their own methods of calculation on it. After identifying areas where there is necessity for BTS implementation or maintenance of the capital equipment they would send these requests for approval directly to the SCM board & SCM transfer those budgetary demands to Integrated Planning team. The Integrated Planning team would then deploy the necessary CAPEX to those areas.
Throughout the whole decision-making, there is no consideration of the Profitability of the ventures and whether there would be any probable returns from the approved business cases.
Finance division also had no LOA (Limit of Authority) to approve or reject business cases. They were approved by the technology division with final approval of SCM or BOD. There were no financial calculations made such as the NPV/ Payback period/ IRR valuation. Later it was seen that most of the CAPEX deployed was involved in areas where there was no return or profit. Unnecessary BTS implementation in different areas created huge expense and maintenance costs that had to be minimized.
Current CAPEX Optimization system by (Oikotan):
Experience from previous system of CAPEX distribution led the Integrated Planning team to change the whole pattern of decision-making and data analyzing. Oikotan/ IPF is a new system of capital distribution that was introduced to promote more involvement in decisionmaking processes and fill up the loop holes. In Oikotan CAPEX distribution consists of three teams: Marketing team, Finance team and Technology team.
These teams coordinate with each other and with other departments to bring in data that would help in generating more return for the company. The investment prospects considered such as 3G rollout plan and implementation of new BTS in areas to build more capacity of existing BTS. Functions of the three teams are described below:
(1) Market Operations team collects data for the Integrated Planning team. This is a collection of data from the field level operations of Robi Axiata Limited. The data collected is through extensive market research and analysis. Data is also collected from customer feedback including corporate clients. All the data collected are analyzed for future data forecast.
Market Operations team then conducts a demand forecast based on this data. The demand forecast is created to identify which areas of Robi Axiata have profit potential. So, the information gathered from Market Operations is passed through the Oikotan verification and a series of tests is conducted by which the less profitable plans are identified.
(2) In Oikotan the data need to pass a series of filtering processes. First comes calculating the breakeven point of these business cases. This is the most primary essential level of filtering conducted by Oikotan. Along with the demand forecast, market operations team also sends a revenue forecast of the areas. It identifies the amount of revenue that would be generated from these areas if network capacity was increased or modernized. BEP is then compared to the standard BEP created by Robi Axiata. Cases which seems less profitable are kept for further evaluation (qualitative) to make sure whether these have potential to become an emerging market for Robi or are capable of growing in the future and earning revenue.
(3) Once the BEP of the investment prospects are calculated and the most potential of the cases are identified from the rest, to make sure that the market potential of these areas is not over-valued, the surrounding areas and districts are also taken into consideration. It is assumed that the benefit of increasing network in one area will also affect its neighboring areas. That‟s why the revenue pattern, demand, minutes per unit of call and network coverage of the neighboring areas are taken into consideration and used as parameters. This is to make sure that the demand and revenue forecast was not over-valued.
(4) The cases are then compared to standard parameters of Robi Axiata Limited to verify the level of network capacity needed in each area. The parameters divide the areas into different stages of development. By comparing the areas with the parameters and highlighting the level of BTS availability and network coverage, these stages highlight areas where there is need for network connectivity, where the growth prospect for Robi is high and where markets are saturated and where markets are still untapped. In this way, the areas where there is scope for return are segmented and categorized and sent to the Finance and Technology section for further evaluation on their part. The finance team investigates how the information gathered by the marketing team can be financed properly and whether it is feasible to distribute CAPEX in the forecasted areas.
Under the previous system of CAPEX distribution, the finance division was rarely involved in decision-making. The data received from Market Operations was not properly verified and Technology division solely decided on the CAPEX distribution. As a result, the ventures were done without verification of the market information and a large amount of capital investment was tied down. Oikotan is an effort to monitor and control the CAPEX.
The Finance section of Oikotan follows a more process-oriented approach for CAPEX distribution-
(1) The finance team evaluates the business cases and divides them into two parts-The Immediate Budget and the Non-Immediate Budget. In the immediate budget, the cases which are thought to provide immediate benefit and return are placed here. These are cases regarding strategically important prospects such as where the area has prospect for growth and there is scope to increase network capacity.
(2) Once the costs and added benefits of these cases are conducted, the finance team focuses on the valuation of these cases. They calculate which business case would give the most return once CAPEX is deployed. This is done through a series of different valuation methods.
The primary method used is the payback period. In the payback period, the finance team calculates the period of time needed for the return on an investment to pay back the original amount of invested capital.
(3) The finance team conducts the NPV method of valuation over a period of ten years. This is a more accurate measure of efficiency than the payback period as the time value of money is also included. The business cases with high levels of NPV are given more preference and are immediately carried out for approval. Some decisions are qualitative and conducted with a managerial decision. These are business cases which may not provide any immediate, monetary expansion but have potential to provide non-monetary or intangible benefits.
(4) Finally, the IRR method is used to further gauge the internal rate of return on a project. The internal rate of return (IRR) is used by the Finance team to measure the rate of profitability of the investment. The business cases where the IRR is higher than the cost of capital or equal to it are immediately carried out, given more priority than lower ones.
(5) Once the projects that are projected with the highest rate of return, NPV and IRR, the finance team focuses on cases where the NPV was lower than expected. Cases with low NPVs are not immediately rejected as they are checked to evaluate whether here is scope for further growth. They might provide future value in the long-run.
(6) Once the business cases that require immediate budgeting are distributed and carried out, the finance team then diverts its attention to the non-immediate budget. They may not provide any return in the short run but these business cases may have a deep value which is realizable in the future or long run of the business. While conducting analysis for the nonimmediate budget and secondary items, often the finance team encounters the same budget requirement from different departments. In that case, extensive budget summaries are conducted and a critical cross evaluation is conducted where a series of questions and negotiations are done regarding how much both the departments really need and a list of all their costs and expenses. Finally, reached to solution where both parties agree to a negotiated amount. All this has to be done before the Integrated Planning team sends a request for CAPEX which is sent to the CEO in the beginning of every year. The Technology team of Oikotan is involved in analyzing the requirements needed to improve the mobile network capacity of Robi Axiata in different areas of the country. This is done by validating and verifying the data sent from the Marketing and Finance team. The Technology team then coordinates with the Radio Networking Department of the Technology division to collect and analyze the various projects they have outlined for the year. For the data received from the Marketing and Finance team, the technology team gathers information regarding the cost of the capital equipment of the projects approved. This includes the cost of maintenance and the technical feasibility of the projects. This information is passed back to the finance team for further approval of the costs. Once approved, it is sent to the Radio and Networking Department to seek their approval.
Oikotan then prioritizes the various business cases After verifying whether the BTS are RTT (Rooftop Tower), RTP (Rooftop Pole), GFT (Greenfield Tower) or IBS (In-Build System), the technology team makes a list of all the expenses incurred. This includes the cost of electricity, the cost of maintenance of BTS and generator, cost of rent and, if the BTS site is shared with other telecommunication networks, then the cost of leasing. The technology team then passes the collected and evaluated data to the finance team for prioritization. The Finance team prioritizes the business cases received from the technology team by calculating their NPV and IRR as mentioned above. The projects that create the highest NPV and IRR are given top priority and the information is passed back to the technology team. Then Integrated Planning team sends a request for approval to the SCM board. The SCM board has the power to make the final decision for approval.
Oikotan is an essential and strategically important tool for Robi. While the old system was still implemented, the company was investing in projects which did not bring any return.
These projects were thought to be profitable initially, but due to lack of information from the key departments, the true state of these projects has been found to be over-valued. Thus, there was no return gained from these project and most of the capital was tied down when they could have been invested somewhere more lucrative. This process allows Robi to invest in more profitable business projects. One of the main benefits attained from Oikotan is that this system is not solely dependent on market operations for information regarding customers and area subscribers. With this new system of distribution, it allows more informed decisionmaking and ideas about the market and the technology available to Robi. It can also help the company understand which aspects of the market are growing and make qualitative decisions.
Using this, Robi can invest in sound projects that would benefit the company by increasing its company revenue and growth through an increased return on capital investments. Robi‟s open working policy creates a fluid channel of communication between all the departments and territories of Robi. Moreover, it allows all departments to share their ideas and discuss their projects so that the Integrated Planning department can come to a more informed decision regarding where best to deploy capital. Oikotan helps to maintain organizational agility and strengthen divisional collaborations.
Benefits Achieved by Oikotan-
- Investment is aligned with customer requirement and business strategy.
- Improves growth prospect of the company.
- Improved quality in investments and technology.
- Organization is agile and divisional collaborations are improved.
- Process Oriented Approach.
Robi Axiata Limited typically prefers OPEX to CAPEX. Rather than buying equipments or any assets, the company prefers to lease it from a vendor for few years. Buying of equipment is a capital expense. Deduction of expenses reduces income tax which is levied on net income. Privilege lays here. Time value of money is another advantage. On the other hand, operating expenses are tax deductible, which is not possible in capital expenditure and capital expenditure also needs huge amount of money at a time. This is why Robi prefers to lease rather than purchase.
From a financial analysis perspective, a business should at least maintain its historical level of capital expenditures. Otherwise, it will be suspected that management is not adequately reinvesting in the organization, which will eventually lead to a decline in the business.
In SAP which is used by Robi as an enterprise resource planning software there are record every of every budget issued and distributed against business cases. According to Aporajita Roy Chowdhury (Specialist, IPF) & Shafiq Karim (Service provider, IPF) each cases is recorded under an identification number. Under this number there are serials of numbers showing the purpose with budget allocated and distributed amount of that business case. In every business case there is a WBS number (Work breakdown structure) & in WBS no. there are several work orders which is generated at different time for that business case. For example, when a business case or project consists of 3G rollout plan, modernization of sites, laptop purchasing etc. at different time no. of work orders are issued for battery, generator, space, transmission equipment, air condition and many others as these things are needed to be import from outside of the country. When the user of any business case asks for budget of specific amount with WBS no. it is easily tracked through SAP as if there is approval for the budget, how much consumed, remaining amount, additional budget requirement approval from concerned authorities etc. When they are tracking this number they are getting day wise budget distributed amount and from this information they can compare it with their projection that how much budget is distributed from the projected amount. It also reflects the execution of business case.
Lease line process:
Generally lease line capacity is decided during Business Planning (BP). Purchase requisition is raised after finalization of actual measurement depends upon availability, incremental rate & duration etc. upon agreed by lessor or 3rd party service provider. User raises requirements of lease line capacity as per business need/ demand. Integrated planning finance (IPF) team evaluates the requirements in regard to strategies as well as operational needs and agrees on it. If business case is required according to limits of authority (LOA), user department facilitates partner department to prepare structured business case providing necessary infoemation.IPF team will provide necessary support to BP team regarding pricing information of links. Concerned person of business partner prepare the business case in alignment with complete representation of the requirements. Upon preparation of business case, concerned user follows up with necessary procedure to get approval of business case as per LOA. Once the business case gets approved concerned user raises and releases the PR as per LOA and accordingly notifies IPF. After confirming the requirement and receiving released PR, IPF team checks whether there is any Frame contract (FC) exist or not. If not then issues PO with the help of procurement under the agreement of FC. If further negotiation is required IPF team starts with negotiation plan to bring necessary changes in the contract. If no FC exists, then follow competitive bidding process as per procurement process to select vendor/ lessors. Concerned IPF member compiles and prepares a comparative report based on the technical, commercial offers, physical survey and legal verification. Report is presented to MPT (Head of IPF, Head of transmission planning and representative from SCM) and direction for evaluation is taken from Procurement evaluation committee (PEC). IPF team arranges negotiation with the potential lessors/ service provider. Outcomes of the meeting are documented in the form of Meeting minutes, signed off by the attendees or distributed through e-mail. IPF will finalize the comparative report based on the negotiation. MPT recommends to PEC to award lease lines to selected vendor(s) as per business case after evaluation. If the negotiated rent of capacity exceeds the approved budget, user takes necessary actions to take management approval for additional budget in coordination with relevant business partner through revision/ modification of business case. User prepares procurement approval and obtains approval as per LOA. SCM issues PO with the help of user and IPF team. Then user checks the readiness of lease line and after confirmation lease starts. Necessary payment is made as per invoice and payment process.
Recommendations on observation:
Robi Axiata Limited is trying to be more efficient by learning from experiences, create brand image and improving its CAPEX distribution process to make better investment decisions. In this short period of my internship, though it is not possible to diagnose the effect and system of Oikotan completely but I made few recommendations that I would suggest are:
(i) When a user comes with business plan the main thing focused by Oikotan in the analysis part is the quantitative figures which are only the measure of efficiency. So emphases on qualitative issue like strategic planning; operational continuity can be given to ensure investment is aligned with Robi‟s vision, mission and goal.
(ii) If the location selected for the BTS site is faced with serious problem while taking permission to take the lease (Govt. land) drop the plan for investing in that area doing nothing. Use of IBS or Repeater there may solve the network problem to some extent.
(iii) Robi can give more emphasis on own fiber line or microwave transmission while rolling out a new site rather than depending on leased line. This is because sometimes vendors face with legal issue or line remains down for significant times which are major cause of losing actual as well as potential customers.
(iv) SAP (ERP) software used by Robi is not updated from time to time because of the extra cost pressure. But up gradation of SAP can make the work easier and clearly visible. Proper training of employees on SAP is also essential to be considered. Robi can engage more employees in small teams to accelerate the efficiency level.
To wrap up it can be said that, Robi Axiata Limited is working hard to grab the Bangladeshi mobile market successfully and by this time they have gained second position in terms of revenue as well. Before taking the investment decision for roll out plan Robi is following a sound and in depth investigation. Team coordination in Robi is clearly visible which helps to come out with better and profitable outcomes. Moreover, Robi Axiata Limited has every potential for a bright future and Oikotan will help to reduce loss potentials for Robi and increase its number of subscribers. Axiata is climbing to the top position not for that the world can see it, but to serve the world with pride.