Comparison between the previous and current method of copex distribution and optimization of Robi Axiata Limited
AuthorSarah Sarwar, Sarwat
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RobiAxiata Limited is the third largest telecommunication service provider in Bangladesh and, over time, it is steadily increasing its customer base and number of subscribers. In order to do so, Robi has to constantly increase its investment prospects to get an ideal return on invested capital. The decision to invest and which areas would provide the greatest return and least risk is crucial and must be made with care. So, Robi has to constantly analyze its potential and in which investment areas it is wise to deploy its Capital Expenditures (CAPEX) Previously, the system of CAPEX distribution lay solely in the control of the Market Operations and Technology. Market Operations would routinely send monthly demand forecast to the Technology division. The Technology department would then assess the areas where new technology is required or a new BTS implementation is required to send a budget requirement form to the Integrated Planning department of the Finance division. The finance division would then send the required CAPEX. The CAPEX deployed to these areas would be done without any intervention from the Finance department and there would be no financial calculations conducted, such as calculating the Net Present Value (NPV) or the Internal Rate of Return (IRR) of these investment prospects. Thus, there was no way to calculate the required rate of return (RRR) of these projects and whether they will generate a net profit anytime soon. As a result, it was seen that, despite the large amounts of CAPEX deployed in these areas, there weren’t any profits being accumulated and the CAPEX was being tied down in loss generating investments.