Global mobile companies would not have invested tens of thousands of crores of taka in Bangladesh, one of the fastest growing telecom markets, had the country not offered free spectrum 15 years back, said a top official. "Nobody wants to pour in money if there is no business case," said Raihan Shamsi, chief financial officer of Grameenphone.
"Our garments industry has blossomed because the government patronised it with right fiscal policies," he told The Daily Star recently. His comments come as the country's four major mobile operators -- Grameenphone, Banglalink, Robi and Citycell -- face high fees to renew their 2G licences and spectrum.
The 2G licences of the four operators, which make up over 90 percent of the country's over 7 crore subscriber base, will expire in November. Shamsi said the 2G renewal fees and astronomically high price of spectrum allocation proposed by the regulator are unheard of in the world and make the telecom business in Bangladesh uncertain.
"Bangladesh is one of the poorest countries in the world, where taxes are the highest but mobile tariff is one of the lowest. If our upfront fee is so high, investors will be discouraged. I will tell the government -- 'Please do not kill the goose'."
Bangladesh Telecommunication Regulatory Commission (BTRC) maintains that it fixes such fees as the operators got the spectrum free 15 years back. However, Shamsi said, "Bangladesh was not a favourite pick for a new business venture 15 years back. Nobody would have invested in the country without incentives like low licensing fees. It has also happened to the garments industry."
"If we had high licence fees and spectrum charges at that time, Bangladesh would not have the industry it has today," he said, adding that as of 2009, Grameenphone reinvested 80 percent of its profits in Bangladesh for expansion.
He said the 2G licence renewal guidelines have created panic among shareholders. "For years, shareholders only thought of reinvesting their profits in the country so that the business expands and serves more customers. But the 2G licence renewal signals have spread panic among the shareholders. As a result, the shareholders have declared high dividends to make returns on their investment."
"I believe the operators and the regulators will be on a common platform when it comes to licence renewal and spectrum pricing, to secure the best interest of the general people, especially from the remote and rural areas."
"We are willing to pay any money. But it has to be rational. The authorities should study practices in other countries and then give us a rational framework," Shamsi said.
"We want an investment-friendly regulatory guideline that covers everything. Now our main concern is 2G licence renewal. We need regulatory consistency, as it is a capital intensive industry."
Shamsi said the government has done a good job by appointing international consultants in the 3G technology licensing process. "If the same could be done in case of 2G licence renewal, then there would have been fewer debates, as they could have properly guided us and fixed charges as it should be.”
Just a month into the year, the country's leading mobile operator published its audited annual reports, first by any company, and according to what its officials say, to fulfil its commitments to the shareholders.
"Shareholders need information to decide whether they will buy, sell or retain shares of the company. It also helps new investors to decide whether they will purchase our shares," Shamsi said.
"The faster we can provide this information, the better it is for the shareholders. We closed the audit by one month and completed the audit. It's a great achievement."
"We are the largest company in the country, but we delivered the report first. It is not an easy task. It took a lot of effort -- from within the company, as well as cooperation from the audit firms."
He acknowledged that the operator knew from the very beginning that the fourth quarter would be a daunting challenge. "We knew the securities regulator would not accept any un-audited reports, so we did not set aside anything for December. We concluded auditing after each month."
Grameenphone, the lone listed telecommunications company, made public its audited annual financials on February 7. To get all these done on a tight deadline is challenging, but not impossible, he said.
"Being a part of a global company like Telenor comes here as an advantage. Automation and IT-based accounting and reporting solutions are the absolute essentials for fast processing of huge financial data."
Grameenphone topped the Telenor Group reporting benchmark for its yearly reporting this time, which, Shamsi said, was more challenging and critical than ordinary quarterly reporting.
He said their sincere efforts in preparing a well-audited annual report were manifested when Grameenphone won awards for published accounts from Institute of Chartered Accountants of Bangladesh (ICAB). "We hope to grab more successes in the coming years."
Shamsi, also the deputy chief executive officer, judges 2010 as a year of growth and innovation for Grameenphone, which acquired 67 lakh net subscribers in the year.
"We ended the year with around 3 crore subscriber base, maintaining the market share at 44 percent in the face of fierce competition."
The mobile operator experienced steady growth in voice revenues, with an impressive 64 percent increment in data revenue from previous year.
"It indicates that data is the next growth area. In each quarter of 2010, we surpassed our previous quarter's revenue, reaching a total of Tk 7,473 crore at year-end, up by 14 percent from 2009," he said.
Shamsi said SIM tax continues to be a significant barrier to the industry where operators, for the sake of growth, are subsidising the SIM tax.
The Tk 800 tax on SIM has also eaten away a significant part of profits, he said. "We have always told the government that if they can eliminate the SIM tax, mobile penetration growth will go up dramatically. The mobile industry can develop the government's 'Digital Bangladesh' vision.”
Shamsi said the country's telecom laws have also created uncertainty. "We did not hope that such unfriendly laws would be enacted in a democratic environment. No expert will say it is an investment-friendly regulation. It has included fines to the tune of Tk 300 crore, unheard of in other parts of the world."
Grameenphone is going to organise its second annual general meeting as a listed company on April 19. Shamsi said preparations are going on and hopes to stage the event in line with the regulator's guidelines.
Since inception, Grameenphone has invested nearly Tk 16,000 crore in the country and contributed TK 18,500 crore to the government coffer.
In 2010, Grameenphone invested Tk 846 crore for network quality and data capacity enhancement and modernisation. It contributed Tk 3,715 crore to the national exchequer in the year.
He said the next growth area for the industry would be internet, especially from data traffic. "Growth in this area indicates that Bangladesh is preparing for 3G technology."
News Source: The Daily Star