GP fears slower mobile phone growth due to high SIM tax

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M Azizur Rahman
The country's largest mobile phone operator GrameenPhone feared a slower growth as high government taxes on connection and existing tariff rates have become big barriers to expansion into the rural areas, its chief executive said Monday.
"The current growth in mobile phone penetration in Bangladesh is excellent. But it might face a setback if the mobile phone operators fail to expand their clientele in the rural areas profitably," GrameenPhone CEO Anders Jensen told the FE Monday.
The mobile phone subscriptions in Bangladesh is set to reach 50 million mark by 2008 up by 45 per cent from 34.37 million from the previous year, he said.
But to maintain the growth rate the operators must have to provide mobile phones to the poor villagers in affordable prices while ensuring a minimum of profit, Jensen said.
"We are not willing to fail in our efforts to expand the mobile phone clientele in the remote areas as most of the Bangladesh's people resides in the rural villages. We are moving ahead with several specific plans to tap the rural markets," he said.
The GrameenPhone was the pioneer to provide mobile phones for the rural people under its 'village phone' in a limited scale.
But to ensure mobile phones to the tens of millions of poor villagers the government should come forward in support of the operators, he said.
"The current margin on call rates need to be adjusted and a reduction or limiting of taxes on subscribers' identity module (SIM) cards is required," he added.
Under the existing rules set by the Bangladesh Telecommunications Regulatory Commission (BTRC), the operators are bound to charge call rate between the margin of Tk 0.25 and Tk 2.0 per minute from the customers.
Besides, the government collects a one-time tax of Tk 800 from the operator for every SIM card it sells. The operators usually subsidise the tax due mostly to the intense price war in the market.
The number of the GrameenPhone's subscribers reached a total of 18 million on Monday, up from 16.8 million at the end of 2007 and 10.8 million in December 2006.
"Eleven years of operation is not a long time. But it is quite significant for Bangladesh's telecommunication sector," the GrameenPhone CEO said on the eve of 11 years of its operation in the country.
To commemorate its 11th year of operation GrameenPhone on March 26 has launched a special tariff rate of Tk 0.25 per minute for all of its 'djuice' and 'smile' subscribers.
"So far we could mange astonishing achievement as we were on our drives to provide best services to our customers expanding excellent networks across the country," Anders said, summing up the reason behind the company's success.
The company has invested Tk 110 billion to build network infrastructure, of which Tk 35.5 billion was invested during 2007 alone.
The CEO said he hoped the company would float shares soon after approval from the shareholders
The management and adviser of GrameenPhone have already recommended floatation of the company's Initial Public Offering (IPO) in the Bangladesh's growing capital market.
The amount of IPO floatation and its timing will be decided by the shareholders, he added.
GrameenPhone is a GSM-based mobile phone company in Bangladesh, with 62 per cent owned by Norweigian telecom company Telenor and 38 per cent by Grameen Telecom.