GP to take up tax issues with government

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A Z M Anas
Cell phone behemoth Grameen Phone (GP) has sounded a note of dismay over some budgetary proposals that could deliver a blow to the country's fast-developing telecom sub-sector.
"A few tax measures relating to the operations of cell phone companies seem to be disappointing," Arif Al Islam, GP's chief financial officer, said Monday in an interview.
The national budget for the fiscal 2007-08 has proposed to impose a 45 per cent corporate tax exclusively on mobile phone companies. However, the rate will be reduced to 35 per cent, provided the cell phone service providers are listed with the stock exchanges.
In his budget speech, finance and planning adviser Mirza Azizul Islam has also proposed to impose 60 per cent taxes on SIM cards.
The GP executive noted that his company would take up the issue of proposed taxes on the cell phone operators with the government shortly.
"This (cell phone industry) is perhaps the only industry which is highly-taxed. For every Tk 100 we earn, we pay Tk 42 as taxes," Islam said.
"We're still assessing the potential impact of the proposed budgetary measures on us. And we look forward to taking up the issue with the government side," he told newsmen at his office in Gulshan.
At 14 per cent tele-density, the country's mobile phone market is growing at a faster pace. Studies say, the number of cell phone users will hit a 50 million mark by 2009 before being slowed down in 2010.
An estimated 22 million people have access to telephones, of which 13 million are the subscribers of the GP, which saw an exponential growth of 140 per cent last year.
The Grameen, a subsidiary of Norwegian Telenor, pumped nearly Tk 67 billion into the country's booming telecom industry between 1997 and 2006, according to figures available with the company.
The company's investments totalled Tk 21.66 billion in 2006, up by Tk 15.66 billion over the year before.
Although he was cagey about the size of potential investment this year, Islam said his company looks to invest more.
"Our investments will certainly go up this year," he pointed out.
Islam, a fellow of the UK's Chartered Certified Accountants, insisted if the government cut back on SIM and corporate taxes, it would get higher revenues, while the users would benefit from the reduced tariffs.
He, however, welcomed the proposed budget for having some people-focussed features.
"There're quite a positive things in the proposed budget. We appreciate the budget's positive aspects in the context of Bangladeshi people," Islam said, but declined to comment on the budgetary matters further.
In an hour-long interview, the GP executive also dwelt on the company's plan to be listed with the Dhaka Stock Exchange (DSE), saying "it's a matter of taking the matter forward."
He said the GP wants to get the facility of voice over internet protocol (VoIP) or internet telephony in order to serve an estimated 4.0 million overseas Bangladeshis.
"You'll see a dramatic change in international calls once the VoIP is given the due legal coverage," his colleague Syed Yamin Bakht said as he supplemented the response to the controversial issue.
Asked if he foresaw the merger and acquisition in the cell phone services industry, the GP executive said it remains a question whether there is enough breathing space for more than six players.
"In neighbouring countries, the number of mobile operators was reduced through merger and acquisition among the existing players," he said, citing the example of Malaysia.
Islam landed a job at GP back in 2000 and was appointed as its finance director last year. He has over five years of public practice experience in the United Kingdom with a range of experience in audit, taxation and financial consultancy.