Heavy tax burden impeding growth of telecom industry

The government should look to rationalise the current 'high' corporate tax on the mobile operators in order to foster digitisation in Bangladesh, said a top official of a leading mobile phone operator.
"Currently, we are running our operations in a highly competitive market carrying a heavy tax burden," said Ritesh Kumar Singh, Chief Commercial Officer (CCO) of Banglalink, in an exclusive interview with the FE.
"Also, the price of spectrum in the country is one of highest in the world," he added.
Presently, mobile phone operators in the country have to pay 40 per cent corporate tax in case they are listed with the stock exchange, while it is 45 per cent for the non-listed ones.
Such a heavy tax burden is 'impeding the growth of the telecom industry by affecting the proper utilisation of the revenues earned by the telecom operators', observed the Banglalink official.
"Since entering the Bangladesh market, Banglalink has invested over Tk 23,000 crore (Tk 230 billion) and paid Tk 24,000 crore (240 billion) in taxes," Mr Ritesh said.
"If the tax is brought down to a reasonable level, we will be able to provide better services to customers along with contributing more significantly to the GDP of the country," he added.
The Banglalink CCO also noted that the import duties on handsets are also currently high in Bangladesh, which is impeding the adoption of 4G technology in the country.
Import duty on mobile handsets now stands at over 31 per cent while the penetration of smartphones is only about 35 per cent, according to industry insiders.
"The penetration of 4G-enabled handsets is quite low, especially in the rural and suburban areas, due to such high import duty on mobile handsets," Mr Ritesh said.
"Therefore, the handset import duties should also be reviewed, so the devices can be brought to the customer at a minimum price to ensure faster adoption of 3G and 4G."
Banglalink started its operation in Bangladesh back in 2005. As of October this year, the total number of its subscribers stood at 33.8 million, accounting for 21.6 per cent of the country's total subscriber base.
Back in February this year, Banglalink doubled its spectrum holding by acquiring additional 5 MHz spectrum in 2100 MHz Band and 5.6 MHz spectrum in 1800 MHz Band.
"We have invested around Tk 30 billion in buying the spectrum and now we have the highest spectrum per customer," Mr Ritesh said.
"This would mean that we can now provide better quality data services as well as voice service."
The Banglalink high official also noted that the acquiring of additional spectrum was also quite timely, as it came just a few months before the launching of 4G in the country.
"The launching of 4G was the biggest accomplishment of Banglalink this year," he said.
"We have successfully rolled out the service in all the major districts and divisional headquarters, and are currently in the process of bringing every corner of the country under our strong 4G network."
Recently, the country's telecom regulator has published an SMP guideline with a view to 'restricting monopoly in the industry'.
Referring to this, Mr Ritesh said that such regulatory interventions can play a vital role in ensuring a level-playing field for all the operators.
"If implemented properly, SMP regulations will give a new impetus to the telecom industry by encouraging a fair competition among the operators," he said.
Looking back at the outgoing year of 2018, Mr Ritesh termed it a period of turnaround for Banglalink.
"According to the Q3 report, our service revenue increased by 1.8 per cent quarter on quarter while data revenue increased by 11.9 per cent year on year," he said.
"Most importantly, Banglalink's customer-base grew by 2.8 per cent year on year and 1.0 per cent quarter on quarter due to the stronger dual carrier network."
"Overall, we went through a turnaround phase throughout 2018, and hope to accelerate the growth rate in the upcoming year providing better services to customers," said Mr Ritesh.
Recently, Banglalink also launched two different programmes in partnership with two global tech giants Facebook and Google.
"The programme launched in collaboration with Facebook will train 20,000 Banglalink retailers and 4,500 dedicated promoters on providing customers with instructions on basic internet use," said the Banglalink CCO.
"Furthermore, we teamed up with Google with a view to easing job-seekers' access to employment opportunities and professional development resources available on 'Kormo', a job and career development app developed inside of Google's Area 120 group".
Mr Ritesh, who has worked with various telecom giants across the Asian region over the years, also noted that customers in Bangladesh are highly price sensitive.
"In my opinion, price-sensitivity of the customers is the most notable aspect of Bangladesh's telecom industry, which compels the telecom operators to compete with one another hard for providing services at the lowest prices," he noted.
"The average revenue per user procured by the operators in the country is one of the lowest in the world," he added.
"The existing circumstances might be very challenging for the telecom operators; but it should be kept in mind that with over 150 million mobile subscribers, Bangladesh is one of the most promising telecom markets in the world," he observed.
"The way people of this country are adapting to the digital mode of life is really remarkable."
"If the telecom operators can cater to the demands of customers by providing innovative digital services, the telecom industry will continue to flourish in the days to come," said the Banglalink CCO.

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