Telecommunication industry is highly capital intensive, on top of which huge tax burden remains a barrier to ensuring a good return to shareholders, said the head of Robi Axiata.
In an interview with The FE, Robi Chief Executive Officer Rajeev Sethi said mobile network operators were required to increase investment every year from the previous year to stay competitive in the market.
"To take care of that capital expenditure, and to provide a decent return to the shareholders, we are not where we should be.
"You'd be surprised to know that for every Taka a customer pays, roughly around 55 -56 per cent goes to the government."
Against this backdrop, the smaller a player is in the industry the greater negative impact it endures.
Mr Sethi, who has been leading Robi since 2022, earlier worked as managing director and CEO of Grameenphone in Bangladesh. He has extensive experience working in the telecom sector in India and Myanmar.
He said Robi was confident about future profitability, which was why it had decided to pay investors more in cash dividends for 2023 than the profit it earned in the year.
The operator expects a significant profit growth over the span of next three to four years, added Mr Sethi.
Robi recorded an annual profit growth of 74.3 per cent year-on-year to reach earnings of Tk 0.61 per share or Tk 3.21 billion in 2023.
The telecom operator recommended 10 per cent cash dividends on its face value of Tk 10 per share for the year, exceeding what it paid -- 7 per cent-- for 2022. It provided 5 per cent cash dividends for 2021.
"Our dividend policy says that we should be giving an increased return as we move forward."
Bangladesh is a "pretty interesting place" to do business for telecom service providers for its geographical location, population density, and the size of young population, said the Robi chief.
Three private and one state-owned operators are good to create healthy market competition and for profitability and sustainability.
"If you have too many players, then nobody makes enough money to be able to invest in the networks and whatever is required to offer quality services to customers."
Mr Sethi said the regulator had been playing its due role but there needed some reforms.
According to him, the telecom industry is too fragmented; it has been broken down into small components to be navigated by different players.
"We need to have not only very good radio equipment at the tower, but also the ability to carry the traffic back to our data centres, but the link is missing."
The dependency on the third party impacts quality, lamented Mr Sethi.
According to him, telecom operators should be allowed to build infrastructure, especially of optical fiber to offer quality services.
Mobile network operators used to build their own network of optical fiber before Nationwide Telecommunications Transmission Network (NTTN) came into being around 15 years back.
The Bangladesh Telecommunication Regulatory Commission issued licences for developing, building, operating, and maintaining optical fiber network all over the country, known as NTTN, to prevent duplication of network, reduce wastage of national resources, and establish a common and affordable national telecommunication infrastructure for operators, according to NTTN licensing guidelines. Currently, there are three NTTN operators -- Summit Communications Limited, Fiber @ Home Ltd, and Bahon Limited.
Mr Sethi also spoke of SMP (significant market player) restrictions, which, according to him, have not been enforced fully.
"It's not about a player A or a B or a C, this [putting restrictions] is the right thing to do for the industry because this industry will require multiple strong players."
If the operators are unable to compete, then mobile network users will be the sufferers. That will ultimately come in the way of fulfilling the dream of smart Bangladesh.
"So, we have to look at the SMP regulations in that light."
Regarding complaints about service quality, Mr Sethi said telecommunication services are better in Bangladesh than in the neighbouring country India.
On deployment of 5G network, the Robi chief said he did not see the necessity of the network standards to be elevated to that level yet.
He said 5G network should be put in place "once the traditional 4G spectrum has been completely utilized and there's a demand beyond that".
"For a developing country like Bangladesh, we cannot waste any resources," said Mr Sethi, adding that Robi's $100 million investment in 5G network was a wrong move.
About subsidiary companies formed under Robi, he said it was permissible. "We'll create more value for customers."
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