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Bangladesh Telecommunications Report Q3 2010

Bangladesh Telecommunications Report Q3 2010

Table of Contents

Management Report
Published: June 2010
Pages: 81
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 353.33  Buy Now!
Research from: Business Monitor International
Sector: Networks & Infrastructure

Following the publication of data by all key mobile network operators in Bangladesh, BMI is now able to offer a more complete picture regarding the development of the telecoms industry. At the end of 2009, there were a total of 55.017mn subscribers, following 9.846mn net additions in the year, which was slightly down from the 10.017mn net additions in 2008. This decline in growth between 2009 and 2008, despite penetration rates in 2009 at just 38% has been the result of the government’s SIM taxation. To alleviate the burden to customers of the SIM tax, operators have absorbed the additional cost in an effort to ensure that growth of their subscriber bases increases. Following the publication of data by all key mobile network operators in Bangladesh, BMI is now able to offer a more complete picture regarding the development of the telecoms industry. At the end of 2009, there were a total of 55.017mn subscribers, following 9.846mn net additions in the year, which was slightly down from the 10.017mn net additions in 2008. This decline in growth between 2009 and 2008, despite penetration rates in 2009 at just 38% has been the result of the government’s SIM taxation. To alleviate the burden to customers of the SIM tax, operators have absorbed the additional cost in an effort to ensure that growth of their subscriber bases increases.

That said, operators are not in a strong position to take on additional taxation costs, given that they have strong prepaid bases and therefore lower ARPUs. The ability to fund network upgrades and expansions from their own resources has therefore been diminished and so for the most part, we have seen the introduction of IPOs. Grameenphone was among the first, followed by Banglalink, while a more recent announcement in April 2010, revealed that Teletalk, the smallest operator, is planning a public flotation of 25% of the equity. Next to IPOs, funding has also come from loans and bonds. Banglalink raised BDT7.07bn (US$101.95mn) through the issuance of a five-year senior secured bond in March 2010, which will be used to expand its network into rural areas and improve the quality of its services. Year-end figures for blended ARPUs by the three largest operators show a decline over 2009. The market average ARPU reached US$2.97, which was down by 2.9% in the year, and is expected to continue falling during 2010, according to BMI forecasts. By the end of 2010, the average ARPU rate is forecast to reach US$2.92 before falling further to US$2.26. The fall in ARPU relates to expectations that the prepaid subscriber base will continue to increase as a proportion of the total, a trend that is encouraged by network expansion into rural markets, where three-quarters of the population reside.

There is talk of 3G licences being awarded in 2010; however, there have yet to be any concrete details to emerge. The government claims it is drafting legislation that would allow it to sell licences via a beauty contest in the near future. Given that Teletalk is owned by the state-owned incumbent fixed-line operator, BMI expects that special consideration may be given to the company when it comes to apportioning licences. This may draw criticism from the country's larger players, even though Teletalk poses little threat.

Meanwhile, the broadband sector is expected to be central in the government’s recently unveiled ambitious long-term project aimed at transforming the country into a fully digital society by 2021 through a massive rehabilitation of its ageing telecommunications infrastructure. At the heart of the project is a commitment to introduce new or rehabilitated fibre-optic networks. Joint ventures between the public and private sectors are to be encouraged to finance the plan.

The ambition is to eliminate poverty and corruption from Bangladesh through the unification and standardisation of the country's diverse broadband networks, resulting in lower operating costs. This would help to make universal broadband services affordable for most Bangladeshis as well as speed up the process of government decision-making and planning.

Although we welcome any attempts to boost broadband service availability in Bangladesh, we believe that the cost of even basic services will remain beyond the reach of many rural and low-income inhabitants for many years to come. This means that the initiative may not have an immediately significant impact on public communications services.

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