Bangladesh

Telecommunication
Industry:
A Comprehensive Review

100 .00%

G r o w i n g Te l e d e n s i t y i n
94%
95. 00%

B a n g l a d e s h 88%
90. 00%

85. 00%

83%
78%
76%
80. 00%

75. 00%

70. 00%

2014 2015 2016 2017 2018

The
digitalization
journey changing the
lifestyle of the country people...
 Mohammad Asrarul Haque
Research Analyst
research@eblsecurities.com

THE TELECOM INDUSTRY IN BANGLADESH: A Key Milestones

SUCCESS STORY OF TWO DECADES
The country’s march towards materializing its vision ‘Digital Bangladesh’ has 1989
 License issued to Bangladesh Telecom
brought impressive growth in the telecommunication and information
Limited (CDMA) and Sheba Telecom
technology sector. The country’s active mobile subscriber penetration 1996
reached to 93.4% from meagre 30.6% in 2008. Bangladesh is now the eighth-  License issued to Telecom Malaysia
largest mobile market in the world in terms of unique subscribers and the International Bangladesh and Grameenphone
sector now contributes almost 1.8% of total GDP. Two major telecom service  Bangladesh Telecom Limited rebranded to
Pacific Bangladesh and Citycell brand
offerings are “Voice Calls” and “Internet Data” services. Revenue from voice launched
calls still dominates the industry while contribution from data revenue is 1997
growing exponentially since the launching of 3G in Bangladesh.  Launch of Grameenphone, AKTEL and
Sheba
1999
Despite being the fifth largest market in Asia Pacific region,  Launch of prepaid service
2002
real industry penetration is still half of the country  1 million connections
population implying healthy growth potential 2004
 Launch of state-owned Teletalk
The telecom industry in Bangladesh has scaled up rapidly over past decade
2005
having a total of 157 million active subscription and more than 85 million  Introduction of SIM tax
unique subscribers. Unique subscriber penetration in Bangladesh rose to  Launch of Warid telecom
almost 55% by 2018 from only 1% in 2003 due to rapid adoption of 2010
telecommunication services. The industry has turned out to be fifth largest  Bharti Airtel acquires Warid
 AKTEL rebranded as Robi
market in Asia Pacific Region, according to GSMA.
2011
However, about half of the entire population are yet to be connected with  Renewal of 2G spectrum for 15 years
the mobile telecommunication network, also indicating that there is 2012
enormous room to grow. The real market penetration remained steady in  Teletalk launches first 3G network in
the last three years as mandatory bio-metric SIM reregistration has slowed Bangladesh
2013
down the pace of new customer acquisition.  Grameenphone, Robi, Banglalink and Airtel
Mobile Subscriber Dynamics in Bangladesh launch 3G networks
 100 million connections
Unique Subscriber Count (mn) Unique Subscriber Penetration Rate
120 60.0% 2016
 Merger of Robi and Airtel creates number
100 50.0% two operator by number of connections
80 40.0%  Introduction of biometric SIM registration
2017
60 30.0%  Unique subscriber penetration surpasses 50%
40 20.0% of the population
20 10.0% 2018
 Spectrum auction
0 0.0% 
201…
201…
202…
202…
202…
202…
202…
202…

4G services launched
2016
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

2017

 Introduction of uniform voice tariffs

 Launch of MNP
Source: GSMA Bangladesh Country Report & EBLSL Research

A multi-SIM market with growing subscriber addition

The Bangladesh telecom market is mainly dominated by pre-paid customers and almost 98% of total subscriptions are prepaid,
according to Grameenphone. Though industry penetration based on number of subscription is huge, a large portion of customer
holds more than one subscription at the same time.
Bangladesh Telecom Industry Subscription Industry Subscrition Panetration
(in million) GP Banglalink
180 Robi+ airtel Teletalk
GP Banglalink Robi Airtel Citycell Teletalk
160 Cellular subscribers
140 100.0%
90.0%
120 80.0%
70.0% 88.1% 93.8%
100 83.0%
80
60.0% 75.5% 77.6%
50.0% 43.5%
60 40.0%
30.0% 28.0%
40 20.0% 20.0%
20 10.0%
0.0% 2.3%
0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Source: BTRC & EBLSL Research Source: BTRC & EBLSL Research

1
In 2016, SIM re-registration through the biometric process has been a major development in telecom sector. Due to bio-metric
reregistration of SIMs in 2016, total number of active subscription dropped by 5% during the year as a number of subscribers did
not complete the bio-metric reregistration within stipulated timeframe. In terms of performance, Grameenphone was ahead of
other operators and 97% of its subscribers were re-registered through the bio-metric process. The growth in total number of
subscriptions may slow down in next few years as a result of implementation of MNP service in Bangladesh in the late 2018 but
real industry penetration is expected to continue its steady growth.

Along with stable voice traffic growth, market for mobile internet is enjoying hefty growth driven by
high subscriber addition and increased penetration
Bangladesh has advanced significantly in internet connectivity. However, data penetration is still far below than other countries
in the region. According to GSMA, only around one-in-five Bangladeshi’s are subscribed to mobile internet connection in 2017.
As of December, 2018 there are around 85.6 million mobile internet connection in Bangladesh i.e., 54.5% of mobile users are
now using internet with cellular phones. This significant deviation between mobile data connection penetration and mobile data
user penetration is due to having multiple number of connections by the same users. The total number of Internet Subscribers
has reached 91.348 million at the end of December, 2018. Of the total connections, 93.7% are through the mobile network, 6.3%
through the internet service providers (ISP & PSTN) and only 0.06% through WiMAX that is available in cities. Qubee, Banglalion
Communications and Ollo has been providing WiMAX connection in Bangladesh. Recently, Qubee has suspended its services for
individual clients. Since the launching of 3G, WiMAX service providers are experiencing de-growth in subscription. Active WiMAX
connection fell down from 0.504 million in 2013 to 0.083 million in 2018.

Mobile Data Subscription Trend Mobile Data Consumption (AMBPU)

140 0
GP Robi Banglalink
Mobile Data User % of Industry sub. base 1149
100 100% 120 0

1182
986
90 90%
80 80%
100 0

807 851 949

70 70% 754
60 60%
800

621 660 803

712
50 50% 630
600

734
40 40% 531 684
30 30% 463 580 600
400

523
20 20%
10 10% 364
304
200

0 0%
Sep-16
Nov-16

Sep-17
Nov-17

Sep-18
Nov-18
Mar-16

Jul-16

Mar-17

Jul-17

Mar-18

Jul-18
May-16

May-17

Jan-18

May-18
Jan-16

Jan-17

Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018
Source: BTRC & EBLSL Research *AMBPU=Avg. MB per user per month; Source: Company Disclosures,
Compiled by The Daily Star
Last 5 years CAGR in total number of internet subscribers in Bangladesh was 20.6% and that of mobile internet was 20.1%.
Contribution of data revenue to total revenue of the country’s leading mobile operator GP increased to 18.9% as on 2018 (up to
9 months) compared to meagre 3.4% in the year 2013, reflecting the overall industry scenario. Data Subscription in the last 2
months (November & December) experienced marginal decline due to lower internet use prior to national election.

4G Subscription is yet below expectation, however, 3G data consumption getting momentum after
launching 4G
The 4G/LTE spectrum auction took place in the beginning of 2018 and 4G service was formally launched in February 19, 2018 by
the three leading market players and state-run Teletalk also launched the service in December, 2018. 4G is the fourth generation
of wireless mobile telecommunication technology, succeeding 3G, as defined by the International Telecommunication Union
(ITU). Since its first commercial launch in 2009, 4G has become the fastest developing system in the history of mobile
communication in the world.
However, even after launching 4G technology in Bangladesh, 3G coverage still dominates while 2G still poses handsome market
share. The internet users in the country grew considerably in 2013 when the 3G internet service was launched. However, the
number of internet subscribers grew slowly in 2018 despite the launch of faster internet service, 4G. High prices of 4G enabled
devices, lower network coverage, and poor service quality are the reason for slow growth in 4G.

2
Earlier, the regulator provided 3G license to 4 operators on 8th September 2013 under the 3G auction. Although, state owned
operator Teletalk has been providing 3G services in Bangladesh since October 2012. Since the roll out of 3G in Bangladesh, cellular
phone based data service has been enjoying robust growth. As per the BTRC’s latest statistics, cited in the New Age1, the number
of 4G and 3G subscribers reached 11.7 million and 63.5 million respectively at the end of December, 2018 meaning only 13.7%
of the country’s mobile internet users are using the fourth generation (4G) mobile phone service even after ten months of the
launch of the service while 74.2% mobile data users using 3G internet and rest 12.1% using 2G internet. However, according to
the leading mobile operator GP, the 3G data volume consumption witnessing significant growth after launching 4G by the
operator even though 3G subscriber count witnessed a de-growth due to upgradation to 4G.
3G Users in Bangladesh (in million)
3G subscriber 3G as % of total mobile data subscriber

66.6

66.0

65.6
65.5

65.4

64.9
64.3
63.1
61.5
60.6
59.2
57.3
70. 0 95%

49.7
60. 0 85%

86% 87% 86% 84%

36.1
35.6
34.6
82% 82% 82% 83% 84%
33.8
32.9
32.3

50. 0 75%

82% 81% 79%

31.1
29.4
29.1
28.8

28.3

27.8

72%
40. 0 65%

30. 0 55%

54% 54% 54% 54%

50% 52% 52%
20. 0 45%

48% 49% 48% 47%

10. 0

44% 35%

0.0 25%
Dec-16
Aug-16

Sep-16

Apr-17

Aug-17

Sep-17

Apr-18
Jul-16

Nov-16

Feb-17

Jul-17

Nov-17

Dec-17
Oct-17

Feb-18
Mar-17

May-17

Mar-18

May-18
Oct-16

Jan-17

Jan-18
Jun-16

Jun-17

Jun-18
Source: Annual Report, Posts & Telecommunications Division, GoB

Under the 4G rollout obligation, the operators will have to take 4G network to all divisional headquarters within the first nine
months of getting the license and to district headquarters within 18 months. They will get a total of three years to complete their
rollout of 4G service across the country. If the operators comply with the obligations, they will get a refund of BDT 250 million in
each segment. As per BTRC guidelines, mobile operators are supposed GP Banglalink Robi Teletalk
to provide 160 kilobits per second download speed in 2G service and Launching Year: 2G 1997 1997 1997 2004
2Mbps in 3G service. In the case of 4G, mobile phone operators are Launching Year: 3G 2013 2013 2013 2012
supposed to maintain 7Mbps download speed and 1Mbps upload Launching Year: 4G 2018 2018 2018 2018
speed.
Currently Robi is leading the 4G/LTE in terms of capacity and coverage with spectrum band flexibility while GP is leading in terms
of subscriber count. Robi has 4.2 million unique 4G subscribers and 3.4 million active 4G users as on October 2018 2. The 4G
subscriber base of Grameenphone hit 5 million active subscribers in November 2018 (3.8 million in September 2018).3

Grameenphone dominates the oligopoly market

The telecommunication in Bangladesh is oligopolistic in nature where only few operators serves the market while nearly half of
the industry subscribers belongs to only a single operator. Due to increased competitiveness, the industry has witnessed some
major incidence in past few years. With two mobile phone operators having been merged and another shutting down, a six-player
market has turned out to be a four-player one. Robi (Axiata) with Airtel (Bharti Airtel) got merged to attain operational efficiency
in 2016, which made them the second largest operator by number of connections. Meanwhile, Citycell, the country’s first MNO
left the battle after a long period of struggle to survive in the industry. BTRC has suspended its operating license due to
nonpayment of dues in Q4, 2016. Banglalink, another leading operator in the industry has been operating with steady growth in
Subscriber Market Share the number of subscribers but its
EBITDA Market Share
GP Robi Banglalink Teletalk market share is continually on the
(Q3,2018)
Grameenphone Robi Banglalink wane. Teletalk, the only state-owned
2% operator, failed to attract users despite
22% 13% having significant government support
46% 16% in various issues. The only operator
71% that has been continually
outperforming the industry in terms of
30% both subscriber acquisition as well as
profitability is ‘Grameenphone’, a
Source: BTRC, Robi & EBLSL Research Source: BTRC, Robi & EBLSL Research concern of Norway based ‘Telenor’. GP

1 http://www.newagebd.net/article/61623/only-743pc-mobile-subscribers-use-4g-service
2 http://axiata.listedcompany.com/misc/4%20%20Robi_Executing%20dual%20brand%20strategy%20successfully%20and%204G%20leadership.pdf
3 https://www.thedailystar.net/business/telecom/news/grameenphone-gp-bags-5m-active-4g-internet-users-1657363

3
dominates the telecom industry with 46.5 % of the total market share in terms of active mobile user as on December 2018.
Banglalink was in the second leading position before the merger of Robi with Airtel. However, 8.2 million subscribers from Airtel
have been added to Robi’s subscriber base through merger that uplifted the operator (Robi) into
Top three players hold 98% of
the second-leading position. As on September 2018, total mobile internet subscriber of GP stood the market share with leading
at 36.3 million, Robi 28.3 million, Banglalink 20.0 million, according to the respective company position seized by GP
disclosures.
Active Mobile Internet Subscriber
Total Revenue Market Shares*
Market Share (September 2018) Grameenphone Robi Banglalink
Robi GP Banglalink Teletalk

1% 100 %

23% 33% 90%

80%

70%

60%

50%

40%

30%
53% 53% 51% 53% 53% 55%
43% 20%

10%

0%

Source: EBLSL Research Source: Grameenphone & Axiata Disclosure, EBLSL Research; *excluding Teletalk

Service quality depends highly on allocated spectrum & frequency to operators

The much-awaited spectrum auctions in bands 900, 1800 and 2100 MHz concluded on 13 February 2018. Out of 2×46.4 MHz of
spectrum on offer, only 33% of spectrum was sold. Besides, the mobile network operators had the opportunity to convert their
prevailing spectrum licences to technology-neutral licences at a cost of USD 4 million per MHz and Banglalink, Grameenphone,
Robi availed the offer.
February 2018: Spectrum Auction Result
Spectrum on offer Licences Sold Left Unsold
2x25 MHz in 2100 MHz band at a Grameenphone: 2×20 MHz (paired) spectrum in 2100
reserve price of $27 mn per MHz. 2×5 MHz (paired) spectrum in 1800 MHz
2×18 MHz in 1800 MHz band at a MHz 2×7.4 MHz (paired) spectrum in
reserve price of $30 million per Total cost $155 million 1800 MHz
MHz Banglalink 2×3.4 MHz (paired) spectrum in 900
2×3.4 MHz in 900 MHz band at a 2×5 MHz (paired) spectrum in 2100 MHz
reserve price of $30 million per MHz
MHz 2×5.6 MHz (paired) spectrum in 1800
MHz
Total cost $308 million
Source: Country Overview: Bangladesh by GSMA Intelligence

Earlier, in 2013, BTRC held a 3G auction where each MHz of paired spectrum in 2100 band was sold at USD 21 million against the
base price of USD 20 million. Grameenphone (GP) bagged a 3G license for 10Megahertz (MHz) spectrum at USD 210 million, while
Banglalink, Robi and Airtel each acquired 5MHz of spectrum at a
Spectrum Held by Mobile Operators
price of USD 105 million. State-owned Teletalk also collected 25

19.6
10MHz of spectrum. After completion of the merger, Robi Axiata 20
15.6 17.4
Bangladesh with its two operating brands ‘robi’ and ‘airtel’ 15

10 10 10 10 10
conjointly holds the highest spectrum allocation from all three 7.4 7.4
5
10

5.2
bands. However, as a condition for the merger Robi-Airtel had to 5

surrender 5MHz spectrum in the EGSM or 900 band that were 0

GP

GP

GP
Banglalink

Teletalk

Banglalink

Teletalk

Banglalink

Teletalk
Robi

Robi

Robi

previously allocated to Airtel.

According to the management of a leading telecom brand of the
country, 1800 MHz is the most suitable for providing 4G services. 900 MHz (2G) 1800MHz (2G) 2100MHz (3G)
However, technology neutrality now allows operators to use any Source: EBLSL Research
band for providing 3G or 4G services in the country.

4
The industry witnessed some major regulatory developments in last few years
Past few years marked some major developments and reforms in local telecom industry and implementation of some major
reforms are in progress. Significant Market Power Regulation was published in the late 2018 that might bring some control in the
prevailing market competitiveness. The country upgraded to 3G cellular network in 2013 and rolled out 4G at the beginning of
2018. Besides, trial run of 5G has already been done. The industry experienced unprecedented growth, especially in data segment
since the launching of 3G in 2013. The regulator has published Tower Sharing Licensing Guidelines and four companies have
already been provided licenses to set up and operate telecom towers as part of its move to separate the network business from
telecom services with the view to rationalizing the number of towers in the country. Telecom VAS guideline has been initiated
where telecom operators are now entitled to offer Value Added Services (VAS). The government’s effort towards introducing
MNP in Bangladesh and introduction of uniform call rates by eliminating off-net and on-net tariff structure in 2018 is another
major incidence in the countries telecom industry.
Regulatory Developments in 2018
Timeline Events
1st Quarter  ‘Pay As You Go’ limit was introduced at BDT 5.0 per day
2nd Quarter  Tower Company Licensing guideline was published on 1 Apr’18 where MNOs will not be eligible to
participate
 BTRC has disallowed registration of more than a SIM within three hours against a national identity
card
3rd Quarter  VAT on internet usage was reduced to 5 percent from 15 percent on 1 July 2018
 BTRC revised tariff circuit in order to introduce single floor price for all MNOs effective from 14
Aug’18
4th Quarter  All operators have launched MNP services on 1 Oct’18
 Implementation of e-SAF (Online subscriber registration)
 SMP (Significant Market Power) Regulations, 2018 published by BTRC
 High Court ban on arbitrary call rate hike

Some recent regulatory developments having potential market impact are discussed here;
1. Significant Market Power (SMP) regulation aims to bring greater competition
Much waited Significant Market Power Regulation for the telecommunication industry in Bangladesh has been finalized recently.
A gazette has been published on SMP namely ‘Bangladesh Telecommunication Regulatory Commission (Significant Market Power)
Regulations, 2018’ by the telecom regulatory body on 14 November 2018 with immediate effect. The regulation aims to bring
greater competition in the telecom market with a view to ensuring improved customer service and safeguarding the industry
from being dominated by a single player.
However, Grameenphone Ltd. being the leading telecom service provider in the industry having almost 46% market share in
terms of total subscriber, 54% total revenue market share and 43% mobile internet subscriber market share the operator is the
only eligible candidate to be declared as an SMP by the regulatory commission. GP is likely to face additional/ special restrictions/
regulation while conducting business operations once it gets declared as an operator having SMP. The latest regulatory move
from the government will have material impact on the growth prospect and future business of Grameenphone Limited.

Key highlights of the SMP regulation:

1. Any operator shall not engage in any anti-market activities that may have significant impact in the telecom industry,
like
 Any operator shall not engage in any kind of agreement or collusion that may have or cause any significant
impact in the market to create monopoly or oligopoly situation.
 Make mutual agreement, take decision or collective actions that may reduce/ hinder/ limit/ stagnant the
market competitiveness
 decide on buying/ selling prices or any other commercial agreement without consultation
 limit or control product, market and technical development and local or foreign investment
 Monopolistic control over market or sources of production
 Imposing any unequal conditions in arm’s length transaction that may place the other party into
disadvantaged position
 Impose additional conditions
 Pushing others to agree on additional conditions that are beyond the contract

 Any explicit or implicit agreement or misuse of power with a view to establishing monopolistic control.
 Any anti-market agreement including above mentioned activities that may have significant impact will be
considered as void ab initio.

5
  An operator can’t impose any conditions on subscribers restricting to avail services from other operators.
2. Permission needs to be taken from the commission for any activities that may potentially reduce industry
competitiveness. And commission may give permission beyond the SMP regulation if,
 Related to national interest
 For the explicit wellbeing of the consumers or for definite economic or social welfare and not at the cost of
other operators’ interest
 In line with approved government regulations

3. Determination of significant market power: The commission may decide on significant market power considering
relevant issues. The commission may consider, among other, following issues…
 Structural Issues
A. Market share and concentration level: while determining market share and level of
concentration commission will consider, among other, following issues
 The operator’s assessed contribution to the total unit sold in the industry
 The operators available capacity of the probable total unit sold in the industry
 Percentage contribution to the total generated revenue by all operators.
B. Vertical integration level in telecom industry
C. Degree of entry barrier
D. Trend in global trade and technology
E. Product/ service differentiation and standard of revenue growth.

 Behavioral issues
A. Supply
B. Price fixation
C. Degree of freedom

 The commission may issue directives considering other relevant issues along with above mentioned issues
for determining significant market power.
 If any of the service providers hold at least 40% control in terms of any of the below mentioned indicators
over retail mobile service industry (the industry where commission allocated spectrum is used for providing
voice, data & internet services and earns direct or indirect revenue from subscribers) that will be defined as
Significant Market Power.
A. Number of total subscriber
B. Annual revenue achieved
C. Commission allocated spectrum and other properties

 The commission shall, if required, discuss with other government bodies for determining SMP.
 The commission can identify an operator as an SMP and issue directives for ‘dos and don'ts’.
 If any activities from the SMP results in the reduction or arises any probability of reduction in the market
competitiveness in the country’s telecommunication industry, the commission may direct the operator to
suspend relevant activities or, if required, direct to initiate any special steps or activities.
 The commission will consider following issues while determining the result from any activities
A. The extent to which the industry competitiveness has been damaged or likely to damage
B. The operator’s explanation, if any. However, the operator’s intention will not be
considered.
 Before issuing any directives, the commission will give a notice for providing explanation, if any,
within 15 days.
 The commission will take remedial measure if the said operator experiences any loss due to
implementation of the above mentioned directives.

2. Implementation of uniform floor price increased average voice tariffs in the industry: The government has increased the
floor prices of voice call by eliminating the on-net and off-net differential call rates structure and introducing uniform call
rates in the country. Previously floor price for On-net voice call was 0.25 and for Off-net, it was 0.60 per minutes while ceiling
price was BDT 2.0 per minutes, excluding VAT and other regulatory charges. Now, floor price for both the on-net and off-net
calls stands at BDT 0.45 per minutes. This increase in on-net floor prices has increased overall average price per minutes
(APPM). Implementation of uniform floor tariff for on and off net calls has resulted into increase in revenue. However, with
the new unified floor price of BDT0.45, the off net floor prices have gone down. The market has been experiencing increased
competition with the introduction of uniform voice tariff. Also there was some reduction in outgoing minutes of usage after
implementation of new voice tariff structure.

6
3. Introduction of Data Tariff Circuit on the card: BTRC is planning to introduce tariff circuit for data price (floor and ceiling
price). Currently no data price range for mobile operators as well as broadband service providers is available. GP
management is in favor of market determined rates while the second largest operator, Robi, is seeking for both upper and
lower limits for mobile data rates to stop the ongoing 'price war’. The third largest operator ‘Banglalink’ is looking for just
the ceiling price and not the floor price. According to a report from The Daily Star, Currently, price per megabyte of data
ranges from BDT 0.09 to BDT 0.14 and citing the cost modelling study by the International Telecommunication Union, report
says that, the minimum price should be BDT 0.26 per MB. Based on our experience from the revised floor price for voice
calls, we can expect that setting the floor prices for data prices will actually result in increase in the average price per MB
and ultimately will result in higher internet prices for the economic consumers. Considering the current state of digitalization,
where people are increasing adopting to digital mode of life while access to internet is growing, any such floor price fixation
will not generate any good thing for the industry in the long run though short term profit margins for mobile operators may
accelerate. Any unexpected increase in mobile data floor prices may result in higher growth of broadband cable internet and
more use of internet through WiFi connections might result in lower than expected mobile data usage growth.
4. Mobile number portability failed to catch mass attraction in the first 2months of launch: Mobile number portability was
launched on the 1st of October 2018. In the first 2 months a total of 77,085 customers switched their network, of them, Robi
received 62.0% customers, Banglalink 24.4%, GP 12.1% and Teletalk 1.5% of the customers through MNP. GP was reluctant
to carry out any campaign regarding the MNP service thus resulting in lower number of customer acquisition by them
through the MNP. GP has decided not to promote MNP due to complexity in the implementation of the service while another
major market player, Robi is actively promoting MNP. During the period, a total of 1,35,159 customers requested for taking
the service and of them 57% or 77,085 customers were successfully ported. Of the total porting, 35,597 customers of GP or
46.2% of total customers who took the MNP service opted out to other operators4. However, the number is very insignificant
compared to GP’s total subscriber of almost 72.0 million as on October 2018.
5. Separation of tower business from MNO’s is underway: As an endeavor to separate tower sharing businesses from the
telecom service businesses the regulatory body has published the ‘Regulatory and Licensing Guidelines for Issuing License
for Tower Sharing in Bangladesh’ on 1st April 2018 after several discussion and feedbacks from the telecom service providers.
The development aims to create two separate industries, the network business and the infrastructure services one, with the
view to rationalizing the number of towers in the country. The governments’ initiative towards separation of tower and
relevant infrastructure business is a positive development in the country’s telecom industry from the 'operator-as-a-service'
viewpoint.
In Bangladesh, there are almost 36,000 towers at present and majority of them are in the hand of MNOs. Only edotco, a
concern of Malaysian Axiata Group, operates in the country under a statement of non-objection. Edotco has already received
license for running infrastructure service business under the new guideline.
Under the new industry landscape, tower companies will develop, build, own, acquire, rent, lease, operate and maintain
towers while operators, including all mobile, WiMAX and other telecom service providers, will take services from them. Four
new firms have already been selected for owning towers and providing network infrastructure to the mobile network
operator. The winners are all joint ventures with foreign parties, which can have at most 70% stakes in the company. The
firms are edotco Bangladesh Tower Company Limited, TASC Summit Tower, Kirtankhola Tower Bangladesh Limited and AB
HiTech Consortium Limited.
Despite no established standard regulatory regime, infrastructure sharing is well established in Bangladesh, with a prevailing
tenancy ratio of around 1.25. Grameenphone, the market leader has been promoting co-location on its towers since 2010
and Robi has leased up its towers to third parties though parent company Axiata’s towerco edotco. Meanwhile Banglalink,
a subsidiary of VEON, is attempting to divest its towers. The tower sharing in the country is expected to flourish under the
new regulatory regime.

Key Highlights of the Guidelines are:

 The Cellular Mobile Phone and/or Broadband Wireless Access (BWA) Operators having license from the Commission
shall not be eligible to apply for this license.
 The tenure of the license would be 15 years initially and would be extended gradually by five years, subject to
government approval
 The Licensee shall start its operation within 06 (six) months from the date of issuance of the license. Rollout obligation
period shall be counted from 180 days after the issuance of license. On the other hand, mobile phone operators will
have to roll back their towers within five years, but they can build towers in places where the tower sharing companies
have no presence. Tower companies have to go to all Upazilas in the next five years

4
http://www.newagebd.net/article/58355/robi-gets-highest-customers-thru-mnp-service

7
 o (a) The licensee(s), within 1st year of roll out, shall have to provide Tower Sharing Service covering up to all
Divisions Headquarters.
o (b) The licensee(s), within 2nd year of roll out, shall have to provide Tower Sharing Service covering up to all
Districts Headquarters.
 The MNOs cannot set up any tower on the basis of roll out of tower companies. Besides, any MNO cannot rent tower
to another MNO but they can sell the tower to the tower companies.
 No entity having relations with mobile phone or WiMAX companies can apply for the tower sharing business license.
 License acquisition fee has been set at BDT 250 million while annual renewal fee BDT 50 million.
 Licensees will have to share 5.5% of their revenue with the government and contribute another 1% to the social
obligation fund from the second year of getting licences.
Fourth generation of wireless mobile telecommunication technology (4G) was launched in Bangladesh in the beginning of 2018.
Mobile operators are yet to make any significant investment in this technology. Hence, tower companies will bear the
responsibility to upgrade the towers for providing 4G connectivity. As a result of this development, mobile operators in
Bangladesh will no longer be required to own capital-intensive infrastructure. Tower companies will allow mobile operators to
rationalize their capital expenditure and 4G investment spending. This will enable mobile operators to concentrate on QoS and
selling minutes and megabytes, improve efficiency in other service area in spite of making capital expenditures in towers. Besides,
the opportunity to divest existing sites to the tower companies will result in positive short term cash flows and potential one-off
gains for mobile operators. Operators will be able to focus spending on service differentiation from the free-up funds through
divestment of transmission assets.
Earlier in February 2017, VEON-owned Banglalink had announced that it was keen to offload its 9,000 towers to tower companies
once the licensing regime is finalized. Edotco Bangladesh, part of the Axiata Group, with about 8,200 towers as on 2017, was the
only tower company operating at scale in Bangladesh under a no-objection certificate (NOC) from the BTRC after taking over the
management of 5,300 tower assets from Robi. edotco Bangladesh was created in response to the draft tower company guidelines
in Bangladesh. The entrance of three new foreign-backed competitors will be positive in creating more competition within the
sector which will likely drive down access rates charged to operators.5
6. BTRC bars mobile packages with less than 7 days of validity: BTRC has recently scrapped all the voice and data packages
from mobile operators with up to 6 days of validity with effect from 27 January 2019. This initiative may result in reduced
consumption of voice and data pack, mostly from short tenure bundle offers in next few quarters. However, to satisfy the
economical mobile phone users the operators will have to introduce low priced weekly packages and offers that will
ultimately result in lower revenue growth than expected and higher cost. But we believe that overall impact of this new
regulatory measure is insignificant and not a major concern for the investors.
7. High Court ban on Call Rate Hike: In 13 December 2018, the High Court has issued a ban on future mobile call rate hikes
and on charging subscribers for dropped calls for all telecom operators in the country. It also issued a rule asking the
government and the mobile phone operators to explain in four weeks why hiking mobile charge without soliciting opinions
from the subscribers should not be declared illegal6. However, we are in general not expecting any further call price hike in
future. So, such action will not have any significant impact on the expected revenue growth of mobile operators.

A number of socio-economic factors driving the growth in telecommunication industry

As the country is progressing towards increased digitalization, with growth in per capita income and change in the life style of its
citizens, mobile subscription has become a part and parcel of everyday life of its population irrespective of the income level. Most
people now hold more than one mobile phone set and more than one subscription, which is also resulting in significant growth
in market penetration.
Stable macro-economic scenario driving the growth in Bangladesh Telecommunication Sector: Growing GDP is also
driving the country towards its digital growth. The economy of Bangladesh has been witnessing average 6% plus growth
rate over the last decade and has run above 7% over the past two years while the economy is growing at an increasing
rate over the last 5 years.
Bangladesh aspires to be middle income country by 2021, which will require increasing GDP growth to 7-8% per year.
Post and telecommunication sector grew by 6.68% in FY 2017-18 with 2.58% contribution to GDP (at Constant Prices)
during the year, according to BBS data. According to industry insiders, a 1% increase in mobile penetration could lead
to an increase in the GDP growth rate by 0.28%, while a 1% increase in internet penetration can lead to an increase of
up to 0.077% in the GDP growth rate. Communication services, particularly the mobile phone based services (MPS)
market continued to drive the telecommunications industry which led to the high growth of Post and
Telecommunication sub-sector.

5
https://www.fitchsolutions.com/telecoms-media-technology/tower-licenses-boon-bangladeshi-mobile-market-16-08-2018
6
https://www.thedailystar.net/backpage/news/no-more-rate-hike-charges-dropped-calls-1673398

8
Favorable macro-economic indicators kept the country ahead of its other regional economies. Domestic interest rate
is declining and single-digit lending rate is helping corporations to finance for capital investment at a low cost. Private
sector credit is also experiencing growth. In the last 8 years, CAGR in foreign exchange reserve was 20.6%, reflecting
the country's strength from the economic and financial point of view. Bangladesh usually needs a reserve of about 10
billion U.S. dollars to meet its import bills for three months in light of an internationally accepted standard.
Growing population along with large number of young and middle aged group population are accelerating the pace
of growth in telecommunication industry: The country has a population of 168 million and is expected to grow by
1.04%. 35.8% of them reside in urban areas and the annual rate of change in urbanization is 3.19%. Increased
urbanization is transforming the traditional
Age Distribution Structure
structure of communication and with increased
digitalization, the country is progressing 39.73%
45. 00%

40. 00%

towards more connectivity. Widespread access 27.76% 35. 00%

to internet is increasing and mobile phones

30. 00%

19.36% 25. 00%

have become part and parcel of everyday life. 20. 00%

Young and middle-aged people are the major

15. 00%

10. 00%
6.93% 6.23%
users of mobile communication devices and
5.0 0%

0.0 0%

around 60% of the entire country belongs to 0-14 years: 15-24 years: 25-54 years: 55-64 years: >65 years:
these two groups.
Source: CIA (US Central Intelligence Agency) World Fact Book
Lower subscription penetration compared to
other market: Bangladesh belongs to one of the 10 countries having highest number of mobile subscribers in the world
but the country’s mobile subscriber base for both voice traffic and internet is still far below than that of other
developing economies in the world that signifies ample growth prospect for the industry.
Mobile Subscriber Panetration Rate '17 Internet Subscrition Panetration Rate '17
Hong Kong, China 249.0 Denmark 97.1
Thailand 176.0 Norway 96.5
Oman 149.8 United Arab Emirates 94.8
Singapore 148.2 Japan 90.9
Sri Lanka 135.1 Hong Kong, China 89.4
Malaysia 133.9 Belgium 87.7
Japan 133.5 Spain 84.6
Viet Nam 125.6 Singapore 84.4
Nepal (Republic of) 123.2 Germany 84.4
Philippines 110.4 France 80.5
Norway 107.8 Malaysia 80.1
Egypt 105.5 Turkey 64.7
China 104.6 Tunisia 55.5
Turkey 96.4 Bangladesh 54.4
Myanmar 89.8 China 54.3
Bangladesh 88.1 Thailand 52.9
India 87.3 Iraq 49.4
Iraq 87.1 Egypt 45.0
Pakistan 73.4 Indonesia 32.3
0.0 20.0 40.0 60.0 80.0 100 .0 120 .0

0.0 50.0 100.0 150.0 200.0 250.0 300.0

Source: International Telecommunication Union (ITU) & EBLSL Research

Increased smartphone penetration resulting into higher data consumption: With increased smartphone market
penetration and afterwards the launching of 3G and 4G services in the country, mobile internet subscription witnessed
tremendous growth along with growth in overall internet penetration. Currently, there are almost 100 million mobile
phone devices in the country, according to industry experts. Use of smartphone in Bangladesh is growing in line with
reduction in smart phone prices and increase in purchase
power of people. According to Grameenphone Ltd., total Smartphone Sales in Bangladesh (in mn)
smartphone penetration of the country stood at 28% as on 9.00
8.00
August 2017. Along with branded smartphones, low cost 6.50
Chinese phone are driving the growth. Branded
manufacturers have already started to manufacture/ 4.00
assemble smartphones locally, which will bring
1.40
affordability. Besides, prevailing 2G devices in the market 0.30
are to be replaced with 3G & 4G enabled devices in the
market which will bring more uses in Data. Moreover, the 2012 2013 2014 2015 2016 2017
proliferation of smartphones will continue and the number Source: Bangladesh Mobile Phone Importers Association (BMPIA), Cited
of data users will keep growing. by the Daily Star

9
 Heading towards “Digital Bangladesh” vision by the government driving the growth in telecommunication industry:
The government of Bangladesh is working towards accelerated use of information and digital communication systems
to materialize its “Digital Bangladesh” vision by 2021, which is directly driving the growth in internet uses in the country.
Realization of this vision remains a political priority and is supposed to enable significant growth in local telecom
industry. Nearly all of the government services are now online-based, and they are also implementing aggressive
campaigns to educate the masses about internet use alongside offering IT-based training programs and increased
access to information technology. These efforts are culminating into huge growth in internet uses. The government is
also working to take the rate of internet penetration in the country to 100% from present 47.9% by 2021, ensuring high
speed broadband internet at cheaper rate to all the government offices, educational institutions, health centers and
union parishads, expanding 3G network to all across the country and launching 4G.
Cultural transformation driven by increased globalization: The country is undergoing a transformation journey in
terms of its socio economic factors, rapid changes have been observed in the life-style of its population. Heading
towards globalization is also reshaping the prevailing culture as well as trade and commerce. Connectivity has been an
integral part of modern-day life, thus accelerating the growth in mobile communication and internet uses. Meanwhile,
use of social media platforms like Facebook, WhatsApp, Viber etc. and video streaming sites like YouTube now became
part of everyday life for all classes of people mostly among the young and middle-age group. And the use of such media
is growing every day, ultimately resulting in more and more use of internet data. Steady population growth and increase
in purchase power will continue to drive the telecom sector growth.

The sector experiences rigid regulatory environment and high taxation

The telecom industry is highly regulated and highly taxable sector in Bangladesh. Publicly traded/ listed corporations are imposed
with a 40% income tax while unlisted telecom operators are exposed to a 45% income tax, a much higher rate compared to any
other industry. Meanwhile, BDT100 for each new or replacement SIM is also applicable. Besides, there exist 5.5% of the revenue
sharing from mobile operators with the government that will remain unchanged up to 2033.

Challenges ahead for telecom operators despite having bright industry prospect
The industry outlook seems bright however the prospect of individual operators might not be as good as the industry. The country
has a large population base with steadily increasing disposable income, consistent GDP growth, and low penetration of internet
connectivity. The country is now undergoing a transformation period towards going more digital, that will have a major
contribution from telecommunication industry and the industry will also enjoy a robust growth along with this transformation
journey. Rigid and uncertain regulatory environment remains a key concern for the operators as strict regulation, high taxation
and several pending disputes between mobile operators and NBR are yet to be resolved. Fresh development in regulatory
landscape might bring changes in existing business operations of telecom operators. The government of Bangladesh and telecom
regulatory body, BTRC is working to bring various new regulatory developments.
Teledensity is expected to go up further: According to GSMA Intelligence, the number of unique mobile subscribers is projected
to reach to 107 million with 60% real penetration rate by 2025 from prevailing 85 million with 51% penetration. Besides total SIM
connection is expected to be 190 million with 102% penetration rate by 2025 from prevailing 157 million (as on December 2018),
with 93.4% penetration. Meanwhile, unique mobile internet subscription is also expected to grow at a CAGR of 10% and will reach
73 million by 2025 with 41% penetration rate from 35 million in 2017, with only 21% penetration rate7. Over the next decade,
increasing consumers’ affordability, falling prices of smartphones, technology advancement (4G/LTE/5G) and wider network
coverage etc. are key factors that will drive the growth.
Increased data consumtion, driven by 4G, will result in heafty revenue from data: Introduction of 4G in early 2018 will help
further amplify data service growth as service quality will Data Uses Potential Based on Technology
increase and result in additional data subscribers from rural
areas. According to Grameenphone, 3G smartphone users
have 34% and 4G smartphone users have 116% higher ARPU
than feature phone users due to higher uses of data volume.
So, with the launch of 4G, ARPU of the market operators are
likely to increase significantly. However, the industry is yet to Feature phone 3G Smartphone 4G/LTE Smartphone
reap the full potential of 4G connectivity. 150 MB data 950 MB data 2000 MB data
usage/month usage/month usage/month
Further regulatory intervention can be expected to improve Source: Grameenphone Ltd. & EBLSL Research
the industry competitiveness: Looking forward, the potential for further merger/ consolidation in the industry cannot be
overlooked if present state of industry competitiveness prevails. Top three players are in a battle to acquire new subscribers with

7
https://www.gsmaintelligence.com/research/?file=a163eddca009553979bcdfb8fd5f2ef0&download

10
aggressive marketing strategy. The government has already introduced Significant Market Power (SMP) regulation to protect the
industry from becoming monopolistic by any single operator.
Revenue from voice traffic might witness declining trend due to increased over-the-top (OTT) service as a result of data user
growth: Globally, telecom companies have started facing competition from non-traditional players such as over-the-top (OTT)
service providers. The pace of technological advancements and the magnitude of user benefits derived from OTT services will
make them the default choice of customers. Voice ARPU will increase in the next year due to revised uniform floor in the late
2018 however may decline in the long run due to increased OTT (Over-The-Top) calls and price competition in the industry but
data ARPU is expected to grow further in the years to come due to increased data consumption and new data subscriber addition.
According to TeleGeography estimate, over 5 billion monthly users in September 2018 used 7 OTT applications (WhatsApp,
Facebook Messenger, WeChat, QQ, Viber, Line, and KakaoTalk). The rise of mobile social media is taking over the share of voice
traffic globally and a turning point in the international voice market was marked in 2015 with declining voice traffic caused by
increased OTT calls. This decline in traffic may reflect a permanent, structural shift: the mass adoption of new “over-the-top”
communications services that are reshaping the international communications market.
International Voice Traffic 1998-2018 Carrier and OTT Traffic 1998-2018
International Traffic Traffic Growth Carrier Traffic+OTT Carrier Traffic only
600 35%
550 30.0%
30%
500 25% 25.0%
450
400 20%
20.0%
350 15%
300 10% 15.0%
250 5%
200 10.0%
0%
150
100 -5% 5.0%
50 -10%
0.0%
0 -15%
20…

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
1998

2002

2006

2010

2014
1999
2000
2001

2003
2004
2005

2007
2008
2009

2011
2012
2013

2015
2016
2017

-5.0%
-10.0%
Source: TeleGeography, Extracted by EBLSL Research; Note: OTT traffic reflects
in-app cross-border traffic only, and excludes calls originated on apps but terminated to the PSTN.

The telecom sector has been experiencing a rapid change around the world. The average revenue per user (ARPU), a long-standing
metric for measuring financial performance, has been steadily declining over the last decade. Worldwide, telecom companies are
now experiencing big challenge of shifting their focus to non-voice services to continue growing. As the industry penetration is
maturing while industry experiencing tremendous competition, especially in the area of voice call segment, MNOs are eying
towards redesigning their business models by introducing more customer friendly products as well as trying to reap the benefit
of country’s digital growth by offering cloud based services and business diversification. However, in the near future, growth will
be driven by data and the internet services, customer analytics services and new technology-led capabilities.

11
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