A bleak year rolled past the telecom industry.
But stakeholders — instead of reminiscing the past — look to the new government’s steps to tackle the global economic crisis that threatens to dampen mobile operators’ massive investment intentions.
It is still too soon to assess how the new democratic government will carve out a strategy for the sector, but a loud pledge to build a Digital Bangladesh surely raised hopes for better days.
The telecom watchdog’s intention to introduce several technologies within a short period of time will warrant a suitable environment for investment.
Some of the world’s telecom giants, such as Vodafone, Sistema, Etisalat and Airtel, may tie up with Bangladesh’s telecom market, depending on the government’s policies and the regulator’s role.
"Growth of the sector in 2009 will depend on the reduction or withdrawal of the SIM tax, but even more on the development of the Bangladeshi economy, in relation to the global economic crisis," said Oddvar Hesjedal, chief executive officer of Grameenphone, the country’s leading telecom operator.
"I believe Bangladesh can overcome the crisis and this will have a positive effect on the telecom industry. Still, we will need to focus on increased operational efficiency, to optimally use our investment," he said.
A high official of Banglalink, the second market leader, said: "The market will definitely grow as communication needs are high and the overall penetration level is still low in Bangladesh. However, in the wake of the global recession, some slowdown should be expected in the form of Capex and overall investment."
"The regulator’s role will be crucial as policies will dictate the course the industry takes in 2009 and how the industry, as a whole, becomes sustainable and profitable," he added.
A question — whether the telecom regulator’s strong role will continue through 2009 — is on the back of everyone’s mind.
The year 2008 had shaped up into a turning point for the telecom industry, where technology introduction dominated the scene. Whether the market was worth such technology remains to be judged.
Bangladesh Telecommunication Regulatory Commission (BTRC) issued licences for call centres, international gateway, WiMax, internet service providers, interconnection gateway and international internet gateway.
The year 2008 saw a change in the relationship between the regulator and operators. It seemed that the regulator had no longer cared for the operators’ whims.
Four telecom companies had compensated for past illegal practice — international call termination — by paying Tk 588.4 crore in a combined fine. Analysts say malpractices crept in because of the laidback policy followed by the regulatory top brass in the past.
Grameenphone’s intention to list on the capital market took centre stage in 2008. The company received high acclaim.
Furthermore, optimism over a smooth IPO process had been briefly undermined by a dispute between the two main shareholders: Telenor of Norway and Nobel laureate Muhammad Yunus’ Grameen Telecom.
On September 4, the microfinance pioneer said: "The recent activities (of Telenor-controlled management) in Bangladesh leaves me with little alternative other than to investigate the possibility of taking legal action.” He softened his stance a day later by stating that a lawsuit was only a remote possibility and "this is not an outcome that we think is necessary".
Telenor, however, had its own interpretation of the 1996 partnership deal. "In the conflict regarding the ownership of Grameenphone, Telenor disagrees with Muhammad Yunus that we have an agreement to sell our stake in the company to him. We would like to emphasise that the shareholder agreement clearly states that any disagreements should be resolved through the Swedish courts," Telenor said.
The conflict came to an end, thanks to both partners looking forward to the IPO issue, by signing a joint press statement that they are firm on listing on the capital market as early as possible. The announcement came as a relief to investors.
Grameenphone was busy in December with pre-IPO private placement of shares, which amounted to $60 million (Tk 413 crore), to local institutional investors.
Grameenphone filed its final application for an initial public offering (IPO) of $65 million (Tk 449 crore) with the Securities and Exchange Commission on December 11.
Grameenphone’s Board of Directors had earlier approved a proposal for an IPO of its shares, subject to necessary approval and market conditions. The price for the IPO has been proposed at Tk 7 a share, subject to SEC approval.
In mid-2008, Japanese NTT DoCoMo entered Bangladesh by purchasing a 30 percent stake in AKTEL for $350 million, aiming to introduce high-tech mobile products in Bangladesh.
The Japanese giant’s entrance broadened AKTEL’S horizon, which is mainly controlled by the shareholding company Telekom Malaysia.
AKTEL also promised to go public by 2008. However, the dismal state of the balance sheet in 2007 discouraged such steps.
"The prospects of Grameenphone’s issue will likely prompt other telecom operators to come to the market. The sector will be of significantly greater focus to capital market investors," said Ifty Islam, managing partner of Asian Tiger Capital Partners.
"We believe that once Grameen and AKTEL are listed, there will be a regulatory pressure on other mobile phone operators to offload shares onto the local stock exchanges," he added.
The private landline operators’ allegations against the regulator of policy discrimination developed into another much-talked-about issue in 2008. The issue was partially solved by introducing interconnection exchanges in December 2008.
The industry also faced hurdles in WiMax licensing. Although the auction price was Tk 215 crore, BTRC is struggling to hand over one WiMax licence, out of three.
The high-priced auction also rattles prospective 3G operators, as they think that if the 3G auction goes beyond a moderate level, operators may be reluctant to invest in the technology.
"BTRC is expected to give 3G licences in 2009. Taking the current economic crisis into consideration, it is not likely that operators will be keen to invest heavily in mobile broadband. Therefore, the license requirements and auction prices should be set carefully," said Oddvar Hesjedal, the Grameenphone CEO.
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