News From Telecom World

Telecom market shrinking in Bangladesh: GP CEO blames high tax for slow customer acquisition

Posted on: May 25, 2009

Grameenphone (GP) has blamed high taxation for the recent stagnant growth of the telecom industry saying customer acquisition by six mobile operators marked 76 percent less in the first three months of the current year than the period a year ago.

“The telecom market is shrinking. High taxation is the main reason behind such stagnant growth,” said Oddvar Hesjedal, GP’s chief executive officer, yesterday.

The country’s six mobile operators added only 1.11million customers during January-March, while the addition was 4.02million during this specific time in 2008.

“If the Tk800 tax on SIM (subscriber identification module) is scrapped in the upcoming budget, we believe the industry can back to its usual growth,” observed the Grameenphone CEO at a press meet disclosing the company’s first quarter financial report at its office in Dhaka.

Grameenphone and its majority stakeholder Norway’s Telenor come out as strong performers, even in the global economic crisis, as the local mobile operator posted an 83 percent rise in operating profit in the first quarter of 2009 over the same period a year ago.

GP is a joint venture — 62 percent owned by Telenor and 38 percent by local Grameen Telecom. Telenor provides voice, data, content and other communication services in 13 countries across Europe and Asia.

Norwegian telecommunications group Telenor reported a 65 percent decline in first quarter net profits, compared with a year earlier.

The group said the net profit in January-March period was 1.62 billion kroner ($248 million) against 4.57 billion kroner a year earlier. Revenues rose to 27.1 billion kroner from 26.38 billion kroner.

GP’s operating profit jumped to 530 million Norwegian Kroner (NOK) (Tk 562.86 crore) in the first three months of 2009, NOK 289 million up from the same period of 2008, according to Telenor’s financial report.

Grameen’s net profit stood at Tk230crore this time.

Pointing to a big untapped market in Bangladesh,

GP’s Chief Financial Officer Arif Al Islam said telecommunication penetration is 30 percent here and it would be increased more if the tax on SIM card goes.

“When the customer acquisition growth goes up, the government can earn more revenues from the mobile industry,” said Islam.

GP is the market leader among the six. The company now holds 46 percent market share with 21 million customers up to March 2009.

Its revenue also went up by 6 percent in the first quarter this year over the same period a year earlier. The first quarter revenue was NOK 1,574 million (NOK 1 = BDT 10.62), while it was NOK 1,153 million in the same period of 2008. Last year’s total revenue was NOK 5,049 million.

The number of subscribers added in Q1 of 2009 was 63,000, a slowdown attributable to the higher start-up price on inclusion of the SIM (subscriber identity module) tax. Along with some other mobile operators, GP increased its connection price to Tk 800.

The operator’s EBITDA (earnings before interest, taxes, depreciation and amortisation) up to March was NOK 934 million, which was NOK 545 million a year earlier. The company said EBITDA increased mainly on higher revenues combined with lower subscription acquisition costs.

The Telenor financial report said GP’s monthly average revenue per user (ARPU) to March was NOK 25, which was NOK 22 a year ago.

The $3.2 billion Grameenphone is the first mobile company that has submitted its plan for listing on the capital market. The $65 million (Tk 449 crore) initial public offering (IPO) proposal however is still under consideration of the capital market watchdog.

Source: Daily Star

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1 Response to "Telecom market shrinking in Bangladesh: GP CEO blames high tax for slow customer acquisition"

[…] mobile operators marked 76 percent less in the first three months of the … More here:  Telecom market shrinking in Bangladesh: GP CEO blames high tax for … BangladeshBangladesh, bangladesh mobile, customer-acquisition, high-taxation, operators-marked, […]

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