Among South and Southeast Asian countries, Bangladesh’s mobile phone operators have been paying the third highest spectrum charge in last 10 years, said a sector in-depth report of global rating agency Moody’s Investment Service.
The report was released on Tuesday.
In Bangladesh, telecom operators have paid 7 per cent of their aggregated revenue for spectrum charge.
Indian mobile phone operators have paid the highest (7.6 per cent) of their aggregated revenue as spectrum charge.
The second highest spectrum charge was paid by the telecom operators in Thailand — 7.3 per cent of their revenue.
However, the spectrum payment terms are operator-friendly, said the Moody’s report, adding that the telecommunication companies in Thailand, India and Bangladesh pay between 25 per cent and 50 per cent of the total amount upfront, with the option to pay the rest over three to 10 years.
In the three countries, the governments also typically allow a moratorium period before the annual spectrum payment instalments kick in, the report said.
In exceptional circumstances, governments could provide more payment buffers, the report said, adding, ‘For instance, in August 2019, the Indian government termed out the spectrum payments to 16 years from the earlier agreed 10 years after considering the constraints on the Indian telecom companies following a period of unprecedented intense competition.’
On the other hand, telecom operators in Singapore, Malaysia and Indonesia make spectrum payments upfront, with small annual licensing fees.
As percentage of revenue, spectrum payments in Singapore and Malaysia were lower than in the other five countries covered in the analysis.
Moody’s analysed financial data from 2009 to 2018 of 20 telcos in seven South and Southeast Asian countries — the leading three telcos by subscribers in Bangladesh, India, Indonesia, Malaysia, Singapore and Thailand, and the leading two telcos by subscribers in Pakistan.
The report also revealed that the country where telecom operators made high spectrum charge, usually paid lower dividend to their shareholders.
In the countries, the shareholders other than the government received $52 billion as dividend during the period.
On the other hand, the government received $37 billion as spectrum charge, $24 billion as taxes and another $28 billion as dividend from the South Asian telecom operators.
‘The high prices that telcos in this region pay during spectrum auctions regularly make headlines, but the recurring dividends that they do pay to governments tend to get less attention,’ said Nidhi Dhruv, Moody’s vice-president and senior analyst.
‘Yet, our analysis finds that in some countries dividends account for a greater share of revenue,’ it said.
While spectrum payments in government-run auctions were higher in absolute terms, on a relative basis dividends account for a larger percentage of aggregate revenue for telcos in several countries, he said.
‘Government-owned incumbent telcos in Singapore, Malaysia and Indonesia pay the highest dividends to their respective governments, while privately owned telcos in India, Thailand and Bangladesh pay more in spectrum auctions,’ said Dhruv.
About the regulatory framework, the Mood’s report said that the regulations in Thailand, India, Bangladesh and Pakistan were less predictable and often politicised.
Government-owned telcos pay high dividends but also benefit from regulatory support, it said.