Published at: New Age, May 04, 2019
Profitability and sustainability of all the mobile phone operators are vital for customer satisfaction otherwise the customers will have no other option but to subscribe to only the Grameenphone service thus resulting in monopoly, said Banglalink chief executive officer Erik Aas in a recent interview with New Age at its office in Dhaka.
Aas made the observation in the context that none of the telcos except Grameenphone had been earning profit for the past few years due to the overwhelming dominance of the market leader.
He also mentioned that high taxes and extremely high price of spectrum are the major concerns for the country’s mobile telephony sector.
Aas, a Norwegian, took the charge of Banglalink as its head in 2015 after successfully working at Grameenphone and at Telenor Group in various capacities, including as the chief executive officer of GP, during 1997- 2007.
Aas is a master of electrical engineering and computer science from Norwegian University of Science and Technology.
After Joining Banglalink on December 1, 2015, Aas led the technological transformation of the company into a digital operator, along with capacity enhancement of its employees, amid intense competition after the emergence of merged Robi-Airtel as the second largest operator, pushing Banglalink to the third position from the second.
Amid increased competition in the country’s telecom sector, Banglalink in January-March quarter of 2019 posted a 4.5 per cent revenue growth.
The operator’s revenue increased to Tk 1,121.30 crore in Q1 against Tk 1,073.02 crore during the same period last year.
Replying to a question regarding the present state of the country’s telecom industry, Aas said that high taxation, extremely high spectrum price and dominance of Grameenphone are the three major issues in the country’s mobile telephony sector.
Speaking about the taxation, he said that every time a customer recharged Tk 100 the government took Tk 51 out of that amount.
He also said that the taxes in the telecom industry were limiting the growth of the sector and at the end of the day the government’s income from the sector would be less than what it should be due to the slow growth of the sector.
The spectrum price in Bangladesh, Aas said, is extremely high compared to the country’s economy and the most striking thing is that one operator is taking all the money.
‘It’s very important that all the operators become sustainable and sustainable means at least making a little bit of profit,’ the Banglalink CEO said.
It’s not because Banglalink intends to take a lot of money from the country rather it’s for the sustainability of the business, he said.
To curb the power of GP, the government has devised significant market power regulations and it’s a very good thing that the government has decided to do so, he said.
Such regulations would make an important contribution in rebalancing the powers of all the operators for making all the mobile phone operators sustainable.
Expressing his optimism regarding the SMP regulations’ positive impact over the market, the Banglalink head said, ‘I think that the Bangladesh Telecommunication Regulatory Commission and the telecommunication ministry will do the right thing with regard to regulation for ensuring a level playing field for all the operators.’
A level playing field means that the customers would get realistic choices, . . .but for some reasons the customers in Bangladesh do not have the option of making a right choice because of high dominance of Grameenphone, he added.
As a result of the GP dominance, Banglalink and Robi cannot afford building network in the places where GP has a strong presence, Aas observed.
The customers, he went on, really don’t have a choice other than GP due to its dominance and it has become a vicious circle for us as the economic dimension of the country’s telecom sector does not allow us to build network.
‘For example, GP holds more than 80 per cent market share in Sylhet and that’s why it’s not financially viable for us to build network there,’ the Banglalink CEO argued.
At the same time he also said that building network must be economically viable otherwise none of the operators would be able to build network everywhere, the CEO said.
Aas said that he was not trying to criticise GP, rather his intention was to ensure that the customers get the scope to choose from among the operators.
Expressing satisfaction about Banglalink’s performance on many counts, the CEO of the company, however, expressed his dissatisfaction over the operator’s financial performance.
Digitisation, internet-based services, sales services, youtuber competition, branding and the performance of the employees in Banglalink are satisfactory, according to him.
He also expressed his satisfaction over, among others, the government moves, including spectrum auction before the launch of 4G services, ensuring technology neutrality of spectrum and changing floor tariff to Tk 0.45 for all operators.
Suggesting reduction in taxes on imported handsets, he said that the high taxes on foreign handsets result in illegal import, along with high public expenditure for expensive handsets.
Reduction in taxes on imported handset is important for the growth of internet as well as for increasing penetration of the 4G services, he said.
He also said that the penetration of 4G technology is also dependent on 4G-enabled handsets as a greater number of 4G handsets would encourage us to build the [requisite] network to provide the 4G services.
Speaking about the issue of Banglalink’s service quality, the CEO said that their call drop rate is the lowest among the operators as it has highest spectrum per customer than any other operator.
Highlighting that 6.2 per cent of the country’s gross domestic product was generated by the telecommunication industry, Aas noted that he call tariff in the country was the cheapest in the world.
‘I think that the industry, the people and the government have achieved a lot as a result of the mobile telecommunication,’ he said, adding, ‘the present state of internet penetration was a wild dream for the country even ten years ago.’
In reply to a query on the mobile financial services in the country, the Banglalink CEO said that the prevailing way of MFS has been limiting the growth of the services, pointing out that MFS would grow fast if banks were not kept as mandatory part of MFS.
He, however, said that the mobile phone operators would not be able to make money from the MFS even if the telcos were allowed to provide the service, rather it would empower more people due to wide reach of the telecom operators.
A wide range of financial transactions through MFS would make such transactions more transparent and that would ultimately allow the government to earn more revenue from the informal sectors, he viewed.
Replying to a question regarding the country’s investment climate, the telecom operator’s CEO said that predictable, consistent and long-term regulatory and taxation policies were vital for attracting foreign investment.
‘International investors have options to choose from to make investment and they will go to the country where it’s easy to make investments and from where they would be able to take back their money after a certain period of time,’ said the Banglalink CEO, adding that Bangladesh would have to do more to become more investor-friendly.
