Neither operators nor customers are happy

Whenever any Robi user tops up Tk 100 for service, the National Board of Revenue is said to get Tk 27.50 from it as surcharge, value added tax and supplementary duty and Tk 11.4 as minimum turnover tax and SIM tax.

Another Tk 14.4 goes to Bangladesh Telecommunication Regulatory Commission in the form of revenue sharing and spectrum and licence fees while Tk 18.2 to the ecosystem licensees, leaving Tk 28.5 for the carrier.

These numbers were shared by Mahtab Uddin Ahmed, chief executive officer and managing director of Robi, in a Facebook live session on Monday evening.

There were about 1,000 concurrent viewers who also engaged in a question-answer session.

Using what was left, Robi has to manage and expand its network, bear staff salaries and run promotions and other expenses, he said, adding that it was quite impossible to run all these efficiently with this sum.

Ahmed also referred to media reports on the government's intent to increase additional supplementary duty on all kinds of mobile services by 5 percentage points in the upcoming national budget of 2020-21.

"If the government incorporates additional taxes with it then it will be unbearable for us to run the service," said Ahmed.

Currently the services carry 15 per cent VAT, 10 per cent supplementary duty and 1 per cent surcharge.

The government has increased taxes on mobile services consistently for the past few years and it had an impact on users, said Ahmed, also the president of the Association of Mobile Telecommunication Operators of Bangladesh (AMTOB).

"Definitely usage and user numbers will not increase if the tax on usage increases further. We also acknowledge that the government needs money to run the country but how long can a single industry be taxed?" said Ahmed.

"With this tax structure we are not happy and we can't make the customers happy."

He also asked customers to request the government to bring down taxes on telecom services which would ultimately help them reduce service costs and improve service quality.

Ahmed gave a presentation stating that the country's mobile operators were currently paying 53 per cent of their total revenue as taxes and fees. He said this was the highest in the world. Next in line was Argentina and Pakistan at 38 per cent.

According to his presentation, the average tax on telecom services in the Asia Pacific region is 24 per cent, Latin America 18 per cent and Europe 21 per cent.

Ahmed said the viewers could go ahead to get the facts and numbers about investment, revenue and taxes checked to see if they were telling the truth.

"Thanks to the government that they have declared a vision to make Bangladesh a digital country but the tax policy on digital services is contradicting that vision, which needs to be revised," he added.

Bangladesh is a land of opportunities and if policymakers can present the right tax policies, more operators will come over with huge amounts in investments, he added.

"The telecom regulator has tried to bring new operators in Bangladesh in 2013 and 2018 but failed because of the tax policies," he said.

Once there were six players but unfortunately it came down to four and a good number of international investors left this country's telecom industry already, he said.

Ahmed showed a government letter acknowledging Robi as the single foreign investor to bring in the highest amount of foreign direct investment five times in a row. But he also expressed his frustration on their profitability.

Robi's shareholders have so far invested more than Tk 26,500 crore and made a profit of Tk 1,240 crore in its journey of more than two decades in Bangladesh.

The management was able to provide Tk 292 crore to investors as dividend and contributed more than Tk 27,690 crore to the national exchequer as of 2019.

"Our shareholders haven't come to Bangladesh to incur losses and it's not possible for investors to carry these losses for long."

Ahmed also said the spectrum pricing formula was a very big hurdle for offering telecom services.

"Spectrum price is much higher than gold and platinum in Bangladesh and highest in the world in different parameters," he quoted a study of GSMA, an industry organisation that represents the interests of mobile network operators worldwide.

Spectrum price per megahertz (MHz) increased from $12 million to $20 million in 2011 when the operators renewed their 2G licences, he said.

It was again fixed at $21 million per MHz in 2013 when 3G licences were awarded and increased to $27 million and $31 million in two bands in 2018 for awarding of 4G licences, said Ahmed.

"Spectrum is our lifeline and there is no shortage of it in Bangladesh but its price has increased over the period," he added.

"And moreover the regulator has created different licensing regimes and in doing that they have cut our hands and legs and now we have to take services from other parties which is also very costly."

But on the other hand, because of the competitiveness of the market prices, quality of different services also came down to a world low, he said.

Currently per minute voice call charge is Tk 0.58 and per MB data charge is Tk 0.03, both one of the lowest in the world, Ahmed added.

All the operators have also cut data prices amidst the COVID-19 pandemic, he said. "Data use has increased about 25 per cent in the industry but it also led to losses for us for price adjustments."

Ahmed also compared data of the telecom industry with that of others between 2011 and 2020.

He said per unit price of electricity had increased 28.3 per cent, gas 106 per cent, water 117 per cent and bus fare 10 per cent whereas voice call charges had declined 35 per cent while data cost 97 per cent.