Telcos in a tight spot

The Covid-19 pandemic is taking a heavy toll on the telecom operators, as they saw a 2 per cent decline in their client base in the past two months, according to data from the Bangladesh Telecommunication Regulatory Commission (BTRC).

In March, Grameenphone, Teletalk, Banglalink and Robi collectively lost about 12 lakh active connections for voice services but witnessed an increase in internet service usage at the same time.

In April, with the sales of new connections having considerably slowed, the situation spiralled out of control with all four carriers losing a total of around 24 lakh and 20 lakh users for voice and internet services respectively.

Operators now fear that more harm could come to the sector in the coming days due the combined impact of the coronavirus outbreak and higher taxes.

The finance ministry's decision to increase supplementary duty on mobile phone services from 10 to 15 per cent in the budget for fiscal 2020-21 comes as another blow to the telecom sector, which is already reeling from the coronavirus fallout, officials of the four carriers said.

Customers will now have to pay Tk 133.25 to avail services worth Tk 100 due to the tax hike, they added.

Considering the telecom industry's current situation, the Covid-19 fallout has dealt quite a blow to Bangladesh's socio-economic development as other sectors were similarly impacted, said SM Farhad, secretary general of the Association of Mobile Telecom Operators of Bangladesh (AMTOB).

"People are communicating less now than they did before the pandemic and organic growth has been declining because of the lockdown."

Echoing Farhad's sentiment, the country's leading mobile operator, Grameenphone, said the pandemic has taken a serious toll on several socio-economic factors, leading to a reduction in customer acquisition for telecom services.

But although almost no new connections are being registered amid the coronavirus outbreak, it is actually a common phenomenon for a considerable number of users to be inactive each month, according to various industry insiders.

"We issued new numbers to make up for the dip in sales but due to the lockdown, our retailers can't open their shops while distributors can't deliver the products. That's why our new connections remain unsold," said a senior executive of a reputed carrier requesting anonymity.

During the government announced nationwide closure from March 26 to May 30 to control the spread of coronavirus, all economic activities were shut down, leading to massive losses for most businesses.

Even with the 'general holiday' having since ended, the number of coronavirus cases continues to rise in Bangladesh, forcing the government to extend lockdown procedures in severely affected zones while keeping social distancing guidelines in place.

And with customers remaining at home to protect themselves from infection, many users failed to recharge their accounts and subsequently had their connections cut off, said Shahed Alam, head of corporate and regulatory officer for Robi.

Robi believes the number of customers would bounce back to normal after the end of the lockdown. However, a new phenomenon emerged following the 5 per cent hike in supplementary duty for all mobile services.

"Users now restrict the amount of money they recharge into their accounts. This has become another pressure for us," Alam said.

The number of active connections dropped from 16.53 crore in March to 16.29 crore in April, according to BTRC data published on Friday.

To calculate the number of active customers, the BTRC rules state that if any SIM is not used for at least once in a 90-day period, it will be considered unused or inactive.

In April, the number of active voice connections lost by Grameenphone, Robi, Banglalink and the state-owned Teletalk were 9.7 lakh, 8.7 lakh, 4.9 lakh and 73,000 respectively.

Although the carriers have endured a declining trend for active connections for a few months now due to regulatory issues, the combined total number of users slumped drastically from 7.65 crore at the end of January to 7.44 crore as of April.

By the end of the month, Robi was left with 4.88 crore active voice service users despite being close to the 5 crore landmark back in March. Meanwhile, the number of customers for Banglalink stands at 3.49 crore and Teletalk 48.40 lakh.

Similarly, the number of active internet connections declined from 10.33 crore in March to 10.12 crore in April.

By the end of April, there were a total of 9.31 crore active mobile internet subscribers, 2,000 WiMAX users and 80.84 lakh broadband service users.