Banglalink's 3G appetite spoilt by high floor price

Orascom Group Chief Executive Officer Ahmed Abou Doma speaks in a press briefing at the Westin hotel in Dhaka yesterday. Doma announced that Banglalink's subscription reached the 2.5 crore mark. Photo: Banglalink

Bangladesh's second largest mobile operator Banglalink may not participate in a 3G auction if the floor price in the bidding is set at $30 million for per megahertz spectrum, a top official said yesterday.
Ahmed Abou Doma, group chief executive officer of Orascom Telecom Holding, the parent company of Banglalink, said the original price of spectrum will go much higher at the floor price, which will not be viable.
Doma spoke to The Daily Star on the sidelines of a press conference organised by the operator at the Westin Dhaka to mark the 2.5 crore subscriber base in Bangladesh.
Banglalink may have to keep providing the internet through EDGE technology, which is not as speedy as the 3G (third generation) system, he said.
EDGE (Enhanced Data GSM Environment) is a technology that can transfer data through 2G spectrums at a slower rate than 3G technology.
Banglalink now targets the low-income segment of population in Bangladesh, Doma said. Each subscriber talks worth Tk 145 per month, according to a financial report of Orascom Telecom.
In a guideline in March, the telecom regulator proposed $30 million for per Mhz spectrum as floor price for the upcoming 3G auction.
Each operator will be provided 10 Mhz spectrum in the 2,100 Megahertz band. The draft guideline is now at the telecom ministry for approval.
However, on reaching the new milestone in its subscription growth, the operator said: “The 2.5 crore milestone has been reached in a little more than seven years of operation, which represents an incredible achievement, and provides testimony to the company's rapid expansion.”
Grameenphone stands at the top with 3.76 crore subscribers, while Robi Axiata in the third place with 1.76 crore users, according to Bangladesh Telecommunication Regulatory Commission (BTRC).
Doma came to Dhaka along with some other top officials of Orascom and VimpelCom Ltd. Russia-based VimpelCom became a major shareholder of Egyptian Orascom last year.
The officials will participate in the launch of "technology labs" that Banglalink has set up in 270 schools under a corporate social responsibility project. Prime Minister Sheikh Hasina is scheduled to inaugurate the project today.
Doma also criticised the recently published guideline for value added services of the mobile operators where the regulator made it mandatory for the content developers to have licences.
“I don't see such a guideline in the world.”
About profitability, he said high spectrum price, SIM tax and other taxes and VAT have barred the company from reaching the break-even point yet.
He added, 51 percent of gross revenue goes to the government exchequer as various taxes, and from the rest Tk 49 out of Tk 100 they provide services, invest and purchase equipment, which is not enough.
Over the last few years Banglalink has invested $2 billion in Bangladesh and strengthened its network across the country, he said.
Stating various upcoming guidelines by the regulator, he said, “We don't feel great to invest in Bangladesh.” The guidelines are not helpful for business, he said.
He suggested the regulator should consider the operators' views before taking any decision.
"The government asks for too much upfront money rather than long-term revenue," he said.
The operators want to be the partners in the 'Digital Bangladesh' vision of the government, Doma said.
“The regulator should consider us as partners instead of thinking that the operators only want to extract money,” he said.