Take balanced gains from 3G auction

Jon Fredrik Baksaas

Bangladesh must strike a balance between its ambitions to have higher telecom and internet penetration and earn as much money as possible from the upcoming 3G auction to attract investors, the head of Telenor said.
If the government cannot ensure the balance then there will be no investment, said Jon Fredrik Baksaas, chief executive officer of Telenor.
He was talking to a group of Bangladeshi reporters in Barcelona last week.
The head of the world's one of the top telecom service providers was in the Spanish tourist destination to attend the GSMA Mobile World Congress, the largest gathering of international mobile companies and operators.
His comments came as reports suggest that the Bangladesh government plans to raise a total of $1 billion from the 3G (third generation) auction, which many operators claim to be too high.
In Barcelona, the industry is discussing what kind of ambitions the industry should have by bringing connectivity for internet through much higher degree than it has today, said Baksaas.
The internet and data connectivity is the need of the hours for the billions of users around the world, as voices and SMS services have already met their demand and increased expectations, he said.
He said voice and SMS services were important when those services were not there. "And when it is there then everyone takes it for granted.”
“Now internet is going to take the same development curve. This is as important for Norway as it is for Bangladesh. That is why Telenor is so eager at building the internet connectivity capacity in its networks all around the world.”
For internet penetration, 3G technology is important, as it is a better platform to offer better services than 2G.
“3G is something that we want also for Bangladesh to happen.”
He thanked the government for announcing the 3G auction date, scheduled for June this year. Baksaas also called for flexible regulations for a thriving telecom sector.
“If you go the extreme way, you do not get the satisfactory balance between the two. At the Leadership Summit [in Barcelona] this issue was addressed.”
“Regulation does play a role all the time. If you regulate too much, the market forces will no longer be interested to bring more efficient solutions and greater value to the end-users over time. That is my solid belief.”
Penetration has proved to develop much faster if the licence process is structured in the right way, he said.
The best example, for the time being, is the US, which made strong decision on 4G three years ago. As a result, the fourth generation mobility in the US stands out as a global reference, Baksaas said.
“There are very strong links between the government decisions and market development.”
“The government needs to strike the right balance from their perspective to see investment happen and thus create a possible industry that is capable of bringing the extensive investment into the network.”
He said, in 2000 Europe was too aggressive in pricing. As a result, innovation did not happen for five years, he said.
Baksaas also talked about the recent Grameen Bank Commission report, which has raised some critical questions, baffling many in the industry.
“The interim report that implicated GP is a big concern to Telenor. We are also surprised because we, through GP, have presence in Bangladesh for 15 years. We have invested $2 billion to $2.5 billion. GP has contributed more than $3 billion in taxes and revenues over the years.”
“GP has been stock-listed as a very important company. I think there is a solid history of how GP has developed. GP is also planning to take 3G step. Then we cannot have surprising reports, raising questions about the history of the company.”
He said Telenor is not part of Grameen Bank. Telenor has been the majority owners of GP all the way. “We have supported and developed the company at the period of time when things did not look promising than it is today.”
“In that sense, we are surprised because we are long-term. Of course, that is what we want to continue to be.”
He said the ownership of GP is very clear. It is the Grameen Telecom which is holding the 34.2 percent shares into the GP.
“The relationship between the GP and Grameen Bank is not a subject relevant to Telenor,” he said.
He declined to comment on the government's claim that Grameen Bank is a government bank. “Telenor is not part of it.”
He said Telenor is a long-term industry investor in Bangladesh and plans to continue that journey into the internet space.
“It is the government responsibility on how to develop the framework for the investment to happen. For us to be there, it has to be transparent. Then we will do the job on investment.”
Baksaas also talked about the Commission's claim that Telenor had agreed to reduce its stake into GP to 35 percent from the initial 51 percent after six years' of operation in 2003.
“This is a preliminary report and the claim is an annexure to the preliminary report. It has been claimed before.”
“After six years of operation in 2003, there was no one willing to stand up to provide the necessary financing for the next steps of GP. Telenor did that. There were other financiers who partnered at that time and said Telenor should be a majority.”
“So, there is a clear history path here where we have supported the company and built the company. We also want to continue to build Grameenphone in the internet connectivity space, which is right around the corner.”
Telenor now owns 55.80 percent into the GP.

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