Bangladesh Telecommunications Report Q2 2012

In this quarter’s update, we have incorporated the latest subscriber data from the International Telecommunication Union (ITU), the Bangladesh Telecommunication Regulatory Commission (BTRC) and Bangladeshi mobile operators, and made several adjustments to our forecast scenarios. We have also extended our forecast period to 2016.

At the time of writing, the BTRC and several mobile operators have yet to release the latest subscriber data pertaining to the quarter ended September 2011. We estimate that there were about 86.555mn mobile subscribers in Bangladesh at the end of September 2011, representing a net addition of 4.728mn from the previous quarter. Grameenphone was the only operator to have announced its September 2011 results.

The operator’s subscriber base increased to 35.245mn from 33.824mn in June 2011, while its blended ARPU fell to BDT257 from BDT270 over the same period. We believe that the Bangladeshi mobile industry is on track to meet our end-2011 target of 90.511mn. In our newly extended forecast, we expect 158.940mn subscribers in the country at the end of 2016, with a penetration rate of 99.2%. While we have largely retained our expectations for Bangladesh’s fixed-line industry, we have adjusted our forecasts for the country’s internet and broadband sectors in light of new data from the ITU. We forecast 9.718mn internet users and 4.729 broadband (fixed and mobile) subscribers in Bangladesh at the end of 2016.

In the quarter ended September 2011, we saw the announcements that the Bangladeshi government has planned to auction 3G licences in September 2012 and state-owned Teletalk has been granted permission to trial the technology. The dust surrounding the 2G licence renewal fees for Bangladesh's four mobile operators was seemingly settled in September 2011 after a year of negotiations with the regulator.

However, the BTRC contacted the companies in October wanting further fees for additional spectrum that was purchased in 2008. The Bangladeshi telecoms industry has been a significant revenue contributor to the government's coffers through initiatives such as revenue-sharing and the social obligation fund.

However, recent decisions by the government suggest it is trying to squeeze more out of the operators, especially considering that many firms are backed by major international telecoms firms.

Bangladesh remained in 13th position in BMI’s latest Asia Pacific telecoms Risk Reward Ratings.

However, the country saw its overall Telecoms Rating score decline from 48.4 to 47.8 in the previous quarter. The downgrade was due to continued depressed ARPU levels, which were a result of a continued lack of more lucrative 3G services. This was partially offset by an increase in Bangladesh’s Country Risk score. Following Indian Prime Minister Manmohan Singh's historic visit to Bangladesh, bilateral relations between Dhaka and New Delhi are set to enter into a higher growth trajectory. Most importantly, Bangladesh appears to be reaping the fruits of this improving relationship, as various deals boost to the country’s business environment . Dhaka may also benefit from increased attention from Beijing, should Indo-Bangla relations continue to improve.