Mobile operator's licence renewal - Draft guideline likely to offer unfair advantage to Airtel
According to high officials in the industry, right from Airtel's acquisition of 70 per cent of the stake in Warid Telecom for $100,000 to allowing Airtel to exchange spectrum band access free of charge
The draft Cellular Mobile Telecommunication Operators Licence Renewal Guidelines 2011, prepared by the Bangladesh Telecommunication Regulatory Commission on behalf of the posts and telecommunications ministry, appears to hand over unfair market advantage to Airtel, an Indian telecommunications company and the latest operator to enter the market, telecom industry insiders say.
According to high officials in the industry, right from Airtel's acquisition of 70 per cent of the stake in Warid Telecom for $100,000 to allowing Airtel to exchange spectrum band access free of charge, the government and the commission have displayed a bias towards Airtel in their treatment of the telecom industry.Four leading operators — Grameenphone, Orascom (Banglalink), Axiata (Robi) and Pacific Bangladesh Telecom Ltd (Citycell) — are up for licence renewal in November, after the expiry of the 15-year term of their licences, handed over in 1996.
According to the draft, operators will need to pay application fee, licence renewal fee, annual licence fee, revenue sharing, social obligation fund as well as separate licence fees and charge for spectrum use.The spectrum fees have been set at Tk 150 crore per MHz of GSM 1800MHz band frequency and Tk 300 crore per MHz of GSM 900MHz band to be multiplied with the utilisation factor of each of the operators.
In total, Grameenphone would have to pay Tk 5,504 crore, Banglalink Tk 2,994 crore, Robi Tk 3,000 crore and Citycell Tk 620 crore.Top officials of the four leading operators say that the proposed fees are too high and do not reflect the true market value and will force the operators to increase prices for services, leaving Airtel, who acquired the licence in December 2005 for $50 million and are not up for renewal until 2020, a window of nine years in which it will be providing services for much lower rates.
'Outside of Grameenphone, the three other operators still operate on losses and, therefore, we do not understand the justification of this staggering fee,' says a top official of Banglalink.'The fees set are more than a year worth of Grameenphone's revenue earning and higher than 10 years of Robi's earning and 15 years earning of Citycell,' says another top official of Grameenphone.The official also points out that such high charges will significantly weaken the four operators' ability to pay for 3G licence, scheduled to be available by the middle of 2011.
Meanwhile, only in August 2010, Airtel exchanged 5MHz allotted from the 1800MHz band to 5MHz of 900MHz band without paying any fee, despite 900MHz band being worth twice in value, clearly indicating to a bias in the treatment of operators.
Officials of the top four operators also allege that the draft guideline also includes a number of regulatory conditions including obligation fund, mobile number portability, employment regulations and significant market power, all of which are beyond the scope of a licence renewal guideline.
'These conditions should apply to the whole industry and not just to operators seeking renewal,' says the top official of Banglalink.Telecom industry insiders also allege that Airtel has been receiving preferential treatment ever since it acquired stake in Warid Telecom in January 2010.'A number of our base transceiver station, or BTS, towers are running on generators most of the time while Airtel towers receive uninterrupted power supply,' says a top official in the telecom industry.
The official also said that Airtel's promotional offer of dinner with Indian actors Saif Ali Khan and Kareena Kapoor was against BTRC regulations, and on complaint from other mobile operators, all the BTRC did was issue a letter to all operators to not flout rules, foregoing any punitive action against Airtel.
Earlier, the parliamentary standing committee on the planning ministry in January described the acquisition of 70 per cent of the stake in Warid Telecom by Airtel as 'questionable', with indication of 'underhand deal', and asked the BTRC to conduct a full investigation in the matter to find out the loss in government revenue.
Airtel acquired stake in Warid for $100,000 whereas in 2008, Japanese operator NTT DoCoMo bought 30 per cent of the stake in Aktel (now Robi) for $350 million.
The BTRC chairman, Zia Ahmed, refuted all the allegations that the licence renewal fees are too high saying that they have been calculated based on the average revenue earning per subscriber of the four operators for 15 years.'We are charging them 15 per cent of their future earnings based on their present market share, also taking into consideration that they did not pay any spectrum fees for the first 15 years and without calculating their potential for future growth,' Zia says.'They are essentially charging us on potential future earnings,' says the top official of Grameenphone.
On the question of whether the telecom companies will be able to pay such high fees, especially since three of them are operating on losses, Zia says he doubts whether these companies are in fact incurring losses judging the size of their advertisement budgets. 'We will soon conduct audits on all the telecom companies.'
With regards to non-licence issues being included in the licence renewal guideline, Zia says that these are standard regulations for telecom industries around the world which had been missing in Bangladesh and the BTRC had taken the opportunity to include them in the draft.
With regards to Airtel, Zia says that when their time comes they will also have to pay the same charges. As for questions surrounding the acquisition of stake in Warid Telecom, Zia says, 'Warid was essentially a dying company and the low acquisition price has been offset by $300 million invested by Airtel into the company.'
Meanwhile, in a written response to queries of New Age, Airtel officials said that Airtel does not currently fall under the licence renewal process. 'Our company paid the requisite fees at the time of acquiring the licence and we would have to pay it again in future.'
With regards to the exchange of spectrum band frequency free of charge, Airtel said that despite paying the highest licence acquisition fee, Warid was only provided with 15MHz in 1800 band. 'These created an adverse effect for a level playing field in the industry. To ensure the level playing field for all operators, the BTRC allocated 5MHz Spectrum in EGSM band to Airtel in exchange of surrendering its 5MHz frequencies from its existing allocation,' reads the statement.
As for questions surrounding the acquisition of stake in Warid, Airtel responded that the transfer of the 70 per cent of the share from the Warid Telecom International Ltd has been transparent and in complete compliance with the government regulations where all due payments to authorities were cleared in time
http://newagebd.com/newspaper1/frontpage/14905.html
According to high officials in the industry, right from Airtel's acquisition of 70 per cent of the stake in Warid Telecom for $100,000 to allowing Airtel to exchange spectrum band access free of charge, the government and the commission have displayed a bias towards Airtel in their treatment of the telecom industry.Four leading operators — Grameenphone, Orascom (Banglalink), Axiata (Robi) and Pacific Bangladesh Telecom Ltd (Citycell) — are up for licence renewal in November, after the expiry of the 15-year term of their licences, handed over in 1996.
According to the draft, operators will need to pay application fee, licence renewal fee, annual licence fee, revenue sharing, social obligation fund as well as separate licence fees and charge for spectrum use.The spectrum fees have been set at Tk 150 crore per MHz of GSM 1800MHz band frequency and Tk 300 crore per MHz of GSM 900MHz band to be multiplied with the utilisation factor of each of the operators.
In total, Grameenphone would have to pay Tk 5,504 crore, Banglalink Tk 2,994 crore, Robi Tk 3,000 crore and Citycell Tk 620 crore.Top officials of the four leading operators say that the proposed fees are too high and do not reflect the true market value and will force the operators to increase prices for services, leaving Airtel, who acquired the licence in December 2005 for $50 million and are not up for renewal until 2020, a window of nine years in which it will be providing services for much lower rates.
'Outside of Grameenphone, the three other operators still operate on losses and, therefore, we do not understand the justification of this staggering fee,' says a top official of Banglalink.'The fees set are more than a year worth of Grameenphone's revenue earning and higher than 10 years of Robi's earning and 15 years earning of Citycell,' says another top official of Grameenphone.The official also points out that such high charges will significantly weaken the four operators' ability to pay for 3G licence, scheduled to be available by the middle of 2011.
Meanwhile, only in August 2010, Airtel exchanged 5MHz allotted from the 1800MHz band to 5MHz of 900MHz band without paying any fee, despite 900MHz band being worth twice in value, clearly indicating to a bias in the treatment of operators.
Officials of the top four operators also allege that the draft guideline also includes a number of regulatory conditions including obligation fund, mobile number portability, employment regulations and significant market power, all of which are beyond the scope of a licence renewal guideline.
'These conditions should apply to the whole industry and not just to operators seeking renewal,' says the top official of Banglalink.Telecom industry insiders also allege that Airtel has been receiving preferential treatment ever since it acquired stake in Warid Telecom in January 2010.'A number of our base transceiver station, or BTS, towers are running on generators most of the time while Airtel towers receive uninterrupted power supply,' says a top official in the telecom industry.
The official also said that Airtel's promotional offer of dinner with Indian actors Saif Ali Khan and Kareena Kapoor was against BTRC regulations, and on complaint from other mobile operators, all the BTRC did was issue a letter to all operators to not flout rules, foregoing any punitive action against Airtel.
Earlier, the parliamentary standing committee on the planning ministry in January described the acquisition of 70 per cent of the stake in Warid Telecom by Airtel as 'questionable', with indication of 'underhand deal', and asked the BTRC to conduct a full investigation in the matter to find out the loss in government revenue.
Airtel acquired stake in Warid for $100,000 whereas in 2008, Japanese operator NTT DoCoMo bought 30 per cent of the stake in Aktel (now Robi) for $350 million.
The BTRC chairman, Zia Ahmed, refuted all the allegations that the licence renewal fees are too high saying that they have been calculated based on the average revenue earning per subscriber of the four operators for 15 years.'We are charging them 15 per cent of their future earnings based on their present market share, also taking into consideration that they did not pay any spectrum fees for the first 15 years and without calculating their potential for future growth,' Zia says.'They are essentially charging us on potential future earnings,' says the top official of Grameenphone.
On the question of whether the telecom companies will be able to pay such high fees, especially since three of them are operating on losses, Zia says he doubts whether these companies are in fact incurring losses judging the size of their advertisement budgets. 'We will soon conduct audits on all the telecom companies.'
With regards to non-licence issues being included in the licence renewal guideline, Zia says that these are standard regulations for telecom industries around the world which had been missing in Bangladesh and the BTRC had taken the opportunity to include them in the draft.
With regards to Airtel, Zia says that when their time comes they will also have to pay the same charges. As for questions surrounding the acquisition of stake in Warid Telecom, Zia says, 'Warid was essentially a dying company and the low acquisition price has been offset by $300 million invested by Airtel into the company.'
Meanwhile, in a written response to queries of New Age, Airtel officials said that Airtel does not currently fall under the licence renewal process. 'Our company paid the requisite fees at the time of acquiring the licence and we would have to pay it again in future.'
With regards to the exchange of spectrum band frequency free of charge, Airtel said that despite paying the highest licence acquisition fee, Warid was only provided with 15MHz in 1800 band. 'These created an adverse effect for a level playing field in the industry. To ensure the level playing field for all operators, the BTRC allocated 5MHz Spectrum in EGSM band to Airtel in exchange of surrendering its 5MHz frequencies from its existing allocation,' reads the statement.
As for questions surrounding the acquisition of stake in Warid, Airtel responded that the transfer of the 70 per cent of the share from the Warid Telecom International Ltd has been transparent and in complete compliance with the government regulations where all due payments to authorities were cleared in time
http://newagebd.com/newspaper1/frontpage/14905.html
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