June 15, 2009

Mobile Operators Calls for SIM Tax Waiver

Pointing out to the government's dream of a Digital Bangladesh, six mobile operators yesterday urged the prime minister's intervention in waiving Tk 800 tax on each mobile connection, a major demand from the telecom sector that was not incorporated in the proposed budget. The proposed budget did not give any indication of cutting SIM (subscriber identity module) tax, which means the Tk 800 tax on SIM will remain unchanged.

Chief executive officers and top brasses of the mobile operators in a rare fraternity came under a same umbrella over the SIM tax issue, as the mobile phone market witnessed a near-stagnant growth in the last few months. "Our prayer to the prime minister is to kindly waive the SIM tax completely for the interest of
a developed and Digital Bangladesh," said the Association of Mobile Telecom Operators Bangladesh (AMTOB) in a combine presentation at a press meet yesterday.

The six mobile operators added around 46.41 million customers as of May 2009. However of the total market, top three operators -- GrameenPhone, Banglalink and AKTEL -- hold more than 90 percent share. Citycell, TeleTalk and last entrant Warid are the bottom three players. Except GrameenPhone no other operators are in profit, which compelled all the operators not to subsidize SIM tax.

In such cases, "it could be a merger, it could be a consolidation, or it could be a closure, and we may pack our bag and go," said Muneer Farooqui, chief executive officer of Warid Telecom. Following the operators' decision to discontinue bearing the SIM tax, the six mobile operators added a mere 0.94 million customers to their networks in the second half of 2008, which is 86 percent less than the same period a year ago. In the second half of 2007 they added 6.65 million customers.

Bangladesh has the potential for acquiring more than 55 percent penetration rate in the next five years. A high tax on the telecom industry is baring the development, said the operators. The mobile industry anticipates that the subscriber base will reach 95 million from existing 46 million by 2013 if the SIM tax is waived.

Citing the recent development in Pakistan, the operators said the country reduced SIM tax to Pakistani Rupees (PKR) 250 from PKR 500 and handset tax to PKR 250 from PKR 700. Tax structure for telecom industry in India is the lowest among the South Asian countries, they said. "We should not be opposite (to them)," Oddvar Hesjedal, chief executive officer of GrameenPhone, said, adding that Tk 800 SIM tax is a barrier for reaching rural areas.


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