Vol. 5 Num 994 Sun. March 18, 2007  
Front Page

Cell Phone Operators
Govt to talk companies into hiking its revenue
Plans to encourage them to float shares

The government today sits with the association of mobile phone operators to discuss how they could increase revenue share of the nation as was originally intended in the mobile phone agreements signed in 1996.

Undue political influence regarding the contracts during the rule of the four-party alliance and also of the Awami League (AL) allowed the mobile companies to give the government only 5.5 percent revenue instead of 15 percent spelled out in the original contracts.

Besides, the government will also encourage the phone companies to float shares in the local securities market, said a highly placed telecom ministry source.

The modalities and proportions of their shares to be off loaded will be decided in follow-up meetings.

The first meeting of its kind to be held by the telecom ministry today will also ask the mobile phone companies to find modalities through which a larger part of their revenue stays in Bangladesh.

The meeting will be attended by high officials of the ministries of finance and commerce, Bangladesh Telecommunication Regulatory Commission, Telegraph and Telephone Board, Signal Corps Division of Bangladesh Army and two representatives from the mobile phone operators association.

Other agenda of this meeting include increase of job opportunity for local people in the phone companies, further reduction of call rates and overall service improvement.

"Once we discuss our basic issues with the association, we want to hold a series of discussions with the mobile phone operators to determine various modalities through which Bangladesh will get a higher level of revenue from them," said the source.

Explaining the significance of this meeting, another source said that back in 1996 when the 15-year agreements with GrameenPhone, Aktel and Sheba Telecom (there was already a 20-year agreement with City Cell) were being finalised, the government told the phone companies that they should give it 15 percent of their revenue.

But under the influence of the then telecom minister Mohammad Nasim and a high official of the ministry, the AL government inserted a set of options for the mobile companies in the agreements.

As per these options, the mobile companies may pay the government 15 percent of their revenue or (A) pay four lakh dollars and one percent revenue annually in the first five years (B) pay eight lakh dollars and one percent revenue annually in the next five years (C) pay 16 lakh dollars and one percent revenue annually in the last five years.

"This was absurd. Because four lakh to 16 lakh dollars plus one percent revenue sharing is nothing compared to 15 percent revenue sharing," notes the source.

Taking advantage of such an uneven set of options, the mobile companies opted for whichever benefited them most. With very little client base, Sheba Telecom paid 15 percent of its revenue while fast growing GrameenPhone and Aktel opted for the first option and then for the second one, thus paying very little to the government.

"The government is not supposed to allow this but in this case, it had to do so,"the source mentioned.

The 2001 caretaker government took note of this anomaly and came up with a report saying that the government was being deprived of hundreds of crores of taka in revenue. This report went to the ministries of law and finance for follow-up action.

The mobile phone agreements allowed modification and amendments. The law ministry remarked that the agreements may be amended to serve the national interest better.

In 2002, the alliance government formed the BTRC and asked it to amend the contracts. The then BTRC chairman Margub Morshed ignored this.

After Omar Faruk was made BTRC chairman on April 16, 2006, he amended the contracts by dropping the options altogether and in their place inserted that the phone companies would give the government 5.5 percent revenue till their 15-year (and City Cell's 20-year) contracts expire. This decision was made effective from July 1, 2005.

"This was a serious compromise of national interest which we must address now," the source pointed out.

Among the mobile phone companies, only GrameenPhone has taken primary initiative to offload shares in the local market. As the mobile market leader, the copmpany contributed over Tk 2,100 crore to the national exchequer last year.