2011 Bangladesh - Telecoms, Mobile, Broadband and Forecasts

As Bangladesh’s fixed market experiences bad times, mobile subscribers grow strongly

Bangladesh remains one of the poorest, most densely populated, least developed countries in the world; yet it has somehow managed to show considerable spirit in the development of its telecom sector. Bangladesh has discovered a way to grow the sector in spite of the odds. This nation of almost 170 million people, with its comparatively low GDP per capita, has been involved in the creation of a very competitive mobile telephone market. Most noticeable has been the willingness of Bangladesh to encourage foreign participation in these endeavours. Following a number of years of strong growth, starting from a very low base, mobile telephone penetration was around 53% (80 million subscribers) by mid-2011.

The success of the mobile market, however, has been achieved in a Bangladesh that continues to struggle with its lowly economic status, its frequent natural disasters such cyclones and floods and the slow implementation of much-needed economic reforms. This state of affairs is reflected in the fixed-line segment of the local telecom market which remains stagnant with a teledensity of less than 1%, by far the lowest in South Asia. With 97% of homes lacking a telephone and with a substantial waiting list for fixed-line services, the country is still struggling with some of the most underdeveloped telecommunications infrastructure in the world. About 80% of Bangladesh’s fixed telephone services are to be found in its four main cities and most of these had been provided by the state-owned Bangladesh Telegraph and Telephone Board.

As the country struggled to put an effective telephone network in place, the fixed market experienced a major setback in 2010. The regulator shut down five of the country’s fixed-line operators because of their alleged involvement in illegal VoIP traffic. This saw a huge number of fixed subscribers disconnected. Twelve months later the five operators were still suspended and the number of fixed lines in operation had almost halved. By July 2011, after 16 months of stalemate, it appeared that some form of resolution was at hand. But the overall damage to the market will certainly take some time to repair.

In the meantime, the mobile market is still growing at an annual rate of close to 30%. Furthermore, the booming mobile phone industry is estimated to have created nearly 250,000 jobs throughout the country. The challenge for the operators is to maintain viable business models, given that mobile ARPU had fallen rapidly in the period to 2009 as the telcos chased subscribers in the rural areas where 80% of the population lives in 86,000 villages. It appeared that ARPU had stabilised by 2011 but it remained low for the time being.

The internet has grown quickly in Bangladesh in the last few years, although obviously from a very low base. With an estimated internet user-base of close to 700,000 coming into 2011, representing only a 0.4% user penetration, the local internet industry is preparing to move into the next stage of its development. The country must work hard, however, to overcome obstacles associated with the country’s lowly economic status and still developing ICT infrastructure. Broadband internet is in its infancy, but the country has started moving into WiMAX services in a significant fashion. This is important because the technology overcomes some of the infrastructure limitations.

Key highlights

• Bangladesh’s mobile market passed 80 million subscribers by the middle of 2011 as penetration neared 50%.
• This had been preceded by a significant five-year period in which the country saw mobile subscriber numbers grew almost 20 times.
• Of the six mobile operators, GrameenPhone was far and away the leader, claiming close to 35 million subscribers, or 44% of the total mobile subscriber base, as at mid-2011, despite the best commercial efforts of its competitors.
• Airtel Bangladesh became the fastest growing mobile operator in the country, its subscriber base lifting 51% in the 12 months to August 2011; in the previous year Orascom had been the fastest mover.
• Internet penetration remains low (0.4% user penetration coming into 2011) and Internet subscription rates are considerably lower.
• Although broadband internet remains almost non-existent in Bangladesh, following the granting of a number of WiMAX licences, there were early signs that the market was about to change as the new WiMAX services were rolled out and started to attract customers.
• The fixed-line market experienced a major setback in the first half of 2010 when the regulator shut down five operators; the action had been taken as part of a major move against illegal VoIP services.
• The number of fixed services decreased dramatically almost halving in a short period of time. The problem remained unresolved for 16 months; by August 2011 it appeared that a solution was at hand. But the market was going to take a long time to recover.

Bangladesh: - key telecom parameters – 2010 - 2011

(Source: BuddeComm)

Note: ¹the estimates shown in the table for fixed lines in 2011 assume a final resolution of the dispute between the regulator and the five banned operators.

Data in this report is the latest available at the time of preparation and may not be for the current year.