Bangladesh Telecommunications Report Q4 2009

BMI's latest update on the telecommunications market of Bangladesh contains revised forecasts for the development of the country's mobile market over the next five years. This quarter, we have also introduced an additional forecast, which charts the development of mobile ARPU levels. ARPU levels in Bangladesh are currently being eroded by the general slowdown in the accumulation of prepaid customers at the expense of postpaid growth, as well as lacklustre economic growth.

Mobile subscriptions grew by 6.2% (the equivalent to 2.81mn net additions) in the first seven months of 2009, to reach 47.97mn as of July. Compared to the same period of the previous year, this marked a 73% fall. The lower rate of growth has resulted in part from the decision taken by operators to pass the full hike in SIM taxation on to the end-user. Prior to the government's move to raise SIM tax, operators had been happy to subsidise this; however, having spent significantly on network and services investments, mobile service providers are now intent on making a return on those investments.

This, together with the economic recession, will have a negative impact on mobile growth rates in the country, and in view of this, BMI has revised down its forecast for 2009. We estimate that the remainder of the year will see 3.062mn net additions, with annual growth at just 13.0%, compared to 2008 at 28.5%, bringing the total to 51.032mn. By the end of our five-year forecast in 2013, we estimate mobile subscriptions of 105.3mn, and a penetration rate of 68.3%.

Meanwhile, the biggest development for the broadband market was the announcement that around 32 internet service providers (ISPs) have been provided with IP licences. This is the first time that private ISPs will be given the opportunity to provide VoIP services. However, this has not stopped the illegal usage of VoIP services from occurring. The government alleges that the rise in illegal VoIP had caused a 30% fall in legal voice calls for the month of May 2009, and therefore deprived the government of muchneeded revenues.

BMI does not expect to see a sudden drop in fixed lines as a result of the licensing of VoIP. Certainly, not all VoIP licensees will deploy services immediately. Rather, we anticipate a slowdown in growth rates.

We have maintained our current forecast for 2009, with expectations of an 11.7% increase in the year, down from the 13.3% year-on-year (y-o-y) increase reported in 2008. Subsequent years are expected to continue this trend of slow growth, so that by the end of our five-year forecast in 2013, we expect the total to have reached 2.1mn, and a penetration rate of 1.6%.