Another global player departs Bangladesh

Japan’s largest mobile firm NTT DoCoMo is set to leave Bangladesh by selling its entire stake in Robi Axiata to Bharti International, raising questions about the country’s telecom policies and regulatory regime.

Once it secures DoCoMo’s stake, Bharti will hold 31.31 percent of the second largest mobile phone carrier of Bangladesh. Axiata retains the controlling stake of 68.95 percent.

With the departure, DoCoMo will join a list of telecom players such as Orascom Telecom Holding, SingTel and Dhabi Group (Warid Telecom) that wounded up operations in Bangladesh in the past.

The Japanese firm has been with Robi for 12 years after entering the country in 2008 by acquiring 30 percent stake in the carrier, which was then called Aktel. At the time of exit, it had only 6.31 percent shares.

The Bangladesh Telecommunication Regulatory Commission has approved the proposal and sent its recommendation to the telecom ministry with a positive note for the government’s final nod, said Md Jahurul Haque, chairman of the regulatory body.

The proposal, which did not mention anything about the value of the transaction, has been given the consent under the condition that the responsible company would have to assume the dues of DoCoMo, he told The Daily Star yesterday.

Although the government is not getting anything from the transaction, there are regulations that 5 percent of the total value of the transaction must be shared with the state.

DoCoMo had paid the sum when it acquired 30 percent stakes from local investor AK Khan and Company for $350 million in 2008.

Similarly, when Bharti International acquired Warid in 2013 and renamed it as Airtel, it had to share 5 percent of the transferred value, said industry insiders.

NTT DoCoMo’s exodus from Bangladesh caps a frustrating 12 years for the Japanese telecom giant.

Soon after coming to Bangladesh, exasperation set in the operator about the policies on fibre optical cable, interconnections and telecommunication transmission.

Mobile operators are allowed to lay fibre optic in other countries. But in Bangladesh, they have to take the service from other companies.

Similarly, the carriers have to go through interconnection exchange operators and international gateway operators before connecting subscribers at home and abroad. Thus, apart from sharing revenues, mobile operators have to rely on others to provide service.

High tax is also another reason, say industry people. At 54 percent, Bangladesh’s mobile industry has one of the world’s highest taxation rates.

As a result, after making the initial investment, DoCoMo has not brought in any money to Bangladesh save for some requisite technological support, sources said.

In the first half of 2013, the predominant mobile operator of Japan decided to squeeze its stake to 8 per cent from 30 per cent — a move that highlighted the unfriendly regulatory environment and business uncertainties in Bangladesh and possibly warding off potential investors.

And when Robi and Airtel merged in November 2016, DoCoMo’s share was diluted and came down to 6.31 per cent.

“When NTT DoCoMo contracted its shareholding from 30 per cent to 8 per cent in 2013, the Bangladesh government should have taken it as a wakeup call,” said Abu Saeed Khan, a senior policy fellow at LIRNEasia, an information and communication technology policy and regulation think-tank based in Colombo.

At that time, the Japanese behemoth had squarely blamed regulatory uncertainty for downsizing its stake, but the situation kept worsening.

“Now it is finally leaving Bangladesh at such a time when the world is nervously waiting for a severe economic downturn.”

Not just that, any global player will rethink before entering Bangladesh due to the departure of NTT DoCoMo, said Khan, also a former secretary general of the Association of Mobile Telecom Operators of Bangladesh.

The departure will also impact the 5G roadmap of Bangladesh as NTT DoCoMo is ranked the world’s leading operator in terms of applications for candidate standard-essential patents and the number one in terms of 5G technical proposals in 2019, according to Khan.

However, the BTRC chairman begged to differ.

“Bangladesh is a huge market and all the top global players are running business here. You will never find so many customers in a very small cell like Bangladesh,” Haque said.

For DoCoMo, it was a strategic investment, one that never yielded the company any returns of note, insiders say.

In the last one year, DoCoMo has not sat in the board of Robi Axiata and withdrawn all of its employees who were in the management team of Robi more than a year ago.

“We believe that global telecom giant Bharti Airtel’s decision to increase its shareholding in Robi is reflective of its confidence in the future of the company as a leader in the digital era as well as the long-term prospect of the Bangladesh economy,” Shahed Alam, chief corporate and regulatory officer of Robi, told The Daily Star in a statement.

In February, Robi announced that it wants to get listed on the stock market and has applied to the Bangladesh Securities and Exchange Commission, in a testament of the operator’s foreign owners’ commitment to the market.

Once the issue becomes mature, the stakes of both Axiata and Bharti will be diluted and shareholding structure will change again.  Robi has 4.96 crore active users as of February, trailing behind market leader Grameenphone.

―The Daily Star