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High tax bar to better telecom service: GSMA

Star Business Report
The national exchequer gets Tk 51 of every Tk 100 spent by a mobile user, leaving less money for the operators to develop network and run business smoothly, the GSMA said yesterday.
Bangladesh's mobile industry has one of the world's highest taxation rates while operators' monthly average revenue per user (ARPU) is one of the lowest, less than $3, the association said.
The Groupe Speciale Mobile Association (GSMA) represents the interests of mobile operators worldwide, uniting nearly 800 operators with over 300 companies, including handset and device makers, software companies, equipment providers and internet companies and organisations in adjacent industry sectors.
"Low ARPU, high tax and high spectrum charge cannot give you quality of service,” Emanuela Lecchi, head of Asia Pacific of GSMA, said at a press conference in Pan Pacific Sonargaon Dhaka.
This makes the situation very difficult for the government to achieve the goal of establishing a Digital Bangladesh, she said.
Lecchi also sought a predictable regulation regime for better investment, saying taxation should neither discourage investment, nor be industry specific.
At the press meet, the GSMA released three reports on the Bangladesh market where the officials of the Bangladeshi operators were present.
The operators could not purchase necessary spectrum in a recent auction due to high prices, leaving a huge amount of spectrum unsold and with "zero" value, said TIM Nurul Kabir, secretary general of the Association of Mobile Operators of Bangladesh.
He said the operators invested around $ 1 billion for 4G services, including spectrum purchase and network development, and now they demand withdrawal of import duty on smartphones to boost broadband penetration.
“We have requested the National Board of Revenue to remove levies over internet use and import duty on smartphones so that people at the grassroots can afford 4G services," Kabir said.
The GSMA proposed withdrawal of the 35 percent supplementary duty and 15 percent value added tax on SIM cards.
It also demanded withdrawal of a 5 percent supplementary duty on mobile service usage. Along with supplementary duty, customers have to pay a 15 VAT and a 1 percent surcharge.
The GSMA said the corporate tax rate in Bangladesh was the highest in South Asia. The listed operators have to pay a 40 percent corporate tax while it is 45 percent for the non-listed ones whereas nearly all other companies pay 25 percent and 35 percent respectively, it said.
The exceptions are cigarette manufacturers (irrespectively 45 percent) and financial institutions (listed 37.5 percent and non-listed 42.5 percent).
In its report, the GSMA said the mobile industry in Bangladesh grew rapidly to become the fifth largest in the Asia Pacific region with 8.5 crore unique subscribers, accounting for half of the population.
However, with a predominant 2G mobile market, the country faces a significant digital divide, with only one in five Bangladeshis subscribing to mobile internet services in 2017 despite 3G networks covering in excess of 90 percent of the population, according to the report.
Only 21 percent of the population in both Bangladesh and Pakistan has mobile internet connection, the lowest among regional peers, it adds.
Even countries like Nepal and Myanmar—both of which have a lower GDP per capita than Bangladesh—have higher mobile internet penetration: 28 percent and 35 percent respectively.
The majority of the subscribers in Bangladesh primarily use phones for basic voice and SMS services, the report said.
The ARPU of $2.9 is considerably lower than the averages of $10.4 and $14.6 for the Asia Pacific and the world respectively, limiting the ability of operators to engender the required transition to mobile broadband technologies, it said.
Shahed Alam, head of regulatory affairs at Robi, and Taimur Rahman, chief corporate affairs officer at Banglalink, also spoke.