Govt lost crores in revenues over interconnectivity

Dhaka, Jan 1 (bdprem.com) – The government has lost more than Tk 6700 crore ($1.145 billion) in revenue as the BTTB did not properly link the private mobile phone providers with its network. The figure pops up from the payment records of Grameenphone and Telekom Malaysia (TMIB) that owns AKTEL from 1997 to 2006. Grameenphone had 12.1 million subscribers until 2006 but only 39 percent (4.74 million) of them could access BTTB. The GP paid Tk 805 crore to BTTB for interconnection and call charges while the National Board of Revenue received Tk121 crore in VAT. The state telecoms operator could have earned a further Tk 4887 crore if all of the GP's "mobile-to-mobile" customers were connected to the BTTB network. In addition, Tk 733 crore of VAT could have also been realised from the GP if it were fully connected with BTTB. This is how the government could have altogether earned extra Tk.5620 crore if the BTTB provided full interconnection to Grameenphone since 1997. The impact of interconnection on the exchequer's earnings becomes compelling if the case of TMIB is taken into consideration. Only 20 percent (150,000) of TMIB's 751,000 subscribers were connected to the BTTB until 2004. It has paid the BTTB Tk.138.20 crore and the NBR Tk.20.73 crore in VAT from 1997 to 2004. TMIB got fully connected with BTTB in 2005 and it achieved 300 percent annual growth followed by nearly double that clientele in 2006. The exchequer also reaped benefits after the full TMIB-BTTB interconnection during 2005-06. TMIB has paid Tk131 crore to BTTB in two years (2005-06), which is close to what the company had paid (Tk.138 crore) during the preceding eight years (1997-2004). It has also paid NBR Tk 20 crore in VAT in 2005-2006, which is almost similar to the preceding eight years' payment (Tk 21 crore). If the TMIB were fully connected since 1997, the government could have earned an additional Tk1082 crore through the BTTB and NBR until 2004. It could have also made a further Tk.5620 crore from Grameenphone between 1997 and 2006. The government has altogether lost at least Tk.6702 crore ($1.145 billion) in telecoms revenue and VAT from only these two mobile phone providers for not fully connecting them with the BTTB since they launched operations. It is a conservative estimate as only the receivables from GP and AKTEL have been taken into account in this case study. The mobile-bound calls revenue from the BTTB's network has not been considered. The value of unconnected millions of mobile-bound international calls also remains unaccounted for because of a lack of data. Bangladesh receives more calls from abroad than what it sends. This is how BTTB annually earns millions of dollars from the overseas carriers. It could have been easily increased manifolds if all the mobile networks were fully linked with BTTB to terminate voluminous incoming overseas calls. The government missed earning hundreds of crores of taka from interconnection during the first decade of the telecoms reform. Its apathy has eventually contributed to the boom of bypassed international calls through illegal VoIP outfits. The mobile industry had outsized the BTTB in 2001. International telecoms carriers immediately tapped the captive but exponentially growing mobile market that remains isolated from BTTB's international gateway. In fact, the lack of interconnection prompted this illicit and substandard business. Yet it connects millions of mobile phone users with rest of the world. And the exchequer has lost its shares due to such unlawful practice. Financial penalties not necessarily compensate the actual loss. The government should not have been complacent when the state-owned entity denied interconnection to the mobile phone providers in the first place.