'Administrator' challenges the 5G potential

The telecom sector dominated the news cycle last Wednesday. First came the news of the planned rollout of the fifth generation (5G) mobile service in Bangladesh by the beginning of 2021 -- a progressive move on the part of the government by all accounts.

But the goodwill generated soon got buried when it was learnt that the government would be appointing administrators in Grameenphone and Robi, the country’s top two mobile operators, to seize dues of Tk 13,446 crore.It is this latter development that dominated the public discourse for the rest of the day and sent out the wrong message to the world at a time when the country is courting foreign direct investment, which remains the second-lowest in the Saarc region.

Both the operators are largely foreign-owned: Norwegian Telenor is the biggest shareholder in Grameenphone and Malaysian Axiata in Robi. So, such a confrontational move on the part of the government will surely alarm interested parties considering taking up investment opportunities in Bangladesh.

It all started last year when the Bangladesh Telecommunication Regulatory Commission (BTRC) demanded Tk 12,579 crore from Grameenphone and Tk 867 crore from Robi after running audits into the two operators’ books from their inception until 2014.Both the operators vehemently disputed the audit findings and were willing to fight the matter in court. But for the sake of civility they sought arbitration -- an idea that the telecom regulator never warmed up to.Instead, the BTRC took a hard-line approach and served notice on the two operators last month asking them why their licences would not be revoked for their failure to pay the dues determined by the audit.And on Tuesday came the final punch: it recommended appointing administrators in the two operators, which the telecom ministry readily approved.Such a provoking move is being taken by the BTRC at a time when it is taking preparations for 5G rollout.On Wednesday, it organised a seminar with stakeholders of the telecom sector, where the draft 5G roadmap was presented.And as per the draft 5G roadmap, high-speed mobile broadband will be accessible across the country by 2026, meaning wholehearted participation of the mobile operators is needed for 5G rollout to be a success.But its action the previous day raises questions about how fleshed out the BTRC’s plans for 5G are.

Did it think that Telenor and Axiata would stick around after ‘outsiders’ are appointed in their companies to run them? Would 5G succeed without the enthused participation of the country’s top two mobile operators? 5G needs fresh investment of about a billion US dollar, and given the hostile environment created by the telecom regulator by this move would Telenor and Axiata, or any foreign party for that matter, commit that staggering amount?

The term fourth industrial revolution (4IR) is tossed around often nowadays. Although Bangladesh failed to catch the first, second and third industrial revolutions, we are now hearing that Bangladesh will be at the forefront of 4IR.Everybody knows that artificial intelligence (AI), internet of things (IoT), robotics and big data will drive 4IR and, needless to say, all these services will only be available if there is 5G network.And a hearty participation of mobile operators is imperative for successful rollout of 5G in Bangladesh.This brings to discussion the need for the government to hear out the mobile operators’ side of the story. This has to be a two-way street.

Finance Minister AHM Mustafa Kamal did attempt to play the role of a mediator last month, when he called a meeting with the BTRC, the National Board of Revenue, the telecom ministry and the two operators on September 18.After the meeting, he proclaimed that that matter would be solved within two to three weeks. Already four weeks have passed, and in that time, the matter seems to have taken a turn for the worse.

When the finance minister decided to insert himself in this conflict, he was strictly thinking from the point of view of government’s revenue -- and definitely not from the perspective of Bangladesh’s digitalisation.He mentioned that if the mobile operators earned Tk 100 half of the sum goes to the national exchequer, which is why he was keen on breaking the deadlock and facilitating them to thrive.

Since July 22 the two operators were forbidden from importing equipment for network maintenance and rolling out new plans, both of which affected their business.

But what the finance minister did not mention was the aspect of foreign investment, which must have been on the back of his mind.Foreign investors have been retreating from the Dhaka Stock Exchange in droves since February, when Grameenphone’s regulatory tussles became unyielding.

Grameenphone is the largest company on the DSE by market capitalisation and a good portion of their shares were held by foreign institutional investors.With the withdrawing foreign investors Grameenphone’s share price started sliding, which, in turn, has created a nervous situation in the stock market.

When the finance minister did not get any positive result from his discussions, the government inevitably took the harsh stance.It is said that the main task of the administrators will be to realise the audited amount claimed by the telecom regulator.

For the sake of argument, according to the balance sheet of the two operators, it will take at least three years for the administrators to realise the amount from their profits.But if they want to drain it from their capital base the companies’ very existence will be threatened, so the question of fresh investment on 5G becomes a moot point.Besides, the appointment of an administrator has hardly yielded any success in the past.And this is the first time that the government has decided to appoint an administrator to run a private company and that too in companies like Grameenphone and Robi that are based on state-of-the-art technology.If administrators are any good at running mobile companies, why is state-owned Teletalk being allowed to hang by a thread? Why doesn’t the government make Teletalk a financially viable concern by appointing an administrator?

After the BTRC’s decision to appoint auditors word on the street is that the two operators will take the dispute to the international stage, where the optics for Bangladesh would not look good.And this is not the first time that the telecom regulator has let its dispute with Grameenphone get this messy.

Back in 2011, before the 2G licence renewal, the telecom regulator ran an audit into the mobile operator’s book and claimed Tk 3,034 crore. And the BTRC also placed clearing of the dues as a condition for its licence renewal though the issue was in the court then.Later, the high court asked the telecom regulator to go for a fresh audit as the auditor appointment process was not right.

This episode became a cautionary tale for the other foreign mobile companies which were operating in Bangladesh then. One by one, Singtel, Warid Telecom and Airtel drew up their exit plan and quietly left Bangladesh, writing off their huge investment.But from that game Bangladesh as a country did not emerge victorious; rather, it damaged the country’s image, which can never be measured in terms of money.Which is why, when the BTRC was seeking applications for 3G or 4G licences, it found no foreign takers.

Coming back to 5G, there is no doubt that this mobile technology will be a game changer in the coming days. And if we really miss the train it will be difficult to catch up later.For instance, in 1992 Bangladesh was offered connection to the submarine cable but it passed up on the offer based on a lame excuse. Two decades have passed by and the country is yet to make up for that poor decision.But it is a whole different ballgame now. The world is becoming more competitive by the minute. So if the 5G or the 4IR train is missed again the country will fall back by a few generations.

So those who decide on the policy must think twice before taking such a drastic step as appointing an administrator.