Both mobile network operators (MNOs) and internet service providers (ISPs) in Bangladesh face a wide range of taxes and revenue-sharing mechanisms, which inflate the cost of data services. The tax burden for telecom providers includes:15% VAT is levied uniformly across telecom services, affecting both MNOs and ISPs, and an additional 10% SD is applied to mobile services. Further additional surcharge of 2% on total revenue of MNOs adds more financial strain.
In addition to these taxes, MNOs are obliged to share around 5.5% of their revenue with the Bangladesh Telecommunication Regulatory Commission (BTRC), the regulator, while ISPs share about 3-5% as per condition of the licence. Additional revenue-sharing and tax arrangements apply to other services, such as Gateways, Transmission, and Terrestrial layers. These cumulative costs ultimately increase the retail price of data made the services more expensive for consumers. This is an unprecedented step of any regulator of sharing profits of the operators.
Recently, BTRC plans to auction 25spectrums of700 MHz band. The base price has been set at Tk 263 crore per MHz of spectrum. With 7.5 percent VAT, the cost rises to Tk 284 crore per MHz, though the government is considering a 10 percent discount on this steep rate. There was no cost of spectrum when the service was launched about 30 years ago.Tk 284 crore for each MHz of 700 spectrum -- or Tk 2,840 crore for just 10 MHz -- knowing it could reach only about 35 percent of customers, demand extra hardware, software, rental, and electricity costs, and still require additional network sites due to limited availability.Operators would need fresh investment in radio equipment, antennas, software, power supply, and other infrastructure to deploy it.
They would also face higher site rental costs, as new hardware would need to be mounted on existing towers. In essence, after paying a hefty sum to acquire the 700 spectrums, operators would still have to spend heavily on capital and operational expenses to make it usable. When telecom companies are already struggling to maintain sustainable business models in data services, this additional burden could distort market competition.
Other countries do notcharge such a high price for spectrums. In 2025 Vietnam auction and sold 700 MHz at Tk 91.25 per MHz while Bangladesh asking for Tk 284 crore for each MHz of 700 spectrum. The present minimum price of Bangladesh appears inflated when compared with countries of similar socio-economic standing.
Moreover, the service charges of tele companies are lower in Bangladesh than other countries. As per data analysis done by cable.co.uk in 2023 average cost of 1GB datain Bangladesh is $0.23; which is $0.28 in Indonesia, $0.41 in Thailand, and $0.29 in Vietnam. For Fixed Broadband the average rate is $13.53 per month, $28.05 per month, $22, and $8.72 per month respectively.
According to an interview with the operators by a daily newspaper, a significant portion of telco subscriber revenue goes to covering subscriber taxes and other duties. Roughly 39% of that revenue is eaten up by value added taxes, supplementary duties, SIM tax, customs duty and corporate taxes, among others. Meanwhile, another 18% goes to revenue sharing expenses for International Internet Gateway and tower companies, and around 15% goes to annual license fees, annual spectrum fees, and revenue sharing with BTRC. These add in the cost of network operations, marketing, administration, human resources etc, and only 2% of subscriber revenue is left for the operators. The income tax rate for telecom operators is 45%. It is not only highest tax in Bangladesh but also highest among the countries in this region.
In 2024 national budget raised value-added tax (VAT) on SIM cards by 50 percent, hiking it from Tk 200 to Tk 300.Mobile network operators cited this increase as the major reason for what they identified as the biggest decline in a single quarter in recent memory.GP, Robi, Banglalink, and Teletalk collectively lost about 16.3 lakh customers in September alone, before shedding about 36 lakh subscribers in July and August, 2024.
If only the strongest operator secures this premium band, it will gain a coverage advantage no competitor can challenge. The consequences include: (1) Super-dominance, (2) Consumer lock-in, (3) Market foreclosure, (4) Decline in competition, (5) Higher risk of regulatory capture, (6) Slower rural and indoor connectivity upgrades.
Bangladesh has four mobile operators and the market is imbalanced. This is not a healthy market and there is no effective competition. This is an oligopoly market sliding toward dominance. According to published reports, one operator controls 91% of industry profit, second one holds just 9%, third one operator is struggling to survive and last forth one operator has incurred BDT 1,100+ crore loss. In this situation, only two operators will be able to buy further spectrum at the offered price. If the 700 MHz spectrum goes mainly to one or two powerful operators, the imbalance will become permanent. This is how a market "tips" into monopoly.
Authority already imposes high spectrum prices on mobile network operators (MNOs), which significantly raises operational costs. According to GSMA, spectrum pricing in Bangladesh is among the highest in the region. This forces operators to focus on recovering costs rather than investing in network upgrades.
BTRC introduced Significant Market Power (SMP) regulationin 2018 to curb the dominance of large players like Grameenphone and promoting fairer competition. The rulelimits the single operators' share within 40% so that any operator can get ability to influence prices, quality, and terms in a specific market. In the contrary, the tender in question will facilitate SMP in mobile phone sector and may even driveway some operators from the market.
The writer is CEO, Bangla Chemical
