Bangladesh auctions 3G licences in a bid to attract foreign investment

Hoping to court investors, Bangladesh’s telecoms regulator has announced that auctions for 3G licences will be held in 2010. According to Zia Ahmed - the head of Bangladesh Telecommunications and Regulatory Commission – the licensing guidelines will be finalised by June 2010, after which the auctions will be held.

Speaking to AFP, Mr. Ahmed confirmed that at least four bandwidth slots will be put up for auction, and that several top telecom companies have expressed interest in bidding – including the British provider Vodafone, according to officials at the BTRC.

Mr. Ahmed added that the BTRC would allow the private sector access to its international telecommunications gateway – meaning that operators would for the first time be permitted to lay underwater cables and connect terrestrial lines with India. “All these (moves) will create a new dynamism in the market and ensure at least one billion dollars of new investment in the telecoms sector this year," said Mr. Ahmed.

The confirmation of 3G auctions comes just days after the BTRC approved Indian operator Bharti Airtel’s US$300 million bid for Bangladesh’s fourth-largest mobile operator Warid, currently owned by the Dhabi Group, an Abu Dhabi-based company which last month asked the BTRC for permission to sell the firm.

The bid represents an initial investment which will eventually lead to Bharti taking a 70% stake in the company; Mr. Ahmed stated that he expected investments to continue over the next few years.

Although it is the market leader in India, Bharti is looking to move into less crowded, emerging markets. The fact that it is targeting Bangladesh suggests that the telecoms giant is looking to smaller territories after the failure of its proposed US$23 billion merger with South Africa’s MTN.

Bharti is the latest in a slew of foreign companies moving into the rapidly expanding Bangladesh mobile market: the country’s market leader is the Telenor-owned Grameenphone, with second place held by Sheba, which was taken over by the Egyptian firm Orascom in 2004. Singaporean Singtel bought a 45% stake in Bangladesh Telecom in 2005, and in 2009 Japanese NTT DoCoMo bought a 30% stake in Aktel, the third largest operator in Bangladesh, which is majority owned by Malaysian Axiata.

Despite this, infrastructure investment has been lacking in Bangladesh and market growth has slowed in recent years. Mr. Ahmed points out: "Companies have been reluctant to invest heavily in network expansion. As a result, telecom penetration could not achieve our desired level.”

While the auctions represent a bid to attract investment and renew growth, Bharti’s investment will also have a significant impact on the market by providing stronger competition to existing providers. The country’s six current operators have 52 million subscribers between them – 35% of the country’s population. Analysts predict that this figure will grow to 100 million in 5 years, as prices will be kept down by the strong competition.

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