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Companies and Markets: Bangladeshi fixed-line still growing

Sharply contrasting with her neighbours, Bangladesh’s fixed-line sector is in good health: it grew by 158,000 lines in 3Q09. The sector’s market-leader was the casualty: BTCL’s share fell eight percentage points to 54% in the year to 3Q09. Companies and Markets’ new report has all the details...

Bangladesh Telecommunications Company Limited’s (BTCL's) share of the fixed-line market is in decline, as it faces growing competition from rivals, which now total 11 operators, Companies and Markets has stated in its new report Bangladesh Telecommunications Report Q1 2010. The market leader, which has witnessed a decline in fixed-line market shares to 54.8% in 3Q09, down from 60.6% in 2Q09, and 62.9% in Q308, has plans to create a further 10 million new landline connections by 2015. There are also plans to install 1 million new fixed connections across the country at a cost of US$174 million by the operator, who will in turn be aided by a Chinese government soft loan valued at US$189 million.

The fixed-line market in Bangladesh continues to rise, in contrast to many of her regional peers, which have witnessed a decline in their markets. At the end of 3Q09, the Bangladesh Telecommunications Regulatory Commission (BTRC) stated there had been more than 158,000 net additions in the quarter, up from 50,400 net additions in Q209, and taking the total to 1.592 million subscribers. The stronger than anticipated growth led BMI to revise upwards its expectations for the year ended December 2009, which we now believe will reach 1.611 million, to account for a penetration rate of 1.11%.

 By the end of our five-year forecast in 2014, we expect around 3.3 million lines, to account for a penetration rate of 2.11%. While the fixed-line market is expected to continue to grow over our five-year forecast, there are greater concerns within the telecoms industry over the development of the broadband market. As we cited last quarter, a study by JETRO found Bangladesh to have among the highest charges for broadband services, potentially leading to a loss of foreign investment to neighbouring countries. To resolve this, the government sought to reduce broadband tariffs, while broadband market leader BTCL also dropped its broadband service tariffs. However, this may appear to have been insufficient.

The operator announced in November 2009 the introduction of three new tariffs. The operator reported that earlier tariff reductions had gone unnoticed by customers due to a lack of publicity. With these new tariffs, it aims to attract new customers.

 Commercial WiMAX services were also launched in the quarter by Augere Wireless Broadband; in October 2009, the operator had launched WiMAX services in some designated areas of Dhaka under the brand name of Qubee. Two packages have been offered in the initial phase: 521 kb/s at US$49 per month, while the 1Mb package has been fixed at US$90. The modem price for both packages is US$101. Although the operator admits its tariffs are by no means cheap and could be lower, it is focusing on quality first.

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