The telecom sector in Bangladesh is facing a critical challenge, with high taxes squeezing the industry and pushing costs onto consumers. This issue is a ticking time bomb, impacting not just the operators but also the overall digital ecosystem and future technological advancements.
Let's delve into the heart of the matter.
The Heavy Tax Burden on Telecom
For every Tk100 spent on mobile services, a staggering Tk55 goes straight to the government in taxes and fees. This burden is not only affecting the operators' profitability but also their ability to invest in network expansion and service upgrades. Industry experts reveal that Bangladesh's telecom tax burden surpasses its neighboring countries and the global average, with operators diverting investments from core telecom to other digital services.
But here's where it gets controversial...
Mobile services are subjected to a 20% supplementary duty, typically imposed on discouraged products like tobacco. This places the telecom industry at a significant disadvantage compared to most other sectors. The corporate tax adds to the strain, with listed operators paying 40% and non-listed ones paying a whopping 45%. When combined with other taxes and fees, the total consumption of telecom revenue reaches approximately 55%.
In comparison, the overall tax burden on telecom operators stands at around 35% in India and 29% in Pakistan.
A senior industry executive highlights, "The burden does not fall solely on operators. Consumers pay through higher charges, slower upgrades, and uneven service quality."
The Impact on Operators and Consumers
The effects are evident across the sector. Grameenphone stands as the sole operator generating relatively sustainable profits, while others, despite decades of operation, continue to struggle. With stagnant voice revenue, high spectrum costs, and declining returns, operators are repositioning themselves as digital service providers out of necessity rather than strategic choice.
Fahim Mashroor, from the civic platform Voice for Reform, emphasizes the disconnect between the tax regime and the essential nature of connectivity today. He questions, "Why impose a 20% supplementary duty on internet and voice services, which are basic necessities? Supplementary duty is usually applied to discouraged products, not essential services."
He further highlights that despite lower internet penetration in Bangladesh compared to neighboring countries, telecom taxes are significantly higher.
Regulator's Acknowledgement and the Need for Relief
Officials at the Bangladesh Telecommunication Regulatory Commission (BTRC) recognize the strain and submit tax-reduction proposals to the National Board of Revenue (NBR) before each budget. However, authorities have been hesitant to offer relief, citing Bangladesh's low tax-to-GDP ratio.
Abdun Naser Khan, secretary of the Posts and Telecommunications Division, acknowledges the issue's impact on both the industry and consumers. He states, "This huge tax burden is pushing the industry back and causing hardship for consumers. Companies and the BTRC can take joint initiatives on this matter, considering service simplification and consumer benefits."
The Layered Tax Structure and Its Impact
Data from GSMA Intelligence reveals that corporate tax on mobile operators in Bangladesh can reach 45%, a level typically associated with harmful products in many countries. In comparison, India applies 35%, Pakistan 29%, Sri Lanka 28%, and Brunei a mere 19%.
Customers face a 20% supplementary duty on recharges, alongside VAT. Operators must also navigate minimum turnover tax, revenue-sharing fees, spectrum charges, license fees, social obligation fund contributions, customs duties, and various local taxes.
These levies collectively absorb about 55% of telecom revenue in Bangladesh, significantly higher than the Asia-Pacific average of 24% and the global average of around 22%. Even Sub-Saharan Africa, at roughly 35%, has a lower burden than Bangladesh.
Mohammad Zulfikar, secretary-general of the Association of Mobile Telecom Operators of Bangladesh (AMTOB), emphasizes the unsustainability of this layered tax structure. He calls for an urgent review of supplementary duty, VAT on spectrum, SIM taxes, and minimum turnover tax, highlighting that such burdens are rare internationally.
The Struggle of Operators
The strain is most evident at Banglalink, which, despite 26 years of operation, has yet to post a profitable year. With a 22% market share and roughly 40 million subscribers, Banglalink reported a Tk331 crore loss in the latest fiscal year. An additional 2% turnover tax, even during loss-making periods, further constrains cash flow, leaving limited scope for network upgrades after meeting tax, spectrum, and license obligations.
Robi, Bangladesh's second-largest operator with nearly 70 million subscribers, took 21 years to reach profitability after launching in 1997. Last year, the company recorded a turnover of Tk9,950 crores, but profit stood at just 7% of revenue. While cost control and growth in digital and enterprise services have helped, tax pressure continues to limit investment in unified network management, fiber backhaul expansion, and 4G quality enhancement.
Grameenphone, the market leader with a 46% market share, posted a turnover of Tk15,845 crore and a profit of Tk3,630 crore in 2024. Despite its financial strength, tax pressure has limited reinvestment to around Tk1,830 crore in 2024, which analysts say is insufficient given rising data demand.
The Forced Pivot and Future Challenges
Under mounting pressure, operators are expanding beyond traditional telecom. Grameenphone is growing its MyGP app, offering content, bill payments, and digital services, while strengthening enterprise offerings in cloud, IoT, and cybersecurity. Robi is focusing on enterprise solutions, smart metering, fleet management, and smart city projects, alongside digital partnerships in education and healthcare. Banglalink is positioning itself as a digital lifestyle brand, leveraging its MyBL app, fintech partnerships, data analytics services, and its popular OTT platform Toffee.
Faheem Mashroor warns that without adequate funding, 4G quality improvements and eventual 5G deployment could face significant delays. He emphasizes, "The tax structure is hurting the entire digital ecosystem."
AMTOB's Zulfikar advocates for sustainable growth through the gradual rationalization of taxes and fees in line with international benchmarks, along with a review of spectrum pricing and renewal costs. He concludes, "Without an investment-friendly policy environment, expecting large-scale 5G deployment is unrealistic."
Conclusion and Call for Action
The high tax burden on the telecom sector in Bangladesh is a pressing issue that requires immediate attention. It impacts not only the operators' profitability but also the quality of services and the potential for future technological advancements. A comprehensive review of the tax structure and a shift towards an investment-friendly policy environment are crucial steps towards ensuring the sector's sustainability and growth.
What are your thoughts on this matter? Do you think the government should reconsider its tax policies to support the telecom industry's growth and benefit consumers? Share your insights and let's spark a discussion on this critical issue.
