Conspiracy to control IGW business in Bangladesh

A powerful cartel is conspiring to take control of the business of International Gateway (IGW) operators in Bangladesh.

Shamim Ahamedbdnews24.com
Published : 5 Nov 2014, 08:43 AM
Updated : 5 Nov 2014, 02:32 PM

IGWs act as intermediaries on international phone calls.

According to IGW operators, if the plan succeeds then all but seven of the IGWs will have to wrap up their businesses.

They also apprehend of illegal transaction of tens of millions in the business of international call termination.

Officials of the telecoms regulator and IGW operators say the plan has been hatched by some ruling party leaders.

On Sept 28, the Bangladesh Telecommunication Regulatory Commission (BTRC) forwarded a letter to the telecoms ministry after responding to the proposal to form a body called the International Gateway Operators' Forum (IOF).

In its letter, the BTRC asked the ministry to approve formation of the IOF.

BTRC officials say they had to give their nod on the issue under huge pressure from the telecoms ministry.

The licensing guidelines for IGW put all operators on the same platform. But the new plan divides them into two tiers of IGW. Tier -1 consists of 16 IGWs and tier-2 includes seven.

The BTRC rushed to finalise the seven IGW operators (IOS switch operators) under tier 2 and forwarded it to the ministry on Sept 28. They are Unique Infoway, Digicon Telecommunication, Roots Communication, Global Voice Telecom, Mir Telecom, Bangla Trac Communications and Novotel Limited.

Sheikh Fazle Noor Taposh

Special assistant to the prime minister Abdus Sobhan Golap, whose wife holds a 50 percent stake in one of the IGW companies

Of them, Mir Telecom, Bangla Trac Communications and Novotel Limited won IGW license in the first phase of bidding in 2008 during the regime of the military-backed caretaker government.
A senior official of BTRC's legal and licensing wing said that BNP leader GM Siraj's wife Shahnaz Siraj owns Unique Infoway.
Digicon Telecommunication got its license in 2012 on recommendations by the prime minister's nephew MP Sheikh Fazle Noor Taposh, several sources confirmed. The telecoms regulator had blocked IGW connection of Digicon in July 2013 as it did not pay up the BTRC the share of revenue due to it.
Special Assistant to PM and the ruling Awami League's Office Secretary Abdus Sobhan Golap's wife Gulshan Ara holds 50 percent share in Roots Communication.
Global Voice Telecom is owned by AKM Shamsuddoha. Several sources confirmed that Beximco Vice Chairman Salman F Rahman's son Shayan F Rahman has interests in the company, though he's not named as an owner. He was seen in several meetings over the IGW Forum at the BTRC.
bdnews24.com obtained a copy of BTRC's letter forwarded to the telecoms ministry. It says 18 IGWs out of the total 23 operating have been brought under the newly formed body, IOF.
Owners of several IGW companies, preferring anonymity, said that they were forced to join the forum.

Shayan F Rahman

According to the BTRC letter to the ministry, the seven IGW operators of tier-2 have been nominated based on factors including highest rate of call terminations between Mar and Aug this year, revenue generation in Jan-Jul period in 2014 and the amount of arrears pending against the operators with the BTRC.
A top businessman, said to be the key player in stock market manipulations, has held several meetings with former telecoms minister Abdul Latif Siddique over executing the plan, according to ministry officials, who refused to disclose names.
Several meetings over the past few months have taken place at the BTRC on this issue.
Finally, 18 IGW operators were included in IOF following sustained pressure.
A businessman and owner of an IGW company confirmed that those who took part in pressuring IGWs to join the forum include a minister, who is known to be a key spokesperson of the government.
The businessman also said that he refused that minister's request to include his company in the forum.
According to the plan, a bank account of tier-2 operators will handle all the transactions of international call terminations.
Other operators will transact their funds through tier-2 operators, who will then handover the revenue to other stakeholders such as BTRC, ICXs and ANSs.
The IGW licensing guideline lays down a revenue sharing pattern -- 40 percent for BTRC, 17.5 percent for ICXs (Interconnection Exchanges) and 22.5 percent for ANSs (mobile and fixed phone operators).
The new plan proposes a profits sharing on a ratio of 1:1.9 between tier-1 and tier-2 operators after deduction of the revenue, which means tier-2 operators get the opportunity to almost double their profits as against those of tier-1 operators.
IGWs pay the share of its revenue it owes to BTRC every two months, which means tier-2 operators will also be able to earn huge interest on these amounts.
Operators apprehend in case of delays, tier-2 operators will get an additional income amounting to billions of takas.
The monetary value of monthly international call terminations in Bangladesh now stands at Tk 3.5 billion. According to the new plan, tier-2 operators will have total authority over it.
The state earns around Tk 20 billion annually from this sector in revenues.
The new model also makes it obligatory for tier-1 IGW operators to bring in 3 million minutes of international calls every month.
IGW operators say tier-2 operators will be able to bring in international calls at discounted rates as they would be able to double revenue in the proposed model, which will force all except those seven operators to wrap up their businesses.
The BTRC letter sent to the ministry mentions an account styled 'Market Development Expense', but it does not stipulates how it will work and what would be the size of the fund.
Operators allege that this would be another avenue to embezzle millions of takas.
The letter also sought approvals to amend the IGW licensing guidelines to execute the proposed model.
Four IGW operators did not take part in the forum. They are Bangla Tel, BG Tel, Sigma Engineer and DBL.
"This plan will ruin the level-playing field. If it's executed then all other operators except the Tier-2 ones will have to shut their businesses within six months," Bangla Tel's Managing Director Zahir Ahmed told bdnews24.com. "We have spent Tk 150 million to get the license. We pay an annual fee of Tk 42.3 million for the license. Why should be there a disparity if everyone pays the same amount of license fee and share revenue at the same rate?"
Speaking to bdnews24.com, BG Tel CEO Kamrul Islam said: "The plan is a clear violation of the licensing guideline; this will ruin competition in the market.
"The revenue sharing with BTRC is done by pay-orders; it would have been more transparent if it was done through bank transactions."
They say that the IGW business will end up as a monopoly of a few companies if the plan goes through.
"The four operators, who did not take part, share the same view that this will lead a few companies to control the whole business," Sigma Engineering CEO Syed Md Kamal told bdnews24.com.
A tier-2 stakeholder, however, defended the move to create such a syndicate.
"This sector will benefit a lot once the IGW Operators' Forum (IOF) is effective," claimed Global Voice Telecom's owner AKM Shamsuddoha.
Speaking on the matter, Telecoms Secretary Faizur Rahman Chowdhury told bdnews24.com:" I have heard a proposal has come from the BTRC on this matter, but I am yet to see it."
But a senior official of the telecoms ministry said otherwise: "Already 16 negative points have been marked in the proposal."
BTRC Chairman Sunil Kanti Bose is now abroad and the regulatory body's Vice Chairman Ahsan Habib Khan declined to comment on the issue.
Several BTRC officials told bdnews24.com that the amount of dues of the IGW operators to the regulators between Oct, 2012 and Aug, 2014 stands at almost Tk 10 billion.
According to BTRC statistics, there is a market of something between 100 million and 200 million minutes of international call terminations in Bangladesh daily.
There are a total of 29 IGW operators, including the state-owned Bangladesh Telecommunications Company Ltd (BTCL). Of them, 23 are in business.
After the first phase in awarding IGW licenses in 2008, the BTRC allowed 25 more operators in 2012.
Operators have been long complaining of trouble in business because so many IGW licenses were doled out without evaluating the market.
Toufique Imrose Khalidi
Editor-in-Chief and Publisher