BTCL is now expanding telephone and internet services to survive

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BTCL is now expanding telephone and internet services to survive

In the fiscal year 2023–24, state-owned BTCL made a net profit of Tk 67 crore, nearly five times higher than the previous year and eleven times higher than the fiscal year 2021–22. But the company’s remarkable growth is mostly the consequence of income from the bank’s fixed deposits, not service revenue or operational efficiency.

According to experts, Bangladesh Telecommunication Company Limited (BTCL) might have made a profit of over Tk 200 crore even if it had ceased all operations.

However, why is there this disparity? The company’s financial report states that BTCL’s total revenue for the fiscal year 2023–24 was Tk 774.69 crore, a mere 4 percent increase over the previous year. However, it had to calculate a loss of Tk 132 crore against a huge operating expense of Tk 907 crore.

Salary, benefits, and other expenses for employees accounted for Tk 299 crore of the approximately Tk 400 crore in administrative costs. There were Tk 105 crore in general administrative expenses. BTCL’s expenditure of an additional Tk 280 crore on service management is indicative of the company’s inefficiency.

Nevertheless, BTCL’s non-operating income was primarily responsible for its profitability. Its total income was Tk 206 crore, primarily from Tk 2,200 crore in interest on fixed deposits (FDRs). The high interest rates offered by the banks made it possible for this rate to be 362 percent higher than the net profit of the prior year.

However, there is still a crisis with BTCL’s core business operations. Divisions like International Gateway (IGW), phone services, and value-added services see a steady decline in revenue. IGW revenue fell by 12 percent to Tk 216 crore, and revenue from telephone services fell by 13 percent to Tk 94 crore.

However, there have been some positive developments—revenue from capacity leasing increased by 81 percent to Tk 160 crore, and revenue from internet and data services increased by 8 percent to Tk 245 crore.

Although the operating loss of Tk 146 crore in FY 2022-23 narrowed slightly to Tk 132 crore in FY 2023-24, the overall picture is clear that BTCL’s business model is not sustainable. Non-operating income from FDR was Tk 168 crore in FY 2022-23 and Tk 170 crore in FY 2021-22, which is still the company’s main source of profit.

‘Embarrassing reality’

Industry experts and insiders say BTCL’s over-reliance on financial instruments rather than its core operations is exposing its inefficiency. The company is yet to compete with private rivals, which have captured the market due to better services and competitive pricing.

Telecom policy analyst Mustafa Mahmud Hossain told The Business Standard, “To increase revenue, BTCL needs to expand broadband services, monetize infrastructure, target entrepreneurs and launch digital services like IoT (Internet of Things) and cloud solutions.”

He stressed the need for strategic cost optimization. These include sharing infrastructure, consolidating staff, automating operations and ensuring tax benefits, as well as debt restructuring.

Mahmud Hossain recommended several strategic steps. Such as gaining regulatory benefits, accelerating the rollout of 5G services and building international partnerships.

He noted that BTCL has some invaluable assets that no other major mobile operator has. “If these assets are used properly, BTCL can be profitable,” he said.

He added that BTCL has spent millions of taka to introduce GPON, a system to provide high-speed broadband services to homes and businesses. This has created the potential to generate strong revenue. But despite this, BTCL still faces challenges, even as private companies have succeeded.

He also suggested that BTCL’s extensive infrastructure—including the towers used for telephone and internet services—could be shared with private companies or foreign institutions for big profits. This would ensure effective use of unused assets and could be an important way for the company to grow.

According to officials, BTCL was consistently profitable until 2008, operating a monopoly in landline phone and international voice call services. However, in the last two decades, BTCL’s business position has declined due to the popularity of smartphones and mobile internet.

During this time, many private telecom and internet service providers in the country have made significant improvements. However, despite the presence of the necessary infrastructure and policy support, BTCL is still facing losses.

Poor service quality, billing problems for idle connections and lack of technological expansion have played a major role in BTCL’s downfall.

BTCL’s turnaround initiatives

To survive in the competition, BTCL has now taken various initiatives such as expanding telephone and internet services, leasing capacity and buying bulk internet from Bangladesh submarine cables and selling it directly to customers.

BTCL’s Deputy General Manager Ali Akkas told TBS, “We have taken several initiatives by diversifying products, which we hope will yield positive results in the future. This will help increase the company’s revenue.”

He further said, ‘The steps taken in management have contributed to the increase in the company’s income. In addition, the increase in interest rates has increased income from FDR, overall the company has been able to make good profits.’

4,000-fold growth in the internet market

According to a recent report, the internet market in Bangladesh has grown 4,000-fold in the last two and a half decades.

The annual market of 60 million taka, which operated at a maximum speed of 64 kbps in 1996, has now reached 240 billion taka and its capacity is 2,400 Gbps.

According to a report by global market research firm Mordor Intelligence, the size of the telecom market in Bangladesh will increase to 5.08 billion dollars in 2025 and it could reach 6.27 billion dollars by 2030.

Large companies including Robi Axiata, Grameenphone and Banglalink currently dominate the country’s telecom sector. There has been significant growth in this sector due to increasing mobile usage, increasing number of internet users and expansion of 4G network coverage.

According to data from the Bangladesh Telecommunication Regulatory Commission (BTRC), as of November 2024, the number of mobile phone users in the country was 188.8 million and the number of internet users was 132.8 million.

After Bangladesh’s independence in 1971, the Bangladesh Telegraph and Telephone Board (BTTB) was established. On July 1, 2008, BTTB was converted into a public limited company and became known as BTCL.

Currently, BTCL provides a variety of services including telegraph, local telephone network, domestic dialing (NWD), international telephone calls, international circuit leasing, international maritime satellite communications, and internet and data services.

All-time low in landline connections

Despite the recent growth in profits, BTCL’s core business—landline telephone connections—is steadily declining.

According to BTCL data, the number of telephone connections has been declining steadily since the 2010-11 fiscal year. While the number of connections was once more than one million, it has now come down to just three lakh.

BTCL officials said that the number of telephone connections has reached a record low of 3.29 lakh as of June 2024, compared to 4.52 lakh in the previous fiscal year. A decrease of 1.23 lakh connections in one year.

According to officials, the ease of access to mobile phones and the popularity of app-based communication are the main reasons for the decline in telephone connections.

In addition, the cost of telephone connections has discouraged many customers from taking up the connection.

BTCL Managing Director Md. Anwar Hossain told TBS, “The company’s income has increased due to several measures. The management has also given instructions to increase income.” However, he did not comment on the decline in telephone connections.

Assets of Tk 58,000 crore

According to BTCL’s annual report, the company’s total assets are around Tk 70,000 crore. However, after a depreciation of Tk 12,195 crore, its actual asset value stands at Tk 57,950 crore.

The value of land is the highest among these assets, which is estimated at Tk 50,000 crore.

While the written value of land is Tk 28,058 crore, its value has increased to an additional Tk 28,150 crore due to revaluation, which has resulted in the total value of the land standing at around Tk 56,000 crore.

The company’s buildings are worth about Tk 1,000 crore, and the exchange equipment, transmission and external plant assets are worth about Tk 12,000 crore.

Challenges of technological change

According to BTCL officials, the challenges of technological change are increasing for the company due to the widespread use of mobile phones and the internet.

To survive with the advancement of technology after technology, BTCL has focused on technology-based services and diversified its operations. To make landline connections profitable, it has launched Gigabit Passive Optical Network (GPON) services, which provide internet and telephone services over optical fibre. As a result, customers can use video, voice and data services – all three together.

In addition, BTCL has launched its own over-the-top (OTT) calling app ‘Alap’ to compete with foreign OTT calling applications like WhatsApp, Imo, Viber.

BTCL has emphasized data and internet services as part of its product diversification. The company’s revenue from this sector in the 2017-18 fiscal year was only Tk 99.23 crore. In a span of six years, it has increased to Tk 245 crore.

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