Pakistan’s Mobilink and Bangladesh’s Banglalink have strong potential for revenue growth since mobile penetration and ARPU in the two countries are lower than in other emerging Asian markets, but new taxes will curb that growth.
The two operators share the same parent company — Egyptian operator Global Telecom Holdings, which is owned by VimpelCom. Mobilink is Pakistan’s largest operator with a 29 per cent market share, while Banglalink is the second-largest player with a 25 per cent share among the six operators in Bangladesh, according to Q3 data from GSMA Intelligence.
Despite the strong growth potential, new regulations, in the form of higher taxes, in both countries will prevent their subscriber numbers and revenues from rising as much as they should, said Gloria Tsuen, a Moody’s VP and senior analyst.
Pakistan’s government in June doubled the sales tax on various categories of imported mobile handsets to PKR300-1,000 ($3-$10) from PKR150-500 ($1.50-$5.00). Although the tax may seem low, it affects
low-income mobile phone users, who are very price-sensitive and represent a large proportion of users.
The higher sales tax follows the Punjab government levying a 19.5 per cent sales tax on internet usage. Meanwhile, Bangladesh introduced a 3 per cent supplementary duty on mobile usage in July.
Moody’s said Banglalink also faces greater challenges due to potential spectrum auctions and sizeable foreign-currency exposures.
Tsuen said that if the government holds auctions in the next twelve months, Banglalink will need to raise funds from its parents or banks. “But it has an adequate liquidity profile before any new spectrum auctions. In addition, about 84 per cent of its debt is denominated in US dollars with no foreign-currency hedges, which means its interest payments could increase if the Bangladeshi taka depreciates against the dollar.”