Spectrum auctions likely to delay again

Bangladesh’s spectrum auctions, after being pushed back a month to 20 May, will likely be delayed again, after mobile operators failed to resolve the long-simmering SIM replacement tax issue in a meeting with regulators and the finance minster last week.

telecomThe Dhaka Tribune reported that the finance minister asked the operators to pay the replacement SIM tax without interest and withdraw their case in order to move ahead with the auctions.

The government demanded four operators – Grameenphone, Banglalink, Robi and Airtel – pay the unpaid tax after concluding from an extremely small sample that they had not been charging customers tax on SIM replacements.

A representative from a leading operator told the Tribune that since there was no positive outcome from the meeting, the auction date will “obviously need to be rescheduled”. Under the current schedule, operators have to submit applications for the 2G and 3G auctions by 16 April.

The heads of the National Board of Revenue (NBR) and the Bangladesh Telecommunication Regulatory Commission (BTRC) attended the meeting as well at the Telecommunications division secretary.

In a joint letter sent to the financial minister in early March, the operators made resolving the controversial SIM replacement tax issue a condition for participating in the auction.

After the spectrum auction in 2012, the NBR fixed the tax at BDT30.11 billion ($381 million) despite a committee with representatives from the NBR, the BTRC and operators recommending a tax of just BDT6 billion.

Late last year the finance ministry proposed lowering it to BDT20.48 billion without interest or BDT24.68 billion with interest.

Last June the operators called for the BDT100 flat tax on SIM replacements to be removed from the national budget for the 2014-15 financial year. Operators pay the BDT300 government tax for each SIM card they sell.

The BTRC’s draft guidelines for the 1.8 and 2.1GHz spectrum auction were approved by the prime minister in late February.

The rules prevent Grameenphone, the country’s largest operator with a 42 per cent market share, from participating in the 1.8GHz auction because only operators with less than 20MHz in the 900MHz and 1.8GHz bands are eligible.

If the spectrum remains unsold after the first round, Grameenphone can participate in the second round.

The reserve price of the 10.6MHz of 1.8GHz airwaves (sold in two slots: 5MHz and 5.6MHz) is $30 million per megahertz, while the 15MHz of 2.1GHz spectrum has a base price of $22 million per megahertz.

BTRC expects the auction to generate about BDT50 billion ($631 million).