14 January, 2010, New York
India has become desperate to capture the Bangladesh’s telecommunication system and to build up a fibre optic network by using the Cox’s Bazar submarine cable to connect India’s seven sisters in the Northeast India. In this connection the Indian Telecom companies Bharti Airtel and Reliance Communications have already submitted a joint proposal to Bangladesh Telecommunication Regulatory Commission (BTRC). Thaindia news, a web based news media reported about the development centring the Bangladesh’s communication system.
Bangladesh’s defence network
Experts opined that if India has to depend on Bangladesh regarding maintaining communication with its north eastern provinces, why it had turned down the proposal of sub-regional cooperation as was mooted by the Awami League government in the year 1996. Experts now opine that if it happens so, India will be able to control Bangladesh’s communication system, including the defence network fully. Even the military establishments of Bangladesh will be nothing but an extension of the Indian eastern command.
Apart from the proposal of fibre optic network, Bharti Airtel is about to complete a deal to buy 70 per cent share of Bangladesh’s Warid Telecom for a reported $900 million from Abu Dhabi Group. While Bharti and Reliance are rivals to each other in the Indian domestic market they have joined hands while bidding for fibre optics network in Bangladesh.
Before getting Transit – Corridor through Bangladesh for easier communication with the isolated North-Eastern Provinces (Assam, Meghalaya, Tripura, Monipur, Mizoram, Arunachal and Nagaland), India wants to build up the fibre-optic network, by using the existing submarine lending cable of Bangladesh, the backbone of the Bangladesh’s international communication. The cable again is frequently disrupted, sometimes due to theft of cable and sometime for technical reasons. However Bharti and Reliance have offered Bangladesh access to the alternative submarine cable in exchange of the permission to build up fibre optic network.
The seven north eastern states now get telecom services through VSAT (Very Small Aperture Terminal) at a high price.
Cox’s Bazar: Disruption likely
A BTRC official confirmed the report and said that as per the proposal Bangladesh could use the companies’ undersea cable network as an alternative to lone submarine cable SEA-ME-WE-4. The existing optical fibre line connects Dhaka to the south-eastern Cox’s Bazar’s submarine cable landing station. It serves as the backbone of international communication, while satellite services act as backup with limited bandwidth.
Experts opined that if India is allowed to build up fibre optic network in Bangladesh that will surely disrupt the Bangladesh’s communication with outside world. It is not feasible before launching its own satellite by Bangladesh.
Meanwhile Bangladesh plans to join 50 other countries, including South Asian neighbours India and Pakistan, to ramp up its communications network by launching a satellite.
The cost of the programme will be between $150 million and $200 million according to Post and Telecommunications Minister Raziuddin Ahmed Raju. Bangladesh has started talking to different countries including the US, Japan and China, to help launch own satellite by Bangladesh.
Bharti Airtel has almost finalized a deal with the Abu Dhabi group to buy 70m percent of Bangladesh’s Warid Telecom. The total deal will cost $900 million while the initial investment will be $300 million. Reuters reported from India that Bharti declined to make any comment, but its share has gone up by 2.8 per cent while Abu Dhabi Group Chief Commercial Officer Ali Tahir said that they expect to seal the deal by mid-January 2010. But he did not disclose the sale price.
Bharti targeted this small deal with Abu Dhabi Group to buy Bangladesh’s share when the company failed to materialise its $24 billion merger with South Africa’s MTN. South Africa showed its reluctance to allow a flagship corporate to lose its national character.
Warid is the Bangladesh’s fourth-biggest telecom company. As per the contemplated deal, Abu Dhabi Group will retain 30 per cent share, said the report quoting the source of the selling firm. The sale proceed is likely to help Dubai, which has been crunched recently.
Reuters report said: UAE-based Abu Dhabi Group, a consortium of investors that includes members of the royal family of Abu Dhabi, sought approval from Bangladesh’s telecoms regulator for the sale on December 13, according to the regulator’s chairman, Zia Ahmed.
The deal is set against a backdrop of this week’s announcement that oil-rich Abu Dhabi will provide $10 billion to Dubai in order to help its neighbour meet its debt obligations.
Bharti’s expansion would give the Indian phone leader access to Bangladesh’s rapidly growing mobile sector at a time when it is locked in an intense price war in India with rivals Reliance Communications. For the Abu Dhabi Group, the deal will enable it to focus on other telecoms markets where it can have a bigger market share, Tahir said.
No comment from Bharti
Bharti said on Wednesday it was evaluating international opportunities, but declined to comment on plans to buy Warid. Bharti initially plans an investment of $300 million. He said a written proposal by Abu Dhabi Group did not pin a full value on the deal. A section of newspapers in Bangladesh had reported the final deal could be worth $900 million, citing Warid officials.
“The dynamics of the Bangladesh market are similar to those in India, where Bharti has proven itself,” said Phani Sekhar, fund manager at Angel Broking, which holds Bharti shares, in Mumbai Stock market.
Warid Telecom also operates in Pakistan, Uganda and the Congo. Singapore Telecommunications bought a 30 percent stake in Warid’s Pakistan business for $758 million in 2007 from the Abu Dhabi Group. Warid’s operations in Pakistan, India’s neighbour and political rival, are not part of the Bharti deal. At the end of October, Warid had 2.79 million subscribers – far fewer than Grameenphone whose majority share is owned by Norway’s Telenor.
Bharti, which has more than 100 million subscribers in India, is looking to replicate its staggering growth at home in other emerging markets, where scale is vital, many customers are poor and rural, and penetration rates are low but rising fast. Indian mobile operators are locked in an intense tariff war that has raised concerns about profitability. The price war is aimed at grabbing new users as new firms enter the market.
Bangladesh’s mobile sector has grown rapidly, with subscriber numbers reaching more than 51 million at the end of October from 200,000 in 2001, helped by low penetration levels, competitive tariffs and steady economic growth. Analysts predict the number of subscribers could top 70 million by 2011, nearly half the country’s population of 150 million.
The news came two-and-a-half months after talks between Bharti and MTN Group to create the world’s third-largest mobile operator collapsed for the second time in just over a year on South Africa’s reluctance to allow a flagship corporate to lose its national character.
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Moinuddin Naser is a Bangladeshi writer, contributes in the Weekly Holiday from New York.