High taxes squeeze telecom sector, push costs onto consumers
Operators repositioning themselves as digital service providers less by strategy than by necessity
When 28-year-old ride-sharing driver Hasan Mahmud tops up his mobile each week, he does not think about supplementary duty, VAT or spectrum fees. Hasan only notices that mobile internet feels increasingly expensive and sometimes slower.
What he does not know is, for every Tk100 he spends on mobile services, about Tk55 goes straight to the government in taxes and fees, a burden that increasingly eats into his livelihood while forcing operators to run on thin margins and limiting investment in network expansion and service upgrades.
Industry executives and analysts say Bangladesh's telecom tax burden far exceeds that of neighbouring countries and the global average, and operators are increasingly diverting investments from core telecom to other digital services.
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Mobile services are subject to a 20% supplementary duty, a tax typically imposed on products the government seeks to discourage such as tobacco, placing telecom at a disadvantage compared with most other industries. Corporate tax adds to the strain: 40% for listed operators and 45% for non-listed ones.
When combined with supplementary duty, VAT, revenue-sharing fees, spectrum charges and licence costs, total taxes and fees consume around 55% of telecom revenue.
By comparison, the overall tax burden on telecom operators stands at about 35% in India and 29% in Pakistan, according to industry estimates.
"The burden does not fall on operators alone," said a senior industry executive. "Consumers pay through higher charges, slower upgrades and uneven service quality."
Profits elusive for most operators
The impact is visible across the sector. Grameenphone remains the only operator generating relatively sustainable profits. Others, despite decades of operation, continue to struggle.
With voice revenue stagnating, spectrum costs remaining high and returns declining, operators are repositioning themselves as digital service providers, less by strategic choice than by necessity.
Fahim Mashroor, convener of civic platform Voice for Reform, said the tax regime fails to reflect how essential connectivity has become.
"Internet and voice services are basic necessities today. So why impose a 20% supplementary duty on them?" he asked. "Supplementary duty is usually applied to discouraged products like tobacco, not essential services."
He added that Bangladesh's internet penetration remains lower than in neighbouring countries, yet telecom taxes are significantly higher. "Taxes are always passed on to consumers. People suffer, and service providers are left without enough funds to invest in better networks."
Regulator acknowledges pressure, but relief elusive
Officials at the Bangladesh Telecommunication Regulatory Commission (BTRC) acknowledge the strain and say tax-reduction proposals are submitted to the National Board of Revenue (NBR) ahead of every budget. However, authorities have been reluctant to offer relief, citing Bangladesh's low tax-to-GDP ratio.
Abdun Naser Khan, secretary of the Posts and Telecommunications Division, told The Business Standard that the issue has yet to be formally reviewed under his tenure, but conceded the pressure is hurting both the industry and consumers.
"This huge tax burden is pushing the industry back and equally causing hardship for consumers," he said. "Companies and the BTRC can jointly take initiatives on this issue. We will take steps considering service simplification and consumer benefits."
High tax at the heart of the problem
Data from GSMA Intelligence shows corporate tax on mobile operators in Bangladesh can reach 45% – levels typically associated with harmful products in many countries.
By comparison, India applies 35%, Pakistan 29% and Sri Lanka 28%. Vietnam, Thailand and Cambodia hover around 20%, while Brunei's corporate tax stands at just 19%.
Beyond corporate tax, customers face a 20% supplementary duty on recharges, alongside VAT. Operators must also pay minimum turnover tax, revenue-sharing fees, spectrum charges, licence fees, social obligation fund contributions, customs duties and various local taxes.
Taken together, these levies absorb about 55% of telecom revenue in Bangladesh. In Asia-Pacific, the average is 24%. Globally, it is around 22%. Even Sub-Saharan Africa, at roughly 35%, remains well below Bangladesh's burden.
Mohammad Zulfikar, secretary general of the Association of Mobile Telecom Operators of Bangladesh (Amtob), said such a layered tax structure is unsustainable.
"It has created deep uncertainty for investors, weakened the industry and resulted in poor returns on investment," he said, calling for an urgent review of supplementary duty, VAT on spectrum, SIM taxes and minimum turnover tax, burdens he noted are rare internationally.
Banglalink: Survival mode after 26 years
The strain is most visible at Banglalink. Even after 26 years of operation, the operator has yet to post a profitable year. Despite a 22% market share and roughly 40 million subscribers, Banglalink reported a Tk331 crore loss in the latest fiscal year.
An additional 2% turnover tax, imposed even during loss-making periods, has further constrained cash flow. Persistent losses have forced the operator into cautious investment, leaving limited scope for network upgrades after meeting tax, spectrum and licence obligations.
Robi: Growth with limited returns
Robi, Bangladesh's second-largest operator with nearly 70 million subscribers, took 21 years to reach profitability after launching in 1997. Last year, the company recorded a turnover of Tk9,950 crores, but profit stood at just 7% of revenue.
While cost control and growth in digital and enterprise services have helped, tax pressure continues to limit investment in unified network management, fibre backhaul expansion and 4G quality enhancement.
Company Secretary Mohammad Shahed Alam said that after paying taxes and spectrum costs, very little capital remains for network upgrades or new technologies.
Grameenphone: Profitable, yet constrained
Market leader Grameenphone controls 46% of the market. In 2024, it posted a turnover of Tk15,845 crore and a profit of Tk3,630 crore, slightly lower than its post-tax profit of Tk3,718 crore in 2020.
Despite financial strength, tax pressure has limited reinvestment to around Tk1,830 crore in 2024, which analysts say is insufficient given rising data demand.
A forced pivot beyond core telecom
Under mounting pressure, operators are expanding beyond traditional telecom.
Grameenphone is growing its MyGP app, offering content, bill payments and digital services, while strengthening enterprise offerings in cloud, IoT and cybersecurity. Robi is focusing on enterprise solutions, smart metering, fleet management and smart city projects, alongside digital partnerships in education and healthcare.
Banglalink is positioning itself as a digital lifestyle brand, leveraging its MyBL app, fintech partnerships, data analytics services and its OTT platform Toffee, which has gained popularity among users.
Risks to service quality and future technologies
Faheem Mashroor warned that without adequate funding, 4G quality improvements and eventual 5G deployment could face prolonged delays.
"The tax structure is hurting not just operators, but the entire digital ecosystem," he said.
AMTOB's Zulfikar said sustainable growth requires gradual rationalisation of taxes and fees in line with international benchmarks, along with a review of spectrum pricing and renewal costs.
"Without an investment-friendly policy environment," he said, "expecting large-scale 5G deployment is unrealistic."
