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Dhaka Tribune

Axiata hopeful about market potential in Bangladesh

Update : 24 May 2013, 07:35 AM

While Japanese mobile giant NTT Docomo has decidedto cut its investments in the telecommunications sector in Bangladesh, its major partner Axiata Ltd remains confident about business potential in the market here.

On Wednesday, Robi, the country’s third largest mobile operator, declared that its second shareholder, NTT Docomo, has decided not to make further investments in the run up to 3G auction, diluting its shares in the company from 30% to 8%.

Docomo’s decision comes in the face of what it cited as an unfriendly regulatory environment and business uncertainties.

Industry insiders said Docomo’s stand will no doubt send a negative message to foreign investors, but the issues raised by the Japanese company cannot be solved overnight.

“It is a vote of ‘no confidence’ to the regulatory affairs in Bangladesh,” Abu Saeed Khan, senior policy fellow of LIRNEasia told the Dhaka Tribune yesterday.

“It will send a very strong signal to prospective investors,” said Khan, a telecom analyst and a former secretary general of the Association of Mobile Telephone Operators of Bangladesh (AMTOB).

But the Bangladesh Telecommunication Regulatory Commission (BTRC) is very optimistic about the future of the country’s telecom industry.

BTRC Vice Chairman Md Giashuddin Ahmed would not comment on the matter, saying he had no idea what Docomo or Robi had said.

“We are trying to follow the best practices of the telecom world. And we have lots of scope left to improve ourselves,” Giashuddin said.

Docomo joined Axiata (previously known as AKTel) in 2008, buying 30% stakes from the local investor, AK Khan Group, for $381m.

“It is more than sure that after Docomo’s decision, there will be some negative impact on foreign investment,” Mahtab Uddin Ahmed, Robi’s chief financial officer and acting chief executive officer, told the Dhaka Tribune yesterday over phone.

Mahtab said Axiata has already invested lots of money here, and it can’t go out all at once. And the Malaysian-owned company is hopeful that regulations will gradually improve.

“Axiata is used to working in a third world regulatory framework. And it still finds lots of opportunity in the market here,” Mahtab said.

Abu Saeed Khan said the country’s regulatory environment started deteriorating form 2008, particularly after “hijacking of BTRC’s powers,” and there is no sign of things improving at all.

In a press statement, Docomo criticized Bangladesh’s regulatory framework, as well other government agencies.

“The telecom industry is at a critical juncture in Bangladesh, with many issues pending between regulators and other agencies, notably related to VAT rebate on 2G and 3G licenses,” the statement said.

The company is not interested to invest further in Bangladesh due to these long-standing uncertainties, and potentially poor return on investments, Docomo’s management has opted to dilute its holding in Robi, it added.

Sources said Docomo first hinted at its intention to leave Bangladesh nearly two years ago, and it even informed the regulatorsand the government.

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