Yet Another Major Telecom Player, Japan’s DoCoMo, Exits Bangladesh

Japan's largest mobile phone operator, NTT DoCoMo is planning to sell its entire 6.3% stake in Robi Axiata, the second largest mobile phone carrier in Bangladesh, to Bharti Airtel Ltd. of India.

The Bangladesh Telecommunication Regulatory Commission, or BTRC, has approved the sale and recommended the telecom ministry pass it.

At closing, Bharti will hold 31% of Robi, while Axiata Group Berhad of Malaysia will retain a controlling stake of 69%.

Robi had 49.6 million active users in Bangladesh as of February, behind only market leader Grameenphone, which had more than 74 million users.

"We believe that global telecom giant Bharti Airtel's decision to increase its shareholding in Robi is reflective of its confidence in the future of the company as a leader in the digital era as well as the long-term prospect of the Bangladesh economy," said Shahed Alam, chief corporate and regulatory officer of Robi.

But DoCoMo becomes the latest of a series of foreign telecom players who have decided to depart Bangladesh – including Orascom Telecom Holding (now Global Telecom Holding of Netherlands), Singapore Telecommunications Ltd. and Dhabi Group (Warid Telecom) of Abu Dhabi.

DoCoMo initially bought a 30% stake in Robi (formerly called Aktel) 12 years ago for $350 million.

DoCoMo's tenure in Bangladesh has been frustrating due to the Dhaka government’s regulatory policies on fiber optical cable, interconnections and telecommunication transmission.

Most mobile operators can lay fiber optic in other countries, but in Bangladesh, they must have other companies perform that service. DoCoMo also reeled from the Bangladesh's mobile industry very high 54% tax rate.

"When NTT DoCoMo [reduced] its shareholding [in Robi] from 30% to 8% in 2013, the Bangladesh government should have taken it as a wake-up call," said Abu Saeed Khan, a senior policy fellow at LIRNEasia, an information and communication technology policy and regulation think-tank based in Colombo, Sri Lanka. "Now [DoCoMo] is finally leaving Bangladesh at such a time when the world is nervously waiting for a severe economic downturn."

For DoCoMo, this investment in Robi did not produce any noteworthy returns. Over the past year, DoCoMo had no one sitting on the board of Robi and even withdrew all of its managers at Robi more than a year ago.

Khan, also a former secretary general of the Association of Mobile Telecom Operators of Bangladesh, now warned that DoCoMo’s exit might make other global players hesitate to enter Bangladesh.

The departure of the Japanese telecom giant may also delay Bangladesh’s path towards 5G services.

However, Jahurul Haque, the Commissioner of the BTRC, disagrees with that notion.

"Bangladesh is a huge market and all the top global players are running [businesses] here. You will never find so many customers in [such a] small [place] like Bangladesh," Haque said.

In February, Robi applied to the Bangladesh Securities and Exchange Commission in order to get listed on the stock market.

Robi said it was seeking to raise about $62 million in the capital markets. The proceeds raised will be used for network expansion. (Grameenphone started trading in November 2009.)

However, Robi’s corporate parent Axiata wants the Bangladeshi authorities to lower its corporate tax rate by at least 10% from the current 45% rate.

"We will seek to bring down the corporate tax to 30% to 35%, or else there will not be any benefit for the listed company," said Alam of Robi. (Grameenphone initially received the corporate tax benefit when it first got listed, but the Dhaka government revoked that benefit a few years ago).

Axiata also wants a removal of the government’s 2% minimum income tax on overall revenue.

Robi officials were expected to meet with Bangladesh finance minister to discuss these demands.