BTCL is meant for telecom business, but it now survives on its FDR

Infograph: TBS

Summary:

• TCL's net profit surged to Tk67 crore in FY24.
• Profit primarily driven by Tk2,200 crore in fixed deposits.
• Operating loss of Tk132 crore due to high expenses.
• Administrative costs hit Tk400 crore, including Tk299 crore in salaries.
• IGW and telephone service revenues dropped by 12% and 13%.

The state-owned Bangladesh Telecommunication Company Limited (BTCL) reported a net profit of Tk67 crore in fiscal 2023-24 – nearly five times higher than the previous year and over 11 times that in FY22. However, this remarkable growth owes little to operational efficiency or service revenue and is primarily attributed to income generated from fixed deposits in banks.

Experts even suggest that the BTCL would have seen a staggering profit of over Tk200 crore if it had entirely ceased its operations.

How does this paradox arise? The financial report reveals that BTCL's total revenue for FY24 stood at Tk774.69 crore, a modest 4% increase from the previous year. But this was overshadowed by an overwhelming expenditure of Tk907 crore, resulting in an operating loss of Tk132 crore.

A closer look at the expenses paints a worrying picture. Administrative costs alone accounted for nearly Tk400 crore, with Tk299 crore allocated for salaries, allowances, and benefits for its staff, and Tk105 crore for general administrative expenses. Another Tk280 crore was spent on service provision, highlighting the inefficiencies of the organisation.

Despite this, the BTCL managed to report a profit, primarily due to its non-operating income, which totalled Tk206 crore, driven by Tk2,200 crore fixed deposit receipts (FDRs). This marks a 362% increase in net profit compared to the previous year, benefiting from higher interest rates offered by banks amid a liquidity crunch and soaring inflation that prompted the central bank to raise the policy rate to 10%.

Officials now say to stay competitive, the company has undertaken initiatives such as enhancing internet services alongside telephone services, leasing capacity, and purchasing bulk internet from Bangladesh Submarine Cables to sell directly to customers

Meanwhile, BTCL's core business operations remain deeply flawed. Revenue from key segments – international gateway (IGW), telephone services, and value-added services – has continued to decline. IGW revenue dropped by 12% to Tk216 crore, and revenue from telephone services plummeted by 13% to Tk94 crore. On the brighter side, capacity leasing revenue soared by 81% to Tk160 crore, and internet and data service revenue saw an 8% growth to Tk245 crore.

Even as operating losses declined slightly from Tk146 crore in FY23 to Tk132 crore in FY24, the overall picture suggests that BTCL's business model remains unsustainable. Non-operating income from FDRs, which stood at Tk168 crore in FY23 and Tk170 crore in FY22, continues to be the crutch supporting the organisation's bottom line.

"Troubling reality"

Industry insiders and experts say BTCL's reliance on financial instruments rather than core operations underscores a troubling reality. It has yet to adapt to a rapidly changing telecom landscape, where private players have seized the market with superior services and competitive pricing.

Mustafa Mahmud Hussain, a telecom policy analyst, told the Business Standard, "For revenue growth, BTCL needs to expand broadband services, monetise its infrastructure, target enterprises, and launch digital services such as IoT (Internet of Things) and cloud solutions." 

He emphasized the need for strategic cost optimisation, which includes sharing infrastructure, streamlining the workforce, automating operations, and restructuring debt while optimising taxes.

He also recommended several strategic initiatives, such as pushing for regulatory relief, accelerating the rollout of 5G, and forming global partnerships.

Hussain highlighted that BTCL has resources that no other major mobile operator possesses. "If these resources are utilised effectively, BTCL could become profitable," he noted.

He pointed out that BTCL has launched GPON– high-speed broadband access to homes and businesses – at a cost of millions of taka, which holds the potential for strong revenue generation. However, despite this, private companies have found success, while BTCL has struggled.

Additionally, he suggested that BTCL's extensive infrastructure, including towers used for telephone and internet services, could be shared with private companies or foreign institutions to generate substantial profits. This, he believes, could provide a key avenue for growth, tapping into underutilised assets.

Officials say until 2008, the BTCL enjoyed steady profits operating a monopoly business for landline phones and international voice call services. Its fortunes have since declined as people increasingly turned to smartphones and mobile internet over the past two decades.

During the time, many private-sector telecom and internet service providers in the country have flourished, while the BTCL, despite having the necessary infrastructure and policy support, has continued to suffer from persistent losses.

Poor service quality, billing issues for inactive connections, and a lack of technological expansion also contributed to the decline.

BTCL tries to come back

Officials now say to stay competitive, the company has undertaken initiatives such as enhancing internet services alongside telephone services, leasing capacity, and purchasing bulk internet from Bangladesh Submarine Cables to sell directly to customers.

"We have introduced several initiatives through product diversification, which we expect will yield positive results in the future and further increase the company's revenue," Ali Akkas, BTCL's deputy general manager, told TBS.

He said, "The management has taken several initiatives that have played a key role in increasing the company's revenue. Additionally, with the rise in interest rates, income from FDRs has increased, allowing the company to achieve good profit overall."

Internet market grows 4,000 times

According to recent reports, Bangladesh's internet market has grown 4,000-fold over the past two and a half decades.

What was a Tk6 crore annual market in 1996 – operating at a maximum speed of 64 kbps – has now expanded to Tk24,000 crore, with a capacity of 2,400 Gbps.

According to a report by Mordor Intelligence, a global market research firm, Bangladesh telecom market size is estimated at $5.08 billion in 2025, and is expected to reach $6.27 billion by 2030, with a compound annual growth rate (CAGR) of 4.31% during the forecast period (2024–2030).

Key players like Robi Axiata, Grameenphone and Banglalink currently dominate the country's telecom landscape. The industry has experienced significant growth, driven by rising mobile penetration, an expanding internet user base, and increased 4G coverage.

According to the Bangladesh Telecommunication Regulatory Commission (BTRC), as of November 2024, the country had 18.88 crore mobile phone users and 13.28 crore internet users.

Following Bangladesh's emergence as a sovereign country in 1971, the Bangladesh Telegraph & Telephone Board (BTTB) was founded. On 1 July 2008, the BTTB became a public limited company and was renamed as BTCL.

BTCL offers services such as telegraph, local telephone networks, nationwide dialling (NWD), international telephone call facilities, international circuit leasing, international maritime satellite communication, and internet and data services.

Landline connections hit all-time low

Despite a recent surge in profits, the core business of BTCL – landline telephone connections – has been steadily declining.

According to BTCL data, the number of telephone connections has been decreasing consistently since FY11. While the company had over 10 lakh connections earlier, the figure has now dropped to just over three lakhs.

As of June 2024, telephone connections hit a record low of 3.29 lakh, according to BTCL officials. In just one year, the number of connections dropped by 1.23 lakh, down from 4.52 lakh in FY23.

BTCL officials stated that the decline in telephone connections is due to the ease of communication via mobile phones and the expansion of app-based communication systems.

They also pointed out that the fixed cost associated with obtaining a telephone connection has made many people less interested in subscribing.

Md Anwar Hossain, managing director of BTCL, told TBS, "Several measures have contributed to the increase in the company's revenue. The management has also provided directives to further boost earnings."

However, he did not respond to the question regarding why the number of connections has declined.

Sitting on assets worth Tk58,000 crore

According to the annual report, the company holds assets totalling around Tk70,000 crore. After accounting for depreciation of Tk12,195 crore, the total assets stand at Tk57,950 crore.

Among these, land holds the highest value, estimated at Tk50,000 crore.

The written-down value of land is Tk28,058 crore, but its revaluation has increased its value by an additional Tk28,150 crore. In total, the company's land assets are worth nearly Tk56,000 crore.

The value of BTCL's buildings is around Tk1,000 crore, while the assets related to exchange equipment, transmission, and outside plant are valued at approximately Tk12,000 crore.

Facing technological changes

According to its officials, BTCL has been significantly impacted by rapid technological changes, with the widespread use of mobile phones and internet access posing a major challenge for the company.

To survive in the business, BTCL has diversified its operations by adopting technology-based services. In an effort to make landline connections profitable, the company launched the Gigabit Passive Optical Network (GPON) service, which provides internet and telephone services through optical fibre, enabling customers to access Triple Play (video, voice, and data) services.

In addition, BTCL introduced its own over-the-top (OTT) calling application, "Alaap", to compete with foreign OTTs like WhatsApp, IMO, and Viber.

As part of its product diversification, BTCL expanded into data and internet services. In FY18, revenue from data and internet services was only Tk99.23 crore. However, after six years, income from this segment has grown to Tk245 crore in FY24.