Bangladesh Submarine Cables sees revenue decline after 8 years
Bangladesh Submarine Cable Company is the sole provider of submarine cable bandwidth services in the country
After consistent growth since the fiscal 2014-15, Bangladesh Submarine Cable Company, a submarine cable-based internet bandwidth provider, witnessed a decline in revenue in the last fiscal year due to a significant decrease in income from its core business.
As a result, the state-owned firm reduced its dividend payment for shareholders, recommending a 40% cash dividend for fiscal 2023-24, down from 51% in the previous fiscal year.
Following the announcement at the Dhaka Stock Exchange (DSE) today, the company's share price dropped by 4.96% to Tk130.40 each.
According to its financials, revenue decreased by 22.68% to Tk398.54 crore, and net profit fell by 34.41% to Tk182.99 crore compared to the same period of the previous fiscal year.
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Previously, it had posted a remarkable 38-fold growth in profits to Tk279 crore in FY23, up from only Tk7 crore in FY18. Additionally, its revenue had quadrupled to Tk515.49 crore.
The profit and revenue for FY24 were the highest in its history. Company sources attributed this massive jump in profit growth to the government's efforts to strengthen digital connectivity across the country and increase 4G-based internet usage.
However, the growth momentum in revenue and profit of Bangladesh Submarine Cable failed to sustain in FY24 due to a reduction in IPLC rent and IP transit service revenues in the ordinary course of business, along with an unexpected cable cut of SMW5 (the Indonesian seashore end route to Singapore), according to its disclosures.
The disclosures also noted that the decline in profit was due to reduced revenue from IPLC rent and IP transit service, as well as increased operation and maintenance expenses and provisions for bad and doubtful debts.
An official of Bangladesh Submarine Cables, who requested anonymity, told The Business Standard that the management has reduced IPLC rent due to tough competition from International Terrestrial Cable (ITC) operators.
According to its last annual report for FY24, in 2012, the Bangladesh Telecommunication Regulatory Commission issued ITC licenses to six private operators, of which four are now in active commercial operation. The ITC license holders offer IPLC service from neighbouring India through international terrestrial cables connecting the landing stations in India with Bangladesh.
As a result, ITC license holders are the main competitors of Bangladesh Submarine Cable, and they sometimes offer lower tariffs to attract customers. To remain competitive, Bangladesh Submarine Cable occasionally needs to revise its IPLC and IP transit service tariffs downward, which impacts the company's revenue.
Despite the tough competition from ITC operators, Bangladesh Submarine Cable holds around 52% market share in the country's international bandwidth market, according to its annual reports.
Bangladesh Submarine Cable Company is the sole provider of submarine cable bandwidth services in the country and manages the country's submarine cable system. It is also an International Internet Gateway (IIG) service provider.
Currently, it provides bandwidth service to international internet gateway (IIG) operators through International Private Leased Circuits (IPLC), IP transit to IIGs, and IPLC services to various corporate and other customers. Bangladesh Submarine Cable Company operates two submarine cable landing stations with a combined capacity of 1,900 gigabits per second.
The first is SMW-4 (South East Asia-Middle East-Western Europe) in Cox's Bazar, launched in 2005, and the second is SMW-5 in Kuakata, which started operations in 2017.
The company has planned a third submarine cable in collaboration with a new submarine cable consortium titled South East Asia-Middle East-Western Europe-6 (SEA-ME-WE 6 or SMW6).
Following that, it signed a construction and maintenance agreement with SMW6 consortium members and agreements with suppliers in 2021. The third submarine cable is expected to be commissioned by the year 2025.
This new cable will help the company achieve an additional 13,200 Gbps of submarine cable capacity toward Singapore in the east and toward France in the west, as stated in its annual reports.
