Lack of foresight brings Banglalion down

Unrealistically high investment in the globally declining WiMax technology for wireless broadband services has brought Banglalion Communications Ltd to the ground – with experts blaming the failure partly on an absence of foresight on the part of the telecom regulator.

Ignoring warnings from experts and stakeholders, the concern of Sunman Group, owned by Major (retd) Abdul Mannan, had entered the Internet business in 2008 after buying spectrum at nearly three times as high as global rates.

After so many years, the warnings have come true as the company has lost its licence amid mounting liabilities to its lenders and the Bangladesh Telecommunication Regulatory Commission (BTRC).

Banks and non-bank financial institutions are now hunting for Banglalion sponsors to retrieve their investments in the now-defunct company.

Sumon Ahmed Sabir, a telecom and ICT expert, told The Business Standard that the failure of Wimax operators, including Banglalion, is a consequence of mistakes they committed in the beginning.

"Broadband wireless access or WiMax operators had received licences with high hopes of providing services like those which mobile operators provide now. And they procured spectrum and licences at a high cost but that (their hope) did not materialise," said Sumon, who serves Fiber@Home Ltd as its chief technology officer.

Infographic: TBS

Secondly, they failed to transform technology in accordance with demand, added Sumon. Till 2021, the outstanding dues of Banglalion to the BTRC stood at Tk200 crore, according to sources in the commission.

Banglalion had procured a 35 MHz spectrum from the BTRC at a record Tk215 crore when the maximum value of the spectrum of the same technology worldwide was around Tk80 crore.

It had to invest around Tk450 crore to set up the business. Tk171 crore came from a syndicate of nine banks and financial institutions led by AB Bank. In addition, the company raised Tk130 crore by issuing bonds.

At the time, telecommunication and ICT experts had warned investors that such an extravagant investment would not be viable as the WiMax technology had started to become obsolete globally with the evolution of third-generation (3G) technology.

But the investors did not pay heed to the warning and criticism as it seemed there was a demand for high-speed Internet in the absence of 3G technology and expansion of broadband internet.

In the first three years following launching, the operator received a massive response from different walks of people and professionals, with the number of its subscribers reaching 3.5 lakh, according to BTRC data.

But the dream turned into a nightmare once mobile operators introduced the 3G technology in the country in 2013.  In addition, the service provider suffered from a scarcity of Wimax technology equipment as suppliers put the technology on the shelves.

In a short span of time, the high hoped entrepreneur started to decay, finally dying in 2021 when the regulatory commission cancelled Banglalion's BWA licence as the operator had failed to pay the regular charges and fees.   

This correspondent could not reach Major (retd) Abdul Mannan despite repeated attempts on his phone for his comments on the issue.

Sources said the BTRC is now going to take legal action against the company to recover its dues.

On the other hand, the leader of the syndicate lenders AB Bank has called an auction to sell Banglalion's mortgage properties with the aim of recovering its default loans, totalling Tk139crore.

Survival game before the collapse

Many are blaming the BTRC for the company's collapse after investing in a declining sector like WiMax technology.

The telecom regulator shrugged off the blame and said it is the responsibility of the entrepreneur to review business prospects before an investment. If someone invests, it is not the responsibility of the regulator to keep them in business.

Even then, WiMax operators were given the opportunity to expand their business with LTE (Long-Term Evaluation) licences but they could not use it.

At the same time, despite trying to work with mobile operators, the WiMax services provider failed to do the job.

On condition of anonymity, a BTRC director said that the use of technology in the world of the Internet is constantly being updated. Businesspeople invest with that risk. There are many examples in the world of investment incurring losses as a result of the modernisation of technology. It has to be accepted.

A total of 110MHz of spectrum was allocated to three companies. Of these, Banglalion and Qubee were allotted 35MHz each on the 2300MHz and 2500MHz bands. And the regulator later allocated 40MHz of spectrum on the 2600MHz band to Ollo.

Other operators also on death row  

Along with Banglalion Communications Ltd, Augere Wireless Broadband Bangladesh Limited also got a BWA licence to provide services under the brand name Qubee.

Qubee also procured a 35MHz spectrum for Tk215 crore in 2008. Later, Bangladesh Internet Exchange Limited entered the market in 2013 under the brand name of Ollo and Bangladesh Telecommunications Company Limited in 2019.

BTRC officials said that these companies also closed down their business and they do not have any activities currently.

"The commission will move to cancel their licences as they have not been paying regular fees and charges against the license," according to sources.