Government approves 20-year spectrum deal worth Tk 21,000 crore

Finance Minister Amir Khosru Mahmud Chowdhury has approved the renewal of 79.2 megahertz of spectrum for the country’s three leading mobile operators, Grameenphone, Robi and Banglalink, at a record cost of Tk 21,238 crore.

Under the new policy, the spectrum allocation will be valid for 20 years instead of the previous 15 years. However, a strict condition has been imposed: the operators will not receive a No Dues Certificate unless they pay their outstanding value added tax (VAT) and taxes owed to the National Board of Revenue (NBR).

Analysts believe the flexible installment payment facility and long-term agreement will boost government revenue. Meanwhile, mobile operators are expected to make major investments in 5G and advanced 4G services.

In 2008, mobile phone companies were allocated spectrum for 15 years. The validity of the 79.2 MHz spectrum allocated to Grameenphone, Robi and Banglalink expired on November 10. At that time, the total cost was Tk 9,749 crore.

Accordingly, the government is set to collect record revenue from mobile operators this time. Although spectrum usage agreements were previously signed for 15 years, the duration has now been extended to 20 years under the Telecommunications Network and Licensing Policy, 2025.

Those concerned believe that granting spectrum usage rights for 20 years will encourage mobile operators to make larger investments in 5G and advanced 4G technologies in the coming years. This will enable customers to receive better quality internet and voice call services.

The proposal for spectrum renewal sent to the finance minister stated that 79.2 MHz of spectrum would be renewed for 20 years.

Of this, the price of the 900 MHz band has been set at Tk 316 crore. This band has the strongest ability to penetrate physical barriers. It is the most effective for providing good network coverage indoors and transmitting signals over long distances in rural areas. As a result, demand for this band is the highest and so is its price.

The price of the 1800 MHz band, which is considered a mid-range band, has been set at Tk 264 crore. It maintains the main balance between voice calls and 4G internet services.

Meanwhile, the price of the 2100 MHz band, which is relatively cheaper, has been set at Tk 229 crore. It is primarily used to increase high speed data and internet capacity in urban areas. However, its signals do not travel as far as those of the other two bands. Therefore, its price per megahertz is lower.

Based on this calculation, approval may be granted for Tk 21,238 crore.

Sources said the Finance Division conducted a comprehensive study with the assistance of expert consultants before determining the spectrum prices.

Several factors were considered in the study. These included international spectrum pricing methods, spectrum prices in regional countries, the impact of spectrum on national GDP, the financial capacity and income and expenditure of mobile operators, growing demand for mobile internet, future spectrum requirements and the country’s overall socioeconomic situation.

Following the study, the expert consultant proposed spectrum prices based on the consideration of allocations to mobile operators for 15 years.

Meanwhile, the government formulated the Telecommunications Network and Licensing Policy, 2025, to make the licensing system for mobile operators more business friendly and supportive of investment.

The policy includes a provision to extend the license validity period from 15 years to 20 years.

Against this backdrop, the government is proceeding with a proposal to determine the prices and renewal conditions for the allocation of 79.2 MHz of renewable spectrum for a 20-year period.

The Finance Division also said the Spectrum Management Committee had recommended allocating 79.2 MHz of spectrum to the mobile operators.

However, the committee said it would be difficult to determine spectrum prices or make recommendations on the submitted report within a short period. Therefore, it recommended that the spectrum be renewed after the commission determines an appropriate price.

Meanwhile, payment conditions for the operators have been made more flexible. In particular, they have been given the option to pay the amount in installments.

A 10.5-year payment schedule with 12 installments can be followed. If the entire amount is paid within one year, no interest will be charged.

However, if payment is not completed within one year, interest will be charged on each subsequent installment at a rate of 8.11 percent, equivalent to the rate on 90-day government Treasury bills.