Mobile phone operators are now targeting the rural areas as their hotspots due to sluggish growth in urban areas.

‘We have planned to focus on the rural market for new subscribers,’ said Rashid Khan, chief executive officer of Banglalink on Wednesday. ‘We are confident to provide service there with affordability.’

He said rural segment would be the driver of the next growth as the country is expected to have 50 million mobile phone users by the end of this year, up from 35 million last year.

Anders Jensen, chief executive officer of Grameenphone, in an interview in November also said the wireless carrier sought additional spectrum from the telecom regulator to expand its footprint in the country to offer new services as well as reach the rural areas to tap underserved market.

Jensen said Grameenphone had planned to make its subscriber base double by the next two years mainly concentrating on untapped rural areas which he termed ‘emerging segment.’

‘We will direct lot of our efforts to make sure that we continue to have leadership in this area. And to be able to do so, we have to consider the buying power of this segment, which will be lower and we will have to reinforce our effort to offer cheap, affordable and efficient service to rural areas,’ Jensen said in the interview.

Nearly 1.5 million subscribers are signing up for mobile connections every month in the country as the mobile market booms in the recent years despite achieving a 58 per cent, a slower than expected growth last year.

In January, around 2.05 million new users registered for mobile connections provided by country’s six operators, said sources in the Bangladesh Telecommunications Regulatory Commission. As growth in urban areas begins to receding, mobile operators are eyeing on the vast rural areas where 80 per cent of country’s more than 140 million people live.

Rashid said though there was no available statistics about what percentage of mobile users actually were from urban areas, it was estimated that 70-80 per cent of 36 million subscribers till January came from cities and towns.

The mobile phone penetration rate is still at around 25 per cent and there were lot opportunities to grow. ‘We call it saturation point when the penetration rate touches 50 per cent, so still there is plenty scope to grow.’

He pointed out that the Tk 800 tax on SIM [subscriber’s identification module] card is a major barrier to reach the rural people with affordable connections amid declining average revenue per user resulted from massive price war among the operators.

Currently the ARPU, the average amount of revenue a company collects from each user per month touches as low as $3.

‘Because of the SIM tax, an operator needs eight months to recover the cost of providing the connections as the ARPU touches around Tk 140 a month amid the significant fall of call tariffs in the past years.’

Besides SIM tax, he said, an operator has to spend around Tk 300 for distribution and other related costs to reach a potential subscriber.

Rashid said they had had talks with the BTRC about the matter and the regulator was working on lowering the tax on SIM card from next fiscal.

The mobile companies were trying to ensure affordability for low-income customers through offering recharging the balance denomination as low as Tk 10, he added.

Grameenphone and Banglalink, the first and second largest operators in the country, altogether hold the 70 per cent of the 36 million mobile phone users.

‘With the seriousness of country’s two largest operators, it is obvious the next battle field will be the rural areas,’ said a telecom analyst adding that the other operators had to follow the suit to stay in the competition.

Affordable prices would be the only weapon to win the battle to woo new customers from this segment with limited buying capacity which often termed by the industry people as the ‘bottom of the pyramid,’ the analyst said.

According to the industry insiders, the handset prices and call tariffs fell by 40 and 80 per cent respectively since the beginning of 2006 because of the cutthroat competition among the six operators to increase subscriber base to cannibalise each other market share.

Zahedul Islam