Industry data supports the concern. The heavy tax and fee burden effectively leaves operators with thin post-tax margins and limited capacity to reinvest. Total tax incidence is significantly higher than in neighbouring markets such as India.

The future of Bangladesh’s telecommunications industry is at a critical juncture, with Grameenphone’s Chief Executive Officer warning that the sector is “designed to fail” unless fundamental reforms are enacted. In an interview to The Financial Express, Yasir Azman outlined a host of systemic, regulatory and fiscal challenges that he says are making the business environment commercially unviable for operators and unattractive to foreign investors.

Azman’s blunt assessment comes amid intensifying debate over the long-term sustainability of one of the country’s most important digital infrastructure sectors. With mobile subscriber numbers near saturation and data consumption climbing, Bangladesh’s telecom industry has been viewed as a cornerstone of the government’s digital ambitions – but the current operating environment, he argues, undermines that potential.

Tax Burden Squeezes Profits and Investment

At the heart of the crisis is what operators describe as an exceptionally onerous tax regime. Azman said the cumulative effect of corporate tax, value-added tax (VAT), supplementary duties and spectrum fees means more than 55 per cent of consumer spending goes directly to the government – a share among the highest in the region.

“When a customer buys a mobile pack, about 55 per cent goes straight to the government. It is a direct cut,” Azman said, adding that while other countries maintain competitive tax structures to stimulate connectivity and investment, Bangladesh’s fiscal load deters risk-taking.

Industry data supports the concern. The heavy tax and fee burden effectively leaves operators with thin post-tax margins and limited capacity to reinvest. Total tax incidence is significantly higher than in neighbouring markets such as India, where operators face lower combined rates.

Local reports also underscore that network upgrades and maintenance alone can consume about 20 per cent of earnings, exacerbating stress on cash flows, particularly as the Bangladesh Taka depreciates and increases equipment import costs.

Audit Disputes and Regulatory Uncertainty

Beyond taxation, unresolved audit disputes between operators and the Bangladesh Telecommunication Regulatory Commission (BTRC) have added layers of legal and financial uncertainty. Azman revealed that in 28 years of operations, not a single audit dispute has been conclusively resolved, leaving operators with billions of taka in tied-up disputed claims.

“Grameenphone alone has around Tk 125 billion tied up in disputed claims,” he said, highlighting the broader industry liability that runs into tens of thousands of crores of taka. Continued litigation, he warned, could cripple the sector if left unresolved.

Azman called for international arbitration to break the impasse, arguing that domestic legal processes have failed to deliver closure. “This door was entirely closed,” he said, referring to regulators’ resistance to arbitration.

Competition Rules and Innovation Constraints

Competition policy has also emerged as a contentious issue. The BTRC’s Significant Market Power (SMP) framework, intended to prevent monopolistic behaviour, has instead been criticised by operators as overly restrictive and bureaucratic. Azman said the SMP regime has slowed the launch of new products and services, with approvals dragging on for years and discouraging innovation.

This view is echoed by industry analysts who note that while competition exists among operators, regulatory uncertainty and opaque pricing frameworks limit genuine competitive dynamics.

Smaller operators have independently voiced concerns about market imbalance. Executives from Robi, Banglalink and state-run Teletalk have previously argued that dominant players enjoy disproportionate advantages, and called for more equitable competition and infrastructure sharing to foster a healthier market.

Profitability Under Pressure

Despite Bangladesh’s large subscriber base, profitability for most operators remains fragile. Market leader Grameenphone continues to post profits, but even it faces limits on reinvestment due to tax pressures, according to industry reports. Robi took more than two decades to reach consistent profitability, and Banglalink operates with narrow margins – illustrating the uneven financial health across the sector.

These conditions have contributed to a paradox: strong subscriber growth has not translated into robust industry economics. Azman pointed out that operators were more profitable in the past with far fewer customers, implying that escalating costs, taxes and regulatory friction are eroding returns.

Broader Implications for Bangladesh’s Digital Future

The ramifications extend beyond telecom firms. Bangladesh’s government has ambitious plans to transform the economy through digital services, aiming for broader access to healthcare, education and financial inclusion. But unreliable connectivity and slow network expansion risk undermining these goals, industry observers say.

High service costs and constrained investment capacity could widen the digital divide, especially in rural and underserved areas, making it harder for citizens and businesses to participate fully in the digital economy.

“The telecom sector’s problems reflect a wider issue for foreign direct investment in Bangladesh,” Azman said. “Investors’ appetite to invest in Bangladesh is very, very low.”

Calls for Reform Grow Louder

Industry players and analysts are increasingly urging policymakers to rethink the sector’s structural framework. Key recommendations include tax rationalisation, expedited dispute resolution mechanisms, more flexible competition policies, and clear long-term regulatory roadmaps to restore investor confidence.

Recent debates on new licensing policies and guidelines, however, show the complexity of reform. Some stakeholders have expressed concern that draft policies could inadvertently stifle local entrepreneurship or lead to price hikes, underscoring the need for inclusive consultations and careful design.

For Bangladesh to achieve a digitally inclusive future, telecom reform advocates argue, the state must strike a balance between revenue generation and creating an enabling environment that attracts investment, fosters competition and delivers quality services to consumers.

Without such changes, Azman and others warn, the telecom sector’s potential to drive economic growth and digital transformation may remain unrealised – leaving Bangladesh to face both connectivity challenges and a weaker platform for future innovation.