The Bhutanese Leading the way.
One debate is on if BT can sustain a 50% cut
It has been learnt that the Bhutan Telecom (BT) Board had proposed to the Druk Holding and Investments (DHI) Board that the 50% data hike ordered by the government be done over two years with a 25% cut in the first year and then another 25% cut in the second year.
This would allow BT to deal with any change in network load and potential congestion by deploying additional infrastructure. It would also be less drastic and allow for revenue to grow too as usage went up or more people came on.
The DHI Board not only looked at the above, congestion and sustainability of BT, but also asked BT what are its plans to counter offers by Starlink and TashiCell in the market.
Starlink is offering 25 to 100 Mbps download speed and 5 to 10 Mbps upload speed with unlimited data for Nu 3,000 a month in its Residential Lite plan among others.
TashiCell said its current Internet Leased Line (ILL) Plans (4G/5G Home Internet) range from Nu. 1,477 for 15 Mbps (300GB) to Nu. 4,777 for 200 Mbps (1TB).
The Enterprise ILL over Fiber starts at 5 Mbps for Nu. 1,950 with unlimited data and guaranteed speeds with 1:1 contention.
The DHI Board wanted to know from BT what is its strategy or counter to the above plans as BT currently only offers lease lines at Nu 550 per Mbps with the minimum requirement to take 2 Mbps or Nu 1,100.
A BT official said that to match the TashiCell and Starlink leased line offers it will have to build more 5G towers and for that an analysis of the cost has to be done.
The DHI Board on 26th June asked BT to do a detailed study on all of the above issues.
This is why BT could not follow the letter sent by GovTech Agency asking it to slash data rates by 50% from 1st July 2025.
In the meantime, BT has put a letter to the government via the GovTech Agency asking for some more time to do its study.
As BT does its analysis, the question now is the financial impact of any 50% data hike on BT, and if BT can take that load.
In 2024 BT made a total of Nu 6.140 billion (bn) in revenue and a profit before tax of Nu 3.345 bn and Nu 2.370 bn in profit after tax.
BT has total assets of Nu 7.273 bn which means that profit for 2024 is generating a 32.58% return on the asset. BT has a total equity of Nu 5.940 bn which makes the return on equity at around 40%.
A government official said that BT’s main excuse is sustainability, and the need to maintain its infrastructure but the official said the above data shows a very high return on asset or equity which shows there is space to cut. The official said BT is very profitable and the return on asset or equity is disproportionate.
However, at the same time, when one takes a close look at the data, it is clear that a large chunk of BT’s revenue and profits come from mobile data.
Of the Nu 6.140 bn in revenue, the biggest chunk of Nu 5.656 bn is from mobile (data, voice and SMS) while a distant second is leased line internet at Nu 381.43 million (mn), landline at Nu 43.32 mn and others at Nu 59.05 mn.
A BT official said around 75% of its mobile revenue of Nu 5.656 bn comes from data with the rest 25% coming from voice and SMS.
This means around 4.242 bn of BT’s Nu 6.140 bn in total revenue comes from mobile data.
The above data shows BT’s heavy reliance on mobile data for its revenue, and may explain the nervousness of the DHI Board on the issue and asking for the detailed study on BT’s sustainability.
A BT official said that if the 50% is cut in one go without a corresponding rise in revenue through increased usage or user base, it would not cripple the company but would certainly lead to difficult times ahead.
Here, the government official said the past trends show that whenever BT has cut data rates, the consumption has gone up, and this time around the same is expected. BT reduced its data charges by 59% in the last five years, but instead saw an increase in revenue and profits.
In response to this, the BT official said they have also seen an increase in the number of users and so it is not clear whether it was due to the number of users going up or the rate cuts entirely.
The government official said that BT can do much more in terms of buying cheaper internet from its international providers.
Here, the BT official said the only way to bring down international per Mbps cost is to buy more, but the concern is that if this spare capacity is not used. BT, anyhow, currently imports 40 Gbps and is in the process of buying 20 more Gbps.
The government official said that BT has to get cheaper and more competitive because if it wants to maintain a certain price then it will eventually lose its customer to cheaper offerings by private competitors like Starlink and TashiCell’s offerings listed above. The official said that once people get internet at home the mobile data usage will go down and that is the future.
The only point where the government official and the BT official agreed was on the potential of congestion and the need to prepare for it and address it.
There is some surprise in the government that BT has asked for more time as consultations had been going in for months, but here, the Cabinet will have to reply to BT’s request for more time.
The BT official said the main concern for BT is its sustainability, offering congestion free services and taking into account what its competitors are doing.
