Because of years of work on family planning, child health and womens’ education, its fertility rates are declining and the country is just entering the golden period in terms of demography: declining child dependency; increases in elderly dependency not yet started; and a bulge of unencumbered working-age people.

But dividends come with dangers: if the demographic bulge finds no opportunities for making a living, they will rise in rebellion (e.g., the three youth revolts in Sri Lanka in the 1970-90 period). For this it is necessary to remove stifling regulation and encourage investment.

Sadly, the government of Bangladesh seems to be doing the exact opposite, as reported in the influential Economist:

The government is calling for the Grameen empire to be brought together “under a single structure”. Bangladeshi businessfolk are horrified. If a Nobel prize is no defence against expropriation, that doesn’t bode well for the security of property rights in Bangladesh.

Grameen’s foreign partners are keeping quiet, for now. A spokesman for Telenor Group, in an e-mail, says that the firm expects that its relationship with Grameen Telecom “will continue based on professionalism, openness and in the best interest of Grameenphone.” Eric Lesueur of Grameen-Veolia says he believes that the new management of Grameen Bank “will respect the growth plans and strategies developed with Professor Yunus.”

The Za­mbian government has confirmed expectations and will renationalise the local mobile network, Zamtel, which is 75% owned by Lybia’s Lap Green Networks.

The government has also dissolved the board of directors and appointed its own interim CEO.

Zamtel’s bank accounts were also frozen last week in an allegedly unrelated investigation into money laundering claims, which the company denies.

The previous government sold the 75% stake in Zamtel to Lap Green Networks in 2010 for US$257 million – a figure which the then-opposition claimed was substantially below the book value for the company.

Story.

Digital Bangladesh is the centerpiece of the government’s ICT policy. Therefore, the government must consider the evidence, in both Bangladesh and in fast-developing Asia, on what infrastructure is likely to make Digital Bangladesh possible. Will Digital Bangladesh become a reality on wireless network platforms operated by well capitalised and managed mobile operators, or on some government-managed wireguide-based platform? Also considered must be the evidence building up on the use of mobile applications on inexpensive phones as well as the explosion of smart phones that have as much computing power as desktop machines a few years back.

This mirrors a response I gave yesterday when speaking at an innovation event in Helsinki. The best way to advance innovation in the ICT space is improve the investment environment and free up spectrum.

Just yesterday, on the train to Brussels, I just finished answering a series of questions sent by Voice & Data, the leading ICT industry publication in South Asia. This included a question on whether it would be possible for Indian telcos to do business in China. My answer was “China is a market that is still heavily controlled by the government. I see possibilities for Indian equipment/software/apps suppliers to enter, but believe it is premature to think of Indian operators entering the Chinese market like they have entered African or South Asian markets.” I went on to say that I was not an expert on corporate strategy, either of Chinese operators or of Indian operators. Unlikely that this response will appear in the final piece.

And today, I am at the conference on Asian rise in ICT R&D in Brussels, and up comes a senior executive of Telefonica. His entire talk is about the strategic alliance between his company, one of the largest telecom operators in the world with a massive footprint in Latin America and Europe, and China Unicom, one of the major operators in China. Telefonica is the second largest shareholder of China Unicom (after the government of China) and its Chairman sits on the China Unicom board. CU has invested in Telefonica and its Chairman sits on Telefonica’s board. They are doing common procurement of dongles, for example; they are educating each other’s managerial staff; collaborating on LTE development, and so on. Wow.

Then an irreverent soul from the audience asked when Telefonica would be able to sell directly in China. It turned out that the Telefonica executive was expert only on regulatory strategy and was not best placed to answer that kind of sensitive question. But you can infer the answer.

So there’s the answer: it is possible to work with the state-market enterprises of China, but it is not in the conventional way. It is through the classic JV route that one uses in opaque, patronage-ridden countries. It is not the competition path; it’s the collaboration path.

I dislike travelling 10+ hours to participate in two-day conferences. But on days like this, I see it makes sense.

This above/below the norm assessment is a tough one for the regulator to do on a regular basis. One should not draw conclusions directly from the raw number. While the LKR 1.275 billion profit made by Dialog Axiata does seem like a large amount of money, it must be first seen in relation to the size of its capitalization (Dialog was a one point the largest in the Colombo Stock Exchange), and then in relation to the returns on investment in similar companies. The former is quite simple; but the latter requires a bit of specialized knowledge, not normally available with regulatory agencies and government ministries.

Anyway, the profit picture seems okay on the surface, because Sri Lanka’s largest mobile operator is investing again.

Sri Lanka’s Dialog Axiata, the islands largest mobile operator said it will invest 150 million US dollars in expansion bringing the total foreign direct investments by the firm to 1.2 billion US dollars.

Dialog Axiata chief Hans Wijayasuriya said the new investments in part will to go strengthen its broadband and fiber optics network coverage.

“We will focus a lot of it in broadband, mobile broadband as well as fiber optics,” Wijayasuriya said.

“We want to make our products available seamlessly across the country.”

The firm started in 1994 and now has 7 million subscribers in a market which had over 15 million subscribers.

“In the past telecoms and power sector contributed around 60 percent of FDI, while 40 percent came from other sectors,” Perera told reporters in Colombo.

“In the future the telecoms and power sectors will come down to around 40 percent.”

But we wonder whether this is the full story. Or whether investment in telecom is actually going down in absolute terms and the BOI Chairman is simply doing his job (or trying to save it) by spinning the decline.

BTW, the same story states that 18 telecom operators invested LKR 194.6 billion rupees in Sri Lanka. Guess this is FDI and guess this is cumulative. Still that’s serious money, about USD 2 billion.

Capital investment in Sri Lanka’s telecom infrastructure has plummeted amid a price war and high taxation which will crimp expansion in the future and broadband roll out in the island, top telecom operators said.

“Before the price war each operator was spending about 150 to 200 million (US dollars) a year in capital expenditure,” Dumindra Ratnayake, head of Tigo Sri Lanka said at a forum organized in Colombo by LirneAsia, a regional policy research body.

“This year all operators put together may have invested about 150 million.”

Already jittery investors were alarmed on Thursday when a Norwegian cellphone company announced that a Siberian court had seized its multibillion-dollar investment in a Russian joint venture and would turn it over to a company thought to be allied with a Russian oligarch.

The decision signaled an escalation in a long-running dispute between the Norwegian company, Telenor, and the Alfa Group, an alliance of Russian businessmen that was also at the center of a separate fight with the British oil giant BP last summer. That dispute also shook faith in the Russian market.

Russia’s stock market fell on the news of the asset seizure.

Google paid for the final design of the stations and is covering the monthly fees for satellite bandwidth. The company has also invested in O3b, a start-up that hopes to deploy a constellation of satellites over Africa by the end of next year.

“Building infrastructure is not necessarily Google’s objective, but if you look at all the areas that Google has gone into, in many cases it has been to fill a gap,” said Joseph Mucheru, who heads Google’s East Africa office. “The market should see the opportunity.”

Just how much opportunity there is remains unclear. Google is uncertain whether such satellite stations can pay for themselves in rural areas, given the cost of equipment and bandwidth. Communities may well benefit from the connection, but they do not all have the means to afford it.

Bandwidth fees for stations like the one in Entasopia could cost as much as $700 a month, though slower ones cost less, said Wayan Vota, a senior director at Inveneo, a nonprofit that works to disseminate Internet technology throughout Africa and the developing world. As these connections are introduced more widely, which is O3b’s goal, the price could fall, Mr. Vota said.

Panic over, then? Not quite. Perversely, the real threat may come from a reduction in internet-traffic growth, says Dr Odlyzko. Too little internet traffic, he contends, could prove to be more dangerous to the industry than too much. A traffic-growth rate of 50%, combined with steady declines in equipment costs, means revenues are stagnant, “which is hardly a cheering prospect for the industry”. If traffic growth continues to fall—it is already below 10% in Hong Kong, where high-speed access is abundant—there will be slowing demand for faster connections from operators and new equipment from vendors. But if compelling new applications drive the growth rate back up to 100%, its level for many years, there will be more demand from customers for new services and equipment. Accordingly, says Dr Odlyzko, the industry should be looking for ways to stimulate traffic growth, rather than limit it.

One cannot draw conclusions from one quarter, but do not be surprised if the first half of 2008 turns out to be the high point of investment in the sector.

“The BoI recognized Dialog Telekom as the company with the highest level of realized investment in 2007 totalling 328 million dollars in 2007.” Dialog Telekom, which has over four million subscribers, secured the top slot in investment rankings for the third year in succession having being recognized as Sri Lanka’s largest investor in 2005 and 2006 with investments of 90 million dollars and 150 million dollars.
Sri Lanka Dialog Telekom top investor for third year running – LANKA BUSINESS ONLINE