Nokia annual TCO [total cost of ownership] results show Bangladesh and Sri Lanka as cheapest

Posted on June 7, 2011 / 6 Comments

TCO 2011 study update_wallet share

Every year Nokia conducts the telecom equivalent of the Economist’s “Big Mac” study; it compares the total costs of using an identical basket of services over a mobile phone in multiple emerging economies. It used to cover 77 countries, but now they’ve pared it down to 50 major emerging economies.

If only the voice and SMS services are counted (plus 1/36th of the cost of the cheapest Nokia phone in that market), Bangladesh is the winner. A Bangladeshi user will pay only USD 1.91/month as against the average of USD 11.47. Brazil continues to be the most expensive, with a user having to pay 23 times what a BD user pays: USD 43.69.

When the Internet premium is added (a modest additional amount of Internet use from the mobile handset), Sri Lanka pulls ahead, at USD 2.91 (as against USD 3.31 for Bangladesh). The worst performance in this comparison comes from Morocco, where a user would pay 57 times what is paid in Sri Lanka: USD 52.14.

The Internet premium is not in the mounted slide. We will get that posted in a few days.

6 Comments

Abu Saeed Khan
June 8, 2011, 12:52 pm
And that’s after the operators subsidizing US$12 for every new connection they sell in Bangladesh!
1. Brendan W.
  
  June 8, 2011, 5:44 pm
  
  Interesting article — thanks Abu. But could you explain your $12 figure for SIM cards? It strikes me as likely misleading in a BD context; and perhaps as being a developed-world price being used out of context. It only costs about 17 cents* to make a SIM card, and that’s 1/70th of what you cite as a retail value. How can a retail SIM card price of more than $1 be normal business, rather than gouging, in emerging markets?*http://allafrica.com/stories/201101271074.html
Rohan Samarajiva
June 9, 2011, 10:29 am
The Nokia calculation includes all taxes. Bangladesh has a SIM tax of 800 Taka (around USD 12). That would be included in the installation charge, which is prorated at 1/36th per month.
1. Brendan W.
  
  June 9, 2011, 8:26 pm
  
  Ah, so the craziness is the extortionate VAT, which is now being lowered to tk600 from tk800. That is still far too high–nearly $10–and impossible to justify or even square with other policy aims. If that VAT ought to be the focus of the industry displeasure, perhaps it should express its absurdity in terms of percentage of tax grab vs. the actual cost of a SIM.
Abu Saeed Khan
June 12, 2011, 1:35 pm
@ Brendan: According to your link a SIM Card costs US$0.17 in South Africa. It doesn’t, however, mention the data storage capacity of that SIM. Let’s say the manufacturer makes 100% profit (very unlikely) and charges US$0.34 for each SIM of 64KB in wholesale. Therefore, US$0.40 should be its landed cost.

Bangladesh government has never officially valued the SIM. But the customs has been arbitrarily assessing each SIM’s value well above US$1.00 and tax accordingly. It may look like a good way to tax. But it hurts the foreign exchange reserve.

Because, the government doesn’t recognize the cheaper price the operators pays for the SIM. Therefore, the invoice must reflect the inflated price that the government dictates. Revenue collection, in local currency, may look sexy but huge amount of foreign exchange is simultaneously drained out due to the flawed valuation of SIM.

This is the first time the government has fixed US$0.65 tariff for each SIM of 64KB in the proposed budget of 2011-12. Yet it is well above the real price.
Tim Kelly
February 28, 2012, 5:46 pm
Did you manage to get the version of the study with the data services included on the website? I may have missed it.
Also, where can I find the full study and previous years?
cheers,
tim