Bangabandhu Satellite incurs loss of Tk 600m annually

Bangladesh Satellite Company Limited (BSCL), which operates Bangabandhu Satellite, is incurring losses as the expenditure for the satellite is higher than the income.

However, they are cleverly showing themselves as profitable.

According to BSCL's latest audit report for the fiscal year 2021-22, the company reported a profit of Tk 850 million.

However, this profit calculation does not account for the satellite's depreciation.

When depreciation is taken into account, the company actually faced a loss of approximately Tk 660 million. The previous fiscal year also saw a similar loss.

When calculating profits and losses, depreciation must be accounted for each year in relation to the longevity of the concerned item. For instance, if a car costs Tk 1 million and has a useful life of 10 years, its annual depreciation would be Tk 100,000.

The Bangabandhu Satellite has a lifespan of 15 years and is valued at Tk 27.84 billion. This results in an annual depreciation (using the straight-line method) of about Tk 1.86 billion.

The Bangabandhu Satellite was launched in 2018 under a project by the Bangladesh Telecommunication Regulatory Commission (BTRC), and ownership was transferred to BSCL on 31 January 2022.

This new company was established to manage the satellite. BSCL’s audit report for the fiscal year 2021-22 does not show any depreciation for the satellite's assets.

Instead, the satellite’s revenue is reported, leading to a declared profit of Tk 850 million. However, when considering Tk 1.86 billion in depreciation, BSCL actually incurred a loss of Tk 660 million in that fiscal year.

The audit of BSCL was conducted by SF Ahmed & Company. Their report states that BSCL did not include complete asset details for the satellite in their asset summary. BSCL argues that the BTRC did not transfer the satellite's asset value details to them.

The auditors also noted that not showing the asset value of the satellite might affect the interpretation of BSCL’s financial statements.

BTRC’s audit report in the same fiscal year did not show any assets for the Bangabandhu Satellite. However, BTRC had recorded the satellite’s asset value in the previous fiscal years. For 2021-22, BTRC reported a depreciation against the satellite assets.

Prothom Alo took the opinion of three certified accountants regarding the audit report of BSCL. All three experts said that BSCL appears profitable on paper as depreciation is not shown. If depreciation were included, the company would be recognized as having incurred losses for the relevant fiscal year.

Speaking to Prothom Alo, former president of the Institute of Chartered Accountants of Bangladesh (ICAB), Humayun Kabir, said that the audit firm itself has disclosed the issue in their report.

Kabir pointed out that omitting depreciation from the financial statements means that the actual financial picture of the company is not represented.

Interestingly, BSCL has not reported any profits in any fiscal year that has been audited so far, including the 2021-22 fiscal year.

There are also concerns about whether the company will be able to make a profit in the coming years, given that its revenue remains significantly lower than its expenses.

Thales Alenia Space in France manufactured the Bangabandhu Satellite. The Bangabandhu Satellite-1 was launched from Kennedy Space Center in Florida in May 2018. At the time of the launch, the prime minister at the time, Sheikh Hasina, and other government officials, including Sajeeb Wazed Joy, former state ministers Tarana Halim and Zunaid Ahmed Palak, were present to witness the event.

Following the successful launch, Sheikh Hasina expressed gratitude and congratulated all involved.

She said, "Bangladesh's flag was flown into space today and we are a proud member of the satellite club from today."

Bangladesh joined the satellite club as the 57th country through the Bangabandhu Satellite. At the time, the government had talked about gaining various benefits, including foreign currency earnings from the satellite.

But some raised questions about the necessity of the satellite given its cosr of nearly Tk 300 billion.

From the beginning, there has been a lack of transparency regarding BSCL's profit and loss calculations.

After the downfall of the Awami League government on 5 August, following a student-led uprising, inquiries into the satellite’s financial performance led to the release of BSCL’s 2021-22 audit report. The company indicated that audits for the fiscal years 2022-23 and 2023-24 have not yet been completed.

BSCL operates under the posts and telecommunications ministry, with its advisor being Nahid Islam. On 3 September, a meeting was held with Nahid Islam present, where BSCL outlined its activities and revenue details, but did not provide specific profit and loss information.

For the fiscal year 2021-22, BSCL’s audit report shows a total revenue of Tk 13 billion, up slightly from the previous year's Tk 1.29 billion. The majority of this revenue comes from selling bandwidth to private and foreign television channels.

BSCL’s asset summary lists have no mention of the satellite among its permanent or current assets. The reported depreciation amounts to about Tk 2 million, related to other assets rather than the satellite itself.

In contrast, BTRC recorded a Tk 1.86 billion depreciation for the satellite in the same fiscal year. BTRC earned revenue of about Tk 44 billion in that fiscal year. So depreciation counted for the satellite didn't impact the income and expenditure of BTRC. In all it is seen that BTRC shows depreciation in its calculation for the Bangabandhu Satellite. But BSCL is not showing the depreciation and the company is being shown as profitable

After launching the satellite, the project cost and daily expenses are not being fully covered.

BSL former chairman and CEO Shahjahan Mahmood, who departed on 5 September, claimed that the project is not a loss-making one.

Speaking to Prothom Alo, he said with the current earnings, it would not need to seek additional funding from the government for a second satellite.

However, BSCL’s financial reports suggest that the annual revenue is less than the depreciation amount, let alone accounting for other expenses.
By excluding depreciation, the company shows a profit, which is reported as retained earnings.

BSCL’s general manager for sales and marketing, Shah Ahmedul Kabir, stated that the Bangabandhu Satellite was launched under BTRC, and that depreciation was accounted for by BTRC until the fiscal year 2021-22.
From the next fiscal year, this responsibility shifted to the satellite company.

Kabir claimed that BSCL is indeed making losses, although these are decreasing.

According to the BTRC project report, the Bangabandhu Satellite is equipped with 40 transponders: 20 for Bangladesh and 20 for international use. Foreign currency can be earned by leasing transponders abroad.

However, after six years, it was seen that transponders allotted for the country are being used fully, but the usage of the 20 transponders designated for international markets remains limited. Overall, only 60 per cent of the satellite’s available bandwidth is sold.

BSCL reports that around 40 television channels use the satellite’s services, with four Indian channels—Star, Sony, Zee Network, and Colors TV—broadcasting within Bangladesh.

The satellite’s coverage extends to several countries including India, Sri Lanka, Pakistan, Nepal, Bhutan, Myanmar, Afghanistan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, the Philippines, and Indonesia.
Sources said attempts to sell transponders in Indonesia and the Philippines in the launch year were unsuccessful.

On 3 September, challenges related to the sale of satellite services were highlighted during a meeting at the secretariat.

These include the division of the satellite’s Ku-band transponders into four distinct blocks, each containing six transponders. Selling a transponder from a block means the remaining five transponders in that block cannot be sold to another country, due to design constraints. If there is no demand or suitable price, the remaining transponders in the block remain unsold.

BSCL also noted that proper frequency coordination with other countries was not conducted prior to the satellite’s launch, complicating efforts to obtain landing rights in those countries.

Before the downfall of the Awami League government, plans were underway for the launch of Bangabandhu Satellite-2. On 20 June, former state minister for posts and telecommunications, Junaid Ahmed Palak, announced that the second satellite would be launched within four years. Prior to that, in February 2022, Bangladesh signed a memorandum of understanding with Russia's Glavkosmos for the launch of Bangabandhu Satellite-2.

Speaking to Prothom Alo, professor at BRAC University’s Computer Science and Engineering Department, Mohammad Khalilur Rahman, said while there was a need for Bangladesh to launch its own satellite the lack of a proper business plan for the satellite's utilization is a concern.

He emphasized the need to evaluate whether the technological knowledge and local expertise expected to develop from the satellite have been achieved.

Professor Rahman also noted that the Bangladesh Space Research and Remote Sensing Organization (SPARSO) was not involved at any stage with the Bangabandhu Satellite.

He suggested that SPARSO should be included in future satellite projects to mitigate losses and enhance business prospects.

**This article, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.