The setback for the state-run telecom operator came at a time when overseas phone calls, once the prime source of its earnings, are growing by 10 to 15 percent a year and incoming calls from different countries rise by 20 percent annually.

"Given that the market is booming, our business growth should have doubled in last five years, but instead our income is coming down every year due to illegal VoIP business," said a top BTTB official.

The board earned Tk 1,330 crore in the fiscal 2005-06, the lowest in the last five years and could not achieve its income target in the last 10 years. The earnings had been Tk 1,425 crore in 2004-05, Tk 1,531 crore in 2003-04 and Tk 1,544 crore in 2002-03 and Tk 1,583 crore in 2001-02 financial years.

Internet telephony or Voice over Internet Protocol (VoIP), which is now widely used in the country, drains out nearly Tk 100 crore of the BTTB's business a month. The number of illegal VoIP operations across the country has reached several thousand, according to market operators.

Nearly six million Bangladeshis living abroad call to their near and dear ones and each of them talks for 25 minutes on average a month, accounting for 150 million minutes of incoming calls into Bangladesh. Another 15-20 million minutes of business calls are also received as incoming calls every month, the board officials said.

Currently, the state-run telecom operator, sole provider of incoming and outgoing overseas traffic, receives calls of around 60 million minutes a month. The volume will continue to dip further as nearly two-thirds of the calls are handled by the illegal operators, they noted.

"Our earnings from overseas calls saw a drastic fall due to aggressive illegal Internet telephony business. Now overseas calls make up only 30 percent of its income," said an official. The majority of its revenues from overseas calls come from the Middle Eastern countries while that for calls from other parts of the world is little.

An intense competition in call termination has also forced BTTB to reduce the termination rates for the main foreign operators. It also introduced a tariff of Tk 7.5 a minute for overseas calls to 10 countries on December 30, 2003.

Besides, it expanded the economy service to another 15 countries from April 1, 2006 to check the income downslide.

The board, however, has been able to keep its earnings at a reasonable level as the number of subscribers has doubled in five years. It earned over Tk 1,305 crore in fiscal 2000-01 with only 5.5 lakh clients, the number of which has now exceeded one million mark.

According to a report of international telecom research organisation Telegeography, Bangladesh was the third fastest growing destination for international VoIP traffic in 2004. The country marked a growth of 97 percent. Brazil and Nigeria led the world in growth with 112 percent and 103 percent and VoIP traffic grew by 35 percent globally in 2004.

The government first decided to legalise VoIP in June 2002. However, the decision okayed on November 10, 2003 by a cabinet meeting with Prime Minister Khaleda Zia in the chair, has yet to be implemented.

The BTTB will start issuing licence for VoIP only after setting up a common platform in four regions of the country. To be set up in Dhaka, Chittagong, Sylhet and Bogra, the platform will channelise the Internet phone calls.