Robi, the country’s second-largest mobile operator, has once again sought tax break from the government it was promised for getting listed on the bourse.
In a letter to Finance Minister AHM Mustafa Kamal on February 11, Shahed Alam, the chief corporate and regulatory officer of Robi, sought the withdrawal of the 2 per cent minimum income tax on its revenue.
The withdrawal of the 2 per cent turnover tax was one of the two conditions Robi had for going public, the talks of which began from 2013 at least.
If the minimum tax is withdrawn, Robi would be a profitable company and would be able to reward its investors generously, the letter said. Dhaka Tribune has a copy of the letter.
This comes as the operator, which saw its profit soar more than 8 times to Tk 150 crore in 2020, chose not to pay any dividend to its expectant shareholders.
“Had the 2 per cent minimum tax on our revenue been removed, our earnings per share could easily have been Tk 0.64,” Alam told Dhaka Tribune on Tuesday.
In 2020, Robi’s earnings per share, which is its net profit divided by the number of common shares it has outstanding, stood at Tk 0.33, up from Tk 0.04 in 2019.
“It is worth noting that this was one of the conditions Robi had placed for entering into the capital market. In the end, even though the 2 per cent minimum tax was not removed, Robi still went ahead with its decision to come to the capital market and that too at the face value of only Tk 10 per share and without charging any premium respecting the assurance we received from the authority.”
Moreover, due to the minimum tax, Robi could not even avail the 5per cent reduction in corporate tax rate offered to the listed mobile phone operators, he said.
As a result, Robi was subjected to an effective tax rate of 71.8 per cent for 2020.
In this backdrop, considering the positive growth trajectory of the company, the Robi board has recommended not to give any dividend for 2020 to secure the investment funds necessary to stimulate Robi’s future growth, Alam added.
“Our board is not against paying dividends,” said Mahtab Uddin Ahmed, chief executive officer of Robi, at the press briefing yesterday to unveil the operator’s earnings for the year that ended on December 31, 2020.
Had the board decided to pay a dividend this year, the amount for each shareholder would have been minimal.
“It is a critical concern if we would be able to make anyone happy with so little dividend. Instead, if we reinvest the amount not paid out as dividend, we would be able to guarantee business growth and higher returns,” he added.
The shareholders though remained unimpressed.
Shares of Robi fell as much as 15.2 per cent during the trading session on Tuesday to close at Tk 41.8, down 9.1 per cent from the previous day.
Concerned about the repercussions Robi’s announcement of no dividend would have on the bourse, the Bangladesh Securities and Exchange Commission yesterday summoned Robi’s top brass to its headquarters.
At the meeting, where Robi was led by Alam, the stock market regulator expressed dissatisfaction over the issue and directed the operator to pay an interim dividend to its retail investors at least.