BSEC summons Robi top brass to its headquarters today for announcing no dividend
Robi, the country’s second-largest mobile operator, logged in its highest profit yet in its 13-year history in 2020, as people started doing everyday activities remotely amid the pandemic facilitated by the carriers.
Starting from work to commerce, everything was done over the phone amid the two-and-a-half-month-long countrywide shutdown announced on March 26 to slow the spread of coronavirus. For those who had no fixed internet connection, mobile internet was a Godsend for them.
Subsequently, Robi, which saw its subscriber base expand 3.9 per cent during the course of the year to 5.1 crore, posted a profit of Tk 172.9 crore, up a whopping 8.25 times from a year earlier.
And yet, the operator, which made its stock market debut in December last year amid much fanfare, did not announce any dividend for its shareholders.
Its rival Grameenphone, which also logged in a record year of profit of Tk 3,718.7 crore, announced a 145 per cent cash dividend for its shareholders for the 2020 financial year, which runs from January to December.
This makes for sobering reading for Robi’s investors, who had jostled with each other to snap up a slice of the operator’s stock sale.
Shares of Robi, which soared more than three times since they began trading on the bourse on December 24 last year, closed at Tk 46 yesterday ahead of its earnings disclosure, up 9.5 per cent from the previous session, snapping the two-day losing streak.
But the no-dividend announcement could be detrimental to Robi’s stock market pull.
As is practice, Robi’s shares are trading under the N category.The N-category companies are those that shall be transferred to other categories based on their first dividend declaration and respective compliance after listing of their shares.
Since Robi announced no dividend, it could very well be heading to the ‘Z’ category, where typically junk stocks are banished to.
Concerned about the repercussions this announcement might have on the bourse, the Bangladesh Securities and Exchange Commission has summoned Robi’s managing director and its top management to its headquarters today, Mohammad Rezaul Karim, spokesperson of the stock market regulator, told Dhaka Tribune.
The capital market watchdog would try to convince the Robi top management to announce some form of dividend for its general shareholders, he added.
Though it is a multinational company, its financial status is not that great, said Abu Ahmed, an honorary professor of the Dhaka University’s economics department.
“We are concerned about its low profit vis-a-vis Grameenphone. We hope Robi’s profit will grow soon.”
Ahmed, also a stock market analyst, went on to advise retail investors to park their funds in a stock by doing proper analysis.
“Although Robi has a decent top line, the numbers drop significantly when it comes to the bottom line due to inefficiency in managing expenses,” said a report of Brac-EPLahead of the operator’s record-setting initial public offering last year.
Its asset turnover is half of Grameenphone’s without any trend in improvement in efficiency.
Its net property, plant and equipment (PPE)/site is Tk 84 lakh, which is more than double of Grameenphone’s net PPE/site of Tk 38 lakh.
“Therefore, it seems like Robi is inefficient in utilising its funds to construct sites for its subscribers,” the report said.
Robi has a much lower operating margin than that of Grameenphone due to the higher cost of revenue, maintenance and depreciation expenses.
Moreover, due to a high debt number, the interest and lease payments pull down the earnings as well, the report added.
In another concerning development, Robi’s cash flow shrivelled during the course of the year, which saw the carrier raise Tk 523.8 crore from the public as well as seal a $95 million loan from the International Finance Corporation, the World Bank’s private sector arm.
The net operating cash flow per share stood at Tk 5.36 at the end of last year, in contrast to Tk 6.10 at the end of 2019.
Positive cash flow indicates that a company's liquid assets are increasing, enabling it to settle debts, reinvest in its business, return money to shareholders, pay expenses and provide a buffer against future financial challenges.
Robi Axiata is a joint venture between Axiata Group Berhad of Malaysia and Bharti Airtel of India. Axiata holds 68.7 per cent controlling stake in the entity, and Bharti holds the remaining 31.3 per cent share in the company.
The company commenced operations in 1997 as Telekom Malaysia International (Bangladesh) with the brand name ‘Aktel’. In 2010, it was rebranded as ‘Robi’ with the company changing its name to Robi Axiata.
Robi declined to comment for the report.