The government has approved Bharti Airtel’s taking over the remaining 30% stake of Warid Telecom in Airtel Bangladesh Limited, the fourth largest mobile operator in the country.
With the acquisition at a cost of US$80m, the Indian company will own 100% shares of the company, officials at the Ministry of Telecommunications said.
The ministry, following its approval, notified Bangladesh Telecommunications Regulatory Commission (BTRC), National Board of Revenue (NBR), Board of Investment (BoI) and Registrar of the Joint Stock Companies and Firms to see whether they have any dues.
“After going through the Deed of Exit and other documents, we have approved Airtel’s application recently before sending it back to the BTRC. They will take care of the remaining formalities,” Telecommunications Minister Shahara Khatun told the Dhaka Tribune.
She said the company is going to purchase the stake following proper procedure. “However, it is unfortunate that the giant Dhabi Group (the owner of Warid Telecom) is exiting from Bangladesh.”
The NBR Chairman Ghulam Hussain said they would check and collect receivables, if any, in the process selling the shares. He said the NBR would get some money from the transfer of the stake under the Stamp Act, in addition to capital gain tax.
“Airtel is completing all the necessary regulatory and legal formalities with regard to the share transfer process as per the laws of the land,” said an Airtel spokesperson.
The “Deed of Exit” dated April 29 shows Warid Telecom International LLC is selling off its 137.9m shares to Bharti Airtel Holdings (Singapore) Pte Ltd at an under price, said an official, requesting anonymity.
As a result, the possibility of getting the gain tax is bleak, he added.
Supreme Court lawyer and Airtel’s counsel, Barrister Tanjib-ul Alam, said: “Under the Stamp Act, the government will get 1.5% of the total transfer value even though the deed was prepared under the England and Wales Companies Act of 2006.”
The stamp tax, considering the $80m price, would amount to $1.2m, close to Tk1bn. The “Deed of Exit” says $65m of the amount would be wire transferred.
A BTRC official, on condition of remaining unnamed, said Airtel would have to complete its taking over the shares in line with the stamp act as they have got the BTRC approval. “They would have to go to the joint stock to fulfill the remaining formalities after which the process would be completed.”
In a five-page report approving Airtel’s application, the telecom ministry pointed out that Airtel is already operating in the country. So, there would be no problem with the new purchase.
However, since the license is in the name of Warid Telecom, Airtel would have to take care of all of Warid’s responsibilities, including complying with the regulations and paying fees and charges imposed by the government.
On May 2, Bharti Airtel announced they would purchase the remaining 30% stake from Warid Telecom International. The Dhabi Group venture will sell off all of its 137,948,402 shares.
Seven days after the declaration, Airtel Bangladesh Ltd applied to BTRC seeking government endorsement on the purchase.
Airtel, in January 2010, took over 70% of Warid Telecom’s shares at $100,000, which stimulated criticisms in the country’s telecommunication and political arenas.
Warid was given a licence to operate in Bangladesh in 2005 and launched operations on May 10, 2006. It was rebranded in December 2010 from Warid to Airtel after the sale off.