The leading telecom operator Robi Axiata came under the securities regulator's action for its failure to declare any dividend for the year 2020.
The Bangladesh Securities and Exchange Commission (BSEC) has also asked the country's second largest telecom operator to 'revise' its decision taking investors' expectation into account.
The regulatory instruction came Tuesday at the office of the Bangladesh Securities and Exchange Commission (BSEC) in the backdrop of recommending no dividend announced by Robi Monday for the year ended on December 31, 2020.
"Perhaps, Robi has failed to recommend dividend due to any reason despite the company has a capacity of distributing dividend as our projection on the earnings became real," BSEC commissioner Dr Shaikh Shamsuddin Ahmed told the FE.
He said the BSEC expects that the Robi will value investors' expectation regarding the distribution of dividend.
Hours after the BSEC's instruction, the Robi's officials, however, said their company has not recommended any dividend considering future growth without distributing minimal of amount dividend which will not please investors.
For the year 2020, Robi has reported an EPS (earnings per share) of Tk 0.33 which was Tk 0.04 reported during the listing.
Meanwhile, the company's share price declined 9.13 per cent or Tk 4.20 to close at Tk 41.80 each on Tuesday as investors were frustrated following the 'no dividend' declaration.
Another top official of the securities regulator told the FE that they came down heavily on Robi's officials at the meeting.
"Robi will have to pay 10 per cent tax to include its profit of 2020 in retained earnings. It had to pay 9.0 per cent interest if took bank loans without raising capital from the capital market," the BSEC official said on anonymity.
He said the company might need in between Tk 400 million and Tk 800 million for dividend purpose.
"But the company did not evaluate the expectation of general investors. We have expressed our strong anger and dissatisfaction at Tuesday's meeting," the BSEC official said, adding that the regulator will watch the company's activities strongly.
He has also said the company's officials have also been asked to find out any way of fulfilling investors' expectation. "Interim dividend may be the way of fulfilling investors' expectation."
After the meeting held with the BSEC officials, the Robi's chief executive officer (CEO) Mahtab Uddin Ahmed told a webinar that their board had many considerations including the distribution of dividend.
"But the amount of dividend stands at only 1.6 per cent. The board discussed whether there would be any positive impact of this amount of dividend. Then they thought about the re-investment of the profit for better growth of the company," said Mr Ahmed.
Robi, the country's second largest mobile phone operator, which received the regulatory approval from the Bangladesh Securities and Exchange Commission (BSEC) on September 23, raised a capital of above Tk 5.23 billion under the fixed price method.
With a view to creating a positive impact on the market, the regulator approved the Robi's IPO (initial public offering) proposal, the largest ever, fulfilling the company's demand of including its employees' shares, distributed under the Employee Share Purchase Plan (ESPP), in the IPO.
Asked about the BSEC's queries at Tuesday's meeting, the Robi' CEO Mr Ahmed told the Tuesday's webinar that the BSEC certainly is not happy with the company's decision of recommending no dividend.
"As a regulator, the securities regulator wants investors' pleasure. Of course, we will share the BSEC's concern with our company's board," Ahmed said.
Asked about any possibility of distributing dividend only for general shareholders, other than the sponsor-directors, Mr. Ahmed said he was not aware of such practice followed by the companies having good governance.
"Our genuine investors (sponsors) invested millions of dollar in the company. Now, will we consider dividend excluding them after the company's listing executed here? So far I know, good companies do not follow this."
For the year ended on December 31, 2020, Robi reported its total revenue of Tk 75.64 billion which was 1.1 per cent higher than the revenue reported for 2019.
The company's profit after tax stood at Tk 1.55 billion for 2020.
According to the company's financials disclosure, the Robi's voice revenue declined by 1.0 per cent in Q4 (October-December), 2020, compared to Q3, 2020.
"This translated into 0.7 per cent de-growth in total revenue for Q4,20, compared to Q3, 2020."
Compared to last year (2019), Robi's voice revenue declined by 9.9 per cent in 2020, indicating customers' growing reliance on OTT platforms for making voice calls.
Data revenue, on the other hand, grew by 1.0 per cent compared to last quarter (Q3, 2020), and by 26 per cent compared to last year (2019), according to the disclosure.