Grameenphone’s net profits last year contracted about 2 per cent to Tk 3,450 crore after seven years of positive growth, as its battle with the telecom regulator is started to draw blood from it.
This has pushed the operator, which is the largest listed company on the Dhaka Stock Exchange by market capitalisation, to declare its lowest divided in nine years: it announced 130 per cent cash dividend for its shareholders, down from 280 per cent in 2018.
The news has sent its stock down 1.99 per cent yesterday to Tk 266.
From July last year the country’s leading mobile phone operator is combatting either bandwidth restrictions or a bar on network maintenance equipment imports, which impacted its service quality. And yet, its revenue increased 8.1 per cent year-on-year to 14,370 crore.
“We have delivered a solid business performance,” said Michael Patrick Foley, Grameenphone’s outgoing chief executive officer.
Thanks to excellent execution in the market and its network leadership position, Grameenphone has been able to navigate the many challenges that impacted its day-to-day operations.
“2019 was a particularly tough year for Grameenphone on the regulatory front.”
The operator is in loggerheads with the Bangladesh Telecommunication Regulatory Commission over claims of unpaid dues amounting to Tk 12,579.95 crore.
In the fourth quarter Grameenphone was able to complete its ambition of rolling out 10,000 4G sites throughout their network, and with an added focus on 4G SIM conversion, they ended the year with 1.19 crore 4G users, Foley added.
Grameenphone also has secured 24.01 per cent net profit against total revenue, which also declined after four years of consecutive growth, according to the financial statement.
“Investors are disheartened with the lower dividend announcement,” said a merchant banker requesting anonymity.
Since its regulatory tussles began in March last year, Grameenphone’s stock price plunged about 31.80 per cent.
Grameenphone alone snatched about 10 points from DSEX, the benchmark index of the premier bourse.
It was the second most traded stock: about 6.15 lakh shares worth Tk 16.35 crore changed hand yesterday.
Fuad Hossain, a stock investor, said he was panicking in the last few months as Grameenphone’s share price tumbled.
And yet he did not offload his shares. Not just that, he snapped up more stocks of Grameenphone, which is always generous with dividends, last week expecting higher dividends as the company’s earnings grew.
“I am now disappointed,” he said, adding that the company has handsome reserves.
Grameenphone’s reserves and surpluses stood at Tk 2,123.26 crore, according to the data from the DSE.
However, Grameenphone its official response said this proposal has been made by the board in alignment with its dividend policy and current uncertainties.
Grameenphone’s data revenue at Tk 2,990 crore is up 17 per cent year-on-year, while its voice revenue expanded 8.5 per cent.
It acquired more than 38 lakh new subscribers in last year, reporting a total of 7.65 crore subscribers at the end of 2019.
It also reached four crore active internet data users and ended the year with 4.06 crore users, which is 53.1 per cent of its total subscribers.
“We witnessed healthy growth in data revenue and data usage and we want to reiterate our commitment towards meaningful consultations between our industry and our government that can enrich our service propositions and facilitate the current growth momentum of the country,” Foley said.
Grameenphone chief financial officer Jens Becker said they have reported a solid business performance with strong margins in the fourth quarter of 2019.
“We experienced a solid growth despite aggressive competition in data and seasonality challenges during this quarter. We will continue investing in the country and building a strong network and distribution ecosystem in order to deliver value to our shareholders and our customers,” he added.
Last year, Grameenphone has invested Tk 1,390 crore to modernise network for the 4G rollout and other services, down from Tk 3,400 crore it spent a year earlier.
In the fourth quarter, it invested Tk 390 crore for network coverage, less than what was planned for, as a result of the bar on equipment import.
It added 715 new 4G sites along with network modernisation; the total number of sites stands at 16,508.
The operator’s profit after taxes for the fourth quarter was Tk 920 crore, with a 25.4 per cent margin. Earnings per share (EPS) for the period stood at Tk 6.81. Grameenphone also paid out Tk 8,510 crore, which is equivalent to 59.2 per cent of its total revenues, to the national exchequer in the form of taxes, VAT, duties, fees, 4G licence and spectrum assignment.