Robi's net profit declined a massive 77 per cent year-on-year to Tk 38.9 crore in the third quarter of 2020 because of a higher turnover tax.
The profit was also 33.4 per cent lower than a quarter ago.
The operator's revenue grew 9.7 per cent in the July-September period compared to the previous quarter, when it was Tk 1,934 crore. Revenue rose 1.7 per cent year-on-year.
"Despite the increased revenue, our profits fell due to the higher turnover tax," said Mahtab Uddin Ahmed, managing director and CEO of Robi Axiata.
The National Board of Revenue imposed 2 per cent turnover tax on telecom companies, which were given a choice to pay either corporate tax or turnover tax depending on whichever is higher.
"Whether we make profits or not, we have to pay the tax, which is much higher than the previous 0.75 per cent," Ahmed said.
With the higher tax regime, Robi's effective tax rate stands at 77 per cent while market leader Grameenphone is paying 40 per cent, according to the managing director.
"This is why we are lagging," he said, adding that the Significant Market Power guidelines are not in effect.
Robi has a subscriber base of 5.1 crore, which is 30 per cent of the total market. Of them, 3.47 crore use internet, according to a press release issued yesterday.
Robi's revenue from voice call services dipped 8.2 per cent year-on-year to Tk 972 crore in the third quarter, indicating a sharp decline in 2G-based voice call services amid the ongoing coronavirus pandemic.
Data revenue rose 22 per cent year-on-year to Tk 684 crore.
Although Robi is going to be listed on the Dhaka Stock Exchange, it is yet to get any extra incentives for going public.
"And unfortunately, our conditions have yet to be fulfilled either," Ahmed said.
Robi included two conditions in its application for the initial public offering. The first is to reduce the turnover tax to 0.75 per cent from the existing 2 per cent and the second one was to reduce corporate tax by 10 percentage points.
Robi paid Tk 875 crore to the government exchequer in the third quarter, which is 45.3 per cent of its total revenue.
"We got the commitment from a high authority of the government on the conditions, but they were not fulfilled yet. We are disappointed, but we are still hopeful that the government will consider our conditions," the Robi CEO said.
"Otherwise, it will give a bad signal to foreign investors."
Replying to a query, Ahmed said that the telecom operator did not boost its assets through revaluations.
Robi is a technology company, and it is currently growing. It is the only way to quantify its value since earnings per share are not yet available.
"We are in a massive expansion phase," Ahmed said.
Robi's capital expenditure rose 24.8 per cent to around Tk 360 crore this year.
"We have been running our business for the last 22 years and incurred losses in six of them because of the merger with Airtel," said Shahed Alam, chief corporate and regulatory officer at Robi.
The Robi-Airtel merger was completed in 2016.
"When a company merges with another, it is normal for it to incur a loss for a few years before a turnaround," Alam said.
"Besides, the increased tax on turnover also lowered our profits," he added.
In the last nine months, Robi's revenue grew by about 1 per cent year-on-year to Tk 5,644 crore. Profits rose 1.9 per cent to Tk 116 crore, the company's financial report shows.
Robi Axiata completed its IPO subscription last Monday and aims to raise a fund of Tk 523 crore from the stock market.