For Grameenphone, it is all bad news for now. The company posted a meagre profit in 2019. It could have been even worse by being in the negative, had the company not revised its previous year's data.
Topping it all off, Grameenphone fears that Telenor, its lion shareholder, may not approve the final dividend in the upcoming annual general meeting (AGM) if its hurdle to repatriate dividends remains unresolved.
Grameenphone posted a record revenue of Tk14,377 crore in 2019 – an 8 percent year on year growth. The telecom service provider also posted a 3.4 percent growth in net profit after tax, resulting in earnings per share (EPS) of Tk25.56.
Thanks to the revised expenditure figures of 2018, the 2018 EPS was brought down from the previously disclosed Tk26.04 to Tk24.71. Otherwise, 2019 could have been another year of negative earnings growth after 2015.
The Grameenphone board recommended a 40 percent final cash dividend for 2019 in addition to a 90 percent interim cash dividend disbursed from its half-yearly profit. The total 130 percent annual dividend is the lowest since 2010.
The bad news for Grameenphone shareholders is that this low dividend is also at risk of being disapproved in the upcoming AGM.
Norwegian company Telenor Mobile Communications AS, which holds 55.8 percent of Grameenphone shares, did not receive the interim dividends disbursed to all other shareholders in mid-2019, said the latest price-sensitive information document of the company.
Grameenphone failed to remit Telenor's receivable dividend as it could not get clearance from Bangladesh Bank to do so.
The controlling shareholder may not approve Grameenphone's final dividend if the issue remains unresolved till the 23rd AGM of the company, set to be held on April 21, 2020, said Grameenphone.
The company board considers its failure to remit Telenor's interim dividend as an unequal treatment to shareholders.
The document also said that the problem with Bangladesh Bank relates to the issuance of the shares issued against the "in-kind" contribution of three nonresident shareholders, including Telenor in 1997.
"Some pre-formation expenditures take place before and during the registration of a company. More than two decades ago, Grameenphone issued some shares to promoters against their spending," a Grameenphone official told The Business Standard.
"The shares are called issued against "in-kind" contribution. Such shares do not exceed 2 percent of existing Grameenphone shares.
The company had been paying dividends against such shares until last year. Unfortunately, it became an issue after so long.
"However, we hope things will be okay before the next AGM. It will be a serious problem if Telenor refuses to approve the recommended dividend for 2019."
Grameenphone is in a tug of war with the telecom regulator and the tax authority over an "unpaid audit claim" along with interest totaling Tk12,580 crore. Of that, the Bangladesh Telecommunication Regulatory Commission (BTRC) is claiming Tk8,494 crore, and the National Board of Revenue Tk 4,086 crore.
Following a review petition, the Appellate Division, on November 24, 2019, ordered Grameenphone to deposit Tk2,000 crore to the BTRC within three months.
But the company on January 26 filed a petition to cut the amount to Tk575 crore as an adjustable deposit, and allow it to pay the amount in 12 monthly installments.
"The year 2019 was a particularly tough year for Grameenphone on the regulatory front, facing many challenges that impacted our day to day operations," said Grameenphone Chief Executive Officer Michael Patrick Foley.
"But 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."
The gradually unfolding regulatory risk has been pushing down Grameenphone's share price since the beginning of 2018. In the last two years, Grameenphone's share price halved, dropping to Tk266 in the Dhaka Stock Exchange.
Grameenphone is the largest listed company in the country with a market capitalisation of over Tk36,647 crore.
Sponsors and directors own 90 percent of the company's shares, while foreign portfolio investors, local institutional investors, and the general public hold the rest of the shares.