Grameenphone has treated its Tk1,000 crore payment to the telecom regulator in the last quarter as noncurrent receivables.
The largest mobile phone service provider in Bangladesh made the payment to remain under court protection despite its claim and belief that it does not owe the money.
The Supreme Court had ordered the company to pay Tk1,000 crore to the Bangladesh Telecom Regulatory Commission (BTRC) by February 24, and Tk1,000 crore more by May 31.
Grameenphone on February 23 this year made the first payment, and is now enjoying no objection certificates from the regulator to expand its business.
Had the company treated the payment as expenses, it would end up with a net profit of Tk68.98 crore for the January-March period.
According to its first quarter financial report, the company's net profit has shot to Tk1,068.98 crore from less than Tk850 crore for the same period a year ago.
Equity analysts backed the idea.
Chartered financial analyst Md Ashaduzaman Riadh, chief investment officer of United Securities, said as Grameenphone was still expecting to get back the paid amount according to the international financial reporting standard, it can treat the figure as noncurrent receivables. "But they could have been more conservative."
"If the company ultimately loses the legal battle with the regulator over the disputed audit claim of more than Tk12,500 crore, then GP must absorb the loss," he told The Business Standard.
"They have to charge the paid amounts as expenses in profit and loss statements," said Riadh, who is also a certified financial risk manager.
The company has reduced dividend payments for 2019 to 130 percent from 280 percent for 2018 with a view to retaining over Tk2,000 crore of cash, which is being paid to the BTRC.
Grameenphone's revenue in the first quarter grew 3.75 percent to reach Tk3,616.85 crore, while its net profit grew over 25 percent.
Earnings per share for the first three months of the year stood at Tk7.92 – an increase from Tk6.92 in the same period of the previous year.
Less cash out along with the uncommon accounting treatment helped the company see a rise in its net asset value per share to Tk36.31 at the end of March from Tk28.40 a year ago.