Dividend not sole indicator of good company: Robi

The share price of Robi Axiata Ltd dropped by 9.13% on Tuesday, as the newly listed telecommunications company declared not to provide dividend to its shareholders at the end of its maiden year. The company made eight times the profit last year.

Robi's decision – announced on Monday night – left investors disappointed and impacted the indices at both stock exchanges. The Bangladesh Securities and Exchange Commission also summoned its management on Tuesday and expressed dissatisfaction over the move.

Meanwhile, Robi's Managing Director and CEO Mahtab Uddin Ahmed requested general investors not to consider the dividend as the only indicator of a company's performance.

He made the statement on Tuesday while addressing a press conference on Robi's Quarterly Business Update, adding, "Dividend is an important part of business, but it is not an essential component."

"Therefore, good companies in the world do not declare dividends to the shareholders. It does not seem that Robi's board of directors is against dividend. Rather, we are keen on having a stable performance."

Speaking to The Business Standard, the regulatory commission's Executive Director and spokesperson Md Rezaul Karim said, "Robi's decision regarding dividend has frustrated general investors."

"Therefore, the commission recommended that the company declare an interim dividend based on its quarterly financial report."

Robi, the second largest mobile operator of Bangladesh, got listed with the stock exchanges on 24 December last year. It raised Tk524 crore from general investors through initial public offering.

The company contributed 5.32% of the Dhaka Stock Exchange's total market capital, while Grameenphone – the largest mobile operator and Robi's key competitor – has 12.19% of the market capital.

Grameenphone declared a 275% cash dividend to the shareholders for the same period, which represents 99.86% of its total profit.

Robi's share price skyrocketed after its trading debut on the stock exchanges, and the per share price rose from Tk 10 to Tk70 the day it got listed. But on Tuesday, its share price stood at Tk41.80. 

At the press conference, Robi officials disclosed that despite the pandemic Robi managed to end 2020 with 1.1% revenue growth compared to 2019.

The total revenue of the company stood at Tk7,564 crore and its total profit after tax reached Tk155 crore in 2020. At the end of last year, the company's earnings per share was Tk0.33.

Robi's subscriber base reached 5.09 crore by the end of 2020. Out of which, 69.2% were data subscribers. 4G subscribers, in particular, had grown by more than 72.8% compared to last year.

However, Robi's subscribers are suffering from poor network service as the highest number of call drops reaching 48.17 crore was registered against the operator between January and August of 2020, says Bangladesh Telecommunication Regulatory Commission (BTRC) data.

The operator is unable to provide optimum service to its user base because it has not expanded its network infrastructure with the subscribers' growth.

In this regard, Shahed Alam, chief corporate and regulatory officer of Robi Axiata Ltd, said, "Spectrum is the primary infrastructure for providing quality service to users, and we always focus on better service towards customers."

"But the existing rate is much higher. Therefore, we are currently consulting with the regulatory commission for procuring the required spectrum at an affordable price." 

At present, Robi has 36.4 MHz in different bands to serve 5.09 crore subscribers, while Grameenphone has 37 MHz spectrum for 7.64 crore subscribers.