The Bangladesh Submarine Cable Company Ltd (BSCCL) will issue shares worth Tk166 crore against share money deposit to the government following the Financial Reporting Council's direction.
The board of directors of BSCCL has recently approved to appoint ICB Capital Management Ltd as issue manager regarding the issuance of those shares to comply with the requirements of the Financial Reporting Council (FRC).
An official of the BSCCL said that the company received Tk166 crore as share money deposit from the government for implementing the "Regional Submarine Telecommunication Project". Now the company will give shares to the government against that equity.
In February this year, the FRC issued a directive saying that share money deposits must be converted into the company's capital within six months of receiving the money.
The directive further said that the companies must include the share money deposits while calculating earnings per share and dividends as soon as the money is deposited, even before the securitisation.
The circular also prohibited withdrawal or taking back the share money deposited in the company's dedicated bank account.
The BSCCL is listed with the Dhaka Stock Exchange (DSE) and its paid up capital is Tk164.90 crore. Currently the government holds 73.84 percent shares of the company.
BSCCL share price increased by 11 percent in the last six days at the DSE. Investors are buying the company's shares because they are optimistic about internet business, said several brokerage officials.
The closing price of the company's each share was Tk86.70 at DSE on Tuesday.
An issue manager said share money deposits should be converted into shares on the basis of current market price valuation, which will increase the paid up capital of the company.
Earlier, the Power Grid Company of Bangladesh Ltd raised its paid-up capital by Tk251.81 crore through issuing shares against share money deposit to its parent organisation- Bangladesh Power Development Board (BPDB).
The Bangladesh Securities and Exchange Commission (BSEC) allowed the company to sell shares at a face value of Tk10.
However, The City Bank and Mutual Trust Bank issued shares to the foreign investors against share money deposit on current market price valuation.
BSCCL Financial Performance
In the first three quarters of the 2019-20 financial year, the company's revenue jumped by 28 percent to Tk181.50 crore. Its net profit also grew by 61 percent to Tk65.63 crore and its earnings per share was Tk3.98 at that time.
The company said in the three quarters' unaudited financial statements that its revenue has increased after implementing the Regional Submarine Telecommunications Project which was known as the second submarine cable.
Meanwhile, the BSCCL is going to sign a memorandum of understanding with SEA-ME-WE-6, which is called the third submarine cable, to meet the country's growing demand for data consumption.
The proposal of the agreement has recently been approved at the meeting of the company's board of directors.
The first submarine cable was set up in 2006 at Cox's Bazar and the second submarine cable was set up in 2017 at Patuakhali.
At present, almost 1,300 GBps (billions of bits per second) bandwidth is used in Bangladesh, of which SEA-ME-WE-5 and SEA-ME-WE-4 provide 900 GBps.
Bandwidth export closed
India has stopped importing bandwidth from the BSCCL since February this year.
A BSCCL official seeking anonymity said, "The Bharat Sanchar Nigam Limited - which bought bandwidth from the company – has discontinued doing it for the last few months. The Indian company said that they do not need to buy bandwidth."
In the first three quarters of the 2019-20 financial year, the Indian company has bought bandwidth of Tk3.68 crore, which was Tk4.37 crore at the same period in the previous year.