Robi Axiata Ltd has submitted its application for initial public offering (IPO) recently to the Bangladesh Securities and Exchange Commission (BSEC).
The second largest telecom operator of the country has also sought a special exemption from the post-IPO lock in period for their existing shareholders.
According to the updated public issue rules, sponsors and directors of a newly listed company cannot sell their stake in the first three years after debut.
Robi, in its IPO application, has sought an exemption from that rule for their existing shareholders so that they can transfer their stakes at any time.
They sought the opportunity to sell shares off market, not in public trading board of the stock exchanges, according to the application.
"We have three significant foreign shareholders and they may need to transfer their stakes any time if their global or regional strategic plan demands," said a top Robi official while talking to The Business Standard.
"After the IPO if they have to wait three years for that transferring, it will be a problem for them. That is why we attached the point in IPO application," added the official.
The company also has written to the BSEC that its existing shareholders agreed to float shares in stock market with an expectation of corporate tax reduction and withdrawal of minimum 2 percent tax on turnover as discussed with and applied to the finance ministry of Bangladesh.
The company seeks 10 percent point reduction of corporate tax for 10 years, which is 45 percent for non listed telecom operators and 40 percent for the listed ones from the sector.
A 10 percentage point reduction from the existing level will result in 30 percent corporate tax for the listed Robi Axiata.
Besides, the government has increased minimum tax on telecom operator's turnover from 0.75 percent to 2.0 percent in last budget for 2019-20.
The burden along with corporate tax is eating away 96 percent of Robi's earnings before interest, tax, depreciation and amortisation (EBITDA) leaving shareholders in a marginal gain from the business.
Robi also sought it to be withdrawn for the entire industry.
Too many exemptions
A BSEC official told The Business Standard that the company's IPO is subject to too many exemptions.
For waiver from the lock in period, BSEC needs to issue a separate general notification and publish gadget. Public issue rule by BSEC do not allow the commission to award the exemption.
"However, the waiver makes sense," said the official seeking anonymity.
Robi is going to issue shares a total of Tk523.79 crore at face value of Tk10 each.
Of that, it has already issued shares worth Tk136 crore at the same rate to their employees under an employee share purchase plan (ESPP), while the remaining shares will be offered to the public.
Robi applied to the BSEC to consider the issuance in ESPP as a part of the IPO to make the total float 10 percent of the post-IPO number of shares.
Robi Axiata Ltd, Tk4,700 crore paid-up capital company, posted earnings per share of Tk0.04 only for 2019, which was Tk0.46 in 2018. The company also posted losses in the previous two years.
It had a turnover of Tk7,400 crore in 2019. At the end of last December, net asset value against each Robi shares was Tk12.64.
In a press briefing recently, Robi Chief Executive Officer Mahtab Uddin Ahmed blamed high taxes and some one-off expenses to compensate the outgoing employees for the low profitability.
The company paid 4 percent dividend for 2014 and that was the last one.
Robi Axiata Ltd emerged as the second largest telecom operator in Bangladesh following a merger between Airtel and Robi.