BSEC steps in to strengthen Information Services Network

In its efforts to protect investors' interest, the securities regulator has issued a set of instructions for the poorly performing Information Services Network, asking for plans on strengthening its financial health.

In a recent meeting, the Bangladesh Securities and Exchange Commission (BSEC) has instructed the company, which has not been doing well for the last decade, to submit its plans for the future by 15 January.

The regulator has also asked the internet service provider (ISP) to declare its interim dividend, ensure 30% shareholding by the board and conduct a special audit to know the financial status of the company.

A senior official at the BSEC said the board was called to the commission to learn about the latest status of the company, which failed to pay dividends to its shareholders in the last fiscal year.

The commission has also instructed the board to bring the company back to business.

HRC Group and Ispahani Group jointly set up the company in 1996 as the country's first internet service provider. Later, Ispahani withdrew its stake.

The ISP got listed on the capital market in 2002 and is currently traded under the "B" category on the Dhaka Stock Exchange (DSE).

The company initially ran well, but it lost its business to competitors due to a lack of modernisation and skilled employees. It has experienced trouble with its business since 2003.

A senior official at the company, seeking to remain anonymous, identified two reasons behind their weak business – the unwillingness of the owners to expand the business and growing competition on the internet market.

Its board jointly holds only 21.62% shares, where the minimum requirement is 30% as per the BSEC provisions.

In addition, the current value-added tax (VAT) law has been another barrier to the internet business. Internet service providers pay 15% VAT on bandwidth purchases and collect just 5% VAT from their subscribers, added the official.

In FY21, the company incurred a loss of Tk9.06 crore as it has written off several debts from its accounts.

However, in the first quarter of this fiscal year, its net profit jumped 12 times to Tk0.13 crore but revenue could not grow significantly.

Following the quarterly profit growth, investors went into a buying spree of the company's shares which helped the stocks soar by 44% since November last year. Its shares closed at Tk47.50 each at the DSE on Tuesday.

The company's share plummeted 37% in October after it failed to declare dividends.