The listing of Grameenphone in 2009 was a remarkable feat for the share market.
AB Mirza Azizul Islam, the then chairman of the securities commission, considers the listing as the greatest achievement during his tenure at the commission. And, because no large companies got listed on the stock market for quite a long time, the entry of Grameenphone also rekindled hope among investors.
Mirza Azizul told The Business Standard that Grameenphone had revived the stock market.
The company could make its impact felt on the first day of trading on the stock market. On that day, the DGEN, the then benchmark general index of the Dhaka Stock Exchange (DSE), rose 22% or 764 points and crossed 4,000 for the first time. On that day, Grameenphone alone added 717 points.
Grameenphone is doing well despite many changes in technology over the past decade, as the company's efficient management has turned these changes into their assets, Mirza Azizul said, adding, "Currently, our stock market has no other company like Grameenphone and this is why Grameenphone still holds the top spot."
The largest mobile network operator in the country has also been serving up good returns to its investors since its stock market listing. Because of this, the company's shares are still lucrative to investors as its price-to-earnings (P/E) ratio is far below the risky level.
At present, Grameephone's P/E ratio stood at 12.65 based on its audited report for 2021, whereas the DSE's annual ratio was 14.48.
The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS).
According to stock market rules, the P/E ratio is the first step in determining risky stocks. If any share's P/E ratio is above 40, it is risky. And, if the P/E ratio of a company's shares is above 40, no margin loan is given against these shares.
Since its listing on the capital market, Grameenphone gradually paid over 100% cash dividend each year to its shareholders, and its dividend yield was 7.15%, whereas the DSE's average dividend yield stood at only 3.18%.
EBL Securities in its equity note on Grameenphone said a strong brand image and active subscriber base have positioned the company ahead of its rivals.
Grameenphone's unique ability to control operating costs with higher efficiency led to significant improvement in profit margins that ultimately resulted in a noticeable improvement in net profit margins, it added.
The report also reads that as the local telecom industry is heading towards its maturity stage, with its conventional service offerings, Grameenphone is also not an exception. Its historical growth engine with steady operating performance is being challenged by a slow-down in average minutes of usage by consumers and lower revenue per user per month triggered by higher OTT platform dependency and a significant decline in data prices.
In the present scenario, ignoring the regulatory tussles and pandemic impact, Grameenphone's growth in the next few years will be mostly driven by growth in data usage, the report observes.
Currently, the country's total internet penetration rate is 59.5%, and the internet penetration rate of Grameenphone is only 24%. So, Grameenphone has room for growth in data subscription along with an increase in average data consumption per user for the next few years, the report adds.
A senior analyst of a renowned investment firm said Grameenphone is in a strong position financially and in terms of infrastructure in the telecom sector, which is why its business is growing day by day despite SMP imposition.
He further said the company recently bought spectrum to launch the 5G network and this will accelerate the business growth of the company.
The Bangladesh Telecommunication Regulatory Commission on 21 June 2020 imposed the Significant Market Power (SMP) Regulations-2018 on Grameenphone intending to facilitate smaller operators' growth by containing market share acquisition by the larger operators.
Grameenphone got listed on the capital market in 2009 by raising Tk486 crore through issuing shares at Tk70 each including a premium at Tk60.
Currently, Grameenphone's shares are being traded at Tk320.90 each on the DSE.
The company currently holds 9.2% of the DSE's total market capitalisation. So, any fluctuation in Grameenphone's shares has a ripple effect on the indices.
Telenor owns a 55.80% stake in Grameenphone, whereas Grameen Telecom has 34.20%, institutional investors 5.02%, foreign 2.96%, and the general investors have 2.02% shares.