Robi to borrow $55m from Malaysian parent Axiata Group

Revenue breakdown in Jan-Mar 2023

• Tk2,347cr from mobile services including voice, non-voice traffic, data, subscriptions, and connection fees
• Tk131cr from interconnect services
• Tk2.65cr from sale of devices 
• Tk29.4cr from commissions, IT professional services, and digital services 

The country's second-largest mobile network operator Robi Axiata Limited will receive a $55 million shareholder loan facility from its parent company Axiata Group, a Malaysian multinational telecommunications conglomerate.

In a stock exchange filing on Monday, Robi stated that it would secure the fund for a period of three years.

According to officials at the company, the loan is being taken as a precautionary measure to safeguard against any potential impact from the ongoing dollar crisis in the country.

Robi is not the first company to receive such a loan. Previously, Berger Paints also obtained a loan in foreign currency from its foreign partners.

In the disclosure made to the Dhaka Stock Exchange (DSE), the telecom operator stated that it did not need to pledge any assets as security and did not create any charge with the Registrar of Joint Stock Companies and Firms in relation to this loan agreement.

The interest rate of the loan will be based on the secured overnight financing rate (SOFR), which is 1.2%.

The interest rate of this loan will be calculated by adding 1.2% to the SOFR, according to an official of the company.

Mohammed Shahedul Alam, company secretary and chief corporate and regulatory officer at Robi, told The Business Standard, "We will need foreign currency for future expansion, especially network expansion. So, we have made an agreement to take a loan from our foreign partner. We will use this loan when we need dollars."

"This facility has been kept so that our expansion work is not hindered due to the country's dollar crisis," he added.

Robi got listed on the stock exchanges in 2020. Axiata Group Berhad owns 61.82% of Robi, Bharti Airtel of India holds 28.18%, and the general public holds the remaining 10%.

In April this year, Berger Paints Bangladesh Ltd decided to enter into an agreement with its foreign parent company, J&N Investments (Asia) Limited, to avail $60 million in loans.

The loan will facilitate the opening of letters of credit for raw material imports by Berger Paints and will be disbursed in phases based on business requirements.

Sazzad Rahim Chowdhury, director and chief financial officer at Berger Paints Bangladesh, had earlier told TBS, "The move comes as a part of our commitment to lend a hand to the country's foreign currency reserve."

"We will build a foreign currency reserve out of the loan, to pay our import bills," he said, adding that the shareholder's loan would help smooth the company's imports as well.

In 2020, Robi borrowed $95 million from the International Finance Corporation for the purchase of telecommunication equipment, the payment of spectrum renewal fees, TAX, and VAT.

Meanwhile, the country's gross foreign exchange reserves dropped by $6.44 billion to $23.56 billion in the Bangladesh Bank's new reserve calculation, published on 13 July, as per the formula suggested by the International Monetary Fund.

The gross reserves were $29.92 billion as per the previous calculation, according to the central bank data posted on its website.

The new gross reserves can cover imports for nearly four months, as per the recent import trend.

Moody's, in its latest report, downgraded Bangladesh's credit rating due to heightening external vulnerability and liquidity risks amid deterioration in foreign exchange reserves.

The global rating agency forecast that Bangladesh's gross foreign reserves might remain below $30 billion for the next two to three years, with an import coverage of around three months.

A higher outflow of foreign funds than inflow put pressure on the country's balance of payments, with the financial account turning into a deficit.

Robi financials

Robi Axiata Limited has reported growth in both its revenue and profit in the January to March quarter of 2023, compared to the same quarter of the previous fiscal year.

According to its unaudited financial statement for the March quarter, its mobile services revenue, including voice, non-voice traffic, data, subscriptions, and connection fees, surged by 16% to Tk2,347 crore. And, its net profit grew by 5.44% to Tk42 crore.

Its interconnect services increased by 13% to Tk131 crore.

However, its revenue from the sale of devices declined by 73% to Tk2.65 crore, and other revenue like commission, IT professional services, and digital services revenue declined by 14% to Tk29.40 crore.

Robi's consolidated earnings per share stood at Tk0.08, net asset value per share at Tk12.90, and net operating cash flow per share at Tk1.83 at the end of March 2023.

As of May 2023, the company had a total of 5.59 crore subscribers, up from 5.44 crore in December 2022.

The company raised Tk523 crore from the stock market through an initial public offering in 2020.

Its shares have been stuck at the floor price of Tk30 each since August last year at the DSE.

The company's share price rose to a high of Tk76.80 after the listing.