Flash Report /
Bangladesh

Grameenphone seeks legal recourse on license cancellation notice

    Tanay Kumar Roy
    Tanay Kumar Roy

    Research Analyst

    IDLC Securities
    5 September 2019
    Published by

    According to reports, the Bangladesh Telecommunication Regulatory Commission (BTRC) has issued two separate "show cause" notices to Grameenphone (GP) and Robi today, to cancel their licenses if they do not pay the contingent liability claim. It is a fresh attempt by the BTRC to collect audit claim from these two operators, which jointly own c76% of the subscriber market share in Bangladesh.

    We learnt from management that GP filed a civil suit on 26 August challenging the BTRC’s audit claim since the regulator did not respond to calls for arbitration. With GP taking legal recourse on the contingent liability claim, we expect the courts to intervene. Until this is done, we expect GP to get a stay order on any restrictions imposed by the BTRC, including the latest show-cause notice about license cancellation.

    Our TP for GP stands at BDT438.8 with an ETR of 56.3%. Our TP already includes c36% payment for the contingent liability (BDT33/share). Even if we consider the total payment of contingent liability (BDT93/share), the fair value of GP would stand at BDT379/share, offering 28.3% return. Therefore, we think the impact of the contingent liability claim is already priced in and reiterate our Buy recommendation.