Flash Report /
Bangladesh

Grameenphone: Fine for broadband payment already provisioned

    Tanay Kumar Roy
    Tanay Kumar Roy

    Research Analyst

    IDLC Securities
    26 August 2019
    Published by

    Press reports state that the High Court has ordered the Bangladesh Telecommunication Regulatory Commission (BTRC) to reassess the disputed amount of BDT300mn imposed on Grameenphone (GP) for providing broadband internet services in violation of telecom regulations during the 2013-16 period. BTRC will review the claim through the Auditor General in the next four months.

    GP already provisioned the whole amount of BDT300mn in its 2016 financials. After the final verdict of the High Court, GP will make the necessary payments. As we expect the newly audited amount to be less than BDT300mn, there may be some provision add back when the dispute is settled. We expect the overall financial implication as well as cash outflow regarding the dispute to be negligible. Therefore, we maintain our TP at BDT438.8 and reiterate our Buy recommendation as we believe that the risks associated with the contingent liability are already priced in. 

    A timeline of the dispute:

    • 2013-16: GP provided broadband services named Go Broadband
    • November 2016 – January 2017: BTRC demanded BDT300mn from GP issuing three separate notices
    • February 2017: GP challenged BTRC’s claim through a writ petition in the High Court