Grameenphone: Final payment for injunction; fresh dialogue on audit claim likely
- The second and final installment of BDT10bn (USD117.6mn) paid to BTRC to continue injunction against non-issuance of NOC
- The regulator seems willing to resolve the audit dispute through dialogue
- We expect GP to resume its usual dividend payment
Grameenphone (GP) paid the second and final installment of BDT10bn (USD117.6mn) to the Bangladesh Telecommunication Regulatory Commission (BTRC), according to reports. The court demanded BDT20bn (USD235.3mn, c16% of audit claim) from GP in November 2019 when the company applied for an injunction against the non-issuance of a no-objection certificate (NOC). The regulator stopped issuing this certificate to GP to persuade them to pay the audit dispute claim.
We expect to see a fresh discussion on the audit dispute. This payment to the BTRC does not solve the audit dispute, rather it provides an opportunity to restart the negotiation process. Before the payments, the regulator seemed reluctant to start any discussion. After GP made the first payment, the regulator eased its stance and started issuing NOCs. Now that GP has made the last payment, we expect the regulator to take the initiative to review the audit dispute and resolve it. Meanwhile, GP is considering the payment not as an expense, but as a deposit adjustable with the final audit claim settlement.
Please note that there is a separate litigation on the BTRC Audit, which is pending at the lower court. The next court date is scheduled on 21 July 2020. This litigation will continue in parallel with the expected negotiation with the regulator.
BTRC to review the significant market participant (SMP) guideline. The High Court declared BTRC’s previous SMP directives illegal on 15 December 2019. The regulator then formed a new committee to review the SMP guideline. Once the committee drafts the guideline, GP will have 15 days to communicate its observation on the guideline. After assessing the observations, the regulator will complete the SMP guideline.
We expect GP to resume its usual dividend payment. GP took a dividend cut in 2019 to counterbalance the BDT20bn payment to the BTRC. The payment is now complete and we expect GP to resume its usual dividend payment in 2020.
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