Flash Report /

Grameenphone: Supreme Court demands BDT20bn to continue injunction

    IDLC Securities
    24 November 2019
    Published byIDLC Securities

    According to press reports, the Appellate Division of the Supreme Court (SC) asked Grameenphone (GP) to pay BDT20bn (USD235mn, 15.7% of total audit claim) in three months to continue the High Court’s (HC) injunction on the audit claim of Bangladesh Telecommunication Regulatory Commission (BTRC). 

    Earlier in October, GP appealed to the HC for an injunction against BTRC’s audit claim soon after the regulator intended to appoint administrators. The regulator appealed to the SC against GP’s appeal in the HC. The verdict was due on 5 November, but later postponed to 24 November (today).

    We think that today’s verdict is not a final judgment on the audit claim issue. However, it allows GP to get the regulator’s non-objection certificate (NOC), which is necessary for various operational activities including the launching of new packages, capital expenditure for network upgrade and expansion. 

    Please note that our TP for GP stock (BDT438.8) already includes c36% payment for the audit claim (BDT33/share). Even if we consider the total payment of the audit claim (BDT93/share), the fair value of GP would stand at BDT379/share, offering a 26% return. Therefore, we think the impact of the claim is already priced in. We have a Buy recommendation.