Mobile operator Robi Axiata has cleared its position why it decided to not pay dividend to shareholders in the very first year of its enlistment to the stock market.
Robi officials meeting with officials of Bangladesh Security and Exchange Commission (BSEC) on Tuesday made the situation clear responding to a call to appear in person at the regulator office in this regard.
They have mainly blamed the 2 percent minimum tax on turnover on stock market-listed telecom firms as the reason behind its decision to not pay dividends to investors.
The officials of the country second-largest telecom firm said that the company’s effective tax has increased to 71.8 percent in 2020 as a result of the minimum turnover tax, which in turn has significantly reduced its actual net profit.
They said even if they would announce the dividend, it would have been very ‘minimal’ for a quarter of the year of its enlistment and such insignificant dividend would not have a ‘positive effect’ on the market.
Therefore, with the future business in mind, the company has decided to reinvest the profits without paying dividends, they said. The newly-listed telecom firm published a summary of its audited financial statements approved by its board of directors for the year 2020 on its website on Feb Tuesday.
The company’s earnings per share surged more than eight times year-on-year to 0.33 taka in 2020, but it did not announce dividends for the year in a move which has only frustrated investors.
Robi officials explained their position in meeting with BSEC officials on uesday but no specific decision came from the meeting.
Later, Robi’s Managing Director and Chief Executive Officer Mahtab Uddin Ahmed briefed the media on its fourth-quarter financial record of 2020.
He defended the company decision to not pay dividend to reporters saying, “if we paid dividends in line with our dividend policy; it would be of such an insignificant percentage to raise concern whether it would have a positive impact.”
“So we have decided to re-invest these dividends which would help with our future growth. Many other have factors were also considered.”
Robi’s Chief Corporate and Regulatory Officer Shahed Alam also defended the decision not to pay dividends to investors.
In a statement, he said Robi was has been deprived of the “benefits of the 40 percent corporate tax” levied on listed telecom operators as the government has not revoked the 2 per cent minimum turnover tax as a precondition for entering the stock market, despite making assurances to the contrary.”
“Considering the potential for business growth and the overall future of the company, Robi’s board of directors has decided not to pay any dividend for 2020.”
Shahed said Robi has done well commercially in 2020 despite numerous adversities.
Robi’s earnings per share (EPS) has risen to Tk 0.33 in 2020, six times higher than Tk 0.04 in 2019. “Had the 2 percent minimum corporate tax on revenues been withdrawn, this EPS could have easily increased to Tk O.64,” he said.