Published: Thursday, May 23, 2013

Japan’s Docomo shrinks stake in Robi

Company suspends further investment due to regulatory and political uncertainties

Mahtab Uddin Ahmed, second from right, chief financial officer of Robi, speaks at a press conference at its office in Dhaka yesterday. From left, Pradeep Shrivastava, chief market officer; Matiul Islam Nowshad, chief human resources officer; and Mahmudur Rahman, executive vice president, are also seen. Photo: STAR

Mahtab Uddin Ahmed, second from right, chief financial officer of Robi, speaks at a press conference at its office in Dhaka yesterday. From left, Pradeep Shrivastava, chief market officer; Matiul Islam Nowshad, chief human resources officer; and Mahmudur Rahman, executive vice president, are also seen. Photo: STAR

Japan’s NTT Docomo, the minority shareholder of mobile operator Robi Axiata Ltd, will not invest further in the company, squeezing its stake to 8 percent from 30 percent, a move that sends a bad signal to potential foreign investors.
The Docomo decision comes in the face of what it cites as an unfriendly regulatory environment and business uncertainties.
Robi fights a legal battle with the telecom regulator and the National Board of Revenue over a 15 percent VAT rebate on 2G spectrum fees.  Robi has found about $35 million stuck in the court battle.
With Docomo’s latest move, uncertainty deepened over Robi’s participation in the 3G auction slated for July 31.
Japan's Docomo shrinks stake in Robi“An unpredictable regulatory environment dented Docomo’s expectations,” Mahtab Uddin Ahmed, Robi’s chief financial officer and acting chief executive officer, told The Daily Star.
“The volatile political situation also eroded its confidence,” he added.
Axiata Berhad of Malaysia, the majority shareholder, will increase its holding to 92 percent in its Bangladeshi subsidiary as soon as the adjustment is made after the completion of legal and regulatory processes, Robi said in a statement.
However, the processes await approval from the government.
The industry is at a critical juncture with many issues pending with government agencies, related to licensing rules.
The issues were not addressed even in the recent notices of the NBR, Ahmed said at a media briefing at Robi’s corporate office in Gulshan.
Robi also said the recent NBR circular is well short of the commitments made by the government in addressing treatment of additional VAT on spectrum and its expectations.
Robi brought in Tk 1,757.7 crore from shareholders to the country as foreign direct investment in 2012, while no dividend was proposed for the same business year.
The operator has not paid any dividend to its shareholders since 2006, while investing Tk 2,677.4 crore in the same period.
Docomo entered Bangladesh in 2008 by buying AK Khan’s 30 percent stake in the company at $381 million.
Robi, which also released its first quarter results yesterday, said its net profit in the quarter fell by 9 percent to Tk 113.1 crore compared to the previous quarter, amid higher SIM tax subsidies.
However, its net profit in the first quarter of 2012 was Tk 11.6 crore.
CFO Ahmed said the operator reported only 1.7 percent subscriber growth in the first quarter of 2013, compared to the previous quarter.
However, he said growth was down from the natural curve due to a fierce market competition.
“During the first quarter the company has seen reduction in earnings before interest, taxes, depreciation and amortisation (EBITDA). The company recorded Tk 410.4 crore EBIDTA in the quarter, down by 4.2 percent from Tk 428.5 crore in the fourth quarter last year,” Ahmed said.
Its revenue in the first quarter was Tk 1,080.6 crore, up 5.5 percent from the previous quarter. Pradeep Shrivastava, chief market officer, Matiul Islam Nowshad, chief human resources officer, and Mahmudur Rahman, executive vice president, were also present.
Docomo is Japan’s largest mobile service provider, serving more than 60 million customers.
The company operates a high-quality nationwide 3G network and an ultra-high-speed LTE network, one of the world’s first launched in 2010.