Business Report :
The proposed budget for the fiscal year 2024-25 raises the supplementary duty (SD) and value-added tax (VAT) for the telecom sector, leading to increased sales costs for two of the three listed telecom companies on the capital market: Bangladesh Submarine Cables PLC, Robi Axiata Ltd, and Grameenphone Ltd.
The two key tax increases are a rise in supplementary duty (SD) on SIM/RUIM cards for mobile services, from the current 15 per cent to 20 per cent, and an increase in VAT on the supply of each SIM/e-SIM card, from Tk 200 to Tk 300.
These changes will lead to increased sales costs for Bangladesh Submarine Cables PLC and Grameenphone Ltd, two of the three listed telecom companies on the stock market.
Despite the cost increases, the proposed budget offers some relief as it extends concessional facilities for one year for local mobile phone manufacturers/assemblers, potentially boosting domestic production. Additionally, the budget outlines plans for installing the fourth submarine cable by 2028 and the fifth one by 2033, which could significantly improve internet bandwidth and connectivity in Bangladesh.
In view of such proposals, EBL Securities, a brokerage house, said in its budget review that the increase in supplementary duties and VAT will increase the cost of sales for telecom companies, which is likely to affect their bottom line.
However, the review said that local mobile phone manufacturers and assemblers would benefit from the lower tax rates.
Meanwhile, a phone call to Robi Axiata Company Secretary Mohammed Shahedul Alam regarding his views went unanswered.
GP Q1’24
Grameenphone, Bangladesh’s largest mobile phone operator, rallied to a 72 per cent year-on-year profit jump in the first quarter of FY24. The company reported a robust Tk 1,338 crore profit, fueled by reduced net finance costs and foreign exchange gains.
Grameenphone, Bangladesh’s largest mobile operator with the highest subscriber base, reported a solid first-quarter profit coming on the heels of Robi Axiata Ltd, the country’s second-largest operator, announcing a 153 per cent profit jump to Tk 106 crore for the same period.
GP said its revenue grew 5 per cent year-on-year to Tk 3,734 crore in Q1. However, due to an increase in overall costs, the operating profit rose only 3 per cent.
On the other hand, the company posted a 180 per cent gain through foreign exchange transactions. In the January-March period, earnings per share (EPS) grew to Tk 9.91 from Tk 5.77 posted just a year ago.
The operator, which reported a profit of Tk 3,306 crore in the last financial year, closed almost flat at Tk 232.50 per share on the Dhaka Stock Exchange on Thursday.
Robi Q1’24
Robi Axiata Ltd, Bangladesh’s second-largest mobile operator, surged 153 per cent in profits for the first quarter of fiscal year 2024, driven by strong data revenue and reduced costs. According to its unaudited financial statement for the period, the company reported a profit of Tk 106.7 crore, a significant increase from Tk 42 crore in the same period last year.
This robust performance follows Robi’s 75.7 per cent profit increase to Tk 321 crore in 2023, highlighting a trend of steady growth.
Its EPS rose to Tk 0.2 in the January-March quarter from Tk 0.08 recorded in the same period of the previous fiscal year. Also, Robi’s revenue rose 7 per cent year-on-year to Tk 2,516 crore in Q1’24.
BSCPLC Q3’24
Bangladesh Submarine Cable Company’s EPS dropped 19.68 per cent year-on-year in nine months ending in March 2024 as its revenue decreased during the period under review.
As per the disclosure, the state-run company’s EPS stood at Tk 10.20 for the Jul 23-Mar 24 period, against Tk 12.70 recorded for the Jul 22-Mar 23 period.