The Appellate Division of the Supreme Court of Bangladesh disposed the appeals of mobile phone operators, Grameenphone (GRAM BD), Robi (ROBI BD) and Banglalink, regarding some payments to Bangladesh Telecommunication Regulatory Commission (BTRC), including VAT on spectrum and licence fees. GRAM BD would pay BDT 15bn, ROBI BD BDT 5bn, and Banglalink BDT 6.5bn.

Government gets a fee from the spectrum allocated to mobile operators and VAT is imposed on that fee. However, the operators challenged the decision of imposing VAT by filing case with the High Court. According to the decision by the Appellate Division now the operators are required to add the Value Added Tax (VAT) for renewing and purchasing spectrum. Besides, the operators will not get any rebate facility from the VAT to be paid for the same purposes.

This payment will have an impact of ~BDT 11.0 per share for GRAM BD and BDT 1.0 per share for ROBI BD. Our fair value estimate for GRAM BD is BDT 359 per share if we consider GRAM BD needs to pay all the contingent claims (including this VAT payment) by the government.