The telecom tussle

This article raises concern at the ways in which BTRC the regulator, and its market stakeholders GP and Robi, are engaging against each other, clearly extending the policy crevice that, unless sowed, will eventually create a near-market collapse and distortion. 

The erratic behaviours have robbed many investors their hard-earned money in the stock-market and the reputation of Bangladesh, as a foreign investment-friendly country, is being severely tested. Let me first quote some recent articles, negotiations, and discussion in the matter of GP, Robi, and BTRC. 

A Financial Express report published on August 29 said that BTRC had moved to scrap licenses of GP and Robi. On September 9, a Dhaka Tribune report said that there was significant progress in dispute with GP. 

Finance Minister AHM Mustafa Kamal stepped in as a mediator, as per a report published on September 19 in The Daily Star. He claimed that the conflict will be resolved within two to three weeks. BTRC had sought ministry nod to appoint administrators at GP and Robi, as per a report published in Dhaka Tribune on October 16.

The newspapers covered stories about the entanglement between GP, Robi, and BTRC. GP is perhaps the largest market capitalized company in the Dhaka Stock Exchange (DSE). It is the big elephant in the market and, with its prices falling, the market slide will accelerate. 

Investor confidence in the past few weeks have been ebbing daily. The above reports clearly show that the finance minister, understanding the ramifications of the dispute between GP, Robi, and BTRC, intervened to set things straight while the sector is not under his portfolio. 

The minister concerned dealing with the Ministry of Post and Telecommunications in this case has been in suspended hiatus, raising questions as to whether he has the grit or dedication to address the frailties of the sector, review the legal structure and function of the regulator, and also address the alleged tax evasion issue and its merit thereof. 

Stocks slumping for the fifth day -- published on October 14, 2019 in The Daily Star -- shows us a negative market indicator for us to grapple with. The stock market shed Tk13,031 crore in five days and that run is spiralling down each day as the tussle between GP, Robi, and BTRC continues. 

In recent days, a BTRC-initiated government audit suddenly unearthed a claim of Tk13,446cr of unpaid taxes. The findings are close to 20 years old, necessitating a more pertinent question to be asked: Why did it take 20 years to extricate this information? 

What kind of relationship did the regulators have that they could not calculate the tax amount owed to the government? Accounting, auditing, etc are mathematically arrived at and scope for grey areas in calculations is very limited. 

A separate government investigation with a transparent body needs to dig into these matters. It seems evidently clear that either a hand of corruption had stopped the regulators to pinpoint the tax evasions or the people manning these delicate functions do not have the accounting/technical skills to calculate the owed taxes. 

This calls for a series of questions and beacons a public hearing on this matter so the state machinery can identify under whose watch this allegedly dreadful incompetence had taken place. Similarly, it needs to be seen how such grossly incompetent or corrupt people were brought into taking such positions of great responsibility. The country deserves to know. Such huge amounts of unpaid taxes is no joke. 

On the other hand, the veracity of the denial by GP and Robi also raises questions as to whether the tax evasion findings are genuine or not. For one, whether the age-old arm-twisting regulatory philosophy is being taken by BTRC or not, especially since it can hide under the cloak of the government when push comes to shove. Subsequent to these findings, we also see both GP and Robi challenging these figures, suggesting a fault-ridden methodology was used to calculate back taxation. 

They also claimed for statutes of limitation of government audit and sought arbitration in this process. While gerrymandering beyond the system, BTRC’s role has been questionable at the very least. 

Assuming GP and Robi had been allegedly at fault but where were the regulator BTRC hibernating for the past 20 odd years, leading up to this predicament. The public of Bangladesh want to see a system that works and not to the advantage of a particular entity.

The context in which these large organizations are battling is causing great grief to the common masses, who stand to lose money daily. This fight cannot rob the investors’ confidence and turn Bangladesh into an erratic country which eventually may spur foreign investment flight out of the country. 

These grave and far-reaching consequence are not being considered by BTRC, the regulator, while they are fixated on head-butting without offering scope for mediation. 

The finance minister had spoken about solving the situation with two to three weeks in one of his comments, but the regulator had sent out of the blue a letter to the Ministry of Post and Telecommunications for their nod in installing an administrator at the above companies. This very act goes opposite to the statement and workings of the minister of finance. 

The Dhaka Stock Exchange General Index tumbled another 40 points to settle at 4781 points on October 16. Worrying signs are all over and, sadly, it seems that the government machinery is waiting for the PM to lift a finger and then the ball will start rolling. 

But, until then, all bets are off and the stock market may slide south.

Ziaur Rahman is the CEO of IITM