News From Telecom World

GP may halve IPO size due to NBR directive on pre-IPO placement

Posted on: September 21, 2008

The country’s largest mobile phone company Grameenphone (GP) is likely to halve its proposed initial public offering (IPO) size as a NBR directive denies it a 10 per cent tax benefits if it makes any pre-IPO placement, sources said Thursday (18 Sept ‘08).

The National Board Revenue (NBR) cuts corporate taxes of a company by ten per cent if goes public, but it is not applicable to the companies which raises money in pre-IPO placement.

“The NBR does not believe that pre-IPO money is a part of public subscription. As a result, the GP, which intends to raise US$150 million in pre-IPO placement, will not get the corporate tax benefits,” a market source said.

“The GP has therefore moved to reduce its IPO size to $150 million including pre-IPO placement from the proposed $ 300 million,” he said.

When contacted, company spokesman Yamin Bakht refused to comment on the latest development. However, a source associated with GP’s sharroposed new IPO size, he said there might be no foreign placement.

Meanwhile, the weighted average share prices for pre-IPO placement have already been fixed at Tk 11.58 per share after bidding from local financial institutions.

Trust Bank, Prime Bank, IDLC Finance Limited, Lankabangla Finance, AIMS of Bangladesh and AB Bank are the possible buyers in the on-going pre-IPO placement offer, the source said.

The cell phone operator filed its IPO application with the SEC in June this year, valuing the company at $3.00 billion, the largest in the country.

In its applications, it planned to raise $150 million in a pre-IPO placement with international and local investors and a further $150 million form country’s stock markets.

Norway’s Telenor and Bangladesh’s Grameen Telecom, which controls nearly 50 percent of the country’s 45 million-strong mobile phone market, are the “benchmark corporate in Bangladesh”.

Telenor owns 62 per cent of GP, while Grameen Telecom holds the rest 38 per cent stake.

The GP has become a key operation for the Telenor, which is the world’s seventh largest mobile phone operator, 54-percent owned by the Norwegian government.

The company’s market share came down to 47 percent as of June 2008 from 63 percent in 2006.

Among the six-operator market, however, GP still remains in the leading position with 20.84 million customers followed by Egyptian Orascom Telecom’s Banglalink with 10.17 million customers and Aktel with 8.14 million customers as of August.

Source: Financial Express

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