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Robi margin remains flat despite slight post-merger growth

With continued investment in network expansion and the unchanged tax regime, the Robi Axiata Limited is bracing itself for a dismal financial performance by the end of the year, a press release said Wednesday.

However, the customers have positively responded to the first ever merger in the country’s telecom sector, as the merged company, Robi, has added 3.4 million subscribers in Q2 2017, taking the subscriber base to 39.6 million.

Although it translated into revenue growth for both voice and data service, the hefty investment for post-merger network expansion (540 crore taka) and heavy tax burden culminating into the contribution of 46.8% of the company’s revenue for Q2 2017 towards the Government Exchequer left the newly-merged Robi with a slim profit margin.

This narrative of Robi’s business again highlights the perils of high taxation regime in the industry.

Robi and airtel customers are enjoying good quality network and widest coverage with lower value for on-net benefit.

Robi has been able to add another 3.4 million new subscribers in Q2 2017 to reach 39.6 million, representing 29.2% subscriber market share.

The company witnessed solid growth in both voice revenue (YoY +36.5%) and data revenue (YoY +106.9%) driven by the merger resulting in overall revenue growth (YoY +35.1%). Data revenue growth was propelled by significant investments in network coupled with customer-oriented data offerings to drive 3.5G data usage.

Robi achieved operating profit (EBITDA) margin of 15.9% in Q2 17, which is lower than the same period of previous year mainly for lower margin of airtel business resulting from the merger.

Robi witnessed encouraging 9.3% subscriber growth in Q2 17, raising the subscriber base to 39.6 million, driven by successful Robi-airtel merger.

QoQ revenue increased by 8.6%, amounting to BDT 16.8 billion, registering strong growth in both voice (+8.0%) and data revenue (+14.8%). QoQ EBITDA remained flat at BDT 2.7 billion in Q2 17 mainly for investment in NW opex and marketing activities.

Robi recorded PAT BDT 685mn in Q2 17 with the margin of 4.1%.

Robi continued investing aggressively to fast-track its 3.5G network expansion and improving 2.5G network quality for better customer experience both in voice and data services.

Total CAPEX investment made by Robi since inception amounted to BDT 192.1 billion inclusive of BDT 5.4 billion CAPEX investment in the second quarter of 2017 (4.5bn in Q1 17).

The company has network coverage in all the 64 districts of the country through over 11,000 sites; of which over 8,500 are 3.5G sites.

Robi Managing Director and CEO, Mahtab Uddin Ahmed said, “Year 2017 started with the biggest challenge of integrating Robi-airtel network and providing best customer service to the subscribers. By the time, this financial report is published, we would have completed the network integration of Robi and airtel, reaching one of the biggest milestones in our journey to create the number #1 digital network of the country.

Our continued investment and efficient integration of Robi and airtel network has enabled us to offer strong network coverage, both indoor and outdoor – with significant expanded data capabilities for our subscribers. The positive customer feedback received to this effect, works as a source of inspiration, as we sustain our effort in offer a complete set of digital lifestyle services for our customers.

During the second quarter of 2017 we continued to bring most innovative and affordable product offers in the market. Robi introduced the first Islamic mobile package of the country – ‘Noor’, offering special call rate and attractive Islamic VAS services. Robi has recently launched an e-shop to offer best smartphone deals.

Bangladesh Cricket Control Board has kept its confidence on Robi again and awarded us the sponsorship of national cricket team for the next two years.”

 In Q2 2017, the company contributed BDT 7.9 billion to the Government Exchequer representing 46.8% of company revenue.

Since inception in 1997, Robi has paid more than BDT 193.5 billion to the Government Exchequer while for the same period remitted BDT 2.9 billion dividends to its shareholders.