Lack of transparency in Warid-Bharti deal alleged
Allegations of lack of transparency have surfaced over the telecom deal between Bharti Airtel and Warid. Indian mobile telecom giant Bharti Airtel in 2009 bought 70 per cent stake in Warid, the sixth telecom operator in the country, almost at no price.
Chief strategy officer of Robi (formerly AkTel) Koji Ono has openly questioned the deal saying: "Docomo bought 30 per cent stake in Robi (formerly Aktel) at a price of $350 million and paid $20 million as tax to the government in 2008, but we don't know how much tax Bharti paid to the government to get the 70 per cent stake in Warid," he said.
The telecom regulatory authorities should make the whole deal clear so that everybody knows about the exact status of the deal and that Bharti was not given any undue favour for any reason, he said.
The parliamentary standing committee on planning has recently asked the telecom regulatory authorities to spell out the deal as the agreement has deprived the government of about Tk 1.35 billion in tax."We have sought an explanation on the deal as there is allegation that the government lost some revenue over the agreement," the committee chairman Oli Ahmed said.
Warid was registered with the Registrar of Joint Stock Company in December 2004 with a paid-up capital of Tk 2.0 million and authorised capital of Tk 100 million. It changed its name from Warid Telecom BD (Pvt) Limited to Warid Telecom International Limited in 2006.
It raised its paid-up capital by Tk 9.25 billion in January 2007 and again by Tk 10.73 billion in March 2009. It struck a deal with Bharti Airtel and sold a part of its ownership to the Indian company.Warid Telecom transferred over 114.47 million shares to Bharti Telecom at a price of Tk 0.06 per share on February 25 this year against its face value of Tk 100. The Warid telecom showed over Tk 27 billion in losses before the share transfer.
The government, however, withdrew 5.5 per cent telecom share transfer tax just before the handover of Warid share to Airtel.On February 25, 2010, 207m new shares were created and transferred in the name Bharti.AT present, Bharti Airtel owns 321.879 million shares and Warid Telecom International LLC owns 137.948 million of the company, whose paid-up capital stood at over Tk45 billion..
Bangladesh Telecom Regulatory Commission (BTRC) chairman Zia Ahmed said, "We have asked Bharti to submit its investment plan. It gave us a plan of $300 million for business expansion," he said.He admitted that Bharti gave Warid $100,000 as "token money" and then it brought $300 million for investment in the company."Now Bharti owns 70 per cent stake in Warid and the $300 million investment has already arrived in the country," the chairman said.
Dhabi Group, promoter of Warid, was looking for a strategic partner as the operator had negative equity and eventually it struck the deal with Bharti, he said.When asked about the tax loss to the government, he said, "I am against the 5.5 per cent tax imposed on transfer of telecom shares and I am happy that the tax was waived in February this year."
Mr Zia claimed that the commission allowed the Bharti-Warid deal after consulting with the government.Under the Bangladesh Telecom Act, 2001, BTRC is empowered to take any decision and it does not need to consult with or inform the telecom ministry or any other government agency for taking any decision.
A post and telecommunication ministry official said the government was not aware of the deal as under the existing laws the BTRC does not need to discuss with the ministry for taking decisions."We cannot poke our nose into BTRC matters as the ministry's hands are tied," he explained.He, however, said the cabinet has already approved the amendment to the telecom act to clip powers of BTRC and hand over certain authority to the government. "The amendment is likely to be placed in the budget session for the approval of parliament," he said.
The amendment will empower the government to become the licencing authority and it will also fix tariff rates and revenue, he added.
When asked why the government has taken the decision to trim the regulatory authorities' power, he said the cabinet is the highest decision making body of the government and it must have a role in tariff and revenue matters of the telecom sector."The regulatory authorities will only be the implementing agency after the amendment to the telecom act," he added.
The government, however, withdrew 5.5 per cent telecom share transfer tax just before the handover of Warid share to Airtel.On February 25, 2010, 207m new shares were created and transferred in the name Bharti.AT present, Bharti Airtel owns 321.879 million shares and Warid Telecom International LLC owns 137.948 million of the company, whose paid-up capital stood at over Tk45 billion..
Bangladesh Telecom Regulatory Commission (BTRC) chairman Zia Ahmed said, "We have asked Bharti to submit its investment plan. It gave us a plan of $300 million for business expansion," he said.He admitted that Bharti gave Warid $100,000 as "token money" and then it brought $300 million for investment in the company."Now Bharti owns 70 per cent stake in Warid and the $300 million investment has already arrived in the country," the chairman said.
Dhabi Group, promoter of Warid, was looking for a strategic partner as the operator had negative equity and eventually it struck the deal with Bharti, he said.When asked about the tax loss to the government, he said, "I am against the 5.5 per cent tax imposed on transfer of telecom shares and I am happy that the tax was waived in February this year."
Mr Zia claimed that the commission allowed the Bharti-Warid deal after consulting with the government.Under the Bangladesh Telecom Act, 2001, BTRC is empowered to take any decision and it does not need to consult with or inform the telecom ministry or any other government agency for taking any decision.
A post and telecommunication ministry official said the government was not aware of the deal as under the existing laws the BTRC does not need to discuss with the ministry for taking decisions."We cannot poke our nose into BTRC matters as the ministry's hands are tied," he explained.He, however, said the cabinet has already approved the amendment to the telecom act to clip powers of BTRC and hand over certain authority to the government. "The amendment is likely to be placed in the budget session for the approval of parliament," he said.
The amendment will empower the government to become the licencing authority and it will also fix tariff rates and revenue, he added.
When asked why the government has taken the decision to trim the regulatory authorities' power, he said the cabinet is the highest decision making body of the government and it must have a role in tariff and revenue matters of the telecom sector."The regulatory authorities will only be the implementing agency after the amendment to the telecom act," he added.
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