The dispute between Grameenphone, Robi and BTRC comes to a head.

On September 5, the Bangladesh Telecommunication Regulatory Commission (BTRC) served notices to the country's two leading mobile phone operators- Grameenphone and Robi- asking them to explain why their licences to offer 2G and 3G services should not be revoked for failure to pay up "dues".

"A notice has been sent to Grameenphone and Robi pursuant to section 46(2) of the Bangladesh Telecommunication Regulation Act, 2001, asking why their licences will not be scrapped. They must respond within 30 days," said BTRC Chairman Jahurul Haque.

Talking to journalists, the BTRC chairman said if they fail to pay the outstanding dues their licenses would be revoked, "but organizations cannot be shut down that is why we would appoint administrators to run Grameenphone and Robi." He did add though that the next course of action would be finalised after the 30-day deadline.

In the event, aws the 30-day deadline passed, the two operators challenged the legality of the BTRC's September 5 notice itself. The operators said they filed cases in late August challenging the audit claims before the notice was served, which meant the issue was subjudice, and so the BTRC should not have sent out the show-cause notice. The cases had been accepted by the lower court in the presence of the government lawyers. So all parties were certainly cognisant.

"Audit claims running into hundreds of crores of taka that does not take our views or concerns into cognizance is not in keeping with the standard audit practice," said Shahed Alam, chief corporate and regulatory officer of Robi, in a written statement. "We have therefore long been requesting the BTRC to resolve this dispute amicably by agreeing to participate in mediation or ADR, as laid down in our civil procedure."

But the BTRC has not responded to the "well-intentioned gesture" to find a lasting solution to the current impasse. "Hence, we were forced to file a suit challenging the flawed audit findings. In this backdrop, audit is now a subjudice matter and any show-cause issued is invalid," Alam added.

In a separate statement Grameenphone said: "The unfounded show-cause notice by the BTRC to cancel our licence has not been withdrawn and hence we have provided our responses."

However, BTRC Chairman Md Jahurul Haque said they were following the telecom act and they had no intention to do anything arbitrarily. About the next step of action, the BTRC chairman again said appointing administrators was an option, although subject to the approval of the government.

Investors meanwhile, took solace from the words of no less a figure than the country's finance minister, traditionally the most powerful member of the cabinet, who on September 18 had provided assurances that "the ongoing conflict between top two mobile phone operators and the BTRC over the payment of the telecom regulator's dues will be resolved through discussion within three weeks".

"We will reach a solution over the conflict of Grameenphone and Robi with the BTRC for their failure to pay unpaid dues. The conflict will be resolved through discussion within three weeks," Finance Minister Mustafa Kamal had said on that date, at a joint press briefing with Telecom and ICT Minister Mustafa Jabbar at his office, where Chief Executive Officer (CEO) of Grameenphone Michael Foley, among others, was present. He had just held a meeting with BTRC, Grameenphone and others. Kamal also said it was decided in the meeting that the BTRC will withdraw the show cause notices which were issued to Grameenphone and Robi. Besides, the two operators would also withdraw the cases filed with a Dhaka court, he said. As far as optimism goes, this was the high-point in the entire saga.

"Minister Kamal's leadership was on point here," Grameenphone CEO Michael Foley told a closed WhatsApp group, according to the Nikkei Asian Review. In a statement, the company said it is committed to finding a path toward "an amicable solution."

Robi also hailed the government's decision to mediate. "We are happy that the industry's engine will start humming again," said Shahed Alam, Robi's chief corporate and regulatory officer. But it all seems to have gone rather downhill from there.

Not so fast

This past week, the very same 'Minister Kamal' made it clear that the telecom regulator's Tk 13,447 crore (Tk 135 billion, or $1.6 billion at today's exchange rate) audit claim dispute with telecom operators Grameenphone and Robi would be settled through the court, as the two operators had not paid any amount till date as part of an 'out of court' settlement.

"We moved ahead sincerely to make an "out of court" settlement and we've also waited for long. But, they (GP, Robi) didn't pay anything. Had they (GP, Robi) made any payment, we then could understand that they are sincere and interested about the out of court settlement," Kamal said. The minister was talking to reporters after chairing two separate meetings on the Cabinet Committee on Economic Affairs and Cabinet Committee on Public Purchase held at the Cabinet Division conference room on October 31.

Kamal said that he had done his level best to come to a solution over the matter along with his colleagues at the Ministry of Post and Telecommunications, the National Board of Revenue, the Bangladesh Telecommunication Regulatory Commission, adding, "Now things will move on as per the decision of the court. We won't be able to go beyond the decision of the court." He could only 'hope' that something positive would come from the court in this regard. Is it really such an intractable issue that even the country's finance minister had come a cropper in his efforts to resolve it?

Indeed, the latest development, or lack thereof, has come about despite even the Prime Minister's son and ICT Affairs Adviser Sajeeb Wazed Joy getting involved to settle the dispute amicably. Joy's intervention followed a direct appeal from Mats Granryd, director general of the GSMA, a trade body representing the interests of mobile network operators worldwide, who called on him "to ensure BTRC is able to reconsider its stance on this matter". Granryd's appeal was prompted by the Bangladeshi government stating that it would despatch administrators to each operator in order to recoup the taxes.

During a meeting with officials at Gono Bhaban on October 21, Joy said he would prefer an out-of-court settlement, according to officials who attended the meeting. The meeting was attended by officials of the carriers, National Board of Revenue (NBR), and BTRC. Those in attendance got the impression that he didn't like the idea of appointing administrators for Grameenphone and Robi "on such a short notice." Although a number of options were discussed to resolve the ongoing battle, no decision was made, officials said.

They discussed whether to form a committee to review the audit reports that found that the carriers owed the government Tk 13,446 crore. The committee's terms of reference would be fixed beforehand. It was also suggested that the companies should be asked to deposit a handsome amount to a BTRC account before the review starts. The amount would be adjusted after the review concludes.

Earlier, on July 4 this year the telecom regulator directed all the International Internet Gateway (IIG) operators to cut down 30 percent bandwidth of the total usage of Grameenphone while it was 15 percent for Robi to realize the dues. But, later the partial block was lifted on July 17 considering the inconveniences of the subscribers, partly on the intervention of Joy. The BTRC also suspended issuing NOC for importing equipment to run the operators networks as part of the punitive measures.

In the October meeting the ICT advisor said that he was looking for a solution that would be acceptable to all as the country's reputation as a destination of foreign direct investment is related to the issue. Telecom Minister Mustafa Jabbar also said the government has been trying to diffuse tension between the two companies and the telecom regulator: "We will not do anything that may hurt foreign direct investment to the country."

Yet everyone seems to have run out of rope.

The road ahead

Currently, one sticking point seems to be how much the operators are willing to pay up front. On October 17, the High Court issued a two-month injunction on BTRC's move to realize the money from Grameenphone. But on October 24, the Supreme Court asked Grameenphone to inform it within a week about how much money the operator could pay the government now out of the total audit claim against it of Tk 12,579 crore (the claim against Robi amounts to Tk 867 crore).

Accordingly on October 31, Grameenphone lawyer Barrister Sheikh Fazle Noor Taposh informed the court that the mobile operator, during a meeting held with Finance Minister AHM Mustafa Kamal, offered to pay Tk100 crore due at the moment. A bench of the Appellate Division, led by Chief Justice Syed Mahmud Hossain, rejected the offer. It has set November 14 for the next hearing, asking GP to reconsider the amount it is offering up front.

Robi meanwhile has hinted that it may move to an international arbitration body to settle the government's audit claim if the operator fails to get justice in Bangladesh. In an interview with a group of journalists at Robi headquarters in the capital, Mahtab Uddin Ahmed, chief executive officer and managing director of the company, said they may take the issue to the International Centre for Settlement of Investment Disputes (ICSID), one of the five agencies of World Bank Group. Robi's shareholders invested in Bangladesh under a special act that allows the investors to move to an international court, Mahtab said.

According to Supreme Court lawyer Kawser Ahmed, since Bangladesh has concluded bilateral investment treaties (BIT) with Malaysia, Singapore and Japan, there is no bar for the foreign shareholders in Robi to bring investment disputes before the ICSID (ICSID) tribunal.

When it comes to GP though, Bangladesh has not concluded any BIT with Norway. "Therefore, the possibility of bringing an investment dispute by TMC or Telenor ASA will much depend on their corporate structures. Apart from Telenor Group, there are chances that other foreign shareholders in Grameenphone may avail of ICSID arbitration if Bangladesh has already concluded BIT with the country of which any such shareholder is a national," according to Advocate Kawser Ahmed.

That sort of move would increase the dispute's visibility on the global stage to a whole new level, and possibly discourage future foreign direct investment, at a time when the country is unabashedly hungry for it. That is why the BTRC should consider the steps it takes carefully. As it is, the regulator's deployment of the auditor was not without its doubters. GP took it to court and prevailed, with the Supreme Court declaring the appointment illegal. GP has also disputed BTRC's authority to raise demands on behalf of the NBR.

Analysts say that with international investors watching the situation unfold, the government is under pressure to quickly resolve the issue. Foreign investors will take note of how "judiciously" the disputes are resolved, said Khalid Quadir, chief executive officer and co-founder of Brummer and Partners Asset Managers, which operates the Frontier Fund, the country's first private equity company. He also believes the current downward trend in the stock market is partly due to this ongoing dispute, noting that Grameenphone has the largest market capitalisation on the Dhaka Stock Exchange. According to the U.N. Conference on Trade and Development, Bangladesh in 2018 recorded its highest-ever inflow of FDI, $3.6 billion. Almost all economic indicators for the country are pointing up, increasing its attractiveness as a destination for international investment. It is not the time for a dampener.

Grameenphone

After running an audit on Grameenphone, which is jointly held between Norway-based Telenor (55.8%), Grameen Telecom (34.2%) and 10% publicly. BTRC in 2016 claimed Tk12,579.95 crore from the mobile phone operator in taxes and late fees accumulated over the years.

BTRC ran its first audit back in 2011 on Grameenphone and found financial discrepancies amounting to Tk3,034 crore in the operator's books from its inception in 1996 till March 2011.

Grameenphone then disputed the appointment process of the auditing firm, and after a court ruling BTRC in October 2015 appointed another firm, Toha Khan Zaman and Co, to run a new audit on Grameenphone's books from its inception until June 2015.

GP officials claimed that the methodology used in the audit was questionable. Nevertheless, on April 2, the Bangladesh Telecommunication Regulatory Commission (BTRC) issued a demand letter against Grameenphone claiming Tk 8,494.01 crore and another Tk 4,085.94 crore for the National Board of Revenue, to be paid within 10 working days.

Robi

Following an audit in 2016, the Bangladesh Telecommunication Regulatory Commission claimed that Robi, a joint venture between Axiata Group of Malaysia (68.7%), Bharti Airtel of India (25%) and NTT Docomo Inc. of Japan (6.3%) had owed Tk 867.23 crore for dodging revenue share, taxes and late fees accumulated until December 2014 since its inception in 1997.