Why Aamra Networks is selling data centre

Aamra Networks – an IT communication solutions provider whose prime business is data connectivity – has decided to sell its data centre owing to dissatisfactory revenue generation.

The company will sell the data centre at Tk11.50 crore and invest the fund in a new business, and in developing its existing business lines, according to its officials.

It will invest Tk3 crore in the Internet Protocol Telephony Service Provider—a new product line—subject to the approval of the Bangladesh Telecommunication Regulatory Commission.

The internet protocol telephony service offers digital telecommunications services based on voice over internet protocol that are provisioned via the internet provider.

It will also invest Tk7 crore in the infrastructure development of its existing multiprotocol label switching (MPLS) business line, which is now profitable and has a promising future.

MPLS is a routing technique in telecommunication networks that directs data from one node to the next based on a short path rather than a long network address.

The remaining Tk1.50 crore will be used as working capital for the company.

The company said the board believes the introduction of a new product line and investments in profitable MPLS products will have a greater impact on its profitability than the data centre.

According to the company, the data centre was established with the funds from the initial public offering in 2017.

Now the company has decided to sell its data centre to Aamra Holdings, a related party for common directorship at Tk11.50 crore, where its book value is Tk8.45 crore.

As a result, the company will gain Tk2.37 crore from selling the asset, which will have a direct impact on profitability.

Its earnings per share (EPS) will increase by Tk0.38.

For the related party transaction, it will arrange an extraordinary general meeting (EGM) on 31 December for securing shareholders' approval, and 28 December has been fixed as the record date.

An official told TBS that even after five years of setting up the data centre, the company is not seeing any improvement in revenue.

"A sister concern of the Aamra Group offered to buy the data centre as the expected revenue did not come in," he said.

Aamra Networks was listed on the Dhaka Stock Exchange in 2017, with Tk56.22 crore as paid-up capital.

On Thursday, its share price closed at Tk56 each. In fiscal 2021-22, its EPS declined to Tk1.85 from Tk2.04 in the previous fiscal year due to the cost escalation compared to the previous year.

In FY22, it recommended 5% cash and 5% stock dividends for the shareholders.