News From Telecom World

Grameen Telecom hears the call to take on poverty

Posted on: November 19, 2008

Record-breaking IPOs are a little thin on the ground, so Oddvar Hesjedal, the chief executive of Grameenphone, a man intent on putting mobile phones in the pockets of some of the world’s poorest people, may soon have reason to be doubly pleased.

Bangladesh’s largest mobile company, an outfit setting new standards in ultra-cheap communication, said this week that it was ploughing on with long-mooted plans to raise $125 million (£98.6 million), $75 million of that on Dhaka’s stock market. The sum may be sharply down from the $300 million envisaged in July, but still would represent the largest flotation in the country’s history.

The company’s heritage is striking: its roots stem back to the Grameen family of enterprises, the brainchildren of Muhammad Yunus, the Chittagong-born economist who won the 2006 Nobel Peace Prize for inventing microfinance, the practice of lending tiny but life-transforming sums to the impoverished.

In 1996, Dr Yunus’s Grameen Telecom, a non-profit group dedicated to rolling out a mobile network to Bangladesh’s rural hinterland, teamed up with Telenor, the Norwegian group, to found Grameenphone. Today, Telenor owns 62 per cent, Grameen Telecom the remainder.

The two shareholders are embroiled in a messy argument over control of the company. Dr Yunus thinks that it should be given to the poor of Bangladesh through the non-profit Grameen Telecom; Telenor disagrees. Despite the high-profile spat, Grameenphone has caught the eye of the industry cognoscenti. It operates in one of the mobile sector’s sweet spots, an emerging market nearly bereft of landlines (Bangladesh has only 1.2 million fixed lines to cover a population of 160 million). It is the kind of high-growth environment that much larger groups, such as Vodafone, of Britain, and DoCoMo, of Japan, are desperate to enter.

In some respects, Grameenphone has forged well ahead of its richer Western rivals. Up to four million of its customers are using their Grameen Telecom mobile to access the internet. In a country with only 600,000 web-connected fixed lines, this makes it the dominant web provider. Groups such as Vodafone have spent billions on 3G licenses in the West in an effort to attain the same status to no avail.

Mention Dr Yunus’s social work and Mr Hesjedal is keen to emphasise that Grameenphone is a money-making enterprise but is highly conscious of its social responsibilities. “I meet with [Dr Yunus] regularly,” Mr Hesjedal, a Telenor veteran, says. “We have a good relationship. We discuss how to create opportunities for the poor in Bangladesh.”

His concerns and those of Bangladesh are aligned, he says: “Communications infrastructure is capable of having a massive impact on this country’s economy. The economy improves; people have more money; they buy more mobile phones.”

For the moment, however, Grameenphone must work at providing ultra-cheap services to a cash-strapped population. Nearly 40 per cent of Bangladeshis live on less than a dollar a day. The company’s average revenues per mobile-user (known in the industry as Arpu) per month languish at about $3 or $4, Mr Hesjedal says, a fraction of those in the West.

Source: The Times


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