Grameenphone Will Seek Acquisitions to Drive Growth

from Bloomberg

Grameenphone Ltd., the Bangladeshi mobile-phone company founded by Nobel Peace Prize laureate Muhammad Yunus, said it may buy other operators as competition intensifies from rivals including Orascom Telecom Holding SAE.

``We are always seeking to extend our footprint,'' Chief Executive Officer Anders Jensen said in an interview yesterday in Macau. The six wireless carriers operating in the country are ``two to three too many,'' he said.

Acquiring other operators will give Grameenphone, controlled by Norway's Telenor ASA, more airwave spectrum to accommodate its target of adding 7 million users a year. The Dhaka-based company has a 61 percent share of a market where less than one in five of the 150 million people own a mobile phone.

Bangladesh is ``attractive because it has low penetration and a high growth rate,'' said Paul Budde, managing director of telecommunications researcher Paul Budde Communication Pty. in Bucketty, New South Wales. ``In a fast-growing market, there's room for four to six competitors.''

Bangladesh had 28.5 million mobile users at the end of June, compared with 15.4 million a year earlier and about 1 million in 2002, Budde said. Bangladesh is expected to have 50 million mobile subscribers by the end of 2008, he said.

Peace Prize

Yunus and the Grameen Bank were jointly awarded the Nobel Peace Prize in a December 2006 ceremony in Oslo for advancing social and economic development by giving small-business loans to the poor.

The Dhaka-based bank's so-called microcredit system has spread to impoverished communities around the world since its inception in 1976. The lender makes most of its loans to women and serves tens of thousands of villages in Bangladesh.

Yunus, who studied in the U.S., returned to Bangladesh in 1972, according to the Nobel Prize Web site. In 1976, driven by the sights of poverty and famine in his home country, Yunus decided to lend $27 to 42 craftsmen and told them they could pay the money back when they could afford to, the site said.

Grameen Telecom Corp. started the phone company with the aim of bringing services to 100 million villagers in Bangladesh, according to the Web site.

Grameen Telecom owns 38 percent in GrameemPhone, while Telenor, the largest phone company in the Nordic region, owns 62 percent, according to the Bangladeshi carrier's Web site.

Rising Competition

Closely held Grameenphone faces rising competition as Cairo- based Orascom, the Middle East's largest wireless operator, and Singapore Telecommunications Ltd. invested in mobile-phone operations to tap demand in Bangladesh.

In the nation, mobile-phone calling rates may fall to about 1 cent a minute as operators offer discounts to lure users, CEO Jensen said in the interview. Grameenphone plans to encourage users to make more calls and introduce services such as Research in Motion Ltd.'s Blackberry device to increase average spending from less than $5 a month, he said.

Grameenphone invested about $300 million in each of the past three years to meet demand, former chief executive officer Erik Aas said in June. Jensen, previously an executive at the Swedish unit of Fornebu, Norway-based Telenor, replaced Aas in September.

``If we get additional spectrum, we will be more willing to invest,'' said Jensen. Grameenphone may otherwise slow capital spending as equipment purchases alone can't create enough new capacity, he said. The company has almost 16 million users, Jensen said.

2008 IPO?

Grameenphone may complete a share listing on the Dhaka stock exchange next year, Jensen said. The proposed stock offering will be the biggest in Bangladesh, he said.

``There is strong interest from the owners for the IPO,'' said Jensen. ``There are practical things such as whether the Dhaka Stock Exchange can handle a deal of this size.''

The company has about 260,000 subscribers on its Village Phone Program, which it runs jointly with Grameen Telecom and Grameen Bank, according to the carrier's Web site. The 10-year-old project offers loans to villagers to buy handsets, which are then used in the community as pay phones, earning the operators income.