Telenor, March 14, 2007
Grameenphone – a win-win for everyone
Grameenphone has built one of the most extensive infrastructures of Bangladesh and is a major contributor to the development of the national economy.
Grameenphone launched mobile services in March 1997 and is currently the leading mobile operator in Bangladesh with more than 11 million subscribers. Grameenphone has been a pioneer in introducing new products and services in the local market, extending connectivity to those who have no alternative access to communication technology and to those with little to spend on services.
Grameenphone is a unique international joint venture between Telenor ASA (62 per cent), a leading Telecommunications Company based in Norway and listed on the Oslo and NASDAQ Stock Exchanges, and Grameen Telecom Corporation (38 per cent), a Bangladeshi company working in close collaboration with the micro-credit pioneer Grameen Bank and professor Muhammad Yunus, the Nobel Peace Prize winners 2006.
With a mobile network backbone, operators are able to offer a comprehensive ICT service throughout the country. Mobile networks have proved the most efficient basis for ensuring ICT access to the Bangladeshi people. Bangladesh has a population of approx. 147 million. There are currently only approx. 1.5 million fixed-line subscribers and a total of approximately 17 million mobile subscribers, which constitutes a teledensity of 12 per cent. Today there are five mobile operators in Bangladesh, and a sixth operator is planning to enter early next year. Out of these six operators, five have strong international partners, ensuring balanced competition in the market in order to drive down prices and provide mobile services for the customers on par with advanced international markets. Call rates in Bangladesh are currently among the lowest in the world. Bangladesh is one of the top ten fastest growing mobile markets in the Asia Pacific region and the number of subscribers in the country is estimated to reach 50 million within 2009.
From the entire Telenor Group of 13 mobile operators, Grameenphone represents 10 per cent of the total customer base, and has over the past three years generated between three and five per cent of Telenor’s total revenues. Telenor considers Grameenphone a vital part of its Asian strategy. Telenor is proud to have contributed to the successful introduction and growth of telecommunication in Bangladesh and the development of a successful company. The 62 per cent ownership of Grameenphone reflects Telenor’s belief in the Bangladeshi market, and Grameenphone in particular, and allows Telenor to continue its strategic focus on the further development of mobile communication in Bangladesh.
International group benefits are key to local success
As a long-term, industrial player, Telenor contributes substantially to the mobile operations within the Telenor Group by leveraging group-wide purchasing power, extensive technological experience and commercial competence. In this way the companies within the Group are able to lower costs and push end-user prices down; thus bringing modern mobile communications to new user groups. The advantages the companies secure from being part of the group are a key factor to explain the success of each country.
Telenor believes in an operating model where global scale is balanced with local relevance. Service production, marketing, deliveries and all operational decision-making in general should be local. At the same time, the companies in the Telenor Group benefit from common marketing concepts and business tools to enhance local operational efficiency. Telenor also firmly believes in empowering employees and in local management and the development of its people. Through centralised leadership training, knowledge sharing and learning programmes, local employees are encouraged to develop personal business skills which also impact the overall performance of the local company. Out of Grameenphone’s 5,000 employees, eight are international Telenor resources.
As part of the Telenor Group, Grameenphone also benefits from the group’s common cost savings efforts on network infrastructure purchasing and increased network efficiency. This has enabled Grameenphone to rapidly extend coverage. Group cost saving initiatives have also earned Grameenphone a local competitive edge with the reduction of end-user prices to ensure connectivity for the Bangladeshi people who have little to spend on mobile communication. In 2006 alone, Grameenphone’s tariffs have been reduced by up to 40 per cent and in the past year, the number of Grameenphone subscribers has almost doubled to 11 million. The coverage has increased from 55 per cent in 2004 to 95 per cent of the population at year-end 2006.
Grameenphone is an impressive and healthy business
Increased competition from international operators is driving growth, coverage and service development and bringing down end-user prices in Bangladesh. In order to ensure sustainable growth and remain competitive, local mobile operators are dependent on strong business models, technological expertise and shareholder backing.
Grameenphone is an exceptionally healthy business. The company’s revenues for 2006 are estimated to surpass USD 600 million in 2006. In local currency the company’s ARPU (Average Revenue Per User) decreased by 31 per cent in the third quarter 2006 primarily due to the decrease in average prices. Despite this, the company’s EBITDA margin remained stable, while EBITDA in local currency increased by 57 per cent. The company’s total revenues increased by 57 per cent in the third quarter compared with the same period last year.
The company’s constantly evolving business models and shareholder backing has ensured its success. Almost all of Grameenphone’s revenues are re-invested in Bangladesh. Over the last 8 years, the company has generated earnings (EBITDA) of USD 1.08 billion, and of this amount USD 1.06 billion is invested in the country.
Connectivity promotes national economy
Scientific research from the World Bank suggests that mobile growth is a significant contributor to GDP growth. According to World Bank figures, a 10 per cent increase in mobile penetration boosts GDP growth by 0.6 per cent while a 1 per cent increase in the number of Internet users in a country increases total export by 4.3 per cent. This impact on the economy stems largely from the fact that ICT improves the flow of information and improves efficiency. A well developed ICT infrastructure in a country is also attractive for foreign investments in general. Therefore, GDP is higher and growth faster in countries with a more advanced ICT sector.
Grameenphone’s network today covers approx. 95 per cent of the population. The entire network has EDGE or GPRS connectivity allowing mobile Internet access to customers with no alternative Internet facilities. EDGE was launched in September 2005, and Grameenphone now has more than 1.3 million EDGE users as opposed to approximately 600.000 fixed-line Internet service subscribers in the country as a whole.
Up to May 2006 Grameenphone’s accumulative contribution to the national exchequer was approximately BDT 50 billion (USD 900 million) in direct and indirect taxes. In 2005 alone, this contribution amounted to more than BDT 16 billion (USD 230 million).
Grameenphone currently has 5,000 employees. An estimated further 100,000 people in Bangladesh make their living as vendors, suppliers and retailers of Grameenphone. In addition more than 280,000 village phone ladies make a living by retailing mobile phone services to their fellow villagers.
In order to further ensure universal access to communication technology across the country, Grameenphone initiated the Community Information Centre (CIC) project in February 2006 in collaboration with the GSM-Association development fund. These centres are shared data access centres located in rural areas using Grameenphone’s nationwide EDGE connectivity. After the successful pilot phase a target has been set to establish 500 CIC’s around the country. There are currently 400 CICs 
in operation. The CICs are independent businesses run by local entrepreneurs. They provide high speed Internet access and other information based services in the rural areas, the nearest Internet facilities to these places would otherwise be at least 20-30 miles away in the nearest big city.
Grameenphone is constantly exploring new services that reflect the distinct needs of the people. Recently the company launched HealthLine, a 24-hour call centre manned by registered physicians who provide basic health information. The service is accessible to all Grameenphone subscribers and those who register are also able to conduct consultation over the phone (their medical files are retained at call centres). In Bangladesh there is a ratio of one doctor per every 4,000 people and this service helps to extend primary health care information and services to a large number of people (all Grameenphone subscribers). The initial results are promising and plans are under way to increase the capacity of the 24-hour call centre.
The telecommunication industry in Bangladesh is now estimated to represent around 1 per cent of the country’s GDP. From day one of operation Grameenphone has worked on the basis of a fundamental belief that enabling poor people to communicate stimulates the individual and the society as a whole.
Strong collaborations
In addition to supporting the individual mobile operators in the Telenor Group, Telenor also collaborates actively with international industry organisations such as the GSM Association and the International Telecommunication Union. This collaboration helps to ensure international standards and quality of service in local markets and reduce entry barriers for new customers to promote universal access to useful communication technology.
The ICT industry is undergoing rapid development and it is vital that industry players have the technological expertise and financial strength to adapt to a changing environment, and that they invest in new technology and service evolution. Telenor is prepared to increase investments, extend knowledge-sharing with other companies in their group, and put the best efforts into the development of the Grameenphone. Telenor is committed to the continuing development of Grameenphone and the positive impact on the Bangladeshi society.
Telenor salutes Professor Yunus as the 2006 Noble Peace Prize Laureate
In Telenor we are proud to have worked with Grameen Bank and Professor Yunus over the years since the inception of Grameephone in 1997. Micro Credits have been instrumental in bringing modern mobile communication to rural villages through the Village Phone programme, being run by Grameen Telecom and supported by Grameenphone.