Grameenphone (GP), the largest provider of cell phone service in Bangladesh with over 20 million customers, has closed the subscription for an Initial Public Offering (IPO) expected to take place on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) this November. The subscription was “apparently hugely oversubscribed as long queues of aspirants were seen at the banks, even on the last day” [1]. Officials have not said how many times it has been oversubscribed.
At USD 70.4 million, it is expected to be the largest IPO in Bangladesh’s history. GP is 62 percent owned by Telenor, a Norway-based communications, IT and media company, and 38 percent owned by Grameen Telecom. Grameen Telecom is a non-profit telecommunications service provider with the objective of providing universal coverage for villagers. It receives organizational and infra-structural support from Grameen Bank. Citigroup Global Markets Bangladesh Private Limited will be the Private Placement Agent, Issue Manager and Lead Underwriter for the Pre-IPO and IPO [2, 3].
GP plans to sell 69.44 million shares at seven cents a piece with a premium of USD 42 cents per share, for a total of USD 70.4 million. As of July 2009 GP had already raised USD 60 million through the pre-IPO private placement offer. Private investors are allowed to buy a maximum of 200 shares. MicroCapital previously reported that it had been GP’s intention from the beginning “to sell Grameenphone shares to Grameen borrowers so that telephone services are not only brought to the poor, but also owned by the poor” [4].
It is the country’s largest private company in terms of revenue, with an equivalent of USD 215.2 million as of quarter two of 2009, up 10 percent in one year. Since its founding in 1997, GP has invested over USD 1.6 billion on network infrastructure, building 10,000 base stations and making it possible for 98 percent of the country to live within coverage of the Grameenphone network [5, 6].
GP was founded on the concept that affordable “access to information empowers” [7]. The Village Phone Program, a flagship initiative headed by GP, provides employment to over 210,000 women living in rural areas, bringing phone services to at least as many rural villages. The women use micro-loans to purchase a cell phone from their local MFI. They then retail the “minutes” to others in their community, acting as the Village Phone Operators (VPOs). “Administered by Grameen Telecom Corporation, it enables rural people who normally cannot afford to own a telephone to avail the service while providing the Village Phone operators an opportunity to earn a living” [6].
Differing views on appropriate management of GP has been a point of contention between parent companies Grameen Telecom and Telenor. While Grameen Telecom reinvests profits from GP back into the organization, Telenor keeps these profits as revenue. In a 2006 statement by Nobel Prize winner and founder of Grameen Bank, Dr. Muhammad Yunus, “there’s a philosophical difference. They’re [Telenor] oriented toward profit maximization. We’re oriented toward social objectives” [8].
By: Stefanie Rubin, Research Assistant
Bibliography:
[1] BDnews24.com, “GP IPO Closes, Apparently Hugely Oversubscribed”: http://bdnews24.com/details.php?id=144455&cid=2
[2] Thousands Queue for Bangladesh’s Largest IPO: http://www.google.com/hostednews/afp/article/ALeqM5g7MpQLn3hRf9LDcMiAO5AoLcUaTQ
[3] Grameenphone Press Release,”GP Receives Consent for IPO”: http://www1.grameenphone.com/index.php?id=493
[4] MicroCapital.org Story: http://www.microcapitalmonitor.com/cblog/index.php?/archives/55-Grameen-PhoneA-Hot-Stock.html
[5] Grameenphone Press Release, “GP Posts 10% Growth in Revenue¨: http://www1.grameenphone.com/index.php?id=499
[6] Grameenphone: History: http://www1.grameenphone.com/index.php?id=63
[7] Grameen Foundation: Technology Programs: http://www.grameenfoundation.org/what_we_do/technology_programs/village_phone/heritage/
[8] CNNMoney.com, “Nobel Peace Prize Winner Itching for a Fight”: http://money.cnn.com/2006/12/04/news/international/yunos_telenor.fortune/index.htm
http://www.google.com/hostednews/afp/article/ALeqM5g7MpQLn3hRf9LDcMiAO5AoLcUaTQ
http://rashedchittagong.blogspot.com/2009/10/thousands-queue-as-grameenphone-ipo.html
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