Grameenphone Slashes Stock Market Floatation Plans

Bangladesh's largest mobile operator, Grameenphone has slashed the expected proceeds from its planned stock market floatation, to just US$125 million - citing the economic downturn in the global markets.

In July, Grameenphone, which is 62%-owned by Norwegian telecom operator Telenor said it planed to raise up to US$300 million in share sales on the domestic stock exchanges in two tranches: US$150 million as a pre-IPO placement, and the remainder as the IPO in what will be Bangladesh's biggest floatation.

The company is now understood to be looking to raise US$50 million in the pre-IPO placement and US$75 million in the floatation.

Telenor set up Grameenphone with Bangladesh's Grameen Telecom in 1996. Grameen Telecom is owned by microfinance pioneer Grameen Bank, which was founded by by 2006 Nobel peace prize winner Muhammad Yunus.

Dr Yunus has however recently said he may take legal action to force Telenor to give up control of the venture. In a statement, he says that the two companies agreed that they would ensure that the company was locally managed within six years of being founded - but that Telenor has refused to relinquish management control. Under the agreement, which is now disputed by both parties, Telenor should have reduced its shareholding and handed over control of the company in 2002.

Telenor disputes the claim.

The country currently has six operators - and according to figures from the Mobile World, ended the first half of this year with just under 43.7 million mobile subscribers - which is still a population penetration level of 28.5%. Also worth noting is that while the country has six operators, only four of them are of any significant scale, Grameenphone (20.3m), Banglalink (9.5m) and Aktel (7.8m) and finally, Warid Telecom (3.3m). The two remaining long term incumbents, Citycell and Teletalk add up to 2.7 million customers between them.

Posted to the site on 6th October 2008