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IFC INVESTS IN BANGLADESH'S GRAMEENPHONE

DHAKA, BANGLADESH, July 8, 1999 --- The International Finance Corporation has signed an agreement that will help build a nationwide cellular telecommunications network and bring community telephones to 30,000 villages in rural Bangladesh through an investment in GrameenPhone Limited, the largest cellular phone operator in Bangladesh.
GrameenPhone is linked, through one of its major shareholders, to the Grameen Bank – the world's largest microcredit organization – which has made small loans to more than two million low-income borrowers, many of them women, in the villages of Bangladesh.
GrameenPhone, which started operations two years ago, has identified significant new demand for its low-tariff telephone services.  It is undertaking a US$124 million project to create more cellular connections and expand and upgrade the national telecommunications infrastructure. Bangladesh has one of the lowest telephone penetration rates in the world, with only three lines per 1,000 people.  
The project includes installation of village pay phones, where local women operate one pay phone service for the whole village.  They receive microloans from Grameen Bank to finance the cost of handsets.  GrameenPhone aims to install village phones in half of Bangladesh's 60,000 villages.
IFC is providing a $16.67 million loan and an equity investment of $1.57 million towards the company's expansion.  The Asian Development Bank and the Commonwealth Development Corporation will provide parallel financing in the form of loan and equity investments.
Mr. Declan Duff,  Director of IFC's Telecommunications, Transportation and Utilities Department said that the investment would bring the rural areas of Bangladesh into closer touch with the outside world.  Better communications services would create and foster small-scale businesses, thereby stimulating economic growth and raising the living standards of the rural poor.
The two main shareholders of GrameenPhone are Telenor A.S. and Grameen Telecom. Telenor A.S. is the Norwegian state telecommunications operator and Grameen Telecom is an affiliate of Grameen Bank.  Other shareholders are Marubeni, the Japanese trading house, and Gonofone, a U.S.-based company.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives.  IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.