Washington, D.C., June 24, 2004—
The International Finance Corporation, the private sector arm of the World Bank Group, has provided a $30 million loan to the leading GSM mobile telecom operator in Bangladesh, GrameenPhone Ltd., to develop its telecommunications network.
IFC also arranged parallel loans of $20 million and $10 million respectively from the Asian Development Bank and the Norwegian Investment Fund for Developing Countries. IFC’s loan will fund the nationwide expansion of GrameenPhone’s network and the refinancing of debt.
IFC’s first investment in the company, in 1999, consisting of a $16.7 million loan and $1.58 million in equity, financed the initial build-up of GrameenPhone’s network over the first four years of operation. GrameenPhone currently has over 1 million subscribers, representing close to 70 percent of the market.
The current project supports the expansion of rural connectivity through GrameenPhone’s participation in the Village Phone program, run by Grameen Telecom, an affiliate of the internationally recognized microfinance institution, Grameen Bank. The Village Phone program provides affordable, low-cost telecom facilities through mobile phone operators; these operators are women from the villages being served. Up to 50 million people currently benefit from the program, which has won numerous awards as an effective model for increasing telecom access in rural areas and has improved the economic position of women operators. IFC has replicated the model in Uganda and is embarking on a similar initiative in Nigeria.
According to Mohsen Khalil, IFC director of Global Information and Communication Technologies, “GrameenPhone, which has revolutionized telecommunications access in Bangladesh, is the first operator to adopt a successful mass-market, low-tariff strategy. The availability of affordable, reliable services has not only increased cellular penetration from 0.1 percent in 1999 to 1.25 percent today (more than double the rate of fixed-line use), but also spurred competition and reforms.”
Dimitris Tsitsiragos, IFC director for South Asia, added, “We are hoping to repeat the success of our first investment, which had a tremendous demonstration effect. The current investment, which is in line with our strategy to establish a favorable investment and regulatory environment, will encourage more private sector participation in infrastructure as well as long-term debt financing.”
Ola Ree, managing director of GrameenPhone, noted, “We are pleased to continue our partnership with IFC, ADB, and NORAD/Norfund. This new financing will help GrameenPhone achieve its goal of providing quality telecommunication services throughout Bangladesh.”
GrameenPhone’s shareholders include Telenor ASA, Norway’s largest telecommunications group, with a 51 percent participation, and Grameen Telecom, with a 35 percent participation. The remaining shareholdings of 9.5 percent and 4.5 percent are respectively held by Marubeni Corporation and Gonofone Development Corporation.
The World Bank Group's Global Information and Communication Technologies Department promotes the transfer of communications and information technologies to the developing world. The Information Technologies Investments Division, part of GICT, is a stage-independent investor with an exclusive focus on building successful information technology businesses in the emerging markets. Formed in mid-2000, the group brings a global perspective to information technology, a long-term approach to investments, an ability to leverage the resources of the entire World Bank Group as well as a commitment to maximize the value of its portfolio companies through sustained strategic assistance.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.7 billion for its own account and $6.6 billion held for participants in loan syndications.
