Grammenphone Report

GrameenPhone is a joint-venture telecom company set up in Bangladesh by Grameen Bank - with capital from the Norwegian company Telenor and loans from donors to provide mobile telephony to its subscribers. Its "Village Phone Programme" provides a remarkable example of how innovative private-sector initiatives can work to stimulate development even in conditions of considerable poverty.

Since 1997 the Village Phone Programme has provided some 45,000 telephones to 39,000villages in Bangladesh, bringing access to the telephone networks to some 70 million people.

The formula is simple: a subscriber - usually a woman, hence the label "Village Phone lady" borrows around $350 from Grameen Bank and repays the loan by selling phone services to her fellow villagers who, usually for the first time, can enjoy the economic and social benefits of telecommunication contact with the outside world.

The Village Phone Programme produces fair returns on GrameenPhone's investment: although Village Phone operators account for only 3.5% of the company's total subscriber base (of over 1.3 million) they provide 15% of its total gross revenues.

With 700 base stations GrameenPhone already offers coverage to 49 of the 64 districts which make up Bangladesh. The company proposes to expand the number of base stations to 800 so that it can offer coverage to the entire country.

Grameenphone nearly doubled its subscriber base during the initial years while the growth was much faster during the later years. It ended the inaugural year with 18,000 customers, 30,000 by the end of 1998, 60,000 in 1999, 193,000 in 2000, 471,000 in 2001, 775,000 in 2002, 1.16 million in 2003, 2.4 million in 2004 and it ended 2005 with 5.5 million customers.