Mobile subscriber base is expected to top 50 million this year as telecom companies aggressively market their services and even low-income people reap the benefits of better connectivity Photo: Syed Zakir Hossain

Grameenphone, the largest mobile telephony company in Bangladesh, has told the capital market regulator Securities and Exchange Commission that it had a valuation of $3.75 billion (Tk 25,875 crore).

In a presentation to SEC on March 25, the company said it planned to sell around 10 percent of its shares through a public issue. The presentation was essentially to keep SEC informed about the progress the company had made on its proposed initial public offer (IPO) during July-September, sources in the know said.

The $3.75 billion valuation is about 14 per cent higher than the $3.3 billion valuation indicated by the company last March and by its CEO Anders Jensen who later in November said Grameenphone was worth more than $3.5 billion. But, it is significantly lower than the $5 billion valuation tag Citigroup Global Markets, the company-appointed consultant, attached to the telecom major. Citigroup's valuation takes into account the company's future investment and projected returns from it also, the sources said.

The company, which launched operations in 1997, is 62 percent owned by Norway's Telenor, with the balance 38 percent being held by Grameen Telecom, part of the Grameen Group. It has been under pressure from the Bangladesh Telecommunication and Regulatory Commission and SEC to list on the Dhaka Stock Exchange.

Grameenphone, according to Telenor's financial report, posted 7 per cent higher revenue at NOK 4,622 million (Tk 6,138 crore) in 2007 compared with NOK 4,314 million (Tk 5,729 crore) in 2006. Its operating profits, however, dropped sharply by about 33 per cent to Norwegian Krone (NOK) 1,239 million (Tk 1,645 crore) during the year compared with NOK 1,836 million (Tk 2,438 crore) in 2006.

At the presentation last week, the company, which has a subscriber base of 17.2 million, also proposed to reserve some shares for its subscribers and customers of Grameen Bank. A 10 per cent public offer will help Grameenphone raise a whopping $375 million (Tk 2,587 crore), in what would be the largest-ever IPO in the country and the first by a telecom company. Intense competition from rivals including Telekom Malaysia-promoted Aktel and Orascom-owned Banglalink has, however, seen Grameen's market share slip from a dominant 63 per cent in 2006 to 48 per cent in 2007.

The sources said Grameenphone may adopt the book-building process for the proposed issue. Here, the price will be discovered based on the demand from institutional investors. For this, the company needs to be in commercial operation for last five years and made net profit for last three years.

DSE sources said it was in the process of introducing a book-building process in the market especially to handle big-ticket IPOS like that of Grameen. When contacted, a Grameenphone official said, "These letters are official and confidential to the regulator, and we will treat them as such. So we are not going to comment on that.”

The company submitted an IPO roadmap to the telecom regulator in December 2007 and hoped to offload its shares by the third quarter of 2008. Later, as part of its roadmap, Grameenphone appointed Citigroup Global Markets to assess its assets.

Capital market analysts feel that Grameenphone's listing will have a sobering effect on the overheated stock markets. “Market should value the price of the company's shares through a book building process,” said Yawer Sayeed, Chief Executive of Asset and Investment Management Services of Bangladesh Ltd, an asset management firm.

While many debate whether the market will be able to absorb such a mammoth issue, Sayeed says, “Its not a matter of wariness… it's a very good news for the capital market.” In fact, he expects the market to be more vibrant after Grameenphone lists itself on the DSE.

hasan@thedailystar.net