GP worth over $3.5b, CEO claims
Grameenphone is worth more than $ 3.5 billion, but the mobile operator may initially list less than 10 percent of its shares on the Dhaka stock market next year, according to the new Chief Executive Anders Jensen.
Jensen, who took over as Chief Executive Officer (CEO) in October, made the comments in a media briefing in Dhaka at which he urged the regulators to make more frequency available to allow the company to grow.
Jensen also again stressed the need for a market consolidation. "Six or seven players are too many, this is a four to five, maybe even three operators' market", he said.
Grameenphone is Bangladesh's largest mobile operator with close to 16 million subscribers and a market share of 59 percent. The company, that is 62 percent owned by Norway's Telenor and 38 by Grameen Telecom, has been under pressure to list some of its shares in Dhaka and is expected to hold an IPO next year.
The value of the listing has been disputed, with European analysts seeing the company worth $3.3 billion to $3.5 billion while Bangladeshi regulators have previously hinted that the value is much lower.
However yesterday Jensen made clear he considered the company to be worth more. "An IPO valuation of $ 3.5 million is in the lower parts, we believe the value is higher", he said.
"We believe that the year of 2008 will be a good time for a listing", Jensen said, adding that both of Grameenphone's shareholders have a big interest in an IPO, but have not yet decided its date or how many shares will be offloaded.
If the company lists more than ten percent of its shares it can benefit from a tax reduction and will pay only 35 percent corporate tax instead of 45. But Anders Jensen indicated that the portion of listed shares could be smaller, saying that "the tax reduction is one thing, but ensuring a successful IPO which will benefit the investors is even more important."
The comment is likely to sooth concerns of investors who fear the listing could be too big for the Dhaka Stock Exchange to swallow.
To explain the difference between his own and analysts' valuation Jensen said that the analysts are expecting profit margins to go down, "but we will continue to grow at the same margin level because we will stabilize our costs."
He said that the company would prevent the EBITDA-margin (earnings before interest, taxes and depreciation}from sliding below 35 percent. In the third quarter of 2007 this margin fell to 35.7 percent from 56.9 in the same quarter 2006.
Having 10.8 million customers at the end of 2006, Grameenphone is now serving almost 16 million clients.
"By now the mobile phone penetration (in Bangladesh) is close to 18 percent, that means that there is still 82 percent to go", Jensen said, adding that the company needs additional frequency spectrum to be able to grow further and to introduce new services.
"We are holding a meaningful dialogue with the Bangladesh Telecommunication Regulatory Commission BTRC", he said adding that an analysis of frequency usage by BTRC supports the allocation of extra capacity to Grameenphone.
At present there are six mobile companies operating in Bangladesh, more than the market can sustain, according to Jensen.
The increased competition has been seen as one of the reasons behind falling prices for consumers. However Jensen said prices would have fallen anyway, moreover, it is only the new customers that tend to benefit from the high number of operators, he added.
In the future he sees the market as consolidating. ""Six or seven players are too many, this is a four to five, maybe even three operators' market", he said, adding that a smaller number of strong operators would be better able to bear the cost of the investments needed to develop the market.
Asked which company he wanted to buy, Jensen remained coy. "We are talking to various companies, but not negotiating," he said.
Since the penetration rate of internet access over land lines is currently only 0.5 percent Grameenphone is evaluating next generation technologies such as UMTS (3G) and Wimax for faster mobile data connections.
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