Bangladesh: Grameenphone Telecommunications Project and Grameenphone Telecommunications Expansion Project

Date: March 2013
Type: Evaluation Reports
Country:
Subject:
Evaluation; Private sector
Series: Project Performance Evaluation Reports

Description

In the mid-1990s, the telephone service in Bangladesh was in a very poor state. The country had one of the lowest teledensities in the world with less than one phone per 100 inhabitants. In 1996, the government granted three additional cellular service licenses, one of which to Grameenphone Limited (Grameenphone). In January 1998, ADB approved an equity investment of $1.6 million and a senior loan of up to $30.0 million. The project entailed the construction and operation of a nationwide cellular telephone system that would provide common cellular services in the main cities, and village phone program in rural areas of Bangladesh. In January 2004, ADB approved another loan of up to $20.0 million for the expansion of Grameenphone’s network.

The performance evaluation report rates the project highly successful overall. The project achieved its main objective of assisting the establishment of a nationwide telephone system. By the end of 2011, Grameenphone’s mobile services covered 90% of the land area and 99% of the population. The village phone program has also provided telephone access to about 95% of the villages in rural Bangladesh.

The project made a very substantial contribution to private sector development and was rated excellent in this category. Grameenphone, as the dominant cellular service operator, contributed greatly to the growth of the telecommunications sector. It has notable upstream and downstream linkages, promoted competition and innovation, provided a big boost to the country’s capital markets, and demonstrated high standards of corporate governance.

In terms of business success, the project was rated excellent. The project surpassed all the operational and financial targets that were set during approval. Its contribution to economic development was likewise rated excellent, as its real economic internal rate of return was greater than the threshold economic internal rate of return of 20% for such a rating.

The project’s environmental, social, health, and safety performance has been exemplary. In 2008, Grameenphone formally launched its Climate Change Program with the objective of reducing carbon dioxide emissions by 40% by 2015 from the business-as-usual situation, with 2008 as the baseline.

The project purposely promoted social development and inclusive growth. The village phone program has provided earning opportunities for thousands of people who serve as village phone operators and has afforded telephone access to previously unserved areas. Grameenphone has also established community information centers that offer low-rate but high-speed voice, data, and other communication services to previously unconnected people.

One lesson from the project is the importance of strong sponsors to help ensure the success of private sector projects. The individual strengths of the major sponsors—particularly the extensive business experience and good corporate governance practices of Telenor and the wide distribution network and brand recognition of Grameen Bank—and the synergies between them are the qualities that ADB should look for in project sponsors when considering future private sector operations projects.

Contents

  • Basic Data
  • Executive Summary
  • The Project
  • Evaluation
  • Lessons and Issues
  • Appendixes