ADB to Help Finance Expansion of Bangladesh's GrameenPhone Cell Phone Network

MANILA, PHILIPPINES (18 June 2004) - ADB has signed a loan of up to US$20 million to finance the expansion of Bangladesh's major mobile cellular phone network - GrameenPhone.

ADB in 1998 helped finance the initial build-out of GrameenPhone, participating with a package of $1.5 million equity and $16.67 million debt.

Key to the project is continued access to a 1,800-km optical fiber transmission system leased out to GrameenPhone by Bangladesh Railway. This state-of-the-art technology forms a national network linking cities and rural areas into a single system that allows scope for additional services, such as data communications.

The project will also facilitate expansion of the village pay telephone service, operated by Grameen Telecom, which leases telephones to village entrepreneurs who sell telephone services to fellow villagers. Operators are selected from women villagers, most of whom can be considered poor.

Through this arrangement, the Grameen Bank organization makes available its network of branches and microcredit facilities to finance and operate the village phone service.

"The new loan will help continue the expansion of Bangladesh's telecoms sector, which still has a large unmet demand," says Stephen Wermert, an ADB Senior Structured Finance Specialist.

"Expansion will bring the country broad economic benefits such as greater market efficiency and improved distribution channels in agriculture, merchandising, manufacturing, and financial services. Better communications improves people's lives in other ways, by strengthening social and cultural ties, boosting access to health and education services, and providing speedier response to emergencies."

IFC will provide a loan of $30 million, and a loan of $10 million will come from the Norwegian Investment Fund for Developing Countries (Norfund).

ADB's $20 million loan is issued without government guarantee from ADB's ordinary capital resources, with a term of five years, including a grace period of one year.

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