The New Nation - Internet Edition

Staff Reporter

Grameenphone, the biggest mobile phone operator in the country, is going to float huge shares in the capital market shortly.

The board of the telecom giant yesterday approved plans to raise US$ 300 million through initial public offering (IPO), half by floating shares on the Dhaka and Chittagong bourses and the other half by selling pre-IPO shares.

The move will be the biggest in Bangladesh's history and comes as stocks on both of its two main bourses have been plunging.

Last year privately owned Shahjalal Islami Bank raised $13.4 million, currently the biggest IPO in the country.

Grameenphone's 62 percent is owned by Norwegian telecom company Telenor and 38 percent is owned by local Grameen Telecom. Grameen Telecom, owned by micro-finance giant Grameen Bank, was set up by 2006 Nobel peace prize winner Muhammad Yunus.

The conglomerate plans to file by the end of this month a formal application with the Securities and Exchange Commission (SEC) and other authorities to list its shares on the Dhaka and Chittagong stock exchanges, the statement said. It also aims to sell another $150 million worth of shares before its IPO.

"We are hopeful that Grameenphone's inclusion in the country's bourses will further highlight the potential of capital markets as an important engine of economic growth," Grameenphone CEO Anders Jensen said.

"It will also enable the people of Bangladesh to share the success of the company."

Citigroup Inc. will manage GrameenPhone's IPO.

The company has more than 20 million of Bangladesh's 44 million cellular subscribers.

Meanwhile, Telenor reported second-quarter profit that missed analysts' estimates and cut its sales target for this year yesterday as customers in Asia spend less and currency swings hurt sales. Operating profit at GrameenPhone dropped 85 percent, hurt by lower prices and a provision related to a possible violation of international call termination rates, Telenor said.

Telenor cut its 2008 revenue growth target to around 3 percent from 5 percent, but said strong performance of deconsolidated Ukrainian unit Kyivstar would keep the group's underlying revenue growth unchanged at around 6 percent.

Telenor said soaring food and energy costs have squeezed consumers' budgets particularly in relatively poor countries such as Bangladesh, Pakistan and Thailand.

In local currency terms, Telenor's average revenue per user slumped by 14 percent year-on-year in Pakistan, 17 percent in Thailand and 24 percent in Bangladesh.

"We do not believe these problems are short-term t as they are fundamentally linked to adverse economic conditions which are difficult to escape for both Bangladesh and Pakistan, two of the main growth drivers of the company," Dexia Bank said.

According to the DJ Stoxx telecoms index shares in Telenor were the biggest losers with a 3.4 percent drop on Wednesday.