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Ichiro TamboAdvisor on Science & Technology

Development Co-operation DirectorateOECD

Grameen Village Phone Lady

Community Telecenters

As Community Telecenter in Rural Bangladesh

International Seminar on ICT Policy Reform and Rural

Communication Infrastructure23 August – 1 September 2004,

Japan

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Q1: Bangladesh: what is the general situation?

The people’s Republic of BangladeshSouth Asia, N-W India, E-India & Myanmar, S- Bay of BengalArea: 47,570 sq KmCapital city: DhakaPopulation: 135.6 millionReligion: M-88%, H-10.5%, C-0.3%2002/2003 GDP: US$ 52 billion (US$ 388/per capita-annum)Main productions: jute, tea, textiles, garments, paper, fertiliser, leather and its goods, sugar, cement, fish processing, pharmaceuticals.

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Q2: What is the situation of the telecom sector?

5 OperatorsFixed-line - BTTBMobile - GrameenPhone,

Aktel,Sheba and City Cell

Teledensity in South Asia, 2002

05

1015

2025

30

Bangla

desh

India

Mal

dives

Nepal

Pakis

tan

Sri Lan

ka

Fixed Lines

Cellular Mobile Subscribers

Total Fixed and Mobile

Source: World Telecommunication Development Report, ITU, 2003

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Q3: What is the Village Phone Programme?

Administered by Grameen Telecom, not-for-profit companyBrief Business Model:

A person, usually women, buys a telephone handset and subscriptionGrameen Bank provides the person with necessary financingShe retails phone services to villagersThrough retailing, she pays off her loan and makes a livingShe benefits from a tariff discount system.

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Q4: What kind of partnership is involved?

Programme Administration: Grameen Telecom

Telecom Service Provision: GrameenPhone Ltd.

Micro credit and Support: Grameen Bank

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Partnership of GrameenPhone Ltd.

GP mobile phone subscribers in Bangladesh

GrameenPhone(for-profit)

“Village Phone” programme(Operators or VP ladies)

Telenor AS

Marubeni

IFCAsian Development BankCDCNORAD (NORFUND)

Debt Financing

Support- Programme management

- Training of operators- All service related issues

Microcredit

Grameen Bank(for-profit)

Tariff Discount

Mobile phone and related services

Soros Foundation

51%

9.5%

4.5%Gonofone

35% Equity investment

Grameen Telecom(not-for-profit)

Debt Financing

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Q5: What is the role of Grameen Telecom?

Programme Management

Training of Village Phone Ladies (operators)

All service-related issues supported by Grameen Bank and its family organisations

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Q6: How does the tariff discount work?

* Invoices are translated in Bangla by Grameen Telecom

Phone Service

GrameenPhone Ltd

Purchase of air time at discounted rate (50%)

Billing *Billing

Aggregate Payment Phone Bill (50%) +Commission (15%)

Tariff at market rate(100%)

Grameen BankBranches

Village Phone Operators

Phone Usersin villages

45,000 operators in approx. 39,000 villages

Aggregate Monthly payment

70 million people in rural areas have access

Grameen Telecom

Tariff Discount System

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Q7: Is this discount system sustainable?

VP Ladies: business opportunity

GrameenPhone: guaranteed revenue / no extra cost

Grameen Telecom: Cost recovery / no subsidy

Phone users:no physical trips / market rate phone

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Q8: How does the Village Phone lady make money?

Revenue

Cost /Profit

Phone bill paid to

Grameen Telecom(50%)

Commission paid to

Grameen Telecom

(15%)

Marginal Profit (35%)

Instalment to Grameen Bank

Net profit

Phone User Village Phone

Operator

Tariff at Market Rate(100%)

Cost Structure for Village Phone Operator

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Q9: What is the Programme Management Policy?

Strict rules of the programme

Sequential approach in villages

Monopoly Competition

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Q10: How is extensive service coverage provided?

1,800 Km fibre optic backbone

Continuous increase in the number of base stations

Strong emphasis on operational excellence and efficiency

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Coverage

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Q11: Can this be replicated elsewhere?

MTN Village Phone in Uganda

Success factors?

Other replication initiative in Latin America

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Q12: What are the lessons learned?

Creative partnerships can expand infrastructure services beyond profitable areas

Strong leadership and ownership of the local partners are critical

Synergies between business objectives and development goals are possible.

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Thank You !

Ichiro TamboAdvisor on Science & Technology

Development Co-operation Directorate

OECD

ichiro.tambo@oecd.orghttp://www.oecd.org/dac/ict