Ichiro Tambo Advisor on Science

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Ichiro TamboAdvisor on Science
TechnologyDevelopment Co-operation
DirectorateOECD
Community Telecenters

• Grameen Village Phone Lady

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 peoples Republic of Bangladesh
• South Asia, N-W India, E-India Myanmar, S- Bay
  of Bengal
• Area 47,570 sq Km
• Capital city Dhaka
• Population 135.6 million
• Religion 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 Operators Fixed-line - BTTB Mobile - GrameenP
  hone, Aktel, Sheba and City Cell
• Teledensity in South Asia, 2002

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
  company
• Brief Business Model
• A person, usually women, buys a telephone handset
  and subscription
• Grameen Bank provides the person with necessary
  financing
• She retails phone services to villagers
• Through retailing, she pays off her loan and
  makes a living
• She 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
Microcredit
Village Phone programme (Operators or VP
ladies)
Grameen Bank (for-profit)
Support
- Programme management - Training of operators -
All service related issues
Mobile phone and related services
Tariff Discount
Debt Financing
Soros Foundation
Grameen Telecom (not-for-profit)
GrameenPhone (for-profit)
IFC Asian Development Bank CDC NORAD (NORFUND)
35 Equity investment
Debt Financing
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Telenor AS
9.5
Marubeni
4.5
Gonofone
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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?
Tariff Discount System
GrameenPhone Ltd
Aggregate Monthly payment
Purchase of air time at discounted rate (50)
Phone Service
Billing
Billing
Grameen Telecom
Grameen Bank Branches
Village Phone Operators
Phone Users in villages
Aggregate Payment
Phone Bill (50) Commission (15)
Tariff at market rate (100)
70 million people in rural areas have access
45,000 operators in approx. 39,000 villages
Invoices are translated in Bangla by Grameen
Telecom
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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 usersno physical trips / market rate
  phone

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Q8 How does the Village Phone lady make money?
Cost Structure for Village Phone Operator

Phone bill paid to Grameen Telecom (50) Commission paid to Grameen Telecom (15) Marginal Profit (35) Marginal Profit (35)
Phone bill paid to Grameen Telecom (50) Commission paid to Grameen Telecom (15) Instalment to Grameen Bank Net profit
Phone User Village Phone Operator Tariff at Market Rate (100) Phone User Village Phone Operator Tariff at Market Rate (100) Phone User Village Phone Operator Tariff at Market Rate (100) Phone User Village Phone Operator Tariff at Market Rate (100)
Cost /Profit
Revenue
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Q9 What is the Programme Management Policy?

• Strict rules of the programme
• Sequential approach in villagesMonopoly
  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 Tambo Advisor on Science
Technology Development Co-operation
Directorate OECD ichiro.tambo_at_oecd.org http//ww
w.oecd.org/dac/ict