Bangladeshi phone row escalates

Mr Yunus said Grameenphone should focus on village projects

Bangladesh's community mobile phone firm Grameenphone is at the centre of a row between Norway's Telenor and Nobel Prize-winning academic Muhammad Yunus.

Telenor said it wanted to float some Grameen shares on the Bangladeshi stock market, rejecting calls to sell part of its 62% stake to its partner, Mr Yunus.

Mr Yunus wants to take control of the firm, saying this will ensure it still works as a social enterprise.

Grameenphone employs 5,000 staff while 12 million people use its phones.

Anti-poverty tool

Cheap mobile phone services are indispensable in Bangladesh, one of the poorest countries in the world and one with a sparse fixed-line phone network.

But Grameenphone's success has been clouded by an increasingly bitter dispute between Telenor and Mr Yunus, whose efforts to help lift Bangladeshi families out of poverty earnt him the 2006 Nobel Peace Prize.

Telenor has a clear reason for wanting to continue running the company Arve Johansen, Telenor deputy chief executive

Mr Yunus, whose Grameen Bank offers small loans known as "micro finance" for community projects, wants to increase its subsidiary Grameen Telecom's 38% stake in Grameenphone.

The company has offered $427m to buy an additional 13% stake from Telenor, which would in effect give it control of the business.

Mr Yunus has argued the move will preserve the firm's roots in "social enterprise" projects such as village phone booths where people can rent out their mobiles cheaply.

Mr Yunus has accused Telenor of reneging on a 1996 agreement which he says required it to give up control of the business in 2002.

Speaking recently in Oslo, Mr Yunus said he was "disappointed" by Telenor's attitude, suggesting its efforts should be directed towards entrenching the social and cultural benefits that mobiles bring, not merely extending phone ownership.

Stake in success

But Telenor has insisted there was no legal agreement on the future ownership of the business.

It has also argued that Grameenphone's strong growth would not have happened if Telenor had not invested significantly in its development between 2001 and 2003.

By floating its shares on the stock market, Telenor believes more Bangladeshis will be able to have a stake in the firm's success.

It says the move will also fund valuable new services for the poorest people, such as medical and financial information delivered via mobile phones.

"The demand for the company's conversion into a social enterprise has no basis in reality," said Telenor's deputy chief executive Arve Johansen.

"Telenor has a clear reason for wanting to continue running the company. It is crucial to the company's further development in what is now a very competitive market that the company is run by a professional player."