UPDATE 4-B'desh's Grameenphone plans $300 mln IPO, placement

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By Tony Munroe and Serajul Islam Quadir

HONG KONG/DHAKA, July 24 (Reuters) - Bangladesh's top mobile phone carrier, Grameenphone, said on Thursday it plans to raise up to $300 million in a share sale and domestic listing that would be the impoverished South Asian country's largest IPO.

Grameenphone, 62 percent-owned by Norway's Telenor (TEL.OL), said it aimed to raise up to $150 million with a pre-IPO share placement and another $150 million through the initial public offering itself.

Bangladesh's fast-growing telecoms sector has been a magnet for investment by foreign operators, with Japan's NTT DoCoMo Ltd (9437.T) last month paying about $350 million for a 30 percent stake in No.3 cellphone carrier TM International (Bangladesh) Ltd, also known as AKtel.

With market share of 47 percent, Grameenphone is expected to draw plenty of investor interest.

Still, its operating profit fell 89 percent in the second quarter to 40 million crowns ($7.76 million), due to one-time items and a drop in average revenue per user to 19 crowns ($3.69) a month from 30 crowns a year earlier, according to Telenor's second-quarter results report.

Spending power, meanwhile, is under pressure as Bangladesh struggles with double-digit inflation. Per capita income rose 15 percent during the year through June to $599.

"It is a mega issue in Bangladesh and definitely there will be huge demand for it," Mostaque Ahmed Sadeque, managing director of brokerage Investment Promotion Services Ltd, told Reuters. "It is doing very well as the largest mobile operator of the country."

Grameenphone said it expects to submit filings by the end of this month to list on the Dhaka and Chittagong stock exchanges. Listing depends on regulatory approvals and market conditions.

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

Citigroup (C.N) is underwriting the share sale, which would be its first in Bangladesh since it won an investment banking licence last year. Citigroup also represented AK Khan & Co in the sale of its AKtel stake to NTT DoCoMo.

The Dhaka bourse has a market value of $13.8 billion and has seen just a handful of IPOs larger than $10 million, according to Thomson Reuters data.

"For any capital market, the infrastructure sector plays a significant role in bringing market depth, and Grameenphone is the biggest such company in Bangladesh," Salahuddin Ahmed Khan, CEO of Dhaka Stock Exchange Ltd told Reuters.

GROWING MARKET

Grameenphone's subscriber base rose 23 percent from January through June, to 20.3 million. The company invested more than $500 million in 2007 to expand its business.

Bangladesh's mobile sector has grown rapidly, with subscriber numbers reaching more than 42 million at end-May from 200,000 in 2001, helped by competitive tariffs, cheap handsets and an economy that grew more than 16 percent in the fiscal year that ended in June.

Analysts predict the number of subscribers could top 70 million by 2011, nearly half the country's population of more than 140 million people.

Grameenphone was founded in 1996 by Telenor and Grameen Telecom, which was launched by microfinance pioneer and Nobel Prize winner Muhammad Yunus.

Its competitors include Egyptian Orascom Telecom's (ORTE.CA) Banglalink, AKtel, majority owned by Telekom Malaysia International (TLMM.KL), CityCell, a joint venture between Pacific Bangladesh Telecom and Singapore Telecommunications (STEL.SI), Gulf-based Warid Telecom and state-run Teletalk.

Although nearly half of Bangladesh's population is still below the poverty line, the country has been one of the world's fastest growing cellular markets. ($1 = 68.45 taka = 5.1523 crowns) (Additional reporting by Jeffrey Hodgson; editing by Ken Wills & Ian Geoghegan)