(Fortune Magazine) -- When Muhammad Yunus traveled to Oslo to receive the Nobel Peace Prize earlier this month, he came prepared to fight for management control over a company he believes is sucking profits from the poor of Bangladesh.
Before leaving for Norway, Yunus told Fortune he intended to point out the irony that a country awarding him the Nobel Prize also owns a company that, he says, refuses to honor an agreement with Yunus's nonprofit Grameen Bank. The company, Telenor, was supposed to have ceded majority control of its mobile-phone venture, Yunus says: "There's tension between us and Telenor. There's a philosophical difference. They're oriented toward profit maximization. We're oriented toward social objectives."
At issue is Grameen Phone, Bangladesh's largest mobile-phone provider, with ten million customers--among them, 260,000 "phone ladies" who provide village phone service for the poor all over the country. As the first mobile-phone company to set up in Bangladesh, Grameen Phone has a 63% market share in the country's rapidly growing mobile market. Its 2005 revenues of $433 million, up 50% over the previous year, are forecast to increase to $580 million this year.
Grameen Phone was created in 1996 as a joint venture between Telenor, microcredit lender Grameen Bank, and two minor partners that were later bought out. Telenor now holds a 62% share, with Grameen Telecom, a division of Grameen Bank, owning the remaining 38%.
That means Telenor takes 62% of Grameen Phone's net earnings, which amounted to $93.6 million last year. That's a lot of money in a poor country like Bangladesh, and Yunus doesn't want it going to Norway.
Yunus insists that Telenor "agreed to give us majority ownership within six years. Our intent was to convert to a social business enterprise [where profits are reinvested in the company rather than taken out], but Telenor does not accept." In 1996, when the venture was established, Telenor was a state-run company. Although the Norwegian government still holds the majority of shares, Telenor partially privatized in 2000, in the largest IPO in Norwegian history, and issued shares on Nasdaq. After that, Yunus says, Telenor reneged. "It's a very simple reason," Yunus says. "It's a cash cow."
Telenor denies that the company is a cash cow or that it ever agreed to relinquish majority control. Grameen Phone's revenues are less than 5% of Telenor's revenues from mobile activities, says Jon Fredrik Baksaas, who became Telenor's president and CEO in 2002. (Baksaas was CFO in 1996, when the joint venture was created under his predecessor, Tormod Hermansen.) Telenor's revenues from its operations in 12 countries were close to $11 billion in 2005.
"Different opinions are part of daily business life," says Baksaas. "We have never committed to reducing our share in the company." Telenor also says it has not recouped its investment and that without its ability to negotiate volume discounts with suppliers, Grameen Phone would not be as profitable as it is today.
Yunus says he asked for a meeting with Telenor's board while in Norway in order to appeal to it directly to honor the previous CEO's promise. But as of presstime no meeting had been scheduled, according to Baksaas, who says that Yunus would visit Telenor's offices as part of the Nobel ceremonies to celebrate his achievement as the founder of microcredit, not to discuss management control.
"The corporate governance of a group like Telenor does not entertain the mechanics that a board meeting can be established in such a way," Baksaas says. "We believe that on the questions of the future ownership of Grameen Phone, there should be other occasions for those topics to be discussed." Yunus was invited to address the topic at an unspecified future date, he says, noting, "We are at all times willing to discuss future ownership structures."
Baksaas denies that ceding majority control has ever been on the table. The last time a change was discussed, Baksaas says, was in 2004, when Telenor bought out a third partner and most of a fourth, increasing its stake from 51% to 62%; cash-strapped Grameen Bank, which netted only $5 million the year before, was able to buy 3% of available shares.
But according to Muhammad Khalid Shams, managing director of Grameen Telecom and for many years chairman of Grameen Phone, Grameen has been insisting for years that Telenor renegotiate and honor the pledge made by the previous CEO, who Grameen officials say was asked from the beginning to create a nonprofit venture with Grameen. (Hermansen, the former CEO, could not be reached.)
"We have been talking with them, negotiating with them, reminding them that we intend to make our members the owners of the largest telecom company in Bangladesh, and that they would not have had the license without professor Yunus's support," Shams says. "They have gone back on that. They say it's only an intention, not legally binding. They seem to have defied the will and intention of their own people. They think they owe it to their shareholders to hang on to Grameen Phone."
Grameen even hired an arbitration lawyer in a third country, Sweden, to seek redress. "He charged us an enormous amount of money and told us there's no guarantee," Shams says, "so we don't want to risk it." 
