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TABLE OF CONTENTS

THIS IS GRAMEENPHONE

VISION AND VALUES

THE SHAREHOLDERS

KEY FIGURES

DIRECTORS REPORT

14 PROFILE OF THE DIRECTORS


16 INTERVIEW WITH THE MANAGING DIRECTOR
20 MANAGEMENT TEAM
24 ORGANIZATIONAL CHART
26 CORPORATE GOVERNANCE
32 CONTRIBUTION TO GOVERNMENT EXCHEQUER
34 NEW COMMUNITY SERVICES
40 FOCUS ON NETWORK QUALITY
42 IMPROVED PRODUCTS AND SERVICES
44 REACHING OUT TO THE CUSTOMERS
46 THE VILLAGE PHONE PROGRAM

1
ANNUAL REPORT 2005

This is GrameenPhone ...


GrameenPhone Ltd. has stepped
into its 10th year of operation,
having completed its ninth year
on March 26, 2006.
It is the leading
telecommunications service
provider in the country with more
than 8.5 million subscribers as of
June 2006.
GrameenPhone has been
recognized for building a quality
network with the widest coverage
across the country while offering
innovative products and services
and committed after-sales
service.

2
GRAMEENPHONE LTD.

our vision
We're here to help
We exist to help our customers get the full benefit of
communications services in their daily lives. We want to make it easy for
customers to get what they want, when they want it

our values
Make it Easy
We are practical. Everything we produce should be easy to
understand and use. Because we never forget we are trying to make our
customers lives easier

Keep Promises
Everything we set out to do should work. If it doesnt, we are
there to put things right. We are about delivery, not over promisingactions
not words

Be Inspiring
We are creative. We bring energy and imagination to our work.
We want to be a partner in the development of our community. We are
passionate about our business, customers and our country

Be Respectful
We acknowledge and respect the local culture. We are respectful
and professional in regard to all our interactions, both internally and
externally. We are open, helpful and friendly

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ANNUAL REPORT 2005

THE SHAREHOLDERS
The shareholders of
GrameenPhone
contribute their unique,
in-depth experience in
both
telecommunications and
development. The
international shareholder
brings technological and
business management
expertise while the local
shareholder provides a
presence throughout
Bangladesh and a deep
understanding of its
economy. Both are
dedicated to Bangladesh
and its struggle for
economic progress and
have a deep
commitment to
GrameenPhone and its
mission to provide
affordable telephony to
the entire population of
Bangladesh

4
GRAMEENPHONE LTD.

the shareholders

Telenor Mobile Communications AS

Telenor Mobile
Communications AS
[62%]

Telenor AS is the leading Telecommunications Company of Norway


listed in both the Oslo and NASDAQ stock exchanges. It owns 62%
shares of GrameenPhone Ltd.
Telenor has played a pioneering role in the development of cellular
communications. It has substantial international operations in mobile
telephony, satellite operations and pay television services. In addition to
Norway and Bangladesh,Telenor owns GSM companies in Denmark,
Austria, Hungary, Russia, Ukraine, Montenegro,Thailand, Malaysia, Pakistan
and Serbia.

Grameen
Telecom
[38%]

Telenor uses the expertise it has gained in its home and international markets
for the development of emerging markets like Bangladesh.

Grameen Telecom

Grameen Telecom, which owns 38% of the shares of GrameenPhone, is a


not-for-profit company and works in close collaboration with Grameen
Bank.The internationally reputed bank for the poor has the most extensive
rural banking network in Bangladesh and also the expertise in microfinance.
Grameen Telecom, with the help of Grameen Bank, manages the Village
Phone Program, through which GrameenPhone provides its GSM services to
the fast growing rural customers. Grameen Telecom trains the operators,
supplies them with handsets and handles all after- sales services needed by
the dispersed rural clientele.
Grameen Telecoms objectives are to provide easy access to GSM cellular
services in rural Bangladesh and creating new opportunities for income
generation through self-employment by providing villagers with access to
modern information and communication technologies.

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ANNUAL REPORT 2005

KEY FINANCIAL FIGURES

6
GRAMEENPHONE LTD.

key financial figures

in '000 BDT

2005

Restated*
2004

2003

29,627,949
(17,026,228)
89,935
(830,754)
(99,412)
11,761,490
(4,848,613)
6,912,877
(509,073)
6,403,804

19,700,695
(9,676,718)
330,661
(137,745)
(91,085)
10,125,808
(3,382,301)
6,743,507
(562,020)
6,181,487

12,577,199
(5,743,374)
350,964
(246,358)
(56,166)
6,882,265
(2,561,500)
4,320,765
(455,845)
3,864,920

Income Statement
Total operating revenue
Total operating expenses
Interest income
Financial cost
Non operating expenses
Net earnings before Income Tax
Tax expenses
Net earnings before appropriation
Transfer to tax holiday reserve
Net earnings available for appropriation

Revenue

29,628

30000

Balance Sheet (as of December 31)


Total assets
Long term borrowings
Total liabilities
Total equity

25000

49,536,664**
3,278,370
31,295,970
18,240,694

27,023,369
1,668,448
13,581,714
13,441,655

17,263,866
1,735,550
9,255,473
8,008,393

19,700

20000
15000

12,577

10000 8,779
5000
0

2002

2003

2004

2005

Figures in million BDT

Notes :
1. * Previous year's figures have been restated for recognition of new accounting policies during
the year 2005.
2. ** During the year 2005, a contract for the lease of fibre network previously recognised as an
operating lease is now being recognised as a finance lease under IFRS/BAS.The reporting of
this lease increased capital expenditure by BDT 5,050 million which is included in the assets.
Total assets also include accounting adjustments with respect to capitalisation of borrowing
costs and foreign exchange rate fluctuation effect on long term interest bearing debt.
3. Closing conversion rates considered for 2005, 2004 and 2003 against USD are BDT 68.40,
BDT 61.45 and BDT 59.20 respectively.

7
ANNUAL REPORT 2005

DIRECTORS REPORT TO THE SHAREHOLDERS


FOR THE YEAR ENDING DECEMBER 31, 2005
GrameenPhone had
another successful
business year in 2005
acquiring more than 3
million new subscribers.
With a total subscription
of 5.5 million at the end
of 2005 around 130
percent higher than last
year--GP continued to be
the telecom market
leader of the country,
with a network covering
95 percent of the
population. GP provides
the distinct market
leadership in the midst
of emerging stiff
competition

8
GRAMEENPHONE LTD.

Dear Shareholders,

our Board of Directors welcomes you to the 9th Annual


General Meeting of GrameenPhone Ltd. and is pleased to
present the Directors Report, together with the Audited
Financial Statements of the Company for the year ending
December 31, 2005 and the Auditors Report thereon, for
your consideration and approval.

2005 Another Eventful and Successful Year!


GrameenPhone had another successful business year in 2005 acquiring more
than 3 million new subscribers.With a total subscription of 5.5 million at the
end of 2005 around 130 percent higher than last year--GP continued to
be the telecom market leader of the country, with a network covering 95
percent of the population. GP provides the distinct market leadership in the
midst of emerging stiff competition.
The brand image of GrameenPhone along with continuing innovations in
products and services, quality network coverage and committed customer
service, made GP the preferred telecom service provider of the people of
Bangladesh.

Number of Subscribers

5.5

5
4
3

2.4

Economy & Business Scenario

The overall economic performance of the country in 2005 provided grounds


for optimism with 5.7 percent growth in GDP, compared to 5.5 percent the
previous year.The inflation rate reached a record high of 7.9 percent. Foreign
investors demonstrated growing interest in a number of sectors. Balance of
payment and foreign exchange reserves were under pressure throughout the
year due to the international oil price hike. BD Taka lost its value by around
9 percent against the US dollar during the year.

0.77

2002

1.1

2003

2004

2005

Figures in million

The telecom sector continued to expand in 2005. State-owned cell phone


company TeleTalk started its operation from March.Warid Telecom of the
UAE obtained the countrys 6th mobile operating license, while four private
PSTN operators started their business in regions allocated to them. Stiff
competition is inevitable in the coming days among the operators, as they
desperately try to secure a strong position in the market.
GP Offers Innovative Products Creating Values for the Customers
Innovation has been a primary factor accounting for GrameenPhones success
so far. It was yet another year of innovative offers, with additional attractive
values for the customers. GP this year launched an altogether new brand
djuice the first of its kind in the country, targeted towards the growing

9
ANNUAL REPORT 2005

DIRECTORS REPORT TO THE SHAREHOLDERS


youth segment, which constitutes 40 percent of the population.The
electronic recharge system FlexiLoad added more comfort to the prepaid
users. GP was the first operator in the country to introduce the EDGE
service - an advanced high-speed mobile Internet facility. Multi Media
Messaging (MMS) and Voice SMS were also offered this year.
With the increase of subscription base in 2005, GP reduced its tariff
significantly (i.e by around 30%) in line with the expectation of the
customers. Incoming charges from the fixed line phones of BTTB were
removed for the first 5 minutes for postpaid and the first minute for prepaid,
while the network mobility charge was entirely removed.
Striving for Improved Customer Service
In order to provide easy access to our products and deliver the best after-sale
services at the doorstep of the existing and potential customers,
GrameenPhone opened service desks across the country. The nine Customer
Centers in the divisional headquarters now remain open from 8am-8pm
throughout the year including all holidays. Service improvement programs
are continuously being developed and implemented with the objective of
providing satisfactory service to our customers. Call Center capacity was
doubled keeping pace with the growth in the number of subscribers. More
automation was made in information technology to facilitate speedier service
to the satisfaction of our customers.
Our People The Most Valuable Asset
The driving force behind GPs success is the professionally competent team
of people working for the Company.The Directors are proud to have a
highly qualified and motivated group of employees meeting the new
challenges in a dynamic business environment. GP believes in investing in
human capital. It has continuously trained and developed its employees for
enhancing their competencies and leadership qualities. Common values have
been established across the organization to align the team towards the
Company vision. An enabling working environment and a corporate
culture milieu along with ample opportunity for career growth, has made GP
clearly a preferred employer in the Bangladesh job market.
Investment in Further Expansion and Improvement of Network
GrameenPhone invested over USD 300 million in the year 2005, for further
expansion and improvement of its network across the country. A total of
2,160 new base stations were built and upgraded in 2005. As a result, GP
currently covers 95 percent of the population in 440 Upazilas (or sub
districts) of 61 districts of the country. Indoor coverage solutions were also
installed in important public buildings in the cities.
Enhanced Value of Shareholders Investment

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GRAMEENPHONE LTD.

GrameenPhone continued to enhance the value of its shareholders


investment.The significant growth in subscriber base has made a positive
contribution to the revenue, EBITDA and net results, in line with the

expectations of the shareholders. Revenue in 2005 grew by 50 percent


compared to the previous year. As a result, EBITDA and net profits were
recorded at a higher level despite introduction of a new SIM tax in the
2005-06 National Budget. Percentage of EBITDA, Net Profit and ARPU,
however, declined slightly compared to last year, due to higher intake of
prepaid customers and change in tariff plans. Major part of the profit was reinvested in the expansion of network in order to meet the pressing demand
for providing coverage in new areas.
The Board has accordingly recommended payment of dividends to our
shareholders for 2005. GP is well positioned in the market with its firm focus
on the strategic goals and we look forward to increasing the value for the
shareholders in the years ahead.
Regulatory Environment
The cell phone industry faced new entry level restrictions with the sudden
imposition of a new SIM tax of BDT 900 per connection in the current
fiscal year. Tax burden on telecom equipment was already excessive in
Bangladesh in comparison to that of the neighboring countries. Imposition
of the new SIM tax thus restricted the growth of the sector.
Bangladesh Telecommunications Act 2001 was amended allowing intelligence
and law enforcement agencies to tap the telephonic conversation of any
individual.
It is hoped that the Bangladesh Telecommunication Regulatory Commission
(BTRC) being the watchdog to ensure a level playing field in the telecom
industry, will secure a stable and enabling regulatory environment in the
country. It should consider removal of the entry level barriers and create
positive incentives so that the telephone penetration rate can be further
increased, benefiting the nation and also in the process increase the sectors
contribution to the Exchequer.

Number of Base Stations

3,500

3500
3000
2500
2000
1,400

1500
1000

500

680

500
0

2002

2003

2004

2005

Corporate Social Responsibility


Besides increasing shareholders value to the expected level, GP continued to
be a socially responsible company. More than 4,000 people are directly
employed in the organization while another 70,000 people are dependent on
GP for their livelihood working for its dealers, distributors, vendors,
suppliers, contractors and others.
GrameenPhone is proud to be the official sponsor of Bangladesh Cricket
Team. GP joined hands with Bangladesh Red Crescent Society for its
Earthquake Preparedness and Awareness Program.The Company also
participated in the rehabilitation of the earthquake affected people in
Pakistan.
Number of Village Phones Doubled Again
The Village Phone Program--a unique initiative to provide Universal Access
to telecommunications facilities in rural Bangladesh--jointly undertaken by

11
ANNUAL REPORT 2005

DIRECTORS REPORT TO THE SHAREHOLDERS


GrameenPhone and Grameen Telecom in cooperation with Grameen Bank,
has increased by more than 100 percent. Around 191,000 rural women earn
their living through the Village Phone Program, increasing their household
income and enhancing their social status.The Village Phones have proven
their immense potential in boosting income of poor households in rural
areas, promoting health care, development of agri-business and in the social
empowerment of rural women. A similar programsetting up the
Community Information Centre (CIC)--is now being undertaken in
cooperation with the GSM Association to connect rural people with the
Internet through GrameenPhones EDGE connectivity. GrameenPhone has
also collaborated with Grameen Telecom and the Diabetic Association of
Bangladesh in setting up the first pilot telemedicine project in the country.
Contribution to National Exchequer
GrameenPhone as a responsible and transparent organization has been fully
compliant with all government regulations since the beginning of its
operation. It has become one of the largest contributors to the Government
Exchequer in recent years. Since its inception till December 2005, the
company contributed nearly BDT 47 billion, in direct and indirect taxes to
the Government Exchequer. During 2005 alone, the company contributed
around BDT 16.2 billion to the Government Treasury.The contribution is
expected to grow with the expansion and growth of the organization.
Dividend
The Directors are pleased to recommend a final dividend @ 50% of the paid
up share capital amounting to BDT 1,215.17 million (@BDT 21.50 per
share of BDT 43.00 each) for the year 2005 for consideration and approval
of the shareholders for distribution.
Directors of the Board
In line with the Articles of Association of the Company, all the Directors will
retire at the AGM and will be eligible for re-appointment, if so nominated
by the shareholders.The composition of the Board of Directors during the
year was as below:
1. Mr. M. Khalid Shams, Grameen Telecom, Director & Chairman
2. Mr. M. Faizur Razzaque , Grameen Telecom, Director
3. Mr.Thor Asbjorn Halvorsen,Telenor Mobile Communications AS,
Director
4. Mr. Ole Bjorn Sjulstad,Telenor Mobile Communications AS, Director
5. Mr. Ragnar H. Korsaeth,Telenor Mobile Communications AS, Director

12
GRAMEENPHONE LTD.

With effect from the 63rd Board meeting held on June 26, 2006, Mr. Arve
Johansen, Mr. Dipal Chandra Barua and Mr. M. Shahjahan were appointed to
the Board to replace Mr.Thor Asbjorn Halvorsen, Mr. M. Khalid Shams and
Mr. M. Faizur Razzaque respectively.

Auditors:
As per Articles of Association, the external auditors of the company M/S
Rahman Rahman Huq, Chartered Accountants, a member firm of KPMG,
will retire in this AGM and, being eligible, offered their willingness to be reappointed for the year 2006.The Directors recommend their re-appointment
for the year 2006 till holding of the next AGM.
Looking Ahead 2006 and Beyond
The year 2005 was a year of considerable achievement in terms of subscriber
growth, expansion of network and improved customer service.This has been
possible with a highly competent and dedicated team of people under the
able leadership of the Management and the Board of the Company.We
recognize a number of significant challenges ahead.We are aligning our
strategy accordingly and we are confident that we will be able to reach our
goal with the sincere efforts of all.
Members of the Board take this opportunity to express their gratitude and
sincere thanks to the Shareholders for their continued support and guidance.
We are also grateful to the Government of Bangladesh, Ministry of Post and
Telecommunications, Bangladesh Telecommunication Regulatory
Commission (BTRC), Bangladesh Railway, National Board of Revenue,
Bangladesh Bank, Board of Investment (BOI), Registrar of Joint Stock
Companies, Chief Controller of Export & Import, our bankers, vendors and
other business partners for the positive support and active cooperation that
the Company has received from them.
We are grateful to our valued subscribers who have helped us achieve what
we are today.The Board also records its appreciation for the employees at all
levels for their dedicated service, sincerity, hard work and strong commitment
which enabled the Company to rapidly advance on what we perceive to be a
sustainable growth path.

Thanking you all and with best regards.


For and on behalf of the Board of Directors of GrameenPhone Ltd.,

Ole Bjrn Sjulstad


Director
Dated June 26, 2006

Dipal Chandra Barua


Director

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ANNUAL REPORT 2005

PROFILE OF THE DIRECTORS

M. Khalid Shams

M. Faizur Razzaque

Thor A. Halvorsen

(66 years of age, Bangladeshi)

(62 years of age, Bangladeshi)

(52 years of age, Norwegian)

M. Khalid Shams was educated at Dhaka


University and the Kennedy School at
Harvard. He worked as a program coordinator at the Asian Pacific Development
Centre, based in Kuala Lumpur, between
1985 and 1990.
He was an Additional Secretary to the
Government of Bangladesh, when he took
up his assignment as the Deputy Managing
Director of Grameen Bank, which has
pioneered the micro-credit movement in
the world. He has been closely associated
with the founding of a number of new
socially oriented corporate enterprises
within the Grameen Family, including
Grameen Uddog for marketing handwoven cotton fabric, Grameen Fund
providing social venture financing to
technology entrepreneurs and Grameen
Telecom mandated to provide telecom
services to the rural poor. He was involved
with the conceptualization, planning and
implementation of GrameenPhone from
the very outset. He is at present the
Managing Director of Grameen Telecom.
Currently, he is the chairman of the board
of directors of GrameenPhone, representing
Grameen Telecom, a not-for-profit
company which holds 38 percent of GP's
equity.

14
GRAMEENPHONE LTD.

He was appointed to the Board on March


01, 2004. He did his BA (Honors) in
Economics from Dhaka University and
Master in Public Administration from
Harvard University, USA.
He started his career as a banker in 1965 and
later joined the Civil Service in October
1966. After 34 years of continuous service
with the Government, he retired from the
Service in 2000. Some of the positions he
held while in Government, were Managing
Director of Biman Bangladesh Airlines,
Chairman of Bangladesh Small and Cottage
Industries Corporation, Director General of
Bangladesh Television, Chairman of
Bangladesh Power Development Board,
Secretary of the Ministry of Power, Energy
and Mineral Resources, Secretary of the
Bangladesh Election Commission Secretariat
and Alternate Executive Director in the
Board of Directors of the Asian
Development Bank in Manila, Philippines.
In 1991, the highest award in the field of
scouting in Bangladesh was conferred on
him.
Currently, he is the Managing Director of
Grameen Fund, since May 15, 2002. He is
also serving in the Boards of Directors of
eleven other Grameen peer companies that
work in the fields of Telecommunications,
IT, Knitwear, Manufacturing and Capital
Market.

He was appointed to the Board on June


11, 2003. He holds a Master of Science
degree in Electrical Engineering
(Telecommunications and Computer
Science) from the Norwegian Institute of
Technology in Trondheim, Norway and
completed a program for Management
Development at INSEAD in
Fontainebleau, France.
He has served in several Executive
Management positions in Telenor including
CEO of Telenor Networks from 1995 to
1998 and CEO of Telenor Business
Solutions from 1998. Prior to this, he has
been responsible for sales activities, Product
Management and Developments and
different technical activities both in the
fixed and mobile networks.
Currently, he is Executive Vice President in
Telenor working with the Eastern Europe
region and Director of several companies in
Norway and internationally.

profile of the directors

Ole B. Sjulstad

Ragnar H. Korsth

(44 years of age, Norwegian)

(40 years of age, Norwegian)

He was appointed to the Board on


December 18, 2002. He graduated in
Mechanical Engineering and Business
Administration from Kongsberg
Ingeniorhogskole, Norway in 1983.
His background is within
telecommunications business, primarily
within the South East Asian region and
offshore oil & gas engineering and
production business.
He joined Telenor Asia Pte Ltd, Singapore,
as Vice President in 2000 and served as it's
Managing Director from November 2002.
He relocated to Norway in 2004 and is
currently Senior Vice President of Telenor,
Asia Region.

He was appointed to the Board on


November 27, 2004. He holds a Master of
Science degree from the Norwegian
School of Business Administration in
Bergen, Norway. Mr. Korsth is also a
Certified Financial Analyst.
He has served in several Executive
Management positions in Telenor including
CFO of Telenor International and Telenor
Mobile from 1999 to 2004 and COO of
Telenor International Mobile from 2004 to
2006.
Currently, he is Executive Vice President
and Head of Global Coordination of
Telenor ASA. Mr. Korsth is Director of
the Boards of Telenor Pakistan, Digi.Com
in Malaysia and Total Access
Communication in Thailand.

15
ANNUAL REPORT 2005

AN INTERVIEW WITH THE MANAGING DIRECTOR


The shareholders of
GrameenPhone have
reinvested nearly all of
their earnings so far,
enabling us to offer our
services to a much
larger number of people
by continuously
increasing the capacity
and expanding the
coverage of the GP
network

16
GRAMEENPHONE LTD.

an interview with the managing director

Positioned for further growth


rameenPhone Ltd. witnessed another year of high growth in
2005, having more than doubled the subscriber-base and retaining
its market share in spite of increased competition, observes Erik
Aas, Managing Director of the company.At the same time, we
have also further strengthened our organizational capabilities.
Thus, GrameenPhone is well-positioned for continued growth.
In an interview, he explains that more than 5.5 million people
made GP their preferred service provider by the end of the year,
up from 2.4 million at the end of 2004, registering a growth of around
130 percent.The market share remained steady at 62 percent, even though the overall
competitive environment has considerably intensified.
Strong international operators like Orascom and Singtel have entered the market in late
2004 while a fifth operator, government-owned Teletalk, also launched its services last
year. A sixth mobile phone operating license was awarded to Warid Telecom of the Dhabi
Group in the United Arab Emirates, in December.The industry is becoming increasingly
more competitive because of the entry of these internationally experienced operators, he
adds.
Erik Aas (39) has been at the helm of GrameenPhone since December 2004. He has nine
years of experience with Telenor.The last five years have been spent with Telenors
affiliates in Malaysia,Thailand and Bangladesh.
Investments
The shareholders of GrameenPhone have reinvested nearly all of their earnings so far,
enabling us to offer our services to a much larger number of people by continuously
increasing the capacity and expanding the coverage of the GP network, he observes.
Fresh investment of over USD 300 million was made during the year to implement an
aggressive network rollout plan.The population coverage of the GP network was
increased from 55 percent to 95 percent during the year, Erik Aas points out.We will
continue to make network quality and capacity improvements throughout the country
and also improve coverage in major highways and important publicly-accessed buildings.
In addition to increasing core network elements to enhance capacity, another 2160 base
stations were added to the network while dual-band base stations (900MHz and
1800MHz) were introduced for the first time in the country during the year. Indoor
coverage solutions were also provided in many important buildings including airports,
high-rise office buildings and shopping malls. In September, GrameenPhone became the
first operator in the country to introduce the EDGE service, a high-speed mobile Internet
and data service, and it was made available to all GP subscribers.
Market activities
There were considerable market activities throughout the year with a number of new
product and service launches and sales campaigns.The successful launch of djuice, the
youth brand of GrameenPhone, in April was a milestone. It was the first brand specifically
targeted towards the youth segment, which constitutes about 40 percent of the
population, says the GrameenPhone MD.By the end of the year, there were nearly one
million djuice subscribers.
The launch of Business Solutions in early 2006 was another clearly segmented approach
tailored to serve the special needs of large and small businesses, he adds.

The industry is
becoming increasingly
more competitive
because of the entry of
these internationally
experienced operators

17
ANNUAL REPORT 2005

AN INTERVIEW WITH THE MANAGING DIRECTOR

18
GRAMEENPHONE LTD.

The Electronic Recharge Service for pre-paid accounts called FlexiLoad was also
introduced last year. It was later followed by the introduction of the Balance Transfer
feature, enabling GP pre-paid users to transfer certain amount of balance to any other GP
pre-paid account.GP pre-paid subscribers are increasingly using FlexiLoad to recharge
their accounts as it is widely available and convenient, Erik Aas informs.
The average GrameenPhone tariff was reduced by 30 percent during the year.In
addition, monthly charges for GP post-paid subscribers and incoming call charges were
also reduced, he elaborates.
Customer focus
Significant changes have been implemented to further improve the delivery of customer
services.The aim is to deliver the services closer to where the customers live, says Erik
Aas. All GP Customer Centers now remain open from 8am to 8pm throughout the year
including all holidays.
The first GrameenPhone Service Desk (GPSD) was opened in July and numbered over
600 around the country by early 2006.This initiative, partly implemented in cooperation
with the existing GP sales agent outlets, expanded the reach of GPs after-sales service,
taking it closer to the customers door-step.A substantial increase of the 24-hour Call
Center capacity enabled us to respond to the queries of more customers while also
reducing the waiting period, he adds.
Strengthening the organization
Some structural changes in the company were initiated during the year with a much
stronger regional focus, explains Erik Aas.The regional markets are becoming
increasingly more important as a large portion of the subscriber growth is coming from
these places. Six Regional Sales Managers, based in the divisional headquarters, have been
appointed with a strong mandate while the organizational structures of the Regional
Offices have been considerably strengthened.
The Regional Offices focus on the local market, network quality and coverage needs,
providing after-sales service and on serving the needs of the business customers in the
regions.
More than 1,500 new employees have joined the GrameenPhone Family during the year.
We have a skilled and highly motivated team which is very much target-oriented, says
the GP Managing Director.
Automation is being increasingly introduced to further streamline the work processes and
enhance the efficiency.Introduction of the Enterprise Resource Planning (ERP) system
was initiated during the year and it was implemented in February this year, notes Erik
Aas.
GrameenPhone is also actively participating in initiatives to create synergies within the
mobile phone operations of the Telenor Group.This is a very good initiative as it enables
us to share and learn from each others experiences, he says.
Regulatory environment
Imposition of the BDT 900 SIM tax in July last year had a dampening effect on the
market growth, with the sale of new subscriptions reducing by about 50 percent. At the
same time, in a welcome move, the import duty on handsets was reduced from BDT 1500
to BDT 300.The SIM tax acted as an entry-level barrier for people seeking to use a
mobile phone service, he observes.
The Government has decided to reduce the SIM tax to BDT 800 and the handset duty to

an interview with the managing director

BDT 200 from July 2006.We certainly welcome this initiative. However, we feel the
Government should gradually withdraw these taxes which will help to further increase the
countrys low telephone penetration rate, observes Erik Aas.The Government will also
benefit by collecting more VAT and other taxes from the increased use of mobile phones.
The GrameenPhone MD hopes that access to the sea-cable network will be provided to
all operators based on their needs and guidelines for Voice-Over Internet Protocol (VOIP)
will be prepared and licenses given soon.
This will enable all mobile phone users to make and receive international calls at a very
affordable rate, he says.Overall, we seek a stable and predictable regulatory regime to
run our business in a market-based competitive environment.
CSR initiatives
The internationally acclaimed Village Phone Program is continuing to grow and by the
end of the year 2005 there were around 191,000 Village Phones in operation around the
country.Since the inception of GrameenPhone, the Shareholders have taken a conscious
decision to provide Universal Access to telecommunications services in the rural areas of
Bangladesh, points outs Erik Aas.And over the years, the Village Phone Program has
been very successful in doing that while providing a good income-earning opportunity to
the VP operators, who are mostly poor village women.
The success of the Village Phone initiative, he says, has encouraged GrameenPhone to start
a pilot project called the Community Information Centers (CICs), providing access to the
Internet and other communication and information-based services in the rural areas
through GrameenPhones nationwide EDGE connectivity.The CICs, being implemented
in cooperation with the GSM Association, are shared premises where the public can access
services such as Internet, voice communications, video conferencing and a number of
other information-based services.
With an investment of about USD 700 through micro-financing or self investment, each
CIC is targeted to generate a revenue stream of USD 5 per day. Each CIC is equipped
with the minimum of a computer, a printer, a scanner, a web cam and an EDGE enabled
modem or phone to access the Internet using GrameenPhones EDGE connectivity. ICT
related and value-added services of GP are also dispensed at this center to make the
enterprise financially viable.The initial results are very encouraging and we plan to
gradually increase the number of CICs around the country and include tele-medicine and
other useful services with it, adds the GrameenPhone MD.
Business outlook
GrameenPhone is well-positioned for further growth in the years to come as the countrys
telephone penetration rate is still low at around 10 percent.The mobile phone service in
Bangladesh is now catering towards the mass market. Globally, the next billion mobile
phone users will spend much less than the first billion, he observes.
As for GrameenPhone, he says, it will continue to focus on further improving the three
main reasons people prefer the GP service: quality network with nationwide coverage;
affordable prices along with innovative products and services; and committed customer
service.
I am confident that GrameenPhone is very well positioned for continued growth as it is
organizationally strong and, most importantly, it has a highly motivated and enthusiastic
team, observes the GP Managing Director.
(Erik Aas was interviewed by Syed Yamin Bakht)

GrameenPhone is wellpositioned for further


growth in the years to
come as the countrys
telephone penetration
rate is still low at around
10 percent. The mobile
phone service in
Bangladesh is now
catering towards the
mass market. Globally,
the next billion mobile
phone users will spend
much less than the first
billion

19
ANNUAL REPORT 2005

PROFILES OF MANAGEMENT TEAM

20
GRAMEENPHONE LTD.

profiles of management team

Erik Aas
(39 years of age, Norwegian)
8

He joined as the Managing Director of GrameenPhone in December 2004.


He has nine years of experience from Telenor, five of which have been spent
in Asia. He has held the position of Marketing Director of Malaysian mobile
phone company DiGi since June 2002. He was a Board Member of
GrameenPhone from October 2001 up to December 2004.

7
10

He completed his Master of Science degree from NTNU in Trondheim,


Norway in 1991, and also earned a Master of Business Administration degree
from IMD in Switzerland in 2001.
Frank Fodstad
(45 years of age, Norwegian)

4
2

He joined GrameenPhone as the Deputy Managing Director in March 2004.


He has a Bachelor of Engineering Degree from the University of Glasgow in
Scotland.
He has been working with Telenor since 1988. He successfully established,
launched and headed the Delta-4 Cost Reduction Program of Telenor. He
has been in charge of initiating and completing several performance
improvement initiatives in Telenor.
Khalid Hasan
(50 years of age, Bangladeshi)
He was appointed as Director, Corporate Affairs of GrameenPhone, in May
2001. He has a Masters Degree in Business Management from Dhaka
University.
He has acquired a wide range of experiences during the last two decades in
international business development, specializing in breakthrough joint
ventures and global partnerships in rapidly changing, highly competitive
environments. Prior to joining GrameenPhone, he was the country manager
for General Electric (GE).

1
2
3
4
5
6
7
8
9
10

Erik Aas
Rubaba Dowla Matin
Frank Fodstad
Khalid Hasan
Stein Naevdal-Larsen
Emad Ul Ameen
Shafiqul Islam
Kafil HS Muyeed
Ingvald Lyche
Md Arif Al Islam

Ingvald Lyche
(46 years of age, Norwegian)
He joined as the Director, Sales and Distribution of GrameenPhone, in
April 2005.
A management professional, he has long experience in marketing and sales of
IT and telecommunications products and services. He gathered 15 years of
international telecommunications management experience in Telenor and
other organizations. Before joining GrameenPhone, he worked as the
Business Market Development Director, responsible for development and
implementation of business models and marketing concepts for all Telenor
affiliates: mainly with GrameenPhone, Pannon GSM in Hungary and
Vimpelcom in Russia.

21
ANNUAL REPORT 2005

PROFILES OF MANAGEMENT TEAM


He has studied at both the Norwegian School of Economics and also the
Norwegian School of Management.
Stein Naevdal-Larsen
(39 years of age, Norwegian)
He was appointed as the Information Technology (IT) Director of
GrameenPhone in February 2004. His background is in Business
Administration and Project Management from the Norwegian School of
Management and in Mathematics and Informatics from the University of
Oslo. Moreover, he has published a number of books on macroeconomics
and developed financial application software.
He has been working with Telenor since 1997, and has since 2000 worked as
the IS Director of Telenor Business Solutions, Communications. Prior to
joining Telenor, he gained experience working in different position in
multinational companies.
Emad Ul Ameen
(50 years of age, Bangladeshi)
He was appointed as Director, Human Resources Division of
GrameenPhone, in November 2003. He has a Masters degree in Marketing
from Dhaka University.
He has extensive experience working in responsible positions in
multinational organizations in Human Resources functions. He was also
Director of a leading consultancy firm in the country providing services to
various multinational and reputed local companies in Human Resources and
Corporate Governance areas.
Md. Shafiqul Islam
(35 years of age, Bangladeshi)
He was appointed as the Acting Head of Technical Division in March 2006.
He has been working with GrameenPhone since its inception. He has a
Bachelors degree in Electrical and Electronics Engineering from Bangladesh
University of Engineering and Technology.
He started as planner of GP mobile network and was involved in different
areas of planning and has been the Head of Network Planning since
1999. He also has been a member of the GP Business Planning team and
has considerable experience in cost efficiency of network CAPEX and
OPEX.
Md. Arif Al Islam
(35 years of age, Bangladeshi)
He was appointed as Director, Finance of GrameenPhone, in June 2006. He
is a Fellow of Chartered Certified Accountants from the UK.

22
GRAMEENPHONE LTD.

He has over five years of public practice experience in the UK with a range
of experience in audit, taxation and financial consultancy services. He has

profiles of management team

been with GrameenPhone for over six years and mainly contributed in the
areas of financial planning, reporting and business analysis.
Kafil HS Muyeed
(38 years of age, Bangladeshi)
He was appointed as Director, New Business in June 2006. He has a
Bachelor of Science degree in Civil Engineering from the Florida Institute
of Technology in the USA. After joining GrameenPhone in 1998, he gained
extensive operational experience in all sales and marketing areas a well as in
development of key strategies to drive growth. He established the product
development department and played a key role in building distribution
channels of GrameenPhone in 1998 and 1999. Over the years, Kafil has
worked closely with Telenor on various projects and acquired knowledge of
the international telecommunications industry.
Prior to joining GrameenPhone, he gained entrepreneurial and marketing
experience in international trade and export.
Rubaba Dowla Matin
(34 years of age, Bangladeshi)
She was appointed as the Head of Marketing in May 2006. She did her
MBA with a major in Marketing and shortly embarked on her career in
Marketing in GrameenPhone in 1998.
Prior to becoming the Head of Marketing, she had been leading the Market
Research & Development team for a considerable length of time. She has
been the architect behind developing Products and Value Added Services
(VAS) & Strategy departments in the Marketing Division.
Rubaba has also worked with Telenor in many projects and acquired
knowledge of the International Telecommunications industry.

23
ANNUAL REPORT 2005

ORGANIZATIONAL CHART

24
GRAMEENPHONE LTD.

organizational chart

BOARD OF
DIRECTORS

Managing Director
Erik Aas

Deputy Managing
Direcrtors Division
Frank Fodstad

Information Technology
Division
Stein Nvdal-Larsen

Technical Division
Md. Shafiqul Islam
Customer Management
Division
Bidyut Kumar Basu

Fiber Optic Network


Division
A M M Yahya
New Business Division
Kafil H. S. Muyeed

Supply Chain Management


Legal & Compliance
Village Phone
Administration

Marketing Division
Rubaba Dowla Matin

Information Department
Syed Yamin Bakht

Sales & Distribution


Division
Ingvald Lyche

Compay Secretary &


Internal Audit Department
Ahmed Raihan Shamsi

Finance Division
Md. Arif Al Islam

Special Projects
N K A Mobin

Corporate Affairs
Division
Khalid Hasan

Human Resources
Division
Emad Ul Ameen

25
ANNUAL REPORT 2005

CORPORATE GOVERNANCE
GrameenPhone believes
in the continued
improvement of
corporate governance.
This in turn has led the
Company to commit
considerable resources
and implement
internationally accepted
Corporate Standards in
its day-to-day operations

26
GRAMEENPHONE LTD.

corporate governance

n the fast-paced world of telecommunications, vibrant and dynamic Corporate


Governance practices are an essential ingredient to success. GrameenPhone
believes in the continued improvement of corporate governance.This in turn
has led the Company to commit considerable resources and implement
internationally accepted Corporate Standards in its day-to-day operations.

Being a private limited company, the Board of Directors of GrameenPhone


have a pivotal role to play in meeting all stakeholders interests.The Board of
Directors and the Management Team of GrameenPhone are committed to
maintaining effective Corporate Governance through a culture of accountability,
transparency, well-understood policies and procedures.The Board of Directors and the
Management Team also persevere to maintain compliance of all laws of Bangladesh and
all internally documented regulations, policies and procedures.

Board of Directors
The formation and management of the Board of Directors are governed by the Articles
of Association of GrameenPhone Ltd. which contains, inter alia, the following
procedures:
i)

The Board of Directors of the Company shall be elected by the Ordinary


Shareholders of the Company in a General Meeting of the shareholders.

ii) The Board of Directors is composed of 05 (five) members including the Chairman,
who shall be elected from members of the Board of Directors.
iii) The tenure of members of the Board of Directors is determined in a General
Meeting. A retiring director(s) is eligible for re-election.
iv) Telenor Mobile shall nominate 03 (three) members and Grameen Telecom shall
nominate 02 (two) members of the Board.
v) The Board shall meet at least 04 (four) times a year and when otherwise duly called
for in writing by a Board member or by a Shareholder. Questions arising at any
meeting shall be decided by a simple majority of votes. In the event of an equality
of votes, the Chairman shall have a second or casting vote.

The Board of Directors


and the Management
Team of GrameenPhone
are committed to
maintaining effective
Corporate Governance
through a culture of
accountability,
transparency, wellunderstood policies and
procedures

vi) The Board of Directors shall not make a decision which would adversely affect one
particular Shareholder if such decision does not produce proportional adverse effects
on all the other Shareholders, and shall at all times act in a manner that will be in
the best interest of the Company.
In addition to the above, the power, duties, qualification and disqualification of a
Director are explicitly mentioned in the Articles of Association which has also been
prepared in compliance with the Companies Act, 1994 of Bangladesh.
The Board, apart from its statutory power, ultimately governs the whole Company by
determining its vision, mission and strategy to maximize return to shareholders,
reputation as a whole and welfare to society.
Management Team (MT)
The Management Team (MT) consists of the Managing Director and other senior
managers across the various divisions of GrameenPhone.These Division Heads represent
respective divisions and always endeavor to meet the Companys mission and guidelines

27
ANNUAL REPORT 2005

CORPORATE GOVERNANCE
provided by the Board of Directors.
The MT is guided in accordance with the vision and the strategies of the Company. In
addition to this, the MT is obligated to refer every issue to the Board if there is any
deviation in business plan, budget, borrowing, capital expenditure, pledging, etc., from
the approved plan.
Control Environment
To implement Corporate Governance, the MT is required to carry out the following
functions which are approved by the Board:
a) Business Plan & Budget
With close guidance of the Board, the MT prepares the annual Business Plan and
Budget. It is prepared and amended from time to time with the active participation
of all divisions of GrameenPhone and these are reviewed and approved by the Board.
b) Financial Reporting
GrameenPhone has established strong financial reporting procedures in line with
Telenor Group reporting requirements and local regulations.This reporting system
facilitates to not only understand the true financial conditions of the Company but
also to monitor Budget and Business Plan compliance and analyze key performance
indicators and other parameters. GrameenPhone has to follow international
accounting standards i.e. IFRS, US GAAP and the local accounting standard (BAS)
while preparing financial reports for respective users. Group Auditors of Telenor also
review the accounting and reporting system and policies from time to time.
c) Asset Management
GrameenPhone is continuously investing in network and other related infrastructure
in line with the Business Plan and Budget.To maintain accountability and proper
utilization of assets, it maintains clear policies starting from procurement, locationwise recording, and timely utilization to disposal of obsolete assets. Physical
verification of network assets is conducted periodically. All risks relating to these
huge assets are properly insured both locally and internationally.
d) Internal Control
GrameenPhone has established effective internal control systems to maintain
accountability, integrity and security of its assets, important systems like billing
system, network management system and information.This internal control system
guides every member of the Company in respect to process of every transaction,
authority level for approval of the transaction, documentation, access to the systems
and responsibility. As the business of the Company evolves continuously, the
requirement for amendment of internal control systems is mostly a continuous
process.
i. Sarbanes Oxley Act (SOA)

28
GRAMEENPHONE LTD.

As an affiliate of Telenor, which is listed in NASDAQ, GrameenPhone has come


under the purview and compliance of the Sarbanes-Oxley Act (SOA) and other
regulations promulgated by the U.S. Securities Exchange Commission and
NASDAQ to protect the rights of investors.

corporate governance

The Sarbanes-Oxley Act includes strict requirements and internal controls


relating to financial reporting and good governance. GrameenPhone has
started implementing a strong set of internal control points in its major class
of transactions as well as in the IT section. Additionally, GrameenPhone is
also implementing various policies and procedures which will ensure strong
governance at the Company level. By December 2006, GrameenPhone is
expected to become a Sarbanes-Oxley Act compliant company.
ii. Statutory Audit
Statutory audit is governed by the Companies Act, 1994 of Bangladesh.The
Companies Act explicitly provides guidelines for the appointment, scope of
work and retirement of auditors. Shareholders appoint auditors in the Annual
General Meeting and the appointed auditor can only be removed on the
ground of unwillingness to continue by the auditor and/or disqualification of
the auditor.Therefore, the auditor enjoys immense independence as well as
responsibilities in conducting his duties. Moreover, the Board maintains
certain criteria for selecting auditors; one of them is that the auditors must be
associated with big international accounting firms. Accordingly, the present
auditor is associated with KPMG, an internationally reputed accounting firm.
In addition to the annual audit, the auditor carries out interim audit and
review on quarterly reports as per guidelines of the Telenor Group.
iii. Compliance of External Rules & Regulations
The Management of GrameenPhone is accountable not only to its Board or
shareholders but also to various external regulatory bodies.These regulatory
bodies maintain a close look on GrameenPhone since it has become a very
significant organization in Bangladesh as a result of its large subscriber base,
wide network and huge contributions to the Government Exchequer. In this
context, the Company provides full-fledged financial reports to the National
Board of Revenue, Banks, Registrar of Joint Stock of Companies and the
Board of Investment. Apart from this, for every approval from regulatory
bodies or as a routine reporting, GrameenPhone is providing information to
various bodies such as Bangladesh Bank, Bangladesh Telecommunications
Regulatory Commission (BTRC), Customs Authority and other relevant
organizations. In addition, GrameenPhone is subject to compliance of the
rules and regulation of the US Stock Exchange Commission as the Telenor
Group is listed with the NASDAQ stock exchange.
v. Internal Audit
This unit is responsible for monitoring the activities in the light of policies or
procedures set by the Board of Directors and/or the MT. In addition, this
unit has to follow the Group Internal Auditing Guideline, being a subsidiary
of Telenor. On the basis of reports from the Internal Auditor, actions are
taken to bring about developments and rectifications of systems or policies.
In the absence of any guideline or standard from local bodies, GrameenPhone
is exercising corporate governance as a part of good practice and
continuously developing in this area to maintain and adopt corporate
governance standards followed internationally.

This internal control


system guides every
member of the Company
in respect to process of
every transaction,
authority level for
approval of the
transaction,
documentation, access
to the systems and
responsibility. As the
business of the Company
evolves continuously, the
requirement for
amendment of internal
control systems is
mostly a continuous
process

29
ANNUAL REPORT 2005

CORPORATE GOVERNANCE
Employees are one of
the most important
assets of any
organisation.
Transparency of their
goal and performance
measurement plays an
important role in
achieving the target of
the organisation

30
GRAMEENPHONE LTD.

corporate governance

e) Investment Committee
The Investment Committee is a cross-functional committee represented by
Management members including the Finance Director to scrutinize investments
from different aspects.This committee has a controllership role on investment
decisions and is answerable to the concerned parties, interested in the said
investment, for its decision.
f) Codes of Conduct
Telenor guided Codes of Conduct has been adopted by GrameenPhone and it has
been read and signed by all employees of GP.This document underlines the
importance and requirement of securing good business ethics in all aspects of the
Companys activities.
g) Management & Leadership Development
Employees are one of the most important assets of any organisation.Transparency of
their goal and performance measurement plays an important role in achieving the
target of the organisation. GrameenPhone has implemented the following tools
developed by Telenor to maintain this asset to reach its goal:
i.

Telenor Development Process


Telenor Development Process (TDP) has been adopted by GrameenPhone since
2005 as a leadership development procedure.The process starts with an appraisal
dialogue on appraisees past performance, future goals and targets, development
needs etc.This is followed by a Review Meeting where all concerned appraisees
are assessed and development measures are discussed by the respective
management teams. At review meetings, the Management Team also identifies
the talents those with high potential and in critical positions. Finally, at the
Adjustment and Feedback Dialogue following the review meeting, appraisees
receive feedback on discussions at the review meeting.This is followed by readjustment of goals and targets and initiation of development plans for
appraisees as per requirements identified by their managers.TDP at
GrameenPhone supports leaders and employees in developing capabilities in
strategic areas thereby ensuring a responsible and productive corporate
environment.

ii. Internal Value Creation (IVC)


Each year employees respond to an IVC survey which comprises targets and
management, human capital, process capital, innovation and simplification.This
process is one of several tools used for the Companys ambition to realize
transparency and accountability relating to individual employees and the
Company itself. By comparing the result of the annual IVC survey with TDP, a
basis is achieved for the implementation of improvement measures with respect
to employees in general and managers in particular.
GrameenPhone believes in transparency and accountability to society as a whole through
establishment of efficient and effective Corporate Governance. It also believes that
Corporate Governance is a journey not a destination and it needs to be continuously
developed and adapted to meet the changing needs of modern businesses.

GrameenPhone believes
in transparency and
accountability to society
as a whole through
establishment of efficient
and effective Corporate
Governance. It also
believes that Corporate
Governance is a journey
not a destination and it
needs to be continuously
developed and adapted
to meet the changing
needs of modern
businesses

31
ANNUAL REPORT 2005

BDT 50 BILLION CONTRIBUTION TO


GOVERNMENT EXCHEQUER
GrameenPhone Ltd. has
contributed more than
BDT 50 billion to the
Government Exchequer
in taxes, duties and
payments to various
Government bodies
since its inception in
1997 and up to April
2006. The company has
contributed BDT 16.2
billion to the Government
in 2005 alone

32
GRAMEENPHONE LTD.

contribution to government exchequer

rameenPhone Ltd. has contributed more than BDT 50


billion to the Government Exchequer in taxes, duties
and payments to various Government bodies since its
inception in 1997 and up to April 2006.The company
has contributed BDT 16.2 billion to the Government
in 2005 alone.

With the payments of taxes and the investments in the


network, GP is making a significant contribution to the
countrys development and growth.
GP has generated direct and indirect employment for a large number of
people over the years.The company presently has 4,000 employees. Another
70,000 people are directly dependent on GrameenPhone for their livelihood,
working for the GP dealers, retailers, scratch card retail outlets, suppliers,
vendors, contractors and others.
In addition, the Village Phone Program, initiated in 1997, presently provides a
good income-earning opportunity to more than 230,000 mostly women
Village Phone operators living in rural areas.
The following table illustrates how the National Treasury was augmented:

16,209

11,525

7,214
5,288
3,180
521

386

1997

1998

BR

BTTB

1,593

747
1999

2000

BTRC

2001

2002

Tax, VAT and Duties

2003

SIM Tax

2004

GP has generated direct


and indirect employment
for a large number of
people over the years.
The company presently
has 4,000 employees.
Another 70,000 people
are directly dependent
on GrameenPhone for
their livelihood, working
for the GP dealers,
retailers, scratch card
retail outlets, suppliers,
vendors, contractors
and others

2005

Indirect

Figures in million BDT

33
ANNUAL REPORT 2005

NEW COMMUNITY SERVICES

Set up with technical


assistance from the
GSM Association, the
Community Information
Centers (CICs) are
equipped with the
minimum of a computer,
a printer, a scanner, a
web cam and an EDGEenabled modem to
access the Internet
using the EDGE
connectivity

34
GRAMEENPHONE LTD.

new community services

rameenPhone has always been more than just a mobile


phone service provider in Bangladesh.The
internationally acclaimed Village Phone Program was
launched on the same day the GrameenPhone service
was introduced in March 1997.

Presently, as of June 2006, more than 230,000 Village


Phones are in operation around the country, providing
Universal Access to telephone services in rural areas where no such facilities
were available before.
As GP develops and introduces innovative and technologically advanced
products and services, it seeks out to develop new ways in which those
services may be utilized to deliver services to communities.

GrameenPhone developed and launched two such community services in the


early part of 2006.The first is the Community Information Centers
initiative developed to provide Internet, voice communications, video
conferencing and a number of other information-based services in rural areas
through GPs nationwide EDGE connectivity.
The second is the Health Information and Service (HIS) for GP mobile
phone subscribers where a registered caller can consult a licensed physician
through teleconferencing for both emergency and non-emergency medical
consultation and treatment advice.
Community Information Centers
Set up with technical assistance from the GSM Association, the Community
Information Centers (CICs) are equipped with the minimum of a computer,
a printer, a scanner, a web cam and an EDGE-enabled modem to access the
Internet using the EDGE connectivity.
The CICs are designed to be run independently as small businesses by local
entrepreneurs.The CICs are set up on shared premises in select rural markets
around the country.These centers are ICT-related and also dispense GP
value-added services to make the enterprise financially viable.

Presently, access to
passport forms, birth
and death certificate
forms and other related
information are available
through the Government
websites. Market prices
of agricultural produce
are also available
through the website of
the Agricultural
Extension Department

The CICs help rural people to stay in touch with their friends and relatives
living in foreign countries using email, fax and instant messaging.Through web
cams, it is now possible for them to see their near and dear ones staying abroad.
Presently, access to passport forms, birth and death certificate forms and other
related information are available through the Government websites. Market
prices of agricultural produce are also available through the website of the
Agricultural Extension Department.
The CICs are also of help to students and professionals for gathering reports
and news suiting their requirements. Information relating to local and foreign
job search sites is available at the centers. Many services which would
continue to remain beyond the reach of an individual in rural areas would
now be available at the Community Information Centers.

35
ANNUAL REPORT 2005

NEW COMMUNITY SERVICES


Health and medical information will be made available through the CICs
soon. In addition, other useful content will be added gradually.
Initially, 16 CICs were established as a pilot project in different parts of the
country in February 2006. Of them, four each were set up in Sylhet,
Rajshahi and Khulna divisions and two each in Dhaka and Chittagong
divisions. In May, another 10 CICs were established: seven in Chittagong,
two in Dhaka and one in Rajshahi divisions.
GrameenPhone has partnered with Grameen Telecom and Society for
Economic and Basic Advancement (SEBA) that are involved in entrepreneur
selection, training, and distribution of kit and marketing materials.
GrameenPhone provides the GSM infrastructure and supports the initial
services.The micro-financing partners, if required, provide small loans to
entrepreneurs who provide the services to the local rural community.
The initial results are very encouraging and GrameenPhone is now looking into
the possibility of further expanding this program in many other areas of the
country.There is a demand for information-based services in the rural areas.
What determines if a center is successful is the motivation and spirit of the local
entrepreneur, appropriate location of the center and awareness in the community.
Health Information and Service (HIS)
GrameenPhone has formed a partnership with the Telemedicine Reference
Center Limited (TRCL) to render HealthLine Information and Services
(HIS) for GP mobile phone subscribers.
The Medical Call Center was inaugurated in July 2006 and is providing
services to all GrameenPhone employees. HIS is scheduled to be formally
launched in September 2006, making the services available for all GP
subscribers with a prior registration.
The service is an interactive teleconference between a patient (i.e. any GP
subscriber with any kind of general or emergency medical/health related
questions) and a licensed physician. Physicians are available 24 hours a day, 7
days a week to take the calls.
Subscribers are encouraged to use their GP mobile phones for HealthLine
services as expert doctors help, direct or guide them through the required
medical solutions. Some of the HealthLine services offered are:

Doctor and Medical Facility Information


Drug or Pharmacy Information

Laboratory Test Report Information (interpretation)


Medical Advice from Doctor
Medical Emergency

36
GRAMEENPHONE LTD.

In addition to the above services, as part of the HIS concept, all GP mobile
phone subscribers can request their pathology/radiology tests, from

new community services

designated Diagnostic Centers, be sent to them via SMS for a special charge.
This feature would be conducted through a booth of the HealthLine service
at the diagnostic center.The SMS would be followed by delivery of the
report to the customers mailing address the following day.
GrameenPhone has been actively working to make mobile communication
and technology solutions available to the wider community.With the
introduction of these two new services, the company has once again
demonstrated its commitment towards the community and towards the
development of the rural landscape. By constantly promoting cutting-edge
services and making those services available in the community, GP strives to
reduce the existing digital divide.

Corporate Social Responsibility


is an important function
The shareholders of GrameenPhone believe that Good business is good
development. Since its inception, GrameenPhone has always considered
Corporate Social Responsibility (CSR) to be an important function of
the company.
Along with providing telecommunication services to more than 8.5
million people, providing direct income-earning opportunities to a large
number of people and being one of the top corporate taxpayer in the
country, GrameenPhone has an extensive CSR program.
An independent organization called Ideas & Insights conducted a survey
among people from different walks of life on the CSR activities of
different companies. According to the survey, GP has been recognized as
among the most socially responsible companies in the country.
GrameenPhone has developed a very strong CSR program over the years,
some of which are highlighted below:

The Village Phone Program was launched on the same day the
service of GrameenPhone was introduced on March 26, 1997.The
Village Phone Program is a unique initiative to provide Universal
Access to telecommunication facilities in rural areas while providing a
good income-earning opportunity for the Village Phone operators,
mostly rural poor women. It enables people in the rural areas who
cannot afford to own a telephone to avail the service closer to their
homes.

GrameenPhone supports a number of national socio-cultural activities


including sponsoring the National Book Fair (Ekushey Boi Mela),
National Poetry Festival, childrens art competitions, major art
exhibitions and other events.

Along with providing


telecommunication
services to over eight
million people, providing
direct income-earning
opportunities a large
number of people and
being one of the top
corporate taxpayers in
the country,
GrameenPhone takes its
CSR activities quite
seriously

37
ANNUAL REPORT 2005

NEW COMMUNITY SERVICES


The Company also takes
an active interest in
spreading IT education
through both urban and
rural schools. Over the
years, GP has donated
more than 100
computers to a number
of mostly rural schools,
benefiting thousands of
poor students

38
GRAMEENPHONE LTD.

new community services

GrameenPhone actively participates in the development of cricket in


the country and is presently the official sponsor of the Bangladesh
National Cricket Team. It has also sponsored the National Under-17
team, Premier Cricket League and the Corporate Cricket League.
GrameenPhone also sponsors the Presidents Cup Golf Tournament
and other sports events.
The Company takes an active interest in spreading IT education
through both urban and rural schools. Over the years, GP has
donated more than 100 computers to a number of mostly rural
schools, benefiting thousands of poor students.

During the floods of 2004, GP was actively involved in helping


flood-affected people by donating and supplying medicine, drinking
water and arranging health camps.
GrameenPhone donated more than BDT 10 million toward the
School Rebuilding Program of UNICEF for the Tsunami affected
areas of Sri Lanka and the Maldives. GP also donated BDT 10
million for rehabilitation of the earthquake affected people of
Pakistan.

A donation of BDT Two million was made to the Bangladesh Red


Crescent Societys Earthquake Preparedness and Awareness Program
last year.
GrameenPhone has sponsored excavation work of the promising
Wari-Bateshwar Heritage site for the year 2006.

The Company actively participates in the city beautification program


initiated by Dhaka and Rajshahi city corporations and also supports
improvement of the traffic systems in major cities.

GrameenPhone supports the Acid Survivors Foundation and a project


for autistic children by providing support for their education and
improvement of learning ability.

GrameenPhone donated
more than BDT 10
million toward the
School Rebuilding
Program of UNICEF for
the Tsunami affected
areas of Sri Lanka and
the Maldives. GP also
donated BDT 10 million
for rehabilitation of the
earthquake affected
people of Pakistan

GrameenPhone launched the EDGE technology earlier last year, which


enables its subscribers to access high-speed data and Internet services
anywhere within its network coverage area.This will also help bridge the
existing digital divide to some extent by allowing people in the rural areas
access to the Internet or information highway.

39
ANNUAL REPORT 2005

FOCUS ON NETWORK QUALITY

In 2005, GrameenPhone
introduced dual band
base stations (900 MHz
and 1800 MHz) for the
first time in the country
to further enhance the
network capacity. As a
direct result of the
aggressive and efficient
roll-out, GP has added
2,160 base stations in
2005 a figure that is
more than the total rollout during the previous
eight years

40
GRAMEENPHONE LTD.

focus on network quality

ne of the major strengths of GrameenPhone has been its quality GSM


network with the widest coverage around the country.
Continuous efforts were made during 2005 to maintain GPs position of
advantage in network coverage and to find ways to further improve
network quality. As part of this process, the GrameenPhone GSM network
has gone through a transformation in terms of:

Coverage expansion
New technology

Capacity building
Network availability

Value-added services
The coverage of GrameenPhone network has been increased significantly in comparison to
the coverage in 2004. At the end of 2004, the population coverage was only 55 percent. In
December 2005, the GP network covered about 95 percent of the population.
GrameenPhone has been a pioneer in providing in-building coverage. GP has set up omnidirectional antenna in various important high-rise buildings including hotels, shopping
centers, airports, large commercial buildings, market places, etc.Till date, 67 buildings have
been provided with dedicated in-building coverage, ensuring better customer experience.
The Company is putting extra efforts to further improve coverage at road junctions, highways
and other important locations, so that wide coverage is ensured everywhere indoors or
outdoors.
In 2005, GrameenPhone introduced dual band base stations (900 MHz and 1800 MHz) for
the first time in the country to further enhance the network capacity. As a direct result of the
aggressive and efficient roll-out, GP has added 2,160 base stations in 2005 a figure that is
more than the total roll-out during the previous eight years. In 2006, GP is going for an
equally ambitious roll-out target to ensure the best quality, coverage and customer
experience.
To further add to its reputation as the best network with latest technology, GrameenPhone
was the first operator to launch EDGE services in the country. EDGE was launched in
September 2005, and now provides all GP subscribers the option of using EDGE and other
EDGE-related services such as MMS, Internet browsing, and Multimedia Content Download,
etc. Business solutions have also been developed for offices and individuals based on the
EDGE services.
Many value-added services like Personalized Ring Back Tone and Voice SMS were
introduced during the year.
As a part of the evolution of its network, GrameenPhone is not only concentrating on
coverage and capacity building, but also working to ensure network quality and availability,
i.e. less downtime and congestion.
With a severe power shortage problems in the country, there are still many places without
access to commercial power and regular power outages are very common.To ensure
continued network availability, GP has been providing standby generators with the towers at
all power outage-prone areas. GrameenPhone has even set up towers in areas without any
regular supply of electricity through the use of multiple generators.

GrameenPhone has
been a pioneer in
providing in-building
coverage. GP has set up
omni-directional antenna
in various important
high-rise buildings
including hotels,
shopping centers,
airports, large
commercial buildings,
market places, etc. Till
date, 67 buildings have
been provided with
dedicated in-building
coverage, ensuring
better customer
experience

To ensure network quality, GP teams are routinely driving around different areas of the
country to better understand the network situation from the customers point of view so that
the service can be immediately fine-tuned accordingly.
GrameenPhone will continue to provide Best-In-Class network quality through
understanding and exceeding customer expectations.

41
ANNUAL REPORT 2005

IMPROVED PRODUCTS AND SERVICES


Startup prices for all GP
products dropped
significantly during the
year. Tariff reduction, a
result of renewed
competition in the
industry, has been a
characteristic for the
year. GP has responded
to the market through
significant lowering of
tariffs on different
packages

42
GRAMEENPHONE LTD.

Improved products and services

rameenPhone has mainly focused on product and service


improvements in 2005, in order to both retain existing customers
through increased satisfaction and encourage new ones to opt for its
improved products and services.
With more than 50 products, services, promotions and features
introduced during the year, GP has geared itself in the right direction
to define new levels of excellence in the industry.
Among the many attractive features introduced last year, My Choice stands out for
giving the subscribers an opportunity to choose their own tariff plan. In addition, GP
offered different recharge-based promotions from time to time such as Bonus Talktime,
free ring tones, and bonus SMS with each recharge.
FlexiLoad or the Electronic Recharge System introduced in April has been a landmark
addition to GP services.There have been several other innovative products and services
introduced for prepaid customers; the P2P Balance Transfer system launched in June, was
the first of its kind in the country. MY Time was extended by two hours daily (6am11am or 12pm-5pm) providing Easy and Easy Gold subscribers an opportunity to call
selected GP numbers at off-peak hour rates during the day.
Among the new postpaid product and service enhancements introduced in 2005 were the
new airtime bundled product "Anytime 500" and GP Public Phone. January 2006 marked
the introduction of Business Solutions a tailored mobile solution for business users which
includes complete Internet and data solutions. Business Solutions features unlimited Internet
browsing through EDGE, mobile e-mail, SMS based reporting tools, data and fax services.
A number of innovative new Value-Added Services were offered during the year:

EDGE with MMS, Internet access and download facilities was launched
Voice SMS service was introduced for the first time in the country
Introduction of the Welcome Tune suddenly the age-old monotonous ring heard
before a phone was picked up was replaced by user-defined tunes, selectable for
download from a large collection.
Startup prices for all GP products dropped significantly during the year.Tariff reduction,
a result of renewed competition in the industry, has been a characteristic for the year. GP
has responded to the market through significant lowering of tariffs on different packages.
Tariff rates on both prepaid and postpaid products have been lowered in different stages
by an average of 30 percent last year.
Subsequently, to create a long-term relationship with subscribers, GP started the
Thankyou reward program from January 2006. Under the campaign, discount or free
talk-time are offered to customers based on their usage and the length of time they have
been with GP. Customers are rewarded for their loyalty through Thankyou strategic
partner outlets of GP which offer different discount facilities to the customers who have
been using GP services for more than six months.
In another development, in May 2006 the GrameenPhone Centers were launched as
flagship GP sales channels, selling all GP products and services and also attractively
priced handsets with the best warranty and after-sales service.
The GrameenPhone Centers provide a one stop solution for all customers, with all
telecommunications products and services, under a single roof.The GrameenPhone
Centers are designed to increase the customer satisfaction by integrating sales and after
sales services in an open, friendly and comfortable environment.
All these efforts have enabled GrameenPhone to remain the most preferred mobile
phone service provider in the market.

The GrameenPhone
Centers provide a one
stop solution for all
customers, with all
telecommunications
products and services,
under a single roof. The
GrameenPhone Centers
are designed to increase
the customer
satisfaction by
integrating sales and
after sales services in an
open, friendly and
comfortable environment

43
ANNUAL REPORT 2005

REACHING OUT TO CUSTOMERS


The GrameenPhone
Service Desks (GPSDs)
were launched in July
with a mission to take
customer service to the
customers doorstep. As
a result, within early
2006, more than 600
GPSDs started
countrywide operation
down to every Upazilalevel so as to serve the
customers better. These
service desks have
remarkably reduced the
travel time for
customers from as
much as eight hours to a
maximum of one hour

44
GRAMEENPHONE LTD.

reaching out to customers

he Customer Management Division (CMD) took up many


customer-focused activities in 2005, focusing on customer relations
and overall enhancement of after-sales service quality.
The division was re-organized and re-aligned with other divisions to
further enhance cross-functional cooperation, in order to be able to
provide a positive experience through proper and on-time delivery
of customer service.
The GrameenPhone Service Desks (GPSDs) were launched in July with a mission to
take customer service to the customers doorstep. As a result, within early 2006, more
than 600 GPSDs started countrywide operation down to every Upazila-level so as to
serve the customers better.These service desks have remarkably reduced the travel time
for customers from as much as eight hours to a maximum of one hour. Operating five
days a week between 10 a.m. to 6 p.m., the original idea was later expanded to include
the concept of mobile GPSD set up to meet the customers latent need for a mobile
booth from where customer managers could deliver the required after-sales services.
Additionally, from December the nine existing GrameenPhone Customer Centers,
located in all the divisional headquarters, started full year-round operations between 8
a.m. and 8 p.m., thus ensuring the availability of after-sales service 365 days a year.
The CMD achieved greater efficiency, in terms of on-time service delivery, through its
trained customer managers and the effective use of technology.
With the introduction of online banking and auto unbarring, bill payments made at
any of the GP partner banks are updated within 5 minutes (minimum) of payment
through faster electronic interconnectivity with the banks, thus ensuring prompt
connectivity upon payment of bills. Service Class barring is in effect since July and
has enabled customers to receive incoming calls despite service being barred due to
non-payment of bills.
Another milestone for postpaid users was the payment of bills through FlexiLoad, an
electronic recharge system, where payment is updated within 5 minutes of
confirmation.This has removed the customers need to depend only on banks for bill
payments and with the added flexibility of being able to make payments even after
banking hours.
CMD on the Move was introduced last year with the intention of reaching
customers throughout the country. Branded GrameenPhone Grahak Katha the
concept was developed to give customers a platform to voice their opinions and
expectations of GP. Customer feedback is taken in order to use the insights to further
improve service quality.
For the first time in the telecom industry in Bangladesh, Itemized Bill for Prepaid
users was initiated and a specialized GP Newsletter for Prepaid subscribers was
developed and delivered to keep prepaid subscribers updated about new company
initiatives.
In an effort to become more user-friendly, a single GP Hotline number 121 for all
customers was introduced.The Hotline number has a language option for English,
Bangla and six other local dialects: Barisal, Sylhet, Rajshahi, Chittagong, Noakhali and
Khulna. GP subscribers can dial the 24-hour Hotline number 121 from their GP
mobile phones 365 days a year.The Call Center capacity has been considerably
enhanced, thus reducing the waiting period to enter the Hotline.
The Customer Management Division strives to take after-sales service to the customer
rather than expect the customer to come to them for service. After all, positive
customer experience is the key differentiator to being the industry leader.

For the first time in the


telecom industry in
Bangladesh, Itemized Bill
for Prepaid users was
initiated and a
specialized GP
Newsletter for Prepaid
subscribers was
developed and delivered
to keep prepaid
subscribers updated
about new company
initiatives

45
ANNUAL REPORT 2005

VILLAGE PHONE PROGRAM


Commencing its
operation in March
1997, the VPP is a
unique initiative to
provide
telecommunications
facilities in remote, rural
areas where no such
service was available
before. It has brought
about a quiet revolution
in mobile telephony in
Bangladesh, by putting
cell phones in the hands
of the rural poor, many
of them women, who had
never seen a telephone
before

46
GRAMEENPHONE LTD.

village phone program

Providing Telephony to
the Rural Population
through Village Phones

he internationally acclaimed Village Phone Program (VPP)


continued to grow rapidly during 2005, providing
telecommunications services in rural areas all over
Bangladesh, covering even the remote off-shore islands in
the Bay of Bengal.

Managed by Grameen Telecom in cooperation with


Grameen Bank and GrameenPhone, the VPP further expanded to add
nearly another 100,000 new VP subscribers, with the total year-end
figure standing at around 191,000.
As of June 2006, there are more than 230,000 VP operators in over
50,000 villages in 439 Upazilas (sub-districts) of the country. Amongst
GP subscribers,VP operators yielded the highest average revenue per
month.
Commencing its operation in March 1997, the VPP is a unique initiative
to provide telecommunications facilities in remote, rural areas where no
such service was available before. It has brought about a quiet revolution
in mobile telephony in Bangladesh, by putting cell phones in the hands
of the rural poor, many of them women, who had never seen a telephone
before.
The Village Phones work as an owner-operated pay phone. It has created
a good income-earning opportunity for the VP operators, mostly poor
women who are borrower members of Grameen Bank.Typically, a
member of Grameen Bank takes a loan to buy a handset and a GP
subscription and she is trained by Grameen Telecom on how to operate
it.
VPP has received many international awards while it has also been
extensively featured in the international media over the years and
documented by researchers both at home and abroad. It was given the
GSM in the Community Award by the GSM Association at the GSM
Congress in Cannes, France in February 2000. It also received the
Commonwealth Innovation Award in 2003 and the Petersburg Prize
awarded by the Gateway Foundation in 2005.
The Village Phone Program has also been replicated in a number of
countries including Uganda and Rwanda in Africa.

Research studies have


found that the
introduction of Village
Phones has made a
tremendous social and
economic impact in the
rural areas, creating a
substantial consumer
surplus for the users. It
directly increases the
household income of the
Village Phone operator.
Findings showed that
this modern technology
has increased the social
standing of the Village
Phone Lady

47
ANNUAL REPORT 2005

VILLAGE PHONE PROGRAM


Research studies have found that the introduction of Village Phones has
made a tremendous social and economic impact in the rural areas,
creating a substantial consumer surplus for the users. It directly increases
the household income of the Village Phone operator. Findings showed
that this modern technology has increased the social standing of the
Village Phone Lady.
The various studies have found that one of the most important
contributions of Village Phones was to make market information
accessible to all. It has also substantially empowered the women from the
rural households, who can now access numerous services provided by the
government and non-government organizations through a simple
telephone call from her village.

48
GRAMEENPHONE LTD.

www.grameenphone.com

CORPORATE OFFICE : GRAMEENPHONE LTD., CELEBRATION POINT, PLOT 3 & 5, ROAD 113/A, GULSHAN, DHAKA 1212, BANGLADESH
TEL (880) 2 9882990 FAX (880) 2 9882970 EMAIL: info@grameenphone.com
INTERNET: www.grameenphone.com
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