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Coverage 2004 Additional Coverage 2005 ANNUAL REPORT 2004

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Page 1: ANNUAL REPORT 2004 - Grameenphone · Annual Report 2004 Main Events 2004..... coverage of the GP network continued to be expanded around the country. Sixty-one districts are under

Coverage 2004

Additional Coverage 2005

ANNUAL REPORT 2004

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This is GrameenPhone

GrameenPhone: Preferred by 3.5 million users

Main Events 2004

Shareholders

Key Figures

Directors’ Report

Profile of the Directors

Letter from the Managing Director

Management Team

Organizational Chart

Corporate Governance

Corporate Social Responsibility an integral part of GP

Village Phone: A year of Dynamic Growth

Contribution to Government Exchequer

Network Capacity Expands, Quality Improves

New Products and Services

Successful Launch of djuice

International Roaming

Customer Management Centers

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1 GrameenPhone Ltd.Annual Report 2004

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GRAMEENPHONETHIS IS

November 28, 1996: GrameenPhone was offered a cellular license in Bangladesh by

the Ministry of Posts and Telecommunications

March 26, 1997: GrameenPhone launched its service on the Independence Day of

Bangladesh

After eight years of operation, GrameenPhone has more than 3.5 million subscribers as of May 2005

[ ]

VISIONIDEAS THAT

SIMPLIFY

2 GrameenPhone Ltd.Annual Report 2004

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GrameenPhone has a dual purpose: to receive an economic return on its investments and to contribute to the economic development of Bangla-desh where telecommunications can play a critical role.

The Purpose

GrameenPhone's basic strategy is coverage of both urban and rural areas. GrameenPhone builds continuous coverage, cell after cell. While the intensity of coverage may vary from area to area depending on market conditions, the basic strategy of cell-to-cell coverage is applied throughout GrameenPhone's network.

The Strategy

The people who are making it happen at GrameenPhone - the employees - are young, dedicated and energetic. All of them are well-educated at home or abroad, with both sexes (genders) and minority groups in Bangladesh being well represented. They know in their hearts that GrameenPhone is more than just about phones. This sense of purpose gives them the dedication and the drive, producing - in about eight years - the widest coverage and largest subscriber-base in the country. GrameenPhone knows that the talents and energy of its employees are critical to its operation and treats them accordingly.

The PeopleGrameenPhone's Global System for Mobile or GSM technology is the most widely accepted digital system in the world, currently used by over 1.3 billion people in some 150 countries. GSM brings the most advanced developments in cellular technology at a reasonable cost by spurring severe competition among manufacturers and driving down the cost of equipment. Thus, consumers get the best for the least.

The Technology

GrameenPhone believes in service, a service that leads to good business and good development. Telephony helps people work together, raising their productivity. This gain in productivity is development, which in turn enables them to afford a telephone service, generating a good business. Thus, development and business go together. A recent study by London Business School found that, in a typical developing country, a rise of ten mobile phones per 100 people boosts GDP growth by 0.6 percentage points.

The Service

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Preferred by 3.5 million users

..... GP added nearly 1.4 million new subscribers to its network in 2004. Ittook GrameenPhone six years to reach the one million subscriber mark inAugust 2003, about one year to reach the second million in September2004 and just about six months to reach the three million subscriber mark inMarch 2005.

More than 3.5 million mobilephone users in Bangladesh

now prefer GrameenPhone as ofMay 2005.

GP added nearly 1.4 million newsubscribers to its network in2004. It took GrameenPhone sixyears to reach the one millionsubscriber mark in August 2003,about one year to reach thesecond million in September2004 and just about six monthsto reach the three millionsubscriber mark in March 2005.

The largest telecommunicationsservice provider in the country,GrameenPhone is playing acrucial role in increasing thecountry’s telephone penetrationrate, which is still one of thelowest in the world with lessthan four telephones per 100people.

Along with the spectaculargrowth, since its inception onMarch 26, 1997, GP has set upthe largest network with thewidest coverage around thecountry.The active support ofthe shareholders ofGrameenPhone has enabled thecompany to make the necessaryinvestments for this quickgrowth.The GP network

presently has coverage in nearly380 upazilas of 61 districts in thecountry.

The company is planning toincrease the GP networkcoverage to more than 80percent of the population withinthis year. GP presently has some1750 base stations in operationaround the country and morethan 1000 additional basestations will be added to thenetwork this year.

GrameenPhone has always beena pioneer in introducing newproducts, services andtechnologies in the local market.For the first time in the country,GrameenPhone has started todeploy 1800 MHz frequency basestations from March this year. GPalong with the other GSMoperators in the country havebeen using the 900 MHzfrequency so far.

This will greatly improve thequality and further enhance thecall-handling capacity of the basestations and it will help improvethe overall customer experience.The 1800 MHz base stations arebeing initially deployed in thenorthern and central regions ofDhaka city and later in phases to

other areas of the city and also inChittagong and other regions.

In June 2005, GP introduced theEDGE technology for the firsttime in Bangladesh. EDGE (orEnhanced Data Rates for GlobalEvolution) is a 3G technologythat delivers broadband-like dataspeeds to mobile devices. Itallows customers to connect tothe Internet and send and receivedata, including digital images, webpages and photographs, up toeight times faster than anordinary GSM/GPRS network.

The EDGE technology willprovide a boost to the country’snascent ICT sector, which hasbeen declared as a thrust sectorby the Government, by enablingusers to access the Internetthrough the mobile phone fromanywhere in the country.AllGPRS-enabled handsets can alsobe used in the EDGE technologyenvironment.

Earlier, faced with limitedinterconnection channels withthe fixed-line network ofBangladesh Telegraph andTelephone Board, GrameenPhoneintroduced the GP-GP or mobile-to-mobile service in June1998.This service went on to become

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GrameenPhone has hadanother successful year in2004 with the subscriberbase reaching 2.39 million2.39 million

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a very successful product andnow accounts for over 90percent of all GP subscribers.

The mobile-to-mobile product isnow replicated by all mobilephone operators in Bangladeshand also in some developingcountries, as it is found to bemore economical to rendertelecommunications facilities tothe people compared to land-linetelephones.

In September 1999, GP becamethe first mobile phone operatorin the country to introduce theEASY pre-paid service.This wenton to become very popular witha majority of the GP subscribersnow opting for the pre-paidservice.

GrameenPhone also introduced anumber of value-added servicesover the years.A News Updateservice was introduced incooperation with two leadingnational newspapers of thecountry.

In early 2003, GP again becamethe first cellular operator in thecountry to introduce the TextMessage-based (SMS) “push-pull”service, providing access tomuch-needed information to thesubscribers. It may be noted thatGrameenPhone was the firstmobile phone operator in the

country to introduce value-addedservices like Voice Mail Service,Text Mail Service,WirelessApplication Protocol (WAP) andfax and data transmissionservices.

The International Roaming facilityis another useful service providedby GrameenPhone.As of June2005, GrameenPhone hasInternational Roamingagreements with 252 mobilephone operators in 100countries.

The internationally acclaimedVillage Phone Program ofGrameenPhone is another uniqueinitiative which providestelephone services in remoterural areas where no suchfacilities existed before.Administered by GrameenTelecom in cooperation withGrameen Bank, the initiative alsoprovides the Village Phoneoperators, mostly poor villagewomen, a good income-earningopportunity.There are more than110,000 Village Phones inoperation now in some 44,000villages around the country.TheVillage Phone Program won the‘GSM in the Community’ Awardgiven at the GSM WorldCongress held in Cannes, Francein February 2000.

As a socially responsiblecompany, GrameenPhonesupports a number of socio-cultural activities. GP activelyparticipated in relief andrehabilitation initiatives duringthe devastating floods of 2004.The company made a donation toUNICEF for the Tsunami-affectedchildren of Sri Lanka and theMaldives earlier this year.

GP recently provided funding tothe Bangladesh Red CrescentSociety for its earthquakeawareness and preparednessprogram.The company supportsIT education by providingcomputers to rural schoolsaround the country.

GP actively participates in thedevelopment of cricket in thecountry and is presently theofficial sponsor of the BangladeshCricket Team and the PremierCricket League.

The mobile-to-mobileproduct is now replicatedby all mobile phoneoperators in Bangladeshand also in somedeveloping countries, as itis found to be moreeconomical to rendertelecommunicationsfacilities to the peoplecompared to land-linetelephones.

M2M

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8 GrameenPhone Ltd.Annual Report 2004

Main Events 2004

..... coverage of the GP network continued to be expanded around thecountry. Sixty-one districts are under the coverage of the GP network.

Continued Growth

The subscriber-base ofGrameenPhone continued to

grow at a healthy pace.Another1.4 million subscribers wereadded to the network in 2004.

Network Expansion

Increasing the capacity andexpanding the coverage of theGP network around the countrycontinued throughout the year.Starting with 680 base stations,GP ended the year with 1400base stations on air.

Enhanced Coverage

Coverage of the GP networkcontinued to be expandedaround the country. Sixty-onedistricts are under the coverageof the GP network.

New Products

GP introduced two new post-paid bundled products named

"Anytime 450" and “Anytime300”in April, the first such product tobe launched in the local market.

Premium SMS service

New features like ring tone andlogo downloads were introducedin cooperation with the contentproviders last year.The

subscribers can download ringtones and logos by sending SMSwith codes to special numbers.

SMS to other operators

Inter-operator SMS services wereintroduced with City Cell,Akteland Banglalink.

Mobile e-mail Launched

A new value-added servicenamed ‘Cell E-mail’ was beenlaunched with the help of InforevLimited in September.Thisservice has enabled the valuedsubscribers to send and receivee-mail through SMS from theirmobile phone without anyInternet connection.

Internet Bill Payment

GrameenPhone signedagreements with two banksnamed Eastern Bank Ltd andCommercial Bank of Ceylon Ltdenabling its subscribers who haveaccounts with those banks to paytheir GP bills through theInternet.

Mobile Mela

GrameenPhone organizedMobile Mela, the country’s first-ever exposition of mobile phonehandsets and accessories in June2004. Seeing the immense

response from the visitors, thesecond such Mobile Mela washeld in November in a muchlarger scale, with GPconnections on sale too. Morethan 70,000 people visited thefair.

BTRC Citation

GrameenPhone was lauded byBangladesh TelecommunicationRegulatory Commission for itsrole in expanding the tele-densityin Bangladesh. BTRC Awarded GPwith a citation and crest on theoccasion of reaching the twomillion subscriber mark inSeptember 2004.

Improved and New CRCs

GP opened a CustomerManagement Center (CMC) inDhanmondi in late December.Moreover, all the seven CMCsaround the country now remainopen on Saturdays, while theGulshan CMC offers eveningservice from 5:00 pm till 8:00 pm.A new Call Center helpline wasintroduced to allow customers tocall from any other telephone.

Flood Relief and Tsunami Aid

GrameenPhone took part in theflood relief program during thedevastating floods last year. GP

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donated BDT 2.5 million to thePrime Minister’s Relief Fund.Thecompany also donated medicinesto Bangladesh Red CrescentSociety and ICDDR,B. Inaddition, health camps were setup and medicines and otherrelief materials were distributedamong the flood-affected people.GP also donated more than BDT10 million towards the ‘SchoolRebuilding Program’ of UNICEFfor the Tsunami affected areas ofSri Lanka and The Maldives.

Computer Donation

GP donated more than 100computers to educationalinstitutions mostly in rural areas,which is benefiting thousands ofpoor students.

International RoamingProgram

The International Roamingprogram continued to expandduring the year.At the end ofthe year, GP had 230International Roaming partnernetworks spread across 81countries in five continents.Moreover, GP has introducedLocal Direct Dialing, throughwhich GP subscribers can makecalls to a visiting roamer in GPnetwork without ISDconnection.A new hotline wasalso introduced for theInternational Roaming customersand visiting roamers to cater totheir queries in early 2005.

Growth of Village PhonesContinues

The Village Phone Programcontinued to witness rapidgrowth during the year, doublingthe number of Village Phones inoperation to more than 94,000.

Cricket Sponsorships

GrameenPhone sponsored twoCorporate Cricket Leagues lastyear in April and in November.The players in the teams werefrom the National Team and theFirst Division League.TheGrameenPhone team won thetitle in the second CorporateLeague.

Together with the BangladeshCricket Board, in December,GrameenPhone launched themonth-long ‘GrameenPhonePacer Hunt’ in search of fastbowlers from anywhere in thecountry. Selected players will beinvited to be part of the HighPerformance Program for the2005 off-season.

New employees

A total of 371 new employeesjoined GrameenPhone during theyear, bringing the total to 1004.Extensive training programs, bothat home and abroad, werearranged during the year for thebenefit of the employees.

Deployment of 1800 MHzfrequency

GP has started to deploy the1800 MHz base stations in Dhakaand Chittagong earlier this year.This will enable the expansion ofthe capacity and furtherimprovement of quality.

Launch of djuice

GP successfully launched theinternational brand djuice inMarch 2005 with very goodmarket response. It is speciallytargeted towards the youth,which is a very importantsegment of the market as theyconstitute about 40 percent of

the population in the country.

FlexiLoad

The electronic recharge systemfor pre-paid accounts wasintroduced in April. GP pre-paidusers now have the freedom torecharge their accountelectronically with any amountthey prefer.

EDGE

GP introduced EDGE, anadvanced high-speed mobileInternet and data service, for thefirst time in the country througha soft-launch in June this year. Itenables advanced mobile servicessuch as down-loading of videoand music clips, multi-mediamessaging (MMS), high-speedInternet access and e-mail on themove.

Balance Transfer

GrameenPhone introduced a new“Balance Transfer” feature ofFlexiLoaD, the electronic re-charge system, for GP pre-paidsubscribers.

The Balance Transfer featureenables all GP pre-paidsubscribers, EASY, EASY Goldand djuice, to transfer certainamounts of balance to any otherGP pre-paid subscribers.

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Shareholders

.....both are dedicated to Bangladesh and its struggle for economicprogress and have a deep commitment to GrameenPhone and its missionto provide affordable telephony to the entire population of Bangladesh

The shareholders ofGrameenPhone

contribute their unique, in-depthexperience in both

telecommunications anddevelopment.

The international shareholderbrings technological and businessmanagement expertise while the

local shareholder provides apresence throughout Bangladeshand a deep understanding of itseconomy. Both are dedicated to

Bangladesh and its struggle foreconomic progress and have a

deep commitment toGrameenPhone and its mission to

provide affordable telephony tothe entire population of

Bangladesh

Telenor MobileCommunications ASTelenor AS is the leadingTelecommunications Company ofNorway listed in the Oslo andNASDAQ Stock Exchanges. Itowns 62% shares ofGrameenPhone Ltd. Telenor hasplayed a pioneering role in thedevelopment of cellularcommunications. It has substantialinternational operations in mobiletelephony, satellite operations andpay Television services. In additionto Norway and Bangladesh,Telenorowns GSM companies in Denmark,Austria, Hungary, Russia, Ukraine,Montenegro,Thailand and Malaysia.It has recently started a mobilephone operation in Pakistan.

Telenor uses the expertise it hasgained in its home andinternational markets for thedevelopment of emerging marketslike Bangladesh.

Grameen TelecomGrameen Telecom, which owns38% of the shares ofGrameenPhone, is a not-for-profitcompany and works in close

collaboration with Grameen Bank.The internationally reputed bankfor the poor, has the mostextensive rural banking networkand expertise in microfinance. Itunderstands the economic needsof the rural population, inparticular the women from thepoorest households. GrameenTelecom, with the help of GrameenBank, administers the Village PhoneProgram, through whichGrameenPhone provides itsservices to the fast growing ruralcustomers. Grameen Telecomtrains the operators, supplies themwith handsets and handles allservice-related issues. GrameenBank currently covers more than51,000 villages which are servicedby 1326 bank branches (December’‘04) all over the countryside.At theend of the year, the bank had 3.78million borrowers, 95 percent ofwhom were women.

Grameen Telecom’s objectives areto provide easy access to GSMcellular services in ruralBangladesh, creating newopportunities for incomegeneration through self-employment by providing villagerswith access to modern informationand communication basedtechnologies.

Telenor Mobile Communications AS62%

Grameen Telecom38%

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Revenue in 2004 grew by 57percent, compared to lastyear and as a result EBITDAand net profit were recordedat a higher level

Growth

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Key Financial Figuresin '000 BDT.

Restated*2004 2003 2002

Income StatementTotal Operating Revenue 19,700,695 12,577,199 8,778,750Total Operating expenses (9,676,718) (5,743,374) (4,159,845)Interest income 330,660 350,964 212,503Financial cost (135,776) (246,358) (311,304)Non operating expenses (91,085) (56,166) (17,643)Net Earnings before Income Tax 10,127,776 6,882,265 4,502,461Tax expense (3,382,300) (2,561,500) (1,565,384)Net Earnings before appropriation 6,745,476 4,320,765 2,937,077Transfer to Tax Holiday Reserve (562,020) (455,845) (333,766)Net Earnings available for appropriation 6,183,456 3,864,920 2,603,311Balance Sheet (as of December 31)Total assets 27,006,573 17,263,866 13,253,298Long term borrowings 1,668,448 1,735,550 2,791,022Total liabilities 13,558,352 9,255,473 7,738,924Total equity 13,448,221 8,008,393 5,514,375Investment in associated company - - 11,700

Notes1. *Previous years figures have been restated for showing retrospective effect due to changes in certain

accounting policies during the year 2004.

2. Closing conversion rates considered for 2004, 2003 and 2002 against US$ are BDT 61.45, BDT 59.20,and BDT 59.15 respectively.

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Directors’ Report to the ShareholdersFor The Year Ending December 31, 2004

.... GrameenPhone has had another successful business year in 2004 withthe addition of 1.4 million new subscribers. It continued to be the telecommarket leader in Bangladesh. Being one of the four mobile operators, GPalone held the lion’s share of the cell phone market (62 %) of the countrywith the addition of more and more valuable subscribers every day

Your Board of Directorswelcomes you to the 8th

Annual General Meeting ofGrameenPhone Ltd., and ispleased to present theDirectors’ Report, togetherwith the Audited FinancialStatements of the Company forthe year ending December 31,2004 and the Auditors’ reportthereon, for your considerationand approval.

2004: Another SuccessfulYear

GrameenPhone has hadanother successful businessyear in 2004 with the additionof 1.4 million new subscribers.It continued to be the telecommarket leader in Bangladesh.Being one of the four mobileoperators, GP alone held thelion’s share of the cell phonemarket (62 %) of the countrywith the addition of more andmore valuable subscribersevery day.

The brand position ofGrameenPhone along with itsinnovative products, nationwidecoverage and devotedcustomer service, have madeGP the preferred telecomservice provider of the peopleof Bangladesh.

Economy & Business

The global economy in 2004has shown a consistent growthtrend. However, internationaloil price hike had an adverseeffect on the global economywhich led to higher commodityprices across the world. In thecontext of Bangladesh, despitecountrywide devastating floodsin 2004, its major macro-economic indicators were quitepositive. GDP growth was 5.5%,compared to 5.3% of thepreceding year and showed anincreasing trend in investmentand savings. Inflation rate,however, rose to 6 percent.Improved foreign currencyreserve, reduced budgetary

deficit and the execution of anumber of reforms in somepolicy areas, were some of thementionable improvements inthe economy. Investmentclimate became slightly morefavorable with someimprovement in the law andorder situation. Hartals andagitation in the political arena,however, continued to plaguethe economy.There were quitea number of new foreign directinvestment proposals, somesizeable ones, from India,Taiwan, UK, UAE and Egypt,which were at various stages ofnegotiations.

The telecommmunicationssector has emerged as themost promising sector in 2004and will continue to remain sofor the years to come, withnearly USD One billioninvestment in the pipeline.Anumber of land phonecompanies will soon enter themarket to offer fixed line

Dear Shareholders,

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phones in the main cities ofBangladesh.The takeover ofSheba Telecom by Orascom(named Banglalink) and thelaunching of BTTB’s TeleTalk,have made the industry morecompetitive. Stiff competition isinevitable in the coming daysamong the operators, in theirendeavor to secure a strongposition in the market.

GrameenPhone: Eight Yearsof Development!

GrameenPhone has completedeight years of its operation inBangladesh.The Directors havethe pleasure to note that asmany as 3 million subscribersare currently benefiting fromthe world class communicationservices provided by yourcompany.Access totelecommunications is now anessential prerequisite for accessto information.When GPstarted in 1997,telecommunication service wasquite inadequate, with less than1% teledensity. Undevelopedtelecommunications was amajor constraint and causedmany hindrances in businessand the day to day lives of thepeople of this country. Because

of rapid expansion ofGrameenPhone’s network andservices, in the few years since,the cell phone industry alonehas relieved the country fromthe telecommunicationbackwardness.The totaltelecom market is now around6 million subscribers, with ateledensity of around 4percent, a substantialimprovement indeed. GP isproud to be the leader of sucha silent revolution in the field oftelecommunications inBangladesh.

Innovative Products &Services: Value for money

Pioneering innovations hasbeen one of the reasons forGrameenPhone’s success so far.Starting from GP to GP (mobileto mobile without PSTN)which was considered a bigbreakthrough in the telecomsector, GP continued to be thefirst in introducing the “prepaidservice”, International Roamingand value-added services likeSMS,WAP,“PushPull” and“News services”. GP MobileMela – first of its kind attunedto the local tradition - wassuccessful in adding speed to

the growth of the cell phoneindustry.

In 2004, GP launched cost-effective airtime bundledproducts like “Anytime 300”and “Anytime 450”.“E-mailthrough SMS” literally movedsubscribers’ access beyond thecell phone network.“MyTime”allowed subscribers to choosetheir preferred time for callingat a very attractive rate andfinally “My Choice” was clearlya value for the subscribers witha 25 percent reduction in tariff.

Inter-operator SMS andrevenue-sharing agreement wassigned with Aktel, CityCell andBanglalink at the initiative ofGrameenPhone that benefitedthe subscribers of all theoperators with addedaccessibility through theirmobile phones.

GP further expanded itsdistribution channel, which isone of the best in the country,ensuring availability of itsproducts within the vicinity ofits subscribers.

The telecommmunications sector hasemerged as the most promisingsector in 2004 and will continue toremain so for the years to come,with nearly USD One billioninvestment in the pipeline

USD1 billion

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The total telecom market is nowaround 6 million subscribers, witha teledensity of around 4 percent, a substantialimprovement indeed

subscribers

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Village Phone ProgramPromotes RuralAdvancement

The Village Phone Program, aunique initiative to promotedevelopment oftelecommunications in ruralBangladesh, was jointly undertakenby GrameenPhone and GrameenTelecom, in co-operation withGrameen Bank.The program hasexpanded rapidly during the year,keeping pace with the expansion ofGP’s own network..With a robustgrowth of 100 percent during theyear in terms of both number ofcustomers and revenue earnings,the Village Phones have proven itsimmense potential in boostingincome of poor households inrural areas, promoting healthcare,development of agri-business andin the social empowerment ofrural women. Many othercountries have shown interest inreplicating the Village PhoneProgram which demonstrates howdevelopment oftelecommunications can directlyaugment income of ruralhouseholds.

Our People : Our Key ToSuccess

The best contributor to our

success as a company is ourhuman resource.The Directorsare proud to have a verycompetent and dynamic groupof employees who work as ateam to meet challenges in anever changing businessenvironment. GP continued toinvest in training and developingour employees to enhancetheir capabilities.An enablingwork environment, goodcorporate ethics along withopportunities for careergrowth has made GP apreferred employer in the jobmarket.

Investment in ContinuousExpansion and Improvementof Network

GrameenPhone invested USD196 million in the year 2004 forthe expansion andimprovement of its networkthroughout the country tofacilitate the expected growth.Apart from rolling out 720 newbase stations, GP installed 6MSCs, 7 BSCs and an IVRsystem in its network last year.Fiber Optic cable was laid along250 kilometers to improve thenetwork. GP now covers 59%population of the countryinhabiting 55% of the land area.

Deployment of 1800 MHzfrequency has already started atthe beginning of 2005.Thiswould contribute significantlyto improving the quality andcapacity of the network. Moreautomation was introduced inthe Information Technologydepartment to facilitatespeedier service to ourcustomers.

Striving Towards BetterCustomer Service

GP has added another“Customer Relations Center”in the capital city as part of itscontinuous effort to providequality after-sales service to itssubscribers. Call center capacityhas been doubled, keeping pacewith the growth in the numberof subscribers. Implementationof globally tested tools in linewith the Telenor experience,was yet another step in GP’scommitment to provide thebest possible service to itsvalued customers. GP is alsoworking on a plan to offercustomer care through itscountry-wide distributionchannel, to facilitate quickestpossible service from pointsclosest to its subscribers.

The Directors are proud tohave a very competent anddynamic group of employeeswho work as a team to meetchallenges in an ever changingbusiness environment

people488

1004

686591

2001

20042003

2002

EMPLOYEE

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International Trunk Exchange (ITX) through VOIP has been a long pending issue for theindustry, while inadequacy of PSTN access for the cell phones still remained a majorobstacle for the growth of the industry

Enhanced Value ofShareholders’ Investment

GrameenPhone continued toenhance the value of itsshareholders’ investment.Thesignificant growth in subscriberbase has made a positivecontribution to the revenue,EBITDA and net results, in linewith the expectation of theshareholders. Revenue in 2004grew by 57 percent, comparedto last year and as a resultEBITDA and net profit wererecorded at a higher level.Percentage of EBITDA, Netprofit and ARPU, however,declined slightly compared tolast year due to higher intakeof prepaid customers andchange in tariff plans. Majorpart of the profit was re-invested in the expansion ofnetwork in order to meet thepressing demand for GPcoverage in new areas.TheBoard has also recommendeddividends to our shareholdersfor 2004. GP is well positionedin the market with its firmfocus on the strategic goalsand we look forward toincreasing value forshareholders in the yearsahead.

Regulatory Highlights

The Government ofBangladesh has prioritized ICT

as a thrust sector. BangladeshTelecommunication RegulatoryCommission (BTRC), theguardian of the country’snascent telecommunicationsector, has been working since2003.The project for laying ofthe submarine cable toconnect the country with restof the world, is in progress,though behind schedule.Success of this project is ofimmense importance to theICT sector. International TrunkExchange (ITX) through VOIPhas been a long pending issuefor the industry, whileinadequacy of PSTN access forthe cell phones still remained amajor obstacle for the growthof the industry.

Tax burden on handset andtelecom equipment isundoubtedly excessive inBangladesh, when compared tothat of the neighboringcountries and it is hoped thatthe government would favorablyrevise the taxation on telecomindustry to further speed updevelopment of the industry.

GrameenPhone: A SociallyResponsible Company

Besides increasingshareholders’ value to theexpected level, GP continuedto be a socially responsiblecompany .GrameenPhone is

proud to be the officialsponsor of the BangladeshCricket Team. Last year theteam won the first-ever Testand the ‘One DayInternational’ series, since thecountry gained its Test status.Similar patronization is alsobeing offered to thedevelopment of country’scultural and sports sector. ITeducation support wasprovided to many mostly ruralschools of the country bydonating more than 100computers, benefitingthousands of poor students.GP’s prompt response to therehabilitation of flood-hitcitizens in Bangladesh andtsunami victims in neighboringcountries, made its employeesand directors proud of beingpart of a socially responsibleorganization.

GP Contributed BDT 11.50Billion to the NationalExchequer

GrameenPhone has become oneof the largest contributors tothe Government Exchequer.Since its inception, in the lasteight years of operation, thecompany has contributedaround BDT 30.46 billion onaccount of various taxes, levies,license fees and interconnectioncharges. During the year 2004

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21 GrameenPhone Ltd.Annual Report 2004

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22 GrameenPhone Ltd.Annual Report 2004

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23 GrameenPhone Ltd.Annual Report 2004

alone, the company contributedaround BDT 11.53 billion to theGovernment Treasury.Thecontribution is expected togrow with the expansion andgrowth of the organization.

Dividends to the Shareholders

The Board distributed aninterim dividends of BDT 593.46million (@ BDT 10.5 per share)for the year 2004 and is pleasedto recommend final dividends ofBDT 1,921.67 million (@BDT34 per share) for considerationand approval of theshareholders, for distribution.Based on the finalrecommendation the totaldividends for 2004 would standat BDT 2,515.13 million.

Directors of The Board

In line with the Articles ofAssociation of the Company, allthe Directors will retire at thisAGM and will be eligible for re-appointment, if so nominated bythe shareholders.Thecomposition of the Board ofDirectors during the year was asbelow:

1. Mr. M Khalid Shams,Grameen Telecom, Director& Chairman

2. Mr. M Faizur Razzaque,Grameen Telecom, Director

3. Mr. Ole Bjorn Sjulstad,Telenor MobileCommunication A.S.,Director

4. Mr.Thor Asbjorn Halvorsen,Telenor MobileCommunication A.S.,Director

5. Mr. Erik Aas,Telenor MobileCommunication A.S.,Director who was laterreplaced by Mr. RagnarKorsaeth from the sameCompany in November2004.

6. Mr.Takashi Utsunomiya,Marubeni Corporation,Director, who resigned inSeptember 2004, as a resultof the change in theshareholding.

Auditors

The Auditors of the company,Rahman Rahman Huq, thechartered accountants, will retirein this AGM and, being eligible,offered their willingness to be re-appointed for the year 2005.Thedirectors recommend their re-appointment for the year 2005till holding of the next AGM.

Dynamic Growth in the YearsAhead

GrameenPhone with itsdedicated employees and veryable guidance of its Managementand the Board, has maderemarkable progress in 2004,despite many challenges. It isnow looking forward to a yetmore challenging year in 2005.By segmenting the market, GPwould be able to reach yet alarger number of customerswith more innovative productsand services. GP has targeted tocover 80% of the population ofBangladesh by rolling out fasterall over the country.

Mr. Erik Aas has joined theManagement Team as the newManaging Director by replacingMr. Ola Ree, who had served thecompany with distinction forfour years.While appreciatingthe excellent service renderedby Mr. Ree, the Directors wishMr. Erik Aas all the success inleading GP in the competitive,but an emerging, dynamicBangladesh market.

The Directors and theManagement of the companywould like to thank theshareholders for their continuous

During the year 2004alone, the companycontributed around BDT11.53 billion to theGovernment Treasury

BDT11.53 billion

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24 GrameenPhone Ltd.Annual Report 2004

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25 GrameenPhone Ltd.Annual Report 2004

support and guidance.With thechanges that have taken place inthe ownership, the companyexpects to benefit even morefrom the guidance and goodpartnership of Telenor andGrameen Telecom.

We also express our sincerethanks to the Ministry of Post &Telecommunications, BangladeshTelecommunication RegulatoryCommission (BTRC), BangladeshRailway, National Board ofRevenue (NBR), Board ofInvestment (BOI), BangladeshBank, Chief Controller of Export& Import, our bankers and otherfinancial institutions, suppliers,content providers and ourchannel partners, for theirsupport that made 2004 asuccess .We are grateful to ourvalued subscribers for theirsupport and great confidencethey have on us.We hope toreceive similar support from allquarters in the years aheadenabling GP to continue to bethe best telecom service providerin the country.

We earnestly expect that acongenial and fair businessatmosphere will prevail in thecountry with a level-playing field

for all operators and that thetelecommunication sector willreceive appropriate policysupport from the Government inorder to realize the enormousdevelopment potentials of thisindustry.

The Directors would like toplace on record their deepappreciation to all the employeesfor their unflinching dedication,high level of professionalism andpraiseworthy hard work thathelped the company to continueto grow rapidly and deliverquality service to its subscribers.

Thanking you all and with bestregards.

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

M. Khalid ShamsChairman Dated April 22, 2005

GP has targeted to cover80% of the population ofBangladesh by rolling outfaster all over thecountry

80%

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26 GrameenPhone Ltd.Annual Report 2004

Profile of the Directors

M. Faizur Razzaque

Thor A. Halvorsen M. Khalid Shams

Ragnar H. Korsæth Ole Bjorn Sjulstad

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27 GrameenPhone Ltd.Annual Report 2004

M. Khalid Shams[65 years of age, Bangladeshi]

M. Khalid Shams was educated atDhaka University and the KennedySchool at Harvard. He worked as aprogram co-ordinator at the AsianPacific Development Centre, based inKuala Lumpur, between 1985 and 1990.

He was an Additional Secretary to theGovernment of Bangladesh, when hetook up his assignment as the DeputyManaging Director of Grameen Bank,which has pioneered the micro-creditmovement in the world. He has beenclosely associated with the founding ofa number of new socially orientedcorporate enterprises within theGrameen Family, including GrameenUddog for marketing hand-wovencotton fabric, Grameen Fund providingsocial venture financing to technologyentrepreneurs and Grameen Telecommandated to provide telecom servicesto the rural poor. He was involved withthe conceptualization, planning andimplementation of GrameenPhonefrom the very outset. He is at presentthe Managing Director of GrameenTelecom.

Currently, he is the chairman of theboard of directors of GrameenPhone,representing Grameen Telecom, a not-for-profit company which holds thirtyeight percent of GP's equity.

M. Faizur Razzaque [61 years of age, Bangladeshi]

He was appointed to the Board onMarch 01, 2004. He did his BA(Honors) in Economics from DhakaUniversity and Master in PublicAdministration from HarvardUniversity, USA.

He started his career as a banker in1965 and later joined the Civil Servicein October 1966.After 34 years ofcontinuous service with the

Government, he retired from theService in 2000. Some of the positionshe held while in Government, wereManaging Director of Biman BangladeshAirlines, Chairman of Bangladesh Smallscale and Cottage IndustriesCorporation, Director General ofBangladesh Television, Chairman ofBangladesh Power Development Board,Secretary of the Ministry of Power,Energy and Mineral Resources,Secretary of the Bangladesh ElectionCommission Secretariat and AlternateExecutive Director in the Board ofDirectors of the Asian DevelopmentBank in Manila, Philippines.

In 1991, the highest award in the fieldof scouting in Bangladesh wasconferred on him.

Currently, he is the Managing Directorof Grameen Fund, since May 15, 2002.He is also serving in the Boards ofDirectors of eleven other Grameenpeer companies that work in the fieldsof Telecommunications, IT, Knitwear,Manufacturing and Capital Market.

Ragnar H. Korsæth [39 years of age, Norwegian]

He was appointed to the Board onNovember 27, 2004. He holds a Masterof Science from the Norwegian Schoolof Business Administration in Bergen,Norway. Mr. Korsæth is also a CertifiedFinancial Analyst.

He has served in several ExecutiveManagement positions in Telenorincluding CFO of Telenor Internationaland Telenor Mobile from 1999 to 2004.

Currently, he is Executive VicePresident and Chief Operating Officerof Telenor International Mobile. Mr.Korsæth is Chairman of Telenor Asia inSingapore, and Director of the Boardsof Telenor Pakistan, Digi.Com inMalaysia and Total AccessCommunication in Thailand.

Ole Bjorn Sjulstad[43 years of age, Norwegian]

Mr. Sjulstad was appointed to the Boardon December 18, 2002. He graduatedin Mechanical Engineering and BusinessAdministration from KongsbergIngeniorhogskole, Norway in 1983.

His background is within offshore oiland engineering business, Informationand Communications Technology aswell as Telecommunications business,primarily within the South East Asianregion.

He joined Telenor Asia Pte Ltd,Singapore, as Vice President in 2000 andserved as Managing Director of TelenorAsia from November 2002. He is nowlocated in Norway and serves as SeniorVice President of Telenor InternationalMobile.

Thor A. Halvorsen [51 years of age, Norwegian]

He was appointed to the Board onJune 11, 2003. He holds a Master ofScience in Electrical Engineering(Telecommunications and ComputerScience) from the Norwegian Instituteof Technology in Trondheim, Norwayand read a programme for ManagementDevelopment at INSEAD inFontainebleau, France.

He has served in several ExecutiveManagement positions in Telenor includingCEO of Telenor Networks from 1995 to1998 and CEO of Telenor BusinessSolutions from 1998. Prior to this, he hasbeen responsible for sales activities,Product Management and Developmentsand different technical activities both inthe fixed and mobile networks.

Currently, he is Executive VicePresident in Telenor responsible forMobile Operations and CorporateProcurements and Director of severalcompanies in Norway andinternationally.

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28 GrameenPhone Ltd.Annual Report 2004

Letter from the Managing Director

It was another successful year forGrameenPhone in terms ofsubscriber intake, revenue growth

and also in terms of enhancing theoverall organizational capability as awhole.

The subscriber-base was more thandoubled during 2004, adding another1.4 million users to the network andenabling GP to retain its 62 percentmarket share.The revenue growthwas 57 percent compared to theprevious year.

With GP having the largest networkand the widest coverage around thecountry, the network capacity wasfurther increased while the coveragearea was also expanded during theyear.The number of base stations wasmore than doubled with the additionof 720 new sites.

Regulatory environment

The Bangladesh TelecommunicationsRegulatory Commission (BTRC) re-validated the operating license ofGrameenPhone last year.A shift in the900 MHz frequency was also allowed,enabling GP to better utilize theallocated frequencies and toovercome the earlier interference. GPwas also granted a license to operatein the 1800 MHz frequency.This will

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29 GrameenPhone Ltd.Annual Report 2004

facilitate GP to further expand itsnetwork and improve the quality ofits service.We have already startedto deploy the 1800 MHz basestations in Dhaka and Chittagongearly this year.A VSAT license wasalso provided to GrameenPhonelast year for its own IT use.TheGovernment also approved the useof Voice over Internet Protocol(VOIP) early last year and askedBTRC to formulate guidelines andprovide licenses. However, thisformality is yet to be completed.Wefeel this process should beexpedited as VOIP will enable themillions of mobile phone users tomake overseas calls at a very cheaprate.The subscribers of BangladeshTelegraph and Telephone Board(BTTB), the state-owned land-linemonopoly, are already enjoying thisfacility for nearly a year.We hopethe regulators will ensure a level-playing field for all telecomoperators in the country, so thatnone will get any undue advantageover any other operator.

The Government reduced the highimport duty on mobile phonehandsets from as high as BDT 4000to a flat rate of BDT 1500 in the2004-05 National Budget, afterbeing persuaded by the entiremobile phone industry.Although the

import duty on handsets werefurther reduced to BDT 300 in the2005-06 National Budget, but a newcharge of BDT 900 was added toeach new mobile phone connection.This has increased the entry-levelbarrier for new users at a timewhen the market is moving towardsaddressing the needs of people inthe lower-income group.Thus, thisnewly imposed tax is likely to have adampening effect on the furthergrowth of the mobile phone sector.

The existing entry-level barriers forthe new subscribers should bereduced as much as possible as hasbeen done in the neighboringcountries of India, Sri Lanka andPakistan.This will enable a muchlarger number of people to use amobile phone, thus helping toincrease the country’s lowtelephone penetration rate.Thetelecom industry should workclosely with the Government toreduce all entry-level barriers forthe new subscribers.

Market Scenario

The mobile phone marketwitnessed intense competitionthroughout the year.Thecompetitors tried to further

strengthen their market position byoffering new products and servicesat low prices.They were alsoaggressive with regard to promotionand communication in the market.

In early September last year, theEgypt-based telecommunicationscompany Orascom acquired 100percent equity of Sheba Telecom,the fourth operator in the country,and renamed the brand asBanglalink. Soft-launch of the mobilephone service of the state-ownedTeletalk was also held late last year,with a low start-up price.Apreliminary agreement was alsosigned for Singtel to acquire a 45percent stake in CityCell.

The most positive outcome inrelation to the competitors is thatGrameenPhone signed separateinterconnection agreements forboth voice and SMS traffic with allthree cellular operators in 2004.Asa result, traffic-flow with the otheroperators has improvedconsiderably.Amendment of theinterconnection agreement with thestate-owned Bangladesh Telegraphand Telephone Board, the lone fixed-line operator in the country so far,was also initiated last year, in orderto create a more level-playing fieldfor all telecom operators.

With GP having thelargest network and thewidest coverage aroundthe country, the networkcapacity was furtherincreased while thecoverage area was alsoexpanded during the year.The number of basestations was more thandoubled with the additionof 720 new sites

basestation

412500

680

1400

2001

20042003

2002

BASE STATION

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30 GrameenPhone Ltd.Annual Report 2004

Letter from the Managing Director

GP made a donation to the UNICEF for the tsunami affected children of SriLanka and the Maldives. The company has also donated more than 100computers to a number of educational institutions, mostly in rural areas

New Products & Services

A number of new products andservices were launched during theyear.Among the new productswere Anytime 300 and Anytime450, both bundled productsoffering some unique benefits tothe post-paid customers.A specialfeature for the pre-paid segmentcalled My Time was introduced,providing 50 per cent reduced callrates at chosen hours of a day.The more you talk, the less youpay feature was also launched,enabling pre-paid customers a 33percent reduction in call chargesfrom the third minute onwards.Value-added services like “Cell e-mail”, ring tone and logodownload and SMS banking,enabling GP users with accountswith particular banks to checktheir balance and credit cardinformation through text message,were also introduced during theyear.

The distribution channel wasfurther strengthened by signinganother six dealers with salesoutlets around the country.Thenumber of points of sale andscratch card retail outlets has alsobeen further increased.

Customer Focus

A number of steps were taken tofurther improve the delivery ofafter-sales services.AnotherCustomer Relations Center (CRC)was opened in Dhaka last year.TheCRCs have started offering servicessix days a week instead of theearlier five days while the GulshanCRC remains open up to 8pm toenable customers to avail after-salesservices after their office hours.More CRCs will be opened in manyother important districts within thisyear, to bring after-sales servicenearer to the customers.

The Call Center Hotline capacitywas doubled in 2004. Next daydelivery after printing of post-paidbills has been ensured within theDhaka city area.The SMSPAYservice was launched enabling post-paid customers to send their billpayment information through textmessages.

Organizational Strengthening

The employees of GrameenPhoneare its biggest assets. They are well-trained, professional and dedicatedtowards the company.The companyended the year with a total of 1004employees.A large number of

employees participated in in-houseand external training programs,both at home and abroad. Theremuneration package was re-structured at the upper quartile ofmarket based on a survey.ACorporate Code of Conduct,incorporating standards of goodbusiness practices and ethicalconduct, was adopted and signed byall employees.

Corporate Social Responsibility

GrameenPhone considersCorporate Social Responsibility tobe an integral part of its overalloperation.Thus, GP has anelaborate CSR program.Thecompany actively participated in therelief efforts during the devastatingfloods of last year and distributedwarm clothes in the northerndistricts during winter. GP made adonation to the UNICEF for thetsunami affected children of SriLanka and the Maldives.Thecompany has also donated morethan 100 computers to a number ofeducational institutions, mostly inrural areas.

In addition, GrameenPhone alsosponsored many socio-culturalactivities. GP is the current sponsor

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31 GrameenPhone Ltd.Annual Report 2004

of the Bangladesh Cricket Team andalso of the Premier Cricket League.

Business Outlook

The rapid growth in thetelecommunications sector isexpected to continue.As of May2005, we have more than 3.5 millionsubscribers. Competition willfurther intensify in the market withcompetitors becoming moreaggressive. GrameenPhone willrenew its efforts to remain thepreferred mobile phone operator inthe country and retain its marketposition. Customer focus will be thekey to enhance customerexperience by providing qualityservices.

Steps will also be taken to furtherstrengthen the organization.TheSales and Marketing Division hasalready been separated into theSales and Distribution Division andthe Marketing Division earlier thisyear.This was done to provide morefocused attention in these keyfunctional areas. Efforts are alsobeing made to strengthen theregional offices located around thecountry.

GP will focus on expanding itssubscriber-base while retaining its

market share.Timely introduction ofnew products and services will bevery important. GP has alreadysuccessfully launched aninternational youth brand calleddjuice and introduced Flexiload, anelectronic re-charge system for pre-paid accounts.The EDGEtechnology, providing high-speeddata and Internet access, was alsointroduced for the first time inBangladesh. Network coverage isgoing to be expanded to covermore than 80 percent of thepopulation by the end of this year.Access to the international gatewayis expected to increase substantiallyafter the country is connected tothe sea-cable link later this year.

The EDGE technology, providing high-speed data and Internet access,was also introduced for the firsttime in Bangladesh

EDGE

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32 GrameenPhone Ltd.Annual Report 2004

Profiles of Management Team

From left to right - Stein Naevdal-Larsen, Kafil HS Muyeed, Khalid Hasan,Emad Ul Ameen, NKA Mobin, Erik Aas, Yogesh Malik, Ingvald Lyche, Frank Fodstad

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33 GrameenPhone Ltd.Annual Report 2004

ERIK AAS(38 years of age, Norwegian)

Erik Aas joined as the Managing Directorof GrameenPhone in December 2004. Hehas eight years experience from Telenor,four of which have been spent in Asia. Hehas held the position of MarketingDirector of Malaysian mobile phonecompany DiGi since June 2002. He was aBoard Member of GrameenPhone fromOctober 2001 up to December 2004.

He completed his Master of Sciencedegree from NTNU in Trondheim,Norway in 1991, and has also a Master ofBusiness Administration degree from IMDin Switzerland in 2001.

FRANK FODSTAD(44 years of age, Norwegian)

Frank Fodstad joined GrameenPhone asthe Deputy Managing Director in March2004. He has a Bachelor of EngineeringDegree from the University of Glasgowin Scotland.

He has been working with Telenor since1988. He successfully established,launched and for the last 12 monthsheaded, the Delta-4 Cost ReductionProgram. He has been in charge ofinitiating and completing severalperformance improvement initiatives inTelenor.

NKA Mobin(45 years of age, Bangladeshi)

NKA Mobin was appointed as FinanceDirector in November 1998. He holdsMaster degree in Finance from DhakaUniversity and completed his CharteredAccountancy degree from a KPMGrepresentative firm.

He has extensive knowledge onimplementing prudent financialmanagement system including setting upof an Integrated Computerized FinancialAccounting System in three companies.

KHALID HASAN (49 years of age, Bangladeshi) He was appointed as Director, CorporateAffairs of GrameenPhone, in May 2001.He has a Masters Degree in BusinessManagement from Dhaka University.

He has acquired a wide range of

experience during the last two decades ininternational business development,specializing in breakthrough jointventures and global partnerships inrapidly changing, highly competitiveenvironments.

INGVALD LYCHE(45 years of age, Norwegian)

Ingvald Lyche joined as the Director;Sales and Distribution in April 2005.Amanagement professional, he has longexperience in marketing and sales of ITand telecommunications products andservices. He gathered 15 years ofinternational telecommunicationsmanagement experience in Telenor andother organizations. Before joiningGrameenPhone, he worked as theBusiness Market Development Director,responsible for development andimplementation of business models andmarketing concepts for all Telenoraffiliates: mainly with GrameenPhone,Pannon GSM in Hungary and Vimpelcomin Russia.

He has studied at both the NorwegianSchool of Economics and also theNorwegian School of Management.

STEIN NAEVDAL-LARSEN(38 years of age, Norwegian)

Stein Naevdal-Larsen was appointed asthe Information Technology (IT) Directorof GrameenPhone in February 2004. Hisbackground is in Business Administrationand Project Management from theNorwegian School of Management and inMathematics and Informatics from theUniversity of Oslo. Moreover, he haspublished a number of books onmacroeconomics and developed financialapplication software.

He has been working with Telenor since1997, and has since 2000 worked as theIS Director of Telenor Business Solutions,Communications. Prior to joining Telenor,he gained experience working in differentposition in multinational companies.

EMAD UL AMEEN(49 years of age, Bangladeshi)

Emad Ul Ameen was appointed asDirector, Human Resources Division ofGrameenPhone, in November 2003.

He has extensive experience working inresponsible positions in multinationalorganizations in Human Resourcesfunctions. He was also Director of aleading consultancy firm in the countryproviding services to variousmultinational and locally reputedcompanies in Human Resources andCorporate Governance areas.

YOGESH MALIK(32 years of age, Indian)

He was appointed as the TechnicalDirector in January 2005. He holds aBachelors Degree in ElectronicsEngineering from Maharaja Sayaji RaoUniversity, India.

Over the past 11 years he has gained vastexperience within management,engineering, IT and operations. Prior tojoining Telenor in Jan 2005, he wasworking with a Canadian company andhas held several management positionsboth in specific engineering discipline andgeneral management position.

He was the head of Engineering, IT andRegional Operations of Oskar, a mobileoperator in the Czech Republic, beforejoining Telenor and GrameenPhone.

KAFIL HS MUYEED(38 years of age, Bangladeshi)

Kafil HS Muyeed joined GrameenPhoneLtd. in 1998.He was appointed asDirector, Marketing Division ofGrameenPhone in April 2005. He has aBachelor of Science degree in CivilEngineering from the Florida Institute ofTechnology in the USA.

He has extensive operational experiencein all sales & marketing areas a well as indevelopment of key strategies to drivegrowth. He established the productdevelopment department and played akey role in building distribution channelsof GrameenPhone in 1998 and 1999.Over the years, Kafil has worked closelywith Telenor on various projects andacquired knowledge of the internationaltelecommunications industry.

Prior to joining GrameenPhone, hegained entrepreneurial and marketingexperience in international trade andexport.

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Customer Management

FiberOptic

Network

Revenue Assurance& Fraud

Management

SupplyChain

Management

Syed Yamin Bakht GM Information

Kafil H. S. MuyeedDirector

Marketing

Represents Members of Management Team

Ingvald LycheDirector

Sales and Distribution

N K A MobinDirector Finance

Khalid HasanDirector

Corporate Affairs

Emad Ul Ameen Director

Human Resources

Stein Nævdal-LarsenDirector

Information Technology

Yogesh Malik Director

Technical

Erik AasManaging Director

Ahmed Raihan Shamsi Company Secretary & GM Internal Audit

Frank Fodstad Deputy Managing Director

34 GrameenPhone Ltd.Annual Report 2004

Organizational Chart

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35 GrameenPhone Ltd.Annual Report 2004

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36 GrameenPhone Ltd.Annual Report 2004

Corporate Governance

Good Corporate Governancepractices are a hallmark of a

successful and efficient company.GrameenPhone has alsoimplemented internationallyaccepted Corporate Governancestandards in its day-to-dayoperations.

GrameenPhone being a privatelimited company, the Board ofDirectors has a pivotal role to playin achieving all stakeholders’interests.The Board of Directorsand Management Team ofGrameenPhone are committed tomaintaining effective CorporateGovernance through a culture ofaccountability, transparency, well-understood policies and procedures.The Board of Directors and theManagement Team also persevereregarding compliance of all laws ofBangladesh and all internallydocumented regulations, policies andprocedures.

Board of Directors

The formation and management ofthe Board of Directors are governedby the Articles of Association ofGrameenPhone Ltd. which contains,inter alia, the following procedures:

i) The Board of Directors of the

Company shall be elected by theOrdinary Shareholders of theCompany in General Meeting ofthe shareholders.

ii) The Board of Directors iscomposed of 05 (five) membersincluding the Chairman who shallbe elected from members of theBoard of Directors.

iii) The tenure of members of theBoard of Directors isdetermined in a GeneralMeeting. Retiring director(s) iseligible for re-election.

iv) Telenor Mobile shall nominate 03(three) members, GrameenTelecom shall nominate 02 (two)members of the Board.

v) The Board shall meet at least 04(four) times a year andotherwise when duly called for

in writing by a Board member orby a Shareholder. Questionsarising at any meeting shall bedecided by a simple majority ofvotes. In the event of an equalityof votes, the Chairman shall havea second or casting vote.

vi) The Board of Directors shall notmake a decision which wouldadversely affect one particularShareholder if such decision isnot producing proportionaladverse effects on all the otherShareholders and it shall at alltimes act in a manner that willbe in the best interest of theCompany.

In addition to the above, power,duties, qualification anddisqualification of a Director areexplicitly mentioned in the Articlesof Association which also has been

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37 GrameenPhone Ltd.Annual Report 2004

prepared in compliance with theCompanies Act, 1994 of Bangladesh.

The Board, apart from its statutorypower, ultimately governs the wholecompany by determining its vision,mission and strategy to maximisereturn to shareholders, reputation asa whole and welfare to society.

Management Team (MT)

The Management Team (MT) consistsof the Managing Director and othersenior managers across the variousdivisions of GrameenPhone.TheseDivision Heads (position termed asfunctional Directors) representrespective divisions and alwaysendeavour to achieve Company’smission and guidelines provided bythe Board of Directors.

The MT is guided in accordance with

the vision and the strategies of thecompany. In addition to this, the MTis obligated to refer every issue tothe Board if there is any deviation inimplementing business plan, budget,borrowing, capital expenditure,pledging, etc. from the approved plan.

Committees:

In order to enable the Board tomake decisions more promptly andeffectively and look into thecompany’s affairs in-depth, it hasformed two committees consistingof members of Board of Directors,representatives from Shareholdersand members of Management Team.The two committees are: OperatingCommittee and TreasuryCommittee.

a) Operating Committee

This committee comprises fourmembers nominated by theBoard of Directors.The long-term and strategic issues arediscussed in depth by thiscommittee.

b) Treasury Committee

This committee consists of threemembers nominated by theBoard of Directors.All crucialfinancial matters which concernthe Board are discussed in thiscommittee in details and

reviewed thoroughly.Theseissues are ultimately forwardedto the Board for their finalreview and approval.

Control Environment

To implement CorporateGovernance, the MT is required tocarry out the following functionswhich are approved by the Board:

a) Business Plan & Budget:

With close guidance of theBoard, the MT prepares theannual Business Plan and Budget.It is prepared and amended fromtime to time with the activeparticipation of all divisions ofGrameenPhone and these arereviewed and approved by theBoard.

b) Financial Reporting:

GrameenPhone has establishedstrong financial reportingprocedures in line with TelenorGroup reporting requirementsand local regulations.Thisreporting system facilitates notonly to understand the truefinancial conditions of theCompany but also to monitorBudget and Business Plancompliance and analysing keyperformance indicators and

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38 GrameenPhone Ltd.Annual Report 2004

Corporate Governance [continued]

GrameenPhone has established effective internal control systems to maintainaccountability, integrity and security of its assets, important systems like billing system,network management system and information.

other parameters.GrameenPhone has to followinternational accountingstandards i.e. IFRS, US GAAP andalso Local Accounting Standard(BAS) while preparing financialreports for respective users.Group Auditors of Telenor alsoreview the accounting andreporting system and policiesfrom time to time.

c) Asset Management:

GrameenPhone is continuouslyinvesting in network and otherrelated infrastructure in line withthe Business Plan and Budget.Tomaintain accountability andproper utilisation of assets, itmaintains clear policy startingfrom procurement, location-wiserecording, and timely utilisationto disposal of obsolete assets.Allrisks relating to these hugeassets are properly insured bothlocally and internationally.

d) Internal Control:

GrameenPhone has establishedeffective internal control systemsto maintain accountability,integrity and security of itsassets, important systems likebilling system, networkmanagement system andinformation.This internal control

system guides every member ofthe Company in respect ofprocess of every transaction,authority level for approval ofthe transaction, documentation,access to the systems andresponsibility.As the business ofthe company evolvescontinuously, requirement ofamendment of internal controlsystem is mostly a continuousprocess.

Compliance of External Rules &Regulation

The Management ofGrameenPhone is accountablenot only to its Board orshareholders but also to variousexternal regulatory bodies.Theseregulatory bodies have closelook on GrameenPhone since ithas become very significantorganisation in Bangladesh interms of huge subscribers, widenetwork and huge contributionsto the Government Exchequer.In this context, the Companyprovides full-fledged financialreports to National Board ofRevenue, Banks, Registrar of JointStock of Companies and Boardof Investments.Apart from this,for every approval from

regulatory bodies or as a routinereporting, GrameenPhone isproviding information to variousbodies such as Bangladesh Bank,Bangladesh TelecommunicationsRegulatory Commission (BTRC),Customs Authority and otherrelevant organizations. Inaddition, GrameenPhone is alsosubject to compliance of therules and regulation of the USStock Exchange Commission asthe Telenor Group is listed withthe NASDAQ stock exchange.

Statutory Audit

Statutory audit is governed bythe Companies Act, 1994 ofBangladesh.The Companies Actexplicitly provides guidelines forthe appointment, scope of workand retirement of auditors.Shareholders appoint auditors inthe Annual General Meeting andthe appointed auditor can onlybe removed on the ground ofunwillingness to continue byauditor and disqualification ofthe auditor.Therefore, theauditor enjoys immenseindependence as well asresponsibilities in conducting hisduties. Moreover, the Boardmaintains certain criteria for

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39 GrameenPhone Ltd.Annual Report 2004

selecting auditors; one of them isthat the auditors must beassociated with big internationalaccounting firms.Accordingly, thepresent auditor is associatedwith an internationally reputedaccounting firm. In addition tothe annual audit, the auditorcarries out interim audit andreview on quarterly reports asper guidelines of the TelenorGroup.

Investment Committee

Given the company’scontinuous long-terminvestment in its network tokeep up pace with thesubscriber growth, the need toestablish a cross-functionalcommittee whose responsibilityis to scrutinise investment fromvarious aspects, from strategicimportance to the contributionto bottom line of the company.This is a cross-functionalcommittee represented bymanagement members includingFinance Director to cater tothe above need.This committeehas a controllership role oninvestment decisions and isanswerable to the concernedparties interested in the saidinvestment for its decision.

Revenue Assurance

Revenue Assurance unit is reportingto the Deputy Managing Director toensure revenue across the processesand systems.This unit operates withsub-teams consisting of cross-functional members and these sub-teams operate on routine basis withanalysing tools rather than on an adhoc basis.Therefore, ensuringrevenue has become a proactiveroutine job of every concern acrossthe company.

Internal Audit

This unit is responsible formonitoring the activities in the lightof policies or procedures set by theBoard of Directors and/or the MT. Inaddition, this unit has to follow theGroup Internal Auditing Guideline aspart of being a subsidiary of Telenor.On the basis of reports of theInternal Auditor, actions are taken tobring about developments andrectifications of systems or policies,etc.

In the absence of any guidance orstandard from local bodies,GrameenPhone is exercisingcorporate governance as a part ofgood practice and continuouslydeveloping in this area to maintain

and adopt standard corporategovernance followed internationally.

Newly implementedsystem/tools/processes

GrameenPhone being an affiliate ofTelenor has automatically benefiteditself by the implementation of somenew tools, systems or processes atthe Group level.

a) Sarbanes Oxley Act (SOA):

Listing in NASDAQ involvescompliance with regulationpromulgated by the U.S.Securities ExchangeCommission and NASDAQsuch as the Sarbanes-Oxley Act(SOA), which includes strictrequirements and internalcontrols relating to financialreporting and good governance.GrameenPhone as an affiliate ofTelenor, which is listed inNASDAQ, has come under thepurview and compliance ofSOA. It requires the constantdevelopment and updating ofdocuments on the processesand controls related to financialreporting and also taking upremedial measures for anyweak controls after it isidentified.

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40 GrameenPhone Ltd.Annual Report 2004

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41 GrameenPhone Ltd.Annual Report 2004

Codes of Conduct

Telenor guided Codes of Conducthas also been adopted byGrameenPhone and it has been readand signed by all employees of GP.This document underlines theimportance and requirement ofsecuring good business ethics in allaspects of the company’s activities.

Management & LeadershipDevelopment

Employees are one of the mostimportant assets of any organisation.Transparency of their goal andperformance measurement plays animportant role in achieving target ofthe organisation. GrameenPhone hasimplemented the following toolsdeveloped by Telenor to maintainthis asset to reach its goal:

a) Telenor Leadership DevelopmentProcess (TLDP):

Telenor has initiated anintegrated process designed toevaluate, develop and rewardmanagers in accordance withTelenor’s own leadershipdemands and business results.This process provides details ofoverall management capacity,management teams, key positionsand extent to which GP recruits

relevant expertise. Under theprocess, candidates for keypositions are identified, alongwith training required to developsuch positions.Talents are alsoidentified, as are candidates forfuture management positions.This process also providesdetails relating to careerobjectives for managers, and alsoreflects the diversity.TLDP alsosets targets – financial and non-financial-- and follow up in asystematic manner.

b) Internal Value Creation (IVC):

Each year employees respond toan IVC survey which comprisestargets and management, humancapital, process capital, innovationand simplification.This process isone of several tools used forcompany’s ambition relating tobringing transparency andaccountability relating toindividual employees and thecompany itself. By comparing theresult of the annual IVC surveywith TLDP, a basis is achieved forthe implementation ofimprovement measures withrespect to employees in generaland managers in particular.

GP believes in transparency andaccountability to society as a whole

through establishment of efficientand effective corporate governance.It also believes that this is acontinuous process and will bealways developed to furtherstrengthen GrameenPhone’scorporate governance functions inthe years to come.

.... Telenor guided Codes of Conduct has also been adopted by GrameenPhone and ithas been read and signed by all employees of GP. This document underlines theimportance and requirement of securing good business ethics in all aspects of thecompany’s activities

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42 GrameenPhone Ltd.Annual Report 2004

GrameenPhone and the Community

The shareholders ofGrameenPhone believethat “Good development

is good business”. Since itsinception, GrameenPhone hasalways considered CorporateSocial Responsibility (CSR) as animportant function of thecompany.

CSR is an integral part of anygood company anywhere in theworld.The importance of CSR inthe developed economies hasgrown substantially over the pastdecade or so.The goal of a goodCSR program is to make thecompany a good corporatecitizen of the country it operatesin.The aim is to initiate orsupport social developmentprograms which have a directimpact on the development ofthe society, thus making acompany socially responsible.

Along with providingtelecommunication services tomore than three million people,providing direct income-earningopportunities to over 200,000people and being one of the topcorporate taxpayers in thecountry, GrameenPhone takes itsCSR activities quite seriously.

An independent organizationcalled ‘Ideas & Insights’ conducteda survey late last year, amongpeople from different walks oflife, on the CSR activities ofdifferent companies. CSR was thecentral issue of this survey.According to the survey, GP hasbeen recognized as among themost socially responsiblecompanies in the country.

The company has initiated a verystrong CSR program over theyears, some of which arehighlighted below:

• GrameenPhone initiated theVillage Phone Program on thesame day the service ofGrameenPhone was launchedon March 26, 1997.The VillagePhone Program is a uniqueinitiative to provide much-needed telecommunicationfacilities in remote rural areaswhile providing a goodincome-earning opportunityfor the Village Phoneoperators, mostly rural poorwomen. Presently, there aremore than 110,000 VillagePhones in operation in over44,000 villages around thecountry.The Village Phonesprovide access to telecom

services to some 70 millionpeople living in rural areas.Atthe same time, the VPoperators earn an average ofTk 5,000 per month, which ismore than twice the percapita income.The VillagePhone Program has beenwidely acclaimedinternationally. It received the“GSM in the Community”award given by the GSMAssociation in February 2000.

• In March 2001,GrameenPhone signed anagreement with UNICEF,under which GP contributedtowards some UNICEFassisted projects devotedtowards improving the qualityof primary education inBangladesh.

• As a socially responsiblecompany, GrameenPhonesupports a number of nationalsocio-cultural activitiesincluding sponsoring theNational Poetry Festival,major art exhibitions andother events. It activelyparticipates in thedevelopment of cricket in thecountry and is presently theofficial sponsor of the

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43 GrameenPhone Ltd.Annual Report 2004

Bangladesh Cricket Team,Premier Cricket League andthe Corporate CricketLeague. GrameenPhone alsosponsors the President’s CupGolf Tournament and othersports events.

• GrameenPhone takes anactive interest in spreading ITeducation through both urbanand rural schools. Over theyears, GP has donated morethan 100 computers to anumber of academicinstitutions including theInstitute of BusinessAdministration of DhakaUniversity, the UCEP School,Bishwa Sahitya Kendra and anumber of rural schools.

• During the floods of 2004, GPwas very actively involved insupporting flood victims bydonating and supplyingmedicine, drinking water andarranging health camps. GPalso donated more thanBDT10 million toward the‘School Rebuilding Program’of UNICEF for Tsunamiaffected areas of Sri Lankaand the Maldives.

• GrameenPhone actively

participates in the citybeautification programinitiated by Dhaka CityCorporation and alsosupports improvement of thetraffic systems in major cities.

• GrameenPhone supports theAcid Survivors Foundationand an orphanage with thesupport of Telenor.

• GP supports a project forautistic children by providingsupport for their educationand improvement of learningability.

• GP launched the EDGEtechnology earlier this year,which will enable itssubscriber’s access to high-speed data and Internetservices.This will help bridgethe existing digital divide tosome extent by allowingpeople in the rural areasaccess to the Internet orinformation highway.

....... as a socially responsible company, GrameenPhone supports a number of national socio-cultural activities including sponsoring the National Poetry Festival, major art exhibitions and otherevents. It actively participates in the development of cricket in the country and is presently theofficial sponsor of the Bangladesh Cricket Team, Premier Cricket League and the CorporateCricket League. GrameenPhone also sponsors the President’s Cup Golf Tournament and othersports events

GrameenPhone providesdirect income-earningopportunities to morethan 200,000 people andis also one of the topcorporate taxpayers inthe country

200,000

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44 GrameenPhone Ltd.Annual Report 2004

Village Phones: A year of Dynamic Growth

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45 GrameenPhone Ltd.Annual Report 2004

The Village Phone Program(VPP), implemented by

Grameen Telecom incollaboration withGrameenPhone as the primaryservice provider and GrameenBank providing financing to therural women to buy the GSMservices, experienced rapidgrowth during the year.

The VPP is a very uniqueproduct that enables the ruralpoor in Bangladesh to haveaccess to moderntelecommunication services.What started as a distantdream in 1997, has nowbecome a bold reality and alsoa model for the mobileoperators in developingcountries around the world.

This became possible becauseof Grameen Telecom’s specialrole as a service provider forthe rural areas and thepowerful institutionalinfrastructure of GrameenBank that providesmicrofinance to the rural poor,specially the women of thepoorest household. It becamepossible also because ofGrameenPhone’s willingness torapidly expand its network

coverage in the far flung ruralareas, whereas other telecomoperators in the past haveconcentrated on customerbase in the bigger towns andmetropolitan cities.

The VPP in the Bangladeshcontext has clearlydemonstrated that there is ahuge unmet demand fortelecom services in the villagesand these can be met bydesigning special institutionalarrangements that can cater tothe needs of the low- incomehouseholds.

Village Phone SubscribersDoubled Again

During 2004 the number of VPoperators has doubled, keepingpace with GrameenPhone’sown expansion.At the end of2003, there were 46,259 VillagePhone Operators (VPOs) whohad functioned as mobile publiccall offices in the villages, smalltowns and market places in thecountryside.At the end of2004, this number was doubledto 94,003 VPOs.The numberkeeps on growing rapidlybecause while the teledensity

in Bangladesh is abysmally lowin the urban areas, it is evenlower in the villages. Hence thebig demand for GSM servicesfrom GrameenPhone thatensures quality coverage allover the country.The currentyear (2005) is going to witnessanother spurt in growth withGrameen Telecom committedto expand the customer baseby registering another 100,000plus VPOs.

High Revenue Product

During the year, GrameenTelecom generated revenuesworth BDT 3.61 billion forGrameenPhone in terms of theairtime bills which are paidpromptly at the end of themonth. Grameen Bank fieldstaff assists GTC in collectingthe airtime bills from remotelocations all over Bangladesh.The monthly average bill paidby the village phones in 2004was more than BDT 4,500.

An analysis of calls made byVPOs in 2004 showed thatVPOs are now using their GSMservice for making more callswithin the GP network that

At the end of 2004, thisnumber was doubled to94,003 VPOs. The numberkeeps on growing rapidlybecause while the teledensityin Bangladesh is abysmallylow in the urban areas, it iseven lower in the villages. 94,003 9,222

23,035

45,500

94,003

2001

20042003

2002

[subscriber]VILLAGE PHONE

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46 GrameenPhone Ltd.Annual Report 2004

Contrary to the popular impression that people inthe villages would not know how to use themodern, sophisticated cell phones, VPOs havedemonstrated that investments in this sector meansnot only good development, but also very goodbusiness for all parties concerned

has expanded rapidly. Contraryto the popular impression thatpeople in the villages wouldnot know how to use themodern, sophisticated cellphones,VPOs havedemonstrated that investmentsin this sector means not onlygood development, but alsovery good business for allparties concerned i.e., theVillage Phone Operators,Grameen Bank, GrameenTelecom and alsoGrameenPhone.

Benefits from the Village PhoneProgram became apparentspecially during the severefloods that inundated thecountry during the monsoon of2004. For the first time it waspossible for thousands of floodaffected villagers to stayconnected throughGrameenPhone. Many VPOs setup their phone booths on highgrounds and on the roadsideto provide essential telecomservices to marooned peoplein flood affected areas.

High Development Impact

The Village Phone Program

assigns women borrowers ofGrameen Bank as Village PhoneOperators.This not onlyprovides the rural poorhouseholds opportunities toestablish phone booths in therural and semi urban marketplaces, but also enables themto operate those booths by theimmediate family members ofthe borrowers - with highincome-earning opportunities,and it also dramaticallyincreases their social status.

There have been numeroussurveys and research studieswhich showed the high incomeeffect and social impact on thelives of rural women and theirhouseholds. Many dignitarieshave visited the VPOs andcommended their enterpriseand the ingenuity in managing amodern communicationstechnology.The visitorsincluded the US President BillClinton, Queen Sophia ofSpain, Princess Maria Teresaand the Grand Duchess ofLuxembourg. In addition towinning the “GSM in theCommunity Award” in 2000, italso received the“Commonwealth InnovationAward” in 2003 and recently

the “The Petersburg Prize”awarded by the GatewayFoundation in 2005.

402

1,114

2,070

3,610

2001

20042003

2002

[revenue in million BDT]VILLAGE PHONE

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47 GrameenPhone Ltd.Annual Report 2004

In addition to winning the ‘GSMin the Community Award ’ in2000, it also received theCommonwealth InnovationAward in 2003 and recently theThe Petersburg Prize awardedby the Gateway Foundation in2005

award

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48 GrameenPhone Ltd.Annual Report 2004

Contribution to Government Exchequer

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49 GrameenPhone Ltd.Annual Report 2004

The services of GrameenPhone have been helping everyone win over the last eight years since itsinception on March 26, 1997.

Along with the four other cellular operators in the country, GrameenPhone has established that themobile phone is not just a status symbol in the hands of the well to do, it is rather a tool "in the hands ofthe people" to achieve economic growth for the nation.

GrameenPhone, as a service provider, also enriches the National Treasury in many different ways. Since itsinception up to December 2004, GrameenPhone has contributed more than BDT 30 billion to theGovernment Exchequer in direct and indirect taxes.

The following table illustrates how the National Treasury was augmented:

52

1

38

6 74

7 1,5

93

3,1

80

5,2

88

7,2

14

11,

525

Tax, VAT & Duties

Tax and Levies-indirect

Ministry of Post and Telecommunication/Bangladesh Telecommunication Regulatory Commission

Bangladesh Telegraph and Telephone Board

Bangladesh Railway

20042003200220012000199919981997

[ Figures in million BDT]

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50 GrameenPhone Ltd.Annual Report 2004

Network capacity expands, quality improves

.... Six new switches were added to the network to further expand itscapacity. Another 720 base stations were put on air during the year, bringingthe total to 1400 base stations operating around the country

The GrameenPhone networkexpanded at a record pacelast year.The radio,

transmission and switchingnetwork, in terms of number ofBase Stations, connectingtransmission lines, MSCs etc. wasmore than doubled in 2004compared to total network builtsince inception of the company in1997.

Six new switches were added tothe network to further expand itscapacity.Another 720 base stationswere put on air during the year,bringing the total to 1400 basestations operating around thecountry.

In addition, GP swapped lowcapacity BTSs with high capacityones and ‘EDGE/GPRS’ enabledBTSs. Other activities includedprocessor up-gradation ofswtiches, software and hardwareup-gradation of nodes, capacityincrement in inter-operator routes,Optical Fiber up-gradation, INnetwork up-gradation etc.A totalof 250 km of new fiber optic cablewas laid to enhance capacity and toensure higher redundancy.At theend of the year network was madeable to carry 109 per cent moretraffic compared to beginning of

the year.

As a result of this expansion,network congestion reduced by 60per cent even after adding 1.4million new subscribers.

Achieving network qualitytarget

A number of steps were taken tofurther improve the quality of thenetwork. Following are some of theimportant ones:

a) To avoid radio interferencefrom external sources, GPwas able to shift the lowerpart of its 900 MHz spectrumfollowing extensivecoordination with differentmobile operators andregulatory authority. GP alsoused huge number of bandpass filters in the basestations to secure itsnetwork from externalinterference.

b) GP was awarded a newfrequency band in the1800MHz spectrum.GrameenPhone has alreadystarted building Base Stationsusing this new frequencyband which is also helping toimprove the network qualityand capacity.

c) GP re-planned thefrequencies of its basestations many times duringthe year and implementednew features like DBPC(Dynamic BTS PowerControl) which haveimproved the network qualityfurther.

d) GP has also placed specialattention on in-buildingcoverage and capacitysolutions in later part of2004. Coverage in bigshopping complexes like‘Bashundhara City’ and otherimportant high-rise buildingsare being gradually improvedunder this initiative.

Enriching roaming and othervalue added services

Welcome text messages both forinbound and outboundinternational roamers were put inservice for commercial use.Optimal Call Routing (OCR) forinbound roamers were configuredand implemented by which inboundroamers can call at a cheaper rateto a fellow inbound roamer withbetter voice quality. Inter-OperatorSMS has been implementedgradually with all other mobileoperators.

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51 GrameenPhone Ltd.Annual Report 2004

New Network ManagementCentre

GrameenPhone's NetworkManagement Centre (NMC) wasexpanded and relocated earlyDecember 2004 to a new securelocation.

The new NMC will ensure a betterand more efficient environment forkeeping control ofGrameenPhone's network at anytime and to provide timelynotification to management andother stakeholders in case of majorincidents in the network.The NMCis built on modern design principlesand represents a big step forwardin terms of GrameenPhone's abilityto monitor and control itsnetwork.The NMC will be furtherextended and improved in 2005.

Successfully handling naturalcalamities

GrameenPhone's network andorganizational preparedness werethoroughly tested by the heavyrains and severe floods around thecountry during the July-Augustperiod of 2004.The most criticalperiod lasted for around 3 weeks.Although the flood was affecting alarge part of GP's network interms of commercial power failure

and restrictions to physical siteaccess, the mobile service in mostareas was kept alive and accessibleto the customers.This wasachieved due to GP's own powerbackup facilities and also thetremendous efforts by the fieldengineers throughout the countryand the centralized monitoringfunctions in Dhaka. GrameenPhonereceived a lot of praise for itscontinuous mobile phone serviceduring the flood, and was creditedfor playing a vital role in enablingcommunication for the importantflood relief operations.

GP was awarded a new frequency band inthe1800 MHz spectrum. GrameenPhone hasalready started building Base Stations using thisnew frequency band which is also helping toimprove the network quality and capacity

1800MHz

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GrameenPhone introduced a number of new products and services in the market during the year 2004. At the same time, a number of premium value-added services were launched while the GP distribution system around the country was further strengthened.

GP launched two new post-paid bundled products named "Anytime450" and “Anytime300” in April, the first such products to be introduced in the local market. In May this year, the Anytime 450 product was replaced by the new Anytime 500 product with a monthly bundle fee of BDT 1500 and 500 minutes of free talk-time.

Moreover, the ‘Friends and Family” option for GP Regular users and a pre-paid product with a reduced tariff from the third minute onward was also introduced last year. The MY Time

option for pre-paid customers, with reduced tariff in specific time slots, was also introduced in August.

Premium SMS products like ring tone and logo download was also introduced for the first time in the country. The ‘SMS to e-mail’ and the ‘e-mail to SMS’ service was launched in September while the inter-operator SMS service with City Cell, Aktel and Banglalink was also started.

The GP distribution network was further enhanced last year, further increasing the number of points of sale and scratch card retail outlets around the country.

Following is a list of GP products:

GP RegularThis is a post-paid product that allows both-way BTTB (local, NWD, ISD) connectivity. The “Friends & Family” feature allows the subscribers to call at a reduced rate to three pre-selected GP numbers during any time of the day.

GP NationalThis is a post-paid product with mobile to mobile connectivity. The “Friends & Family” feature allows the subscribers to call at a reduced rate to three pre-selected GP numbers during any time of the day.

AnyTime 300This is a post-paid monthly airtime bundled product with mobile to mobile connectivity with the first 300 minute of talk-time free.

AnyTime 500This is a post-paid monthly airtime bundled product having both-way BTTB (local, NWD, ISD) connectivity with the first 500 minute of talk-time free.

52 GrameenPhone Ltd.Annual Report 2004

SMS-based Services:

• 2000 – This is the GP in-house information cellproviding information on bill payment and usage, credit

limit, emergency numbers like ambulance and policestation, and important telephone numbers such as bank

head offices, airlines, newspapers and taxi.

• 2233 – It is the First SMS to email and vice versaservice in Bangladesh. It also is the number for the

popular game GPsixer.

• 2345 – Offers information ranging from news,weather, emergency to entertainment in the form of

jokes, quotes, etc.

• 2777 – News headlines, cricket score updates andjokes are available here.

• 3333 – Offers news, jokes, beauty tips and cricketupdates among other information services.

Premium SMS-based Services – Ring-tones andlogo

• 3355 – Lists code of most popular ring tonesdownloaded.

• 2355 – Offers different kinds of ring-tones availablefor downloads.

• 2700 – Ring Tones and Logo Downloads.

The following numbers provide informationabout bank accounts:

• 2727 – Standard Chartered Bank

• 2929 – Bank Asia

• 2799 – Vanik

Following is a list of some of the GP value-added services:

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EASY Pre-PaidThis is a Pre-Paid product with mobile-to-mobile connectivity. Moreover, the “My Time” feature also allows subscribers to make calls to any GP number at a reduced rate during a pre-selected time slot of the day. The pre-paid customers can also choose different rate plan by activat-ing the “My Choice” feature.

djuiceThis is a Pre-Paid product with mobile-to-mobile connectivity. This product is designed for the youth segment of the market.

EASY GOLDThis is a Pre-Paid product that allows both-way BTTB (local, NWD, ISD) connectivity. The “My Time” feature allows subscribers to make calls to any GP number at a reduced rate during a pre-selected time slot of the day. The “My EASY” feature also allows the subscribers to call at a reduced rate to one pre-selected GP number during any time of the day.

53 GrameenPhone Ltd.Annual Report 2004

Products and services

SMS-based Activation Numbers:

• 888 – My Choice offers lower call rates.

• 2800 – For Friends and Family (F&F) Activation.

• 2828 – Gives users the choice of when to takeadvantage of lower call rates at certain periods of the

day.

• 2888 – Pre-Paid subscribers can send SMS to thisnumber to assign 1 GP number as their “MY EASY”

number. Subscribers can call at a flat rate of Tk. 3/min tothe assigned number.

Voice-based services:

• 1515 – Information service on Sehri and Iftar timingduring Ramadan.

• 2002 – This feature provides event-based sportsupdate.

• 2200 – This SMS number provides GrameenPhoneshrimp news service.

• 2221 – An English news update service provided byThe Daily Star.

• 2222 – Prothom Alo’s Bengali news update service.

• 2255 – This SMS number provides voice basedinformation service.

• 2525 – This SMS number offers Channel-i televisionprogram schedule and quiz programs.

• 2626 – This is an information service in collaborationwith Channel-i. It offers updated news highlights,

horoscopes, transport schedules etc.

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54 GrameenPhone Ltd.Annual Report 2004

GrameenPhone successfullylaunched ‘djuice’, an

international youth brand, in April2005.

This was the first time in Bangladeshthat a brand totally dedicated to theyouth was launched by a mobilephone service provider.The youthsegment of Bangladesh has specialneeds and aspirations – they aremore adventurous, more ambitiousand would like to see the worldaround them through their own eyes.Seeing this dynamism of the market,GrameenPhone as the pioneer ofthis sector, brought a brand thatwould talk the language of youth anda brand that would personify youth.

djuice is a Telenor brand currentlybeing marketed in Norway, Ukraine,Sweden and Hungary. Bangladesh isthe first country outside Europewhere this unique brand has beenlaunched.

GrameenPhone had felt the need toprovide a unique experience for theyouth segment of this country andalways believed that the youth of

Bangladesh deserved better serviceat a reasonable price.Thus came indjuice – the brand especially tailoredto meet the needs and desires ofyoung people.The brand would helpthe youth of Bangladesh to not onlyuse the mobile phone as acommunication device but also assomething that they could proudlyassociate with.

djuice was launched on the first dayof the Bengali New Year in thepresence of youth celebrities and themedia.The launch program andpress-conference took place at PizzaHut with a presentation of all thebenefits that djuice would bring to itsvalued subscribers. Black, the popularyouth band in Bangladesh which isalso the official celebrityspokesperson of djuice, attended thelaunch ceremony along withcricketers of the Bangladesh NationalCricket Team.

A series of hugely successfulconcerts were also held after thelaunch event with local bands Blackand Miles along with Indian Idol stars,

Amit Sana and Rahul Saxenaenthralling the huge number ofaudiences of Dhaka and Chittagong.The entry for the concerts wasmade free by GrameenPhone, withtickets for the concert being freelydistributed amongst the youth of thetwo lucky cities. GrameenPhoneplans to continue providing thesubscribers with such offers in thefuture.

The djuice package is a whole bundleof values for its subscribers.Thespecial 32k djuice SIM allows theusers to store additional 200 friends’and family entries with threenumbers against each entry. It has alarger mail-box storage capacity andSMS chat facilities. From informationon film and music-charts to beautytips and dictionary, the djuiceconnection offers more than just ameans of communication.

With pulse rates as low as 20seconds from the first minute (forthe first time for any pre-paidconnection) and tariffs as low as Tk.1.66 and 0.66 per pulse (peak and

Successful launch of djuice

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55 GrameenPhone Ltd.Annual Report 2004

off-peak), it was an instant success.But GrameenPhone wanted to givemore than just lower tariffs andlower pulse rates because it believesin providing more value to thecustomer. djuice wanted to give itssubscribers a sense of belonging toan exclusive djuice-club.The djuiceXTRA card was therefore given withthe connection.This unique card,given with every new subscription,opened a totally new era in valueaddition to the customer.

The XTRA card provides thesubscribers with discounts at popularfood outlets, fashion outlets, musicstores and sports shops.The numberof outlets providing these benefits tothe subscribers of djuice is beingincreased gradually to provide morebenefits to the valued subscribers.The djuice XTRA card also acts as apass to popular concerts andprograms exclusively arranged for

the djuice subscribers. Some of thetactical partners of djuice who wouldbe providing the holders of djuiceXTRA card with discounts are: foodplaces like Arabian Fast Food,Boomers, Ninfas,A&W, Dahlia’s,SweetMax, Copper Chimney, SilverSpoon etc. Sports World,Thunderbolt,Woodland, Reebok, KayKraft, DBC, Piano, Fahim’s Music,BBC are some other places XTRAcard holders would receivediscounts.

GrameenPhone has already signed upwith a number of companies toprovide life-style benefits to thedjuice users. Pizza Hut is providingevery djuice subscriber ordering amenu from the outlet with specialbenefits. G-Series, the leading recordlabel of Bangladesh, is also planningto bring new and popular music atthe fingertips of djuice subscribers.

Along with 50 free SMS and Tk. 50

free talk-time and the other benefits,djuice has already established itself ina unique position in the mobilemarket. djuice also boasts its ownwebsite: www.djuice.com.bd and willact as a communication means forthe youth and a source ofinformation that may interest theyouth population of this country.

djuice promises to provide morevalue to its subscribers and aims todeliver the promises with innovativeproducts and value-added-servicesthat would make djuice the onlybrand that youth of Bangladeshwould relate to.

The XTRA card alsoacts as a pass to popularconcerts and programsexclusively arranged forthe djuice subscribers.

XTRA

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International Roaming

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