Performance dynamics of an industrial enterprise in bangladesh a case study of grameenphone

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Assignment
Performance Dynamics of an Industrial Enterprise in
Bangladesh: a Case Study of Grameenphone
By
Khan Md. Sher Zaman
ID: 115010003
MBA Program, Fall-2015
Management and Organizational Behavior
Faculty of Business Studies
Notre Dame University Bangladesh
Dhaka, Bangladesh
2015

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Performance Dynamics of an Industrial Enterprise in
Bangladesh: a Case Study of Grameenphone :
1. Historical Background
Grameenphone, the leading telecommunications operator of Bangladesh
started its journey with the Village Phone program: a pioneering
initiative to empower rural women of Bangladesh. The name
Grameenphone translates to “Rural phone”. Starting its operations on
March 26, 1997, Grameenphone was the first operator to introduce GSM
Technology in this country. Grameenphone pioneered the then
breakthrough initiative of mobile to mobile telephony and became the
first operator to cover 99% of the country’s people with network.
Grameenphone has built the largest cellular network in the country with
over 8500 base stations. Presently, nearly 99 percent of the country's
population is within the coverage area of the Grameenphone network.
Grameenphone was the first telecommunication operator in Bangladesh
to introduce the pre-paid service in September 1999. In 2007, they have
introduced their IPO in share market. Finally, in October 2013 the
company launched the latest 3G services commercially. The entire
Grameenphone network is now 3G/EDGE/GPRS enabled. There are
currently over 14 million Internet users in the Grameenphone network.
Today, Grameenphone is the leading and largest telecommunications
service provider in Bangladesh with more than 55 million subscribers as
of September, 2015.
2. Products and Services Profile
Grameephone has always been a pioneer in introducing new products
and services in the local telecom market.
Postpaid Services: Xplore, Xplore Legend, Business Solution, Ekota,
GP Public Phone, Internet SIM, Bundles, Star Bundle, Call Drop Service.

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Xplore and Xpolre legend: These are products in a brand and exciting
new way. With an aim of delighting all existing Xplore and Xpolre
legend subscribers and the upcoming generation of postpaid users.
Prepaid Services: Nishchinto, Bondhu, djuice, Apon, Shohoj, Smile,
Spondon, Amontron, Village Phone, Internet SIM Business Solution,
Shofol, Ekota, My Zone, Emergency Balance 25 Paisa Offer, Weekly
Packs ,Daily Pack, 7 Paisa Offer Star Bundle, Call Drop Service.
Nishchinto: It is the default Consumer prepaid price plan offered from
Grameenphone. Gives one the opportunity to make any local voice calls,
with a call rate of 15 paisa per 10 second. New Connection Price: BDT
188.
Bondhu: This is the first time that a total of 15 F&F numbers are
allowed for each Bondhu customer. With 10 second pulse facility, this
package gives one the privilege of calling to one GP-GP Super F&F at
only 5 paisa/ 10 second. In addition, 14 (maximum) any operator F&F
are available at 10 paisa/ 10 second.
Amontron: is an attractive price plan from Grameenphone which gives
one the opportunity to talk to any other operator at a call rate of
11paisa/10 second (24 hours) and One GP-GP Super F&F at 5 Paisa/10
Second (24 hours).
Spondon: This unique package gives one the privilege of calling at any
local numbers with 1 second pulse facility at a flat tariff (24 hours) of
2.05 Paisa/Second.
djuice: It addresses the most relevant elements of a typical Ones
lifestyle: Community, F&F and Night-time!
Mobile services: Call Block, Friends & Family, Missed Call Alert,
MMS, Voice Mail Service, Pay For Me, Balance Transfer, Vehicle
Tracking, Voice SMS, International SMS, E-bill, Facebook SMS,
Mobile Twitting, Quick Search, GP APP - Mobile Self Service.

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3. Market Status
GP has been the market leader at a stretch for almost two decades.
Currently, the total number of mobile phone subscribers has reached
130.844 million at the end of August 2015 of which GP has 55.04
million (42.1%), Banglalink has 32.879 million subscriber (25.1%) and
ROBI’s subscriber base stood at 28.316 million (21.6%). Other 12.1%
market share is held by three operators Airtel 9.392 million subscriber
(7.2%), Citycell 1.138 million subscriber (0.9%) and Teletalk 4.079
million subscriber (3.1%).
The Mobile Phone subscribers are shown below:
Operators Active Subscribers %
Airtel Bangladesh Limited (Airtel) 9.392 7.2%
Banglalink Digital Communications Ltd 32.879 25.1%
Pacific Bangladesh Telecom Limited (Citycell) 1.138 0.9%
Grameenphone Ltd. (GP) 55.04 42.1%
RobiAxiata Limited (Robi) 28.316 21.6%
Teletalk Bangladesh Ltd. (Teletalk) 4.079 3.1%
Total 130.844 100%
4. Employee Structure:
Corporate Governance
Grameenphone believes in the continued improvement of corporate
governance. The Board of Directors of Grameenphone has a pivotal role
to play in meeting all stakeholders’ interests. The Board of Directors and
the Management Team of GP are committed to maintaining effective
Corporate Governance through a culture of accountability, transparency,
well-understood policies and procedures. They also persevere to
maintain compliance of all laws of Bangladesh and all internally
documented regulations, policies and procedures.

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Organization Structure
5. Performance Dynamics:
In 2014, Grameenphone (GP) recorded revenue growth of 6.3% over
2013 to BDT 102.7 billion (2013: BDT 96.6 billion), with net profits of
BDT 19.8 billion (2013: BDT 14.7 billion). In line with internet for all
commitment, GP continued to attract more mobile internet customers in
the year, which totaled 10.8 million at the end of 2014.
i) Customers and Average Revenue/Minutes Per User (ARPU &
AMPU): GP added 4.4 million (2013: BDT 7.1 million) new
customers in 2014, resulting in 1.4 percentage increase in subscriber
market share at 42.8%.

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In 2014, ARPU decreased by 6.0% at BDT 165 (2013: BDT 176),
mainly due to competitive pressure within domestic voice which was
partly offset by data and VAS uplift.
ii) Revenue Performance
Total revenue reached BDT 102.7
billion in 2014 (2013: BDT 96.6
billion), a growth of 6.3% over the
previous year. This was mainly
driven by growth in revenue from
communication and customer
equipment.
Revenue from mobile communication grew by 5.9% in 2014 to BDT
98.5 billion (2013: BDT 92.9 billion) with positive contribution from
data and VAS, voice and interconnection.
Voice revenue grew by 2.1% in
2014, to BDT 76.6 billion (2013:
BDT 75.0 billion).
Interconnection revenues increased
by BDT 648 million to BDT 10.6
billion (2013: BDT 10.0 billion).

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Data and VAS revenue grew by
BDT 3.3 billion for the year to
BDT 11.2 billion (2013: BDT 7.9
billion). At the end of 2014, data
and VAS revenue accounted for
11.4% (2013: 8.5%) of mobile
communication revenue.
iii) Profit After Tax
Profit after tax for 2014 increased by 34.7% at BDT 19.8 billion (2013:
BDT 14.7 billion). Increase in profit before tax resulted from higher
operating income, partly offset lower foreign exchange gain and gain on
sale of Garmeenphone IT Ltd. (GPIT) last year. Normalizing the gain on
GPIT sale and one-off tax adjustment, Gp achieved 12% growth in profit
after tax over the previous year.
6. SWOT Analysis
Strengths
 Good Owner Structure

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 Availability of Backbone Network (Optical fiber)
 Financial Soundness
 Brand Name / Grameen Image
 Largest Geographical Coverage
 Good Human Resource and Infrastructure Installation all over the
country through Bangladesh Railway and Grameen Bank
 Access to the widest rural distribution network through Grameen
Bank
Weaknesses
 Mixture of different cultures is used as an excuse not to solve
problems
 Too much inside out thinking in the company.
 Poor interconnection with BTCL.
 Complicated price structure
 Billing System can’t handle sophisticated billing.
Opportunities
 Economic growth of Bangladesh.
 New and better interconnection agreement
 Huge need for telecom services
 Declining prices for handsets
 New international gateway
 Demand for inter-city communication
 Future privatization of fixed network
Threats
 More rigid government regulations.
 More influence of competitors on the fixed network
 Devaluation of Taka
 National catastrophes.
 Sabotage of installation.

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 Non-co-operation of government and fixed PSTN (Public Service
Telephone Network).
 BTCL has limited capacity for interconnections.
7. Possible Measures to Improve Performance
Grameenphone’s sale has increased in a substantial amount in 2014 and
2015 as well. Basically sustainable growth in sales can ensure more
contribution to their revenue. If GrameenPhone increase their current
assets and fixed assets both their total assets will also increase. However,
they have succeeded to increase their total assets till now and it is very
important for the company to continue this trend. As GP focus more on
its network upgradation, what I think is very important for the company.
Day by day customers are becoming more quality oriented and to ensure
that Grameenphone do need a constant focus on its network upgradation.
As a responsible corporate citizen, in 2011, the Company has integrated
its technological expertise with social projects to bring positive changes
in the life of general people. It’s a very positive sign for the company.
Therefore, they do need to focus more on this CSR (Corporate Social
Responsibility) part for ensuring better stakeholders experience.
8. Concluding Remarks
Grameenphone is one of the largest multinational companies of
Bangladesh. GP added 4.4 million new customers in 2014, which
indicates a rising trend in mobile penetration. The relative position of
GP among the operators is indicative of the likely sustainability of its
operating position and ability to exercise control over the nature and
pace of development. The present subscriber base and leading position
of GP in the market demonstrates that the customers perceived GP well
and has realized its ability to bring innovation in products and services
development.