Assignment

Performance Dynamics of an Industrial Enterprise in Bangladesh: a Case Study of Grameenphone

ByKhan Md. Sher Zaman

ID: 115010003MBA Program, Fall-2015

Management and Organizational Behavior

Faculty of Business StudiesNotre Dame University Bangladesh

Dhaka, Bangladesh2015

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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%

Robi Axiata 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

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maintain compliance of all laws of Bangladesh and all internally documented regulations, policies and procedures.

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.

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