Grameenphone Ltd.

May, 2019

1
Disclaimer
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as a guide to the future performance of such investments.

This presentation does not constitute an offering of securities or otherwise constitute an

invitation or inducement to any person to underwrite, subscribe for or otherwise acquire
securities in Grameenphone Ltd. The release, publication or distribution of this presentation
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into which this presentation is released, published or distributed should inform themselves
about, and observe, such restrictions.
 Mobile market
leader in a
fast-growing
economy

3
 BANGLADESH AT A GLANCE
Demographics Economics

Age distribution Real GDP growth (Avg. of last 10 years)

40%
6.2%
5.9% 6.0%
28%

19% 5.2%
5.0%

7% 6%

0-14 yrs 15-24 yrs 25-54 yrs 55-64 yrs >64 yrs Nigeria Kenya Sri Lanka Vietnam Bangladesh

• Population of 168m, growing by >1% per year • GNI per capita of USD 1,330
• Young population, 47% below 25 years • Largely a cash based economy
• Expanding middle class • Main sectors: Service, manufacturing and agriculture
• Stable inflation and currency performance

Sources: WorldBank, CIA Factbook

4
 26 YEARS OF MOBILE TELECOM SERVICES
Grameenphone
declared SMP
2019
SIM re-registration through
Launch of state owned 2018
NID & Biometric Launch of 4G
operator Teletalk as the Verification System services
5th player
• 100 mn 2016
• 1mn subscriber • New interconnection subscribers
• Formation of Bangladesh regime (ICX, IGW & IIG) • 3G cellular
2013
Telecommunication • Launch of separate mobile phone Merger of Robi
Regulatory commission Broadband Wireless services and Airtel
Access (Wimax) 2011
operation
Prepaid service Renewal of 2G
launch 2010 spectrum for 15
2009 years
Mobile-Mobile 2002 2004
service launch 2005 2008
1999
Entry of Airtel
Launch of brand Bangladesh by
1998
name Citycell by 3 major GSM players acquiring Warid
PBTL (restructured currently named GP, Telecom
1997
HBTL) Banglalink and Robi came
into operation
1996 • Introduction of SIM tax
• 90%+ population coverage
• Launch of Warid Telecom as the
• 50 Mn subscribers
6th player
Commercial operation of
1993 • Banglalink re-launch after
HBTL (Hutchison Bangladesh
Orascom’s acquisition
Telecom Ltd.) with AMPS
technology

5
 AN ATTRACTIVE AND GROWING MOBILE MARKET
DOMINATED BY PREPAID
Industry Subscribers (Mn)

• 159 million subscribers, of which 98% prepaid 157

145
134
• Multi-SIM market with around 58% real mobile penetration* 120
126

• 50% internet penetration*, rapidly increasing

• ARPU of around USD 2

• Scale benefit drives healthy margin for top 3 players

• Continuously developing regulatory landscape

2014 2015 2016** 2017 2018

*Based on estimation
6 **Subscriber adjustment due to bio-metric verification during 2016
 GRAMEENPHONE IS THE UNDISPUTED MARKET LEADER WITH
SOLID FINANCIAL PERFORMANCE
Total revenue market shares* Revenues (BDT Bn) and EBITDA margin (%)***

140

128 132.8 80%

25% 25% 26% 24% 115

28% 28% 120

105
75%

103
100
97 70%

22% 22% 23% 22% 19% 18% 80 65%

60.70%
59%
60 60%

55%
53% 53%
54% 51%
40 55%

53% 53% 51% 53% 53%

20 50%

0 45%

2013% 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Grameenphone Banglalink Robi Revenue EBITDA Margin

• 74.1 million subscribers and #1 brand in Bangladesh • 6.5% revenue CAGR and 10.3% EBITDA CAGR in 5 years
• Largest network: 15,939 total sites out of which 5935 4G • Growing EBITDA margin with efficiency improvements
• Widest distribution: More than 373k points of sales • 17.7% operating cash flow CAGR with margin improvement

**Airtel merged wih Robi from Q4'2016

7 *** EBITDA before other items
 1Q2019: STRONG BUSINESS PERFORMANCE DRIVEN BY
VOICE AND MARKET EXECUTION
Revenue (BDT Bn) and Growth (YoY) EBITDA* (BDT Bn) and Margin** NPAT (BDT Bn) and Margin
34.9
12 100.0%

34.7 10.8
34.3 28.0%
22.0
21.6 90.0%

34.5

21.2 21.1 230.0%

10

8.9 9.1 8.9 80.0%

23.0% 21.0

70.0%

33.5 8

32.6 18.0% 20.0

19.6 180.0% 6.4 60.0%

11.6%
32.5 6 50.0%

13.0% 19.0

33.2% 40.0%

7.7%
130.0%

31.5
31.2 18.0 4 25.9% 26.1% 25.6%
8.0% 18.0 20.5% 30.0%

3.4%
2.0% 57.4% 60.2% 61.8% 62.2% 60.6% 80.0%
20.0%

30.5

0.5% 3.0%
17.0
2

10.0%

0 0.0%
29.5 -2.0%
16.0 30.0%

Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19

• 11.6% YoY growth in total revenue
• 15.1% YoY growth in voice revenue driven
by 9.8% growth in subscriber base
• 2.8 Bn normalized EBITDA uplift • One-off negative effect of BDT 518 Mn
in Q1’19 for VRS and business
transformation costs

*EBITDA before other items

**As per IAS 18
8
***Normalized for one-off items
Reached 6.8 Mn active 4G users

5900+ 58% 4G Devices

LTE Sites with 4G SIMs

38.2 Mn 27% of daily

data customers traffic on 4G

Q1 2019
 Significant
Growth
Opportunities

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 VOICE SEGMENT REMAINS IMPORTANT AND STILL OFFERS
ATTRACTIVE GROWTH OPPORTUNITIES
AMPU and APPM (BDT)

• Real mobile penetration currently at approx. 58%, 250

234 1.2

216
expected to increase 194 203 1.1

200

168
•
1

Affordability of marginal subscriber improving 0.9

150

• Leverage expanded network and distribution footprint

100
0.68 0.67
0.8

0.7

0.59
• Improving price perception and simplicity in offers
50
0.56 0.58
0.6

•
0.5

Strengthen position in B2B, postpaid and youth

0 0.4

segment 2015 2016 2017 2018 3M 2019

AMPU APPM (BDT)

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 INCREASING DATA USAGE WILL BE THE PRIMARY
REVENUE GROWTH DRIVER GOING FORWARD
Average data usage (MB per month) Data users and revenue contribution
60% 40%

1397 51% 52%

48%
35%

50%

42% 30%

1002 40%

25%

20%
28% 19%
30%

17% 20%

651
488 20%
12% 15%

8%
284 10%

10%

5%

0% 0%

2015 2016 2017 2018 3M 2019 2015 2016 2017 2018 3M 2019

• Usage driven by video streaming, social media and OTT • 19% total data revenue growth in Q1’19 YoY
• 72% of monthly active data users use facebook • Support from 3G/4G network coverage expansion
• Flagship ‘Digital Bangladesh’ vision of Government to act • Proliferation of affordable smartphones will be key
as an enabler

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 INVESTING IN NETWORKS TO CAPTURE DATA GROWTH

• 15,939** no of 3G sites is covering 95.2%** of population 3G/4G sites & Pop. coverage per operator*

• 5900+ 4G sites rolled out till Q1 2019 GP Robi BL

15939
• Network modernization ongoing to consolidate superior
position 95%

9519
72%
• Strong end-to-end fiber backhaul across the country 7294
5939
• Expansion of indoor coverage to address rapid
urbanization and vertical city expansion

• Constrained fixed broadband market 3G 4G 3G Population Coverage

*Source: Company website (Q4 2018), data not yet published for Q1 2019
16 ** End of Q4 2018
 Physical
Distribution has
been a Major
Strength

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 …WHILE PHYSICAL DISTRIBUTION REMAINS THE CORE,
DIGITAL DISTRIBUTION IS SHAPING UP
Recharge through digital channels (% of sales)
• Convenience is driving recharge through digital
channel
17%

• Most digital interaction starts from physical location

11.70%
• Bridging the digital and physical world with GP 10.40%
8.20%
Express stores i.e. integration of e-commerce platform

• Digitization of tools and processes to ensure

empowerment and efficiency of channel 0.50%

2014 2015 2016 2017 2018

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 COMMITMENT TO FURTHER EFFICIENCY
Technology
• New operating model for
network management
activities
• IT & network service
contract re-negotiation and
scope rationalization
• Rent reduction through
contract negotiation with
service provider
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Market Personnel Support
• Elimination of hard copy • Effect realization of • Optimization of support
subscriber acquisition form headcount efficiency and overhead costs
with electronic version
• Optimization of channel • Further exercise • Control over
incentives ongoing for Head discretionary costs
Quarter staff
• Increased sales through
digital channels
• Optimized shift in digital
media for market spending
 MANAGING RISKS IN THE BUSINESS ENVIRONMENT
While there are substantial challenges in the business environment, Grameenphone has more than 20 years
of experience in successfully managing regulatory and policy risks

Government’s Vision of
Regulatory Developments Business Environment Management
‘Digital Bangladesh’

• Realization of Digital Bangladesh
remains a political priority and
expected to enable growth in the
telecom industry
• Recognition of Telecom and ICT
sectors as enablers of economic
and socioeconomic development
• Numerous initiatives undertaken for
enabling local ecosystem for
software and IT services e.g. e-
government, public-private
partnerships
• Formulation of new regulations and
revision of existing ones through public
as well as industry consultation
• Nascent regulations regarding digital
services, but so far have been
conducive to continued growth i.e. e-
commerce policy
• Bangladesh Labour Act is under
review; anticipation of further clarity for
service sector employees
• Establishment as a trusted partner of
the Government as well as a service
provider, value creator and innovator
contributing towards Digital
Bangladesh vision
• Aspiration to strengthen
sustainability initiatives and role in
empowering society
• Considerable priority towards
managing regulatory and policy risks
by the company
• Collaboration with local and
international stakeholders

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 • Despite several rounds of consultations with BTRC and the auditors, our observations regarding the audit were ignored, especially
post February 2018.
• On 2 Apr’19, BTRC sent a demand of BDT 125.79 Bn payable within 10 working days from date of issuance of demand. BDT 84.94
BTRC Bn (Principle 22.99 Bn + Interest 61.94 Bn) was claimed by BTRC and BDT 40.86 Bn was claimed on behalf of NBR.
Audit • After assessments, GP considers the demand unfounded and without any legal basis and accordingly on 16 Apr’19, GP responded
to BTRC requesting it to withdraw the claims and to enter into discussions with a view to find an amicable resolution.
• BTRC responded on 12 May’19 directing GP to make the full payment without any further delay. GP is in the process of assessing
this reply in order to determine the next course of action.

• On 10 Feb’19 BTRC declared GP as SMP and subsequently issued 2 directives stating certain prohibitions towards GP on 18 Feb’
19. GP filed a writ petition challenging the above directives on 25 Feb’19.
• On 19 Mar’19, BTRC withdrew and cancelled the 2 directives issued on 18 Feb’19 and asked GP’s for feedback on 20 areas as cited
SMP for further directives.
Regulations • On 31 Mar’19, GP responded to BTRC and denied to make any comment on 20 areas as the Letter did not contain any proposed
directives and no reason for issuing directives was given.
• On 12 May’19 BTRC issued a notice asking GP to provide feedback within 15 days on 4 new proposed remedies. GP is in the process
of assessing this notice in order to determine the next course of action.

• On 18 Feb’19 BTRC published the QoS Drive test report in media without considering Industry observations regarding the drive test
methodology. GP along with the Industry rejected the report.
• On 3 Apr’19, BTRC has published QoS bench marking report for 4 division (Barishal, Khulna, Rajshahi & Rangpur).
QoS
Reporting by • Call drop in GP network in all the 4 divisions are within KPI threshold. The industry and GP is still concerned about the non-aligned
drive test modalities .
Regulator

Developing Regulatory Landscape

 CONTINGENCIES
Sl. Items
1 Information system audit by BTRC
Refer to Annual
2 SIM tax on replacement SIMs (2007 – 2011)
Report 2018 and
3 SIM tax on replacement SIMs (2012 – 2015) 1Q2019 Financial
Statements for details.
4 Claim for VAT based on C&AG audit

5 (https://www.grameenphone.
VAT rebate on 2G license renewal fee
com/about/investor-
6 Interest on SIM Tax (2006 – 2007) relations/ir-financial-report)

7 Interest for delayed payment of Guaranteed Annual Rent to

Bangladesh Railway

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 HEALTHY SHAREHOLDER RETURN
Payout Ratio and Dividend Yield* Total Shareholder Return**
140%

129% 50.0%

45.0%

320%
120%

109% 105% 108%

101% 40.0%

270%
100%
96%
220%
35.0%

30.0%

80%
170%
25.0%

60%
120%
20.0%

70%
15.0%

40%

7.5% 20%
5.9% 7.2%
4.9% 4.7% 4.8%
10.0%

20%

-30%
5.0%

0% 0.0%

2013 2014 2015 2016 2017 2018

• Dividend policy states at least 50% dividend payout of NPAT; last three years average payout was 101%
• Total shareholder return of 200% from 2013
• Outperformed local market index (DSEX) by 162 percentage points

*Considered closing price of prior trading session of record date

**Including dividend reinvestment and end period of 30 August 2018
27
Investment & Payment to the Bangladesh Economy
Investment BDT Bn Payment to National Exchequer BDT Bn

84.2
34 61.8
58.6 12.7 Bn*
17.14 Bn 51.1
4G License
Fees 71.5
21.1
19.3

14.5
20.3

4.2

2015 2016 2017 2018 3M 2019 2015 2016 2017 2018 3M 2019

• BDT 20.3 Bn (58.1% of revenues) contributed to exchequer in the first quarter of 2019
• Contribution includes in the form of taxes, VAT, duties, fees, *4G license & spectrum assignment
Summary
Strong business performance in a
challenging environment

EBITDA growth with strong

margins

Building strong data network

enabling personalization remains
our focus for future growth &
efficiency

Q1 2019
*In consideration of the local regulations, Grameenphone Ltd. does not provide any forward looking statements.