BRIEF HISTORY OF GRAMEEN PHONE

Grameenphone in Bangladesh started providing mobile telephony services in 1997

after incorporation in 1996 and is now the leading provider of mobile

communications services in Bangladesh. In addition to core voice services,

Grameenphone offers a number of value-added services, in each case on both a

contract and prepaid basis. Value-added services include voice messaging services,

SMS, MMS, ring-back tones and data services through EDGE/GPRS.

Grameenphone’s services have some of the most advanced and up-to-date features

in the Bangladeshi market. For example, Grameenphone was the first Bangladeshi

mobile operator to launch WAP in 2001 and EDGE service in 2005.

Grameenphone offers innovative services in line with socio-economic conditions

of Bangladesh. In 2006, Grameenphone introduced HealthLine, a 24 hour medical

call centre manned by licensed physicians, and BillPay, which allows utility bill

payments to be made by mobile phone. “Studyline”, a call centre based service

providing education related information, was launched in October 2009.

Grameenphone has established approximately 500 Community Information

Centres which aim to bring affordable Internet access and other information based

services to people in rural areas of Bangladesh. In 2009, Grameenphone introduced

branded plug and play USB Internet access modems and branded handsets at a

very affordable price. Grameenphone won the GSMA Global Mobile Award for
“Best use of Mobile for Social and Economic Development” for its HealthLine.

Grameenphone also won the GSMA “Green Mobile Award” jointly with Huawei

Technologies for building an environment friendly network in Bangladesh.

As at 31 March 2010, Grameenphone had 23.9 million subscriptions, while the

mobile penetration and number of inhabitants in Bangladesh were 36% and 169

million, respectively.

Grameenphone has been listed on both Dhaka and Chittagong Stock Exchanges

since November 2009 following the largest initial public offering so far in

Bangladesh. Shares were offered at BDT 70 and were over subscribed by around

four times. Trading of Grameenphone shares commenced on 16 November 2009.

As at 31 March 2010, Telenor holds 55.8% of the shares in Grameenphone, while

Grameen Telecom, the other main shareholder, holds 34.2% of the shares. The

remaining 10% of the shares are held by general retail and institutional investors.
 BUSINESS PERFORMANCE

Between 1991 and 1996, mobile telephone services in Bangladesh were provided

by a single company, Pacific Bangladesh Telecom Ltd. (PBTL) that targeted the

country’s relatively small urban elite. The market expanded significantly when

new licenses for relatively small urban elite. The market expanded significantly

when new licenses for GSM networks were awarded in 1996. However,

GrameenPhone’s competitors have not been able to expand beyond subscriber

bases in the tens of thousands. GrameenPhone, meanwhile, has experienced rapid

growth.
 PURPOSE OF GRAMEEN PHONE

To receive an economic return on its investments.

To contribute to the economic development of Bangladesh where

telecommunications can play a critical role.

This is why GrameenPhone, in collaboration with Grameen Bank, is aiming to

place one phone in each village to contribute significantly to the economic uplift of

those villages.

The goals of GrameenPhone are to promote economic development, promote

social development, provide affordable GSM cellular service nationwide, and to

connect rural Bangladesh through the provision of mobile telephone service by

creating micro-enterprises that can both generate individual income and provide

whole villages with connectivity. The Top Ranked Objective is to connect rural

Bangladesh through the provision of mobile telephone service by creating micro-

enterprises that can both generate individual income and provide whole villages

with connectivity. This is GP's TRO because it accomplishes the rest of the goals
that it has set for itself. It also addresses the problems of connectivity in

Bangladesh, poverty, and underdevelopment.

GrameenPhone’s basic strategy is coverage of both urban and rural areas. In

contrast to the “island” strategy followed by some companies, which involves

connecting isolated islands of urban coverage through transmission links,

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.
 NETWORK AND LICENSES

Grameenphone holds a mobile cellular license with both GSM 900 MHz and GSM

1800 MHz spectrum. The mobile cellular license expires in 2011, and will

thereafter be subject to annual renewal by the BTRC. The regulator has so far not

defined the process for the renewal. Meanwhile, the Bangladesh

Telecommunication Regulatory Commission (BTRC) has communicated its

intention to issue 3G licenses/spectrum in Bangladesh during 2010. Grameenphone

has the largest network with the widest coverage in Bangladesh and the entire

network is EDGE/GPRS enabled. The Grameenphone network currently covers

almost the entire population of the country.

According to Grameenphone, it has so far invested more than BDT 10,700 crore

(USD 1.6 billion) to build the network infrastructure since 1997. It has invested

over BDT 3,100 crore (USD 450 million) during the first three quarters of 2007

while BDT 2,100 crore (USD 310 million) was invested in 2006 alone.
Grameenphone has built the largest cellular network in the country with over

10,000 base stations in more than 5700 locations. Presently, nearly 98 percent of

the country's population is within the coverage area of the Grameenphone network.

The entire Grameenphone network is also EDGE/GPRS enabled, allowing access

to moderate speed Internet and data services from anywhere within the coverage

area. There are currently nearly 3 million EDGE/GPRS users in the Grameenphone

network.

With the help of Grameenphone, Grameen Telecom operates the national Village

Phone programme, alongside its own parent Grameen Bank and the International

Finance Corporation (IFC), acting as the sole provider of telecommunications

services to a number of rural areas. Most Village Phone participants are women

living in remote areas. Village Phone works as an owner-operated GSM payphone

whereby a borrower takes a BDT 12,000 (USD 200) loan from Grameen Bank to

subscribe to GP (Grameenphone) and is then trained on how to operate it and how

to charge others to use it at a profit. As in September 2006, there are more than

255,000 Village Phones in operation in 55,000 villages around Bangladesh. This

program has been replicated also in some other countries including in Uganda and

Rwanda in Africa.[15]
The mobile-to-mobile GSM network that GrameenPhone (GP) uses is more

expensive and less efficient than what its competition uses. To combat a limited

infrastructure Grameen Telecom uses GrameenPhone's mobile-to-mobile GSM

technology to provide nationwide access. Service is provided in urban areas as well

as rural areas by a system of cellular towers connected by fiber optics that follow

major railways, or by microwave connections.

GP was the first company to provide a GSM mobile phone service to rural areas

which otherwise would have no phone service at all or very limited service

considering its current competitors. Village Phones not only make communication

for rural Bangladeshis easier or possible, it creates economic opportunity for

villagers, increases efficiency and productivity for businesses, and enhances

women's status. GP may use technology that is more expensive and inefficient to

some consumers but its shared-access business model enables it to pay the extra

costs and wealthier consumers, especially consumers who travel, find GP's mobile

GSM technology appealing. These strategies help GP achieve its goals.

Before GrameenPhone came along the Bangladesh Telegraph and Telephone

Board (BTTB) was the only telecommunications operator and carrier in the

country. They held a monopoly over the telecom industry until 1989. Its service

was slow, costs were high, and complaint rate was high. BTTB controlled the

national switched network and its capacity to expand into rural areas. From 1991 to

1996, Pacific Bangladesh Telecom Ltd. (PBTL) was the only mobile telephone

service provider, who provided to the small group of urban elites. Policy and

infrastructure barriers kept threats of substitute products would not increase and the
entry of new competitors to a minimum. This lead to almost no intensity of

competitive rivalry at the time. Customers had no bargaining power because there

were only two services. The suppliers had all the bargaining power.

In 1996, new GSM network licenses were auctioned off and the market grew

extensively. The poor performance of BTTB's service lead to increased demand for

efficient telephone service, giving new competitors the opportunity to enter the

market. Customers were given more bargaining power, more substitute products

became available, and the intensity of competitive rivalry has risen. Now many

mobile providers are working together to compete with BTTB to expand its fixed

network.

There were a few technology challenges that Grameen Telecom (GT) had to face

when it began the Grameen Phone project. The goals of GrameenPhone are to

promote economic development, promote social development, provide affordable

GSM cellular service nationwide, and the TRO is to connect rural Bangladesh

through the provision of mobile telephone service by creating micro-enterprises

that can both generate individual income and provide whole villages with

connectivity. Grameen Telecom uses GrameenPhone's mobile-to-mobile GSM

technology to provide nationwide access. Policy and infrastructure barriers kept

threats of substitute products and the entry of new competitors to a minimum. The
poor performance of BTTB's service lead to increased demand for efficient

telephone service, giving new competitors the opportunity to enter the market. GP

was the first company to provide a GSM mobile phone service to rural areas which

otherwise would have no phone service at all or very limited service considering its

current competitors.