Asia Investor & Analyst Field Trip 2014

Bangladesh

Vivek Sood, CEO

2

A fast growing resilient

economy

● 8th most populous with 167 Mn people

– Density of 1131 / square KM

– Median age of 24.3

● Domestic consumption driven GDP

● Growing per capita income

● Strong currency among peers

● Stable inflation

*Real GDP growth and Std Dev

Source: World Bank

GDP considered for Frontier market only

* 10 Years average from 2004 to 2013

Inflation correlation with peers

6.5%

6.5%

6.4%

6.2%

4.8%

4.5%

4.4%

4.0%

Sri Lanka

Nigeria

Vietnam

Bangladesh

Kenya

Pakistan

Morocco

Tunisia 1.7

1.5

2.1

1.6

0.3

0.9

1.4

1.3

0

5

10

15

20

25

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bangladesh Pakistan Sri Lanka Vietnam

An industry ahead of its

time

● Competitive market of 6 players

– 3 players consist 89%

● 99% prepaid with voice dominance, encouraging data adoption

● Widespread network coverage

● Real penetration of around 46%

● Flagship ‘Digital Bangladesh’ vision of Government

● Very high and unpredictable tax regime

Subscriptions (Mn) and Penetration*

* GP own estimation

68.64

85.45 97.18

113.78 118.49

27.5%33.2% 37.2%

44.5% 45.7%

2010 2011 2012 2013 Sep'2014

An exciting journey of connecting people

1997- 99 2000 - 02 2003 - 05 2006 - 08 2009 - 11 2012 -14

M2M Service

Prepaid Service

WAP service

Best Joint venture

Enterprise

Prepaid product with PSTN

connectivity

2 Mn Subscriber

5.5 Mn 21 Mn 36.5 Mn 50.7 Mn 1 Mn Su

bscrib

er

ba

se

A company bringing magic

of closeness to the mass

● Connecting 50+ Mn people

● Nationwide robust 2G network covering 99% of population

● 45% population under 3G coverage

● Largest listed entity of $ 5.5 Bn*

● Top line comprising of 1.3% of GDP**

● Long term loan of $ 345 Mn

● Largest corporate tax payer

● Direct and indirect employment of 700k lives

*At Dhaka Stock Exchange as of 24 Nov 2014

** Considered real GDP for 2013

Regulatory landscape

● Increasingly consultative approach

● Cooperation with other sector regulators e.g. Bangladesh Bank,

NBR etc.

● Collaboration within mobile industry, and with other important

stakeholders

● Long term road map for predictability and certainty lacking

Corporate governance framework

Shareholders

Board of Directors

Treasury

Committee

Audit

Committee

HR

Committee

HSSE

Committee

Management Team

Organization

CEO Company

Secretary Internal Audit

Stakeholders

Recognitions that inspire us

mBillionth Award GSMA Award

Brand Award

Declaration of Best

Presented Annual Reports

2013 by SAFA & ICAB

Opportunities in a changing

environment

● Connecting the unconnected

● Growing internet penetration and new services

● Enabler of Mobile Financial Service

● Social VAS in agriculture, health & education

● Partnership with ‘Accenture’

Strategic priorities going

forward

● Achieving no 1 position in Net Promoter Score (NPS)

● Acquiring 50 Mn internet users

● Driving efficiency through performance management and

territory approach

● Developing scale in Mobile Financial Services

Asia Investor & Analyst Field Trip 2014

Bangladesh

Dilip Pal, CFO

A profitable company

● Revenue CAGR (5 yrs) of 9.1%

● Consistently maintaining high EBITDA margin

● Healthy OCF and NPAT margin

● APPM stabilizing

Revenue (BDT Bn) and EBITDA Margin

OCF (BDT Bn) and Margin

EBITDA is before other items

OCF defined as EBITDA before other items, less capex excl spectrum fees

YTD 2014 denotes figures upto September 2014

Deconsolidation of GPIT considered from 2013

ARPU (BDT), AMPU, APPM (BDT)

180 178 165 166 170 165

254 255 240 240

250 243

0.71 0.70 0.69 0.69 0.68 0.68

Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

ARPU (BDT) AMPU APPM (BDT)

74.73

89.06 91.92 96.62

76.74

49.5%53.4% 53.3% 50.7% 54.0%

2010 2011 2012 2013 YTD 2014

+6.1%

28.54

34.65 36.36 36.36

32.25

38.2% 38.9% 39.5% 37.6%41.9%

2010 2011 2012 2013 YTD 2014

12.0

20.5

14.0 14.0

9.5

4%

12%

9% 8%

3%

2010 2011 2012 2013 2014(Interim)

Healthy shareholder return

● 66% annualized cumulative return

● Attaining more balanced capital structure

● Stated dividend policy

● Outperforming the market index

Dividend Per Share (BDT) and Yield*

Relative Market Performance in DSE*** Total Shareholder Return**

*Considering yearly average closing price of DSE

**Including dividends reinvested

*** Price and index rebased

-90%

-40%

10%

60%

110%

160%

210%

260%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

50

70

90

110

130

150

170

190

210

230

250

Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14

% of Total Turnover (RHS) GP Price DSEX DSE30

Driving revenue growth

● Volume growth from untapped segment

● Growth in data subscribers

– Higher voice revenue

– Contribution from data

● Retention of HVU with innovative value propositions

● Youth opportunity capturing VAS and contents

● Adjacent business

Structured effort towards

operational excellence

● Cost benchmarking through globally reputed consultant ATKearney

● Learning & synergies at the Telenor Group level

● Robust Opex management process with focus on granularity

● Stable opex margin

Opex Margin

YTD 2014 denotes figures upto September 2014

42.5%39.1% 40.1%

41.3%38.0%

2010 2011 2012 2013 YTD 2014

Bangladesh

Region

Area

Territory

Cluster formation:

Territory Approach

● Thana is the smallest Govt. administration hub with 50-90 Sq km

● Each territory contains on an avg 1-2 thana based on the following:

–Size & business – 200 Sq Km Max

–Telco POS: 200-250 POS

–Number of BTS: 40-50

–Avg Travel Time (E2E): 4 - 5 Hours

● Territory officer and area manager

● Similar principle followed in area formation

9 Region

34 Area

114 DTR

222 Territory

9k BTS

Growth story is intact. Data the main driver.

Grow profitably

Ambition to retain market share

Investment in network for strengthening leadership position

Summary

This presentation includes “very high level guidance on the future" These may include, without limitation,

statements relating to our future business development and economic performance, future earnings and cash

flow, our business strategy, regulatory changes, future policy of the Bangladeshi Government relating to the

telecommunications industry in Bangladesh, our competitive position and the effects of competition, and the

amount and nature of our capital expenditures and capital commitments. These guidance represents our

current views with respect to future events and are not a guarantee of future performance. You are cautioned

not to rely on these very high level guiding statements. A number of important factors could cause actual results

or outcomes to differ materially from those expressed in any forward-looking statement.

We have obtained certain market data, industry forecasts and data used in this presentation from market

research, publicly available information, including governmental publications, and industry publications. Industry

publications generally state that the information contained therein has been obtained from sources believed to

be reliable, but that the accuracy and completeness of the information is not guaranteed. While we believe

these industry forecasts and market data are reliable, we have not independently verified this information, and

we make no representation as to the accuracy of this information.

Because the market data included in this presentation is derived from multiple sources, you should not assume

that it has been compiled on a consistent basis. You should exercise caution when comparing market data from

different sources or across different time periods. We make no representation that such market data is accurate

or complete or that it has been compiled or presented on a consistent basis.

Disclaimer

Cluster Way of Work

The New Way of Work – Regional Approach

National Approach Looking at the Country

Regional / Cluster

Approach Granular way of looking into

cluster markets

HH Income 20K+ 5%

HH Income 20K+ 9%

HH Income 20K+ 10%

HH Income 20K+ 53%

HH Income 20K+ 9%

HH Income 20K+ 28%

HH Income 20K+ 28%

21

Unique Economy and Culture

Company Confidential

Agriculture

Industrial/trading

Agro/ Industrial

Remittance

Commercial Hub

Agro/Riverine

Trading/Seaport

Regions

Area

Distributor

Territories

BTS

Areas (3-7 areas per

Region)

Regions based on

Geography and Business

Volume

Distributors per Area

based on Partner and

Market Profile. The DTR are

3rd Party Partners Few Territories per Area.

The territories are mapped

according to the geography,

volume and POS Numbers.

Each Territory is managed

by Territory officer.

A Territory contains • Xx BTS

• xx Telco POS

• xx ERS POS

Grameenphone - Regional Sales Structure

23 Confidential

Cluster Approach Strategy

From National to Granular

Implement a Cluster Approach from Improving our Competitive Positions in the Markets and Grow Revenue &

SIM Market Share in Respective Territories

Indicators Drivers

Revenue /

Reload Sales

Gross Add

Sub Base

Strategic Dimensions

Distribution

Communication

People Product

Network Cluster

Level

Actions Revenue Market Share

Active SIM

Share

Main SIM

Share

Internet

Revenue

MFS

Cluster Strategy

Right Insights, Right Actions

Action Planning

“KPI”

Insights & Analytics

Issues & GAPs

Desired Picture & Targets

Distribution Product Comm./

Visibility Network People

Recipe Mapping – Regions + HQ

Cluster Level Actions

25

Cluster

KPI

New Add

Reload Sales

Devices POS

Expand

NPS

Network KPI

Result Indicators

Market

Share

Distribution Product/Sub Analysis Network Investment Industry

Revenue

The KPI Flow

Linked with

Performance and

Bonus/Incentive

Monitored

Regularly to Impact

KPI

Distribution Quality

and Availability Product / Campaign

Performance Traffic/Utilization

Strong Performance Management & Right Actions

Territory KPI1 KPI2 KPI2 Key Insights Actions

A Trend Target Relative Maintain

B Target Relative Trend POS, Campaigns Focus: Distribution,

People

C Trend Growth Relative Utilization, Awareness Focus:

Communication, BTL

D Relative Relative Relative Network Issues Fix Network Issues

E Target Relative Growth HV Churn Focus: New Offer,

Micro Campaign

Organization Wide Collaboration to Develop Action

Points

Organizational Collaboration Keeping Functional & Regional Alignment

Strategic Planning:

1. National War Room

2. Information alignment

3. Region specific Focus

4. Investment

Prioritization &

Profitability Analysis

5. Product &

Communication

Strategy

6. Revenue, RMS, RG

Action & Execution:

1. Regional War Room

2. Performance Mgt

3. Territory specific TM

Planning

4. Focus on Execution

5. Sales, Campaign,

Distribution, RNPS &

Visibility

Some Demonstrations

Cluster Approach – KPI Monitoring

Sub Reload

Sales Growth

Internet

MobiCash Expansion

Devices

Distribution

Quality Cluster KPI Focus

Setting Actions

Cluster Approach – Network Utilization U

tiliz

atio

n C

ate

gory

6

0 PLAN COMBAT

MAINTAIN

Sites

HIGH FOCUS All Out Drive

Sites

HIGH FOCUS All Out Drive

Sites

Drop Growth Change in Utilization

Increasing Investment Efficiency by

Focused Activity Planning

Campaign communication Brand Promoter Activity

Rural Activation Events

Challenges: 1. Revenue stagnant 2. Campaign/Product Awareness

Results:

Market share Increase

Cluster : A

Segment based campaign Communication BTS Based event

Results:

Increase in Campaign Takers.

Low BTS utilization sites decreased.

Challenges: 1. Low Utilization of Network

Cluster : B

Key Component Engaging Retailers & Customers

Hype generating activities in retail

hotspots

MT & Back office employees’ visit to

retail

Colorful customer engagement activities in flagship channels

Strong Performance Management Culture Celebrating with Management

Q1 2013: Sylhet Q2 2013: Dhaka Q3 2013: Bogra

Q4 2013: Barisal Q1 2014: Sylhet

Empowerment – Territory Level Actions

Driving Internet for All in Bangladesh

Erlend

Prestg

ard,

CSO

Grame

enpho

Although low-income, Bangladesh is a country of strong

growth and an exceptionally young population

Country overview

• Population: 166 million

• 51% of population < 25 years

• GDP per capita of USD 752

• GDP growth ~6%

37 Source: ITU, World bank and CIA World Factbook

Grameenphone is a strong and profitable player in a

competitive, but growing, telecom market

38 1 Active data users baed on 90d users using GP internal estimates

Q3 2014 numbers, 1 USD = 77.49 BDT,

EBITDA before other items

50 Mn

~47% Revenue market share

BDT 165 /

USD 2.1

Subscriptions

~54%

Market share

EBITDA Margin ARPU

BDT 25.7Bn /

USD 331.7Mn

Quarterly revenue

~45% Real mobile penetration

~20% Active data users

Mobile penetration1

GP regular data user base has grown over the last

quarter, mainly driven by micro data packs

39

Regular internet user base have growth

(90 day, > 150 KB)

Median data usage is also in a growth

trajectory

Aug-14

+14%

Oct-14 Sep-14

+28%

Oct-14 Sep-14 Aug-14

Internet penetration in this market is “push based” – in

other words, we drive the market for internet

1-Jan-14 1-Feb-14 1-Mar-14 1-Apr-14 1-May-14 1-Jun-14 1-Jul-14 1-Aug-14 1-Sep-14 1-Oct-14 1-Nov-14

Continuous push to drive down handset devices –

although cheap, they are still a hurdle in BD context

41

GP Initiatives to introduce affordable internet phones

EDGE Feature

phone

USD 18.75

3G Smartphone

(FireFox)

USD 58

Pushing data enabled handsets down in price

BDT 850/USD 10.6, unbranded

Chinese basic

BDT 925 /USD 11.5, local basic, strong

brand

BDT 1,500/USD 18.75, Edge+Java,

good local

BDT 4,000/USD 50, low-end 3G

smartphone

BDT 6,500/USD 81, most selling

smartphone

BDT 20,000/USD 250 high-end local

GP: Regaining coverage supremacy by building on the

widest 3G network coverage in Bangladesh

42

Q3 ’14 Q2 ’14

Regaining the coverage supremacy by rolling out new

3G sites

Existing

New roll out in quarter

• 1st operator cover all 64 administrative

districts in Bangladesh

• 3G coverage of about 2/3 of 3G

handsets

• ~ 45% of population within 3G coverage

• ~ 99% EDGE or 2G internet coverage

• Additional coverage build up in Q4 ’14 –

investment on network roll out to

continue in 2015

• Competition ramping up their 3G

coverage too

GP working on two fronts – acquire new customers with

affordable product & capture smart phone segment with

all-in bundles

43

• 1 Taka whole day internet

• 3 MB data, 2G

• New user acquisition

• Launched on July ’14

• Helped to grow regular data subscriber base

by over 15% in two month period

Data centric monthly commitment bundles with Data +

Voice + SMS + MMS Offered free Facebook to stimulate usage & acquire new

data users

Our internal analysis shows positive impact of data

usage on service ARPU – but causes “prisoner’s

dilemma” dynamics

44

Data users’ ARPU is higher than non-data

users’ ARPU

Moving forward, data usage to take a greater

ARPU share

2014 2013

Voice & others

Data

Data Non data

New users

Data Non data

Existing users

Competition not monetizing speed / driving down 3G

prices / aggressive roll-out = demanding dynamics

45

Data prices being driven down by competition

3G data at the price of 2G/ unlimited utilities with

data packs

Prices of 1 GB data has fallen by 25% in 3

quarters

300

400

Q4 ’13 Q3 ’14

-25%

Future of internet growth is very bright in Bangladesh;

GP to get its fair share

• All major factors to drive mobile internet penetration in place

– Youthful population (majority population

below 24 years)

– No fixed internet infrastructure

– Mobile internet network coverage across the

nation

– Ever decreasing prices of internet devices

– Strong (> 6% year on year) economic

growth

• Monetization and competitive dynamics will remain challenging

46

Driving Internet for All in Bangladesh

Erlend

Prestg

ard,

CSO

Grame

enpho