We too have a Dream

We too have a DreamWe do not always dream as individuals; sometimes we dream as a group, sometimes we even dream as a nation. When dreams are collective, the dream is a reflection of the values and beliefs of a community. Grameenphone shares in the power of collective dreams. We strive to connect 160 million people, so that we may dream as one. Because it is only when we are united, can a nation boldly step up and reach towards a better future. The power of collective dreams gives us hope; brings us together.

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This is Grameenphone

Our Vision, Mission & Values

Performance at a Glance- 2009

Corporate Directory

Business Review

The Shareholders

Organizational Structure

Directors’ Profile

Profile of the Management Team

Chairman’s Message

CEO’s Message

Corporate Governance in Grameenphone

Report on Corporate Social Responsibility

Five Years Financial Summary

Financial Review

Value Added Statement

Contribution to National Exchequer

Directors’ Report

Report of Audit Committee

Auditors’ Report

Statement of Financial Position

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flow

Notes to the Financial Statements

Useful Information for Shareholders

Notice of the 13th AGM

Proxy Form, Attendance Slip andOption for Receiving Dividend

Contents

Grameenphone Ltd., the largest telecommunications service provider in Bangladesh,

received its operating license in November 1996 and started its service from March

26, 1997, the Independence Day of Bangladesh.

Now, after 12 years of successful operations, Grameenphone is the largest mobile

phone service provider in Bangladesh, with more than 23 million subscribers as of

December 2009. The Company was successfully listed in November 2009 – which

was the largest IPO in the history of the Bangladesh capital market.

Grameenphone provides services to rural and urban customers across Bangladesh,

where mobile telephony is acknowledged as a significant driver of socio-economic

development, both for individuals and the nation.

This isGrameenphone

This is Grameenphone

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02/03

Rubel Hossain is the 21 years old speedster of our national cricket team; chosen from thousands. The youngest

as well as the fastest pacer so far in Bangladesh with an average speed of 92 miles per hour, Rubel’s name is

recognized by millions of cricket fanatics across the world. His pace is feared by the top international batsmen

– especially those who have found themselves at the crease facing a charging Rubel.

Pacer Hunt in 2007, Rubel Hossain towered above all and took his first step towards becoming a key player in

a nation’s collective dream. He joined the Bangladesh national team in 2009, and, he has never looked back.

Together with his teammates, they have taken us to glorious and even unexpected victories, often against all

odds. Rubel’s story is not just a true example of achievement through grit and determination, but also that of a

collective dream shared by 160 million people, in which he stars with his 10 other teammates.

Dreaming together

Rubel HossainNational Cricketer

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04/05

Together with histeammates, the team has taken us to glorious and even unexpected victories, often against all odds. A cricket team powered by a collective dream has given our nation the right to roar mightily as “The tigers”.

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06/07

OurVision Mission &Values

“We are here to help”

Our Vision We exist to help our customers get the full benefit of communications services in their daily lives. We’re here to help.

Our Mission Grammenphone is the only reliable means of communication that brings the people of Bangladesh close to their loved ones and important things in their lives through unparalleled network, relevant innovations & services.

Our ValuesMAKE IT EASY

Everything we produce should be easy to understand and use. We should always remember that we try to make customers’ lives easier.

KEEP PROMISES

Everything we do should work perfectly. If it doesn’t, we’re there to put things right. We’re about delivery, not over-promising. We’re about actions, not words.

BE INSPIRING

We ‘re creative. We bring energy and imagination to our work. Everything we produce should look fresh and modern.

BE RESPECTFUL

We acknowledge and respect local cultures. We want to be a part of local communities wherever we operate. We want to help customers with their specific needs in a way that suits way of their life best.

Vision, Mission & Values

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08/09

Performanceat a Glance 2009

Revenue

65.3 Bn

6%

BDT 12.08

391%

NAV

per

Sha

re

BDT 37.14

64%

Net Operating Cash

Flow per Share

BDT 24.77

22%

Net Profit after Tax

15.0 Bn

402% Profit before Tax

18.6 Bn

61%

Ope

ratin

g Pr

ofit

20.5 Bn

34%

Gross Profit32.2 Bn

12%

(Figures in BDT)Growth from last year

Performance at a Glance

Earnings p

er Share

Company NameGrameenphone Ltd.

Company Registration No.C-31531 (652)/96

Legal FormA public listed company with limited liability. Incorporated as private limited company on October 10, 1996 and subsequently converted to a public limited company on June 25, 2007. Listed on the Dhaka and Chittagong Stock Exchange Limited on November 11, 2009.

Board of Directors

ChairmanSigve Brekke

DirectorsNurjahan BegumHilde TonneM. ShahjahanPer Erik HyllandMd. Ashraful HassanKnut BorgenSnorre Corneliussen

Independent DirectorDr. Jamaluddin Ahmed FCA

Company SecretaryRaihan Shamsi

Audit CommitteeM. Shahjahan (Chairman)Per Erik HyllandDr. Jamaluddin Ahmed FCAFarhad F. Ahmad (Secretary)

Treasury CommitteeM. Shahjahan (Chairman)Pal StetteRaihan ShamsiImdadul Haque (Secretary)

Human Resources CommitteePer Erik Hylland (Chairman)M. ShahjahanArnfinn GrovenHossain Sadat (Secretary)

Health, Safety, Security & Environment CommitteePer Erik Hylland (Chairman)M. ShahjahanDr. Mohammad Shahnawaz Hossain Sadat (Secretary)

Management TeamOddvar Hesjedal, Chief Executive OfficerRaihan Shamsi, Deputy CEO & Chief Financial Officer Frode Stoldal, Chief Technology OfficerArnfinn Groven, Chief People OfficerKazi Monirul Kabir, Chief Communications OfficerArild Kaale, Chief Marketing OfficerMahmud Hossain, Acting Chief Corporate Affairs Officer

Head of Internal AuditFarhad F. Ahmad

Statutory AuditorsRahman Rahman HuqChartered Accountants

Legal AdvisorHasan & Associates

Registered OfficeCelebration PointPlot # 3 & 5, Road # 113/AGulshan-2, Dhaka-1212

Corporate Directory

Corporate Directory

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10/11

The year 2009 has been a fantastic year for Grameenphone from many fronts – we have successfully been able to introduce various “first of its kind” innovative products and services to the market. The biggest news, however, for the company has been successful listing of Grameenphone in November 2009 – which was the largest IPO in the history of Bangladesh capital market.

Notably the company crossed the 23 million subscriber mark in December 2009, and saw both a steady revenue growth from quarter to quarter and increasing EBITDA margins – despite declining ARPU (Average Revenue Per User).

The most significant BIG introductions for the company have been the launch of our internet vision “light will find its way” with the GP-branded EDGE Modem in February; the introduction of the Grameenphone branded handset V100 into the market in August; and the launch of the StudyLine service in October 2009.

Among the other notable launches were the mobile back-up service and the in-flight roaming service. The Samsung handset bundle offer for Bengali New Year met with a great response allowing subscribers to choose between two handset packages at the two attractive package rates of BDT 5,899 & BDT 1,899 respectively.

Grameenphone formally signed two separate agreements with ICX (Interconnection Exchange) operators, GETCO Telecommunications Ltd. and M&H Telecom Ltd. for routing domestic inter-operator calls and International calls to and from GP subscribers, and IGW (International Gateway) operators, Bangla Trac Communications Ltd. and NovoTel Ltd., for routing International calls to and from GP subscribers respectively.

2009 was also the year the company took a deeper look at environment and took the lead in protection of the environment in Bangladesh when the environment and climate change campaign was launched in June 2009. The objective of the campaign was to support a healthier environment by both reducing GP’s carbon footprint. GP’s environmental roadmap aims to promote a low-carbon society and taking responsibility for its own carbon emissions. The program aims to reduce carbon emissions by 30-40% within 2015 from business as usual situation considering 2008 as the baseline.

The collaborative project with the Prothom Alo in the collection of letters from 1971, culminated in the publication of a book “Ekatturer Chithi” in March 2009. As CEO, Oddvar Hesjedal explained at the onset of the project in December 2008, the project comes “from the heart and will leave behind in its wake a document which will help to preserve an important part of history through the letters written by the Freedom Fighters to their near and dear ones.”

The IPO StoryThe biggest milestone for Grameenphone in 2009 was the listing of Grameenphone in the Bangladesh capital market on November 11, 2009.

The issue was formally declared for trading on conclusion of signing of the Listing Agreement, which gave the go ahead for the Grameenphone shares to begin trading in the Dhaka and Chittagong stock exchanges the same day. Public subscriptions for shares of Grameenphone was the biggest public offer in Bangladesh history and mobilized a fund of BDT 4.86 billion with the allocation of nearly 69.5 million shares.

Following the approval for Grameenphone’s initial public offering (IPO) by the Securities and Exchange Commission (SEC) of Bangladesh earlier in August 2009, the subscription process opened on October 04, 2009 and continued till October 08, 2009 to overwhelming response and was subscribed by more than three times. Interested investors were asked to submit their applications through 503 branches of 15 commercial banks and the Investment Corporation of Bangladesh.

While the face value of each Grameenphone share was BDT 10 each, the actual issue price was BDT 70, which included a premium of BDT 60. The market lot was fixed at 200 shares, which meant that potential investors paid out BDT 14,000 with each application.

Business Review2009: A Year of Innovation

The subsequent IPO Lottery was concluded at the Bangabandhu International Convention Center (BICC) on October 28, 2009, amidst huge, unprecedented participation from investors and the interested general public. Over 300,000 Grameenphone shares were allocated through the IPO and a pre-placement offer (PPO) process. In total around BDT 9.72 billion, or 10 per cent of the company’s valuation, was mobilized in two installments with BDT 4.86 billion raised through pre-placement (PPO), which was completed earlier in December 2008, and the rest BDT 4.86 billion was raised through the IPO. The total amount raised represented seven percent of the total DSE market capitalization.

Business HighlightsThe biggest highlight for 2009 has been the launch of the Grameenphone branded handset – Grameenphone V100 – in August. This was first time that a mobile phone operator in Bangladesh brought its own handset to the market. The handset, priced at an affordable BDT 3,199, featured with a camera, FM radio and internet browsing facilities and had an inbuilt ‘GP menu’ which listed all the attractive GP value added services in a single menu. The handset has a full color display and dual language option for both Bengali and English menus.

Overall, the GP handset provided a subscriber everything he or she needed from a mobile phone at a very affordable price; and, backed by Grameenphone reliability, the handset received overwhelming response from the market.

2009 also saw the launch of Grameenphone’s new internet vision “Light will find its way” and the launch of a special internet SIM for internet access, in February. The move followed closely after an ISP license was granted to the Company. GP also pledged to expand its internet platforms and develop more internet-related products and services. Currently Grameenphone has over 4.3 million EDGE subscribers making the company the largest ISP in the country.

Among other customer services introduced in the year was the in-flight roaming service and mobile backup service. In-flight roaming offers our international roaming subscribers with roaming facility during the flight. The service was initially available on Emirates flights and has been extended to Malaysian Airlines, Qantas, Turkish Airlines and Saudi Arabian Airlines. Subscribers onboard can use in-flight roaming after the aircraft leaves Bangladesh air space.

Mobile backup protects subscribers, who avail the service, from data loss on their phones. This service supports a wide-range of mobile devices, including Symbian, J2ME, Windows Mobile and BlackBerry handsets.

The international SMS service has also been extensively expanded in 2009 to include 542 operators around the world to include African countries like Ivory Coast, Rwanda and Liberia – which were long-pending expectation from the Bangladesh Armed Forces to facilitate cheaper communication for family members posted in those locations.

As a company that serves to provide its subscribers solutions to make life easier, Grameenphone launched the StudyLine service in June. StudyLine is accessible from any Grameenphone connection through a short code and callers can receive education-related information from a human agent. In addition to other services, StudyLine offers admission information on local schools, colleges and universities, as well as admission procedures for renowned universities from around the world including up-to-date information on standardized tests like IELTS, SAT, GMAT, and GRE, etc.

Grameenphone has also partnered with the government in various projects, the most significant of which are the Early Warning service, with the Ministry of Food and Disaster Management to disseminate early disaster warning to the people in disaster-prone areas through the mobile phone’s cell broadcast function; and the partnership with the Bangladesh Post Office and the Bangladesh Railway.

Under the terms of the agreement with the Bangladesh Post Office (BPO) Grameenphone has supplied 24,000 special SIM cards to the employees of the BPO working in 8,000 Extra Departmental Sub and Branch Post Offices across the country. These special SIMs feature a combination of the Flexiload (top-up) and GPPP (Grameenphone Public Phone) facilities; the postmen will use these SIMs to both supplement their own income in the rural areas and facilitate communication between themselves and the central post office.

In another business development, Grameenphone signed agreements with ICX (Interconnection Exchange) and IGW (Interconnection Gateway) operators to route international calls to and from GP subscribers. This was done in compliance with the ILDTS (International Long Distance Telecommunication Services) Policy 2007 which required that mobile operators establish physical interconnection with ICXs and logical interconnection with IGWs via ICXs.

Implementation of the ILDTS Policy has removed the sole dependency on state-owned BTCL (Bangladesh Telecommunications Company Limited) for international traffic business and introduced a competitive business environment.

Business Review

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The ShareholdersThe shareholding structure comprises of mainly two sponsor Shareholders namely Telenor Mobile Communications AS (55.80%) and Grameen Telecom (34.20%). The rest 10.00% shareholding includes General public & other Institutions.

Telenor Mobile Communications AS (TMC)

TMC, a company organized under the laws of the Kingdom of Norway, seeks to develop and invest in telecommunications solutions through direct and indirect ownership of companies and to enter into national and international alliances relating to telecommunications. It is a subsidiary of Telenor Mobile Holdings AS and an affiliate of Telenor. Telenor AS is the leading Telecommunications Company of Norway listed on the Oslo Stock Exchange. It owns 55.80% shares of Grameenphone Ltd.

Telenor's strong international expansion in recent years has been based on leading-edge expertise, acquired in the Norwegian and Nordic markets, which are among the most highly developed technology markets in the world. It has substantial International operations in mobile telephony, satellite operations and pay Television services. In addition to Norway and Bangladesh, Telenor owns mobile telephony companies in Sweden, Denmark, Hungary, Russia, Ukraine, Serbia, Montenegro, Thailand, Malaysia, Pakistan and India with more than 174 million mobile subscriptions worldwide as of December 31, 2009.

Grameen Telecom (34.20%)

Telenor Mobile Communications AS (55.80%)

General public & other Institutions (10.00%)

Telenor uses the expertise it has gained in its home and international markets for the development of emerging markets like Bangladesh.

As part of the conversion of Grameenphone from a private limited to a public limited company, Telenor Mobile Communications AS transferred 10 shares each on May 31, 2007 to its three (3) affiliate organizations namely Nye Telenor Mobile Communications II AS, Norway; Telenor Asia Pte. Ltd., Singapore; and Nye Telenor Mobile Communications III As, Norway.

Grameen Telecom (GTC)Grameen Telecom, which owns 34.20% of the shares of Grameenphone, is a not-for-profit company in Bangladesh, working in close collaboration with Grameen Bank, winner of the Nobel Peace Prize for 2006 along with its founder Professor Muhammad Yunus. The internationally reputed bank for the poor has the most extensive rural banking network and expertise in microfinance. It understands the economic needs of the rural population, in particular the women from the poorest households.

GTC’s mandate is to provide easy access to GSM cellular services in rural Bangladesh and creating new opportunities for income generation through self- employment by providing villagers, mostly to the poor rural women with access to modern information and communication-based technologies.

GTC is also one of the three National distributors of Nokia brand handsets in Bangladesh and also the authorized service provider of Nokia Care network, providing after sales services to the Nokia customers.

With the help of Grameen Bank, Grameen Telecom, with its field network, administers the Village Phone Program, through which Grameenphone provides its services to the fast growing rural customers. Grameen Telecom trains the operators, supplies them with handsets and handles all service-related issues.

GTC has been acclaimed for the innovative Village Phone Program. GTC & its chairman Nobel peace prize laureate Professor Muhammad Yunus have received several awards which include: First ITU World information Society Award in 2005; Petersburg Prize for Use of the IT to improve Poor People’s Lives” in 2004; GSM Association Award for “GSM in Community Service” in 2000.

As part of the conversion of Grameenphone from a private limited to a public limited company, Grameen Telecom transferred one share each on May 31, 2007 to its two affiliate organizations namely Grameen Kalyan and Grameen Shakti.

The Shareholders

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Top Twenty Shareholders as on December 31, 2009

Sl No Name of Shareholders Number of Ordinary Shares held Percentage

1 Telenor Mobile Communications AS 753,407,724 55.80%

2 Grameen Telecom 461,766,409 34.20%

3 Grameen Bank Borrower’s Investment Trust 11,037,221 0.82%

4 IDLC Finance Ltd. Portfolio A/C 6,598,800 0.49%

5 AB Investment Limited - IDA 6,495,300 0.48%

6 IFIC Bank Limited 3,684,900 0.27%

7 LankaBangla Finance Limited - Portfolio A/C 2,161,800 0.16%

8 United Commercial Bank Ltd. 2,096,700 0.15%

9 Grameen Capital Management Ltd. - Investors’ A/C 1,693,900 0.12%

10 Rupali Bank Ltd. 1,283,800 0.10%

11 Popular Life Insurance Co. Ltd. 1,234,400 0.09%

12 Prime Bank Ltd. – Investors’ A/C 1,158,100 0.09%

13 Trust Bank 1st Mutual Fund 1,064,200 0.08%

14 Union Capital Ltd. – Investors’ A/C 1,059,000 0.08%

15 ICB Unit Fund 975,800 0.07%

16 The City Bank Ltd. 975,600 0.07%

17 The Trust Bank Ltd. 894,300 0.06%

18 Trust Bank Ltd. – NRB A/C 891,800 0.06%

19 Grameen One : Scheme Two 872,800 0.06%

20 People’s Leasing and Financial Services Ltd. 799,700 0.06%

Total 1,260,152,254 93.31%

The Shareholders

* Not a part of the Management Team

** Deputy CEO has a special role on Stakeholder Relation of the Company. Stakeholder Relation team of Corporate Affairs has a dotted reporting to Deputy CEO.

Board of DirectorsBoard

Audit Committee

Oddvar Hesjedal Chief Executive

Officer

Farhad F. Ahmad* Internal Audit

Raihan Shamsi Deputy CEO

**Ishtiaq Hussen Chowdhury* Stakeholder

Relation

Department ofCompany Secretary

Frode Stoldal Chief Technology

Officer

Arild Kaale Chief Marketing

Officer

Kazi Monirul Kabir Chief

Communications Officer

Raihan Shamsi Chief Financial

Officer

Arnfinn Groven Chief People Officer

Mahmud Hossain (Acting) Chief

Corporate Affairs Officer

Delwar Hossain Azad*

Financial Services

Mustaque Ahmed* Strategy

Serajus Saleheen* Wholesale Business

Arne Viggo Aronsen* Sourcing

GP Organogram &Management

Organizational Structure

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What does it take to be a family? Is it just a bond shared between people connected by blood? Or a connection

shared between individuals bonded by loyalty, devotion and similar aspirations? Perhaps no one knows better

than Amir Hossain, aged 52, and a proud member of one of the largest families around; over 4800 individuals

looking out for each other, sharing the same goals and thinking uniquely, yet collectively.

History talks about many such examples when people came together; each individual being as unique as they

are, but tied as one by a belief that’s greater than each of them. During times of war, times of peace, times of

unforeseen catastrophes, times of unimaginable discoveries, times of oppression, times of revolution, times of

mourning and during times of celebration – we have chosen to set aside our differences and become part of

one family, sharing a single dream.

Amir Hossain is one of the oldest members of a family bonded together by a single dream; connected together

with a mission to connect others, former strangers become members of a family - the Grameenphone family.

A family made of dreams

Amir HossainOffice Assistant

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The family which Amir Hossain belongs to is built on the very essence of relationships shared between people and theirfamilies. And, the commitment towards ensuring that families always “Stay Close”, is the single dream that ties together the Grameenphone family.

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Hilde Tonne

Sigve Brekke

Mr. Sigve Brekke was appointed to the Board on September 1, 2008, and is also chiarman of Grameenphone Board. Mr. Brekke has held a number of positions in the Telenor Group. He joined Telenor Asia PTE Ltd. in 1999 as Manager of Business Development, and later became Managing Director. He served as the co-CEO of Total Access Communications PLC (“DTAC”) from 2002 to 2005, and became sole CEO from 2005 till September 1, 2008. Most recently, in July 2008, he was appointed as Head of Telenor Asia. Prior to joining Telenor, Mr. Brekke served as the Deputy Minister (State Secretary) of Defence in Norway in 1993 and was also an associate research fellow at the John F. Kennedy School of Government, Harvard University. Mr. Brekke holds a Master of Public Administration from John F. Kennedy

School of Government, Harvard University.

Ms. Hilde Tonne was appointed to the Board on January 20, 2010. She currently serves as Executive Vice President and Head of Communications & Corporate Responsibility, Telenor Group. Ms. Tonne came to Telenor in 2007 from Norsk Hydro, where she was Head of Technology & Research in Hydro Oil & Energy. During the years from 1991 to 1999, Ms. Tonne held various positions in Saga Petroleum. From 2000 to 2007, she served in several managerial positions in Hydro. Ms. Tonne serves on the Board of Directors in Det Norske Veritas AS and Statkraft AS. She obtained a Master of Science in Petroleum Technology from the Norwegian Institute of Technology in Trondheim,

Norway and RWTH Aachen in Germany.

Mr. M. Shahjahan was appointed to the Board on June 26, 2006 and is also chairman of our Treasury Committee and Board Audit Committee. He currently serves as the General Manager and Head of the Accounts, Finance, Planning, Monitoring and Evaluation Division of Grameen Bank. Prior to joining us, he served in several executive management positions in Grameen Bank, including Chief of the Audit Department and Zonal Manager. Mr. Shahjahan is a member of the Board of Directors of several Grameen peer companies that work in the fields of health, education, agriculture, welfare, renewable energy, telecommunications, venture capital financing and merchant banking. He obtained, from the University of Dhaka, a Bachelor of Commerce (Honours) in Accounting in 1976, as well as a Masters degree in Accounting in 1977 and a Masters degree in Finance in 1981. He was awarded ICAB Medal (Silver) for passing the ‘C.A Intermediate’ examination at the earliest eligible chance in 1981.

M. Shahjahan

Ms. Nurjahan Begum was appointed to the Board on January 20, 2010. She is currently serving as Deputy Managing Director of Grameen Bank, and also as honorary Managing Director of Grameen Shikkha (Education), a non-profit organization in the Grameen family. She was one of the earliest associates of Professor Muhammad Yunus when the latter started the Grameen Bank Project in 1976 in the village Jobra in Chittagong district of Bangladesh. Ms. Nurjahan, who studied Bangla Literature and Culture at Chittagong University, played an important role in organizing poor rural women in Grameen Bank’s grassroots groups during the bank’s earliest and most challenging days. She was the first ‘Principal’ of the Grameen Bank Training Institute. She served as consultant, trainer and evaluator of microcredit programs in many countries and lectured at different universities, conferences and seminars in different countries of the world. She is also serving on the Board of several organizations including Grameen Foundation, USA. She was awarded the Susan M. Davis Lifetime Achievement Award 2008 by Grameen Foundation. She was also awarded World Summit Millennium Development Goals Award 2009 and the Vision Award 2009. She participated in the Fortune Most Powerful Women Summit held in Los Angeles in 2007 and was appointed president to the Foundation for Justice Prize giving ceremony held in Valencia, Spain in 2007.

Nurjahan Begum


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Mr. Per Erik Hylland was appointed to the Board on June 25, 2007 and is also chairman of our Human Resources Committee and Health, Safety, Security & Environment Committee. He is Senior Vice President in Telenor Asia and serves as Country Manager in Bangladesh. Mr. Hylland has professional experience in the banking, information technology and telecommunications industries. He joined Telenor in 1994 and since then has held several senior management positions. During the past eleven years, he has worked in ten countries as a Telenor representative for Central and Eastern Europe, North Africa and Asia. During the same period, Mr. Hylland acted as a director for Telenor companies in Austria, the Czech Republic, Hungary and Slovakia. He is an information technology engineer educated in the Norwegian Ministry of Defence.

Mr. Md. Ashraul Hassan was appointed to the Board on January 20, 2010. He currently serves as Managing Director of Grameen Telecom, engaged in promoting and providing easy access to GSM cellular services in rural Bangladesh. He also serves as Managing Director of Grameen Knitwear Ltd., Grameen Distribution Ltd. and Grameen Fabrics & Fashions Ltd. He gained diversified knowledge in textile sector specially in the field of composite knit wear having wide exposure in the industrial management, export market, labour management and so on. He started his professional career in Grameen Bank, the Nobel Peace Prize winning organization. During his 15 years tenure with the Bank, he held various key positions including the Chief of Engineering section. He has gained extensive knowledge in the field of construction engineering and extended notable contribution for the infrastructural development of the Grameen Bank. He serves as a member of the Board of Directors of several enterprises of Grameen family which play commendable role in the fields of renewable energy, health care, food & nutrition, information technology, etc. He holds Bachelor of Science in Civil Engineering from Khulna University of Engineering and Technology, Bangladesh.

Md. Ashraful Hassan

Per Erik Hylland

Mr. Knut Borgen was appointed to the Board on January 20, 2010. He currently serves as Senior Vice President - Business Development, Telenor Asia (ROH). Mr. Borgen has professional experience in banking and telecommunications industries. He joined Telenor in 1997. He has been working in the Asian region since 2001. He is currently a member of the Board of Directors of Telenor Pakistan and Total Access Communications (Thailand). He obtained a B.A. in Economics from San Jose State University in 1984 and a Master of Business Administration from University of Michigan in 1987.

Knut Borgen


Mr. Snorre Corneliussen was appointed to the Board on the March 23, 2009. In January 2009, he joined the Telenor Asia office, and from 2005 he was serving as Senior Advisor at the Telenor Global Coordination in Norway. Mr. Corneliussen started in Telenor in 2003 as Operations Manager responsible for the operations of the fixed, mobile and data networks in Norway, Sweden and Denmark. Before he began working for Telenor, Mr. Corneliussen held several positions in Ericsson. He started working as a researcher in 1997 then became a project leader and led several of the early 3G and IP related development projects. In 2000, Mr. Corneliussen became a Product Manager before he moved to Sweden in 2001 and worked as project office manager at the Ericsson head office in Stockholm. He is currently a board member at DTAC in Thailand. Mr. Corneliussen holds a Master of Business Administration degree from the Norwegian School of Economics and Business Administration (NHH). He holds a Master of Science degree in telecommunication from the Norwegian School of Technology (NTH) and he has additional education in Social Economy from the University in Oslo (UiO). Mr. Corneliussen has also studied leadership development at Harvard Business School.

Snorre Corneliussen

Dr. Jamaluddin Ahmed FCA

Dr. Jamaluddin Ahmed FCA was appointed to the Board on March 19, 2010 as the Independent Director. Dr. Jamal is a Partner at Hoda Vasi Chowdhury & Co., Chartered Accountants, which is the associate firm of Deloitte & Touche in Bangladesh. He is the current president of the Institute of Chartered Accountants of Bangladesh (ICAB). Dr. Jamal is engaged in assignments in Financial, Banking and Energy Sector industries. He worked as country specialist in Migrant Remittance Management. He was involved in DFID funded Cheque Automation, Automated Clearing System and in the development of National Payment System in Bangladesh. Over his professional career, Dr. Jamal has written copious publications and conducted numerous research papers on various aspects. Recently, Dr. Jamal completed his research paper on mobile banking for speedy remittance to rural Bangladesh, Cost and Pricing of Remittance - A Comparative Study. Moreover, he conducted a Study in 2008 on the Mobile Banking in Afghanistan for the Micro Finance Transaction funded by the USAID. Dr. Jamal is currently working as Independent Director of four other organizations. He holds Masters degree in Accounting from Dhaka University, PhD from the Cardiff Business School, under the University of Wales United Kingdom, and he is also a fellow of the ICAB.


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Profile of theManagement Team

Mr. Raihan Shamsi was appointed as our Deputy Chief Executive Officer and Chief Financial Officer, effective from March 9, 2010. He also remains as Company Secretary, a position he has held since 2005. He was previously our Chief Corporate Affairs Officer and, before that, Director of Financial Management & Head of Internal Audit. Prior to joining us in late 2001, he worked in a number of multinational organizations, including Shell, Unilever and KPMG Bangladesh. He is a Chartered Accountant in profession and has been working in financial

management and internal control functions for around twelve years.

Mr. Oddvar Hesjedal was appointed as our Chief Executive Officer effective from November 10, 2008 after joining us as Chief Technical Officer in June 2008. He was a Senior Vice President of Telenor, and had held senior management positions within the Telenor Group over the last 15 years. He was Chief Technical Officer and Chief Operating Officer of Kyivstar GSM, Ukraine from 2004 to 2006, Head of Corporate Strategy of Telenor AS from 2001 to 2003, Head of Corporate Research & Development of Telenor AS from 1995 to 2001 and Chief Information Officer of Telenor AS from 1993-1995. He previously headed the International Broadband Initiative within the Telenor Group, in 2005. He has been a member of numerous Boards of companies within and outside Telenor. Before joining Telenor, he was the Chief Executive Officer of software and consultancy companies in Norway and Sweden. He holds a Masters

degree in computer science from the University of Oslo.

Mr. Arnfinn Groven was appointed as our Chief Human Resource Officer, effective from January 19, 2009. He was previously Director of Customer Services. He joined us as Senior Advisor in the Customer Management Division in August 2007. He started his career in 1984 at the Work Research Institute in Oslo as a Scientific Assistant. For the next 12 years, he developed his expertise in human resource management and career counseling in different reputable organizations in Norway. In 1996, he joined the Telenor Consumer Customer Service. In 2000, he became the Operational Director of Telenor Customer Service in Oslo. He is currently on secondment from Telenor. He holds a degree in Psychology from the University of Oslo and an executive degree on the Telenor International Management Program from the Stockholm

School of Economics.

Oddvar HesjedalCEO

Raihan ShamsiDeputy CEO & CFO

Arnfinn GrovenCPO


Mr. Frode Stoldal was appointed as our Chief Technology Officer, effective from January 19, 2009. He joined us as Chief Information Officer in November 2007 and is on secondment from Telenor. Prior to that, he was with Telenor for approximately seven years in a number of senior positions, including Project Director for Global Coordination, Strategy Adviser for Group CIO and Head of CRM solutions for Telenor Norway. Prior to joining Telenor, he worked for four years in the consulting and internet industry, for PricewaterhouseCoopers and Infostream. He holds a Masters degree in Technology Management from NTNU/Massachusetts Institute of Technology, Sloan School of Management, Boston, specializing in Business Value of IT. He also holds a Master of Science in Economics and Business Administration from the Norwegian School of Economics and Business Administration and he has a Business degree specialized in Managing Networked Businesses from Harvard Business School.

Mr. Arild Kaale was appointed as our Chief Marketing Officer, effective from September 10, 2009. Before joining Grameenphone he was Chief Marketing Officer in Telenor Promonte, the number one operator in Montenegro. While with Telenor and Promonte, he has been a part of the Board of Directors of Penetrace in Norway. After three years serving as a second lieutenant in the Norwegian armed forces, Arild started his career as Managing Director in Lasbuakonsernet in 1995. He joined Scandinavian Airlines System in 1997, working both in Sweden and in the US with Star Alliance related activities. In 1998 he was appointed Marketing Director for the Swedish market. Before joining Telenor Zonavi as Commercial Director he served in Office 24-7 AS in the capacity of Nordic Marketing Director. In 2003, Arild joined Telenor Business Norway as Head of Marketing with responsibilities of marketing/CRM activities, segment management, analysis and training. Arild has also been responsible for third party distribution within the business segment in Norway. Arild holds a Masters of Business and Economics from Bedriftsokonomisk Institute in Oslo and Indiana University in the US.

Mr. Kazi Monirul Kabir was appointed as our Chief Communications Officer, effective from September 01, 2009. He has been a part of Grameenphone since April 2008 when we joined as the Head of Regional Sales to lead the largest team in Grameenphone. He moved to Communications Division as Head of Market Communication before being appointed as the Chief Communications Officer. He has extensive experience spanning over 11 years in the corporate world. He started his career at British American Tobacco Bangladesh where he received numerous accolades for his role in Trade Marketing & Distribution, Brand Communication and Change Management at company level. He was the architect of the Direct Sales team of Banglalink GSM that was pivotal in the achieving wide reach and sales volumes that the initiatives generated. He has also held an Executive Director position at one of the leading media agencies in the country. Prior to his corporate life he had completed his Bachelors of Business Administration from School of Management & Business Administration of Khulna University.

Mr. Mahmud Hossain was appointed as our acting Chief Corporate Affairs Officer, effective from March 08, 2010. Immediately prior to taking on this role, Mahmud was serving as General Manager, Regulatory Affairs of Corporate Affairs – a position he has held since August 2009. He started his career as a telecom professional since the beginning of the liberalization of the industry in Bangladesh in 1990. He joined the Technical team of Hutchison BD Telecom (presently CityCell) after his completion of Bachelors degree in Electrical & Electronic Engineering from the Bangladesh University of Engineering & Technology (BUET). Later he did his MBA (majoring in Finance) from IBA, University of Dhaka, and his Masters (Telecom) from Concordia University, Canada. Mahmud had earlier worked for Grameenphone as Additional General Manager in Network Operations for a brief period in 2000-2001.

Frode StoldalCTO

Arild KaaleCMO

Kazi Monirul KabirCCO

Mahmud HossainActing CCAO


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Message fromthe Chairman

2009 has had a great year, least of because Grameenphone has been successfully listed in the local stock exchanges – the listing was the result of countless man-hours and incredible effort from a large dedicated team.

The IPO was also a demonstration of the cooperation and commitment we have received from the government and regulatory bodies to transform Grameenphone into a public listed company.

It has been no small feat that the Grameenphone IPO was the largest single issue in Bangladesh for both the Dhaka and the Chittagong bourses; we all expect that the company as well as the shareholders will both gain immensely from this exposure.

The company has seen gradual increase in EBITDA margins in 2009, despite a slight drop in the last quarter compared to the last quarter of 2008 – but this has been mainly due to higher subscription acquisition cost. However, capital expenditure has decreased through 2009 in line with traffic demand. Notably capital expenditure for the fourth quarter of last year included BDT 5.9 billion (590 crore) for acquiring additional frequency.

This frequency has helped greatly in expanding our mobile services to 23 million subscribers nationwide, although the SIM tax still remains to be the biggest barrier for subscriber growth for the industry. It is very evident that subscriber growth is affected by the existing high SIM tax because when it is passed onto the customer it significantly reduces the number of new connections.

Nonetheless at the end of 2009, the number of subscriptions has crossed 23 million, which translates to a little over 44% of market share.

Grameenphone has invested heavily in Bangladesh and will continue to do so. So far the Company has invested more than BDT 149.5 billion (BDT 14,950 crore) in Bangladesh; last year 2009 alone Grameenphone invested over BDT 10 billion (BDT 1,036 crore).

As a strong corporate house in Bangladesh, Grameenphone has paid Bangladesh Government BDT 28.7 billion (BDT 2,870 crore) as direct taxes, VAT and duties, and in fees paid to the Bangladesh Telecommunication Regulatory Commission (BTRC). Additionally, Grameenphone paid another BDT 1.8 billion (BDT 180 crore) through commercial agreements with the Bangladesh Railway (BR) and Bangladesh Telecommunications Company Limited (BTCL).

Happily the Grameenphone network presently covers almost the entire population with more than 12,700 base stations located in about 7,200 sites in operation around the country. The network is also fully EDGE/GPRS enabled, allowing the customers to access high-speed internet from anywhere within its coverage area.

Among the major developments in 2010, in the period before publication of this Annual Report, the Board of Directors of the Company, at its 99th meeting held on January 20, 2010, decided to form a new wholly-owned subsidiary named 'Grameenphone IT Ltd.'. The objective of this company is to provide IT related services to Grameenphone and other external parties. This new subsidiary was incorporated on 28 January 2010.

Additionally Grameenphone is in the process of signing telecom infrastructure sharing agreements with other telecom operators and internet service providers. In 2010, Grameenphone Ltd has signed agreements with Orascom Telecom Bangladesh Limited (Banglalink), and Axiata Company Limited (AKTEL) to share telecom infrastructures. This initiative will mutually benefit both operators in terms of providing faster and cost effective services to subscribers.

Sigve BrekkeChairman

March 19, 2010

Looking back at 2009, I can safely say that it has been a wonderful year for Grameenphone – this will forever be marked the year that Grameenphone went closer to the people when the Company was successfully listed in the local bourses in November.

Significantly the Grameenphone listing has been the biggest public offer in Bangladesh history, mobilizing a fund of BDT 4.86 billion with the allocation of nearly 69.5 million shares; accounting for almost seven percent of the market capitalization of the Dhaka Stock Exchange (DSE) alone. We could not done any of this had it not been the trust placed on us by the investors.

IPO aside, we saw an addition of 2.27 million new subscribers for the Company, boosting our subscriber base to more than 23 million or a little over 44% market share when we ended the year. However the BDT 800 SIM tax continues to be a major barrier for greater tele-penetration in the country.

The year 2009 has been eventful with the launch of many unique innovative services. We launched our internet vision and the GP-branded internet (EDGE) Modem in February with the promise that “light will find its way,” following the approval of our ISP license. Then in August, for first time ever by a mobile operator in Bangladesh, we introduced a Grameenphone branded handset into the market, to great appreciation.

In October 2009, we introduced a service called StudyLine which is accessible from any Grameenphone connection through a short code for callers to receive education-related information through a human agent.

We continue to explore avenues for introducing financial services through the mobile phone and have made significant headway in 2009 with the expansion of our BillPay service to include many more utility companies in its fold. We are exploring the possibility of other financial services that may bring an immediate benefit to the people of Bangladesh – remittance services.

Effectively, remittance services over the mobile network would easily reach locally or internationally remitted funds almost to the receiver’s doorstep – cost efficiently and hassle-free. Moreover, remittance services would usher in financial accountability to the more informal rural financial sector.

Our climate initiative led us to roll-out 12 solar and 1 wind power BTS across the country. I am proud to say that our climate change initiative was recognized internationally when Grameenphone, jointly with Huawei Technologies Ltd., was awarded the “Green Mobile Award” at the GSMA Asia Congress last November for our climate-friendly new network equipment.

2010 promises to be full of opportunities to expand our business and ICT expertise to meet new development challenges as well as offer yet even more innovative products and services for our customers. Again, 2010 will also be our first year as a listed company and this status brings up additional challenges both in terms of information protection and disclosure.

In my opinion, in an environment of heightened competition triggered by the possible entrance of a new player in the market, the playing field is ripe for action and the possibilities are rich with potentials. Sound competition and investment-friendly regulations are good for the telecom industry as well as the general development of the country.Message from the

Chief Executive Officer Oddvar HesjedalCEO

March 19, 2010

Corporate Governancein Grameenphone

Corporate Governance is the structured process through which an organization is directed, controlled and held accountable. It clearly defines the rights and responsibility of the Board, Management, Shareholders and other Stakeholders like Government and the society at large. Grameenphone believes in the continued improvement of corporate governance. This in turn has led the Company to commit considerable resources and implement internationally accepted Corporate Standards in its day-to-day operations.

The Board of Directors and the Management Team of Grameenphone are committed to maintaining effective Corporate Governance through a culture of accountability, transparency, well-understood policies and procedures. The Board of Directors and the Management Team also ensure maintaining of compliance with all applicable laws of Bangladesh and internally developed policies, procedures and controls.

Board of DirectorsThe Directors of the Board are appointed by the Shareholders in the Annual General Meeting (AGM) who are accountable to the Shareholders. The Board is responsible for guiding the Company towards the goal set by the Shareholders. The Board also ensures that Grameenphone Policies & Procedures and Codes of Conduct are implemented and maintained; and the Company adheres to generally accepted principles for the governance and effective control of Company activities. In addition to the other legal guidelines, the Grameenphone Board has also adopted “Governance Guidelines for the Board” for ensuring better governance in the work and the administration of the Board. The Board of Directors in Grameenphone is comprised of nine members including the Chairman who is elected from amongst the members. In compliance with the Corporate Governance Guidelines issued by the Securities and Exchange Commission (SEC) and as per the provision of the Articles of Association (AoA) of the Company, the Board of Directors in its 101st Board meeting held on March 19, 2010 appointed an Independent Director to the GP Board.

The AoA requires the Board to meet at least four times a year and otherwise when duly called for in writing by a Board member or Shareholder. Dates for Board Meetings in the ensuing year are decided in advance and the notice of each Board Meeting is served in writing.

Board Committees

a) Audit Committee

The Grameenphone Audit Committee was established in late 2008 as a sub-committee of the Board and has jurisdiction over Grameenphone and its subsidiaries. The audit committee is comprised of three members of the Board including an independent Director. The Chief Executive Officer, the Chief Financial Officer, the Company Secretary and the Head of Internal Audit are permanent invitees to the Audit Committee meetings.

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to internal control,

financial reporting, risk management, auditing matters and GP’s processes of monitoring compliance with applicable legal & regulatory requirements and the Code of Conduct. The Audit Committee Charter as approved by the Board defines the purpose, authority, composition, meetings, duties and responsibilities of the Audit Committee.

b) Treasury Committee

This committee consists of three members who are appointed by the GP Board. All significant financial matters which concern the Board are discussed in this committee meeting in detail. Upon endorsement of the Treasury Committee, such issues are forwarded to the Board for their final review and approval.

c) Human Resources Committee

This Committee consists of three members who are appointed by the GP Board . The Committee supports the Board in fulfilling its oversight responsibilities with respect to Human Resources policy, including employee performance, motivation, retention, succession matters and Codes of Conduct.

d) Health, Safety, Security and Environment Committee

This Committee consists of three members who are appointed by the GP Board. The Committee supports the Board in fulfilling its legal and other obligations with respect to Health, Safety, Security and Environment (HSSE) issues. The Committee also assists the Board in obtaining assurance that appropriate systems are in place to mitigate HSSE risks in relation to the company, employees, vendors etc.

Company SecretaryThe Board of Directors appoints Company Secretary and defines his/her roles & responsibilities. In GP, among other functions, the Company Secretary:

bridges between the Management and the Shareholders/Board on strategic and statutory decisions and directions.

acts as a quality assurance agent in all information stream towards the Shareholders/Board.

is responsible for ensuring that the appropriate Board procedures are followed and advises the Board on Corporate Governance matters.

Corporate Governance

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Board of Directors

Audit Committee Treasury Committee Human Resources Committee

Health, Safety,Security and

Environment Committee

acts as the “Disclosure Officer” of the Company and monitors the compliance of the Acts, rules, regulations, notifications, guidelines, orders/directives etc. issued by the Securities and Exchange Commission (SEC) or Stock Exchange(s) applicable to the conduct of the business activities of the Company so as to promote the interest of the investors.

Management Team (MT)The Management Team is the executive committee of Grameenphone managing the affairs of the Company. The Management Team consists of the CEO and other key leaders across the Company. The CEO is the leader of the team. Management Team endeavors to achieve the strategic goals & mission of the Company set by the Board of Directors. The Management Team meets on a weekly basis to monitor the business performance of the Company.

Control Environment in Grameenphone In implementing the right Governance in Grameenphone, the Board and the Management Team ensures the following:

a) Going Dynamic Management Model

Going Dynamic is a strategic management model that focuses on relating strategic ambitions with actions and emphasizes on regular monitoring of the KPIs with a realistic predictive model (rolling forecast). This enables a forward-looking and action oriented approach towards managing the business. The resource allocations are dynamic and are based on the intended actions linked with the strategy. It aims to build a culture of freedom through responsibility and thereby inculcating an entrepreneurial mindset in the organization leading to increased responsiveness to surrounding changes.

As opposed to traditional budgets where targets, resource allocation and forecasts are combined, the Going Dynamic concept manages the aforesaid three processes separately. By separating these three processes, the model tries to eliminate the "budget-gaming" and re-focuses on initiatives to minimize the gap between the targets (KPIs) and forecasts and drive business towards ambitions. The corporate level initiatives are cascaded down at divisional & individual levels and reviewed and monitored continuously against the forecasts, which serves as a radar screen, showing the future outcome of actions undertaken. Targets/KPIs are set on relative terms to reflect the changes in business environment and thus ensuring a performance culture focused on attainting strategic ambitions. Resource allocations are aligned with strategic ambitions through the setting of relative KPIs.

b) Financial Reporting

Grameenphone has strong financial reporting procedures in line with the requirements of International Financial Reporting Standard (IFRS), Bangladesh Accounting Standard (BAS) and other local legislations. In Grameenphone financial reports are generated from ERP (Enterprise Resource Planning) system.

Apart from the statutory reporting, Grameenphone also maintains regular reporting to its group company Telenor which consolidates all its subsidiaries’ financial information in its consolidated Financial Statements.

c) Management of Assets

Grameenphone is continuously investing in telecom network and other related infrastructure in line with the Company Strategy. To maintain accountability and proper utilization of assets, it complies with clearly defined and approved policies starting from procurement, recording, reporting and up to the level of disposal of assets. To ensure proper safeguarding of assets, physical verification of network assets is conducted periodically on test basis and all risks relating to these assets are properly insured both locally and internationally.

d) Statutory Audit

Statutory Audit of the Company is governed by the Companies Act, 1994. The Companies Act explicitly provides guidelines for the appointment, scope of work and retirement of auditors. Shareholders appoint auditors and fix their


remuneration in the Annual General Meeting. The auditors also carry out interim audit and review the quarterly �nancials of the Company.

e) Internal Audit

Internal Audit supports the Company to achieve its objectives by bringing a systematic, disciplined approach to evalua te and improve the e�ectiveness of its risk management, control and governance processes. In order to ensure organizational independence of Internal Audit, the Head of Internal Audit reports functionally to the Audit Committee and administ ratively to the Chief Executive O�cer.

Grameenphone Internal Audit is empowered to carry out its activities in Grameenphone and its subsidiaries. Internal Audit activity is governed by the Internal Audit Charter, which is approved by the Board. Grameenphone Internal Audit department discharges its assurance and consulting activities through management of three distinct audit streams: Finance, Technology and General Business processes. Additionally, a separate team is responsible for quality assurance of internal audit activity. A risk-bas ed annual audit plan is in place, which takes into consideration the strategic imperatives and major risks surrounding Grameenphone, while considering pervasive audit needs. Grameenphone Internal Audit also works closely with Telenor Group Internal Audit in sharing knowledge and resources to ensu re achi evement of internal audit delive rables.

f) Internal Control

Grameenphone has established a strong internal control as a part of good Corporate Governance. Board of Directors, Management, and Personnel of the Company ensure sound internal controls to provide reasonab le assurance regarding the achievement of Company objectives in the a reas of:

E�ectiveness and e�ciency of ope rations

Reliability of �nancial reporting

Compliance with laws and regulations

Five essen tial components of Internal Control; Control Environment, Risk Assessment, Control Activities, Informa tion & Communication and Monitoring are embedded into the Governance culture of Grameenphone.

g) Risk Management

Risk Management at Grameenphone is concerned with earning competitive returns from the Company’s various business activities at acceptable risk level. It supports the Company’s competitiveness by developing a culture, practice and structure that systematically recognize and addresses future opportunities whilst managing adverse e�ects through recognizing risk and acting appropriately upon it. The Company has well de�ned risk management policy, procedures and processes to mi tigate strategic and enterprise level risks.

Further to address & manage risk, the Company also works on ensuring,

Implementation & good practice of required policies & p rocedures

Controls on di�erent Revenue Assurance & Fraud Management func tions

h) Pursuan ce of Sarbanes Ox ley Act

Grameenphone has its strong intention to retain solid Financial Accounting & Reporting platform by ensuring e�ective transac tional �ows across the Company.

To achieve such target a strong set of control points in line with the principles of “Internal Control over Financial Reporting (ICFR)” has been successfully implemented. These controls are fully aligned with globally recognized apparatus, Sarbanes-Ox ley Act 2002. Grameenphone has been SOX successful for last four consecutive years 2006, 2007, 2008 and 2009.


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i) Compliance with Rules & Regulations of the Country

As the leaders of a compliant Company, the Management Team of Grameenphone is accountable not only to its Board or Shareholders but also to various external regulatory bodies. These regulatory bodies maintain a close monitoring process on Grameenphone. In this context, the Company provides complete set of financial statements to the Securities and Exchange Commission (SEC), Stock Exchanges, National Board of Revenue (NBR), Registrar of Joint Stock Companies & Firms (RJSC), Bangladesh Telecommunication Regulatory Commission (BTRC) and the Board of Investment (BOI). In order to conduct day to day business Grameenphone has been rendering its best effort to comply with the existing applicable laws of the country as well as with the directives/guidelines of various Government Authorities.

j) Business Continuity and Crisis Management (BCCM)

Being the country’s largest communication solution provider Grameenphone feels an immense responsibility for its continuous operation under any circumstances. We must embrace the fact that no matter how solid any business is, things may go wrong at any time & research results also support this fact.

So to generate resilience in entire business operations Grameenphone started practicing world class Business Continuity & Crisis Management since last year to avoid this kind of catastrophic situation and also to uphold the shareholder’s value.

Business Continuity Management is a holistic management process that GP embeds in its business culture by this time with several different methodical approach including disaster recovery planning, business resumption, contingency planning, and crisis management planning etc.

Last year GP BCCM has reviewed all critical business processes and conducted Business Impact Analysis (BIA) of all these processes and its dependent technology & IT systems. Through this rigorous analysis GP has been able to find out the areas where it needs special attention. After successful completion of BIA, GP has formulated the BCM Strategy, Disaster Recovery Plan, Department of Continuity & Recovery plans

To enhance crisis management capability GP BCCM has also conducted international level Crisis Management Exercise last year at its own crisis management centre which is a separate location built only to handle the crisis or disastrous situations. Many internal & external observers from home and abroad have observed this unique exercise and appreciated this initiative of building robustness in management competence

In BCCM’s continuous journey it has got many initiatives like to foster business continuity management sense up to regional level, awareness development, practice, rehearse & maintain of entire BCM life cycle in true sense so that GP can leverage its business efficiency and generate more resilience to protect its shareholder’s value.

k) Ethics and Behaviour

i) Codes of Conduct

Grameenphone has adopted a clearly defined Codes of Conduct approved by the Board of Directors for securing good business ethics and conduct in all aspects of the Company’s activities. The Codes of Conduct are properly communicated to all the employees and others acting on behalf, who are strictly required to abide by it.

ii) Restrictions on dealings in GP Shares by Insiders

The Company has established policy relating to trading in the GP shares by Directors, Employees and other Insiders. The securities laws also impose restrictions on similar sort of transactions. All the Insiders are prohibited from trading in the GP shares, while in possession of unpublished price sensitive information in relation to the Company during prescribed restricted trading period. Directors and Employees are also required to notify their intention to trade in the GP shares prior to execution of the same.

l) Investors Relation (IR)

As the largest public listed corporate house in Bangladesh, Grameenphone always pays great importance to its investors community and their information requirements. With the sincere desire to stay close with investors


community, GP has recently established the Investor Relations Department which will bridge the gap between investors and the Company.

Institutional investors, security analysts and other members of the professional financial community , have the right to know about GP , its developments and future directions on a broad basis. IR as a specialized department will keep in touch with Investors community on proactive basis and will feed in the pulse of the capital market to the management by maintaining required communication process.

The IR department is being headed by Head of Investor Relations with reporting to the Chief Financial Officer.

m) Communications with Shareholders

The Company aims to be open and transparent with all stakeholders, including the owners of the Company – the Shareholders. Information is communicated to the Shareholders regularly through a number of forums and publications. These include:

Annual General Meeting of the Company

Quarterly, Half-yearly and the Annual financial statements, which is also posted at Company’s website

Price Sensitive Disclosure and other disclosures to the SEC, Stock Exchanges and mass shareholders; and

Company’s website, where the Company announcements, media releases, previous year’s results etc. are posted under the Investors Relation section

The Company has adopted a detailed policy on information disclosure and communication. In compliance with continuous disclosure requirements, the Company’s policy is that Shareholders will be informed in a timely manner of all major developments that impact the business of the Company.

Grameenphone believes in transparency and accountability to society as a whole through establishment of efficient and effective Corporate Governance procedure. It also believes that Corporate Governance is a journey not a destination and it needs to be continuously developed and adapted to meet the changing needs of a modern business.


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Shammi is a proud member of our National Special Olympics team, but she isn’t just aparticipant, she is a Gold Medal Winner in Badminton at the Special Olympics. Shammi is not alone, Grameenphone proudly sponsors her team of special athletes–special not because they aredifferent, but because they are Olympians.

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“A shared responsibility, for a common future”

While we maintain our business focus, taking the nation forward remains our top priority. Thus our relationship with Bangladesh is built on a partnership, which strives to achieve common economic and social goals.

Our Social investments are consolidated in three main focus areas, namely, Healthcare, Education and Environment.

HealthAlmost half of the country’s population lives below the poverty line and are deprived from basic primary healthcare.

In partnership with Pathfinder International and USAID, Grameenphone has been supporting the “Safe Motherhood and Infant Care” program since May 2007. Under the program, free comprehensive primary healthcare services are provided to economically disadvantage pregnant mothers and infants through over 300 Smiling Sun clinics located in 61 districts around the country. So far 1,333,314 services have been provided to the economically

disadvantaged mothers and infants under this program. In 2009, two clinic-on-wheels and five ambulances were handed over to different NGOs of Smiling Sun Network, to increase the accessibility of maternal and infant healthcare services to the hard-to-reach economically disadvantaged population.

Grameenphone, jointly with Sight Savers International, has been organizing free Eye Camps to ensure eye-care services since 2007. In total, 21 such free eye-camps have been organized throughout the country and a total of 29,270 patients were given free eye care support, among them 3,887 patients were administered Intra Ocular lens or cataract surgeries.

CorporateResponsibility

People

Product

Business

Environment

SocialInvestment

Corporate SocialResponsibility

Education The main goal of Grameenphone’s CSR Eductaion initiative is to provide access to education and information.

Grameen Shikhkha

Grameenphone provides scholarship to meritorious but underprivileged students through a scholarship fund at different academic levels, in collaboration with Grameen Shikhkha, an organization of Grameen Bank Family.

Alokdeep, Non-formal School cum cyclone shelter

Grameenphone, as part of its rehabilitation plans in the SIDR affected areas, provided financial assistance to build education center-cum-cyclone shelters in the southern belt of the country. Four such non-formal primary school-cum-cyclone shelters were planned, of which two are already operational. The new cyclone shelters will be used as primary school throughout the year to provide non-formal primary education to underprivileged children of the locality.

Information Boat

Grameenphone, in partnership with CARE Bangladesh, started the “Information Boat” project. Boats are also equipped with digital contents, such as livelihood and agricultural information, suited for the specific areas served by the designated boats. A typical information Boat is equipped with computers, Internet, photocopies, fax machines, printers, webcams and scanners. So far, four such Information Boats have been launched in the northeast region.

Environment

Our Environmental campaign titled “Stay Green, Stay Close,” was launched in June 2009 with an objective to support a healthier environment through innovative environmental activations and initiatives, as well as increasing awareness among different stakeholder groups. As part of this program, over 21,000 free saplings were distributed across the country.

Our Partners- Together we Win

Other Initiatives

Sponsoring Special Olympics Bangladesh

Grameenphone became the sole sponsor of Special Olympics Bangladesh in 2007 when it provided necessary support and training for the athletes to participate in the Special Olympics Games 2007 in Beijing, China. The team won 71 medals in different categories. In 2008-09, the company supported and organized regional talent hunts across the country. A total of 94 (64 male and 30 female) intellectually challenged athletes were selected from four regional talent hunt programs. These selected athletes are to be trained and groomed for the Special Olympics World Summer Games 2011 in Athens, Greece.

Emergency Relief Works A total of 14,500 blankets were distributed in different regions of the country during the cold wave in December. Grameenphone employees donated warm clothes and actively participated in the distribution of relief materials.

After the devastating cyclone AILA hit the country, Grameenphone came forward to help the victims with basic food items, healthcare service through medical teams and providing temporary shelters made with GP’s used billboard wrappers.

Corporate Social Responsibility

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We think of an orphan as a person without a father or a mother. However, for Ismail being an orphan also

meant being without a place to call home; being without loved ones or without anything to call his own. The

only thing that he ever wished for was a sense of belonging; the only thing that Ismail would dream of was

having an identity.

We are all aware of the need for an identity, but very few of us would think of it as a dream. But then most of

us have been fortunate enough have our own identity - something to call our own, something that grows

alongside us as we move ahead in life.

Grameenphone may be an entity but the importance of having an identity is shared with that of any individual.

Our identity is not as just a business organization, but rather an enabler of dreams. It is based on these

possibilities that we have been able to come so far – into the hearts of millions of people. When Grameen-

phone offered its shares to the public, it not only enabled people to become part owners of a company that

they have helped to build, but it also eliminated the wall between the customer and the owner.

Owing a dream

IsmailGP Shareholder

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Everyone has a common story of glory to share, a joint testament of achievement and celebration. Today tens of thousands like Ismail are a Grameenphone shareholder - today that all have a shared identity as a proud owner of our company.

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Five years FinancialSummary

2009 2008 2007 2006 2005Operational Results in million BDT Revenue 65,300 61,359 54,303 45,640 29,473Gross Profit 32,222 28,667 29,946 26,962 17,283Operating Profit 20,518 15,350 16,287 18,195 12,602Profit before tax 18,596 11,579 13,535 17,020 11,761Net Profit after tax 14,968 2,984 3,060 7,484 6,913

Financial Position in million BDTPaid-up Capital 13,503 12,152 2,430 2,430 2,430Shareholders' equity 50,154 27,588 26,111 24,509 18,241Total assets 109,162 108,194 88,461 66,757 49,537Total liabilities 59,008 80,606 62,350 42,247 31,296Current assest 22,182 14,430 6,851 10,442 6,974Current liabilities 38,952 50,231 36,445 23,568 16,592Non current assets 86,981 93,765 81,610 56,314 42,563Non current liabilities 20,056 30,375 25,905 18,680 14,704

Financial RatiosCurrent Asset to Current Liability 0.57 0.29 0.19 0.44 0.42 Debt to Equity 0.14 0.68 0.63 0.32 0.50 Gross Profit Margin 49% 47% 55% 59% 59%Operating Profit Margin 31% 25% 30% 40% 43%Net Profit Margin 23% 5% 6% 16% 23%Return on Equity 38.5% 11.1% 12.1% 35.0% 43.6%Return on Total Assets 13.8% 3.0% 3.9% 12.9% 18.1%

Ordinary Shares InformationOrdinary Shares outstanding (in million) 13,503.00 12,151.75 56.52 56.52 56.52Face Value per share 10 1 43 43 43Cash Dividend on paid up capital 60% 13% 62% 60% 50%Dividend payout 54% 53% 49% 19% 18%NAV per Share * 37.14 22.70 21.49 20.17 15.01Net Operating Cash Flow per Share ** 24.77 20.24 19.86 21.53 14.03Earnings Per Share 12.08 0.25 54.14 132.41 122.31 Adjusted Earnings Per Share * 12.08 2.46 2.52 6.16 5.69

* Face value @ Tk. 10 ** Weighted average number of shares

* ARPU- Average Revenue Per User ** AMPU- Average Minutes Per User

29,473

45,640

54,303 61,359

65,300

2005 2006 2007 2008 2009

Revenue (Million BDT)

ARPU (BDT)*

653

466

329 262 250

2005 2006 2007 2008 2009

Capex (Million BDT)

26,151 21,656

35,763

27,351

10,369

2005 2006 2007 2008 2009

Total Assets (Million BDT)

49,537

66,757

88,461

108,194 109,162

2005 2006 2007 2008 2009

Subscriber ('000)

5,542

10,759

16,483

20,993 23,259

2005 2006 2007 2008 2009

Adjusted EPS (BDT)

5.69 6.16

2.52 2.46

12.08

2005 2006 2007 2008 2009

ROA

18.1%

12.9%

3.9% 3.0%

13.8%

2005 2006 2007 2008 2009

NPAT (Million BDT)

6,913 7,484

3,060 2,984

14,968

2005 2006 2007 2008 2009

AMPU (Minutes)**

235 216

252

309 306

2005 2006 2007 2008 2009

Total Equity (Million BDT)

18,241

24,509 26,111 27,588

50,154

2005 2006 2007 2008 2009

Market Share59.8%

50.1% 48.0% 47.0% 44.4%

2005 2006 2007 2008 2009

NAV/Share (BDT)

15.01

20.17 21.49 22.70

37.14

2005 2006 2007 2008 2009

ROE

43.6%

35.0%

12.1% 11.1%

38.5%

2005 2006 2007 2008 2009

Net Operating Cash Flow/Share (BDT)

14.03

21.5319.86 20.24

24.77

2005 2006 2007 2008 2009

Operating Profit (Million BDT)

12,602

18,195 16,287

15,350

20,518

2005 2006 2007 2008 2009

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Five years Financial Summary

Amidst global recession and intense competition in the market, Grameenphone has had a good year in terms of subscription growth and its financial consolidation. Competitors are engaged into price war and with new entrants coming into the market, there is a possibility of exhilarating competition ahead.Regulatory authorities have played a pivotal role in business environment with new directives and guidelines, such as reduced interconnect prices, guidelines for infrastructure sharing and likewise. Grameenphone continued with its product innovation and offering wide array of services, namely introducing GP branded handsets and edge modems bringing alternate revenue streams. Side by side, Grameenphone embraced cost optimization initiatives through operational excellence program to maximize profit. In addition, Grameenphone opted for cost-efficient network solutions through swapping of assets with Huawei equipments. The most colossal episode for Grameenphone was its listing in the country’s two bourses in Nov’09, which entitled Grameenphone to avail a reduced corporate tax rate.

Subscriber base crossed 23 million landmark in 2009.

During the year, subscription base increased by 11% with 2.27 million additions.

Internet subscriptions reached 4.3 million compared to 3.7 million of 2008.

GP’s subscriber market share stood at 44.4%.

Subscriptions

Revenue increased by 6.4% (BDT 3.9 billion) mainly due to growth in traffic revenue driven by subscription growth and new revenue streams from sale of GP branded handsets and edge modems.

The growth in revenue was partially offset by lower interconnect revenues resulted from reduced interconnect rates set by the regulator.

Increased data revenue from data subscriptions also contributed to the revenue growth.

Revenue

Total operating expenditure in 2009 decreased by 9% (BDT 2.8 billion) from 2008 mainly due to lower cost of network operation (mainly in interconnection and BTS maintenance) and lower subscription acquisition costs.

A total savings of BDT 3.5 billion has been achieved through the operational excellence initiatives during the year.

Operating Expenditure

Net profit before tax increased by BDT 7 billion for the year 2009 compared to 2008. The surge was due to higher revenue and lower operating expenses.

Income tax expense was lower due to one-time effect for reduced tax rate. However, it was partially offset by higher tax provision due to higher profit.

In addition, 2008 net profit after tax was lower due to one-time regulatory payment on account of government compensation.

Net Profit after Taxes

Grameenphone’s current asset base increased by BDT 7.6 billion mainly in cash and bank balance resulting from higher net cash from operations and proceeds from IPO.

However, non-current asset base decreased by BDT 6.8 billion due to higher depreciation and amortization expenses than fresh investments.

Capital expenditure during 2009 was BDT 10.4 billion compared to BDT 27.4 billion of 2008.

Total Assets

Total liabilities decreased during the year mainly due to early settlement of entire bond obligation, repayment of short-term borrowings, reduced deferred tax liabilities due to change in corporate tax rate and allocation of shares to PPO investors from advance against IPO.

Total Liabilities

3.0

2.46

12.0

15.0

12.08EPS

108.21.0

109.2

2008 2009

2008 2009

30.9 -2.828.1

2008 2009

80.6 -21.6

59.0

2008 2009

61.43.9 65.3

2008 2009

2,266

20,993 23,259

2008 2009

Financial Review

in '000 BDT

Value created2009 % 2008 %

Revenue 65,299,567 61,358,978Other income 43,258 52,583Vat on above 9,801,424 9,211,734

75,144,249 70,623,295Less: Cost of network and services 14,033,062 17,406,968Less: Deferred Tax (5,029,312) 2,025,073

66,140,499 100% 51,191,254 100%Value distributed

Employees and channel partners 8,184,542 12.4% 7,554,032 14.8%Government 24,340,366 36.8% 23,703,949 46.3%Providers of debts and banks 1,920,437 2.9% 1,805,249 3.5%Shareholders 8,101,800 12.2% 1,506,817 2.9%

42,547,146 64.3% 34,570,047 67.5%Value retained:

Depreciation 16,726,988 25.3% 15,144,157 29.6%Retained profit 6,866,366 10.4% 1,477,050 2.9%

35.7% 32.5%23,593,354 16,621,20666,140,499 100% 51,191,254 100%


Distribution of Value Added (2008)

Distribution of Value Added (2009)

Employees and channel partners 12%

Retained profit reinvested for expansion 36%

Dividend to Shareholders 12%

Contribution to Government 37%

Providers of debts and banks 3%

Employees and channel partners 15%

Retained profit reinvested for expansion 32%

Dividend to Shareholders 3%

Contribution to Government 46%

Providers of debts and banks 4%


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Largest Corporate Tax payer in the country

The collective contribution to the National Exchequer from inception up to December 2009 was BDT 147.9 billion (BDT 14,790 crore), of which, BDT 30.5 billion (BDT 3,050 crore) was made in 2009 alone. Out of total BDT 147.9 billion (BDT 14,790 crore), BDT 122.2 billion (BDT 12,220 crore) was made on account of direct tax, VAT and duties through National Board of Revenue (NBR) and Bangladesh Telecommunication Regulatory Commission (BTRC), BDT 20.1 billion (BDT 2,015 crore) through commercial agreements with Bangladesh Railway (BR) and Bangladesh Telecommunications Company Limited (BTCL) and BDT 5.5 billion (BDT 550 crore) as indirect payments on account of local and foreign staff income taxes and withholding taxes on operating expenditure payments. Grameenphone has been the largest corporate taxpayer in the country for the last four years.

Grameenphone has also generated direct and indirect employment for a large number of people over the years. The company presently has about 4,800 employees while 150,000 people are directly dependent on Grameenphone for their livelihood, working for the dealers, retailers, electronic reload and scratch card retail outlets, suppliers, vendors, contractors and other business partners.

With the payment of taxes and the investment in the network, Grameenphone is making a significant contribution to the country’s development and growth.

Year- wise Contribution to National Exchequeras of December 31, 2009

Contribution to National Exchequer

in B

DT

Cror

e

1 47 35 59 113 208 402

584 824

1,296

1,818

2,843

3,507

3,050

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Withholding Taxes - 1 2 2 3 4 8 14 26 44 75 113 119 140

BTCL/BR - 13 18 23 50 43 123 147 147 256 278 403 335 180

BTRC 1 3 3 7 21 57 71 65 117 124 252 477 879 717

NBR - 30 12 27 39 103 200 357 535 872 1,213 1,851 2,174 2,014

Total Payment 1 47 35 59 113 208 402 584 824 1,296 1,818 2,843 3,507 3,050

Dear Shareholders, It is a great pleasure and privilege on the part of the Board of Directors and me to present the Directors’ Report, together with the Audited Financial Statements of the Company for the year ended on December 31, 2009 and the Auditors’ Report thereon, for consideration and approval of our valued Shareholders.

The largest ever IPO in the Capital Market 2009 has been fabulous for Grameenphone (GP) from many counts. We have successfully introduced various “first of its kinds” innovative products and services to the market. The biggest news, however, for the Company has been listing with the Stock Exchanges in November 2009 after successful completion of the largest ever IPO in the history of our Capital Market.

In 2009, despite regulatory challenges, global recession and natural calamity, GP continued to expand its market reach, attract millions of subscribers and maintained an accomplished financial performance. With 23 million subscribers’ landmark, GP’s subscriber market share stood at more than 44% adding 2.27 million subscribers in 2009.

2009 - A Socio Economic LandscapeIn the face of global turmoil, GDP growth of 5.9% in first half of the current fiscal year (July’09 to Decmebr’09) was still better than neighboring countries. Rates of exchange between Taka and Dollar were mostly stable during 2009 with a marginal decline by 0.39% against the US Dollar. Forex reserve crossed USD 10 billion mark for the first time in Bangladesh history. Buoyed by it, the Government announced a stimulus package of BDT 44 billion to mitigate the affect of global recession.

In contrast, strong liquidity and entry of fresh investors have driven the Bangladesh Capital Market to its new height in 2009. The Dhaka Stock Exchange (DSE) market capitalization surged to USD 27.54 billion during the year.

Telecommunication Industry Scenario Mobile technology has been identified as a sustainable channel of communication worldwide. According to Wireless Intelligence Report (December 31, 2009), this device is used by more than 4.6 billion people around the globe, covering 61% of world population. With that in the context, the telecommunication sector in Bangladesh is poised for rapid growth in the coming years. The concept of mobile telephony has become largely familiar and phenomenal in Bangladesh from the early 90s. The telecom industry has connected and empowered people and made revolutionary changes in lifestyles. It has brought Internet to the people and thereby increased productivity in services, manufacturing & agriculture and improved access to education, health care and rural lives. Total mobile phone subscribers in Bangladesh reached 52.43 million, where the tele-density reached approximately 33 % with 54.09 million people having access to telecommunication facility. Six mobile phone operators of the country added 7.79 million customers in 2009 posting a 17 % growth. SIM tax of BDT 800, at the time of sale, has been the real barrier to the growth of the connectivity. 2009 growth of the industry would have been much higher otherwise.

Directors’ ReportFor the year ended December 31, 2009

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Despite rapid growth over the last 5 years, Bangladesh remains one of the lowest in Internet penetration. The adaptation and usage of Internet has been largely linked to the national economic development and consequent human development of the country. Currently about 5 million subscribers in Bangladesh use Internet services of which 92% is done through mobile phone. The ICT policy 2009 has specific direction and guidelines reflecting most of the priorities of the “Digital Bangladesh” agenda of the Government. The policy directive to “ensure Internet for all” highlights the importance of Internet at policy level.

Regulatory Environment Regulatory regime in Bangladesh is far from ideal; however, the Regulator is taking a number of steps to make the regime stable and predictable. During 2009, industry has been consulted on National Frequency Allocation Plan (NFAP), Quality of Service (QoS) and a number of other areas. GP has submitted its comments and reservations on these consultancies. Other than QoS, none of the rests has been finalized.

Bangladesh Telecommunication Regulatory Commission (BTRC) is yet to prepare a License Renewal framework for the mobile operators (including Grameenphone), whose licenses are expiring in November 2011. 3G licensing allocation framework is expected to be visible after the renewal framework is established.

International incoming grey traffic is still prevalent despite combined efforts of BTRC, GP and few other mobile operators. It is believed that it would continue to hurt national exchequer and mobile operators unless Government and BTRC remove the premium between local and international call termination rates.

The current Government has set a vision of Digital Bangladesh by 2021 and also approved an ICT Policy during 2009. Government is putting a lot of emphasis on digitalization but in real terms there are few incentives given to the ICT industry. Bangladesh has the lowest mobile tariff while having the highest tax regime in the region. A rationalization of the tax structures and elimination of SIM tax, which proved to be the key barrier to further growth, will stimulate industry growth and enable the mobile industry to make even greater contribution to the National exchequer and thereby, the economy.

Innovative Products & Services GP continued its efforts to develop innovative and useful new products and services to meet customer needs. In the year under review, we launched GP branded handset as well as EDGE Modem for the first time in Bangladesh market. We are also the first to launch “Studyline” – a helpline on education in Bangladesh. Among other notable launches were mobile back-up service, call block service, in-flight & maritime roaming service and e-bill service for our post-paid subscribers etc.

We are already in mobile based collection services for utility bills since 2006 and will introduce other mCommerce services like electronic Ticketing, bill collection, electronic Lottery and remittance disbursement under the brand “Mobitaka”.

Customer Service – Our Commitment to Stay CloseGP is a customer centric organization. We are investing more in customer service infrastructure, systems and training to ensure that we have the right people in place with the right tools to understand customer needs, respond quickly and resolve customer issues efficiently. GP introduced the country’s first 24-hour Call Center in 1999. In 2008, GP implemented world class IP Based Contact solution for managing customer interactions more effectively. In addition, there are 18 Grameenphone Centers (GPC) and 52 Grameenphone Center Franchises (GPCF) – a flagship sales and service point under one roof - specially designed to cater to the needs of the subscribers.

Continuous Investment Grameenphone continued to invest in its network to deliver a quality network-reach and to maintain its leadership position in the industry. The cumulative investment reached over BDT 149.5 billion (BDT 14,950 crores) where more than BDT 10 billion was invested in 2009 alone to further increase the capacity, coverage and quality of its nationwide network.

We have completed 2,009 km Bangladesh Railway (BR) optical fiber replacement project. Besides that we have also installed 2,600 km optical fiber alongside highway on our own. This fiber ensures nation-wide transmission backbone, the largest in the country, as well as technological redundancy. We have also completed a radio and core network swap with Huawei.

Our Employees We recognize that continued and sustained improvement in the performance of the Company depends on its ability to attract, motivate and retain employees of the highest caliber. We are committed to the principle of equal and fair opportunity in employment and also put in place a number of initiatives to build strong corporate culture. A performance driven corporate culture along with ample opportunities for career growth, has made GP a preferred employer in the Bangladesh job market.

Directors’ Report

Socially Responsible & Compliant CompanyGrameenphone is a socially responsible company. Our mobile services are in many ways a social service in itself, creating closeness in families & communities, and enable business improvements & new business development. GP as a responsible company strives to be compliant in all aspects of its operations. We are the highest tax payer in the country and want to continue our participation in the development of the country.

Our Corporate Social Responsibility (CSR) program covers many aspects of life with special focus on health, education, entrepreneurship and environment through its ventures like Village Phone, Community Information Centre (CIC), HealthLine, Studyline, etc.

Grameenphone has been a patron of sports since its inception. In 2009, GP became the first Bangladeshi company to sponsor a cricket series abroad. Recently GP has renewed its sponsorship with the Bangladesh Cricket Board (BCB) for another two years till 2011. GP also entered into a partnership with Special Olympics Bangladesh with the objective to form a “national talent pool” of intellectually-challenged athletes, who will be further nurtured for the next Special Olympics in 2011.

A Green CampaignerClimate change is becoming a big concern in all part of the world. GP is also concerned about the consequences of climate change. As a “Green Conscious” company, GP has targeted to reduce carbon emission by 30-40% by 2015.

By the end of 2009, GP established 12 Solar and 1 wind power site and shall continue to endeavor the effort throughout 2010 with large scale solar deployment at 100 or more sites. New network deployment is done with focus on reduction of power usage.

Health, Safety, Security and Environment (HSSE)Grameenphone is very conscious about the health, safety, security and environment issues. This organization has made a huge change in the safe behavior of its internal and external stakeholders. In 2009, a total of 118 different audits/inspections have been carried out while 99 training & awareness programs have been conducted covering 3,294 employees and vendors. Initiative has also been taken for implementing ABC (agreement on responsible business conduct) for proper compliance of Supplier Conduct Principle (SCP) for its 1,188 vendors of the value chain. Grameenphone always comes forward in critical situations (e.g. swine flu) of the community to mark a footprint which makes a difference. Last year, a Board sub-committee was formed, namely “HSSE Committee” for advising the Management on different HSSE issues of the Company. Village Phone Program & Community Information Center (CIC)Village connected means a country connected. In rural and remote areas, where isolation and poor infrastructure services are often the norm, telecommunication can play an extremely important role in enhancing social and economic development. Village Phone (VP) Program has been a unique initiative to provide telecommunication services in remote and rural areas all over Bangladesh. By focusing on the women as entrepreneurs, this program has liberated the women of villages, who are mostly poor and borrower members of Grameen Bank. This program is the most powerful symbol of how social closeness enhances life. There were 360,939 VP subscribers providing telecommunication services in over 72,000 villages in 64 districts across the country. Besides, the Village Phone Program has also been replicated in a number of countries including Uganda and Rwanda in Africa.

12 years back, GP connected the rural Bangladesh with VP program and we are now working to take internet to the rural people. Around 500 CICs are facilitating internet services across the country.

Directors’ Responsibilities for Financial Statements

The Directors confirm, to the best of their knowledge –

(a) that the financial statements prepared by the Management of the Company present fairly its state of affairs, the result of its operations, cash flows and change in equity;

(b) that proper books of account of the Company have been maintained;

(c) that appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment;

(d) that the International Accounting Standards, as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure therefrom has been adequately disclosed;

Directors’ Report

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(e) that the system of internal control is sound in design and has been effectively implemented and monitored;

(f) that there is no significant doubt upon the Company’s ability to continue as a going concern;

(g) that the significant deviations from the last year in operating results of the Company have been highlighted and reasons thereof have been explained;

(h) that the key operating and financial data for the last five years are annexed.

Shareholding Patterns

Shareholding patterns of the Company as on December 31, 2009 is shown in Annexure III to this report.

Corporate GovernanceCorporate governance is ensured through a structured process that directs, controls and holds the organization accountable. The Company is firmly committed to the highest standards of Corporate Governance and has consistently been applying high standards of Corporate Governance practices. Governance, and by that measure Board supervision in GP is a dynamic and continuous process. A detailed compliance report on Corporate Governance as recommended by the Securities and Exchange Commission of Bangladesh is shown in Annexure I to this report.

Changes in Capital Structure After offering 10% of total Share Capital through PPO & IPO process, the total Paid-up Share Capital of the Company stands at BDT 13,503 million, divided into 1,350 million Ordinary Shares of BDT 10 each. Trading in GP shares commenced both at Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) on November 16, 2009, and the per share price closed at BDT 187.5 at DSE and BDT 188.60 at CSE on December 30, 2009.

Enhanced Value of Shareholders’ InvestmentIn the year under review, Revenue increased by 6.4% in 2009 compared to last year mainly due to subscription growth combined with sales of GP branded handsets and data cards. EBITDA and operating profit increased by 21% and 34% respectively mainly due to lower subscription acquisition cost and savings through Operational Excellence (OE) program. Net Profit After Tax (NPAT) increased to BDT 14.97 billion (23%) compared to BDT 2.98 billion (5%) of 2008 mainly due to higher operating profit and tax benefit obtained due to change in corporate tax rate from 45% to 35% after successful completion of listing in the capital market. Lower NPAT in 2008 was mainly due to compensation to BTRC.

The Directors take pleasure in reporting the financial results of the Company for the year ended December 31, 2009 and recommended the appropriation as mentioned in the “Appropriation of Profit” table below:

Notable Contribution to the National ExchequerGrameenphone has been the largest contributor to the National Exchequer for the last few consecutive years. The collective contribution to the National Exchequer from inception up to December 2009 was BDT 147.9 billion (BDT 14,790 crores). During 2009 alone, the Company contributed BDT 30.5 billion (BDT 3,050 crores) to the National Exchequer compared to BDT 35.1 billion (BDT 3,507 crores) of 2008. The lower contribution in 2009 was mainly due to lower amount of SIM tax resulted from lower subscriber acquisition.

2009 2008

Profit available for appropriation

Profit/ (Loss) after tax 14,968,166,256 2,983,866,587

Add: Un-distributed profit brought forward from previous year 13,266,605,231 21,510,953,768

Total amount available for appropriation 28,234,771,487 24,494,820,355 Appropriation

Issue of Bonus Shares - (9,721,398,376)

Dividend for Previous year (1,579,727,236) (1,506,816,748)

Closing retained Earnings at year end (before proposed Dividend) 26,655,044,251 13,266,605,231 Proposed Dividend for the year (2009: 60% cash; 2008: 13% cash) (8,101,800,132) (1,579,727,236)

Retained earnings after proposed dividend 18,553,244,119 11,686,877,995

Directors’ Report

Dividend

The Directors are pleased to recommend a cash dividend of BDT 8,101.8 million, being 60% of the paid-up capital of BDT 13,503 million, which is BDT 6 per share of BDT 10 each for the year 2009 for consideration and approval of the Shareholders for distribution. Such recommendation of dividend is as per the Board approved dividend policy which is – “Minimum 50% of the Net Profit After Tax to be allocated for dividend payment depending on the financial health and capital requirement of the Company with an aim to have a relatively steady growth in per share dividend.”

Board of Directors & Board Meetings

The Directors in the Board who held office during the year were as below:

1. Mr. Sigve Brekke, Telenor Mobile Communications AS, Director & Chairman

2. Mr. Per Erik Hylland, Telenor Mobile Communications AS, Director

3. Mr. Snorre Corneliussen, Telenor Mobile Communications AS, Director

4. Mr. Dipal Chandra Barua, Grameen Telecom, Director

5. Mr. M. Shahjahan, Grameen Telecom, Director

The Board of Directors at its 99th Board meeting held on January 20, 2010 has appointed Mr. Md. Ashraful Hassan as Director in the Board in replacement of Mr. Dipal Chandra Barua. Three more additional Directors namely Ms. Hilde Tonne, Mr. Knut Borgen and Ms. Nurjahan Begum were also appointed in the said meeting as per Articles of Association of the Company. Dr. Jamaluddin Ahmed FCA has been appointed as Independent Director by the Board of Directors at its 101st meeting held on March 19, 2010.

During 2009, a total of 11 (eleven) Board meetings were held, which met the regulatory requirement in this respect. The attendance record of the Directors is shown in Annexure-II to this report.

Directors’ appointment & Re-appointment

With regard to the appointment, retirement and re-appointment of Directors, the Company is governed by its Articles of Association, the Companies Act, 1994 and other related legislations. Accordingly, in the forthcoming Annual General Meeting, the following Directors of the Board will retire and will be eligible for re-appointment:

1. Mr. Snorre Corneliussen

2. Mr. Md. Ashraful Hassan

3. Ms. Hilde Tonne

4. Mr. Knut Borgen

5. Ms. Nurjahan Begum

6. Dr. Jamaluddin Ahmed FCA

Appointment of Auditors

As per Articles of Association, the statutory auditors of the Company, Rahman Rahman Huq, Chartered Accountants, a member firm of KPMG, shall retire in this AGM. The Firm, being eligible, has offered their willingness to be re-appointed. The Board recommends their re-appointment for the year 2010 and to continue till the next AGM at a fee of BDT 1.8 million (Taka one million and eight hundred thousand only) plus VAT, subject to regulatory clearance from the Securities and Exchange Commission.

Risks and Concerns

In the context of a volatile economy, business is subject to variety of risks and uncertainties e.g. Regulatory Risks, Market Risk, Operational Risk, Legal Risk, Interest Rate Risk, Exchange Rate Risk and potential changes in Global or National policies etc., which are, however, no different from any other company in general and our competitors in particular. In this respect, Grameenphone has well defined risk management policies and periodic monitoring that act as an effective tool in mitigating various risks to which our businesses are exposed to in the course of its day-to-day operations as well as in its strategic actions.

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Events after the Balance Sheet Date

i) Formation of 100% owned subsidiary company The Board of Directors of Grameenphone Ltd. at its 99th meeting held on January 20, 2010 decided to form and incorporate an IT Company under the name and style of Grameenphone IT Ltd., which shall be a wholly owned subsidiary company of Gramneephone Ltd. The proposed IT Company shall support all IT needs of Grameenphone Ltd. and shall provide such services and support to third parties. Grameenphone IT Ltd. was incorporated on January 28, 2010. This will contribute to the development of IT and IT outsourcing industry of the country.

ii) Infrastructure Sharing Agreement

erutcurtsarfni mocelet gningis fo ssecorp eht ni si enohpneemarG ,CRTB fo senilediuG gnirahS erutcurtsarfnI htiw enil nI sharing agreements with other telecom operators and internet service providers. In 2010, we have signed such infrastructure sharing agreements with Orascom Telecom Bangladesh Limited (Banglalink) and AXIATA (Bangladesh) Limited (AKTEL). There will be more such sharing agreements in future upon mutual understanding. It is believed that such infrastructure sharing will ensure sustainable utilization of natural resources.

Outlook for 2010Based on market situations and available indications, we expect 2010 to be another year of continuing improvement and progress for our business, aligned with our vision of being the most trusted service provider of telecommunication. We are confident that we shall stay ahead through our innovation and operational excellence. We shall remain committed to be partner of the Government in the development of Bangladesh and would give our full support to the initiatives to bring modern ICT services to the people of Bangladesh.

AcknowledgementsMembers of the Board would like to place on record their appreciation to the Shareholders of the Company for their continued support and guidance. The Board also recognizes the cooperation, positive support and guidance extended to the Company by the Government of Bangladesh, Ministry of Post and Telecommunications (MOPT), Bangladesh Telecommunication Regulatory Commission (BTRC), Bangladesh Railway, National Board of Revenue (NBR), Bangladesh Bank, Board of Investment (BOI), Registrar of Joint Stock Companies and Firms (RJSC), Chief Controller of Export & Import, Securities and Exchange Commission (SEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), Grameenphone’s bankers & financial institutions , vendors and other business partners.

The Board acknowledges with thanks the contribution of the valued customers by making Grameenphone their preferred service provider. The Board would also offer its most sincere appreciation and gratitude to the employees for their dedicated efforts and endeavors in making Grameenphone to be the number one Company in Bangladesh and hope that they would continue to put their best in the days ahead to keep the Company at the lead. At the same time, we, the Members of the Board, as a representative of the Shareholders assure the Management and employees of the Company of our continued support in strengthening the Company and would continue to serve our valued customers of the Company with the same zeal as demonstrated last year. Our ambition for 2010 is to maintain our leading position and even to strengthen our place as the foremost operator in Bangladesh by staying close to our customers and by traversing newer frontiers with exciting innovations for them.

Thanking you all and with best regards.

For and on behalf of the Board of Directors of Grameenphone Ltd.

Sigve BrekkeChairman

March 19, 2010

Directors’ Report

Annexure-IStatus of compliance with the conditions imposed by the Securities and Exchange Commission’s Notification No SEC/CMRRCD/2006-158/Admin/02-08 dated February 20, 2006 issued under section 2CC of the Securities and Exchange Ordinance, 1969 is presented below.

Our Ex-Chief Corporate Affairs Officer & Company Secretary has been placed in the position of CFO & Company Secretary on March 09, 2010. The Company is in the process of appointing a separate person as Company Secretary.

Explanation fornon-compliance

with the condition

ComplianceStatus

ConditionNo. Title

1.1 Board’s Size (number of Directors – minimum 5 and Maximum 20) Complied

1.2 (i) Independent Directors ( at least one tenth of Directors should be Independent Directors) Complied

1.2 (ii) Independent Directors Appointment (should be appointed by the elected Directors) Complied

1.3 Chairman & Chief Executive Officer be different persons Complied

1.4 (a) Directors Report on Financial Statements (fairness of financial statements) Complied

1.4 (b) Books of Accounts (maintenance of proper books of accounts) Complied

1.4 (c) Adaptation of appropriate accounting policies & estimates Complied

1.4 (d) International Accounting Standards Applicable in Bangladesh (application & adequate disclosure for any departure) Complied

1.4 (e) System of Internal Control (soundness and efficiency of Internal Control System) Complied

1.4 (f) Going Concern (ability to continue as a going concern) Complied

1.4 (g) Deviations in Operating Results (highlighting significant deviations from last year in operating result) Complied

1.4 (h) Presentation of key Operating and Financial Data (summarized financial data of at least preceding three years) Complied

1.4 (i) Declaration of Dividend Complied

1.4 (j) Number of Board Meetings held during the year and attendance by each Director Complied

1.4 (k) Pattern of Shareholding (disclosing aggregate number of shares) Complied

2.1 Appointment of CFO, Head of Internal Audit and Company Secretary and defining their respective roles, responsibilities & duties

2.2 Attendance of CFO and the Company Secretary at Board of Directors Meeting Complied

3.0 Audit Committee (should have an Audit Committee as a sub-committee of the Board of Directors)

Complied

3.1 (i) Composition of Audit Committee (should be composed of at least three members) Complied

3.1 (ii) Audit Committee Members Appointment (members should be appointed by the Board with at least one Independent Director) Complied

Directors’ Report

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Mr. Sigve Brekke 11 9

Mr. Per Erik Hylland 11 11

Mr. Snorre Corneliussen 9 8

Mr. Dipal Chandra Barua 11 11

Mr. M. Shahjahan 11 9

Mr. Ole Bjorn Sjulstad 2 2 Retired on March 23, 2009 at 12th AGM

Name of Directors RemarksMeetings attended

Number of meetings held whilst a Board member

Annexure IIBoard Meeting and attendance during the year ended December 31, 2009

Explanation fornon-compliance

with the condition

ComplianceStatus

ConditionNo. Title

3.1 (iii) Term of Service of Audit Committee (Board to ensure continuity of minimum prescribed number of members) Complied

3.2 (i) Chairman of Audit Committee (Board to select Chairman from Audit Committee) Complied

3.2 (ii) Professional qualification and experience of the Chairman of the Audit Committee

Complied

3.3.1 (i) Reporting on the activities of the Audit Committee to the Board of Directors Complied

3.3.1 (ii)(a) Reporting of Conflict of Interest to the Board of Directors None

3.3.1 (ii)(b) Reporting of any fraud or irregularity or material defect in the Internal Control System to the Board of Directors None

3.3.1 (ii)(c) Reporting of non-compliance of Laws to the Board of Directors None

3.3.1 (ii)(d) Reporting of any other matter to the Board of Directors None

3.3.2 Reporting to SEC (if any material impact on the financial condition & results of operation, unreasonably ignored by the Management)

None

3.4 Reporting of activities to the Shareholders Complied

4.00 External / Statutory Auditors

4.0 (i) Non- engagement in appraisal or valuation services Complied

4.0 (ii) Non-engagement in designing of Financial Information System Complied

4.0 (iii) Non-engagement in Book Keeping or other services related to the accounting records or financial statements Complied

4.0 (iv) Non- engagement in Broker-Dealer services Complied

4.0 (v) Non- engagement in Actuarial services Complied

4.0 (vi) Non- engagement in Internal Audit services Complied

4.0 (vii) Non- engagement in any other services Complied

Directors’ Report

Annexure IIIThe Pattern of Shareholding as on December 31, 2009

Name of Shareholders Status Shares Held Percentage

i) Parent/Subsidiary/Associate Companies

Telenor Mobile Communications AS - 753,407,724 55.80%

Nye Telenor Mobile Communications II AS - 215 0.00%

Nye Telenor Mobile Communications III AS - 215 0.00%

Telenor Asia Pte. Ltd. - 215 0.00%

Grameen Telecom - 461,766,409 34.20%

Grameen Kalyan - 22 0.00%

Grameen Shakti - 22 0.00%

ii) Directors, Chief Executive Officer, Chief Financial Officer, Company Secretary, Head of Internal Audit and their spouses and minor children

Mr. Sigve Brekke Chairman - -

Ms. Hilde Tonne Board Member - -

Mr. Per Erik Hylland Board Member - -

Mr. Knut Borgen Board Member - -

Mr. Snorre Corneliussen Board Member - -

Ms. Nurjahan Begum Board Member 4,813 0.00%

Mr. M. Shahjahan Board Member - -

Mr. Md. Ashraful Hassan Board Member 6,000 0.00%

Dr. Jamaluddin Ahmed FCA Board Member - -

Mr. Oddvar Hesjedal Chief Executive Officer - -

Mr. Raihan Shamsi Chief Financial Officer & Company Secretary

94,381 0.01%

Mr. Farhad F. Ahmad Head of Internal Audit 22,220 0.00%

Mr. Abrar Jaman Son of Ms. Nurjahan Begum 2,803 0.00%

Mr. Shoreaz Bin Shahjahan Son of M. Shahjahan 200 0.00%

Ms. Salina Hassan Spouse of Md. Ashraful Hassan 23,759 0.00%

iii) Executives

Mr. Arnfinn Groven Chief People Officer - -

Mr. Arild Kaale Chief Marketing Officer - -

Mr. Frode Stoldal Chief Technology Officer - -

Mr. Odd Egil Aasen Head of Internet & Broadband - -

Mr. Petter Russ Head of Property & Facilities Services - -

iv) Shareholders holding ten percent or More Voting Interest

Telenor Mobile Communications AS - 753,407,724 55.80%

Grameen Telecom - 461,766,409 34.20%

Directors’ Report

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Grameenphone Board Audit Committee was established and its Charter was approved in the 85th meeting of the Board of Directors on November 10, 2008. The Audit Committee, a sub-committee of the Board, supports the Board in fulfilling its oversight responsibilities. The jurisdiction of Grameenphone Board Audit Committee extends over Grameenphone Ltd. and its subsidiaries.

Composition and MeetingsMr. M. Shahjahan, Chairman [Replaced Mr. Dipal Chandra Barua]

Mr. Per Erik Hylland, Member

Dr. Jamaluddin Ahmed FCA, Member [Effective from March 19, 2010]

A total of 3 (three) meetings were held during 2009. Mr. Ashraful Hassan (Managing Director, Grameen Telecom) attended the meetings as a special invitee. Permanent invitees to the meetings were the Chief Executive Officer, Chief Financial Officer, Company Secretary and Head of Internal Audit. Relevant heads of divisions and other members of management also attended the meetings as required. Head of Internal Audit acts as the Secretary to the Audit Committee.

Major Responsibilities of the Audit CommitteeThe purpose, authority, composition, duties and responsibilities of the Audit Committee are delineated in its Charter. Some of the major responsibilities of the Audit Committee are as follows:

Review the annual, half-yearly and quarterly financial statements and other financial results, and upon its satisfaction of the review, recommend the same to the Board.

Review the adequacy and effectiveness of financial reporting process, internal control system, risk management, auditing matters, and the Company’s processes for monitoring compliance with laws and regulations and the Code of Conduct.

Recommend appointment, termination and determination of audit fees for statutory auditors. Consider the scope of work, and oversee and evaluate the work performed by statutory auditors. Review permitted non-audit services performed by statutory auditors.

Exercise its oversight of the work of Grameenphone Internal Audit. Review the effectiveness of internal audit function including performance, structure, adequacy of resources, and compliance with professional standards. Examine audit findings and material weaknesses and monitor implementation of audit action plans.

Major Activities of the Audit CommitteeThe committee reviewed and recommended to the Board, financial statements for the year ended December 31, 2009 and quarterly statement for the fourth quarter of 2009 and for the appointment of statutory auditors for the year ending December 31, 2010.

The committee reviewed the activities of Internal Audit, including approval of internal audit structure and internal audit plan and monitoring achievement of the audit plan. Internal Audit reports and findings were discussed in detail with auditors and members of management. The committee also monitored the status of implementation of audit action plans and provided guidance to ensure timely completion of action plans. The committee also reviewed the Board Audit Committee Charter and Internal Audit Charter and recommended changes for approval to the Board.

Report ofAudit Committee

M. ShahjahanChairmanAudit Committee

March 19, 2010

Auditors’ Report &Audited FinancialStatements

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Auditors’ Reportto the shareholders ofGrameenphone Ltd.

IntroductionWe have audited the accompanying financial statements of Grameenphone Ltd., which comprise the statement of financial position as at 31 December 2009, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS), Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA) and Bangladesh Standards on Auditing (BSA). Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements, prepared in accordance with International Financial Reporting Standards (IFRS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the company's affairs as at 31 December 2009 and of the results of its operations and cash flows for the year then ended and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

We also report that:

yrassecen erew feileb dna egdelwonk ruo fo tseb eht ot hcihw snoitanalpxe dna noitamrofni eht lla deniatbo evah ew )afor the purposes of our audit and made due verification thereof;

sa raf os yraidisbus sti dna ynapmoc eht yb tpek neeb evah wal yb deriuqer sa tnuocca fo skoob reporp ,noinipo ruo ni )bit appeared from our examination of these books;

)tnuocca ssol dna tiforp( emocni evisneherpmoc fo tnemetats dna )teehs ecnalab( noitisop laicnanif fo tnemetats eht )cdealt with by the report are in agreement with the books of account and returns; and

d) the expenditure incurred was for the purposes of the company's business.

AuditorsRahman Rahman HuqDhaka, 19 March, 2010

Rahman Rahman HuqChartered Accountants9 Mohakhali C/A (11th & 12th Floors)Dhaka 1212, Bangladesh.

Telephone +880 (2) 988 6450-2Fax +880 (2) 988 6449Email [email protected] www.rahman-rahman-huq.com

Auditors’ Report

2009 2008Notes Taka Taka

Grameenphone Ltd.Statement of Financial Positionas at 31 December 2009

AssetsNon current assets:

Property, plant and equipment, net 4Intangible assets 5Investment in shares of X-Net Ltd. 6Long-term receivables and deposits 7

Current assets:Inventories 8Deferred cost of connection revenue 9Accounts receivable, net 10Advances, deposits and prepayments 11Cash and cash equivalents 12

Total assets

Equity and LiabilitiesShareholders' equity:

Share capital 13Share premium 13.4Capital reserve 14Deposit from shareholders 15General reserve 16Retained earnings

Non-current liabilities:Loans and borrowings, net of current portion 17Bond obligation 18Deposit from agents and subscribers 19Finance lease obligations, net of current portion 20Deferred tax liabilities 21Long term payables and provisions 22Employee benefits - provision for gratuity

Current liabilities:Accounts payable 23Payable to government and autonomous bodies and other operators 24Income tax payable 25Unearned revenue 26VAT payable 27Loans and borrowings - current portion 17Finance lease obligations - current portion 20Deferred connection revenue 28Interest payable on loans and borrowingsLocal interest bearing short-term borrowings 29Provision for expenses 30Advance against PPO 31Liabilities for share money refund 31.1

Total equity and liabilities

85,553,852,5898,193,645,543

4,467,96812,658,694

93,764,624,794407,184,697360,712,137

4,146,483,2672,494,777,9077,020,671,289

14,429,829,297108,194,454,091

12,151,747,97013,743,98714,446,4521,882,996

2,139,729,36513,266,605,23127,588,156,001

1,907,356,3344,216,405,145482,653,949

5,046,935,82618,535,226,437

164,633,96622,122,040

30,375,333,6974,098,581,741

11,174,424,00710,077,565,649

1,260,211,2602,226,760,0001,406,260,6101,160,709,556

474,142,173153,997,529

4,992,322,9169,069,346,780

4,136,642,172-

50,230,964,393108,194,454,091

79,287,993,9197,681,126,893

-11,635,675

86,980,756,487430,870,209

483,550,1164,697,066,1621,968,937,23214,601,313,087

22,181,736,806109,162,493,293

13,503,000,2207,840,225,942

14,446,4521,880,178

2,139,729,36526,655,044,25150,154,326,408

917,924,127-

440,948,1915,019,805,83813,505,914,117

160,033,35011,454,139

20,056,079,7624,692,964,457

9,304,514,27512,228,778,445

1,679,152,3522,234,779,1331,036,943,071

-541,731,92666,356,035

-7,078,349,758

-88,517,671

38,952,087,123109,162,493,293

The annexed notes 1 to 56 form an integral part of these financial statements.

Director Director Chief Executive Officer Company Secretary

As per our report of same date.

Dhaka, 19 March, 2010 Auditors

Statement of Financial Position

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Revenue 32 65,299,567,088 61,358,978,118

Cost of network operations:Direct cost of network revenue 33 (13,256,145,333) (14,858,520,766)Network operation and maintenance expenses 34 (4,773,426,129) (4,501,457,137)Depreciation and amortisation 35 (15,048,323,189) (13,332,231,627)

(33,077,894,651) (32,692,209,530)Gross profit 32,221,672,437 28,666,768,588

Other income, net 36 43,258,418 52,582,628

Operating expenses:General and administrative expenses 37 (6,593,087,935) (5,682,107,936)Selling and distribution expenses 38 (3,474,969,079) (5,875,351,653)Depreciation and amortisation 35 (1,678,664,554) (1,811,925,203)

(11,746,721,568) (13,369,384,792)Operating profit 20,518,209,287 15,349,966,424

Finance costs, net 39 (1,920,437,487) (1,805,249,292)Gain on sale of investment 6 7,960,532 -Gain/(loss) on disposal of property, plant and equipment 40 (9,768,387) 34,126,142Compensation to BTRC 41 - (2,000,000,000)

(1,922,245,342) (3,771,123,150)

Profit before income tax 18,595,963,945 11,578,843,274Income tax expenses 42 (3,627,797,689) (8,594,976,687)Profit for the year 14,968,166,256 2,983,866,587

Other comprehensive income - -

Total comprehensive income for the year 14,968,166,256 2,983,866,587

Earnings per share:Basic earnings per share (par value Tk 10 each) 43 12.08 2.46

Grameenphone Ltd.Statement of Comprehensive Incomefor the year ended 31 December 2009

2009 2008Notes Taka Taka

The annexed notes 1 to 56 form an integral part of these financial statements.

Director Director Chief Executive Officer Company Secretary

As per our report of same date.

Dhaka, 19 March, 2010 Auditors

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Notes2009 2008Taka Taka

Grameenphone Ltd.Statement of Cash Flowfor the year ended 31 December 2009

Cash flows from operating activities:

Cash receipts from performance of services/sales 44 64,925,924,469 59,519,675,251

Payroll and other payments to employees (4,079,088,982) (3,579,036,748)Payments to suppliers and contractors 45 (21,832,429,882) (24,670,422,156)Finance income received 335,144,569 92,672,551Finance cost paid for short-term loans (450,749,036) (834,671,532)Finance cost paid for long-term loans (1,691,869,816) (1,091,200,938)Income tax paid (6,505,897,213) (4,842,709,822)

(34,224,890,360) (34,925,368,645)Net cash flow from operating activities 30,701,034,109 24,594,306,606

Cash flows from investing activities:

Payment for acquisition of property, plant and equipment (11,867,221,673) (18,938,035,066)Proceeds from sale of property, plant and equipment 40,312,438 76,107,923Payment for acquisition of intangible assets (4,184,634,864) (4,415,375,410)Net cash used in investing activities (16,011,544,099) (23,277,302,553)

Cash flows from financing activities:

Repayment of/ proceeds from local interest bearing short-term borrowings (4,992,322,916) 83,487,763Repayment of bond/ proceeds from issuance of bond (4,250,000,000) 4,250,000,000Payment of long term borrowings (1,422,706,278) (1,074,340,018)Payment of finance lease obligation (562,546,039) (964,871,433)Payment of dividend (1,579,727,236) (1,506,816,748)Proceeds from PPO and IPO 5,698,452,575 4,111,572,296Proceeds from issue of shares to existing shareholders 1,682 -

Net cash flow from financing activities (7,108,848,212) 4,899,031,860

Net changes in cash and cash equivalents 7,580,641,798 6,216,035,913

Cash and cash equivalents at beginning 7,020,671,289 804,635,376Cash and cash equivalents at closing 14,601,313,087 7,020,671,289

Statement of Cash Flow

1. Reporting entity

1.1 Company profile Grameenphone Ltd. (hereinafter referred to as "GP"/"Grameenphone"/"the company") is a public limited company

incorporated in Bangladesh in 1996 under the Companies Act 1994 with its registered address at Celebration Point, Road 113/A. Gulshan, Dhaka, Bangladesh. GP was initially registered as a private limited company and subsequently converted into a public limited company on 25 June 2007. During November 2009, GP listed its shares with both Dhaka and Chittagong Stock Exchanges.

1.2 Nature of business Grameenphone Ltd. is a mobile telecommunication service provider in Bangladesh providing voice, data and other

related services. The company obtained a radio system operating licence from the Ministry of Posts and Telecommunications (MOPT), Government of Bangladesh, commencing from 11 November 1996 and launched commercial operation on 26 March 1997.

The company's network covers six divisional towns (Dhaka, Chittagong, Khulna, Rajshahi, Barisal and Sylhet) and all

64 districts of the country. The company also provides international roaming services through international roaming agreements with various operators of different countries across the world.

As per the terms of the "Licensing Agreement" with MOPT, (succeeded by Bangladesh Telecom Regulatory

Commission), the radio system operating licence of GP will expire on 11 November 2011. The licence is, however, subject to renewal upon fulfilment of certain terms and conditions. Management foresees no uncertainty regarding renewal of this licence and believes that the Company will continue as a going concern in the foreseeable future.

2. Basis of preparation

2.1 Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS),

Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws in Bangladesh. The company's Articles of Association require that the financial statements be prepared in accordance with IFRS.

The requirements of IFRS and BFRS, to the extent relevant to preparation of these financial statements, do not vary significantly from each other. However, the effective dates for certain BFRSs differ from those for corresponding IFRSs. The following BFRSs were adopted early while preparing these financial statements to ensure compliance with both sets of standards.

Title of relevant BFRSs Effective date

BAS 1: Presentation of Financial Statements (revised 2008) 1 January 2010 BAS 23: Borrowing Costs (revised 2008) 1 January 2010 BAS 32: Financial Instruments: Presentation 1 January 2010 BAS 39: Financial Instruments: Recognition and Measurement 1 January 2010 BFRS 7: Financial Instruments: Disclosures 1 January 2010 These financial statements have been authorised for issue by the board of directors on 19 March 2010. 2.2 Basis of measurement The financial statements have been prepared on a historical cost convention except for the following items in the

statement of financial position: (a) Employee benefits plan was measured based on actuarial valuation.

(b) Capitalisation of the lease of Bangladesh Railway (BR) Fibre Optic Network (FON) was valued at present value of minimum lease payments as fair value of such lease was not determinable.

(c) Asset retirement obligations (ARO) were measured at present value of expected future expenditure.

Grameenphone Ltd.Notes to the Financial Statementsas at and for the year ended 31 December 2009


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2.3 Functional and presentation currency The financial statements are presented in Bangladesh Taka (Taka/Tk/BDT) which is both functional currency and

presentation currency of the company. The figures of financial statements have been rounded off to the nearest Taka.

2.4 Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that

affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying

accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

Note 20 : Finance lease obligation Note 21 : Deferred tax liabilities Note 22 : Long term payables and provisions Note 30 : Provision for expenses Note 32 : Revenue Note 35 : Depreciation and amortisation Note 42 : Income tax expenses

3. Significant accounting policies Accounting policies set out below have been applied consistently to all periods presented in the financial statements. 3.1 Property, plant and equipment

(a) Recognition and measurement Items of property, plant and equipment, excluding freehold land, are measured at cost less accumulated depreciation

and accumulated impairment losses, if any. Freehold land is measured at cost. The cost of an item of property, plant and equipment comprises its purchase price, import duties and non-refundable taxes, after deducting trade discount and rebates, and any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the intended manner. Cost also includes initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. The costs of obligations for dismantling, removing the item and restoring the site (generally called 'asset retirement obligation') are recognised and measured in accordance with IAS/BAS 37: Provisions, Contingent Liabilities and Contingent Assets. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

(b) Subsequent costs The cost of replacing or upgrading part of an item of property, plant and equipment is recognised in the carrying

amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day to day servicing of the property, plant and equipment are recognised in the statement of comprehensive income as incurred.

(c) Depreciation No depreciation is charged on land and capital work in progress. Depreciation on other items of property, plant and equipment is provided on a straight-line basis over the estimated

useful lives of each item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the entity will obtain ownership by the end of the lease term. For addition to property, plant and equipment, depreciation is charged from the date of capitalisation up to the month immediately preceding the month of disposal. Depreciation method, useful lives and residual values are reassessed at each date of statement of financial position. The estimated useful lives for the current and comparative years are as follows:


2009 2008

Building 20 years 20 years

Base station- equipments 3-10 years 3-10 years

Base station- Tower, fiber optic network and related assets 7- 20 years 20 -30 years

Transmission equipment 5-10 years 5-10 years

Computers 4 years 4 years

Furniture and fixtures (including office equipment) 3 years 3 years

Vehicles 4 years 4 years

Other than those mentioned in note 4.7, estimated useful lives of property, plant and equipment remained unchanged in 2009.

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amounts and are

recognised net. (d) Capital work-in-progress Capital work in progress consists of acquisition costs of network plant and machinery, capital components and

related installation cost until the date placed in service. In case of import of components, capital work in progress is recognised when risks and rewards associated with such assets are transferred to the Company, i.e. at the time shipment is confirmed by the supplier.

(e) Capitalisation of borrowing costs As per the requirements of IAS/BAS 23: Borrowing Costs, directly attributable borrowing costs are capitalised during

construction period for all qualifying assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made.

3.2 Intangible assets

(a) Recognition and measurement Intangible assets are measured at cost less accumulated amortisation and accumulated impairment loss, if any.

Intangible asset is recognised when all the conditions for recognition as per IAS/BAS 38: Intangible assets are met. The cost of the intangible assets comprises its purchase price, import duties and non-refundable taxes and any directly attributable cost of preparing the asset for its intended use.

(b) Subsequent costs Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific

asset to which it relates. All other expenditures are recognised in the statement of comprehensive income when incurred.

(c) Amortisation Amortisation is recognised in the statement of comprehensive income on a straight line basis over the estimated useful

lives of intangible assets, from the date that they are available for use. The estimated useful lives are as follows:

2009 2008

Operational software 3 years 3 years

Billing software 5 years 5 years

Network management software 10 years 10 years

Licence fees for Pulse Code Modulation (PCM) 5 years 5 years

3.3 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity

instrument of another entity.


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3.3.1 Financial assets The company initially recognises receivables and deposits on the date that they are originated. All other financial

assets are recognised initially on the date at which the company becomes a party to the contractual provisions of the transaction.

The company derecognises a financial asset when the contractual rights or probabilities of receiving the cash flows

from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.

Financial assets includes cash and cash equivalents, accounts receivable, and long term receivables and deposits.

(a) Accounts receivables represent the amounts due from mobile telephony subscribers for telecom services, other operators for interconnection services, customers for FON connectivity and other services and includes both billed and unbilled portion of such services at the date of statement of financial position. Accounts receivables are stated net of bad debts provision.

(b) Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents.

3.3.2 Financial Liability

The company initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the transaction date at which the company becomes a party to the contractual provisions of the liability.

The company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial liabilities include loans and borrowings, finance lease obligation, accounts payables and other payables.

(a) Finance lease obligation Leases in terms of which the entity assumes substantially all the risks and rewards of ownership are classified as

finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Incremental borrowing rate has been used to calculate the present value of minimum lease payments.

(b) Loans and borrowings Principal amounts of the loans and borrowings are stated at their amortised amount. Borrowings repayable after

twelve months from the date of statement of financial position are classified as non-current liabilities whereas the portion of borrowings repayable within twelve months from the date of statement of financial position, unpaid interest and other charges are classified as current liabilities.

(c) Payables

settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

3.4 Impairment(a) Financial assets Accounts receivable is assessed at each date of statement of financial position to determine whether there is

objective evidence that it is impaired. Accounts receivable is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by

a debtor, indications that a debtor or issuer will enter bankruptcy, etc. Accordingly, 100% provision is made over the amount outstanding (after considering security deposits) from the churned subscribers. As per the existing credit policy of the company, a post paid subscriber is barred if his usage exceeds approved credit limit or any non-payment of invoice. A subscriber is considered churned after three months of barring. For receivables from other operators and FON sublease customers, bad debt provision is made after analysing the recoverability of the amount from the concerned parties. The provision for doubtful debts is written off as bad debts after one year from the date of recognition.


(b) Non-financial assets At each reporting date indications of impairment are reviewed. For this review Grameenphone is considered as a

single cash generating unit and both tangible and intangible assets are reviewed. If any such indication exists, the assets' recoverable amount will need to be estimated. As at 31 December 2009, the assessment of indicators of impairment reveals that impairment testing is not required for Grameenphone Ltd.

3.5 Inventories Inventories consisting of mobile handsets, data cards and other communication devices, scratch cards and SIM cards

are valued at lower of cost and net realisable value. Costs of inventories include expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Cost of inventories is determined by using the weighted average cost formula. Net realisable value is based on estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

3.6 Employee benefits

The company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds as approved by the National Board of Revenue (NBR).

(a) Defined contribution plan (provident fund) Defined contribution plan is a post-employment benefit plan. The recognised Employees' Provident Fund is

considered as defined contribution plan as it meets the recognition criteria specified for this purpose. All permanent employees contribute 10% of their basic salary to the provident fund and the company also makes equal contribution.

The company recognises contribution to defined contribution plan as an expense when an employee has rendered

services in exchange for such contribution. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund.

(b) Defined benefit plan (gratuity) Defined benefit plan is a retirement benefit plan under which amounts to be paid as retirement benefits are

determined by reference to employees' earnings and years of service. The recognised Employees' Gratuity Fund is considered as defined benefit plan as it meets the recognition criteria. The company's obligation is to provide the agreed benefits to current and former employees as per condition of the fund.

Present value of defined benefit obligation and the fair value of the plan assets were determined by professional

actuary. Projected Unit Credit method is used to measure the present value of defined benefit obligations and related current and past service cost and mutually compatible actuarial assumptions about demographic and financial variables were used. The difference between fair value of the plan assets and present value of obligation is recognised as a liability or an asset in the statement of financial position.

The rate used to discount post employment benefit obligations is determined by reference to market yields at the

date of statement of financial position on treasury bills. The expected return on plan assets is based on market expectation and is one of the components of expenses recognised in the statement of comprehensive income. Total expenses recognised in the statement of comprehensive income comprise of current service cost, interest cost and expected return on plan assets.

(c) Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related

service is provided. Provision is created for the amount of annual leave encashment based on the latest basic salary.

3.7 Income tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement of

comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

(a) Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively

enacted at the date of statement of financial position, and any adjustment to tax payable in respect of previous years. In 2009, Grameenphone became listed as a publicly traded company with both Dhaka and Chittagong Stock


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Exchanges by issuing 10% of its paid up capital (out of which more than 5% was issued through IPO). Accordingly, the applicable tax rate for the company has been reduced to 35% as per the provisions of Finance Act 2009. The tax rate used for the years ended 31 December 2009 and 31 December 2008 are as follows:

Year ended Tax rate

31 December 2009 35%

31 December 2008 45%

(b) Deferred tax Deferred tax is recognised in compliance with IAS 12: Income Tax, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the date of statement of financial position. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary difference can be utilised. Deferred tax assets are reviewed at each date of statement of financial position and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3.8 Provisions A provision is recognised in the statement of financial position when the company has a legal or constructive

obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provision is ordinarily measured at the best estimate of the expenditure required to settle the present obligation at the date of statement of financial position. Where the effect of time value of money is material, the amount of provision is measured at the present value of the expenditures expected to be required to settle the obligation.

Asset retirement obligation (ARO) Asset retirement obligation (ARO) is recognised when there is a legal or constructive obligation for dismantling and

removing an item of property, plant and equipment and restoring the site on which the item is located. The company recognises ARO in respect of roof-top Base Transceiver Station (BTS) and office space based on the present value of expected expenditures required to settle the obligation. The periodic unwinding of the discount is recognised in profit or loss as a finance cost as it occurs.

3.9 Revenue recognition Revenues are measured at fair value of the consideration received or receivable, net of discount and sales related

taxes (VAT). Revenues are reported gross with separate recording of expenses to vendors of products or services. However, when Grameenphone Ltd. only acts as an agent or broker on behalf of suppliers of products or services, revenues are reported on a net basis. Revenues of Grameenphone comprise:

(i) Rendering of services: traffic fees, subscription and connection fees, interconnection fees, various customer

support revenues and other value added service revenues. (ii) Sale of goods: mobile handsets, data card and others. (a) Traffic revenue -Post-paid Post-paid revenue is recognised on accrual basis and recorded as income (exclusive of VAT) as services are rendered.

(b) Traffic revenue -Prepaid Prepaid revenue is recognised (exclusive of VAT) as per the usage recorded in the network from the prepaid cards and

electronic recharge system (ERS). The unused portion of the prepaid cards and ERS remains as unearned revenue (exclusive of VAT) and is reported as liability.

(c) Subscription revenue Subscription revenue represents fixed line rent charged to post-paid customers for voice, content and other

communication services. It is billed in advance and recognised evenly over the subscription period.

(d) Connection revenue Connection revenue represents the revenue arising from sale of connection to the subscribers through new SIM which

is recognised over the estimated period of customer relationship. The estimated period of customer relationship is


based on past history of churn and expected development. Expected development reflects the recent development in customer churn in the industry as well as in other group entities.

(e) Roaming revenue International roaming revenue is recognised on accrual basis as services are rendered. (f) Interconnection revenue Interconnection revenue from other operators are recognised when GP subscribers receive calls from other operators'

subscribers. From August 2008 onwards, interconnection revenue is recognised based on calls through interconnection exchange (ICX) and international gateways (IGW).

(g) Other operating revenue Other operating revenue comprises customers support revenue, VAS, SMS, MMS and other revenue from content

providers and is recognised in the same manner as corresponding prepaid traffic revenue and post-paid traffic revenue recognition policy.

(h) Village pay phone Village pay phone is a prepaid service. Prepaid revenue-VPP is recognised (exclusive of VAT) as per the usage

recorded in the network from the prepaid cards and electronic recharge system (ERS). The unused portion of the prepaid cards and ERS remains as unearned revenue (exclusive of VAT) and is reported as liability.

(i) Other non mobile revenue Other non mobile revenue represents revenue earned from sale of handset, data card and various services like bill

payment services, channel fees, etc.. Revenue is recognised when goods are delivered or services are rendered. (j) Income from sub-lease of optical fibre network Rental income from sublease of optical fibre network is recognised as per the arrangements provided in the relevant

agreements on accrual basis.

3.10 Deferred connection revenue Deferred connection revenue represents the portion of connection revenue which is deferred over the remaining

period of estimated customer relationship. 3.11 Deferred cost of connection revenue Deferred cost of connection revenue represents the costs directly related to the acquisition of subscribers.

Connection costs in excess of connection revenue is charged as expenses when incurred. Connection costs up to connection revenue are deferred and amortised over the period of estimated customer relationship.

3.12 Operating Lease All leases other than those which meet the definition of finance lease are treated as operating lease and are not

recognised in the statement of financial position.

3.13 Foreign currency transactions Transactions in foreign currencies are recorded in the books at the rate of exchange prevailing on the date of the

transaction. Monetary assets and liabilities in foreign currencies at the date of statement of financial position are translated into Bangladesh taka at the rate of exchange prevailing at the date of statement of financial position. All exchange differences are recognised in the statement of comprehensive income.

3.14 Earnings per share The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS) data for its ordinary

shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant periods.

3.15 Events after the reporting period Events after the reporting period that provide additional information about the company's position at the date of statement

of financial position or those that indicate the going concern assumption is not appropriate are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material.


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2009 2008Taka Taka

4.2 Land represents freehold land acquired for office premises and base stations.

4.3 Asset exchange transaction

In 2009, a portion of GP's core network equipment supplied by Ericsson having carrying amount of Tk 2,795,643,569 was replaced by network equipment supplied by Huawei. The above mentioned transaction is expected to have economic substance in terms of its impact on configuration of future cash flows. However in absence of reliable information regarding fair market value of the assets acquired or the assets given up, cost of the assets acquired were measured at the carrying amount of the assets given up in compliance with applicable accounting standards.

4.4 Capital work in progress This represents primarily the cost of corporate headquarters and network equipments under

installation/construction. The components of network equipments are procured mostly from Ericsson and Huawei.

4.4.1 Capital work in progress - transferred The work in progress completed and transferred during the year to the corresponding items of property plant and

equipment was as follows:

Name of assets

Land - 6,459,520 Base station 5,686,463,561 12,922,106,954 Transmission equipment 4,309,646,132 4,797,755,554 Computers 294,103,846 465,403,988 Furniture and fixtures 65,923,615 251,397,708 Vehicles 93,431,947 116,368,800 10,449,569,101 18,559,492,524

4.4.2 Capital work in progress - components Capital work in progress consists of capital inventory of Tk 1,086,510,194 (2008: Tk 1,314,925,691), work-in-progress

for corporate headquarters (CHQ) of Tk 3,010,975,922 (2008: Tk 1,282,988,446), and for BTS, switch, other telecom equipment and civil works of Tk 1,842,355,368 (2008: Tk 1,696,264,681).

4.5 Depreciation charged to Cost of network operation 14,481,369,413 13,186,081,885 Operating expenses 1,099,739,855 1,181,365,675 15,581,109,268 14,367,447,560

4.6 Security Assets with a carrying amount of Taka 7,208,750,000 are subject to a mortgage registered with the Registrar of Joint

Stock Companies (RJSC) against the loans and borrowings obtained from senior lenders.


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2009 2008Taka Taka

2011 2012Taka Taka

2009 2010Taka Taka

4.7 Change in estimates During 2009, estimated useful lives of the certain assets under the category base station and transmission

equipment (namely, cable ducts, equipment cooling units, fibre cable equipment, GSM antenna and antenna equipment, network management system, packet switching and router, power equipment, tower and certain other switching hardware & software.) were revised. The effect of such changes in useful lives on the financial statements is summarised below:

Decrease/(increase) in depreciation (66,796,764) (66,796,764) (66,796,764) (66,796,764)

Decrease/(increase) in income tax expense 23,378,867 23,378,867 23,378,867 23,378,867 Increase/(decrease) in profit (43,417,897) (43,417,897) (43,417,897) (43,417,897)

Increase/(decrease) in property, plant and equipment, net (66,796,764) (66,796,764) (66,796,764) (66,796,764) Decrease/(increase) in deferred tax liability 23,378,867 23,378,867 23,378,867 23,378,867 Increase/(decrease) in equity (43,417,897) (43,417,897) (43,417,897) (43,417,897)

4.8 Capitalisation of borrowing costs The following amounts were capitalised as a part of cost of the following assets as per the requirements of IAS/BAS

23: Borrowing Costs.

Base station and transmission equipment - 32,876,333 Corporate Headquarters (CHQ) 189,744,831 78,325,027

189,744,831 111,201,360 The amount of capitalisable borrowing costs were determined applying weighted average rate ranging from 10.55%

to 11.72% (2008: 10.17% to 10.94%) on monthly average CWIP balance of respective qualifying assets.

5. Intangible assets

Disposal/As at Addition Adjustment As at As at Charged Disposals As at As at As at

1 January during during 31 December 1 January during the during 31 December 31 December 31 DecemberName of assets

2009 the year the year 2009 2009 year the year 2009 2009 2008

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka

Pulse Code Modulation (PCM) (Note 5.1) 64,530,000 20,000 - 64,550,000 43,524,341 6,993,101 - 50,517,442 14,032,558 21,005,659

Software and others (Note 5.2) 3,956,465,902 801,362,308 (318,889,833) 4,438,938,377 2,003,467,446 809,996,486 (177,646,391) 2,635,817,541 1,803,120,836 1,952,998,456

Telecom Licence - spectrum (Note 5.3) 5,920,000,000 - - 5,920,000,000 55,713,418 328,888,889 - 384,602,307 5,535,397,693 5,864,286,582

9,940,995,902 801,382,308 (318,889,833) 10,423,488,377 2,102,705,205 1,145,878,476 (177,646,391) 3,070,937,290 7,352,551,087 7,838,290,697

Intangible capital in process (Note 5.4) 355,354,846 785,480,006 (812,259,046) 328,575,806 - - - - 328,575,806 355,354,846

10,296,350,748 1,586,862,314 (1,131,148,879) 10,752,064,183 2,102,705,205 1,145,878,476 (177,646,391) 3,070,937,290 7,681,126,893 8,193,645,543

Cost Amortisation Carrying amount

5.1 Pulse Code Modulation (PCM) This represents licence fee for channels with BTCL (formerly Bangladesh Telegraph and Telephone Board - BTTB).

5.2 Software and others Software includes business software and network management software. Business software includes mainly billing

software, oracle financial software and other business software. Network management software represents PPS, Paso link, minilink etc.

5.3 Telecom Licence (Spectrum) Additional 7.4 MHz Spectrum licence @ BDT 800 million per MHz was acquired from BTRC in September 2008 for

subsequent 18 years.

5.4 Intangible capital in process (CIP) Intangible CIP includes software under testing phase awaiting user's acceptance.


6 Investment in shares of X - Net Ltd. As at 31 December 2008, Grameenphone held 140,070 shares in X-Net Ltd. representing 30% of its paid up capital

which was acquired in exchange of right to use GP's fibre optic network. The investment was accounted for under the cost method following BAS 25: Accounting for Investments. In 2009, Grameenphone disposed of all its shares in X-Net upon receipt of approval by the Board of Directors of X-Net Ltd on 12 January 2009. Accordingly, a settlement agreement was signed on 3 March 2009 between GP and X-Net Ltd. Gain on disposal of such investment amounted to Tk 7,960,532.

7 Long-term receivables and deposits Receivable from X-Net Ltd. - 2,226,000 Long term deposits (Note 7.1) 11,635,675 10,432,694 11,635,675 12,658,694 7.1 Long term deposits Long-term deposit account is maintained with Southeast Bank as lien against bank guarantees issued in favour of

Ministry of Posts and Telecommunications, Government of Bangladesh for telecom licence and Bangladesh Railway for lease of optical fibre network. This amount is refundable upon cancellation of guarantee.

8 Inventories Handsets, Data Cards and other communication tools 55,362,359 13,469,924 SIM cards (Note 8.2) 363,659,067 353,171,527 Scratch cards 11,848,783 40,543,246 430,870,209 407,184,6978.1 Number of inventory Handsets 8,252 2,058 SIM cards (Note 8.2) 4,489,268 5,953,591 Scratch cards 26,384,723 33,104,923

8.2 SIM cards As at 31 December 2009 GP had 4,489,268 SIM cards (2008: 5,953,591 SIM cards). Out of 4,489,268 SIM cards

639,226 cards (2008: 588,030 SIM cards) were ready to be offered as new connection to subscribers. Each new connection attracts Tk. 800 as VAT and Supplementary Duty to be paid to Govt. exchequer.

9 Deferred cost of connection revenue Opening balance 360,712,137 357,679,797 Addition during the year 322,972,861 208,730,620 683,684,998 566,410,417 Amortisation during the year (200,134,882) (205,698,280) 483,550,116 360,712,13710 Accounts receivable, net Receivables for mobile service-postpaid and others (Note 10.1) 162,048,506 416,731,695 Receivables for mobile service-interconnection (Note 10.2) 4,505,904,450 3,707,456,935 Receivables for sub lease of optical fibre network (Note 10.3) 24,685,230 19,635,161 Other receivables for non-mobile service 4,427,976 2,659,476 4,697,066,162 4,146,483,26710.1 Receivables for mobile service-postpaid and others Accounts receivable 271,826,022 623,529,693 Provision for doubtful debts (109,777,516) (206,797,998) 162,048,506 416,731,695

2009 2008Taka Taka

5.5 Amortisation during the year charged to:

Cost of network operation 566,953,776 146,149,742 Operating expenses 578,924,699 630,559,528 1,145,878,475 776,709,270


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10.2 Receivables for mobile service-interconnection Accounts receivable 4,534,263,197 3,753,965,124 Provision for doubtful debts (28,358,747) (46,508,189) 4,505,904,450 3,707,456,935

10.3 Receivables for sub lease of optical fibre network Accounts receivable- sublease 31,909,788 26,859,719 Provision for doubtful debt (7,224,558) (7,224,558) 24,685,230 19,635,161

This represents amount receivable from several parties against sub-lease of optical fibre network.

10.4 Provision for doubtful debts Opening balance 260,530,745 148,643,786 Provision made during the year 91,628,074 260,530,745 Written off during the year (206,797,998) (148,643,786) 145,360,821 260,530,745

10.5 Accounts receivable-security, related parties etc. Good and secured 3,495,124,415 2,691,392,304 Good and having no security other than personal security 1,201,941,747 1,455,090,963 Doubtful and bad 145,360,821 260,530,744 Gross accounts receivable 4,842,426,983 4,407,014,011 Less. Provision for bad and doubtful debts (145,360,821) (260,530,744) Net accounts receivable 4,697,066,162 4,146,483,267

As at 31 December 2009, Grameenphone Ltd. had no receivable from:

(a) the directors and other officers of the company;

rotcerid ,rentrap a si .dtL enohpneemarG fo rotcerid yna hcihw ni ylevitcepser seinapmoc detimil etavirp ro smrif )b(or member, other than those disclosed in note 52.1; and

(c) companies under the same management.

11 Advances, deposits and prepayments

Advances: Advance to employees (Note 11.1) 51,378,857 22,962,673 Advance to Bangladesh Railway 3,181,426 3,076,096 Advance for capital expenditure (Note 11.2) 444,382,534 608,512,929 Other advances 719,651 551,858 499,662,468 635,103,556 Deposits: Deposit for Bank guarantee 127,957,944 94,178,334 Security deposits for utilities and services 54,897,307 55,384,258 182,855,251 149,562,592 Prepayment and other receivables: Prepayment against rent (Note 11.3) 288,961,363 311,951,875 Prepayment against expenses (Note 11.4) 235,134,835 652,058,122 Receivables from Ericsson 428,123,981 509,092,652 Other receivables (Note 11.5) 334,199,334 237,009,110 1,286,419,513 1,710,111,759 1,968,937,232 2,494,777,907


2009 2008Taka Taka

11.1 Advance to employees includes advances made in relation to official travel, training, electricity bills, other office running expenses and advance bonus payments.

11.2 Advance for capital expenditure represents partial payment to the vendors against running bills for civil works and towers at various sites and also for Corporate Headquarters of Grameenphone Ltd.

11.3 Prepayment against rent represents advance payment of rent for base station locations and office buildings.

11.4 Prepayment against expenses represents advance payment of insurance premium, payment to suppliers for spare parts and others.

11.5 Other receivables include reimbursable cost on customs clearing and forwarding charges, accrued interest on STD accounts and reimbursable expenditure incurred on behalf of Telenor made by Grameenphone as well as other inter-company receivables.

11.6 Security deposit, advance to employees and related parties etc.

Good and secured 444,382,534 608,512,929 Good and having no security other than personal security 55,279,934 26,590,627 Doubtful and bad - - Total advance deposits and prepayments 499,662,468 635,103,556 Provision for bad and doubtful amount - - Advance deposits and prepayments, net 499,662,468 635,103,556

As at 31 December 2009, Grameenphone Ltd. had Tk 51,378,857 (2008: Tk 22,962,673 ) as advance to the employees. Other than those, Grameenphone Ltd. had no loans or advances to:

(a) Directors of the company;

rotcerid ,rentrap a si .dtL enohpneemarG fo rotcerid yna hcihw ni ylevitcepser seinapmoc detimil etavirp ro smriF )b(or member; and

(c) Companies under the same management.


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12 Cash and cash equivalents Cash in hand 7,422,192 14,769,868 Cash at bank : Southeast Bank Limited 618,226,240 27,557,747 Standard Chartered Bank 329,492,761 102,164,966 Sonali Bank Limited 9,112,126 3,779,134 IFIC Bank Limited 310,245,153 9,076,206 Commercial Bank of Ceylon Limited 370,478,423 119,234 EXIM Bank Limited 509,456,920 3,344,949 Citibank, N.A. (Note 12.1) 987,567,559 4,952,706,383 Dhaka Bank Limited 512,650,251 4,928,430 Islami Bank Bangladesh Limited 9,585,159 9,854,040 One Bank Limited 1,355,622,153 85,768,106 HSBC 829,155,699 103,227,354 Prime Bank Limited 629,764,197 14,773,015 Premier Bank limited 500,288,702 - Dutch Bangla Bank Limited 372,855,996 61,886,730 Eastern Bank Limited 710,658,504 1,548,576,315 National Bank Limited 513,583,396 7,593,705 BRAC Bank Limited 1,151,503,585 5,136,705 The City Bank Limited 428,247,825 11,056,277 Trust Bank Limited 504,697,678 4,985,109 Bank Asia Limited 503,381,293 4,591,882

Mercantile Bank Limited 402,205,090 4,339,289 United Commercial Bank Ltd. 302,998,526 3,852,439 Jamuna Bank Limited 512,037,622 2,633,385 Agrani Bank Limited 5,725,486 1,531,474 Shahjalal Islami Bank Ltd. 1,403,465,596 2,202,012 Woori Bank 4,878,157 - Pubali Bank Ltd. 300,000,000 - Bank Alfalah Ltd. 300,167,744 - Utility bill pay service collection A/C (Note 12.2) 203,505,631 24,090,246 Collection account with other banks (Note 12.3) 2,333,423 6,126,289 14,593,890,895 7,005,901,421 14,601,313,087 7,020,671,289

12.1 This includes Tk. 91,954,691 representing amounts received against share application which were in the process of being refunded as at 31 December 2009 and interest accrued on such balance.

As at 31 December 2008 an amount Tk 4,111,572,296 received for Private Placement Offering (PPO) purpose was deposited with Citibank, N.A.

12.2 This represents the amount deposited at Citibank, N.A. (2009: Tk 123,335,836; 2008: Tk 24,090,246) and BRAC Bank Limited (2009: Tk 80,169,795) on account of collection against utility bill pay services at the date of statement of financial position.

12.3 Collection account with other banks This represents the amount which was in transit at the date of statement of financial position.


2009 2008Taka Taka13 Share capital

Authorised : 40,000,000,000 ordinary shares of Tk. 1 each - 40,000,000,000 4,000,000,000 ordinary shares of Tk. 10 each 40,000,000,000 - 40,000,000,000 40,000,000,000

At its 93rd Board meeting held on 2 July 2009, Grameenphone altered the face value of ordinary shares from Tk. 1 to Tk 10, which was approved by the shareholders at the 19th EGM held on the same date.

Issued, subscribed, called up and paid-up : 12,151,747,970 shares of Tk. 1 each - 12,151,747,970 1,350,300,022 ordinary shares of Tk. 10 each 13,503,000,220 - 13,503,000,220 12,151,747,970

Movement of share capital in 2009 Face value of Face value of Tk. 1 per share Tk. 10 per share

Taka Taka Opening balance (12,151,747,970 shares of Tk. 1 each) 12,151,747,970 - Issue of additional shares to the existing shareholders 250 shares of Tk. 1 per share 250 - Effect of reverse split during the year (12,151,748,220) 12,151,748,220

(Issue of shares of Tk. 10 against 10 shares of Taka 1) - Issue of shares to the public, institutional investors and others (Note 13.1) 69,439,400 shares of Tk 10 each through Initial Public Offering (IPO) - 694,394,000 65,685,800 shares of Tk 10 each through Private Placement Offering (PPO) - 656,858,000

Closing balance - 13,503,000,220

Movement of share capital in 2008 Face value of Face value of Tk. 43 per share Tk. 1 per share

Taka Taka Opening balance (56,519,758 shares of Tk. 43 each) 2,430,349,594 - Effect of share split during the year (2,430,349,594) 2,430,349,594 (Issue of 43 shares of Tk. 1 against 1 share of Taka 43) Issue of bonus shares (Note 13.2) - 9,721,398,376 Closing balance - 12,151,747,970

13.1 Issue of shares to the public, institutional investors and others In 2009, Grameenphone issued 65,685,800 shares at the rate of Tk. 74 per share including a premium of Tk. 64 per

share to institutional investors, GP employees and Grameen bank borrowers through Private Placement Offering (PPO); and 69,439,400 shares at the rate of Tk. 70 per share including a premium of Tk. 60 were issued to the public through IPO processes.

13.2 Issue of bonus shares At the 16th EGM (Extra-ordinary general meeting) held on 15 July 2008, GP issued bonus shares @ 400% of the

paid-up capital amounting to Tk. 9,721,398,376 i.e. four bonus shares of Tk. 1.00 each for every share of Tk. 1.00 each held by each shareholder. Paid-up capital immediately before this issuance of bonus share was Tk. 2,430,349,594.


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13.3 Shareholding position

Shareholding range No. of shareholders No. of shares

2009 2008 2009 2008 (at face value (at face value Tk 10 per share) Tk 1 per share)

1-500 179,001 2 36,663,152 430 501-5,000 9,793 3 14,611,180 6,450 5,001-10,000 828 - 5,993,944 - 10,001-20,000 418 - 5,824,433 - 20,001-30,000 104 - 2,544,649 - 30,001-40,000 57 - 1,991,885 - 40,001-50,000 33 - 1,497,906 - 50,001-100,000 85 - 6,125,896 - 100,001-1,000,000 66 - 20,304,723 - 1,000,001-1,000,000,000 14 2 1,254,742,254 12,151,741,090 190,399 7 1,350,300,022 12,151,747,970

13.4 Share premium

Opening balance 13,743,987 13,743,987 Received during the year (Note 13.4.1) 8,370,259,450 - Adjustment of share issue costs (Note 13.4.2) (543,777,495) - Closing balance 7,840,225,942 13,743,987

13.4.1 In 2009, total amount of Tk 8,370,259,450 was received on account of shares issued to the existing shareholders, GP employees, Grameen bank borrowers, institutional investors and to general public. Net issue cost of Tk 543,777,495 was set-off against share premium as per IAS 32: Financial Instruments.

13.4.2 This includes Tk 13,229,830 paid to auditors for IPO related services in 2009 and 2008.

13.3 Shareholding position

Name of shareholders Percentage of holding )akaT( serahs fo eulaV

2009 2008 2009 2008 (at face value (at face value Tk 10 per share) Tk 1 per share) Telenor Mobile Communications AS, Norway 55.80% 62.00% 7,534,077,240 7,534,077,085 Nye Telenor Mobile Communications II AS, Norway 0.00% 0.00% 2,150 2,150 Nye Telenor Mobile Communications III AS, Norway 0.00% 0.00% 2,150 2,150 Telenor Asia Pte Ltd, Singapore 0.00% 0.00% 2,150 2,150 Grameen Telecom, Bangladesh 34.20% 38.00% 4,617,664,090 4,617,664,005 Grameen Kalyan, Bangladesh 0.00% 0.00% 220 215 Grameen Shakti, Bangladesh 0.00% 0.00% 220 215 General public, GP employees and institutions 10.00% 0.00% 1,351,252,000 -

100.00% 100.00% 13,503,000,220 12,151,747,970


2009 2008Taka Taka

14 Capital reserve In 2004, the holders of preference shares converted their preference shares to ordinary shares as per clauses 41 to

44 of Memorandum and Articles of Association. Preference shares of Tk 45.84 each were converted into ordinary shares of Tk 43.00 each and the balance Tk 2.84 per share was transferred to capital reserve account. This amount is not distributable as dividend as per the Companies Act 1994.

15 Deposit from shareholders

Telenor Mobile Communications AS, Norway 1,880,178 1,882,968 Grameen Telecom, Bangladesh - 28 1,880,178 1,882,996

Deposit from shareholders represents balance of the share money remittance which had not been used for issuance of share capital. An amount of Tk. 2,818 was adjusted during 2009 against issue of new shares to the existing shareholders.

16 General reserve This reserve represents the amount invested in the acquisition of property, plant and equipment in the old unit from

the accumulated tax holiday reserve of 2nd Phase Expansion Unit-1. The tax holiday reserve has been transferred to general reserve upon fulfilment of necessary conditions as per Income Tax Ordinance 1984.

17 Loans and borrowings, net of current portion IFC (Note 17.1) 206,389,257 618,404,345 ADB (Note 17.1) 152,690,367 427,579,842 NORFUND (Note 17.1) 71,782,052 209,545,914 Eksportfinans ASA (Note 17.2) 49,037,159 76,980,013 NORAD (Note 17.3) 98,074,370 153,960,054 Local syndicated loan (Note 17.4) 1,376,893,993 1,827,146,776 1,954,867,198 3,313,616,944 Current portion of loans and borrowings (Note 17.5) 1,036,943,071 1,406,260,610 917,924,127 1,907,356,334

17.1 Loan from IFC, ADB and NORFUND In 2004, Grameenphone Ltd. entered into loan agreements with IFC, ADB and NORFUND for a total amount of USD

60 million, which was financed in proportion of 3:2:1 respectively. GP drew USD 25 million (USD 12.5 million from IFC, USD 8.33 million from ADB and USD 4.17 million from NORFUND) as the first instalment on 26 August 2004. The second and third instalments amounting to USD 15 million and USD 20 million respectively were drawn on 29 March 2005 and 26 April 2005 respectively.

The loans are repayable in 10 half yearly installments starting from 15 December 2005 with the following interest rates:

If net debt : EBITDA >1; LIBOR + 3.5% per annum.

If net debt : EBITDA <1 and > 0.5 ; LIBOR + 3.25% per annum.

If net debt : EBITDA <0.5; LIBOR + 3.0% per annum.

17.2 Loan from Eksportfinans ASA Grameenphone Ltd. borrowed NOK 25 million in December 2000 from Eksportfinans ASA, Norway with interest to be

paid at the rate of 6 months NIBOR (the rate appearing on page NIBOR on the Reuters money rate service) plus 30 basis points per annum. The loan is repayable in 14 equal semi-annual installments starting from 29 June 2004.


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2009 2008% of principal % of principal

17.5 Loans and borrowings - current portion

IFC 206,389,257 410,782,046 ADB 152,690,367 284,024,722 NORFUND 71,782,052 139,193,232 Eksportfinans ASA 49,037,159 38,490,006 NORAD 98,074,370 76,980,027 Local syndicated loan 458,969,866 456,790,577 1,036,943,071 1,406,260,610

17.6 Tenure of repayment of loans and borrowings

The tenures of repayment as per the agreements are as follows: Payable not later than 1 year 53% 42% Payable later than 1 year but not later than 5 years 47% 58%

18 Bond obligation Grameenphone Ltd. issued debt instruments in the form of unsecured, non-convertible, and freely transferable

coupon bearing Bond on 11 November 2008, for an aggregate principal amount of Taka 4,250 million through private placement with domestic investors. Each bond was denominated at Taka 10 million with one tranche having 540 days tenor and the other tranche having 720 days tenor maturing for payment on 04 May 2010 and 31 October 2010 respectively. The bonds had an interest rate of 14.5% per annum, payable semi-annually. However, the bond was repaid fully in December 2009.

17.3 Loan from Norwegian Agency For Development Cooperation (NORAD) Grameenphone Ltd. entered into an agreement with Norwegian Agency for Development Cooperation (NORAD) to

obtain loan of NOK 50 million and to obtain guarantee in its favour to borrow another NOK 25 million from Eksportfinans. According to the terms of the contract, interest at 3.4% per annum is to be paid on drawdown amount. The interest is payable semi-annually in arrears with the first payment to be made from 6 months after the first drawdown date which will be repayable in 14 installments with the first instalment falling due from 42 months after the last drawdown date. GP received the loan in two installments; one on 30 December 1997 (NOK 35 million) and another on 3 January 2001(NOK 15 million).

17.4 Local syndicated loan Grameenphone Ltd. signed a Tk 2,000,000,000 syndicated loan agreement with 16 local financial institutions.

Standard Chartered Bank was the lead arranger for the syndicated loan. The loan is being financed by Agrani Bank, Bank Asia, Citibank N.A., IDCOL, IFIC Bank, Jamuna Bank, National Bank, Pubali Bank, SABINCO, Sonali Bank, Standard Bank, Standard Chartered Bank, Trust Bank, The City Bank, United Commercial Bank and Uttara Bank. The loan agreement was signed on 17 September 2007. The loan bears interest at 13.50% per annum, which is calculated on the amount outstanding on a daily outstanding amount basis and payable at the end of each quarter. The repayment started on 15 November 2008. The first drawdown has been effected on 8 October 2007. 5.8824% of the principal amount will be repaid on a quarterly basis.

All the above loans are secured by a first priority floating charge on the company's undertaking, property and assets, present and future including goodwill and money held to the credit of the company's bank accounts to the extent of Tk 7,208,750,000.


2009 2008Taka Taka

19 Deposit from agents and subscribers

Security deposits from subscribers (Note 19.1) 405,633,191 411,388,949

Security deposits from dealers and agents (Note 19.2) 35,315,000 71,265,000

440,948,191 482,653,949

19.1 The amount of security deposits from subscribers represents security money obtained from subscribers. This amount can be used in full or in part to adjust any amount due from subscribers. The amount is refundable to subscribers on their termination of relationship with GP.

19.2 This amount of security deposits from dealers and agents represents security money obtained from channel partners (i.e. dealer, distributor, outlet agent). This amount can be used in full or in part to adjust any amount due from channel partners. The amount is refundable to channel partners on their termination of business relationship with GP.

20 Finance lease obligation Obligation under finance lease has been recognised as liability in the statement of financial position at an amount

equal to the present value of minimum lease payments. GP's incremental borrowing rate, which was 15% at the inception of the lease, was used to calculate the present value of minimum lease payments, as it was impracticable to determine the implicit interest rate at that time.

Finance lease of optical fibre network with Bangladesh Railway (BR) 5,019,805,838 6,207,645,382

Less: Current portion of finance lease - 1,160,709,556

5,019,805,838 5,046,935,826

Finance lease obligation as at 31 December 2009 is payable as follows:

Present value of Future minimum minimum lease lease payments Interest payments Taka Taka Taka (i) Not later than one year 680,999,391 680,999,391 - (ii) Later than one year but not later than five years 3,026,663,961 3,026,663,961 - (iii) Later than five years 12,575,788,757 7,555,982,919 5,019,805,838 16,283,452,109 11,263,646,271 5,019,805,838

Finance lease obligation as at 31 December 2008 was payable as follows:

(i) Not later than one year 2,002,206,462 841,496,906 1,160,709,556

(ii) Later than one year but not later than five years 2,905,597,402 3,143,050,089 (237,452,687)

(iii) Later than five years 13,377,854,707 8,093,466,194 5,284,388,513

18,285,658,571 12,078,013,189 6,207,645,382

Grameenphone entered into a lease agreement with Bangladesh Railway (BR) in 1997 for the right to use the optical fibre network along with its ancillary facilities. The lease was treated as operating lease until the end of 2004. Following an amendment to the lease agreement in 2004, it has been reclassified as finance lease and has been treated as such since 1 January 2005.

The lease agreement was further amended on 13 June 2007 with Guaranteed Annual Rental (GAR) being revised and lease term being extended upto June 2027. Considering the extended tenure and revised GAR, the leased asset and obligation have been adjusted with the amount equal to the difference between the present value of the revised minimum lease payments and the carrying amount of lease obligation.


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22 Long term payables and provisions

Payable to Bangladesh Railway for X-Net Ltd. - 4,882,500 Asset retirement obligations (Note 22.1) 160,033,350 148,358,966 Deferred revenue from X -Net Ltd. - 11,392,500 160,033,350 164,633,966

21 Deferred tax liabilities Deferred tax assets and liabilities have been recognised and measured in accordance with the provision of IAS/BAS 12:

Income Taxes. Related deferred tax expense/income have been disclosed in note 42. Deferred tax assets and liabilities are attributable to the following:

Taxable/ Carrying amount (deductible) at the balance temporary sheet date Tax base difference Taka Taka Taka

As at 31 December 2009 Property, plant and equipment (excluding land and 66,464,688,129 28,340,515,231 38,124,172,898 capital work in progress) Property, plant and equipment under finance lease 5,825,063,878 - 5,825,063,878 Difference for vehicle (143,928,932) - (143,928,932) 72,145,823,075 28,340,515,231 43,805,307,844

Accounts receivable 4,697,066,162 4,784,507,038 (87,440,876) Finance lease obligation (5,019,805,838) - (5,019,805,838) Accrued finance cost on lease obligation (55,974,858) - (55,974,858) Asset retirement obligation (53,760,224) - (53,760,224) Net taxable temporary difference 38,588,326,048

Applicable tax rate (Note 3.7) 35%

Deferred tax liabilities 13,505,914,117

As at 31 December 2008 Property, plant and equipment (excluding land and 74,051,177,543 32,738,745,149 41,312,432,394 capital work in progress) Property, plant and equipment under finance lease 6,402,100,304 - 6,402,100,304 Difference for vehicle (21,627,366) - (21,627,366) 80,431,650,481 32,738,745,149 47,692,905,332

Accounts receivable 4,146,484,000 4,390,067,871 (243,583,871) Finance lease obligation (6,207,645,382) - (6,207,645,382) Asset retirement obligation (52,283,997) - (52,283,997)

Net taxable temporary difference 41,189,392,082

Applicable tax rate (Note 3.8) 45%

Deferred tax liabilities 18,535,226,437


2009 2008Taka Taka

22.1 Asset retirement obligations (ARO) Opening balance 148,358,966 129,341,160 Provision made during the year 19,484,384 27,286,666 167,843,350 156,627,826 Adjustment during the year (7,810,000) (8,268,860) Closing balance 160,033,350 148,358,966

Grameenphone Ltd. recognises ARO in respect of roof-top BTS and office space based on the present value of expected expenditure to be required to settle the obligation. Initial estimate of ARO is added to property, plant and equipment and unwinding of the discount is charged as financial expense.

23 Accounts payable Liability for capital expenditure 2,253,928,756 2,550,938,946 Payable for expenses:

International roaming services 39,852,930 65,986,664 Training and travel expenses 30,739,546 29,196,555 Sales and promotional expenses 41,964,797 173,111,438 Consultancy and professional fees 765,471,809 444,664,720 Office and general expenses 1,045,054,158 533,056,444 Network operations and maintenance 345,587,495 80,624,229 2,268,670,735 1,326,640,050 Payable for others: Tax deducted at source from suppliers 123,690,977 134,530,211 VAT deducted at source from suppliers 21,132,551 72,806,656 Retention money from suppliers 25,541,438 13,665,878 170,364,966 221,002,745 4,692,964,457 4,098,581,741

Payable for expenses include payable to Telenor, its subsidiaries and affiliates.

24 Payable to government, autonomous bodies and other operators

Bangladesh Telecommunication Regulatory Commission (BTRC) Frequency and spectrum charges (Note 24.1) 225,255,158 286,971,639 Revenue sharing 1,118,791,311 877,127,718 Liability for purchase of additional spectrum - 3,330,000,000 1,344,046,469 4,494,099,357 Bangladesh Telecommunications Company Limited (BTCL) Interconnection charges (Note 24.2) 4,461,599,602 3,404,001,304 PCM related expenses (Note 24.3) 60,643,877 40,481,872 4,522,243,479 3,444,483,176

Other service cost and revenue sharing with content providers 51,675,839 36,519,071 Supplementary duty on SIM payable to National Board of Revenue (NBR) 2,628,076,000 2,407,968,034 Share of sub-lease rent payable to Bangladesh Railway 12,946,399 4,603,261 Interconnection charges payable to other operators 547,842,411 765,007,231 Payable for Bills Pay receipt 197,683,678 21,743,877 9,304,514,275 11,174,424,007

24.1 Frequency and spectrum charges This relates to frequency / spectrum charges and roaming line rent.


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29 Local interest bearing short-term borrowings As at 31 December 2008, the outstanding balance of credit facilities availed by Grameenphone from different banks

stood at Tk. 4,992,322,916. This amount has been fully repaid during 2009.

29.1 Credit facilities available at the reporting date Grameenphone enjoys credit facilities with 16 banks for short-term working capital facilities. The non-funded

facilities include Letters of Credit, Letters of Guarantees and FX Forward. The funded facilities include overdraft facility, short-term loan and import loan. The aggregate amount of the working capital facilities and the short term loans is Tk. 19,603.45 million. The facilities have a non-funded limit of Tk. 18,427.80 million and a funded limit of Tk. 10,185.65 million.

A detail of the total facilities is enumerated below:

(a) Credit facility from Standard Chartered Bank i) Letter of credit (L/C) facility for Tk. 2,500 million (in 2008 Tk. 2,333 million). ii) Overdraft / short term loan facility for Tk. 1,380 million (in 2008 Tk. 950 million).

(b) Credit facility from Commercial Bank of Ceylon Ltd. i) Letter of credit facility for Tk. 670 million (in 2008 Tk. 550 million). ii) Overdraft for Tk. 100 million (inner limit of LC Tk. 550 million) iii) Short term loan facility for Tk. 100 million (inner limit of LC Tk. 550 million) . iv) Foreign Exchange Forward arrangement for Tk. 670 million.( in 2008 Tk. 550 million).

Total funded exposure under the Overdraft and Short Term Loan facility is Tk. 200 million (in 2008 Tk. 210 million).

2009 2008Taka Taka

24.2 Interconnection charges This represents provision for interconnection charges in respect of Local, NWD and ISD calls. According to the latest

policy promulgated by BTRC, each operator including BTCL (formerly BTTB) is liable to pay interconnection charge for outgoing calls to other operators.

24.3 PCM related expenses This represents amount due to BTCL (formerly BTTB) for PCM (Pulse Code Modulation) related expenses.

25 Income tax payable

Opening balance 10,077,565,649 8,350,371,941 Provision made during the year 8,657,110,009 6,569,903,530 18,734,675,658 14,920,275,471 Paid during the year (including tax deducted at source) (6,505,897,213) (4,842,709,822) 12,228,778,445 10,077,565,649

26 Unearned revenue This includes mainly the unused portion of scratch cards, Flexi Load and advance post-paid bills received for which

revenue has not been recognised yet.

27 VAT payable This represents VAT amount payable to NBR arising from provision of services by the company that are subject to VAT.

28 Deferred connection revenue

Opening balance 474,142,173 617,220,271 Addition during the year 309,549,358 224,397,633 783,691,531 841,617,904 Recognised as revenue during the year (241,959,605) (367,475,731) Closing balance 541,731,926 474,142,173


(c) Credit facility from Citibank N.A i) Sight/usance letter of credit up to Tk. 2,800 million (in 2008 Tk. 2,800 million).

ii) Overdraft/ short term loan for Tk. 2,100 million (inner limit of LC Tk. 2,800 million) (in 2008 Tk. 2,100 million).

The short term loan and the overdraft limits are interchangeable. Total funded exposure under the short-term loan and the overdraft facility may not exceed Tk. 2,100 million at any point of time.

(d) Credit facility from HSBC i) Sight/usance letter of credit up to Tk.1,600 million (in 2008 Tk 2,300 million).

ii) Short-term loan up to Tk. 700 million (inner limit of LC Tk. 1,600 million) (in 2008 Tk. 700 million).

iii) Overdraft facility for Tk. 150 million (inner limit of LC Tk. 1,600 million) (in 2008 Tk.150 million).

iv) Foreign Exchange line up to Tk. 10 million (in 2008 Tk.10 million).

Combined funded exposure will not exceed Tk. 700 million at any point of time.

(e) Credit facility from Prime Bank Ltd. i) Sight/usance letter of credit up to Tk. 1,500 million (in 2008 Tk. 1,500 million).

ii) Overdraft/LTR facility for Tk. 950 million (inner limit of LC TK. 1,500 million) (in 2008 Tk. 950 million).

(f) Credit facility from Eastern Bank Ltd. i) Sight/usance letter of credit up to Tk. 1,400 million (in 2008 Tk. 1,400 million).

ii) Short-term loan/LTR facility for Tk. 600 million (inner limit of LC Tk. 1,400 million) (in 2008 Tk. 600 million).

iii) Overdraft facility for Tk. 100 million (inner limit of LC Tk. 1,400 million) (in 2008 Tk. 100 million).

iv) Bank Guarantee limit up to Tk. 500 million. (inner limit of LC Tk. 1,400 million) (in 2008 Tk.150 million).

Combined funded exposure will not exceed Tk. 600 million at any point of time.

(g) Credit facility from One Bank Ltd. i) Sight/Usance letter of credit up to Tk. 660 million (in 2008 Tk. 660 million).

ii) LTR/ Time loan facility for Tk. 280 million (inner limit of LC Tk. 660 million) (in 2008 Tk. 280 million).

iii) Bank guarantee limit up to Tk. 660 million (inner limit of LC Tk. 660 million) (in 2008 Tk. 10 million).

(h) Credit facility from BRAC Bank Ltd.

i) Sight/usance letter of credit up to Tk. 1,300 million (in 2008 Tk.1300 million).

ii) Overdraft/short term loan facility for Tk. 900 million (inner limit of L/C Tk. 990 million) (in 2008 Tk. 550 million).

iii) Bank guarantee limit up to Tk. 1,300 million (inner limit of LC Tk. 1,300 million).

(i) Credit facility from Dhaka Bank Ltd.

i) Sight/usance letter of credit up to Tk. 1,200 million (in 2008 Tk. 1,000 million).

ii) Short term Loan/LTR facility for Tk. 600 million (inner limit of LC Tk. 1,200 million) (in 2008 Tk. 435 million).

(j) Credit facility from Dutch Bangla Bank Ltd.

i) Sight/usance letter of credit up to Tk. 1,600 million (in 2008 Tk. 930 million).

ii) Short term loan/LTR/overdraft facility for Tk. 685 million (inner limit of LC Tk. 1,600 million) ( in 2008 Tk. 390 million).

(k) Credit facility from Woori Bank

i) Sight/usance letter of credit up to Tk. 412.8 million.( in 2008 Tk. 274.20 million).

ii) Overdraft facility for Tk. 205.65 million. ( in 2008 Tk. 205.65 million).

(l) Credit facility from The City Bank Ltd.

i) Sight/usance letter of credit up to Tk. 660 million.( in 2008 Tk. 590 million).

ii) Overdraft/ short term loan facility for Tk. 420 million. ( in 2008 Tk. 370 million).

iii) Bank guarantee facility for Tk. 660 million (inner limit of L/C Tk. 590 million).( in 2008 Tk. 590 million).


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(m) Credit facility from Trust Bank Ltd.


ii) Overdraft facility for Tk. 280 million. ( in 2008 Tk. 280 million).

(n) Credit facility from Premier Bank Ltd.


ii) Overdraft facility for Tk. 390 million. (inner limit of L/C Tk. 910 million).( in 2008 Tk. 390 million).


(o) Credit facility from Bank Asia Ltd.


ii) Overdraft facility for Tk. 270 million. ( in 2008 Tk. 270 million).

(p) Credit facility from Bank Alfalah Ltd.


ii) Cash finance facility for Tk. 225 million. (inner limit of L/C Tk. 525 million).( in 2008 Tk. 225 million).


(q) Credit facility from Other Banks

GP has signed an acceptance of offer from the Pubali Bank Ltd. for Credit facility of Tk. 1,000 million as non-funded facility and Tk. 1,000 million as Overdraft limit. The credit line is awaiting completion of documentation formalities for activation.

The short-term credit facilities are availed on an unsecured basis and are backed by standard charge documents of individual banks and financial institutions.

As per GP Board of Directors' approval, the total amount of short-term credit facilities from the above banks is limited to a maximum outstanding limit of US$ 210 million equivalent. However, the ratio of financial indebtedness to shareholders' equity may not exceed 2:1 as per the financial covenants under our long-term loans and borrowings.

2009 2008Taka Taka

30 Provision for expenses

International roaming services 17,588,572 25,294,597 Provision for Commission and other operational expenses 46,769,340 41,015,966 Personnel expenses 918,628,342 642,804,579 Obligation in respect of employees Provident Fund 24,996,388 21,288,716 Training and travel expenses 48,027,244 23,850,003 Sales and promotional expenses 683,381,530 526,639,170 Consultancy and professional fees 461,445,444 344,613,452 Network operations and maintenance 513,171,766 1,173,794,521 Provision for capital expenditure 3,090,889,804 5,326,924,372 Office and general expenses (Note 30.1) 1,265,694,304 925,559,270 Operating lease rent payable to Power Grid Company of Bangladesh Ltd. 7,757,024 17,562,134 7,078,349,758 9,069,346,780

Provision for expenses include provision for payable to Telenor, its subsidiaries and affiliates.

30.1 Provision for office and general expenses includes provisions for vehicle running expenses, stationery, utility, communication expenses, share issue costs etc.


2009 2008Taka Taka

31 Advance against PPO In 2008, Grameenphone raised subscription against its shares offered through Private Placement Offering (PPO)

from institutional investors, its employees and Grameen Bank borrowers. As at 31 December 2008, the Company's liability stood at Tk. 4,136,642,172 on account of money received against share application and interest accrued on the fund. During 2009, the shares against such applications were issued to the applicants and accordingly the amount was transferred to share capital and share premium account.

31.1 Liabilities for share money refund This represents the amount received against share application which were in the process of being refunded as at 31

December 2009. Subsequently, up to 19 March 2010 an amount of Tk 27,829,175 was refunded to respective accounts of the share applicants.

32 Revenue Traffic revenue -Postpaid 2,518,790,257 3,416,682,161 -Prepaid 52,139,114,255 47,933,000,073

54,657,904,512 51,349,682,234 Subscription revenue -Postpaid 550,777,898 530,770,936

550,777,898 530,770,936 Connection revenue -Postpaid 25,784,885 55,298,487 -Prepaid 256,873,714 299,746,027

282,658,599 355,044,514 Roaming revenue -Inbound 174,323,904 175,091,485 -Outbound 205,247,996 222,432,040

379,571,900 397,523,525 Interconnection revenue -Postpaid 148,531,536 155,551,770 -Prepaid 6,369,308,888 6,361,791,542

6,517,840,424 6,517,343,312 Other operating revenue -Customer support revenue 11,204,066 16,235,152 - SMS and MMS revenue 1,523,743,904 1,577,330,828 -Internet and data revenue 669,949,709 480,274,745

-VAS and other revenue (Note 32.1) 73,586,027 45,887,312 2,278,483,706 2,119,728,037 Other non- mobile revenue - Sale of handsets 393,464,596 28,254,167 - Sale of broadband wireless data card 205,321,468 - - Channel fees 27,967,331 57,188,661 - Bills pay service 5,576,654 3,442,732

632,330,049 88,885,560 65,299,567,088 61,358,978,118

32.1 VAS revenue includes revenue from SMS/MMS services, internet facilities (EDGE/GPRS), medical services and music download services.


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2009 2008Taka Taka

33 Direct cost of network revenue

Cost of interconnection (Note 33.1) 4,126,962,061 5,981,299,890 Cost of SIM card, scratch card and handsets (Note 33.2) 1,238,279,122 792,264,197 International roaming costs (Note 33.3) 192,142,950 203,327,269 Licence fees and spectrum charges (Note 33.4) 702,148,351 923,443,577 Revenue sharing with BTRC (Note 33.5) 3,386,016,902 3,029,973,262 Other service cost and revenue sharing with content providers 10,353,289 934,133 Dealers and agency commission 3,600,242,658 3,927,278,438 13,256,145,333 14,858,520,766

33.1 Cost of interconnection As per the latest policy promulgated by BTRC, each operator including BTCL (formerly BTTB) is liable to pay

interconnection charges for outgoing calls to other operators based on data provided by interconnection exchange (ICX) and international gateway (IGW).

Cost of interconnection is recorded on the basis of traffic to other operators, which is regulated and settled through interconnection agreements between Grameenphone and other operators.

33.2 Cost of SIM card, scratch card and handsets Cost of inventory charged off as expense SIM card 689,306,636 520,102,923 Scratch card 59,063,460 233,808,734 Handset, data card and other communication devices 489,909,026 38,352,540 1,238,279,122 792,264,197

33.3 International roaming costs GP is required to pay roaming charges to the roaming partners when GP subscribers use their network, based on

roaming agreement between the parties.

33.4 According to licence agreement, Grameenphone is required to pay operating licence fee and spectrum charges to BTRC. These expenses are presented under this head.

33.5 Revenue sharing with BTRC As per the amendment of the operating licence agreement dated 16 April 2006, GP is required to pay 5.5 % of the

collected rent and call charges to BTRC with effect from 1 July 2005.

34 Network operation and maintenance expenses

Rent (Note 34.1) 524,502,150 523,493,294 Electricity charges (Note 34.2) 1,236,053,711 1,066,936,844 Operation and maintenance - base station 767,990,010 1,016,508,495 Operation and maintenance - switch 848,248,070 934,459,745 Operation and maintenance - optical fibre network 55,095,455 32,830,754 Network quality maintenance expenses (Note 34.3) 1,185,365,580 788,138,233 PCM operation and maintenance (Note 34.4) 27,210,190 40,128,241 Lease rent for submarine cable 128,960,963 98,961,531

4,773,426,129 4,501,457,137


2009 2008Taka Taka

34.1 Rent includes location rent for base stations, switch, and other locations. Future minimum lease payments under non-cancellable operating leases for such locations are payable as follows:

(i) Not later than one year 412,655,841 322,857,405 (ii) Later than one year but not later than five years 1,681,406,594 1,665,450,051 (iii) Later than five years 4,014,486,480 4,204,952,266 6,108,548,915 6,193,259,721

34.2 Electricity charges include electricity charges for running base stations, switches and selected offices of Bangladesh Railway.

34.3 Network quality maintenance expenses include consultants' expenses and network operational services and maintenance fees.

34.4 PCM operation and maintenance includes rental charges of PCM, maintenance charges of PCM and microwave link.

35 Depreciation and amortisation

Cost of network operation:

Depreciation of property, plant and equipment 14,481,369,413 13,186,081,885

Amortisation of network system software 138,250,073 55,713,418 Amortisation of telecommunication licences 328,888,888 9,216,157 Amortisation of non-telecommunication licences 99,814,815 81,220,167 566,953,776 146,149,742 15,048,323,189 13,332,231,627 Operating expenses:

Depreciation of property, plant and equipment 1,099,739,855 1,181,365,675 Amortisation of business system software 578,924,699 630,559,528 1,678,664,554 1,811,925,203 16,726,987,743 15,144,156,830

36 Other income, net Rental income from sublease of optical fibre network 44,703,178 62,755,962 Franchisee fees and others 5,142,325 5,028,724 Sub lease cost (6,587,085) (15,202,058) 43,258,418 52,582,628


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2009 2008Taka Taka

37 General and administrative expenses Personnel expenses (Note 37.1) 4,490,186,510 3,580,873,187 Employee training and ancillary expenses 94,112,772 45,880,345 Rent (Note 37.2) 359,508,815 358,810,853 Office maintenance and running expenses 662,754,375 626,347,053 Travelling expenses 123,279,655 104,559,220 Vehicle running expenses 360,568,165 349,520,516 Telephone and communication 105,010,719 106,885,846 Printing, postage and stationery 175,655,177 133,148,768 Legal and professional fees (Note 37.3) 91,795,510 64,809,015 Statutory audit fee 1,500,000 1,500,000 Meeting expenses (Note 37.4) 33,538,907 17,209,323 Entertainment expenses 22,121,711 25,142,482 Revenue collection charges 22,400,616 23,837,457 Bad debt expense (Note 37.5) 50,655,003 243,583,871 6,593,087,935 5,682,107,936

37.1 Personnel expenses include company's contribution to recognised provident fund of Tk. 118,167,092 and provision for gratuity fund of Tk. 148,649,410.

Personnel expenses include Tk. 6,173,578 related to share based payment to key management personnel with respect to entitlement of parent company's shares. The vesting period for such entitlement is three years. The policy on share based payment including the underlying valuation method is guided by group policy.

37.2 Rent includes rent for office, warehouse, GPC, GPSD, GPDC, GPCF info-center and guest houses. Future minimum lease payments under non-cancellable operating leases for such locations are payable as follows:

(i) Not later than one year 351,585,254 289,929,337 (ii) Later than one year but not later than five years 576,246,007 541,525,487 (iii) Later than five years 402,080,704 626,197,088 1,329,911,965 1,457,651,912

37.3 Legal and professional fees include fees payable against legal advice and other professional services received time to time from lawyers, auditors and other professionals.

Of this, Tk 2,552,848 (2008: Tk 2,714,716) was paid to auditors for services in connection with repatriation of fees and dividends, etc.

37.4 Meeting expenses include expenses incurred by the Board of Directors and members of operational committee for attending the board meetings and operational committee meetings respectively.

37.5 Bad debt expense Provision made during the year 91,628,074 260,530,744 Recovery of bad debt during the year (40,973,071) (16,946,873) Bad debt expense 50,655,003 243,583,871

Provision for doubtful debts has been made as per policy of the company mentioned in Note 3.4.

38 Selling and distribution expenses Advertisements 626,666,038 864,591,192 Business development and promotional expenses 297,112,986 369,916,574 Sales, marketing and representation costs 2,551,190,055 4,640,843,887 3,474,969,079 5,875,351,653


2009 2008Taka Taka

39 Finance costs, net Interest on long term loans 91,537,425 314,968,528 Interest on bonds 623,097,222 79,512,361 Interest and service charge on short-term debt 208,126,084 956,531,502 Foreign exchange (gain)/loss 233,243,638 (292,037,932) Finance charge - lease 841,496,904 727,226,707 Interest (accretion) on ARO 15,901,954 15,536,115 Other finance charges 119,841,732 96,592,571 2,133,244,959 1,898,329,852 Finance income (212,807,472) (93,080,560) 1,920,437,487 1,805,249,292

40 (Gain)/loss on disposal of property, plant and equipment

Sale proceeds (28,612,438) (76,107,924) Written down value of the assets sold 38,380,825 41,981,782 9,768,387 (34,126,142)

41 Compensation to Bangladesh Telecommunication Regulatory Commission (BTRC) Compensation to BTRC - 2,000,000,000 - 2,000,000,000

This relates to the settlement agreement between Grameenphone and BTRC dated 14 August 2008 to pay a fine of Tk. 2,500,000,000 for Grameenphone's involvement in unregulated international call termination business through VoIP prior to February 2007. In December 2007, Grameenphone took a provision for BDT 500,000,000 in this regard and remaining BDT 2,000,000,000 was charged in 2008.

42 Income tax expenses Current tax expense (Note 3.8) 8,657,110,009 6,569,903,530 Deferred tax expense/ (income) (Note 42.1) (5,029,312,320) 2,025,073,157 3,627,797,689 8,594,976,687

42.1 Deferred tax has been recognised to account for the tax consequence of transactions and other events recognised in the financial statements. Deferred tax expenses arise mainly due to difference in the carrying amount of the assets that will result in taxable amount in determining taxable profit or loss of future periods when the carrying amount of the asset would be recovered or settled.

As per the provisions of Finance Act 2009, applicable tax rate for the company has been reduced to 35% from 45% as a result of being listed with the stock exchanges. Such change in tax rate has resulted in a significant reduction in deferred tax provisions made in earlier years. This adjustment together with deferred tax impact of regular transactions in 2009 has resulted in a deferred tax income of Tk 5,029,312,320.

43 Earnings per share (EPS) Profit attributable to ordinary shareholders 14,968,166,256 2,983,866,587 Weighted average number of ordinary shares outstanding during the year (Note 43.1) 1,239,238,201 1,215,174,797 Basic earnings per share (EPS) (Note 3.14) 12.08 2.46

43.1 Weighted average number of ordinary shares The weighted average number of ordinary shares outstanding during the year is the number of ordinary shares

outstanding at the beginning of the year, adjusted by the number of ordinary shares issued during the year multiplied by a time-weighting factor. The time-weighting factor is the number of days that the shares are outstanding as a proportion of the total number of days in the year.


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2009 2008Taka Taka

Outstanding shares as at 1 January* 1,215,174,797 1,215,174,797 Effect of issue of additional shares during the year 24,063,404 - 1,239,238,201 1,215,174,797

*Converted to Tk 10 share equivalent number, after adjustment for bonus issue (4 shares against each share) and share split (conversion of shares of Tk. 43 each into shares of Tk. 1 each) in 2008 and reverse split (conversion of shares of Tk. 1 each into shares of Tk. 10 each) in 2009.

43.2 Dilution of earnings per share No diluted earnings per share is required to be calculated for the periods presented as there was no scope for dilution

during these periods.

44 Cash receipts from performance of services/sales Proceeds from mobile service revenue 58,140,345,116 54,778,874,070 Proceeds from interconnection revenue 5,719,392,909 4,216,484,147 Proceeds from roaming revenue 395,087,196 382,091,529 Proceeds from other sales 671,099,248 142,225,505 64,925,924,469 59,519,675,251

45 Payments to suppliers and contractors Payments for interconnection cost 3,283,691,636 3,373,506,763 Payments for roaming out cost 225,982,709 182,113,584 Payments for leased lines cost 212,874,431 233,571,374 Payments for material cost 781,655,058 293,333,415 Payments for other operating expenses 17,328,226,048 20,587,897,020 21,832,429,882 24,670,422,156

46. Financial risk management The Company management has overall responsibility for the establishment and oversight of the Company's risk

management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital. The company has exposure to the following risks from its use of financial instruments.

Credit risks

Liquidity risks

Market risk

47 Credit risk Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to

meet its contractual obligations, and arises principally from the Company's receivables from subscribers, interconnect operators, roaming partners and dealers.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

In monitoring credit risk, debtors are grouped according to their risk profile, i.e. their legal status, financial condition, ageing profile etc. Accounts and other receivables are mainly related to the Company's subscribers. The Company's exposure to credit risk on accounts receivables is mainly influenced by the individual payment characteristics of postpaid subscribers. Interconnection receivables are normally paid within 3 months from when they are invoiced and


2009 2008Taka Taka

credit risk from these receivables is very minimal. The company employs financial clearing house to minimise credit risk involving collection of roaming receivables. Credit risk does not arise in respect of any other receivables.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.

47.1 Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit

risk at the reporting date was:

Inter company receivables 129,172,571 189,569,335 Receivables for mobile service-Postpaid & Others 162,048,506 416,731,695 Receivables for mobile service-Interconnection 4,505,904,450 3,707,456,935 Receivables for sub lease of optical fibre network 24,685,230 19,635,161 Others receivable for non-mobile service 4,427,976 2,659,476 Cash and cash equivalents 14,593,890,895 7,005,901,421 19,420,129,628 11,341,954,023

The maximum exposure to credit risk for accounts receivable at the end of the reporting year by geographic region was:

Domestic 19,323,729,687 11,261,047,488 Asia 52,863,858 45,473,555 Europe 40,183,831 29,992,382 Australia 1,451,549 1,494,751 America 1,235,340 3,075,828 Africa 665,363 870,019 19,420,129,628 11,341,954,023

47.2 Aging of receivables

a) The aging of gross postpaid & other mobile receivables at the end of the reporting year was: Invoiced 0-30 days 176,370,711 244,347,082 Invoiced 31-60 days 7,015,024 11,837,467 Invoiced 61-90 days 8,758,671 45,283,420 Invoiced 91-180 days 50,122,986 96,767,646 Invoiced over 180 days 29,558,628 225,294,075 271,826,020 623,529,692

b) The aging of gross interconnection receivables at the end of the reporting year was: Invoiced 0-30 days 1,154,155,997 2,988,962,239 Invoiced 31-60 days 480,585,352 262,954,123 Invoiced 61-90 days 371,626,754 389,681,319 Invoiced 91-180 days 761,317,694 52,163,705 Invoiced 181-365 days 1,112,196,985 14,300,334 Invoiced over 365 days 654,380,415 45,903,404 4,534,263,197 3,753,965,124

c) The aging of gross sub lease of FON receivables including from inter companies at the end of the reporting year was: Invoiced 0-60 days 2,961,221 2,282,279 Invoiced 61-90 days 2,429,595 - Invoiced 91-180 days 1,715,340 - Invoiced 181-365 days 11,218,665 3,848,775 Invoiced over 365 days 13,584,968 20,728,665 31,909,788 26,859,720


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Paya

ble

for e

xpen

ses

2,26

8,67

0,7

3512

Mon

ths

N/A

2,26

8,67

0,7

351,3

61,2

02,

441

907,

468,

294

--

-

Paya

ble

for o

ther

s17

0,3

64,9

6612

Mon

ths

N/A

170

,364

,966

102,

218,

980

68,14

5,98

6-

--

11,6

67,6

37,4

9323

,274

,993

,083

3,99

4,33

9,35

92,

608,

345,

186

1,278

,341

,90

72,

818,

177,

874

12,5

75,7

88,7

57

1-2

year

s

Flo

atin

g ra

te a

s pe

r

note

17.1

2-5

year

sM

ore

than

5 y

ears

6-12

mon

ths

Mat

urity

per

iod

Carr

ying

am

ount

Cont

ract

ual c

ash

flow

s6

mon

ths

or le

ssN

omin

al In

tere

st

rate

Liqu

idity

risk

is th

e ris

k th

at th

e Co

mpa

ny w

ill n

ot b

e ab

le to

mee

t its

fina

ncia

l obl

igat

ions

as t

hey

fall

due.

The

Com

pany

's ap

proa

ch to

man

agin

g liq

uidi

ty (c

ash

and

cash

equ

ival

ents

) is

to e

nsur

e, a

s far

as p

ossi

ble,

that

it w

ill a

lway

s ha

ve su

ffici

ent l

iqui

dity

to m

eet i

ts li

abili

ties w

hen

due,

und

er b

oth

norm

al a

nd st

ress

ed c

ondi

tions

, with

out i

ncur

ring

unac

cept

able

lo

sses

or r

iski

ng d

amag

e to

the

Com

pany

's re

puta

tion.

Typ

ical

ly, t

he C

ompa

ny e

nsur

es th

at it

has

suf

ficie

nt c

ash

and

cash

equ

ival

ents

to m

eet e

xpec

ted

oper

atio

nal e

xpen

ses,

in

clud

ing

finan

cial

obl

igat

ions

thr

ough

pre

para

tion

of t

he c

ash

flow

for

ecas

t, pr

epar

ed b

ased

on

time

line

of p

aym

ent

of t

he f

inan

cial

obl

igat

ion

and

acco

rdin

gly

arra

nge

for

suffi

cien

t liq

uidi

ty/f

und

to m

ake

the

expe

cted

pay

men

t with

in d

ue d

ate.

Mor

eove

r, th

e Co

mpa

ny s

eeks

to m

aint

ain

shor

t ter

m li

nes

of c

redi

t with

sch

edul

ed c

omm

erci

al b

anks

to

ensu

re p

aym

ent o

f obl

igat

ions

in th

e ev

ent t

hat t

here

is in

suffi

cien

t cas

h to

mak

e th

e re

quire

d pa

ymen

t. Th

e re

quire

men

t is

dete

rmin

ed in

adv

ance

thro

ugh

cash

flow

pro

ject

ions

an

d cr

edit

lines

with

ban

ks a

re n

egot

iate

d ac

cord

ingl

y.

In e

xtre

me

stre

ssed

con

ditio

ns, t

he C

ompa

ny m

ay g

et s

uppo

rt fr

om th

e pa

rent

com

pany

in th

e fo

rm o

f sha

reho

lder

's lo

an.

It m

ay b

e no

ted

that

the

Com

pany

repa

id si

gnifi

cant

fina

ncia

l lia

bilit

ies i

n 20

09

prio

r to

due

date

s. I

n ad

ditio

n, so

me

othe

r maj

or lo

ans a

re e

xpec

ted

to b

e re

paid

fully

in 2

010

, whi

ch

is e

xpec

ted

to b

e fin

ance

d fr

om o

pera

tiona

l cas

h flo

w.

The

follo

win

g ar

e th

e co

ntra

ctua

l mat

uriti

es o

f fin

anci

al li

abili

ties

:


As a

t 31 D

ecem

ber

200

8 (T

aka)

1-2

year

s2-

5 ye

ars

Mor

e th

an 5

yea

rs6-

12 m

onth

sM

atur

ity p

erio

dCa

rryi

ng a

mou

ntCo

ntra

ctua

l cas

h flo

ws

6 m

onth

s or

less

Nom

inal

Inte

rest

ra

te

Long

term

ban

k lo

ans

IFC

(Not

e 17

.1)61

8,40

4,34

515

-Jun

-10

658,

845,

714

226,

750

,534

218,

972,

565

213,

122,

615

ADB

(Not

e 17

.1)42

7,57

9,84

215

-Jun

-10

439,

230

,477

151,1

67,0

2314

5,98

1,710

142,

081

,744

NO

RFU

ND

(Not

e 17

.1)20

9,54

5,91

415

-Jun

-10

219,

615,

238

75,5

83,5

11.0

072

,990

,855

.00

71,0

40,8

72.0

0

Eksp

ortf

inan

s ASA

(Not

e 17

.2)

76,9

80,0

13D

ec-1

0 6

mon

ths

NIB

OR

+

30 b

asis

poi

nts

75,5

53,8

2025

,467

,556

25,2

16,9

4324

,869

,321

NO

RAD

(Not

e 17

.3)

153,

960

,054

Dec

-10

3.4%

per

ann

um15

2,10

8,87

651

,536

,529

.34

50,7

02,

922.

00

49,8

69,4

25

Loca

l syn

dica

ted

loan

(Not

e 17

.4)

1,827

,146,

776

Nov

-12

13.5

0%

per

ann

um2,

397,

244,

412

355,

075

,284

340

,825

,152

631,4

88,15

61,0

69,8

55,8

20

Bond

obl

igat

ion

4,21

6,40

5,14

5O

ct-1

214

.5%

5,0

21,9

88,0

5629

3,48

8,0

5630

8,12

5,0

00

4,42

0,3

75,0

00

-

Fina

nce

leas

e lia

bilit

ies

5,0

46,9

35,8

26Ju

n -2

715

%18

,285

,658

,571

1,397

,332

,453

604,

874,

00

968

0,9

99,3

912,

224,

598,

011

13,3

77,8

54,7

07

Acco

unts

pay

able

Liab

ility

for c

apita

l exp

endi

ture

2,55

0,9

38,9

4612

Mon

ths

N/A

2,55

0,9

38,9

461,5

30,5

63,3

681,0

20,3

75,5

78-

--

Paya

ble

for e

xpen

ses

1,021

,759

,104

12 M

onth

sN

/A1,0

21,7

59,10

461

3,0

55,4

6240

8,70

3,64

2-

--

Paya

ble

for o

ther

s22

3,10

2,17

912

Mon

ths

N/A

223,

102,

179

133,

861,3

07

89,2

40,8

72-

--

16,3

72,7

58,14

431

,046

,045

,393

4,85

3,88

1,083

3,28

6,0

09,

248

6,23

3,84

6,52

43,

294,

453,

831

13,3

77,8

54,7

07

Flo

atin

g ra

te a

s pe

r

note

17.1


Gra

mee

npho

ne

102/103

i)Ex

posu

re to

cur

renc

y ris

k

The

Com

pany

's ex

posu

re to

fore

ign

curr

ency

risk

was

as

follo

ws

base

d on

not

iona

l am

ount

s:

As a

t 31 D

ecem

ber 2

00

9As

at 3

1 Dec

embe

r 20

08

USD

NO

KG

BPEU

RJP

YU

SDN

OK

SGD

EUR

JPY

Fore

ign

curr

ency

den

omin

ated

ass

ets

Inte

rcom

pany

rece

ivab

les

122,

118,

771

--

--

65,8

78,5

08

--

--

Acco

unts

rece

ivab

le83

,071

,426

-4,

248,

064

3,13

0,6

06

-95

,267

,619

--

6,0

23,0

59-

Cash

and

ban

k ba

lanc

es84

,890

,516

--

--

222,

838,

625

--

--

290

,080

,713

-3,

130

,60

6-

383,

984,

752

--

6,0

23,0

59-

Fore

ign

curr

ency

den

omin

ated

liab

ilitie

sLo

ans

and

borr

owin

gs43

0,8

61,6

7614

7,11

1,529

--

-1,2

55,5

30,10

123

0,9

40,0

67-

--

Inte

rcom

pany

pay

able

s10

,874

,038

1,80

0,9

06,

230

-8,

301,0

78-

-1,1

68,6

71,2

80-

-Tr

ade

and

othe

r pay

able

s fo

r exp

ense

s2,

614,

460

,452

-14

,30

6,63

111

7,48

8,73

835

,655

,946

1,698

,537

,767

822,

262,

504

161,8

1928

,229

,670

19,2

73,5

68

3,0

56,19

6,16

61,9

48,0

17,7

5914

,30

6,63

112

5,78

9,81

635

,655

,946

2,95

4,0

67,8

682,

221,8

73,8

5116

1,819

28,2

29,6

7019

,273

,568

Net

exp

osur

e3,

346,

276,

879

1,948

,017

,759

14,3

06,

631

128,

920

,422

35,6

55,9

463,

338,

052

,620

2,22

1,873

,851

161,8

1934

,252

,729

19,2

73,5

68

The

follo

win

g si

gnifi

cant

exc

hang

e ra

tes

are

appl

ied

durin

g th

e ye

ar:

Exch

ange

rate

as

at

31 D

ec 2

00

931

Dec

20

08

Taka

Taka

US

Dol

lar

69.6

569

.50

Nor

weg

ian

Kron

er (N

OK)

13.7

310

.78

49

Mar

ket r

isk

M

arke

t ris

k is

the

risk

that

any

cha

nge

in m

arke

t pric

es, s

uch

as fo

reig

n ex

chan

ge ra

tes

and

inte

rest

rate

s w

ill a

ffect

the

Com

pany

's in

com

e or

the

valu

e of

its

hold

ings

of f

inan

cial

in

stru

men

ts. T

he o

bjec

tive

of m

arke

t ris

k m

anag

emen

t is

to m

anag

e an

d co

ntro

l mar

ket r

isk

expo

sure

s w

ithin

acc

epta

ble

para

met

ers.

49.1

Cur

renc

y ris

k

The

Com

pany

is e

xpos

ed to

cur

renc

y ris

k on

cer

tain

reve

nues

and

pur

chas

es s

uch

as ro

amin

g re

venu

es a

nd e

xpen

ses,

tele

com

equ

ipm

ent p

urch

ases

, net

wor

k re

late

d co

sts

and

inte

rest

exp

ense

and

repa

ymen

ts re

latin

g to

bor

row

ings

incu

rred

in fo

reig

n cu

rren

cies

. M

ajor

ity o

f the

Com

pany

's fo

reig

n cu

rren

cy tr

ansa

ctio

ns a

re d

enom

inat

ed in

USD

and

re

late

s to

pro

cure

men

t of C

APEX

item

s fr

om a

broa

d. T

he C

ompa

ny a

lso

has

expo

sure

in N

OK

rela

ting

to B

usin

ess

Serv

ice

Cost

s an

d Co

nsul

tanc

y Co

sts

and

Fore

ign

Curr

ency

Loa

n.

The

Com

pany

mai

ntai

ns a

USD

ban

k ac

coun

t whe

re a

ll re

ceip

ts fr

om In

tern

atio

nal R

oam

ing

Serv

ices

are

dep

osite

d an

d al

l cor

resp

ondi

ng p

aym

ents

are

mad

e.


ii) Foreign exchange rate sensitivity analysis for foreign currency expenditures 2009 A change of 10 basis points in foreign currencies in 2009 would have increased/ (decreased) equity and profit or loss

by the amounts shown below. This analysis assumes that all other variables, in particular interest rates remain constant.

Profit or loss Equity 10 bp increase 10 bp decrease 10 bp increase 10 bp decrease 31 December 2009 Taka Taka Taka Taka Expenditures denominated in USD (10,158,259) 10,158,259 (10,158,259) 10,158,259 Expenditures denominated in EURO (443,336) 443,336 (443,336) 443,336 Expenditures denominated in JPY (6,655,351) 6,655,351 (6,655,351) 6,655,351 Expenditures denominated in NOK (9,173,395) 9,173,395 (9,173,395) 9,173,395 Exchange rate sensitivity (26,430,341) 26,430,341 (26,430,341) 26,430,341

49.2 Interest rate risk Interest rate risk is the risk that arises due to changes in interest rates on borrowings. Most foreign loans of the

company are subject to floating rates of interests. Local syndicated loans are however not significantly affected by fluctuations in interest rates. The Company has not entered into any type of derivative instrument in order to hedge interest rate risk as at 31 December 2009.

Profile At the end of the reporting year the interest rate profile of the Company's interest-bearing financial instruments was:

Carrying amount Carrying amount as at 31 Dec 2009 as at 31 Dec 2008 (Taka) (Taka) Fixed rate instruments Financial assets 19,298,379,249 11,167,154,556 Financial liabilities 5,117,880,208 6,361,605,436

Floating rate instruments Financial assets - - Financial liabilities 1,856,792,828 7,376,062,035

50. Cash flow sensitivity analysis for variable rate instruments 2009 A change of 10 basis points in interest rates for loans and borrowings in 2009 would have increased/ (decreased)

equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates remain constant.

Profit or loss Equity 10 bp increase 10 bp decrease 10 bp increase 10 bp decrease Taka Taka Taka Taka 31 December 2009 Foreign currency denominated loans 1,145,653 (1,145,653) 1,145,653 (1,145,653) Local syndicated loans 1,627,448 (1,627,448) 1,627,448 (1,627,448) Cash flow sensitivity (net) 2,773,101 (2,773,101) 2,773,101 (2,773,101)

Cash flow sensitivity analysis for variable rate instruments 2008 A change of 10 basis points in interest rates for loans and borrowings in 2008 would have increased/ (decreased)

equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates remain constant.


Gra

mee

npho

ne

104/105

2009 2008

Profit or loss Equity 10 bp increase 10 bp decrease 10 bp increase 10 bp decrease 31 December 2008 Taka Taka Taka Taka Foreign currency denominated loans 2,004,374 (2,004,374) 2,004,374 (2,004,374) Local syndicated loans 2,008,170 (2,008,170) 2,008,170 (2,008,170) Cash flow sensitivity (net) 4,012,544 (4,012,544) 4,012,544 (4,012,544)

2009 2008 Carrying amount Fair value Carrying amount Fair value Taka Taka Taka Taka Financial instruments-Fair value Assets carried at fair value - - - -

Assets carried at amortised cost

Accounts receivable, net 4,697,066,162 4,697,066,162 4,146,483,267 4,146,483,267 Long-term receivables and deposits 11,635,675 11,635,675 12,658,694 12,658,694 Cash and cash equivalents 14,601,313,087 14,601,313,087 7,020,671,289 7,020,671,289

Liabilities carried at fair value - - - -

Liabilities carried at amortised costs Loans and borrowings 1,954,867,198 1,954,867,198 3,313,616,944 3,313,616,944 Finance lease obligation 5,019,805,838 5,019,805,838 6,207,645,382 6,207,645,382 Accounts payable 4,692,964,457 N/A* 4,098,581,741 N/A* Liabilities for share money refund 88,517,671 N/A* - - Advance against PPO - - 4,136,642,172 N/A*

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows, when applicable were as follows:

Loans and borrowings 7.8%-16% 7.8%-16% Finance lease obligation 15.00% 15.00%

.)92 araP :fer( serusolcsiD :stnemurtsnI laicnaniF 7 SRFI fo stnemeriuqer eht rep sa deriuqer ton si eulav riaf fo noitanimreteD *However, fair value of such instruments is not however likely to be significantly different from the carrying amounts of such instruments.

51 Capital Management

Capital management refers to implementing policies and measures to maintain sufficient capital, assessing Company's internal capital adequacy to ensure Company's operation as a going concern. Board of directors are charged with the ultimate responsibility for maintaining a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. All major investment and operational decisions with exposure to certain amount is evaluated and approved by the board. The Board of Directors also monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders’ equity. The Board of Directors also monitors the level of dividends to ordinary shareholders.


2009 2008

Taka Taka

52 Related party transactions Name of related parties Nature Nature of transactions

Telenor Mobile Communications AS Shareholder Dividend payment for previous year 979,430,020 934,225,557 Nye Telenor Mobile Communications II AS Shareholder -do- 280 267 Nye Telenor Mobile Communications III AS Shareholder -do- 280 267 Telenor Asia Pte. Ltd. Shareholder -do- 280 267 Grameen Telecom Shareholder Revenue 1,272,082,901 1,183,020,136 Revenue received 1,384,027,938 605,480,077 Commission expense 109,466,803 90,631,360 Dividend payment for previous year 600,296,320 572,590,336 Grameen Kalyan Shareholder Dividend payment for previous year 28 27 Grameen Shakti Shareholder Dividend payment for previous year 28 27 Telenor ASA Group entity Sharing of Microsoft license fee 113,814,025 144,698,303 Consultancy service fee 485,920,827 344,429,369 Telenor Consult AS Group entity Consultancy and professional service fee 440,128,305 422,526,851 Telenor Asia Pte. Ltd. Consultancy service fee - 36,839,032 Telenor Key Partner AS. Consultancy service fee 1,023,312 - Telenor Bedrift Service fee 12,979,514 - Digi Telecommunication Group entity Roaming revenue 1,231,645 1,080,011 Roaming expenses 2,108,688 1,665,849 Kyivstar GSM - Ukraine Group entity Roaming revenue 194,152 74,486 Roaming expenses 28,201 56,768 Telenor d.o.o (YUGMT) Group entity Roaming revenue 42,370 51,570 Roaming expenses 14,103 8,322 Pannon - GSM Group entity Roaming revenue 108,391 77,163 Roaming expenses 293,892 154,359 Sonofone Group entity Roaming revenue 798,048 1,230,992 Roaming expenses 781,145 476,208 Telenor Mobil AS Group entity Roaming revenue 2,290,439 3,555,610 Roaming expenses 899,641 682,197 Telenor Pakistan Group entity Roaming revenue 326,588 126,878 Roaming expenses 280,188 554,647 TAC(Total Access Communication) Group entity Roaming revenue 1,375,583 2,610,916 Roaming expenses 9,225,352 9,743,626 Telenor Sverige (Europolitan AB) Group entity Roaming revenue 626,342 969,500 Roaming expenses 467,582 576,067 ProMonte GSM, Serbia and Montenegro YUGPM Group entity Roaming revenue 29,828 16,714 Roaming expenses 10,914 116,641 Sonofon DNKT2 Group entity Roaming revenue 1,390 -

52.1 Receivables/(payables) with related parties Grameen Telecom Shareholder Accounts receivable 7,053,800 118,998,837 Accounts payable 8,802,872 65,420,997 Telenor ASA Group entity Accounts payable 1,032,526,483 793,790,123 Accounts Receivable 2,200,470 3,048,714 Telenor Consult AS Group entity Accounts payable 752,281,449 374,881,157 Accounts Receivable 113,000,502 62,195,912 Telenor Asia Pte. Ltd. Shareholder Accounts payable 6,893,690 31,727,426 Accounts Receivable - 633,882 Telenor International Center Accounts Receivable 5,482,914 - Telenor Key Partner AS. Accounts payable 881,330 -


Gra

mee

npho

ne

106/107

2009 2008Taka Taka

2009 2008

Taka Taka Name of related parties Nature Nature of transactions

Telenor Bedrift Accounts payable 11,681,679 - Digi Telecommunication Group entity Accounts payable 446,891 834,778 Accounts receivable 217,421 281,954 Kyivstar GSM - Ukraine Group entity Accounts payable - 9,510 Accounts receivable 38,702 23,938 Telenor d.o.o (YUGMT) Group entity Accounts payable - 9,263 Accounts receivable 12,859 43,029 Pannon - GSM Group entity Accounts payable 58,082 48,580 Accounts receivable 8,537 46,625 Sonofone Group entity Accounts payable 231,495 216,730 Accounts receivable 118,319 197,767 Telenor Mobil AS Group entity Accounts payable 104,316 464,736 Accounts receivable 473,027 1,322,895 Telenor Pakistan Group entity Accounts payable 41,317 326,921 Accounts receivable 272,340 171,480 TAC(Total Access Communication) Group entity Accounts payable 1,885,517 3,302,916 Accounts receivable 155,863 1,944,090 Telenor Sverige (Europolitan AB) Group entity Accounts payable 62,697 72,485 Accounts receivable 135,754 647,683 ProMonte GSM, Serbia and Montenegro YUGPM Group entity Accounts payable - 31,092 Accounts receivable 2,063 12,529

52.2 Key management personnel compensation comprises:

Short-term employee benefits (salary and other allowances) 1,355,738,804.00 922,250,259

Post employment benefits (provident fund, gratuity etc.) 68,138,604 58,957,031

Termination benefits 30,139,977 -

Other long-term benefits - -

Share based payments 6,173,578 8,048,736

1,460,190,963 989,256,026

Key management personnel includes employees of the rank of Deputy General Manager and above.

53 Expenses/expenditure and revenue in foreign currency

CIF value of imports: SIM and scratch card 156,392,060 183,058,899 Telecommunication equipments 7,073,204,082 11,274,252,547

Expenditure in foreign currency during the year: Consultancy fee 613,392,162 500,042,256 Consultancy fee - expatriate 387,714,112 358,374,808 Other fee (travel and training) 87,036,972 51,105,794 Technical know how 498,603,368 973,063,285 International roaming cost 192,142,950 199,182,350

Foreign earnings: Revenue from roaming partners 169,208,003 170,722,456


2009 2008Taka Taka

54 Capital commitments Capital commitments represent the orders placed for purchase of network equipments and other services. Major

vendors were Huawei and Ericsson.

Capital commitments 3,214,712,265 8,353,367,274

54.1 Contingent liabilities arising from letters of credit Outstanding letters of credit 639,445,111 2,367,926,759

55 Contingent liabilities

55.1 Bank guarantee provided against various parties As at 31 December 2009, GP has outstanding bank guarantee amounting to Tk 215,130,547 on account of import of

SIM, Scratch card, capital machinery and some other operational issues like utility connection and contract with PGCB for lease of optical fiber network.

55.2 Contingent liabilities for lawsuits There are few litigations against Grameenphone Ltd. Management, in consultation with lawyers, has reviewed the

merits of those lawsuits to assess the potential impact those may have on the financial position and financial performance of Grameenphone Ltd. Based on such assessment, management is of the opinion that the likelihood of losing those lawsuits is remote and therefore no provision has been taken in the accounts.

56 Other disclosures

56.1 13 ta sa 622,4 saw munna rep evoba ro 000,63 .kT fo noitarenumer gniviecer seeyolpme raluger fo rebmuN December 2009 and was 3,687 as at 31 December 2008.

56.2 Comparative figures have been rearranged wherever considered necessary to conform to the current year’s presentation.

56.3 Events after the balance sheet date

(a) Formation of subsidiary The Board of directors of the company at its 99th meeting held on 20 January 2010 decided to form a new wholly

owned subsidiary named 'Grameenphone IT Ltd.'. The objective of this company is to provide IT related services to Grameenphone and other external parties. This new subsidiary was incorporated on 28 January 2010.

(b) Infrastructure sharing agreement Grameenphone is in the process of signing telecom infrastructure sharing agreements with other telecom operators

and internet service providers. In 2010, Grameenphone Ltd has signed agreements with Orascom Telecom Bangladesh Limited (Banglalink) and Axiata (Bangladesh) Limited (AKTEL) to share telecom infrastructures. This initiative will mutually benefit both operators in terms of providing faster and cost effective services to subscribers.

(c) Proposed dividend Subsequent to the balance sheet date, the Board of directors recommended a dividend of Tk 6.00 per share

amounting to Tk 8,101,800,132 at the meeting held on 19 March 2010, which is subject to shareholders' approval at the forthcoming annual general meeting.


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Having a disability is perceived as lacking the power, strength, the physical or mental ability to lead a full, normal life. However, ask Ms. Farzana Taleb and she would disagree – even though she lives everyday of her life with a disability of her own. Visually impaired, Ms. Farzana has never let her condition stop her from anything. She accepts her disability as a challenge, but not an excuse that would keep her from leading a normal life.

We consider those who are physically challenged to have been deprived, by some cruel twist of fate, of a basic right to life. We sympathize with them. However, we quickly write-off a disabled person as being incapable. Put in those shoes we probably start to believe that nothing’s possible and give up on our dreams.

Through the implementation of various tools, such as using non-graphical based software for those who are visually impaired, Grameenphone mother company Telenor has not only facilitated employment opportunities for the physically challenged over in Norway but also back here in Bangladesh. Grameenphone’s implementation of the same pro-handicapped software in the office has given Ms. Farzana a chance to fulfill her dream of a life among “equals”.

An enabled dreamer

Ms. Farzana TalebGP Employee

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She had always dreamt of working for a Corporation where she would compete, not as a physically challenged person but an equal. Now, working as a Customer Manager in Grameenphone, she thanks her stars everyday being in a company that has enabled the dreams of the physically challenged.

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1. General Authorized Capital : BDT 40,000,000,000 Issued and Fully Paid-up Capital : BDT 13,503,000,220 Class of Shares : Ordinary Shares of BDT 10.00 each Voting Rights : One vote per Ordinary Share

2. Stock Exchange Listing

The Ordinary Shares of the Company are listed in the Dhaka and Chittagong Stock Exchange Limited. Company trading code [GP].

3. Distribution Schedule of the Shares as on December 31, 2009

Range of Shareholdings Number of Shareholders Total Number of Shares Percentage

001 to 500 179,001 36,663,152 2.72%

501 to 5,000 9,793 14,611,180 1.08%

5,001 to 10,000 828 5,993,944 0.44%

10,001 to 20,000 418 5,824,433 0.43%

20,001 to 30,000 104 2,544,649 0.19%

30,001 to 40,000 57 1,991,885 0.15%

40,001 to 50,000 33 1,497,906 0.11%

50,001 to 100,000 85 6,125,896 0.45%

100,001 to 1,000,000 66 20,304,723 1.51%

1,000,001 to 1,000,000,000 14 1,254,742,254 92.92%

Total 190,399 1,350,300,022 100.00%

4. Dividend

For the Year Dividend Rate Dividend Per Par Value Dividend Type Share (BDT) Per Share (BDT)

2009 60% (Proposed) 6.00 10.00 Cash

2008 13% 0.13 1.00 Cash

In 2008* 400% - - Bonus Share

2007 62% 26.66 43.00 Cash

2006 60% 25.80 43.00 Cash

2005 50% 21.50 43.00 Cash

Useful Information For Shareholders

* In 2008, we capitalized a portion of our retained earnings through the issuance of bonus shares. The issuance was approved by our shareholders at

the Extra-Ordinary General Meeting of shareholders on July 15, 2009 and subsequently by the Securities and Exchange Commission.

5. Market Value Per Share as on December 31, 2009

Highest Price (BDT) Lowest Price (BDT)

DSE 190.00 187.00

CSE 189.80 186.20

6. Subsidiary Company

Name of the Company Holding Activity

Grameenphone IT Ltd. 100% IT Company

(The Grameenphone IT Ltd. was incorporated on January 28, 2010)

7. Credit Rating

The Company’s credit rating was reaffirmed by Credit Rating Agency of Bangladesh Ltd. (CRAB) on July 16, 2009.

Long Term Short Term

AAA ST-1

8. Company Website Anyone can get information regarding Company’s activities, products & services or can view Annual Report 2009 at

www.grameenphone.com.

9. Investor Relations Institutional investors, security analysts and other members of the professional financial community requiring

additional financial information can visit the Investor Relations section of the www.grameenphone.com website.

10. Shareholder Services If you have any queries relating to your shareholding, please contact at 01711555888 or mail to our Share Office at

[email protected].

DisclaimerThis report contains statements regarding the future in connection with Grameenphone’s growth initiatives, profit levels, outlook, strategies and objectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factors may lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

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Notice of the 13th Annual General Meeting

Grameenphone Ltd.Registered Office: Celebration Point

Plot # 3 & 5, Road # 113/A, Gulshan-2, Dhaka-1212

Notice of the 13th Annual General MeetingNotice is hereby given that the 13th Annual General Meeting of Grameenphone Ltd. will be held on Tuesday, June 08, 2010 at 11:00 am at Bangabandhu International Conference Centre (BICC), Agargaon, Sher-E-Bangla Nagar, Dhaka-1207 to transact the following business:

AGENDA

1. Consideration and adoption of the Directors’ Report and the Audited Financial Statements of the Company for the year ended December 31, 2009 together with the Auditors’ Report thereon.

2. Declaration of Dividend for the year ended December 31, 2009 as recommended by the Board of Directors.3. Election/Re-election of Directors.4. Appointment of Auditors and fixation of their remuneration.

By order of the Board of Directors

Sd/-

May 13, 2010 Company Secretary

Notes:

Members whose names appear on the Members/Depository Register as on “Record Date” i.e. April 08, 2010 shall be eligible to attend the Annual General Meeting (AGM) and receive dividend.

A Member entitled to attend and vote at the AGM may appoint a Proxy to attend and vote in his/her stead.

The “Proxy Form”, duly filled and stamped at Tk. 8 must be deposited at the Company’s Registered Office not later than 72 hours before commencement of the AGM.

A Corporate Member of the Company may authorize, by resolution of its Board of Directors, such person as it thinks fit, to act as its representative at the AGM. Such resolution should be provided at the Company’s Registered Office not later than 72 hours before commencement of the AGM.

Members/Proxies should bring dully filled “Attendance Slip” sent with the Annual Report to attend the AGM.

Members/Proxies are requested to record their entry in the AGM well in time on June 08, 2010. No entry will be recorded after 11:00 am.

In case of not receiving of Annual Report of the Company sent through courier, Members may collect the same from the Company’s Registered Office within June 07, 2010. No additional Annual Report will be distributed at AGM venue.

Members are requested to submit to the Company’s Registered Office on or before June 01, 2010, their written option to receive dividend in the form enclosed with the Annual Report. If the Members fail to submit such option within the stipulated time, the dividend will be paid off as deemed appropriate by the Company.

Members are requested to update the particulars of their Bank Account and any change of address with their respective Depository Participant (DP).

Grameenphone is concerned about the environment and utilizes natural resources in a sustainable way. We request you to update your email address and contact number (mobile/fixed phone) with your Depository Participant (DP) for quicker and easier communication. Your cooperation will help conserve paper and minimize the impact on the environment.

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Members may please note that no gift/gift coupon/food box shall be distributed at the Annual General Meeting.

Proxy Form Attendance Slip &Option for Receiving Dividend

I/We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . being Member of Grameenphone Ltd. do hereby appoint

Mr/Ms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

as my/our PROXY to attend and vote on my/our behalf at the 13th Annual General Meeting of the Company to be held on Tuesday, June 08, 2010 at 11:00 am at Bangabandhu International Conference Center (BICC), Agargaon, Sher-e-Bangla Nagar, Dhaka and at any adjournment thereof.

Signed this . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . . . . . . . 2010.

Signature of the Member(s) Signature of the PROXY

Number of Shares held . . . . . . . . . . . . . . . . . . . . . . . . . . .

BO ID No.

RevenueStamp

Tk. 8.00

Notes: The Proxy Form, duly filled and stamped, must be deposited at the Company’s Registered Office not later than 72 hours before the commencement of AGM.

Signature of the Member(s) must be in accordance with the Specimen Signature recorded with the Company.

Proxy Form

Grameenphone Ltd.Registered Office: Celebration Point, Plot # 3 & 5, Road # 113/A, Gulshan-2, Dhaka-1212

I/We do hereby record my/our attendance at the 13th Annual General Meeting of the Company being held on Tuesday, June 08, 2010 at 11:00 am at Bangabandhu International Conference Center (BICC), Agargaon, Sher-e-Bangla Nagar, Dhaka.

Signature Verified by

Signature of the Member/Proxy Authorised Signatory of the Company

Name of the Member/Proxy(in Block Letter)

BO ID No.

Mobile Number

E-mail address (if any)

Notes: Please present this attendance slip at the registration counter on or before 11:00 am on the AGM date.

Attendance Slip


I/We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . being Member of Grameenphone Ltd. do hereby exercise my/our option to receive dividend in the following manner: Please (√) in the applicable box

In the form of Dividend Warrant

Through transfer to my/our Bank Account recorded with the Company

Required information of the Member(s):

BO ID Number

Mobile Number

E-mail (if any)


Signature Verified by

Signature of the Member(s) Authorised Signatory of the Company

Notes: The form duly completed must be deposited at the Company’s Registered Office on or before June 01, 2010.

Signature of the Member(s) must be in accordance with the Specimen Signature recorded with the Company.

Number of Shares, Bank Account details and Address shall be considered final as provided by CDBL on Record Date i.e. April 08, 2010.

Applicable service charge, if any, shall be borne by the Member(s) in case of payment of dividend through transfer to the Member(s) Bank Account as per SEC notification.

Option for Receiving Dividend

Documents

We too have a Dream