An Overview of the Financial Performance of Grameenphone Limited

Abstract

Grameenphone, widely known as GP, is the leading telecommunications service provider in Bangladesh. With more than 28 million subscribers (as of October 2010), Grameenphone is the largest cellular operator in the country. It is a joint venture enterprise between Telenor and Grameen Telecom Corporation, a non-profit sister concern of the internationally acclaimed microfinance organization and community development bank Grameen Bank. Telenor, the largest telecommunications company in Norway, owns 55.8% shares of Grameenphone; Grameen Telecom owns 34.2% and the remaining 10% is publicly held. Grameenphone was the first company to introduce GSM technology in Bangladesh. It also established the first 24-hour Call Center to support its subscribers. With the slogan Stay Close, stated goal of Grameenphone is to provide affordable telephony to the entire popUlation of Bangladesh. Grameenphone received a license for cellular phone operation in Bangladesh from the Ministry of Posts and Telecommunications on November 28, 1996. Grameenphone started operations on March 26, 1997, the Independence Day in Bangladesh. Grameenphone originally offered a mobile-to-mobile connectivity (widely known as GP-GP connection), which created a lot of enthusiasm among the users. It became the first operator to reach the million subscriber milestone as well as ten million subscriber milestones in Bangladesh. The mobile phone market of the Bangladesh is a highly competitive market and Grameenphone (GP) limited, a subsidiary of Telenor Mobile Communication AS, is the market leader in this field. It is the only company which earns profit throughout the last 13 years in this sector of the country. This report is conducted to know the current fmancial situation of GP. The financial ratios indicate high profitability position of GP considering its size and scale of operation in spite of recent downturn in the ratios. Slow down of revenue growth due to reduction in tariff structure (high competition affects GPs pricing power) and higher asset growth and revenue growth (Asset Growth: 2008 22.3%; Revenue Growth 2009: 6.0%) partly attributes to the profitability level. The total revenue of GP increased by 6.0% in 2009 and stood at around BDT 65,300 million. GP earned its revenue from different sources i.e. tariff, subscription fees and roaming charge from its prepaid and post paid customers, revenue from interconnection mobile operator, VAS, SMS, MMS and other non mobile revenue. The net profit after tax increased 402% in 2009 than the previous year. In Capital Expenditure account there is a downward shift, which is very good sign for the company. The company also maintains a balanced level of equity and debt. From the analysis it can be conclude that the performance of the Grameenphone whether it is financial performance or market performance, is quiet satisfactory. Though some negative things are seen in their market performance in recent time it will not so much affect them, because it has a huge customer base, established infrastructure, network and greater customer loyalty. Moreover the company will enjoy reduced tax rate from that year, which is an extra benefit for them. So by considering the overall situation of the market it can be said 1hat Grameenphone will enjoy profitability and remain as market leader for long time.