Rise of Grameenphone: The Giant of Bangladesh Telecommunication Industry

rise of grameenphone

Like their tagline, GrameenPhone quite literally has come a long way ahead of everyone else. According to the BTRC report May 2021, there are 17.5 crore mobile phone subscribers in the country. Among that, 8.15 crore subscribers belong to GP forging 46% of the market share that is the highest number of subscribers belonging to anyone else.

According to the BTRC report May 2021, there are 17.5 crore mobile phone subscribers in the country. Among that, 8.15 crore subscribers belong to GP forging 46% of the market share that is the highest number of subscribers belonging to anyone else.

History

From an article by Bhaskar Chakravorti and David Lane published in Harvard Business Review we have come to learn that Ikbal Kadir, a Bangladeshi New-Yorker, who used to be an investment banker back in 1993, had noticed the boom of mobile phones in the US market. Upon realizing the future of mobile phones for connectivity and access to information, he started dreaming of establishing digital telephone services for the people in Bangladesh. Consequently, he left his job in May 1994 and raised funds of 125,000 USD from Joshua Mailmen, the founder of the Venture Network, and opened Gonofone Development Corporation in New York. Thereafter, he tried to create a coalition of advisors, investors, and partners.

At the time 70% of all telephone lines were in Dhaka, Chittagong, and Khulna metropolitan areas. The state-run company called T&T tried to monopolize the market with as little as 20,000 subscribers, Citycell used to be the only mobile operator other than two pay telephone service providers, with another 20,000 subscribers, initially maintained their operations in the Zilla centers. Nearly 80% of the population was still living in rural areas. Thus, the culminating progress of the nation was severely hindered due to a lack of proper communication.

After returning to Bangladesh, Mr. Ikbal Kadir started taking numerous initiatives to resolve this crisis. He was inspired by the Micro-Credit system of Grameen Bank. He wanted to come up with a business that will consider cellphones as an income source. After three years of struggling, he received support from Dr. Yunus and Telenor and initiated GrameenPhone’s journey. They received their license as mobile network operator from Bangladesh Telegraph and Telephone Board on 28th November 1998 and started operation on 26th March 1997, Independence Day. GrameenPhone introduced GSM telecommunication service technology and since the beginning, they did not charge anything for incoming calls. In June 1997, Asian Development Bank (ADB), International Finance Corporation, and Commonwealth Development Corporation together approached GrameenPhone for a combined project.

GP share statistics

The aim of the project would be to establish and maintain a cellular telephone system throughout the country; establishing cellular services in urban areas and Village Pay-Telephone (VPT) services for the remote areas. In January 1998, Asian Development Bank (ADB) allowed a 1.5-million-dollar equity investment, additionally with a loan of up to 30 million dollars. With better services, coverage area expansion, and lucrative offers, the company excelled in its use of the technology as they lead the way to the future; it got listed and started trading in the Dhaka and Chittagong Stock Exchange from November 2009. Currently, with 55.8% shares, Telenor from Norway is the highest shareholder followed by 34.2% is the valued stakeholder- Grameen Telecom. The rest of the 10% of the company is owned by individual or organizational investors.

Rise of Grameenphone

In 1998 GrameenPhone started mobile to mobile services without PSTN (Public Switched Telephone Network). In 1999, they were the first company to launch pre-paid services in the country and by the year 2000, their network coverage encompassed around 30 Districts. They launched their Wireless Application Protocol (WAP) as soon as 2001; a technology that allowed access to the internet through wireless mobile network technology. Through such successive steps, GrameenPhone started to earn public admiration, and thereby, in 2002, they received the honorable- “BD Business Award for Best Joint Venture Enterprise”. The very next year, their subscriber base toppled the 10 lakh benchmark. In the following years, their subscriber base kept on climbing to everyone’s surprise. To top that, they received another 20-million-dollar fund from Asian Development Bank (ADB), International Finance Corporation (IFC), and Norwegian Investment fund for developing countries (Norfund) in January 2004. In April 2005, GrameenPhone introduced an electronic recharge system for the first time and in the same month, they had begun their youth-based brand called Djuice in Bangladesh which was already a huge success in Norway and Hungary. Although initially, Djuice garnered the attention of the youth, eventually GrameenPhone discontinued the brand. By 2005 they had also introduced Edge and voice-SMS services. There was ample competition from Aktel, Banglalink, Teletalk, and Warid, the other telecom services in the country.

subscriber counts

Their subscribers had summed up to a crore by 2006. In the following years, they kept coming up with fascinating services like bill pay service, business solutions for business class and community, value-added service, missed-call alert, pay-for-me service, and more. Profit came pouring in as the number of subscribers kept on rising. From 2004 up to 2006, the net profit of the company was BDT 674.36 crore in the first year followed by BDT 691.29 crores in the second and nearly BDT 748.3 crores.

GrameenPhone was officially transformed into a public limited company on 25th June 2007. On the other hand, their subscribers had reached 2 Crores. In February 2009, GP launched the new Edge-enabled Internet Modem. Through such exponential accolades, in July 2009 GrameenPhone raised 486.08 crores through the largest IPO in the history of the nation. The record had been broken after 11 years by Robi Telecom in September 2020 at 523.70 crores. GP’s profit started climbing higher after joining the stock market. From 2008 to 2009, the profit margin grew a whopping 400%; from 299.38 crores to 1496.81 crores. Their financial statements reveal that profit per share (EPS) had become 12.08 taka from 2.46 taka in just one year. In the following years, they had established Customer Experience Lab, e-care solutions, and a myriad of various wonderful package offers. Then in 2010, they started Mobicash financial services. In October 2013, they launched the 3G service that had reached every corner of the country by the following year. The subscriber base reached 5 crores in 2014. They launched a music streaming platform named GP Music the next year. GP Music reached 17 lakh subscribers in 4 months including 6 lakh paid users. They launched a digital wallet service, G-Pay in October 2016 that allowed subscribers to pay utility bills, internet bills and to book train tickets as well. A year after that, in 2017 they launched “Bioscope”- a video streaming service. The same year they also introduced the My GP App; an app that allows users to have a virtual GP account with every kind of service they offer in one place. They are the first to launch the 4G LTE service in 2018. Besides, GP has collaborated with SD Asia to run the “GP Accelerator Programme” since 2015 to support startups in Bangladesh. Sheba.xzy, CMED Health, Repto, and many other entrepreneurs were supported through the platform. GrameenPhone’s revenue was 14,370 crore taka in 2019 with a growth margin of 8.1% compared to the previous year. The company had profited around 3,451 crores with an EPS of 25.56 taka per share.

gp-profit stats

The Reason behind GP’s Success

For the past 23 years, Grameen Phone had been doing successful business in Bangladesh. What could be the secret to their success? GP came into the market with GSM technology when Citycell was still only offering CDMA. Safe to say, it was a paradigm shift in Bangladesh. Citycell users with CDMA tech were still struggling with network limitation, device choice limitation, incoming call charges to even charging for calls that hadn’t been successful. Compared to that, GrameenPhone was offering far better innovative and user-friendly services. Besides, since day one, they had been providing premium and reliable telecommunication services. How GrameenPhone had brought new offers for their customers is as impressive as the way they conveyed their messages through various ingenious promotional activity and marketing campaigns. Their advert- “Ma” and “Shopno Jabe Bari” had created tremendous emotional appeal and found a way into people’s admiration. Besides, GrameenPhone had been a valued and befitting sponsoring partner of the Bangladeshi National Cricket Team regardless of being a foreign company. They have also organized various CSR campaigns dedicated to the well-being of general people.

In 2014, they received the “Green Mobile Award” from Mobile World Congress 2014 by GSMA for their climate change program and in 2018, they were awarded “Innovation in corporate social responsibility practices” at the Bangladesh CSR Leadership Award. Recently, on 12th November 2020, GrameenPhone signed a treaty with the University Grant Commission on designing affordable internet packages for students of private & public universities during the Covid-19 lockdown to help support the education sector during the spreading of the virus. GrameenPhone plays a pivotal role in Bangladesh’s economy as well. Since the start, they have contributed 85,370 crores to the government’s revenue board. So far, they have been crowned the country’s highest taxpayer of the year several times including 2014, 2015, 2016, and 2017. Their performance in investor and employee management is remarkable. According to the 2019 Annual Report, in the last six years, the company’s total shareholder returns have been 87.31%. For outstanding human resource management and development, Grameenphone has been nominated for BDjobs’ ‘Best Employer’ award three times, including 2010, 2011, and 2013. The adaptability rate of 5G services is increasing worldwide. BTRC aims to launch 5G connectivity in Bangladesh by 2021 and reach 5G in every district of the country by 2023. In this context, the preparation of Grameenphone as the top operator of the country is progressing quite well.

Grameenphone has been criticized at various times on some issues. However, it has never stopped its progress. Although there has been some negativity with the BTRC over the issue of license renewal fees and taxes, the company is now looking for a peaceful solution to the issue with the intervention of the High Court. In January 2020, Yasir Ajman was appointed as the first Bangladeshi CEO. Previously, he served as the company’s deputy CEO. In the 3rd quarter (July-September) of 2020, their after-tax net profit increased by 25% over the same period of 2019 and the total revenue of the 3rd quarter was BDT 3560 crore. Will Grameenphone be able to hold the leadership position of the country’s mobile phone operator industry with the best telecommunication and digital services even in the competitive times ahead?

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