Contents

This is Grameenphone 02

Our Vision, Mission & Values 03

Grameenphone Milestones 05

Products & Services 06

Major Awards & Recognition 07

Performance at a Glance - 2010 (Consolidated) 09

Corporate Information 10

Business Review - 2010 11

The Shareholders 15

Organizational Structure 18

Directors’ Profile 19

Profile of the Management Team 22

Chairman’s Message 26

CEO’s Message 28

Corporate Governance in Grameenphone 31

Report on Corporate Social Responsibility (CSR) 37

Five Years’ Financial Summary 40

Financial Review - 2010 42

Value Added Statement 43

Contribution to National Exchequer 44

Directors’ Report 45

Report of Audit Committee 62

Auditors’ Report & Audited Financial Statements of Grameenphone Ltd. 63

Subsidiary Profile : Grameenphone IT Ltd.

- Directors’ Report 115

- Auditors’ Report & Audited Financial Statements 118

Useful Information for Shareholders 135

Our

Our Vision, Mission & Values

Vision, 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
Grameenphone 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 Values
MAKE 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.

02/03
Corporate Information

Corporate Information
Company Name Treasury Committee
Grameenphone Ltd. M. Shahjahan (Chairman)
Pal Stette
Company Registration No. Raihan Shamsi
C-31531 (652)/96 Imdadul Haque (Secretary)

Human Resources Committee

Legal Form
Per Erik Hylland (Chairman)
A public listed company with limited liability. Incorporated
M. Shahjahan
as private limited company on October 10, 1996 and Arnfinn Groven
subsequently converted to a public limited company on Hossain Sadat (Secretary)
June 25, 2007. Listed on the Dhaka and Chittagong Stock
Exchange Ltd. on November 11, 2009. Health, Safety, Security
& Environment Committee
Board of Directors Per Erik Hylland (Chairman)
M. Shahjahan
Chairman
Dr. Mohammad Shahnawaz
Sigve Brekke
Hossain Sadat (Secretary)
Directors
Nurjahan Begum Management Team
Hilde Tonne Tore Johnsen, Chief Executive Officer
M. Shahjahan Raihan Shamsi, Deputy CEO & Chief Financial Officer
Per Erik Hylland Tanveer Mohammad, Chief Technology Officer
Md. Ashraful Hassan Arnfinn Groven, Chief People Officer
Knut Borgen Kazi Monirul Kabir, Chief Communications Officer
Snorre Corneliussen Arild Kaale, Chief Marketing Officer
Independent Director Mahmud Hossain, Chief Corporate Affairs Officer
Dr. Jamaluddin Ahmed FCA
Head of Internal Audit
Company Secretary Emadul Hannan
Hossain Sadat
Statutory Auditors
Audit Committee Rahman Rahman Huq
M. Shahjahan (Chairman) Chartered Accountants
Per Erik Hylland
Dr. Jamaluddin Ahmed FCA Legal Advisors
Emadul Hannan (Secretary) Hasan & Associates
Sheikh & Chowdhury

Registered Office
GPHouse
Bashundhara, Baridhara
Dhaka-1229, Bangladesh
Business Review - 2010

Business Review
Marking another successful year, Grameenphone ended 2010 with The “Grameenphone C100” handset is also very suitable for rural
29.97 million subscribers, up from 23.26 million in December areas. It has a user friendly interface, a built-in torch light, long
2009. lasting battery and both Bangla and English menu. It also has an
extended warranty period of 16 months.
Grameenphone has played a leading role in increasing the
country’s tele-penetration rate in mobile industry from less than Grameenphone has also introduced a full-fledged and innovative
one percent in 1997 to over 40 percent as of 2010. telecom solution - Ekota. This package was especially designed to
meet the business needs of small organizations. Simplicity and
The Company committed to making modern mobile telephony
innovativeness are the unique features of the product. Business
and data services available to everyone, both in urban and rural
relevant tariff has been introduced to ensure greater convenience
areas, thereby making a positive contribution to the lives of the
for business communication.
people of Bangladesh.
Subscribers of this business package can get instant help from any
Grameenphone earned BDT 7,473 crore revenues for the year
of our marked customer service points available countrywide,
2010 with a 14.4% increase from 2009. The growth was mainly
along with Grameenphone Centers across the country. Ekota
from voice as well as interconnection revenues driven by
subscribers enjoy prioritized customer service while dialing 121.
subscription growth and revenues from sales of mobile devices.
Data revenue has also contributed to this strong revenue growth As a company that provides its subscribers with solutions to
for the year 2010 going up by 64.0% from 2009. make life easier, Grameenphone became the first company in
Bangladesh to launch mobile ticketing system for train tickets
Grameenphone has been able to maintain its leadership
through its MobiCash service.
position in the industry by both continuing to deliver innovative
and relevant products and services to its customers, and by The electronic ticketing service was launched by Grameenphone
providing a quality network with the widest coverage. with data support from Bangladesh Railway and CNS, the authorized
ticketing partner of the Bangladesh Railway. Using the MobiCash
The Company has so far invested BDT 15,796 crore to build the
service, a traveller can purchase electronic railway tickets at anytime
network infrastructures since its operation on March 26, 1997.
and from anywhere from his/her mobile phone and avoid the hassle
BDT 846 crore was invested during 2010 alone. Grameenphone
of travelling to the station during working hours or standing in queue
has built the largest cellular network in the country, covering 99
for long.
percent of the population and over 89 percent of land areas.
Apart from train tickets, different lottery tickets have also been
The entire GP network is EDGE/GPRS enabled, allowing its
made available through MobiCash service.
customers access to high-speed Internet services from
anywhere within its network. Presently, more than 2.6 million In another business development, Grameenphone signed
GP subscribers are using the EDGE/GPRS services to access the agreements with different mobile phone operators to share its
Internet through mobile phones. By far, more people are infrastructures. Leading mobile operators Orascom Telecom
accessing the Internet through mobile phones than through Bangladesh Ltd.(Banglalink), Axiata (Bangladesh) Ltd.(Robi)
any other means, which indicates the future trend. and Airtel Bangladesh Ltd. (formerly known as Warid) are among
the major signatories. WiMax operators, Augere and Banglalion
One of the biggest highlights for 2010 has been the announcement
also opted for Grameenphone’s infrastructures to expand their
of the four price packages – Shohoj, Aapon, Bondhu, along with
services around the country.
djuice – developed for pre-paid subscribers and with an offer of
interchangeability and easy migration facilities. Infrastructure sharing agreements, done in compliance with the
guidelines issued by BTRC, enabled all parties to optimize their
This was the largest and most comprehensive tariff offer for
resource utilization and minimize cost of network deployment as
Grameenphone subscribers since its inception.
well as of operations and maintenance. As a result, it would
Another big offer was a new package named Baadhon, designed ensure sustainable utilization of national resources and reduce
to serve the rural population of Bangladesh. This package deployment of unnecessary infrastructural facilities in future.
contains a “Grameenphone C100” handset and a Grameenphone
In 2010 Grameenphone strengthened its environment friendly
prepaid connection.
position by signing agreements to bring renewable energy to its

10/11
 140 base stations. The company signed three power purchase Medical College Hospital (DMCH) emergency gate. It was a
agreements with renewable energy producers. The suppliers will dramatization of the events of the fateful thirty minutes from
install solar panels on Grameenphone’s Base Transceiver Station 1952 when the Pakistani police opened fire on a band of
Business Review

(BTS) premises and maintain them. Grameenphone will be unarmed student protesters who had defied Section 144 to
buying electricity on unit (Kwh) consumption basis for a contract raise support for their rights to speak their mother language.
period of 10 years with a buy back option after that period. Eminent soldiers of the language movement along with
thousands of people, young and old, congregated in front of the
Grameenphone's environmental roadmap aim to promote a
DMCH emergency gate to witness the history being retold.
low-carbon society, and its first priority is to take responsibility for
the excessive CO2 emissions generated by its own operations. Another programme titled “Amar Desh Amar Gorbo” was held to
Grameenphone has set a target of reducing 30% of its emission celebrate Victory Day on December 16, 2010. Freedom fighters,
within 2015 from the business as usual situation considering Grameenphone employees and thousands of general people
2008 as the baseline. In this regard, deploying solar power sang the National Anthem with eminent singers of the country in
system in large scale will definitely help achieve that target. the programme held at the south plaza of National Parliament.

Grameenphone shifted its corporate head office to its own Both programmes were broadcast live by major television
building named GPHouse, situated at Bashundhara, Baridhara, channels.
Dhaka-1229. GPHouse is an embodiment of Grameenphone’s
corporate identity, its values and culture.

GPHouse is a unique building – an environment friendly, and at the

same time, very cost efficient office. Incorporating a new way of work,
environmentally responsible work practices and technologies, this
truly sustainable architecture and contemporary art hub has
translated our corporate identity into a different level. It represents
Bangladesh into global context with the nation’s pride, values,
heritage and growth.

Last year Grameenphone undertook two interesting competitions,

one was a Mobile Application Development Contest titled
“Aloashbei” and another was a Jersey Design competition named
“Jersey Utshob.”

Aloashbei was arranged in association with Microsoft to hunt for

mobile application developers in Bangladesh. On the other
hand, Bangladesh Cricket Board was the partner in Jersey
Utshob, which was arranged to get the best design for the jersey
of the National Cricket Team.

Both contests received a huge response from the public and the
media.

Another two patriotic campaigns by Grameenphone caught

the attention of people around the country. One was arranged
to observe the Language Martyrs’ Day on February 21, 2010.
The programme titled “Duniya Kapano Tirish Minute” was
orchestrated under the historical Amtala in front of the Dhaka
 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
The Shareholders

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, Serbia, Montenegro, Thailand, Malaysia, Pakistan and India.
Including its 39.6% ownership stake in VimpelCom, Telenor has more than 200 million mobile subscriptions worldwide as of
December 31, 2010.

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 in 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 the poor rural women, with access to modern information
and communication-based technologies.

GTC is 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 and 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.
Top Twenty Shareholders as on December 31, 2010

The Shareholders
Sl. 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 AB Investment Limited - IDA 10,004,800 0.74%
5 IDLC Finance Ltd. Portfolio A/C 6,277,400 0.46%
6 IFIC Bank Limited 3,684,900 0.27%
7 United Commercial Bank Ltd. 2,096,700 0.16%
8 Prime Bank Ltd. – Investors‘ A/C 1 1,932,302 0.14%
9 LankaBangla Finance Ltd. - IP A/C 1,686,225 0.12%
10 Grameen One: Scheme Two 1,549,000 0.11%
11 Rupali Bank Ltd. 1,283,800 0.10%
12 Delta Life Insurance Co. Ltd. 1,111,200 0.08%
13 Union Capital Ltd. – Investors’ A/C 1,043,651 0.08%
14 Prime Finance & Investment Ltd. - Portfolio A/C 989,653 0.07%
15 The City Bank Ltd. 975,600 0.07%
16 The Trust Bank Ltd. - IDA 973,854 0.07%
17 Grameen Capital Management Ltd. Investors’ A/C 949,100 0.07%
18 ICB Unit Fund 826,200 0.06%
19 Trust Bank 1st Mutual Fund 665,200 0.05%
20 Sonali Bank Ltd. 629,800 0.05%

Total 1,262,890,739 93.52%

(as per CDBL records)

16/17
Organogram & Management

Organogram & Management

Board of Directors
Board
Audit Committee
Delwar Hossain
Azad*
Financial Services

Mustaque Ahmed*
Strategy
Tore Johnsen
Emadul Hannan*
Chief Executive
Internal Audit
Officer
Serajus Saleheen*
Wholesale Business
**Ishtiaq Hussen
Chowdhury* Raihan Shamsi
Stakeholder Deputy CEO Arne Viggo
Relation Aronsen*
Sourcing
Hossain Sadat*
Company Secretary

Kazi Monirul Kabir Mahmud Hossain

Tanveer Mohammad Arild Kaale Raihan Shamsi Arnfinn Groven
Chief Chief
Chief Technology Chief Marketing Chief Financial Chief People
Communications Corporate Affairs
Officer Officer Officer Officer Officer Officer

* Not a member 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.
Message
from the Chairman
Dear Shareholders,

Grameenphone passed another successful year as a result of the dedicated efforts of its highly skilled employees and support

Message from the Chairman

of the shareholders. Since the IPO was floated in 2009, our new shareholders have also shown their trust in us by staying with
the Company in a large number. The share price remained stable even with the occasional instability in the market.

The Company has seen gradual increase in revenue but due to higher subscriber acquisition cost, EBITDA margin was lower
compared to 2009. The higher subscriber acquisition cost was mainly driven by high SIM tax, which has remained as the
biggest barrier to the growth of mobile telephone industry in Bangladesh.

Nonetheless, at the end of 2010, the number of subscribers has reached near 30 million, which translates to around 44% of
market share.

To provide quality products and services to this huge number of subscribers, your company will continue to invest in Bangladesh.
Since its inception, the Company has invested BDT 15,796 crore to make an infrastructure spread around the country. It has
invested BDT 846 crore alone in 2010.

As a responsibale corporate house in Bangladesh, in 2010 Grameenphone has paid to Bangladesh Government BDT 3,344
crore as direct taxes, VAT and duties, and in fees paid to the Bangladesh Telecommunication Regulatory Commission (BTRC).
Additionally, Grameenphone paid another BDT 371 crore through commercial agreements with the Bangladesh Railway (BR),
Bangladesh Telecommunications Company Limited (BTCL) and withholding Taxes.

Happily, the Grameenphone network presently covers almost the entire population with more than 13,000 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.

In 2010, your company has formed a subsidiary company named Grameenphone IT Ltd., which is an international B2B
company with a profit balance and stable corporate clienteles right from day one.

During the year, infrastructure sharing has become a steady revenue source. All major mobile operators and WiMax operators
signed agreements with Grameenphone to share our resources. This practice has enabled all parties to optimize their resource
utilization and minimize cost of network deployment as well as of operations and maintenance.

Some developments in regulatory arena were somewhat unsettling for the telecom sector. The amendment to Telecom Act
2001 introduced some nontransparent regulations and abnormally high fines, which are not conducive for further investment.
The license renewal guidelines drafted by BTRC also raised serious concern among the operators.

I hope that the government will do everything to maintain a level playing field and an investment friendly environment. Mobile
phone technology is the main instrument for implementing the vision of Digital Bangladesh. Any barrier to the growth and
business continuity of this industry will be detrimental to the timely implementation of Digital Bangladesh.

At the end, I would like to thank you, our valued shareholders for your support which is helping this company to remain an
innovative and dynamic organization.

Sigve Brekke
Chairman

26/27
Message
from the CEO
Corporate Governance

Corporate Governance
in Grameenphone
In the fast-paced and versatile world of telecommunications, vibrant
and dynamic Corporate Governance practices are essential ingredient
to success. Grameenphone believes in continued nurturing and Grameenphone Governance

improvement of corporate governance. This in turn has led the Company

to commit considerable resources and implement internationally

Technology
Strategy

Process
People
accepted Corporate Standards in its day-to-day operations.

Goal
Being a public limited company, the Board of Directors of Grameenphone
Commitment Transparency Accountability Compliance
has a pivotal role to play in meeting stakeholders’ interests. The Board of Community Economy Authority Industry Culture
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 endeavour to maintain compliance of all laws of Bangladesh and all internally documented regulations,
policies and procedures.

Grameenphone is a transparent company and maintains highest level of integrity and accountability practised on a global standard.

Board Organization & Structure

a) Role of the Board
The Directors of the Board are appointed by the Shareholders at the Annual General Meeting (AGM) and are accountable to the
Shareholders. The Board is responsible for guiding the Company towards accomplishment of the goals 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 good governance and effective control of Company activities. In
addition to 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.

b) Board Composition
The Board in Grameenphone is comprised of nine Directors, 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 provision of the Articles of Association (AoA) of the Company, the Board of Directors has appointed an
Independent Director to the GP Board in 2010. We believe that our Board has the optimum level of knowledge, composure
and technical understanding of our business which, combined with its diversity of culture and background stands as the
perfect platform to perform and deliver.

c) Board Meetings

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

30/31
 d) Division of work for the Board and Chief Executive Officer (CEO)

The roles of the Board and Chief Executive Officer are separate and delineation of responsibilities is clearly established, set out in
Corporate Governance

writing and agreed by the Board to ensure transparency and better corporate governance. To that end, GP has also adopted
“Governance Guidelines for Chief Executive Officer”. The CEO is the authoritative head for day-to-day management in GP. He acts
to reasonably ensure that GP develops and conducts business as per the Articles of Association, decisions made by the Board and
shareholder, as well as according to Grameenphone Policies and Procedures, and applicable regulatory legislations.

Board Committees

Board of Directors

Health, Safety,
Human Resources
Audit Committee Treasury Committee Security and
Committee
Environment Committee

a) Audit Committee

The Grameenphone Audit Committee was established in late 2008 and has jurisdiction over Grameenphone and its
subsidiaries. The Audit Committee is comprised of three members of the Board including the 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 discharging its supervisory 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 Codes 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 discharging
its supervisory responsibilities with respect to Company’s Human Resources policy, including employee performance, motivation,
retention, succession matters, rewards 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 Secretary
The Corporate Governance Guidelines issued by the Securities and Exchange Commission require a company to appoint a full

Corporate Governance
fledged Company Secretary, as distinct from other managers of the Company. In pursuance of the same, the Board of Directors
has appointed Company Secretary in GP and thoroughly defined his roles & responsibilities. In GP, among other functions, the
Company Secretary:

 performs as the bridge among the Board, the Management and the Shareholders on strategic and statutory
decisions and directions.
 acts as a quality assurance agent in all information streams towards the Shareholders/Board.
 is responsible for ensuring that appropriate Board procedures are followed and advises the Board on Corporate
Governance matters.
 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 business activities of the Company as well as to the interest of the investors.

Management Team
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 Managers across the Company. The CEO is the leader of the team. Management Team
endeavours 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) Beyond Budgeting Management Model

Beyond Budgeting 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 Beyond Budgeting
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 drives 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 related 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.

32/33
 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
Corporate Governance

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 specifically 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 financials
of the Company.

e) Internal Audit
Internal Audit supports the Company to achieve its objectives by bringing a systematic and disciplined approach to
evaluate and improve the effectiveness 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 administratively to the Chief Executive Officer.

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-based 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 ensure
achievement of internal audit deliverables.

f) Internal Control
Corporate Governance is on its strong foot in GP supported by sound internal control system in pursuance of Sarbanes
Oxley Act. The partnership efforts of the Board of Directors, Management and Employees of the Company have made the
company SOX successful since 2006. As a good business practice, Sarbanes Oxley (SOX) Act is a dominant guiding
principle of the Company to attain Internal Control over Financial Reporting (ICFR) consisting of complete, valid and
accurate information while protecting its access to the right person.

After the Company’s enlistment with the Stock Exchanges, the reasonable assurance of operational efficacy, reliable
financial reporting and legal compliance have become more crucial which is persistently enforced by sound internal
control system.

SOX guidance is a continuous process of achieving the objective of being ‘good to great’ by ensuring:

 Better quality and output from defined significant business processes having financial impact
 Job done right at the first time
 Good, consistent processes
 System in place than person in place
 Trust towards the capital market
 Tangible benefit from strong ICFR efforts
 Less error in financial reporting

g) Risk Management
Risk Management at Grameenphone is concerned with earning competitive returns from the Company’s various business
activities at an acceptable risk level. It supports the Company’s competitiveness by developing a culture, practice and
structure that systematically recognize and address future opportunities whilst managing adverse effects (threats)
through recognizing risk and acting appropriately upon it. The Company has well defined risk management policy,
procedures and processes to mitigate strategic and enterprise level risks.
 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
Corporate Governance

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 initiating the same.

k) Investor Relations (IR)

As the largest public listed corporate house in Bangladesh, Grameenphone always pays great importance to the investor
community and their various information requirements. With a vision of establishing the most effective two way
communication between the investors and the Company, a dedicated Investor Relations department started its journey
in 2010. IR as a specialized department has maintained contact with local and international investors, analysts, market
experts, regulators and financial community on proactive basis to communicate the pulse of the Capital Market to the
management throughout the year. Notable events that IR conducted during the year were: workshop for financial
journalists on capital markets, first ever international analyst meeting, launching of a dedicated investor relations
website, quarterly financial publications and press conferences.

l) Communications with Shareholders

We believe good corporate governance involves openness and trustful cooperation between all stakeholders involved in
the Company, 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 are also posted at Company’s website
 Price Sensitive Disclosure and other disclosures to the SEC, Stock Exchanges and general shareholders; and
 Company’s website, where the Company announcements, media releases, previous year’s results etc. are posted
under the Investor Relations 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 and also are able to make informed decisions.

Grameenphone believes in transparency and accountability to society as a whole through establishment of efficient and
effective Corporate Governance procedures. It also believes that Corporate Governance is a journey and not a destination
and it needs to be continuously developed, nurtured and adapted to meet the changing needs of a modern business as well
as the justified expectations of our investors and other stakeholders.
Corporate Social Responsibility

Corporate Social Responsibility

Partnership which strives to achieve common economic and social goals
At Grameenphone, we acknowledge the complementary relationship and interdependency between responsibility and
commercial interest. Our strategic ambitions and the country’s development issues are mutually inclusive, and hence, they
cannot be treated in isolation.

We believe good business is good development and vice versa. As the business grows, it generates positive economic and social
impact in the form of beneficial services, jobs and contributions to the National Exchequer. Likewise, good development equals
good business. Thus, our relationship with Bangladesh is built on a partnership which strives to achieve common economic and
social goals.

When the future is shared, so is the responsibility to perfect it. We believe, we have important contributions in order to ensure
continued growth and development of Bangladesh. Through our commercial presence and our corporate initiatives, we aim to
aid in reaching the development targets set for the country.

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

Health
Safe Motherhood and Infant Care Project
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 disadvantaged pregnant mothers and infants through 320 Smiling Sun clinics located in 61 districts
around the country. From inception up to November 2010, 1,765,088 services have been provided to the economically
disadvantaged mothers and infants under this program. Four clinic-on-wheels and ten 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 as well as to facilitate home delivery by skilled birth attendants.
Under the project, 15,976 deliveries had been conducted by skilled professionals.

Free Eye Care Camps

Grameenphone, jointly with Sightsavers International, organized free Eye Camps to ensure eye-care services since 2007. In
total, 24 such free eye-camps have been organized throughout the country and a total of 36,327 patients were given free
eye care support, among them 4,743 patients were administered Intra Ocular lens or cataract surgeries.

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

Alokdeep, Non-Formal Primary School cum Cyclone Shelter

Grameenphone, as part of its rehabilitation plans in the SIDR affected areas, provided financial assistance to build four
education center-cum-cyclone shelters in the southern belt of the country. These cyclone shelters are used as non
formal primary school throughout the year to provide non-formal primary education to underprivileged children of the
locality.

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 Five Years’
Five Years’ Financial Summary

Financial Summary

2010 2009 2008 2007 2006

Consolidated
Operational Results in million BDT
Revenue 74,733 65,300 61,359 54,303 45,640
Gross Profit 38,730 32,222 28,667 29,946 26,962
Operating Profit 20,207 20,518 15,350 16,287 18,195
Profit before tax 20,913 18,596 11,579 13,535 17,020
Net Profit after tax 10,705 14,968 2,984 3,060 7,484
Financial Position in million BDT
Paid-up Capital 13,503 13,503 12,152 2,430 2,430
Shareholders' equity 48,032 50,154 27,588 26,111 24,509
Total assets 109,502 109,162 108,194 88,461 66,757
Total liabilities 61,470 59,008 80,606 62,350 42,247
Current assests 30,802 22,182 14,430 6,851 10,442
Current liabilities 44,642 38,952 50,231 36,445 23,568
Non current assets 78,700 86,981 93,765 81,610 56,314
Non current liabilities 16,828 20,056 30,375 25,905 18,680
Financial Ratios
Current Asset to Current Liability 0.69 0.57 0.29 0.19 0.44
Debt to Equity 0.11 0.14 0.68 0.63 0.32
Gross Profit Margin 52% 49% 47% 55% 59%
Operating Profit Margin 27% 31% 25% 30% 40%
Net Profit Margin 14% 23% 5% 6% 16%
Return on Equity 22% 38.5% 11.1% 12.1% 35.0%
Return on Total Assets 10% 13.8% 3.0% 3.9% 12.9%
Ordinary Shares Information
Ordinary Shares outstanding (in million) 13,503.00 13,503.00 12,151.75 56.52 56.52
Face Value per share 10 10 1 43 43
Cash Dividend on paid up capital 120% 60% 13% 62% 60%
Dividend payout 151% 54% 53% 49% 19%
NAV per Share * 35.57 37.14 22.70 21.49 20.17
Net Operating Cash Flow per Share ** 23.16 24.77 20.24 19.86 21.53
Earnings Per Share** 7.93 12.08 2.46 2.52 6.16

* Based on Tk. 10 equivalent ordinary share outstanding at December 31.

** Based on weighted average number of share of Tk. 10 each.

 Revenue (Million BDT) Operating Profit (Million BDT) NPAT (Million BDT)

Five Years’ Financial Summary

74,733 14,968
65,300 20,518 20,207
61,359
18,195
54,303 16,287 10,705
15,350
45,640
7,484

3,060 2,984

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Capex (Million BDT) Total Assets (Million BDT) Total Equity (Million BDT)

35,763 108,194 109,162 109,502

50,154
48,032
88,461
27,351

21,656 66,757
26,111 27,588
24,509

10,369
8,456

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Net Operating Cash Flow/Share (BDT) NAV/Share (BDT) EPS (BDT)

37.14
35.57 12.08
24.77
23.16
21.53
19.86 20.24

21.49 22.70 7.93

20.17
6.16

2.52 2.46

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

ROA % ROE % Subscriber ('000)

13.8% 38.5% 29,970

12.9% 35.0%
23,259
9.8% 20,993
21.9% 16,483

10,759
3.9% 12.1% 11.1%
3.0%

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Market Share % ARPU (BDT)* AMPU (Minutes)*

466
309 306
50.1%
48.0% 47.0% 279
44.4% 43.7% 252
329
216
262 250
231

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

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

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 Financial Review - 2010
Financial Review

Grameenphone has set a new benchmark for the telecom industry with its aggressive subscriber acquisition and hefty
revenue generation in 2010. Even in fierce market competition and heavy SIM tax burden, Grameenphone has managed to
add more than 6.7 million subscribers. Emergence of new entrant and belligerent price war in the market could not cast a
shadow over Grameenphone’s performances.

Grameenphone has diversified its business by forming an IT company, Grameenphone IT Ltd. to give a way to the ‘Digital
Bangladesh’. Side by side, Grameenphone has strengthened its rural footprint through new product ‘Baadhon’ bundled
with low cost handsets and continued to be top on the innovation front through segmented price plans with migration
facility, mini-packs for economy internet users and services like Bill Pay, e-ticketing and vehicle tracking.

Grameenphone’s cost optimization initiatives through operational excellence program as well as opting for cost-efficient
network solutions through swapping of assets with Huawei have played a constructive role.

Regulatory authorities have played a pivotal role in business environment with new directives and guidelines such as SMS
tariff, toll-free hotline and likewise.

Subscriptions

 Subscriber base reached almost 30 million at the end of 2010. 6.71

29.97

 During the year, subscription base increased by 29% with 6.7 million additions. 23.26

 Active internet users increased to 2.6 million from 1.4 million in 2009.
 In the competitive market, GP’s subscriber market share stood stable at around 44%.
2009 2010

Revenue
 Total revenue increased by 14% (BDT 943 crore) mainly due to growth in traffic revenue driven by subscription
growth and revenues from sale of GP branded handsets and EDGE modems. 943 7,473

 Impressive 64% growth in data revenues against 82% increase in active users, mainly driven by economy 6,530

mini-packs.
 New segmented price plans designed as per the users’ needs and migration facility well-received by the
subscribers. Strengthened rural footprint by “Baadhon” product bundled with very low cost GP branded 2009 2010
handsets and extended distribution network.

Operating Expenditure
970 3,779
 Total operating expenditure in 2010 increased by 35% (BDT 970 crore) from 2009 mainly due to higher 455 680

subsidy (BDT 455 crore), commissions (BDT 116 crore), SIM card and cost of device (BDT 108 crore), rent, 2,810
226
515
3,099

electricity and maintenance cost (BDT 90 crore) and revenue sharing (BDT 43 crore). 2,584 Subsidy

 A total savings of BDT 270 crore have been achieved through the operational excellence initiatives
during the year.
2009 2010

Net Profit After Taxes

 Lower net profit after tax for the year 2010 compared to 2009 was mainly driven by heavy subsidy of
BDT 680 crore, partly offset by revenue growth.
1,497 (426)
 The 2009 net profit after tax was higher due to a positive adjustment of BDT 412 crore in income tax
after successful listing into the stock exchanges. Without this adjustment, the 2009 net profit after 12.08
EPS
1,071

tax was BDT 1,085 crore.

7.93
 EPS of 2010 (BDT 7.93) was lower than that of 2009 (BDT 12.08); yet it is considered reasonable in
the competitive environment where SIM tax has restricted EPS growth. 2009 2010

Total Assets
 Total asset base increased marginally by BDT 34 crore between 2009 and 2010 mainly due to higher 34
cash generation from operation and higher inventory build-up of handsets and SIM card in line with 10,916 10,950

higher sales target.

 However, this increase in assets was partly offset by higher depreciation and amortization expenses
charged on existing asset base during the year.
 Capital expenditure during 2010 was BDT 846 crore compared to BDT 1,037 crore in 2009. 2009 2010

Total Liabilities
246

 Total liabilities increased by BDT 246 crore during the year mainly on account of payables against 5,901
6,147

income tax and SIM tax. The increase was partly offset by settlement of long term borrowings obligation
and reduced deferred tax liabilities.

2009 2010
 Directors’ Report

Directors’ Report
For the year ended December 31, 2010

Dear Shareholders,
On behalf of the Board of Directors and Management, I welcome you all to the 14th Annual General Meeting (AGM) of
Grameenphone Ltd. (GP). We are very delighted to place herewith the Directors' Report and the Auditors' Report together with
the Audited Financial Statements of the Company for the year ended December 31, 2010 thereon, for your valued
consideration, approval and adoption.

2010 – Another Year of Accomplishment

GP had another successful business year in 2010 achieving more than 6.7 million new subscribers. The total subscribers’ market
share in the year stood at 43.7 % with the 29.97 million subscribers’ landmark. When we started our journey in March 1997, this
was a dream figure and very few people could imagine that this would ever be accomplished. At the same time, our revenue is
up with double digits in percentage growth and we have a consistent profit throughout the year in spite of challenging macro
economic conditions. However, SIM tax remains the main hurdle to mobile industry growth, hindering further investment as well
as the progress of the Government's much envisaged digitalization of Bangladesh to a great extent.
Superior service quality and innovative products and services have given us a competitive edge over the market. In 2010, we
have strengthened our rural footprint through the introduction of new product ‘Baadhon’ bundled with low cost handsets. We
have diversified our business portfolio through infrastructure sharing and formation of a wholly owned subsidiary company
“Grameenphone IT Ltd.”
GP completed a full year 2010 as a listed company. GP was seen as benchmark for its compliance, transparency and service to
its close around 100,000 shareholders. Amongst, the most significant event of the year was holding flawless AGM of the largest
shareholder base of the country in June 2010. GP was also commended for completing dividend disbursement process in the
quickest possible time. Those all reveal the Company's ability and candid commitment to deliver to its shareholders.
GP has been contributing significantly to heritage, culture, sports and welfare through its various initiatives. We have been
maintaining high standards in Corporate Responsibility, Health, Safety, Security and Environment (HSSE) and Employee
welfare. We have further enhanced our cooperation with Government such as sponsored the 11th South Asian Games, Access to
Information (A2I) Programme and other initiatives.

2010 - Socio Economic Environment

On the way to new and digitalized Bangladesh, 2010 was the year of bounce for the global economy as well as for Bangladesh.
Despite acute power & energy crisis and infrastructure deficiency, most of the economic indicators showed positive trend
throughout the year except some volatility in the money and capital markets and inflation at the end. The country registered a
GDP growth of 5.8% in the fiscal year 2009-2010 driven mainly by the services and industrial sectors. An optimistic economic
growth has, however, been envisaged for the coming years by the experts and analysts. With the support from the international
bodies, the Government strives to maintain the ongoing trend of economic stability in Bangladesh.
The year 2010 witnessed a number of hiccups in commodity markets that created some challenges for the fixed and
low-income groups. The Consumer Association of Bangladesh (CAB) has said that the prices of some major food items have
increased by more than 20 percent year on year basis. Managing inflation is emerging as a major macroeconomic challenge.
Bangladesh’s growth prospect would depend on large and quick investments in power, energy, transport infrastructure and tax
reforms etc.

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 Telecommunication Industry Scenario
As per the Global Information Technology Report 2009-2010 of World Economic Forum, Bangladesh in terms of network
Directors’ Report

readiness has moved up from global ranking at 130 to 118. This readiness is mainly attributed to the mobile sector of Bangladesh
which has connected and empowered people and made revolutionary changes in their lifestyles. It has brought basic 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 68.6 million as of December 2010, whereas the tele-density for the
mobile industry reached approximately 40%. Six mobile phone operators of the country added 16.2 million customers in 2010.
Despite rapid growth over the last 5 years, Bangladesh remains as one of the lowest in Internet penetration and the scenario is
likely to change once the 3G technology is introduced in Bangladesh. Currently Internet penetration is soaring around 6.5%.

Regulatory Environment
In terms of regulatory environment, 2010 has been a very eventful year. There has been quite a few regulatory activities
changing the business environment significantly.
The 2010 saw the amendments in Bangladesh Telecommunication Act 2001 (BTA), despite opposition by the telecom industry.
These amendments have increased the risk of doing business in the telecom sector in Bangladesh.
Towards the end of 2010, BTRC has proposed a renewal framework to Ministry of Posts and Telecommunications, without
consultation with the mobile sector operators. Proposed renewal fees are very high and a total of USD 1.6 billion is indicated to
be recovered from four renewing mobile operators. It is also indicated that GP would be paying more than other operators
because of its business success. Renewal framework also contains quite a few non-price but significant elements, without
adequate details e.g., Unified Licensing, Significant Market Power (SMP), Mobile Virtual Network Operator (MVNO) etc., which
adds to the already prevailing uncertainty.
There is only slow movement on 3G. BTRC issued an Expression of Interest (EoI) in later part of December 2010 seeking interest
of international consultants to prepare a 3G framework, with an indication that auction would be the mode of allocation of
spectrum and license. This shows that 3G deployment probably will be further delayed in the country.
Like previous years, despite best efforts of the mobile operators, the Government did not reduce SIM tax in 2010. It makes
difficult to deliver mobile services to the poor people especially in the rural areas.
A stable and long term telecom policy is badly needed to stimulate industry growth and enable the mobile industry to make
further investments in new services and technologies.

2010 - Capital Market Overview

In 2010, the total turnover of Dhaka Stock Exchange (DSE) was a record of BDT 4,009.9 billion compared to BDT 1,475.3 billion
in 2009, an increase of 171.80%. The total market capitalization in 2010 was BDT 3,508 billion, posting an 84.81% rise from that
in 2009. Securities and Exchange Commission (SEC) remained vigilant throughout the year. The regulator changed and/or
modified securities rules time to time in 2010 in order to maintain discipline in the market. The country’s capital markets
witnessed a sharp fall on December 19, 2010. The DSE index fell by 551 points or 6.71%, leading to angry protests from retail
investors forcing regulator to withdraw certain regulatory directives. The number of Beneficiary Owners (BO) account has nearly
doubled to 3.3 million in 2010. The regulator approved Initial Public Offerings (IPO) of 8 companies, gave go-ahead to 2
companies with direct listings while 25 companies offered right shares.
On October 28, 2010, around 66 million placement shares of GP were released from “lock-in”. Despite expiry of lock-in, no
significant fluctuation was noticed in GP share price. GP shares soared in early February 2010 and then came down following
SEC directive to place GP in spot market. It has been on a gradual decline since then with periodic upward movements from time
to time. Subsequently, GP shares were reinstated to regular trading on December 21, 2010. At the beginning of 2010, GP share
price was BDT 187.0 on DSE and BDT 188.6 on Chittagong Stock Exchange (CSE) while the highest share price was BDT 395.0
on DSE and BDT 396.5 on CSE during the year. GP’s market capitalization as of December 31, 2010 was BDT 331.9 billion on DSE
representing 9.5% of the total market capital of DSE.

Innovative Products & Services

Mobile telephony is playing a major role around the world to bring positive changes. GP has already taken modern
telecommunications to the easy reach of the common people around the country. We are dedicated to continuous
improvement to develop innovative and useful products & services to keep our customers close. Over the past 14 years, the
Company has demonstrated its commitment as such to connect people, keeping them close to their dreams and aspirations
through our various services. Those connections deepen relationships, strengthen society and accelerate economic growth of
the country. During the year under review, we launched a new package named “Baadhon” along with GP branded low-cost
handset designed to serve the rural population of Bangladesh, and “Ekota” package to meet the business needs of small
enterprises. As part of new innovations, GP launched Dynamic Pricing, Sachet (bundle minute) offer for the prepaid customers,
“Team Tracker” and “Buddy Tracker” for location tracking through mobile device. We also commercially launched “Vehicle
Tracking” system this year.

Directors’ Report
As part of GP’s continuous efforts to provide maximum benefit to its subscribers, in 2010, we have announced four price
packages – Shohoj, Aapon, Bondhu along with djuice. These have been developed for the prepaid subscribers offering
interchangeability and easy migration. The new price plans bring a simplicity that identifies usage patterns, and promises the
best solution and the best value to GP’s subscribers.

Customer Service – Magic of Closeness

Serving the customers with increasing passion every day is crucial to our success. GP recognizes that “Customer is King”. Our
strategic initiative aims not only to delight customers consistently by offering better products and services, but to win their
loyalty by building a meaningful and memorable total experience. 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, GP is in touch with the subscribers round the year through various customer touch points such as 18 Grameenphone
Centers (GPC) and 70 Grameenphone Center Franchises (GPCF) – a flagship sales and service point under one roof - especially
designed to cater the needs of the subscribers. Moreover, GP has an extensive state-of-the-art distribution network and
infrastructure with more than 120,000 retailers spread across the country with whom more than 7 million subscribers interact
for purchasing GP products every day. Our distribution strength is with 180,000 Point of Sales (POS) is organized by around 97
distributors.

New Business by using GP Competence

i) Grameenphone IT Ltd.
GP has always been at the cutting edge of innovation in Bangladesh and we will continue to develop new ideas to improve
people’s lives. Through the creation of Grameenphone IT Ltd. (GPIT), GP has shown significant commitment to help
develop Bangladesh.
GPIT is a fully-owned subsidiary of GP, and was incorporated on January 28, 2010. GPIT began its operations on April 01,
2010 and has been managing GP’s IT infrastructure, services and solutions. GPIT presently has approximately 359
employees, and will continue to grow in the future.
We see great opportunities for the subsidiary in local and global markets as an IT company. Within the Bangladesh market,
we plan to slowly diversify our capabilities into other industry segments with special focus on the banking and finance
industry. We have also ventured out of Bangladesh by forming partnership with global IT companies. Within Telenor
Group, we have already signed agreement with Telenor Next, Telenor Broadcast and the Telenor Group.
ii) Wholesale Business - a new dimension added
The infrastructure sharing scheme, under wholesale business, was another new dimension added during the year for GP
aiming to make optimum use of the existing resources. BTRC, through directive, made infrastructure sharing compulsory
for the telecom operators of Bangladesh. In 2010, we have taken the step forward. Our initiative will ensure sustainable
utilization of national resources. In this regard, we have signed agreements with Augere Wireless Broadband Bangladesh
Limited; Axiata (Bangladesh) Ltd. (Robi); Orascom Telecom Bangladesh Ltd. (Banglalink); Banglalion Communications Ltd.;
Airtel Bangladesh Ltd. (formerly known as Warid) and Drik Alokchitra Granthagar Limited.
iii) Financial Services
GP has long set out to improve people's lives through the mobile phone infrastructure. One area of increasing priority is
basic transactional services and looking at new ways that the mobile can contribute to making bill payment, purchasing
and other basic transactional services easy and more convenient for the common people. Our tested technology, large
subscriber base and distribution network allow us to bring mobile transactional services to more people in more areas. In
2010, we observed significant acceptance from people and growth on our bill payment, train & sports ticketing and
charitable lottery purchase using mobile phones. With GP's BillPay service, customers can pay their various utility bills
through the subscriber’s mobile or through GP authorised outlets. We also introduced our new brand “MobiCash” for
transactional services this year. In future, GP will be introducing other innovative transactional and mCommerce services to
ensure ultimate convenience and comfort for the people.

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 Continuous Investment
We know that mobile subscribers are always looking for new and innovative products & services and better quality network that
Directors’ Report

fit their needs and offer real value. Keeping this in mind Grameenphone continued to invest in its network to deliver a quality
network experience and to maintain its leadership position in the industry. Our cumulative investment reached BDT 157.96
billion (BDT 15,796 crore) where BDT 8.46 billion (BDT 846 crore) was invested to enhance data capacity and quality of its
nation-wide network in 2010. With 433 new additions in 2010, accumulated number of BTS stood at 13,097 in 7,237 locations all
around the country.

Our Employees - Our Pride

The total strength of GP employees stood at 4,637 at the end of the year. GP recognizes the importance of attracting and
retaining skilled and motivated employees with a strong commitment to the business in line with the Company’s ethical visions
and values. 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. Inspired by Government moves, GP has extended female Maternity Leave from
existing 4 to 6 months and has been running daycare facilities for children of the employees. A performance driven corporate
culture along with opportunities for career growth has made GP a gender balanced and preferred employer in the Bangladesh
job market. GP received the “Best Employer Award for 2010” from BDjobs.com - the largest online job site in Bangladesh.

GPHouse – A new way of work

GPHouse, the new head office building of the Company was inaugurated in 2010. The architecture symbolizes futuristic vision
of GP and is the first true environment friendly building in Bangladesh. It is one of the expressions of GP’s mission to go green.
GPHouse aims to be a workplace that nurtures creativity, flexibility, innovation and transparency in its design. The building
architecture inspires and empowers employees through its open spaces and uniform seating arrangements for all. It also
provides a completely new office approach, which is 'paperless' environment with an 'open' office concept. GPHouse and its new
work environment is an important symbol for GP in its continued efforts to develop new and imaginative products and services.
GPHouse is a cost efficient building with almost double in seating capacity compared to traditional building. The energy
solutions bring down the CO2 emissions by 60% compared with the other traditional buildings.

Corporate Social Responsibility – Commitment towards the Society

GP considers itself a socially responsive, respectful and an abiding company. GP's mobile services are in many ways a social
service itself, creating closeness in families and communities, and enabling business improvements and new business
development. Corporate Responsibility is a complementary combination of responsible business practices and corporate
behaviour and externally focused initiatives to create value for societies and communities. 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.
GP is the fanatic sponsor of Bangladesh National Cricket Team. In 2010, 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. GP joined hands with Campaign for Popular Education (CAMPE) to promote 1GOAL campaign during
world-cup football in 2010. This year, we also entered into sponsorship agreement with Bangladesh Football Federation (BFF)
for “Federation Cup Football League” and “Bangladesh League” – the professional football leagues of the country.

Our Climate Strategy - A way to Green World

Our climate is changing very fast and affecting the earth adversely with its consequences. Although Bangladesh is responsible
for as low as 0.1% of the world carbon dioxide emission, it will be one of the worst-hit countries by suffering consequences
caused by climate change. The Intergovernmental Panel for Climate Change (IPCC), in its report, mentioned that high waters
and salinity are likely to displace millions of Bangladeshi people, and make them climate refugees by the end of 2050. The
green technology is gaining ground in Bangladesh as several sectors are adopting the innovations. Solar energy has emerged
strong in the market for green technology to mitigate the effects of electricity shortages at rural levels.
In this respect, GP’s Climate Strategy aims to become a Green Company by shifting towards low carbon operations, practicing
green standards internally and developing a greater momentum in the community with people. Our ambition is to reduce 30%
carbon footprint and become a Green Company by 2015. In 2010, we signed contract for implementing solar power system in
140 base stations and the installation is currently in progress. New investments in 2011 will remove all air conditioners (AC) from
base stations, reducing the overall network energy consumption by approximately 43%.

Health, Safety, Security and Environment (HSSE)

GP has been a vibrant example in Bangladesh Telecom Industry considering effective management of Health, Safety and
Security issues of employees & its value chain partners. As a responsible company, GP respects all HSSE provisions of Labour
Law as well as standards in this field and gives its best effort to provide for all employees the best working conditions and
necessary protection. Throughout the year 2010, the Company has also put greater emphasis on Supplier & Business Partners'
HSSE culture development. GP conducted more than 550 audits/inspections, and several awareness campaigns for its value

Directors’ Report
chain partners. More than 1,050 Suppliers/Vendors have signed Agreement on Responsible Business Conduct (ABC) covering
Supplier Conduct Principle (SCP) on HSSE aspects. Focus on internal HSSE culture has also been depicted through strong
initiative on implementation of Occupational Health and Safety (OHS) Management System.

Village Phone Program & Community Information Center (CIC)

Village Phone, when started in 1997, was a unique idea that brings modern mobile communication services and new business
opportunities to communities that may have been overlooked by traditional telecommunication access. This program is a
powerful symbol of how social closeness enhances life. There were 478,210 VP subscribers providing telecommunication
services in over 82,000 villages in 64 districts across the country.
Inspired by the success of Village Phone Program, GP introduced Community Information Center (CIC), where the rural people
can have access to wide range of state-of-the-art services such as Internet, voice communications and all other information
services. Around 502 CICs are facilitating internet services across the country.

Directors’ Responsibilities for Financial Statements

The Directors are responsible for the governance of the Company, and in that capacity, the Directors confirm, to the best of their
knowledge that-
(a) 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) proper books of account of the Company have been maintained;
(c) 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) the International Financial Reporting Standards and Bangladesh Financial Reporting Standards, have been followed in
preparation of the financial statements and any departure therefrom has been adequately disclosed;
(e) the system of internal control is sound in design and has been effectively implemented and monitored;
(f) there is no significant doubt upon the Company’s ability to continue as a going concern. The mobile cellular license of GP
will expire on November 11, 2011 and will have to be renewed upon fulfillment of certain terms and conditions. However,
the Management does not believe that the license will not be renewed or that the renewal will be on such terms that might
have an effect on the business continuity or assumptions of going concern of the Company;
(g) the significant deviations from the last year in operating results of the Company have been highlighted and reasons
thereof have been explained;
(h) the key operating and financial data for the last five years are annexed.

Shareholding Pattern
Shareholding patterns of the Company as on December 31, 2010 are shown in Annexure-III to this report.

Corporate Governance
In the fast-paced world of telecommunications, vibrant and dynamic corporate governance practices are an essential
ingredients to success. GP believes in the continued improvement of corporate governance. This in turn lead the Company to
commit considerable resources and implement international corporate standards in its day-to-day operations. In GP,
Corporate governance is ensured through a structured process that directs, controls and holds the organization accountable.
Being a public listed company, the Board of Directors and the Management Team of GP are committed to maintaining effective
corporate governance through a culture of accountability, transparency, well-understood policies and procedures. 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.

48/49
 Enhanced Value of Shareholders’ Investment
In the year under review, Revenue was BDT 74.7 billion (BDT 7,473 crore) with 14.4% increase compared to the previous year.
Directors’ Report

The growth in revenue was mainly in voice and data revenues due to subscription growth and revenues from sale of GP branded
handsets and data cards. Impressive growth in data revenues (64%) partially contributed to this revenue growth. Net Profit
After Tax (NPAT) was BDT 10.71 billion (1,071 crore) with 14.3% margin compared to BDT 14.97 billion (BDT 1,497 crore) with
22.9% margin of the previous year. The fall was mainly due to the subsidy on SIM tax of BDT 6.8 billion (BDT 680 crore), partly
offset by revenue growth. This has also pushed the EBITDA margins down to 49.5 % for 2010 compared to 57.0 % of 2009.
Earnings per share (EPS) for 2010 stood at BDT 7.93 compared to BDT 12.08 for 2009. Notably, the 2009 EPS was higher due
to a positive adjustment of BDT 4.12 billion (BDT 412 crore) in income tax after successful listing on the stock exchanges.
The Directors take pleasure in reporting the financial results of the Company for the year ended December 31, 2010 and
recommend the appropriation as mentioned in the “Appropriation of Profit (excluding Grameenphone IT Ltd.)” table below:

2010 2009
Profit available for appropriation
Profit/ (Loss) after tax 10,579,176,467 14,968,166,256
Add: Un-distributed profit brought forward from previous year 26,655,044,251 13,266,605,231
Total amount available for appropriation 37,234,220,718 28,234,771,487
Appropriation
Final Dividend Paid for Previous year (8,101,800,132) (1,579,727,236)
Interim Dividend Paid for Current year (4,726,050,077) -
Closing Retained Earnings at year end (before proposed Final Dividend) 24,406,370,509 26,655,044,251
Proposed Final Dividend for the year 2010 (85% cash) (11,477,550,187) (8,101,800,132)
(in 2009: 60% cash)
Retained earnings after proposed dividend 12,928,820,322 18,553,244,119

Growth in Contributions to the National Exchequer

Along with its steady revenue growth, GP has been the largest contributor to the National Exchequer in the last few consecutive
years. The collective contribution to the National Exchequer from inception up to December 2010 was BDT 185 billion (BDT
18,502 crore). During 2010 alone, the Company contributed BDT 37.15 billion (BDT 3,715 crore) to the National Exchequer
compared to BDT 30.5 billion (BDT 3,050 crore) of 2009, which represent about 50 % of GP’s total revenue of 2010. Notably,
despite having lower corporate tax rate, GP has paid BDT 9.0 billion (BDT 900 crore) in corporate taxes during 2010, which was
BDT 2.5 billion (BDT 250 crore) more compared to 2009. Such contribution is expected to grow further with the expansion and
growth of the Company in the days ahead.

Dividend
For the year ended December 31, 2010 the Board of Directors paid an Interim Cash Dividend @ 35% of the paid-up capital
amounting to BDT 4,726,050,077 which was BDT 3.5 per share of BDT 10.00 each. The Board of Directors are pleased to
recommend a Final Cash Dividend @ 85% of the paid-up capital amounting to BDT 11,477,550,187, which is BDT 8.5 per share
of BDT 10.00 each out of the undistributed profits of the Company for the year 2010, inclusive of the Interim Dividend of 35%
paid already, thus making a total dividend of BDT 12.00 per share amounting to BDT 16,203,600,264 for consideration and
approval of the Shareholders for distribution.
The above dividend recommendation 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 Meeting

The composition of the Board of Directors who held office during the year was as below:
1. Mr. Sigve Brekke, Telenor Mobile Communications AS, Director & Chairman
2. Ms. Hilde Tonne, Telenor Mobile Communications AS, Director
3. Mr. Per Erik Hylland, Telenor Mobile Communications AS, Director
4. Mr. Knut Borgen, Telenor Mobile Communications AS, Director
5. Mr. Snorre Corneliussen, Telenor Mobile Communications AS, Director
6. Ms. Nurjahan Begum, Grameen Telecom, Director
7. Mr. M. Shahjahan, Grameen Telecom, Director
8. Mr. Md. Ashraful Hassan, Grameen Telecom, Director

Directors’ Report
9. Dr. Jamaluddin Ahmed FCA, Independent Director

During 2010, a total of 9 (nine) 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, the following Directors of the Board will retire
at the Annual General Meeting. They are, however, eligible for re-appointment:
1. Mr. Sigve Brekke
2. Mr. Per Erik Hylland
3. Mr. M. Shahjahan

Appointment of Chief Executive Officer

The Board of Directors has appointed Mr. Tore Johnsen as the new Chief Executive Officer (CEO) with effect from March 01, 2011
in place of Mr. Oddvar Hesjedal, who served the Company for around three years. On this occasion, the Board would put on
record its highest esteem and appreciation for the valuable services rendered by Mr. Oddvar Hesjedal as the CEO and also for
his dedication to the Company. Under his leadership, the Company has strengthened its position as a market leader with close
to 30 million subscribers. During his tenure, GP did its Initial Public Offering (IPO), and was listed on stock exchanges. The Board
also congratulates the incoming CEO Mr. Tore Johnsen and wishes him success in further developing GP’s position as the
leading Bangladeshi mobile operator.

Appointment of Auditors
As per the 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 2011 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 relevant regulatory clearance.

Risks and Concern

GP risk management includes considering both internal and external risks that persist and need to be managed. The Company
is constantly facing regulatory risks from an unstable regulatory regime. GP has well defined risk management policies and
periodic monitoring that act as an effective tool in mitigating various risks to which our businesses is exposed to in the course
of its day-to-day operations as well as in its strategic actions. In 2010, GP has launched a comprehensive Risk Management
System. This will be used to achieve appropriate infrastructure, application of logical and systematic method of establishing the
context, identifying, analysing, evaluating, treating, monitoring and communicating strategic risks. The system will enable the
company to register risk on real time basis and in accordance with risk management framework.

Diverse Awards - Mark of Recognition

The year 2010 was brilliant for GP as it won notable awards during the period. Some of them are mentioned below.
GP has received two prestigious awards in 2010 for its “Published Financial Statements/Annual Report 2009” in the category
of Communication & IT from the Institute of Chartered Accountants of Bangladesh (ICAB) and the South Asian Federation of
Accountants (SAFA). The esteemed awards have given us recognition of our demonstrated commitment to Transparency,
Accountability and Corporate Governance which will certainly strengthen the confidence of our shareholders as well as
stakeholders.
GP won the esteemed e-India Award for e-Governance/ m-Governance initiatives of the year 2010 for its Mobile Train Ticketing
Services. GP and CARE jointly won the 'Chairperson's Appreciation Award (Jury Award)' for the project “Tothyo Tori" (Information
Boat) in the category of e-Enterprise and Livelihood. Besides, GP had been awarded as one of the "Asia's Best Brand" at CMO
Asia Awards.

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 GP also won both "Brand" and "People" awards of the Telenor Group. This is for the first time in the history of the Telenor Group
that an individual Business Unit had received two accolades in the same year.
Directors’ Report

Outlook 2011
Looking ahead from successes of the last 14 years, we can reasonably expect the year 2011 to be hopeful of further growth
and progress. The Telecom industry of Bangladesh is approaching to a new era with innovation and new technology. With
the upcoming introduction of 3G, on going 2G renewal process and the prevailing regulatory environment, we would be in
new dynamics with a new player in the market. Our industry has never been so competitive and complex before. At GP, holding
on to the market leadership will be our priority no matter how challenging it is. If we can tap the rural markets with the help of
our relentless services and ever growing innovations, we believe that 2011 would be prospective for GP.
However, as said elsewhere in this report, the unpredictable regulatory environment remains as challenge for the Company to
plug in for future. In this aspect, the proposed guidelines for 2G license renewal from BTRC, will, if implemented, create an
extremely difficult situation for the mobile operators and for the financial markets. We expect that the Government will reject
this high renewal fees.

Acknowledgements
GP believes that success and progress result from concerted efforts of all the stakeholders together of a corporate
organisation. Without it, a company may continue, but certainly cannot sustain in the long run. Keeping that in mind, the Board
of Directors would like to extend its foremost regards and appreciation to the valued shareholders and other stakeholders of
the Company for their persistent support and guidance to the Company that led to the cumulative achievements. The Board
also recognises that its journey to attainments during the year was possible because of the cooperation, positive support, and
guidance that it had received from the Government of Bangladesh, Ministry of Posts and Telecommunications (MoPT),
Bangladesh Telecommunication Regulatory Commission (BTRC), Bangladesh Railway (BR), National Board of Revenue (NBR),
Bangladesh Bank (BB), 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),
GP’s bankers & financial institutions, vendors and other business partners.
Considering Customers as the king, the Board acknowledges with thanks the contribution of the valued subscribers and
customers by making GP their preferred service provider. On this occasion of success, we are also aware that the achievements
would not have been possible without the dedicated and generous support from our employees and shall also extend to them
our warmest greetings and felicitation. GP with its 14 years of uninterrupted services, promises to serve Bangladesh with a
strong commitment to stay close and meet the ever growing demand of connectivity.

Thanking you all and with best regards.

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

Sigve Brekke
Chairman

February 06, 2011

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MÖvnK †mev Ñ Kv‡Q _vKvi Avb›`

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MÖvgxY‡dv‡bi AvIZvaxb bZzb e¨emv

1. MÖvgxY‡dvb AvBwU wjt
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wRwcnvDm Ñ Kg©¯’‡ji GK bZzb AwfÁZv

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mvgvwRK `vqe×Zv Ñ mgv‡Ri cÖwZ KZ©e¨

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Avgv‡`i Rjevqy fvebv Ñ meyR GK c„w_exi c‡_
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P‡j‡Q| 2011 mv‡j Avgiv †eBR †÷kb †_‡K mKj GqviKwÛkbvi (Gwm) mwi‡q †djvi cwiKíbv MÖnY K‡iwQ, hvi d‡j mvgwMÖKfv‡e cÖvq 43% R¡vjvbx LiP Kg n‡e|

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 ¯^v¯’¨, myi¶v, wbivcËv I cwi‡ek (GBPGmGmB)
MÖvgxY‡dvb Gi Kg©KZ©v-Kg©Pvixe„›` I †PBb Askx`vi‡`i ¯^v¯’¨, myi¶v I wbivcËv wel‡q †Uwj‡hvMv‡hvM wk‡íi GK D¾¡j D`vniY| GKwU `vwqZ¡kxj †Kv¤úvwb wn‡m‡e MÖvgxY‡dvb
kªwgK AvB‡bi mKj GBPGmGmB bxwZgvjvi cÖwZ kª×vkxj I AbymiYKvix Ges Gi mKj Kg©KZ©v-Kg©Pvix‡`i Rb¨ wbivc` Kg©¯’j wbwðZ Kivi Rb¨ m‡e©vZfv‡e m‡Pó| 2010-G
cwiPvjKgÊjxi cÖwZ‡e`b

eQiRy‡o mvc−vqvi I e¨vemvwqK Askx`vi‡`i GBPGmGmB ms¯‹…wZi Dbœq‡bI †Kv¤úvwb AZ¨š— ¸i“Z¡v‡ivc K‡i‡Q| f¨vjy †PBb cvU©bvi‡`i Rb¨ 550wUiI †ewk AwWU/cwi`k©b
msMwVZ Ges m‡PZbZv m„wói Rb¨ wewfbœ cÖPviYv Pvwj‡q‡Q MÖvgxY‡dvb| f¨vjy †PBb-Gi 1,050 R‡biI †ewk mvc−vqvi/†fÛi hv‡Z GBPGmGmB bxwZgvjv Abyhvqx mieivnKvix
AvPiY bxwZgvjv (Gmwmwc) h_vh_fv‡e †g‡b P‡jb †mRb¨ Gwewm (GwMÖ‡g›U Ab †imcwÝej& weR‡bm KbWv±) Pyw³ ¯^v¶i K‡i‡Q| AKz‡ckbvj †nj_ A¨vÛ †mdwU (IGBPGm)
e¨e¯’vcbvi D‡`¨vM¸‡jvi gva¨‡g †Kv¤úvwbi Af¨š—‡i GBPGmGmB ms¯‹…wZ PP©vi cÖwZdjb N‡U‡Q|

cj−x‡dvb Kg©m~wP I KwgDwbwU Bbdi‡gkb †m›Uvi (wmAvBwm)

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Avw_©K weeiYxi e¨vcv‡i cwiPvjKgÊjxi `vwqZ¡
cwiPvjKgÊjx Zuv‡`i Rvbvg‡Z wbwðZ Ki‡Qb †hÑ
K) †Kv¤úvwbi e¨e¯’vcbv KZ…©c¶ KZ…©K cÖ¯‘ZK…Z Avw_©K weeiYx‡Z Gi Kg©KvÊ, Kvh©µ‡gi djvdj, bM` cÖevn Ges BKzBwUi cwieZ©b m¤ú‡K© h_v_© wPÎ Dc¯’vwcZ n‡q‡Q;
L) †Kv¤úvwbi wnmv‡ei h_vh_ ewnmg~n msi¶Y Kiv n‡q‡Q;
M) Avw_©K weeiYxmg~n cÖ¯‘Z Kivi mgq Dchy³ wnmve-bxwZ m½wZc~Y©fv‡e cÖ‡qvM Kiv n‡q‡Q Ges wnmv‡ei cÖv°jb Kiv n‡q‡Q hyw³m½Z I weÁ wePvi‡ev‡ai wfwˇZ;
N) Avw_©K weeiYxmg~n cÖ¯‘Z Kivi mgq Avš—R©vwZK wnmve gvb`Ê I evsj‡`‡ki Avw_©K weeiYxi gvb`Ê AbymiY Kiv n‡q‡Q Ges Zv †_‡K †h‡Kvb e¨Z¨q ch©vßfv‡e cÖKvk Kiv n‡q‡Q;
O) Af¨š—ixY wbqš¿Y c×wZ wQj ewjô Ges Zv Kvh©Kifv‡e ev¯—evqb I cÖZ¨‡e¶Y (gwbUwis) Kiv n‡q‡Q;
P) Pvjy cÖwZôvb wn‡m‡e Kvh©µg Ae¨vnZ ivLvq †Kv¤úvwbi mvg‡_©¨i e¨vcv‡i †Zgb †Kv‡bv wØav †bB; MÖvgxY‡dv‡bi †gvevBj †mjy¨jvi jvB‡m‡Ýi †gqv` 11 b‡f¤^i 2011-G †kl n‡e
Ges G‡¶‡Î cÖ‡hvR¨ mywbw`©ó kZ© c~i‡Yi gva¨‡g jvB‡mÝ bevqb Kiv n‡e| Aek¨ †Kv¤úvwbi cwiPvjbv KZ„©c¶ wek¦vm K‡i bv †h, jvB‡mÝ bevqb Kiv n‡e bv ev bevq‡bi †¶‡Î
cÖ‡hvR¨ †Kvb kZ© †Kv¤úvwbi Kvh©µg Ae¨vnZ ivLvi †¶‡Î †Kv‡bviKg we‡Nœi m„wó Ki‡e;
Q) †Kv¤úvwbi Kvh©µ‡gi djvd‡ji †¶‡Î MZ eQ‡ii Zzjbvq D‡j−L‡hvM¨ †hme e¨Z¨q i‡q‡Q †m¸‡jv eY©bv Kiv n‡q‡Q Ges Zvi KviY e¨vL¨v Kiv n‡q‡Q;
R) Kvh©µg I Avw_©K wel‡q MZ cuvP eQ‡ii ¸i“Z¡c~Y© DcvË ms‡hvRb Kiv n‡q‡Q|

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31 wW‡m¤^i, 2010 Zvwi‡L †kqvi‡nvwìs-Gi aib GB cÖwZ‡e`‡bi mshyw³: 3-G †`Lv‡bv nj|

¯^”Q I Revew`wng~jK K‡c©v‡iU mykvmb

`ª“Z MwZi †Uwj‡hvMv‡hvM we‡k¦ mdjZv AR©‡bi Rb¨ MwZkxj K‡c©v‡iU mykvm‡bi Abykxjb AZ¨š— ¸i“Z¡c~Y©| MÖvgxY‡dvb K‡c©v‡iU mykvmb e¨e¯’vi µgvMZ Dbœqb mva‡b wek¦vmx|
MÖvgxY‡dvb Zvi ˆ`bw›`b Kvh©µ‡g Avš—R©vwZKgv‡bi K‡c©v‡iU mykvmb Pvjy Kivi Rb¨ wecyj m¤ú` wewb‡qvM K‡i‡Q| MÖvgxY‡dv‡b GKwU myMwVZ cÖwµqv Abymi‡Yi gva¨‡g K‡c©v‡iU
mykvmb ev cÖvwZôvwbK cwiPvjbvi welqwU wbwðZ Kiv nq| G cÖwµqvq wb‡`©kbv, wbqš¿Y Ges cÖwZôvb‡K Revew`wn Kivi e¨e¯’v i‡q‡Q| GKwU ZvwjKvfy³ †Kv¤úvwb wn‡m‡e
MÖvgxY‡dv‡bi cwiPvjKgÊjx I e¨e¯’vcbv cl©` Revew`wnZv, ¯^”QZv I mnR‡eva¨ bxwZgvjv I cÖwµqv Abymi‡Yi gva¨‡g GKwU Kvh©Ki K‡c©v‡iU mykvmb e¨e¯’vi Abykxj‡b
cÖwZkÖ“wZe×| evsjv‡`‡ki wmwKDwiwUR A¨vÛ G·‡PÄ Kwgkb mycvwikK…Z K‡c©v‡iU Mfb©¨vÝ m¤úwK©Z GKwU we¯—vwiZ Kgc−v‡qÝ cÖwZ‡e`b mshyw³ 1-G †`Lv‡bv nj|

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G eQi ivR‡¯^i cwigvY wQj 74.7 wewjqb UvKv (7,473 †KvwU UvKv), hv MZ eQ‡ii Zzjbvq kZKiv 14.4 fvM †ewk| cÖavbZ f‡qm I WvUvi MÖvnKmsL¨v e„w× Ges †mB mv‡_
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Ki cwi‡kv‡ai ci wbU gybvdv (GbwcGwU) 2009 mv‡ji 14.97 wewjqb (1,497 †KvwU UvKv) UvKv gvwR©b 22.9%-Gi Zzjbvq K‡g 2010 mv‡j 10.71 wewjqb (1,071 †KvwU)
UvKv gvwR©b 14.3% n‡q‡Q| GB cZb cÖavbZ 6.8 wewjqb UvKv (680 †KvwU UvKv) wmg U¨v· fZz©wKi Kvi‡Y nq, hv ivR¯^ e„wׇZI cÖfve †d‡j| Gi d‡j BweAvBwUwWG gvwR©bI
2009-Gi 57.0% Gi Zzjbvq K‡g wM‡q 2010-G 49.5% nq| 2010-G †kqvi-cÖwZ-Avq (BwcGm) `uvwo‡q‡Q 7.93, 2009-G hv wQj 12.8 UvKv| GLv‡b D‡jL¨ †h,
2009-G MÖvgxY‡dvb †kqvievRv‡i mdjfv‡e ZvwjKvfy³ nIqvi ci 412 †KvwU UvKv AvqKi †_‡K Ae¨vnwZ †c‡qwQj, hvi d‡j 2009-Gi †kqvi-cÖwZ-Avq (BwcGm) AwaK
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cwiPvjKgÊjx 31 wW‡m¤^i, 2010 Zvwi‡L mgvß eQ‡ii Rb¨ †Kv¤úvwbi Avw_©K djvdj cÖKvk Ki‡Z †c‡i Avbw›`Z Ges Zuviv wb‡Pi ÔÔgybvdv eÈbÕÕ (MÖvgxY‡dvb AvBwU wjt
e¨ZxZ) mviYx‡Z D‡j−LK…Z eȇbi mycvwik Ki‡Qb:

2010 2009
e›Ub‡hvM¨ gybvdv
Ki cieZ©x gybvdv/(¶wZ) 10,579,176,467 14,968,166,256
†hvM: c~e©eZx© eQ‡ii AewÈZ gybvdv 26,655,044,251 13,266,605,231
eȇbi Rb¨ cÖvß †gvU cwigvY 37,234,220,718 28,234,771,487
eÈb
MZ eQ‡ii P~ovš— jf¨vsk (8,101,800,132) (1,579,727,236)
Aš—ieZ©xKvjxb jf¨vsk (4,726,050,077) -
eQi †k‡l msiw¶Z Avq (cÖ¯—vweZ P~ovš— jf¨vs‡ki c~‡e©) 24,406,370,509 26,655,044,251
cÖ¯—vweZ P~ovš— jf¨vsk 2010 (85% bM`) (11,477,550,187) (8,101,800,132)
(2009t 60% bM`)
cÖ¯—vweZ jf¨vs‡ki ci msiw¶Z Avq 12,928,820,322 18,553,244,119
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weMZ K‡qKeQi a‡i MÖvgxY‡dvb ivóªxq †KvlvMv‡i me‡P‡q †ewk Ae`vb †i‡L Avm‡Q| cÖwZôvi ci †_‡K wW‡m¤^i, 2010 ch©š— ivóªxq †KvlvMv‡i MÖvgxY‡dv‡bi †gvU Ae`v‡bi cwigvY

cwiPvjKgÊjxi cÖwZ‡e`b
n‡”Q 180 wewjqb UvKv (18,502 †KvwU)| ïaygvÎ 2010-G †Kv¤úvwb ivóªxq †KvlvMv‡i Rgv †`q 37.15 wewjqb UvKv (3,715 †KvwU UvKv), 2009 mv‡j hv wQj 30.5 wewjqb
UvKv (3,050 †KvwU), Ges hv 2010-G MÖvgxY‡dv‡bi †gvU ivR‡¯^i cÖvq 50%| D‡j−L¨, K‡c©v‡iU U¨v‡·i nvi Kg m‡Ë¡I 2010-G MÖvgxY‡dvb 9 wewjqb UvKv (900 †KvwU)
K‡c©v‡iU U¨v· cÖ`vb K‡i, 2009-G hvi cwigvY wQj 2.5 wewjqb (250 †KvwU) UvKv| AvMvgx eQi¸‡jv‡Z †Kv¤úvwbi DbœwZi mv‡_ mv‡_ GB Ae`v‡bi cwigvYI e„w× cv‡e e‡j
Avkv Kiv hvq|
jf¨vsk
cwiPvjKgÊjx 31 wW‡m¤^i, 2010 mv‡ji Rb¨ 4,726,050,077 UvKv cwi‡kvwaZ g~ja‡bi wecix‡Z 35% nv‡i bM` Aš—eZx©Kvjxb jf¨vsk cÖ`vb K‡i‡Qb, A_©vr cÖwZwU 10
UvKv AwfwnZ g~‡j¨i †kqv‡ii wecix‡Z 3.5 UvKv bM` jf¨vsk aiv n‡q‡Q| cwiPvjKe„›` Avb‡›`i mv‡_ 2010 mv‡ji Rb¨ 11,477,550,187 UvKv cwi‡kvwaZ g~‡j¨i wecix‡Z
85% nv‡i P~ovš— bM` jf¨vsk cÖ¯—ve Ki‡Qb, hv cÖwZ 10 UvKv g~‡j¨i †kqv‡ii wecix‡Z 8.5 UvKv| D‡j−L¨, B‡Zvg‡a¨ cwi‡kvwaZ 35% Aš—eZx©Kvjxb jf¨vskmn †gvU
16,203,600,264 UvKv, A_©vr †kqvicÖwZ me©‡gvU 12 UvKv jf¨vsk †kqvi‡nvìvi‡`i Aby‡gv`‡bi Rb¨ cÖ¯—ve DÌvcb Kiv n‡jv|
Dc‡iv³ jf¨vsk cÖ`v‡bi nvi cwiPvjKgÊjx Aby‡gvw`Z jf¨vsk bxwZi m‡½ m½wZc~Y© †hLv‡b ejv n‡q‡Q †h, †kqvicÖwZ jf¨vs‡ki Ae¨vnZ w¯’wZkxj cÖe„w×i j‡¶¨ †Kv¤úvwbi
Avw_©K Ae¯’v I g~ja‡bi Pvwn`v mv‡c‡¶ Ki cieZ©x gybvdvi Ab~b¨ kZKiv 50 fvM jf¨vsk AvKv‡i cÖ`vb Ki‡Z n‡e|
cwiPvjbv cl©` I cl©‡`i mfvmg~n
Av‡jvP¨ eQ‡i cwiPvjbv cl©‡`i MVb wQj wbgœiƒct
1| Rbve wmM‡f †eªK‡K, †Uwjbi †gvevBj KwgDwb‡KkÝ GGm, cwiPvjK I †Pqvig¨vb
2| Rbve wnj‡W †Uvb, †Uwjbi †gvevBj KwgDwb‡KkÝ GGm, cwiPvjK
3| Rbve cvi GwiK nvBj¨vÛ, †Uwjbi †gvevBj KwgDwb‡KkÝ GGm, cwiPvjK
4| Rbve bvU †evi‡Mb, †Uwjbi †gvevBj KwgDwb‡KkÝ GGm, cwiPvjK
5| Rbve †mœv‡i Ki‡bwjD‡mb, †Uwjbi †gvevBj KwgDwb‡KkÝ GGm, cwiPvjK
6| wg‡mm byiRvnvb †eMg, MÖvgxY †UwjKg, cwiPvjK
7| Rbve Gg. kvnRvnvb, MÖvgxY †UwjKg, cwiPvjK
8| Rbve †gvt Avkivdzj nvmvb, MÖvgxY †UwjKg, cwiPvjK
9| W. RvgvjDwÏb Avn&‡g` GdwmG, ¯^Zš¿ cwiPvjK
2010 mv‡j cwiPvjbv cl©‡`i †gvU 9wU (bq) mfv AbywôZ nq hv G‡¶‡Î wewaMZ eva¨evaKZv c~iY K‡i‡Q| mfvmg~‡n cwiPvjK‡`i Dcw¯’wZi Z_¨ GB cÖwZ‡e`‡bi mshyw³: 2-G
†`Iqv n‡q‡Q|
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cwiPvjKgÊjxi wb‡qvM, Aemi I cybtwb‡qv‡Mi †¶‡Î †Kv¤úvwb Zvi AvwU©Kjm& Ae A¨v‡mvwm‡qkb, †Kv¤úvwb AvBb 1994 Ges G msµvš— Ab¨vb¨ AvBb AbymiY K‡i| †mB
Abymv‡i Avmbœ evwl©K mvaviY mfvq cwiPvjbv cl©‡`i wbgœewY©Z cwiPvjKe„›` Aemi MÖnY Ki‡eb Ges cybtwb‡qv‡Mi †hvM¨ n‡ebt
1| Rbve wmM‡f †eªK‡K
2| Rbve cvi GwiK nvBj¨vÛ
3| Rbve Gg. kvnRvnvb

cÖavb wbe©vnx Kg©KZ©vi wb‡qvM

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eQi a‡i cÖavb wbe©vnx Kg©KZ©vi `vwqZ¡ cvjbiZ wg. IWfvi †nm‡RWv‡ji ¯’jvwfwl³ n‡eb| GB Dcj‡¶¨ cwiPvjbv cl©` cÖavb wbe©vnx Kg©KZ©vi c‡` _vKvKvjxb cÖwZôv‡bi cÖwZ
Zvi GKvMÖZv I wbôvi Rb¨ wg. IWfvi †nm‡RWvj‡K K…ZÁZv Rvbv‡”Q| Zvi my`¶ †bZ…Z¡ 30 wgwjqb MÖvn‡Ki GB †Kv¤úvwbi kxl©¯’vb‡K Av‡iv my`„p K‡i‡Q| Zvi mg‡q
MÖvgxY‡dvb ÷K G·‡P‡Ä ZvwjKvfy³ nq| cwiPvjbv cl©` bZzb cÖavb wbe©vnx wg. †Uv‡i Rbmb‡KI ï‡f”Qv Rvbv‡”Q Ges †`‡ki kxl©¯’vbxq †gvevBj †mev`vZv cÖwZôvb wn‡m‡e
MÖvgxY‡dv‡bi Ae¯’vb‡K Av‡iv my`„p Kivi †¶‡Î Zvi mvdj¨ Kvgbv Ki‡Q|
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my‡hvM¨ GB cÖwZôvbwU cybtwb‡qvM †c‡Z AvMÖn cÖKvk K‡i‡Q| cwiPvjbv cl©` h_vh_ KZ…©c‡¶i Aby‡gv`b mv‡c‡¶ 1.8 wgwjqb UvKv I cÖ‡hvR¨ f¨vU cÖ`vb mv‡c‡¶ G cÖwZôvbwU‡K
2011 mv‡ji Rb¨ cybtwb‡qv‡Mi mycvwik Ki‡Q|

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cwiPvjKgÊjxi cÖwZ‡e`b

n‡”Q| MÖvgxY‡dv‡bi i‡q‡Q mywbw`©ó SuywK e¨e¯’vcbv bxwZ Ges wbqwgZ cÖZ¨‡e¶Y (gwbUwis) e¨e¯’v hv ˆ`bw›`b KvR-Kg© I †mB mv‡_ †KŠkjMZ Kvh©µg cwiPvjbv Ki‡Z wM‡q
Avgv‡`i e¨emvwqK Kvh©µg †hme SuywKi m¤§yLxb nq Zv KvwU‡q IVvi GKwU Kvh©Ki nvwZqvi wn‡m‡e KvR K‡i| 2010-G wRwc GKwU mgwš^Z SuywK e¨e¯’vcbv c×wZ cÖYqb K‡i|
h_vh_ AeKvVv‡gv m„wó, †hŠw³K I myk„•Lj DcvË MVb cÖwµqv, †KŠkjMZ SuywK wbY©q, we‡klY, g~j¨vqb, ch©v‡jvPbv, cÖZ¨‡e¶Y I AewnZ Ki‡Z GB mgwš^Z SuywK e¨e¯’vcbv c×wZ
e¨eüZ n‡e| Gi d‡j †Kv¤úvwb SuywK e¨e¯’vcbv KvVv‡gvi gva¨‡g h_vmg‡q SuywK wbY©q Ki‡Z m¶g n‡e|

¯^xK…wZi ¯§viK Ñ GKvwaK cyi¯‹vi

MÖvgxY‡dv‡bi Rb¨ 2010 wQj GKwU Abb¨ eQi| GB mg‡q †Kv¤úvwb †ek wKQz cyi¯‹vi AR©b K‡i| D‡j−L‡hvM¨ Gme cyi¯‹vi¸‡jv wbgœiƒct
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Annexure-I
Status of compliance with the conditions imposed by the Securities and Exchange Commission’s Notification No

Directors’ Report
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.

Condition Compliance Explanation for

No. Title Status non-compliance
with the condition
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 Complied
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 Complied
the Board of Directors)
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

58/59
 Condition Compliance Explanation for
No. Title Status non-compliance
with the condition
Directors’ Report

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

Complied
(Board to select Chairman from Audit Committee)
3.2 (ii) Professional qualification and experience of the Chairman of
Complied
the Audit Committee
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
None
& results of operation, unreasonably ignored by the Management)
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

Annexure II
Board Meeting and attendance during the year ended December 31, 2010.

Number of meetings held Meetings

Name of Directors Remarks
whilst a Board member attended

Mr. Sigve Brekke 9 8

Ms. Hilde Tonne 9 9

Mr. Per Erik Hylland 9 9

Mr. Snorre Corneliussen 9 9

Mr. Knut Borgen 9 7

Ms. Nurjahan Begum 9 9

Mr. M. Shahjahan 9 8

Mr. Md. Ashraful Hassan 9 9

Dr. Jamaluddin Ahmed FCA 7 7 Appointed on March 19, 2010

Annexure III
The Pattern of Shareholding as on December 31, 2010.

Directors’ Report
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. Tore Johnsen Chief Executive Officer - -
Mr. Raihan Shamsi Chief Financial Officer 94,381 0.01%
Mr. Hossain Sadat Company Secretary 31,776 0.00%
Mr. Emadul Hannan Head of Internal Audit - -
Mr. Abrar Jaman Son of Ms. Nurjahan Begum 2,803 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. Arne Viggo Aronsen Head of Sourcing - -
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%

60/61
 Report of
Report of Audit Committee

Audit Committee
Grameenphone Board 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 Meetings

Mr. M. Shahjahan, Chairman
Mr. Per Erik Hylland, Member
Dr. Jamaluddin Ahmed FCA, Member [Effective from March 19, 2010]
A total of 5 (five) meetings were held during 2010. 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 Committee

The 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 Committee

 Reviewed and recommended to the Board the quarterly and annual financial statements for the year ended December
31, 2010.
 Considered and made recommendation to the Board on the reappointment and remuneration of external auditors,
Rahman Rahman Haq, Chartered Accountants, a member firm of KPMG, for the year 2011.
 Reviewed the Management Letter from external auditors for the year 2009 together with Management’s responses to
the findings.
 Approved the Internal Audit Plan for 2010, monitored progress and effected revisions when necessary.
 Discussed Internal Audit reports and findings in detail with auditors and members of management and monitored the
status of implementation of audit action plans and provided guidance to ensure timely completion of action plans.
 Reviewed the Governance, Control, Risk Management, Revenue Assurance and Fraud Management processes in
Grameenphone.
 Reviewed the activities of the Compliance function, incidence reporting and actions, and the status of enforcement of
the Grameenphone Codes of Conduct.
 Also reviewed the Board Audit Committee Charter and Internal Audit Charter.
 The committee was not aware of any issues in the following areas, which needs to be reported to the Board:
 Report on conflicts of interest
 Suspected or presumed fraud or irregularity or material defect in the internal control system
 Suspected infringement of laws, including securities related laws, rules and regulations

M. Shahjahan
Chairman
Audit Committee
February 03, 2011
 Rahman Rahman Huq Telephone +880 (2) 988 6450-2
Chartered Accountants Fax +880 (2) 988 6449
Email kpmg-rrh@citech-bd.com
9 Mohakhali C/A (11th & 12th Floors)
Auditors’ Report

Internet www.rahman-rahman-huq.com
Dhaka 1212, Bangladesh.

Auditors’ Report
to the shareholders of
Grameenphone Ltd.
Introduction
We have audited the accompanying financial statements of Grameenphone Ltd, which comprise the statement of financial
position as at 31 December 2010, 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 and all
related consolidated financial statements of Grameenphone Ltd and its subsidiary (together referred to as "the group").

Management's responsibility for the financial statements

Management 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' responsibility
Our 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 auditors' 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, 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.

Opinion
In our opinion, the financial statements including consolidated 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/group's affairs as at 31 December 2010 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:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for
the purposes of our audit and made due verification thereof;
b) in our opinion, proper books of account as required by law have been kept by the company and its subsidiary so far as it
appeared from our examination of these books;
c) the statement of financial position (balance sheet) and statement of comprehensive income (profit and loss account)
dealt 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/group's business.

Auditors
Rahman Rahman Huq
Dhaka, February 06, 2011
Grameenphone Ltd.
Statement of Financial Position
as at 31 December 2010 2010 2010 2009
Taka Taka Taka
Assets Notes Consolidated Separate Individual
Non current assets:
Property, plant and equipment, net 4 71,696,092,118 71,519,269,716 79,287,993,919
Intangible assets 5 6,991,416,098 6,887,927,919 7,681,126,893
Investment in subsidiary 6 - 74,999,900 -
Long term deposits 7 12,594,949 12,594,949 11,635,675
78,700,103,165 78,494,792,484 86,980,756,487
Current assets:
Inventories 8 834,355,326 834,355,326 430,870,209
Deferred cost of connection revenue 9 484,842,481 484,842,481 483,550,116
Accounts receivable, net 10 5,247,945,772 5,237,659,409 4,697,066,162
Other receivables 11 928,020,269 1,230,518,097 762,323,315
Advances, deposits and prepayments 12 1,621,637,839 1,718,961,429 1,206,613,917
Short term investment 13 2,753,729,110 2,753,729,110 500,000,000
Cash and cash equivalents 14 18,931,502,552 18,674,929,826 14,101,313,087
30,802,033,349 30,934,995,678 22,181,736,806
Total assets 109,502,136,514 109,429,788,162 109,162,493,293
Equity and Liabilities
Shareholders' equity:
Share capital 15 13,503,000,220 13,503,000,220 13,503,000,220
Share premium 16 7,840,225,942 7,840,225,942 7,840,225,942
Capital reserve 17 14,446,452 14,446,452 14,446,452
Deposit from shareholders 18 1,880,178 1,880,178 1,880,178
General reserve 19 2,139,729,365 2,139,729,365 2,139,729,365
Retained earnings 24,532,545,482 24,406,370,509 26,655,044,251
48,031,827,639 47,905,652,666 50,154,326,408
Non controlling interest 20 268 - -
Non-current liabilities:
Loans and borrowings, net of current portion 21 - - 917,924,127
Deposit from agents and subscribers 22 444,639,879 444,639,879 440,948,191
Finance lease obligation 23 5,019,805,838 5,019,805,838 5,019,805,838
Deferred tax liabilities 24 11,201,083,512 11,201,083,512 13,505,914,117
Long term provisions 25 162,876,392 162,876,392 171,487,489
16,828,405,621 16,828,405,621 20,056,079,762
Current liabilities:
Accounts payable 26 10,183,877,792 10,147,977,191 9,814,726,186
Payable to government and autonomous bodies 27 4,814,490,250 4,814,490,250 4,182,752,546
Unearned revenue 28 2,248,977,889 2,248,977,889 1,679,152,352
Loans and borrowings - current portion 21 - - 1,036,943,071
VAT payable 29 2,451,869,531 2,451,869,531 2,234,779,133
Income tax provision 30 15,738,404,448 15,737,871,964 12,228,778,445
Accrued interest 31 155,699,144 155,699,144 66,356,035
Other liabilities 32 38,263,621 38,263,621 88,517,671
Deferred connection revenue 33 581,904,397 581,904,397 541,731,926
Provision for expenses 34 8,428,415,914 8,518,675,888 7,078,349,758
44,641,902,986 44,695,729,875 38,952,087,123
Total equity and liabilities 109,502,136,514 109,429,788,162 109,162,493,293

The annexed notes 1 to 55 form an integral part of these financial statements.

Director Director Chief Executive Officer Company Secretary

As per our report of same date.

Dhaka, February 06, 2011 Auditors

64/65
Grameenphone Ltd.
Statement of Comprehensive Income
for the year ended 31 December 2010 2010 2010 2009
Taka Taka Taka
Notes Consolidated Separate Individual

Revenue 35 74,733,076,434 74,724,497,824 65,299,567,088

Cost of network operations:

Direct cost of network revenue 36 (15,065,442,394) (15,065,442,394) (13,256,145,333)
Network operation and maintenance expenses 37 (5,605,681,662) (5,924,040,604) (4,773,426,129)
Depreciation and amortisation 38 (15,331,945,675) (15,331,928,871) (15,048,323,189)
(36,003,069,731) (36,321,411,869) (33,077,894,651)
Gross profit 38,730,006,703 38,403,085,955 32,221,672,437

Other income, net 39 60,416,193 75,314,120 43,258,418

Operating expenses:
General and administrative expenses 40 (8,634,334,234) (8,454,044,918) (6,593,087,934)
Selling and distribution expenses 41 (8,487,233,821) (8,480,676,834) (3,474,969,079)
Depreciation and amortisation 38 (1,461,626,378) (1,461,626,378) (1,678,664,555)
(18,583,194,433) (18,396,348,130) (11,746,721,568)
Operating profit 20,207,228,463 20,082,051,945 20,518,209,287

Finance income/(expense), net 42 593,473,110 591,748,373 (1,687,193,849)

Foreign exchange gain/(loss) 43 99,963,540 99,963,540 (233,243,638)
Gain on sale of investment in X-Net Ltd. - - 7,960,532
Gain/(loss) on disposal of property, plant and equipment 44 12,091,065 12,091,065 (9,768,387)

705,527,715 703,802,978 (1,922,245,342)

Profit before income tax 20,912,756,178 20,785,854,923 18,595,963,945

Income tax expenses 45 (10,207,404,570) (10,206,678,456) (3,627,797,689)
Profit for the year 10,705,351,608 10,579,176,467 14,968,166,256

Other comprehensive income - - -

Total comprehensive income for the year 10,705,351,608 10,579,176,467 14,968,166,256

Total comprehensive income attributable to:

Owners of the company 10,705,351,440 10,579,176,467 14,968,166,256
Non controlling interest 168 - -
10,705,351,608 10,579,176,467 14,968,166,256
Earnings per share:
Basic earnings per share (par value Tk 10 each) 46 7.93 7.83 12.08

The annexed notes 1 to 55 form an integral part of these financial statements.

Director Director Chief Executive Officer Company Secretary

As per our report of same date.

Dhaka, February 06, 2011 Auditors

 Grameenphone Ltd.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2010

Share Share Capital Deposit from General Retained Non controlling

capital premium reserve shareholders reserve earnings interest Total
Taka Taka Taka Taka Taka Taka Taka Taka

Balance as at 1 January 2009 12,151,747,970 13,743,987 14,446,452 1,882,996 2,139,729,365 13,266,605,231 - 27,588,156,001

Total comprehensive income for 2009

Profit for the year - - - - - 14,968,166,256 - 14,968,166,256
Other comprehensive income - - - - - - - -

Transactions with the shareholders:

Final dividend for the year 2008 - - - - - (1,579,727,236) - (1,579,727,236)
Issue of shares to existing shareholders 250 4,250 - (2,818) - - - 1,682
Issue of shares through PPO and IPO 1,351,252,000 8,370,255,200 - - - - - 9,721,507,200

Share issue costs - (543,777,495) - - - - - (543,777,495)

Balance as at 31 December 2009 13,503,000,220 7,840,225,942 14,446,452 1,880,178 2,139,729,365 26,655,044,251 - 50,154,326,408

Total comprehensive income for 2010

Profit for the year - - - - - 10,705,351,440 168 10,705,351,608
Other comprehensive income - - - - - - - -

Transactions with the shareholders: - -

Final dividend for the year 2009 - - - - - (8,101,800,132) (8,101,800,132)
Interim dividend for the year 2010 - - - - - (4,726,050,077) (4,726,050,077)

Issuance of share of Grameenphone IT Ltd. - - - - - - 100 100

Balance as at 31 December 2010 13,503,000,220 7,840,225,942 14,446,452 1,880,178 2,139,729,365 24,532,545,482 268 48,031,827,907

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Grameenphone Ltd.
Statement of Changes in Equity (Separate)
for the year ended 31 December 2010

Share Share Capital Deposit from General Retained

capital premium reserve shareholders reserve earnings Total
Taka Taka Taka Taka Taka Taka Taka

Balance as at 1 January 2009 12,151,747,970 13,743,987 14,446,452 1,882,996 2,139,729,365 13,266,605,231 27,588,156,001

Total comprehensive income for 2009

Profit for the year - - - - - 14,968,166,256 14,968,166,256

Other comprehensive income - - - - - - -

Transactions with the shareholders:

Final dividend for the year 2008 - - - - - (1,579,727,236) (1,579,727,236)

Issue of shares to existing shareholders 250 4,250 - (2,818) - - 1,682
Issue of shares through PPO and IPO 1,351,252,000 8,370,255,200 - - - - 9,721,507,200

Share issue costs - (543,777,495) - - - - (543,777,495)

Balance as at 31 December 2009 13,503,000,220 7,840,225,942 14,446,452 1,880,178 2,139,729,365 26,655,044,251 50,154,326,408

Total comprehensive income for 2010

Profit for the year - - - - - 10,579,176,467 10,579,176,467

Other comprehensive income - - - - - - -

Transactions with the shareholders:

Final dividend for the year 2009 - - - - - (8,101,800,132) (8,101,800,132)

Interim dividend for the year 2010 - - - - - (4,726,050,077) (4,726,050,077)

Balance as at 31 December 2010 13,503,000,220 7,840,225,942 14,446,452 1,880,178 2,139,729,365 24,406,370,509 47,905,652,666
Grameenphone Ltd.
Statement of Cash Flows
for the year ended 31 December 2010 2010 2010 2009
Taka Taka Taka
Notes Consolidated Separate Individual
Cash flows from operating activities:

Cash receipts from performance of services/sales 47 74,646,490,419 74,646,490,419 64,925,924,469

Payroll and other payments to employees (6,087,982,677) (5,827,353,840) (4,079,088,982)

Payment to suppliers, contractors and others 48 (28,986,804,748) (29,366,578,247) (21,832,429,882)
Net finance income received 1,337,225,663 1,335,500,926 335,144,569
Finance expense paid for short term loans - - (450,749,036)
Finance expense paid for long term loans (630,004,573) (630,004,573) (1,691,869,816)
Income tax paid (9,002,609,172) (9,002,415,542) (6,505,897,213)
(43,370,175,507) (43,490,851,276) (34,224,890,360)
Net cash flow from operating activities 31,276,314,912 31,155,639,143 30,701,034,109

Cash flows from investing activities:

Payment for acquisition of property, plant and equipment (8,774,249,937) (8,835,146,894) (11,867,221,673)
Proceeds from sale of property, plant and equipment 59,884,296 59,884,296 40,312,438
Payment for acquisition of intangible assets (648,524,052) (648,524,052) (4,184,634,864)
Investment in subsidiary - (74,999,900) -
Investment in long term deposits (959,274) (959,274) -
Short term investments (2,253,729,110) (2,253,729,110) (500,000,000)
Net cash used in investing activities (11,617,578,077) (11,753,474,934) (16,511,544,099)

Cash flows from financing activities:

Repayment of local interest bearing short term borrowings - - (4,992,322,916)

Repayment of bond - - (4,250,000,000)
Payment of long term borrowings (1,950,443,211) (1,950,443,211) (1,422,706,278)
Payment of finance lease obligation - - (562,546,039)
Payment of dividend (12,791,086,003) (12,791,086,003) (1,579,727,236)
Net proceeds from PPO and IPO - - 5,698,452,575
Proceeds from issue of shares to existing shareholders - - 1,682
Proceeds from issue of shares to non controlling interest 100 - -
Amount refunded to IPO share applicants (87,018,256) (87,018,256) -
Net cash flow used in financing activities (14,828,547,370) (14,828,547,470) (7,108,848,212)

Net changes in cash and cash equivalents 4,830,189,465 4,573,616,739 7,080,641,798

Cash and cash equivalents at 1 January 14,101,313,087 14,101,313,087 7,020,671,289

Cash and cash equivalents at 31 December 18,931,502,552 18,674,929,826 14,101,313,087

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Grameenphone Ltd.
Notes to the Financial Statements
as at and for the year ended 31 December 2010

1. Reporting entity

1.1 Company profile

Grameenphone Ltd (hereinafter referred to as "GP"/"Grameenphone"/"the company"/"the parent 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. In July 2010, the registered office of the company was shifted
to GPHouse, Bashundhara, Baridhara, Dhaka 1229. 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. In 2010, Grameenphone formed a wholly owned subsidiary namely
Grameenphone IT Ltd (hereinafter referred to as "GPIT"/ "the subsidiary company"), to provide IT services to itself and also
to external customers. GPIT launched its commercial operation from 1 April 2010.
These financial statements as at and for the year ended 31 December 2010 include consolidated and separate financial
statements. The consolidated financial statements comprise the company and its subsidiary, Grameenphone IT Ltd.
(together referred to as "the group"). The separate financial statements present the standalone financial statements of
Grameenphone Ltd.
The group is primarily involved in providing mobile telecommunication services (voice, data and other related services)
and IT related services in Bangladesh. Grameenphone obtained its radio system operating license from the Ministry of
Posts and Telecommunications (MoPT), Government of Bangladesh, commencing from 11 November 1996 and launched
commercial operation on 26 March 1997. Telecommunication network of the company covers all divisional towns and
districts of the country. The company also provides international roaming services through international roaming
agreements with various operators of different countries across the world.
The Mobile Cellular License of GP will expire on 11 November 2011 and will have to be renewed upon fulfilment of certain
terms and conditions. The renewal fees are yet to be fixed by BTRC or MoPT. The management is currently in the process
of consultation with them on the amount of renewal fees and relevant terms and conditions, and expects to arrive at
mutually beneficial and agreeable terms within the end of current license tenure i.e. 11 Nov 2011. Despite the uncertainty
as mentioned above, the management does not believe that the license will not be renewed or that the renewal will be on
such terms that might have an effect on the business continuity or assumptions of going concern of the company.
Accordingly these financial statements have been prepared on the basis of going concern assumption.

2. Basis of preparation

2.1 Statement of compliance

These financial statements (including consolidated and separate 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 Articles of Association of Grameenphone require that the financial statements be prepared in accordance with
International Accounting Standards (IAS)/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 BFRS differ from those for corresponding IFRS. The
following BFRS were adopted early while preparing these financial statements to ensure compliance with both sets of
standards.

Title of relevant Bangladesh Accounting Standards (BAS)/BFRS Effective date Application date
BAS 1: Presentation of Financial Statements (revised 2008) 1 January 2010 1 January 2009
BAS 23: Borrowing Costs (revised 2008) 1 January 2010 1 January 2009
BAS 32: Financial Instruments: Presentation 1 January 2010 1 January 2009
BAS 39: Financial Instruments: Recognition and Measurement 1 January 2010 1 January 2009
BFRS 7: Financial Instruments: Disclosures 1 January 2010 1 January 2009

Authorisation for issue

These financial statements have been authorised for issue by the Board of Directors of the company on 6 February 2011.
2.2 Basis of measurement
These financial statements have been prepared on a historical cost convention except for the following items in the
statement of financial position:

Notes to the Financial Statements

(a) Employee benefit plan was measured based on actuarial valuation.
(b) Finance lease obligation and assets under finance lease were measured at present value of minimum lease payments.
(c) Asset retirement obligations (ARO) were measured at present value of expected future expenditure.

2.3 Functional and presentation currency

These financial statements are presented in Bangladesh Taka (Taka/Tk/BDT) which is both functional currency and
presentation currency of the group/company. The amounts in these financial statements have been rounded off to the
nearest Taka.

2.4 Use of estimates and judgements

The preparation of financial statements requires management to make judgements, 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. Revision to accounting estimates is 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 4.5: Capitalisation of borrowing costs
Note 23: Finance lease obligation (classification and measurement)
Note 24: Deferred tax liabilities (manner of recovery of temporary differences for determination of deferred tax liabilities)
Note 25: Long term provisions
Note 34: Provision for expenses (estimation of future cash outflow and determination of appropriate discount rate)
Note 35: Revenue (allocation of revenue among multiple elements, determination of percentage of completion for
services rendered)
Note 45: Income tax expenses
In addition to the above, determination of the group's liability for gratuity involves the use of estimates regarding
demographic variables (such as employee turnover and mortality) and financial variables (such as future increases in
salaries and medical costs) that will influence the cost of the benefit.

3. Significant accounting policies

Except for those related to consolidation procedure, accounting policies set out below have been applied consistently to
all periods presented in these financial statements. Accounting policies related to consolidation process became
applicable for the group after the formation of GPIT in 2010.
Comparative information for 2009 provided in these financial statements reflect GP's individual financial statements only
as at and for year ended 31 December 2009 (as consolidation procedures were not applicable at that time). Certain
comparative amounts have been reclassified to conform to current year’s presentation (please refer to Note 55.2).

3.1 Basis of consolidation

(a) Subsidiaries
Subsidiaries are entities controlled by the group. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the group. They are de-consolidated from the date on which
control ceases.

(b) Consolidation procedure

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions
are eliminated in preparing consolidated financial statements. Unrealised gains arising from transactions with equity
accounted investees are eliminated against the investment to the extent of the group's interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.

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 3.2 Property, plant and equipment

(a) Recognition and measurement

Notes to the Financial Statements

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses, if any.
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 asset 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 and capitalised borrowing costs.
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.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and 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 group 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 group 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 reporting date. The estimated useful lives of the items of property, plant and equipment for the current and
comparative years are as follows:

2010 2009
Year Year
Own assets
Building 10 -50 20
Base station - equipments 3-10 3-10
Base station - tower, fiber optic network and related assets 7- 20 7- 20
Transmission equipment 5-10 5-10
Computers and other IT equipment 4 4
Furniture and fixtures (including office equipment) 3-5 3-5
Vehicles 4 4
Leased asset
Fibre Optic Network 22.5 22.5

Change in useful lives of building in 2010 is attributable to inclusion of new assets, having different useful lives, as a result
of capitalisation of GPHouse. The change does not result from revision of useful lives of existing assets.
Other than those mentioned in note 4.8, estimated useful lives of property, plant and equipment remained unchanged in 2010.

(d) Gains or losses on disposal

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

(e) 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 group, i.e. at the time shipment is confirmed by
the supplier.
(f) 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

Notes to the Financial Statements

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.

3.3 Intangible assets

(a) Recognition and measurement
Intangible assets that are acquired by the group and have finite useful lives are measured at cost less accumulated
amortisation and accumulated impairment loss, if any. Intangible assets are recognised when all the conditions for
recognition as per IAS/BAS 38: Intangible assets are met. The cost of an intangible asset 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 profit or loss as incurred.

(c) Amortisation
Amortisation is recognised in profit or loss 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:

2010 2009
Year Year
Pulse Code Modulation (PCM) 5 5
Software and others
Billing software 5 5
Other operational software 3 3
Network management software 10 10
Telecom license - spectrum 18 18

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.

3.4 Leased assets

Leases in terms of which the group 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.
Leases other than finance lease are treated as operating leases and are not recognised in both consolidated and separate
statement of financial position.

3.5 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.

3.5.1 Financial assets

The group 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 group becomes a party to the contractual provisions of the transaction.
The group 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 include cash and cash equivalents, accounts receivable, and long term receivables and deposits.

(a) Accounts receivable

Accounts receivable represent the amounts due from mobile telephony subscribers for telecom services, other operators
for interconnection services and infrastructure sharing, 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.

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 (b) Cash and cash equivalents
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 group’s cash management are included as a
Notes to the Financial Statements

component of cash and cash equivalents.

3.5.2 Financial liabilities

The group 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 group becomes a party to the
contractual provisions of the liability.
The group derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.
Financial liabilities include loans and borrowings, finance lease obligation, accounts payable 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. The discount rate used in calculating the present value of the minimum lease
payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental
borrowing rate is used.

(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
The group recognises a financial liability when its contractual obligations arising from past events are certain and the 
settlement of which is expected to result in an outflow from the company of resources embodying economic benefits.

3.6 Impairment
(a) Financial assets
The group considers evidence of impairment for financial assets (loans and receivables and held-to-maturity investment
securities) at both a specific asset and collective level. All individually significant receivables and held-to-maturity
investment securities are assessed for specific impairment. All individually significant loans and receivables and
held-to-maturity investment securities found not to be specifically impaired are then collectively assessed for any
impairment that has been incurred but not yet identified. Loans and receivables and held-to-maturity investment
securities that are not individually significant are collectively assessed for impairment by grouping together loans and
receivables and held-to-maturity investment securities with similar risk characteristics.
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

The carrying amounts of the group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its related
cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose
of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU.
 Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to
reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has

Notes to the Financial Statements

decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.

3.7 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.

3.8 Employee benefits

The group 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. Both of the plans are
supported by separate registered funds.

(a) Defined contribution plan (provident fund)

The group contributes to a registered provident fund scheme (defined contribution plan) for employees of the group
eligible to be members of the fund in accordance with the rules of the provident fund constituted under an irrevocable
trust. All permanent employees contribute 10% of their basic salary to the provident fund and the group also makes equal
contribution.
The group 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 employees gratuity fund is considered as defined benefit
plan as it meets the recognition criteria. The group'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.

3.9 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 reporting date, 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 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

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 been reduced to 35%. The tax rate used for the years ended 31 December 2010 and 31 December 2009 are as follows:

Year ended Tax rate

Notes to the Financial Statements

Year ended 31 December 2010 35%

Year ended 31 December 2009 35%

Being a private limited company, applicable tax rate for GPIT is 37.5%. However IT enabled services provided by GPIT are
exempted from income taxes until 30 June 2011 as per Finance Act 2010.

(b) Deferred tax

Deferred tax is recognised in compliance with IAS/BAS 12: Income Taxes, 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.

3.10 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 obligations (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 station 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.

3.11 Revenue recognition

Revenues are measured at fair value of the consideration received or receivable, net of discount and sales related taxes
and VAT. Revenues are reported gross with separate recording of expenses to vendors of products or services. However,
when the group acts only as an agent or broker on behalf of suppliers of products or services, revenues are reported on a
net basis. Revenues of the group comprise:

(i) Rendering of services:

Revenue from rendering of services includes traffic fees, subscription and connection fees, interconnection fees, various
customer support revenues, value added service revenues, infrastructure sharing and IT related services.

(ii) Sale of goods:

The group sells handset, data card and other device, and software to its customers.

(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

Notes to the Financial Statements

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) 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.

(i) Infrastructure sharing

Revenue from infrastructure sharing comprises lease of telecom infrastructure, including base station shelter, generators,
and charges for fuel and power support. Leases are recognised as per IAS/BAS 17: Leases. revenues are recognised on
accrual basis based on actual usage/consumption by the customers.

(j) Sub lease of optical fibre network

Rental income from sub-lease of optical fibre network is recognised on accrual basis in accordance with the provisions of
relevant agreements.

(k) Rendering IT service

Revenue from IT service is recognised on a percentage of completion basis. Percentage of completion of service is
determined upon periodic review and usually evidenced by work completion certificate. Revenue is recognised only when
it is probable that the economic benefits associated with the transaction will flow to the entity.

(l) Sale of software

Revenue from the sale of software is recognised when significant risks and rewards associated with the software is
transferred and the entity retains neither significant managerial involvement nor effective control over the software. The
other criteria for revenue recognition, i.e. availability of reliable measure for revenue and associated costs and probable
flow of economic benefits to the entity must also be met. Accordingly, delivery of a software is not considered complete
and revenue is not recognised when the software is shipped subject to installation and the installation is a significant part
of the contract which has not yet been completed by the entity.

3.12 Deferred connection revenue

Deferred connection revenue represents the portion of connection revenue which is deferred over the remaining period
of estimated customer relationship.

3.13 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.

3.14 Leases
(a) Finance lease
Leases in terms of which the entity assumes substantially all the risks and rewards of ownership are classified as finance
leases. Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the liability.

76/77
 (b) 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.
Notes to the Financial Statements

3.15 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 that date. All exchange differences were recognised
in the statement of comprehensive income as per IAS/BAS 21: The Effects of Changes in Foreign Exchange Rates.

3.16 Earnings per share

The group/company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary
shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the group/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.

3.17 Events after the reporting period

Events after the reporting period that provide additional information about the group's/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.
 4 Property, plant and equipment

Year 2010 (Consolidated)

Cost Depreciation Carrying amount

Disposal/ Disposal/
Name of assets As at Addition Adjustment As at As at Charged Adjustment As at As at
1 January during during 31 December 1 January during the during 31 December 31 December
2010 the year the year 2010 2010 year the year 2010 2010
Taka Taka Taka Taka Taka Taka Taka Taka Taka

Land (Note 4.1) 806,395,924 - - 806,395,924 - - - - 806,395,924

Building (Note 4.3.1) 39,495,738 4,018,620,231 - 4,058,115,969 11,253,642 67,739,090 - 78,992,732 3,979,123,237

Base station (Note 4.2) 86,207,212,938 2,829,904,349 (143,366,238) 88,893,751,049 37,000,262,825 10,893,690,046 (119,365,963) 47,774,586,908 41,119,164,141

Transmission equipment (Note 4.2) 24,936,637,035 2,257,885,889 - 27,194,522,924 9,325,226,987 3,411,195,892 - 12,736,422,879 14,458,100,045

Computers and other IT equipment 3,243,271,828 315,331,460 (124,904,809) 3,433,698,479 2,248,602,195 568,804,223 (123,235,126) 2,694,171,292 739,527,187

Furniture and fixtures (Note 4.3.1)

(including office equipment) 2,044,818,734 463,486,552 (221,157,806) 2,287,147,480 1,761,079,790 208,373,406 (217,360,242) 1,752,092,954 535,054,526

Vehicles 883,008,531 196,675,019 (44,286,356) 1,035,397,194 543,331,235 89,109,584 (25,983,735) 606,457,084 428,940,110
118,160,840,728 10,081,903,500 (533,715,209) 127,709,029,019 50,889,756,674 15,238,912,241 (485,945,066) 65,642,723,849 62,066,305,170

Capital work in progress (Note 4.3) 6,191,845,987 8,012,459,718 (10,065,059,277) 4,139,246,428 - - - - 4,139,246,428
124,352,686,715 18,094,363,218 (10,598,774,486) 131,848,275,447 50,889,756,674 15,238,912,241 (485,945,066) 65,642,723,849 66,205,551,598

Fibre Optic Network

under finance lease (Note 4.4) 7,678,321,508 - - 7,678,321,508 1,853,257,630 334,523,358 - 2,187,780,988 5,490,540,520

132,031,008,223 18,094,363,218 (10,598,774,486) 139,526,596,955 52,743,014,304 15,573,435,599 (485,945,066) 67,830,504,837 71,696,092,118

Notes to the Financial Statements

78/79
 Notes to the Financial Statements

Property, plant and equipment (contd..)

Year 2010 (Separate)

Cost Depreciation Carrying amount

Disposal/ Disposal/
Name of assets As at Addition Adjustment As at As at Charged Adjustment As at As at
1 January during during 31 December 1 January during the during 31 December 31 December
2010 the year the year 2010 2010 year the year 2010 2010
Taka Taka Taka Taka Taka Taka Taka Taka Taka

Land (Note 4.1) 806,395,924 - - 806,395,924 - - - - 806,395,924

Building (Note 4.3.1) 39,495,738 4,018,620,231 - 4,058,115,969 11,253,642 67,739,090 - 78,992,732 3,979,123,237

Base station (Note 4.2) 86,207,212,938 2,829,904,349 (143,366,238) 88,893,751,049 37,000,262,825 10,893,690,046 (119,365,963) 47,774,586,908 41,119,164,141

Transmission equipment (Note 4.2) 24,936,637,035 2,257,885,889 - 27,194,522,924 9,325,226,987 3,411,195,892 - 12,736,422,879 14,458,100,045

Computers and other IT equipment 3,243,271,828 307,124,216 (124,904,809) 3,425,491,235 2,248,602,195 568,787,419 (123,235,126) 2,694,154,488 731,336,747

Furniture and fixtures (Note 4.3.1)

(including office equipment) 2,044,818,734 463,486,552 (221,157,806) 2,287,147,480 1,761,079,790 208,373,406 (217,360,242) 1,752,092,954 535,054,526

883,008,531 196,675,019 (44,286,356) 1,035,397,194 543,331,235 89,109,584 (25,983,735) 606,457,084 428,940,110

Vehicles
118,160,840,728 10,073,696,256 (533,715,209) 127,700,821,775 50,889,756,674 15,238,895,437 (485,945,066) 65,642,707,045 62,058,114,730

6,191,845,987 7,835,620,512 (10,056,852,033) 3,970,614,466 - - - - 3,970,614,466

Capital work in progress (Note 4.3)
124,352,686,715 17,909,316,768 (10,590,567,242) 131,671,436,241 50,889,756,674 15,238,895,437 (485,945,066) 65,642,707,045 66,028,729,196

Fibre Optic Network

under finance lease (Note 4.4) 7,678,321,508 - - 7,678,321,508 1,853,257,630 334,523,358 - 2,187,780,988 5,490,540,520

132,031,008,223 17,909,316,768 (10,590,567,242) 139,349,757,749 52,743,014,304 15,573,418,795 (485,945,066) 67,830,488,033 71,519,269,716

 Property, plant and equipment (contd..)

Year 2009 (Individual)

Cost Depreciation Carrying amount

Disposal/ Disposal/
As at Addition Adjustment As at As at Charged Adjustment As at As at
1 January during during 31 December 1 January during the during 31 December 31 December
Name of assets 2009 the year the year 2009 2009 year the year 2009 2009
Taka Taka Taka Taka Taka Taka Taka Taka Taka

Land (Note 4.1) 806,395,924 - - 806,395,924 - - - - 806,395,924

Building 39,495,738 - - 39,495,738 9,278,748 1,974,894 - 11,253,642 28,242,096

Base station (Note 4.2) 80,691,997,045 5,819,241,731 (304,025,838) 86,207,212,938 26,088,842,327 11,059,107,019 (147,686,521) 37,000,262,825 49,206,950,113

Transmission equipment (Note 4.2) 25,653,204,629 4,309,646,132 (5,026,213,726) 24,936,637,035 8,564,799,364 2,990,997,780 (2,230,570,157) 9,325,226,987 15,611,410,048

Computers and other IT equipment 2,975,019,578 294,103,846 (25,851,596) 3,243,271,828 1,647,327,755 621,816,664 (20,542,224) 2,248,602,195 994,669,633

Furniture and fixtures

(including office equipment) 2,089,600,879 68,233,047 (113,015,192) 2,044,818,734 1,456,855,037 413,507,010 (109,282,257) 1,761,079,790 283,738,944

Vehicles 812,697,584 93,431,947 (23,121,000) 883,008,531 443,734,679 113,301,856 (13,705,300) 543,331,235 339,677,296

113,068,411,377 10,584,656,703 (5,492,227,352) 118,160,840,728 38,210,837,910 15,200,705,223 (2,521,786,459) 50,889,756,674 67,271,084,054

Capital work in progress (Note 4.3) 4,294,178,818 12,363,737,894 (10,466,070,725) 6,191,845,987 - - - - 6,191,845,987

117,362,590,195 22,948,394,597 (15,958,298,077) 124,352,686,715 38,210,837,910 15,200,705,223 (2,521,786,459) 50,889,756,674 73,462,930,041

Fibre Optic Network

under finance lease (Note 4.4) 7,949,707,324 - (271,385,816) 7,678,321,508 1,547,607,020 380,404,045 (74,753,435) 1,853,257,630 5,825,063,878

125,312,297,519 22,948,394,597 (16,229,683,893) 132,031,008,223 39,758,444,930 15,581,109,268 (2,596,539,894) 52,743,014,304 79,287,993,919

Notes to the Financial Statements

80/81
 4.1 Land
Land represents freehold land acquired for office premises and base stations.
Notes to the Financial Statements

4.2 Base station and transmission equipment

Base station and transmission equipment which form the major part of the telecommunication network include Radio
Base Station (RBS) and related accessories, Base Station Controllers (BSC), Trans-Receiver Unit (TRU), GSM antenna,
tower, site infrastructure, civil works, microwave links, Mobile Switching Centres (MSC), Home Location Register (HLR) and
other equipment and accessories.
In 2009, a portion of GP's core network equipment (included in base station and transmission equipment) supplied by
Ericsson having carrying amount of Tk 2,795,643,569 was exchanged against network equipment supplied by Huawei
Technologies Co. Limited (Huawei). Although the transaction had commercial substance in terms of its impact on
configuration of future cash flows, reliable information regarding fair market value of the assets acquired or the assets
given up was not available. Accordingly, costs of the assets acquired were measured at the carrying amount of the assets
given up in compliance with applicable accounting standards.
Further, in September 2010, a similar agreement was signed between Grameenphone and Huawei for supply of network
equipment and related maintenance services. Under the agreement, existing base stations and transmission equipment
of Grameenphone will be replaced by new equipment supplied by Huawei. Exchange of assets under the contract is
expected to occur during 2011- 2013.

4.3 Capital work in progress (CWIP)

This represents primarily the cost of network equipment under construction and capital inventories. The components of
network equipment were procured mostly from Ericsson and Huawei.

4.3.1 Capital work in progress transferred

The amount of CWIP completed and transferred during the year to the corresponding items of property, plant and
equipment was as follows:
2010 2010 2009
Taka Taka Taka
Name of assets Consolidated Separate Individual

Building (a) 4,018,620,231 4,018,620,231 -

Base station 2,814,553,658 2,814,553,658 5,686,463,561
Transmission equipment 2,257,885,889 2,257,885,889 4,309,646,132
Computers and other IT equipment 315,331,460 307,124,216 294,103,846
Furniture and fixtures (a) 461,969,932 461,969,932 65,923,615
Vehicles 196,675,019 196,675,019 93,431,947
CWIP transferred 10,065,036,189 10,056,828,945 10,449,569,101
Adjustment (write-off) 23,088 23,088 16,501,624
Total transfer/adjustment of CWIP 10,065,059,277 10,056,852,033 10,466,070,725

(a) Construction of Corporate Head Office

Construction of Corporate Head Office of Grameenphone, GPHOUSE, which started during 2005, was completed in
August 2010 and was capitalised on 1 September 2010. Accumulated cost for the assets up to completion was Tk
4,440,612,053 (including capitalised borrowing costs of Tk 382,346,681).
The components of GPHouse are expected to have different useful lives ranging from 5 to 50 years. Accordingly, these
components were capitalised as separate items under different sub-categories mentioned below on the basis of their
respective nature and expected useful lives.
Expected useful life Cost
Years Taka
Building
Sub structure and super structure 50 1,187,399,199
Indoor facilities and fittings 10 - 20 1,893,985,086
Fencing, fenestration, raised floor and ceiling 15 - 25 937,235,946
4,018,620,231
Furniture and fixtures 5 421,991,822
4,440,612,053
4.3.2 Capital work in progress - components
Capital work in progress of the company as at 31 December 2010 consists of capital inventory of Tk 1,478,397,052 (2009:
Tk 1,086,510,194), and base station, transmission and other telecom equipment, and civil works of Tk 2,492,217,414

Notes to the Financial Statements

(2009: Tk 1,842,355,368).
In addition to the above, CWIP in the consolidated financial statements includes Tk. 168,631,962 representing cost of
computers and other IT equipment of GPIT which were in process of installation at the reporting date.

4.4 Fibre Optic Network under finance lease

This represents the fibre optic network acquired under finance lease from Bangladesh Railway (BR). The lease agreement
with BR is valid until June 2027.

4.5 Capitalisation of borrowing costs

During the year ended 31 December 2010, Grameenphone capitalised Tk. 91,599,570 (2009: Tk. 189,744,831) as a part
of cost of GPHouse as per the requirements of IAS/BAS 23: Borrowing Costs.

4.6 Allocation of depreciation charged during the year

2010 2010 2009

Taka Taka Taka
Consolidated Separate Individual

Cost of network operation (Note 38) 14,736,928,488 14,736,911,684 14,481,369,413

Operating expenses (Note 38) 836,507,111 836,507,111 1,099,739,855
15,573,435,599 15,573,418,795 15,581,109,268

4.7 Security
Property, plant and equipment with carrying amount of Tk 7,208,750,000 was subject to mortgage registered with the
Registrar of Joint Stock Companies and Firms (RJSC) against the loans and borrowings obtained from senior lenders.
These loans were fully repaid by December 2010 and accordingly the mortgage is in the process of cancellation.

4.8 Change in estimates

Estimated useful life of air conditioners at office locations was reduced to 3 years from 5 years during 2010 as a result of
regular review of useful lives of assets. The effects of such change in useful life on the financial statements are
summarised below:

2010 2011
Taka Taka

Decrease/(increase) in depreciation (62,032,164) (62,032,164)

Decrease/(increase) in income tax expense 21,711,257 21,711,257
Increase/(decrease) in profit (40,320,907) (40,320,907)

Increase/(decrease) in property, plant and equipment (62,032,164) (62,032,164)

Decrease/(increase) in deferred tax liability 21,711,257 21,711,257
Increase/(decrease) in equity (40,320,907) (40,320,907)

82/83
 5 Intangible assets

Year 2010 (Consolidated)

Notes to the Financial Statements

Cost Amortisation Carrying amount

Disposal/ Disposal/
Name of assets As at Addition As at As at Charged As at As at
Adjustment Adjustment
1 January during 31 December 1 January during the 31 December 31 December
during during
2010 the year 2010 2010 the year 2010 2010
the year the year

Taka Taka Taka Taka Taka Taka Taka Taka Taka

Pulse Code Modulation (PCM) 64,550,000 9,148,000 - 73,698,000 50,517,442 10,455,865 - 60,973,307 12,724,693
Software and others (Note 5.1) 4,438,938,377 501,605,190 (2,729,720) 4,937,813,847 2,635,817,541 880,791,701 (2,729,720) 3,513,879,522 1,423,934,325
Telecom licence - spectrum (Note 5.2) 5,920,000,000 - - 5,920,000,000 384,602,307 328,888,888 - 713,491,195 5,206,508,805

10,423,488,377 510,753,190 (2,729,720) 10,931,511,847 3,070,937,290 1,220,136,454 (2,729,720) 4,288,344,024 6,643,167,823

Capital work in progress (Note 5.3) 328,575,806 530,425,659 (510,753,190) 348,248,275 - - - - 348,248,275

10,752,064,183 1,041,178,849 (513,482,910) 11,279,760,122 3,070,937,290 1,220,136,454 (2,729,720) 4,288,344,024 6,991,416,098

Year 2010 (separate)

Cost Amortisation Carrying amount

Disposal/ Disposal/
Name of assets As at Addition As at As at Charged As at As at
Adjustment Adjustment
1 January during 31 December 1 January during the 31 December 31 December
during during
2010 the year 2010 2010 the year 2010 2010
the year the year

Taka Taka Taka Taka Taka Taka Taka Taka Taka

Pulse Code Modulation (PCM) 64,550,000 9,148,000 - 73,698,000 50,517,442 10,455,865 - 60,973,307 12,724,693
Software and others (Note 5.1) 4,438,938,377 501,605,190 (2,729,720) 4,937,813,847 2,635,817,541 880,791,701 (2,729,720) 3,513,879,522 1,423,934,325
Telecom licence - spectrum (Note 5.2) 5,920,000,000 - - 5,920,000,000 384,602,307 328,888,888 - 713,491,195 5,206,508,805

10,423,488,377 510,753,190 (2,729,720) 10,931,511,847 3,070,937,290 1,220,136,454 (2,729,720) 4,288,344,024 6,643,167,823

Capital work in progress (Note 5.3) 328,575,806 426,937,480 (510,753,190) 244,760,096 - - - - 244,760,096
10,752,064,183 937,690,670 (513,482,910) 11,176,271,943 3,070,937,290 1,220,136,454 (2,729,720) 4,288,344,024 6,887,927,919

Year 2009 (Individual)

Cost Amortisation Carrying amount

Disposal/ Disposal/
Name of assets As at Addition As at As at Charged As at As at
Adjustment Adjustment
1 January during 31 December 1 January during the 31 December 31 December
during during
2009 the year 2009 2009 year 2009 2009
the year the year

Taka Taka Taka Taka Taka Taka Taka Taka Taka

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

Telecom licence - spectrum (Note 5.2) 5,920,000,000 - - 5,920,000,000 55,713,418 328,888,889 - 384,602,307 5,535,397,693
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

Capital work in progress (Note 5.3) 355,354,846 785,480,006 (812,259,046) 328,575,806 - - - - 328,575,806

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

5.1 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.

5.2 Telecom licence - spectrum

This represents the cost of spectrum licence obtained from BTRC. In September 2008, GP acquired licence for use of
additional 7.4 MHz spectrum for subsequent 18 years in consideration for BDT 800 million per MHz.

5.3 Capital work in progress (CWIP)

CWIP includes cost of software in process of installation/ implementation and also software under testing phase awaiting
users' acceptance.
CWIP in the consolidated financial statements includes Tk. 103,488,179 representing cost of Network Engineering
Resource Management (NERM) software and capitalised personnel and other direct costs for NERM. The software is in the
process of installation for GP by GPIT.
 2010 2010 2009
5.4 Allocation of amortisation expense Taka Taka Taka
during the year Consolidated Separate Individual

Notes to the Financial Statements

Cost of network operation (Note 38) 595,017,187 595,017,187 566,953,776
Operating expenses (Note 38) 625,119,267 625,119,267 578,924,700
1,220,136,454 1,220,136,454 1,145,878,476

6 Investment in subsidiary
This represents GP's investment in GPIT, a wholly owned subsidiary of GP. GPIT was incorporated on 28 January 2010 with
the objective of providing IT related services to GP and other external parties. The newly formed subsidiary was registered
as a private limited company with an authorised share capital of Tk 7,500,000,000 divided into 75,000,000 shares of Tk
100 each. As at 31 December 2010, paid up capital of GPIT was Tk. 75,000,000 representing 75,000 shares, out of which
749,999 shares (99.99% of total share capital) were subscribed by GP at face value.

7 Long term deposits

These represent the deposit maintained with Southeast Bank Limited 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
Handset, data card and other device 133,374,666 133,374,666 55,362,359
SIM card (Note 8.2) 633,598,995 633,598,995 363,659,067
Scratch card 67,381,665 67,381,665 11,848,783
834,355,326 834,355,326 430,870,209

8.1 Movement of inventories Handset, data card

SIM card Scratch card
and other device
Taka Taka Taka

Balance as at 1 January 2009 13,469,924 353,171,527 40,543,246

Purchase during the year 2009 509,792,328 470,029,187 25,457,560
Issued during the year 2009 (445,361,051) (455,182,713) (41,030,324)
77,901,201 368,018,001 24,970,482
Adjustment/write-off for obsolescence (22,538,842) (4,358,934) (13,121,699)
Balance as at 31 December 2009 55,362,359 363,659,067 11,848,783

Purchase during the year 2010 1,187,172,203 805,866,013 72,949,983

Issued during the year 2010 (1,058,734,515) (532,711,300) (17,376,328)
183,800,047 636,813,780 67,422,438
Adjustment/write-off for obsolescence
and net realizable value (50,425,381) (3,214,785) (40,773)
Balance as at 31 December 2010 133,374,666 633,598,995 67,381,665

During 2010 handset inventories were written down by Tk 42,713,999 (2009: Tk 1,329,258) to reflect net realisable value
of such inventories.

8.2 Number of inventories 2010 2010 2009

Units Units Units
Consolidated Separate Individual

Handset, data card and other device 136,081 136,081 8,252

SIM card (Note 8.3) 6,221,301 6,221,301 4,489,268
Scratch card 44,681,581 44,681,581 26,384,723

8.3 SIM card

As at 31 December 2010, GP had 6,221,301 SIM cards (2009: 4,489,268 SIM cards) out of which 1,505,220 SIM cards
(2009: 639,226 SIM cards) were intended to be issued with new connection to subscribers. Each new connection attracts
Tk. 800 as VAT and Supplementary Duty to be paid to Govt. exchequer.

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 2010 2010 2009
9 Deferred cost of connection revenue Taka Taka Taka
Consolidated Separate Individual
Notes to the Financial Statements

Balance as at 1 January 483,550,116 483,550,116 360,712,137

Addition during the year 210,567,585 210,567,585 322,972,861
694,117,701 694,117,701 683,684,998
Amortisation during the year (209,275,220) (209,275,220) (200,134,882)
Balance as at 31 December 484,842,481 484,842,481 483,550,116

10 Accounts receivable, net

Receivables for mobile service-interconnection (Note 10.1) 4,877,394,453 4,877,394,453 4,505,904,450
Receivables for mobile service-post paid and others (Note 10.2) 180,435,548 180,435,548 162,048,506
Receivables for infrastructure sharing (Note 10.3) 153,522,463 153,522,463 -
Receivables for sub lease of fibre optic network (Note 10.4) 22,995,771 22,995,771 24,685,230
Other receivables for non-mobile service (Note 10.5) 13,597,537 3,311,174 4,427,976
5,247,945,772 5,237,659,409 4,697,066,162

10.1 Receivables for mobile service-interconnection

Accounts receivable 5,095,844,311 5,095,844,311 4,534,263,197
Provision for doubtful debts (218,449,858) (218,449,858) (28,358,747)
4,877,394,453 4,877,394,453 4,505,904,450

10.2 Receivables for mobile service-post paid and others

Accounts receivable 234,980,149 234,980,149 271,826,022
Provision for doubtful debts (54,544,601) (54,544,601) (109,777,516)
180,435,548 180,435,548 162,048,506
Receivables for mobile service-post paid and others include receivables from post paid subscribers, content providers,
and channel partners.

10.3 Receivables for infrastructure sharing

Accounts receivable 153,522,463 153,522,463 -
Provision for doubtful debts - - -
153,522,463 153,522,463 -
10.4 Receivables for sub lease of fibre optic network
Accounts receivable- sublease 30,351,110 30,351,110 31,909,788
Provision for doubtful debt (7,355,339) (7,355,339) (7,224,558)
22,995,771 22,995,771 24,685,230

10.5 Other receivables for non-mobile service

Other receivables for non-mobile service include receivables against broadband internet service, bill pay service of GP
and receivables against IT services provided by GPIT to external customers.

10.6 Provision for doubtful debts

Balance as at 1 January 145,360,821 145,360,821 260,530,745
Provision made during the year 251,991,051 251,991,051 91,628,074
397,351,872 397,351,872 352,158,819
Written off during the year (117,002,074) (117,002,074) (206,797,998)
Balance as at 31 December 280,349,798 280,349,798 145,360,821

10.7 Security against accounts receivable

Good and secured 402,024,879 402,024,879 3,495,124,415
Good and having no security other than personal security 4,845,920,893 4,835,634,530 1,201,941,747
Doubtful and bad 280,349,798 280,349,798 145,360,821
Gross accounts receivable 5,528,295,570 5,518,009,207 4,842,426,983
Provision for bad and doubtful debts (280,349,798) (280,349,798) (145,360,821)
Net accounts receivable 5,247,945,772 5,237,659,409 4,697,066,162
10.8 Debts due by directors, officers and other related parties
As at 31 December, accounts receivable does not include any receivable from:
(a) the directors and other officers of the company/group;

Notes to the Financial Statements

(b) firms or private limited companies respectively in which any director of Grameenphone Ltd. is a partner, director or
member, other than those disclosed in note 51.1; and
(c) companies under the same management. 2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual
11 Other receivables
Accrued interest 156,269,520 156,269,520 44,665,557
Receivable from Ericsson 428,123,981 428,123,981 428,123,981
Receivable from other Telenor entities ( Note 11.1) 182,467,922 182,467,922 120,838,513
Receivable from GPIT (Note 11.2) - 304,773,298 -
Receivable from other external parties 161,158,846 158,883,376 168,695,264
928,020,269 1,230,518,097 762,323,315

11.1 Receivable from other Telenor entities

Receivable from other Telenor entities includes reimbursable expenses incurred on behalf of Telenor and its subsidiaries
as well as other inter company receivables.

11.2 Receivable from GPIT

Receivable from GPIT includes receivable for reimbursable office running expenses (Tk 31,911,047), IT related maintenance
charges paid on behalf of GPIT (Tk. 47,931,921), preliminary expenses of GPIT (Tk 13,870,968), rent for GPHOUSE
(Tk. 17,132,616), and reimbursable cost for computers and other IT equipment (Tk 168,631,953) and relevant VAT.

12 Advances, deposits and prepayments

Advances
Advance to employees (Note 12.1) 78,945,026 70,281,406 51,378,857
Advance to Bangladesh Railway 5,545,166 5,545,166 3,181,426
Advance for capital expenditure (Note 12.2) 343,053,611 321,809,991 444,382,534
Advance to GPIT for NERM project - 161,032,225 -
Advance VAT (Note 12.3) 30,016,625 - -
Other advances 1,006,311 853,156 719,651
458,566,739 559,521,944 499,662,468
Deposits
Deposit for bank guarantee (Note 12.4) 127,957,944 127,957,944 127,957,944
Security deposit for utilities and services 60,483,786 60,483,786 54,897,307
188,441,730 188,441,730 182,855,251
Prepayments
Prepayment against rent (Note 12.5) 295,451,291 295,451,291 288,961,363
Prepayment against expenses (Note 12.6) 679,178,079 675,546,464 235,134,835
974,629,370 970,997,755 524,096,198
1,621,637,839 1,718,961,429 1,206,613,917

12.1 Advance to employees

This includes advances made to employees in relation to official travel, training, office utility bills, other office running
expenses etc.

12.2 Advance for capital expenditure

This includes advance to vendors for civil works and towers at different sites and other advances for acquisition/
construction of property, plant and equipment and intangible assets.

12.3 Advance VAT

This represents advance VAT of GPIT and includes debit balance of VAT current account, and VAT deducted at source
(which can be reclaimed as rebate) by customers from GPIT's bills against which VAT deduction certificates and/or copy
of treasury challans are yet to be received.

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 12.4 Deposit for bank guarantee
This represents the bank guarantee margin deposited at different banks against guarantee provided in favour of Customs
authority and other parties.
Notes to the Financial Statements

12.5 Prepayment against rent

This represents payment of rent in advance for base stations and office locations.

12.6 Prepayment against expenses

This includes prepaid insurance premium, payment to suppliers for operating inventories, spare parts, software support
maintenance and others.

12.7 Security against advances 2010 2010 2009

Taka Taka Taka
Consolidated Separate Individual

Good and secured 343,053,611 321,809,991 444,382,534

Good and having no security other than personal security 115,513,128 237,711,953 55,279,934
Doubtful and bad - - -
458,566,739 559,521,944 499,662,468
Provision for bad and doubtful amount - - -
Total advances 458,566,739 559,521,944 499,662,468

12.8 Loans and advances to subsidiaries, directors, officers and other related parties
Other than those mentioned in note above, there was no loans or advances to-
(a) Directors of the company/group;
(b) Firms or private limited companies respectively in which any director of Grameenphone Ltd. is a partner, director or
member; and
(c) Subsidiaries or companies under the same management.

13 Short term investment

This represents the amount of fixed deposits having maturity period of more than three months at the following banks-

State Bank of India 356,550,000 356,550,000 -

Southeast Bank Limited 1,161,620 1,161,620 -
Standard Chartered Bank 100,000,000 100,000,000 -
Pubali Bank Ltd. 700,000,000 700,000,000 -
NCC Bank Ltd. 454,122,500 454,122,500 -
Jamuna Bank Limited 541,894,990 541,894,990 500,000,000
Commercial Bank of Ceylon PLC 400,000,000 400,000,000 -
Bank Asia Limited 200,000,000 200,000,000 -
2,753,729,110 2,753,729,110 500,000,000

Interest rates on the above FDRs range from 8.25% to 11% (2009: 9%).
 2010 2010 2009
14 Cash and cash equivalents Taka Taka Taka
Consolidated Separate Individual

Notes to the Financial Statements

Cash in hand 3,737,483 3,697,741 7,422,192
Cash at bank :
Southeast Bank Limited 1,341,255,729 1,341,255,729 618,226,240
Standard Chartered Bank 481,974,849 235,593,382 329,492,761
Sonali Bank Limited 10,372,742 10,372,742 9,112,126
IFIC Bank Limited 734,094,183 734,094,183 310,245,153
Commercial Bank of Ceylon PLC 114,235,913 114,235,913 370,478,423
Export Import Bank of Bangladesh Limited 1,220,496,073 1,220,496,073 509,456,920
Citibank, N.A. (Note 14.1) 1,790,754,085 1,790,754,085 987,567,559
Dhaka Bank Limited 345,695,375 345,695,375 512,650,251
AB Bank Limited 1,310,677,500 1,310,677,500 -
Islami Bank Bangladesh Limited 1,811,608 1,811,608 9,585,159
One Bank Limited 677,230,821 677,230,821 1,355,622,153
The Hongkong and Shanghai Banking Corporation Limited 323,126,235 314,931,502 829,155,699
Prime Bank Limited 1,165,222,607 1,165,222,607 629,764,197
Premier Bank Limited 666,824,444 666,824,444 500,288,702
Dutch-Bangla Bank Limited 17,118,741 15,161,957 372,855,996
Eastern Bank Limited 177,397,337 177,397,337 710,658,504
National Bank Limited 1,320,631,806 1,320,631,806 513,583,396
BRAC Bank Limited 993,928,719 993,928,719 1,151,503,585
The City Bank Limited 260,262,726 260,262,726 428,247,825
Trust Bank Limited 13,030,577 13,030,577 504,697,678
Bank Asia Limited 1,039,663,592 1,039,663,592 503,381,293
Mercantile Bank Limited 1,261,929,492 1,261,929,492 402,205,090
United Commercial Bank Ltd. 630,927,317 630,927,317 302,998,526
NCC Bank Ltd. 102,137,500 102,137,500 -
Jamuna Bank Limited (Note 14.2) 255,869,855 255,869,855 12,037,622
Agrani Bank Limited 1,286,457 1,286,457 5,725,486
Shahjalal Islami Bank Limited 1,141,777,137 1,141,777,137 1,403,465,596
Woori Bank 700,751 700,751 4,878,157
Pubali Bank Ltd. - - 300,000,000
Bank Alfalah Ltd. 344,753,073 344,753,073 300,167,744
Mutual Trust Bank Ltd. 407,485,675 407,485,675 -
Standard Bank Limited 304,377,500 304,377,500 -
Social Investment Bank Limited 50,000,000 50,000,000 -
Utility bill pay service collection A/C (Note 14.3) 418,184,172 418,184,172 203,505,631
Collection account with other banks (Note 14.4) 2,530,478 2,530,478 2,333,423
18,927,765,069 18,671,232,085 14,093,890,895
18,931,502,552 18,674,929,826 14,101,313,087

14.1 This includes Tk. 1,499,415 (2009: Tk. 88,517,671) representing amounts received against share application which were
in the process of being refunded as at 31 December 2010.

14.2 Fixed deposit of Tk. 500,000,000 at Jamuna Bank Limited was rearranged and presented under short term investment in
2010. This amount was included in cash at bank in 2009 considering the significance of the amount and remaining
maturity period.

14.3 Utility bill pay service collection A/C

This represents the amount deposited at Citibank, N.A. (2010: Tk 268,220,631; 2009: Tk 123,335,836) and BRAC Bank
Limited (2010: Tk 15,502,791; 2009: Tk 80,169,795) and other banks (2010: Tk. 134,460,750; 2009: Nil) on account of
utility bill pay services as at 31 December. Use of this amount is restricted to settlement of payable for bills pay receipt as
mentioned in note 27.

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 14.4 Collection account with other banks
This represents the amount which was in transit as at 31 December.
Notes to the Financial Statements

15 Share capital 2010 2010 2009

Taka Taka Taka
Consolidated Separate Individual
Authorised:
4,000,000,000 ordinary shares of Tk. 10 each 40,000,000,000 40,000,000,000 40,000,000,000
40,000,000,000 40,000,000,000 40,000,000,000
Issued, subscribed, called up and paid up:
1,350,300,022 ordinary shares of Tk. 10 each 13,503,000,220 13,503,000,220 13,503,000,220
13,503,000,220 13,503,000,220 13,503,000,220

Face value of Face value of

Movement of share capital Tk. 1 per share Tk. 10 per share
Taka Taka
Balance as at 1 January 2009
(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 2009 (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 15.1)
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
Balance as at 31 December 2009 - 13,503,000,220

The company was initially registered with ordinary shares of Tk 43.00 each. These shares were subsequently converted
into Tk 10 shares through a 43:1 split at the 16th EGM (held on 15 July 2008) and 1:10 reverse split at the 19th EGM (held
on 2 July 2009).
There has been no change in share capital during 2010.

15.1 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 Initial
Public Offering (IPO) processes.

15.2 Shareholding position

a) Percentage of shareholdings
Name of shareholders % of holding Value of shares (Taka)
2010 2009 2010 2009
Telenor Mobile Communications AS,
Norway 55.8% 55.8% 7,534,077,240 7,534,077,240
Nye Telenor Mobile Communications
II AS, Norway 0.0% 0.0% 2,150 2,150
Nye Telenor Mobile Communications
III AS, Norway 0.0% 0.0% 2,150 2,150
Telenor Asia Pte Ltd, Singapore 0.0% 0.0% 2,150 2,150
Grameen Telecom, Bangladesh 34.2% 34.2% 4,617,664,090 4,617,664,090
Grameen Kalyan, Bangladesh 0.0% 0.0% 220 220
Grameen Shakti, Bangladesh 0.0% 0.0% 220 220
General public, GP employees and
institutions 10.0% 10.0% 1,351,252,000 1,351,252,000
100% 100% 13,503,000,220 13,503,000,220
b) Classification of shareholders by range of number of shares held

Shareholding range No. of shareholders No. of shares

Notes to the Financial Statements

2010 2009 2010 2009

1-500 81,024 179,001 17,945,880 36,663,152

501-5,000 17,159 9,793 24,439,298 14,611,180
5,001-10,000 1,089 828 7,853,255 5,993,944
10,001-20,000 527 418 7,481,613 5,824,433
20,001-30,000 121 104 2,917,988 2,544,649
30,001-40,000 73 57 2,565,305 1,991,885
40,001-50,000 46 33 2,091,771 1,497,906
50,001-100,000 85 85 6,156,150 6,125,896
100,001-1,000,000 90 66 23,516,430 20,304,723
1,000,001-1,000,000,000 12 14 1,255,332,332 1,254,742,254
100,226 190,399 1,350,300,022 1,350,300,022

16 Share premium 2010 2010 2009

Taka Taka Taka
Consolidated Separate Individual

Balance as at 1 January 7,840,225,942 7,840,225,942 13,743,987

Addition during the year (Note 16.1) - - 8,370,259,450
Adjustment of share issue costs (Note 16.2) - - (543,777,495)
Balance as at 31 December 7,840,225,942 7,840,225,942 7,840,225,942

16.1 In 2009, total amount of Tk 8,370,259,450 was received as share premium in respect of shares issued to the existing
shareholders, GP employees, Grameen bank borrowers, institutional investors and to general public.

16.2 Net issue cost of Tk 543,777,495 was set off against share premium as per IAS 32: Financial Instruments: Presentation.

17 Capital reserve
In 1999, Grameenphone issued 5,086,779 preference shares of Tk 45.84 each, which were converted into ordinary shares
of Tk 43.00 each in 2004. The balance Tk 2.84 per share was transferred to capital reserve account. The conversion was
in accordance with clauses 41 to 44 of Memorandum and Articles of Association of GP. This amount is not distributable as
dividend as per the Companies Act 1994.

18 Deposit from shareholders

Balance as at 1 January 1,880,178 1,880,178 1,882,996
Utilised against issue of right shares - - (2,818)
Balance as at 31 December 1,880,178 1,880,178 1,880,178
Deposit from shareholders as at 31 December represents balance of the share money received from Telenor Mobile
Communications AS, Norway, which has not been used against issuance of shares.

19 General reserve
Grameenphone availed tax holiday benefits from 1 June 2001 to 31 May 2006 as per the provisions of Income Tax
Ordinance 1984. A tax holiday reserve was created during the Tax Holiday period to ensure investment in compliance with
the said ordinance. The reserve was subsequently transferred to general reserve upon fulfilment of necessary conditions.

20 Non controlling interest

Non controlling interest is the equity in GPIT not attributable, directly or indirectly, to GP. This includes the amount of paid
up capital and proportionate share of accumulated profit of GPIT attributable to shareholders of GPIT other than GP.

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 2010 2010 2009
21 Loans and borrowings, net of current portion Taka Taka Taka
Consolidated Separate Individual
Notes to the Financial Statements

IFC (Note 21.1) - - 206,389,257

ADB (Note 21.1) - - 152,690,367
NORFUND (Note 21.1) - - 71,782,052
Eksportfinans ASA (Note 21.2) - - 49,037,159
NORAD (Note 21.3) - - 98,074,370
Local syndicated loan (Note 21.4) - - 1,376,893,993
- - 1,954,867,198
Current portion of loans and borrowings (Note 21.5) - - (1,036,943,071)
- - 917,924,127
The above lenders are referred to as senior lenders in other parts of this financial statements.

21.1 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 were repayable in 10 semi annual instalments 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.

21.2 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 instalments starting from 29 June 2004.

21.3 Loan from The Norwegian Agency For Development And Cooperation (NORAD)
Grameenphone Ltd. entered into an agreement with 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
on drawdown amount was payable semi-annually starting after 6 months from the first drawdown date. The principal amount
was repayable in 14 instalments with the first instalment falling due 42 months after the last drawdown date. GP received the
loan in two instalments; one on 30 December 1997 (NOK 35 million) and another on 3 January 2001 (NOK 15 million).

21.4 Local syndicated loan

On 17 September 2007, Grameenphone Ltd. signed a Tk 2 billion syndicated loan agreement with 16 local financial
institutions, namely 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. Standard Chartered Bank was the lead arranger for the syndicated loan. Applicable interest rate for the loan
was 13.50% per annum to be compounded daily. The loan was repayable through 17 quarterly instalments each
representing 5.8824% of the principal. The repayment started on 15 November 2008.

21.5 Loans and borrowings - current portion

IFC - - 206,389,257
ADB - - 152,690,367
NORFUND - - 71,782,052
Eksportfinans ASA - - 49,037,159
NORAD - - 98,074,370
Local syndicated loan - - 458,969,866
- - 1,036,943,071
21.6 Repayment of loans and borrowings
During 2010, the loans from IFC, ADB, NORFUND, Eksportfinans ASA and NORAD were repaid in full at maturity while local
syndicated loan was repaid prior to maturity on 30 June 2010. The local loan had a contractual maturity on 15 October 2012.
The early settlement of local syndicated loan did not involve any additional cost as breakage charge or early settlement
charge.
21.7 Security against loans and borrowings
All the above loans were secured by a first priority floating charge on the company's undertakings, 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

Notes to the Financial Statements

7,208,750,000. Following full repayment of all the loans, the above charge is in the process of being cancelled.

21.8 Tenure of repayment of loans and borrowings 2010 2010 2009

% of principal % of principal % of principal
The tenure of repayment as per the agreements
Consolidated Separate Individual
are as follows:
Payable not later than 1 year N/A N/A 53%
Payable later than 1 year but not later than 5 years N/A N/A 47%

21.9 Credit facilities available as at 31 December

The group enjoys both funded and non funded short term working capital facilities with 16 banks. The non funded facilities
include Letters of Credit (LC), Letters of Guarantee and foreign exchange forward contracts (FX Forward). The funded
facilities include overdraft facility, short term loan and import loan. The aggregate amount of available short term working
capital facilities is Tk. 27,564.65 million (2009 : Tk. 19,603.45 million) of which non funded limit is Tk. 22,039 million
(2009 : Tk. 18,427.80 million) and funded limit is Tk. 13,235.65 million (2009 : Tk. 10,185.65 million).
A detail of the total facilities is enumerated below:

(a) Standard Chartered Bank

i) L/C facility - Tk. 1,500 million (2009 : Tk. 2,500 million) for GP and Tk. 1,650 million for the group.
ii) Overdraft / short term loan facility - Tk. 1,500 million (2009 : Tk. 1380 million).

(b) Commercial Bank of Ceylon PLC

i) LC facility - Tk 500 million (2009 : Tk 670 million).
ii) Overdraft facility - Tk. 250 million (2009 : Tk. 100 million).
iii) Short term loan facility - Tk. 100 million (2009 : Tk. 100 million)
iv) Foreign exchange forward arrangement - Tk. 500 million (2009 : Tk. 670 million).

(c) Citibank, N.A.

i) Sight/usance LC facility - Tk. 2,800 million (2009 : Tk. 2,800 million).
ii) Overdraft/ short term loan facility -Tk. 2,100 million with inner limit of LC Tk. 2,800 million (2009 : 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, however, may not exceed Tk. 2,100 million (2009 : Tk. 2,100 million) at any point of time.

(d) The Hongkong and Shanghai Banking Corporation Limited

i) Sight/usance LC facility -Tk.1,600 million (2009 : Tk 1,600 million).
ii) Short term loan facility - Tk. 700 million with inner limit of LC Tk. 1,600 million (2009 : Tk. 700 million).
iii) Overdraft facility - Tk. 150 million with inner limit of LC Tk. 1,600 million (2009 : Tk.150 million).
iv) Foreign exchange line - Tk. 10 million (2009 : Tk.10 million).
However, combined funded exposure is limited to Tk. 700 million (2009 : Tk. 700 million) at any point of time.

(e) Eastern Bank Limited

i) Sight/usance LC facility - Tk. 2,000 million (2009 : Tk. 1,400 million).
ii) Short term loan/LTR facility - Tk. 1,000 million with inner limit of LC Tk. 2,000 million (2009 : Tk. 600 million).
iii) Overdraft facility - Tk. 100 million with inner limit of LC Tk. 2,000 million (2009 : Tk. 100 million).
iv) Bank guarantee - Tk. 800 million with inner limit of LC Tk. 2,000 million (2009 : Tk.150 million).
However, combined funded exposure is limited to Tk. 1,000 million at any point of time.

(f) One Bank Limited

i) Sight/usance LC facility - Tk. 660 million (2009 : Tk. 660 million).
ii) LTR/time loan facility - Tk. 280 million with inner limit of LC Tk. 660 million (2009 : Tk. 280 million).
iii) Bank guarantee - Tk. 660 million with inner limit of LC Tk. 660 million (2009 : Tk. 660 million).

(g) BRAC Bank Limited

i) Sight/usance LC facility - Tk. 1,300 million (2009 : Tk.1,300 million).
ii) Overdraft/short term loan facility - Tk. 900 million with inner limit of L/C Tk. 1,300 million (2009 : Tk. 900 million).
iii) Bank guarantee - Tk. 1,300 million with inner limit of LC Tk. 1,300 million (2009 : Tk. 1,300 million).

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 (h) Dutch-Bangla Bank Limited
i) Sight/usance LC facility - Tk. 1,600 million (2009 : Tk. 1600 million).
ii) Short term loan/LTR/overdraft facility - Tk. 685 million with inner limit of LC Tk. 1,600 million (2009 : Tk. 685 million).
Notes to the Financial Statements

(i) Woori Bank

i) Sight/usance LC facility - Tk. 414 million.(2009 : Tk. 412.80 million)
ii) Overdraft facility for Tk. 205.65 million. (2009 : Tk. 205.65 million)
(j) The City Bank Limited
i) Sight/usance LC facility - Tk. 660 million.(2009 : Tk. 660 million)
ii) Overdraft/ short term loan facility - Tk. 420 million. ( 2009 : Tk. 420 million)
iii) Bank guarantee facility - Tk. 660 million with inner limit of LC Tk. 660 million (2009 : Tk. 660 million).

(k) Premier Bank Limited

i) Sight/usance LC facility - Tk. 910 million.(2009 : Tk. 910 million)
ii) Overdraft facility - Tk. 390 million with inner limit of LC Tk. 910 million.(2009 : Tk. 390 million)
iii) Bank guarantee facility - Tk. 910 million with inner limit of LC Tk. 910 million.(2009 : Tk. 910 million)
(l) Pubali Bank Ltd.
i) Sight/usance LC facility - Tk. 1,000 million (2009: Tk 1,000 million).
ii) Overdraft facility - Tk. 1,000 million (2009: Tk 1,000 million).

(m) Mutual Trust Bank Ltd.

i) Sight/usance LC facility - Tk. 890 million (2009 : nil).
ii) Overdraft facility - Tk. 650 million (2009 : nil).
iii) Bank guarantee facility - Tk. 890 million with inner limit of LC Tk. 890 million (2009 : nil)

(n) Southeast Bank Limited

i) Sight/usance LC facility - Tk. 1,400 million (2009 : nil).
ii) Overdraft facility - Tk. 1,400 million (2009 : nil).
iii) Bank guarantee facility - Tk. 1,400 million with inner limit of LC Tk. 1,400 million (2009 : nil).

(o) United Commercial Bank Ltd.

i) Sight/usance LC facility -Tk. 2,100 million (2009 : nil).
ii) Overdraft/LTR facility - Tk. 900 million with inner limit of LC 2,100 million (2009 : nil).
iii) Bank guarantee facility - Tk. 2,100 million with inner limit of LC 2,100 million (2009 : nil).

(p) Bank Alfalah Ltd.

i) Sight/usance LC facility - Tk. 525 million.(2009 : Tk. 525 million)
ii) Cash finance facility - Tk. 225 million with inner limit of LC Tk. 525 million (2009 : Tk. 225 million).
iii) Bank guarantee facility - Tk. 300 million with inner limit of LC Tk. 525 million (2009 : Tk. 300 million).

(q) Jamuna Bank Limited

i) Sight/usance LC facility - Tk. 680 million (2009 : nil).
ii) Overdraft facility - Tk. 280 million with inner limit of LC Tk. 680 million (2009 : nil).
iii) Bank guarantee facility - Tk. 680 million with inner limit of LC Tk. 680 million and Customs guarantee maximum 50
million (2009 : nil).
As per the approval of Board of Directors of GP, 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, financial covenants under the long term
loans and borrowings required debt equity ratio to be maintained below 2:1 during 2009. Following full repayment of the
loans and borrowings, the condition does not apply in 2010.

Security against short term credit facilities

The short term credit facilities are unsecured and backed by standard charge documents as per terms and conditions set
by respective banks and financial institutions.
 2010 2010 2009
Taka Taka Taka
22 Deposit from agents and subscribers Consolidated Separate Individual

Notes to the Financial Statements

Security deposit from subscribers (Note 22.1) 402,024,879 402,024,879 405,633,191
Security deposit from dealers and agents (Note 22.2) 42,615,000 42,615,000 35,315,000
444,639,879 444,639,879 440,948,191
22.1 Security deposit from subscribers
This represents security money obtained from post paid subscribers against their dues and can be used in full or in part to
adjust any unpaid portion of such dues. Any unadjusted amount of security deposits is refundable to subscribers on
termination of customer relationship or on demand.

22.2 Security deposit from dealers and agents

Security deposit from dealers and agents represent security money obtained from channel partners (i.e. dealer,
distributor, outlet agent). These deposits can be used in full or in part to adjust any amount due and are refundable at the
termination of contract.

23 Finance lease obligation

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 up to June 2027.
Obligation under finance lease was initially measured at an amount equal to the present value of minimum lease
payments. The effect of change in lease agreement in 2007 was accounted for as an adjustment of the leased asset and
obligation by the amount equal to the difference between the present value of revised minimum lease payments and the
carrying amount of lease obligation at that date. 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 obligation 5,019,805,838 5,019,805,838 5,019,805,838

Less: Current portion (Note 23.1) - - -
5,019,805,838 5,019,805,838 5,019,805,838

Finance lease obligation as at 31 December 2010 is payable as follows:

Future minimum Present value of

lease payments Interest minimum lease
payments
Taka Taka Taka

(i) Not later than one year 708,162,324 708,162,324 -

(ii) Later than one year but not later than five years 3,133,994,968 3,133,994,968 -
(iii) Later than five years 11,692,211,996 6,672,406,158 5,019,805,838
15,534,369,288 10,514,563,450 5,019,805,838

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

(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

23.1 Current portion of finance lease obligation

Current portion of finance lease obligation represents the principal amount of lease obligation included in the minimum
lease payments falling due in next 12 month period from the end of the reporting period. Minimum lease payments for
fibre optic network were revised in June 2007 with an annual escalation clause resulting in higher lease payments in later
parts of the lease tenure. Such increasing cash flow pattern has led to higher amount of interest expense being
recognised in the earlier periods and minimum lease payments falling short of the interest amount (until June 2014).
Accordingly, current portion of finance lease obligation was nil for 2010 and 2009.

94/95
 24 Deferred tax liabilities
Deferred tax assets and liabilities have been recognised and measured in accordance with the provisions of IAS/BAS 12:
Income Taxes. Related deferred tax expense/(income) have been disclosed in note 45. Deferred tax assets and liabilities
Notes to the Financial Statements

are attributable to the following:

Taxable/(deductible)
Carrying amount Tax base temporary
difference
Taka Taka Taka
As at 31 December 2010 (Separate)
Property, plant and equipment (excluding land and 61,251,718,806 29,220,855,793 32,030,863,013
CWIP and leased assets) (Note 4)
Property, plant and equipment under finance
lease (Note 4) 5,490,540,520 - 5,490,540,520
Difference for vehicle (Note 24.1) (117,530,099) - (117,530,099)
66,624,729,227 29,220,855,793 37,403,873,434

Accounts receivable (Note 10) 5,237,659,409 5,426,305,053 (188,645,644)

Finance lease obligation (Note 23) (5,019,805,838) - (5,019,805,838)
Accrued interest on finance lease obligation (Note 32) (144,706,628) - (144,706,628)
Asset retirement obligations (47,619,576) - (47,619,576)
Net taxable temporary difference 32,003,095,748

Applicable tax rate (Note 3.9) 35%

Deferred tax liabilities 11,201,083,512

As at 31 December 2010 (Consolidated)

Deferred tax liability for Grameenphone Ltd. 11,201,083,512
Deferred tax liability for Grameenphone IT Ltd. -
11,201,083,512

As per the provisions of Income Tax Ordinance 1984 (ITO), any income derived from the business of software development
and Information Technology Enabled Services (ITES) are subject to tax exemption until 30 June 2011.

As at 31 December 2009 (Individual)

Property, plant and equipment (excluding land and 66,464,688,130 28,340,515,231 38,124,172,899
CWIP and leased assets) (Note 4)
Property, plant and equipment under finance
lease (Note 4) 5,825,063,878 - 5,825,063,878
Difference for vehicle (Note 24.1) (143,928,932) - (143,928,932)
72,145,823,076 28,340,515,231 43,805,307,845

Accounts receivable (Note 10) 4,697,066,162 4,784,507,038 (87,440,876)

Finance lease obligation (Note 23) (5,019,805,838) - (5,019,805,838)
Accrued interest on finance lease obligation (Note 32) (55,974,858) - (55,974,858)
Asset retirement obligations (53,760,224) - (53,760,224)
Net taxable temporary difference 38,588,326,049
Applicable tax rate (Note 3.9) 35%
Deferred tax liabilities 13,505,914,117

24.1 Difference for vehicle

This represents the permanent difference related to sedan cars, not plying for hire, owned by the group. As per the provisions
of Income Tax Ordinance 1984, depreciation on such cars is allowed only up to certain limit of cost (currently Tk. 2 million per
car) of such cars for tax purpose. Difference for vehicle represents the amount of cost exceeding such limits.
 2010 2010 2009
Taka Taka Taka
25 Long term provisions Consolidated Separate Individual

Notes to the Financial Statements

Asset retirement obligations (Note 25.1) 162,876,392 162,876,392 160,033,350
Employee benefits - provision for gratuity (Note 25.2) - - 11,454,139
162,876,392 162,876,392 171,487,489

25.1 Asset retirement obligations (ARO)

Balance as at 1 January 160,033,350 160,033,350 148,358,966
Provision made during the year 18,105,501 18,105,501 19,484,384
178,138,851 178,138,851 167,843,350
Adjustment/payment made during the year (15,262,459) (15,262,459) (7,810,000)
Balance as at 31 December 162,876,392 162,876,392 160,033,350

Grameenphone Ltd. recognises asset retirement obligations (ARO) in respect of roof-top base stations and office space
for any constructive and/or legal obligations for dismantlement, removal or restoration incurred by the company as a
consequence of installing or constructing the sites. ARO is measured at the present value of expected cash out flows
required to settle such obligations. Unwinding of the discount is charged as financial expense in the profit or loss.

25.2 Employee benefits - provision for gratuity

Balance as at 1 January 11,454,139 11,454,139 22,122,040
Provisions made during the year 361,074,926 342,551,685 173,465,265
372,529,065 354,005,824 195,587,305
Transfer to fund during the year (372,529,065) (354,005,824) (184,133,166)
Balance as at 31 December - - 11,454,139

26 Accounts payable
Liability for capital expenditure 2,246,290,076 2,246,290,076 2,253,928,756
Payable for expenses:
Interconnection charges (Note 26.1) 4,938,280,452 4,938,280,452 5,009,442,013
Revenue sharing with content providers 113,692,440 113,692,440 51,675,839
International roaming services 63,481,362 63,481,362 39,852,930
Training and travel expenses 28,597,152 27,387,721 30,739,546
Sales and promotional expenses 96,973,807 96,973,807 41,964,797
Consultancy and professional fees 1,172,240,814 1,172,162,721 765,471,809
Cost of SIM card, scratch card, handsets etc. 217,699,901 217,699,901 147,055,638
Office and general expenses 617,037,743 597,421,920 897,998,520
PCM related expenses 48,764,725 48,764,725 60,643,877
Network operations and maintenance 325,732,166 314,169,878 345,587,495
7,622,500,562 7,590,034,927 7,390,432,464

Payable for others:

Tax deducted at source from suppliers 190,429,664 190,429,664 123,690,977
VAT deducted at source from suppliers 99,200,250 95,765,284 21,132,551
Retention money from suppliers 25,457,240 25,457,240 25,541,438
315,087,154 311,652,188 170,364,966
10,183,877,792 10,147,977,191 9,814,726,186

26.1 Interconnection charges

These represent accrued interconnection charges with respect to off-net local calls and international calls. According to
prevailing BTRC policies, each operator is liable to pay interconnection charges to other operators for outgoing off-net
calls.

96/97
 27 Payable to government and autonomous bodies 2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual
Notes to the Financial Statements

Bangladesh Telecommunication Regulatory Commission (BTRC)

Frequency and spectrum charges (Note 27.1) 226,000,964 226,000,964 225,255,158
Revenue sharing (Note 27.2) 1,388,092,365 1,388,092,365 1,118,791,311
1,614,093,329 1,614,093,329 1,344,046,469
Supplementary duty on SIM payable to NBR 2,869,736,536 2,869,736,536 2,628,076,000
Share of sub-lease rent payable to Bangladesh Railway 10,908,544 10,908,544 12,946,399
Payable for Bills Pay receipt 319,751,841 319,751,841 197,683,678
4,814,490,250 4,814,490,250 4,182,752,546

27.1 Frequency and spectrum charges

This relates to charges payable to BTRC for use of frequency and spectrum allocated to the company and roaming line rent.

27.2 Revenue sharing

As per amendment of the operating licence agreement dated 16 April 2006, Grameenphone has to share 5.5 % of the
collected rent and call charges with BTRC with effect from 1 July 2005. The scope of collected rent and call charges is
defined by BTRC through guidelines issued from time to time.

28 Unearned revenue
This includes mainly the unused portion of scratch cards, flexi load and advance post paid bills received for which services
have not yet been provided.

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

30 Income tax provision

Balance as at 1 January 12,228,778,445 12,228,778,445 10,077,565,649
Provision made during the year 12,512,235,175 12,511,509,061 8,657,110,009
24,741,013,620 24,740,287,506 18,734,675,658
Paid during the year (including tax deducted at source) (9,002,609,172) (9,002,415,542) (6,505,897,213)
Balance as at 31 December 15,738,404,448 15,737,871,964 12,228,778,445

31 Accrued interest
Accrued interest includes Tk. 144,706,628 (2009 : Tk. 55,974,858) representing interest on finance lease obligation.

32 Other liabilities
Unclaimed dividend (Note 32.1) 36,764,206 36,764,206 -
Liabilities for share money refund (Note 32.2) 1,499,415 1,499,415 88,517,671
38,263,621 38,263,621 88,517,671
32.1 Unclaimed dividend
As at 31 December 2010, the following amount of dividends remained unclaimed by the shareholders. These amounts are
deposited in dedicated bank account and are payable on demand.
Interim dividend for 2010 22,577,719 22,577,719 -
Final dividend for 2009 14,186,487 14,186,487 -
36,764,206 36,764,206 -
32.2 Liabilities for share money refund
This represents the amount received against share applications which was in the process of being refunded at the
reporting date. The amount is deposited into dedicated bank account with Citibank, N.A.

33 Deferred connection revenue

Balance as at 1 January 541,731,926 541,731,926 474,142,173
Addition during the year 290,789,714 290,789,714 309,549,358
832,521,640 832,521,640 783,691,531
Recognised as revenue during the year (250,617,243) (250,617,243) (241,959,605)
Balance as at 31 December 581,904,397 581,904,397 541,731,926
34 Provision for expenses 2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual

Notes to the Financial Statements

International roaming services 8,705,560 8,705,560 17,588,572
Commission and other operational expenses 81,454,862 81,454,862 44,669,906
Cost of SIM card, scratch card, handsets etc. 1,302,937,127 1,302,937,127 538,881,153
Personnel expenses (Note 34.1) 2,046,458,804 1,979,970,377 918,628,342
Obligation in respect of employee provident fund 26,643,930 26,643,930 24,996,388
Training and travelling expenses 62,799,455 48,389,507 48,027,244
Sales and promotional expenses 776,568,213 776,568,213 683,381,530
Consultancy and professional fees 703,940,472 703,307,972 461,445,444
Network operations and maintenance 711,382,083 895,141,717 513,171,766
Capital expenditure 1,953,597,498 1,945,390,245 3,090,889,804
Office and general expenses (Note 34.2) 749,139,910 745,378,378 728,912,585
Lease rent to Power Grid Company Of Bangladesh Ltd. 4,788,000 4,788,000 7,757,024
8,428,415,914 8,518,675,888 7,078,349,758

Provision for expenses includes balances with other Telenor group entities.

34.1 Personnel expenses

This includes provision for bonus, earned leave and any unpaid salary at the reporting date.

34.2 Office and general expenses

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

35 Revenue
Traffic revenue
-Post paid 2,601,806,772 2,601,806,772 2,518,790,257
-Prepaid 58,804,470,026 58,804,470,026 52,139,114,255
61,406,276,798 61,406,276,798 54,657,904,512
Subscription revenue
-Post paid 632,968,125 632,968,125 550,777,898

Connection revenue
-Post paid 11,215,442 11,215,442 25,784,885
-Prepaid 235,311,520 235,311,520 256,873,714
246,526,962 246,526,962 282,658,599
Roaming revenue
-Inbound 211,251,659 211,251,659 174,323,904
-Outbound 253,026,794 253,026,794 205,247,996
464,278,453 464,278,453 379,571,900
Interconnection revenue
-Post paid 130,314,299 130,314,299 148,531,536
-Prepaid 7,292,825,149 7,292,825,149 6,369,308,888
7,423,139,448 7,423,139,448 6,517,840,424
Other operating revenue
-Customer support revenue 9,939,263 9,939,263 11,204,066
-SMS and MMS revenue 940,054,489 940,054,489 1,523,743,904
-Internet and data revenue 1,199,732,065 1,199,732,065 669,949,709
-VAS and other revenue (Note 35.1) 876,590,604 876,590,604 73,586,027
3,026,316,421 3,026,316,421 2,278,483,706

98/99
 Revenue(Contd..) 2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual
Notes to the Financial Statements

Other non- mobile revenue

-Sale of handset 720,457,284 720,457,284 393,464,596
-Sale of data card 417,901,222 417,901,222 205,321,468
-Sale of vehicle tracking systems 4,488,791 4,488,791 -
-Infrastructure sharing revenue 366,748,338 366,748,338 -
-Channel fees 4,323,941 4,323,941 27,967,331
-Broadband internet revenue 291,005 291,005 -
-Bills pay service 10,781,036 10,781,036 5,576,654
-IT service maintenance fee (Note 35.2) 8,578,610 - -
1,533,570,227 1,524,991,617 632,330,049
74,733,076,434 74,724,497,824 65,299,567,088
35.1 VAS and other revenue
Value Added Service (VAS) revenue includes revenue from content sale (e.g. medical services and music download
services, news service, and other contents), call block service, mobile back-up service etc.

35.2 IT service maintenance fee

This represents revenue earned by Grameenphone IT Ltd. on account of IT services provided to external customers, both
foreign and local.

36 Direct cost of network revenue

Cost of interconnection (Note 36.1) 3,220,716,202 3,220,716,202 4,126,962,061
Cost of SIM card, scratch card, handset etc. (Note 36.2) 2,313,553,976 2,313,553,976 1,238,279,122
International roaming cost (Note 36.3) 218,580,685 218,580,685 192,142,950
Licence fees and spectrum charges (Note 36.4) 713,715,145 713,715,145 702,148,351
Revenue sharing with BTRC (Note 36.5) 3,811,231,491 3,811,231,491 3,386,016,902
Dealers' and agents' commission 4,768,977,779 4,768,977,779 3,600,242,658
Revenue sharing with content providers and others 18,667,116 18,667,116 10,353,289
15,065,442,394 15,065,442,394 13,256,145,333
36.1 Cost of interconnection
This represents the amount payable to the other operators (including interconnection exchange and international
gateway operators) for outgoing off-net calls (including international calls) made by GP subscribers.
Rates for interconnection charges are guided by BTRC directives. Cost of interconnection is measured on the basis of
actual outgoing off-net traffic information.

36.2 Cost of SIM card, scratch card, handset etc.

SIM card 1,197,437,835 1,197,437,835 689,306,636
Scratch card 49,596,375 49,596,375 59,063,460
Handset, data card and other device 1,066,519,766 1,066,519,766 489,909,026
2,313,553,976 2,313,553,976 1,238,279,122

36.3 International roaming cost

This represents the roaming charges payable to the roaming partners for use of roaming partners' network by GP
subscribers.

36.4 Licence fees and spectrum charges

This represents operating licence fee and spectrum charges payable to BTRC as per licence agreement.

36.5 Revenue sharing with BTRC

As per the operating licence agreement as amended on 16 April 2006, GP has to share 5.5 % of its collected rent and call
charges with BTRC. The revised revenue sharing percentage is applicable from 1 July 2005.
37 Network operation and maintenance expenses 2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual

Notes to the Financial Statements

Rent (Note 37.1) 645,947,505 645,947,505 524,502,150
Electricity charges (Note 37.2) 1,384,933,652 1,384,933,652 1,236,053,711
Operation and maintenance - base station 736,012,502 736,012,502 767,990,010
Operation and maintenance - switch 766,172,089 766,172,089 848,248,070
Operation and maintenance - optical fibre network 43,678,791 43,678,791 55,095,455
Network quality maintenance expenses (Note 37.3) 1,813,743,149 2,132,102,091 1,185,365,580
PCM operation and maintenance (Note 37.4) 10,306,363 10,306,363 27,210,190
Lease rent for submarine cable 204,887,611 204,887,611 128,960,963
5,605,681,662 5,924,040,604 4,773,426,129
37.1 Rent
Rent includes location rent for base stations, mobile switching centers (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 452,829,940 452,829,940 412,655,841
(ii) Later than one year but not later than five years 1,970,092,627 1,970,092,627 1,681,406,594
(iii) Later than five years 3,421,268,732 3,421,268,732 4,014,486,480
5,844,191,299 5,844,191,299 6,108,548,915
37.2 Electricity charges
These represent electricity charges for base stations, mobile switching centres (switch), other transmission equipment etc.
This also includes such expenses incurred in connection with maintenance of fibre optic network at selected offices of
Bangladesh Railway.

37.3 Network quality maintenance expenses

Network quality maintenance expenses include consultancy charges and other operation and maintenance fees incurred
for telecom network.
37.4 PCM operation and maintenance
PCM operation and maintenance expenses include rental and maintenance charges for PCM and microwave link.
38 Depreciation and amortisation
Cost of network operation:
Depreciation of property, plant and equipment 14,736,928,488 14,736,911,684 14,481,369,413
Amortisation of Pulse Code Modulation (PCM) 10,455,865 10,455,865 6,993,101
Amortisation of software and others 255,672,434 255,672,434 231,071,787
Amortisation of telecom licence - spectrum 328,888,888 328,888,888 328,888,888
595,017,187 595,017,187 566,953,776
15,331,945,675 15,331,928,871 15,048,323,189

Operating expenses:
Depreciation of property, plant and equipment 836,507,111 836,507,111 1,099,739,855
Amortisation of software and others 625,119,267 625,119,267 578,924,700
1,461,626,378 1,461,626,378 1,678,664,555
16,793,572,053 16,793,555,249 16,726,987,744

39 Other income, net

Rental income from sublease of optical fibre network 51,555,822 51,555,822 44,703,178
Sublease cost (4,170,800) (4,170,800) (6,587,085)
47,385,022 47,385,022 38,116,093
Rental income from GPIT - 14,897,927 -
Franchisee fees and others 13,031,171 13,031,171 5,142,325
60,416,193 75,314,120 43,258,418

100/101
 40 General and administrative expenses
2010 2010 2009
Taka Taka Taka
Notes to the Financial Statements

Consolidated Separate Individual

Personnel expenses 6,357,733,483 6,271,935,440 4,490,186,510

Employee training and ancillary expenses 45,956,956 45,956,956 94,112,772
Rent (Note 40.1) 396,214,903 382,578,015 359,508,815
Office maintenance and running expenses 718,505,421 712,498,019 662,754,374
Travelling expenses 158,099,188 137,276,620 123,279,655
Vehicle running expenses 423,339,553 412,930,925 360,568,165
Telephone and communication 71,612,442 68,214,866 105,010,719
Printing, postage and stationery 100,990,936 92,612,077 175,655,177
Legal and professional fees (Note 40.2) 60,818,647 29,512,505 91,795,510
Statutory audit fee 2,325,000 1,800,000 1,500,000
Meeting expenses (Note 40.3) 45,978,161 45,969,951 33,538,907
Entertainment expenses 15,716,391 15,716,391 22,121,711
Revenue collection charges 18,836,311 18,836,311 22,400,616
Bad debt expense (Note 40.4) 218,206,842 218,206,842 50,655,003
8,634,334,234 8,454,044,918 6,593,087,934

40.1 Rent
Rent includes rent for office, warehouse, Grameenphone Center (GPC), Grameephone Service Desk (GPSD),
Grameenphone Distribution Center (GPDC), 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 251,781,202 248,035,702 351,585,254

(ii) Later than one year but not later than five years 656,510,119 656,510,119 576,246,007
(iii) Later than five years 428,937,973 428,937,973 402,080,704
1,337,229,294 1,333,483,794 1,329,911,965

40.2 Legal and professional fees

Legal and professional fees include fees for legal advice and other professional services received time to time from
lawyers, auditors and other professionals.
During 2010, Tk 2,344,784 (2009: Tk 2,552,848 ) was paid to auditors for professional services in connection with
issuance of certificate for repatriation of fees and dividends, review of interim financial statements etc.

40.3 Meeting expenses

These include expense for board meetings amounting to Tk. 3,299,672 (2009 : Tk. 2,708,011), and other meetings
including AGM Tk 42,669,029 (2009 : Tk 30,829,606)

40.4Bad debt expense

Provision made during the year 251,991,051 251,991,051 91,628,074
Recovery of bad debt during the year (33,784,209) (33,784,209) 40,973,071)
Bad debt expense 218,206,842 218,206,842 50,655,003

Provision for doubtful debts has been made as per policy of the group mentioned in Note 3.6.

41 Selling and distribution expenses

Sales, marketing and representation costs (Note 41.1) 7,318,184,187 7,318,184,187 2,551,190,055
Advertisements 734,460,277 727,903,290 626,666,038
Business development and promotional expenses 434,589,357 434,589,357 297,112,986
8,487,233,821 8,480,676,834 3,474,969,079

41.1 Sales, marketing and representation costs

This primarily represents subsidies provided by GP in connection with acquiring new subscribers.
42 Finance income / (expense), net
2010 2010 2009
Taka Taka Taka

Notes to the Financial Statements

Consolidated Separate Individual

Interest on long term loans (4,463,240) (4,463,240) (91,537,425)

Interest on bonds - - (623,097,222)
Interest and service charge on short term loans (2,581,366) (2,581,366) (208,126,084)
Finance charge - lease (768,429,911) (768,429,911) (841,496,904)
Interest on ARO (16,181,507) (16,181,507) (15,901,954)
Other finance charges (63,912,059) (63,700,492) (119,841,732)
(855,568,083) (855,356,516) (1,900,001,321)
Finance income 1,449,041,193 1,447,104,889 212,807,472
593,473,110 591,748,373 (1,687,193,849)

43 Foreign exchange gain/(loss)

Realised gain/ (loss) 91,384,591 91,384,591 70,202,213
Unrealised gain/ (loss) 8,578,949 8,578,949 (303,445,851)
99,963,540 99,963,540 (233,243,638)

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

Disposal proceeds 59,884,296 59,884,296 28,612,438
Carrying amount of the assets disposed off (47,793,231) (47,793,231) (38,380,825)
12,091,065 12,091,065 (9,768,387)

45 Income tax expenses

Current tax expense (Note 3.9) 12,512,235,175 12,511,509,061 8,657,110,009
Deferred tax income (Note 45.1) (2,304,830,605) (2,304,830,605) (5,029,312,320)
10,207,404,570 10,206,678,456 3,627,797,689

45.1 Deferred tax income

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.
Applicable tax rate for GP was reduced to 35% from 45% as a result of being listed with the stock exchanges, as per the
provisions of Finance Act 2009. Such change in tax rate 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 resulted in a deferred
tax income of Tk 5,029,312,320 for that year.

46 Earnings per share (EPS)

Profit attributable to ordinary shareholders 10,705,351,442 10,579,176,469 14,968,166,256
Weighted average number of ordinary shares
outstanding during the year (Note 46.1) 1,350,300,022 1,350,300,022 1,239,238,201
Basic earnings per share (Note 3.16) 7.93 7.83 12.08

46.1 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.

Outstanding shares as at 1 January* 1,350,300,022 1,350,300,022 1,215,174,797

Effect of issue of additional shares during the year - - 24,063,404
1,350,300,022 1,350,300,022 1,239,238,201

*Outstanding shares on 1 January 2009 has been converted to Tk 10 share equivalent number, considering 1:10 reverse
split (conversion of shares of Tk. 1 each into shares of Tk. 10 each) in 2009.

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 46.2 Dilution of earnings per share
No diluted earnings per share is required to be calculated for the years presented as there was no scope for dilution during
these years.
Notes to the Financial Statements

47 Cash receipts from performance of services/sales

2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual

Proceeds from mobile service revenue 65,689,380,364 65,689,380,364 58,140,345,116

Proceeds from interconnection revenue 7,051,649,445 7,051,649,445 5,719,392,909
Proceeds from roaming revenue 455,455,866 455,455,866 395,087,196
Proceeds from sale of handset, data card etc. 1,142,847,297 1,142,847,297 598,786,064
Proceeds from other sales 307,157,447 307,157,447 72,313,184
74,646,490,419 74,646,490,419 64,925,924,469
48 Payment to suppliers, contractors and others
Payments for interconnection cost 3,282,201,408 3,282,201,408 3,283,691,636
Payments for roaming cost 203,835,265 203,835,265 225,982,709
Payments for fibre optic network 244,919,831 244,919,831 212,874,431
Payments for material cost 2,363,700,312 2,363,700,312 781,655,058
Payment of VAT and other public duties 6,370,816,460 6,340,799,835 2,038,093,690
Payments for other operating expenses 16,521,331,472 16,931,121,596 15,290,132,358
28,986,804,748 29,366,578,247 21,832,429,882
49 Financial risk management
The management has overall responsibility for the establishment and oversight of the group's risk management
framework. The group's risk management policies are established to identify and analyse the risks faced by the group, 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 group's activities. This
note presents information about the group's exposure to each of the above risks, the group's objectives, policies and
processes for measuring and managing risk, and the group's management of capital. The company has exposure to the
following risks from its use of financial instruments.
 Credit risk
 Liquidity risk
 Market risk

49.1 Credit risk

Credit risk is the risk of a financial loss to the group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the group's receivables from subscribers, interconnect operators,
roaming partners, dealers and IT service customers.
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 receivable are mainly related to the group's subscribers/customers, interconnect operators
and roaming partners for provision of services, while other receivables represent receivable for accrued interest and
receivables arising from external parties other than for services. The group's exposure to credit risk on accounts
receivables is mainly influenced by the individual payment characteristics of post paid subscribers and interconnect
operators. Interconnection receivables are normally realised within 3 months from when they are invoiced. The group
employs financial clearing house to minimise credit risk involving collection of roaming receivables.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of
financial position.

a) 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:
Accounts receivable, net
Receivables for mobile service-interconnection 4,877,394,453 4,877,394,453 4,505,904,450
Receivables for mobile service-post paid and others* 180,435,548 180,435,548 162,048,506
Receivables for infrastructure sharing 153,522,463 153,522,463 -
Receivables for sub lease of fibre optic network 22,995,771 22,995,771 24,685,230
Others receivable for non-mobile service** 13,597,537 3,311,174 4,427,976
5,247,945,772 5,237,659,409 4,697,066,162
Exposure to credit risk (Contd..) 2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual

Notes to the Financial Statements

Other receivables
Other receivables- other than Telenor entities 745,552,347 1,048,050,175 641,484,802
Receivable from other Telenor entities 182,467,922 182,467,922 120,838,513
928,020,269 1,230,518,097 762,323,315
Long-term deposits 12,594,949 12,594,949 11,635,675
Deposit for bank guarantee 127,957,944 127,957,944 127,957,944
Security deposits for utilities and services 60,483,786 60,483,786 54,897,307
Short term investment 2,753,729,110 2,753,729,110 500,000,000
Cash at bank 18,927,765,069 18,671,232,085 14,093,890,895
28,058,496,899 28,094,175,380 20,247,771,298
* includes Tk 6,143,380 ( 2009: Tk 8,334,058) representing receivable from Telenor entities
** includes Tk. 2,297,658 representing receivables from Telenor entities for the group.

The maximum exposure to credit risk for accounts receivable as at 31 December by geographic regions was:
Domestic 5,156,379,116 5,148,390,405 4,600,666,221
Asia 46,331,342 46,331,342 52,863,858
Europe 37,142,575 34,844,923 40,183,831
Australia 1,271,770 1,271,770 1,451,549
Americas 5,695,687 5,695,687 1,235,340
Africa 1,125,282 1,125,282 665,363
5,247,945,772 5,237,659,409 4,697,066,162
b) Ageing of receivables
i) The ageing of gross interconnection receivables as at 31 December was:
Invoiced 0-30 days 1,434,087,416 1,434,087,416 1,154,155,997
Invoiced 31-60 days 558,026,984 558,026,984 480,585,352
Invoiced 61-90 days 260,484,947 260,484,947 371,626,754
Invoiced 91-180 days 495,165,272 495,165,272 761,317,694
Invoiced 181-365 days 598,856,982 598,856,982 1,112,196,985
Invoiced over 365 days 1,749,222,710 1,749,222,710 654,380,415
5,095,844,311 5,095,844,311 4,534,263,197
ii) The ageing of gross receivable for post paid and others as at 31 December was:
Invoiced 0-30 days 121,714,993 121,714,993 176,370,711
Invoiced 31-60 days 34,177,510 34,177,510 7,015,024
Invoiced 61-90 days 17,635,416 17,635,416 8,758,673
Invoiced 91-180 days 31,063,246 31,063,246 50,122,986
Invoiced over 180 days 30,388,984 30,388,984 29,558,628
234,980,149 234,980,149 271,826,022
iii) The ageing of gross receivables for infrastructure sharing as at 31 December was:
Invoiced 0-60 days 153,522,463 153,522,463 -
Invoiced over 60 days - - -
153,522,463 153,522,463 -
iv) The ageing of gross receivables for sub lease of fibre optic network as at 31 December was:
Invoiced 0-60 days 13,507,647 13,507,647 2,961,221
Invoiced 61-90 days 3,234,482 3,234,482 2,429,595
Invoiced 91-180 days 4,816,507 4,816,507 1,715,340
Invoiced 181-365 days 4,507,074 4,507,074 11,218,664
Invoiced over 365 days 4,285,400 4,285,400 13,584,968
30,351,110 30,351,110 31,909,788
c) Impairment losses
Impairment losses on the above receivables were recognised as per the group policy mentioned in note 3.6. Quantitative
disclosure for such impairment losses are disclosed in Note 10.1 to Note 10.6 of these financial statements.

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 Notes to the Financial Statements

49.2 Liquidity risk

Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group's approach to managing liquidity (cash and cash equivalents) is
to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the group's reputation. Typically, the group ensures that it has sufficient cash and cash equivalents to meet expected operational expenses, including
financial obligations through preparation of the cash flow forecast, based on time line of payment of financial obligations and accordingly arrange for sufficient liquidity/fund to
make the expected payments within due dates. Moreover, the group seeks to maintain short term lines of credit with scheduled commercial banks (Note 21.9) to ensure payment
of obligation in the event that there is insufficient cash to make the required payment. The requirement is determined in advance through cash flow projections and credit lines
with banks are negotiated accordingly.
In extreme stressed conditions, the group may get support from the ultimate parent company (Telenor) in the form of shareholder's loan.

The following are the contractual maturities of financial liabilities:

As at 31 December 2010 (Consolidated)

Nominal Interest Contractual cash

Carrying amount Maturity period rate flows 6 months or less 6-12 months 1-2 years 2-5 years More than 5 years
Taka Taka Taka Taka Taka Taka Taka
Loans and borrowings - - - - - - - - -
Finance lease obligation 5,019,805,838 June 2027 15% 15,534,369,288 346,547,520 361,614,804 1,506,728,350 2,486,101,777 10,833,376,837

Accounts payable
Liability for capital expenditure 2,246,290,076 December 2011 N/A 2,246,290,076 1,337,774,046 908,516,030 - - -
Payable for expenses 7,622,500,562 December 2011 N/A 7,622,500,562 4,493,006,227 3,129,494,335 - - -
Payable for others 315,087,154 December 2011 N/A 315,087,154 189,062,292 126,024,862 - - -

Payable to government and autonomous bodies

Payable to BTRC 1,614,093,329 June 2011 N/A 1,614,093,329 1,614,093,329 - - - -
Payable to Bangladesh Railway 10,908,544 June 2011 N/A 10,908,544 10,908,544 - - - -
Payable for Bills Pay receipt 319,751,841 June 2011 N/A 319,751,841 319,751,841 - - - -

VAT payable 2,451,869,531 June 2011 N/A 2,451,869,531 2,451,869,531 - - - -

Accrued interest 155,699,144 June 2011 N/A 155,699,144 155,699,144 - - - -
Other liabilities 38,263,621 June 2011 N/A 38,263,621 38,263,621 - - - -
19,794,269,640 30,308,833,090 10,956,976,095 4,525,650,031 1,506,728,350 2,486,101,777 10,833,376,837
 Liquidity risk (contd…)
Exposure to liquidity risk in respect of the separate financial statements at 31 December 2010 does not vary significantly from above. The only difference in such exposure arises from
payable to GPIT for IT services (Tk. 210,935,580) which has a maturity period of less than six months.

As at 31 December 2009 (Individual)

Nominal Interest Contractual cash

Carrying amount Maturity period rate flows 6 months or less 6-12 months 1-2 years 2-5 years More than 5 years

Loans and borrowings

IFC (Note 21.1) 206,389,257 June 2010 213,122,615 213,122,615 - - - -
ADB (Note 21.1) 152,690,367 June 2010 Floating rate as 158,797,982 158,797,982 - - - -
per note 21.1
NORFUND (Note 21.1) 71,782,052 June 2010 74,653,334 74,653,334 - - - -

6 months NIBOR
Eksportfinans ASA (Note 21.2) 49,037,159 December 2010 50,086,263 25,216,943 24,869,320 - - -
+ 30 basis points

NORAD (Note 21.3) 98,074,370 December 2010 3.4% per annum 100,572,347 50,702,922 49,869,425 - - -
Local syndicated loan (Note 21.4) 1,376,893,993 November 2012 13.5% per annum 1,701,343,976 323,133,852 308,354,304 567,075,876 502,779,944 -

Finance lease obligation 5,019,805,838 June 2027 15% 16,283,452,109 332,933,036 348,066,355 711,266,031 2,315,397,930 12,575,788,757
Accounts payable
Liability for capital expenditure 2,253,928,756 December 2010 N/A 2,253,928,756 1,352,357,254 901,571,502 - - -
Payable for expenses 7,390,432,464 December 2010 N/A 7,390,432,464 5,397,873,152 1,931,915,435 - - -
Payable for others 170,364,966 December 2010 N/A 170,364,966 102,218,980 68,145,986 - - -

Payable to government and autonomous bodies

Payable to BTRC 1,344,046,469 June 2010 N/A 1,344,046,469 1,344,046,469 - - - -
Payable to Bangladesh Railway 12,946,399 June 2010 N/A 12,946,399 12,946,399 - - - -
Payable for Bills Pay receipt 197,683,678 June 2010 N/A 197,683,678 197,683,678 - - - -

VAT payable 2,234,779,133 June 2010 N/A 2,234,779,133 2,234,779,133 - - - -

Accrued interest 66,356,035 June 2010 N/A 66,356,035 66,356,035 - - - -
Other liabilities 88,517,671 June 2010 N/A 88,517,671 88,517,671 - - - -
20,733,728,607 32,341,084,197 11,975,339,455 3,632,792,327 1,278,341,907 2,818,177,874 12,575,788,757

Notes to the Financial Statements

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 Notes to the Financial Statements

49.3 Market risk

Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters.

a) Currency risk
The group is exposed to currency risk on certain revenues and purchases such as roaming revenues and expenses, telecom equipment purchases, network related costs and
interest expense and repayments relating to borrowings incurred in foreign currencies. Majority of the company's foreign currency transactions are denominated in USD and
relate to procurement of capital items from abroad. The group also has exposure in NOK relating to business service costs and consultancy costs and foreign currency loans.
The group maintains a USD bank account where all receipts from international roaming services are deposited and all corresponding payments are made.

i) Exposure to currency risk

The group's exposure to foreign currency risk was as follows based on notional amounts (in Taka):

As at 31 December 2010 (Consolidated) As at 31 December 2009 (Individual)

USD NOK GBP EUR JPY USD NOK GBP EUREUR JPY JPY
Foreign currency denominated assets
Receivable from other Telenor entities - 188,611,302 - - - 122,118,771 - - - -
Accounts receivable 107,078,115 - 5,507,509 3,782,447 - 83,071,426 - 4,248,064 3,130,606 -
Cash at bank 143,798,951 - - - - 84,890,516 - - - -
250,877,066 188,611,302 5,507,509 3,782,447 - 290,080,713 - 4,248,064 3,130,606 -
Foreign currency denominated liabilities
Loans and borrowings - - - - - (430,861,676) (147,111,529) - - -
Payable to other Telenor entities* - (1,923,825,361) - - - (10,874,038) (1,800,906,230) - (8,301,078) -
Trade and other payables for expenses (1,791,972,054) - - (35,965,784) (83,819,373) (2,614,460,452) - (14,306,631) (117,488,738) (35,655,946)
(1,791,972,054) (1,923,825,361) - (35,965,784) (83,819,373) (3,056,196,166) (1,948,017,759) (14,306,631) (125,789,816) (35,655,946)
Net exposure (1,541,094,988) (1,735,214,059) 5,507,509 (32,183,337) (83,819,373) (2,766,115,453) (1,948,017,759) (10,058,567) (122,659,210) (35,655,946)

* Payable to other Telenor entities represents payable for business service costs, consultancy fees etc. which are included mainly in accounts payable.
Exposure to currency risk as at 31 December 2010 in respect of the separate financial statements does not vary significantly from above.

The following significant exchange rates are applied during the year: Exchange rate as at

31 December 2010 31 December 2009

Taka Taka

US Dollar 71.40 69.65

Norwegian Kroner (NOK) 13.85 13.73
Great Britain Pound (GBP) 113.23 113.09
EURO (EUR) 96.94 102.12
Japanese Yen (JPY) 0.93 0.79
ii) Foreign exchange rate sensitivity analysis for foreign currency expenditures
A change of 10 basis points in foreign currencies would have increased/ (decreased) equity and profit or loss of the group
by the amounts shown below. This analysis assumes that all other variables, in particular interest rates remain constant.

Notes to the Financial Statements

Profit or loss Equity
10 bp increase 10 bp decrease 10 bp increase 10 bp decrease
2010 (Consolidated) Taka Taka Taka Taka
Expenditures denominated in USD (14,556,090) 14,556,090 (14,556,090) 14,556,090
Expenditures denominated in NOK (824,712,297) 824,712,297 (824,712,297) 824,712,297
Expenditures denominated in GBP (5,936,499) 5,936,499 (5,936,499) 5,936,499
Expenditures denominated in EURO (171,129,498) 171,129,498 (171,129,498) 171,129,498
Expenditures denominated in JPY (189,673,264) 189,673,264 (189,673,264) 189,673,264
Exchange rate sensitivity (1,206,007,648) 1,206,007,648 (1,206,007,648) 1,206,007,648

2009 (Individual)
Expenditures denominated in USD (10,158,259) 10,158,259 (10,158,259) 10,158,259
Expenditures denominated in NOK (9,173,395) 9,173,395 (9,173,395) 9,173,395
Expenditures denominated in GBP (10,059) 10,059 (10,059) 10,059
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
Exchange rate sensitivity (26,440,400) 26,440,400 (26,440,400) 26,440,400

b) Interest rate risk

Interest rate risk is the risk that arises due to changes in interest rates on borrowings. Most foreign currency loans of the
group were subject to floating rates of interest. Local syndicated loans are, however, not significantly affected by
fluctuations in interest rates. The group has not entered into any type of derivative instrument in order to hedge interest
rate risk as at the reporting date.

i) Profile
As at 31 December, the interest rate profile of the group's interest bearing financial instruments was:

Carrying amount
2010 2010 2009
Taka Taka Taka
Fixed rate instruments
Consolidated Separate Individual
Financial assets
Long term deposits 12,594,949 12,594,949 11,635,675
Short term investment 2,753,729,110 2,753,729,110 500,000,000
Cash at bank 18,927,765,069 18,671,232,085 14,093,890,895
Financial liabilities
Finance lease obligation 5,019,805,838 5,019,805,838 5,019,805,838
Accrued interest 155,699,144 155,699,144 66,356,035

Floating rate instruments

Financial assets - - -
Financial liabilities
Foreign currency denominated loans - - 479,898,835
Local syndicated loans - - 1,376,893,993

ii) Cash flow sensitivity analysis for variable rate instruments

A change of 10 basis points in interest rates for loans and borrowings would have increased/ (decreased) equity and
profit or loss of the group by the amounts shown below. This analysis assumes that all other variables, in particular
foreign exchange rates remain constant.

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 Profit or loss Equity
10 bp increase 10 bp decrease 10 bp increase 10 bp decrease
Notes to the Financial Statements

2010 (Consolidated) Taka Taka Taka Taka

Foreign currency denominated loans (251,631) 251,631 (251,631) 251,631
Local syndicated loans (630,716) 630,716 (630,716) 630,716
Cash flow sensitivity (net) (882,347) 882,347 (882,347) 882,347

Profit or loss Equity

10 bp increase 10 bp decrease 10 bp increase 10 bp decrease
2009 (Individual) Taka Taka Taka Taka

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 for foreign currency rates and variable interest rates for the separate financial statements does not
vary significantly from above.

c) Accounting classification and fair values

Fair value of financial assets and liabilities together with carrying amount shown in the statement of financial position are
as follows:
2010 (Consolidated) 2009 (Individual)
Carrying amount Fair value Carrying amount Fair value
Taka Taka Taka Taka

Assets carried at fair value

through profit or loss - - - -

Held to maturity assets

Long term deposits 12,594,949 12,594,949 11,635,675 11,635,675
Short term investment 2,753,729,110 2,753,729,110 500,000,000 500,000,000
Loans and receivables
Accounts receivable, net 5,247,945,772 5,247,945,772 4,697,066,162 4,697,066,162
Cash and cash equivalents 18,931,502,552 18,931,502,552 14,101,313,087 14,101,313,087
Other receivables 928,020,269 928,020,269 762,323,315 762,323,315
Available for sale financial assets
Deposit for bank guarantee 127,957,944 127,957,944 127,957,944 127,957,944
Security deposits 60,483,786 60,483,786 54,897,307 54,897,307
Liabilities carried at fair value
through profit or loss - - - -
Liabilities carried at amortised costs
Loans and borrowings - - 1,954,867,198 1,954,867,198
Finance lease obligation 5,019,805,838 5,019,805,838 5,019,805,838 5,019,805,838
Accounts payable 10,147,977,191 N/A* 9,814,726,186 N/A*
Payable to government and
autonomous bodies 1,944,753,714 N/A* 1,554,676,546 N/A*
VAT payable 2,451,869,531 N/A* 2,234,779,133 N/A*
Accrued interest 155,699,144 N/A* 66,356,035 N/A*
Other liabilities 38,263,621 N/A* 88,517,671 N/A*
 Interest rates used for determining fair value
The interest rates used to discount estimated cash flows, when applicable were as follows:

Notes to the Financial Statements

2010 2010 2009
Taka Taka Taka
Consolidated Separate Individual

Loans and borrowings N/A N/A 7.8%-16%

Finance lease obligation 15.00% 15.00% 15.00%

* Determination of fair value is not required as per the requirements of IFRS/BFRS 7 : Financial Instruments: Disclosures
(ref: Para 29). However, fair value of such instruments is not likely to be significantly different from the carrying amounts
of such instruments.

50 Capital management
Capital management refers to implementing policies and measures to maintain sufficient capital, assessing group's
internal capital adequacy to ensure group'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 are evaluated and approved by the board. The Board of Directors also monitors the return on capital,
which the group defines as result from operating activities divided by total shareholders’ equity. The Board of Directors
also monitors the level of dividends to ordinary shareholders.

51 Related party disclosures

During the year ended 31 December 2010, group entered into a number of transactions with related parties in the normal
course of business. The names of the related parties, nature of these transactions and amount thereof have been set out
below in accordance with the provisions of IAS/BAS 24: Related Party Disclosures.

51.1 Related party transactions

2010 2010 2009
Name of related parties Nature Nature of transactions Taka Taka Taka
Consolidated Separate Individual
Telenor Mobile Shareholder Dividend payment 7,157,373,378 7,157,373,378 979,430,020
Communications AS
Nye Telenor Mobile -do- -do- 2,043 2,043 280
Communications II AS
Nye Telenor Mobile -do- -do- 2,043 2,043 280
Communications III AS
Telenor Asia Pte. Ltd. -do- -do- 2,043 2,043 280
Grameen Telecom -do- Revenue 134,126,628 134,126,628 1,272,082,901
Commission expense 121,883,391 121,883,391 109,466,803
Dividend payment 4,386,780,886 4,386,780,886 600,296,320
Grameen Kalyan -do- Dividend payment 209 209 28
Grameen Shakti -do- Dividend payment 209 209 28
Grameenphone IT Ltd. Subsidiary IT service maintenance - 633,428,614 -
charge
Telenor ASA Telenor Sharing of Microsoft license fee - - 113,814,025
group entity fee
Consultancy service fee 622,971,462 622,971,462 485,920,827
Telenor Consult AS -do- Consultancy and professional 643,459,582 643,459,582 440,128,305
service fee
Telenor Key Partner AS Consultancy service fee 1,698,750 1,698,750 1,023,312
Telenor Bedrift Service fee 20,537,449 20,537,449 (12,979,514)
Digi Telecommunication -do- Roaming revenue 1,251,786 1,251,786 1,231,645
Roaming expenses 3,119,827 3,119,827 2,108,688
Kyivstar GSM - Ukraine -do- Roaming revenue 154,199 154,199 194,152
Roaming expenses 20,857 20,857 28,201
Telenor d.o.o (YUGMT) -do- Roaming revenue 61,112 61,112 42,370
Roaming expenses 348,926 348,926 14,103

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 2010 2010 2009
Taka Taka Taka
Name of related parties Nature Nature of transactions Consolidated Separate Individual
Notes to the Financial Statements

Pannon - GSM -do- Roaming revenue 51,837 51,837 108,391

Roaming expenses 103,674 103,674 293,892
Sonofone -do- Roaming revenue 1,272,695 1,272,695 798,048
Roaming expenses 483,108 483,108 781,145
Telenor Mobil AS -do- Roaming revenue 3,752,207 3,752,207 2,290,439
Roaming expenses 1,116,690 1,116,690 899,641
Telenor Pakistan -do- Roaming revenue 180,957 180,957 326,588
Roaming expenses 265,219 265,219 280,188
TAC (Total Access Telenor Roaming revenue 1,403,520 1,403,520 1,375,583
Communication) group entity
Roaming expenses 9,800,618 9,800,618 9,225,352
Telenor Sverige -do- Roaming revenue 1,037,783 1,037,783 626,342
(Europolitan AB)
Roaming expenses 252,155 252,155 467,582
ProMonte GSM, Serbia and -do- Roaming revenue 11,859 11,859 29,828
Montenegro YUGPM Roaming expenses 88 88 10,914
Sonofon DNKT2 -do- Roaming revenue 644 644 1,390
Unitech Wireless -do- Roaming revenue 920,790 920,790 -
Roaming expenses 99,781 99,781 -

51.2 Receivables/(payables) with related parties

Grameen Telecom Shareholder Accounts receivable 10,970,099 10,970,099 7,053,800

Accounts payable (11,591,510) (11,591,510) (8,802,872)
Telenor Asia Pte. Ltd. Shareholder Accounts payable - - (6,893,690)
Grameenphone IT Ltd. Subsidiary Receivable for IT equipment - 168,631,962 -
-do- Receivable for rent, office - 136,141,336 -
running expense,
maintenance and others

-do- Advance for NERM - 161,032,225 -

-do- Payable for IT service - (210,935,580) -
Telenor ASA Telenor Accounts payable (1,208,232,989) (1,208,232,989) (1,032,526,483)
group entity Accounts receivable 1,905,281 1,905,281 2,200,470
Telenor Consult AS -do- Accounts payable (462,764,109) (462,764,109) (752,281,449)
Accounts receivable 172,227,093 172,227,093 113,000,502
Telenor International Center -do- Accounts receivable 6,037,058 6,037,058 5,482,914
Telenor Key Partner AS -do- Accounts payable (2,557,560) (2,557,560) (881,330)
Telenor Bedrift -do- Accounts payable (20,704,411) (20,704,411) (11,681,679)
Digi Telecommunication -do- Accounts payable (380,525) (380,525) (446,891)
Accounts receivable 269,047 269,047 217,421
Kyivstar GSM - Ukraine -do- Accounts payable (2,034) (2,034) -
Accounts receivable 10,974 10,974 38,702
Telenor d.o.o (YUGMT) -do- Accounts receivable 34,340 34,340 12,859
Pannon - GSM -do- Accounts payable (19,809) (19,809) (58,082)
Accounts receivable 28,622 28,622 8,537
Sonofone -do- Accounts payable (15,122) (15,122) (231,495)
Accounts receivable 156,497 156,497 118,319
Telenor Mobil AS -do- Accounts payable (103,349) (103,349) (104,316)
Accounts receivable 682,881 682,881 473,027
Telenor Pakistan -do- Accounts payable (12,582) (12,582) (41,317)
Accounts receivable 201,655 201,655 272,340
 2010 2010 2009
Taka Taka Taka
Name of related parties Nature Nature of transactions Consolidated Separate Individual

Notes to the Financial Statements

TAC (Total Access -do- Accounts payable (967,388) (967,388) (1,885,517)
Communication)
Accounts receivable 282,324 282,324 155,863
Telenor Sverige -do- Accounts payable (17,537) (17,537) (62,697)
(Europolitan AB)
Accounts receivable 2,350,643 2,350,643 135,754
ProMonte GSM, Serbia and Telenor Accounts payable (87) (87) -
Montenegro YUGPM group entity
Accounts receivable 1,706 1,706 2,063
Sonofon DNKT2 -do- Accounts receivable 584 584 -
Unitech Wireless -do- Accounts payable (232,721) (232,721) -
Accounts receivable 895,668 895,668 -
Telenor Broadcast Holding -do- Accounts receivable 2,297,658 - -
Holding AS

51.3 Key management personnel compensation

Short term employee benefits (salary and other allowances) 1,191,881,187 1,075,167,947 1,355,738,804
Post employment benefits (provident fund, gratuity etc.) 90,090,555 82,029,590 68,138,604
Termination benefits 30,139,977 30,139,977 30,139,977
Other long term benefits 11,408,688 11,408,688 6,173,578
1,323,520,407 1,198,746,202 1,460,190,963
Key management personnel includes employees of the rank of Deputy General Manager (DGM), DGM equivalent and
above.
52 Expenses/expenditure and revenue in foreign currency during the year
CIF value of imports
SIM card and scratch card 268,734,995 268,734,995 156,392,060
Telecommunication equipment 4,795,853,024 4,795,853,024 7,073,204,082
NERM software 96,164,211 - -

Expenditure in foreign currency

Consultancy fee 1,029,465,734 1,029,465,734 613,392,162
Consultancy fee - expatriate 613,259,692 613,259,692 387,714,112
Other fee (travel and training) 33,184,341 33,184,341 87,036,972
Technical know how 379,757,774 379,757,774 498,603,368
International roaming cost 218,580,685 218,580,685 192,142,950
Software (NERM) implementation support 21,243,620 - -

Foreign earnings
Revenue from roaming partners 209,779,078 209,779,078 169,208,003
IT service revenue 2,297,652 - -

53 Capital commitments
Capital commitments represent the orders placed for purchase of network equipment and other services, mainly from
Huawei and Ericsson, and outstanding letters of credit. Total amount of such commitment as at 31 December stood at-

Purchase orders 3,982,891,459 3,918,377,435 3,214,712,265

Outstanding letters of credit 1,100,184,088 1,100,184,088 639,445,111

54 Contingent liabilities

54.1 Bank guarantee provided in favour of different parties

As at 31 December 2010, GP had outstanding bank guarantee amounting to Tk. 305,931,947 (2009: Tk 215,130,547) on
account of import of SIM card, scratch card, capital machinery and other services.

112/113
 54.2 Contingent liabilities for lawsuits
There are few litigations against the group. 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 the group.
Notes to the Financial Statements

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 these financial statements.

55 Other disclosures

55.1 Number of employees

As at 31 December 2010, number of regular employees receiving remuneration of Tk. 36,000 or above per annum was
3,930 for GP (2009: 4,226), and 4,286 for the group.

55.2 Comparatives
Comparative information in the following major areas has been rearranged wherever considered necessary to conform to
the current year’s presentation.
i) Other receivables
Other receivables are presented separately (see note 11) from 'Advances, deposits and prepayments' to better reflect the
nature of such balances.
ii) Short term investment
Tk. 500,000,000 representing investment in FDR was presented separately and excluded from cash and cash equivalents
(see note 14).
iii) Payable to government and autonomous bodies
Interconnection charges, revenue sharing with content providers and PCM related expenses, which were included under
the head 'Payable to government and autonomous bodies and other operators' were reclassified and presented under
"Accounts payable" (see note 26) to achieve better presentation. The name of the account head 'Payable to government
and autonomous bodies and other operators' was revised accordingly.
iv) Foreign exchange gain/(loss)
Foreign exchange gain/(loss) has been presented separately on the face of the statement of comprehensive income. In
2009, this was presented under 'Finance income/(expense), net' with detail presented in the notes to the financial
statements.

55.3 Interim dividend

GP paid an interim dividend @ Tk 3.50 per share of Tk 10 each aggregating to Tk 4,726,050,077 which was approved by
the Board of Directors at its 106th meeting held on 22 October 2010.

55.4 Events after the reporting period

The Board of Directors of GP, at its 109th meeting held on 6 February 2011, proposed Tk 8.50 per share, amounting to a
total of Tk 11,477,550,187 as final dividend for the year ended 31 December 2010, which represents 85% of the paid up
capital. Total dividend for the year ended 31 December 2010 including the interim dividend (see note 55.3) thus comes to
Tk 16,203,600,264, which is 120% of paid up capital. These dividends are subject to final approval by the shareholders at
the forthcoming Annual General Meeting of the company.
Grameenphone IT Ltd.
Directors’ Report
FOR THE YEAR ENDED DECEMBER 31, 2010

Dear Shareholders,
On behalf of the Board of Directors and Management, I welcome you all to the 1st Annual General Meeting of GPIT. We are very
delighted to place herewith the Directors’ Report and Auditors’ Report together with the Audited Financial Statements of the
Company for the year ended December 31, 2010 for your consideration, approval and adoption.

Socio Economic Perspective

The global economy bounced back steadily in the year 2010. Bangladesh has witnessed firm growth in GDP during 2009- 2010
fiscal year with a growth rate of 5.8%. In many countries domestic IT consumption is about 5% of the total GDP. In comparison,
IT adoption is significantly smaller in Bangladesh. However, IT industry is also one of the prospective sectors, where Bangladesh
has the best potentials to export skilled professionals and earn significant foreign revenue.

Regulatory Environment and Road Map

With the vision for a Digital Bangladesh, the Government shows keen interest in the development of Information and
Communication Technologies (ICT) sector in Bangladesh. Besides policymaking and awareness development, the Government
has also initiated implementation of the ICT policy by enacting the ICT Act 2009, setting up of the Controller of Certifying
Authorities etc, with a view to making the sector more regulated, committed and vibrant.
However, it is still felt that due to lack of proper infrastructure and connected facilities, the Information Technology (IT) industry
in Bangladesh is facing various challenges . For example, the tax exemption as offered at present by the Government to the IT
industry with regard to Information Technology Enabled Services (ITES) will be expiring in 2011, which, if not extended, will
significantly impede the pace and prospects of development of the industry. Further, although the existing definition of ITES
includes a number of IT services, it does not cover various types of other IT services. As an incentive to the industry, the definition
needs to be updated to include more comprehensive IT services.
It is felt that a combined approach is required to promote the industry and to address the challenges that the industry is facing
both at the domestic and international level. Policies, regulations and Government incentives, that specifically address the
needs of the IT industry, are to be developed and adopted to allow the sector grow into a profitable and globally recognized
industry. From another perspective, extensive measures should be taken and resources should be made available to ensure
sufficient knowledge and training to members of the society, who would help further to promote the industry both at the
domestic and international levels.

Our Products & Services

GPIT can offer its clients complete end-to-end solutions for all their IT needs.

Solutions: Services: Products:

• Mobile Solutions • Applications Development • ERP (Enterprise Resource Planning)
• Enterprise Solutions • System Integration • CRM (Customer Relationship Management)
• Communication Solutions • IT Consultancy • Core Banking
• Network Solutions • Support & Maintenance • Business Intelligence and Data Warehouse
• Infrastructure Solutions • Business Process Outsourcing • Call Center Solutions
• DR & Data Center

114/115
 Our Employees
With a steady growth in employment, GPIT has at present 391 employees with world class experience. GPIT has the highest IT
certifications in the country and many have international work experience. The Company is looking to cultivate an open “one
GPIT Directors’ Report

team” culture with our employees who, apart from routine commitments, are also engaged in sports, health and other
extramural activities. The company strives to inculcate social consciousness of workplace ethics and sustainability principles.
In the coming years, we will be working closely to build a competent & high performing team.

Investment Risks & Concerns

Although GPIT has huge potentials and opportunities ahead, there are some risks concerns and uncertainties as well, which
may challenge the pace of growth. Key concerns and uncertainties are as below:
• Lack of proper policy support from the Government,
• No separate regulatory body to regulate ICT industry,
• Making payments to suppliers outside the country,
• Inadequate Copyright protection law,
• Shortage of capable technical resource,
• Connectivity infrastructure,
However, the Government aspires in building a Digital Bangladesh which may address these risks. GPIT is committed to assist
Bangladesh Government and all its agencies in building a Digital Bangladesh.

Contribution to the National Exchequer

GPIT made significant contributions to the National Exchequer last year. The collective contribution to the National Exchequer
up to December 2010 was BDT 104 million (BTD 10.4 crore).

Enhanced Value of Shareholders’ Investment

The Directors take pleasure in reporting the financial results of the Company for the year ended December 31, 2010 and
recommended the appropriation as mentioned in the “Appropriation of Profit” table below:

2010
Profit available for appropriation
Profit/(loss) after tax 126,175,141
Total amount available for appropriation 126,175,141
Appropriation
Proposed Dividend for the year 2010 Nil
Retained Earnings 126,175,141

Dividend
Being a new Company, GPIT completed its first financial year successfully. In view of the performance of the Company and
considering the current cash position, investments plan for the year 2011 and future expansion of the business, the Directors are
not recommending any dividends to the shareholders for the year 2010.

Board of Directors & Board Meetings

The composition of the Board of Directors who held office during the year is as below:
1. Mr. Oddvar Hesjedal
2. Mr. Raihan Shamsi
3. Mr. Arild Kaale
4. Mr. Frode Stoldal
5. Mr. Arnfinn Groven
6. Mr. Kazi Monirul Kabir

In addition, Mr. Tanveer Mohammad was also appointed Director mid-term at the 8th Board meeting on 17th August, 2010 as
per provision of the Articles of Association of the Company.

During 2010, a total of 13 (thirteen) Board meetings were held, which met the regulatory requirement in this respect.
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, the following Directors of the Board will retire

GPIT Directors’ Report

at the Annual General Meeting. They are, however, eligible for re-appointment:
1. Mr. Oddvar Hesjedal
2. Mr. Kazi Monirul Kabir
3. Mr. Frode Stoldal
4. Mr. Tanveer Mohammad

Appointment of Chief Executive Officer

The Board of Directors has appointed Mr. Peter Anthony Dindial as the new Chief Executive Officer (CEO) with effect from
February 20, 2011. At this occasion, the Board would like to put on record its highest esteem and appreciation for the valuable
services rendered by Mr. Kazi Islam as the CEO and also for his solid contribution in establishing GPIT. The Board also
congratulates the incoming CEO Mr. Peter Anthony Dindial and wishes him success in developing GPIT’s position as the leading
Bangladeshi IT company.

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 expressed their willingness to be re-appointed. The Board
recommends their re-appointment for the year 2011 and to continue till the next AGM at a fee of BDT 5,25,000 (Five lacs twenty
five thousand) plus VAT.

Looking ahead 2011 and beyond

The business of the Company combines both technology and services .We recognize a number of significant challenges ahead
as mentioned earlier. In our preparedness to be successful in the coming years, we are working hard with the right people and
right products to ensure foolproof strategy so as to execute our plans effectively and even more efficiently and thereby taking
the Company to further heights.

Acknowledgements
Members of the Board take this opportunity to express their gratitude and sincere thanks to the Shareholders for their
continued support and guidance.
We are also grateful to Government of Bangladesh, Bangladesh Association of Software & Information Services (BASIS),
Bangladesh Computer Samity (BCS), Dhaka Chamber of Commerce & Industry (DCCI), Bangladesh Telecommunication
Regulatory Commission (BTRC), National Board of Revenue, Bangladesh Bank, Board of Investment (BOI), Registrar of Joint
Stock Companies and Firms (RJSC), our bankers, vendors and other business partners for their strong support and active
cooperation that the Company has received from them during the year.
The Board also records its appreciation for the employees at all levels for their dedicated services, sincerity, hard working and
strong commitment which enabled the Company to rapidly advance on what we fervently perceive to be a sustainable growth
path.

Thanking you all and with best regards.

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

Oddvar Hesjedal
Chairman
Grameenphone IT Ltd.

January 31, 2011

116/117
Grameenphone IT Ltd.
Statement of Financial Position
as at 31 December 2010

Assets
Notes Taka
Non current assets:
Property, plant and equipment, net 4 176,822,402

Current assets:
Inventories 5 103,488,179
Accounts receivable 6 221,221,943
Advances, deposits and prepayments 7 34,076,775
Advance VAT 8 30,016,625
Other receivables 9 1,890,705
Cash and cash equivalents 10 256,572,726
647,266,953
Total assets 824,089,355

Equity and liabilities

Shareholders' equity:
Share capital 11 75,000,000
Retained earnings 126,175,141
201,175,141

Non-current liabilities -

Current liabilities:
Advance from customer 12 161,032,225
Payable for operating expenses 13 121,923,559
Payable for capital expenditure 14 176,839,206
Provision for expenses 15 158,052,956
Income tax provision 16 532,484
Other current liabilities 17 4,533,784
622,914,214
Total equity and liabilities 824,089,355

The annexed notes 1 to 28 form an integral part of these financial statements.

Chairman Director Chief Executive Officer Company Secretary

As per our report of same date.

Dhaka, January 31, 2011 Auditors

Grameenphone IT Ltd.
Statement of Comprehensive Income
for the period from 28 January to 31 December 2010

Notes Taka

Revenue 18 642,007,224
Cost of service rendered 19 (315,086,476)
Gross profit 326,920,748
Operating expenses:
General and administrative expenses 20 (187,873,262)
(187,873,262)
Operating profit 139,047,486
Finance income, net 21 1,724,737
Preliminary expenses 22 (13,870,968)
Profit before tax 126,901,255
Income tax expense 3.8 (726,114)
Profit after tax 126,175,141
Other comprehensive income -
Total comprehensive income for the period 126,175,141

The annexed notes 1 to 28 form an integral part of these financial statements.

Chairman Director Chief Executive Officer Company Secretary

As per our report of same date.

Dhaka, January 31, 2011 Auditors

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Grameenphone IT Ltd.
Statement of Changes in Equity
for the period from 28 January to 31 December 2010

Share Retained Total

capital earnings Taka
Taka Taka

Issue of shares 75,000,000 - 75,000,000

Net profit for the period - 126,175,141 126,175,141
Other comprehensive income - - -
Balance as at 31 December 2010 75,000,000 126,175,141 201,175,141

Grameenphone IT Ltd.
Statement of Cash Flows
for the period from 28 January to 31 December 2010

Taka
Cash flows from operating activities
Cash received from customers 611,038,596
Payment to suppliers and others (170,368,140)
Payment to employees (260,628,837)
Finance income received 1,936,304
Finance expense paid (211,567)
Payment of income tax (193,630)
Net cash flows from operating activities 181,572,726

Cash flows from investing activities -

Cash flows from financing activities

Proceeds from issuance of shares 75,000,000
Net cash flows from financing activities 75,000,000
Cash and cash equivalents as at 31 December 256,572,726
Grameenphone IT Ltd.
Notes to the financial statements
as at 31 December and for the period from 28 January to 31 December 2010
1. Reporting entity
Grameenphone IT Ltd. (hereinafter referred to as "GPIT/the company") is a private limited company incorporated in
Bangladesh under the Companies Act 1994 with an authorised share capital of Tk 7,500,000,000 divided into
75,000,000 ordinary shares of Tk 100 each. The company was registered on 28 January 2010. The company is a wholly
owned subsidiary of Grameenphone Ltd. ("Grameenphone"/"GP"). Registered office of the company is GPHouse,
Bashundhara, Baridhara, Dhaka-1229, Bangladesh.

The company launched its commercial operation on 01 April 2010.

The objective of this company is to provide IT services to Grameenphone Ltd. and other external parties.

2. Basis of preparation

2.1 Statement of compliance

These financial statements have been prepared in accordance with Bangladesh Financial Reporting Standards (BFRS),
the Companies Act 1994 and other applicable laws in Bangladesh.

These financial statements have been authorised for issue by the board of directors on 31 January 2011.

2.2 Basis of measurement

These financial statements have been prepared on the basis of historical cost convention following accrual basis of
accounting except for Statement of Cash Flows.

2.3 Functional and presentation currency

These 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 these 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. Revision to accounting estimates is recognised
in the period in which the estimates are 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 significant effect on the amount recognised in the financial statements are described in the following
notes:

Note 15 Provision for expenses

Notes 16 & 3.8 Income taxes
Note 18 Revenue

2.5 Comparative information

Comparative information has not been presented since the company was incorporated in 2010.

2.6 Reporting period

These financial statements cover the period from 28 January 2010 to 31 December 2010.

3. Significant accounting policies

Accounting policies set out below have been applied in preparing these financial statements.

3.1 Property, plant and equipment

(a) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses, if any.

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 asset to the location
and condition necessary for it to be capable of operating in the intended manner. Purchased software that is integral to
the functionality of the related equipment is capitalised as part of that equipment.

122/123
 When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.

(b) Subsequent costs

Notes to the Financial Statements

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 capital work in progress.
Depreciation on property, plant and equipment is provided on a straight-line basis over the estimated useful lives of each
item of property, plant and equipment. 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 reporting date. The estimated useful lives for the current period is as follows:

Useful life
Computer and other IT equipment 4 years

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 plant, machinery, capital components of other equipment and
related installation costs incurred until the date placed in service. In case of purchase of components, capital work in
progress is recognised when risks and rewards associated with such assets are transferred to the company.

3.2 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.

3.2.1 Financial assets

Financial assets of the company include cash and cash equivalents, accounts receivable and other receivables.
The company initially recognises receivables on the date 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.

(a) Accounts receivable

Accounts receivable represents the amounts due from its customers for IT related services, and includes both billed and
unbilled portion of such services at the reporting date. Accounts receivable is stated net of any impairment loss, if
applicable.

(b) Cash and cash equivalents

Cash and cash equivalents comprise cash balances on hand and balances with various banks. Bank overdrafts that are
repayable on demand, form an integral part of the company’s cash management are included as a component of cash and
cash equivalents.

3.2.2 Financial liability

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 payable for expenses, liability for capital expenditure and other current liabilities.

3.3 Impairment

(a) Financial assets

Accounts receivable and other receivables are assessed at each reporting date to determine whether there is any
objective evidence of impairment. Financial assets are 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 are impaired can include
default or delinquency by a debtor, indications that a debtor or issuer will enter bankruptcy, etc.
(b) Non-financial assets
An asset is impaired when its carrying amount exceeds its recoverable amount. The company assesses at each reporting
date whether there is any indication that an asset or a Cash Generating Unit (CGU) may be impaired. If any such indication

Notes to the Financial Statements

exists, the company estimates the recoverable amount of the asset or CGU. The recoverable amount of an asset or a CGU
is the higher of its fair value less costs to sell and its value in use. Carrying amount of the asset is reduced to its recoverable
amount by recognising an impairment loss if, and only if, the recoverable amount of the asset is less than its carrying
amount. Impairment loss is recognised immediately in profit or loss, unless the asset is carried at revalued amount. Any
impairment loss of a revalued asset shall be treated as a revaluation decrease.

3.4 Preliminary expenses

Preliminary expenses include expenses incurred in connection with the formation of the company. All preliminary
expenses have been expensed as incurred following the requirement of BAS 38: Intangible Assets.

3.5 Revenue
Revenues are measured at fair value of the consideration received or receivable, net of discount and VAT. Revenues are
reported gross with separate recording of expenses to vendors of products or services. Revenues of Grameenphone IT Ltd.
arise from:

(a) Sale of software

(b) IT service revenue

(a) Sale of software

Revenue from the sale of software is recognised when significant risks and rewards associated with the software is
transferred and the entity retains neither significant managerial involvement nor effective control over the software. The
other criteria for revenue recognition, i.e. availability of reliable measure for revenue and associated costs and probable
flow of economic benefits to the entity must also be met.

Accordingly, revenue is only recognised when the software is shipped and the relevant installation is complete.

(b) IT service revenue

Revenue from IT service is recognised on a percentage of completion basis. Percentage of completion of service is
determined upon periodic review and usually evidenced by work completion certificate. Revenue is recognised only when
it is probable that the economic benefits associated with the transaction will flow to the entity.

3.6 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 are translated into Bangladesh taka at the rate of
exchange prevailing at the reporting date. Foreign currency exchange differences arising on foreign currency
denominated liabilities incurred for acquisition of property, plant and equipment and intangible assets have to be
capitalised and included in the carrying amount of asset as per the provisions of section 185, Part-I, Schedule XI of the
Companies Act, 1994 while BAS 21: The Effects of Changes in Foreign Exchange Rates requires recognising such
differences in the profit or loss. However, the above conflict did not have any effect on these financial statements of the
company as the company did not have any such foreign currency transaction.

3.7 Inventories
Cost of inventories include expenditure incurred in acquiring the inventories, and other costs incurred in bringing them to
their existing location and condition. 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.

Generally, the costs of inventories includes cost for the personnel directly engaged in providing the service, including
supervisory personnel, other direct costs and attributable overheads.

3.8 Income tax expense

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.

As per the provisions of Income Tax Ordinance 1984 (ITO), IT enabled services are subject to tax exemption until 30 June
2011. However, income from sources other than IT enabled services are taxable as per Income Tax Ordinance 1984.
Applicable income tax for such other income is 37.5%. as per Finance Act 2010.

3.9 Employee benefits

The company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees.

(a) Defined contribution plan (provident fund)

The company contributes 10% of basic salary of all eligible employees to a provident fund (defined contribution plan)

124/125
 constituted under an irrevocable trust, while the employees also contribute an equal amount to the fund as per the rules
of the trust deed.
The company recognises contribution to defined contribution plan as an expense when an employee has rendered
Notes to the Financial Statements

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)

The company provides retirement benefit in the form of gratuity payments determined by reference to employees'
earnings and years of service to each eligible employees at the time of retirement/separation. Gratuity obligation at the
reporting date is measured on the basis of best estimate of the company from prior experience in its parent company.

(c) Short-term employee benefits

Short-term employee benefits include salary, bonuses, leave encashment. Obligations for such benefits are measured on
an undiscounted basis and are expensed as the related service is provided.

3.10 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.

3.11 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.
 4 Property, plant and equipment

Cost Depreciation Carrying amount

Disposal/ Disposal/
Name of assets As at Addition Adjustment As at As at Charged Adjustment As at As at
28 January during during 31 December 28 January during the during 31 December 31 December
2010 the period the period 2010 2010 period the period 2010 2010
Taka Taka Taka Taka Taka Taka Taka Taka Taka

Computer and other IT equipment (Note 4.1) - 8,207,244 - 8,207,244 - 16,804 - 16,804 8,190,440

- 8,207,244 - 8,207,244 - 16,804 - 16,804 8,190,440

Capital work in progress (Note 4.2) - 176,839,206 (8,207,244) 168,631,962 - - - - 168,631,962

- 185,046,450 (8,207,244) 176,839,206 - 16,804 - 16,804 176,822,402

4.1 Computer and other IT equipment

Computer and other IT equipment include laptops, notebooks, scanners and other IT related accessories.

4.2 Capital work in progress

Capital work in progress as at 31 December 2010 comprises cost incurred in process of building data centre (Tk. 101,187,283), IT equipment in process of installation (Tk. 56,657,810) and installation
charges (Tk. 10,786,869).

Notes to the Financial Statements

126/127
 5 Inventories Taka

Software 103,488,179
Notes to the Financial Statements

103,488,179

This represents the cost of Network Engineering Resource Management (NERM) software acquired for GP and directly
attributable personnel costs. GPIT is responsible for installation of the software as per the 'Frame Contract for Supply of NERM
Software' with GP.

6 Accounts receivable
IT services to Grameenphone 210,935,580
IT operation maintenance to Cell Bazaar 6,464,717
IT services to Brac Bank Limited 1,523,994
IT services to Telenor Broadcast Holding AS 2,297,652
221,221,943

As at 31 December 2010, the above receivable does not include any receivable from:

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

(b) firms or private limited companies respectively in which any director of Grameenphone IT Ltd. is a partner, director or
member.
The entire amount of the above receivable is considered good. However, no security was received against the amount.

7 Advances, deposits and prepayments

Advances
Advance to employees (Note 7.1) 9,048,385

Prepayments
Group insurance premium 3,631,615
NERM software implementation support (Note 7.2) 21,243,620
Other prepayments 153,155
34,076,775

7.1 Advance to employees

Advance to employees represents advances made to employees for foreign travel, training, meeting, workshop, presentation etc
including advances of Tk 545,883 made to directors (employee directors) of the company in connection with business travel and
training. No advances were made to the shareholder directors during the period.

7.2 NERM software implementation support

This represents the amount paid in advance to Oracle Corporation Singapore Pte. Ltd. as fees for implementation support
services.

8 Advance VAT
This includes debit balance of VAT current account, and VAT deducted at source (which can be reclaimed as input VAT) by
customers from the company's bills against which VAT deduction certificate and/or VAT challan are yet to be received.

9 Other receivables
Other receivables include receivable for reimbursable expenses from Telenor Star II AS, receivable from employee benefit funds
etc.

10 Cash and cash equivalents

Cash in hand 39,742
Cash at bank:
Standard Chartered Bank 246,381,467
Dutch-Bangla Bank Limited 1,956,784
The Hongkong and Shanghai Banking Corporation Limited 8,194,733
256,532,984
256,572,726
11 Share capital
Taka
Authorised:

Notes to the Financial Statements

75,000,000 ordinary shares of Tk. 100 each 7,500,000,000
7,500,000,000

Issued, subscribed and paid-up:

750,000 ordinary shares of Tk. 100 each 75,000,000
75,000,000
As at 31 December 2010, shareholding position of the company was as follows:
Percentage Amount
No. of shares
Name of shareholders of holding Taka
Grameenphone Ltd. 749,999 99.9999% 74,999,900
Mr. Raihan Shamsi 1 0.0001% 100
750,000 100% 75,000,000

12 Advance from customer

This represents the amount received by the company from Grameenphone as advance against delivery and implementation of
NERM software.

13 Payable for operating expenses

Payable to Grameenphone (Note 13.1) 88,209,424
Payable to others:
Service maintenance fees 11,168,780
Office rent 1,248,500
Office running expenses 18,700,373
Employee travel and training expenses 1,373,688
Other operating expenses 1,222,794
121,923,559
13.1 Payable to Grameenphone
This represents the amount payable to Grameenphone on account of preliminary expenses (Tk. 13,870,968), rent for head office
at GPHOUSE (Tk. 17,132,616), office running and other operating expenses (Tk. 57,205,840) paid by GP on behalf of GPIT.

14 Payable for capital expenditure

Payable to Grameenphone (Note 14.1) 168,631,962
Payable to others 8,207,244
176,839,206
14.1 Payable to Grameenphone
This represents the cost of computer and other IT equipment transferred from GP to GPIT. The purchase process was facilitated by
GP in terms of execution of the transaction (including arrangement with vendors, inspection etc.).

15 Provision for expenses

Short term employee benefits (Note 15.1) 66,190,077
IT service maintenance charge (Note 15.2) 75,107,867
Training and travel expenses 14,409,948
Audit fee 525,000
Other operational expenses (Note 15.3) 1,820,064
158,052,956
15.1 Short term employee benefits
This represents provision for employee salary, bonus and leave encashment outstanding at the reporting date.

15.2 IT service maintenance charge

This represents mainly provision for IT maintenance service, software support service and other IT related service received by the
company during 2010. The amount includes Tk 47,931,921 representing proportionate cost of IT and other related services for
which payments to vendors were made by GP.

15.3 Other operational expenses

Provision for other operational expenses includes provision for professional fees, office running expenses, etc.

128/129
 16 Income tax provision Taka
Opening balance -
Provision made during the period 726,114
Notes to the Financial Statements

726,114
Less: Advance income tax paid (193,630)
Closing balance 532,484

17 Other current liabilities

Other current liabilities include payables to Telenor, tax deducted at source from employees, and tax and VAT deducted at source
from suppliers etc.

18 Revenue
IT service revenue from:
Grameenphone (Note 18.1) 633,428,614
Cell Bazaar (Note 18.2) 4,955,746
Local customers 1,325,212
Telenor Broadcast Holding AS 2,297,652
642,007,224

18.1 IT service revenue from Grameenphone

This represents the amount of service charge earned against IT services provided to Grameenphone. These services include
maintenance of IT equipment, maintenance of billing, financial and other software, IT project implementation, supervision and
other related services.

18.2 IT service revenue from Cell Bazaar

This represents the amount of service charge earned against IT services provided in connection with operations of Cell Bazaar.

19 Cost of service rendered

Personnel expenses (Note 19.1) 231,972,486
Service maintenance fees 83,097,186
Depreciation on computer and other IT equipment 16,804
315,086,476

19.1 Personnel expenses

Personnel expenses include cost of employee benefits attributable to employees directly involved in providing IT services to the
customers.
Personnel expenses incurred during the 2010 were allocated to cost of service rendered and general and administrative
expenses in the following manner:
Cost of service rendered 231,972,486
General and administrative expenses 85,798,043
317,770,529

20 General and administrative expenses

Personnel expenses (Note 19.1) 85,798,043
Legal and consultancy fees 17,443,384
Statutory audit fee 525,000
Office rent (Note 20.1) 28,534,815
Utility and maintenance 5,447,082
Vehicle running expenses 10,408,628
Office stationery 8,378,859
Postage, freight and communications 3,397,576
Travel and training expenses 20,822,568
Advertisement, subscription and others 6,556,987
Entertainment expenses 560,320
187,873,262
20.1 Office rent
This includes office rent of Tk. 17,132,616 payable to GP for its Corporate Head Office at GPHouse.
21 Finance income, net
Taka

Finance income 1,936,304

Notes to the Financial Statements

Finance expense (211,567)
1,724,737

Finance income represents interest earned on bank deposits, while finance expense represents mainly LC related charges.

22 Preliminary expenses
Legal and professional charges 4,276,065
Consultancy fees 9,586,693
Meeting expenses 8,210
13,870,968

These amounts represent pre-incorporation expense incurred in connection with formation of the company.

23 Financial risk management

The company management has overall responsibility for the establishment and oversight of the company's risk management
framework. Risk management policies, procedures and systems are reviewed regularly to reflect changes in market conditions
and the company's activities. The company has exposure to the following risks from its use of financial instruments.
 Credit risk
 Liquidity risk
 Market risk

23.1 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.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. As at 31 December
2010, substantial part of the receivables are those from its parent company Grameenphone and other Telenor entities and
subject to insignificant credit risk. Risk exposures from other financial assets, i.e. Cash at bank and other external receivables are
also nominal.

(a) Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 31
December 2010 was:
Accounts receivable
IT services to Grameenphone 210,935,580
IT operation maintenance to Cell Bazaar 6,464,717
IT services to Brac Bank Limited 1,523,994
IT services to Telenor Broadcast Holding AS 2,297,652
221,221,943
Other receivables 1,890,705
Cash at bank 256,532,984
479,645,632
Being a balance with the government authority, advance VAT does not contribute to credit risk.
The maximum exposure to credit risk for accounts receivable as at 31 December 2010 by geographic region was:
Domestic 218,924,291
Foreign 2,297,652
221,221,943

(b) Ageing of receivables

The ageing of gross accounts receivable at 31 December 2010 was as follows:
Invoiced 0-90 days 212,459,574
Invoiced 90-180 days -
Invoiced over 180 days -
212,459,574

130/131
 The above ageing schedule considers only the part of the accounts receivable for which invoices were raised on or before 31
December 2010.
Notes to the Financial Statements

23.2 Liquidity risk

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The company's approach
to managing liquidity (cash and cash equivalents) is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to
the company's reputation. Typically, the company ensures that it has sufficient cash and cash equivalents to meet expected
operational expenses, including financial obligations through preparation of the cash flow forecast, prepared based on time line
of payment of the financial obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within
due date.
In extreme stressed conditions, the company may get support from the parent company in the form of short term financing.
The carrying amount of financial liabilities represents the maximum exposure to liquidity risk. The maximum exposure to liquidity
risk at 31 December 2010 was:
Carrying amount Maturity period
Taka Months
Payable for operating expenses 121,923,559 Six months or less
Payable for capital expenditure 176,839,206 -do-
Other current liabilities 4,533,784 -do-
303,296,549
23.3 Market risk
Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the company's
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters.

(a) Currency risk

The company is exposed to currency risk on certain revenues and purchases such as IT service revenue from foreign customers
and import of IT equipment, software and software support services. Majority of the company's foreign currency transactions are
denominated in USD and relates to procurement of software and software support service from abroad. As at 31 December 2010,
only exposure to currency risk arises from receivable for IT services provided to Telenor Broadcast Holding AS amounting to Tk.
2,297,652.

Exchange rate for USD as at 31 December 2010 was Tk 71.40.

Foreign exchange rate sensitivity analysis:

An increase/(decrease) of 10 basis points in exchange rate for USD in 2010 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.

10 bp increase 10 bp decrease
Taka Taka
Profit or loss during the period (115,123) 115,123
Equity (115,123) 115,123

(b) Interest rate risk

The only interest bearing financial instrument for the company is the special notice deposit (SND) account maintained by the
company with its banks. Historically, interest rates for such instruments show little fluctuation. Interest rate risk for the company
is therefore insignificant.

24 Information relating to available bank facilities

As at 31 December 2010, GPIT had Tk.150 million non-funded credit facilities (LC facilities) with Standard Chartered Bank. No
funded facility was availed by the company from any bank or other financial institution during 2010.
25 Related party disclosures
During the period, the company entered into a number of transactions with related parties in the normal course of business. The
names of the related parties and nature of these transactions have been set out below in accordance with the provisions of

Notes to the Financial Statements

IAS 24: Related Party Disclosures.

Related party transactions during the period

Name of related parties
and nature of relationship Nature of transaction Amount Taka
Grameenphone Ltd. Share capital 74,999,900
(parent company) Revenue from IT service 633,428,614
Receipt against IT service (net of VAT) 450,006,371
Advance received against NERM project 161,032,225
Office rent 17,132,616
Telenor Broadcast Holding AS Revenue from IT service 2,297,652
(Telenor group entity)
Telenor Star II AS Cell Bazaar revenue sharing 665,746
(Telenor group entity)

Receivable from/(payable to) related parties

Name of related parties
and nature of relationship Nature of transaction Amount Taka
Grameenphone Ltd. Receivable for IT services 210,935,580
(parent company) Payable for operating expenses (88,209,424)
Advance received against NERM project (161,032,225)
Payable for capital expenditure (168,631,962)
Office rent payable (17,132,616)
Telenor Broadcast Holding AS Receivable for IT service 2,297,652
(Telenor group entity)
Telenor Star II AS Payable for Cell Bazaar operations (665,746)
(Telenor group entity)

25.1 Key management personnel compensation Taka

Short-term employee benefits (salary and other allowances) 116,713,240

Post employment benefits (provident fund, gratuity etc.) 8,060,965
124,774,205
Key management personnel includes employees of the rank of Deputy General Manager (DGM), DGM equivalent and above.

26 Expenses/expenditures and revenue in foreign currency during 2010

Expenditure in foreign currency during the 2010:

CIF value of imports (NERM Software) 96,164,211

Software (NERM) implementation support 21,243,620
IT service revenue 2,297,652

27 Capital commitments
As at 31 December 2010, Grameenphone IT Ltd had a capital commitment of Tk. 64,514,024 for purchase of IT equipment,
installation of such equipment and other implementation services.

28 Other Disclosures

28.1 Number of employees

As at 31 December 2010, number of regular employees receiving remuneration of Tk. 36,000 or above per annum was 356.

28.2 Events after the reporting period

There have been no significant events after the reporting period that might require adjustment or disclosure in these financial
statements.

132/133
With a significant contribution to the GDP, and standing as one of the highest taxpayers to the government and with the recognition as
an organization with one of the largest number of employees, Grameenphone is moving our economy forward. Tax money builds
schools, colleges, hospitals and roads that directly add value to our everyday lives. Each new employment gives birth to new possibilities
and opportunities. And most importantly, a growing GDP bears the stamp of a nation’s improving infrastructure.

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Useful Information for Shareholders

Useful Information for Shareholders

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. Listing on Stock Exchanges

The Ordinary Shares of the Company are listed on the Dhaka and Chittagong Stock Exchange Ltd. Company trading code
is [GP].

3. Distribution Schedule of the Shares as on December 31, 2010

Range of Shareholdings Number of Shareholders Total Number of Shares Percentage

001 to 500 81,024 17,945,880 1.33%
501 to 5,000 17,159 24,439,298 1.81%
5,001 to 10,000 1,089 7,853,255 0.58%
10,001 to 20,000 527 7,481,613 0.55%
20,001 to 30,000 121 2,917,988 0.22%
30,001 to 40,000 73 2,565,305 0.19%
40,001 to 50,000 46 2,091,771 0.15%
50,001 to 100,000 85 6,156,150 0.46%
100,001 to 1,000,000 90 23,516,430 1.74%
1,000,001 to 1,000,000,000 12 1,255,332,332 92.97%
Total 100,226 1,350,300,022 100.00%

4. Dividend

For the Year Dividend Rate Dividend Per Par Value Dividend
Share (BDT) Per Share (BDT) Type
2010 85% (Proposed Final Cash Dividend) 8.50 10.00 Cash
35% (Interim Cash Dividend) 3.50 10.00 Cash
2009 60% 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

* 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.

134/135
 5. GP Share Performance at Stock Exchanges
I. Monthly Open, Close, High and Low share price and volume of the Company’s Shares traded at Dhaka Stock Exchange
Useful Information for Shareholders

Ltd. (DSE) during the year 2010 are -

Month Open High Low Close Total Volume

(BDT) (BDT) (BDT) (BDT)

January 187.0 288.0 187.0 266.9 61,938,600

February 265.2 395.0 265.2 355.3 48,939,800
March 355.0 369.0 304.1 362.2 39,544,400
April 363.0 375.0 321.0 324.7 25,941,600
May 325.0 326.0 264.5 276.4 20,026,000
June 276.6 284.5 233.5 235.7 12,282,800
July 231.5 264.0 221.5 258.4 9,139,800
August 260.0 278.0 252.0 255.5 11,935,400
September 258.9 263.0 236.5 239.4 6,768,800
October 238.1 269.0 225.0 231.9 14,990,600
November 231.1 250.0 209.7 234.7 16,512,200
December 235.0 292.0 211.3 245.8 26,527,800
Total Shares traded during the year 294,547,800

Note:
a. The highest share price of Grameenphone Ltd. at Dhaka Stock Exchange Ltd. (DSE) was BDT 395.0 in February 2010 and the
lowest share price was BDT 187.0 in January 2010.

II. Monthly Open, Close, High and Low share price and volume of the Company’s Shares traded at Chittagong Stock
Exchange Ltd. (CSE) during the year 2010 are -

Month Open High Low Close Total Volume

(BDT) (BDT) (BDT) (BDT)

January 188.6 292.0 188.7 266.7 9,682,800

February 265.0 396.5 265.0 355.2 7,987,400
March 355.2 368.9 305.0 361.3 4,139,600
April 361.3 374.0 322.3 325.1 2,625,600
May 325.1 321.0 263.0 277.3 2,370,600
June 277.3 284.8 234.0 236.3 1,393,800
July 236.3 264.0 224.0 257.7 1,309,000
August 257.7 279.0 250.2 255.3 2,065,200
September 255.3 265.0 236.0 237.1 794,800
October 237.1 267.0 224.4 226.2 1,641,400
November 226.2 250.0 210.0 235.0 1,854,000
December 235.0 294.0 210.0 246.3 6,045,400
Total Shares traded during the year 41,909,600

Note:
a. The highest share price of Grameenphone Ltd. at Chittagong Stock Exchange Ltd. (CSE) was BDT 396.5 in February 2010 and the
lowest share price was BDT 188.7 in January 2010.
 III. Quarterly high-low price of the Company’s share for the year 2010:

Useful Information for Shareholders

DSE CSE
High Low High Low
(BDT) (BDT) (BDT) (BDT)
During Quarter Ended
31-Mar-10 395.0 187.0 396.5 188.7
30-Jun-10 375.0 233.5 374.0 322.3
30-Sep-10 278.0 221.5 279.0 224.0
31-Dec-10 292.0 209.7 294.0 210.0

IV. Year-wise GP Share Price Trend:

DSE CSE
2010 2009 2010 2009

Highest Price (BDT) 395.0 195.0 396.5 200.0

Lowest Price (BDT) 187.0 152.0 188.7 151.1

V. GP Share Price and Transaction Volume in DSE in 2010:

450 8,000

400
7,000

350
6,000

300

Volume in Thousands
5,000
Close Price in BDT

250

4,000

200

3,000
150

2,000
100

1,000
50

0 -
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10

6. Subsidiary Company
Name of the Company Holding Nature of Business
Grameenphone IT Ltd. 100% Information Technology (IT)
(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 January 10,2011.
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 2010 at
www.grameenphone.com

9. Investor Relations
Institutional investors, securities analysts and other members of the professional financial community requiring additional
financial information can visit the Investor Relations section of the Company website: www.grameenphone.com

10. Shareholder Support

If you have any query relating to your shareholding, please contact at 01711555888 or mail to GP Share Office at
shareoffice@grameenphone.com

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Notes

Disclaimer
This 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.