20 YEARS TOWARDS a world unbound

20 years ago when first introduced mobile phone services in , its goal was to put a mobile phone in the hands of every person in the country and to enable access to modern technologies. Today, 20 years on, Grameenphone's vision is the full digitalisation of society and the creation of new solutions to simplify the lives of its customers. With the introduction of high speed services, Grameenphone leads through innovative digital solutions that not only benefit customers, but society as well. Given the relentless conviction of Grameenphone to improve lives, its tools for progress at one's disposal, today and beyond, no dream is too big and no destination is too far. WELCOME TO OUR

ANNUAL REPORT 2016 Grameenphone Annual Report 2016

Overview Business Performance Sustainability

An introduction to our report with a Insights of our operation and how our Our sustainability efforts Overview snapshot of our business, key events strategy is delivered and achievements in 2016

02 Who We Are 10 Quarterly Business Highlights 2016 18 Sustainability Initiatives to 03 Vision, Mission & Values 12 Message from Chairman and CEO Drive Social Impact 04 History & Milestones 15 Management Discussion 20 Climate Change-Ensuring a Better Tomorrow 05 Products & Services & Analysis 22 Supply Chain Sustainability 06 Awards & Recognitions 2016 Business Performance 07 Performance Highlights 2016 09 Corporate Information Sustainability Governance Financial Analysis Additional Information Our framework for corporate governance, Our financial performance and statutory Corporate Information and Notice Management Team and the role and financial statements with associated contribution of our Board audit report and supporting notes

24 The Shareholders 50 Five Years’ Financial Summary 124 Useful Information for 26 Organisational Structure 52 Value Added Statement 2016 Shareholders Governance th 28 Directors’ Profile 53 Contribution to the National 128 Notice of the 20 Annual General Meeting 34 Management Team Profile Exchequer 129 Proxy Form and Attendance Slip 37 Corporate Governance in 55 Directors’ Report Grameenphone 73 Auditors’ Report & Audited 46 Internal Control over Financial Financial Statements Reporting (ICFR) Financial Analysis 47 Enterprise Risk Management 49 Audit Committee Report Additional Information Additional

Visit: www.grameenphone.com to view the online version of this annual report. Grameenphone Annual Report 2016 WHO WE ARE...

Grameenphone believes that connected societies are empowered societies. Across its 20 years journey, Grameenphone has made a significant impact on the socio-economic growth of the people of Bangladesh. In a changing digital landscape, we are now focused on strengthening our mobile data leadership, paving the way to become the most preferred partner in our customers’ digital journey. Years 20of Operating Excellence * 5,881 KM MILLION FIBRE NETWORK SUBSCRIBERS NATIONWIDE *it also includes fibre leased from other parties. 58 POINT OF SALES MILLION MOBILE DATA 24.5 USERS 357,744

We have invested Our 3G coverage is the widest in Bangladesh at BDT299b since our inception and covers 90.2% 99.5% No. 1 Network of the Bangladeshi in Bangladesh population BDT21.1b in 2016 to rollout 3G sites, OVER improve coverage, 35,000 and enhance capacity SHAREHOLDERS

Digitising the Customer Journey We have contributed BDT 523.4b Best Brand in to the National Exchequer Bangladesh since our inception awarded by Bangladesh Brand Forum

> 6 million users > 2 million trial users Directly Employed 2,651 full-time equivalent employees 200K monthly active users > 3 million monthly visit and a large number of indirect jobs through suppliers, retailers, vendors & other business partners Grameenphone is now

> 5 million downloads > 3 million downloads ISO 14001:2004 certified Company

2 Who We Are... VISION, MISSION

& VALUES Grameenphone

VISION Annual Report 2016

Kee Empower Societies sy p p ea ro We provide the power of digital t i m communication, enabling everyone to e help o is improve their lives, build societies and Overview k to ur e a e c s secure a better future for all. r u M e s

h t

o

e

Empower m

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a e

societies r

e MISSION s B W g e n We are here to help i r ir e p our customers sp s Business Performance e in We exist to help our customers get c e tful B the full benefit of being connected. Our success is measured by how passionately they promote us. Sustainability

Values Governance

We‘re creative. We bring energy and Everything we produce should be easy to imagination to our work. Everything we understand and use. We should produce should look fresh and always remember that we try to modern. make customers’ lives easier. Be

Inspiring Make Financial Analysis It Easy

We acknowledge and respect Everything we do should work local cultures. We want to be a part Be Keep perfectly. If it doesn’t, we’re of local communities wherever we Respectful Promises there to put things right. We’re operate. We want to help customers about delivery, not over-promising.

with their specific needs in a way that We’re about actions, not words. Information Additional suits the way of their life best.

Vision, Mission & Values 3 Grameenphone Annual Report 2016 history & Milestones

March 26 The Journey begins on the Launched Mobile to Mobile Advancing towards the Independence Day of Bangladesh Service (without PSTN Access) future with network swap

1997 1998 2011

• More customer centricity • Launched customer experience Introduced first ever 1999 lab and e-care solution Pre-Paid products • Swapped the entire network

Providing communication solutions to 2012 40 million subscribers Launched WAP service in 2001 A family of 1 million small screen Launched ‘MobiCash’ financial subscribers 2010 service brand, Ekota for SME

Launched 3G services in Bangladesh 2013 2003 Launched Grameenphone branded handset & Internet Modem Launched Prepaid 2009 Product with PSTN Successfully listed on the Connectivity Stock Exchanges in Bangladesh

Family of 2 million subscribers Soaring like an eagle 2004 under the Grameenphone with 50 million subscribers 2014 umbrella

Catering to a massive 2008 family of 20 million • Launched brand subscribers • Sharing our smiles with 5 million subscribers • Revolution in electronic recharge • Launched EasyNet 2005 • Launched Grameenphone 2015 • Launched EDGE KrishiSheba (27676) • Voice SMS for the 1st time in Bangladesh

2006 2007 2016

• Expanding horizons with Converted to a Public • Launched GP Online Shop 10 million subscribers Limited Company • Introduced MyGP App • Introduced new Grameenphone logo • WowBox has reached more than 6 million users • Revamped Healthline (789) service under • New era with classified sites the name “Tonic” • Journey of Cellbazaar begins Introduced • Rebranded financial services under the Pay For Me service • Bill Pay service added name “GPAY”

4 History & Milestones Products Grameenphone & Services DIGITAL SERVICES ● GP Music ● Bioscope ● Comoyo ● WowBox ● My Contacts ● Capture ● Kidorkar ● WhiteBoard ● Co-branded Services ● YouTube Pack ● Data Sponsorship ● GSMA Mobile Connect ● Facebook Freebasic ● Facebook Retail ● Wikipedia Zero ● Viber sticker pack ● Gamebox Annual Report 2016

PREPAID Overview INTERNET ● Nishchinto ● Bondhu ● djuice ● Smile Volume Based Packs: (2MB, 4MB, 35MB, 60MB ● Village Phone ● GP Public Phone ● BPO 75MB, 100MB, 250MB, 500MB, 1.5GB, 2.5GB ● Internet SIM ● Business Solution ● Shofol Night 2GB, 4GB, 8GB, 12GB, 20GB) ● Ekota ● Emergency Balance ● 1 Paisa offer Social Packs: (Facebook: 1 Day, 7 Days, 28 Days Packs ● 25 Paisa Offer ● Bundles ● Weekly Packs Viber: 1 Day Pack) ● Daily Pack ● Flexi-plan ● Business Solution ● Ekota Video Packs: (Weekly Video pack, Daily Heavy Video pack) Smart Plans: (Midi Plan, Mega Plan) Wi-Fi Hotspots around City POSTPAID ● Xplore ● Xplore Legend ● GP Public Phone ROAMING ● Internet SIM ● Business Solution ● Ekota Outbound Roaming (Basic, Data, SMS, ● Business Performance Economic SMS) ● Inbound Roaming (Basic, Data, SMS, Travelling Connect Loyalty Program) ● International SMS IOT M4D & DEVICE ● Handset Feature Phone & Smartphone GP STAR Program (Android OS Smartphone with renowned

● Buy 1 Get 1 offer in selected 5 STAR Hotels brands, Apple iPhone) ● Tablets of renowned brands ● Internet & Connected Device 3G ● Attractive discounts in 80+ best outlets Sustainability all over Bangladesh ● STAR Iftar Party Modem ● 3G Router ● Wearables &

● STAR Movie Show ● Buy Data Pack & Be Accessories (Smartwatch etc.) ● TONIC

STAR ● STAR Musical Evening ● Priority in ● MYSTUDY ● GP Krishi Sheba GPCs ● Attractive benefits while buying handsets ● Special discounts while buying special numbers DIGITAL CHANNELS ENTERPRISE SOLUTION ● GP Online Shop ● E-Retail ● Easy Net 2.0 Gamebox 3rd Party Digital Distribution ● BlackBerry Service ● Corporate Bulk SMS ● ● ● Online Recharge ● MyGP ● Voice Message Broadcast ● Vehicle Governance Tracking System ● Team Tracker ● Buddy Tracker ● Train Tracking ● M-Reporting ● GP-Connect ● M-Centrex ● Local Toll Free Service ● Go Broadband VALUE ADDED SERVICE ● Instant Messaging ● Pay for Me SMS ADJACENT BUSINESS ● Miss Call Alert ● Call Block ● Job Alert Infrastructure Services* ● Facebook/Twitter ● Music Radio Financial Services** ● Voice SMS ● SMS ● MMS ● Voice Chat GPAY wallet: Payment solution for ● SMS Chat ● Online Mobile Game ● Welcome Tune *BillPay *Flexiload and *Train Ticketing ● Icche Tune ● Video Store ● Audio-Video Content MobiCash: Retail for GPAY Cash in, ● News Alert ● Sports Alert ● Election Information Financial Analysis Partner Bank Cash in & Cash Out. ● Health Tips ● Education Tips ● Matrimonial Service Pioneer in ● Religious Service ●Entertainment Box providing ● Downloadable Content ● Infotainment ● Business Tune world-class telecommunications services with innovative products and services while delivering superior

customer Information Additional experience

*In compliance with BTRC guidelines, Grameenphone is sharing its passive infrastructure with other licensees under ‘Infrastructure Services’. **Introduced ‘Financial Services’ like bill payment, mobile train ticketing, air time top up through ‘GPAY’ (app and USSD interface) and partner bank services under the brand ‘MobiCash’.

Products & Services 5 Grameenphone Annual Report 2016 another milestone of commitment to excellence & Strengthening trust

We are proud to receive such appreciation and support from you all in our continued effort to ensure excellence. These awards are recognition of the success we have achieved in the fields of corporate governance and industry leadership, while breaking the boundaries in terms of workforce diversity.

Best Presented Annual Report 2015 Won the awards from the following organisations in recognition of our transparency, accountability and compliance with local and international standards. • SAFA (South Asian Federation of Accountants) Best Presented Annual Report Awards 2016 • ICAB (The Institute of Chartered Accountants of Bangladesh) Best Presented Annual Report 2015 • ICSB (The Institute of Chartered Secretaries of Bangladesh) National Award 2016 for Corporate Governance Excellence • ICMAB (The Institute of Cost and Management Accountants of Bangladesh) Best Corporate Award 2015 Best Brand Award 2016 Received top awards both in the “Best Overall Brand” and “Best Telecom Brand” for acceptance among consumers, the awards were presented by Bangladesh Brand Forum in partnership with world’s leading brand research company Kantar Millward Brown. Recognition Award at the Mobile World Congress 2016 Received a recognition award at the Mobile World Congress 2016 held in Barcelona for launching mobile-based authentication solution ‘Mobile Connect’ in partnership with GSMA and Group. Most Female Friendly Organization Award 2016 Received the ‘Most Female Friendly Organisation’ award in Bangladesh at the ‘Yellow Inspiring Women Award 2016’.

6 Awards & Recognitions 2016 PERFORMANCE

Highlights 2016 Grameenphone

(billion BDT) (billion BDT) (billion BDT)

Revenue Operating Profit Profit Before Tax Annual Report 2016

+2.0% +9.6% +0.2% +12.5% +0.2% +9.3%

2015 2015 2015 2016 2016 2016

2016 114.9 2016 41.6 2016 38.2 Overview 2015 104.8 2015 37.0 2015 34.9

Net Profit After Tax (billion BDT) NAV Per Share (BDT) Earnings Per Share (BDT)

-0.5% +14.3% -2.4% +9.6% -0.5% +14.3%

2015 2015 2015 2016 2016 2016 Business Performance

2016 22.5 2016 24.86 2016 16.68

2015 19.7 2015 22.68 2015 14.59

NOCF Per Share (BDT) Sustainability Number of 58.0 Smartphone +24.1% 13.9 +19.0% Subscribers (million) Users (million) 2015 2016

2016 34.18 +18.4% +25.2%

2015 Governance 2016 2015 28.73 56.5M 13.9M 1.5M 11.1M

24.0%

2.0% 10.9% Consumer Business Smartphone count

to total subscriber 2015 2016 Financial Analysis

Mobile Data 24.5 Mobile Data 14.4 Users* (million) Revenue (billion BDT) Additional Information Additional

+45.1% +56.1% +66.0% +69.7%

2015 2016 2015 2016 42.3% 24.5M 15.7M 2016 14.4B NAV- Net Asset Value NOCF- Net Operating Cash Flow 2015 8.5B Data users to total subscribers 2015 2016 * Subscribers having at least 150KB data usage during last 3 months. Performance Highlights 2016 7

converted toapubliclimited company on25June2007.Listed ontheDhakaandChittagong StockExchangeson11November 2009. A publiclylisted company withlimited liability. Incorporated asprivate limited company on10October1996andsubsequently Legal Form C-31531 (652)/96 Company Registration No. Grameenphone Ltd. Company Name INformation Corporate Hossain Sadat (Secretary) Hossain Sadat Mohammed SharifulIslam M Shahjahan Hans Martin Hoegh Henrichsen(Chairman) Human Resources Committee Imdadul Haque(Secretary) Dilip Pal Pal Stette M Shahjahan(Chairman) Treasury Committee (Secretary) Hossain Sadat Tore Johnsen M Shahjahan Rokia Afzal Rahman(Chairperson) Audit Committee Hossain Sadat Company Secretary Prof. (Dr.) JamilurRezaChoudhury Rokia Afzal Rahman Independent Directors Oivind Burdal Hans Martin Hoegh Henrichsen Haakon Bruaset Kjoel Parveen Mahmud Tore Johnsen Md. Ashraful Hassan M Shahjahan Directors Christopher Adam Laska Chairman Board ofDirectors Hasanur RahmanRakib(Secretary) Mohammed SharifulIslam M Shahjahan Hans Martin Hoegh Henrichsen(Chairman) Health, Safety, &Environment Security Committee Dhaka-1229, Bangladesh Bashundhara, Baridhara GPHouse Registered Office Chartered Accountants Rahman Huq Auditors Statutory Hasan Faisal Head ofInternal Audit Kazi MahboobHassan,HeadofTransformation Naser Fazley Azam,DivisionalHead,CustomerExperience &Service Nehal Ahmed, HeadofCommunications Andreas Frandevi, Chief Strategy Officer Mahmud Hossain,Chief Corporate Affairs Officer Yasir Azman, Chief Marketing Officer Mohammed SharifulIslam,Chief HumanResources Officer Medhat ELHusseiny, Chief Technology Officer Dilip Pal, Chief FinancialOfficer Petter Borre Furberg, Chief Executive Officer Management Team Corporate Information

9 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

QUARTERLY Business z Successfully completed biometric re-registration of the entire subscriber base. Verified subscriber HIGHLIGHTS 2016 stood at 52.6 million at the end of the quarter. z Rolled out 10,000+ 3G sites throughout the country. This was delivered as per our commitment made at the beginning of the year. More than 90% of the population in the country has now access to high z Bangladesh Telecommunication Regulatory speed internet. Commission introduced new SIM registration with online NID and Biometric Verification System. Grameenphone started SIM re-registration through biometric verification from January 2016. Initially 2Q 51,000 biometric verification points were deployed UwbK-G wd« R‡qb K‡i throughout the country. †gg¦viiv cv‡”Qb UwbK Rxeb Avcbvi I Avcbvi cwiev‡ii cÖwZw`‡bi my¯^v‡¯’i civgk© cv‡eb SMS Avi www.mytonic.com - G z Launched GP Music 2.0, a music platform with the UwbK Wv³vi Avcbvi ¯^v¯’¨ welqK civg‡k©i Rb¨ †h‡Kvb mgq cÖ‡qvR‡b cv‡k cv‡”Qb GKRb wb‡ew`Z Wv³vi largest local song catalogue as well as international Kj Kiæb 789 b¤^‡i UwbK wWmKvD›U nvmcvZvj †mevq m‡e©v”P 40% ch©šÍ wWmKvD‡›U cv‡”Qb catalogue. The platform is available on Android, iOS, nvmcvZvj kh¨v, cixÿv-wbixÿv Avi we‡klÁ wPwKrmK-Gi civgk© Web and Wap. Google rating of the service is 4.1 and UwbK K¨vk Avcbvi cÖ‡qvR‡b †h‡Kvb nvmcvZv‡j 3 ivZ ev Zvi #1 in music category in Bangladesh. AwaK mgq fwZ© _vK‡jB cv‡”Qb 500UvKv K¨vk myweav

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z Launched a recharge tool through which retailers are empowered to offer customised products to subscribers. The objective of this initiative was to generate additional revenue and ensure positive customer and retail experience.

z To improve data revenue generating subscriber base and revenue, introduced 1GB at BDT 89 with a validity of 7 days. This offer was applicable for all prepaid and postpaid subscribers with a purchase frequency cap of 10 times within the campaign period.

z Piloted the first ever data-centric pricing initiative z Launched 1,000 ‘GP Express’ stores with an aim to in Bangladesh. The offer consisted of 90 MB provide subscribers with a one-stop solution to internet with 2 days validity at BDT 14. On top of that cater to their device and product requirements to customers got a special voice tariff of 1 paisa/sec. help enhance their digital lifestyle. The offer was well accepted by the subscribers. z Introduced ‘Tonic’, a mobile-based integrated healthcare service platform. This is the first global z 4.2 million new data subscribers acquired during bid by a telecom operator to significantly improve the quarter. Segmented micro campaigns healthcare services in emerging markets by contributed to this as opposed to heavy presence addressing local health challenges through on media. technology media.

z Flagship premium device launch of Samsung z Offered two co-branded 3G smartphones in Galaxy S7 Edge and iPad Pro at controlled channel GPC. partnership with the Okapia and Lava. Exciting voice and data offers were also tagged with the offer. z Rolled out 1,804 3G sites throughout the country z As part of Telenor’s initiative to partner with Facebook during the quarter. With this feat, 74% of total sites and promote digital literacy, Grameenphone initiated became 3G enabled. the Facebook retailing campaign which will help drive internet adoption among new users and strengthen Grameenphone’s position in the digital space.

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11 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 MESSAGE FROM CHAIRMAN & CEO

Dear Shareholders,

2016 has been a solid year with exceptional all-round business performance. We made significant progress on a number of fronts throughout the year, despite challenges from a multi-faceted competitive environment. We are happy to report that in 2016, we further consolidated our position as the undisputed leader in the Bangladesh mobile market.

For 2016, Grameenphone’s revenue increased by 9.6% year-on-year to BDT 114.9 billion, resulting in the highest level of profit in the company’s 20-year history. Subscription and traffic revenue (excluding interconnection) grew by 12.0% with, more importantly, growing contribution from data. Data revenue continued its growth momentum alongside voice revenue. Data revenue grew by 69.7%, supported by a 56.1% growth in the number of users and Petter Borre Furberg Christopher Adam Laska a 167.9% growth in volume. Voice revenue Chief Executive Officer Chairman also increased by 5.1% and we saw a healthy development in minutes of usage.

In 2016, SIM re-registration through the biometric process has been a major development in telecom sector. In terms of performance, Grameenphone was ahead of other operators and 97% of its subscriber base re-registered through the biometric process. Grameenphone ended the year with 58 million active subscribers, registering a 2.2% growth from the previous year. Notably, 100% of the current active subscriber base is registered numbers, after the completion of biometric verification drive. With the addition of 8.8 million new data users, Grameenphone’s internet penetration stood at 42.3% at the end of the year.

Net profit after taxes for 2016 stood at BDT 22.5 billion compared to BDT 19.7 billion in 2015. Higher revenue and controlled operating expenditure resulted in a healthy EBITDA (before other items) of BDT 63.8 billion with an improved 55.3% margin. Earnings per Share (EPS) for the year stood at BDT 16.68. Grameenphone secured a strong 14.3% earnings growth from solid top line and operational efficiency initiatives. Operating expenditure grew by 8.1% against a 9.6% revenue growth, despite significant network expansion. EBITDA (before other items) grew by 13.8% with a 2 percentage point margin improvement.

Grameenphone continues to invest in network and technology to improve capability and capacity, and enhance customer experience. Grameenphone has established the country’s largest 3G network for superior quality and crossed the 10,000 3G site mark during the year. Since inception, Grameenphone has invested more than BDT 299 billion. In 2016, the Company invested BDT 21.1 billion to rollout 3G sites, improve 2G coverage, enhance capacity to cater for higher volume of data and voice, as well as enhance its IT infrastructure, for better product and service offerings. Meanwhile, Grameenphone, the largest contributor to the National Exchequer, paid out BDT 58.6 billion, comprising of 51% of total revenue, to the National Exchequer during the year in the form of taxes, VAT, duties and license fees.

Grameenphone’s sustained underlying performance and strong cash position have ensured consistent attractive returns to the Shareholders with a healthy dividend payout. We are pleased to report that for the financial year 2016, the Board of Directors of Grameenphone has recommended 90% Final Cash Dividend (i.e. BDT 9 per share of BDT 10 each). With this, the total cash dividend stands at 175% of the paid up capital, which represents 105% of Profit After Tax for the year 2016 (including the 85% Interim Cash Dividend paid out earlier in 2016).

12 Message from Chairman & CEO 31 January 2017 31 January We lookforward towelcoming you atour 20 raising thebarforcompetition. withouttheircommitment,possible determination andprofessionalism pursuit foroperational intheirrelentless excellence and to take this opportunity to thank all our employees for the significant achievements in 2016. Our success would never have been As always, wethankourshareholders, customers andotherstakeholders fortheircontinued andtrust.We support would alsolike initiative willalsosee escalation through 2017andbeyond to2020. buildonthedigitalfurther ecosystem through empowerment programs likeGrameenphone Accelerator andthe‘White Board’ and nurture to efforts The Company’s nation. digital a for required efficiency integrationand digital of levels higher the in bring Grameenphone willalsopress tocreate new jobsinthisdigital era, bothwithintheCompany andinthecommunities to itserves strengthening datapavingtheway leadership, ourmobile tobecome themostpreferred inourcustomers' partner digital life. In 2017,wewillbeentering thenew phaseofourjourney, makingboldmoves and embracing new businessmodelstowards withoutaffectingbusiness outputasbestpossible customerexperience andbusinessprocesses. will continue to maintain focus our on relentless ensuring efficiency in our investments and operating costs in order to maximise speed data network willcontinue aswelloureffortstodelivernew andeven more relevant digital toourcustomers. services We high- our in investments Company. Our the for profitability future drive us help will efficiencies operating and growthpotential Over thenextcoupleofyears to2020,wewillwork toleverage leading growth opportunities asbestwecan. We believe the the Telenor Way anddoingtherightthing. business with Grameenphone and all operators in the entire value chain.TheCompany enters 2017touphold with a new pledge a hard stand withtheCompany’s ‘zero tolerance’ oncorruption policy. Thechangehasbeen cascaded down toallthosewhodo the rest oftheTelenor Group operations across 12othermarkets, theBangladeshoperations toohasbeen indoctrinated totake An aspect ofchangethathas been reinforced in2016andtaken forward isthecompany’s commitment toanti-corruption. Like us onsolidfooting to face theupcoming ifandwhen they materialise. challenges confident that our prudent strategy, strong subscriber base, healthy balance sheet and robust underlying performance have put the industry. are ofunpredictable Thesechallenges more drivesinthemarket. regulatory However, sogiven thehistory weare merger for largefirst scale the repercussionsyetof unfolding the transformationas digital telcomwell ongoing the as sectorof andexcitingLooking ahead,2017willbebothchallenging onthebackdrop ofa fast changinglandscape brought onbyan potential aswellbeingthedigital socialsafety net forchildren andtheirfamilies asthey venture intothedigital space. forward, Going well. as sphere digital the in the Company willcontinue topositively digitally ofBangladeshbothbyempowering toreach people impactthepeople their place its finding is progress inclusive of kind this that seeing are We worlds. own TheCompany ithasserved. people hasliterally avoice giventhepeople toexpress themselvesandclaimtheirplace intheir its success inthemarket. Thereason behindthissuccess isthattheCompany hasbeen instrumental inuplifting thelivesof with experts international and local from expectations all defied has Grameenphone Bangladesh, in operations of years 20 In them expandtonew markets beyond theborder. training andboosting oftwo batches of start-upsin2016.Ouraimisnotjusttonurture start-ups inBangladeshbutalsohelp up ecosystem in the country. The Grameenphone Accelerator Program, in partnership with SD Asia, hassuccessfully completed inthedigital spaceAs athoughtleader inBangladesh,Grameenphone willcontinue toplay anenablingroletoboostthestart- moving intherightdirection tobecome themostpreferred inacustomers' partner digital life. to better andadvanced onlinehealthcare demonstrate Alltheseservices services. thatGrameenphone hasbeen consciously and accepted byourcustomers. Onamore solution Tonic digital lifestyle angle, was launched, whichisproviding easy access and empower livesthrough innovative digital solutions, are justafew products whichwere andservices, highlyappreciated app; the MyGP App; the GP Music platform; low cost branded - which connects smartphones more onto the 3G network people the customers’ imagination choices. andgained afootholdontheirdigital lifestyle Applications suchastheWowBox–lifestyle totheirdoorsteps.product delivery Inthedigital space, Grameenphone hasintroduced several applications thathascaptured all across customers the for access data segments is particularly noteworthy. hassle-free The Grameenphone Online Shop was launched to cater with to th AnnualGeneral Meeting (AGM). Message from Chairman& CEO

13 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016

where Grameenphone sold404,007smartphones. 3G network coverage and increased penetration in smartphone in the market, investment significant our by driven was This usage. data mobile double revenue ismainlydrivenby56.1%increase ininternet users withmore than communication21.1% (2015:16.2%)ofmobile revenue. Thegrowth indata BDT 16.2billion).Attheendof2016, Data &VAS revenue accounted for Data & VAS revenues increased by BDT 6.9 billion to BDT 23.1 billion (2015: and voice offset andpartly byinterconnection revenue compared to2015. billion (2015:BDT 100.4billion).The growth was mainlydrivenbyData &VAS Revenue fromcommunication mobile grew by9.2%in2016toBDT 109.7 anddevicebundle revenue. with 9.6%growth over 2015.Thiswas mainlydrivenbygrowth indata, voice, Total revenue reached atBDT 114.9billionin2016(2015:BDT 104.8billion), Revenue Performance promotional tohigherusage. price offers whichled andbundle In 2016,ARPUincreased by4.3%toBDT 162(2015:BDT 155),mainlyduetogrowth indata revenue. HigherAMPUresulted from million) attheendofyear. SIMmarket share improved to46.1%atendofOctober2016. continued acquisition driveinthemarket throughout theyear resulted inatotal subscription baseof58.0million(2015:56.7 the biometric re-registration, on an annual basis, the subscription base still increased by 1.3 million (2015: 5.2 million). The Despite thereduction inthesubscription basefrom 56.9millioninJune2016to55.0September 2016asaresult of Customers andAverage Revenue/Minutes Per User(ARPU&U) revenue performance. Duringtheyear, Grameenphone alsocompleted biometric verification ofsubscribers successfully. the reflected in is that coverageexpansion 3G through positioning data its strengthening with along services and offers centric 2016 has been a solid year for Grameenphone with encouraging all-round business performance focusing on simplified customer Operational Excellence alsoresulted ina13.8%growth inEBITDAwithahealthymargin of55.3%. for 2Gand3Gnetwork coverage growth, asaresult ofwhicharound 90%ofournetwork Ourcontinued is3Genabled. focuson users, increasing thetotal internet userto24.5millionattheendof2016.Grameenphone alsoinvested BDT 21.1billionmainly subscriptions registering a2.2%growth inactive subscribers. Duringtheyear, Grameenphone alsoacquired 8.8millioninternet and In 2016,Grameenphone delivered arevenue ofBDT 114.9billion(2015:BDT 104.8billion)representing growth of9.6%over 2015, 2016 Key Highlights Discussion &Analysis Management delivered a net profit of BDT 22.5 billion (2015: BDT 19.7 billion). Grameenphone ended the year with 58.0 million active million 58.0 with year the ended Grameenphone billion). 19.7 BDT (2015: billion 22.5 BDT of profit net a delivered 2012 41.

2% 40,021 Total Subscription (’000):57,954 n Subscript 2013 41.

4% 47,110 ion 42. 2014 ▬ 8% 51,504 Marke t Shar 42. 2015

4% 56,679 e (%) 2016 46.

1% 57,954

2012 191

Mobile CommunicationMobile Revenue Composition Revenue Composition 236 n Mobile CommunicationMobile 8.4% n ARPU(BDT)AMPU(Minutes) 2013 176 2.4% 21.% 95.% n ARPU &U

70.5% 249 V o i 2.1% c e

t 2014 r Management Discussion& Analysis

a 165 f f i c n CustomerEquipmentOtherRevenue n 243 I n t e r c o 2015 n 155 n e c t i o

n 244 n D 10.6% a 2016 t

a 162

2.0% a 16.2% n d 95.% 73.3%

V

A 258 2.% S

15 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Voice revenue experienced 5.1% increase in 2016 despite Data & VAS Revenue Contribution 2.2% growth in subscription base. The 1 paisa/sec and voice bundle offers positively contributed to voice revenue growth in 2016 while usage per subscription has increased compared 23,130 to previous year. 16,227 Grameenphone observed decline in interconnection revenue 20.1% 11,243 in 2016 compared to last year due to a decrease in incoming 15.5% minutes from international and local operators. In addition, 7,946 6,189 Grameenphone observed an increase in On-net calls, which 11.0% has also contributed to a reduction in interconnection 8.2% 6.7% revenue, whilst at the same time contributing to an increase in voice revenue. 2012 2013 2014 2015 2016 n Data and VAS (Mn BDT) ▬ % of Total Revenue (Mn BDT) Growth in other revenues came from telecom infrastructure sharing and mobile financial services.

Cost and Margin Review EBITDA & EBITDA Margin For the year 2016, total cost base of Grameenphone increased by 8.1% to BDT 73.3 billion (2015: BDT 67.8 billion), mainly due 63,772 to higher depreciation & amortisation on account of higher investment and higher traffic related expenses, partly offset by 54,538 56,045 reduction in operation and maintenance and lower subscriber 48,991 49,039 acquisition costs. Like previous years, Grameenphone continued its focus on Operational Excellence in 2016, which resulted in savings of BDT 2.8 billion. 53.3% 55.3% 50.7% 53.0% 53.4% The impact of revenue growth and efficient cost management resulted in a 13.8% growth in EBITDA of BDT 63.8 billion (2015: 2012 2013 2014 2015 2016 BDT 56.0 billion) along with healthy EBITDA margin of 55.3% n EBITDA (Mn BDT) ▬ EBITDA Margin (2015: 53.4%). *EBITDA before other items Profit after Tax Profit after tax for 2016 stood at BDT 22.5 billion (2015: BDT 19.7 billion). NPAT increasedby BDT 2.8 billion due to higher EBITDA, partly offset by increase in depreciation & amortisation, work force reduction cost, loss and impairment of investment in Accenture Communications Infrastructure Solutions Limited (ACISL), formally known as Grameenphone IT, and higher tax. Net profit margin for 2016 stood at 19.6% (2015: 18.8%).

Profit Before Tax, Profit After Tax and Depreciation & Amortisation

38,178 34,855 34,922 32,852 30,193 20,998 17,657 19,008 15,177 15,339 5 2 6 8 0 3 7 0 7 0 2 5 0 1 7 , 1 4 , 1 9 , 1 9 , 2 ,

2012 2013 2014 2015 2016 n Profit Before Tax (Mn BDT) n Profit After Tax (Mn BDT) ▬ Depreciation & Amortisation (Mn BDT)

16 Management Discussion & Analysis Total liabilities decreased during2016mainlyduetopayments of2 impairment ofinvestmentinassociates. Total asset basedecreased toBDT 130.5billion(2015:BDT 132.4billion)mainlyduetodepreciation &amortisation and Balance Sheet total population ofthecountry. provides itstelecommunication covering services 99.5%ofthe 11,871 sites across thecountry, Grameenphone currently the 3Gpopulation coverage to90.2%(2015:71.0%).With sites along with more than 1,800 2G sites in 2016, increasing experience. Grameenphone rolled out more than 4,700 3G customer superior drive to and traffic voice and data higher 3G coverage alongwithcapacity up-gradation tosupport majority oftheinvestmentwas fortheexpansionof2Gand 19.3 billion)withcapex at18.3%(2015:18.3%).The tosales In 2016,Grameenphone invested BDT 21.1billion(2015:BDT Updates Network and (Capex) Expenditure Capital interim dividend fortheyear 2016alongwithothercomprehensive lossagainstpensionobligations. during the year 2016 was BDT 22.5 billion (2015: BDT 19.7 billion), partly offset by payment of final dividend for the year 2015 and Total equity increased to BDT 33.6 billion (2015: BDT 30.6 billion) due to increased profit. The net profit generated from operations term offset loanspartly byhigher trade andotherpayable. Capex (MnBDT) nd 42,508 and3 2012 rd installment ofthelongterm loanfrom IFC and short 29,925 2013 15,164 2014 Management Discussion& Analysis 19,269 2015 21,097 2016

17 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 Sustainability Initiatives to Drive Social Impact Grameenphone believes that growth and success cannot be achieved in isolation, but is a result of the collective effort from each stakeholder and support from every segment of the society. As a strong advocate of Sustainability Initiatives, Grameenphone believes in giving back to the community. For Grameenphone, Sustainability Initiatives are an intrinsic way of working that goes beyond simple financial results or returns. The Company’s objectives are underpinned by inclusive growth and greater social wellbeing; utilising the Company’s core expertise to create shared value and long-term sustainability.

In 2016, Grameenphone’s ongoing commitment to the community was once again evidenced by a number of initiatives that addressed development in the areas of education, ICT, child safety and disaster support, which included new initiatives as well as the continuation of existing programs.

Online School Although Bangladesh has achieved significant progress in primary education in terms of enrolment, the quality of primary education is still far below the quality we aspire towards. Considering that education is a major thrust focus for its sustainability initiatives, Grameenphone came up with the concept of the Online School, aiming to minimise the gap by providing access to quality education for underprivileged and underserved children living at the urban slums and remote areas.

At the online schools, teachers conduct classes from remote centre using video conferencing technology with the aid of moderators in the actual classroom. These moderators, who are from the local community, help the teacher with operational issues. The interaction also helps develop teachers who can deliver quality education at the locations.

Grameenphone initiated online schools back in 2011 in partnership with Jaago Foundation and Agni Systems Ltd. Today there are 990 students in 10 schools, located in Gazipur, Gaibandha, Rajshahi, Madaripur, Bandarban, Teknaf, Rangpur, Dinajpur, Hobigonj and Laxmipur. Raising Awareness for a Safer Internet Usage The internet, a wonderful resource of the digital age for education and entertainment, may also pose a threat to children and young minds if not managed prudently. Grameenphone has always been concerned about internet safety. Data reveals that at least 1 out of 5 children who use the internet come across inappropriate content, and about 50% are subject to some kind of internet bullying. Grameenphone believes that the ideal way to ensure user protection, from any kind of privacy or safety breach on the internet, and establish the best practices is to have open discussions, sharing knowledge, and discussing the concerns.

With this in mind, Grameenphone observed “Safer Internet Day” on the 9 February 2016. Organising awareness session for the students on safer internet practices.

Moreover, on the global theme ‘Safe internet/Digital bullying’, Grameenphone celebrated its Customer First Day in 2016 along with all 13 markets of Telenor. Aiming to create awareness on digital bullying, this initiative gave Grameenphone employees and Management team an opportunity to interact directly with customers and educate them on internet safety.

Besides, more than 700 students and teachers participated in an awareness building session held at the Residential Model College in Dhaka.

Capacity Building for Child HelpLine (1098) In an initiative to make Bangladesh a safer place for children, Grameenphone joined hands with UNICEF for the expansion of the first-ever 'Child Help Line' in Bangladesh. The Child Helpline facilitates anyone to report any act of violence or abuse and exploitation against children, by calling at “1098” on their mobile phone, irrespective of operator. The ‘Child Help Line’ initiative operates a 24-hour toll-free telephone line and provides emergency support services to children at risk or affected.

Grameenphone arranged training programs focusing on advance Customer Service skills alongside presenting them with real- life case studies to decipher. Based on the success of the pilot project led by Department of Social Services of Bangladesh Government and UNICEF, Grameenphone is now supporting the extension of the ‘Child Help Line’ across the country.

18 Sustainability Initiatives to Drive Social Impact under the"exchange Grameenphone happiness"program. people. distressed the towards Grameenphone alsocollected warm clothesfrom theemployees and distributed themamong thepoorthrough JaagoFoundation hands its distributed. were medicine extendedand items food containing packs Relief victims. the to Grameenphonematerials relief with support in-kind provided company, responsible socially a As August in2016.Anestimated, were 3.7millionpeople affected inthefloodsasmany19districtsof country. Bangladesh was heavily hit by floods during the monsoon season when the country received continuous rain for most of July and Stands besideDistressed Communities the to switches) & (routers components network of number ofComputerDepartment Science andEngineering inDhakaUniversity, large foruseintheirlaboratories. a donated Grameenphone 2016, in initiative, this Under other organisations, Unlike set forothers anew tofollow. example inBangladesh. practice a common has which purpose, research for them donating by equipment high-quality its of use best the been make to decided Grameenphone has equipment technical offloaded Physically these factors. various to disposing due offloaded is network telecom the in used equipment the of number significant a year Every Donates Network Devices classroom tostudy attheirown pace. Anyone can access BanglaKhanAcademy free ofcost on bn.khanacademy.org.the of outside and in learners empower which tools, teacher and analytics dashboard videos, instructional exercises, practice collaboration, thousands of video contents and more than two million words were translated and localised. The platform contains Academy.Khan this and GrameenphoneUnder Agami, collaboration throughamong possible made was Bangla Academy Khan Khan Academy provides free onlinematerials andresources personalised tosupport education ofallages. forlearners of version Bengali the launched acclaimed KhanAcademytoopenupdigital teachingtoolstotens modules Grameenphone andlearning ofmillionsBangladeshistudents. effect, that barrier. To language a to due classroom global a of benefits the however,enjoy cannotstudents, Bangladeshi most education, modern of part important an become have tutorials video While Opens theDoortoaGlobalClassroom Shahitto Kendro (BSK). and promotingfor knowledge the practice of reading amongst the younger generation, Grameenphone partnered withBishwo passion ignitethe to means a As moreencourage knowledge. gain to and is readbooks this to do them wayto best citizens. The society of citizen, fate the define and future the shape can who saviours true the are youth The Book ReadingFestival toIgnite BrilliantMinds it isalsoourresponsibility thatwetake steps toensure thatthey grow upasresponsibleandintellectually capable Stepping intothe12 Grameenphone alsopresented 30computers fortheselected were awarded in different categories based on their performance. students 55,208 contest. reading the joined schools, 1,450 from country.the bettermentof the students, to 159,000 astonishing An groomed, educated community basethatcan proactively contribute well- createa and minds brilliant programout stirthe to wasof aim The Khulna. and Chittagong Rajshahi, Dhaka, in Program, Reading Book BSK's for ceremony giving prize a organised jointly BSK and educational institutions tobuildacomputer lab. of cost. th year ofthepartnership, in2016,Grameenphone

from the huge e-library of BSK catalogueBSK e-libraryof fromfreehuge the In addition tothegrand success ofthebook download andread thousandsofbooks a mobile phoneappthatallows usersa mobile to patronised the launching of 'Alor Pathshala', reading program, Grameenphone also Sustainability Initiatives Impact toDriveSocial at large. corporate Asaresponsible

19 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 CLIMATE CHANGE- ENSURING A BETTER TOMORROW

Grameenphone believes that climate change is a real threat for the world and hence having a big operation in Bangladesh, the Company has a huge responsibility towards minimising the impact on the environment. Consequently, Grameenphone's first

priority was to take responsibility for the carbon emissions (CO2) generated from its own operations. Grameenphone has set a target

of reducing 30% CO2 intensity within 2017 from the business as usual situation, considering 2011 as the baseline. Grameenphone is dedicated to the continuous deployment of enhanced sustainable solutions for energy efficient and environment friendly networks, which ultimately aids in the country’s efforts in respect to offsetting the effects of climate change.

E n A mp tio wa loy uc re ee d ne Re ss O 2

C INTERNAL ) y n n i o a t p a Corporate t m p o a

Climate C

d n A ( e MEASURES

Initiatives e R r

S z

G Internal optimisation and

C

EXTERNAL

s

s

e modernisation in network,

n

i

s

u y

B c

a IT and offices

n c

e o e

r dv G A z Aggressive rollout of solar sites z E-waste management z Employee awareness

GOALS z Reduce 30% CO MANAGEMENT 2 intensity by 2017 CONTROLS z Green Company z Environment Management System (EMS) z Green champions z Business reviews

In December 2015, Grameenphone took the initiative to certify its Environmental Management System (EMS) as per the ISO 14001:2004 standard. After two stages of comprehensive audits conducted by International Certification Body “Bureau Veritas”, Grameenphone received the ISO 14001 certification, which means that Grameenphone has complied with the various clauses of the ISO 14001:2004 standard. By having this ISO 14001 certification, Grameenphone can assure stakeholders that its EMS meets international industry specific standards.

Areawise energy consumption in 2016

Others 10%

Office Building 16% Grameenphone has taken lots of green initiatives to reduce its carbon footprint individually and collectively. All the initiatives ensure CO reduction through energy efficiency, increased 2 Networks use of solar energy over fossil fuel, limiting the use of valuable 74% resources, reducing travel requirements for operations, and lastly creating greater environmental awareness among employees and stakeholders.

20 Climate Change- Ensuring a Better Tomorrow hybrid sites willprovide additional savingsof511,000litres offuel,whichisaround 701tonsofCO In 2016, Grameenphone has converted 130 Generator+Solar sites to Commercial Power+Solar Hybrid Sites. The newly introduced Hybrid BTS 4,900 tonsofCO of fuelwhichisayearly reduction ofover litres million 1.87 approx. save sites solar These yearly. electricity powered solar of solarproduction compared to2015) producing 6.11 GWh (i.e 27.3% increment constrainedelectricity zones which are increased compared to2015) in deployed in1,113sites (i.e.6.1%site As of 2016, solar power has been PoweredSolar BTS Green Initiatives framework forsetting andreviewing ourenvironmental objectives andtargets, setting the platformtogobeyond. the provides policy EMS certified 14001:2004 ISO Our employees. all to communicated and implemented documented, policy EMS our 2010, In operations. our of impact environmental the minimising to committedcontinuously are we Grameenphone In reused 8,500refurbished batteries in2016. as our Recycling andreuse acidbatteries of100%used lead havebeen set Reuse&Recycling Battery OSHAS 14000, ISO 18000, andR2standards. to accordance in overseas completed and is Bangladesh recycling in The partner. recycle our through recycled microwave antennas andotherelectronic accessories) hasbeen and (GSM e-waste of tons 383 than more 2016, December 31 of As E-waste Recycling internal KPI. So far we have recycled 18,369 old batteries and batteries old 18,369 recycled have we far So KPI. internal 2 . 2015 2016 Electricity ProducedElectricity from Solar + 2015 44.1% 4.80 GWh 6.11 GWh + 27.3% 2016 Climate Change-Ensuring aBetter Tomorrow 2015 2016 Up to As of No. of Solar SitesNo. ofSolar inNetwork 2 reduction peryear. + 2015 12.9% 1,049 + 2016 6.1% 1,113

21 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 Supply chain SUSTAINABility

Grameenphone strives for high standards of sustainability and continuous 01 improvement in its operations throughout the supply chain. Grameenphone’s Supplier Conduct Principles (SCP) are based on internationally recognised 02 Anti-Corruption standards, including requirements on human rights, health and safety, in Supply Chain Capacity labour rights, environment and anti-corruption. Endorsement of Supplier Building Conduct Principles (SCP) is mandatory for all the suppliers and partners Control & of Grameenphone entering in contractual relationship. Recognition 06 Grameenphone’s approach to supply chain sustainability is to legally Strategic oblige the supplier to ensure responsible business practices, monitor Focus 03 Engagement compliance to Grameenphone’s requirements and build capacity & Empowerment among suppliers. In addition, supply chain sustainability also upholds Quality & Grameenphone’s Zero Tolerance Approach on corruption with an aim Transparency Supply Chain to establish ethical and responsible business conduct in supply chain. Monitoring Partnership and mutual cooperation with suppliers is the key to achieve and 05 establish social compliance and ethical business practice in the supply chain. 04

Telenor, the mother company of Grameenphone, is an active member of the Joint Audit Cooperation (JAC), Child Labour Platform and the Supply Chain Advisory Group of the UN Global Compact, as well as the Global e-Sustainability Initiative (GeSI). Supplier Code All of the Business Units of Telenor across the world along with Grameenphone are Endorsement 100% also committed to contribute in this field to create an impact globally as well as on their respective local societies.

Supply Chain Monitoring 99% 100% Grameenphone carries out inspections in order to monitor compliance to the requirements on responsible business conduct. In 2016, Grameenphone carried 2015 2016 out 934 supplier inspections (ranging from simple site visits to more comprehensive inspections or audits) across the value chain. 70 percent of the inspections were carried out unannounced. 896 major non-conformities were identified during the Supply Chain inspections. All major non-conformities are followed up with mitigation plans and Inspections 20% processes on closing of the non-conformities. Risk re-assessment and plans for preventing similar incidents are already underway.

Supply Chain Capacity Building

Building the capacity of the suppliers in terms of sustainability is one of the 781 934 Inspections Inspections priorities of Grameenphone. In 2016, Grameenphone conducted a total 3,284 man-hours of training and awareness for building the capacity of its suppliers and 2015 2016 partners including coaching, on-job hands-on training, video learning and one- to-one consultation. Supply Chain Capacity Building 174% Grameenphone also organised a program called, ‘Annual Supplier Development Program 2016’ where around 300 suppliers and partners of Grameenphone participated for a half day-long audio-visual sustainability awareness program focusing on practical instances of health & safety, anti-corruption, sustainability requirements as well as green telecom, women empowerment and diversity, etc. Grameenphone is now emphasising on industry and cross-industry collaborations 1,198 3,284 Man-Hour Man-Hour to synergise efforts in capacity building. 2015 2016

22 Supply Chain Sustainability

Grameenphone Annual Report 2016 The SHAREHOLDERs

The shareholding structure comprises of mainly two sponsor shareholders, namely, Telenor Mobile Communications AS (55.80%) and Grameen Telecom (34.20%). The rest 10.00% shareholding includes General Public (2.42%), Foreign (2.40%) and other institutions (5.18%), as on 31 December 2016.

55.8% Telenor Mobile Communications AS

34.2% Grameen Telecom

10% General Public & Other Institutions

Telenor Mobile Communications AS (TMC) TMC is an indirectly wholly-owned subsidiary of Telenor ASA. Telenor ASA is the leading Telecommunications Company of Norway listed on the Oslo Stock Exchange. TMC owns 55.80% shares of Grameenphone Ltd.

Telenor's strong international expansion in recent years has been based on leading-edge expertise, acquired in the Norwegian and Nordic markets, which are among the most highly developed technology markets in the world. It has substantial international operations in mobile telephony, satellite operations and pay television services. In addition to Norway and Bangladesh, Telenor owns mobile telephony companies in Sweden, Denmark, Hungary, Serbia, Montenegro, Bulgaria, Thailand, Malaysia, Pakistan, India and Myanmar. Telenor has 214 million consolidated mobile subscriptions worldwide as of December 31, 2016. Telenor uses the expertise it has gained at 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 ten (10) shares each on 31 May 2007 to its three (3) affiliate organisations, 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 Ltd., is a not-for-profit company in Bangladesh established by Professor , winner of the Nobel Peace Prize 2006.

GTC’s mandate is to provide easy access to GSM cellular services in rural Bangladesh and create 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.

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 and handles all service-related issues.

24 The Shareholders Top Twenty Shareholders ason31December 2016 (1) share eachon31May 2007toGrameen Kalyan andGrameen Shakti. oftheconversionAs part ofGrameenphone from aprivate limited toapubliclimited company, Grameen Telecom transferred one Prize forUseoftheITtoimprove Poor Lives”in2004;GSMAssociation People’s Award for“GSMinCommunity in2000. Service” Muhammad Yunus havereceived several awards whichinclude; First ITUWorld information Society Award in2005;Petersburg GTC hasbeen acclaimed fortheinnovative VillagePhoneProgram. GTC anditsChairman,NobelPeace Prize laureate, Professor Sl. No. 20 10 19 16 18 12 14 15 13 17 11 9 6 8 2 4 5 3 7 1 Total BNSANV A/CBlackrock Frontiers InvestmentTrust PLC. SSBT A/CAberdeen Frontier Markets EquityFund Rupali BankLimited ABERDEEN GLBLFRNTRMRKTSEQTY Fund Grameen Two One:Scheme The BankofNew York MellonAFUPS Group Trust NTC A/CTheCaravel Fund(International) Ltd. Mellon Bank N.A. A/CAcadien FrontierMellon BankN.A. Markets EquityFund Government ofNorway Bangladesh Fund NTC A/CHarding Loevner Frontier Emerging Markets Portfolio United Commercial Bank Ltd. JPMCB NAforJPMLuxA/CSchroder International Fund Selection ICB UnitFund AB InvestmentLimited-Investors Discretionary Account: I2320 A.K. Khan&Co.A.K. Limited Investment Corporation ofBangladesh Telenor Communications Mobile AS Borrower's InvestmentTrustGrameen BankBorrower's Grameen Telecom Name ofShareholders Number ofOrdinary 1,274,802,353 461,766,409 753,407,724 Shares Held 5,508,000 2,790,000 2,049,786 14,444,197 1,400,000 1,420,000 1,283,800 4,307,278 1,566,259 11,037,221 2,373,683 1,297,228 2,461,037 1,921,600 1,243,459 1,314,800 2,023,511 1,186,361 The Shareholders Percentage 94.44% 55.80% 34.20% 0.09% 0.09% 0.82% 0.32% 0.10% 0.10% 0.10% 0.10% 0.18% 0.18% 0.12% 0.21% 0.14% 0.41% 0.15% 0.15% 1.07% 0.11%

25 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 Organisational structure

Board of Directors

Petter Borre Furberg Hossain Sadat* Chief Executive Officer Company Secretary

Dilip Pal Medhat El Husseiny Chief Financial Officer Chief Technology Officer

Yasir Azman Mohammed Shariful Islam Chief Marketing Officer Chief Human Resources Officer

Mahmud Hossain Andreas Frandevi Chief Corporate Affairs Officer Chief Strategy Officer

Nehal Ahmed Kazi Mahboob Hassan Head of Communications Head of Transformation

Naser Fazley Azam Head of Customer Experience & Service

*He also acts as Director and Head of Regulatory Affairs of the Company reporting to Chief Corporate Affairs Officer. • Organisational structure as of 28 February 2017.

26 Organisational structure OF DIRECTORS BOARD Non-Executive Director Oivind Burdal Non-Executive Director Haakon Bruaset Kjoel Non-Executive Director Tore Johnsen Non-Executive Director Hans Martin Hoegh Henrichsen Chairman Christopher Adam Laska From righttoleft STANDING guides our decisions and actions. guides ourdecisions andactions. experience withthem.Theirbreadth ofknowledge of years bring byourBoardOur businessisled ofDirectors (‘theBoard’). They Non-Executive Director Parveen MahmudFCA Non-Executive Director M Shahjahan Independent Director Prof. (Dr.) JamilurRezaChoudhury Non-Executive Director Md. Ashraful Hassan Independent Director Rokia Afzal Rahman From toright left SITTING Board ofDirectors

27 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 Directors' Profile

Mr. Christopher Adam Laska was appointed to the Board on 29 September 2016 and is also the Chairman of Grameenphone Board. Mr. Laska is Senior Vice President, Board Governance and Partner Relations in Asia. Mr. Laska joined Telenor in 1998 as Key Account Manager for Telenor Satellite Services in Central and Eastern Europe, held various roles in business development and M&A and was CEO in Telenor Montenegro from 2009 to 2011, and CEO in from 2011 to 01 September 2016. Prior to Telenor, Mr. Laska was a commercial consultant at the Norwegian Embassy in London, UK, from 1996 to 1998. He holds a Bachelor of Science with honours in Business Management from Bradford University Management Centre, UK, with a Professional Certificate awarded as Distinction, working a year for Sallie Mae in Washington D.C., and a post-graduate degree in Christopher Adam Laska Marketing from the Chartered Institute of Marketing, UK. Chairman

Date of Appointment Nationality 29 September 2016 Norwegian Committee Membership None

M Shahjahan was appointed to the Board on 26 June 2006 and is also Chairman of the Company’s Treasury Committee. He is the former Managing Director of Grameen Bank. He acted as the Managing Director of Grameen Bank from 14 August 2011 to 30 October 2014. Now, he is on retirement. Earlier, he served as M Shahjahan the Deputy Managing Director, the General Manager and Head of the Accounts, Non-Executive Director Finance, Planning, Monitoring and Evaluation Division, the Chief of the Audit Department, and the Zonal Manager of Grameen Bank. Mr. Shahjahan is a member Date of Appointment Nationality of the Board of Directors of several companies that work in the fields of health, 26 June 2006 Bangladeshi education, agriculture, welfare, renewable energy and telecommunications. Last Re-elected He obtained a Bachelor of Commerce (Honours) degree in Accounting from the 19 April 2016 University of Dhaka in 1976, as well as a Master’s degree in Accounting in 1977 Committee Membership and a Master’s degree in Finance in 1981. He was awarded ICAB Medal (Silver) for Audit Committee, Treasury Committee HR Committee, HSSE Committee passing the ‘C.A. Intermediate’ examination at the earliest eligible chance in 1981.

Md. Ashraful Hassan was appointed to the Board on 20 January 2010. He currently serves as Managing Director of Grameen Telecom and is engaged in promoting and providing easy access to GSM cellular services in rural Bangladesh. He also serves as Managing Director of Grameen Distribution Ltd., Grameen Knitwear Ltd., Grameen Fabrics and Fashions Ltd. and Grameen Shamogree. He has a profound knowledge in sales channels and product sourcing. He keeps his own signature tune in Grameen Distribution with a broad experience in the concept of business development and supply chain management. He has extensive and diversified knowledge in various industrial sectors especially in the field of textile focusing on resource efficient, and energy saving production. He has wide exposure in industrial management, local & export market, labour management, developing rural artists & artisan goods and so on. Mr. Ashraf also acquired wide range of experience for different kinds of project development and industrial setup. He Md. Ashraful Hassan has an extensive knowledge in the field of construction engineering. He started Non-Executive Director his career in Grameen Bank in 1984. During his 15 years of tenure with the Bank, he held various key positions including the Chief of Engineering section. He extended notable contribution to the infrastructural development of Grameen Date of Appointment Nationality Bank. He serves as a member of the Board of Directors of several enterprises that play 20 January 2010 Bangladeshi commendable role in the fields of renewable energy, health care, food & nutrition, Last Re-elected 21 April 2015 information and communication technology, employment generation and so forth. He holds Bachelor of Science in Engineering from Khulna University of Engineering and Committee Membership None Technology, Bangladesh.

28 Directors' Profile HR Committee, HSSECommittee Committee Membership 09 April2014 Last Re-elected 2014 22 January Date ofAppointment Audit Committee Committee Membership 21 April2015 Last Re-elected 10 December 2013 Date ofAppointment Mr. Kjoel hasbeen livinginAsiasince 2001andcurrently resides inSingapore. ofManagementmajoringinMarketing School Norwegian andCommunications. his current globalrole inSeptember 2016.Mr. Kjoelisaformerstudentofthe relations, strategic communications andcorporate responsibility. Heassumed to includetheareas ofpublicaffairs, management,government regulatory the Group’s strategy forAsiaandmanaging the Asiabusinessenvironment operational in roles For the last 16 years Mr. in key roles in the development Kjoel has served of significant played years early development andmerger andacquisition activities bothinEurope andAsia. his in he where activities international presence through hisinvolvement inTelenor’s international mobile operationsmobile inNorway. Since then, hecontributed totheGroup’s growing Mr. Kjoel joined theTelenor Group in 1995,beginning hiscareer inthedomestic Vice President andHeadofGroup Public Affairs, &Regulatory Telenor Group. Haakon Bruaset Kjoel was appointed to theBoard on14September 2011. He isSenior Non-Executive Director Tore Johnsen Non-Executive Director Hans Martin Hoegh Henrichsen Norwegian Norwegian Nationality Nationality Economics andBusinessAdministration ofEconomics. from School the Norwegian with Telenor’s expansionintoMyanmar. HeisaMaster ofSciencein (MSc) financing and mobile acquisition projects in markets new to Telenor, most recently the Company. Duringthepast14years, Mr. Henrichsenhasworked withproject He joined Telenor in2000andhassince thenheldseveral seniorpositions in telecommunications industries. and financing the in experiencesMr. Henrichsen professional has Bangladesh. for Officer Representative Chief as serves and Asia Safety, &Environment Security Committee. Vice HeisSenior President inTelenor and isChairmanoftheCompany’s HumanResources Committee, andHealth, Hans Martin Hoegh Henrichsenwas appointed 2014 totheBoard on22January in addition tostudiesinInternational BusinessManagement. managerial positions andinternational assignments.HeholdsaMaster ofScience from 2001to2004.Since joiningTelenor Group in1974, hehasheldanumberof 2008 to 2011, from 2004 to2008, and DiGi.Com Berhad, Malaysia Ltd. from 2011to2013,Total Access Communication PLC (‘’), Thailandfrom Telenor isashareholder. Hehasbeen CEOof4Asiancompanies -Grameenphone and was responsible forPerformance Management oftheAsiancompanies where Viceimmediate asSenior President past,heserved atTelenor Group, AsiaRegion, has alongcareer inTelenor since 1974. Heisnow Advisor, Senior Telenor Inthe ASA. Tore Johnsenwas appointed totheBoard on10December 2013.Mr. Tore Johnsen None Committee Membership 21 April2015 Last Re-elected 14 September 2011 Date ofAppointment Haakon Bruaset Kjoel Non-Executive Director Directors' Profile Norwegian Nationality

29 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Parveen Mahmud FCA was appointed to the Board on 17 October 2012. She is the Managing Director of Grameen Telecom Trust. She is the Council member and Past President of the Institute of Chartered Accountants of Bangladesh (ICAB). In her diversified professional career, Ms. Mahmud worked in the development sector and was a practicing chartered accountant. Ms. Mahmud started her career with BRAC, and was the Deputy Managing Director of Palli Karma-Sahayak Foundation (PKSF). She was a partner of ACNABIN, Chartered Accountants. She was the first female President of ICAB for the year 2011 and also the first female Board member in the South Asian Federation of Accountants (SAFA), the apex accounting professional body of the SAARC. She was the member of National Advisory Panel for SME Development of Bangladesh and founding Board member of SME Foundation and Parveen Mahmud Convener, SME Women’s Forum. Ms. Mahmud serves in various Boards including Non-Executive Director the Chairperson of Shasha Denims Ltd., and was the Chairperson of Acid Survivors Foundation. She was awarded Begum Rokeya Shining Personality Award 2006 for Date of Appointment Nationality women’s empowerment by the Narikantha Foundation, Bangladesh. 17 October 2012 Bangladeshi Last Re-elected 21 April 2015 Committee Membership None

Rokia Afzal Rahman was appointed to the Board on 06 December 2012 as an Independent Director and is also Chairperson of the Company's Audit Committee. She is a leading woman entrepreneur and a former Adviser to the Caretaker Government of Bangladesh, Ms. Rahman started her agro-based company in 1980 and further diversified her business into insurance, media, financial institution and real estate. She is currently the Vice President of International Chamber of Commerce (ICC) Bangladesh and Trustee Board Member of Transparency Rokia Afzal Rahman Independent Director International Bangladesh (TIB). Ms. Rahman is founder President of Bangladesh Federation of Women Entrepreneurs (BFWE) and former President of Metropolitan Chamber of Commerce and Industries (MCCI), Dhaka. Her commitment to Date of Appointment Nationality development brought her to the Board of a number of development organisations. 06 December 2012 Bangladeshi She is also Chair and Managing Director of R. R. Group of Companies; Chair and Last Re-elected 19 April 2016 Managing Director of Arlinks Group of Companies. Ms. Rahman did her Post Committee Membership Graduate Diploma in Banking from Pakistan Audit Committee

Prof. (Dr.) Jamilur Reza Choudhury was appointed to the Board on 15 June 2016 as an Independent Director. He is one of the leading engineers and academics in the country. He started his career in 1963 as a Lecturer in Department of Civil Engineering at Bangladesh University of Engineering and Technology (BUET) and was appointed as Professor in 1976. He was Head of the Department (1978- 79, 1981-83), Dean of the Faculty of Civil Engineering at BUET (1983-85) and Director of Computer Centre at BUET (1982-92), the largest computing facility in the country. He received his Ph.D. from University of Southampton, UK, in 1968 and was awarded the Doctor of Engineering (Honoris Causa) degree by University of Manchester, UK, in 2010. He has been involved with planning, design and construction of some of the largest infrastructure projects in Bangladesh (ports, airports, buildings and bridges). He was the President of Institution of Engineers, Bangladesh (1992-93). He was elected as Fellow of Institution of Civil Engineers, Prof. (Dr.) Jamilur Reza Choudhury UK, in 1995. He was an Adviser (Minister) to the Caretaker Government of Independent Director Bangladesh in 1996 and was in charge of Ministry of Energy and Mineral Resources and Ministry of Water Resources. He was Chairman of the Board of Bangladesh Shilpa Bank (1996-98). He has headed a large number of Committees and Task Date of Appointment Nationality 15 June 2016 Bangladeshi Forces formed by the Government to formulate ICT Policies and Plans (1997, 2001, Committee Membership 2007). He was the first Vice Chancellor of BRAC University (2001-10) and since None 2012, he has been the Vice Chancellor of University of Asia Pacific.

30 Directors' Profile and committee memberships: Companies (otherthanGrameenphone Ltd.) inwhichGrameenphone Directors holddirectorship None Committee Membership 18 May 2016 Date ofAppointment Sl. No Non-Executive Director Oivind Burdal 2 3 1 Mr. Md.Ashraful Hassan Mr. M Shahjahan Mr. Christopher Adam Laska Name ofDirector Norwegian Nationality Grameen Telecom Trust Member ofBoard ofTrustees Grameen Shakti Byabosa Samajik Ltd. Grameen Ltd. Employment Services Grameen HealthCare Ltd. Services Grameen Fabrics and Fashions Ltd. Grameen DanoneFoodsLtd. Grameen Veolia Water Ltd. Grameen Distribution Ltd. Grameen Solutions Ltd. Grameen Telecom Grameen Kalyan Grameen Shakti Grameen Healthcare Trust Grameen Telecom Trust Nobel Laureate Trust Member ofBoard ofTrustees Janata Capital andInvestmentLimited Grameen Distribution Team Accessories Ltd. Grameen Italia Grameen Solutions Grameen HealthCare Ltd. Services Grameen Capital Management Grameen Shamogree Grameen Shakti Byabosa Samajik Ltd. Grameen Communications Grameen Shikkha Grameen KnitwearLtd. Grameen Ltd. Employment Services Grameen Credit Agricole Microfinance Foundation Grameen Fabrics andFashions Ltd. Grameen Kalyan Grameen MothsoOPoshu-Shampad Foundation Grameen Fund Grameen Shakti Grameen Telecom Telenor Pakistan Ltd., Pakistan Ltd., Myanmar Total Access Communication PLC (’dtac’), Thailand from LondonofEconomics School andPolitical Science inLondon, England. Norway andhismasters degree (LLM,Master ofCorporate andCommercial Law) Administration (Bedriftsokonom Oslo, BI)from BusinessSchool BINorwegian hisLaw Burdal obtained Mr. TMT. degree (Cand. Jur.) from and theUniversity ofOslo,Norway, M&A hisdegree inBusiness on focusing in1998, Norway in firms law degree, hejoined ThommessenKrefting Greve Lund,oneofthemajorlaw Vice President, HeadofLegal inTelenor Myanmar Limited. After obtaining his managerial positions within several areas. In July 2015, he was appointed Senior joined theLegal ofTelenor Department ASAwhere hehaspracticed andheld Mr. OivindBurdal was appointed totheBoard on18May 2016.In2004,he Directorship Telenor Pakistan Ltd., Pakistan Telenor Myanmar Ltd., Myanmar None None Member ofBoard committees Audit Committee Audit Committee Directors' Profile

31 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Sl. No Name of Director Directorship Member of Board committees 4 Mr. Tore Johnsen Total access Communication PLC (‘dtac’), Thailand DiGi.Com Berhad, Malaysia DiGi.Com Berhad, Malaysia Audit Committee Remuneration Committee Sdn. Bhd., Malaysia 5 Mr. Haakon Bruaset Kjoel Telenor Pakistan Ltd., Pakistan dtac, Thailand Telenor Asia Pte Ltd., Singapore Nomination Committee Telenor South Asia Investment Pte. Ltd., Singapore Remuneration Committee Telenor South East Asia Investment Pte. Ltd., Singapore Telenor GO Pte. Ltd., Singapore Total Access Communication PLC (’dtac’), Thailand Telenor Asia (IHQ) Limited, Thailand Telenor Myanmar Ltd., Myanmar 6 Mr. Hans Martin Hoegh International Project Development AS, Norway None Henrichsen Sea Resources AS, Norway 7 Ms. Parveen Mahmud Shasha Denims Ltd. Linde Bangladesh Ltd. Shasha Textiles Ltd. Audit Committee Shasha Spinning Ltd. BRAC International Shasha Apparels Ltd. Audit Committee Linde Bangladesh Ltd. BRAC (Association Member) BRAC BRAC International Audit Committee Under Privileged Children Education Program (UCEP) Bangladesh UCEP- Bangladesh Manusher Jonno Foundation (MJF) Audit Committee MIDAS CAMPE Campaign for Popular Education (CAMPE) Audit Committee Rangpur Dinajpur Rural Services (RDRS)- Bangladesh Ghashful Grameen Danone Foods Ltd. Grameen Krishi Foundation Grameen Fisheries and Livestock Ltd. Grameen Health Care Services Ltd. Grameen Fabrics and Fashions Ltd. Grameen Distribution Ltd. Grameen Shamogri Ltd. Grameen Shamogri Uttaranchal Ltd. Grameen Shakti Samajik Byabsha Ltd. 8 Ms. Rokia Afzal Rahman R.R. Cold Storage Ltd. None R.R. Estates Ltd. Imaan Cold Storage Ltd. Aris Holdings Ltd. Arlinks Limited Mediaworld Ltd. (owning company of "The Daily Star") MIDAS Financing Ltd. Mediastar Ltd. (owning company of “Prothom Alo”) ABC Radio Bangladesh Lamps Ltd. Marico Bangladesh Ltd. Governing Body Member BRAC Banchte Shekha, Jessore DNET Member of Board of Trustees Transparency International - Bangladesh (TIB) Grameen Telecom Trust. Council (Board) Member Campaign for Popular Education (CAMPE) 9 Prof. (Dr.) Jamilur Reza Grameen Communications None Choudhury 10 Mr. Oivind Burdal Telenor Pensjonskasse, Norway None

32 Directors' Profile TEAM MANAGEMENT Head ofCustomer Experience &Service Naser Fazley Azam Chief Technology Officer Medhat ElHusseiny Head ofCommunications Nehal Ahmed Chief Executive Officer Petter Borre Furberg Head ofTransformation Kazi MahboobHassan Chief Corporate Affairs Officer Mahmud Hossain From toright left STANDING Officer, include running the day-to-day business of the Company. business the day-to-day Collectively, they inspire ourteams andsteer thesuccess ofourbusiness. running include Officer, The key roles oftheManagementTeam, headed bytheChief Executive Chief Strategy Officer Andreas Frandevi Chief Marketing Officer Yasir Azman Chief Financial Officer Dilip Pal Chief Human Resources Officer Mohammed SharifulIslam From righttoleft SITTING Management Team

33 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 Management team Profile

Mr. Petter Borre Furberg was appointed as interim Chief Executive Officer (CEO), effective from 01 November 2016. Before joining Grameenphone he was the Senior Vice President Telenor Digital Businesses, based in Bangkok. Prior to that, Mr. Furberg served as CEO of Telenor Myanmar for three years. Since joining Telenor in 1998, he has held a number of executive positions, including Chief Financial Officer and Chief Marketing Officer of dtac, Thailand, and Head of Financial Services at Telenor Group. Mr. Furberg holds a degree in Economics and Business Administration based Petter Borre Furberg on a four year program from the Norwegian School of Economics and is a Certified Chief Executive Officer European Financial Analyst (AFA/CEFA).

Mr. Dilip Pal was appointed as Chief Financial Officer (CFO) effective from 01 September 2014. Coming with 25 years of experience across Financial Services, Engineering, FMCG and Telecom sector, his last stint was at Vodafone India as Executive Vice President and National Business Finance Operations head. He has also served in executive positions in leading Indian companies like Tata Tinplate, Hindustan Coca-Cola Beverages (Coca-Cola India). Mr. Dilip is both a Chartered Accountant and Cost Accountant by profession. He holds a Master’s degree in Dilip Pal Commerce from Calcutta University. Chief Financial Officer

Mr. Medhat El Husseiny was appointed as Chief Technology Officer (CTO) effective from October 2014. He has over 22 years of experience from the telecom sector, holding senior management roles in different multinational companies. Prior to joining Grameenphone, he held the position of CTO at Orascom Telecom Algeria (Djezzy), where he was also a member of Vimpelcom Group Leadership Team. His expertise encompasses a range of areas, including IT/ Network Development & Operation, corporate strategy, management of large transformation programs and negotiations/contract management. He has also worked at Orascom Telecom Holding and Lucent Technologies. Mr. Medhat is an Engineer by profession with a Master in Telecommunication Engineering from Benha University, Egypt, along with Medhat El Husseiny MBA from Maastricht School of Management, Netherlands, and Master’s Certificate Chief Technology Officer in Project Management from STEVENS Institute of Technology, USA.

Mr. Yasir Azman was appointed as Chief Marketing Officer (CMO) effective from 15 June 2015. Mr. Azman is an experienced professional with vast international experience in multiple countries and cultures. Before joining as CMO Grameenphone, Mr. Azman served as Telenor Group’s Head of Distribution & eBusiness and worked across all Telenor Operations. He has also worked in operations as EVP & Circle Business Head for Orisssa and Karnataka circles during 2010-2012. In his previous tenure in Grameenphone, Mr. Azman played a leading role to set up Grameenphone sales and distribution organisation and to transform Grameenphone distribution structure. Throughout his career, Mr. Azman has a proven track record as a leader of transformation, change management and business development. He has an MBA from Institute of Business Administration, Dhaka University, and also attended several executive educational programs in the Yasir Azman London Business School and INSEAD France. Chief Marketing Officer

34 Management Team Profile degree from Concordia University, Canada. Business Administration (IBA),Bangladesh.HealsoholdsaMaster’s (Telecom) of Engineering andTechnology (BUET).Heobtained hisMBAfrom theInstitute of obtained inElectrical &Electronic hisB.Sc. Engineering from BangladeshUniversity other telecom operators before rejoining Grameenphone inAugust2009.He Operations Technology during 2000-2001. In his credibly long career, at he also worked for few Manager General Additional as Company, the with spell first his at team HutchisonBDTelecom oftheerstwhile Ltd. Heworked forGrameenphone, from 08March 2010.Hestarted hiscareer in1990whenhejoined thetechnical Mr. Mahmud Hossain was appointed as Chief Corporate Affairs Officer (CCAO) effective INSEAD andAshridge BusinessSchool. through theGeorge Washington University andhastaken additional courses at Planning Business Strategic of field the in certified is and Sweden in Technology degree in EE Industrial Engineering and Management from Lund Institute of region andCapgemini (Sogeti) inSweden. Mr. Andreas holdsaMaster ofScience MENA the in Strategy Deloitte and Europe including in firms, various consultantat this, Mr. Andreas worked formore than6years asastrategy andmanagement capacity asaDirector, focusonEtisalat’s withaprimary African assets. Before in Etisalat Group’s Corporate Strategy inUAEofwhich3was department inthe consultancy perspective. Prior to joining Telenor, Mr. Andreas worked 5years Telecommunication from astrategy andMedia (TMT)Industry andmanagement He bringsmore than13years ofprofessional experience from theTechnology, Mr. Andreas Frandevi was appointed as Chief Strategy Officer (CSO) on 01 July 2016. Head ofCommunications Nehal Ahmed Chief HumanResources Officer Mohammed SharifulIslam Economics from Wichita State University, Kansas,intheUnited States. in International Managementfrom University ofTexas, Arlington,andaBBAin and market research. Mr. IslamhasaMaster inBusinessAdministration (MBA) his earlycareer, hegathered experience infoodandbeverage, administration, where heco-authored two publications andcorporate onleadership ethics. During Mr. Islam,alsoworked asaninstructoratState University andEastWest University, working closely with organisation development and change management. management talent and recruitment processes, introducing andculture leadership transformation programs, and redesigning for responsible specifically Grameenphone, hehasworked extensively inrecruitment anddevelopment Group managementtrainee program, diversity management.In andtalent supporting several Group initiatives development, such as leadership mentorship, focusing oninternal strategic andcollaboration platformsas wellasdrivingand President, Group Development People ofTelenor Group asastrategic advisor aBangladeshi, Islam, Grameenphone andTelenor Group. Prior tojoiningasCHRO, heworked asVice Mr. 2015. 01 September has more than 13 years of experience including 9 years in Human Resources at from effective (CHRO) Officer Mr. Mohammed SharifulIslamwas appointed asChief HumanResources University ofMassachusetts atAmherst, USA. a bachelor’sdegree inIndustrialEngineering andOperations Research from the Foods; andInternational Brand ManageratBritish American Tobacco Plc. He holds Global Marketing ManageratBacardi; European Brand Director atMARS Snack international experience working inseniormanagementrolesasCMOatQUBEE; and Marketing Communications atRobi Axiata Ltd. Healsohasover 18years of appointment. Previously, hehasalsoheldtheposition asExecutive VPforBrand 01 December 2015.Hewas Director Marketing ofGrameenphone priortothis Mr. Nehal Ahmed was appointed as Head of Communications effective from Chief Corporate Affairs Officer Chief Strategy Officer Management Team Profile Andreas Frandevi Mahmud Hossain

35 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Mr. Naser Fazley Azam was appointed as Head of Customer Experience & Service effective from 12 July 2015. He comes with 18 years of professional experience in Sales. He joined Grameenphone in April 2006 as Head of Trade Marketing. Subsequently, he led Retail Channel Management function, Retail Channel Management & Trade Marketing function until he took over the role of Director, Distribution & Retail Sales in November, 2010. After completing his MBA, he started his career in British American Tobacco (BAT) Bangladesh as Territory Officer in November 1997 and later played the roles as Area Manager and Regional Manager Naser Fazley Azam till he joined Grameenphone. Head of Customer Experience & Service

Mr. Kazi Mahboob Hassan was appointed as Head of Transformation effective from 01 February 2016. Prior to Grameenphone, he was a Senior Management Consultant at Deloitte UK responsible for leading transformation programmes for clients across a variety of sectors including Telecom, Oil & Gas, Consumer Business and Financial Services. Prior to Deloitte, he held senior positions in Finance and Marketing with IBM UK and BAT Bangladesh. He has an MBA degree from University of Oxford, Kazi Mahboob Hassan professional qualification with ACCA and BBA from University of Dhaka (IBA). Head of Transformation

PROFILE OF COMPANY SECRETARY

Mr. Hossain Sadat was appointed as Company Secretary effective from 01 July 2010. Additionally, he has been appointed as Director and Head of Regulatory Affairs, effective from 24 February 2014. Consequently, he has been into the above 2 (two) diverse positions concurrently for around 3 (three) years. Mr. Sadat has played a significant role in delivering largest ever IPO in 2009 and transforming Grameenphone into a public listed company. Since joined Grameenphone in mid June 2001, he has held a number of executive positions, including Financial Controller, Head of Financial Reporting, and Head of Budgeting & Accounting. He worked in a number of multinational organisations, including Shell Oil & Gas, Cairn Energy PLC and KPMG Bangladesh. In summary, he comes with 19 (nineteen) years of professional experience in the fields of Corporate Governance, Regulatory management, Government relations, Financial management, and Public communications. Mr. Sadat is a Chartered Secretary by profession and holds a Master’s degree in Commerce. He has also attended executive education Hossain Sadat programs at INSEAD and London Business School. Company Secretary

36 Management Team Profile b) a) Board Formation &Structure withintheCompanyall levels toensure success. sustainable at anappropriate time. AtGrameenphone, ouractions are always governed whichare byourvalues andprinciples, reinforced at (BSEC). TheBoard continues tomonitorandreview theCompany’s corporate governance practices changes andmakesnecessary conditions set outintheCorporate Governance Guidelines2012issued bytheBangladeshSecurities andExchangeCommission The Board isof theview thatthroughout theyear ended 31December 2016,theCompany hascomplied withtheapplicable procedures tomakeGrameenphone athoroughly transparent Company. Management Team alsoputtheirbesteffortstocomply andallinternal withallthelawsofcountry regulations, policiesand to protect the interests ofitsgovernanceAs part pursuits, Grameenphone iscommitted toensuringthehigheststandards ofgovernance designed Corporate Governance Practices and integrity from itsBoard ofDirectors, employees andsuppliers. the Company. TheCompany, atthesametime, expects actsofhonesty create trustwiththepublicand ultimately create shareholder value for and webelieve thatrunningourbusinessesinanethical mannerwill business practices gohandinwithstrong corporate governance, stakeholders' interest and maintain investors’ trust and confidence. Ethical as tocreate andmaintain shareholders' sustainable value, safeguard highest standards ofcorporate governance andbusinessconduct so growth andsuccess. TheCompany hasalways strived tomaintain the governance playstowards animportantpart theCompany’s continued of corporate governance. Grameenphone’s high standards of corporate on transparency, accountability and compliance, which are the essence Being atechnology oriented businessentity, Grameenphone emphasises Corporate Governance Framework in Grameenphone Corporate Governance directors andtheirrespective biographies are set outonpages28to31ofthisAnnualReport. combined withits diversity ofculture andbackground, stands asthe perfect platformtoperformanddeliver. Alistof Board hastheoptimum composure ofknowledge, level andtechnical understanding abouttheCompany’s businesswhich, taking into account theindependence guidelines set outinBSEC Corporate Governance Guidelines.We believe thatour independence his/her of annually confirmation a Director Independent each fromreceived also Companyfactor.has The important utmost the being interests shareholders’ the with processes, management and interests of conflicts conduct, relating totheCompany’s strategies, policies,performance, accountability, resources, key appointments,standards of actively participate inBoard andCommittee meetings. Thedirectors provide independent judgmentandadvice onissues and experience totheCompany by expressing their views inanindependent,constructive andinformed manner, and qualifications diversified contribute Directors Non-Executive The Directors. Independent (2) two and Directors Executive As atthedate theGrameenphone ofthisAnnualReport, Board iscomprised of ten (10)Directors, witheight(8)Non- Board Composition andDiversity Authority thatspellsoutthepractices andprocesses indischarging itsresponsibilities. for ensuringbetter governance inthework andadministration oftheBoard. TheBoard isalsoguided byaDelegation of In addition guidelines,theBoard toother regulatory hasalsoadopted ofProcedure the‘Rules fortheBoard ofDirectors’ the Company adheres togenerally accepted forgoodgovernance principles andeffective control ofCompany activities. Grameenphone Policies &Procedures andCode ofConduct are understood, implemented andmaintained and atalllevels activities, accounts andasset managementare subject toadequate monitoringandcontrol. TheBoard alsoensures that its ensure that position and Company'sfinancial the effectivelyabout informedDirectorscontrolled. themselves The keep to theShareholders. TheBoard isresponsible forensuringthatthebusinessactivities are soundlyadministered and The Directors oftheBoard are appointed bytheShareholders attheAnnualGeneral Meeting (AGM) andaccountable oftheBoardRole Independent 20% Non-Executive 80% Composition of all stakeholders promoting while integrity, transparency and accountability. The Board andthe Female 20% Female 80% Male Gender

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37 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

c) Board Meetings The Articles of Association (AoA) of the Company requires the Board to meet at least four times in a year or when duly called in writing by any Board member. The Board, accordingly met eleven (11) times during the year 2016. Dates for Board Meetings in a year are decided in advance and notice of each Board Meeting is served in writing well ahead of the meeting. The notice contains the detailed statement of business to be transacted at each meeting. The Board meets for both scheduled meetings and on other occasions to deal with urgent and important matters that require attention. A record of the Directors’ attendance at Board meetings during 2016 is set out on page 70 of this Annual Report.

d) The Chairman and the Chief Executive Officer (CEO) The Chairman of the Board is a Non-Executive Director. The Chairman and the CEO of Grameenphone are separate persons. The roles of the Chairman and Chief Executive Officer are clearly established, set out in writing and agreed by the Board to ensure transparency and better governance. To that end, Grameenphone has also adopted ‘Rules of Procedure for Chief Executive Officer’. The Chairman leads the Board and is responsible for ensuring the effectiveness of the Board and its governance processes, while the CEO is the authoritative head for day-to-day management in the Company. He acts to reasonably ensure that Grameenphone operates its business as per the Articles of Association, decisions made by the Board and Shareholders, as well as according to Grameenphone Policies and Procedures and applicable regulatory laws and legislations.

e) Access to Information The Board recognises that the decision-making process is highly dependent on the quality of information furnished. In furtherance to this, every Director has access to all information within the Company. Throughout their tenure in office, the Directors are continually updated on the Company’s business and the regulatory and industry specific environments in which it operates. These updates are transmitted to them by way of written briefings and meetings with Senior Executives and, where appropriate, external sources.

Board Committees For better, quicker and furnished flow of information and thereby exercising effective governance, the Board has also constituted four (4) sub-committees, viz: Audit Committee; Treasury Committee; Human Resources Committee; and Health, Safety, Security & Environment Committee and has delegated certain responsibilities to the Committees to assist the Board in the discharge of its responsibilities. The role of Board Committees is to review and appraise in the respective areas and then to advise and make recommendations to the Board. Each Committee operates in accordance with the Charter/Terms of Reference (ToR) approved by the Board. The Board reviews the ToR of the Committees time to time. The Board appoints the members and Chairman of each Committee. A brief description of each Committee is presented below:

THE BOARD OF GRAMEENPHONE 2 Independent Directors, and 8 Non-Executive Directors Key Objectives To create value for Shareholders and to ensure the long-term success of the Company.

AUDIT COMMITTEE TREASURY COMMITTEE HUMAN RESOURCES HEALTH, SAFETY, SECURITY COMMITTEE AND ENVIRONMENT COMMITTEE 1 Independent Director, and 1 Non-Executive Director 2 Non-Executive Directors, and 2 Non-Executive Directors, and 2 Non-Executive Directors 1 Group Treasury Member, and 1 Management Team Member 1 Management Team Member 1 Management Team Member

CHAIRMAN CHAIRMAN CHAIRMAN CHAIRMAN Rokia Afzal Rahman M Shahjahan Hans Martin Hoegh Henrichsen Hans Martin Hoegh Henrichsen

Key Objectives Key Objectives Key Objectives Key Objectives Assist the Board in discharging Assist the Board in discharging Assist the Board in discharging Assist the Board in discharging its supervisory responsibility its supervisory responsibility with its supervisory responsibility with its supervisory responsibility with with respect to internal respect to all significant financial respect to Company’s Human respect to Health, Safety, Security control, financial reporting, risk matters which concern the Board. Resources policy. and Environment (HSSE) issues. management, auditing matters, and monitoring compliance.

38 Corporate Governance in Grameenphone d) c) b) a) systems are inplace tomitigate HSSErisksinrelation tothegeneral environment, Company, employees, vendors, etc. Safety, Health, to respect with obligations other andEnvironmentSecurity (HSSE)issues.The Committee alsoassiststheBoard inobtaining assurance and thatappropriate legal its fulfilling in Board the supports and necessary whenever This Committee consists ofthree (3)members whoare appointed bytheGrameenphone Board. TheCommittee meets Health, Safety, andEnvironment Security Committee the meeting was asfollows: The HumanResources Committee met two (2)times duringtheyear 2016andattendance ofthe Committee members in employee performance, motivation, retention, succession matters, rewards andCode ofConduct. responsibilitiesthe Board indischarging withrespect itssupervisory totheCompany’s HumanResources policy, including This Committee consists ofthree (3)members whoare appointed bytheGrameenphone Board. TheCommittee supports Human Resources Committee meetings was asfollows: The Treasury Committee met two (2) times during the year 2016andattendance ofthe Committee members in the Committee, suchissuesare forwarded to theBoard fortheirfinal review andapproval. matters whichconcern theBoard are discussed inthiscommittee financial meeting indetail. Uponendorsement oftheTreasurysignificant All Board. Grameenphone the by appointed are who members (3) three of consists Committee This Treasury Committee was asfollows: The AuditCommittee met seven (7)times duringtheyear 2016andattendance oftheCommittee members inthemeetings Committee.The the Audit of detailed activities oftheAuditCommittee during2016are givenonpage49ofthisAnnualReport. andresponsibilities duties meetings, composition, authority, purpose, the defines Board, requirements ®ulatory applicable legal andtheCode ofConduct. with TheAuditCommittee Charter, asapprovedcompliance bythe monitoring of processes Grameenphone's and matters auditing management, risk reporting, financial The AuditCommittee responsibilities assiststheBoard indischargingwithrespect itssupervisory tointernal control, Company Secretary andtheHeadofInternal Auditare permanentinvitees totheAuditCommittee the meetings. Officer, Financial Chief the Officer, Executive Chief The guidelines. BSEC the under required as Director, Independent The AuditCommittee iscomprised ofthree (3)Non-Executive members oftheBoard. TheChairmanoftheCommittee isan The AuditCommittee was established inlate 2008asasub-committee oftheBoard andhasjurisdiction allover theCompany. Audit Committee Mohammed SharifulIslam M Shahjahan Hans Martin Hoegh Henrichsen Name Dilip Pal Pal Stette M Shahjahan Name Dr. Jamaluddin Ahmed FCA M Shahjahan Tore Johnsen Rokia Afzal Rahman Name Attendance Attendance Attendance 2/2 2/2 2/2 2/2 2/2 2/2 2/2 6/7 5/5 7/7 Corporate Governance in Grameenphone

39 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

The HSSE Committee met one (1) time during the year 2016 and attendance of the Committee members in the meeting was as follows:

Name Attendance Hans Martin Hoegh Henrichsen 1/1 M Shahjahan 1/1 Mohammed Shariful Islam 1/1

Company Secretary To ensure effective assimilation and timely flow of information required by the Board and to maintain necessary liaison with internal organs as well as external agencies, the Board has appointed a Company Secretary. The Corporate Governance Guidelines issued by the Bangladesh Securities and Exchange Commission (BSEC), also require a listed Company to appoint Company Secretary. In pursuance of the same, the Board of Directors has appointed the Company Secretary and defined his roles & responsibilities. In Grameenphone, among other functions, the Company Secretary:

z Performs as the bridge between the Board, Management and Shareholders on strategic and statutory decisions and directions. z Acts as a quality assurance agent in all information streams towards the Shareholders/Board. z Is responsible for ensuring that appropriate Board procedures are followed and advises the Board on Corporate Governance matters. z Acts as the Disclosure Officer of the Company and monitors the compliance of the acts, rules, regulations, notifications, guidelines, orders/directives, etc. issued by BSEC or Stock Exchange(s) applicable to the conduct of the business activities of the Company so as to protect the interests of the investors and other stakeholders.

Management Team The Management Team is the Executive Committee of Grameenphone. Headed by the CEO, the Management Team is responsible for managing and running the affairs of the Company. All other key Managers across the Company are members of the Management Team. The Management Team works to achieve the strategic goals & mission of the Company set by the Board of Directors. In discharging its assigned responsibilities, the Management Team meets on a weekly basis to monitor the business performance of the Company.

The Control Environment in Grameenphone In implementing and ensuring good governance in Grameenphone, the Board and Management Team ensure the following:

a) Beyond Budgeting Management Model Grameenphone employs a Beyond Budgeting strategic management model whereby the Company reviews its strategy for the next five years and sets annual and quarterly targets on key KPIs for the upcoming year. The targets/KPIs are set on relative terms to reflect the changes in business environment. The quarterly targets are subject to rigorous monitoring thereby ensuring a performance culture focused on attaining the targets and steering the Company towards fulfilling its strategic ambitions. In every quarter, the Company also prepares forecast for the next five quarters. These forecasts are realistic projections of future directions.

The model focuses on initiatives to minimise the gap between the targets (KPIs) and forecasts. The corporate level initiatives are cascaded down to divisional as well as individual levels. The forecasts on the key KPIs which serve as radar screen on future directions are reviewed and monitored against targets. This is 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 target and strategy. It aims to build a culture of freedom through responsibility and thereby leading to increased responsiveness to surrounding changes.

b) Financial Reporting Grameenphone has strong financial reporting procedures. Financial statements are prepared in accordance with International/Bangladesh Financial Reporting Standards (IFRS/BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable financial legislations. The financial data are captured from the financial reports generated from Oracle ERP (Enterprise Resource Planning) system. These financial statements, once prepared, are reviewed initially by Head of Financial Accounting and Reporting, CFO and CEO respectively and then by the Board Audit Committee on a quarterly basis. In each quarter the external auditors review the quarterly financial statements. The annual audit is conducted by the external auditors, who are appointed by the Board of Directors followed by the Shareholders' approval in the Annual General Meeting. Details of Internal Control over Financial Reporting are described on page 46 of the Annual Report.

40 Corporate Governance in Grameenphone f) e) d) c) consultancy fees, auditors certify payable amount andcalculation foreachremittance. Moreover, inaccordance withguidelinesissued byBangladesh Bank,forremittance oftechnical assistance fees and Securities andExchangeCommission (BSEC). who certify thattheCompany hasdulycomplied requirements withalltheregulatory asstipulated bytheBangladesh Further, to ensure adequate regulatory discharge, a Compliance Certificate is obtained from licensed practicing professional audit ofhalf-yearly financialstatements ofthe Company. out also carry auditors statements, the financial annual of audit the additionto In communicationissues. Boardfor any of before submissiontothe Board ofDirectors forapproval. Auditors alsohaveaccess totheBoard AuditCommittee andthe requiredindependence, otherwise unless bytheregulators. TheBoard AuditCommittee reviews theFinancialStatements Exchange Commission auditors are (BSEC).Statutory asthismay notengaged innon-auditservices compromise auditor be appointed foraconsecutive periodexceeding three years incompliance withtheorder ofBangladeshSecurities and structure isinplace asperCorporate Governance bestpractices toensure theirindependence. auditors cannot Statutory Appropriate AGM. the at Shareholders the by fixed also remunerationis their and (AGM) MeetingGeneral Annual each at accordance withBangladeshStandards onAuditing (BSA).Aspertheseregulations, auditors are appointed byShareholders Auditing ofthe Company isgoverned bytheCompanies 1987andconducted Act,1994andSecurities andExchangeRules in AuditandCertificationStatutory insurance companies. of authenticity and accuracy ensure to and the reported assets numberofassets. Alltheassets are adequately insured againstindustrialriskswithlocal andinternational the safeguard to basis test a on undertaken is verification physical to protect theinterest ofShareholders. Internationally accepted safety measures havebeen implemented andperiodic technology since itsinception. Transparency andaccountability are ensured atallstages from acquisition todisposal Grameenphone, initspursuit ofbestqualitynetwork forits subscribers, hasbeen investing incutting-edge telecom Management ofAssets required. basisto a monthly on results financial CFO review and ensure Grameenphone is on track to deliver its annual financial CEO targets or to identify the corrective action review, required if and when financial and business quarterly to addition In and position ofthecompany versus itsannualfinancial targets. performance financial the monitor to reviewfinancial is the of purpose The environment. regulatory and market changing progress ofstrategic initiatives versus longerterm strategic plansandobjectives, whilstalsotaking intoconsideration the monitor to is reviews business of purpose The basis. quarterly a on conducted are reviews financial and reviews Business Business Reviews andFinancialReviews examined indetail, rigorously analysed andimplemented where applicable. global A basis. monthly on Directors cost benchmarking by an external organisation indicated of Grameenphone’s cost position and recommended actions are Board the to reported also are initiatives efficiency the of progress The results. financial the reflection and in Management by assessment to subject are efficiency and milestones Progressresult.the of review the need and expected outcome of spending in detail to ensure the priority of business needs and optimise the works together withanempowered cross functional transformation project named ‘FundtheJourney’ toanalyseand effort from these streams Grameenphone has enabled to meet the business targets. The Operational Excellence function ProcessBusiness Efficiency, are Management scope the Spend the of of some stones Smart of corner The work. concerted Efficiency,Expenditure Capital Management, CapitalWorking Sold, Goods of Costeffectiveness, Expenditure Operational competitive interms position ofeffectiveness intheindustry andefficiency. better experience tothesubscribers. Grameenphone aimstoengagetheentire employee basewiththejourney toreach a adapts withtheever changingbusinesslandscape andimproves upontheexisting processes toprovide andservices a market, to time enhance qualityandmaximiseoverall service returnfaster through managementofspends.Thefunction smart continuously ensure time same the at while efficiency resource towards approach structured and sustainable of theentire organisation through aninnovative mindsetresults tobringtangible inoperations. TheCompany takes a Operational Excellence forGrameenphone isamultifaceted function thathastheintention sphere totoucheachandevery Operational Excellence (OE) Corporate Governance in Grameenphone

41 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

g) Internal Audit Internal Audit supports the Company in achieving 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 organisational independence of Internal Audit, the Head of Internal Audit reports functionally to the Board Audit Committee and administratively to the Chief Executive Officer. Grameenphone Internal Audit is empowered to carry out its assigned activities in all aspects of the Company. 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 & IT and General Business processes. Additionally, the team also performs quality assurance of internal audit activities and relevant investigations. A risk-based annual audit planning process 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.

h) Internal Control Over Financial Reporting (ICFR) Preparing reliable financial information is a key responsibility of Grameenphone Management. In order to discharge its financial reporting responsibilities, Grameenphone implemented Internal Control over Financial Reporting, designed to provide reasonable assurance that the Company’s financial statements are reliable and prepared in accordance with applicable Accounting Standards.

Grameenphone is committed to ensure excellence in internal control activities as this process has been proven beneficial in relation to the quality of Grameenphone’s Financial Statements. The implementation of good Internal Control over Financial Reporting is continuing over the years and the objective is to ensure that ICFR related activities are integrated into Grameenphone’s business operations.

A standard accountability structure is implemented with defined roles and responsibilities within ICFR in-scope areas to create the basic building blocks to ensure effective ICFR ownership. The overall responsibility for ensuring ICFR, including monitoring and performance of internal controls and maintaining documentation lies with the CEO/CFO, and the process level responsibility lies with the process owners and control owners.

i) Related Party Transactions The Board Audit Committee reviews all the related party agreements and payments before submission to the Board of Directors for approval. Abiding by the laws, a Board Director, who has an interest in a transaction, discloses his interest in such transaction and abstains from deliberations and voting on the relevant resolution in respect of the transactions at the Board meetings. Details of significant related party transactions are disclosed in notes in the Financial Statements as per the requirements of IAS/BAS 24 Related Party Disclosures.

j) Dividend Policy The Board of Directors has established a dividend policy, which forms the basis for the proposals on dividend payments that it makes to the Shareholders taking into consideration the business performance of the Company and its strategic initiatives. The Board believes that it is in the best interest of Grameenphone to draw up a long-term and predictable dividend policy. The objective of the policy is to allow the Shareholders to make informed investment decisions.

k) Enterprise Risk Management & Risk Mitigation Risk Management at Grameenphone is concerned with earning competitive returns from the Company’s various business initiatives at an acceptable risk level. It supports the Company’s competitiveness by developing a culture, practice and structure that systematically recognises and addresses future opportunities whilst managing adverse effects (i.e. threats) by recognising risk and responding appropriately upon it. The Company has well defined risk management manuals and processes to mitigate enterprise level risks. This aspect is discussed more elaborately at the ‘Enterprise Risk Management’ section of the Annual Report.

l) Revenue Assurance and Fraud Management Revenue Assurance function is accountable to ensure the accuracy, completeness, integrity & timeliness of all revenue related events; transactions and revenue driving primary cost components. Along with providing supports to give assurance on correct revenue recognition and reporting, this function also performs continuous monitoring to prevent revenue leakages. The Fraud Management systems and processes are in place to ensure innovative and effective defense mechanisms to prevent losses from internal/external telecom frauds.

42 Corporate Governance in Grameenphone o) n) m) build acompetitive edge. routeamongst oursuppliers istheonlyviable forward. Byworking together withoursuppliers, wecan raise thebarand that decent working conditions, respect forhumanrightsandtheenvironment aswellwillingness toimprove standards the with conduct andanti-corruption shared insupplychainwithits‘Zero Tolerance Approach’ oncorruption. Grameenphone believes are gaps identified Any management. risk respective supplierforthepurpose ofdevelopment. Atthesametime, Grameenphone promotes responsiblebusiness effective by followed and inspections audits- systematic the Company's Supplier Conduct Principles (SCP). Monitoring compliance in relation toSCP is performed by conducting a direct contractual relationship with Grameenphone and offer products to Grameenphone or services must adhere with (c) Suppliercapacity building(d)Auditsandinspections (e)Control mechanism. Allsuppliers andcontractors whohave effective sustainability operations thatincludes-(a)Endorsement ofSupplierConduct Principle(b)Riskassessments Grameenphone ensures continual improvement ofitssuppliers interms ofsustainability andsocialcompliance withits The aimofGrameenphone istoraise thestandards ofsocialcompliance andmakeasocialimpactinthelocal market. for highlabourstandards andcontinuous improvement initsown operations andthroughout itsentire supplychain. Supply Chain Sustainability of corporate is a key element governance and business strategy of Grameenphone that strives Supply ChainSustainability under anyunforeseen circumstances, important toolformanaginganyscaleofdisaster. whichisavery situation. Thispreparedness willhelptheCompany ensure andthecountry uninterrupted telecommunication services and IT domain. Not only the deployment but also these DRplatformsare forensuringits functionality drilled inadisaster has continuous focusondeveloping organisational resilience through Disaster Recovery (DR)infrastructure inNetwork Grameenphone to ensure was intheaffected able itsbasicservices areas where thecompetitors Grameenphone struggled! At onepointoftime, 62%ofGrameenphone sites were runningwithoutcommercial power, 24%formore than5days, but Grameenphone hadtheadvantage ofquickrecovery whenthemassive Nor’wester cycloneshitconsecutively lastsummer. Having proper BCM processes in place, capable organisation in regions andproper infrastructure dimensioning, network toprevent network disruption. with all-IP migration in 2015, the journey is continuously progressing and we have set aggressive plans to expand the fiber backbone optic fiber this modernised have railways. We and highways through both transmission fiber optical diversified oneoftheimportantrequirementsexample, fortelecom operation isthetransmission network where Grameenphone has ofdisasterAs apart managementreadiness, Grameenphone hasbuiltarobust andprotected network infrastructure. For natural disasters likecyclone,flood,earthquake etc. important tominimisethenetwork likeBangladeshwhichisprone impact,especially foracountry andservice tomany process andplanforCrisisManagement. Thisproactive readiness, bothinterms ofprocess andinfrastructure, isvery largest phoneoperator mobile ofthe country, Grameenphone hasastructured BusinessContinuity Management(BCM) To secure thebusiness operation andcontinued telecommunication ofBangladesh,andasthe forthepeople services Business Continuity andCrisisManagement(BCCM) way andstrategy toensure thesame. Company. Overall, Grameenphone hasalways strived toremain afullycompliant Company accommodating possible every various initiatives toconduct awareness sessionsonexisting andproposed lawstoensure compliance throughout the in a compliant way, Grameenphone renders its best efforts to comply with thelaws of the land.Grameenphone alsotakes the Board ofInvestment(BOI)andallotherrelevant bodiesandauthorities. Further, inorder toconduct day-to-day business (NBR), Registrar ofJointStockCompanies &Firms(RJSC),BangladeshTelecommunication Commission Regulatory (BTRC), documents to the Bangladesh Securities and Exchange Commission (BSEC), Stock Exchanges, National Board of Revenue relevant and statements financial of set complete a provides regularly Grameenphone context, this necessary.In where certificationand issues/events of reportingGrameenphoneaccurateprovidesrequiretransparency periodic that and and right throughout theCompany. Grameenphone issubject toclosemonitoringprocess bodies thatfocuson ofregulatory that assure compliance withallrelevant requirements. andregulatory legal Thisensures thatgoodgovernance cascades regulators. of a compliant As leaders Company, the Management Team members of Grameenphone adopted strategies Compliance helpsbuildtrustamongtheBoard Members, Shareholders, Customers andotherstakeholders includingthe Compliance &Regulations withRu Corporate Governance in Grameenphone

43 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

p) Ethics and Behaviour

i. Code of Conduct Code of Conduct is an integral part of our daily life. Grameenphone’s Code of Conduct has been approved by the Board of Directors. It reflects the core values of Grameenphone and provides a clear guideline and principles for conducting fair business practice internally and externally among the business partners, Government, Community, etc. It is one of the governance documents, which helps employees to safeguard from any breach within the organisation. The regular electronic re-signing of the Code of Conduct helps remind the employees from committing any form of violation and further refrain from any kind of obligation. Employee faces dilemma and challenges in their daily works. Grameenphone Ethics and Compliance conducts a yearly program called “E learning - Living the Values” to further enhance employee knowledge to abstain from any kind of ethical dilemma. In line with “Code of Conduct”, Grameenphone also has an electronic real time web-based whistle-blowing mechanism which allows employees to report possible violation, concerns, questions to uphold the image and reputation of the Company. Followed by this whistle-blowing mechanism, a strong compliance process exists to determine innocence and guilt.

ii. Restrictions on dealings in Grameenphone Shares by Insiders The Company has established a detailed policy relating to trading in Grameenphone shares by Directors, Employees and other Insiders. The securities laws also impose restrictions on similar transactions. All the Insiders are prohibited from trading in Grameenphone shares, while in possession of unpublished price sensitive information in relation to the Company during prescribed restricted trading periods.

iii. Supplier Conduct Principles The Supplier Conduct Principles (‘SCP’) outline the standards for ethical and business conduct expected from suppliers and contractors in their relationship with the Company. The SCP are binding on the Company’s suppliers through the confirmation and signing of the Agreement on Responsible Business Conduct to ensure high standards of business ethics amongst all suppliers of the Company.

iv. Anti-Corruption Policy Grameenphone firmly opposes all forms of corruption with an approach of ‘zero’ tolerance. The Company is making active efforts to ensure that corruption does not occur in any of its business activities. Our Anti-Corruption Policy applies to the Board members, employees and others with the authority to act on behalf of Grameenphone. The policy clearly states that bribes are strictly prohibited and the employees shall never offer, give, ask for, accept nor receive any form of bribe. Regular awareness sessions are arranged throughout the year for better understanding of the policy requirements especially with regard to gifts and arrangements of various events.

Grameenphone believes in effective assessment in all of its organisational processes. In view of that, an extensive corruption risk assessment has been conducted in 2016 and having the ambition to monitor and follow up on the same in coming years. All functions of the Company were involved in this exercise through adequate training and guidance. Based on identification of the corruption risks, mitigations actions have been designed for each of the risks. Leaders and relevant managers have designed the ownership and implementation framework to own and act upon. Considering developing nation perspectives and Company’s inner challenges, the entire platform has been designed and is being monitored carefully to ensure stronger governance environment of the Company.

q) Investor Relations (IR) As the largest public listed corporate house in Bangladesh, Grameenphone has always placed high importance to the investor community and caters to 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 functionality is in practice. IR as a specialised function has maintained close contact with both local and international investors, analysts, market experts and financial community on a proactive basis. Through this, the relevant stakeholders were kept informed about the Company’s financial results, regulatory landscape, growth opportunities and strategic ambitions while objectively sharing the associated risk and reward profile. This also reflects Grameenphone’s commitment towards developing the Capital Market of the country by introducing global best practices and ensuring transparency, accountability and compliance. Notable events that IR conducted during the year were quarterly results release, press conferences, analyst call conferences, foreign non-deal road shows and support towards the CFA Institute Research Challenge on being the subject company.

44 Corporate Governance in Grameenphone as thejustified aspirations ofour valued investors, otherstakeholders andthesociety atlarge. and itneeds tobecontinuously developed, nurtured andadapted needs tomeet ofamodernbusinesshouseaswell thevarying effective Corporate Governance regime. TheCompany alsobelieves thatCorporate Governance isajourney andnotadestination and efficient an of establishmentthrough whole a as society transparencythe accountabilityGrameenphonein to and believes r) Shareholders v) iv) Website iii) ii) i) may bedirected toGrameenphone at01711555888ormailed Share Office [email protected] queries These shareholding. their to relating queries specific have may Shareholders that recognises also it activities, its and Company the about Investors and Shareholders to information sufficient provide to aims Company the Whilst Shareholders' Queries on theInvestorRelations section oftheCompany’s website: www.grameenphone.com All financial results and key performance indicators as well as other relevant financial and non-financial data are posted queries ontheresult or anyotheraspect oftheCompany, ifany. communicate withtheBoard. TheBoard Auditors Membersattend andStatutory AGM torespond totheShareholders’ Meetings. TheCompany’s General Meeting-s provide atransparent andopenplatformfortheshareholders to General Meeting (AGM). TheCompany alsoencourages shareholders’ active participation inAGM andotherGeneral the rightsofShareholders andtheShareholders' interests are primarilyensured through Grameenphone’s Annual The General Meeting oftheShareholders isthesupreme governing foruminGrameenphone. TheCompany recognises General Meeting on theCompany’s InvestorRelations section ofthewebsite: www.grameenphone.com All information provided toBSECandstockexchanges are immediately toShareholders madeavailable andthemarket z z z In accordance withthedisclosure requirements, theCompany follows thesethree mainformsofinformation disclosure: Information Disclosure the Company tomakeinformed decisions. andalsobeable policy isthatShareholders willbeinformed inaroutine mannerofallmajordevelopments thatimpactthebusinessof information disclosure andcommunication. Incompliance withcontinuous disclosure requirements, theCompany’s Shareholders regularly through anumberofforumsandpublications. TheCompany hasadopted adetailed policyon in theCompany, includingtheowners oftheCompany–the Shareholders. Information iscommunicated tothe We believe goodCorporate Governance involves opennessandtrustfulcooperation between allstakeholders involved Communications withShareholders stock exchanges&press releases. Event based disclosure –asandwhenrequired, ofadministrative andcorporate developments, usuallythrough Periodic disclosure –intheformofquarterly andyearly reporting offinancial results andotherissues; Continuous disclosure –whichisitscore method disclosure ofinformingthemarket andShareholders; andprimary Corporate Governance in Grameenphone

45 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 INTERNAL CONTROL OVER FINANCIAL REPORTING (ICFR)

In order to be a sustainable business organisation, Grameenphone is committed to maintain a high standard of ethics and transparency as well as continue to earn stakeholders trust and confidence. To uphold its commitment, Grameenphone has instituted internal controls over financial reporting and provide assurance on the accuracy of financial statements.

Grameenphone follows a 5. Information & Communication risk-based approach in • Provide information to the right person in sufficient detail and time designing and implementing • Enable employees to carry out effective internal controls and responsibilities monitors the effectiveness on 4. Monitoring regular basis. The entire financial • Processes that assess the quality, design and operation of controls reporting structure is divided in a timely manner • Ensure taking necessary corrective into 19 individual processes actions and annual risk assessment exercise is performed for each of 3. Control Activities • Policy & procedures that help to the processes. Considering the ensure management directives are carried out probability and the impact on Monitoring • Ensure necessary actions to be financial reporting, each process taken to address risk

is evaluated and categorised Control Activities 2. Risk Assessment into a three-point ordinal scale • Identify and assess relevant risks • Determine how the risk should (High, Medium, and Low). Based be mitigated

on risk assessment exercise, Information & Communication Risk Assessment 1. Control Environment internal controls are established • Set the tone of Management accordingly. • Foundation for all other components Control Environment of internal control

Figure 1: Components of Internal Control System (COSO Internal Control Framework) Operating effectiveness of all controls is monitored throughout the year on sampling basis. Control monitoring activities takes place Identify & Manage Adjust Fin Changes Reporting Risk in two different approaches – Self Assessment and Direct Testing.

For self-assessment, respective FEB control owners provide their 01 MAR JAN assertions on control performance 02 Year End through Positive Assurance System Assessment APR on monthly basis. Direct testing -Filling DEC is also divided into two phases –

Interim Testing and Year end Testing. Self Continuous MAY Scoping & Assessment performance External consultants from local Risk & Direct and NOV Assessment reputed audit firms is engaged for Testing monitoring independent review of the control

environment. JUN OCT Evaluation of

Control Design

04

Grameenphone has a dedicated JUL

SEP 03 Internal Control Team accountable AUG for conducting the monitoring activities related to internal control over financial reporting. The team is adequately resourced and empowered to deliver its Control Implement & responsibilities. Remediation Adjust Control

Figure 2: ICFR Routine in Grameenphone

46 Internal Control over Financial Reporting (ICFR) continues toeffectively promote theidentification, andenable managementandmonitoringofrisksacross theorganisation. evaluated bytheBoard andManagementonaregular basis.Thisistoensure thattheCompany’s riskmanagementframework its risk and the significant risks in the Company’s business were reviewed, monitored and reported and mitigating measures were During the financial year under review, the Company (with assistance of the Risk Management Forum) had conducted a review of in theCompany toensure active participation from different functional areas toincrease itseffectiveness. The ERM takes an integrated and holistic view of the risks facing the organisation. A RiskManagement Forum has been established regulators, andthesociety atlarge. Grameenphone creates value foritsstakeholders -includingcustomers, By identifying and proactively addressing risksandopportunities, impact, determining anaction strategy, andalsomonitoringprogress. opportunities), assessingtheminterms oflikelihoodandmagnitude or circumstances relevant to the Company's objectives (risks and methods andprocesses whichinvolves identifying particular events Enterprise RiskManagement(ERM)framework, whichincludesthe and minimiseimpacts.Grameenphone hasputinplace aneffective of thebusinesstoanacceptable soastomaximiseopportunities level, Grameenphone iscommitted tomitigate risksthatariseinthecourse enhancing Shareholders’ value. meet and compliance its legal responsibilities, thereby protecting and to and goals social and customer-centric financial, business, achieve Effective managementofrisksenhance theCompany’s abilityto business andthedynamicenvironment inwhichitoperates. The Company faces avariety ofrisksduetothecomplexityits MANAGEMENT ENTERPRISE RISK Technology Input: Internal andexternal auditreports, ICFRauditfindings,business review andhistorical events Sourcing Business Continuity Management (BCM)|RAFM|RiskandGovernance Operational risk People Figure 2:RiskManagementOrganisation forintegration Management Team Administrative Board ofDirectors Chief RiskOfficer Commercial Strategic 05 risk

04 RISK RESPONSE Figure 1:Enterprise RiskManagementProcess

CONTROL & MANAGEMENT ASSESSMENT RISK MONITORING Regulatory Regulatory PROCESS risk RISK Enterprise RiskManagement 01 03 Financial

risk

SETTING OBJECTIVE

EVENT IDENTIFICATION 02

47 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016

31 January 2017 31 January Audit Committee Chairperson Rokia Afzal Rahman For andonbehalfoftheBoard AuditCommittee ofGrameenphone Ltd. z z z z z z z z z z Major Activities oftheAudit Committee duringthereporting period z z z z major responsibilities oftheAuditCommittee are asfollows: The purpose, authority, composition, duties and responsibilities of the AuditCommittee are delineated in its Charter. of the Some Major Responsibilities oftheAuditCommittee occasions asrequired. Relevant headsofdivisionsandothermembers oftheManagementandinternal auditteam alsoattended themeetings on Secretary. and Company Executive Audit Officer, Internal Officer,Chief Financial of the weremeetings Chief Head the to invitees invitees. A record of the Members’ attendance at Audit Committee meetings during 2016 is set out on page 39. Permanent Mr. Hans Martin Hoegh Henrichsen (Chief Representative Officer, Telenor Group in Bangladesh) attended the meetings as special A total of07(seven) meetings were heldduring2016.Mr. Md.Ashraful Hassan(ManagingDirector, Grameen Telecom) and coherence andensures compliance withtheCorporate Governance Guidelinespromulgated bytheBSEC. Company Secretary, Mr. actsasSecretary totheCommittee. HossainSadat TheAuditCommittee, accordingly, performsin The IndependentDirector, Ms.RokiaAfzal RahmanactsasChairperson oftheCommittee. guidelines,the Asperregulatory 3. Tore Johnsen,Member 2. MShahjahan,Member 1. RokiaAfzal Rahman,Chairperson bythe promulgated Guidelines Governance the Corporate in Bangladesh Securities andExchangeCommission (BSEC).TheCommittee determined includes: as qualifications adequate possess members All The AuditCommittee ofGrameenphone comprises of02(two) Non-Executive Directors and01(one)IndependentDirector. Composition andMeetings responsibilities. Abrief oftheAuditCommittee anditsroles, responsibilities andfunctions are asfollows: The AuditCommittee ofGrameenphone, asoneofitsprimeBoard sub-committees, assists the Board indischarging itsgovernance COMMITTEE REPORT AUDIT Reviewed othermatters andincidentsofsignificance asperAudit Committee Charter. Reviewed andreceived report onthematters asperrequirement from theBangladeshSecurities andExchangeCommission (BSEC). Rahman Huq,Chartered Accountants, amemberfirmofKPMGforthe year 2017. Considered andmaderecommendation totheBoard ontheappointmentandremuneration auditors, Rahman ofstatutory Reviewed Management Letter issued bytheExternal Auditors intheirpresence. Reviewed compliance ofCode ofConduct oftheCompany. Reviewed andrecommended related transactions party forforeign remittance. Monitored thestatus ofimplementation ofauditaction plansandprovided guidance toensure timely completion ofaction plans. Discussed Internal Auditreports andfindingsguided completion ofannualauditplan. Approved theInternal AuditPlan,monitored theprogress andeffected revisions whennecessary. Reviewed andrecommended thequarterly andannualFinancialStatements fortheyear ended 31December 2016. material weaknessesandmonitorimplementation ofauditaction plans. and performance, structure, adequacy ofresources, andcompliance withprofessional standards. Examineauditfindings Exercise itsoversight ofthework ofGrameenphone Internal Audit.Review theeffectiveness ofinternal auditfunctions including oversee andevaluate auditors. theworks Review performed bystatutory permitted auditors. performed bystatutory non-audit services Recommend appointment,termination and determination auditors. Consider ofauditfees forstatutory thescope ofwork, and matters, andtheCompany’s processes formonitoringcompliance withlawsandregulations andtheCode ofConduct. auditing Review the adequacy andeffectiveness offinancialreporting process, internal control system, riskmanagement, review, the recommend thesametoBoard forapproval. satisfaction of its upon and results, financial other and Statements Financial quarterly and half-yearly annual, the Review Audit Committee Report

49 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016 FIVE YEARS’ FINANCIAL SUMMARY

2016 2015 2014 2013* 2012* Individual Consolidated Operational Results in million BDT Revenue 114,862 104,754 102,663 96,624 91,920 Operating Profit 41,566 36,964 36,896 33,199 33,675 Profit before tax 38,178 34,922 34,855 32,852 30,193 Net Profit after tax 22,526 19,707 19,803 14,702 17,505 Financial Position in million BDT Paid-up Capital 13,503 13,503 13,503 13,503 13,503 Shareholders' equity 33,572 30,625 31,365 31,141 35,458 Total assets 130,500 132,450 130,673 135,221 117,665 Total liabilities 96,927 101,824 99,308 104,080 82,207 Current assets 10,941 11,928 14,865 16,993 14,005 Current liabilities 68,079 67,625 61,402 78,580 63,060 Non current assets 119,558 120,522 115,808 118,227 103,660 Non current liabilities 28,848 34,199 37,906 25,500 19,148 Financial Ratios Current Asset to Current Liability 0.16 0.18 0.24 0.22 0.22 Debt to Equity 0.56 0.80 0.95 0.55 0.16 Operating Profit Margin 36% 35% 36% 34% 37% Net Profit Margin 20% 19% 19% 15% 19% Return on Equity 70% 64% 63% 44% 47% Return on Total Assets 17% 15% 15% 12% 15% Ordinary Shares Information Ordinary Shares outstanding (in million) 1,350 1,350 1,350 1,350 1,350 Face Value per share (BDT) 10 10 10 10 10 Cash Dividend on paid up capital1 175% 140% 160% 140% 140% Dividend payout1 105% 96% 109% 129% 108% NAV per Share2 (BDT) 24.86 22.68 23.23 23.06 26.26 Net Operating Cash Flow per Share3 (BDT) 34.18 28.73 23.15 27.46 22.23 Earnings Per Share3 (BDT) 16.68 14.59 14.67 10.89 12.96

*Gain/loss on disposal of property, plant and equipment has been included in operating profit. 1 Including proposed dividend 2 Based on Tk. 10 equivalent ordinary share outstanding at 31 December. 3 Based on weighted average number of share of Tk. 10 each.

50 Five Years' Financial Summary Revenue (million BDT) Operating Profit (million BDT) Net Profit After Tax (million BDT)

+2.0% +9.6% +0.2% +12.5% -0.5% +14.3% Grameenphone 2015 2015 2015 2016 2016 2016 2016 114,862 2016 41,566 2016 22,526

2015 104,754 2015 36,964 2015 19,707 Annual Report 2016 2014 102,663 2014 36,896 2014 19,803 2013 96,624 2013 33,199 2013 14,702 2012 91,920 2012 33,675 2012 17,505

CAPEX (million BDT) Total Assets (million BDT) Total Equity (million BDT) Overview

+27.1% +9.5% +1.4% -1.5% -2.4% +9.6%

2015 2015 2015 2016 2016 2016 2016 21,097 2016 130,500 2016 33,572 2015 19,269 2015 132,450 2015 30,625 2014 15,164 2014 130,673 2014 31,365 2013 29,925 2013 135,221 2013 31,141 2012 42,508 2012 117,665 2012 35,458 Business Performance

Net Operating Cash Flow Per Share (BDT) Net Asset Value Per Share (BDT) Earnings Per Share (BDT)

+24.1% +19.0% -2.4% +9.6% -0.5% +14.3%

2015 2015 2015 2016 2016 2016 Sustainability 2016 34.18 2016 24.86 2016 16.68 2015 28.73 2015 22.68 2015 14.59 2014 23.15 2014 23.23 2014 14.67 2013 27.46 2013 23.06 2013 10.89 2012 22.23 2012 26.26 2012 12.96 Governance Return on Assets % Return on Equity % Subscriber ('000)

+0.1pp +2.1pp +0.2pp +6.6pp +10.0% +2.2%

2015 2015 2015 2016 2016 2016 2016 17.1% 2016 70.2% 2016 57,954 2015 15.0% 2015 63.6% 2015 56,679 2014 14.9% 2014 63.4% 2014 51,504 Financial Analysis 2013 11.7% 2013 44.2% 2013 47,110 2012 15.5% 2012 47.1% 2012 40,021

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

-0.4pp +3.7pp -6.2% +4.3% +0.5% +5.8%

2015 2015 2015 Information Additional 2016 2016 2016 *2016 46.1% 2016 162 2016 258 2015 42.4% 2015 155 2015 244 2014 42.8% 2014 165 2014 243 2013 41.4% 2013 176 2013 249 2012 41.2% 2012 191 2012 236 * As of October 2016 * ARPU - Average Revenue Per User ** AMPU - Average Minutes Per User

Five Years' Financial Summary 51 Grameenphone Annual Report 2016 VALUE ADDED STATEMENT 2016 in '000 BDT

2016 % 2015 %

Value Added Revenue 114,862,160 104,754,372 Other income including interest income 419,337 583,258 Share of profit/(loss) of associate (223,815) 15,119 Impairment loss on investment in associate (486,828) - Indirect taxes 18,156,599 16,316,374 132,727,453 121,669,122 Less: Cost of network and services 37,219,020 36,137,287 Available for distribution 95,508,433 100% 85,531,835 100%

Distributions Employees 8,276,016 8.6% 7,817,894 9.1% Government 41,057,503 43.0% 37,619,937 44.0% Providers of finance: Financial institutions 2,650,357 2.8% 2,246,218 2.6% Shareholders 22,526,376 23.6% 18,840,106 22.0% 74,510,253 78.0% 66,524,156 77.8% Value Reinvested and Retained Depreciation and amortisation 20,998,180 22.0% 19,007,679 22.2% Retained profit - - 20,998,180 22.0% 19,007,679 22.2% 95,508,433 100% 85,531,835 100%

Distribution of Value Added (2016 & 2015)

2016 2015

l Employees 8.6% l Employees 9.1%

l Government 43.0% l Government 44.0%

l Financial institutions 2.8% l Financial institutions 2.6%

l Shareholders 23.6% l Shareholders 22.0%

l Depreciation & Amortisation 22.0% l Depreciation & Amortisation 22.2%

52 Value Added Statement 2016 Year-wise Contribution totheNational Exchequer asof31December 2016 development andgrowth. With the payment of taxes and the investment in the network, Grameenphone is making a significant contribution to the country’s vendors, contractors andotherbusinesspartners. Grameenphone fortheirlivelihood,workingretailers, forthedealers, electronic reload andscratch card retail suppliers, outlets, 2016, theCompany had2,651permanentfulltime employees more are while than750,000people directly dependenton Grameenphone hasalsogenerated direct andindirect employment foralarge over theyears. numberofpeople Asat31December largest corporate taxpayer forthelastten inthecountry years. of local andforeign staff income taxes andwithholdingtaxes onoperating expenditure payments. Grameenphone hasbeen the billion onaccount of3Glicense andspectrum fee for 10MHzin2013-14andBDT 48.0billionasindirect payments onaccount 33.8 billiononaccount ofrenewal of2Glicense andspectrum in2011-13,purchase ofadditional spectrum in2008andBDT 17.2 and duties through National Board ofRevenue (NBR)andBangladeshTelecommunication Commission Regulatory (BTRC), BDT 58.6 billionwas madein2016alone.Outoftotal BDT 523.4billion,BDT 475.4billion was madeonaccount ofdirect tax, VAT The collective contribution to the National Exchequer since inception until December 2016 was BDT 523.4billion,of which BDT the NationalExchequer Contribution to n T n N n B n n L W i o c T B i t t e R R h a n C h l s

o e P l

a d & i y

n S m g p

e e T n a c t t x r e u s m 1996-2 1,512 1,070 1,512 364 78 0 0 0 1 1,646 1,035 2001 , 575 6 36 4 6 2 2,792 1,999 2002 , 712 82 7 9 2 4 4,366 3,572 2003 650 , 143 3 6 6 6 5,350 6,774 2004 1,168 256 , 7 7 4 1 10,405 0 2005 1,239 8,721 445 , 4 0 5 1 15,397 5 12,126 2,523 2006 748 , 3 9 7 2 24,405 18,509 4 4,766 2007 1,130 , 4 0 5 3 21,739 6,204 2,590 31,718 2008 1 1,185 , 7 1 8 2 28,704 20,140 8 3,836 3,330 2009 1,398 , 7 0 4 3 36,017 29,134 4,308 2,575 6 2010 , 0 1 7 5 13,500 59,289 33,545 20011 9 5,138 7,107 , 2 8 9 Contribution tothe National Exchequer 6 62,667 36,803 13,207 20012 6,659 5,998 2 , 6 6 7 6 69,076 38,159 17,522 20013 9 5,933 7,461 , 0 7 6 5 38,564 58,915 20014 6,858 8 6,173 7,321 , 9 1 5 Figures inBDT million 5 36,922 20015 6,909 51,130 7,300 1 , 1 3 0 5 42,906 58,584 8 7,904 7,774 2016 , 5 8 4

53 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016

sector efficiency – can help accelerate and sustain the growth. The right guidance from the Government and an enthusiastic an entrepreneurship culture can bethepushthatBangladesh needs and tobecome astrong economy inthecoming decade. Government the from guidance right The growth. the sustain and accelerate help can – efficiency sector Strong structural reforms, implementation capacity and good governance – boosting energy, infrastructure, financial and private Looking ahead,Bangladeshneeds tofocuson agrowth agendaifthe growth momentum is tobesustained andstrengthened. development projects,implement narrow base,highcost export ofdoingbusiness,poorgovernance etc. economy faced whichincludestagnant private tough challenges, investmentfollowed byweakinstitutional capacity to the cost oflivinginBangladeshrose to6.47%in2016from theprevious year. Despite allthese goodsigns,theBangladesh against USdollar. alsohitarecord Thereserve ofUSD32billionin2016.AspertheConsumers Association ofBangladesh survey, Statistics (BBS),thepercapita income inBangladeshrose from USD1,190to1,314in2014-15.Thelocal currency was stable Robust investmentandsolidconsumption havekepttheeconomy onasolidfooting. Asestimated bytheBangladeshBureau of has and made businessesconfident of taking onnew challenges. economy the stabilising in role important an played rates interest declining and reserves rising disinflation, stability, consistent GDPgrowth path–more than6%p.a.over thelast10years despite strugglingagainstallodds.Continued macro Bangladesh’s economy remained strong andresilient in2016despite external sawa andinternalThecountry challenges. 2016- ASnapshotofStrong Socio-Economic Foundation towardssupport andchildren’s sports arts, causes. To strengthen itscommitment tocreate apositive impacttosociety andtheoperating environment, Grameenphone extended its GrameenphoneWhile maintained the business focus, Sustainability also remained a focus area as an integral of its business. part by re-verification biometric devices. biometric the during industry the Grameenphone alsotookastrong position toget closetoourcustomers byenabling75,000retailers across with thecountry in stories success notable most completing the of one created Grameenphone the National Exchequer duringtheperiodinformoftaxes, VAT, duties andlicense fees. to theNational Exchequer, Grameenphone paidBDT 58.6billion,whichrepresent about51%ofGrameenphone total revenue to the Government andotherorganisations more totake their digitaltothepeople effectively. services Beingthe largest contributor higher volume ofdata andvoice. Thisexpansionnotonlyconnects with3Gbutalsoenables ofthecountry almostallthepeople The Company 2016. in provider service 3G leading a as position its solidified Grameenphone services, 3G providing in mover first the As and expanded on,pushingtheboundariesofcommunication andcommerce inBangladeshthroughout theyear. users makingitthemostdownloaded digital application inthecountry. Customerfocused products were andservices launched pace towards digitalising the thenation. WowBox, application thenumberonelifestyle ofthecountry, up reached more than6million picked solutions entertainment and agriculture education, health, featuring services digital of wave first The portfolio. Competitive enriched offeringswithawidespectrum Grameenphone’s ofqualitydigitalhasfurther services Digital Lifestyle million in2016. and increasing data volume consumption. TheCompany acquired 8.8millioninternet users, taking theyear endbaseto24.54 share improved to46.1%attheendofOctober2016.Throughout theyear, data continued togrow withhealthyuseraddition Grameenphone closed theyear withstronger subscriberbaseof58million,a2.2%growth from year 2015.Notably, SIMmarket has accelerated expansion thisgrowth. coverage 3G on investment continued and products customer-centric Simplified portfolio. product the across The Company reported record revenue ofBDT 114.9billion fortheyear 2016,upby9.6%YoY, supported bystrong growth growth momentum in place. Consolidation in performance was achieved through double digit growth in the key financial metrics. As acontinuation ofthegrowth trend, 2016was ayear ofexcellence proving tobeasolidyear forGrameenphone withstrong its maintaining inclusivegrowth. while portfolio service diversified and country the across footprint its expanded Grameenphone as leadership and excellence service innovation, On behalfoftheBoard ofDirectors andManagement, Iwelcome you alltothe20 Dear Shareholders, For theYear Ended 31December 2016 DIRECTORS’ REPORT This year marksthe20 The Journey ofGrameenphone: ATale of20Years Statements oftheCompany, fortheyear ended 31December 2016foryour valued consideration, approval andadoption. Ltd. We together Report, withtheAudited Financial havethepleasuretoplace herewith theDirectors’ andtheAuditor's Report invested BDT 21.1billionduringtheyear rollout forfurther of2G&3Gsites andcapacity enhancement tocater for re-registration for more than97%ofitssubscriberbase.We pressed aheadwithasolution tooperate. thatwas simple th anniversary ofGrameenphone’s anniversary inception. Thistwo decades ofpioneering journey hasbeen astory th AnnualGeneral Meeting (AGM) ofGrameenphone Directors' Report

55 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Telecommunication Industry Scenario The mobile industry is in the midst of a transformation. The industry has witnessed a shift from voice to data service. This shift is redefining both the telecom industry and the society at large. In the face of the rapidly evolving mobile industry, 2016 has been a landmark year for the telecommunication sector in Bangladesh and possibly one of the most important in recent past.

The year started with ‘Biometric SIM re-registration’, an enormous task to ensure the ownership of cellular phone number to curb telephony crimes. Grameenphone performed better than the industry in a move that took its market share to 46.1% at the end of October 2016. Reduced price of smart phones significantly increased penetration in the rural and suburban areas, resulting in a positive impact on internet data consumption.

During the year, Grameenphone was deeply focused on expanding 3G coverage across the country. With the proliferation of internet, Value Added Services (VAS) and e-Commerce has also been taking new shape.

The telecom sector has matured gradually and new business dynamics have emerged. The much awaited merger between Robi and Airtel finally took place and is expected to add new dimension in the competitive landscape. Licensing for Mobile Network Operators (MNO) in Mobile Financial Services (MFS) could not gain much momentum despite multilevel engagement. Bangladesh Bank has been playing a cautious and conservative role in the domain of MFS. It has circulated draft MFS guidelines where the MNOs are expected to take part in a regulator prescribed consortium of banks and MNOs but we advocate for a market driven partnership model.

Telecom Regulatory Environment The Bangladesh Telecommunication Regulatory Commission (BTRC) continued to support and facilitate the consolidation of a sustainable techno-economic industry framework, steering towards the vision of Digital Bangladesh.

Throughout the year, the regulatory authorities took numerous initiatives to reshape the sector to make it more compatible with the ever-changing landscape as well as to address the Government’s digital vision. The rigorous work on the National Telecom Policy (NTP), Tower Sharing Licensing Guidelines, and combat against cyber crime and pornography are a few among many initiatives. A well formulated and future leaning Telecom Policy is a foundation for the telecom sector. As a guardian of the sector, BTRC is also responsible for ensuring an investment friendly environment and to assist upholding of social values.

The telecom regulatory environment, however, has remained unpredictable in the context of unresolved and long-pending regulatory issues. Time and again, the telecom industry has sought predictability and certainty in the regulatory regime for a favourable and investment-friendly climate. To cope with the changing landscape, the Government regulatory authorities have persisted their efforts to strengthen their grip on the industry. Additionally, the BTRC has initiated a fresh audit on Grameenphone, whereas issues from the previous audit (for the period from inception to 2011) are still pending at the High Court. Grameenphone is committed to facilitate a lawful, procedurally- proper and transparent BTRC Audit.

In spite of multilevel engagements from MNOs, the tax regime for the telecom sector remained unchanged. High taxation, instability and unpredictability in the taxation regime are still considered to be major barriers for the expansion of the industry. Moreover, increase of supplementary duty from 3% to 5% and introduction of 1% surcharge on mobile usage, added additional burden on the customers in the 2016-17 Fiscal Year.

Industry Outlook and Possible Future Developments 2016 witnessed the first ever large scale merger in the Bangladesh telecom sector. The joint strengths of Robi and Airtel have set the stage for a stronger number two mobile operator in Bangladesh. On the backdrop of this new market dynamic, competition is expected to continue to intensify in 2017.

Increasing competition, along with wider adoption of the digitalised lifestyle, will lead to even more innovative products and services in the coming years. Data hungry applications will boost the internet adoption rate that will enable the consumers to find more value adding services. Concurrently, the boost in internet access is expected to leave positive impact on VAS and e-Commerce. Operators will be investing more on 3G coverage in the deep rural areas in parallel with improving the quality of service. Additionally, if the demands of MNOs are adequately met through the expected 2017 spectrum auction, this will provide another big boost for investments in /LTE. To increase the value of communication services, operators will be looking to venture into new partnerships with other vertical industries. The e-commerce market is flourishing and consumer confidence in mobile financial services is gradually increasing, which will lead to a significant impact on the trade of digital goods and services, provided a favourable policy and framework ‘ecosystem’ is in place. Cyber security will be one of the major areas where the Government and the industry will need to work hand in hand in the coming days. The cooperation across the verticals will be crucial, both at the policy and at the industry level to develop and stimulate the sector as a whole.

Grameenphone appreciates the regulator’s positive approach in inviting sectoral opinion on various matters. Grameenphone is also hopeful that the regulator will be cordial and cooperative in resolving different long-pending issues in the coming period and embark on a sustainable sectoral ecosystem. Positive support from the Government will build confidence among investors and

56 Directors' Report customers indeep rural markets aschannelswere expanded tobringtelecommunication totheirdoorstep. services is responsibleforendtocommercial activities oftherespective markets. TheBusinessCircleteams havecome closerto the BusinessCircleconcept anditssuccessful roll-out in2016hasplayed apivotal roleinthisregard. Each BusinessCircle Grameenphone’s customers toget closertodigitalandon-boarded services tothenew Digital Bangladesh.Inception of Grameenphone hastaken acrucialstep forward inexpandingitsdistribution qualityandcoverage in2016.Thisishelping foritscustomers.services Tonic, themaster planofstaying well,reached 2millioncustomers inDecember 2016. Grameenphone revamped under the name ‘Tonic’ its Healthline (789) service to provide better and advanced health care of theirintellectual property. andGPMusichascreateddigital presence lifestyle amuchdeserving inthemusicindustry, protecting while artists againstpiracy digitise thecustomerjourney inabetter way. Inthedigital arena, services WowBox hasbrought anew way toboostthecustomer become thebestin classe-commerce inBangladeshandourdigital service customercare initiatives are showing usthepathto growing Grameenphone’s onestopsolution app‘MyGP’became choice thenumberoneappinBangladeshaspeople’s andisstill reduce numberofcomplaints bytwo-third compared tolastyear. theCompanyservices, focused onreducing thecomplaints andaddressing customerpainpoints.TheCompany to was alsoable offered operator specific attractive tariffs for its customers, which reduced the expense up to 98% in some cases. In value added Grameenphone also modified its roaming tariff, which was on high demand from our customers. For the first time, Grameenphone Q3 ’16onwards. more relevant forcustomers. 1GBand2 weekly packs,introduced inQ2’16,helped toboostdata revenue growth from portfolio product data the made and products its simplified Grameenphone further, agenda simplification product its Pushing To keep themostrelevant offers fortherespective customers, theproduct was portfolio alsoreduced by12%. customers’ pointofview. Inlinewiththis,more transparent pricingregime was introduced in2016foralldata andminute packs. lives. Grameenphone started backandtooksomeboldsteps thejourney ofsimplicityawhile focusingonfrom the The core strength ofGrameenphone’s products is simplicity, offering the mostrelevant products toitscustomers to simplify their on customerprofile; atruepostpaid connection whichisafirst inthis country. crossed more than5milliondownloads. Grameenphone alsolaunched new postpaidproduct whichhasautocredit facility based has product core own your make to industry the in app first the Flexiplan; results. encouraging showed also products voice for forcustomers torememberthe hassle various activation codes. Usingdigital channels asamedium toreach outtocustomers customer-centric products and to modify existing products to make them more user-friendly. Recharge based activation removed In 2016,Grameenphone managed continuous growth incore revenue streams likevoice The focuswas service. todevelop customer-centricity, differentiation, andvalue byupgraded formoney; allenabled infrastructure. across allbusiness segments, includingthedigital arena, viaafocused, forward-looking strategy pivoted around innovation, capitalise onthedevelopments inanincreasingly digitalised life.In2016,Grameenphone asserted position further itsleadership Grameenphone hasalways been aheadofthecompetition, quicklyadapting tochangeandpositioning itsbusinessmodelto Driving SimplicityandHeadingTowards aDigital World *Source: DhakaStockExchange representing 13.6%oftheDSE’stotal equity market capitalisation. was BDT 224.5.Grameenphone’s market capitalisation on29December 2016stoodatBDT 383.62billion(BDT 38,362crore), BDT 45.7million(BDT 4.57crore). Duringtheyear, highestvalue ofGrameenphone share price was BDT 292andthelowest Grameenphone share price increased by12.3%,closingatBDT 284.1attheyear-end withadailyaverage turnover value of drop in2015andclosed at5036.04points.Dailyaverage turnover value increased by17.0%compared tothepreceding year. 4.8% a against points) (406.4 8.8% gained DSEX index weighted float free and broad the (DSE), Exchange Stock Dhaka the On capital the benefited factors macro-economic market duringtheyear. and stability Political market. the in underperformed companies multinational dominated themarket performance withstocksinthebankingsector posting healthyreturns. Foreign investmentimproved while capital market. From May 2016,however, themarket experienced analmostuninterrupted upturn.Smallcapitalised companies The year 2016sawaturnaround intheBangladeshcapital market. Benignperformance marked thebeginning of2016forthe Capital 2016 Market Overview and MNOscan move together hand inhand,the‘Digital Bangladesh’visionwould notbefar t strongly; TheonestopUSSDhelpline*121#isnow beingused by15millioncustomers. Grameenphone’s OnlineShophas Directors' Report

57 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Enhancing Customer Experience Grameenphone is always striving to provide better customer experience, emphasising on customer value and investing in enhanced quality of services. Delighting customers through service excellence across all touch points remained our focus in 2016. A highly energetic team is working 24/7, 365 days per year to make the customers’ lives easier and more enjoyable.

During the year, the Company made progress in customer service transformation and upgraded the customer care system. As a result, the customer perception has improved and the company was able to maintain industry leading customer satisfaction rates along with the lowest complaint rates. Grameenphone also observed “Customer First Day” in 2016, a major event to directly interact with the customers to reassure them about Grameenphone’s commitment to better services and social empowerment. The focus of the event was generating awareness around digital bullying.

Our Adjacent Business i) Financial Services Grameenphone strongly believes in the impact that mobile financial services can have on driving financial inclusion in Bangladesh. Mobile financial services play an important role in Grameenphone’s endeavour to ‘empower society’ with access to financial solutions. In that context, the Company continued to expand its Mobile Financial Service (MFS) activities throughout 2016. During the year, MFS experienced strong YoY growth, strengthened partnerships with banks through joint campaigns and communications activities in addition to creating awareness around the services. Grameenphone has been providing its partner banks’ with financial services through its mobile network and distribution reach. In 2016, Grameenphone rebranded its Financial Services under the brand name ‘GPAY’ and introduced a digital user interface, the GPAY App. Today, Grameenphone’s own wallet can be used for utility bill payments, mobile top-ups and train tickets.

The MFS Regulatory landscape is in a transition phase, which has also led to a delay in finalisation of MFS guideline. Though, unpredictability around the final regulations may effect Grameenphone’s future strategy and actions the Company firmly believes in the future of this industry and the potential impact it can bring to Bangladesh. We therefore intend to engage strongly and expand our activities in the payment space.

ii) Infrastructure Services Following the BTRC directives to make optimal use of national resources and reduce cost by sharing infrastructure, Grameenphone is providing ‘Shared Telecom Infrastructure’ products and services with other telecom operators as well as other businesses like WiMAX and NTTN operators. Currently, the Company has agreements with all the major telecom operators, NTTNs and WiMAX operators. Grameenphone ended the year with a few thousands shared sites with different telecom operators; although the Robi and Airtel merger has had some negative impact on the site sharing numbers. Apart from sharing passive telecommunication infrastructure with others, Grameenphone sourced more than a thousand sites from different mobile operators in 2016 in order to reduce cost. Whilst passive infrastructure sharing is being practiced by all the telecom operators, with the best- maintained network infrastructure Grameenphone has retained its leading role in infrastructure sharing. The telecom infrastructure service sector may witness a transformation in 2017 as the regulator is actively considering introducing tower company regulations and to issue two tower company licenses, where MNOs are anticipated to be barred from taking part.

Solid Network Growth Focusing on the Future In 2016, Grameenphone focused on meeting its customers’ increased demand for data services. To meet the exponential data usage growth, Grameenphone continued to invest in expanding network reach and to upgrade quality to ensure a superior customer experience. The Company established 10,000 3G sites throughout the country in just the first six months of the year taking the number sites to 10,548 at the end of the year, covering more than 90% of the population. 93% of the consumed data volume is now generated from the 3G network with threefold consumption increase. Grameenphone enhanced its network coverage further by deploying more than 1800 2G coverage sites, including the acquisition of more than 1,100 shared sites this year. One of the major challenges of technology was to support the biometric re-registration process in a smooth way. Grameenphone was the pioneer in delivering the re-registration platform, well ahead of its competitors. This helped the Company achieve the highest proportion of re-registrations among the MNOs. More than 2 million subscriber registrations were done through the Blue-Box platform in a single day on 30 April 2016, which was the initial deadline for re-registration. A number of actions were taken to improve internet user experience through the deployment of various features. To enhance 3G coverage, 2 (two) transmitter, 4 (four) receiver topology was deployed in the network at the beginning of the year. A 3G sector split was done to improve user data speed experience. Subscribers are enjoying average 3G data speed of more than 1.3 Mbps. Call drop rate for both 2G & 3G have been lowered through major feature deployment and optimisation initiatives. All through the year, the call drop rate was well below 1% and much below the BTRC guideline of 2% as well as the most commonly used international standard of 3%. Additionally, major simplification and optimisations were done in the IT systems. As a result, almost 100% of package provisioning is now being done within a minute. The transformation toward becoming a digital service provider required new platforms for digital services to be introduced. Grameenphone launched its Contextual Marketing Platform, which is

58 Directors' Report c. b. a. governance andtothatend the Directors confirm that: tothebestoftheirknowledge good of part a as position and performance financial Company’s the of view fair and true a present to responsible is Board The Directors’ Responsibilities forFinancialStatements involvement andengagementfrom employees inallregional circles,whichresulted inapositive impact. OHS culture; campaigns, events, healthcheck-ups, healthy foodhabits,physical activities and otherprograms garnered huge Grameenphone also continues to strengthen companywide formal employee wellness programs. With a view to building an travel safety across theorganisation. 15awareness sessionswere completed in2016. and best practices. The rise of road accidents recently prompted rollout of an extensive safety awareness campaign on road & maintains routine control riskassessmentand implements mechanisms onwork place hazards as perinternational guidelines of plantsandfacilities, andbyimplementingsafesystems andprocedures throughout theorganisation. Grameenphone also Grameenphone puts utmost priority on occupational safety by promoting positive behaviour from employees, in the design and healthyworking environment thatensures productivity andefficiency. Grameenphone’s business. Grameenphone focuses on continuous improvement a safe of health, safety and wellness to enable Ensuring the safety –andofbusinesspartners,vendors andwell-beingofitsown andvisitors people –isintegral to part Employee Wellness andOccupational Health&Safety (OHS) onpage20. Report Congress in2014.Details ontheCompany’s climate activities havebeen provided intheClimate Changesection oftheAnnual operator inBangladesh.Anotherbigrecognition forGrameenphone was theGSMAGreen Award Mobile attheGSMAWorld phone mobile any for first a 2016, November in certification 14001:2004 ISO received Grameenphone effort, the of recognition As acontinuous efforttowards agreener future, theCompany adopted anEnvironment ManagementSystem (EMS)in2010.In efforts inrespectin thecountry’s tooffsetting theeffects ofglobalwarming. ultimatelyenergy-efficient environment-friendly network, which an and solutions aids for enhanced sustainable of deployment first Grameenphone’s environment. the on business its of priority istotake responsibility forthecarbon emissions(CO impact the minimise to responsibility huge a has Grameenphone Grameenphone believes thatclimate changeisareal threat totheworld. Asthelargest operator mobile inBangladesh, Working foraGreen Future provided intheSustainability Initiatives Impactsection toDriveSocial oftheAnnualReport. enthusiastic employee volunteers. Detailed information ontheinitiatives oftheCompany towards Sustainability activities is for socialandeconomic betterment ofthecommunity through several Sustainability programs and active participation from In thelastone year, Grameenphone hasundertaken several initiatives development sustainable andinclusivegrowth tosupport Technology. vigour duringtheyear withathrustinthearea ofeducation, health,childonlinesafety andenvironment through Information is embedded intothebusiness strategy andoperational policies. Grameenphone pursued Sustainability initiatives withrenewed Driven byitsmissionandtheguidingphilosophy, Grameenphone focusesonSustainability asanintegral ofitsbusinessthat part Sustainability Initiatives Impact toDriveSocial become thefavourite incustomers’ partner digital life. to journey transformation our in efforts its continue to confidence Grameenphone gives This readiness. change and centricity interventions across theorganisation, Grameenphone toimprove was able employee itsleadership, effectiveness, customer- line In digitally. connected being of benefit full get with that, Grameenphone continuedcustomers to invest inbuilding capabilities and creating therightculture forthefuture. Withproper help to people its of commitment and ability the on depends communication, toimprove everyone enable theirlives,buildsocieties andsecure abetter future forall.TheCompany’s success Grameenphone hasapassionate team of2,651employees withthecommon ambition toprovide thepower ofdigital Becoming Future ReadyThrough Effective Interventions governance was established toprotect bothcustomerandcorporate information from cyberthreats. buildingthenetworkWhile forfuture, itwas alsoimportant tohaveourfocusoncybersecurity. In2016information security inthedigital journeymilestone andalsoinlinewiththeDigital Bangladesh ambition. expected togrow tobeafuturistic digital marketing platformforGrameenphone’s businesscustomers. TheAPIgateway was another reducing CO accounting estimates are based onreasonable andprudentjudgments; Appropriate accounting policieshavebeen consistently applied inpreparation oftheFinancialStatements andthatthe Proper booksofaccount oftheCompany havebeen maintained; operations, cash flows andchangesin equity; The FinancialStatements, prepared bytheManagementofCompany, present fairly itsstate ofaffairs, theresult ofits 2 intensity by30% within2017,considering 2011asthebaseline.Grameenphone isdedicated tothecontinuous 2 ) generated byitsown operations. Grameenphone set atarget of Directors' Report

59 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

d. International Financial Reporting Standards (IFRSs), as applicable in Bangladesh, 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 doubt upon the Company’s ability to continue as a going concern.

As required under BSEC’s Corporate Governance Guidelines, the Directors further confirm that the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) have certified to the Board the following: i. they have reviewed the Financial Statements and that these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii. they have reviewed the financial statements and believe that these statements together present a true and fair view of the Company’s affairs and are in compliance with the existing accounting standards and applicable laws; and iii. there are, to the best of their knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the Company’s Code of Conduct.

Corporate Governance The world of telecommunication is fast taking a life shaping dimension and an advanced and improved Corporate Governance practice is an essential factor to success. As a public listed company, Grameenphone believes that the Board of Directors of the Company has a pivotal role to play in meeting all stakeholders’ interests. The Board of Directors and the Management Team of Grameenphone are, as such, committed to maintaining effective Corporate Governance through a culture of accountability, transparency and well-versed policies and procedures to protect the interests of its shareholders and enhance long-term shareholder value.

In line with the same, the Company has complied with the conditions as stipulated in the Corporate Governance Guidelines issued on 07 August 2012 by BSEC. In this connection, the status of compliance has been annexed to this report as Annexure-I. Further, a certificate of compliance from M/s Al-Muqtadir Associates, Chartered Secretaries & Consultants, confirming compliance of conditions of Corporate Governance, as stipulated under condition 7(i) of the BSEC Guidelines is also annexed to this report as Annexure-IV.

Other Disclosure/Statements Pursuant to the Provisions of the BSEC’s Corporate Governance Guidelines 2012

• Segment/Product Wise Performance Grameenphone essentially provides similar products and services to customers across the country. Grameenphone reviews revenue performance of different services which have been disclosed under notes to the Financial Statements.

Grameenphone posted BDT 114.9 billion of total revenue for the year 2016 with 9.6% increase compared to the previous year. The growth in revenue was mainly driven by data, voice and bundle, partly offset by lower interconnection revenue. Infrastructure services, mobile financial services and device sales had considerable contribution in yearly revenue growth. Voice revenue has increased by 5.1% from 2015 due to a 21.0% increase in outgoing minutes driven by promotional tariff in voice bundles and triggers. Figures in BDT Million

+46.7% -12.8% +69.7% +34.2% -7.3% 701 1,596 1,361 482 +5.1% 5,914 3,740 114,862

104,754

+9.6% 10,108

Revenue Growth

2015 Voice traffic Data Customer Other Revenue Interconnection VAS and SMS 2016 Equipment

60 Directors' Report z z z z z z z z z z z (2015: BDT 14.59). as 2015 to compared revenue growth outpaced 14.3% Opexgrowth during2016.Asaresult, EarningsPer Share (EPS) fortheyear 2016stoodatBDT by 16.68 increased tax after profit net and 18.8%) (2015: 19.6% was 2016 year the for margin profit Net increased byBDT 4.6billionover 2015.Profit before tax alsoincreased byBDT 3.3billion over 2015. 2016 year the for profit operating expenses, operating in growth the to compared growth revenue higher the of effect an As retirementvoluntary scheme(VRS), offset partly bylower operation &maintenance andsubscriberacquisition cost. depreciation &amortisation, higherenergy andrent cost duetoincrease innumberof2G(1,803)and3G(4,725) sites and Operating expensefor2016was BDT 73.3 billionwith8.1%increase compared to2015.Theincrease ismainlyduetohigher commissiondealers’ &marketing expense,revenue sharing &frequency charges toregulator anddepreciation &amortisation. Operating expensesconsist ofmaterial cost, personnel expense,network operation andmaintenance, selling&distribution cost, • Review onCost Gross ofGoodsSold, Profit Margin andNet Profit Margin VAS andSMSincludesContent SMSandMMSrevenue. service, VAS andSMSrevenue fellby7.3%from 2015mainlyfrom content service. local operators. Also,higheron-net calls tothedecrease haveled ininterconnection revenue. Interconnection revenue was lower in2016compared to2015following adecrease inincoming minutes from international and Interconnection revenue is generated from the incoming traffic through the calls generated from outside Grameenphone network. revenueOther mobile includesrevenues mainlyfrom telecom infrastructure financialservices etc. sharing,mobile devices,Revenue from ofmobile i.e.handsets customerequipment mainlyincludessale andbranded internet modems. sites in2016. growth indata usagevolume in2016. This data growth through was enabled aggressive 3Gcoverage expansionbyadding4,725 Data revenue hasincreased by69.7%from 2015mainlydrivenby56.1% growth data users inthenumberofmobile and167.9%

The financial results of the Company have continued to improve since the IPO in 2009 as reflected in the yearly Financial yearly the in reflected as 2009 in IPO the since improve to continued have Company the of results financial The transactions havebeen disclosed innote 38totheFinancialStatements asperrequirements ofIAS24,Related Party Disclosures. All transactions withrelated parties havebeen entered basis.Details ofrelated intoonanarms-length parties andrelated party Shareholding pattern oftheCompany as onDecember 31,2016is shown inAnnexure-III ofthisreport. The attendance records oftheDirectors are shown in Annexure-II to this report. During 2016, a total Board of 11 (eleven) meetings were held, which met requirements the regulatory in this respect. Grameenphone hasdeclared interim dividendandrecommended finaldividendforthe year 2016. The key operating andfinancial data for the lastfive years has onpage50. been disclosed inthisAnnualReport meetings are BDT 875,840(2015:BDT 793,730). Sub-Committee meetings. During the year 2016, attendance fees in connection with Board and Board Sub-Committee No remuneration isgiventotheDirectors oftheBoard from apart attendance fees inconnection withBoard andBoard Significant deviations from the last year’s operating results have been highlighted and explained in various places in this report. No significant variations haveoccurred between quarterly and final financial performances oftheCompany during 2016. loss’ intheFinancialStatements. Accordingly, nogainorloss hasbeen presented as‘extraordinary gainorloss’intheFinancialStatements. As perIAS1,Presentation ofFinancialStatements, noitems ofincome andexpenseare presented as‘extraordinary gainor reported totheregulators. equity instrumenthasbeen Nofurther issued since then. The Grameenphone Initial Public Offering(IPO) was madein2009 andthefundsraised were utilised by30June2010as n Op e 36,964 r at 3 2 5 i 0 n . g 3 1

P 5 % ro fi t

( M n

BD T ) nOp e r at i 41,566 n 3 g 2 6

0 P . ro 2 1 6 fi % t

M arg i n 19,707 1 2 8 0 . 8 1 5 % n N P A T

( M n

BD T ) nN P A T

M arg 22,526 1 i 2 n 9 0 . 6 1 6 % Directors' Report Statements. Statements.

61 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Annual Results and Allocations The Directors take pleasure in reporting the financial results of the Company for the year ending 31 December 2016 and recommend the appropriation as mentioned in the ‘Appropriation of Profit’ table below: Figures in BDT Million 2016 2015 Profit available for Appropriation* Profit/ (Loss) after tax 23,099 19,694 Other comprehensive income (loss), net of tax 0 (867) Un-appropriated profit brought forward from previous year 8,693 9,445 Total Amount available for Appropriation 31,792 28,272 Appropriation Final Dividend Paid for Previous Year 8,102 8,777 Interim Dividend Paid for Current Year 11,478 10,802 Closing Retained Earnings at year end (before Proposed Final Dividend) 12,213 8,693 Proposed Final Dividend for the year (2016: 90% cash and 2015: 60% cash) 12,153 8,102 Retained Earnings after Proposed Dividend 60 591

*Based on separate Financial Statements of Grameenphone Ltd.

Contribution to the National Exchequer Being one of the largest contributors to the National Exchequer for the last several consecutive years, the collective contribution of Grameenphone from inception up to December 2016 was BDT 523.4 billion. During 2016 alone, the Company contributed BDT 58.6 billion to the National Exchequer which represents about 51% of Grameenphone’s total revenue of 2016. Grameenphone has paid BDT 16.2 billion corporate taxes during 2016.

Dividend For the year ended 31 December 2016, the Board of Directors of the Company has paid an Interim Cash Dividend @ 85% of the paid-up capital amounting to BDT 11,477,550,187 which was BDT 8.5 per share of BDT 10.00 each. Now, the Directors are pleased to recommend a Final Cash Dividend @ 90% of the paid-up capital amounting to BDT 12,152,700,198 which is BDT 9 per share of BDT 10 each for the year 2016 out of the divisible profits of the Company for consideration and approval of the Shareholders for distribution. Inclusive of the Interim Dividend of 85% paid already, this would make a cumulative total dividend @ 175% of the paid-up capital of the Company which represents 105% of the Profit After Tax for the year 2016 amounting to BDT 23,630,250,385.

The above recommendation of dividend is as per the Board approved dividend policy.

Board of Directors The composition of the Board of Directors who held office during the year was as below:

1. Mr. Christopher Adam Laska, Telenor Mobile Communications AS, Director and Chairman (effective from 29 September 2016) 2. Mr. Hans Martin Hoegh Henrichsen, Telenor Mobile Communications AS, Director 3. Mr. Haakon Bruaset Kjoel, Telenor Mobile Communications AS, Director 4. Mr. Oivind Burdal, Telenor Mobile Communications AS, Director (effective from 18 May 2016) 5. Mr. Tore Johnsen, Telenor Mobile Communications AS, Director 6. Mr. M Shahjahan, Grameen Telecom, Director 7. Mr. Md. Ashraful Hassan, Grameen Telecom, Director 8. Ms. Parveen Mahmud, Grameen Telecom, Director 9. Ms. Rokia Afzal Rahman, Independent Director 10. Prof. (Dr.) Jamilur Reza Choudhury, Independent Director (effective from 15 June 2016)

62 Directors' Report discussed more elaborately atthe‘Enterprise RiskManagement’section onpage 47. ofthe AnnualReport and set action plansontherisksareal-time basisandinaccordance withtherisk managementframeworks. Thisaspect is Grameenphone’s comprehensive risk management system is devisedthe Company to enable torecognise, appraise, review strategic and enterprise-level risks that might affect the business, operations, liquidity, financial position or future performance. the address to system monitoring periodic a and management risk on document governing well-defined a has Grameenphone help managementinsetting strategies considering internal andexternal risksand uncertainties. changes in policies at the national Risk Management practices or global level. thusare integral ofmodern business which parts prepared forotherrisksfrom themarket, operations, issues,interest legal rate andexchangerate volatility, andpotential external fronts. Inaddition tocontinuous uncertainties regulatory from anunsteady regime, regulatory Grameenphone remains Like competitors andothercompanies, Grameenphone’s businessisalsoexposed todiverse risksthatarise from internal and Risk andConcern BDT 2.5millionplusVAT. re-appointed. TheBoard recommends theirre-appointment fortheyear 2017andcontinuation till thenextAGM atafee of Rahman Huq,Chartered Accountants, shallretire inthisAGM. hasoffered TheFirm,being eligible, theirwillingnesstobe As pertheCompanies ofAssociation Act1994andtheArticles ofGrameenphone, auditors oftheCompany, thestatutory Appointment ofAuditors operatormobile inBangladesh. congratulates Mr. Petter Borre Furberg andwisheshimsuccess developing infurther Grameenphone’s position astheleading trajectory andnow placed position onapole tobecome digitalprovider service theleading inBangladesh.TheBoard also thank Mr. Rajeev Sethiforhisdedication toGrameenphone. theCompany Underhisleadership, strong hasembarked onavery 2016 inplace of Mr. theCompany Rajeev Sethi,whoserved for2years. Onthisoccasion, theBoard ofDirectors would liketo The Board has appointed Mr. Petter Borre Furberg as the Company’s Interim Chief Executive Officer, with effect from 01 November Appointment ofChief Executive Officer (CEO) 1.5 (xxii)oftheCorporate Governance GuidelinesofBSEC. Brief profiles of the Directors being proposed for re-appointment are given on page 28 of the Annual Report, which fulfill condition Reza Choudhury istobevettedReza Choudhury andconfirmed attheensuing20 Shareholder will approve thesaidappointmentinAnnualGeneral Meeting. Accordingly, theappointmentofProf. (Dr.) Jamilur Under BSEC’sCorporate Governance Guidelines2012,after theappointment ofIndependentDirector bytheBoard, the 3. 2. 1. at thisAnnualGeneral Meeting. They are, however, forre-appointment: eligible Association, theCompanies Act.1994andotherrelated legislations. Accordingly, thefollowing Directors oftheBoard willretire With regard totheappointment,retirement andre-appointment ofDirectors, theCompany isgoverned of byitsArticles Directors’ Appointment&Re-Appointment over theyears. bestfortheirfutures. TheBoard wishesthemthevery the Company, andMr. Pal WienEspenandDr. JamaluddinAhmed FCA respectively contribution fortheirinvaluable totheBoard Firstly, Mr. Sigve Brekke, which has helped for his inspiring leadership the Board discharge its governing responsibilities towards The Board ofDirectors would alsoliketotake todeeply thankandbidfarewell thisopportunity tothree esteemed Board members. heightsinthefuture.further Mr. SigveBrekke witheffect from 29September 2016andexpected would thathisdynamicleadership take theCompany to Grameenphone alsoannounced theappointmentofMr. ChristopherAdam LaskaasDirector andChairmanoftheBoard, replacing intheBoard andlookforwardJamilur RezaChoudhury fortheirenrichingcontribution tothegovernance oftheCompany. was appointed asIndependentDirector, witheffect from 15June2016.TheDirectors welcome Mr. OivindBurdal andProf. (Dr.) accordingly, and, Choudhury timeline Reza Prof.regulatory (Dr.) the Jamilur within vacancy the fill to obliged Companywas The place ofMr. Pal WienEspen.InMarch 2016,oneofourIndependentDirectors, Dr. JamaluddinAhmed FCA’s position fellvacant. During theperiodunderreview, there were anumberofchangesintheBoard. Mr. OivindBurdal joined theBoard inMay 2016in Changes totheBoard andAppointmentofNew Chairman Mr. Md. Ashraful Hassan Mr. Hans Martin Hoegh Henrichsen Mr. Tore Johnsen th AGM oftheCompany. Directors' Report

63 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Competition and Business Outlook 2017 Grameenphone believes Bangladesh is poised at the point of an era of promise and prosperity arising from the rejuvenation of multiple sectors of the economy where empowering technologies, if deployed inclusively, will be a key driver of development in the emerging era. In line with that potential development Grameenphone embraces the opportunity to reinvent itself year on year– setting new paradigms as the industry leader while making a lasting contribution to the ‘digital future’ of the country.

Moving ahead, Grameenphone is ready to operate in the fast-moving and ever-changing industry, filled with challenges and opportunities. The Company will continue to push the horizon of digital empowerment by leveraging the emerging technologies. Faster network, smarter devices and data-intensive applications will continue to drive mobile data usage and revenue. To keep pace with the change in customer behaviour of the smart phone generation, Grameenphone will continue to offer products and services that bring value to them and help create new digital societies. Delivering integrated digital services and experiences, Grameenphone will be functioning as a platform to broaden access to essential services such as education, healthcare and financial services.

In 2017, competition among operators is expected to remain intense as they race to capture a leading 3G position. Grameenphone’s focus for the year ahead will be to deliver on its promises to enable growth and profitability from its core services while transforming the business, unlocking new capabilities and opportunities to strengthen its play in the digital space. Keeping a keen eye on performance, operational excellence and execution, Grameenphone is confident of good progress on its digital ambition and the creation of value for its shareholders.

A Note of Thanks The outcomes of the Year 2016 would not have been possible if not for the persistent support and encouragement of our stakeholders. As always, the Board of Directors would like to thank the customers for their dedication and loyalty. We would like to express our appreciation to all shareholders for their continued interest and investment in Grameenphone. We also wish to place on record our sincere gratitude to Grameenphone’s business partners for their continued support to the Company during 2016.

The Board also extends its profound gratitude to the Government of the Peoples’ Republic of Bangladesh; the Ministry of Posts, Telecommunications and Information Technology (MoPT); Bangladesh Telecommunication Regulatory Commission (BTRC); Bangladesh Railway (BR); Bangladesh Bank (BB); Bangladesh Investment Development Authority (BIDA); Registrar of Joint Stock Companies & Firms (RJSC); Chief Controller of Export & Import; Bangladesh Securities and Exchange Commission (BSEC); Dhaka Stock Exchange Ltd. (DSE); Chittagong Stock Exchange Ltd. (CSE), Grameenphone’s Bankers, Insurers and financial institutions; and other business partners who we continue to partner with to build a healthy and conducive ecosystem to accelerate Bangladesh’s transformation into a digital nation.

Our employees’ hard work, passion and dedication have been the enduring hallmark of our success. So, we would like to express once again our sincere thanks to them and look forward to their continued dedication and contribution in taking Grameenphone to the next phase of success.

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

Christopher Adam Laska Chairman 31 January 2017

64 Directors' Report Ordinance,1969: No Notification SEC/CMRRCD/2006-158/134/Admin/44 dated 07August,2012issued undersection 2CC oftheSecuritiesCommission’s andExchange Exchange and Securities Bangladesh the by imposed conditions the with compliance of Status Annexure I Condition 1.2(ii)(d) 1.2(ii)(g) 1.2(ii)(h) 1.2(ii)(b) 1.2(ii)(e) 1.2(ii)(a) 1.2(ii)(c) 1.2(ii)(f) 1.2(ii)(i) 1.2(iii) 1.2(iv) 1.2(ii) 1.2(i) No. 1.2 1.1 1. be IndependentDirectors onefifth(1/5)ofthetotal numberofDirectorsAt least shall Independent Directors for more than90(ninety) days The postofIndependentDirector(s) cannot remain vacant Meeting (AGM) approved bytheshareholders intheAnnualGeneral Independent Director(s) shall beappointed byBoDand Independent Director meansaDirector: up shares oftheCompany thanonepercentholds less (1%)shares ofthetotal paid- who eitherdoesnotholdanyshare intheCompany or of stock exchange or an intermediary ofthecapitalof stockexchangeoranintermediary market who isnotashareholder, Director orofficer ofanymember moral turpitude who hasnotbeen convicted foracriminaloffence involving associated companies withtheCompany orotherwise, pecuniary oritssubsidiary/ who doesnothaveanyotherrelationship, whether or aNon-BankFinancialInstitution (NBFI) jurisdiction asadefaulter inpayment ofanyloantoabank who hasnotbeen convicted byacourt ofcompetent (number ofBoard members –minimum5andMaximum20) Board’s Size Board ofDirectors (BoD) Company’s auditfirm statutory an executive duringthepreceding 3(three) years ofthe orexecutivewho isnotapartner orwas or notapartner hold above mentioned shares intheCompany family relationship. His/herfamily members alsoshould not the total paid-upshares oftheCompany onthebasisof shareholder who holdsonepercent (1%)ormore shares of with anysponsoroftheCompany’s orDirector or who isnotasponsoroftheCompany andisnotconnected (three) listed companies who shallnotbeanIndependentDirector inmore than 3 exchange who isnotamember, Director orofficer ofanystock Title (Report undercondition(Report no.7.00) (“√”hasbeen putinthe Complied appropriate column) Compliance Status √ √ √ √ √ √ √ √ √ √ √ √ √ Not Complied b) a) out oftotal 10(Ten) Directors

There are 10(Ten) members Independent Directors (ID) Vacancy outwithin filled declarations abouttheir upcoming 20 to beapproved atthe on14June2016 Choudhury (Dr.) JamilurReza The Board appointed Prof. AGM approved at her 2 Ms. RokiaAfzal Rahman,in The IDshavesubmitted Remarks (Ifany) in theCompany Board regulatory timeregulatory limit There are 2(Two) nd compliances term, already Directors' Report -do- -do- -do- -do- -do- -do- -do- -do- th AGM

65 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Compliance Status (“√” Condition has been put in the Title Remarks (If any) No. appropriate column) Complied Not Complied 1.2(v) The Board shall lay down a code of conduct of all Board There is a written Code of Conduct and all Board members and annual compliance of the code to be √ members and employees are recorded obliged to comply with 1.2(vi) The tenure of office of an independent Director shall be Ms. Rokia Afzal Rahman is in her 2nd term of office for a period of 3 (three) years, which may be extended for 1 √ (one) term only 1.3(i) Independent Director shall be a knowledgeable individual The qualification and background of IDs justify with integrity who is able to ensure compliance with their abilities as such √ financial, regulatory and corporate laws and can make meaningful contribution to business 1.3(ii) Independent Director should be a Business Leader/ -do- Corporate leader/Bureaucrat/University Teacher with Economics or Business Studies or Law background/ Professionals like Chartered Accountants, Cost & √ Management Accountants, Chartered Secretaries. The Independent Director must have at least 12 (twelve) years of corporate management/ professional experiences 1.3(iii) In special cases the above qualifications may be relaxed None subject to prior approval of Commission 1.4 The Chairman of the Board and the Chief Executive Officer The Chairman and CEO are different individuals with (CEO) shall be different individuals. The Chairman shall be clearly defined roles and elected from among the directors. The Board of Directors √ responsibilities shall clearly define respective roles and responsibilities of the Chairman and the CEO 1.5 The Directors’ Report shall include the following additional statements: 1.5(i) Industry outlook and possible future developments in the Included in the Directors’ √ Report industry 1.5(ii) Segment-wise or product-wise performance √ -do- 1.5(iii) Risks and concerns √ -do- 1.5(iv) A discussion on Cost of Goods sold, Gross Profit and Net -do- √ Profit Margin 1.5(v) Discussion on continuity of any Extra-Ordinary gain or loss √ -do- 1.5(vi) Basis for related party transactions - a statement of all -do- related party transactions should be disclosed in the √ annual report 1.5(vii) Utilisation of proceeds from public issues, rights issues -do- √ and/or through any other instruments 1.5(viii) An explanation if the financial results deteriorate after the -do- None Company goes for Initial Public Offering (IPO) 1.5(ix) If significant variance occurs between Quarterly Financial -do- performance and Annual Financial Statements & None Management explanation thereof 1.5(x) Remuneration to directors including Independent Directors √ -do- 1.(xi) The financial statements present fairly its state of affairs, -do- the result of its operations, cash flows and changes in √ equity 1.5(xii) Proper books of account have been maintained √ -do-

66 Directors' Report 1.5(xxi)(d) 1.5(xxi)(b) 1.5(xxi)(a) 1.5(xxi)(c) Condition 1.5(xxii) 1.5(xviii) 1.5(xxi) 1.5(xvii) 1.5(xxii) 1.5(xxii) 1.5(xxii) 1.5(xiii) 1.5(xvi) 1.5(xiv) 1.5(xix) 1.5(xv) 1.5(xx) 3.1(i) 3(iii) 3(ii) 3(i) No. 2.2 (b) (a) (c) 2.1 3 a brief resume ofthedirector nature ofhis/herexpertise inspecific functional areas committee oftheBoD The Company shallhaveanAuditCommittee asasub- Audit Committee of Directors The CFO andtheCSshallattend the meetings oftheBoard respective roles, responsibilities &duties Appointment ofCFO, HIAandCSdefining their writing duties oftheAuditCommittee set in forth shallbeclearly The AuditCommittee shallberesponsible totheBoD. The monitoring system withinthebusiness state ofaffairs oftheCompany and inensuringagood the financialstatements reflect trueand fairview ofthe The AuditCommittee shallassisttheBoDinensuringthat been followed andadequate disclosure foranydeparture IAS/BAS/IFRS/BFRS, asapplicable inBangladesh,have related parties Parent/Subsidiary/Associated Companies andother Going Concern (abilitytocontinue asagoingconcern) been effectively implemented andmonitored The system ofinternal control issoundindesignandhas Adaptation ofappropriate accounting policies&estimates Pattern ofshareholding andnamewisedetails (disclosingaggregate numberofshares): year’s operating results Highlight andexplainsignificant deviations from thelast In case ofthe appointment/re-appointment ofadirector, disclose: (HIA) andtheirspousesminorchildren (CS), Chief FinancialOfficer (CFO), HeadofInternal Audit Directors, Chief Executive Officer (CEO), SecretaryCompany (five) years shallbesummarised Key operatingleast preceding andfinancialdata ofat 5 interest intheCompany Shareholders holdingten percent (10%)ormore voting (three) members The AuditCommittee shallbecomposed 3 ofatleast Board Directorship andthemembership ofcommittees ofthe names ofCompanies inwhichtheperson alsoholdsthe attendance byeachDirector The numberofBoard meetings heldduringthe year and Reason fornondeclaration ofDividend Executives Title Complied Compliance Status (“√” appropriate column) None has been putinthe √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Not Complied The CFO andCSparticipate in different individualsandtheir roles andresponsibilities are Audit Committee comprises approved AuditCommittee Included intheDirectors’ Included intheDirectors’ Given onPage 50ofthe Given onPage 28ofthe The CFO, HIAandCSare established asperBSEC discharges aspergiven Given onPage 31ofthe The duties oftheAudit Remarks (Ifany) Committee are clearly Charter asperBSEC’s The AuditCommittee defined intheBoard all Board meetings Audit Committee is separately defined Annual Report Annual Report Annual Report Does notarise of 3members guidelines. guidelines guidelines Report Report Directors' Report -do- -do- -do- -do- -do- -do- -do- -do- -do-

67 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Compliance Status (“√” Condition has been put in the Title Remarks (If any) No. appropriate column) Complied Not Complied 3.1(ii) The BoD shall appoint members of the Audit Committee Members of Audit Committee are Directors which includes who shall be Directors of the Company and shall include at √ one ID, all appointed by the least 1 (one) Independent Director Board. 3.1(iii) All members of the Audit Committee should be ‘financially The profiles of the members demonstrate their literate’ and at least 1 (one) member shall have accounting √ capabilities as such or related financial management experience 3.1(iv) Expiration of the term of service of Audit Committee Vacancy filled out within regulatory time limit. members making the number lower than 3 (three) and fill √ up the vacancy (ies) by the Board not later than 1 (one) month from the date of vacancy(ies) 3.1(v) The Company Secretary shall act as the secretary of the √ Audit Committee 3.1(vi) The quorum of the Audit Committee meeting shall not √ constitute without at least 1 (one) Independent Director 3.2(i) The BoD shall select the Chairman of the Audit Committee, The Chairman of Audit √ Committee is an ID as who shall be an Independent Director selected by the Board 3.2(ii) Chairman of the Audit Committee shall remain present in Was present in the AGM held √ in 2016 the AGM 3.3 Role of Audit Committee 3.3(i) Oversee the financial reporting process The Audit Committee √ performs as per BSEC’s guidelines 3.3(ii) Monitor choice of accounting policies and principles √ -do- 3.3(iii) Monitor Internal Control Risk management process √ -do- 3.3(iv) Oversee hiring and performance of external auditors √ -do- 3.3(v) Review the annual Financial Statements before submission -do- √ to the Board for approval 3.3(vi) Review the quarterly and half yearly Financial Statements -do- √ before submission to the Board for approval 3.3(vii) Review the adequacy of internal audit function √ -do- 3.3(viii) Review statement of significant related party transactions -do- √ submitted by the Management 3.3(ix) Review Management Letters/Letter of Internal Control -do- √ weakness issued by statutory auditors 3.3(x) Disclosure to the Audit Committee about the uses/ No IPO was made in the year 2016 applications of IPO funds by major category (capital expenditure, sales and marketing expenses, working capital, etc), on a quarterly basis, as a part of their None quarterly declaration of financial results. Further, on an annual basis, shall prepare a statement of funds utilised for the purposes other than those stated in the prospectus 3.4.1(i) Reporting to BoD on the activities of the Audit Committee √ 3.4.1(ii) Reporting to BoD on conflicts of interests None (a) 3.4.1(ii) Reporting to BoD on any fraud or irregularity or material None (b) defect in the internal control system 3.4.1(ii)(c) Reporting to BoD on suspected infringement of laws None

68 Directors' Report Condition 3.4.1(ii) 6(i)(a) 4(viii) 4(vii) 3.4.2 4(iii) 5(iii) 4(vi) 4(iv) 5(iv) 4(ix) 4(ii) 5(ii) 4(v) 5(v) 4(i) 5(i) No. 3.5 (d) 6 4 5 that mightbemisleading statement oromitanymaterial fact orcontain statements these statements donotcontain anymaterially untrue and belief:that tothebestoftheirknowledge The CEOandCFO shallcertify totheBoard thatthey havereviewed Financial Statements for the year and composition Company oftheBoDsubsidiary the holdingCompany shallbemadeapplicable tothe Provisions relating tothecomposition oftheBoD of CompanySubsidiary affairs Company ofthesubsidiary also holding Company shallstate thatthey havereviewed the The minutes oftherespective Board meeting ofthe Company.subsidiary holding Company shallbeaDirector ontheBoDof 1(one)IndependentDirectorAt least ontheBoDof meeting oftheholdingCompany Company shallbeplaced forreview atthefollowing Board The minutes oftheBoard meeting ofthesubsidiary clause (i)ofcondition no.7 compliance ofcorporate governance asrequired under Non-engagement inaudit/certification on services investments made by the subsidiary company investments madebythesubsidiary also review theFinancialStatements, inparticular the The AuditCommittee oftheholdingCompany shall disclosed intheAnnualReport activities, whichshallbesigned bytheChairmanand Reporting totheShareholders ofAuditCommittee the management) condition &results ofoperation, unreasonably ignored by Reporting toBSEC(ifanymaterial impactonthefinancial Reporting toBoDonanyothermatter fairness opinions Non-engagement inappraisal orvaluation or services External Auditors /Statutory their assignment possess anyshare oftheCompany duringthetenure of oremployeesNo partner oftheexternal auditfirmsshall Committee determines thattheAudit Non-engagement inanyotherservices Non-engagement inInternal Auditservices Non-engagement inActuarialservices Non-engagement inBroker-Dealer services Financial Information System Non-engagement indesigningandimplementation of related totheaccounting records orfinancialstatements Non-engagement inBookKeeping orotherservices Title applicable applicable applicable applicable applicable Complied Compliance Status (“√” appropriate column) None None has been putinthe Not Not Not Not Not √ √ √ √ √ √ √ √ √ √ √ Not Complied have any subsidiary Companyhave anysubsidiary page 49oftheAnnualreport The CEOandCFO haveduly Committee are reported on Grameenphone doesnot As declared byAuditors Remarks (Ifany) certified totheBoard Activities oftheAudit as onreporting date Directors' Report -do- -do- -do- -do- -do- -do- -do- -do- -do- -do- -do- -do-

69 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Compliance Status (“√” Condition has been put in the Title Remarks (If any) No. appropriate column) Complied Not Complied 6(i)(b) these statements together present a true and fair view of The CEO and CFO have duly certified to the Board the Company’s affairs and are in compliance with existing √ accounting standards and applicable laws 6(ii) there are, to the best of knowledge and belief, no -do- transactions entered into by the Company during the year √ which are fraudulent, illegal or violation of the Company’s code of conduct 7(i) Obtaining certificate from a practicing Professional Given on page 72 of the Annual Report Accountant/Secretary regarding compliance of conditions √ of Corporate Governance Guidelines of the BSEC and include in the Annual Report 7(ii) Directors statement in the directors' report whether the Detailed status of compliance is given in the Company has complied with these conditions √ Compliance Schedule as published with the Directors' Report

Annexure II Board Meeting and attendance during the year ended 31 December 2016

Number of Name of Directors Board Member Since meetings attended during 2016 Mr. Christopher Adam Laska 29 September 2016 2/2 Mr. Haakon Bruaset Kjoel* 14 September 2011 8/11 Mr. Tore Johnsen 10 December 2013 11/11 Mr. Hans Martin Hoegh Henrichsen 22 January 2014 11/11 Mr. Oivind Burdal 18 May 2016 6/6 Mr. M Shahjahan 26 June 2006 11/11 Mr. Md. Ashraful Hassan 20 January 2010 11/11 Ms. Parveen Mahmud* 17 October 2012 9/11 Ms. Rokia Afzal Rahman* 6 December 2012 8/11 Prof. (Dr.) Jamilur Reza Choudhury* 15 June 2016 4/5 Mr. Sigve Brekke* 1 September 2008 0/9 Mr. Pal Wien Espen* 24 April 2013 0/4 Dr. Jamaluddin Ahmed FCA* 19 March 2010 2/2

* Dr. Jamaluddin Ahmed FCA, Mr. Pal Wien Espen, and Mr. Sigve Brekke retired from the Board on 18 March 2016, 19 April 2016 and 28 September 2016 respectively. * In compliance with the law, the Board granted leave of absence to the members who were unable to attend Board meetings.

70 Directors' Report The Pattern ofShareholding ason31December 2016 Annexure-III Grameen Telecom Telenor Communications Mobile AS iv) Shareholders holdingten percent ormore voting interest Mr. Mohammed SharifulIslam Mr. Mahmud Hossain Mr. Andreas Frandevi Mr. Yasir Azman Mr. Medhat ELHusseiny iii) Executives Mr. Hasan Faisal Mr. Hossain Sadat Mr. Dilip Pal Mr. Petter Borre Furberg Prof. (Dr.) JamilurRezaChoudhury Ms. RokiaAfzal Rahman Ms. Parveen Mahmud Mr. Md. Ashraful Hassan Mr. M Shahjahan Mr. Oivind Burdal Mr. Hans Martin Hoegh Henrichsen Mr. Tore Johnsen Mr. HaakonBruaset Kjoel Mr. ChristopherAdam Laska spouses andminorchildren ii) Directors, Chief Executive Officer, Chief Financial Officer, Secretary, Company HeadofInternal Auditandtheir Grameen Shakti Grameen Kalyan Grameen Telecom Telenor AsiaPte. Ltd. Nye Telenor Communications Mobile IIIAS Nye Telenor Communications Mobile IIAS Telenor Communications Mobile AS i) Parent/Subsidiary/Associate Companies (as explained intheBSEC’sNotification No.SEC/CMRRCD/2006-158/134/Admin/44 dated 07August2012) Name ofShareholders Chief Human Resources Officer Chief Corporate Affairs Officer Chief Strategy officer Chief Marketing Officer Chief Technology Officer Head ofInternal Audit Company Secretary Chief FinancialOfficer Chief Executive Officer Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member Chairman Status ------461,766,409 461,766,409 753,407,724 753,407,724 Shares Held 26,433 376 195 215 215 215 22 22 ------Directors' Report Percentage 55.80% 55.80% 34.20% 34.20% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% ------

71 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Business Office: Phones : 01730 340 340 Al-Muqtadir Associates Block : F, Rania Avenue 01552 108 522 Chartered Secretaries & Consultants Apurba Gardenia e-mail : [email protected] th House # 530, (5 floor) : [email protected] Bashundhara R/A, Dhaka - 1229 URL : www.muqtadirbd.com Bangladesh VAT Reg : 19041063900

Certificate of Compliance to the Shareholders of Grameenphone Ltd. (As required under the BSEC Corporate Governance Guidelines)

We have examined compliance to the BSEC guidelines on Corporate Governance by Grameenphone Ltd. for the year ended 31 December 2016. These guidelines relate to the Notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012 of the Bangladesh Securities and Exchange Commission (BSEC) on Corporate Governance.

Such compliance to the codes of Corporate Governance is the responsibility of the Company. Our examination was limited to the procedures and implementation thereof as adopted by the Management in ensuring compliance to the conditions of Corporate Governance. This is a scrutiny and verification only and not an expression of opinion or audit on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations provided to us, we certify that, subject to the remarks and observations as reported in the attached Compliance Statement, the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned guidelines issued by BSEC.

We also state that such compliance is neither an assurance as to the future viability of the Company nor a certification on the efficiency or effectiveness with which the Management has conducted the affairs of the Company. This is also no endorsement about quality of contents in the Annual Report of the Company for 2016.

Al-Muqtadir Associates Dhaka, 31 January 2017 Chartered Secretaries & Consultants

72 Directors' Report

Grameenphone Annual Report 2016

Rahman Rahman Huq Telephone +880 (2) 988 6450-2 Chartered Accountants Fax +880 (2) 988 6449 9 & 5 Mohakhali C/A Email [email protected] Dhaka-1212, Bangladesh Internet www.kpmg.com/bd Independent Auditor’s Report to the shareholders of Grameenphone Ltd.

Report on the financial statements We have audited the accompanying financial statements of Grameenphone Ltd., which comprise the statement of financial position as at 31 December 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial 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 for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material mis-statement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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 mis-statement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material mis-statement 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 give a true and fair view of the financial position of the Company as at 31 December 2016 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and Bangladesh Financial Reporting Standards (BFRS).

Emphasis of matter We draw users’ attention to Note 42 to the financial statements, where Management explains the circumstances of claim from Bangladesh Telecommunication Regulatory Commission (BTRC), claim from National Board of Revenue (NBR) for SIM tax on replacement SIMs, the uncertainties of getting rebate of input VAT related to 2G licence renewal fee and claim from Large Taxpayers Unit (LTU) - VAT based on assessment by office of the Comptroller and Auditor General (C&AG), interest claim on SIM tax from NBR and Management’s position on the same. Our opinion is not qualified in this regard.

Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994 and the Securities and Exchange Rules 1987, we also report the following: 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 so far as it appeared from our examination of these books; c) the statement of financial position and statement of profit or loss and other comprehensive income 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 business.

Rahman Rahman Huq Chartered Accountants Dhaka, 31 January 2017

74 Auditor's Report & Audited Financial Statements Total assets Total current assets Current assets Total non-current assets Non-current assets Dhaka, 31 January 2017 Dhaka, 31January The annexed notes 1to43formanintegral ofthesefinancialstatements. part Total equity andliabilities Total current liabilities Current liabilities Total non-current liabilities Non-current liabilities Total equity Shareholders’ equity Equity andliabilities Assets Statement offinancialposition Grameenphone Ltd. as at31December 2016 Cash andcash equivalents Trade andotherreceivables Inventories Other non-current assets Investment inassociate assets,Intangible net Property, plantandequipment, net Other current liabilities Current tax payable Loans andborrowings Provisions Trade andotherpayables Other non-current liabilities Employee benefits Deferred tax liabilities Loans andborrowings Finance obligation lease Retained earnings Deposit from shareholders Capital reserve Share premium Share capital

Director

Director Notes 20 22 23 10 19 16 16 18 21 12 14 15 13 17 11 9 6 8 4 5 7 Chief Executive Officer

31 December 2016 Auditor's Report &Audited Report FinancialStatements Auditor's BDT’000 119,558,270 68,079,334 130,499,511 130,499,511 28,847,893 76,787,577 38,183,422 13,503,000 18,942,559 33,572,284 13,556,284 14,274,056 25,363,165 10,941,241 7,463,977 7,840,226 12,212,732 8,235,939 8,100,084 2,911,860 4,587,271 5,093,612 1,399,470 1,335,086 565,404 626,972 14,446 1,880 As perourreport ofsamedate. - 31 December 2015 Company Secretary BDT’000 Auditor 132,449,567 132,449,567 120,521,755 30,625,258 18,964,209 13,503,000 74,204,532 22,575,339 14,077,929 19,785,655 41,045,545 67,625,177 34,199,132 9,265,706 9,975,569 7,840,226 11,927,812 7,910,630 4,561,035 7,339,372 5,207,147 1,210,685 4,153,100 1,444,641 672,505 435,340 710,643 14,446 1,880

75 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Grameenphone Ltd. Statement of profit or loss and other comprehensive income for the year ended 31 December 2016

2016 2015 Notes BDT’000 BDT’000

Revenue 24 114,862,160 104,754,372 Operating expenses Cost of material and traffic charges 25 (10,661,819) (10,693,577) Salaries and personnel cost 26 (8,276,052) (6,373,253) Operation and maintenance 27 (3,757,496) (4,419,129) Sales, marketing and commissions 28 (12,497,326) (12,913,376) Revenue sharing, spectrum charges and licence fees 29 (8,902,203) (8,255,606) Other operating (expenses)/income, net 30 (8,202,961) (6,128,054) Depreciation and amortisation 31 (20,998,180) (19,007,679) (73,296,037) (67,790,674) Operating profit 41,566,123 36,963,698

Share of profit/(loss) of associate 32 (223,815) 15,119 Impairment loss on investment in associate 6 (486,828) - Finance (expense)/income, net 33 (2,591,068) (1,940,737) Foreign exchange (loss)/gain (86,006) (115,721) (3,387,717) (2,041,339) Profit before tax 38,178,406 34,922,359

Income tax expense 34 (15,652,051) (15,215,468) Profit after tax 22,526,355 19,706,891

Other comprehensive income Item that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plan 18 35 (1,444,641) Related taxes (14) 577,856 21 (866,785) Total comprehensive income for the year 22,526,376 18,840,106

Earnings per share Basic and diluted earnings per share (par value BDT 10 each in BDT) 35 16.68 14.59

The annexed notes 1 to 43 form an integral part of these financial statements.

Director Director Chief Executive Officer Company Secretary

As per our report of same date.

Auditor Dhaka, 31 January 2017

76 Auditor's Report & Audited Financial Statements Grameenphone Ltd. Statement of changes in equity for the year ended 31 December 2016

Share Share Capital Deposit from Retained capital premium reserve shareholders earnings Total BDT’000 BDT’000 BDT’000 BDT’000 BDT’000 BDT’000

Balance as at 1 January 2015 13,503,000 7,840,226 14,446 1,880 10,004,950 31,364,502 Transactions with the equity holders: Final dividend for 2014 - - - - (8,776,950) (8,776,950) Interim dividend for 2015 (10,802,400) (10,802,400)

Total comprehensive income for 2015 Profit for the year - - - - 19,706,891 19,706,891 Other comprehensive income - - - - (866,785) (866,785)

Balance as at 31 December 2015 13,503,000 7,840,226 14,446 1,880 9,265,706 30,625,258

Balance as at 1 January 2016 13,503,000 7,840,226 14,446 1,880 9,265,706 30,625,258

Transactions with the equity holders: Final dividend for 2015 - - - - (8,101,800) (8,101,800) Interim dividend for 2016 (11,477,550) (11,477,550)

Total comprehensive income for 2016

Auditor's Report &Audited Report FinancialStatements Auditor's Profit for the year - - - - 22,526,355 22,526,355 Other comprehensive income - - - - 21 21 Balance as at 31 December 2016 13,503,000 7,840,226 14,446 1,880 12,212,732 33,572,284

77 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Grameenphone Ltd. Statement of cash flows for the year ended 31 December 2016

2016 2015 BDT’000 BDT’000 Cash flows from operating activities

Cash receipts from customers 115,707,956 106,354,277

Payroll and other payments to employees (8,345,516) (7,985,573) Payments to suppliers, contractors and others (42,531,964) (43,126,234) Interest received 153,435 211,870 Interest paid (2,662,556) (2,099,166) Income tax paid (16,169,852) (14,564,025) (69,556,453) (67,563,128) Net cash generated by operating activities 46,151,503 38,791,149

Cash flows from investing activities

Payment for acquisition of property, plant and equipment and intangible assets (19,962,199) (19,919,482) Proceeds from sale of property, plant and equipment 122,894 12,106 Net cash used in investing activities (19,839,305) (19,907,376)

Cash flows from financing activities

Proceeds from/(payment of) short-term bank loan (1,911,800) 3,100,000 Payment of long-term loan (5,402,010) (2,682,203) Payment of dividend (19,579,350) (19,579,350) Payment of finance lease obligation (660,278) (329,022) Net cash used in financing activities (27,553,438) (19,490,575)

Net change in cash and cash equivalents (1,241,240) (606,802)

Cash and cash equivalents as at 1 January 4,153,100 4,759,902 Cash and cash equivalents as at 31 December 2,911,860 4,153,100

78 Auditor's Report & Audited Financial Statements for theyear ended 31December 2016 Notes tothefinancialstatements Grameenphone Ltd. 2.2 2.1 2 1

Corporate information Basis ofpreparation various operators ofdifferent countries across theworld. in Bangladesh.Thecompany alsoprovides international roaming through services international roaming agreements with The company isprimarilyinvolved inproviding telecommunication mobile (voice, services data andotherrelated services) ultimate parent isTelenor ASA;boththecompanies are incorporated inNorway. and Chittagong Stock Exchanges.Theimmediate parent of Grameenphone is Telenor Communications Mobile ASandthe into a public limited company on 25 June 2007. In November 2009, Grameenphone listed its shares with both Dhaka Baridhara, Dhaka1229.Grameenphone was initially registered asaprivate limited company andsubsequently converted incorporated Grameenphone Ltd. (hereinafter referred to as “Grameenphone”/”GP”/”the Company”) isa public limited company significant effect ontheamounts recognised inthe financial statements: In theprocess ofapplyingtheaccounting policies,management hasmadethefollowing judgments,whichhavethemost Judgments require amaterial amountofassets adjustment tothecarrying orliabilities affected infuture periods. the disclosure ofcontingent liabilities. Uncertainty abouttheseassumptions andestimates could result inoutcomes that that and assumptions estimates judgments, tomake affect thereported amountsof revenues, expenses, assets andliabilities, andtheaccompanying disclosures including management requires statements financial of preparation The totals may notmatchthesumofindividualbalances. the nearest BDT inthousand(BDT’000) except indicated. otherwise Asaresult oftheserounding off, insomeinstances the which is also the functional currency of the company. The amounts in these financial statements have been rounded off to (“BDT”) Taka Bangladesh in presented are statements financial These currency’). functional (‘the operates company the Items included in these financial statements are measured using the currency of the primary economic environment in which These financialstatements were authorised forissuebytheBoard ofDirectors 2017. ofthe company on31January Authorisation forissue cost hasbeen followed principle forthepurposeofthesefinancialstatements. These financial statements have been prepared on going concern basis. Unless otherwise specifically mentioned, historical financial these to relevant statements, from donotvary eachother.extent the to BFRS, and IFRS of requirements The Bangladesh. in laws applicable other and Bangladesh Financial Reporting Standards (BFRS), the Companies 1987 Act 1994, the Securities and ExchangeRules (IFRS), Standards Reporting Financial International with accordance in prepared been have statements financial These comprehensive income hasbeen information. appended tothesefinancialstatements assupplementary For understanding of Grameenphone’s stand-alone financial performance, a separate statement of profit or loss and other Investment inAssociates and JointVentures. AccentureInfrastructure Solutions Ltd. Communications (ACISL) beingaccounted forundertheequity method inaccordance in with(IAS/BAS)28 investment and Grameenphone’s of Grameenphone performance and position financial the present statements financial unconsolidated These 2016. December 31 ended year the of for and statements) at as Grameenphone financial individual as known (also statements financial unconsolidated are statements financial These Use ofestimates andjudgements Functional andpresentation currency in Bangladesh in 1996 under the Companies Act 1994 and has its registered address at GPHouse, Bashundhara, Notes tothefinancial statements

79 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

1. The company has a lease agreement with Bangladesh Railway for Fibre Optic Network (FON) and this lease has been treated as finance lease. For details, please see note 15 to these financial statements. 2. The company has significant influence over Accenture Communications Infrastructure Solutions Ltd. 3. The company has entered into lease agreements for base stations, switch locations and office space. After evaluation of the terms and conditions of these agreements the company has determined that it does not have substantial risks and rewards related to the assets. For operating lease commitments, please see note 30.2 to these financial statements.

Estimates and assumptions Key estimates and assumptions used in preparation of these financial statements are: 1. Applicable tax rate for Income Year 2016 will be declared by Finance Act 2017. For the purpose of these financial statements, management has assumed that the existing corporate tax rate (40%) will be applicable for Income Year 2016 as well. 2. Appropriate financial and demographic assumptions have been used in consultation with a certified actuary to measure defined benefit obligation as at the reporting date. 3. Key assumptions about the likelihood and magnitude of outflow of resources have been used to recognise and measure provisions and contingencies. 4. Recoverable amount of Investment in associate.

3 Significant accounting policies Accounting policies set out below have been applied consistently to all periods presented in these financial statements. Comparative information has been rearranged wherever considered necessary to conform to the current period’s presentation.

3. 1 Current versus non-current classification The company presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is:

i) expected to be realised or intended to be sold or consumed in normal operating cycle, or ii) expected to be realised within twelve months after the reporting period, or iii) held primarily for the purpose of trading, or iv) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when it is: i) expected to be settled in normal operating cycle, or ii) due to be settled within twelve months after the reporting period, or iii) held primarily for the purpose of trading, or iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3.2 Offsetting The company reports separately both assets and liabilities, and income and expenses, unless required by an applicable accounting standard or offsetting reflects the substance of the transaction and such offsetting is permitted by applicable accounting standard.

Cash receipts and payments on behalf of customers when the cash flows reflect the activities of the customer rather than those of the entity and cash receipts and payments for items in which the turnover is quick, the amounts are large, and the maturities are short are presented net in the statement of cash flows.

3.3 Cash dividend to the equity holders The company recognises a liability to make cash dividend when the distribution is authorised and the distribution is no longer at the discretion of the company. As per the corporate laws in Bangladesh, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

80 Notes to the Financial Statements (c) Depreciation (b) (a) 3.4 (d) Derecognition

Own assets estimated useful lives of the items of property, plant and equipment for the current and comparative periods are as follows: Depreciation method, useful livesandresidual values are reviewed ateachyear-end andadjusted ifappropriate. The itisreasonablyand theiruseful livesunless certain thatthecompany willobtain ownershipterm. bytheendoflease useful lifeofeachitem ofproperty, plantandequipment. Leased assets are depreciated overterm theshorter of thelease Depreciation onotheritems ofproperty, plantandequipment isrecognised onastraight-line basisover theestimated not yet been placed inservice. No depreciation ischarged onlandandcapital work inprogress (CWIP)asthelandhasunlimited useful lifeandCWIPhas ofproperty,servicing plantandequipment are recognised inprofit orlossasincurred. can bemeasured reliably. amountofthereplaced Thecarrying component isderecognised. Thecosts oftheday today cost its and company the to flow will item the within embodied benefits economicfuture the that probable is it if item the The cost ofreplacing orupgradation ofanitem ofproperty, plantandequipment isrecognised amountof inthecarrying items (majorcomponents) ofproperty, plantandequipment. ofanitemWhen majorparts ofproperty, plantandequipment havedifferent useful lives,they are accounted forasseparate equipment. Assets. Purchased software thatisintegral tothefunctionality oftherelated equipment iscapitalised ofthat aspart obligation’) are recognised andmeasured inaccordance withIAS/BAS37Provisions, Contingent Liabilities andContingent The obligations forcosts ofdismantling andremoving theitem andrestoring thesite (generally called ‘asset retirement costs ofdismantlingandremoving theitem andrestoring thesite onwhichitislocated andcapitalised borrowing costs. and condition forittobecapable ofoperating necessary intheintended manner. Cost alsoincludesinitial estimate ofthe taxes, after deducting trade discount and rebates, and any costs directly tobringingtheasset attributable tothelocation The cost ofanitem ofproperty, plantandequipment comprises itspurchase price, duties import andnon-refundable losses, ifany. Items ofproperty, plantandequipment are measured atcost accumulated less depreciation andaccumulated impairment

the difference between thenet disposalproceeds amount oftheasset andthecarrying andisrecognised inprofit orloss. from its use or disposal. Any gain or loss on derecognition of an item of property, plant and equipment is determined as An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected Subsequent costs Recognition andmeasurement Property, plantandequipment Leased asset Base station -equipment Building Transmission equipment Base station -tower, fibre optic network and related assets Furniture andfixtures (includingoffice equipment) Computers andotherITequipment Fibre Optic Network (FON) Vehicles 22.5-30 10 -50 Years 7- 30 2016 5-10 3-10 3-5 4 4 Notes totheFinancial Statements 22.5-30 10-50 7-30 Years 2015 5-10 3-10 3-5 4 4

81 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

(e) Capital work in progress Capital work in progress consists of unfinished work at sites and capital inventory. Spare parts expected to be used for more than one year are treated as capital work in progress. In case of import of components, capital work in progress is recognised when risks and rewards associated with such assets are transferred to the company.

(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 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. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

3.5 Intangible assets

(a) Recognition and measurement Intangible assets that are acquired by the company 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.

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit or loss as incurred.

Development activities involve a plan or design for the production of new and substantially improved products and processes. Development expenditures, on an individual project, are recognised as an intangible asset when the company can demonstrate all of the following:

(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (b) its intention to complete the intangible asset and use or sell it; (c) its ability to use or sell the intangible asset; (d) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; (e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and (f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Other development expenditures are recognised in profit or loss as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is placed in service. It is amortised over the period of expected future economic benefits. During the period of development, the asset is tested for impairment annually.

Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred.

(b) Subsequent costs Subsequent costs are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. All other costs 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.

82 Notes to the Financial Statements 3.7.1 3.7 3.6 (d) Derecognition

Spectrum-2008 Telecom licence andspectrum

the asset expire, or it transfers the rights to receive the contractual cash flows from on flows thecash the financial receiving asset of probabilities in or rights contractual a the transaction when in asset which financial a derecognises company The ‘held-to-maturity’ financialassets, ‘loansand financialassets. (FVTPL), receivables’ or‘available-for-sale’ orloss’ profit through value fair ‘at assets financial into assets financial non-derivative classifies company The Financial assets liabilities atfair value through profit orlossare recognised immediately inprofit orloss. financial or assets financial of acquisition the to recognition.Transaction attributable initial directly on costsappropriate, fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as at liabilities financial and assets financial than (other liabilities financial and assets financial of issue or to theacquisition attributable directly are value. that Transaction fair costs at measured initially are liabilities financial and assets Financial liabilityorequity afinancial entityand the contractual provisions oftheinstruments. one of asset financial toa rise instrument gives that acontract is instrument financial A Financial instruments Financial Reporting Standards (BFRS). the for associate (ACISL) the of performance financial unaudited prepared considering been have statements financial These until is realised statements financial separate in Grameenphone’s through dividend.Dividendincome isrecognised whenGrameenphone’s righttoreceive payment isestablished. not recognised is associate of profit/loss of Share transactions between theinvestorandassociate are eliminated totheextent oftheinterest intheassociate. any changes,whenapplicable,inthestatement ofchangesinequity. Unrealised gainsandlossesresulting from Anychange associate. ofthe there hasbeen achangerecognised directly intheequity oftheassociate, theinvestorrecognises itsshare of and of operations loss or profit theresults of of statement The in othercomprehensive income (OCI)ofthe investee ispresented oftheinvestor’sOCI.Inaddition, aspart when share date. investor’s acquisition the the reflects since income associate comprehensive the of other assets net of share investor’s the powerto in is the influence in anassociate isinitially recognised atcost. amountoftheinvestmentisadjusted Thecarrying torecognise changes Significant influence. significant those over has control joint policies. Investmentinassociate isaccounted or forusingtheequity method. Undertheequity method, theinvestment control investor not is but the investee, the of which decisions policy operating and over financial participate inthe entity an is associate An Investment inassociate proceeds amountoftheassets, andthecarrying are recognised inprofit orloss. Gains orlossesarisingfrom derecognition assets, ofintangible measured asthedifference between thenet disposal disposal. or use from expected are benefits economic future no when or disposal, on derecognised is asset intangible An Amortisation methods, useful livesandresidual values are reviewed ateach year-end andadjusted, ifappropriate. Software andothers The estimated useful livesare asfollows: iln software Billing Other operational software Telecom licence andspectrum -2011 Network managementsoftware 3G licence andspectrum Pulse Code Modulation (PCM)

same reportingsame Grameenphone’s.as period statementsfinancial The of areACISL prepared also following Bangladesh of another entity. Financial assets and financial liabilities are recognised when the company becomes a party to

Years 2016 3-7 18 15 15 5 5 7

Notes totheFinancial Statements Years 2015 3-7 18 15 15 5 5 7

83 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the company is recognised as a separate financial asset or liability.

Financial assets and liabilities are offset and the net amount is presented in the statement of financial position when, and only when, the company has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

i. Financial assets at fair value through profit or loss A financial asset is classified as fair value through profit or loss if it is classified as held-for-trading or designated as such on initial recognition. A financial asset is designated as fair value through profit or loss if the company manages such investments and make purchase and sale decisions based on their fair value in accordance with company’s documented risk management or investment strategy. Financial assets at fair value through profit or loss are measured at fair value and changes there in, which takes into account any dividend income, are recognised in the profit or loss. As at the date of statement of financial position the company had no financial assets at fair value through profit or loss.

ii. Held-to-maturity financial assets If the company has positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity financial assets. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Short-term investments are classified as held-to-maturity financial assets. Short term investments comprise investment in Fixed Deposit Receipts (FDR) with original maturity of more than three months.

iii. Loans and receivables Loans and receivables are financial assets with fixed and determinable payments that are not quoted in the active market. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. This is the most relevant category of financial asset to the company and includes trade and other receivables. Trade receivables with no stated interest rate are recognised at the original invoice amount when the impact of discounting is not material.

iv. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the above categories of financial assets. Subsequent to initial recognition, they are measured at fair value and changes there in, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. As at the date of statement of financial position the company had no financial assets available-for-sale.

3.7.2 Financial liabilities Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. Company’s financial liabilities mainly include trade and other payables, loans and borrowings.

i. Financial liabilities at fair value through profit or loss (FVTPL) Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by IAS/BAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IAS/BAS 39 are satisfied. Financial liabilities at fair value through profit or loss (FVTPL) are subsequently measured at fair value with gains or losses arising on remeasurement are recognised in profit or loss. The company has not designated any financial liabilities as at fair value through profit or loss.

84 Notes to the Financial Statements (b) ii. i. (a) 3.8 Impairment 3.7.3 ii.

possible todeterminepossible the recoverable amount of anindividual asset, thecompany estimates therecoverable amountof the asset’s recoverable amountisestimated inorder todetermine theextent ofimpairmentloss(ifany).Where itisnot at each reporting date todetermine whether there is anyindication ofimpairment.Ifanysuchindication exists, then company’sthe of amounts carrying The assets,non-financial deferred and inventories than other assets,tax are reviewed Non-financial assets recognised inprofit orloss. event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of reversal the fair value debtsecurity ofanimpaired increases andtheincrease available-for-sale can berelated objectively toan period, subsequent a in If, income. interest of component a as reflected are method interest effective the of application to attributable losses impairment cumulative in Changes loss. or profit or lossisthe in previously recognised loss impairment any less profit to equity from isreclassified that loss differenceThe cumulative between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, loss. or profit to equity in reserve value the fair in accumulated losses the reclassifying by recognised are assets financial available-for-sale on losses Impairment Available-for-sale financialassets are written-off. Otheraccounts receivable are written-off whenthere isnoreasonableexpectation offuture recovery. days oftemporary disconnection. Anypost-paid receivables remaining uncollected after oneyear ofallowance creation post-paid subscribers. Post-paid subscribers are permanentlydisconnected ifthey fail tomakeanypayment within90 As pertheexisting credit policy, 100%impairmentallowance isrecognised onreceivables from permanentlydisconnected is reversed through profit orloss. after theimpairment was recognised causes theamountofimpairmentlosstodecrease, thedecrease inimpairmentloss to-maturity investmentsecurities. Interest ontheimpaired assets continues toberecognised. Whenanevent occurring rate. Losses are recognised in the profit or loss and reflected in the allowance interest effective original account asset’s the discounted at flows againstcash estimatedfuture of value loanspresent the and andamount carrying receivables or held- its between difference the as calculated is cost amortised at measured asset financial a of respect in loss impairment An such thattheactuallossesare likelytobegreater thansuggested orlesser byhistorical trends. amount In assessing collective impairment, the company uses historical trend of probability of default, timing of recoveries and maturity investmentsecurities withsimilarriskcharacteristics. held-to- and receivables and loans together grouping by impairment for assessed collectively are significant individually not are that securities investment held-to-maturity and receivables and Loans identified. yet not but incurred been has maturity investment securities found not to be specifically impaired are then collectively assessed for any impairment that held-to- and receivables and loans significant individually All impairment. specific for assessed are securities investment held-to-maturity and receivables significant individually All level. asset collective and asset specific a both at securities) The company considers evidence of impairment for financial assets (loans and receivables and held-to-maturity investment Financial assets measured atamortised cost on theestimated future cash flows ofthatassets that can beestimated reliably. a result ofoneormore events thatoccurred after theinitial recognition oftheassets, andthelossevent(s) hadanimpact there is an objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as A financial asset, not classified as fair value through profit or loss, is assessed at each reporting date to determine whether Financial assets gain or loss is recognised in profit or loss on the sale, repurchase or cancellation of the company’s own equity instruments. liabilities. Equity instruments issued bythecompany are recognised attheproceeds received, net ofdirect issuecosts. No An equity instrument is any contract that gives rise to a residual interest in the assets of an entity after deducting all of its Equity instruments are anintegral oftheEIR.Otherfinancialliabilities part includeloansandborrowings, trade andotherpayables. amortisation process. EIR Amortised cost iscalculated bytaking intoaccount the anydiscount orpremium onacquisition andfees orcosts that through as well as derecognised are liabilities the when loss or profit in recognised are losses and Other financial liabilities are subseq of lossincurred, adjusted formanagement’s judgement astowhether current economic andcredit conditions are Notes totheFinancial Statements

85 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

the Cash Generating Unit (CGU) to which the asset belongs. An impairment loss is recognised if the carrying amount of an asset or its 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, the company considers Grameenphone as the smallest identifiable groups of assets (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 on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has 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.

3.9 Inventories Inventories consisting of scratch cards, SIM cards, mobile handsets, data cards and other devices are valued at lower of cost and net realisable value. Cost 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. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying amount of inventories to the lower of cost and net realisable value. 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.

3.10 Employee benefits The company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective trust deeds and rules. Both of the plans are funded and are recognised/approved under Income Tax Ordinance 1984.

(a) Defined contribution plan (provident fund) A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions intoa separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contribution to defined contribution plans are recognised as an employee benefit expense in profit or loss in the period during which related services are rendered by employees. Advance contributions are recognised as an asset to the extent that a cash refund or a reduction in future payment is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which employees render the services are discounted to the present value.

Grameenphone has a separate recognised provident fund scheme. All permanent employees of Grameenphone contribute 10% of their basic salary to the provident fund and the company makes matching contributions.

The company recognises contribution to defined contribution plan as an expense when an employee has rendered related services in exchange for such contribution. The legal and constructive obligation is limited to the amount Grameenphone agrees to contribute to the fund.

(b) Defined benefit plan (gratuity) A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The employee gratuity plan is considered as defined benefit plan as it meets the recognition criteria. The company’s obligation is to provide the agreed benefits to current and former employees.

The net defined benefit liability (asset) in respect of a defined benefit plan is recognised in the statement of financial position. The net defined benefit liability (asset) is made up of: i) the present value of defined benefit obligation; less ii) the fair value of plan assets; adjusted for iii) any effect of limiting a net defined benefit asset to the asset ceiling.

86 Notes to the Financial Statements (a) 3.11 (c) (b) Provisions (a) Accruals 3.12 (b) reporting periodsare asfollows: enacted atthereporting date, andanyadjustmenttotax payable inrespect ofprevious periods.Thetax rates used forthe Current tax istheexpected tax income payableonthetaxable fortheperiod,usingtax rates enacted orsubstantively Current tax extent thatitrelates toitems recognised directly inequity, inwhichcase itisrecognised inequity. Income tax expense comprises current and deferred taxes. Income tax expense is recognised in profit or loss except to the Income tax is provided. Aprovision isrecognised encashment for theamountofannualleave based onthelatest basicsalary. Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service Short-term employee benefits Relevant tax impactsofsuchremeasurements are alsorecognised underothercomprehensive income. iii) ii) i) Remeasurements ofthenet defined liability(asset) are recognised inother comprehensive income, comprising: net interest onthenet defined benefit liability(asset) isclassified asfinancialexpense. liability benefit defined net loss. the or profit in recognisedare (asset) on interest net and settlement on gain/loss and cost service past cost, service Current compatible actuarialassumptions aboutdemographic andfinancial variables. mutually using by cost service past and current related and obligations benefit defined of value present the measure to used is method Credit Unit Projected actuary. professional by determined is obligation benefit defined of value Present of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is the expenditure required thepresent to settle obligation atthereporting date. Where thecompany expects someorall a reliableestimate can bemadeoftheamountobligation. Provision isordinarily measured at thebestestimate of and obligation the settle to required be will benefits economic of outflow an that probable is it event, past a of result a as obligation constructive or legal a has company the when position financial of statement the in recognised is provision A payables. formally agreed withthesupplier, includingamounts due toemployees. Accruals are reported oftrade aspart andother Accruals are liabilities topaythathavebeen received forgoodsorservices orsupplied buthavenotbeen paid,invoiced or Accruals, provisions andcontingencies the extent thatitisnolongerprobable thattherelated tax benefit willbe realised. the deductible temporary difference can beutilised. Deferred tax assets are reviewed ateachyear-end andare reduced to A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which relate toincome taxes bythesametax entity. levied authorityonthesametaxable assets andliabilities are offset ifthere enforceable isalegally righttooffset current tax liabilities andassets, andthey tax Deferred position. financial of statement of date the by enacted substantively or enacted been have that laws the on tax ismeasured atthetax rates thatare expected tobeapplied tothetemporary differences whenthey reverse, based amounts of carrying assets and liabilities for financial reporting purpose and amounts used for taxation purpose. Deferred Deferred tax is recognised in compliance with IAS/BAS 12 Income Taxes, providing for temporary differences between the Deferred tax any change in the affect the in change any return onplanasset, excludingamounts included innet interest onthenet defined benefit liability(asset); and actuarial gainsandlosses; 2016 2015 Year Tax rate of the asset ceiling excluding amounts included in net interest on the net defined benefit liability (asset). liability benefit defined net the on interestnet in included amounts excluding ceiling asset the of 40% 40% Service cost and gain/loss on settlement are classified as personnel expense and expense personnel as classified are settlement on gain/loss and cost Service Notes totheFinancial Statements

87 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Asset Retirement Obligations (ARO) Asset Retirement Obligations (ARO) are recognised when there is a legal or constructive obligation as a result of past event for dismantling and removing an item of property, plant and equipment and restoring the site on which the item is located and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. A corresponding amount equivalent to the provision is recognised as part of the cost of the related property, plant and equipment. The amount recognised is the estimated expected cost of decommissioning, discounted to its present value. Changes in the estimated timing of decommissioning or decommissioning cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to property, plant and equipment. The company recognises ARO in respect of roof-top base station and office space. The periodic unwinding of the discount is recognised in profit or loss as a finance cost as it occurs.

(c) Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company; or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. Contingent liabilities and assets are not recognised in the statement of financial position of the company.

3.13 Revenue recognition, measurement and presentation Revenues are recognised when goods are delivered or services rendered, to the extent that it is probable that the economic benefits from the transactions will flow to the company and the revenues can be reliably measured. Revenues are measured at the fair value of the consideration received or receivable, net of discounts and sales related taxes. These taxes are regarded as collected on behalf of the authorities.

Revenues primarily comprise sale of: • Services: subscription and traffic fees, connection fees, interconnection fees, roaming charges, fees for leased lines and leased networks. • Customer equipment is primarily mobile devices/phones and data card.

(a) Subscription and traffic fees Revenues from subscription fees are recognised over the subscription period while revenues from voice and non-voice services are recognised upon actual use. Consideration from the sale of prepaid cards to customers where services have not been rendered at the reporting date is deferred until actual usage or when the cards expire or are forfeited.

(b) Connection fees Connection fees that are charged and not allocated to the other elements of an arrangement are deferred and recognised over the periods in which the fees are expected to be earned. The earning period is the expected period of the customer relationship and is based on past history of churn.

(c) Customer equipment Revenues from sales of customer equipment are normally recognised when the equipment, including the related significant risks and rewards of ownership, is transferred to the buyer and the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

(d) Discounts Discounts are often provided in the form of cash discounts or free products and services delivered by the company or by external parties. Discounts are recognised on a systematic basis over the period the discount is earned. Cash discounts or free products and services given as part of sales transactions are recognised as a reduction of revenue. Free products or services provided that are not related to sales transactions are recognised as expenses.

88 Notes to the Financial Statements (b) (a) 3.14 Leases (f) (e) consumed. are assets systematicleased another morerepresentative economicis from benefits the which basis timepattern in the of where except basis, line straight a on expenses rental of reduction a as recognised is incentives of benefit aggregate The incentivesIn theevent thatlease are received toenter intooperating suchincentives leases, are recognised asliability. the company’s net investmentoutstanding inrespect ofthe leases. on return of periodic rate constant reflect a to as so accountingallocatedperiod to is income lease Finance leases. the in Amounts due from lessees under financeleases are recognised as receivables at the amount of company’s net investment The company aslessor Contingent rentals arisingunderoperating are leases recognised asanexpenseintheperiodwhichthey are incurred. systemic basis is more representative of the time pattern in which economic benefits from theleased assets are consumed. Operating payments are lease recognised asanexpenseonstraight term, linebasisover thelease except where another expenses intheperiodwhichthey incur. they are directly toqualifyingassets, attributable inwhichcase they are capitalised. Contingent rentals are recognised as rateliability.remaininginterestbalanceof the of on areimmediatelyFinanceexpenses recognised unless loss, profit or in Lease payments areapportioned between finance expensesand reductionlease obligation achieve asto so of a constant the statement offinancialposition asafinance leaseobligation. or,lease iflower, atthepresent payments. valueThecorresponding ofminimumlease isincluded in liabilitytothelessor the inception of the at value fair their at company the of asset initially are recognised as leases finance under held Assets The company as lessee are Allotherleases classified asoperatinglessee. leases. the to ownership of rewards and risk the all substantially lease transfer of terms the whenever leases finance as classified are Leases arrangement. an in specified explicitly not is right that if even asset, the use to right a conveys arrangement the and assets or asset specific a of use the on dependent is arrangement the of fulfilment whether date: inception the The determination ofwhether anarrangement is,orcontains isbased onthesubstance alease ofthearrangement at the company is considered obligor. tobetheprimary revenue share arrangements are notoffset againsttherevenues. Instead, they are recognised as operating costs because Licence fees payabletoBangladeshTelecommunication Commission Regulatory (BTRC) thatare calculated onthebasisof telecommunications industry. Revenues from roaming are recognised gross inlinewithgenerally accepted accounting withinthe principles in thecapacity ofanagent. against therevenues andtheresulting net revenues represent themargins orcommissions earned forproviding services with anyrelated expenses charged asoperating costs. Where thecompany actsasanagent,theexpensesare offset gross a on recognised basis. Thisrequires revenue are tocomprise thegross value ofthetransaction tothecustomers, after billed traderevenues discounts, the principal, a as acts company the Where rewards. and risks financial underlying of thesubstance ofthetransaction, theresponsibility forproviding andsetting thegoodsorservices prices andthe The determination ofwhether thecompany isacting asaprincipaloranagentintransaction isbased onanevaluation Presentation General Meeting oftheinvestee orotherwise). from aninvestmentisrecognised whenthecompany’s rightstoreceive payment isestablished (declared bytheAnnual Interest income is accrued on a time proportion basis that reflects an effective yield on the financial asset. Dividend income Interest anddividendincome the amountthatisnotcontingent ofadditional items onthedelivery orotherspecified performance criteria. based ontheirrelativethe elements fair values, andrecognition oftherevenue allocated tothedelivered item islimited to and there isobjective and reliable evidence ofthe fair value of undelivered items. The consideration isallocated between is allocated to the separate identifiable components if the delivered item has value to the customer on a standalone basis When the company delivers and/or of equipmentone contract multiple as services part or arrangement, the consideration arrangementsMultiple element Notes totheFinancial Statements

89 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Rental income from operating lease is recognised on straight line basis over the term of relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to carrying amount of leased assets and recognised on a straight line basis over the lease term.

3.15 Foreign currency transactions The financial statements are presented in BDT, which is company’s functional currency. Transactions in foreign currencies are recorded in the books at the exchange rate 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 BDT at the exchange rate prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss as per IAS/BAS 21 The Effects of Changes in Foreign Exchange Rates.

3.16 Earnings per share The 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 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 Amounts recognised in the financial statements are adjusted for events after the reporting period that provide evidence of conditions that existed at the end of the reporting period. No adjustment is given in the financial statements for events after the reporting period that are indicative of conditions that arose after the reporting period. Material non-adjusting events are disclosed in the financial statements.

90 Notes to the Financial Statements 4 Property, plant and equipment, net

31 December 2016

Cost Depreciation Carrying amount As at Addition Disposal/ As at As at Charged Disposal/ As at As at 1 January during Adjustment 31 December 1 January during Adjustment 31 December 31 December Name of assets 2016 the year during the year 2016 2016 the year during the year 2016 2016

BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000

Land (Note 4.1) 807,497 - (447) 807,050 - - - - 807,050 Building 4,058,116 58,690 (66,149) 4,050,657 1,114,566 156,485 (66,149) 1,204,901 2,845,756 Base station 96,724,395 15,352,135 (1,574,914) 110,501,615 57,277,698 10,695,330 (1,550,913) 66,422,116 44,079,500 Transmission equipment 28,070,339 5,502,798 - 33,573,136 17,468,725 4,354,203 - 21,822,928 11,750,208 Computers and other IT equipment 5,145,846 1,312,939 (18,257) 6,440,528 3,786,535 768,112 (18,080) 4,536,567 1,903,961

Furniture and fixtures (including office equipment) 2,681,971 139,198 (33,565) 2,787,604 2,244,545 134,164 (33,565) 2,345,144 442,460 Vehicles 1,872,699 339,530 (214,171) 1,998,059 1,077,825 220,317 (173,354) 1,124,788 873,270 139,360,863 22,705,290 (1,907,503) 160,158,649 82,969,894 16,328,611 (1,842,060) 97,456,444 62,702,205 Capital work in progress (Note 4.3) 13,082,473 19,241,950 (23,018,177) 9,306,246 - - - - 9,306,246 152,443,336 41,947,239 (24,925,679) 169,464,895 82,969,894 16,328,611 (1,842,060) 97,456,444 72,008,451 Fibre Optic Network under finance lease 8,757,398 509,847 - 9,267,245 4,026,309 461,810 - 4,488,119 4,779,126 161,200,734 42,457,086 (24,925,679) 178,732,140 86,996,202 16,790,421 (1,842,060) 101,944,563 76,787,577 Notes totheFinancial Statements

91 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 92 Notes to the FinancialStatements 2016 Annual Report Grameenphone 4 Property, plant and equipment, net

31 December 2015

Cost Depreciation Carrying amount As at Addition Disposal/ As at As at Charged Disposal/ As at As at 1 January during Adjustment 31 December 1 January during Adjustment 31 December 31 December Name of assets 2015 the year during the year 2015 2015 the year during the year 2015 2015

BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000

Land (Note 4.1) 807,497 - - 807,497 - - - - 807,497 Building 4,058,116 - - 4,058,116 873,515 241,051 - 1,114,566 2,943,550 Base station 84,725,450 13,178,693 (1,179,749) 96,724,395 48,997,905 9,433,801 (1,154,008) 57,277,698 39,446,697 Transmission equipment 24,808,303 3,262,036 - 28,070,339 13,517,788 3,950,937 - 17,468,725 10,601,614 Computers and other IT equipment 4,002,248 1,190,209 (46,612) 5,145,846 3,366,503 466,277 (46,245) 3,786,535 1,359,311

Furniture and fixtures (including office equipment) 2,589,066 328,811 (235,906) 2,681,971 2,285,028 195,402 (235,885) 2,244,545 437,426 Vehicles 1,765,999 233,551 (126,850) 1,872,699 1,001,002 176,177 (99,354) 1,077,825 794,874 122,756,679 18,193,300 (1,589,117) 139,360,863 70,041,741 14,463,645 (1,535,492) 82,969,894 56,390,969 Capital work in progress (Note 4.3) 13,013,918 18,301,265 (18,232,710) 13,082,473 - - 13,082,473 135,770,597 36,494,565 (19,821,827) 152,443,336 70,041,741 14,463,645 (1,535,492) 82,969,894 69,473,442 Fibre Optic Network under finance lease 8,160,435 596,964 - 8,757,398 3,582,642 443,666 - 4,026,308 4,731,090 143,931,032 37,091,529 (19,821,827) 161,200,734 73,624,383 14,907,311 (1,535,492) 86,996,202 74,204,532 4.3.1 4.3 4.2 4.1 Land 4.3.2 Name ofassets equipment was asfollows: The amountofCWIPcompleted andtransferred duringtheyear tothecorresponding items ofproperty, plantand Capital work inprogress -transferred This represents primarilythecost ofnetwork equipment underconstruction andcapital inventory. Capital work inprogress (CWIP) 224,389,813 (2015:BDT 946,412,429)forderecognition offullydepreciated assets notyet disposed ofandnolongerinuse. Disposal/adjustment of base station amounting BDT 1,574,914,234 (2015: BDT 1,179,749,762) included disposal of BDT Disposal/adjustment duringtheyear Land represents freehold landacquired foroffice premises andbasestations. Transmission equipment Building 5,051,011,287) andwork-in-progress ofBDT 6,281,809,639(2015:BDT 8,031,461,227). Capital work inprogress asat31December 2016included capital ofBDT inventory 3,024,436,050(2015:BDT Capital work inprogress -components Total transfer ofCWIPduring2016alsoincludescapital write offofBDT inventory 312,887,161 (2015:BDT 39,410,816). Vehicles Furniture andfixtures Computers and otherITequipment Base station BDT'000 22,705,290 2016 2015 5,502,798 15,352,135 1,312,939 339,530 139,198 58,690

Notes totheFinancial Statements

BDT'000 13,178,693 3,262,036 18,193,300 1,190,209 233,551 328,811

-

93 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 94 Notes to the FinancialStatements 2016 Annual Report Grameenphone 5 Intangible assets, net

31 December 2016 Cost Amortisation Carrying amount As at Addition Disposal/ As at As at Charged Disposal/ As at As at 1 January during Adjustment 31 December 1 January during Adjustment 31 December 31 December Name of assets 2016 the year during the year 2016 2016 the year during the year 2016 2016 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000

Software and others (Note 5.1) 6,908,532 1,443,801 - 8,352,333 6,281,819 687,662 - 6,969,481 1,382,852 Telecom licence and spectrum (Note 5.2) 53,049,258 - - 53,049,258 12,801,908 3,520,097 - 16,322,005 36,727,253 59,957,790 1,443,801 - 61,401,592 19,083,727 4,207,759 - 23,291,486 38,110,105 Capital work in progress (Note 5.3) 171,482 1,345,636 (1,443,801) 73,317 - - - - 73,317 60,129,272 2,789,437 (1,443,801) 61,474,908 19,083,727 4,207,759 - 23,291,486 38,183,422

31 December 2015 Cost Amortisation Carrying amount As at Addition Disposal/ As at As at Charged Disposal/ As at As at 1 January during Adjustment 31 December 1 January during Adjustment 31 December 31 December Name of assets 2015 the year during the year 2015 2015 the year during the year 2015 2015 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000

Software and others (Note 5.1) 6,400,269 508,263 - 6,908,532 5,666,994 614,825 - 6,281,819 626,713 Telecom licence and spectrum (Note 5.2) 53,049,258 - - 53,049,258 9,316,366 3,485,542 - 12,801,908 40,247,350 59,449,527 508,263 - 59,957,790 14,983,360 4,100,367 - 19,083,727 40,874,063 Capital work in progress (Note 5.3) 308,014 371,731 (508,263) 171,482 - - - - 171,482 59,757,541 879,994 (508,263) 60,129,272 14,983,360 4,100,367 - 19,083,727 41,045,545

7.2 7.1 5.3 5.2 5.1 6 7 Other non-current assets Investment inassociate

legal processlegal often takes considerable amountoftime, thisamounthasbeen classified asnon-current asset. the order oftheHighCourt referred toundernote 42(c).Considering thefact thatresolution ofsuchissuesintheregular Input VAT claim contractual terms. Trade receivables, net ofimpairmentloss depositsforutilitySecurity andotherinvestments services Input VAT claim(Note 7.2) Trade receivables, net ofimpairmentloss(Note 7.1) users' acceptance. CWIP includescost ofsoftware inprocess ofinstallation/implementation andalsosoftware undertesting phaseawaiting Capital work inprogress (CWIP) Total cost oftelecom licence andspectrum alsoincludescost of7.4MHzspectrum acquired in2008for18years. finance cost over theperiodofpayment. present value oftheinstalments. The difference between total payment andthecash price equivalent isrecognised as recognised inaccordance Assets withIAS/BAS38Intangible andwas measured atthecash price equivalent beingthe of this2Glicence andspectrum was renewed foranother15years on7August2012.This2Glicence andspectrum was The tenure Cellular ofMobile Licence and14.6MHzofspectrum acquired in1996expired on10November 2011.Thetenure 2013. In 2013,Grameenphone, acquired 3Glicence andrelated 10MHzofspectrum for15years effective from 12September Telecom licence andspectrum software, oracle financialsoftware, data miningsoftware, campaign automation software etc. Software includesbusinesssoftware andnetwork managementsoftware. Businesssoftware includesmainlybilling Software andothers in associate remained unchanged asat31December 2016. investment in ACISL (BDT 486,828,493) has been fully impaired. The assessment ofrecoverable amountfrom investment 31 October 2016andestimated therecoverable to amountfrom amount theinvestment.Based ontheassessment,carrying period the for ACISL of performance financial the considering impairment for re-assessed was 2016 October 31 at distributed. yet In accordance withtherequirements ofIAS/BAS36ImpairmentAssets,amountinvestmentinACISL thecarrying as not profit/loss post-acquisition investee's of share Grameenphone's by increased/(decreased) has fair value isregarded asthecost oninitial recognition inassociate'. of'investment Initial amountofinvestment carrying stakein has been determined based onthetransaction price of51%after adjustmentforfactors suchascontrol premium. This remaining stake. Grameenphone's 49% itsremaining with ACISL hasbeen measured atfair value atthedate when51%ofACISL was disposed. Thefair value (BDT 540,235,154) ACISL over influence significant retains and 2013 Grameenphone disposed of51%itsstake initsonlysubsidiary, Grameenphone ITLtd. now known asACISL on1September This represents inputVAT claimagainstVAT already deposited atthetime of2Glicence acquisition inaccordance with This represents theamountofreceivable balance recognised atamortised cost whichhasbeen delayed beyond 31 December 2016 BDT'000 As at 3,807,204 4,587,271

741,617 38,450 Notes totheFinancial Statements 31 December 2015 BDT'000 As at 3,807,204 4,561,035

717,524 36,307

95 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

8 Inventories

As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000

Handset, data card and other devices 431,912 229,373 SIM card 88,208 142,867 Scratch card 45,284 63,100 565,404 435,340

8.1 Movement of inventories Handset, data card and other device SIM card Scratch card BDT'000 BDT'000 BDT'000 Balance as at 1 January 2015 (Gross) 262,948 151,611 126,865 Purchase during 2015 2,096,229 736,216 406,582 Issue during 2015 (2,032,750) (703,672) (453,366) 326,427 184,155 80,080 Adjustment/write-off (97,054) (41,288) (16,980) Balance as at 31 December 2015 (Net) 229,373 142,867 63,100

Balance as at 1 January 2016 (Gross) 326,427 184,156 80,080 Purchase during 2016 2,729,427 457,537 405,276 Issue during 2016 (2,534,494) (497,760) (423,052) 521,360 143,933 62,304 Adjustment/write-off (89,448) (55,725) (17,020) Balance as at 31 December 2016 (Net) 431,912 88,208 45,284

8.2 Number of inventories

As at As at 31 December 2016 31 December 2015 Units Units

Handset, data card and other device 70,705 112,967 SIM card 3,733,641 4,310,307 Scratch card 146,679,479 150,846,230

8.3 SIM card SIM cards include SIMs for new connections and replacement SIMs. Both new connection and replacement SIM attract SIM tax of BDT 100. Value added tax (VAT) and supplementary duty (SD) imposed on SIM cards are popularly known as SIM tax.

96 Notes to the Financial Statements 9.1 9 Trade andotherreceivables 0-30 days pastdue Not pastdue ageing ofgross interconnection receivables asatthestatement offinancialposition date was: This included interconnection receivables ofTk2,220,930,877asat31December 2016(2015:Tk3,678,779,373). The Trade receivables, gross Total prepayments Prepaid expenses Deferred costs related toconnection revenue Prepayments Total othercurrent receivables receivables asatthestatement offinancialposition date was: Other trade receivables asat31December 2016was Tk2,073,472,831 (2015:Tk1,747,119,517). Theageingofother trade Other non-interest-bearing receivables Receivables from employees Interest receivable Other current receivables Total trade receivables Provision Note forbaddebts/impairment(See 36.1) Trade receivables, gross (Note 9.1) Trade receivables However, asperBTRC guidelines weare obligated toprovide totheinter services connection providers. service days pastdueandprovision forbaddebtofBDT 12,367,695(2015:BDT 54,668,707)provided againstthosecustomers. 1,126,383,191) from customers againstwhomreceivables ofBDT 239,988,614(2015:BDT 229,880,585) became over 365 Total notpastduetrade receivables (gross) asat31December 2016includesreceivables ofBDT 1,836,372,568 (2015:BDT over 365days pastdue 181-365 days pastdue 91-180 days pastdue 61-90 days pastdue 31-60 days pastdue Total trade andotherreceivables 0-30 days pastdue Not pastdue 61-90 days past due 31-60 days past due over 365 days pastdue 181-365 days pastdue 91-180 days past due 31 December 2016 BDT'000 4,038,928 4,294,404 As at 7,463,977 2,282,773 (255,476) 2,073,473 1,899,019 2,220,931 1,164,876 1,135,946 1,142,276 897,789 1,117,897 472,792 166,463 107,785 158,793 147,687 146,410 142,217 10,795 94,175 41,961 6,330 2,320 6,198 Notes totheFinancial Statements -

31 December 2015 BDT'000 (1,096,586) As at 5,425,899 3,678,779 1,448,645 4,329,313 1,237,978 1,024,941 2,162,818 7,339,372 1,747,120 250,896 1,258,172 1,751,887 503,055 323,802 135,086 196,545 103,579 303,242 184,774 133,247 96,296 129,831 158,217 19,548 22,812 646

97 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

9.2 Security against trade receivables As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000

Good and secured 433,679 421,273 Good with personal security/unsecured 3,605,249 3,908,040 Doubtful and bad 255,476 1,096,586 Gross trade receivables 4,294,404 5,425,899 Provision for bad and doubtful debts (255,476) (1,096,586) Trade receivables, net 4,038,928 4,329,313

9.3 Future minimum lease payments receivables Future minimum lease payments receivables during non-cancellable period from operating leases are as follows:

(i) Not later than one year 940,865 858,653 (ii) Later than one year but not later than five years 274,201 464,821 (iii) Later than five years - - 1,215,066 1,323,474

10 Cash and cash equivalents

Cash in hand 7,958 5,478 Cash at bank 2,903,902 4,147,622 2,911,860 4,153,100

10.1 Cash and cash equivalents comprise cash balances and call deposits with maturity of three months or less from the date of acquisition that are subject to an insignificant risk of changes in their fair value, and are used by the company in the management of its short term commitments. Bank overdrafts that are repayable on demand and form an integral part of company's cash management are included as a component of cash and cash equivalents for the statement of cash flows. Bank overdraft as at 31 December 2016 was nil and 31 December 2015 was BDT 4,483,799.

10.2 Restricted cash balance Cash at bank as at 31 December 2016 include BDT 12,216,838 (2015: BDT 6,632,729) equivalent to unused Mobicash points in customer wallet and is therefore treated as restricted cash balance. Additionally, Cash at bank as at 31 December 2016 included BDT 93,058,154 (2015: BDT 92,755,407) equivalent to dividend unclaimed amount and BDT 12,867,366 (2015: BDT 12,873,070) equivalent to unclaimed IPO subscription amount. According to Articles of Association (AoA) of Grameenphone, if dividend has not been claimed for three years after passing of either the resolution at a General Meeting declaring the dividend or the resolution of the Board of Directors providing for payment for that dividend, the Board of Directors may invest the unclaimed dividend or use it in some other way for the benefit of the company until the dividend is claimed.

11 Share capital

Authorised: 4,000,000,000 ordinary shares of BDT 10 each 40,000,000 40,000,000 40,000,000 40,000,000 Issued, subscribed, called up and paid up:

1,350,300,022 ordinary shares of BDT 10 each 13,503,000 13,503,000 13,503,000 13,503,000

The company was initially registered with ordinary shares of BDT 43.00 each. These shares were subsequently converted into BDT 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 the current and comparative period.

98 Notes to the Financial Statements

b)

a) 11.1 14 15 12 13 Capital reserve Share premium Finance obligation lease Deposit from shareholders 1,000,001-1,000,000,000 100,001-1,000,000 50,001-100,000 40,001-50,000 30,001-40,000 20,001-30,000 10,001-20,000 5,001-10,000 Grameen Shakti, Bangladesh Grameen Kalyan, Bangladesh Classification ofshareholders by range ofnumbershares held Shareholding range 501-5,000 Grameen Telecom, Bangladesh Telenor AsiaPte Ltd., Singapore per theCompanies Act1994. in accordance withprovisions ofAssociation ofArticles ofGrameenphone. asdividend Thisamountisnotdistributable of BDT 43.00eachin2004.Thebalance BDT 2.84pershare was transferred tocapital account. reserve Theconversion was In 1999,Grameenphone issued 5,086,779preference shares ofBDT 45.84each, whichwere converted shares intoordinary cost ofBDT 543,777,495was set offagainstshare premium asperIAS/BAS32FinancialInstruments:Presentation. Total amountofBDT 8,384,003,437was received asshare premium inrespect ofshares issued toshareholders. Net issue 1-500 General public,GPemployees andinstitutional Nye Telenor Communications Mobile IIIAS,Norway Nye Telenor Communications Mobile IIAS,Norway Telenor Communications Mobile AS,Norway Name ofshareholders Percentage ofshareholdings Shareholding position revised term andlease beingextended uptoJune2027. agreement 2005. Thelease wasamended on13June2007withGuaranteed further 1 January AnnualRental (GAR)being since been such treated has as and lease reclassified finance been as has it 2004, agreementin lease the to amendment facilities.network was alongwithitsancillary treated Thelease asoperating until lease theendof2004.Following an Grameenphone entered agreement intoalease withBangladeshRailway (BR)in1997fortherighttouseoptical fibre from Telenor Communications Mobile AS,Norway, whichhasnotbeen used againstissuance ofshares. received money share the of balance represents date position financial of statement the at as shareholdersfrom Deposit

31 December 2016 31 December 2016 55.8% 34.2% 10.0% 100% 0.0% 0.0% 0.0% 0.0% 0.0% As at As at No. ofshareholders 35,549 27,809 6,547 % ofholding

126 256 557 54 65 25 79 31

31 December 2015 31 December 2015 55.8% 34.2% 10.0% 100% 0.0% 0.0% 0.0% 0.0% 0.0% As at As at 43,698 33,663 8,658

676 328 124 60 76 78 31 4

13,503,000,220 31 December 2016 31 December 2016 4,617,664,090 1,350,300,022 7,534,077,240 1,351,252,000 1,278,011,292 37,768,926 10,249,805 5,680,606 3,652,905 1,596,958 As at As at Notes totheFinancial Statements 5,939,381 4,053,176 1,898,182 1,448,791 Value ofshares (BDT) 2,150 2,150 2,150 No. ofshares 220 220

13,503,000,220 31 December 2015 31 December 2015 4,617,664,090 1,350,300,022 1,240,432,946 7,534,077,240 1,351,252,000 68,986,198 13,382,775 5,750,294 4,852,474 4,654,189 1,886,756 2,120,457 As at As at 6,810,761 1,423,172 2,150 2,150 2,150 220 220

99 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

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. Grameenphone'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.

Apart from the above, Grameenphone has obtained total 934.86 Km of fibre optic network (FON) from Summit Communications Limited against a lease contract for 30 years. This lease has been treated as finance lease as per IAS/ BAS 17 Leases. Total lease obligation as of 31 December 2016 for this FON amounted to BDT 129,416,363 (2015: BDT 80,542,375). As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000

Finance lease obligation 5,336,563 5,358,169 Less: Current portion (Note 20) 242,951 151,022 5,093,612 5,207,147

Future minimum Present value of lease payments Interest minimum lease payments BDT'000 BDT'000 BDT'000 Future minimum lease payments and their present value as at 31 December 2016 were as follows:

(i) Not later than one year 1,018,386 775,436 242,951 (ii) Later than one year but not later than five years 3,857,225 2,818,624 1,038,600 (iii) Later than five years 6,087,183 2,032,170 4,055,012 10,962,794 5,626,230 5,336,563

Future minimum lease payments and their present value as at 31 December 2015 were as follows: (i) Not later than one year 939,377 788,355 151,022 (ii) Later than one year but not later than five years 3,736,686 2,950,331 786,355 (iii) Later than five years 7,096,691 2,675,899 4,420,792 11,772,754 6,414,586 5,358,169

16 Loans and borrowings

Loans and borrowings include a long-term syndicated loan led by the International Finance Corporation (IFC) of USD 345 Million at 6-month-LIBOR + 3.5% interest rate. The full loan amount of USD 345 Million has been drawn down in multiple tranches, the repayment of which is in 10 installments. The first 3 installments have been repaid in October 2015, April 2016 and October 2016, and current outstanding loan balance is USD 241.50 Million. The final installment is scheduled to be paid in April 2020. The syndicate members include IFC, DEG, FMO, Proparco, CDC and OFID. This financial liability has been recognised at amortised cost as per IAS/BAS 39 Financial Instruments: Recognition and Measurement.

Current portion of loans and borrowings include short-term bank loan of BDT 2,688,200,000 (2015: BDT 4,600,000,000) and the part of the above long-term syndicated loan falling due for repayment in next 12 months.

100 Notes to the Financial Statements

17.2 17.1

17 Deferred tax liabilities

Finance obligation lease includingcurrent portion (Note 15) Property, plantandequipment underfinancelease (Note 4) Deferred tax liability@15%tax rate (Note 17.2) Deferred tax liability@40%tax rate (Note 3.11) Net temporary taxable difference Employee benefit plans(funded) Other current liabilities (profit sharingplan) Investment inassociate Difference (Note forvehicle 17.1) assets andliabilities are givenbelow: Income Taxes. Related deferred tax (expense)/income havebeen disclosed innote 34.Thecomponents ofdeferred tax Deferred tax assets and liabilities have been recognised and measured in accordance with the provisions of IAS/BAS 12 CWIP and leased assets) (NoteCWIP andleased 4) Property, plantandequipment (excludingland, As at31December 2016 Investment inassociate Difference (Note forvehicle 17.1) Property, plantandequipment underfinancelease(Note 4) assets) (NoteCWIP andleased 4) Property, plantandequipment (excludingland, As at31December 2015 Deferred tax liabilities (Note 17.3) Trade receivables (Note 9) Telecom licence, spectrum, software andothers Trade receivables, net ofimpairmentloss of Assets, amountofinvestmentinassociate thecarrying hasbeen fullyimpaired asdisclosed inNote 6. deferred tax computation purpose. During the year 2016, in accordance with the requirements of IAS/BAS 36 Impairment Communications Infrastructure Solutions Ltd. and hence tax rate applicable to capital gain (15%) has been considered for Temporary difference related inassociate' to'investment isexpected tobereversed through ofshares sale in Accenture Applicable tax rate forinvestment inassociate exceeding suchlimits. BDT 2.5millionpercar) ofsuchcars fortax purpose.Difference represents forvehicle theamountofdepreciated cost provisions ofIncome Tax Ordinance 1984,depreciation onsuch cars isallowed onlyuptocertain limitofcost (currently This represents thepermanentdifference related tosedan cars, notplyingforhire, owned byGrameenphone. Asperthe Difference forvehicle Deferred tax liabilities (Note 17.3) Deferred tax liability@15%tax rate (Note 17.2) Deferred tax liability@40%tax rate (Note 3.11) Net temporary taxable difference Employee benefit plans(funded) Other current liabilities (profit sharingplan) Finance obligation lease includingcurrent portion (Note 15) Trade receivables (Note 9) Telecom licence, spectrum, software andothers Trade receivables, net ofimpairmentloss

Carrying amount (5,336,563) 40,874,063 (5,358,169) (1,335,086) (1,444,641) 55,583,472 BDT'000 4,038,928 38,110,105 61,895,155 (207,876) 4,731,090 4,731,090 4,329,313 (141,009) (185,353) 4,779,126 (186,193) 710,643 717,524 741,617

-

38,940,547 37,360,423 41,830,725 Tax base BDT'000 31,143,840 5,314,808 1,247,868 1,483,234 4,170,347 36,751

Notes totheFinancial Statements ------

Taxable/(deductible) tempory differencetempory 20,589,846 (5,336,563) 24,439,632 temporary (5,358,169) (1,335,086) 28,984,529 (1,444,641) 29,172,849 24,534,732 BDT'000 20,197,758 7,809,546 (956,662) 8,235,939 8,235,939 (985,495) (830,442) (207,876) 7,910,630 (530,344) 4,731,090 4,779,126 (141,009) (185,353) (741,617) (186,193) (131,419) 673,892 101,084 - -

101 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

17.3 Actuarial gain/loss from re-measurement of defined benefit obligations Deferred tax liabilities as of 31 December 2016 includes net deferred tax asset of BDT 534,034,217 (2015: BDT 577,856,400) for actuarial gain/loss from re-measurement of defined benefit obligations corresponding impact of which has been recognised under other comprehensive income.

18 Employee benefits

As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000 Amounts recognised in the statement of financial position Defined benefit obligation (4,000,142) (3,768,429) Fair value of plan assets 2,665,056 2,323,788 Net defined benefit obligation (1,335,086) (1,444,641)

Change in benefit obligation Benefit obligation at end of prior year (3,768,429) (2,001,293) Current service cost (304,977) (280,000) Interest expense (259,060) (222,907) Benefit payments from plan assets 34,693 87,418 Benefit payments from employer 586 98,908 Settlement payments from plan assets 337,710 - Remeasurements due to change in demographic assumptions 72,809 - Remeasurements due to change in financial assumptions (224,826) (1,288,893) Remeasurements due to experience adjustments 111,352 (161,662) Defined benefit obligation at end of year (4,000,142) (3,768,429)

Change in fair value of plan assets Fair value of plan assets at end of prior year 2,323,788 2,001,293 Interest income 177,753 238,907 Total employer contributions (i) Employer contributions 495,218 264,000 (ii) Employer direct benefit payments 586 - Benefit payments from plan assets (34,693) (87,418) Benefit payments from employer (586) (98,908) Settlement payments from plan assets (337,710) - Remeasurements for return on assets (excluding interest income) 40,700 5,914 Fair value of plan assets at end of year 2,665,056 2,323,788

Fair value of plan assets Cash and cash equivalents 388,118 279,310 Debt instruments 2,276,938 2,044,478 Total 2,665,056 2,323,788

Components of Defined Benefit Cost (DBO) Current service cost 304,977 280,000 Interest expense on DBO 259,060 222,907 Interest (income) on plan assets (177,753) (238,907) Defined benefit cost included in profit or loss 386,284 264,000

Remeasurements (recognised in other comprehensive income (OCI)) Due to change in demographic assumptions (72,809) - Due to change in financial assumptions 224,826 1,288,893 Due to change in experience adjustments (111,352) 161,662 Return on plan assets (excl. interest income) (40,700) (5,914) Total remeasurements in OCI (35) 1,444,641

Total defined benefit cost recognised in profit or loss and OCI 386,249 1,708,641

102 Notes to the Financial Statements

Benefit calculation Normal retirement age Basis ofgratuity Maximum limitofbenefit paid Applicable salary Vesting criteria Risks associated withthe plan Nature ofbenefits Plan sponsor Significant characteristics ofplan Next 5years Year 5 Year 4 Year 3 Year 2 Year 1 Expected total benefit payments Expected employer contributions Expected cash flows forfollowing year Net defined benefit liability(asset) asofend year Employer direct benefit payments Employer contributions Total remeasurements included inOCI Defined benefit costincluded in profit orloss Future salary growthFuture salary in% Discount rate in% rates remain constant. benefit defined (decreased) increased/ have would assumptions significant obligation following in points basis 50 of change A Sensitivity analysis Expected average remaining working livesofemployees Future turnover in% growthFuture salary in % Discount rate in% Significant actuarial assumptions Opening balance ofnet defined benefit liability(asset) Net defined benefit liability(asset) reconciliation Employee benefits (contd.) Above 45 Age 31-45 Up toage30 of thecompany bytheamountsshown below. inparticular Thisanalysisassumesthatallothervariables, interest : : : : : : : : : - More foreachcompleted than10years :2monthapplicablebasic salary years ofservice - Upto 10 years : 1.5 month applicable basic salary foreachcompleted- Upto10years :1.5monthapplicable basicsalary years ofservice years ofservice - Past of5years service foreach completed to5.5years: 1monthapplicable basicsalary 60 years Accrued benefit No upperlimitonbenefit Last drawn monthlysalary 5 year of continuous service Plan sponsorbears interest rate risksassociated of the plan defined benefit plan Final salary Grameenphone 50 bpincrease BDT'000 BDT'000 (204,396) As at31December 2016 205,387

50 bpdecrease (191,103) 222,448 31 December 2016 31 December 2016 BDT'000 As at As at 50 bpincrease 2,310,804 1,335,086 (495,218) 1,444,641 250,000 299,339 386,284 395,635 285,338 375,322 337,134 10 years BDT'000 BDT'000 6.90% (586) 10.0% As at31December 2015 (201,744) (35) 10% Notes totheFinancial Statements 223,012 11% 5%

31 December 2015 31 December 2015 50 bpdecrease BDT'000 As at As at (264,000) 2,168,892 1,444,641 1,444,641 200,000 (206,154) 264,000 260,300 390,380 289,378 355,475 321,729 220,427 10 years 7.40% 10.0% 10% 15% 3% - - 103 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

19 Other non-current liabilities

As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000 Security deposits from subscribers and channel partners 428,016 419,249 Asset retirement obligations (Note 19.1) 124,073 126,699 Other non-current liabilities 74,883 126,557 626,972 672,505

19.1 Asset retirement obligations (ARO) Opening balance 126,699 123,610 Provision made during the year 20,164 4,210 146,863 127,820 Provision released during the year (22,706) (1,121) Closing balance 124,157 126,699

Grameenphone recognises Asset Retirement Obligations (ARO) in respect of roof-top base stations and office space for any constructive and/or legal obligations for dismantling, 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 outflows required to settle such obligations. Unwinding of the discount is charged as finance expense in the profit or loss.

20 Trade and other payables

Trade payables including liability for capital expenditure 12,135,515 11,021,307 Accrued expenses 5,871,661 5,238,083 Finance lease obligation 242,951 151,022 18,250,127 16,410,412 Indirect taxes 1,512,521 1,073,113 Deferred connection revenue 1,291,941 324,198 Unearned revenue 4,308,576 4,767,616 25,363,165 22,575,339

21 Provisions Provisions includes provision for BTRC revenue share, annual operating licence fee, office running, other operational expenses and capital expenditure.

22 Current tax payable Movement of income tax provision is shown as under: Opening balance 19,785,655 19,629,253 Provision made during the year including transactions for other comprehensive income 16,005,063 14,720,427 35,790,718 34,349,680 Paid during the year (incl. tax deducted at source) (16,169,852) (14,564,025) Provision released during the year (678,307) - Closing balance 18,942,559 19,785,655

23 Other current liabilities Other current liabilities mainly include accruals for profit sharing plan BDT 207,853,964 (2015: BDT 185,352,716), payable for bills pay receipts BDT 756,539,891 (2015: BDT 754,499,752) and dividend unclaimed BDT 93,058,154 (2015: BDT 92,755,407).

104 Notes to the Financial Statements

26.1 24.3 24.2 24.1

29 26 28 24 25 27 Service maintenanceService fee includescosts related tooperation andmaintenance communication ofmobile ofserviceability network. annual spectrum fee andcharges. with BTRCfund' as per licencing conditions. Licencing conditions also require Grameenphone to pay annual licence fee and Grameenphone shares 5.5% of itsrevenue as 'revenue sharing' and 1.0% ofitsrevenue as'contribution tosocialobligation 3,002 asat31December 2015. Total ofBDT numberofemployees havingannualsalary 36,000orabove eachwas 2,651asat31December 2016and Number ofemployees retirementvoluntary of348employees duringtheyear. sharing (WPPF), training and other related costs. Additionally, gratuity expense of 2016 includes BDT 944,605,087 for provident, gratuity, including benefits differentemployment bonuses, salaries, costincludes personnel and Salaries profit Sales, marketingSales, andrepresentation costs include costs related totrade marketing andsubscriber acquisition. Commissions Advertisement andpromotional expenses Other operation andmaintenance Vehicle maintenance expense maintenanceService fee Cost ofmaterials includescost andservices ofSIMcard, scratch card, devices andcontents. Traffic charges mainlyincludenational andinternational interconnection cost. Cost ofmaterials andservices Traffic charges This mainlyincludesrevenue from telecom facility sharingandcommission income. Other revenues This mainlyincludesrevenue handsets/devices fromofmobile sale anddata cards. Revenue from customerequipment This includesrevenue from voice andnon-voice traffic, subscription and connection fee andinterconnection revenue. Revenue from communication mobile Other revenues (Note 24.3) Revenue from customerequipment (Note 24.2) Revenue from communication mobile (Note 24.1) The following isananalysisofrevenue fortheyear: Sales, marketingSales, andrepresentation costs Revenue sharing,spectrum charges andlicence fees andpersonnelSalaries cost Operation andmaintenance Cost ofmaterial andtraffic charges Revenue Sales, marketingSales, andcommissions (12,497,326) BDT'000 109,691,382 (10,661,819) (4,929,283) 114,862,160 (3,757,496) (5,732,536) (1,768,930) (1,767,564) (1,903,281) (1,621,922) (8,825,115) 2016 2,419,826 (368,010) 2,750,952

Notes totheFinancial Statements BDT'000 100,409,598 (10,693,577) (3,035,990) (12,913,376) 104,754,372 (5,705,995) (3,064,675) (4,987,582) (1,088,054) (7,943,194) 2015 (4,419,129) (1,934,192) (266,400) 2,294,458 2,050,316

105 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

30 Other operating (expenses)/income, net

2016 2015 BDT'000 BDT'000

Consultancy and professional services (Note 30.1) (963,853) (982,062) Statutory audit fees (2,000) (2,000) Rental expense for property, plant and equipment (Note 30.2) (2,698,401) (1,759,128) Fuel and energy costs (3,080,001) (2,228,105) Bad debt expense (Note 30.3) (204,515) (279,826) Rental and other income 360,048 277,776 Gain/(loss) on disposal of assets (255,118) (80,929) Others (Note 30.4) (1,359,121) (1,073,780) (8,202,961) (6,128,054)

30.1 Consultancy and professional services This includes fees for accounting and legal services, technical and business consultancy and other professional services.

30.2 Rental expense for property, plant and equipment Rent includes location rent for base stations, mobile switching centres (switch) and other locations. Future minimum lease payments during non-cancellable period for such locations are as follows:

(i) Not later than one year 367,980 468,942 (ii) Later than one year but not later than five years - - (iii) Later than five years - - 367,980 468,942

30.3 Bad debt expense Provision (made)/reversed during the year (238,764) (307,260) Recovery of bad debt during the year 34,249 27,434 Bad debt expense (204,515) (279,826)

Provision for doubtful debts has been made as per policy of the company mentioned in Note 3.8.

30.4 Others This includes office supplies, printing and postage, travelling, subscriptions, meeting, insurance etc.

31 Depreciation and amortisation

Depreciation of property, plant and equipment (16,790,421) (14,907,311) Amortisation of intangible assets (4,207,759) (4,100,368) (20,998,180) (19,007,679)

32 Share of profit/loss of associate Share of profit/loss of associate represents Grameenphone’s share of Accenture Communications Infrastructure Solutions Ltd.'s (previously known as GPIT) profit/loss for ten month period ended 31 October 2016. Thereafter, the carrying amount of investment in associate has been fully impaired as disclosed in Note 6 and recognition of Grameenphone's share of further losses has been discontinued.

33 Finance (expense)/income, net

Interest income 152,879 211,892 Unwinding/(rewinding) of discount on non-current trade receivable (Note 36.1) (93,590) 93,590 Interest expense (2,499,797) (2,070,241) Net interest cost on defined benefit obligation (81,306) 16,000 Other finance expenses (69,254) (191,978) (2,591,068) (1,940,737)

106 Notes to the Financial Statements 35.2 35.1

34 35 potential shares. ordinary No diluted earningspershare isrequired tobecalculated fortheperiodspresented asGrameenphone hasnodilutive Diluted earningspershare total numberofdays in theperiod. weighting factor. Thetime-weighting factor isthenumberofdays thattheshares are outstanding asaproportion ofthe at thebeginning oftheperiod,adjusted shares bythenumberofordinary issued duringtheperiodmultiplied byatime- The weighted average shares numberofordinary outstanding shares duringtheperiodisnumberofordinary outstanding Weighted average shares numberofordinary Basic anddiluted earningspershare (Note 3.16)(inBDT) Weighted average numberofshares (Note 35.1) Profit forthe year (inBDT)

Provision released duringtheyear Income tax expensesfortheyear (Note 3.11) Current tax expense reversal oftemporary differences Deferred tax (expense)/income relating toorigination and Deferred tax (expense)/income Earnings pershare Income tax expense 22,526,355,043 1,350,300,022 (16,048,893) BDT'000 (15,652,051) (15,370,586) 2016 (281,465) 678,307 16.68 Notes totheFinancial Statements 19,706,891,276 1,350,300,022 BDT'000 (14,720,427) (14,720,427) (15,215,468) 2015 (495,041) 14.59 - 107 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

36 Financial risk management

Company’s financial risk management is governed by Treasury Policy as approved by the Board of Directors. Company’s principal financial assets include trade and other receivables, cash and short-term deposits that arise directly from its operations. Company’s financial liabilities mainly include trade and other payables, finance lease obligation and loans and borrowings. The main purpose of these financial liabilities is to finance the company’s operations. The company is exposed to credit risk, liquidity risk and market risk in relation to its financial instruments.

36.1 Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Company’s exposure to credit risk primarily relates to trade receivables and balances with banks including short and long term deposits. Customer credit risk, where appropriate, is assessed by using qualitative and quantitative criteria. Outstanding trade receivables are regularly monitored and appropriate impairment charge is considered as per company’s policy.

Credit risk relating to balances with banks is managed by treasury department in accordance with company’s policy. Minimising counterparty risk is given more importance to yield on investment in making investment decisions. Counterparty limits are reviewed and approved by the Board of Directors.

Company’s maximum exposure to credit risk for the components of the statement of financial position was represented by the carrying amounts as illustrated below:

As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000

Trade receivables - non-current 741,617 717,524 Trade receivables - current 4,038,928 4,329,313 Other current receivables Interest receivable - 646 Receivables on Employees - Non-Interest Bearing 6,330 19,548 Other non-interest-bearing receivables 1,135,946 1,237,978 1,142,276 1,258,172

Cash at bank 2,903,902 4,147,622 8,826,723 10,452,632

Movement of the provisions and allowances against trade receivables during the year was as follows:

Opening balance 1,626,930 1,482,094 Provision made during the year 238,764 307,260 Adjustment due to rewinding/(unwinding) of discount 93,590 (93,590) 1,959,284 1,695,764 Amounts written off (962,191) (68,834) Closing balance 997,093 1,626,930

The above provisions and allowances include both provision for uncollectibles and allowances for impairment of receivables from delayed collection.

The maximum exposure to credit risk for trade receivables as at the statement of financial position date by geographic regions was:

Domestic 4,706,851 4,675,453 Asia 39,136 174,063 Europe 30,772 173,752 Australia 573 913 America 2,615 22,316 Africa 598 340 4,780,545 5,046,837

108 Notes to the Financial Statements 36.2 Liquidity risk Liquidity risk is the risk that the company is unable to meet its financial obligations as they fall due. The company forecasts its cash flow requirements and ensures that it has sufficient cash and cash equivalents and loan facilities to cover expected needs for liquidity during the next 12 months. The company maintains a balanced maturity profile of debt obligations and in general minimises current excess cash.

The table below gives the maturity profile of the company's financial liabilities based on contractual undiscounted payments.

As at 31 December 2016 Carrying Maturity Nominal Contractual 6 months 6-12 1-2 2-5 More than amount date Interest rate Cash flows or less months years years 5 years BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000

Finance lease obligation 5,336,563 June 2027 15% 10,962,793 566,368 452,019 919,104 2,938,120 6,087,183 (including current portion)

Loans and borrowings - long-term 13,556,284 April 2020 6-month-LIBOR + 14,599,659 3.5% - - 6,036,984 8,562,676 -

Loans and borrowings - short-term

Foreign 5,411,884 October 2017 6-month-LIBOR + 3.5% 6,295,631 3,181,678 3,113,954 - - - Local 2,688,200 January 2017 3.70% - 4.15% 2,697,307 2,697,307 - - - -

Trade and other payables Trade payables 12,135,515 December 2017 N/A 12,135,515 5,142,090 6,993,425 - - - including liability for capital expenditure

Accrued expenses 5,871,661 December 2017 N/A 5,871,661 3,346,847 2,524,814 - - -

Other current liabilities 1,399,470 December 2017 N/A 1,399,470 1,399,470 - - - - Notes totheFinancial Statements 46,399,577 53,962,036 16,333,760 13,084,212 6,956,088 11,500,796 6,087,183 109 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 110 Notes to the FinancialStatements 2016 Annual Report Grameenphone Liquidity risk (contd...)

As at 31 December 2015 Carrying Maturity Nominal Contractual 6 months 6-12 1-2 2-5 More than amount date Interest rate Cash flows or less months years years 5 years BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000 BDT'000

Finance lease obligation 5,358,169 June 2027 15% 11,772,754 502,426 436,951 888,970 2,847,717 7,096,690 (including current portion)

Loans and borrowings - long-term 18,964,209 April 2020 6-month-LIBOR + 20,491,682 3.5% - - 6,130,828 14,360,854 -

Loans and borrowings - short-term

Foreign 5,375,569 December 2016 6-month-LIBOR + 3.5%6,354,399 3,204,861 3,149,538 - - - Local 4,600,000 January 2016 5% - 6.15% 4,612,506 4,612,506 - - - -

Trade and other payables Trade payables 11,021,307 December 2016 N/A 11,021,307 4,584,240 6,437,067 - - - including liability for capital expenditure Accrued expenses 5,389,105 December 2016 N/A 5,389,105 3,071,790 2,317,315 - - -

Other current liabilities 1,210,685 December 2016 N/A 1,210,685 1,210,685 - - - - 51,919,044 60,852,438 17,186,509 12,340,870 7,019,798 17,208,571 7,096,690 36.3 Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

a) Currency risk Foreign currency risk is the risk of changes in the fair vale or future cash flows of an exposure due to changes in foreign exchange rates. The company's exposure to foreign currency risk relates primarily to the company's operating activities (consultancy, roaming revenue and expense) and financing activities (borrowing in foreign currency). The company is mainly exposed to changes in USD and NOK rates. The company's exposure to foreign currency changes for other currencies is not material. i) Exposure to currency risk The company's exposure to monetary assets and liabilities denominated in foreign currencies was as follows (BDT in thousand):

As at 31 December 2016 As at 31 December 2015 USD NOK GBP EUR JPY USD NOK GBP EUR JPY

Foreign currency denominated assets Receivable from Telenor entities 107,500 - - - - 178,775 - - - - Accounts receivable 71,961 - - - - 336,875 - - - - Cash at bank 125,819 - - - - 566,032 - - - - 305,279 - - - - 1,081,682 - - - - Foreign currency denominated liabilities Loans and borrowings (19,248,303) - - - - (24,703,904) - - - - Payable to other Telenor entities* (921,848) (1,566,816) - - - (1,006,380) (1,188,696) - - - Trade and other payables for expenses (1,200,405) - - - - (2,204,191) - - - (21,370,556) (1,566,816) - - - (27,914,475) (1,188,696) - - - Net exposure (21,065,276) (1,566,816) - - - (26,832,793) (1,188,696) - - -

* Payable to other Telenor entities represents payable for business service costs, consultancy fees etc. which are included mainly in trade and other payables for expenses.

The following significant exchange rates have been applied:

Notes totheFinancial Statements Exchange rate as at 31 December 2016 31 December 2015 BDT BDT US Dollar (USD) 78.92 78.44 Norwegian Kroner (NOK) 9.13 8.90 Great Britain Pound (GBP) 97.08 116.40 EURO (EUR) 82.91 85.65 Japanese Yen (JPY) 0.67 0.65

111 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Market risk (contd.)

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 company by the amounts shown below. This analysis assumes that all other variables, in particular interest rates remain constant.

Profit or loss Equity 10 bp increase 10 bp decrease 10 bp increase 10 bp decrease 31 December 2016 BDT'000 BDT'000 BDT'000 BDT'000

Expenditures denominated in USD (21,065) 21,065 (21,065) 21,065 Expenditures denominated in NOK (1,567) 1,567 (1,567) 1,567 Expenditures denominated in GBP - - - - Expenditures denominated in EURO - - - - Expenditures denominated in JPY - - - - Exchange rate sensitivity (22,632) 22,632 (22,632) 22,632

31 December 2015

Expenditures denominated in USD (26,833) 26,833 (26,833) 26,833 Expenditures denominated in NOK (1,189) 1,189 (1,189) 1,189 Expenditures denominated in GBP - - - - Expenditures denominated in EURO - - - - Expenditures denominated in JPY - - - - Exchange rate sensitivity (28,022) 28,022 (28,022) 28,022

b) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. Exposure to fair value movement relates to fixed rate instruments subject to fair value accounting and exposure to cash flow fluctuation relates to variable rate instruments. The company is primarily exposed to cash flow fluctuation arising from variable rate borrowings. The objective of interest rate risk management for Grameenphone is to reduce financial cost and ensure predictability.

Profile As at 31 December 2016, the interest rate profile of the company's interest bearing financial instruments was:

Carrying amount As at As at 31 December 2016 31 December 2015 BDT'000 BDT'000 Fixed rate instruments Financial assets Short-term investment - - Financial liabilities Loans and borrowings 2,688,200 4,600,000

Floating rate instruments Financial liabilities Loans and borrowings 18,968,168 24,339,778

112 Notes to the Financial Statements

37 through profit orloss Assets carried atfair value Financial assets Short termShort investment Held tomaturityassets No changeswere madeintheobjectives, policiesorprocesses formanagingcapital duringtheyear ended 31December 2016. financial position were asfollows: Fair value offinancialassets andliabilities ofthe company together amountshown withinthestatementcarrying of There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the current period. its Board ofDirectors. shareholders, issuenew shares orobtain long-term debt.Company has capital structure anddividendpolicyapproved by In order tomaintain oradjust thecapital structure, thecompany may adjusttheamountof dividend,return capital to long-termsupport strategic ambitions ofthecompany. totheequity holders attributable ofthecompany.reserves objective capital ofcompany's Theprimary managementisto capitalFor thepurposeofcompany's management, capital includesissued capital, share premium andallotherequity Trade andotherreceivables Loans andreceivables through profit orloss Liabilities carried atfair value Financial liabilities Finance obligation lease Liabilities carried atamortised costs Loans andborrowings -long-term Trade andotherpayables Loans andborrowings -short-term Other current liabilities * Fair value ofsuchinstruments isnotlikelytobesignificantly different from amountsofsuchinstruments. the carrying Loans andborrowings Finance obligation lease The interest rates used to discount estimated cash flows, whenapplicable, were asfollows: Interest rates used todetermine amortised cost Capital management Local Foreign Carrying amount 13,556,284 25,363,165 BDT'000 8,100,084 5,336,563 7,463,977 1,399,470 As at31December 2016 - - -

Fair value BDT'000 13,556,284 6-month-LIBOR +3.5% 8,100,084 5,336,563 7,463,977 3.70% -4.15% N/A* N/A* 15.00% 2016 - - -

Carrying amount BDT'000 18,964,209 22,575,339 9,975,569 7,339,372 As at31December 2015 5,207,147 1,210,685 Notes totheFinancial Statements 6-month-LIBOR +3.5% - - - 5% -6.15% 15.00% 2015 Fair value BDT'000 18,964,209 9,975,569 5,207,147 7,339,372 N/A* N/A* - - -

113 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 114 Notes to the FinancialStatements 2016 Annual Report Grameenphone 38 Related party disclosures

During the year ended 31 December 2016, the company entered into a number of transactions with related parties in the normal course of business. The names of the significant related parties, nature of these transactions [expenditures/(revenue)/, receivables/(payables) and dividend payments] and amounts are set out below in accordance with the provisions of IAS/BAS 24 Related Party Disclosures. Nature of relationship and significance of the amounts have been considered in providing this disclosure.

38.1 Key management personnel compensation 2016 2015 BDT'000 BDT'000 Short term employee benefits 631,273 614,891 Post employment benefits 65,271 49,344 Other long term benefits 12,219 7,722 708,763 671,956

Key management personnel compensation includes benefits for employees of the rank of Deputy Director and above. No remuneration is given to the Board of Directors apart from attendance fees in connection with Board and Board Sub-Committee meetings. During the year 2016, attendance fees in connection with Board and Board Sub- Committee meetings are BDT 875,840 (2015: BDT 793,730).

38.2 Debts due from and due to key management personnel Attendance fees of Board of Directors which are not yet paid, includes BDT 3,143,166 as at 31 December 2016 (2015: BDT 2,870,469). Other than that no debts were due from and due to key management personnel of the company.

Key management personnel of Grameenphone, may use mobile communication services of Grameenphone. These services are charged on the arm's length basis after a certain usage limit and trade and other receivables may include receivables for providing mobile communication services to them.

38.3 Other related party transactions during the year 2016 2015 Name of related parties Nature Nature of transactions BDT'000 BDT'000

Telenor Mobile Communications AS Shareholder Dividend payment 10,924,412 10,924,412 Nye Telenor Mobile Communications II AS Shareholder Dividend payment 3 3

Nye Telenor Mobile Communications III AS Shareholder Dividend payment 3 3 Telenor Asia Pte. Ltd. Shareholder Dividend payment 3 3 Grameen Telecom Shareholder Commission expense 177,358 191,427 Dividend payment 6,695,613 6,695,613 Grameen Kalyan Shareholder Dividend payment 0 0 Grameen Shakti Shareholder Dividend payment 0 0 Accenture Communications Infrastructure Associate Purchase of IT service, equipments and softwares 1,196,310 1,486,310 Solutions Ltd. Rental income and other income (62,412) (64,694)

2016 2015 Name of related parties Nature Nature of transactions BDT'000 BDT'000

Telenor ASA Telenor group entity Consultancy and professional service fee 382,819 166,998 IT support Cost 66,136 103,017

Telenor Consult AS Telenor group entity Consultancy and professional service fee including 5,977 111,454 compensation for key management personnel where relevant Telenor Global Services AS Telenor group entity Consultancy and professional service fee 28,174 28,092

Telenor Global Shared Services AS Telenor group entity Consultancy and professional service fee 435,050 418,691

Telenor GO Telenor group entity Consultancy and professional service fee including 227,944 211,770 compensation for key management personnel where relevant

Telenor Digital AS Telenor group entity Consultancy and professional service fee 99,136 -

Telenor Norway Telenor group entity Roaming revenue net of discount (360) (694) Roaming cost net of discount 17 (617)

Telenor Sweden Telenor group entity Roaming revenue net of discount (108) (115) Roaming cost net of discount (11) (41)

Telenor Denmark Telenor group entity Roaming revenue net of discount (83) (133) Roaming cost net of discount 21 (364)

Telenor Hungary Telenor group entity Roaming revenue net of discount (4) (1) Roaming cost net of discount 9 (2) Capital expenditure 14,947 -

Telenor Serbia Telenor group entity Roaming revenue net of discount (2) 1 Roaming cost net of discount (0) (0)

Telenor Montenegro Telenor group entity Roaming revenue net of discount (0) (46) Notes totheFinancial Statements Roaming cost net of discount 0 0

Telenor Bulgaria Telenor group entity Roaming revenue net of discount (9) (15) Roaming cost net of discount 2 1

Telenor Pakistan Telenor group entity Roaming revenue net of discount (3) (36) Roaming cost net of discount 10 (18)

Telenor India Telenor group entity Roaming revenue net of discount 1,613 (776) Roaming cost net of discount (1,517) (7)

115 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 116 Notes to the FinancialStatements 2016 Annual Report Grameenphone

2016 2015 Name of related parties Nature Nature of transactions BDT'000 BDT'000

Telenor Myanmar Telenor group entity Roaming revenue net of discount (44) (28) Roaming cost net of discount (3) -

Dtac Thailand Telenor group entity Roaming revenue net of discount (275) 39 Roaming cost net of discount 530 (6,142)

Digi Malaysia Telenor group entity Roaming revenue net of discount (4,076) (2,522) Roaming cost net of discount (112) (1,212)

SNT holdings Joint venture of Telenor group Revenue from mobile communication (3,760) -

Vimpelcom Ltd. Associated companies of Telenor group Roaming revenue net of discount (505) (710) Roaming cost net of discount 388 192

Grameen Distribution Related to Grameen Telecom throughPurchase of handsets 987,271 - Grameen Telecom Trust

38.4 Receivables/(payables) with other related parties As at As at 31 December 2016 31 December 2015 Name of related parties Nature Nature of transactions BDT'000 BDT'000

Grameen Telecom Shareholder Accounts receivable 3,170 3,879 Accounts payable (14,859) (14,116) Accenture Communications Infrastructure Associate Accounts receivable 34,020 220,386 Solutions Ltd. Accounts payable (798,646) (158,526) Telenor ASA Telenor group entity Accounts receivable 25,918 20,236 Accounts payable (1,342,333) (959,034) Telenor Consult AS Telenor group entity Accounts receivable - 37,088 Accounts payable (1,859) (69,769) Telenor Global Services AS Telenor group entity Accounts receivable - - Accounts payable (73,000) (68,708) Telenor Global Shared Services AS Telenor group entity Accounts receivable - 13,353 Accounts payable (851,008) (870,972) Telenor GO Telenor group entity Accounts receivable 10,372 24,501 Accounts payable (100,706) (175,017)

As at As at 31 December 2016 31 December 2015 Name of related parties Nature Nature of transactions BDT'000 BDT'000

Telenor Digital AS Telenor group entity Accounts receivable - - Accounts payable (99,136) -

Telenor Health AS Telenor group entity Accounts receivable 49,026 - Accounts payable (5,549) -

Telenor International Centre AS Telenor group entity Accounts receivable 11,145 - Accounts payable - -

Telenor Norway Telenor group entity Accounts receivable 101 225 Accounts payable (9) (8)

Telenor Sweden Telenor group entity Accounts receivable 26 11 Accounts payable (1) (4)

Telenor Denmark Telenor group entity Accounts receivable 17 27 Accounts payable (6) (3)

Telenor Hungary Telenor group entity Accounts receivable 1 0 Accounts payable (14,950) -

Telenor Serbia Telenor group entity Accounts receivable 1 9 Accounts payable - (1)

Telenor Montenegro Telenor group entity Accounts receivable 1 0 Accounts payable (0) (0)

Telenor Bulgaria Telenor group entity Accounts receivable 5 - Accounts payable - (3)

Notes totheFinancial Statements Telenor Pakistan Telenor group entity Accounts receivable 1 0 Accounts payable (4) (5)

Telenor India Telenor group entity Accounts receivable 9,305 6,301 Accounts payable (21) (35)

Telenor Myanmar Telenor group entity Accounts receivable 21 - Accounts payable - -

Dtac Thailand Telenor group entity Accounts receivable 10 116 Accounts payable (61) (100)

117 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 118 Notes to the FinancialStatements 2016 Annual Report Grameenphone

As at As at 31 December 2016 31 December 2015 Name of related parties Nature Nature of transactions BDT'000 BDT'000

Digi Malaysia Telenor group entity Accounts receivable 1,357 0 Accounts payable (21) (23)

SNT holdings Joint venture of Telenor group Accounts receivable 255 - Accounts payable - - Vimpelcom Ltd. Associated companies of Telenor group Accounts receivable 164 184 Accounts payable (1) (4)

Grameen Distribution Related to Grameen Telecom through Accounts receivable - - Grameen Telecom Trust Accounts payable (261,266) -

38.5 Transactions with post-employment benefit plan

No other transaction incurred with post-employment benefit plan other than those disclosed in Note 18.

(b) (a)

40 39 42 41 Capital commitment (openpurchase order) forproperty, plantandequipment Foreign earnings Expenditure inforeign currency CIF value ofimports by respective banksandfinancialinstitutions. The short-term credit facilities are unsecured andbacked bystandard charge documentsasperterms andconditions set term againstshort Security credit facilities to BDT 25,500million(2015:BDT 19,500million). As pertheapproval oftheBoard ofDirectors ofGrameenphone, thetotal amountofshort-term funded facilities are limited BDT 23,758million(2015:BDT 19,388million). (2015: BDT 31,047million)ofwhichnon-funded limitisBDT 23,929million(2015:BDT 16,009million)andfunded limitis ofLC.purpose ofsettlement Theaggregate amountofarranged composite working capital facilities isBDT 39,312million though funded innature, havebeen incorporated undernon-funded facilities giventhatthey forthe are solely availed Foreign Exchange Forward Contracts. The funded facilities includeoverdraft facility term andshort loans, loan.Import (2015: The company enjoys composite working capital facilities including both funded and non-funded facilities from 18 banks Capital commitment (openpurchase order) assets forintangible of BDT 5,454,810,667 forallreplacement SIMsissued during theperiodfrom July2007toDecember that 2011alleging Large Taxpayers Unit(LTU)-VAT byaletter dated 16May 2012claimed SIMtax ofBDT 15,804,391,570, includinginterests SIM tax onreplacement SIMs auditor byBTRC was declared bytheHighCourt illegal Divisionwhichwas later onupheldbytheAppellate Division. issue tothecourt andobtained a'status quo'valid till Itistobenoted disposaloftherule. thattheappointmentof the claimmadebyBTRC andresponded totheletter requesting BTRC to review thenotice. Grameenphone alsotookthe BTRC andauditors appointed byBTRC thatthoseobservationswere framed onwrong basis.Grameenphone disagrees to claiming an amount of BDT 30,341,108,581 on various grounds. Grameenphone during and after the audit clarified to both BTRC carried outanauditoftheinformation system ofGrameenphone from April2011andissued aletter on3October2011 BTRC audit profitability ofthe company butforwhich any provision hasnotbeen recognised inthesefinancial statements. or position financial the on effect significant a have may which proceedingsarbitration or legal any in involved currently governmental The company iscurrently involved proceedings, inanumberoflegal including inquiriesfrom, ordiscussionswith, The company hasfinance as lessee andoperatinglease commitments asdisclosed inNote 15andNote 30.2. (Expense/expenditure) andrevenue inforeign currency duringtheyear Short-term credit facilities asat31December available 2016 Commitments Contingencies Revenue net ofdiscount from roaming partners Interest onforeign loan International roaming cost net ofdiscount Technical know-how Other fee (travel andtraining) Consultancy fee -expatriate Consultancy fee Telecommunication equipment 20 banks).Thenon-funded facilities includeLetters ofCredit (LC), ShippingGuarantee, Letters ofGuarantee and authorities thatare incidental toits operations. However, saveasdisclosed below, thecompany isnot

31 December 2016 BDT'000 BDT'000 (10,830,000) BDT'000 2016 2015 As at (966,458) 4,955,689 (462,531) (858,517) (233,921) (136,093) (54,947) 104,769 169,147 Notes totheFinancial Statements 31 December 2015 BDT'000 (10,119,630) (1,048,888) As at (886,345) 8,395,646 (323,224) (178,272) (113,342) (114,218) 213,843 7,648

119 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Grameenphone evaded SIM tax by selling new connections in the name of replacement SIMs. Grameenphone challenged the demand by a writ petition and the High Court initially passed a stay order on the operation of the demand. The High Court later on 6 June 2013 disposed of the writ petition filed by Grameenphone and asked LTU VAT Commissioner to decide on this matter within 120 days and make no demand in the mean time. Consequently a SIM Replacement Review Committee was constituted by the Commissioner. The LTU representatives of the Committee in January 2014 finalised their observations without changing their earlier position much as far as ‘fact finding’ is concerned.

The mobile operators expressed their dissatisfaction over the findings and the way LTU appointed members of the committee disregarded the spirit of the ‘Terms of Reference’ and agreed methodology as endorsed by BTRC in carrying out the review. Such deviation is evident from significant deviation between interim report and final observations. A hearing notice was also served on Grameenphone for appearance before LTU-VAT on 25 January 2015. By way of a Writ Petition, Grameenphone challenged the premises on which the ‘hearing notice’ was served and obtained a stay order on 19 January 2015 on the operation of that notice for an interim period of three months pending hearing of the Writ Petition. As against such order of stay, the Government moved to the Appellate Division, which was disposed of by order dated 2 March 2015 staying operation of the interim order and directing for the Rule to be heard and disposed of by a particular Bench of the High Court Division, where it is presently listed and pending for a hearing.

In such circumstances, the Commissioner, LTU-VAT issued an order dated 18 May 2015 purporting to dispose of the show cause notice and finalise the demand at Tk 10,232,331,083 as SIM tax. The revised demand includes substantially all replacements done by Grameenphone between July 2007 and December 2011. It may be mentioned that the above amount of demand does not include interest.

After thorough discussion and analysis, management has filed an appeal to the VAT Appellate Tribunal under Section 42(1) (Kha) of the VAT Act 1991 against the demand order. Even though the management of Grameenphone believes that the claim against Grameenphone is not likely to be legally enforceable, 10% of the disputed amount had to be deposited at the time of appeal as part of the appeal procedure prescribed by law. Since the claim is not likely to be legally enforceable, any payment related to this claim is likely to be recoverable after the resolution of this issue. However, pursuant to external legal counsel’s advice the pending Writ Petition was withdrawn by way of non-prosecution (being infructuous) upon filing of the appeal before the VAT Appellate Tribunal.

Even though our legal view related to this claim haven’t changed, current accounting policies followed by Grameenphone requires such deposits to be recognised as an asset only if recovery of the amount is virtually certain. Accordingly, we have considered the deposit as a contingent asset under (IAS/BAS) 37 Provisions, Contingent Liabilities and Contingent Assets. The hearing before the Customs, Excise and VAT Appellate Tribunal took place on 28 September 2016. Now, the Tribunal is expected to pass its judgment.

(c) VAT rebate on 2G licence renewal fee 2G licence of Grameenphone was renewed on 7 August 2012 for the next 15 years effective from November 2011. 100% of the licence renewal fee has been capitalised based on the assumption that Grameenphone's VAT exposure will be nil. This assumption is based on the High Court's verdict in February 2012 which allowed Grameenphone to exercise it rebate right against the VAT paid.

However, the lawsuit over the VAT rebate mechanism is still pending before the Appellate Division. If Appellate Division ruled that Grameenphone would be required to pay VAT and would not get rebate for this VAT, Grameenphone's financial exposure for this licence would increase by 15% (i.e. BDT 4,876,800,000) of the licence renewal fee.

(d) Claim for VAT based on C&AG audit Large Taxpayers Unit (LTU)-VAT on 14 May 2014 issued a ‘pay or explain’ demand of BDT 16.60 billion referring an assessment by Local and Revenue Audit Department of Comptroller and Auditor General (C&AG) office. C&AG office has made this assessment for the fiscal year 2010-11 and 2011-12. Grameenphone disagrees to the findings ofthe assessment referred by LTU because of lack of jurisdiction and improper procedures followed and relevant facts and legal provisions being misconstrued in reaching the conclusion. Grameenphone has taken this issue to court and the High Court on 28 May 2014 issued a rule nisi asking respondents to show cause as to why the demand shall not be declared to have been issued without lawful authority and is of no legal effect and stayed the operation of the demand. The High Court on 15 December 2014 heard the case and passed a judgment making the rule absolute without any cost and set aside the demand. No provision for this demand has been considered in the financials.

On 31.03.2016, pursuant to a Civil Petition for Leave to Appeal filed by NBR the Hon'ble Judge in Chamber of the Appellate Division has referred the matter to the Appellate Division for full hearing. So, the judgement pronounced by the Hon'ble High Court Division in favour of Grameenphone is still operative.

(e) Interest on SIM Tax during 24 August 2006 to 27 March 2007 Large Tax Payer Unit (LTU), VAT, on 9 May 2016 Issued a show cause notice on Grameenphone as to why 2% interest would not be applied for the delay in payment of VAT and Supplementary Duty on sale of SIM (commonly known as SIM tax) during

120 Notes to the Financial Statements (b) (a) 43.3 43.2 43.1 43 An entity shalldetermine term thelease asthenon-cancellable together withboth: periodofalease, operatingfinance or as leases. leases continueclassify accountinglessors to currentstandardi.e. the – to remains similar payments. Thereto make lease are optional exemptions of low value and leases items. for short-term leases Lessor termasset for thelease representing liabilityrepresenting itsrighttousetheunderlying asset andalease itsobligation IFRS/BFRS 16introduces on-balance accounting asingle, sheet lease recognises Alessee modelforlessees. aright-of-use IFRS/BFRS 16Leases detailed a performing currently is and 2018 December assessment oftheimpactthisaccounting standards. 31 ending year the for statements financial its in 15 IFRS/BFRS that Grameenphone hascompleted aninitial assessmentofthepotential impactoftheadoption ofIFRS/BFRS 15andbelieves 2018,withearlyadoptionafter permitted. 1January Contracts and IFRIC/BFRIC13CustomerLoyalty Programmes. IFRS/BFRS 15is effective forannualperiods beginning onor recognised. Itreplaces existing revenue recognition guidance, includingIAS/BAS18Revenue, IAS/BAS11Construction IFRS/BFRS 15establishes acomprehensive framework fordetermining whether, how muchandwhenrevenue is IFRS/BFRS 15 Revenue from Contracts withCustomers standards inpreparing thesefinancialstatements. Requirements ofsignificant new accounting standards are asfollows: 2016 andearlierapplication ispermitted; however, Grameenphone hasnotearlyadopted thefollowing new oramended A numberofnew accounting standards havebeen published thatare noteffective fortheyear ending31December Accounting standards issued butnotyet effective company. 2016. Thesedividendsare subject tofinalapproval theshareholders by forthcoming the at annualgeneral meeting ofthe year the for share) per BDT 17.5 (i.e. capital paid-up the of 175% at stands dividend cash final this including dividend cash dividend amounting to BDT 12,152,700,198being90%ofthepaid-upcapital (i.e. BDT 9pershare) fortheyear 2016.Total Provisions, Contingent Liabilities andContingent Assets. Hearingonthecase isyet tocommence. of Current accounting policiesfollowed byGrameenphone requires suchdepositstoberecognised asanasset onlyifrecovery any payment related tothisclaimislikelybe recoverable after theresolution ofthisissue. the time oftheappealprocedure ofappealaspart prescribed bylaw. Since enforceable, theclaimisnotlikelytobelegally the claimagainstGrameenphone enforceable, isnotlikelytobelegally 10%ofthedisputed amounthadtobedeposited at 42(1)(Kha) oftheVAT Act1991againstthedemandorder. EventhoughthemanagementofGrameenphone believes that Section under Tribunal Appellate VAT the to appeal an filed has Grameenphone analysis, and discussion thorough After i.e. 11September 2012duringwhichthematter was pendingbefore theAppellate Divisionfordisposal. of NBR issued ademandnotice on22June2016askingforpayment ofBDT 4,525,263,202asinterest inrespect ofaperiod vacated bytheAppellate Division. issued 2016 May 9 of notice cause show the challenging High Court the petition before Immediately, writ a Grameenphonefiled judgment andBDT 3,480,971,703was paidon12September 2012onprotest. the after notice demand a issued NBR 2012. August 1 on passed judgment its by reversed finally and 2007 March 27 on Division Appellate the stayed initially by High was the Court of judgment the NBR, the by petitioncivil filed a Upon period. lawful without declared of fixation Court done had been High which have to Hon’ble Tariff tax the determination SIM for of Value the period24August2006to27March 2007.Collection ofSIMtax duringthisperiodwas barred byanorder passed by The Board ofDirectors ofGrameenphone Ltd. atits174 Events after thereporting period geographical components or and itsoperating result is reviewed by its management.Hence, as a whole segment information isnot relevant. product in organised not is business Grameenphone's profile. risk similar have essentiallyand services Grameenphone essentially provides similarproducts tocustomers andservices across anditsproducts thecountry informationSegment Other disclosures b) Periods covered byan option toterminate isreasonably ifthelessee certain thelease not toexercise thatoption. a) Periods covered byanoption isreasonably to extend if thelessee certain thelease toexercise that option; and 65 months, i.e. the period between 1 April 2007 and the day before the date of the payment made by Grameenphone, the amount is virtually certain.the amountisvirtually Accordingly, wehaveconsidered thedeposit asacontingent asset under(IAS/BAS)37 adoption of IFRS/BFRS 15 will not have any significant impact on its financial statements. Management will adopt will Management statements. financial its on impact significant any have not will 15 IFRS/BFRS of adoption authority. Accordingly operators themobile could notcollect SIMTax from thecustomers fortheabove mentioned by NBR.TheHighCourt divisioninitially passed astay order ontheshow cause notice, whichwas subsequently

th meeting held on 31 January 2017 recommended a final cash final a recommended 2017 January 31 on held meeting Notes totheFinancial Statements

121 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

Additionally, in determining the lease term and assessing the length of the non-cancellable period of a lease, an entity shall apply the definition of a contract and determine the period for which the contract is enforceable. A lease is no longer enforceable when the lessee and the lessor each has the right to terminate the lease without permission from the other party with no more than an insignificant penalty. IFRS/BFRS 16 replaces existing leases guidance including IAS/BAS 17 Leases, IFRIC/BFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply IFRS/BFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS/BFRS 16.

Grameenphone will recognise new assets and liabilities for its operating leases of location rent for base stations, mobile switching centres (switch) and other locations. In addition, the nature of expenses related to those leases will now change as IFRS/BFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. As a lessor, Grameenphone is not required to make any adjustments for leases in which it is a lessor except where it is an intermediate lessor in a sub-lease.

Supplementary information Separate statement of profit or loss and other comprehensive income of Grameenphone Ltd. for the year ended 31 December 2016.

2016 2015 BDT'000 BDT'000 Revenue 114,862,160 104,754,372 Operating expenses Cost of material and traffic charges (10,661,819) (10,693,577) Salaries and personnel cost (8,276,052) (6,373,253) Operation and maintenance (3,757,496) (4,419,129) Sales, marketing and commissions (12,497,326) (12,913,376) Revenue sharing, spectrum charges and licence fees (8,902,203) (8,255,606) Other operating (expenses)/income, net (8,202,961) (6,128,054) Depreciation and amortisation (20,998,180) (19,007,679) (73,296,037) (67,790,674) Operating profit 41,566,123 36,963,698

Share of profit/(loss) of associate - - Impairment loss on investment in associate (36,751) - Finance (expense)/income, net (2,591,068) (1,940,737) Foreign exchange (loss)/gain (86,006) (115,721) (2,713,825) (2,056,458)

Profit before tax 38,852,298 34,907,240

Income tax expense (15,753,134) (15,213,200) Profit after tax 23,099,164 19,694,040

Other comprehensive income Item that will not be reclassified subsequently to profit or loss

Remeasurement of defined benefit plan 35 (1,444,641) Income taxes (14) 577,856 21 (866,785) Total comprehensive income for the year 23,099,185 18,827,255 Earnings per share Basic and diluted earnings per share (par value BDT 10 each in BDT) 17.11 14.58

122 Notes to the Financial Statements

Grameenphone Annual Report 2016 USEFUL INFORMATION FOR SHAREHOLDERS

1. General Authorised Capital : BDT 40,000,000,000 Issued and Fully Paid-up Capital : BDT 13,503,000,220 Class of Shares : Ordinary Shares of BDT 10.00 each Voting Rights : One vote per Ordinary Share

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

3. Distribution Schedule of the shares as on 31 December 2016

Range of Number of Total Number Percentage Shareholdings Shareholders of Shares 001 to 500 27,809 5,680,606 0.42% 501 to 5,000 6,547 10,249,805 0.76% 5,001 to 10,000 557 4,053,176 0.30% 10,001 to 20,000 256 3,652,905 0.27% 20,001 to 30,000 65 1,596,958 0.12% 30,001 to 40,000 54 1,898,182 0.14% 40,001 to 50,000 31 1,448,791 0.11% 50,001 to 100,000 79 5,939,381 0.44% 100,001 to 1,000,000 126 37,768,926 2.80% 1,000,001 to 1,000,000,000 25 1,278,011,292 94.64% Total 35,549 1,350,300,022 100%

4. Dividend

Dividend Per Par Value Per For the Year Dividend Rate Dividend Type Share (BDT) Share (BDT) 2016 90% (Proposed Final Dividend) 9.00 10.00 Cash 85 % (Interim Dividend) 8.50 10.00 Cash 2015 60% (Final Dividend) 6.00 10.00 Cash 80 % (Interim Dividend) 8.00 10.00 Cash 2014 65% (Final Dividend) 6.50 10.00 Cash 95 % (Interim Dividend) 9.50 10.00 Cash 2013 50% (Final Dividend) 5.00 10.00 Cash 90 % (Interim Dividend) 9.00 10.00 Cash 2012 50% (Final Dividend) 5.00 10.00 Cash 90 % (Interim Dividend) 9.00 10.00 Cash

124 Useful Information for Shareholders 6. 5. 7. II. Name oftheCompany Associate Company The Company’s credit rating was reaffirmed byCredit Rating Agency ofBangladesh Ltd. (CRAB)on29December 2016. Credit Rating I. Grameenphone Share Performance atStockExchanges (Formerly known asGrameenphone ITLtd.) Accenture Communications Infrastructure Solutions Ltd. III. Long Term

Exchange (CSE)fortheyear 2016and2015. Quarterly high-low oftheCompany’s price history share traded atDhakaStockExchange(DSE)andChittagong Stock and Chittagong StockExchange(CSE)duringtheyear 2016: Monthly high,low andcloseshare price andvolume oftheCompany’s Shares traded atDhakaStockExchange(DSE) Grameenphone Share Price Trend Year wise December Total shares traded duringtheyear October November September August July June May April Highest Price (BDT) March Lowest Price (BDT) February January Quarter 1 Quarter 2 Quarter 3 Quarter 4 AAA Period Month Short TermShort 290.0 286.0 286.0 292.0 292.0 285.0 270.0 258.0 258.0 (BDT) (BDT) 253.0 279.4 264.7 274.0 274.0 257.2 251.5 High High ST-1 2016 260.0 250.0 262.0 249.0 250.0 226.9 265.6 226.9 265.6 283.0 (BDT) (BDT) 224.5 224.5 272.5 241.8 253.1 251.1 Low Low 292.0 224.5 2016 DSE DSE 269.8 256.6 226.8 263.9 369.2 246.4 (BDT) (BDT) 349.8 358.9 287.9 283.4 276.4 256.7 Close 254.7 273.2 284.1 255.1 High DSE 2015 41,057,272 2,663,920 3,796,526 3,532,502 2,246,916 5,489,140 2,538,757 3,563,519 5,750,124 1,749,854 2,912,753 3,181,300 3,631,961 Volume (BDT) 284.5 319.2 236.1 (No.) 317.5 Low 369.2 236.1 2015 Holding 49% 260.0 294.0 260.0 294.0 289.8 (BDT) 249.9 285.5 263.0 258.9 279.0 284.2 273.0 254.6 (BDT) 285.5 273.0 271.0 High High 2016 IT Company 226.0 294.0 2016 Activity 260.0 280.0 240.0 262.0 249.0 249.0 226.0 226.0 249.0 267.0 242.0 267.0 (BDT) (BDT) 272.7 228.1 228.1 251.1 Low Low Useful Information for Shareholders CSE CSE CSE 262.0 226.6 254.0 269.7 246.2 (BDT) 255.8 255.8 276.2 284.3 284.3 272.9 255.2 Close 359.0 (BDT) 287.3 367.3 347.2 High 2015 244.3 367.3 2015 2,568,698 Volume 262,336 335,858 240,619 159,050 444,527 285.9 (BDT) 244.3 325.4 187,984 133,290 (No.) 319.4 145,673 192,041 231,723 171,987 Low 63,610 125 Grameenphone Additional Information Financial Analysis Governance Sustainability Business Performance Overview Annual Report 2016 Grameenphone Annual Report 2016

IV. Grameenphone Share Performance in DSE: 2012–2016

Stand alone performance 2012-2016 5000 400 2012 2013 2014 2015 2016 4500

350 4000 d e e c d

i 3500

300 a r P r 3000 T 250 2500 s e r

200 2000 a Share h

150 1500 S 1000 100 500 50 0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

No of Shares Traded ('000) Closing Price (BDT) Average Price (BDT)

120 Relative performance 2016 12% r

10% e e 110 v l o a n c

8% r S

u d T

100 e 6% E s a D S b

4% f e o

R 90

2% %

80 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec GP Turnover as % of DSE GP(Adjusted & Rebased) DSEX (Rebased) DS30 (Rebased)

Adjusted Price: Average of High, Low & Closing Price; Rebase: Adjustment to 100

8. Financial Calendar 2017

FY2016 Results 1Q 2017 Results 3Q 2017 Results Announcement Announcement Announcement

Apr Jul 2017 2017

Jan Apr Oct 2017 2017 2017

20th Annual 1H 2017 Results General Meeting Announcements

* Subject to change, please check www.grameenphone.com/about/investor-relations for latest updates

9. Company Website Anyone can get information regarding Company’s activities, products & services or can view Annual Report 2016 at www.grameenphone.com 10. Investor Relations Institutional investors, security analysts and other members of the professional financial community requiring additional financial information can visit the Investor Relations section of the Company website: www.grameenphone.com

11. Shareholder Services If you have any queries relating to your shareholding and dividend, please contact 01711555888 or mail to Grameenphone Share Office [email protected]

126 Useful Information for Shareholders GLIMPSE OF 19TH ANNUAL GENERAL MEETING Grameenphone Annual Report 2016

Grameenphone Ltd. Registered Office: GPHouse, Bashundhara, Baridhara, Dhaka-1229 Share Office: Zahurul Tower, Plot#9, Road#113/A, Gulshan-2, Dhaka-1212

Notice of the 20th Annual General Meeting

Notice is hereby given that the 20th Annual General Meeting of Grameenphone Ltd. will be held on Thursday, 20 April 2017 at 10:00 am at International Convention City, Bashundhara (ICCB), Hall-1 (Gulnaksha), Joar Sahara, Khilkhet, Dhaka-1229 to transact the following businesses:

AGENDA

1. Consideration and adoption of the Directors’ Report and the Audited Financial Statements of the Company for the year ended 31 December 2016 together with the Auditor's Report thereon. 2. Declaration of Dividend for the year ended 31 December 2016 as recommended by the Board of Directors. 3. Election/Re-election of Directors. 4. Appointment of Auditors and fixation of their remuneration.

By order of the Board of Directors Sd/- Hossain Sadat Director and Head of Regulatory Affairs 25 March 2017 & Company Secretary

Notes: • Members whose names appeared on the Members/Depository Register as on “Record Date” i.e. 22 February 2017 are eligible to attend the 20th Annual General Meeting (AGM) and receive dividend.

• A Member entitled to attend and vote at the AGM may appoint a Proxy to attend and vote in his/her stead.

• The “Proxy Form”, duly filled and stamped at Tk. 20 must be deposited at the Company’s Share Office located at Zahurul Tower, Road #113/A, Plot #9, Gulshan-2, Dhaka-1212 not later than 72 hours before commencement of the AGM.

• Members/Proxies are requested to record their entry in the AGM well in time on 20 April 2017. The registration counter will open at 9:00 am on the AGM date.

• In case of non-receipt of Annual Report 2016 of the Company sent through courier, Members may collect the same from the Company’s Share Office within 19 April 2017. No additional Annual Report will be distributed at AGM venue. Annual Report is available in Investor Relations section of the Company’s website: www.grameenphone.com

• Members are requested to submit to the Company’s Share Office on or before 05 April 2017, their written option to receive dividend. In case of non-submission of such option within the stipulated time, the dividend will be paid off as deemed appropriate by the Company.

• Grameenphone is concerned about the environment and utilises natural resources in a sustainable way. We request the members to update their email address and contact number (mobile/fixed phone) with their respective Depository Participant (DP) for quicker and easier communication. Such cooperation will help conserve paper and minimise the impact on the environment.

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128 Notice of the 20th Annual General Meeting Grameenphone Ltd. Registered Office: GPHouse, Bashundhara, Baridhara, Dhaka-1229

Proxy Form

I/We...... ………………………………………………………………………of………………………………………………………………………...………...... ………… …………………...... ……………… being Member of Grameenphone Ltd. do hereby appoint Mr./Ms. ……………………………………...…………...... …………………………………… of ……………………………………....……………...... ……………………………… as my/our PROXY to attend and vote on my/our behalf at the 20th Annual General Meeting of the Company to be held on Thurs- day, 20 April 2017 at 10:00 am at International Convention City, Bashundhara (ICCB), Hall-1 (Gulnaksha), Joar Sahara, Khilkhet, Dhaka-1229 and at any adjournment thereof.

Signed this ...... day of ...... 2017

………………………………………………….. ………………………………………….. Signature of the Member(s) Signature of the PROXY

Number of Shares held ...... Revenue Stamp BO ID No. Tk.20

Notes: • The Proxy Form, duly filled and stamped, must be deposited at the Company’s Share Office located at Zahurul Tower, Plot#9, Road #113/A, Gulshan-2, Dhaka-1212 not later than 72 hours before commencement of the AGM. • Signature of the Member(s) must be in accordance with the Specimen Signature recorded with the Company.

Signature Verified by

………………………………...... ……………………………… Authorised Signatory of the Company

Grameenphone Ltd. Registered Office: GPHouse, Bashundhara, Baridhara, Dhaka-1229

Attendance Slip I/We do hereby record my/our attendance at 20th Annual General Meeting of the Company to be held on Thursday, 20 April 2017 at 10:00 am at International Convention City, Bashundhara (ICCB), Hall-1 (Gulnaksha), Joar Sahara, Khilkhet, Dhaka-1229.

Name of the Member/Proxy (in Block Letter) BO ID No.

Signature Verified by

………………………………………………….…….. ………………………………...... ……………………………… Signature of the Member/Proxy Authorised Signatory of the Company

Note: Please present this Attendance Slip at the registration counter on the AGM date.

Disclaimer This report contains statements regarding the future in connection with Grameenphone’s growth initiatives, profit levels, outlook strategies and obejectives. All statements regarding the future are subject to inherent risks and uncertainties, and many factor may lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

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Visit our YouTube channel youtube.com/user/grameenphone www.grameenphone.com Here you will find downloadable PDFs of: • Annual Report 2016 • Proxy Form • Notice of 20th AGM Grameenphone Ltd. GPHouse Bashundhara, Baridhara, Dhaka-1229, Bangladesh Tel: +880-2-9882990, Fax: +880-2-9882970 Website: www.grameenphone.com

Grameenphone wants to contribute to meet climate challenges and aims to reduce the consumption of resources and overall impact on the environment. In an effort to minimize paper consumption, we limit the scope of the printed annual report within regulatory requirement. Grameenphone’s website provides extensive information about the Company and its current activities: www.grameenphone.com