Management Comments & Analysis on 2Q’2013 Financial Result

Continued growth momentum amidst competition After the momentum created during the 1st quarter, GP managed to propel the growth further defying impact of adverse externalities and competition. Less favorable macroeconomic outlook

The near-term outlook of economy has weakened. 16 Weaker import and credit growth point to slowing domestic 14 demand, and political tensions as well as nationwide general 12 strikes are taking a toll on the overall economic activity. 10 8 General inflation decreased to 7.86% against 9.15% last year- 6 end. Food inflation, major contributor of reduction, however is 4 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May deteriorating due to frequent shutdowns that caused General Food Non Food disruptions in the supply chain and the rising world food index. Inflation Y-o-Y%

Local currency continued to appreciate further by 0.55% against US Dollar during the quarter. The major

contributing factor was USD 3.34 bn remittance and slowing import that boosted country’s foreign exchange reserve Y to reach USD 15.3 bn mark in Jun’13. Despite superior growth recorded, it is expected to slow down in the coming months as the major driver of remittance - manpower export - has been observing negative monthly growth.

Escalating political tensions still continue to pose possible threats of broader disruptions to economic activity. The deterioration in state owned commercial bank (SOCB) finances also creates fiscal and financial stability risks. Appropriate restrained monetary policy to contain inflation while ensuring an adequate supply of liquidity to the market will be critical to balance out the risks of near term growth prospects.

Continuing intense competition The Q2 has been another period of intensified competitive environment with industry moving on aggressively. Overall, 104.7 103.0 subscriber base grew by ~5%* with 4.8 Mn new acquisitions 101.2 99.9 mainly coming from the rural areas. 98.5 98.3 98.6 97.5 97.2 97.4 95.5 94.7 Fiscal directive on SIM tax reduction from 16 May 2013 and hike of corporate tax by 5% for listed operators had both positive and negative effect on the industry. Though the latter only affected GP with a contraction in the NPAT.

The Market remained vibrant with intensified market campaigns Jul'12 Aug Sep Oct Nov Dec Jan'13 Feb Mar Apr May Jun inducing usage through rate-cutters, unique bundle offers, Industry sub base in Mn churn-back campaigns and rolling out customized benefits for high value users. Top 3 operators out of 6 (GP, & ) still comprise 89% of SIM market share. 6.79% 6.13% 5.20% Robi concentrated more on brand rather than price perception 3.69% 3.89% with higher usage of affordable campaigns, customer centric strategies and execution. Banglalink has been struggling with lower minutes of usage along with their aggressive price position and market activities. Airtel is still exploiting their diversified GP BL Robi Airtel Teletalk discount offer and continuing their focus on low ARPU and urban youth market. Teletalk, the only operator expanded their 3G services into new areas with good subscriber growth. -4.12%

Sub base growth in 2nd Quarter The SIM penetration for the quarter is estimated at 64%. Considering multiple SIM issue, real penetration is estimated at 41.3%.

For any query please contact: http://investor-relations.grameenphone.com Page 1 *GP Estimate

Formidable growth with a healthy underlying bottom line

23.5 23.9 Revenue & Subscriber: 23.2 22.9 22.6 nd attained BDT 23.9 billion revenues for the 2 3.0% quarter of 2013, a 3.2% increase from the same period last 2.2% 1.3% 0.4% year. GP managed to deliver this growth amid intense market -0.9% competition, political unrest and inclement weather across the country. The growth is attributed to attractive campaign driven 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 usage, continued increase in non voice revenues, higher device Revenue (Bn) Growth % sales and adjacent business.

The ARPU declined by 8.7% vs. last year with 6.2% increase in 245 254 239 232 230 AMPU and 13.8% fall in APPM due to higher discount on 197 187 178 183 180 airtime, the dilution effect of new acquisitions and the impact of 10s pulse tariff.

0.82 0.80 0.77 0.75 0.71 GP was very active in subscriber acquisition and managed to capture a fair share of the market growth and added 2.2 Mn net 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 subscriptions, taking the total to 44 million. With this, GP’s ARPU (BDT) AMPU APPM (BDT) estimated SIM market share increased to 42%. Subscriber grew by 12% YoY with 45% of the quarterly industry gross addition amounting to 4.8 Mn new subscribers clinched by GP. 39.3 41.0 40.0 41.8 43.9

During the quarter, GP focused on strengthening its competitive advantages by expanding its distribution foot print, intensified 41.9% 41.6% 41.2% 41.8% 42.0% retail engagement, visibility improvement, improving network quality leadership and strengthening the financial services platform. 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13* Subscriber (Mn) Market share % Opex and Capex

nd During the 2 quarter, GP witnessed moderate opex growth of 2.6% from the same period of last year. The increase was attributed to advertising and marketing expense in order to cater hyped market activities for combat ing competition, increased start up commission due to higher SIM sale and revision of commission modality. These items were mostly offset by savings from subsidy due to SIM tax reduction and lower consultancy fee.

About BDT 2.1Bn was invested to improve quality and efficiency of the network. The lower capex resulted due to investment prioritization as well as revised spending plan. Around 100 sites were rolled out to enhance quality and strengthen coverage. With 8,400 BTS sites, the population coverage is standing at 99.16% and the geographic coverage at 89.42%.

3.8 12.0 12.3 12.3 11.8 11.2 2.9 2.2 2.1 16.5% 1.2 12.6% 52% 52% 54% 51% 9.8% 48% 8.7% 5.1% 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13

Capex (BDT Bn) Capex/Sales % EBITDA (BDT Bn) Margin %

The EBITDA margin decreased by 0.9 percentage points mainly from the opex development during the quarter. EBITDA in local currency increased by 1.4%. However, significant margin improvement occurred from last quarter with 3.8 percentage points.

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Profitability 4.6 4.5 4.5

The net profit declined by 86.7% due to impact of corporate tax 3.2 rate increase to 40% from earlier rate of 35%. Income tax adjustment of BDT 4 Billion was recognized comprising of 18 19% 20% 19% 14% months starting from 2012. The underlying NPAT margin for the 0.6 quarter was 19.2%. 2% 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 NPAT (BDT Bn) NPAT % Dividend 11.0% The Board of Directors has recommended interim cash dividend for the year 2013 @ 90% of paid up capital in cash (i.e. BDT 9 7.4% per share) on 17 July 2013. The dividend was declared from 6.1% provisional net profit for the first half of 2013 and retained 20.5 5.0% 14.0 earnings up to 31 December 2012. The shareholders as of the 12.0 9.0 record date of 29th July 2013 will be entitled to this final 7.93 13.99 12.96 3.78 dividend . Based on the current market price of BDT 180.9 per 2010 2011 2012 2013 (Interim) share the dividend yield stands at 4.9%. EPS (BDT) DPS (BDT) Yield %

Regulatory Highlights

Upcoming 3G License

On the 14th Feb’13, BTRC has published a 3G Licensing guideline with provision of 4 Licenses through auction with 1 new entrant. The base price for spectrum auction has been set at $20Mn/MHz. The document submission date was

initially on the 12 May which has been rescheduled 4 times and now the new submission date is on 1st August. The date of auction has been shifted twice to 2nd September 2013. The MNOs had 3 round meetings with AMTOB and BTRC for synchronization of the document to be submitted for participating in the auction process. All the MNOs including GP, have communicated to regulator and the Government that until the VAT rebate issue with 2G licensing is resolved, they will not be able to participate in 3G License.

Directives for implementation of MNP

The BTRC has published directives on MNP on the 13th June 2013 with 3 phases execution plan as per which the

MNOs have to form the MNP governance model and a consortium within 3 months, establishment of MNP system in

next 3 months and 1 month more for testing and reporting. GP appreciates the effort of BTRC in developing the MNP

directives but the ground reality says that the directive along with its stringent stipulated time frame will create a

chaotic situation in the industry with customer sufferings, in the absence of a central database. GP and the other

operators have protested the tight guidelines and urged BTRC for consultation with AMTOB before finalizing the

guidelines.

NBR’s claim against replacement SIM With regard to NBR’s claim of BDT 15.84Bn on SIM replacement, the high court division disposed of the writ petition of GP and other operators on the 6th June 2013 and instructed the commissioner of large tax payer unit (LTU) to decide the matter within 120 days and not to make any demand in the meantime. According to the regulation, mobile operators will now be required to go to the NBR’s VAT appellate tribunal. Before the hearing GP has to deposit 10% of the total amount as fees, amounting to nearly BDT 1.58bn.

Grameen bank commission report

The commission formed by the government of Bangladesh to look into relations among Grameen Bank and its 54 other entities bearing the same name, has in its interim report made reference to the annexure where it has cited in a summary letter recommending MOPT for suspension of Grameenphone’s license but not shutting down operations, outlining irregularities committed by the founding shareholders of the company, when the original license was awarded. The ministry has not issued any official comment on the report or no concerned authority has contacted us in this regard. Our major shareholder Group has already stated that Grameenphone has fulfilled all its obligations in the license issued in 1996. The ownership structure was minutely scrutinized during IPO process and a new license was issued in October 2012 and no such allegation had surfaced out at that time. For any query please contact: http://investor-relations.grameenphone.com Page 3