Content

Chapter 1: Introduction....................................................................................................................1
1.1 Background............................................................................................................................1
1.2 Description of the Problem....................................................................................................2
1.3 Purpose of the Report.............................................................................................................2
1.4 Limitations of the study.........................................................................................................2
Chapter 2: Representation of the Data.............................................................................................3
2.1 Return on Assets Ratio...........................................................................................................4
2.2 Return on Common Equity....................................................................................................5
2.3 Gross Profit Margin................................................................................................................6
2.4 Operating Profit margin.........................................................................................................7
2.5 Net Profit Margin Ratio.........................................................................................................9
Chapter 3: Analysis of the Profitability.........................................................................................11
Chapter 4: Conclusion...................................................................................................................13
Bibliography..................................................................................................................................14

List of Figur
Figure 1: Return on Assets.................................................................................................. 4
Figure 2: Return on Equity................................................................................................. 5
Figure 3: Gross Profit Margin.............................................................................................. 7
Figure 4: Operating Profit Margin Ratio.................................................................................8
Figure 5: Net Profit Margin................................................................................................ 9

List of TablesY

Table 1: Five Years Fiscal Summary...................................................................................... 3

Table 2: Return on Assets................................................................................................... 4
Table 3: Return on Common Equity...................................................................................... 5
Table 4: Gross Profit Margin............................................................................................... 6
Table 5: Operating Profit Margin Ratio.................................................................................. 8
Table 6: Net Profit Margin.................................................................................................. 9

Chapter 1: Introduction
1.1 Background
Grameenphone Ltd. was established by a consortium involving Grameen Telecom of
Bangladesh, an affiliate of the world famous Grameen Bank; Telenor AS, the main Norwegian
Telecommunication Company; Marubeni Corporation, one of the largest trading and investment
companies in Japan; and Gonofone Development Corporation, a telecommunication
development company in the United States. The other principle investors were NORAD
(Norwegian Agency for Development Cooperation), CDC, IFC (International Finance
Corporation) and ADB (Asian Development Bank).

Strong retail channel and distribution infrastructure with more than 350,000 point of sales has
enabled GP to reach in to the deep rural areas from where more than 60% of GPs new customers
come onboard. With 2.8 million net customer additions during the first six months, GPs
subscription base stands at 39.3 million with approximately 42% market share.

Grameenphone Ltd. is the market leader in the telecommunication sector in Bangladesh. With
the beginning of 2015 the company completed its Nineteenth year of business. The company
achieved remarkable success during this period. It has the largest network, the widest coverage,
the biggest subscriber base and more value added services than any other mobile phone operators
in Bangladesh. Grameenphone has a very strong competitive position in the telephone industry in
the country.

It has also been one of the most profitable companies operating in Bangladesh. In this report, we
are going to discuss about the Progress Report of Grameenphones profitability between the
years of 2009 and 2013.

1.2 Description of the Problem

As Grameenphone is enlisted in the stock exchange, it publishes its financial reports every year.
However, they are provided in a form of raw data and it is quite difficult for ordinary people to
understand the profitability of the company.

1.3 Purpose of the Report

The report is created with the sole purpose of reviewing the profitability of Grameenphone
between the years of 2009 and 2013. The reason is to represent the data in a visually appealing
way which will help the potential investor to understand the progress in profit of the company
over the few years.

To present the profit data in a more simplified and visually appealing way, different ratios are
being used in this report such as return on assets, return on common equity, gross profit margin,
operating profit margin, net profit margin ratio etc.

1.4 Limitations of the study

As the data are sensitive to the company, the report was based mainly on the annual report
published by the company. There was no scope for collecting primary data. Therefore, the whole
report is based on the secondary data available on the Grammenphone and Telenor websites.
2

Chapter 2: Representation of the Data

Below is the table for Five years financial summary of Grameenphone. This table was prepared
with the data from the annual report

Table 1: Five Years Fiscal Summary

2.1 Return on Assets Ratio

Return on Assets is an indicator of how profitable a company is relative to its total assets. ROA
gives an idea as to how efficient management is using its asset to generate earnings. Below is the
ROA of Grameenphone for five years

Year

2009

2010

2011

2012

2013

Net Income

3060

2984

14968

10705

18891

Total Assets

88461

108194

109162

109502

108905

Return on Assets (%)

3.46%

2.76%

13.70%

9.80%

17.35%

Table 2: Return on Assets

Return on Assets
20.00%
18.00%
16.00%
14.00%
12.00%

Return on Assets

10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2009

2010

2011

2012

2012

Figure 1: Return on Assets

As we can see from the graph, the Return on Assets has increased over the years. This gives the
investors idea of how effectively the company is converting its the money it has to invest into
net income. From the graph, it is clear that the profitability of Grameenphone has increased over
the years.

2.2 Return on Common Equity

This is the amount of net income returned as a percentage of shareholders equity. Return on
Equity measures Grameenphones profitability by revealing how much profit a company
generates with the money shareholders have invested.

Year

2009

2010

2011

2012

2013

Net Income

3060

2984

14968

10705

18891

Total Assets

26111

27588

50154

50374

38883

21.25%

48.58%

Return on Assets (%)

11.72%
10.8%
29.8%
Table 3: Return on Common Equity

Return on Common Equity

48.58%
50.00%
45.00%
40.00%
35.00%

29.80%

30.00%

Return on Common Equity

21.25%

25.00%
20.00%
15.00%

11.72% 10.80%

10.00%
5.00%
0.00%
2009

2010

2011

2012

2013

Figure 2: Return on Equity

As we can see from the chart, the Return on common equity has increased from 11.72% in 2009
to 48.58% in 2013. This clearly shows that Grameenphone is generating more profit from its
shareholders investment. This is very lucrative and should encourage potential investors to
invest in Grameenphone more.

2.3 Gross Profit Margin

This is a financial metric used to asses a firms financial health by revealing the proportion of
money left over from the revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings.

Year

2009

2010

2011

2012

2013

Gross Profit

29946

28667

32222

38730

51221

Sales

54303

61359

65300

74733

89060

Gross Profit Margin

55.15%

46.72%

49.34%

51.82%

57.51%

(%)
Table 4: Gross Profit Margin

Gross Profit Margin

70.00%
60.00%
50.00%
Gross Profit Margin

40.00%
30.00%
20.00%
10.00%
0.00%
2009

2010

2011

2012

2013

Figure 3: Gross Profit Margin

The gross margin is not an exact estimate of the company's pricing strategy but it does give a
good indication of financial health. Without an adequate gross margin, a company will be unable
to pay its operating and other expenses and build for the future. In general, Grameenphones
gross profit margin is stable. It does not fluctuate much from one period to another, which shows
the stability in profitability of the company.

2.4 Operating Profit margin

Operating margin is a measurement of what proportion of a company's revenue is left over after
paying for variable costs of production such as wages, raw materials, etc. A healthy operating
margin is required for a company to be able to pay for its fixed costs, such as interest on debt.

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Year

2009

2010

2011

2012

2013

Income from

16287

15350

20518

20207

32572

Sales

54303

61359

65300

74733

89060

Gross Profit Margin

30%

25.02%

31.42%

27.04%

36.57%

Operation

(%)
Table 5: Operating Profit Margin Ratio

Opearating Profit Margin Ratio

40%
35%
30%
Opearating Profit Margin
Ratio

25%
20%
15%
10%
5%
0%
2009

2010

2011

2012

2013

Figure 4: Operating Profit Margin Ratio

It shows that the operating profit margin has increased over the years. This means that
Grameenphone is earning more per taka sales. This shows increased profitability.
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2.5 Net Profit Margin Ratio

Net Profit Margin is the percentage of revenue remaining after all operating expenses, interest,
taxes and preferred stock dividends (but not common stock dividends) have been deducted from
the companys total revenue.

Year

2009

2010

2011

2012

2013

Net Income

3060

2984

14968

10705

18891

Sales

54303

61359

65300

74733

89060

Net Profit Margin

5.64%

4.86%

22.92%

14.32%

22.21%

(%)
Table 6: Net Profit Margin

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Net Profit
25.00%
20.00%
15.00%

Net Profit

10.00%
5.00%
0.00%
2009

2010

2011

2012

2013

Figure 5: Net Profit Margin

Net Profit Margin is one of the most closely followed numbers in finance. Shareholders look at
net profit margin closely because it shows how good a company is at converting revenue into
profits available for shareholders. From the chart above, we can see that the net profit margin of
Grameenphone has been consistently increasing over the years.

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Chapter 3: Analysis of the Profitability

Grameenphone has maintained its leadership in the mobile industry once again in the year 2013
amidst heavy competition and unprecedented macroeconomic challenges. While competition
opted for price position, GP continued with its quality acquisition and added 6.5 million
subscribers to its subscription base. Macroeconomic factors like double digit inflation, currency
devaluation, multiple price hikes for fuel and power brushed a dent in operating expenditure,
however, business performance was strong and still due to impressive revenue performance and
operational efficiency measures in spending areas.

In the year of 2009 & 2010 there current ratio and quick ratio was smaller than other years. We
see their current assets were much lower and current liabilities were much higher than other
years. If we analyze this situation we see that in these two year there cash is lower than other
years on the other hand payable to government and autonomous bodies and other operators,
provision for expenses was high than other years. It was the reason for that decrease. Comparing
to other years Grameenphone did well in 2010 & 2011 indifferent sectors of it.

Net profit margin increased to 21% from 14% of 2012, which was driven by BDT 819 crore
increments in profit in 2013 compared to last year. Increase in profit after tax for the year 2013
compared to 2011 was mainly driven by revenue growth and lower depreciation expenses, which
was partly offset by higher income taxes and losses on foreign exchange during the year.
Increment of 19% (BDT 1,433 crore) in total revenue was driven by traffic revenue from the

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subscription growth and revenue from wholesale business. The reasons for increasing income
from operation are high gross profit and low operating expenses.

GP subscribers are also increasing year by year. Because there network is better than other and
they give so many offer for their subscriber. One of the major initiatives of 2011 was the network
up gradation. A total of 7,272 base stations were modernized and upgraded to enhance GPs
network in less than a year. Companys returns towards its stakeholders is quiet satisfactory and
they do have expert to maintain their every operations. Innovative offers towards customers,
better employee engagement, standardization in every official aspect has made them unique in
the field of Telecommunication Business. Grameenphone do strongly believe that, Better and
Sustainable performance is the only way to be Successful.

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Chapter 4: Conclusion
GrameenPhone is one of the largest multinational companies of Bangladesh. They earn lots of
profit from their business. In market their investment is also huge. Back in 2007 they have
introduced their IPO.

Bangladesh is a developing country. For a developing country which is trying to move towards
industrial society from agricultural society, communication is very important. Grameenphone
provides the best sound quality and the network while it comes to telecommunication. Therefore,
their subscribers are increasing in a substantially higher rate than its competitors each year.

Moreover, they have already secured a huge customer base and the company is charging premier
prices to them. This makes Grameenphone a very profitable company in the foreseeable future.
Therefore, it is the correct time for the investors to invest in Grameenphone.

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Bibliography
Annual Report

GrameenPhones Annual Report 2011

Web Sites

www.telenor.com

www.grameenphone.com

www.dscbd.org

Books

Corporate Finance (Ross/ Westerfield/ Jaffe)

Intermediate Financial Management (F. Brigham/C.Gapenski)

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