The recording of this call with the earnings release and related materials are available on our website, and we encourage you to review them for further details. We'll now begin our remarks from our CEO and CFO covering key business highlights, financial performance, and strategic priorities. Before we begin, a quick note on today's schedule. The Q&A session will take place a few hours later at 2:00 P.M. local time. This gives our investors and stakeholders enough time to review the materials and come prepared. Invites have already been shared with our investors and analysts. If you'd like to participate, please feel free to share your email address with me during the call, and we'll make sure to include you. Let's now get it over to our CEO, Mr. Yasir Azman, to get us started.
Good morning everyone. Thank you for joining us for our Q2 2025 earnings call. I'm Yasir Azman, Chief Executive Officer of Grameenphone . According to the latest report from our regulators, the telecommunication industry in Bangladesh recorded a total of 187.61 million subscribers as of May 2025, reflecting an increase of 1.39 million subscribers since March 2025. During the same time frame, mobile data users also increased by 1.46 million, reaching 117.68 million in May 2025. Let me now touch upon some of the key macroeconomic updates. Increase of supplementary duty in telecom service from 15% - 20% and increase of syntax from 200 - 300 Bangladeshi taka burdening consumers with heavy tax. The point-to-point inflation rate has gone down to 8.48% which is the lowest in the last 35 months.
As of mid-June, the foreign exchange reserves stood at $20.9 billion as per IMF's BPM6 methodology, supported by a 25% year-on-year increase in remittance flows and improved export earnings. Bangladesh Bank is moving towards a fully market-based exchange rate system where the USD durability has remained stable below BDT 123 taka. As per IMF, Bangladesh's GDP growth for fiscal year 2024 and 2025 has been revised to around 3.8% with further prediction of rebounding the following year to 6.5%. Now let's delve into the detailed aspects of our business updates for this quarter. Q2 2025 highlights: we have been navigating a challenging economic downturn since the second half of last year that has put significant pressure on businesses across sectors including telco. Despite the tough macroeconomic environment, our strategic measures are starting to yield results this quarter. We delivered quarter-on-quarter revenue growth, which is translated into year-on-year 2% MBET improvements.
As the political and economic landscape further stabilizes, we remain optimistic about a stronger outlook as we have modernized the core of our mobile network and moved to a cloud-native architecture, replacing old hardware with a modern, flexible, and scalable setup. Our core is now fully prepared for 5G standalone and the most advanced version of 5G and is powered by AI to drive automation, agility, and a smarter performance. This was not just a tech upgrade for us, it was rather a strategic move where we future-fit core positions as we go forward. For us, for sustainable growth, greater efficiency, and faster innovation, we are seeing stronger momentum in our digital business. MyGP users grew 12% year on year and digital revenue rose by 13%. Nearly 30% of our total revenue now flows through digital channels, a clear sign of increasing digital adoption.
We are strengthening our digital platform by expanding products and capabilities with new streams like DoB content. EdTech and TP5 are gaining traction, delivering accelerated revenue growth in this quarter. Despite economic headwinds in the first half of the year, we remain committed to creating long term value for our shareholders. As part of that commitment, we'll be maintaining our dividend payouts as part of our strategy to provide you with consistent and reliable returns. We are declaring interim dividends this quarter, which our CFO Otto will cover in more detail shortly. ETH acceleration has happened in a very compelling manner, driving results through innovation and collaboration. The second quarter of the year has been all about maintaining strong momentum we built in quarter one and taking it further through innovation and collaboration.
It is one of our peak seasons marked by high network demand as millions travel to their hometowns. This quarter we saw increased mobilization, adding pressure on our infrastructure, and to ensure a seamless experience, we leveraged advanced data analytics and predictive traffic modeling based on historical patterns and user behavior. This allowed us to strategically allocate network resources across the country, ensuring reliable connectivity during one of the most critical periods of our year. This year for the first time in Bangladesh, Hajj pilgrims were able to use their local mobile balances in Taka while they were roaming internationally, a major regulatory milestone achieved through strong industry and government collaboration. Grameenphone introduced tailored Hajj roaming packs with competitive rates and reliable service. We saw a 44% year on year increase in Hajj roaming revenues and usage, reflecting both customer impact and commercial success.
In Q2, strategic changes to product portfolio were made during EID that encouraged upgrades to higher tier packs, supporting both customer value and revenue growth. Grameenphone launched a series of targeted marketing initiatives to boost data consumption and encourage consistent usage behavior with a better network experience. Efforts focused on promoting monthly subscription auto renewals and smarter usage habits, shifting users towards more stable and engaged data behavior. 40% of our total sales to subscriber contribution came through digital channels in Q2 2025. The advanced capabilities of our digital platforms, including personalization, seamless user experience, targeted promotions, and real-time availability, played a key role in driving this growth. These channels not only improved customer experience, but also enabled higher transaction frequency, value, and gave a significant boost to overall revenue during each period. We will now move to the four strategic pillars that are guiding our transformational journey.
Amid ongoing economic challenges, we are taking a strategic approach to capital spending, prioritizing efficiency and impact. By integrating AI and advanced analytics into our network planning and operations, we are making smarter, more targeted investments. As a result, we are not only managing costs carefully, but also increasing the overall effectiveness of our investments. To address the seasonal challenges of summer, including storms, heavy rainfall, and frequent power outages, we implemented a diversified power management plan across all our sites nationwide. This proactive strategy allowed us to anticipate potential disruptions and tailor power solutions based on regional needs and historical patterns. This plan was executed well in advance of the peak season, ensuring maximum network readiness and operational continuity even under extreme weather conditions.
Coming to one of the key pieces of our transformational journey, digital growth, MyGP continues to be a benchmark for our digital platforms in the telecom sector as the largest local self-service app in Bangladesh, now engaging 2.5 million monthly active users. This growth is not just in scale but in impact, with increased revenue contribution and a strategic alignment to business growth in June. During the eighth month, MyGP was responsible for 44% of Grameenphone Ltd.'s month-over-month incremental revenue. Content was a strong performer for us this quarter. We launched affordable internet packs bundling streaming data with access to multiple content platforms, including exclusive Chorki passes through GP OTT packs. These drove strong customer engagement, leading to record-breaking content revenue performance in June. Our digital product Skit to, which targets a specific segment of the youth. Those who are more data savvy and digitally engaged are performing quite well.
It has carved out a clear brand position and continues to grow in relevance among youth users. We have seen year over year a noticeable increase in our revenue contribution from this segment, which is a strong indicator of both traction and loyalty. As digital adoption grows, Skitto is well positioned to capture even more value and play a key role in shaping our youth engagement strategy going forward. Moving to the next topic, which is IT Transformation, and inviting our Chief Information Officer Niranjan t o talk about our vision for it.
Thank you, A zman.
Good day to everyone.
Our vision for IT at Grameenphone is bold, to become an AI-N ative Telco where AI doesn't just support the business, it shapes it. That includes how we engage customers, build products, and operate at scale. The telecom industry is evolving fast: rising customer expectations, digital disruptions, and new competitive pressures. That's why it is no longer a support function. It's the core engine of our growth. We are embedding AI everywhere in operations, in network planning, in customer journeys, and in real time decision making. At the foundation, we are simplifying our stack using a TM Forum aligned, standards-based architecture, cloud-native, API-first, and modular. Our teams are transforming too, embracing GenAI product thinking and a mindset of speed, learning, and bold execution. What does success look like at a Telco that's fully AI-led, real time, hyper-personalized, and effortlessly adaptive?
In five years, GenAI will shape every customer touchpoint, and AI will drive how we build, run, and scale. We are not modernizing, we are reinventing, and we are building that future now. A future-fit Telco, that's Grameenphone. Thank you.
The AI factory is now fully operational and offers artificial intelligence for IT operations platform and can handle increasing workloads and help develop and deploy AI models faster. It's powered by fast GPU hardware and managed through modern cloud-native tools, making it capable of growing with demand and supporting advanced AI use cases efficiently. Grameenphone successfully moved its CRM and charging systems to new partners by eliminating reliance on a single service provider. Through this move, Grameenphone adopted DevOps and automation, enabling us to improve operational efficiency, elevate service experience, and drive business growth. With the change in place, we ensured uninterrupted service during key periods like the two EIDs this year, thanks to the proactive support of our skilled technology partners for this. As part of our AI-first strategy, we have added advanced personalization to the MyGP app, offering smart customer-specific product recommendations.
By connecting our data system with [Netcore], we have moved from users' offers to more relevant and tailored experiences, improving customer engagement, boosting conversions, and supporting long-term growth. Our commitment to the home broadband segment gained strong momentum this quarter, driven by rapid service expansion and enhanced distribution strategy, including partnership with distribution houses, with coverage now established to over 300 thanas across the country. Gpfi is already establishing itself as a key player in the broadband market. I will now hand over to our CFO Otto Risbakk to take you through the financial performance for this quarter in detail.
Thank you, Azman. Good afternoon to the investors in Bangladesh and in Asia, and good morning to all our investors in Europe and in the U.S. It's great to see so many people on this call. Today I will take you through the financial presentation of the second quarter of 2025, and as usual, I will start with the highlights. Before I go into the numbers, let me give some reflections on the macro. I've said many times during this presentation that we always have a very long term in the way we deploy capital and operate, and we do. We do live in extraordinary times. In all the domestic stage, we do see fundamental positive change with the new interim government in place and soon elections will take place.
At the same time, we don't know how it will unfold and we don't know how this current slower growth will continue. On the international stage, obviously there is a lot of insecurity and risk related to the new tariffs and that does hit also Bangladesh. The textile sector, which is the most important sector in Bangladesh, accounting for about $5 billion export per month, is important to the country and 20% of that export is going to the U.S. On that backdrop, it is clear that we have to be very cautious in the way we spend our money and in the way we invest. You remember last time, last quarter I said that in quarter one we saw some signs of recovery.
Now that we are into the second quarter, we can see that the economy has been stable, but we haven't seen that the growth is taking off. We see that inflation is slowing down a little bit, but it's still high around 9%. Whereas the FOREX actually has been quite stable this quarter, for the first time we've seen an appreciation of the taka compared to the dollar. That may also be a weakness of the dollar. For us, the dollar is our main currency we trade in for international trade, so that's important to us. Let me start with the numbers of the second quarter of this year on the backdrop of this challenging macro that we are experiencing right now.
We obviously have been very cautious with our spending in the second quarter, but I'm happy to see that if you look first, if I start with the revenue, we are seeing good momentum. Q on Q, for the revenue, we grew 7% year on year plus $2.6 billion. If I look at the year-on-year growth, it's 2.0, down 2.8%. That's similar to the decline we saw last year, but it's better than the decline we had in the second half of 2025 where we were around -5%. If I move further right to the slide to the EBITDA and the net profit and the cash flow, you actually see a very solid improvement on Q. on Q we can see that we have been very cautious with our spending.
The revenue increase, the 2.6 billion revenue increase we had in the quarter, is slowing all the way down to EBITDA and net profit. This you can see on the margins, we are back to a 60% margin. On EBITDA we are back to + 20%, actually 21.4% net profit margin. You can see that the cash flow margin has also improved a lot. We are over 50%, 52.1% this quarter with a cash flow of 21.4 billion. With these numbers, we are going into the third quarter with quite a good momentum. Now over to the next topic, which is subscriber development. It's encouraging to see that the positive development we saw in the first quarter is continuing into the second quarter. As you can see on this slide, we have both a year-on-year and Q on Q growth of subscriber.
On a year-on-year we grew by 1.1%, whereas in the second quarter we added 2%. Let me give a little bit of background on how we manage this growth. In the second quarter we had two EIDs and that's very important, those are very important events in this country where the whole country will spend a lot of time with their loved ones and their family. In addition, we had much more holidays. We had two times 10, almost 10 days holidays. That changed a lot in the way we operate both for the distribution and for our network. On the distribution they had to be ready to meet the consumers where they were and patterns changed during these festivities and also due to the holidays.
We had to be available for our customers anywhere in the country 24/7 to ensure that they got their connectivity secured for these festive periods. For the network, it's also quite challenging because the usage pattern that we normally have is changing a lot when people travel so much. We had used a lot of AI and predictive models to estimate where the traffic would go, where we would have congestions, and we put up extra capacity on those places. I'm very proud to say that this really worked well in this quarter. I have to give a big credit to our entire organization who worked day and night during these whole fasting periods to secure seamless connectivity to our customers. This performance that you see here really underlines one of our core strengths, which is to continue to grow under difficult market conditions.
Our brand is strong, our network is strong, and that is really valued by customers. I should add also that this quarter we have seen also a very good improvement in churn, which is now below 14%. That's a number I'm quite proud of. Over to the ARPU. As you can see from this slide, this has been quite a good quarter for ARPU development and the metrics that are supporting the ARPU. There are two main factors behind this good improvement. First, we have worked a lot on price and product, in particular to attract the high value customers in line with our more for more strategy. We see that has worked. If you look at the slide, the graph in the middle where data usage has increased now the last three quarters, this is continuing to increase. You see also the good performance on the voice minutes.
As you know, we have a structural decline in minutes and we think that's going to continue. In this quarter we are actually seeing that minutes have gone a little bit up. I think this effort we have to attract high value customers is the reason behind the ARPU growth that you see on the right in the second quarter. ARPU increased by 5.7% after also an increase in the first quarter. You see this good development is reflected in ARPA. In the second quarter we had an ARPA increase of 5.7% after also a good 2% increase in the first quarter. This underlines our strength in driving higher data usage and also supporting voice minutes. There is also a seasonal effect behind this. Obviously with the two EIDs it's difficult to know exactly how much this or that is making up of the growth.
Definitely the good performance in the quarter is an important factor behind this growth. As you can see on this graph, the ARPU in the second quarter is still about 5% below the ARPU we had in the second quarter last year. Reflecting a little bit on how we think about ARPU going forward, I think it's quite important and we will definitely work towards that, that we strive to keep the ARPA growth more or less in line with inflation. This is important to protect our margins. It's important also to secure that we have financial capacity to invest.
If you now look at the ARPU we had in the second quarter, we still see that it's 4.7% below the level we had last year and thinking a little bit about how we should think about ARPU going forward, I think it's important that we strive to keep the ARPU in line with inflation. That is important not only to protect margins, but also to secure that we have financial capacity to invest in future by commodities. We all know that low band is coming very soon and 5G. There's plenty of interesting areas to invest in for us that will create value for our customers. We need to have the financial capacity to support those investments going forward. If you think about the ARPU development, obviously there will be seasonal variations and there will also be temporary variations.
Long term, I think it's important for us and the industry to be able to maintain an ARPU which is close to inflation. Hopefully the inflation will come down and it has started to come down. Maintaining this relation between ARPU growth and inflation, I think it's important not only for us but the entire industry. Now let's go over to revenue. As you can see on this slide, the positive development I show you on the previous slide on ARPU and subs is visible here on revenue growth. This quarter we had a Q on Q growth of 7%. This means that we are going into the third quarter with quite good momentum. We had good subscriber growth in the second quarter. We had a solid ARPU growth also in the second quarter. I'm confident that we go into third quarter with quite a good momentum. Now over to the EBITDA.
You see on this slide on the right side you can see the EBITDA development and you see quite a good improvement. This is the second quarter in a row with EBITDA improvement. There are two main reasons behind this good improvement this quarter. One, we see that the revenue increase that I showed you on the previous slides of 2.6 billion are flowing straight through the P&L and benefiting the EBITDA. The second driver behind the good EBITDA improvement are the cost. As I mentioned earlier, due to the macro backdrop, we've had a very strong focus on cost discipline and capital discipline. You can see this on this graph. The costs have been fairly stable over the last four quarters. You also see improvements both on COGS and OpEx.
If you look at year on year basis, COGS went down by 8.5% or BDT 200 million and OpEx decreased with BDT 100 million or 0.7%. This is the first year on year reduction in OpEx we've had for several years. Also, if you look on a Q on Q basis, despite the very high BDT 2.6 billion revenue increase, OpEx has remained, or total cost, they have remained pretty stable. Let me reflect a little bit on this because this performance actually is challenged by a lot of factors and some are positive and some are negative. If you look at our business today, it's becoming obviously more and more data driven and that means that we have to upgrade our network continuously. The investments that we've done over the last years have all been to support the data growth and more data growth leads that.
We also have to operate our whole IT stack, not only to meet the growth, but also to meet new requirements for cybersecurity and obviously also to take into use new technologies on AI and so forth. There is a lot, there is some cost pressure due to the development. On the other side, we also see that cloud technology and AI will enable us to reduce cost over time. If I look at our business today, it's all driven by data growth. In order to support that data growth, we constantly have to update and operate our network with more capacity and also more coverage. Also, if you look at our IT stacks to support the data, we need more powerful IT stacks, we need more data centers. A second thing is that cybersecurity is becoming increasingly important. We also need to invest in that.
These factors are driving, putting pressure on our cost base. We also have elements that will give us benefit in the future, in particular customers, cloud and AI technology. We have already started to deploy cloud and we are already doing a lot within AI also thanks to partnership. Obviously, going forward we see a lot of opportunity to benefit from those developments. We are currently having a lot of discussions with many partners and I'm quite excited to see how this journey will continue. I should also add obviously that we have a lot of support from Telenor. They have been through this phase before us, so they have a lot of experience to share with us.
The way we normally operate is that when we have these factors like the data growth, which is putting pressure on our cost base, and by the way, we've had that also before with other technologies coming in, we sit down and we look at how can we take out cost to finance or to compensate for this increase. This is what we have been doing over these last quarters, as you can see here, and this is how we will continue to work. This is obviously a challenge for all telcos, but I'm quite confident that with the track record that we have in Bangladesh, with a good team, we will be able to address this well also in the future. Now over to net profit. As you can see on this graph, we come from three quarters with declining profits.
I'm very pleased to see the positive development in this quarter. Here you can see the effect that I talked about in the previous slide where the 2.6 billion revenue increase, and on top of that good cost performance, we see that is flowing all the way down to net profit. That allows us to reach 8.8 billion of profit in this quarter. That is a strong margin of 21.4%. This good performance comes from our good operating leverage and also our low financial leverage. We can see that the improvements we do on the top line, the improvements we do on, are flowing well down to the P&L. This also shows the resilience of our business model with a strong brand and the leading network.
Combine that with a high operating leverage and a low financial leverage, we can see that improvements in business flow directly to the bottom line. Now over to dividends. I would like to start this presentation to give you some historic perspective. As you can see from this graph, we have consistently been paying attractive dividends to our shareholders. Supported by a very strong balance sheet, we have been able to pay close to 100% every year, almost every year, the last 10 years. This quarter, I'm happy to announce that the board has approved a dividend of BDT 11 taka per share. This corresponds to BDT 15 billion that we will share with our shareholders during the third quarter. I've also added tax payments here and that is to illustrate that a profitable company not only manages to reward our shareholders, but also to pay back to society.
I think this graph you see here, starting from BDT 59 billion t ax payment in 2016 and increasing up to BDT 123 billion in 2024, is quite remarkable. We're proud to be one of the largest taxpayers in Bangladesh. It underlines that society really needs profitable companies. I've also noticed that there has been a debate in the country about strengthening the stock exchange in Dhaka. We fully support that initiative and I see a lot of good ideas and proposals. Fundamentally, what the country needs is more champions like GP , companies that are profitable and companies that pay dividends and companies that pay taxes. That is good for the country and that is good for the stock exchange. I think obviously with this performance, GP, Grameenphone is a good inspiration to other companies in the country.
It is absolutely possible to do very good business in this country and I wish that there will be much more investors coming to join us as soon as possible. The government has launched a lot of initiatives to attract new capital and I'm hopeful that many more will come. Obviously, this will only be possible if we let the best people with the best people and the best ideas also having capital be able to start new businesses. I look forward to the development and Grameenphone will definitely support the government and the stock exchange to improve the performance of the stock exchange in the country. As you see from this presentation and in the graph in the middle, just as you saw the development net profit, you also see a very good development of operating cash flow.
You can see that the BDT 2.6 billion revenue and cost improvement that we realized in the second quarter is flowing down to cash flow. On top of that, we have other elements. We have about BDT 4 billion improvement of cash flow in the second quarter and I'm quite proud of having a cash flow margin of 52%. I think that's one of the leading margins in the industry. On the right side of the graph, you can see that we are continuing to invest in operations. You see we invested BDT 4.8 billion in the first quarter and in the second quarter BDT 3.2 billion.
If referring to my reflections on the macro that I made at the beginning of the presentation, I think you will see that we will be a little bit more careful with the CapEx going forward due to the uncertainty and in particular there is a low band auction coming up soon. We don't know when and we don't know how this will play out. On top of that, the macro remains uncertain. You will see that we will be more careful with the CapEx in the next quarters. We do also have a very strong balance sheet and we are ready to invest when the conditions allow us to do so.
If I look at our net debt here to the right on the graph, you can see that we continue to have close to zero debt and that we are able to finance both CapEx that you see here and dividends from all cash flow. If I can sum up this quarter, I would say we've had a very strong performance. We have good underlying metrics in particular with ARPA growth and subscriber growth. We go into the third quarter with quite a good momentum. As I said, the macro is still uncertain. We will probably be a little bit careful with our CapEx until we get some more visibility on low band availability and the macro going forward. In the next quarters we will also meet easier comparables. As you remember, the unrest started in Q3 last year.
From Q3 and onwards we will compare our numbers to post-unrest numbers in the last year. With a good momentum that we have, I'm quite confident that we will get back to year-on-year growth in the quarters to come if the macro economy in general will continue the path and hopefully it will also increase. With that I give the word back to Yasir Azman. Thank you.
We are setting a standard for excellence in our industry. Risk management remains a key focus area for us. Our team is taking a proactive, integrated approach to managing both external pressures and internal vulnerabilities. We are actively working to resolve ongoing risks and disputes while ensuring compliance, safeguarding the business, and enabling informed strategic decisions. This structured approach strengthens our resilience and reinforces our long-term commitment to sustainable performance. Cybersecurity continues to be a top priority for us as we remain fully committed to protecting our customer partners and operations. One example is our AI-powered monitoring capability, which has helped us cut incident threat detection time by half, reducing the risk of data leakage. I'm also very proud to share that our core transformation has achieved Defendable Architecture Maturity Level 3.0, which is the highest security certification in Southeast Asia, making our network stronger and more resilient against threats.
As we keep navigating the ups and downs of our industry, one thing is clear: our success really comes down to our people and the strength of our leadership. We are building a workplace that's inclusive, focused on skills, guided by a diverse international labor leadership. Building on this momentum, we are now taking a more collaborative and outward-looking approach by initiating cross-industry dialogues and working closely with our partners to elevate diversity and inclusion awareness beyond our organization. As a closing remark, I want to thank you for taking the time to connect with us on this call today. As we wrap up, I want to leave with two thoughts that really define where we are and where we are heading to. Number one, the story of the first half of 2025 is one of resilience.
Yes, the country and economy have been slow and recovery has not come overnight. We have stayed the course. We have gradually bounced back quarter by quarter, and that's a credit to the strength of our people, our execution, our partners, and our ability to adapt. We are not just weathering the challenges, we are building momentum through it, building momentum for the coming quarters. Number two, we are stepping into the future with purpose, and that future is AI-led. It's not a choice anymore. It's inevitable. Across the company, we have taken the challenge to embed AI not just in tools but in how we think, how we work, and innovate. We are equipping our people and leadership team, rethinking our operations, and developing AI-driven models to boost efficiency, drive growth, and provide better customer experience.
Whether it's optimizing networks, improving customer experience, or even conserving energy, we see massive potential in what AI can unlock for us. We have an exciting journey ahead of us. Thank you very much for this study today.
Thank you Azman Bhai and Otto for the wonderful presentation on the quarter updates, and that brings us to the end of today's presentation. The Q and A session will soon begin after a few hours on Microsoft Teams at 2:00 P.M. local time. We look forward to sharing updates, answering your questions, and hearing your thoughts. Thank you all for joining the call.