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All advanced functionality of RadGrid like paging, grouping, filtering, sorting is performed over the datasource not on the display value. That is to say in order to use the grouping functionality you need to provide DataField property of GridTemplateColumn with a value and based on that field the grouping functionality will group the data.
I am afraid that the Grid is not capable of grouping by controls or by partial value of the data field.
Please excuse us if this behavior is inconvenient for you.
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