Orascom Telecom Holding Annual Report 2009

ANNUAL REPORT 2009

CONTENTS Letter from Executive Chairman & Group CEO

OTH ANNUAL REPORT 2009

02

About OTH: OTH at a Glance

03

Financial Highlights

04

Organizational Structure

05

Financial Milestones

06

Financial Events 2009

07

Board of Directors

08

Corporate Governance Report

12

Corporate Responsibility Report

13

GSM Operations: OTA

15

Mobilink

17

Mobinil

19

Tunisiana

21

banglalink

23

Telecel Globe

25

koryolink

27

WIND Mobile

29

2009 Financial Review: Board Report

31

Financial Statements (IFRS/US$)

39

Financial Statements (EAS/EGP)

62

Ò

This year Orascom Telecom has exceeded the US$5.3 billion turnover mark, an impressive result which also represents our strongest performance to date.

Ó

Naguib Sawiris, Executive Chairman

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Letter from Executive Chairman & Group CEO

Naguib Sawiris, Executive Chairman Ò2009 demonstrated the strong resilience of our business in increasingly volatile and challenging global economic conditions. Orascom Telecom has continued to focus on its core strategic goals of creating shareholder value through the continued growth of its existing subsidiaries. During the course of this challenging year, Orascom Telecom has had to overcome a series of hurdles: We were cleared to enter the Canadian wireless market, and we managed to attain our initial milestone of launching WIND Mobile Canada before Christmas. We have followed through on our position of good faith with France Telecom, which has culminated in an agreement regarding Mobinil that is satisfying to both parties, and will allow for us to concentrate on maintaining Mobinil's leading position in the Egyptian market. At the end of December 2009, OTH started a local appeal process regarding the Algerian tax claim. The US$800

Khaled Bichara, Group CEO million rights offering gives us the time flexibility to reach the most beneficial outcome in Algeria. As always, we consider our strategic position in each country in which we operate to maximize shareholder value. In accordance with our Group's strategy, in November our Board of Directors endorsed the restructuring of our organization through promoting and entrusting Khaled Bichara to be the Group's Chief Executive Officer, to help us transform OTH into a more innovative, agile and integrated global company and gear the Group into a more aggressive period of growth. I believe that in the coming years the telecom market is going to witness massive consolidation, and with the help of our new structure I will devote more time and effort in this directionÓ.

ÒThe year 2009 has been undisputedly challenging for OTH, leading to a slower growth in 2009 compared to 2008, in line with our forecasts. In Algeria, despite the harsh competition, OTA still remains the clear leader in terms of market share. In Pakistan, Mobilink has observed stable revenues in local currency and increased its subscriber base for the year end of 2009 by 8% compared to 2008. In Egypt, Mobinil has weathered the harsh economic and competitive conditions, displaying a positive growth rate relative to its major competitor in the market. Tunisiana has embarked upon several successful retention initiatives in preparation for the entry of a third player into the Tunisian market. During 2009 our operation in Bangladesh displayed exponential growth on all fronts; ending the year with an increase of 22% in revenues and 34% growth of its subscriber base compared to the previous year. Koryolink is performing strongly and rapidly

expanding its sales and network coverage throughout the country. In Lebanon, we have surpassed the 1 million subscriber mark required by our management contract of Alfa. Finally, on December 16th 2009, our Canadian investment, WIND Mobile, was launched. Throughout this year we have held to an ambitious OPEX reduction plan, resulting in an OPEX reduction of 6.3% vs. our internal budget for 2009. Both Pakistan and Bangladesh showed healthy results thanks to the implementation of our cost optimization plan. We continue to create value through catering to our customers' needs by providing innovative and high quality services.Ó

OTH's vision

To harness our networks to provide millions of connected customers with solutions that empower their personal and professional lives.

OTH's mission

We Exist toÉ Enrich our customers' lives through accessible communication services Ensure our shareholders' returns with the highest yields Expand our employeesÕ horizons with exceptional growth opportunities Enable our communities' development and prosperity by always giving back

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OTH at a Glance

'A VOICE THAT SOUNDS Positioned for success Orascom Telecom Holding S.A.E. ("OTH") is a leading telecommunications company with mobile operators in many regions of the globe including Canada, the Middle East, Africa and Asia. It was established in 1998, by launching its first mobile operation (ÒMobinilÓ), also the first mobile operator in Egypt. OTHÕs headquarters subside in the heart of Cairo where the company initially started. After Mobinil's launch, OTH continued its journey by pursuing markets characterized by large population densities and low mobile penetration rates. However this strategy changed in the last two years as it started to enter more diverse markets with its latest launch to date (ÒWIND MobileÓ) in Canada. In 1998, OTH started off with 200,000 subscribers. By the end of 2009, OTH is proud to be extending its care and services to almost 93 million subscribers. It is also serving a total population under license of approximately 510 million with an average mobile telephony penetration of approximately 49%.

A Borderless company Having launched ÒMobinilÓ in 1998, OTH operations to date include Algeria ("OTA"), Pakistan ("Mobilink"), Egypt ("Mobinil"), Tunisia ("Tunisiana"), Bangladesh ("banglalink"), North Korea ("koryolink") and Canada ("WIND Mobile") through an indirect equity ownership in Globalive Wireless. At the beginning of 2009, OTH was also awarded the management contract of one of the two Lebanese mobile telecommunications operators ("Alfa") from the government of the Republic of Lebanon. Furthermore, OTH has an indirect equity ownership in Telecel Zimbabwe (Zimbabwe) and through its subsidiary Telecel Globe, operates in Burundi, the Central African Republic, and Namibia.

IS A VOICE THAT'S HEARD.' Value to stakeholders OTH's target is to provide value for its investors and shareholders by expanding in high growth markets and strengthening its position in its existing operator companies through focusing on current as well as potential subscribers. Profitability and success are demonstrated through the fact that all of OT's operator companies are either market leaders or major players in their markets. OTH employees take gratification in striving for the success of a business that provides the tools by which people can communicate and improve their lives. OTH's customers everywhere in the world are provided with the best service as operator companies constantly aim to cater and adapt to their needs by offering innovative solutions to make their lives better, easier and more rewarding.

The power to communicate In a world with increasing interconnectivities and rapid technological transformations and advancements, not being able to communicate means not being able to exist. It is OTH's core belief that communication is the essence of life, the inherent right of every human being and the means by which communities advance. Being a borderless company, OTH seeks to provide communications to all peoples of the world. Communication empowers people by letting them tell their stories, enhance their lives and advance their communities. Integrating the most suitable and best technology innovations for each country enables OTH operator companies to facilitate and enrich their subscribers' lives. When the world calls, we listen. When the world talks, we feel for what it wants to say. We help give it a voice.

Subscribers

Revenues in millions

Main Financial Data

EBITDA in US$ millions

(according to IFRS)

in US$ millions

2008

2009

5,327 2,384 44.7% 431 2.30 1,576 5,084

5,065 2,172 42.9% 318 (1) 1.81 1,037 5,113

78

93

5,327

2009

2008

5,065

2,384

2,172

2008

2009

2008

2009

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Financial Highlights

Shareholder Information Orascom Telecom Holding S.A.E. ("OTH") maintains a high level of disclosure and keeps its shareholders informed of any significant events through press releases, quarterly earnings releases, conference calls and an updated website with all relevant operational and financial information in addition to reporting its financials under Egyptian Accounting Standards (LE) and under International Financial Reporting Standards (US$). Ownership Structure Weather Investments S.p.A. directly and indirectly owns approximately 51.6% of the shares of OTH, and 48.4% is public free float as of December 31st 2009. Buyback Shares & Cancellation of Shares In February 2009, the Company announced that it filed an application with the Egyptian Capital Market Authority and the Egyptian Stock Exchange for the selective repurchase of its shares in light of favorable relative market valuations. Orascom Telecom planned a potential on-market GDR and local shares repurchase plan of up to 65 million shares (13 million GDRs) over the coming three months. In October, the Company approved the reduction of its issued capital by writing off the Company's treasury shares,

Revenues (in US$ million) EBITDA (in US$ million) EBITDA Margin Net Income (in US$ million) Earnings per GDR (US$)(1) CAPEX (in US$ million)(2) Net Debt (in US$ million)

(1) Based on a weighted average for the outstanding number of shares of 175,567,008 GDRs (2) CAPEX components classification (e.g. tangible vs. Intangible) may differ from an operational perspective vs. an accounting one. The above figures have been prepared to reflect CAPEX from an operational perspective, and may differ from CAPEX figures released in the financial statements.

by the amount equal to 10,302,769 shares. After this reduction, the total number of fully paid up shares was 889,100,105. In December, the Company approved the amendment of the Authorized Capital to be LE 7.5 billion instead of LE 2.5 billion. The Board of Directors were authorized to increase the Company's capital by way of rights issue by respecting pre-emption rights afforded to existing shareholders. The size of the rights issue was to be maximum (LE 4,392,100,105) and subscription was to be at par (LE 1). The capital increase was conditional upon the prior consent of the Company's lenders to the waivers and conditions according to the Credit Agreement made with the Company in the amount of US$ 2.5 billion, provided same was to be indicated in the prospectus of the public subscription notice to existing shareholders.

Dividends In August 2009, the Company received from the Egyptian Exchange requests for dividend payment in shares from a total number of 8,764,923 local shares and from the London Stock Exchange a total number of 71,463,505 GDRs (equivalent to 357,317,525 local shares). Based on the announced distribution ratio of 36:1; the Company distributed 243,470 shares to its local shareholders and 1,985,097 shares to its GDR holders (equivalent to 9,925,487 local shares). Consequently, the Board of Directors agreed to distribute in cash an amount of EGP 180,111,604 for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of US$ 59,851,888 for a total number of 66,337,438 GDRs (equivalent to 331,687,192 local shares) (around US$ 0.9022/GDR).

Share Ownership Program for Employees As part of its commitment to motivate and retain its key employees, OTH offers an ESOP plan, having an ownership of approximately 1% of OTH shares.

Dividend Policy OTH's primary goal is to maintain sufficient reserves and liquidity to ensure its operational and financial needs and to maintain a strong growth profile of its business. OTH intends to operate a progressive distribution policy based on what are believed to be sustainable levels of dividend payments supplemented by variable distribution to shareholders of any excess cash resources. Consequently, dividends will vary from year to year.

Paid up Capital As at December 31st, 2009, OTH's paid up capital was LE 889,100,105, divided into 889,100,105 shares, each with a nominal value of LE 1.

Share Price Performance At the beginning of 2009, the OTH stock was quoted at LE 30.88 on EGX. The highest quotation during the year was LE 40.25, and the lowest was LE 16.54. At year end, the quotation price was LE 25.17; this amounted to an 18.5% decrease in value. The market value as of December 31st, 2009 was LE 21.5 billion. OTH GDRs listed on the London Stock Exchange at the beginning of 2009 were quoted at US$ 24.56. The highest quotation during the year was US$ 36.49, and the lowest was US$ 14.29. At year end, the quotation price was US$ 24.81; this amounted to a 1% increase in value. The market value as of December 31st, 2009 was US$ 4.4 billion. Trade OTH is traded on both the Egyptian Stock Exchange and on the London Stock Exchange under the symbols (ORTE.CA, ORAT EY) and (ORTEq.L, OTLD LI), respectively. Disclosure To ensure full disclosure and transparency, OTH reports its Holding and Consolidated financials on a quarterly basis applying both the Egyptian Accounting Standards (ÓEASÓ) and US$ consolidated financial statements in accordance with the International Financial Reporting Standards (ÓIFRSÓ).

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OTH ANNUAL REPORT 2009

Organizational Structure

Naguib Sawiris Executive Chairman Manal Abdel Hamid PR & Corporate Communications Director

Mohamed Naguib Internal Audit Officer

Khaled Bichara Group CEO

Emad Farid Group Chief Strategy Officer

Business Planning, Corporate Strategy, Innovation and Partnerships

Philip Tohme Chief Technology Officer

Network & IT Solution Engineering, Procurement, Operations Support, Regional Technical Planning & Control, HQ IT Support

Aldo Mareuse Group Chief Financial Officer

Corporate Finance, Treasury, Tax Planning & Corporate Accounting, Budgeting, Planning & Control, Investors Relations

Ashraf Halim Chief Commercial Officer

Market Development, Sales, Customer Operations, Corporate Marketing, Fixed and Broadband, Market Planning, Products and Services

Ragy Soliman General Counsel

Compliance & Secretarial Corporate Affairs, Corporate Attorney

Wafaa Lotaief Group HR & Admin Officer

Compensation & Benefits, Training & Development, Recruitment and Administration

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Financial Milestones

January 2009

March 2009

May 2009

OTH announces success of PMCL Tender Offer for own bonds

OTH is awarded a Management Contract in Lebanon. Telecel acquires Cell One in Namibia

Globalive Wireless, OTH's Canadian Investment, is granted License and receives Spectrum from Industry Canada

July 2009

OTH announces launch of mobile financial services in Pakistan

August 2009

OTH announces results of Cash/Shares Mix from its Dividend Distribution

November 2009

OTH realigns organization to more effectively focus on growth and strategic transformational initiatives

December 2009

Proposed Rights Issue to raise US$ 800 Million to strengthen the Balance Sheet. OTH celebrates the inauguration of WIND Mobile in Canada

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OTH ANNUAL REPORT 2009

Financial Events 2009 Telecel Globe acquires Cell One in Namibia In January 2009, Orascom Telecom announced that it has acquired the mobile telecommunications operator Cell One in Namibia. Cell One operates a GSM 900/1800 network and has 198,000 active subscribers and over 20% market share. The total consideration of this transaction is approximately US$59 million in cash, of which US$32 million is already paid and the balance due in January 2010. The debt assumed as part of this transaction is nonrecourse on Telecel Globe. Orascom Telecom is awarded a Management Contract in Lebanon In January 2009, OTH announced that it has been awarded the management contract of one of the two Lebanese mobile telecommunications operators, Alfa, which is owned by the Republic of Lebanon. The management contract extends for one year and is renewable for another year. Under this contract, OTH is required to increase the number of subscribers of Alfa from around 600 thousand at the end of 2008 to around 1 million at the end of 2009. The management fee is paid by the Republic of Lebanon and will be defined based on the performance of the operator as measured by operating expenditure per active subscriber. The Republic of Lebanon is fully responsible for the Capex during the contract period. Globalive Wireless, OTH's Canadian Investment, is Granted License and Receives Spectrum from Industry Canada In March 2009, Orascom Telecom announced that Globalive Wireless Management Corp. (ÒGlobalive WirelessÓ), in which OTH has a 65 per cent indirect equity ownership, had officially been granted its spectrum license from Industry Canada and had received the corresponding spectrum. Globalive Wireless expects to launch its network to consumers in the fourth quarter of 2009, providing affordable, customer-centric and innovative wireless services across Canada in a market that is still not fully penetrated, with relatively high ARPU and a reasonably competitive environment.

Launch of mobile financial services in Pakistan In July 2009, Orascom Telecom announced the launch of mobile financial services by its Pakistani subsidiary, Mobilink. Mobilink, Pakistan's market leader in cellular services will be providing these services in association with Citibank under an arrangement endorsed by the State Bank of Pakistan. Mobilink and Citibank will utilize Mobilink's extensive retail infrastructure to extend the reach of financial services to the previously un-served masses. Using Mobilink's cutting edge technology, Mobilink users will be able to open branchless bank accounts through a simple and convenient registration process via authorized agents across the country. The service will allow users to maintain their accounts through their phones and make secure peer to peer money transfers to any Mobilink number simply via SMS. Mobilink envisions extending this partnership with Citibank further by using this platform to empower subscribers to avail and repay loans, purchase goods and services, pay bills, buy airtime and a host of other services using their cell phones. Mobilink is the only mobile operator in Pakistan to have made headway in the m-commerce arena by offering mcommerce services. Orascom Telecom Algeria received the Official Tax Assessment for the years 2005, 2006 and 2007 In November 2009, Orascom Telecom Holding (ÒOTHÓ) announced that its Algerian subsidiary Orascom Telecom Algeria (ÒOTAÓ) received the official tax notification from the Algerian Direction des Grandes Enterprises (Tax Department for LargeScale Companies) (the ÒDGEÓ) in respect of the years 2005, 2006 and 2007, in which the DGE has assessed taxes and penalties alleged to be owing by OTA in the amount of DZD 43.9 billion (approximately USD 596.6 million) (the ÒReassessmentÓ). The Reassessment is based primarily on the unfounded and unacceptable allegation that OTA did not keep proper accounts for the years 2005, 2006 and 2007 notwithstanding that OTA's accounts were fully audited and approved by both OTA's international auditors, and its local

statutory auditors. OTH and OTA confirm that the Reassessment is unfounded. OTH and OTA dispute the concept and the content of the claim based on the fact that the DGE seeks to impose taxes on OTA from which it was exempt during the period under consideration, among other things. OTH and OTA intend to take all necessary legal steps to challenge the Reassessment through all available administrative and judicial channels to defend its reputation, integrity and rights. Without prejudice to its rights under the Investment Agreement and applicable laws, OTA will appeal the Reassessment within the DGE appeal procedure. This tax claim may reduce the amount to be distributed as dividends in 2010 from OTA's 2009 net results. OTH is confident in its ability and experience to mitigate this risk of a possible reduced liquidity position in an efficient manner to meet all its obligations as it did in the past. Proposed Rights Issue to Raise US$ 800 Million to Strengthen the Balance Sheet In December 2009, Orascom Telecom Holding S.A.E. (ÒOTHÓ or the ÒCompanyÓ) announced that the Board of Directors was convened on December 10th, 2009 and had decided to call for an extraordinary shareholders' meeting (the ÒEGMÓ) to increase the Company's authorized capital and to authorize a capital increase through a rights issue (the ÒRights IssueÓ). The proposed Rights Issue is intended to further strengthen the balance sheet and ensure OTH's liquidity including financing needs for the Group in the case where there is no immediate resolution of the tax dispute in Algeria. The size of the Rights Issue proposed to the EGM was up to EGP 5 billion, which allowed the Company to issue a Rights Offering of US$ 800 million or EGP 4,392 million at the existing EGP/US$ rate at the time. The Rights Issue offered existing shareholders new shares for every existing share in the Company at a price of EGP 1 per share (equal to the nominal value of an ordinary share in the Company). Weather Investments, OTH's largest shareholder, which owns approximately 50.6% of the outstanding shares, had communicated to the Company its commitment to subscribe for a minimum of its existing pro rata

share in the Rights Issue. The proposed Rights Issue was approved by shareholders at the EGM held on December 27th, 2009. Orascom Telecom Celebrates The Inauguration Of WIND Mobile In Canada In December 2009, Orascom Telecom Holding (ÒOTHÓ) celebrated the inauguration of WIND Mobile, the latest addition to the successful list of OTH investments. WIND Mobile stores opened in the Greater Toronto Area and Calgary before Christmas. The company will be rolling out in Vancouver, Ottawa and Edmonton in the year 2010. WIND Mobile is the first new national wireless provider in Canada in over a decade. WIND Mobile will provide voice, text and data services to Canadians on a nextgeneration wireless network and, where it has not rolled-out its network, will provide national coverage through a roaming agreement. WIND Mobile is committed to offering a level of wireless service presently not available in Canada. Orascom Algeria (ÒOTAÓ) Appeals the Algerian Notice of Tax Reassessment for 2005-2007 and Pays 20% of The Reassessment to be Permitted to Make such Appeal In December 2009, Orascom Telecom Holding (ÒOTHÓ) announced that its Algerian subsidiary Orascom Telecom AlgŽrie (ÒOTAÓ) filed an administrative appeal (rŽclamation contentieuse) against the notice of reassessment dated November 16th, 2009 received from the Algerian Direction des Grandes Entreprises (Tax Department for LargeScale Companies or "DGE") in respect of the tax years 2005, 2006 and 2007 (the ÒReassessmentÓ). Pending appeal, OTA is not required to pay the full amount of the Reassessment. In order to file its appeal, however, Algerian law requires OTA to pay 20% of the taxes and penalties alleged to be owed, i.e. DZD 8.78 billion (approximately USD120 million). OTA paid this amount to the DGE on December 24th, 2009 under protest and in reservation of all rights. The amount paid will be recoverable if OTA's appeal is successful.

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Board of Directors

Standing from left to right Mohamed Shaker

Non-Executive Board Member

Hassan Abdou

Non-Executive Board Member

Emad Farid

Khaled Ismail

Executive Board Member

Non-Executive Board Member

Naguib Sawiris

Iskander N. Shalaby

Seated from left to right Ahmed Maher El Sayed Non-Executive Board Member

Khaled Bichara

Group Chief Executive Officer

Executive Chairman

Non-Executive Board Member

The above reflects the latest composition of the Board of Directors

Franois Dopffer

Non-Executive Board Member

Ajit Nedungadi

Non-Executive Board Member

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OTH ANNUAL REPORT 2009

Board of Directors Naguib Sawiris Executive Chairman Since joining Orascom in 1979, Mr. Naguib Sawiris has continuously contributed to the growth and diversification of the company into what it is today one of Egypt's largest and most diversified conglomerates. The Orascom Group is the country's largest private sector employer and has the largest market capitalization on the Cairo & Alexandria Stock Exchange. Mr. Sawiris established and built the Railway, Information Technology, and telecommunications sectors of Orascom. The extraordinary success of these ventures as well as the other sectors of the company led to the management decision to split Orascom into separate operating companies: Orascom Telecom Holding (OTH), Orascom Construction Industries (OCI) , Orascom Hotels & Development (OHD) and Orascom Technology Systems (OTS) . Since that time in late 1997, Orascom Telecom Holding S.A.E.(OTH) was established, chaired and managed by Mr. Sawiris. As Executive Chairman of Orascom Telecom Holding (OTH), Mr. Sawiris has dynamically led the growth of the company, to be the leading regional telecom player and among the best regarded emerging markets players in the world. After the foundation of Weather Investments in early 2005, Mr. Sawiris led the landmark leveraged buyout of a majority of Wind Telecommunications in Italy and took over management as its Chairman in late summer 2005. Followed by that, Weather Investments acquired Tim Hellas in Greece and re-branded it under the name ÒWind HellasÓ. In November 2006, Wind Telecommunications floated

the largest ever PIK debt in Europe with proceeds used to complete the buyout of Wind Italy from ENEL resulting in the Sawiris Family owning 98% of Weather Investments. At international and regional levels, Mr. Sawiris serves on the following boards, committees and councils: ¥ Member of the International Advisory Committee to the NYSE Board of Directors (IAC) since November 2005. ¥ Board Member of the International Advisory Board to the National Bank of Kuwait. ¥ President of the German-Arab Chamber of Industry and Commerce for 2008, 2009 and 2010. ¥ Board Member of the Supreme Council of Sciences and Technology formed by a presidential decree issued by Egyptian President Hosni Mubarak. The council's board includes a galaxy of scientists including Nobel laureate Dr. Ahmed Zewail, Dr. Farouq el-Baz and Dr. Magdy Yaqoub. ¥ Board Member on both the Board of Trustees and the Board of Directors of the Arab Thought Foundation. ¥ Board of Trustees member of the French University in Cairo. ¥ Board member of the Egyptian Council for Foreign Affairs. ¥ Board Member of the Consumer Rights Protection Association of Egypt.

Mr. Sawiris is also the recipient of numerous honorary degrees, industry awards and civic honors, including the Ò Legion d'honneur Ò (the highest award given by the French Republic for outstanding services rendered to France) and the recipient of prestigious ÒSitara-e-Quaid-e-AzamÓ award (conferred upon Mr. Sawiris in 2006 by General Pervez Musharref for services rendered to the people of Pakistan in the field of telecommunication, investments and social sector work). Mr. Sawiris holds a diploma of Mechanical Engineering with a Masters in Technical Administration from the Swiss Institute of Technology, ETH, Switzerland.

Khaled Bichara Group Chief Executive Officer Mr. Khaled Bichara is currently the Group Chief Executive Officer of Orascom Telecom Holding S.A.E as well as the Chief Executive Officer of Weather Investments S.P.A. He sits on the board of Orascom Telecom Holding (OTH) since 2003, the largest GSM operator in the Middle East, Africa and Pakistan. He is also a board member of WIND Italy, and various telecom and IT companies. Mr. Bichara was appointed Chief Operating Officer of OTH in April 2009. He was previously COO of Wind Telecommunications. He brings a wealth of experience in both telecommunication and information technology with a strong management and entrepreneurial experience. Mr. Bichara headed the fixed line and portal business unit at Wind Telecomunicazioni S.p.A from 2005 until he was promoted to Chief Operating Officer of the company. At Wind, he played a key and instrumental role in restructuring the company's organization, which led to the successful turnaround of Wind from a continuously loss making company to one of the best performing mobile, fixed line and broadband integrated operators in Europe within a record time span of three years. Prior to joining Wind, he was the cofounder, Chairman and CEO of LINKdotNET (ÓLDNÓ), the largest private Internet Service Provider (ÓISPÓ) in the Middle East. In 2001, following successful negotiations, Microsoft chose to partner with LDN headed by Mr. Bichara to launch MSN Arabia, the Middle East's first global portal, bringing full internet experience of MSN to users in the region.

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OTH ANNUAL REPORT 2009

Board of Directors In December 2003, Business Today Egypt chose Mr. Bichara as the ÒYoung Executive of the YearÓ for executives under the age of 40. Mr. Bichara earned his Bachelor of Science degree from the American University in Cairo where he is a member of the Advisory Board for the Computer Science and Engineering Department. He is an active member of the Software Community in the Middle East, a founding member of the Egyptian Software Association and the Internet Society of Egypt. Ahmed Maher El Sayed Non-Executive Board Member Born September 14th, 1935, graduated from the Faculty of Law, Cairo University in 1956. He joined the Foreign Ministry in 1957 and served in Zurich, Kinshasa and Paris. Moreover, he served in the departments of Arab Affairs, Consular Affairs and European Department. He served in the Office of the President's National Security Advisor from 1972-1974, as Chief of Cabinet of Minister of Foreign Affairs from 1974-1980, as a member of the Egyptian delegation at the Camp David negotiations in 1978 and as a member of the Taba arbitration team. Mr. El Sayed held the following positions: Ambassador to Portugal (1980-1982), Ambassador to Belgium and to the European Community (19831984), Head of Policy Planning Department (19841986), Head of Legal Department (1987-1988), participated in negotiations about Taba and arbitration procedures, Ambassador to the USSR and then Russia (1988-1992), Ambassador to the USA (1992-1999), Head of the Arab League Fund for Africa (2000-2001), and Minister of Foreign

Affairs (2001-2004). He is a member of the Shura Council (the Upper House of Egyptian Parliament), and also publishes articles in various newspapers. Ajit Nedungadi Non-Executive Board Member Mr. Ajit Nedungadi heads TA's International Group and focuses on investments in growth companies in Europe and India. He serves on the Boards of Alma Lasers, eDreams, ION Trading, Micromax Informatics, Sophos Plc and Weather Investments S.p.A. He is also very involved with TA's investments in Idea Cellular, Jupiter Investment Management Group and M and M Direct, and was on the Boards of Drive Assist and SmartStream Technologies. Prior to joining TA in 1999 in the Boston office, Mr. Nedungadi was at Trilogy Software. Prior to that, he was at Investcorp International, specializing in leveraged buyout transactions. Mr. Nedungadi was also previously with Credit Suisse First Boston in the Mergers & Acquisitions department. He received a BS degree in Electrical Engineering and Economics, magna cum laude, Phi Beta Kappa, from Yale University (1992) and an MBA degree as a Baker Scholar from the Harvard Business School (1998). Emad Farid Executive Board Member Emad Farid is the Vice Chairman of Orascom Telecom Holding S.A.E. in charge of Corporate Strategy and Business Development, a position he has been promoted to effective April st 1 , 2009. Before his promotion, he was holding

the position of Group Chief Operating Officer of OTH since 2003. He is a member and/or Chairman of the Board in many of OTH's subsidiaries including OTA (Algeria), Mobilink (Pakistan), OTT (Tunisia), koryolink (DPRK), ARPU+ and MENA Cable among others. In addition, he is member of the Board of Directors of Wind, a mobile and fixed telecommunication operator in Italy. Mr. Farid joined the Orascom group in 1992 where he held different managerial positions. He joined OTH in 2000 and was subsequently appointed as the CEO of Syriatel (OTH's GSM subsidiary in Syria). Mr. Farid holds a Master of Science degree in Telecom Engineering from Cairo University. Franois Dopffer Non-Executive Board Member Mr. Dopffer is a former French Ambassador to Turkey (199196) and to Egypt (2000-2002). He has extensive knowledge of United States, North Africa, Middle East and Asian countries where he served in different positions. He holds degrees in Political Science (IEP Paris), Public Management (ENA) and Law (Paris University). He has published in 2008 a book of political analysis, The Turkish Imbroglio. Hassan Abdou Non-Executive Board Member Mr. Abdou is currently Chief Executive Officer of Weather Investments II, which was formed in 2005 as the majority owner of Weather Investments, a global telecom company owning and controlling Orascom Telecom, Wind Telecommunications in Italy and

most recently TIM Hellas in Greece. Mr. Abdou is an active board member in Weather, Wind and OT and in addition, sits on the board and executive committees of several IT, telecom and media companies in Europe, Egypt and the Middle East. Prior to his involvement with the Orascom Group which started in 2003, he was Chief Investment Officer of EFG-Hermes Private Equity and the Horus Private Equity Fund where he was Fund Manager since 1997. In 1995 and until returning to Egypt, he was a consultant in the New York office of the Boston Consulting Group where he worked with Fortune 500 companies in such areas as Telecommunications, Media & Entertainment, Energy and Pharmaceuticals. Mr. Abdou had begun his career with Exxon Company where he worked for several years as a Project Controls Engineer. In addition to his activities in the region, Mr. Abdou is a member of the Advisory Board of the New York Private Placement Exchange (ÓNYPPEÓ). Mr. Abdou received his Bachelor of Science in Mechanical Engineering from the University of Pennsylvania and a Bachelor of Science in Economics from the Wharton Business School. In addition, he received his MBA from the Harvard Business School. Iskander N. Shalaby Non-Executive Board Member On September 1st, 2008 Alex Shalaby was appointed Chairman of the Egyptian Company for Mobile Services (Mobinil) by board consensus, following his appointment as its President and CEO in 2005. This step came because of Shalaby's remarkable achievements at Mobinil over the preceding three

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OTH ANNUAL REPORT 2009

Board of Directors years where the company has witnessed continued market share leadership, tripled the subscriber base from six to 19 million, doubled the revenues, and increased net profits by 30%. Mr. Shalaby was Chief Officer for Regulatory Affairs at Mobinil from 1998 to 2005 and was responsible for helping with the licensing and regulations required in setting up Mobinil as the first mobile operator in Egypt. Mobinil is partly owned by OTH and France Telecom/Orange, a balancing challenge for Mr. Shalaby to maintain the trust and confidence of the two major shareholders as well as the company's thousands of public shareholders. As former Executive Vice President of (OTH) and continuing to be one of its Board Members, Mr. Shalaby's regional experience proved invaluable as OTH expands its global footprint. Mr. Shalaby came to Mobinil from Washington, DC where he was AT&T Director for Public Affairs, serving as the company's link to lawmakers on Capitol Hill and lobbying the executive branch of the U.S. government. He helped in achieving more liberalization of the telecoms sector internationally for the emerging nations of the Middle East, Africa, Eastern Europe through the relevant multi-lateral agencies. It was during these years that he served on the Boards of the American Chamber of Commerce becoming its president during the period (1991 - 1992) and the Bi-national Fulbright Commission and Seeds of Peace; he currently Chairs the Board of Injaz & SIFE in Egypt. As his AT&T responsibilities shifted from local to regional, with particular focus on North Africa and the Levant, between 1993 and 1995, Mr. Shalaby became Regional Director for International Public Affairs for AT&T, based in Cairo, Egypt, where he was the principal interface with key agencies within the

governments in the region on matters impacting AT&T's operations. Mr. Shalaby started with the early days of data communications at AT&T, moving between posts in California and New Jersey, where he worked with Bell Labs. Mr. Shalaby then moved to become Managing Director for AT&T in Egypt, and General Manager for the Middle East and North Africa region until 1993. He held a variety of technical and managerial positions with AT&T start-ups in the Gulf (1977-1980). In 1977, he moved to Saudi Arabia to help launch the first major AT&T microwave project before moving on to Kuwait and the UAE. Once again, during this period, he established and secured a solid position for AT&T in the Gulf region. In 1966, Mr. Shalaby graduated with a Bachelors of Science degree in Electrical Engineering from the University of Alexandria and started his first job with Egypt Air as a radio and radar engineer for two years. In 1969, he immigrated to the United States, where he settled in San Jose, California and started his first job with Pacific Telephone and Telegraph Company, a subsidiary of AT&T at the time. During this time, he earned a Masters of Science degree in Electrical Engineering and Computer Science from San Jose State University. Khaled Ismail Non-Executive Board Member In February 2010, Dr. Khaled IsmailÊwas the GSM Services Officer at Orascom Telecom Holding, in charge of mobile services and strategic directions for convergence including Wimax.

Prior to that, Dr. Ismail was the senior advisor of the Egyptian Minister of CIT, responsible for technology development. Dr. Ismail is the CEO of SySDSoft, a company focused on the design of wireless digital communication systems. Prior to that, he was with the IBM Research Center in NY. He is the recipient of the IBM Invention Achievement Award and the IBM Outstanding Technical Achievement Award in 1997 and 1995, respectively. He is also the recipient of the IEEE Honorary Society (Eta Kapa Nu), Best Young Electrical Engineer in the US award in 1994, and the Shuman Award for the Young Arab Engineer in 1995. Dr. Ismail received his Ph.D. from the Massachusetts Institute of Technology in 1989. He is an IEEE Fellow since 1997. He has published over 160 papers in international journals and holds 22 US patents. Mohamed I . Shaker Non-Executive Board Member Born October 16,1933 . A graduate of the Faculty of Law, Cairo University in 1955 . Obtained a Doctorate degree in Political Science from the Graduate Institute of International Studies, University of Geneva, in 1975. He joined the Foreign Ministry in 1956 . As ambassador he served at the United Nations at New York (1984 - 1986), Vienna (1986 - 1988) and London (1988 - 1997). During his tenure in Vienna, he was a member of the Board of Governors of the International Atomic Energy Agency (IAEA). Two years before, he was a representative of the Director General of the IAEA

to the United Nations (1982 - 1983). At the present, he is Chairman of the Board of a number of think tanks and academic institutions including the Egyptian Council for Foreign Affairs (a leading non governmental Think Tank), National Center for Middle East Studies, and Regional Information Technology Institute. He is also a member of the Board of the Nuclear Power Plants Authority. He is Chairman of the Board of Trustees of a number of major philanthropic organizations namely; Sawiris Foundation for Social Development and Magdy Yacoub Foundation for Heart Research. He also chaired two major international conferences; Review Conference of Nuclear Nonproliferation Treaty 1985 and Conference on the peaceful uses of the nuclear energy in 1987. He was a member of the U.N. Secretary-General's Advisory Board on Disarmament Matters. He was a member of the UN Expert Group on Disarmament and Non-Proliferation Education (2001 - 2002). Two of Dr. Shaker's major works are The Nuclear Non-Proliferation Treaty: Origin and Implementation 1959 - 1979 (3 volumes), New York: Oceana Publications, Dobbs Ferry, 1980, which was reproduced in an electronic copy issued by both the Egyptian Council for Foreign Affairs (ECFA) and James Martin Center for Nonproliferation Studies, California in May 2010, and The Evolving International Regime of Nuclear Non-Proliferation, Leiden/Boston: Martinus Nijhoff Publishers, 2007, The Hague Academy of International Law, Recueil des Cours, Vol. 321, 2006.

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OTH ANNUAL REPORT 2009

Corporate Governance Report Orascom Telecom Holding is committed to achieving and maintaining the highest standards of corporate governance. The Company considers effective corporate governance essential to enhancing shareholders' value and protecting stakeholders' interests. Accordingly, the Board attributes a high priority to identifying and implementing appropriate corporate governance practices to ensure transparency, accountability and effective internal controls. In 2009, the Board continued to further its commitment to corporate governance through reviewing existing processes and, where appropriate, developing new ones. The Company substantially complies with the practices enunciated in the Egypt Code of Corporate Governance and will strive to comply with these and other appropriate standards and governance guidelines. The key corporate governance principles and practices are as follows: The General Assembly The General Assembly (ÓGAÓ) of the Company is the ultimate governing body of the Company. In summary, the (ÓGAÓ): ¥ includes all the shareholders of the Company; ¥ takes its decision by voting among shares represented in the meeting. The voting rule is: 1 share = 1 vote for all shares indifferently; ¥ holds at least one ordinary meeting per year and may have an extra-ordinary meeting as needed; ¥ The responsibilities of the GA are based on the laws and Company Statutes; ¥ it appoints the board, approves the financial results, appoints the external auditors, and approves dividends distribution. Board of Directors The Board has the responsibility to work to enhance the value of the Company in the interest of the Company and its shareholders. In summary, the Board: ¥ is engaged in active and continuous strategic planning and approves corporate strategies, including the approval of transactions relating to acquisitions and divestments, and capital expenditure above delegated authority limits; ¥ reviews and approves the corporate plan for the forthcoming year and following two years, including

the capital expenditure and operating budget, and reviews performance against strategic objectives; ¥ assesses business opportunities and risks on an ongoing basis and oversees the Company's control and accountability systems; ¥ monitors and approves the Company's financial reporting and dividend policies; ¥ appoints and has the authority to remove the Chief Executive Officer and approves the recommendations of the Human Resources; ¥ ratifies the appointment and has the authority to remove the Chief Financial Officer and Group General Counsel and appoints the Company Corporate Secretary; and ¥ oversees succession planning for the Chief Executive Officer and senior management. The Chairman and the Chief Executive Officer establish meeting agendas to ensure adequate coverage of key issues during the year. In addition workshops and strategy meetings take place. Executives and other senior people regularly attend Board meetings and are also available to be contacted by Directors between meetings. Composition of the Board of Directors Executive Chairman Naguib Sawiris Board Members Naguib Sawiris Khaled Galal Bishara Ahmed Maher El Sayed Ajit Nedungadi Emad Farid Franois Dopffer Hassan Mostafa Abdou Iskander Shalaby Khaled Ezz El-Din Ismail Mohamed Shaker

(Executive-Board Member) (Executive Board Member) (Non-Executive Board Member) (Non-Executive-Board Member) (Executive-Board Member) (Non-Executive Board Member) (Non-Executive Board Member) (Non-Executive-Board Member) (Non-Executive-Board Member) (Non-Executive-Board Member)

In addition to three Alternate Board Members; Hythem El-Nazer Michael Cole Salim Nathoo Secretary to the Board Ragy Soliman

The above Board Members classification is based on the Egyptian Corporate Governance code. The latter did not specify the criteria for independent directors that would allow the Company to benchmark against, yet in our opinion and based on internationally recognized best practices, a number of our directors would qualify as independent directors bringing to the company the highest possible standing from both a personal and professional standpoint. Committees ¥ The Committee System of the Company is one of the most important tools for the management and the operational integration of the Company. It has recently been revised to: ¥ monitor the implementation of strategies and the development of plans and results; ¥ ensure the overall coordination of business actions and the management of the relative cross-over business issues; ¥ build up the necessary operating synergies between the various functions involved in the technological, business and support processes; ¥ support the integrated development of the innovation processes of the Company; ¥ in particular, the new Committee System of the Company includes: Executive Committee The objective of the Executive Committee is to review and, where appropriate, authorize corporate action with respect to most matters concerning the Company's interests, strategy and management of its business and subsidiaries during intervals between meetings of the Board of Directors, and generally perform such duties as may be directed by the Board of Directors from time to time. Investment Committee The objective of the Investment Committee is to assist the Board in reviewing the Company's investment policies, strategies, transactions and

performance, and in overseeing the Company's capital and financial resources. The Committee has resources and authority appropriate to discharge its responsibilities, including the authority to retain experts or consultants. Audit Committee The objective of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities by reviewing (i) proposed financial plans; (ii) the financial information provided to shareholders and others; (iii) systems of internal controls which management and the Board of Directors have established; and (iv) the audit process, including both internal and external audits. The Audit Committee interacts directly with the independent auditor to ensure the independent auditor's ultimate accountability to the Board and the Committee, as representatives of the shareholders, and is directly responsible for the appointment, compensation and oversight of the independent auditor. Remuneration Committee The objective of the Remuneration Committee is to ensure that the company has a formal process of considering management and directors' remuneration, that is executive directors should play no part in decisions on their own remuneration, there should be an alignment of the remuneration schemes and the performance objectives of the Company, and the remuneration schemes should attract and retain talented individuals. Operational Committee The objectives of the Operational Committee is the day-to-day operations on the Operational and Holding level. This committee also serves as a bridge between the management and the Executive Committee to make sure that all are working together for the benefit of the Company.

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Corporate Responsibility Report At Orascom Telecom, we believe that corporate social responsibility is a core business activity that is constantly being reviewed to make sure it is in alignment with our business strategy. In 2008, we established a CSR unit at Orascom Telecom Holding responsible for the promotion and organization of CSR group wide activities. The CSR unit is mainly involved in responding to cross disciplinary CSR issues including stakeholder engagement, environmental responsibility, social investment and employee volunteering in addition to using our core business to empower the bottom of the pyramid segment. For more information on Orascom Telecom corporate social responsibility, please go to www.otelecom/responsbility Social Investment At Orascom Telecom Holding , we believe that the support and trust of the local communities is indispensible to the success of our long-term business activities. Therefore, Orascom Telecom Holding and its local operating companies strive to build and sustain a trustworthy relationship with the host communities where we operate. Through our social investment programs in more than 12 countries, we aim to improve the socio-economic conditions and bring about change in underprivileged communities; our social investment programs are locally tailored to create opportunities and improve the standard of living in areas where we do business. Brief descriptions of some of the group's social investment projects undertaken in different countries in 2009 are listed below. Egypt - Orascom Telecom Holding Education Fund with the French University in Egypt In recognition of the importance of liberal arts education, Orascom Telecom Holding established in partnership with the French University in Egypt 2009 an Educational Fund. The fund supports students who demonstrate educational excellence and are in need of financial assistance to join the undergraduate program in Literature & Linguistics, Engineering or Business Administration. The program will continue until 2012 and it offers both full and partial scholarships to the selected students. The selection criteria include non-academic qualifications such as demonstration of extracurricular

activities, volunteering and leadership skills. Egypt - Orascom Telecom Holding Capacity Building for the Blind In April 2009, the Sawiris Foundation for Social Development (SFSD) and Orascom Telecom Holding in collaboration with IPPSN have accepted to fund The Development Association for Empowering Persons with Special Needs (DAESN) to implement the project titled ÒCapacity Building and Developing Skills Project for the BlindÓ. The project objectives included providing 160 beneficiaries with computer and soft skills training to qualify them to enter the job market. Orascom Telecom Holding and IPPSN provided the beneficiaries with accessible free software that he/she can use to assist accessibility of ICT to blind users in the society. The free software helps the blind and visually impaired people to operate computers and utilize their potentials for their use and the society using adaptive technology. The project also aims at availing employment opportunities to the beneficiaries after completing the training. Egypt - Mobinil SMS Campaign in Ramadan During the holy month of Ramadan 2009, Mobinil led a nationwide initiative to contribute to the development of the Egyptian community, through giving more than 23 million Mobinil customers the opportunity to give back to the community. Through Mobinil's initiative of donating an amount from every transaction made, Mobinil was able to reap LE 24 million during the Holy month, to be distributed to a network of micro-finance charities. The amounts distributed were as follows: ¥ Dar El Orman Organization received LE 9 million; it is estimated that 1300 families benefit from this donation. ¥ Al Tadamun Microfinance Foundation received LE 7 million; the donated amount targets thousands of poor women, through the funding of their micro enterprises. ¥ Egyptian Junior Business Association - EJBA received LE 5 million; young entrepreneurs are to receive financial means to carry out their dream

projects. ¥ The Egyptian (Ana El Masry) received LE 3 million; up to 2500 families are estimated to benefit from facilitated loans to help them sustain stable income generating micro and small enterprises Pakistan - Mobilink SMS - based Literacy for Learning

SMEs working in the agricultural sector is crucial in the path of developing the economy of Bangladesh. However, the existing and potential SME owners are often faced with difficulties regarding access to necessary information required to prosper in business. In response, banglalink introduced 'krishi jigyasha 7676' which is a hotline that provides information and answers to any queries related to agriculture, vegetable and fruit farming, poultry, livestock feed, information on seeds, fisheries including daily prices etc.

Launched in 2009 with a view to reshaping lives through connectivity, the SMS-based literacy program is a joint venture between Mobilink, UNESCO with a local NGO, Bunyad as the implementing partner. In the pilot, the 250 learners received interesting and informative text messages daily in Urdu and were expected to respond. In the second part, the participants were evaluated on a periodical basis to assess gains in knowledge and learning. The program was conducted with the help of 10 teachers enlisted by Bunyad.

Canada - WIND Mobile Random Acts of Kindness

It was found that at the beginning of the program 57% of the girls were graded 'C' and only 28% of the girls managed to score an 'A'. However, near the end of the project the situation reversed where the percentage of girls receiving a 'C' dropped to only 11% whereas more than 60% of the girls were awarded an 'A'. The program teachers also report a stark improvement in the confidence of the young girls as owning a mobile phone made a difference to their sense of security.

On November 18th 2009, WIND Mobile launched its 'Random Acts of Kindness' (RAK) community initiative after a delay to its launch. The stall, as a result of a CRTC ruling, put WIND Mobile in a position where 400 customer facing employees, fully trained and ready to go, were left idle. To best utilize these fully trained and enthusiastic employees, WIND Mobile deployed street teams into the Toronto and Calgary communities where WIND Mobile was to have a business footprint.

The 5 month pilot project conducted with 250 adolescent girls in Punjab has shown a marked improvement in their skills and has managed to overcome the socio-cultural barriers traditionally associated with owning a cell phone.

400 WIND Mobile employees brainstormed in their store and care teams, planning their RAK outreach autonomously. Over the course of one week, teams volunteered their time all over the Greater Toronto Area and Calgary, assisting organizations such as the Salvation Army, Ronald McDonald House, and Habitat for Humanity. Furthermore, many teams participated in ad-hoc public initiatives such as pumping gas, helping people carry groceries and sheltering public transit commuters from the elements. On November 30th, WIND Mobile participated in its biggest group RAK, with over 150 employees volunteering at the Daily Bread Food Bank. This group was made up of both corporate and customer facing employees, including the company's Chief Customer Officer, its Chairman along with many other senior executives.

On March 25th, 2010, Mobilink announced the expansion of the SMS-based literacy project to include another 1,000 girls to understand the impact of replicating the project on a larger scale. Bangladesh- banglalink banglalink jigyasha The economy of Bangladesh is highly reliant on its agricultural sector; in fact, 60% of the population is comprised of farmers. In addition, the growth of

The Òbanglalink jigyashaÓ offers services to individual farmers and fisheries. banglalink is a pioneer in launching such a service in Bangladesh. The Òbanglalink jigyashaÓ won the Best Mobile Enterprise Application Product or Service Category at the prestigious Asia Mobile Awards 2009.

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OTH ANNUAL REPORT 2009

GSM Operations

Orascom Telecom Holding serves a population of 510 million* with an average penetration of 49% Tunisia (Tunisiana) Egypt (Mobinil)

Canada (WIND Mobile) North Korea (koryolink) Pakistan (Mobilink)

Algeria (OTA)

Bangladesh (banglalink)

Central African Republic (Telecel Centrafrique)

Burundi (LeoTM)

Zimbabwe (Telecel Zimbabwe) Namibia (LeoTM)

Country Algeria (OTA) Pakistan (Mobilink) Egypt (Mobinil) Tunisia (Tunisiana) Bangladesh (banglalink) North Korea (koryolink)

Population 34 million 176 million 83 million 10 million 156 million 23 million

Population Figures from CIA Factbook (est. July 2009).

Mobile Penetration 72% 55% 73% 93% 33% 0%

Country Canada (WIND Mobile) Central African Republic (Telecel Centrafrique) Namibia (LeoTM) Burundi (LeoTM) Zimbabwe (Telecel Zimbabwe)

Population 33 million

Mobile Penetration 65%

4.5 million 2.1 million 9.5 million 11 million

15% 71% 10% 26%

Mobile Penetration is based on December 31, 2009 subscribers number & market share.

*excluding Canada and Lebanon.

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OTA - ALGERIA

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

2,040,544

1,867,837

(8.5%)

Revenues (DZD bn)

135.0

135.6

0.4%

EBITDA (US$ 000)*

1,290,062

1,067,241

(17.3%)

83.66

78.10

(6.6%)

EBITDA Margin

63.2%

57.1%

(6.1%)

Capex (US$ m)

167

261

56%

EBITDA (DZD bn)*

September 2009

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

14,108,859

14,726,081

14,618,166

3.6%

64.7%

62.9%

59.4%

(5.3%)

ARPU (US$) (3 months)

11.8

10.5

9.9

(15.8%)

ARPU (DZD) (3 months)

799

766

721

(9.7%)

Avg MOU (YTD)

164

242

248

51.2%

12.5%

7.4%

7.1%

(5.4%)

Operational Data

Financial Data Revenues (US$ 000)

December 2008

Inc/ (dec)

* EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

Subscribers Market Share

Churn (3 months)

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OTH ANNUAL REPORT 2009

OTA - ALGERIA Orascom Telecom Algeria SPA (ÒOTAÓ) operates a GSM network in Algeria and provides a range of prepaid and postpaid products encompassing voice, data and multimedia, using the corporate brand ÒOrascom Telecom AlgŽrieÓ and the dual commercial brands of ÒDjezzyÓ and "Allo". OTA was awarded the second GSM license in Algeria in 2001 and launched its operations in February 2002. OTA commenced its operations under the brand ÒDjezzyÓ and introduced a second prepaid brand ÒAlloÓ in August 2004. As of December 31st, 2009, OTA served over 14.6 million subscribers with a market share of 59.4% of total mobile subscribers and its network covered 96% of the total population of Algeria. Despite having launched its GSM operation approximately three years after the launch by the incumbent, Algerian Mobile Network (ÒAMNÓ conducting business under the ÒMobilisÓ name), OTA was able to rapidly grow into Algeria's leading and preferred telecommunications operator by far. While OTA has already invested considerably in its network, it plans to make further investments to increase its capacity, and to maintain and improve the quality of its network to meet market demand. Finally,

as demand is growing and local content is beginning to develop, OTA has started to rollout a range of value-added multimedia services based on GPRS and EDGE technologies, which are designed to increase customer usage and boost loyalty.

with or to its operators. The license is a 15-year dual band license expiring 2016 with automatic renewal for two subsequent five-year terms as long as OTA complies with the terms of the license. Renewal is at no additional cost.

OTA is IS0 9001 and ISO 14001 certified highlighting its continuous commitment to operational excellence and customer satisfaction.

Network As of December 31st, 2009, OTA's network covered approximately 96% of Algeria's population, spreading its coverage over the 48 wilayas (provinces) in the country and providing on-road coverage along major highways. The New Generation Network (ÒNGNÓ) equipment introduced at the end of 2006 allowed OTA to further reduce the capital expenditure and operating expense per subscriber.

Algerian Telecommunications Market Telecommunications services in Algeria are provided principally by AlgŽrie TŽlŽcom, the incumbent state-owned telecommunications operator, which provides fixed-line services, and by three GSM mobile operators, OTA, AMN and Wataniya Telecom Algeria. AlgŽrie TŽlŽcom held a monopoly position with respect to basic fixed-line services until 2005, when OTH announced the acquisition, jointly with Telecom Egypt, of a second fixed-line license in Algeria. License In July 2001, OTA was granted a license to operate a nationwide GSM telecommunications network, to provide a range of telecommunications services in Algeria, to operate its own backbone and to share or lease network infrastructure

Services and Marketing OTA provides both basic voice and valueadded services to its corporate and retail subscribers. In addition to basic voice services, OTA provides its subscribers with a wide range of value-added services and data services such as : Voicemail, CLIP, CLIR, missed call alert, Voice SMS, chatting services, Web SMS, Data services, MMS, e-voucher, Credit Transfer, Ring Back Tone, EDGE, BlackBerry / BlackBerry Connect, Wap Portal, Streaming, Directory Service, Automatic Device Management, Phonebook Backup over GPRS, STK

menus, USSD menus and all roaming services (Prepaid roaming, GPRS roaming...) OTA offers prepaid, postpaid and hybrid postpaid-prepaid services under its ÒDjezzyÓ and ÒAlloÓ brands and has become the market leader and trendsetter with the highest brand recognition and preference. As of December 31st, 2009, prepaid subscribers represented over 96% of OTA's total subscribers' base. OTA offers its loyalty program ÒImtiyazÓ to its prepaid and postpaid subscribers allowing them to accumulate points when using their mobile phone and convert them into free airtime, handsets or other rewards and advantages. Ownership and Governance Following the completion of an agreement to purchase an additional 1.21% stake in Oratel in November 2006, OTH directly and indirectly owns 96.81% of OTA.

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Mobilink - PAKISTAN

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

1,207,520

1,058,463

(12.3%)

Revenues (PKR bn)

87.4

86.8

(0.7%)

EBITDA (US$ 000)*

491,664

384,781

(21.7%)

34.93

31.70

(9.2%)

EBITDA Margin

40.7%

36.4%

(4.4%)

Capex (US$ m)

537

157

(71%)

EBITDA (PKR bn)*

September 2009

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

28,479,600

30,046,050

30,800,354

8.1%

31.7%

30.9%

31.5%

(0.2%)

ARPU (US$) (3 months)

3.0

2.8

2.9

(3.3%)

ARPU (PKR) (3 months)

243

234

242

(0.4%)

Avg MOU (YTD)

172

198

198

15.4%

11.8%

5.3%

5.2%

(6.6%)

Operational Data

Financial Data Revenues (US$ 000)

December 2008

Inc/ (dec)

* EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

Subscribers Market Share**

Churn (3 months)

** Market share, as announced by the Pakistani Regulator is based on information disclosed by the other operators which use different subscriber recognition policies.

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OTH ANNUAL REPORT 2009

Mobilink - PAKISTAN Pakistan Mobile Communications Limited (ÒMobilinkÓ or ÒPMCLÓ) operates the leading GSM network in Pakistan and provides a range of prepaid and postpaid voice and data telecommunication services to both individual and corporate subscribers. Mobilink launched its operations in August 1994, after it was founded in 1990 as a joint venture between Motorola and the Saif Group. Mobilink's network is the most extensive in Pakistan, reaching over 73% of the total population and 100% of the urban population as of December 31st, 2009, delivered through 8,066 cell sites and 73 switches. Mobilink enjoys the most widespread retail channel in the country, with over 420 Franchise Centers, more than 1800 customer care center touch points and over 180 thousand retailers throughout Pakistan. Mobilink served over 31 million subscribers as of December 31st, 2009, representing a market share, as calculated by the company, of approximately 40% of the total mobile subscribers in Pakistan. According to Pakistan Telecommunication Authority (PTA), Mobilink's market share is 31.50%, but this market share is based on information disclosed by the operators each of which use different subscriber recognition policies. Pakistani Telecommunication Market Telecommunication services in Pakistan are provided by Fixed Local Loop (FLL) operators, Wireless Local Loop operators, mobile operators and Long Distance and International (LDI) operators. Pakistan

Telecommunication Limited (ÒPTCLÓ), the incumbent FLL and LDI operator enjoys the highest share among FLL and LDI operators. PTCL is 62% state-owned, 26% is held by Etisalat and the remaining 12% is with the public. PTA issued 12 new licenses to provide long distance and international services. There are currently five mobile operators in Pakistan: Pakistan Mobile Communication Limited (ÒMobilinkÓ), CMPak Limited (ÒCMPak - formerly PaktelÓ), Pakistan Telecom Mobile Limited (ÒUfoneÓ), a subsidiary of PTCL, Telenor Pakistan and Warid Telecom providing GSM services. WLL operators did not enjoy much penetration in the Pakistani market registering only 2.65 million subscribers until December 2009 as per PTA reports with PTCL, Telecard and World Call being the major operators. The year 2009 remained a tough year for Pakistan during which political instability, inflation, currency devaluation, slow GDP growth and gas and electricity load shedding remained as major challenges, with pressures easing towards the year end. The political instability had a major impact on the cellular industry, resulting in the non-availability of cell sites in war-hit areas. License Mobilink was awarded a 15-year license in July 1992 to establish and operate a digital cellular telecommunication system using the GSM 900 standard and to offer telecommunication services in Pakistan. The license was renewed in 2007 for a further period of 15 years. On June 26th, 2006 Mobilink was granted another Azad

Jammu & Kashmir (AJ&K) and Northern Areas (NAs) license also for a period of 15 years. Network As of December 31st, 2009, Mobilink's GSM network covers more than 10,000 cities, towns and villages and provides on-road coverage along all of the nation's major highways. In addition to voice, Mobilink also has the largest data network in the country. Services and Marketing 2009 was a year full of intense competition, introduction of new services and consumer and operator friendly regulations. The price war going on between mobile operators greatly benefited consumers who were being offered attractive new packages and value added services. Rivals in the industry created waves by launching new packages, such as smaller pulse packages, low cost SMS bundles, late night offers etc. while the facility to change network (Mobile Number Portability) without changing number has eliminated the non-cash cost of switching, and pushed the competition among mobile operators to a boiling point. Mobilink markets its prepaid services under the brand name 'Jazz' which offers different packages to suit the need of diverse customer segments. Mobilink markets its postpaid services using the brand name 'Indigo', which offers different packages and value added services for corporate and individual customers. The brand commands a premium image in the market and is being used by several leading corporations of the country.

Mobilink aligned itself in 2009 to protect its market share, maintain its revenues and decrease its operational costs. With the market rates dropping, Mobilink started the year with its basic tariff adjustment (Rs. 0.68 per 30 sec through Jazz Budget package) which helped reduce churn and bring new subscribers on board. Following the price moves, Mobilink remained aggressive both in voice as well as VAS offers throughout the year. Customer acquisition and retention promos also played an important part in increasing the subscriber base and maintaining market share. At the same time, Mobilink VAS showed significant growth fueled by product life cycle management of top services like Mobitunes, Power Tools and Juke Box etc. Mobile Financial Services Mobilink entered the Mobile Financial Services area in both the banked and unbanked space through the launch of Mobilink Genie and Mobile Money Order. Taxation In 2009, the government reduced the General Sales Tax slightly from 21% to 19.5% and the Activation Tax from Rs. 500 to Rs. 250 which provided relief to the industry. Additionally, the Import Duty on mobile handsets was reduced by 66% from Rs. 750 to Rs. 250. Ownership and Governance Orascom Telecom Holding indirectly owns 100% of the share capital of Mobilink through direct stakes held by wholly owned subsidiaries of OTH.

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Mobinil - EGYPT

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

December 2008

September 2009

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

20,115,377

24,624,733

25,354,209

26.0%

47.2%

43.6%

42.0%

(5.2%)

ARPU (US$)* (3 months)

7.6

6.7

6.5

(14.5%)

ARPU (EGP)* (3 months)

42

37

36

(16.0%)

165

176

173

4.8%

8.8%

8.4%

10.8%

2.0%

Inc/ (dec) Operational Data

Financial Data Revenues (US$ 000)**

890,949

944,133

6.0%

EBITDA (US$ 000)***

429,683

460,457

7.2%

EBITDA Margin

48.2%

48.8%

0.5%

Capex (US$ m)

524

472

(10%)

Subscribers Market Share

Avg MOU (YTD)* Churn (3 months)* * ARPU, MOU & Churn expressed under OTHÕs definition may differ from MobinilÕs disclosed figures. ** Proportionate consolidated figures

*** Proportionate consolidated figures. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

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OTH ANNUAL REPORT 2009

Mobinil - EGYPT The Egyptian Company for Mobile Services (Mobinil or ECMS) operates the leading mobile telecommunications network in Egypt and provides a range of prepaid and postpaid voice and data telecommunications services, under the brand name ÒMobinilÓ. Mobinil launched its operations in May 1998. As of December 31st, 2009, Mobinil's network covered approximately 99.66% of the total population of Egypt. Mobinil has been serving over 25 million subscribers as of December 31st, 2009, as it continues to lead the market share in Egypt with 42% of total mobile subscribers in Egypt. Egyptian Telecommunications Market Fixed line services are provided exclusively by Telecom Egypt, the incumbent 80% government-owned operator, with nearly 11 million customers. Three GSM mobile operators, Mobinil, Vodafone Egypt and Etisalat, compete to serve more than 60 million Egyptians, providing a variety of voice and data services. Egypt also has the largest number of internet users in the region, using both dial up, and increasingly broadband services. A second fixed license was mooted, after Telecom Egypt's monopoly expired at the end of 2005. But this has been indefinitely postponed due to the adverse global financial climate. Etisalat acquired its own limited gateway, while Vodafone chose to continue to route its international traffic through the Telecom Egypt gateway. Mobinil has continued to use the Telecom Egypt gateway while studying the IGW

option. Recently, the NTRA is about to offer licenses to provide triple play services to gated communities. License Mobinil was granted a license in 1998 to operate a GSM mobile telecommunications network and to provide a range of telecommunications services in Egypt. The license, amended in January 2005 by the National Telecommunication Regulatory Authority (NTRA), is a 15-year dual band license with automatic renewal for successive five-year periods if Mobinil complies with the license requirements. As Mobinil signed the 3G license agreement in October 2007, the 2G license has been extended till 2022 as will the 3G license. Network Following the successful launch of 3G in 2008, Mobinil managed to sustain its market leadership throughout 2009 by reinforcing, not only network capacity, but also network coverage, quality of service and following through on its commitment to modernize its network elements to ensure the most up-to-date technology with the best quality of service. By the end of 2009, Mobinil's territory coverage reached 22.87% reaching 99.66% of the population. Network capacity has been significantly increased in 2009 to cope with the market demand. Services and Marketing Mobinil continued to lead the market with a variety of offers and propositions for its consumer as well as enterprise markets.

Its commercial activities primarily revolved around offering best value for money for customers with their varying communication needs as well as budgetary constraints. 2009 was a very active year for Mobinil on the consumer market front with propositions for both prepaid and postpaid customers. Targeting its prepaid customers, Mobinil launched a series of plans with some of the lowest per minute rates in the market, such as El Masry line or the Ahla Kalam tariff plan. Further offers were extended to the customers in rural areas, reinforcing the fact that Mobinil's customers residing outside the main cities are as much a priority to the company as urban residents. Other offers targeting high school diploma students encouraged the youth segment to discover the world of mobile communication with free minutes and SMS. A memorable year-closer for the company was that of the Mobinil Grand Trivia contest which offered very lucrative cash prizes to customers who partake in a trivia contest via SMS or Interactive Voice Reply (IVR). The contest yielded total net winnings of LE 11.1 million, higher customer engagement and SMS usage, and higher credibility for Mobinil. Postpaid customers were able to reap the benefits of a revamp of Mobinil's Star tariff plans, allowing for free minutes to Mobinil users, mobile users and landlines, depending on the selected plan. In addition, a loyalty Star Awards Program was instated to foster loyalty among, and retain the high customer base.

Another significant achievement for Mobinil in 2009 was the enhancement of the company's Mobile Broadband (MBB) activities. Offers on USB modems, laptops and netbooks also made the Internet accessible to a wider layer of the Egyptian market. The introduction of prepaid internet lines increased customer potential to purchase broadband products. Finally to close 2009, Mobinil introduced a new Unlimited offer which gave customers high speed connectivity up to 4 GB. Mobinil also introduced the latest iPhone 3GS as well as the full range of BlackBerry devices. BlackBerry service was also extended to prepaid customers. On the enterprise market front, Mobinil focused on both voice and Internet services. Mobinil launched its Office Anywhere service using the Flybox - offering WiFi coverage for several users in a certain locale. Prepaid business tariff plans were also among the company's 2009 achievements. Another major launch in 2009 was that of Blackberry services for the enterprise market. Ownership and Governance Mobinil is owned by OTH, FT Group and public market equity investors. Orascom Telecom has a 34.66% economic interest and FT Group has a 36.34% economic interest, in ECMS. The remaining shares of ECMS (29%) are publicly traded on the Egyptian Stock Exchange.

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Tunisiana - TUNISIA

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

326,110

356,675

9.4%

432.2

482.3

11.6%

EBITDA (US$ 000)**

188,912

192,227

1.8%

EBITDA (TND bn)**

232.71

260.58

12.0%

EBITDA Margin

57.9%

53.9%

(4.0%)

Capex (US$ m)

99

91

(8%)

Revenues (TND bn)

* Proportionate consolidated figures

September 2009

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

4,256,573

4,807,677

5,210,926

22.4%

51.1%

53.0%

53.4%

2.3%

ARPU (US$) (3 months)

12.7

13.1

11.6

(8.7%)

ARPU (TND) (3 months)

17

17

15

(11.6%)

158

172

171

8.5%

8.0%

5.5%

4.4%

(3.6%)

Operational Data

Financial Data Revenues (US$ 000)*

December 2008

Inc/ (dec)

Subscribers Market Share

Avg MOU (YTD) Churn (3 months)

** Proportionate consolidated figures. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

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OTH ANNUAL REPORT 2009

Tunisiana-TUNISIA Orascom Telecom Tunisie (ÒTunisianaÓ or ÒOTTÓ) operates a GSM network in Tunisia and provides a range of prepaid and postpaid voice and data telecommunications services, under the brand name "Tunisiana". Tunisiana launched its operations in December 2002 and, as of December 31st, 2009, its network covered more than 99% of the total population of Tunisia.

In the context of the progressive liberalization of the telecommunications market in Tunisia, a third operator, Divona Telecom in partnership with Orange was granted a license in June 2009, following a successful bid of approximately TND 257 million. The licence allows the new operator to operate a national telecommunications network and to provide fixed and mobile telephony, 3G and Internet access services.

2107 cell sites and 13 switches. International traffic is serviced through 4 international gateways.

In 2009, Tunisiana maintained its position as market share leader and ended the year with 5.2 million subscribers, representing a market share of approximately 53.36% of total mobile subscribers in Tunisia.

Alongside the Ministry of Technologies of Communication, the NTC is also involved in the development of telecommunications sector by providing the necessary environment to establish a fair and healthy competition among players and actors.

Tunisiana provides both basic voice and value-added services to its corporate and residential subscribers. In addition to basic voice services, Tunisiana provides its subscribers with value-added services such as voice SMS, voicemail, detailed monthly billing, SMS Billing, call line identification presentation or restriction, call waiting/holding, call forwarding, mobilebanking, reversed roaming, international roaming and data services. Tunisiana's network offers GPRS technology, which it launched in February 2006, as well as EDGE technology. Tunisiana is providing a range of value-added services based on these technologies including MMS, Internet, WAP portal, e-mail push and Data.

To reach this result, Tunisiana managed to acquire over 59.07% of the total market gross adds and almost 61.5% of the total market net additions. Tunisian Telecommunications Market Telecommunications services in Tunisia are provided currently by 3 operators: Tunisie TŽlŽcom, the incumbent telecommunications operator which offers Mobile, fixed telephony and Internet services, Tunisiana the private telecom operator in Tunisia which offers only mobile telephony services and Orange Tunisia that will provide fixed and mobile telephony added to 3G and Internet access services. The Tunisian government has partially privatized Tunisie TŽlŽcom by selling a 35% stake of the company to Dubai Group TeCom-DIG in March 2006.

License OTT was granted a license in May 2002 to operate a national GSM telecommunications network and to provide a range of the telecommunications services in Tunisia. The license was granted for a fee of US$454 million, payable in two equal installments, which were paid in May 2002 and September 2004. Tunisiana's license has a duration of 15 years and is renewable for consecutive five-year periods, provided that OTT has met its obligations under the license in the prior period. Network As of December 31st, 2009, TunisianaÕs network provided coverage over an area encompassing over 99% of Tunisia's population and 90% of its geographic territory. Tunisiana network consists of

Services and Marketing Tunisiana offers both prepaid and postpaid telephony services. As of December 31st 2009, prepaid subscribers represented around 97.7% of Tunisiana's total subscribers.

In addition to VAS, Tunisiana launched new services in 2009, such as international top-up (from France), e-shop site, USSD bill payment. Furthermore, Tunisiana began providing BlackBerry service, but have yet to commercially launch it. During 2009, Tunisiana focused on community and abundance offers, such as

Amigos, a group calling plan targeting the youth segment, Familia and Dhayafni, both group sharing plans aimed at postpaid and prepaid subscribers respectively. Other abundance offers were developed to maintain high network traffic. Tunisiana also focused on capturing migrant subscribers to postpaid offers, and encouraged high value postpaid and business customers through a diversification of services, as well as loyalty and retention programs. Finally, Tunisiana released international offers to boost international usage. In 2009, Tunisiana decreased the SMS tariff (0.050 NTD instead of 0.060 NTD) in order to remain competitive with regards to Tunisie TŽlŽcom. In order to boost Internet usage, Tunisiana repriced many of its Internet bundles. Ownership and Governance Orascom Telecom Holding has a 50% economic interest in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT, respectively. During 2005, OTH increased its economic interest in OTT from 20.27% to 50%. The remaining 50% interest is held by National Mobile Telecommunications Company KSC (ÓWataniya TelecomÓ), a Kuwaiti telecommunications company, which was sold to Qatar Telecom during 2007.

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banglalink - BANGLADESH

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

December 2008

September 2009

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

10,337,128

12,135,528

13,886,913

34.3%

23.2%

24.2%

26.8%

3.6%

ARPU (US$) (3 months)

2.5

2.5

2.3

(6.7%)

ARPU (EGP) (3 months)

175

174

163

(7.0%)

Avg MOU (YTD)

256

259

253

(1.3%)

1.9%

(5.5%)***

(0.6%)***

(2.5%)

Inc/ (dec) Operational Data

Financial Data Revenues (US$ 000)

288,144

350,994

21.8%

EBITDA (US$ 000)*

13,683

117,238

n.m.

EBITDA Margin

4.7%

33.4%

n.m.

Capex (US$ m)

407

122

(70%)

Subscribers Market Share**

Churn (3 months) * EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

** Market share, as announced by the Regulator in Bangladesh is based on information disclosed by the other operators which use different subscriber recognition policies. *** Negative figure due to a customer reactivation program

24

OTH ANNUAL REPORT 2009

banglalink - BANGLADESH Orascom Telecom Bangladesh Limited (ÒbanglalinkÓ or ÒOTBÓ) is a GSM telecommunications operator in Bangladesh and provides a range of prepaid and postpaid voice and data telecommunications services, using the TM brand name Òbanglalink .Ó Operating in a highly competitive market populated by six mobile operators, banglalink was the fourth entrant in the market, and commenced operation in Feb 2005. banglalink soon overtook the market position of Robi (former ÒAKTELÓ) to become the second largest operator in Bangladesh within less than 3 years of operation. As of December 31st, 2009, banglalink's network covered over 94% of the total population of Bangladesh with over 13.89 million subscribers and a market share of over 26.8%. This phenomenal growth is based on the overwhelming response to banglalink's products and innovative services, a strong brand image, an extensive distribution network, and continuous improvement in service quality. Bangladeshi Telecommunications Market Telecommunications services in Bangladesh are provided by 5 GSM and 1 CDMA mobile operators, and 13 land line operators. The oldest mobile operator is still the only CDMA operator, Pacific Bangladesh Telecom Ltd. (ÒCitycellÓ), in

which SingTel acquired a minority interest. The five GSM operators are, in order of launch date, GrameenPhone (GP) the market leader, 55.8% owned by Telenor Mobile Communications AS, 34.2% held by Grameen Telecom and has a 10% stake floated to the public through an IPO in 2009. GP, is a publicly listed company listed in both the stock exchanges of Bangladesh. AXIATA (Bangladesh) Ltd (former TM International Bangladesh Ltd.) (ÒAKTELÓ), the third largest player is a joint venture company in which Axiata holds 70% and NTT DoCoMo holds a 30% stake. Orascom Telecom Bangladesh Ltd. (ÒbanglalinkÓ), Teletalk Bangladesh Ltd. (ÒTeletalkÓ), the state owned mobile operator, and Warid Telecom (ÒWaridÓ) all launched operations in 2007. The Bangladesh Telecommunications Company Limited (ÒBTCLÓ) is the incumbent state-owned fixed-line operator that has been present from the beginning. The remaining private fixed line operators were issued licenses a few years ago. License banglalink was issued a nationwide 15year GSM license in November 1996 that is valid until 10 November 2011. Network With the help of an aggressive network roll-out since launch, banglalink's network extends all across the country in all 64

districts of the country and covers over 94% of the population. The primary focus in recent years has been on ensuring continuous improvement in the quality of the network. Services and Marketing banglalink's marketing strategy focused on targeting different consumer segments with specially designed products and services that are tailored to the needs of these segments. banglalink's prepaid brand, Òbanglalink deshÓ, is perceived as the best prepaid package in the country with innovative and value for money features and a very strong brand image. Òbanglalink businessÓ and Òbanglalink SMEÓ caters to the needs of the business segment including the thriving SME sector where banglalink has been the pioneer in the country. In 2009, banglalink set another benchmark in the industry as it started offering value propositions catering to the needs of different 'micro-segments' through below-the-line promotions. banglalink provides its subscribers with a wide range of innovative value-added services including caller ring-back tone, music station, song dedication, voice portal, voice chat, voice-SMS etc to name a few. In 2009, banglalink also launched Call Block, Friend Finder, Field Force Locator, Vehicle Tracking and call-center based information services 'banglalink Krishi jigyasha 7676' and 'banglalink Babsha

jigyasha 7677', which provide advisory service regarding agriculture and SME business queries respectively. 'banglalink jigyasha' services won the Asia Mobile Awards 2009 under the category Best Mobile Enterprise Application Product or Service. banglalink has already established a nationwide EDGE/GPRS network serving both postpaid and prepaid subscribers. banglalink's international roaming network comprises of 250 operators across 95 countries and EDGE/GPRS connectivity is available to roaming customers as well. banglalink's customer care services are regarded as the best in the mobile industry of Bangladesh. A state-of-the art call center with highly trained agents provides round the clock service to customers. banglalink is also the pioneer in taking customer service closer to its subscribers by introducing Òbanglalink service pointsÓ in over 1,000 locations across the country by far the widest in the industry. A dedicated team of relationship managers provides exclusive services to business customers. Ownership and Governance Orascom Telecom Holding owns 99.9998% of the shares of banglalink. Orascom Telecom Bangladesh Limited (banglalink) was incorporated in Bangladesh under the Companies Act 1994 which is obliged to comply with the laws of land.

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Telecel Globe

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

Inc/ (dec)

EBITDA (US$ 000)* EBITDA Margin

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

894,822

1,823,000

n.m

Operational Data

Financial Data Revenues (US$ 000)

December 2008

25,345

81,384

n.m

492

(202)

n.m

1.92%

(0.2%)

2.1%

* EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

Subscribers

26

OTH ANNUAL REPORT 2009

Telecel Globe Telecel Globe, a wholly owned subsidiary of Orascom Telecom Holding, launched its operations in February 2008. It is an international telecommunications company that manages GSM operators in small and medium sized countries in Sub-Saharan Africa with high growth potential. It currently manages four GSM networks in the Central African Republic, Burundi, Namibia and Zimbabwe and plans to continue expanding its footprint by acquiring or developing other operators. Telecel Globe positions its networks as market leaders and strives to improve the quality of life of the people in the markets which it operates in by increasing network coverage, improving network quality and introducing new value added services such as data services, prepaid roaming and air time credit transfer. The portfolio of VAS on offer by its operators is being aggressively expanded as the new stateof-the-art networks allow more innovative services and promotions to be implemented, increasing customer satisfaction and ARPUs. Telecel Globe has also established the Telecel Globe Foundation to serve the local communities in the countries in which it operates. The Foundation regulates all the Group's CSR activities to ensure that all operators are responsible corporate citizens that give back to their communities.

Cell One (LeoTM) - Namibia Telecel Globe acquired Cell One Namibia in January 2009. The Namibian telephony market has a penetration rate of about 77%. Cell One is currently competing for the growth opportunities against MTC, a GSM operator partially owned by Namibia Post and Telecommunications Holding (NPTH) and Portugal Telecom (PT), and Telecom Namibia, which is wholly owned by the Government and is a subsidiary of Namibia Post and Telecom Holdings Limited. Cell One operates GSM 900/1800/3G/HSDPA networks and is currently the market challenger with 268,480 subscribers and about 16.5% market share, as of December 31st, 2009. Cell One offers a range of basic and value added voice and data services, such as missed call alert, roaming, 3G, GPRS, airtime credit transfer, conference call, credit balance query, call waiting/forwarding, voice-fax-to-email, internet browser, and email. CellOne's network infrastructure provided coverage to over 63% of the Namibian population. In 2009, Cell One rebranded its commercial activities to start operating under the name LeoTM. U-COM (LeoTM) - Burundi In 2008, Telecel Globe acquired 100% of the shares of U-COM, the leading telecommunications network in Burundi.

Burundi has an emerging telephony market with a penetration rate of 11.4%, thus availing growth opportunities for existing operators. U-COM is currently competing against Africell, Econet, Onamob. U-COM Burundi operates GSM 900/1800, CDMA 800, and WIMAX (in Bujumbura) networks and is the market leader with 659,589 subscribers and over 72% market share, as of December 31st, 2009. U-COM provides voice and data services to both its pre-paid and postpaid customers covering around 42% of the Burundi population. Such offerings range from basic services to value added services, such as missed call alerts, 5 numbers for friends and family, roaming, airtime credit transfer, conference call, credit balance query and call waiting. U-Com also operates under the commercial brand name LeoTM. Telecel - CAR (Central African Republic) Telecel Globe acquired 100% of TelecelCAR in July 2008. The Central African Republic's (CAR) telecommunications market had a penetration rate of 14.9%, as of December 31st, 2009, providing substantial growth opportunities for TelecelCAR. Current competitors in CAR are Nationlink, Orange and Moov. Telecel-RCA operates GSM 900/1800

networks and is the market leader with 303,142 subscribers and over 45% market share, as of December 31, 2009. TelecelRCA provides voice services to both its pre-paid and postpaid customers covering around 50% of the countryÕs population. Such services range from basic to value added ones, such as call waiting/holding, call forward, CLIP/CLIR, friends and family (CUG) postpaid and prepaid, location based tariffs, SMS, SMS international, USSD balance enquiry, voicemail, credit alert, credit transfer and bulk SMS. Telecel Zimbabwe - Zimbabwe Telecel was established in 1995 and began operating a GSM mobile network in 1998. As of December 31st, 2009, the mobile penetration rate in the country stood at approximately 25% and Telecel Zimbabwe had approximately 592,160 subscribers through its GSM network, equivalent to a 20% market share. Telecel's network covered over 68% of the population in Zimbabwe. Telecel Globe signed a management agreement with Telecel Zimbabwe in July 2009, retroactive to January 1st, 2009. Pursuant to that agreement, Telecel Globe has assumed operational management of Telecel Zimbabwe.

Democratic People's Republic of Korea (DPRK)

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koryolink

Financial and Operational Overview: Operational Data

Financial Data December 2008

December 2009

December 2008

September 2009

December 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

1,694

69,261

91,704

n.m.

100.0%

100.0%

100.0%

0%

ARPU (US$) (3 months)**

n.a.

21.6

24.5

n.a.

Avg MOU (YTD)

n.a.

215

239

n.a.

Inc/ (dec) Operational Data

Financial Data Revenues (US$ 000)**

-

25,951

n.a.

EBITDA (US$ 000)*

-

17,153

n.a.

EBITDA Margin

n.a.

66.1%

n.a.

Capex (US$ m)**

n.a.

27

n.a.

* EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

Subscribers Market Share

** Based on the official exchange rate between the North Korean Won (KPW) and US$.

28

OTH ANNUAL REPORT 2009

koryolink - Democratic People's Republic of Korea koryolink's subscriber base has grown to reach 91,704 for the year ended December 31st,2009. Since its launch in December 2008, koryolink has been received very positively in the market being the first full fledged operator in the DPRK to offer state of the art mobile services at attractive prices.

the company's launch in major newspapers and radio stations as well as producing different types of communication material (flyers, posters, danglers, etc.). Additionally, koryolink was able to provide continuous support to its subscribers through establishing the first of its kind Call Center in the country.

During its first year of operation, koryolink has established many precedents in the Korean market. Despite the lack of active marketing and advertising industries, koryolink succeeded in creating awareness and educating consumers about its different products and services through advertising

By the end of 2009, koryolink had embarked upon the realization of its ambitious expansion plan to cover the entire territory of DPRK with the 3G mobile service. 2009 also witnessed another important development for koryolink, the opening of the first sales outlet outside the

capital Pyongyang in Sariwon City. The sales outlet in Sariwon is the first one of many outlets in various large cities across the country to be opened as the koryolink coverage expands to cover more and more parts of the entire DPRK. koryolink had previously kicked off its direct sales network with one centralized shop in Pyongyang, and by the end of 2009, two additional sales shops were added. Apart from the sales shops, koryolink developed an indirect sales network consisting of nine outlets located inside KPTC's post offices throughout Pyongyang. These outlets helped in increasing the operator's footprint

and availing its Scratch Cards to subscribers located in different areas throughout the city. By the end of 2009, koryolink's network currently has 153 on air base stations covering Pyongyang as well as 6 cities (Pyongsong, Anju, Kaechon, Nampo, Sariwon, and Haeju) and 8 highways (Hyangsan, Sariwan, Tangun Tomb, Nampo, Haeju-Sariwon, Sariwon -Kaesong, Haesong railway and the airport road). The network supports a variety of services - in addition to voice - such as video call, SMS, MMS, voice mail, WAP and HSPA.

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WIND Mobile- Canada

Globalive Wireless Management Corp. (ÒGWMCÓ), operating its wireless business under the brand name WIND Mobile, successfully launched services in Toronto and Calgary on December 16th and 18th, 2009 respectively, after having undergone a protracted legal and regulatory marathon to establish that it met Canadian ownership and control requirements. The process culminated with the Government of Canada effectively approving GWMC as a Canadian Wireless Operator.

WIND Mobile is aiming to become the fourth national wireless carrier with its fully enabled HSPA network and offerings of Voice; Text; and Data plans. WIND Mobile introduced new concepts to the Canadian wireless market through its combination of no contracts, unlimited plans, Canada wide calling features, and the redefinition of 'Home Zones'. GWMC is on track to launch service to the public in Ottawa and Edmonton within the

first quarter of 2010, followed by a Vancouver launch in the 2nd quarter. GWMC enjoys the benefit of national and international roaming services through various partners. Over 30 outlets were opened by the end of 2009 with the help of two branded distribution channels: WIND Mobile stores and kiosks, in addition to a partnership with media retailer 'Blockbuster'. Ambitious

efforts are underway to expand distribution to 3rd party retailers. The state of the art in-house call center was fully in service at the time of WIND Mobile's launch in December 2009. WIND Mobile's subscriber base at the end of 2009 was close to 5,000 subscribers.

2009 Financial Review

CONTENT: Board Report Financial Statements (IFRS/US$) Financial Statements (EAS/EGP)

31 Orascom Telecom Holding Board Report Highlights

ARPU

• TOTAL SUBSCRIBERS were just under 93 million, an increase of 19% over 2008. • EBITDA reached US$ 2,172 million1 (LE 12,183 million), a decrease of 8.9% over the previous year. On a pro-forma basis2 YoY EBITDA decreased only by 7.2%. EBITDA for OTA decreased by 6.6% in local currency vs. a decrease of 17.3% in US$, EBITDA for Mobilink decreased by 9.2% in local currency vs. a decrease of 22% in US$, EBITDA for Tunisiana increased by 12% in local currency vs. an increase of only 2% in US$, and grew by 7.2% in Egypt where the local currency was stable against the US$. • NET INCOME for the period reached US$ 318 million1 (LE 1,845 million). Q4 Net Income was mainly impacted by: the unfavourable events that took place in Algeria, as well as the increase in the Tax Rate in Pakistan. Tax provision for OTA’s tax assessment in 2009 was US$ 50 Million of which US$ 40 Million were formed in Q4 09. • REVENUES of US$ 5,065 million1 (LE 28,262 million), decreased by 4.9% compared to 2008. On a pro-forma basis2 YoY revenues remained stable (-0.6%). In local currency revenues for OTA and Mobilink were stable vs. a decrease of 8.5% and 12.3% in US$ respectively. Revenues for Tunisiana increased by 12% in local currency vs. only an increase of 9.4% in US$. In Egypt and Bangladesh where the local currency was stable against the US$, revenues grew by 6% and 22% respectively. • Group EBITDA margin was at 42.9%. GSM EBITDA margin was at 47.8%. EBITDA margins of the major subsidiaries were: Djezzy 57.1%, Mobilink 36.4%, Mobinil 48.8%, Tunisiana 53.9%, and banglalink 33.4%. • NET DEBT stood at US$ 5,113 million1 (LE 28,047 million) resulting in a Net Debt/EBITDA of 2.4x for the period, which on a proforma basis including the US$ 800 Million proceeds from the Rights Issue will reach 2.0x. • EARNINGS PER GDR reached US$ 1.81 (based on a weighted average for the outstanding GDRs of 175.7 million over 12M 2009)3. • THE SITUATION IN ALGERIA – The recent riot events in Algeria following the football match had a negative impact on the operations. We estimate the impact on OTA Q4 2009 EBITDA to be around US$55 million between loss of revenue opportunity, damages of stock (SIM and scratch cards, handsets) and provision for taxes and around US$41 million below the EBITDA line (damage to physical assets net of insurance and provision for Income tax).

In Tunisia, the seasonality trends contributed to the decline in ARPU in Q4 09 compared to the previous quarter. ARPU in Q4 09 declined compared to Q4 08, due to the fact that during Q4 09 OTT introduced many offers to stimulate acquisitions in lower income market segments. The ongoing high subscriber growth trend in Mobinil throughout the year, coupled with the change in subscriber mix with an increasing penetration in the lower market segment, caused ARPU in Egypt to decline. The decline was further enhanced by the highly aggressive pricing launched by Etisalat in Q2 and Q3 to which the other players, including Mobinil, responded with aggressive tariff plans, which have been withdrawn in Q4. Despite the high subscriber growth, ARPU in Bangladesh decreased only by a mid-single digit over the previous year due to revenue enhancement initiatives aimed at the existing customer base.

During the year 2009, ARPU was negatively impacted by the effect of the depreciation of the local currencies against the US$ in Algeria, Pakistan and Tunisia. The negative impact has however become less relevant in H2 09 as the local currencies have stabilised against the US$. In local currency terms ARPU was stable in Mobilink, while it decreased over the previous year in OTA and in OTT. To offset the impact of the unfavourable climate and fierce competitive environment in Algeria, OTA focused more on retaining its subscriber base by introducing strong retention campaigns rather than animating the market. This had a negative impact on the outgoing ARPU. In addition, the new yearly interconnection rate implemented as of July (1.5 DZD vs. 2.6 DZD previously) impacted the incoming ARPU in Q4 09 compared to Q4 08. Table 2: Blended Average Revenue Per User (ARPU)

Subsidiary

31 Dec. 2008 US$ (3 months)

30 Sept. 2009 US$ (3 months)

31 Dec. 2009 US$ (3 months)

Inc/(dec) Dec. 2009 vs. Dec. 2008

Djezzy (Algeria)

11.8

10.5

9.9

(15.8%)

1. US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (IFRS). 2. After excluding M-Link and OrasInvest figures from 2008. 3. The outstanding GDRs as of December 31st, 2009 were 176 million.

Mobinil (Egypt)1

7.6

6.7

6.5

(14.5%)

Operational Performance

banglalink (Bangladesh)

2.3

(6.7%) n.a.

Subscribers

Tunisiana (Tunisia)

ous year. As a result of the unfavourable events that took place in Q4 2009, the customer base in Algeria remained almost stagnant compared to Q3 2009 resulting in only a 4% growth compared to 2008. A significant contribution to customer base growth was also delivered by Telecel Globe, with subscribers surpassing the 1.8 million mark, and by koryolink which counts almost 92 thousand subscribers as of December 31, 2009. It is worth noting that the customer base of Alfa in Lebanon exceeded the 1 million mark required in the management contract signed by OTH with the Republic of Lebanon in January 2009.

During the year 2009 Orascom Telecom continued to grow its customer base reaching almost 93 million subscribers, a 19% growth over the previous year. Growth was particularly strong in Bangladesh, up almost 35%, in Egypt, up 26%, and in Tunisia, up almost 23%. After the substantial inactive customer base cleanup performed up to Q1 2009, subscribers’ growth in Pakistan has resumed throughout the rest of the year reaching 30.8 million subscribers and demonstrating an increase of 8% over the previ-

31 Dec. 2008

30 Sept. 2009

31 Dec. 2009

Inc/(dec) Dec. 2009 vs. Dec. 2008

Djezzy (Algeria)

14,108,859

14,726,081

14,618,166

3.6%

Mobilink (Pakistan)

28,479,600

30,046,050

30,800,354

8.1%

Mobinil (Egypt)

20,115,377

24,624,733

25,354,209

26.0%

4,256,573

4,807,677

5,210,926

22.4%

10,337,128

12,135,528

13,886,913

34.3%

701,647

1,496,000

1,823,000

159.8%

1,694

69,261

91,704

n.m.

-

988,831

1,067,552

n.a.

Tunisiana (Tunisia) banglalink (Bangladesh) Telecel Globe

1

koryolink (DPRK) Alfa (Lebanon)

Grand Total 1.

78,000,878

88,894,161

92,852,824

19.0%

Includes Burundi, Central African Republic subscribers in December 2008, Burundi, Central African Republic, Namibia and Zimbabwe subscribers in September and December 2009.

3.0

12.7 2.5

koryolink (DPRK)

-

Alfa (Lebanon)

Global ARPU (3 months)

2.8

2.9

13.1

11.6

2.5

21.6

24.5

-

49.3

40.0

6.3

5.8

5.5

6.6

Global ARPU (YTD)2

5.8

5.7

(3.3%)

(8.7%) n.a.

(13.4%) (12.8%)

Table 3: Blended Average Revenue Per User (ARPU) (Local Currency) Subsidiary Djezzy (Algeria) (DZD)

Mobilink (Pakistan) (PKR)

Table 1: Total Subscribers Investment

Mobilink (Pakistan)

Tunisiana (Tunisia) (TND)

1. 2.

31 Dec. 2008 (3 months)

799.0

242.8

17.0

30 Sept. 2009 (3 months)

765.9

234.2

17.4

31 Dec. 2009 (3 months)

721.4

241.7

ARPU expressed under OTH’s definition may differ from Mobinil’s disclosed ARPU. Please see Appendix for definition. Global ARPU is calculated on a Year to date basis, taking into account the weighted average subscribers for calculation, excluding Alfa.

15.0

Inc/(dec) Dec. 2009 vs. Dec. 2008

(9.7%)

(0.4%)

(11.6%)

32

Market Share & Competition In 2009 OTH maintained its market leadership position in all its countries of operation. In Bangladesh OTH has further strengthened its number two position. Market share in Egypt declined marginally as a result of the increased competition and aggressive market share promotions during the last three quarters. In Algeria the attacks resulting from the football games caused interruptions to the operational activities, which heavily impacted the market share in Q4. Furthermore, market share declined as a result of

the slower approval process of Djezzy’s promotions by the local regulator. Performance was outstanding in Bangladesh where OTH increased its market share by 260bps over Q3. In Tunisia market share increased slightly over the previous quarter. With the growth trend resuming in Pakistan market share for Mobilink, as reported by the regulator, grew to 31.5% over the previous quarter. It should be noted that a number of competitors in Pakistan do not apply a strict churn policy. Mobilink’s market share of active subscribers as measured internally on traffic patterns remains above 40% as of December 31, 2009.

Table 4: Market Share & Competition

Country Algeria

Pakistan

1

Egypt

Brand name

30 Sept 2009

31 Dec. 2009

Market Position

Djezzy

62.9%

59.4%

1

Mobinil

43.6%

42.0%

1

Mobilink

Tunisia

Tunisiana

Bangladesh1

banglalink

1.

Market Share (%)

30.9% 53.0%

24.2%

31.5% 53.4%

26.8%

Names of additional network operations

1

U-Fone, Paktel, Telenor, Al Warid

1

Tunisie Telecom

Vodafone, Etisalat

Garmeen, Aktel, Citycell, BTTB, Al Warid

Market share, as announced by the national Regulator is based on information disclosed by the other operators which use different subscriber recognition policies.

Capital expenditures in 2009 were substantially lower than the previous year mainly as a result of the implementation of OTH’s

simple free cash flow boost program which entails a reduction of investments: mainly in Pakistan and Bangladesh. The “Other” CAPEX mainly relates to investments made in 2009 in Telecel Globe, koryolink and our submarine cables.

Algeria

Pakistan2 Egypt2

Tunisia

Bangladesh

Other3 Total

Total Consolidated4

Consolidated Capex/Sales

1. 2. 3. 4. 5.

Service name Djezzy

Mobilink Mobinil

Tunisiana

banglalink

Consolidated revenues in 2009 declined mid-single digit over the previous year with GSM revenues only marginally down 1.9% and a sharp decrease in Telecom Services revenues mainly as a result of the exclusion of OrasInvest and M-Link from the 12M 2009 scope of consolidation following their disposal. The performance in GSM revenues in 2009 vs. 2008 was the result of the substantial weakening of the local currency against the US$ in Algeria, Pakistan and Tunisia. This effect was evident in the per-

Total US$ million 20085

Subsidiary

167

537 524 99

Inc/(dec)

Mobilink (Pakistan) Mobinil (Egypt)

Tunisiana (Tunisia)

banglalink (Bangladesh)

Telecel Globe (Africa)

koryolink (North Korea) Total GSM

261

OrasInvest

56%

157

(71%)

91

(8%)

472

(10%)

122

(70%)

1,894

1,324

(30%)

29.6%

20.5%

(9%)

1,576

Djezzy (Algeria)

M-Link

407

160

GSM

Ring

Total US$ million 20095

221

1,037

38%

(34%)

Based on 100% ownership of all subsidiaries. Excludes intangible CAPEX of US$ 12 million in Pakistan for WiMax License, US$ 408 million in Egypt related to the 3G license fee in 2008. “Other” companies include Linkdotnet, M-link, MedCable, Mena-Cable, OrasInvest, OT Holding, Ring and Telecel in 2008, and CHEO, Linkdotnet, MedCable, Mena-Cable, OT Holding, Ring and Telecel Globe in 2009. Consolidated CAPEX based on: 48.75% in ECMS and 50% in Tunisiana. CAPEX components classification (e.g. tangible vs. Intangible) may differ from an operational perspective vs. an accounting one. The above figures have been prepared to reflect CAPEX from an operational perspective, and may differ from CAPEX figures released in the financial statements.

formance of Mobilink, with US$ revenues declining 12.3% against a flat growth in local currency terms, of OTA, which recorded a decline of 8.5% in US$ against a stagnant growth in local currency terms, and of Tunisiana, with US$ revenues up 9.4% against an increase in local currency revenues of 11.6%. In the countries of operation not impacted by currency fluctuations, performance remained strong with Mobinil growing 6.0% over the previous year and banglalink recording an impressive 21.8% growth over 2008, as a result of strong subscriber increases in both operations.

Table 6: Consolidated Revenues

Telecom Services

Table 5: Capital Expenditure of OTH Subsidiaries for the nine months to December 311 Country

Revenues

AMN, Qtel

2

CAPEX

Financial Review

Other2

Total Telecom Services Total Internet Services

Total Consolidated 1. 2.

31 Dec. 2008 US$ (000)

31 Dec. 2009 US$ (000)

2,040,544 1,207,520 890,949

326,110

1

288,144 25,345 -

Inc/ (dec)

1,867,837

1,058,463

944,133

356,675

(8.5%)

Q4 - 2009

(3 months) US$ (000)

(3 months) US$ (000) 447,553

(6.5%)

244,583

248,027

1.4%

258,982

9.4%

99,639

6.0%

21.8%

25,951

n.a.

Inc/ (dec)

478,841

(12.3%)

350,994 81,384

Q3 - 2009

89,070

270,473

4.4%

93,127

(6.5%)

91,559

2.8%

n.m.

20,836

23,591

13.2%

5,984

7,495

25.2%

4,778,612

4,685,436

(1.9%)

1,197,934

1,181,825

(1.3%)

228,252

210,896

(7.6%)

49,365

65,378

32.4%

194,868 37,292

11,449

-

-

79,906

n.a.

n.a.

n.m.

471,861

290,802

(38.4%)

5,326,549

5,064,790

(4.9%)

76,076

88,551

16.4%

-

-

23,299

72,664

20,499

1,291,097

Excluding intercompany revenues generated by M-Link. Other Telecom Services Companies include C.A.T., OT Lebanon and TWA in 2009, C.A.T., Telecel Globe and TWA in 2008.

-

-

25,530

n.a.

n.a.

9.6%

90,909

25.1%

1,295,517

0.3%

22,783

11.1%

33

EBITDA

Consolidated Revenues 5,327

5,065

4,779

4,685

Consolidated EBITDA in 2009 declined 8.9% over the previous year mainly as a result of the decline in revenues resulting from the currency weakness against the US$ in Algeria, Tunisia and Pakistan. In Tunisia the performance in local currency terms was very positive with a sharp increase over the previous year of 12% vs. a slight increase of almost 2% in US$. EBITDA performance in OTA was negatively impacted by the introduction of a new 5% sales tax on mobile recharges to be borne by the mobile operators and not passed on to the end user and to a lower extent by the introduction of the new termination rates. Currency depreciation against the US$ in Pakistan declined sharply by 21.7% in US$ EBITDA translating into a decline of only 9.2% in local currency terms.

Total Consolidated Total Internet Services Total Telecom Services Total GSM

Table 8: Consolidated EBITDA1

31 Dec, 31 Dec, 2008 US$ (000) 2009 US$ (000)

Fourth quarter revenues performance improved over the previous quarter in all major subsidiaries, with the exception of Algeria and Tunisia. In Q4 2009, OTA witnessed a decline in traffic and network usage resulting from the unfavourable events that took place in November and were partially offset by discounts and free minutes promotions. In Tunisia, revenues were down 6.5% in Q4 09 over Q3

09 due to the summer seasonality effect which helped generate higher revenues in Q3. Revenue was positive in Pakistan, Egypt and Bangladesh with single digit increases over the previous quarter. It is worth noting that the recent agreement signed between Ring and Nokia allowed the entity to increase its revenue by 32.4% in Q4 09 compared to Q3 09.

Table 7: Proforma Consolidated Revenues (Local Currency)1 Subsidiary GSM

31 Dec. 20082

Djezzy (Algeria) (DZD bn)

135.0

135.6

Tunisiana (Tunisia) (TND mn)

432.2

482.3

Mobilink (Pakistan) (PKR bn)

1. 2.

Un-audited Figures. Excluding the effect of M-Link in 2008.

87.4

Subsidiary GSM

Djezzy (Algeria)

Mobilink (Pakistan) Mobinil (Egypt)

Tunisiana (Tunisia)

31 Dec. 2009

86.8

Inc/ (dec)

Q3 - 2009 (3 months)

Q4 - 2009 (3 months)

Inc/ (dec)

0.4%

34.8

32.4

(6.9%)

11.6%

132.5

121.0

(8.7%)

(0.7%)

21.5

Margins in Pakistan have also continued to suffer from the sharp YoY increase in utility expenses as a result of the frequent power outages on the national electricity grid. During the 12 months of 2009 Mobinil continued to perform well posting a 7.2% increase in EBITDA as a result of its on-net strategy and cost control measures. Compared to the previous year, banglalink delivered an impressive performance in 2009 with EBITDA growing exponentially mainly as a result of the removal of subsidies on the SIM tax. It is worth noting that the EBITDA decline at the consolidated level is heavily impacted by the decrease in Telecom Services EBITDA as a result of the exclusion of M-Link and OrasInvest from the scope of consolidation in 2009; as well as the decline of the EBITDA of Ring.

22.7

5.3%

banglalink (Bangladesh) Telecel Globe (Africa)

koryolink (North Korea)

Total GSM

31 Dec. 2008 US$ (000)

31 Dec. 2009 US$ (000)

Q3 - 2009 (3 months) US$ (000)

Inc/ (dec)

Q4 - 2009 (3 months) US$ (000)

Inc/ (dec)

1,290,062

1,067,241

(17.3%)

283,121

213,318

429,683

460,457

7.2%

116,157

120,026

n.m.

35,390

491,664

188,912 13,683 492 -

384,781

192,227 117,238 (202)

17,153

(21.7%)

1.8% n.m. n.a.

91,932

55,223 3,519

7,188

5

105,259

(24.7%)

14.5%

3.3%

48,137

(12.8%)

(2,926)4

n.m.

22,224 7,164

(37.2%) (0.3%)

2,414,496

2,238,894

(7.3%)

592,530

513,203

(13.4%)

Ring

(1,593)

(6,791)

n.m.

(2,718)

(1,162)

57.3%

OrasInvest

19,260

-

n.a.

-

-

n.a.

Telecom Services M-Link

Other2

Total Telecom Services Internet Services

OT Holding & Other3 Total Consolidated

1. 2. 3. 4. 5.

24,985

(10,116)

-

(3,456)

32,536

(10,247)

(63,411)

(67,079)

(62)

2,383,559

10,370

2,171,938

n.a.

65.8%

-

1,217

n.m.

(1,501)

(5.8%)

(16,680)

n.m.

(8.9%)

3,280

577,629

-

2,344 1,182 5,570

(24,091) 495,864

n.a.

92.6%

n.m.

69.8%

(44.4%)

(14.2%)

EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding. Other Telecom Services Companies include in C.A.T., MedCable, Mena Cable, OT Lebanon, TWA, and OTWIMAX in 2009, and C.A.T., CHEO, OT WIMAX, MedCable, Mena Cable, Telecel Globe and TWA in 2008 Other non operating companies include: Cortex, Eurasia, FPPL, Moga Holding, MinMax, OIIH, Oratel, OTCS, OT ESOP, OTFSCA, OTI Malta, OT Services Europe, OT Oscar, OTH, OT Wireless Europe, OT Asia, Pioneers, SAWLTD, ITCL, M-link and Telecel. Mainly due to an increase in staff costs related to 2008 and 2009 that took place in the fourth quarter of 2009. Increased EBITDA mainly due to reallocation of the staff cost compared to H1 09 and freezing the handset sales based on NK Government requirements.

34

Consolidated EBITDA

EBITDA MARGIN

2,500

2,384 (176,0)

2,000

(43)

10

Although the cost cutting initiatives undertaken by the subsidiaries delivered their results in the first nine months of 2009, the negative impact of Q4 EBITDA caused a decrease in the consolidated EBITDA margin by 190bps to reach 42.9% over the previous year. GSM margin declined by 2.7% to 47.8% as a result of lower margins in OTA, Mobilink and OTT resulting from the currency devaluation witnessed throughout 2009. This was partially offset by the strong increase in banglalink’s and koryolink’s margins. The margin decline in OTA was driven by the aforementioned sales tax introduction, borne by the operators, and by the termination rate

2,172

(4)

1,500

Table 10: Consolidated EBITDA Margin

(8.9%)

1,000

Subsidiary GSM

500 0

Total Consolidated 2008

Total GSM

Total Telecom Services

In local currency terms, Q4 2009 performance versus Q3 was strong in Pakistan, but was weaker in Tunisia due to the decrease in revenue. In Algeria the Q4 EBITDA was impacted by the attacks resulting from the football games which caused interruptions to the operational activities. Moreover, in order to rebuild its brand after the negative impact of the football game OTA incurred an increase in cost of sales and marketing expenses versus the previous quarter. We estimate the impact on OTA Q4 2009 EBITDA to be around US$55 million between loss of revenue opportunity, damages of stock (SIM and scratch cards, handsets) and provision for taxes and around US$41 million below the EBITDA line (damage to physical assets net of insurance and provision for Income tax).

Internet Services

OT Holding & Other

Total Consolidated 2009

In Egypt the EBITDA increased by a mid-single digit over the previous quarter mainly due to the success of the on-net strategy and the applied cost optimization initiatives. In Bangladesh the decrease over Q3 was driven by a more aggressive marketing approach to capture market share by introducing promotions and offers that subsidized occasionally the SIM tax; a reaction to the strategy adopted by certain competitors who started to re-subsidize the SIM tax. The sharp decrease in Telecel Globe EBITDA was mainly due a reclassification of staff costs related to 2008 and 2009 that took place in the fourth quarter of 2009. Consequently, at the consolidated EBITDA level the fourth quarter of 2009 was down by 14.2% over the previous quarter.

Table 9: Proforma Consolidated EBITDA (Local Currency)1 Subsidiary GSM

Djezzy (Algeria) (DZD bn)

Mobilink (Pakistan) (PKR bn)

Tunisiana (Tunisia) (TND mn)

1. 2. 3.

31 Dec. 20082

31 Dec. 2009

Inc/ (dec)

Q3 - 2009 (3 months)

Q4 - 2009 (3 months)

Inc/ (dec)

83.7

78.1

(6.6%)

20.83

15.7

(24.9%)

232.7

260.6

12.0%

73.6

62.5

(15.1%)

34.9

31.7

revision in July; in addition to the adverse events that occurred in November 2009 as a result of the football games. The margin decline for Mobilink was mainly attributable to the increase in network maintenance and utility expenses which are mostly denominated in US$. The margin for Mobilink in Q4 was however higher compared to what was recorded in the previous quarter, as was the margin recorded by Mobinil. OTT’s margins declined from Q3 to Q4 by 3.7% due to the decrease in seasonal visitor roaming traffic. Consequently, overall consolidated margin in Q4 09 was 38.3%; 6.5% lower than the result delivered in the previous quarter. Total GSM margin in Q4 was 43.4%.

(9.2%)

Un-audited Figures. Excluding the effect of M-Link in 2008. In Q4 09 a reclassification of expenses was carried out resulting in an increase in Djezzy’s Q3 local currency EBITDA

7.7

8.9

16.2%

Djezzy (Algeria) Mobilink (Pakistan) Mobinil (Egypt) Tunisiana (Tunisia) banglalink (Bangladesh) Telecel Globe (Africa) koryolink (North Korea) Total GSM Total Telecom Services Total Internet Services EBITDA Margin

1.

31 Dec. 2008

31 Dec. 2009

Change

Q3 - 2009 (3 months)

Q4 - 2009 (3 months)

Change

63.2% 40.7% 48.2% 57.9% 4.7% 1.9% n.a. 50.5% 6.9% (0.1%)

57.1% 36.4% 48.8% 53.9% 33.4% (0.2%) 66.1% 47.8% (3.5%) 11.7%

(6.1%) (4.4%) 0.5% (4.0%) 28.7% (2.2%) n.a. (2.7%) (10.4%) 11.8%

59.1% 35.5% 47.5% 55.4% 39.7% 16.9% 120.1%1 49.5% (2.1%) 16.0%

47.7% 38.9% 48.4% 51.7% 24.3% (12.4%) 95.6% 43.4% 1.3% 24.4%

(11.5%) 3.4% 0.9% (3.7%) (15.5%) (29.3%) (24.5%) (6.0%) 3.4% 8.4%

44.7%

42.9%

(1.9%)

44.7%

Mainly due to reallocation of the staff cost compared to H1 09 and freezing the handset sales based on NK Government requirements.

38.3%

(6.5%)

35

Foreign Exchange Rates

Net Income

Table 11: Foreign Exchange Rates used in the Income Statement & Balance Sheet Currency

Dec. 08

Egyptian Pound/USD Income Statement1

Balance Sheet

2

Algerian Dinar/USD Income Statement1

Balance Sheet2

Tunisian Dinar/USD Income Statement1

Balance Sheet2

Pakistan Rupee/USD Income Statement

1

Balance Sheet2

Bangladeshi Taka/USD Income Statement1 Balance Sheet

2

Canadian Dollar/USD Income Statement1 Balance Sheet2

1- 2- 3-

Sept. 09

Dec. 09

% Chg 3

Dec. 09 vs Dec. 08

% Chg 3

Dec. 09 vs Sept. 09

5.4735

5.6084

5.5804

(1.9)

0.5

64.5161

72.6195

72.4638

(11.0)

(2.1)

0.2

(0.0)

1.2302

1.3708

1.3521

(9.0)

1.4

5.5340

70.9220

1.3137

5.5250

72.4466

1.2974

5.5096

72.4638

1.3173

0.4

0.3

(0.3)

(1.5)

70.9220

81.3647

81.9672

(13.5)

(0.7)

69.4444

69.4289

69.4444

0.0

(0.0)

78.7402

69.4444 1.1266

1.2042

83.1200

69.4200 1.1478

1.0628

Represents the average monthly exchange rate from the start of the year until the end of the period. Represents the spot exchange rate at the end of the period. Appreciation/(Depreciation) of Local Currency vs. USD.

84.0336

69.4444 1.1211

1.0386

(6.3)

0.0 0.5

15.9

(1.1)

(0.0) 2.4

2.3

Net Income in 2009 decreased by 26% to US$ 318 Million mainly driven by the loss recorded in the fourth quarter. The recent riot events in Algeria following the football match had a negative impact on the operations. We estimate the impact on OTA Q4 2009 EBITDA to be around US$55 million between loss of revenue opportunity, damages of stock (SIM and scratch cards, handsets) and provision for taxes and around US$41 million below the EBITDA

line (damage to physical assets net of insurance and provision for Income tax). The increase in Net Financing Cost in Q4 was mainly triggered by the decrease of foreign exchange gain compared to Q3 09. In addition to the tax provision in Algeria of $30 million out of which $20 million was made in Q4, a change in the tax law in Pakistan, where a minimum tax of 0.5% of revenues was implemented and accounted for in Q4 09. EPS in the 12 months ended December 31, 2009 reached US$1.81/GDR.

Table 12: Income Statement in IFRS/US$

31 Dec. 2008 US$ (000) Revenues

Other Income

Total Expense

Net unusual Items

Restructuring costs EBITDA1

Depreciation & Amortization

Impairment of Non Current Assets

Gain (Loss) on Disposal of Non Current Assets Net unusual Items

Operating Income Financial Expense Financial Income

Foreign Exchange Gain (Loss) Net Financing Cost

Net unusual financial items

Share of Profit (Loss) of Associates Gain on Disposal of Associates Profit Before Tax Income Tax

Profit from Continuing Operations Profit for the Period Attributable to:

Equity Holders of the Parent5

Earnings Per Share (US$/GDR)

Minority Interest Net Income

1- 2- 3- 4- 5- 6-

31 Dec. 2009 US$ (000)

5,326,549

41,257

(2,984,247)

-

-

Inc/ (dec)

5,064,790

30,978

(2,910,771) (13,059) -

2,383,559

2,171,938

(39,464)

(38,296)

(912,173)

66,315 -

(984,067)

1,176,096

53,110

95,528 3

(201,083)

4

(511,332)

Q4 - 2009 (3 months) US$ (000)

1,291,098

1,295,516

(720,310)

(794,571)

6,840 -

(9%)

-

577,628

(248,935)

(7,243)

41,638

(15,117)

1,498,237 (468,453)

(5%)

Q3 - 2009 (3 months) US$ (000)

(424)

(22%)

(13,059)

-

495,864

(15,223)2

6,302

(118,948)

(130,511)

77,8784

14,9934

218,132

(388,663)

(27,383)

(115,454)

(2,955)

(47,129)

(9,804)

(26,156)

27,262

906,118

-

740,304

(18%)

379,472

(25%)

318,134

(26%)

(403,494)

(360,832)

502,624

379,472

502,624

430,822

2.30

71,802

502,624

-

1.81

6

61,338

379,472

Management Presentation developed from IFRS financials. Mainly due to the impairment of goodwill in PMCL’s ISP subsidiary amounting to approx. US$ 7 million. Mainly due to gains of approx. US$ 36.5 million resulting from the early extinguishment of PMCL’s bond. Due to appreciation of Canadian Dollar and depreciation of US$ in 2009 vs.2008. Equates to Net Income after Minority Interest. Based on a weighted average for the outstanding number of shares of 175,686,958 GDRs.

(25%)

(21%) (25%)

-

283,839

-

76,522

(84,490)

(110,383)

199,349

(33,861)

199,349

(32%)

64

(616,426)

-

(14%)

(253,694)

(15,117)

13,687

27,1414

0%

7,977

-

321,026

Inc/ (dec)

(73%)

(33,861)

n.m.

180,942

(46,390)

n.m.

18,406

12,529

1.03

199,348

n.m.

(0.26)

n.m.

(33,861)

n.m.

36

Table 13: Balance Sheet in IFRS/US$

Assets

Property and Equipment (net)

Intangible Assets

Other Non-Current Assets

Total Non-Current Assets

Cash and Cash Equivalents Trade Receivables

Assets Held for Sale

Other Current Assets

Total Current Assets Total Assets

Equity Attributable to Equity Holders of the Company

Minority Share

Table 14: Cash Flow Statement in US$ IFRS/US$ 31 December 2008 US$ (000) 5,052,5741

IFRS/US$ 31 December 2009 US$ (000) 5,031,757

2,383,5721

2,261,477

8,163,582

8,257,224

327,638

331,759

727,436 651,783

963,990 759,546

80,4712

109,953

1,765,301

1,841,795

705,409

9,928,883

1,080,2303

120,994

640,537

10,099,019 1,275,765

140,029

Total Equity

1,201,224

1,415,794

Long Term Debt

5,205,030

4,873,991

Total Non-Current Liabilities

5,728,833

5,214,136

Liabilities

Other Non-Current Liabilities

Short Term Debt

523,8031

530,315

340,145

998,231

Trade Payables

1,186,051

1,042,907

Total Current Liabilities

2,998,826

3,469,089

Other Current Liabilities Total Liabilities

Total Liabilities & Shareholder’s Equity Net Debt4

1- 2- 3- 4-

1,282,460

8,727,659

9,928,883

5,083,562

Cash Flows from Operating Activities Profit for the Period

502,624

379,472

951,637

1,022,363

Net Financial Charges

415,343

415,805

Income Tax Expense

Share of Loss (Profit) of Associates Accounted for Using the Equity Method Other

403,494 2,955

96,250

360,832 47,129

(27,011)

Changes in Assets Carried as Working Capital

(152,127)

(170,678)

Income Tax Paid

(480,807)

(621,940)

Net Cash Generated by Operating Activities

1,422,731

1,186,290

(1,745,442)

(1,327,136)

-

(40,762)

(441,910)

(135,237)

(65,839)

(1,220,197)

2,522,216

848,314

Changes in Other Liabilities Carried as Working Capital Interest Expense Paid

Cash Flows from Investing Activities Cash Outflow for Investments in Property & Equipment, Intangible Assets, and Financial Assets & Consolidated Subsidiaries Net (Payments) for Current Financial Assets Proceeds from Disposal of Property & Equipment, Associates, Subsidiaries and Financial Assets

Advances & Loans made to Associates & other parties Dividends & Interest Received

Net Cash Used in Investing Activities

8,683,225

Cash Flows from Financing Activities

5,112,676

Repayment of Non-Current Borrowings

In accordance to the IFRS-3 a reclassification was done on December 2008 balances as a result of the finalization of the purchase price allocation of Telecel Globe which covers the acquisition of Burundi and CAR. Includes M-Link. Reflects the purchase of approximately 29.3 million GDRs of treasury shares in 2008. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.

IFRS/US$ 31 December 2009 US$ (000)

Depreciation, Amortization & Impairment of Non-Current Assets

1,427,951

10,099,019

IFRS/US$ 31 December 2008 US$ (000)

Proceeds from Non-Current Borrowings

Net Proceeds (Payments) from Current Financial Liabilities Net Change in Cash Collateral Dividend Payments

111,808

(428,447)

2,087,121

34,392

(1,975,760)

(56,633) (76,872)

Cash & Cash Equivalents at the Beginning of the Period

Cash & Cash Equivalents at the End of the Period

(802,073)

164,611 83,125

(34,548)

(1,901,812)

Effect of Exchange Rate Changes on Cash & Cash Equivalents

32,171

(62,563)

Net Cash generated by (Used in) Financing Activities Cash included in Assets Held for Sale

250,767

(91,160)

(2,086,224)

Net Increase (Decrease) in Cash & Cash Equivalents

(472,260)

(165,977)

Proceeds / Payments for Treasury Shares Change in Minority Interest

252,577

(544,920)

(4,189)

164,080 130,173

(7,804)

(12,561)

1,238,568

651,783

(34,060) 651,783

(9,849)

759,546

37

Table 15: Income Statement in EAS/Egyptian Pounds

Revenues

Other Income Total Expense

Net unusual Items

Restructuring costs EBITDA1

Depreciation & Amortization

Other

Operating Income

Table 16: Balance Sheet in EAS/Egyptian Pounds1 Inc/ (dec)

31 Dec. 2008 LE (000)

31 Dec. 2009 LE (000)

29,153,310

28,261,946

(16,255,932) -

225,805 -

13,123,183

(4,980,805) 146,959

8,289,337

Q3 - 2009 (3 months) LE (000)

Q4 - 2009 (3 months) LE (000)

7,185,568

7,122,189

(16,178,907)

(4,013,452)

(4,369,574)

-

-

-

172,837

(72,869)

12,183,007

(5,477,033) (65,702)

6,640,272

Financial Expense

(2,562,366)

(2,851,808)

Foreign Exchange Gain (Loss)

(1,101,000)

151,449

Financial Income

Net Financing Cost

Net unusual financial items

Share of Profit (Loss) of Associates Gain on Disposal of Associates Profit Before Tax Income Tax

Profit from Continuing Operations Gains or losses from discontinued operations Profit for the Period Attributable to:

Equity Holders of the Parent Earnings Per Share (EGP)

Minority Interest Net Income 1-

Management Presentation developed from EAS financials

291,000

(3%)

37,991 -

(7%)

(20%)

533,056

3,210,107

43,854

2,723,600

(1,389,623)

1,784,842

1,199,493

74,931

(2,346)

(660,763)

438,245

(1%)

(134,484) (717,118)

Intangible Assets

Other Non-Current Assets (15%)

(33%)

(636,148)

(16,171)

(262,986)

(54,735)

(145,357)

5,050,011

4,209,983

(17%)

1,582,520

417,988

(74%)

2,196,512

(23%)

1,112,376

(190,858)

n.m.

149,211

-

(2,208,409)

(2,013,471)

-

-

2,841,602

2,196,512

2,841,602

2,463,594 2.63

378,389

2,841,602

1,845,289 2.10

351,223

2,196,512

(23%) (25%)

-

-

1,112,376

(190,858)

(23%)

1,112,376

102,286

Total Current Assets

-

-

1.1485997

Other Current Assets

Total Equity

(608,846)

2%

Assets Held for Sale

-

(470,144)

1,010,089

Trade Receivables

Minority Share

(147,587) -

Cash and Cash Equivalents

Equity Attributable to Equity Holders of the Company

(2,167,303) -

Total Non-Current Assets

Total Assets

83,316

(3,372,366) -

Assets

Property and Equipment (net)

(72,869)

(1,381,819) (43,446)

Inc/ (dec)

(262,284) (0.30)

71,426

(190,858)

n.m. n.m. n.m.

27,907,419 12,996,658 4,026,358

EAS/LE 31 December 2009 LE (000) 27,526,242 12,262,066

5,310,618

44,930,435

45,098,927

1,813,478

1,827,658

3,607,620 445,408

3,912,554

4,184,340 605,732

3,570,237

9,779,060

10,187,968

5,791,788

6,806,645

54,709,495

632,979

55,286,895 762,697

6,424,767

7,569,342

Long Term Debt

28,794,164

26,747,498

Total Non-Current Liabilities

31,693,408

28,633,509

6,567,076

5,745,373

Liabilities

n.m.

EAS/LE 31 December 2008 LE (000)

Other Non-Current Liabilities

Short Term Debt Trade Payables

Other Current Liabilities

2,899,244

2,929,972 7,094,272

1,886,011

5,483,389 7,855,282

Total Current Liabilities

16,591,320

19,084,044

Total Liabilities & Shareholder’s Equity

54,709,495

55,286,895

Total Liabilities Net Debt2 1- 2-

Management presentation developed from EAS financials. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.

48,284,728 28,116,516

47,717,553 28,046,547

38

Appendix 1

Table 17: Ownership Structure & Consolidation Methods Ownership December 31

Subsidiary 2008

GSM Operations

2009

Mobinil (Egypt)1

28.75%

28.75%

Egyptian Co. for Mobile Services

20.00%

20.00%

100.00%

100.00%

100.00%

100.00%

50.00%

50.00%

100.00%

94.00%

IWCPL (Pakistan)

Orascom Telecom Algeria

2

Telecel (Africa)

Orascom Telecom Tunisia3 Telecel Globe

OT Ventures

4

CHEO

96.81%

Intouch

Non GSM Operations Ring

100.00%

Full Consolidation

Full Consolidation

99.00%

99.00%

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

100.00%

MedCable

Full Consolidation

100.00%

Full Consolidation

100.00%

100.00%

100.00%

100.00%

100.00%

C.A.T.5

50.00% 100.00%

Full Consolidation

Full Consolidation

100.00% 100.00% 50.00% 100.00%

100.00%

100.00%

FPPL

100.00%

MinMax Ventures

100.00%

OIH

OTFCSA

OT Holding Canada ITCL SAWLTD 1- 2- 3- 4- 5- 6- 7-

51.00%

Full Consolidation

Full Consolidation

Full Consolidation Proportionate Consolidation Full Consolidation Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation Proportionate Consolidation Full Consolidation Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

100.00%

Full Consolidation

100.00%

Full Consolidation

100.00%

Full Consolidation

Full Consolidation Full Consolidation

100.00%

100.00%

Full Consolidation

Full Consolidation

100.00%

100.00%

Full Consolidation Proportionate Consolidation Full Consolidation

Full Consolidation Proportionate Consolidation Full Consolidation

100.00% 7

Full Consolidation

100.00%

OIIH6

100.00%

Full Consolidation

Full Consolidation

100.00%

OT Holding

-

Full Consolidation

100.00%

51.00%

Full Consolidation

Full Consolidation

100.00%

OT WIMAX

TWA

Full Consolidation

-

100.00%

Oratel

OT Wireless Europe

75.00%

100.00%

100.00%

99.97%

Moga Holding

Full Consolidation Proportionate Consolidation Full Consolidation

100.00%

100.00%

Mena Cable

Full Consolidation

Full Consolidation

OT ESOP

M-Link

Full Consolidation Proportionate Consolidation Full Consolidation

Full Consolidation

100.00%

OT Services Europe

Full Consolidation

Proportionate Consolidation Proportionate Consolidation Full Consolidation

100.00%

Orasinvest OTCS

96.81%

Proportionate Consolidation Proportionate Consolidation Full Consolidation

100.00%

75.00%

Internet Service

Glossary

Consolidation Method December 31 2008 2009

100.00%

50.00%

50.00%

100.00%

100.00%

Full Consolidation

Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS. Direct and Indirect stake through Moga Holding Ltd. and Oratel. Orascom Telecom Tunisia is proportionately consolidated through Orascom Tunisia Holding and Carthage Consortium. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL). OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007. Holding company for OTH’s Share in Globalive which has been accounted for under the equity method.

Full Consolidation

ARPU (Average Revenue per User): Average monthly recurrent revenue per customer (excluding visitors roaming revenue and connection fee). This includes airtime revenue (national and international), as well as, monthly subscription fee, SMS, GPRS & data revenue. Quarterly ARPU is calculated as an average of the last three months. Capex: Tangible & Intangible fixed assets additions during the reporting period, includes work in progress, network, IT, and other tangible and intangible fixed assets additions but excludes license fees. Churn: Disconnection rate. This is calculated as the number of disconnections during a month divided by the average customer base for that month. Churn Rule: A subscriber is considered churned (removed from the subscriber base) if he exceeds the 90 days from the end of the validity period without recharging. It is worth noting that the validity period is a function of the scratch denomination. In cases where scratch cards have open validity, the subscriber is considered churned in case he has not made a single billable event in the last 90 days (i.e. outgoing or incoming call or sms, wap session…). Open cards validity

is applied for OTA, Mobilink, Mobinil and banglalink so far. OTT customers are considered churn if they do not recharge within 90 days after the validity of the scratch card; while a koryolink customer is considered churn if he/she does not recharge within four months after the validity of the scratch card. MOU (Minutes of Usage): Average airtime minutes per customer per month. This includes billable national & international outgoing traffic originated by subscribers (on-net, to land line & to other operators). Also, this includes incoming traffic to subscribers from land line or other operators. OTH’s Market Share Calculation Method: The market share is calculated through the data warehouse of OTH’s subsidiaries. The number of SIM cards of competitors that appeared in the call detail record of each of OTH’s subsidiaries is collected. This reflects the number of subscribers of the competition. However, OTH deducts the number of SIM cards that did not appear in the call detail records for the last 90 days to account for churn. The same is applied to OTH subsidiaries. This method is used to calculate the market shares of Djezzy, Mobinil, and Tunisiana only. In Pakistan and Bangladesh, Market share as announced by the Regulators is based on disclosed information by the other operators which may use different subscriber recognition policy

39

Independent auditor’s report To the board of directors of Orascom Telecom Holding (S.A.E) We have audited the accompanying consolidated financial statements of Orascom Telecom Holding (S.A.E), which comprise the consolidated balance sheet as at 31 December 2009, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement 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 consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

Consolidated financial statements and auditor’s report

(in IFRS/US$)

• • • • • • • • •

Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Appendix A - Liabilities to Banks Appendix B - Bonds Appendix C - Scope of Consolidation

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 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 consolidated 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 consolidated financial statements present fairly, in all material respects, the financial position of Orascom Telecom Holding (S.A.E) as at 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Emphasis of a matter Without qualifying our opinion, we draw attention to note (35) “Contingent assets and liabilities” for the following: 1- Some subsidiaries received tax assessment from the tax authorities in the territories in which they operate. Management believes that these assessments are excessive, and intends to challenge the assessments through the proper legal channels. Currently, the management of these subsidiaries cannot make reliable estimate of tax exposures. 2-   Egyptian Company for Mobile Services (ECMS) “Jointly controlled entity” filed a lawsuit against the National Telecommunication Regulatory Authority (NTRA) to cancel NTRA’s decision relating to the amendments of the interconnect prices between the fixed and mobile networks. The Company and its external legal counselor believe that the possibility of winning the lawsuit is probable as NTRA’s decision does not have legal or contractual ground, therefore the Company continued to recognize interconnect revenue and cost from and to Telecom Egypt based on the existing agreement.

Cairo, 15 March, 2010





KPMG Hazem Hassan

40 Consolidated Balance Sheet As of December 31,

Consolidated Income Statement

Note

(in million of US$)

Assets Property and equipment Intangible assets Other non-current financial assets

18 19 20

Deferred tax assets

   

 2009

21

Total non-current assets Inventories Trade receivables Other current financial assets Current income tax receivables Other current assets Cash and cash equivalents

22 20 17 23 24

Assets held for sale

6

Total current assets

5,032 2,261 845

5,053 2,383 639

8,257

8,163

119

  55 332 114 100 371 760 110

1,842

88

106 328 277 75 247 652 80

1,765 9,928

 

Equity and liabilities

 

Share capital Reserves

258 (214)

261 (329)

Retained earnings

1,232

1,148

1,276

1,080

 

Total equity

25

Liabilities Non-current borrowings Other non-current liabilities Provisions Non-current income tax liabilities

26 27 17

Deferred tax liabilities

21

Current borrowings Trade payables Other current liabilities Current income tax liabilities Provisions

26 28 27 17

Total non-current liabilities

Liabilities held for sale

    4,874 121 4 216

5,215

  998 1,043 1,091 187 94

3,468

Total liabilities

Total equity and liabilities

1,416

55

6

Total current liabilities

140

8,683

10,099

121

1,201

5,205 220 3 43 257

5,728

530 1,186 856 341 61 25

2,999

8,727

9,928

(The notes from (1) to (37) are an integral part of these consolidated financial statements)

Group CFO Chief Executive Officer Aldo Mareuse Khaled Bichara

Executive Chairman Naguib Onsi Sawiris

 2009 7

Other income

Auditor’s report ‘attached’

2008 5,065

5,327

31

41

Purchases and services

8

(2,364)

(2,511)

Other expenses

9

(215)

(174)

Personnel costs

10

(332)

(299)

Net unusual inventory loss

13

(13)

-

Depreciation and amortization

11

(984)

(912)

Impairment charges

12

(39)

(39)

Net unusual capital loss

13

(15)

-

Disposal of non current assets

14

42

66

Operating income

1,176

1,499

Financial income

15

95

52

Financial expense

15

(511)

(468)

Foreign exchange gain /(loss)

15

27

(201)

(389)

(617)

Net financing costs

Equity attributable to owners of the Company Non-controlling interest

Note

(in million of US$) Revenues

10,099

Total assets

For the year ended December 31

2008

Share of loss of associates

16

(47)

(3)

Gain on disposal of associates

16

-

27

740

906

(361)

(403)

379

503

Profit before income tax Income tax expense

17

Profit for the year Attributable to:

 

Owners of the Company

318

431

Non-controlling interest

61

72

379

503

0.36

0.46

Basic and diluted earnings per share - (US$)

29

(The notes from (1) to (37) are an integral part of these consolidated financial statements)

41 Consolidated Statement of Comprehensive Income For the year ended December 31, (in million of US$) Profit for the year

Other comprehensive income:

Changes in fair value of available-for-sale financial assets Cash flow hedges, net of tax

Consolidated Statement of Changes in Equity 2009

2008

 

 

Attributable to owners of the Company (in million of US$)

379

503

(2)

(2)

 

25

(88)

Currency translation differences

(46)

(176)

Other comprehensive income for the year, net of tax

(23)

(261)

Share of profit recognized directly in equity of associates Total comprehensive income for the year Attributable to:

Owners of the Company Non-controlling interest

-

356

5

242

   

292

64

173

69

(The notes from (1) to (37) are an integral part of these consolidated financial statements)

As of January 1, 2009

Share capital

Treasury shares

261

Other reserves

(190)

Retained earnings

(139)

Non controlling Interest

Total

1,148

1,080

121

1,201

61 3

  379 (23)

64

356

Profit for the year

-

-

(26)

318 -

  318 (26)

Total comprehensive income

-

-

(26)

318

292

Comprehensive income Other comprehensive income Transactions with owners

Change in non controlling interest Dividends Share based compensation Cancellation of shares Purchase of treasury shares Sale of treasury shares

Total transactions with owners As of December 31, 2009

-

-

-

-

(3) -

56 5 92 (38)

10 (3) (15) -

(160)

(3) 258

27 142 (48)

7 (1) (166)

 

Share capital

Treasury shares

Other reserves

 

 -

(10)

(74) -

(94) 2 (38)

(35) -

(129) 2 (38)

(234) 1,232

34 (96) 1,276

(45) 140

34 (141) 1,416

Attributable to owners of the Company (in million of US$)

Total equity

Retained earnings

Total

316

(892)

212

3,513

  3,149

Profit for the year

-

-

-

431

Other comprehensive income

-

-

(258)

Total comprehensive income Transactions with owners

-

-

(55) -

Non controlling interest

(10)

Total equity

93

  3,242

431

72

503

-

(258)

(3)

(261)

(258)

431

173

69

242

2,789 (2,202) 115

(9) 11 (79) -

(157) (2,655) -

(166) 11 (2,202) 115

(61) -

(227) 11 (2,202) 115

Total transactions with owners

(55)

702

(16) (93)

16 (2,796)

(2,242)

(41)

(2,283)

As of December 31, 2008

261

(190)

(139)

1,148

1,080

121

1,201

As of January 1, 2008 Comprehensive income

Dividends Share based compensation Cancellation of shares Purchase of treasury shares Sale of treasury shares Capital increase non-controlling interest Reclassifications

-

-

-

-

-

20

20

(The notes from (1) to (37) are an integral part of these consolidated financial statements)

42 Consolidated Statement of Cash Flows For the year ended December 31, (in millions of US$)

Note

2009

1- General information

2008

Adjustments for: Depreciation, amortization and impairment charges Net unusual inventory loss and capital loss Income tax expense Share-based compensation Net financial charges Unrealized foreign exchange difference loss on disposal of non-current assets Gain from sale of subsidiaries and financial assets Share of loss of associates Gain on disposal of associates Change in assets carried as working capital Change in provisions and allowances Change in other liabilities carried as working capital Income tax paid Interest expense paid

379   1,023 28 361 12 416 (43) 2 (44) 47 (197) 73 223 (622) (472)

951 403 11 416 143 2 (68) 3 (27) (152) 35 112 (481) (428)

Net cash generated by operating activities

1,186

1,423

(1,103) (118) (76) (30)

(1,474) (146) (20) (103)

35 216 (41) (135) 32

11 69 956 1,049 (442) 34

(1,220)

(66)

848 (802) 165 83 (91) (5) (35)

2,522 (1,976) (57) (77) (166) (2,086) (61) (1,901)

Net increase/(decrease) in cash and cash equivalents

163   129

Cash included in assets held for sale Effect of exchange rate changes on cash and cash equivalents

(14) (7)

(8) (35)

Cash and cash equivalents at the beginning of the year

652 760

1,239 652

Profit for the year

Net cash outflow for investments in:

- Property and equipment - Intangible assets - Financial assets and associates - Consolidated subsidiaries Net proceeds from disposals of:

- Property and equipment -Subsidiaries -Associates -Financial assets Net investments in financial assets held for trading Advances and loans made to associate and other parties Dividends and interest received Net cash (used in) investing activities

Proceeds from non-current borrowings Repayment of non-current borrowings Net proceeds/(payments) from Current financial liabilities Net change in cash collateral Dividend payments Net (payments) for treasury shares Change in non-controlling interest Net cash generated by / (used in) financing activities

Cash and cash equivalents at the end of the year

(37)

503

(544)

(The notes from (1) to (37) are an integral part of these consolidated financial statements)

•

Orascom Telecom Holding S.A.E. (the “Company”) is a joint stock company with its head office in Cairo, Egypt. The Company, through its subsidiaries (together the “Group”) is a leading mobile telecommunications company operating in high growth emerging markets in the Middle East, Africa and Asia, having a total population under license of approximately 510 million. The Company is a subsidiary of Weather Investments S.p.A. (“Weather Investments” or the “Parent Company”). The Company is listed on the Egyptian Stock Exchange and has Global Depository Receipts (“GDR”) listed on the London Stock Exchange. These consolidated financial statements as of and for the year ended December 31, 2009 (the “Consolidated Financial Statements”) were approved for issue by the Board of Directors on March 15, 2010. 2- Significant accounting policies 2.1 Basis of presentation The Consolidated Financial Statements of the Group, as of and for the year ended December 31, 2009, have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations as adopted by the International Accounting Standards Board (IASB) and all interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and all interpretations of the Standing Interpretations Committee (SIC). The consolidated financial statements have been prepared under the historical cost basis except for the following: • derivative financial instruments are measured at fair value; • financial instruments at fair value through profit or loss are measured at fair value; and • available-for-sale financial assets are measured at fair value. For presentational purposes, the current/non-current distinction has been used for the balance sheet, while expenses are analyzed in the income statement using a classification based on their nature. The indirect method has been selected to present the cash flow statement. The information presented in this document has been presented in millions of United States Dollar (US$”), except earnings per share and unless otherwise stated. 2.2 Change in Accounting Polices The Group has adopted the following new and amended IFRSs as of January 1, 2009: • IAS1 (revised), “Presentation of financial statements”. The revised standard prohibits the presentation of items of income and expense (“non-owner changes in equity”) in the statement of changes in equity. “Non-owner” changes in equity are presented in the statement of comprehensive income. Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The Group has elected to present two statements: an income statement and a statement of comprehensive income. Comparative information has also been represented so that it is in conformity with the new standard.

IFRS 8,“Operating segments”, IFRS 8 replaces IAS 14, “Segment reporting” and requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the number of operating segments reported, as a result of the adoption of IFRS 8 we now present our segment reporting using a geographical analysis. Goodwill is allocated by management to groups of cash generating units on a segment level. The change in reportable segments has not resulted in any additional goodwill impairment. The comparative information for 2008 has been restated.

The Group has also adopted the following new and amended IFRSs and IFRIC Interpretations with no material impact: • IFRS 7(amendment), “Financial instruments – Disclosures” – which requires additional disclosures about fair value measurement and liquidity risk. • Amendment to IFRS 2 “Share-based Payment” relating to vesting conditions and cancellations. • Revised IAS 23 “Borrowing Costs” relating to capitalization of borrowing costs and IAS 23 (amendment) relating to the calculation of borrowing costs. • IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” relating to guidance on the accounting for hedges of a net investment in foreign operations. • IFRIC 18 “Transfers of Assets From Customers” relating to treatment of items of property, plant and equipment or cash to acquire or construct such assets received from customers. • IAS 1 (amendment) “Presentation of financial statements”, relating to the classification of financial assets and liabilities held for trading. • IAS 28 (amendment), “Investments in associates,” and consequential amendments to IAS 32, “Financial Instruments: Presentation” and IFRS 7, “Financial instruments: Disclosures” relating to impairment testing of investments. • IAS 36 (amendment), “Impairment of assets” relating to impairment testing disclosures. • IFRIC 13, “Customer loyalty programmes” relating to calculating the fair value of customer loyalty programmes. 3.3

Summary of main accounting principles and policies

The main accounting principles and policies adopted in preparing these Consolidated Financial Statements are set our below. These policies have been consistently applied to all periods in those consolidated financial statements, and have been applied consistently by the group entities. Basis of consolidation The Consolidated Financial Statements include the financial statements of the Company and those entities over which the Company exercises control, both directly or indirectly, from the date of acquisition to the date when such control ceases. Control may be exercised through direct or indirect ownership of shares with majority voting rights, or by exercising a dominant influence expressed as the direct or indirect power, based on contractual agreements or statutory provisions, to determine the financial and operational policies of the entity and obtain the related benefits, regardless of any equity relationships. The existence of potential voting rights that are exercisable or convertible at the balance sheet date is also considered when determining whether there is control or not.

43

The financial statements used in the consolidation process are those prepared by the individual Group entities as of and for the year ended December 31, 2009 (the reporting date for these Consolidated Financial Statements) in accordance with IFRS used by the Company in preparing these statements and approved by the respective Boards of Directors. The consolidation procedures used are as follows: ·

·

·

·

·

·

·

the assets and liabilities and income and expenses of consolidated subsidiaries are included on a line-byline basis, allocating to non-controlling interests, where applicable, the share of equity and profit or loss for the year that is attributable to them. The resulting balances are presented separately in consolidated equity and the consolidated income statement; the purchase method of accounting is used to account for business combinations in which the control of an entity is acquired. The cost of an acquisition is measured as the fair value of the assets acquired, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus all other costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the assets, liabilities and contingent liabilities acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized immediately in the income statement; business combinations in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination are considered business combinations involving entities under common control. In the absence of an accounting standard guiding the accounting treatment of these operations the Group applies IAS 8, consolidating the book values of the entity transferred and reporting any gains arising from the transfer in goodwill; the purchase of equity holdings from non-controlling holders in entities where control is already exercised is considered a purchase. Therefore the difference between the cost incurred for the acquisition and the respective share of the accounting equity acquired is recognized in goodwill; any options to purchase non-controlling interests outstanding at the end of the year are treated as exercised and are reported as a financial liability or in equity depending on whether the transaction is to be settled in cash or through the exchange of equity instruments; unrealized gains and losses on transactions carried out between companies consolidated on a line-by-line basis and the respective tax effects are eliminated if material, as are corresponding balances for receivables and payables, income and expense, and finance income and expense; gains and losses arising from the sale of holdings in consolidated entities are recognized in the income statement as the difference between the selling price and the corresponding portion of consolidated equity sold.

Associates Investments in companies where the Group exercises a significant influence (hereafter “associates”), which is presumed to exist when the Group holds between 20% and 50%, are accounted for using the equity method. The equity method is as follows: •

the Group’s share of the profit or loss of an investee is recognized in the income statement from the date when

•

•

significant influence or control begins up to the date when that significant influence or control ceases. Investments in associates with negative shareholders’ equity are impaired and a provision for its losses is accrued only if the Group has a legal or constructive obligation to cover such losses. Equity changes in investees accounted for using the equity method that do not result from profit or loss are recognized directly in consolidated equity reserves; unrealized gains and losses generated from transactions between the Company or its subsidiaries and its investees accounted for using the equity method are eliminated on consolidation for the portion pertaining to the Group; unrealized losses are eliminated unless they represent an impairment. The license of the Group’s associated undertaking in Canada, Globalive Wireless Management Corp, are indefinite lived assets. Although the spectrum licenses have an initial term of 10 years, based on available information, the management believes that they are subject to perfunctory renewal and that renewal cost will not be significant. Accordingly, they are not subject to amortization but are tested annually for impairment, or when indicators exist that the carrying value is not recoverable.

Joint ventures Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Interests in joint ventures are consolidated using the proportionate method under which the assets and liabilities and income and expenses of the joint venture are consolidated on a line-by-line basis in proportion to the share held by the Group in the venture. The carrying amount of the consolidated investment is then eliminated against the respective portion of equity. Transactions, balances and any unrealized gains and losses on intercompany transactions are proportionately eliminated. Unrealised gains arising from transactions with associates (and jointly controlled entities) are eliminated to the extent of the Group’s interest in the enterprise. Unrealised gains resulting from transactions with associates and joint ventures are eliminated against the investment in the associates or joint venture. Appendix C includes a list of the entities included in the scope of consolidation. Foreign currency translation Functional and presentation currency The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial information to international investors the Group’s presentation currency is US$. Transactions and balances Transactions in foreign currencies are translated into the functional currency of the relevant entity at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated, at the balance sheet date, into the prevailing exchange rates at that date. Foreign currency exchange differences arising on the settlement of transactions and the translation of the balance sheet are recognized in the income statement.

Group companies The financial statements of the Group entities are translated into the presentation currency as follows: • assets and liabilities are translated at the closing exchange rate; • income and expenses are translated at the average exchange rate for the year; • all resulting exchange differences are recognized as a separate component of equity in the “translation reserve”; • goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate; and • in the preparation of the consolidated cash flow statement, the cash flows of foreign subsidiaries are translated at the average exchange rate for the year. The exchange rates applied in relation to the US$ are as follows: Average for year ended December 31, 2009 2008 Egyptian Pound (LE) Algerian Dinar (DZD) Tunisian (TND) Pakistan Rupee (PKR) Bangladeshi Taka (BDT)

Canadian Dollar (CAD) Euro

Closing rate as of December 31, 2009

2008

0.1792

0.1827

0.1815

0.1807

0.0138

0.0155

0.0137

0.0141

0.7395

0.8129

0.7591

0.7612

0.0122

0.0141

0.0119

0.0127

0.0144

0.0144

0.0144

0.0144

0.8920

0.8876

0.9628

0.8304

1.4134

1.4935

1.4551

1.4113

The useful lives estimated by the Group for the various categories of property and equipment are as follows. Buildings Cell Sites Tools Computer equipment Furniture and Fixtures Vehicles Leasehold improvements and renovations

Number of years 50 8-15 5-10 3-5 5-10 3-6 3-8

Gains or losses arising from the sale or retirement of assets are determined as the difference between the net disposal proceeds and the net carrying amount of the asset sold or retired and are recognized in the income statement in the period incurred under “Disposal of non-current assets”. Finance leases are leases that substantially transfer all the risks and rewards incidental to the ownership of assets to the Group. Property and equipment acquired under finance lease are recognized as assets at their fair value or, if lower, at the present value of the minimum lease payments, including any amounts to be paid for exercising a purchase option. The corresponding liability due to the lessor is recognized as part of financial liabilities. An asset acquired under a finance lease is depreciated over the shorter of the lease term and its useful life. Lease arrangements in which the lessor substantially retains the risks and rewards incidental to ownership of the assets are classified as operating leases. Lease payments under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

Property and equipment

Intangible assets

Property and equipment are stated at purchase cost or production cost, net of accumulated depreciation and any impairment losses. Cost includes expenditure directly attributable to bringing the asset to the location and condition necessary for use and any dismantling and removal costs which may be incurred as a result of contractual obligations which require the asset to be returned to its original state and condition. Borrowing costs directly associated with the purchase or construction of property and equipment are capitalized as incurred together with the asset to which they relate. Costs incurred for ordinary and cyclical repairs and maintenance are charged directly to the income statement in the year in which they are incurred. Costs incurred for the expansion, modernization or improvement of the structural elements of owned or leased assets are capitalized to the extent that they have the requisites to be separately identified as an asset or part of an asset, in accordance with the “component approach”. Under this approach each asset is treated separately if it has an autonomously determinable useful life and value. Depreciation is charged at rates calculated to write off the costs over their estimated useful lives on a straight-line basis from the date the asset is available and ready for use.

Intangible assets are identifiable non-monetary assets without physical substance which can be controlled and which are capable of generating future economic benefits. Intangible assets are stated at purchase and/or production cost including any expenses that are directly attributable to preparing the asset for its intended use, net of accumulated amortization and impairment losses, if applicable. Borrowing costs accruing during and for the development of the asset are capitalized as incurred. Amortization begins when an asset becomes available for use and is charged systematically on the basis of the residual possibility of utilization of the asset, meaning on the basis of its estimated useful life.

The useful lives of property and equipment and their residual values are reviewed and updated, where necessary, at least at each year end. Estimate in respect of certain items of “Cell Sites” were revised in 2009 (see note 18).Land is not depreciated. When a depreciable asset is composed of identifiable separate components whose useful lives vary significantly from those of other components of the asset, depreciation is calculated for each component separately, applying the “component approach”.

•

•

Licenses

Costs for the purchase of telecommunication licenses are capitalized. Amortization is charged on a straight-line basis such as to write off the cost incurred for the acquisition of a right over the shorter of the period of its expected use and the term of the underlying agreement, starting from the date on which the acquired license may be exercised. Goodwill

Goodwill represents the excess of the cost of an acquisition over the interest acquired in the net fair value at the acquisition date of the assets and liabilities of the entity or business acquired. Goodwill relating to investments accounted for using the equity method is included in the carrying amount of the investment. Goodwill is not systematically amortized but is rather subject to periodic tests to ensure that the carrying amount in the balance sheet is adequate

44

(“impairment testing”). Impairment testing is carried out annually or more frequently when events or changes in circumstances occur that could lead to an impairment of the cash generating units (“CGUs”) to which the goodwill has been allocated. An impairment loss is recognized whenever the recoverable amount of goodwill is lower than its carrying amount. The recoverable amount is the higher of the fair value of the CGU less costs to sell and its value in use, which is represented by the present value of the cash flows expected to be derived from the CGU during operations and from its retirement at the end of its useful life. The method for calculating value in use is described in the paragraph below “Impairment of assets”. Once an impairment loss has been recognized for goodwill it cannot be reversed.

profile of the asset. If an asset does not generate independent cash flows its recoverable amount is determined in relation to the cash-generating unit (CGU) to which it belongs. An impairment loss is recognized in the income statement when the carrying amount of an asset or the CGU to which it is allocated exceeds its recoverable amount. If the reasons for previously recognizing an impairment loss cease to exist, the carrying amount of an asset other than goodwill is increased to the net carrying amount of the asset that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset, with the reversal being recognized in the income statement.

Whenever an impairment loss resulting from the above testing exceeds the carrying amount of the goodwill allocated to a specific CGU the residual loss is allocated to the assets of that particular CGU in proportion to their carrying amounts. The carrying amount of an asset under this allocation is not reduced below the higher of its fair value less costs to sell and its value in use as described above.

Investments in companies other than those classified as available for sale are measured at fair value with any changes in fair value being recognized in the income statement. (The accounting treatment of financial assets available for sale is discussed in “Financial assets available for sale”). If fair value cannot be reliably determined, an investment is measured at cost. Cost is adjusted for impairment losses if necessary, as described in the paragraph “Impairment of Assets”. If the reasons for an impairment loss no longer exist, the carrying amount of the investment is increased up to the extent of the loss with the related effect recognized in the income statement. Any risk arising from losses exceeding the carrying amount of the investment is accrued in a specific provision to the extent of the Group’s legal or constructive obligations on behalf of the associate. Investments held for sale or to be wound up in the short term are classified as current assets and stated at the lower of their carrying amount and fair value less costs to sell.

•

Software

Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Software licenses are amortized on a straight-line basis over their useful life (between 3 to 8 years), while software maintenance costs are expensed in the income statement in the period in which they are incurred. Costs incurred on development of software products are recognized as intangible assets when the Group has intentions to complete and use or sell the assets arising from the project, considering the existence of a market for the asset, its commercial and technological feasibility, its costs can be measured reliably and there are adequate financial resources to complete the development of the asset. Other development expenditures are recognized in the income statement in the period in which they are incurred. Directly attributable costs that are capitalised as part of a software product include software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. •

Customer List

The customer list as an intangible asset consists of the list of customers identified when allocating the purchase price in acquisitions carried out by the Group. Amortization is charged on the basis of the respective estimated useful lives which range from 5 to 10 years. Impairment of non-financial assets At each balance sheet date, property and equipment and intangible assets with finite lives are assessed to determine whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset concerned is estimated and any impairment loss is recognized in the income statement. Intangible assets with an indefinite useful life are tested for impairment annually or more frequently when events or changes in circumstances occur that could lead to an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use, which is represented by the present value of its estimated future cash flows. In determining an asset’s value in use the estimated future cash flows are discounted using a pre-tax rate that reflects the market’s current assessment of the cost of money for the investment period and the specific risk

Investments

Financial instruments Financial instruments consist of financial assets and liabilities whose classification is determined on their initial recognition and on the basis of the purpose for which they were purchased. Purchases and sales of financial instruments are recognized at their settlement date. Financial assets are derecognized when the right to receive cash flows from them ceases and the Group has effectively transferred all risks and rewards related to the instrument and its control. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by reference to prices supplied by third-party operators and by using valuation models based primarily on objective financial variables and, where possible, prices in recent transactions and market prices for similar financial instruments. •

Financial Assets

Financial assets are initially recognized at fair value and classified in one of the following four categories and subsequently measured as described: •

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets purchased primarily for sale in the short term, (held for trading) and derivative financial instruments, except for the effective portion of those designated as cash flow hedges. These assets are measured at fair value; any change in the year is recognized in the income statement. Financial instruments included in this category are classified as current assets if they are held for trading or expected to be disposed of within twelve months from the balance sheet date. Derivatives are treated as assets or liabilities depending on whether their fair value is positive or negative; positive and negative fair values arising from transactions with the same counterparty are offset if this is contractually provided for. Fair value gains and losses from foreign currency

swaps are recognized in foreign currency gains and losses in the income statement. •

Financial receivables

Financial receivables are non-derivative financial instruments which are not traded on an active market and which are expected to generate fixed or determinable repayments. They are included as current assets unless they are contractually due more than twelve months after the balance sheet date in which case they are classified as non-current assets. These assets are measured at amortized cost using the effective interest method. If there is objective evidence of factors which indicate impairment, the asset is reduced to the present value of future cash flows. The impairment loss is recognized in the income statement. If in future years the factors which caused the impairment cease to exist, the carrying amount of the asset is reinstated up to the amount that would have been obtained had amortized cost been applied. •

Financial assets available-for-sale

Financial assets available for sale are non-derivative financial instruments which are either designated in this category or not classified in any of the other categories. Available for sale financial assets are measured at fair value. Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analyzed between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss; translation differences on non-monetary securities are recognized in equity. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement. The classification of an asset as current or non-current is the consequence of strategic decisions regarding the estimated period of ownership of the asset and its effective marketability, with those which are expected to be realized within twelve months from the balance sheet date being classified as current assets. •

Financial assets held to maturity

These are non-derivative assets with fixed maturities that the Group has the intention and ability to hold to maturity. Those maturing within 12 months are carried as current assets. These financial assets are measured at amortized cost using the effective interest method. Impairment of financial assets Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

Financial liabilities Financial liabilities consisting of borrowings, trade payables and other obligations are measured at amortized cost using the effective interest method. When there is a change in cash flows which can be reliably estimated, the value of the financial liability is recalculated to reflect such change based on the present value of expected cash flows and the originally determined internal rate of return. Financial liabilities are classified as current liabilities except where the Group has an unconditional right to defer payment until at least twelve months after the balance sheet date. Financial liabilities are derecognized when settled and the Group has transferred all the related costs and risks relating to an instrument. Derivative financial instruments Derivatives are initially recognized at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Derivatives which do not qualify for hedge accounting are classified as a financial asset at fair value through profit or loss. ·

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. If the hedge is not fully effective, meaning that these changes are different, the noneffective portion is treated as part of the net financing cost for the year in the income statement. ·

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity in a specific reserve (the “cash flow hedge reserve”) . The gain or loss relating to the ineffective portion is recognized immediately in the income statement. A hedge is normally considered highly effective if from the beginning and throughout its life the changes in the expected cash flows for the hedged item are substantially offset by the changes in the fair value of the hedging instrument. When the economic effects deriving from the hedged item are realized, the related gains or losses in the reserve are reclassified to the income statement together with the economic effects of the hedged item. Whenever the hedge is not highly effective, the non-effective portion of the change in fair value of the hedging instrument is immediately recognized as part of the net financing cost for the year in the income statement. When a hedging instrument expires or is sold, or when a hedge

45

no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. Inventories Inventories are stated at the lower of purchase cost or production cost and net realizable value. Cost is based on the weighted average method. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. When necessary, obsolescence allowances are made for slow-moving and obsolete inventories. Inventories mainly comprise handsets and SIM cards.

the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Additional income taxes that arise from the distribution of dividends are recognised at the same time that the liability to pay the related dividend is recognised.

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Non-current assets and liabilities held for sale

Provisions

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use is classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter the assets and liabilities held for sale (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, and deferred tax assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent losses on remeasurement are recognised in the income statement. Subsequent increase in fair value less costs to sell may be recognised in the income statement only to the extent of the cumulative impairment loss that has been recognised previously.

Provisions are only recognized when the Group has a present legal or constructive obligation arising from past events that will result in a future outflow of resources, and when it is probable that this outflow of resources will be required to settle the obligation. The amount provided represents the best estimate of the present value of the outlay required to meet the obligation. The interest rate used in determining the present value of the liability reflects current market rates and takes into account the specific risk of each liability. Provisions are not recognised for future operating losses.

Cash and cash equivalents

Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries, associates and joint venture operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or

Employee benefits •

Short-term benefits

are subsequently re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to equity holders of the Company. Legal reserve As per the Company’s statutes 5% of net profit for the year is set aside to form a legal reserve, the transfer to such reserve ceases once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized for covering losses or for increasing the Company’s share capital. If the reserve falls below the said 50%, the Company should resume setting aside 5% of its annual net profit until the reserve reaches 50% of the Company’s paid in share capital. Dividend distribution Dividend distribution to the Company’s shareholders is recognized as a liability in the Consolidated Financial Statements in the period in which the dividends are approved by the Company’s shareholders. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value added tax, rebates and discounts and after eliminating sales within the Group. Revenue from the sale of goods is recognized when the Group transfers the risks and rewards of ownership of the goods. Revenue from services is recognized in the income statement by reference to the stage of completion and only when the outcome can be reliably estimated. More specifically, the criteria followed by the Group in recognizing ordinary revenue are as follows: •

Short-term benefits are recognized in the income statement in the year when an employee renders service. •

Share-based employee benefits

The Group recognizes additional benefits to certain managers and other members of personnel through share based payment plans. IFRS 2 - Share-based Payment considers these plans to represent a component of employee remuneration. The fair value of the employee services received at the grant date in exchange for the grant of options or shares is recognized as an expense with a correspondent increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from proceeds. Treasury shares Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to equity holders of the Company until the shares are cancelled or re-issued. Where such shares

•

• •

revenue arising from post-paid traffic, interconnection and roaming is recognized on the basis of the actual usage made by each subscriber and telephone operator. Such revenue includes amounts paid for access to and usage of the Group network by customers and other domestic and international telephone operators; revenue from the sale of prepaid cards and recharging is recognized on the basis of the prepaid traffic actually used by subscribers during the year. The unused portion of traffic at period end is recognized as “Liabilities – Deferred Income”; revenue from the sale of mobile phones and fixed-line phones and related accessories is recognized at the time of sale; one-off revenue from landline and mobile (prepaid or subscription) activation and/or substitution, prepaid recharge fees and the activation of new services and tariff plans is recognized for the full amount at the moment of activation independent of the period in which the actual services are rendered by the Group. In the case of promotions with a cumulative plan still open at the end of the year, the activation fee is recognized on an accruals basis so as to match the revenue with the year in which the service may be used.

Dividend income from investments recorded at fair value through profit and loss or as available for sale is recognized when the right to receive payment is established. Interest income Interest income is recognized on a time-proportion basis using the effective interest rate method. 

Earnings per share Basic Basic earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company, both from continuing and discontinued operations, by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.  Diluted Diluted earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average of the number of ordinary shares of the Company outstanding during the year where, compared to basic earnings per share, the weighted average number of shares outstanding is modified to include the conversion of all dilutive potential shares, while the profit for the year is modified to include the effects of such conversion net of taxation. Diluted earnings per share are not calculated when there are losses as any dilutive effect would improve earnings per share. Discontinued operations A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period. Segment reporting Operating segments are reported in a manner which is consistent with the internal reporting information provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors. Recent accounting pronouncements The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year 2009 and have not been early adopted: IAS 27 (revised), “Consolidated and separate financial statements” will be effective for the Group from January 1, 2010. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the equity is re-measured to fair value, and a gain or loss is recognized in profit or loss. The Group will apply IAS 27 (revised) prospectively to transactions with noncontrolling interests from January 1, 2010. IFRS 3 (revised), “Business combinations,” will be effective for the Group from January 1, 2010. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the income statement. There is a choice on

46

an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (revised) prospectively from January 1, 2010. IFRS 5 (amendment) “Non-current assets held for sale and discontinued operations” and consequential amendments to IFRS 1 “First-time adoption” will be effective for the Group from January 1, 2010. The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS 1 states that these amendments are applied prospectively from the date of transition to IFRS. The Group will apply IFRS 5 (amendment) prospectively to all partial disposals of subsidiaries from January 1, 2010. IFRIC 17, “Distribution of non-cash assets to owners” will be effective for the Group from January 1, 2010. The interpretation is part of the IASB’s annual improvement project which was published in April 2009. This interpretation provides guidance on accounting for arrangements whereby the entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended. The Group will apply IFRIC 17 from January 1, 2010. IAS 38 (amendment), “Intangible Assets”. The amendment is part of the IASB’s annual improvements project published in April 2009 and the Group will apply IAS 38 (amendment) from that date that IFRS 3 (revised) is adopted (January 1, 2010). The amendment to the standard clarifies guidance in measuring the fair value of an intangible asset that is acquired in a business combination and permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives.

any inconsistencies from the definition and furthermore provides a partial exemption from the disclosure requirements. IFRS 9, “Financial Instruments” will be applicable for the Group from January 1, 2013. IFRS 9 is the first part of Phase 1 of the IASB’s project to replace IAS 39. IFRS 9 governs the classification and measurement of financial assets. IFRIC 14, “Prepayments of a minimum funding requirement” will be applicable for the Group from January 1, 2011 . The amendment applies in limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover these requirements. The amendment permits an entity to treat the benefit of such a payment as an asset. IFRIC 19, “Extinguishing financial liabilities with equity instruments” will be applicable for the Group from January 1, 2011. The interpretation provides guidance on how to interpret IFRS when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept equity instruments to fully or partially settle the financial liabilities. 3- Use of Estimates The preparation of these Consolidated Financial Statements required management to apply accounting policies and methodologies that are based on complex, subjective judgments, estimates based on past experience and assumptions determined from time to time to be reasonable and realistic based on the related circumstances. The use of these estimates and assumptions affects the amounts reported in the balance sheet, the income statement and the cash flow statement as well as the notes. The final amounts for items for which estimates and assumptions were made in the Consolidated Financial Statements may differ from those reported in these statements due to the uncertainties that characterize the assumptions and conditions on which the estimates are based.

IAS 1 (amendment), “Presentation of financial statements”. This amendment is part of the IASB’s annual improvements project published in April 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. The Group will apply IAS 1 (amendment) from January 1, 2010.

The accounting principles requiring a higher degree of subjective judgment in making estimates and for which changes in the underlying conditions could significantly affect the Consolidated Financial Statements are briefly described below.

IFRS 2 (amendments), “Group cash-settled and share-based payment transactions”. In addition to incorporating IFRIC 8, “Scope of IFRS 2”, and IFRIC 11, “IFRS 2 - Group and treasury share transactions”, the amendments expand on the guidance in IFRIC 11 to address the clarification of group arrangements that were not covered by that interpretation. The new guidance is not expected to have a material impact for the Group.

Goodwill is tested for impairment on an annual basis to determine whether any impairment losses have arisen that should be recognized in the income statement. More specifically, the test is performed by allocating the goodwill to a cash generating unit and subsequently estimating the unit’s fair value. Should the fair value of the net capital employed be lower than the carrying amount of the CGU an impairment loss is recognized for the allocated goodwill. The allocation of goodwill to cash generating units and the determination of the fair value of a CGU requires estimates to be made that are based on factors that may vary over time and that could as a result have an impact on the measurements made by management which might be significant.

IAS 39 (amendment), “Financial instruments: Recognition and Measurement. This amendment will be applicable for the Group from 1 January 2010. The amendment on eligible hedged items specifies that an entity may designate an option as a hedge of changes in the cash flows or fair value of a hedged item above or below a specified price or other variable. The provisions are to be applied retrospectively. IAS 32 (amendment), “Financial instruments: Presentation”. This amendment will be applicable for the Group from January 1, 2011. The amendment clarifies the classification of rights issues as equity or liabilities when the rights are denominated in a currency other than the issuer’s functional currency. IAS 24, “Related Party Disclosures” will be effective for the Group from January 1, 2011. The amendment simplifies the definition of a related party by clarifying its intended meaning and elimination of

Goodwill

affecting the estimates and measurements. Depreciation of non-current assets The cost of property and equipment is depreciated on a straightline basis over the useful lives of the assets. The useful life of property and equipment is determined when the assets are purchased and is based on the past experience of similar assets, market conditions and forecasts concerning future events which may affect them, amongst which are changes in technology. The actual useful lives may therefore differ from the estimates of these. The Group regularly reviews technological and business sector changes, dismantling costs and recoverable amounts in order to update residual useful lives. Such regular updating may entail a change of the depreciation period and consequently a change in the depreciation charged in future years. Deferred tax assets The recognition of deferred tax assets is based on forecasts of future taxable profit. The measurement of future taxable profit for the purposes of determining whether or not to recognize deferred tax assets depends on factors which may vary over time and which may lead to significant effects on the measurement of this item. Income tax The companies of the Group are subject to different tax legislation. A significant amount of estimates are necessary in order to account for the total tax effects on the financial statements. The Group has a number of operations for which the relevant taxes are difficult to estimate and thus has to accrue some tax liabilities based on estimates. Whenever the actual tax expense is different from the estimated, the difference is recorded in the income statement. Fair value of derivatives and other financial instruments The fair value of financial instruments is determined based on quoted market prices, where available, or on estimates using present values or other valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Where market prices are not readily available, fair value is based on either estimates obtained from independent experts or quoted market prices of comparable instruments. Provisions and contingencies In recognizing provisions the Group analyses the extent to which it is probable that a liability will arise from disputes with employees, suppliers and third parties and in general the losses it will be required to incur as a result of past obligations. The definition of such provisions entails making estimates based on currently known factors which may vary over time and which could actually turn out to be significantly different from those referred to in preparing the financial statements.

Impairment of non-current assets

4- Financial Risk Management

Non-current assets are reviewed to determine whether there are any indications that the net carrying amount of these assets may not be recoverable and that they have suffered an impairment loss that needs to be recognized. In order to determine whether any such elements exist it is necessary to make subjective measurements, based on information obtained within the Group and in the market and also on past experience. When a potential impairment loss emerges it is estimated by the Group using appropriate valuation techniques. The identification of the elements that may determine a potential impairment loss and the estimates used to measure such loss depend on factors which may vary over time, thereby

Financial Risk Factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and cash flow interest risk), credit risk and liquidity risk. In particular the Group is exposed to risks from movements in exchange rates, interest rates and market prices. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s performance through ongoing operational and finance activities. Depending on the risk assessment, the Group uses selected derivative hedging

instruments. The management has overall responsibility for the establishment and oversight of the group’s risk management framework. Market Risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising when its business transactions are in currencies other than its functional currency. The main currencies to which the Group is exposed are the US dollar, the Canadian Dollar and the Euro. In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a natural hedge of the exchange rate of such financing. However, as some transactions are executed in foreign currencies, and in particular in US$, CAD and Euro, the Group may be subject to the risk of exchange rate fluctuations which, in certain instances the Group manages through the use of hedging strategies. As of December 31, 2009 the Group’s borrowings included US$ borrowings amounting to US$ 4,232 million and Euro borrowings amounting to Euro 248 million (equivalent to US$ 361 million). In certain instances the Group has entered into economic hedging agreements to manage the risk of fluctuations relating to these financing operations. In particular, Pakistan Mobile Communication Limited (PMCL) had borrowings for US$ 177 million and Euro 190 million (equivalent to US$ 276 million) as of December 31, 2009. Such borrowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani Rupee. The Group subsidiaries generally execute their operating activities in their respective functional currencies. Some Group subsidiaries are, however, exposed to foreign currency risks in connection with scheduled payments in currencies that are not their functional currencies. In general this relates to foreign currency denominated supplier payables and receivables. The Group monitors the exposure to foreign currency risk arising from operating activities and, where relevant, enters into hedging transactions in order to manage the exposure. As of December 31, 2009, if the functional currencies had weakened / strengthened by 3% against the US$, the Euro and CAD, with all other variables held constant, the translation of foreign currency receivables and payables would have resulted in a decrease/ increase in profit for the year (after tax)of US$ 65 million, mainly relating to US$ denominated borrowings. Additionally, the Group has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure to such risk is not hedged. Cash flow and fair value interest rate risk The Group is exposed to market risks as a result of changes in interest rates particularly in relation to borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floating interest rate borrowings based on the Group’s perception of future interest rate movements. In particular, the risk monitored relates to the impact of movements in floating rate indices on the Group’s finance costs. When considered appropriate, the Group manages its cash flow

47

interest rate risk by using floating-to fixed interest rate swaps. In particular, as of December 31, 2009 the Group had two interest rate derivative contracts. The first contract is a floating-to-fixed interest rate swap with a notional value of US$ 1.5 billion and the other contract is a switchable interest rate swap with a notional value of US$ 500 million. After considering such derivative transactions approximately 57% of the Group’s total borrowings had a floating rate of interest. The Group considers the sensitivity of its finance costs to movements in interest rates. In particular an increase / decrease of 1.0% in interest rates as of December 31, 2009 would have resulted in an increase / decrease in finance costs of US$ 33 million and a decrease / increase in the cash flow hedge reserve of US$ 34 million. Price risk The Group has limited exposure to equity securities price risk on investments held by the Group.

•

Credit Risk The Group considers that it is not exposed to major concentrations of credit risk in relation to trade receivables. However, credit risk can arise in the event of non-performance of a counterparty, particularly in relation to credit exposures for trade and other receivables, financial instruments and cash and cash equivalents. The Group considers that the concentration of credit risk with respect to trade receivables is limited given that the Group’s customer base is largely pre-paid subscribers. Post paid subscribers generally represent a small portion of the subscriber base and therefore the credit exposure is limited. In addition, the Group tries to mitigate credit risk by adopting specific control procedures, including assessing the credit worthiness of the counterparty and limiting the exposure to any one counterparty. Credit risk relating to cash and cash equivalents, derivative financial instruments and financial deposits arises from the risk that the counterparty becomes insolvent and accordingly is unable to return the deposited funds or execute the obligations under the derivative transactions as a result of the insolvency. To mitigate this risk, wherever possible the Group conducts transactions and deposits funds with financial institutions with a minimum of investment grade rating. The Group is exposed to credit risk relating to financial receivables as follows: •

Holdings Corp (“Globalive”). The amount of these loans was further increased to CAD 608 million during 2009. As of December 31, 2009 the amount outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to US$ 696 million).The loans were primarily provided to GWMC to fund the acquisition of spectrum licenses in Canada. The licenses were awarded to GWMC during March 2009 by Industry Canada and GWMC launched operations in December 2009. During the start-up phase of operations Globalive has incurred losses and as a result the Group’s share of losses exceeds the carrying value of the investment. The Group considers the loan provided as part of the investment and has therefore deducted the excess losses from the receivable. After considering such losses an amount of US$ 643 million is recorded in financial receivables. (see Note 20 “Other financial assets” for further details) In November 2008 the Company sold its investment in Orasinvest Holding Inc. (“OrasInvest”). The total receivable from the sale amounted to US$ 180 million, prior to price adjustments. Of this US$ 180 million, US$ 90 million was received in 2008 and a further US$ 75 million was received and settled in 2009. As of December 31, 2009 the amount outstanding was US$ 15 million. The remaining receivable is expected to be settled during 2010.

In general the remaining other receivables and financial receivables included in financial assets generally relate to a variety of smaller amounts due from a wide range of counterparties, therefore, the Group does not consider that it has a significant concentration of credit risk. Liquidity Risk The Group monitors and mitigates liquidity risk arising from the uncertainty of cash inflows and outflows by maintaining sufficient liquidity of cash balances as well as undrawn credit lines and by diversifying its sources of finance. In general, liquidity risk is monitored at entity level whereby each subsidiary is responsible for managing and monitoring its cashflows and rolling liquidity reserve forecast in order to ensure that it has sufficient committed facilities to meet its liquidity needs. The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows.

During 2008 the Company entered into two loans agreements to provide a total amount of CAD 508 million to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment

As of December 31, 2009 Liabilities Liabilities to banks Bonds Finance lease liability Other borrowings Telecommunication license payable Trade payables

Carrying amount

Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

More than 5 years

5,012 1,674 43 18

1,021 159 7 18

3,969 1,515 15 -

22 21 -

363

420

286

60

74

1,043

1,043

1,043

-

-

8,210

2,534

5,559

Liabilities Liabilities to banks Bonds Finance lease liability Other borrowings Telecommunication license payable Trade payables

Expected cash flows (*)

4,421 1,153 33 15 395 1,186

117

Less than 1 year

5,515 1,627 45 15 477 1,186

7,203

Between 1 and 5 years

734 114 12 12 204 1,186

8,865

4,563 733 33 3 184 -

2,262

5,516

More than 5 years 218 780 89 -

1,087

* Expected cash flows are the gross contractual undiscounted cash flows including interest, charges and other fees. amounts disclosed in the table are the contractual undiscounted cash flows.

The table below analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The As of December 31, 2009 Cash outflow / (cash inflow) Interest rate derivatives

98

Foreign exchange derivatives Total

Between 1 and 5 years

65

(214)

Other derivative instruments - cash intflow As of December 31, 2008

Less than 1 year

Expected cash flows (*)

(41)

More than 5 years

33

-

(173)

-

(16)

-

(16)

-

(132)

24

(156)

-

Expected cash flows (*)

Cash outflow / (cash inflow) Interest rate derivatives Foreign exchange derivatives Other derivative instruments - cash outflow Other derivative instruments - cash inflow Total

116 (2) 31 (31) 114

Less than 1 year 43 10 31 (31) 53

Between 1 and 5 years 73 (11) 62

More than 5 years (1) (1)

* Derivative cashflows for interest rate derivatives and foreign exchange derivatives represent the net cashflow from the relevant swap transaction as such derivatives are net settled. Cash inflow

and cash outflow for other derivative instruments are shown separately as such derivatives are gross settled.

Derivative cash outflows do not include the potential cash outflows should the share warrants of My Screen and Lingo be exercised. The exercise of such warrants is at the option of the Company. Details of such warrants are provided in Note 20 “Other financial assets”. Contractual cash flows are derived based on the relevant index as of the balance sheet date.

Group are affected by the current and future economic and political developments in these countries. In particular, the results of operations could be unfavorably affected by changes in the political or governmental structures or weaknesses in the local economies in the countries where it operates. These changes could also have an unfavorable impact on financial condition, performance and business prospects.

Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may, among other things, adjust the amount of dividends paid to shareholders, return capital to shareholders through share buyback transactions, issue new shares or sell assets to reduce debt.

4,475 1,255 24 19

7,179

Carrying amount

As of December 31, 2008

Other risks Political and economic risk in emerging countries A significant amount of the Group’s operations are conducted in Algeria, Pakistan, Egypt and Tunisia. The operations of the Group depend on the market economies of the countries in which the subsidiaries operate. In particular, these markets are characterized by economies that are in various stages of development or are undergoing restructuring. Therefore the operating results of the

Regulatory risk in emerging countries Due to the nature of the legal and tax jurisdictions in the emerging countries where the Group operates, it is possible that laws and regulations could be amended. This could include factors such as the current tendency to withhold tax on the dividends of these subsidiaries, receiving excessive tax assessments, granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable effect on the financial activities of the Group and on the ability to receive funds from the subsidiaries. Revenue generated by the majority of the Group subsidiaries is expressed in local currency. The Group expects to receive most of this revenue from its subsidiaries and therefore it relies on their ability to be able to transfer funds. The regulations in the various countries where the subsidiaries operate could reduce the ability to pay interest and dividends and to repay loans, credit instruments and securities expressed in foreign currency through the transfer of currency. In addition, in some countries it could be difficult to

48

convert large amounts of foreign currency due to central bank regulations. The central banks may amend regulations in the future and therefore the ability of the Company to receive funds from its subsidiaries may be restricted. 5- Segment reporting The chief operating decision-maker has been identified as the board of directors of the Group. The board of directors reviews the Group’s internal reporting in order to assess its performance and allocate resources, mainly from a geographical perspective, of the mobile telecommunication business. Management has determined the reportable operating segments according to the information analyzed periodically by the board of directors as follows: • • • • • •

Mobile telecommunication business in Algeria; Mobile telecommunication business in Pakistan; Mobile telecommunication business in Egypt; Mobile telecommunication business in Tunisia; Mobile telecommunication business in Bangladesh; Other GSM which comprises the mobile telecommunication businesses in Central and South Africa and Namibia and North Korea ; and

•

Other Telecom service (Non GSM Service) which includes other territories in which the Group operates as a mobile telecommunication operator and other services.

The Group reports on operating segments which are independently managed. The board of directors assesses the performance of such operating segments based on: • •

•

Total revenues EBITDA, defined as profit for the period before income tax expense (or if applicable profit from continuing operations for the period before income tax expense), gains (losses) on disposal of associates, share of profit (loss) of associates, foreign exchange gains (losses), financial expense, financial income, disposal of non current assets, impairment charges, depreciation and amortization and net unusual capital loss, and Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

The information provided to the board of directors is measured consistently with that of the financial statements.

 

Other GSM

Bangladesh

Other Telecom services (Non GSM)

Holdings & Others

Algeria

Pakistan

Egypt

Tunisia

Consolidated

2009

 

 

 

 

 

 

 

 

 

2008

 

 

 

 

 

 

 

 

 

Total segment revenue - current year

1,868

1,061

944

357

351

107

358

63

5,109

Total segment revenue - previous year

2,088

1,231

891

362

288

26

793

-

5,679

(Inter-segment revenue - current year)

-

(2)

-

-

-

-

(42)

-

(44)

(47)

(23)

-

(36)

-

-

(246)

-

(352)

1,868

1,059

944

357

351

107

316

63

5,065

2,041

1,208

891

326

288

26

547

-

5,327

 

 

 

 

 

 

 

 

 

EBITDA - current year

1,014

385

445

192

103

17

(1)

17

2,172

EBITDA - previous year

1,225

409

415

190

2

(2)

27

118

2,384

 

 

 

 

 

 

 

 

 

(337)

(264)

(167)

(56)

(120)

(36)

(38)

(5)

(1,023)

(334)

(253)

(148)

(57)

(92)

(4)

(60)

(3)

(951)

 

 

 

 

 

 

 

 

(Inter-segment revenue - previous year) Total revenue from external customers current year Total revenue from external customers previous year  

 

Depreciation, amortization & Impairment current year Depreciation, amortization & Impairment previous year   Net unusual capital loss - current year

(15)

-

-

-

-

-

-

-

 

(15)

Net unusual capital loss - previous year

-

-

-

-

-

-

-

-

-

Disposal of non current assets - current year

 

1

(1)

 

(1)

 

63

(20)

42

Disposal of non current assets - previous year

66

(26)

(42)

(22)

(2)

(7)

-

5

160

 

 

 

 

 

 

 

 

 

 

Financial Income - current year

3

34

5

2

1

3

1

46

95

Financial Income - previous year

3

5

4

1

1

-

3

35

52

Financial expense - current year

(10)

(122)

(63)

(5)

(28)

(15)

(9)

(259)

(511)

Financial expense - previous year

(15)

(118)

(52)

(11)

(27)

(3)

(12)

(230)

(468)

Share of (losses) of associates - current year

-

-

-

-

-

-

-

(47)

(47)

Share of (losses) of associates - previous year

-

-

-

-

-

-

-

(3)

(3)

Gain on disposal of associates- current year

-

-

-

-

-

-

-

-

-

Gain on disposal of associates- previous year

-

-

-

-

-

-

-

27

27

Profit (loss) before income tax - current year

652

(35)

222

130

(45)

(30)

14

(168)

740

Profit (loss) before income tax - previous year

849

(107)

192

123

(122)

(9)

(48)

28

906

Total assets - current year

2,474

2,381

1,477

485

967

471

568

1,276

10,099

Total assets - previous year

2,420

2,764

1,367

466

961

308

643

999

9,928

86

1,021

453

84

341

57

27

3,803

5,872

Total Borrowings - previous year

133

1,187

491

123

302

9

74

3,416

5,735

Capital Expenditure - current year

257

150

225

45

130

91

106

31

1,035

Capital Expenditure - previous year

174

554

483

50

441

56

165

5

1,928

Total Borrowings - current year

* Holding and other mainly represent income and expense relating to activities provided from the holding and other companies. These represent mainly management fees and revenue as a result of supporting activities provided by Orascom Telecom Holding. The following table provides a breakdown of revenue by product and service:

49

Product and services Mobile Fixed - line and Internet Other revenue & income Total revenue

 

2009 4,686 316 63 5,065

2008   4,780 547 5,327

6- Assets and liabilities classified as held for sale The following provides a breakdown of assets and liabilities held for sale as of December 31:

Property and equipment Intangible assets Trade receivables Other current assets Cash and cash equivalents Assets held for sale

2009  

46 30 12 8 14

2008  

11 20 40 1 8 80

Current and non-current borrowings

24

-

Trade payables Other current liabilities

15 15

22 2

-

1

1 55

25

Deferred tax liabilities Liabilities held for sale

Assets and liabilities held for sale include the following:

Revenues from services Telephony services Interconnection traffic International and national roaming Other services Total revenues from services Total revenues from sale of goods

110

Current income tax liabilities

7- Revenues

Link Egypt and Link Dot Net In February 2009 the Company stated that they had received an indicative non-binding offer for the acquisition of 100% of the shares of LINKdotNET and Link Egypt. In accordance with IFRS 5 the assets and liabilities held for sale in disposal groups have been separately shown in specific captions on the consolidated balance sheet. The income statement effects of these entities have not been shown as discontinued operations as they do not represent a separate major line of business. Oracap Far East Ltd reclassified as held for use. Orascom Telecom Holding management decided to stop the process of sale of Oracap Far East Ltd. and reclassified as held for use. Sale of M-link S.a.r.l (Luxemburg) (M-Link) The assets and liabilities of M-Link were presented as held for sale in 2008, following the decision of management of the Company to focus on GSM business and dispose of non-core assets. On January 13 th, 2009 the Company announced the sale of 100% of M-Link to TLC SERVIZI S.p.A (now renamed Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A., for a total consideration of approximately US$ 78 million in cash. (See Note 34 “Related party transactions”).

Total

 

2009

an increase in maintenance costs due to an increase in the number of cell sites and general utilities costs and an increase in costs of handsets, scratch cards, sim cards, bundle cost mainly due to the increased sales of Ring.

2008

3,975 599

3,994 864

131

150

118 4,823  

75 5,083

242

244

  5,065

5,327

Revenues from telephony services decreased in 2009 compared to 2008 mainly as a result of a decrease in calling rates as part of a marketing campaign due to competition with the other operators. Revenues from interconnection traffic decreased in 2009 compared to 2008 mainly due to the sale of the Group’s gateway carrier M-Link in January 2009. (See Note 34 “Related party transactions” for further information) Revenue from international and national roaming decreased in 2009 due to the agreement of discounts with many operators and low prices offered to compete in the challenging markets across the territories during 2009. In general revenues during 2009 were negatively impacted by the movements in local currencies compared to the US$ and in particular movements in the Algerian Dinar and Pakistan Rupee. 8- Purchases and services Interconnection traffic and roaming Cost of handsets, scratch cards, sim cards, bundle cost Advertising and promotional services Internet and fixed line costs Customer acquisition costs Maintenance costs Utilities Rental of network Other leases and rentals Rental of civil and technical sites Consulting and professional services Consumable materials, equipment and goods Cost for security service Cost for printing & collection services Other service expenses Total

2009

2008

589

711

313

311

189

253

241 232 233 137 70 72 77

245 222 190 132 85 76 71

65

58

20

48

35

37

20

12

71 2,364

60 2,511

Purchases and services costs decreased during 2009 primarily due to the weakening of the local currencies compared to the US$. As a percentage of revenues, purchase and service costs were substantially consistent, amounting to 46.7% in 2009 and to 47.1% in 2008. In particular, interconnection traffic and roaming costs decreased in 2009 compared to 2008 mainly due to the sale of M-Link in January 2009. Advertising and promotional expenses decreased in 2009 compared to 2008 mainly due to a change in policy in Bangladesh. Consumable materials, equipment and goods decreased in 2009 due to the sale Orasinvest. These items were partially offset by

9- Other expenses Licenses costs Travel costs Accruals for provisions Allowance for doubtful receivables Taxes (other than income tax) Training expenses Other operating expenses Total

2009

57 16 32 39 4 9 58 215

2008

55 21 14 19 17 11 37 174

The increase in other expenses was primarily attributable to the increase in accruals for provisions, allowance for doubtful receivables and other operating expenses during 2009. The increase in the allowance for doubtful receivables was mainly related to a revision of allowance for doubtful debts policy in OTA. While the accruals for provisions increased by US$18 million mainly relating to the accruals for the tax dispute in Algeria. Taxes (other than income tax) decreased mainly due to the sale of M-Link. 10- Personnel costs Wages and salaries Bonuses given to management and employees Social security Share based compensation Pension costs Board of Directors remuneration Other personnel costs Total

2009 208

2008 195

61

45

17 12 9 4 21

16 11 7 3 22

332

299

The increase in personnel cost was primarily due to the increase in the number of employees in 2009 compared to 2008 as well as restructuring and an increase in salaries mainly in the Company and Egyptian Company for Mobile Services S.A.E. (“ECMS”). Bonuses increased in 2009 compared to 2008 mainly relating to bonuses paid in PMCL in 2009 as a result of reaching operational targets. The table below provides a breakdown of the number of employees as of December 31: (in number of employees) Senior management Middle management Staff Total

2009 294 1,701 15,218 17,213

2008 216 1,447 14,859 16,522

The table below provides a breakdown of the average number of employees for the years ended December 31, 2009 and 2008:

(in number of employees) Senior management Middle management Staff Total

Average for the year ended December 31, 2009 2008 255 205 1,574 1,355 15,039 15,012 16,868 16,572

11- Depreciation and amortization Depreciation of property and equipment: -Cell sites -Computers, fixtures and other equipment -Buildings Amortization of intangible assets -Licenses -Other intangible assets Total

2009

2008

 

  744

686

59

63

24     114 43 984

23     112 28 912

Depreciation and amortization increased due to the increase in cell sites depreciation primarily as a result of an increase in investments in the network. 12- Impairment charges Impairment charges amounting to US$ 39 million in 2009 mainly relate to the impairment of US$17 million for plant and equipment in PMCL in Pakistan and LinkDotNet Telecom, a subsidiary of PMCL operating in Pakistan as well as impairment of goodwill amounting to US$6 million in LinkDotNet Telecom. The impairments in LinkDotNet Telecom are mainly as a result of the uncertainties for the future expectations of this business. 13- Unusual Items During November 2009 Orascom Telecom Algeria S.p.A. and Ring Algeria LLC, subsidiaries of the Company, experienced damage to shops, warehouses and infrastructure, as well as breakins to premises and theft of equipment, during football related disturbances in Algeria. The cost of damaged inventories, as a result of such disturbances, amounted to US$ 18 million, whilst the damage to property and equipment amounted to US$ 24 million. Both entities have submitted formal claims to their insurance companies relating to this incident. Furthermore, a technical assessment performed by an independent insurance expert stated that the minimum expected recovery from the insurance company is 1 billion DZD (equivalent to US$ 14 million). This incident is considered as an exceptional event which is outside with the normal course of operations and has been recorded in the income statement as unusual items. After considering the expected minimum insurance proceeds, an amount of US$13 million has been recorded as an unusual inventory loss relating to the damaged inventories and an amount of US$15 million has been recorded as an unusual capital loss relating to the damaged property and equipment.

50

14- Disposal of non-current assets

16- Share of loss of associates and gain on disposal of associates

The gain on disposal of non-current assets amounting to US$ 44 million in 2009 mainly relates to the gain of US$ 35 million on disposal of M-Link which was sold to Wind Telecomunicazioni SpA for a cash consideration of US$ 77 million during January 2009. (See Note 34 “Related party transactions”) Gain on disposal of non-current assets amounting to US$ 68 million in 2008 mainly relates to the gain on the disposal of the subsidiary OrasInvest. During 2009 a further gain of US$ 7.7 million was recorded relating to a post acquisition sale price adjustment. 15- Net financing costs (in million of US$) Interest on deposits and bank accounts

Interest on non-current financial receivables Other financial income Gain on extinguishment of debt Dividends from investments Financial income Interest on bonds Interest on other borrowings Interest on other liabilities and other financial expense Financial expense Foreign exchange gain /(loss) Fair value changes of FX derivative instruments Net foreign exchange gain /(loss) Net financing cost

2009

2008 24

29

11

15

37 23 95   (106) (343)

6 2 52   (91) (318)

(62)

(59)

(511)

(468)

33

(354)

(6)

153

27 (389)

(201) (617)

Gain from extinguishment of debt in 2009 relates to the tender offer by PMCL which was completed in May 2009 to repurchase a portion of its senior notes. As a result of this tender offer, PMCL repurchased the notes at a repurchase price of US$ 730 per US$ 1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million for cash consideration of US$ 101 million. The difference between the repurchase price and carrying value of the debt was recorded as gain from extinguishment of debt, net of the effects of closing out derivatives associated with this debt. Financial income increased in 2009 mainly relating to the interest accrued on the loans to Globalive. (See Note 20 “Other financial assets” for further information). Financial expense increased mainly due to an increase in interest on bonds which related to the issuance of a US$ 230 million bond (“Oscar Bond”) in February 2009 (see Note 26 “Borrowings”). The gain in foreign exchange is mainly due to unrealized gain on translation of supplier facilities, telecommunication license payables and borrowings due to the strengthening of the EGP,PKR and DZD against the US$. Fair value changes on FX derivative instruments relates to the changes in the fair value of the cross currency swaps held by PMCL in connection with the economic hedge of borrowings

Share of loss of associates in 2009 and 2008 relates to the investment in Globalive Canada Investment Holdings Corp. and Globalive Canada Holdings Corp. (collectively “Globalive”). The Group holds a 65.4% investment in Globalive which comprises a combination of voting and non-voting rights. Considering direct and indirect interests, the Group holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The Group has significant influence over this investment and does not have control over the financial and operating policies of Globalive. Therefore the investment is equity accounted. The following table provides selected financial information of Globalive as of December 31, 2009 and 2008 and for each of the years then ended.

Current assets Non-current assets Current liabilities Non-current liabilities Revenue Net loss % shareholding proportional share of net loss Amortization expense of identifiable assets Elimination of proportional share of intra group interest expense Share of loss in associate

2009

64 762 196 722 47 (92) 65.4% (60)

2008 373 2 405 (29) 65.4% (19)

(3)

-

16

16

(47)

(3)

Gain on disposal of associates in 2008 amounting to US$ 27 million relates to the disposal of the remaining investment in Hutchison Telecommunications International Limited (“Hutchison Telecommunications”). In October and November 2007 the Group sold 5% of its investment in this associate and the remaining investment was sold in January 2008. 17- Income tax expense Current income tax expense Deferred taxes Income tax expense

2009 407 (46) 361

2008 427 (24) 403

Current income tax receivables and liabilities in the consolidated balance sheet are as follows: Current income tax receivable Current and non current income tax liabilities

2009 100 (187)

2008

75

(384)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

  Profit before income tax Tax calculated at Company›s income tax rate Different income tax rates in subsidiaries Theoretical income tax for the year Permanent differences Unrecognized deferred tax for tax losses Reversal of expired deferred tax assets for tax losses Utilization of previously unrecognized deferred tax assets Unrecognized deferred tax liabilities on unremitted earnings Adjustments in respect of prior years Other differences Income tax for the year

2009

2008

740

906

148

181

96

87

244 22

268 16

50

90

-

8

-

(16)

-

19

48 (3) 361

18 403

The Group’s income tax expense decreased from US$ 403 million in 2008 to US$ 361 million in 2009 while the effective tax rate increased from 44% to 49%, respectively. The increase in the effective tax rate was primarily attributable to the provision charged to Income tax expense during 2009 with an amount of US$ 30 million against the tax claims 2004-2007 which has been received by Orascom Telecom Algeria S.P.A. (“OTA”).

18- Property and equipment   Cost As of January 1, 2009 Additions Change in the scope of consolidation Assets held for sale Disposals Currency translation differences Reclassifications As of December 31, 2009   Accumulated Depreciation and Impairment As of January 1, 2009 Charge for the year Change in the scope of consolidation Assets held for sale Disposals Impairment loss Currency translation differences As of December 31, 2009   Net book value as of December 31, 2008 Net book value as of December 31, 2009

Land and Buildings 180 44 1 (26) (3) 196

Cell Sites

5,936 267 28 (56) (28) (147) 717 6,717

Computers, fixtures and other equipment 336 52 3 (16) (16) (5) 2 356

Assets Under Construction 955 626 5 (3) (16) (18) (719) 830

Total

7,407 989 37 (75) (86) (173) 8,099    

58 24 (12) (2) 68

2,094 744 5 (22) (19) 5 (59) 2,748

186 59 1 (7) (13) 2 (10) 218

16 17 33

122 128

3,842 3,969

150 138

939 797

2,354 827 6 (29) (44) 24 (71) 3,067   5,053 5,032

51

  Cost As of January 1, 2008 Additions Change in the scope of consolidation Assets held for sale Disposals Currency translation differences Reclassifications As of December 31, 2008   Accumulated Depreciation and Impairment As of January 1, 2008 Charge for the year Change in the scope of consolidation Assets held for sale Disposals Impairment loss Currency translation differences As of December 31, 2008   Net book value as of December 31, 2007 Net book value as of December 31, 2008

Land and Buildings

Computers, fixtures and other equipment

Cell Sites

165 39 (3) (3) (6) (16) 4 180  

5,382 322 55 (16) (41) (682) 916 5,936  

Assets Under Construction

289 87 (11) (3) (6) (25) 5 336  

796 1,184 (4) (1) (8) (87) (925) 955  

(in million of US$) (Decrease) increase in depreciation expense

Total

6,632 1,632 37 (23) (61) (810) 7,407  

 

 

 

 

 

1,628 686 26 (9) (29) (208) 2,094   3,754 3,842

148 63 (7) (2) (3) (13) 186   141 150

9 7 16   787 939

1,829 772 20 (12) (33) 7 (229) 2,354   4,803 5,053

Property and equipment transferred to assets held for sale in 2009 relates to the property and equipment of Link-Egypt and Link dot net See Note 6 “Assets and liabilities classified as held for sale” for further information. Property and equipment pledged as security for bank borrowings amount to US$ 1.3 billion as of December 31, 2009 and primarily relate to securities for borrowings of PMCL, Trans World Associated Private Limited (“TWA”) , Orascom Telecom Tunisie S.A.(“OTT”) and Telecel Namibia . In the year ended December 31, 2009 and 2008 the Group capitalized borrowing costs of US$ 36 million and US$ 63 million, respectively, relating to the acquisition of property and equipment. The Group leases various assets under non-cancelable finance lease agreements. As of December 31, 2009 the Group had assets under finance lease with cost of US$ 36 million and net book value of US$ 31 million mainly relating to a sale and lease back of the premises at Nile City Towers (headquarter offices in Cairo), as well as minor finance leases for vehicles and equipment.

From 2010 to 2017

Later

(8)

(87)

95

19- Intangible assets

44 23 1 (1) (1) (8) 58   121 122

Additions to property and equipment in 2009 mainly relate to cell site investments and assets under construction relating to new base stations, predominantly in GSM companies in Pakistan, Bangladesh and Algeria. Those investments are mainly due to the expansion of the business, increased capacity and the change in GSM technology.

2009

Cost As of January 1, 2009 Additions Change in the scope of consolidation Assets held for sale Disposals Currency translation differences As of December 31, 2009

Net book value as of December 31, 2008 Net book value as of December 31, 2009

Cost As of January 1, 2008 Additions Change in the scope of consolidation Assets held for sale Disposals Currency translation differences As of December 31, 2008 Accumulated Amortization As of January 1, 2008 Charge for the year Change in the scope of consolidation Disposals Impairment loss Currency translation differences As of December 31, 2008 Net book value as of December 31, 2007 Net book value as of December 31, 2008

Goodwill

Others

1,861 8 (23) 1,846

1,227 48 (9) 5 1,271

274 46 10 (34) (7) (3) 286

724 114 1 (10) 829

121 13 1 135

134 43 1 (13) 2 11 178

1,137 1,017

1,106 1,136

140 108

Accumulated Amortization As of January 1, 2009 Charge for the year Change in the scope of consolidation Assets held for sale Impairment loss Currency translation differences As of December 31, 2009

Change in estimates During the year ended 31 December 2009 the Group conducted an operational efficiency review at one of its subsidiaries Orascom Telecom Bangladesh Limited – which resulted in changes to the expected useful life of certain items of cell site equipment. This equipment which management previously intended to depreciate over eight years of use, is now expected to remain in use for fifteen years from the date of acquisition. The effect of these changes on depreciation expense, recognized in income statement, in current and future periods as follows:

Licenses

Licenses

Goodwill

Others

1,701 252 20 (2) (110) 1,861

1,173 71 (17) 1,227

200 44 38 (1) (7) 274

614 112 3 31 (36) 724

120 1 121

115 28 (1) 1 (9) 134

1,087 1,137

1,053 1,106

85 140

 

 

Total 3,362 46 66 (43) (7) (21) 3,403     979 157 2 (13) 15 2 1,142   2,383 2,261 Total 3,074 296 129 (20) (7) (110) 3,362     849 140 3 (1) 32 (44) 979   2,225 2,383

52

minimum level at which the units are monitored for management control purposes.

Additions to others in 2009 mainly relate to software licenses. Additions to intangible assets in 2008 primarily relate to the acquisition of a 3G license in Egypt, by Egyptian Company for Mobile Services S.A.E. (“ECMS”) with a duration of 14 years validity, the group’s proportionate share is US$ 172 million and the acquisition of a WiMax License by PMCL.

The carrying amount as of December 31, 2009 was subject to an impairment test to compare the carrying amount with value in use and the recoverable amount. The goodwill of LinkDotNet Telecom was impaired during the year prior to performing this test. After having considered this previous impairment, no further evidence of impairment arose. Value in use was determined by discounting the expected cash flows, resulting from business plans approved by the respective Board of Directors, using the post-tax weighted average cost of capital (WACC) as the discount rate.

Intangible assets pledged as security for bank borrowings amount to US$ 1.3 billion and primarily relate to securities for borrowings of PMCL and OTT. Impairment tests for goodwill Goodwill is allocated to the individual CGU which reflects the

2009

GSM Telecom Services Internet & Fixed Line

Algeria

Pakistan

Egypt

Tunisia

Bangladesh

 

 

 

 

 

529 529

277 1 278

168 2 8 178

36 36

Central and South Africa   104 104

11 11

2008

GSM Telecom Services Internet & Fixed Line

Central and South Africa

Algeria

Pakistan

Egypt

Tunisia

Bangladesh

527 527

277 1 278

167 1 22 190

36 36

11 11

Total  

Non-current

North Korea  

North Korea

64 64

-

Total

-

  1,125 3 8 1,136

Total

1,082 2 22 1,106

20- Other financial assets

Financial receivables Derivative financial instruments Deposits Financial assets held for trading Financial assets available for sale

Non-current   676 109 41 19 845

2009 Current  

Financial Receivables As of December 31, 2008 and 2009 financial receivables mainly relate to loans provided to Globalive Management Corp (“GWMC”), a subsidiary of Globalive (see Note 16 “Share of loss of associates and gain on disposal of associates”). During 2008 the Company entered into two loan agreements with Globalive Management Corp (“GWMC”, a subsidiary of Globalive) to borrow an amount of up to CAD 508 million. Both loans are nonrevolving term loans bearing interest of Libor plus 18%. In 2009 the loan agreements were amended to increase the facility to CAD 608 million. As of December 31, 2008 the amount outstanding under such loan agreements, including accrued interest, amounted to CAD 483 million (equivalent to US$ 401 million). During 2009 a

21 42 14 32 5 114

697 151 55 32 24 959

Derivative financial instruments

Interest rate derivatives Foreign exchange derivatives Other derivative instruments

The following table provides an analysis of goodwill by segment

 

outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to US$ 696 million) , the Group’s share of the excess losses of Globalive compared to the carrying value of the investment have therefore been deducted from the long term receivable. After considering the share of such losses the amount recorded in financial receivables is US$ 643 million.

416 160 43 20 639

2008 Current 170 25 82 277

Total 586 185 125 20 916

further amount of CAD 137 million was advanced under the original loan agreements. Globalive was awarded CAD 442 million of spectrum licenses in March 2009 and the loans are secured on a subordinated basis by an assignment of these licenses and are guaranteed on a non recourse basis. Globalive launched its wireless network to the Canadian market in December 2009 and is therefore in the start-up phase of operations and has incurred losses to date. The Group’s share of these losses is in excess of the carrying value of the investment. The loans provided to Globalive are long term loans and have been considered to be a long-term interest forming part of the net investment in Globalive. As of December 31, 2009 the amount

Total Less non-current portion Interest rate derivatives Foreign exchange derivatives Other derivative instruments Current portion Interest rate derivatives The notional principal amounts of the outstanding interest rate swaps that qualify for hedge accounting amounts to US$ 1.5 billion, relating to the A1 and A2 term loan supplements of the Company. Under the derivative contract the Company pays fixed interest rate and receives 6 month Libor. Gains and losses are recognized in the cash flow hedge reserve in equity. As of December 31, 2009 the fair value of the derivative liability was US$ 96 million. The gain recognized in the cash flow hedge reserve, net of deferred tax during the year ended December 31, 2009, amounts to US$ 25 million. Additionally, during 2009 the Company entered into a switchable interest rate swap for a notional amount of US$ 500 million to cover a portion of the syndication loan. Under the derivative contract the Company receives a 25 basis point reduction in the floating interest rate and at the end of the first year (September 23, 2010) the bank has the right to either switch to a fixed rate swap (whereby the Company will pay fixed rate interest and receive floating) or switch to a floating rate with a cap (whereby the Company will pay floating rates up to a cap strike of 4.15%). As of December 31, 2009 the fair value of the derivative liability was US$ 3 million. The changes in the fair value of the derivative are recognized in financial income and expense in the income statement was US$ 1 million.

Financial receivables as of December 31, 2008 also include an amount of US$ 165 million relating to receivables from the sale of subsidiaries. This primarily relates to the receivable from the sale of OrasInvest amounting to US$ 90 million, of which US$ 75 million was settled in December 2009 and the residual receivable of US$ 75 million from the sale of Iraqna which was settled during 2009. As of December 31, 2009, the residual receivable from the sale of OrasInvest of US$ 15 million is due to be settled in 2010.

Assets  

2009 1 134 16

Liabilities  

Assets

2008

Liabilities

99 -

178 7

112 1

151

99

185

113

94 15 42

35 64

154 6 25

71 42

derivative are recognized in foreign exchange loss / gain in the income statement. Other derivative instruments Other derivative instruments mainly include the warrants to purchase shares of My Screen Mobile Inc and Lingo Media Corporation amounting to US$ 2 million and US$ 0.4 million, respectively as of December 31, 2009. The details of these warrants are provided below in the section “Financial assets available for sale”. In February 2009 the Company issued equity indexed notes with a nominal amount of US$ 230 million which mature in 2013. The notes have a redemption price on maturity which is indexed to the Company’s GDR price. This feature of the debt is considered as an embedded derivative which is valued at fair value through profit and loss. As of December 31, 2009 the fair value of this embedded derivative asset was US$ 14 million. CDC Fennec Ltd, a lender to Moga has the option to convert all amounts payable under the loan agreement into shares of the Company until the debt is extinguished. As of December 31, 2009 the amount due, recorded as liabilities to banks, amounted to US$ 29 million. As of December 31, 2009 and 2008 the fair value of this option was zero.

Foreign exchange derivatives

Deposits

Foreign exchange derivatives primarily relate to the economic hedge of PMCL. The cross currency swap relates to certain borrowings of PMCL, which are swapped from US$ to PKR and from Euro to PKR, whilst the associated interest is swapped from LIBOR to KIBOR and from Euribor to KIBOR. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement. As of December 31, 2009 the fair value of this derivative asset was US$ 125 million

Deposits primarily relate to letters of guarantee and other restricted cash held as security for the performance of Group obligations. The decrease in deposits in 2009 mainly relates to the liquidation of deposits in Algeria for the payments of the dividend and the tax appeal.

Telecel Globe entered into a currency forward to hedge exposures to movements in Namibian Dollars in relation to the purchase price to be paid for the investment in PowerCom Namibia. The final installment of the purchase price was due to be paid in January 2010. As of December 31, 2009 the fair value of this derivative asset was US$ 9 million. The changes in the fair value of the

The following table shows the ageing analysis of financial receivables and long term deposits as of December 31, 2009 and 2008:

Deposits with amounts of US$ 29.5 million are pledged or blocked as security against related bank borrowings or others commitments.

53

2009 Deposits Not past due Past due 0-30 days Past due 31-120 days

55 55

Financial receivables 697 697

2008 Deposits 125 125

Financial receivables 511 75 586

Financial assets available for sale Company name

% ownership

Smart Village (ECDMIV) My Screen Mobile Inc Lingo Media Corporation Top Level Domain Co. Other investments

10% 9% 23% 5%

December 31, 2009  

December 31, 2008  

8 2 3 1 10 24

8 4 3 1 4 20

21- Deferred taxes

In May 2008, the Company concluded a “Restricted Stock Purchase Agreement” with My Screen Mobile Inc, an entity specializing in the delivery of advertising to mobile phones, to acquire 12.5 million shares which represents approximately 9% of the total share capital and existing voting rights. Additionally, the Company purchased share warrants to acquire up to 20 million shares at an exercise price of US$ 2 per share. The warrants can be exercised from the date of the agreement until May 23, 2012. The total purchase price of the shares and warrants was US$ 10 million. Upon exercise of the warrants, the Company would hold approximately 20% of the existing and potential voting rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009 the fair value of the investment amounted to US$ 2 million and the fair value of the warrant amounted to US$ 2 million.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes due to the same tax authority. The following table provides a reconciliation of deferred tax assets and liabilities of the Group to the amounts included in the face of the balance sheet.

Lingo Media Corporation In August 2008, the Company entered into a subscription agreement to acquire 2,857,143 common shares of Lingo Media Corporation, a media entity focusing on online advertising. The investment represents approximately 23% of the total share capital and existing voting rights. The Company also purchased share warrants to acquire up to 2,142,857 shares of this entity. The warrants can be exercised from the date of the agreement for a period of two years, at an increasing price from US$4 up to US$8. The total purchase price of the shares and warrants was US$ 5 million. Assuming exercise of the warrants, the Company would have an interest of approximately 34% in this entity. Based on an assessment of the contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009, the fair value of the investment amounted to US$ 3 million and the fair value of the warrants, which is recorded in derivative financial assets, amounted to US$ 0.4 million. Financial assets held for trading Financial assets held for trading relate to government treasury bills and investment bonds purchased by PMCL.

Deferred tax liabilities, gross

2008 430

423

(214)

(166)

Deferred tax liabilities

216

257

Deferred tax assets, gross

333

254

(214) 119

(166) 88

Deferred tax assets offset

Deferred tax liabilities offset Deferred tax assets of which recognized directly in equity

5

(22)

The movement in the deferred income tax account is as follows: As of January 1, Exchange differences Change in scope Income statement charge Tax charged directly to equity As of December 31,

2009

169 (12) (19)

2008

Deferred tax assets

Accrued expense

Depreciation and amortization

Impairment of assets

Provisions

152

36

22

8

7

22

7

74

5

(6)

2

-

1

3

79

-

-

-

-

-

(5)

-

(5)

(4)

(1)

-

(1)

-

(7)

(13)

Tax losses

As of December 31, 2008 Charged / (credited) to the income statement Charged directly to equity Change in scope

My Screen Mobile Inc

2009

The movement of deferred tax assets and liabilities during the year, without taking into consideration any offsetting is provided in the tables below:

18

Exchange differences 

As of December 31, 2009

-

240

40

(24)

(46) 5

(22)

97

169

-

16

Depreciation and amortization

Deferred tax liabilities As of December 31, 2008

-

Unremitted earnings

-

-

9

Other

7

Total  

-

18

3

Other

254

18

333

Total  

335

80

8

17

(17)

33

33

Exchange differences

(26)

(4)

5

(25)

As of December 31, 2009

325

59

46

430

Charged / (credited) to the income statement

(1)

Change in scope

-

423

-

(1)

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carry forwards of the Group’s subsidiaries in Pakistan with no expiry date.

temporary differences related to accruals for provisions, due to uncertainties in connection with the tax treatment of such expenses, as they might be challenged by local tax authorities.

No deferred tax assets were recognized on income tax loss carryforwards for some foreign subsidiaries, mainly Orascom Telecom Bangladesh Limited (“OTB”) and CAT, as it is currently not probable that taxable profit will be available in the near future against which such tax loss carryforwards might be utilized.

No liability has been recognized in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

Generally the Group does not recognize deferred tax assets for The following table provides a breakdown by estimated recoverability of recognized deferred tax assets and liabilities:

Deferred tax liabilities

2009

within 1 year

within 1 - 5 years

2008

14

2009

50

6

2008

1

339

327

252

430

423

333

254

34

22- Trade receivable

Receivables due from customers Receivables due from telephone operators Accrued revenue (unbilled) Receivables due from authorized dealers Other trade receivables Allowance for doubtful receivables Total

Deferred tax assets

2009

243

173

after 5 years 250 (42) 7

-

Fair value

2008 177

165

98

91

79

76

12

17

50

46

(84)

(67)

332

328

-

1

54

The following table shows the movement in the allowance for doubtful receivables

At January 1 Exchange differences Additions (allowances recognized as an expense) Change in scope Use Reversal Reclassifications At December 31,

2009

67 (1)

2008

87 (6)

39

19

(5) (11) (5) 84

(13) (2) (18) 67

The following table shows the ageing analysis of trade receivables as of December 31, 2009 and 2008, net of the relevant provision for doubtful receivables:

Not past due Past due 0-30 days Past due 31-120 days Past due 121 - 150 days Past due more than 150 days

2009

Trade receivables

123 86 81 4

2008

154 71 64 9

38

30

332

328

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any collateral as security. 23- Other current assets Prepaid expenses Advances to suppliers Receivables due from tax authority Deferred cost Other receivables Allowance for doubtful current assets Total

2009

82 12

2008

76 16

185

15

141

14 172

(49)

(46)

371

247

24- Cash and cash equivalents Bank accounts Deposits

Cash on hand Total

2009

413 344 3

2008

760

• 580 70 2 652

Cash and cash equivalents as of December 31, 2009 were unusually high mainly due to undistributed dividends at Orascom telecom Algeria “OTA” and Mobinil amounted to US$ 243 million . Deposits includes an amount of DZD 10,201M equivalent to US$ 140 million representing the remaining agreed amount not to be repatriated until the Algerian tax authority “DGE” issue a clearance certificate in relation to the tax position of OTA (see note 35). 25- Share Capital Authorized and issued share capital and legal reserves As of December 31, 2008 the issued and fully paid share capital amounted to L.E. 899 million (equivalent US$ 261 million) comprising 899,402,874 shares of a nominal value of L.E. 1 per share. The Company is listed on the Egyptian Stock Exchange and also has GDRs (where one GDR is equivalent to 5 local shares) listed on the London Stock Exchange. On October 22, 2009, the Extraordinary General Meeting approved a share capital reduction through the cancellation of 10,302,769 treasury shares (856,624 local shares and 1,889,229 GDRs) amounting to US$ 76 million. The legal reserve connected with the cancelled shares including currency translation differences was reclassified from other reserves to retained earnings. Accordingly, as a result of the above transactions, as of December 31, 2009 the issued and paid up share capital amounted to LE 889 million (equivalent to US$ 258 million) comprising 889,100,105 shares of a nominal value of LE 1 per share. Dividends The shareholder’s meeting of the Company held on June 7, 2009 approved a dividend distribution of LE 1 per share in the form of cash and/or shares. Based on the announced distribution ratio of 36:1; on August 27, 2009 the Company distributed 243,376 shares to local shareholders and 1,985,097 shares to the GDR holders (equivalent to 9,925,487 local shares).

The increase in receivables due from tax authority is mainly related to down payments against the tax claim received by OTA covering the years 2004-2007.

Consequently, the Company distributed in cash an amount of LE 180 million for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of US$ 60 million for a total number of 66,337,438 GDRs (equivalent to 331,687,192 local shares) (around US$ 0.9022/GDR).

The following table shows the movement in the allowance for other current assets:

The dividend distribution in 2008 amounted to LE 1 per share (LE 5 per GDR) and was paid in cash on June 5, 2008.

At January 1 Exchange differences Additions (allowances recognized as an expense) Reclassifications At December 31,

2009

46 -

2008

27 (1)

5

2

(2)

18

49

46

Treasury shares As of December 31, 2008 the Company had 17,681,700 shares which were held as treasury shares, during 2009 the following movements took place: •

as previously explained, the Company cancelled 10,302,769 treasury shares on October 22, 2009 (comprising 856,624 local shares and 1,889,229 GDRs) and distributed the equivalent of 10,168,861 local shares from treasury stock

as payment of the dividend ; and during the year ended December 31, 2009 the Company also purchased the equivalent of 7,240,310 local shares from the market to be held as treasury shares and sold the equivalent of 4,450,380 local shares to the market.

As a result of the above transactions there were no treasury shares as of December 31, 2009.

26- Borrowings within one year

1-2 years

Share based compensation plan As of December 31, 2008 the Company had 3,661,785 shares which were held for the purposes of the share based compensation plan. During the year ended December 31, 2009 the Group acquired 1,235,735 of its own shares for the purposes of the share based compensation. Share grants exercised during 2009 resulted in 950,220 shares. As a result of the above transactions, as of December 31, 2009 the Company had 3,947,300 shares held as treasury shares for the purposes of the share based compensation plan. The fair market value of such shares was US$ 91 million.

2-3 years

3-4 years

after 5 years

4-5 years

Total

As of December 31, 2009 As of December 31, 2008 Liabilities to banks

838

830

972

1,655

160

20

4,475

945

1,620

210

4,421

-

1,255

432

468

746

Bonds

76

13

197

230

739 253

737

1,153

Derivative instruments

64

32

4

(1) 11

-

1

-

99

113

2

2

10 -

24

33

-

19

Finance lease liability Other borrowings Total as of December 31, 2009

Total as of December 31, 2008

35

51

14

42

36

23

4

3

3

63

8

8

7

6

4

16

-

3

-

-

878

1,179

13 998

530

563

-

790

1,886

1,025

2 901

1,880

30

947

15 5,872

5,735

Liabilities to banks

Bonds

Appendix A includes a detailed analysis of liabilities to banks as of December 31, 2009.

Appendix B includes a detailed analysis of Bonds as of December 31, 2009. Changes in bond liabilities during 2009 primarily relate to the repurchase by PMCL of a portion of its Senior Notes and the issuance of an equity indexed bond Orascom Telecom Oscar Luxembourg (the “Oscar Bond”).

In addition to the normal scheduled repayments of borrowing facilities, in accordance with the relevant agreements, various Group companies (mainly OTH, PMCL, ECMS and Bangladesh) entered into new borrowings during the year in order to finance license payments, ongoing operations and capital expenditure programs. Pakistan Mobile Communication Limited PMCL entered into a syndicate loan agreement with Pakistani banks for a facility amounting to PKR 5.1 billion equivalent to US$ 61 million dealing with standard chartered bank Pakistan as the agent, repayments of principal amount starts from November 9, 2010 and the financing period will last for 4 years. In addition, during the 2009, OTH and some of its subsidiaries obtained new short term facilities. As in OTH obtained a nominal of US$ 140 million.

Pakistan Mobile Communication Limited In May 2009 PMCL completed a tender offer to repurchase a portion of its 8 5/8% Senior Notes amounting US $ 250 million due 2013. PMCL repurchased the notes at a repurchase price of US$730 per US$1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million for cash consideration of US$ 101 million. Orascom Telecom Oscar In February 2009 the Oscar Bond was issued with a nominal amount of US$ 230 million maturing in 2013, through a fully subscribed private placement. The notes carry a coupon of US$ Libor plus a margin of 500bps and rank pari-passu to the existing US$2.5bn senior secured credit facility with accession to the security pool under the Security Share Agreement. The notes have a redemption price at maturity indexed to Orascom Telecom’s GDR which may potentially allow the Group to further reduce financing

55

costs of the notes. Derivatives Details of the derivative liabilities are provided in Note 20 “Other financial assets”. Finance lease liabilities Gross finance lease liabilities – minimum lease payments Within one year Between 1-5 years After 5 years

2009

2008

 

 

Future finance charges on finance leases Present value of finance lease liabilities

The present value of finance lease liabilities is as follows: Within one year Between 1-5 years After 5 years Currency Information of Borrowings

12 31 -

(18)

(10)

24

33

Other borrowings mainly include promissory notes and loans from non-controlling shareholders in subsidiaries.

Notional amount of currency derivatives Borrowings after derivative effect of which (after derivative effect): floating rate borrowings fixed rate borrowings As of December 31, 2008 Total borrowings by currency of issue

Notional amount of currency derivatives Borrowings after derivative effect of which (after derivative effect): floating rate borrowings fixed rate borrowings

Telecommunication license payable Taxes (Other than income taxes) *Prepaid Traffic and deferred income Due to local authorities Personnel payables Other Total

2009  

Capex payables

Egyptian Pound

Pakistan Rupee

Bangladeshi Taka

Algerian Dinar

Tunisian Dinar

Trade payables due to suppliers Trade payables to telephone operators Other trade payables Total Others

Total

As of December 31, 2009 Total borrowings by currency of issue

Current   283 228 237 130 77 136 1,091

2009 Non-current   80 41 121

Total  

Current

363 228 237 130 77 177 1,212

2008 Non-current

202 190 187 62 53 162 856

Total

193 27 220

395 190 187 62 53 189 1,076

Under this agreement GBI should pay a milestone payments against a commitment from MENA Cable to fulfill certain conditions. As of the date of the financials the amounts received from GBI amounted to US$ 29 million recorded as a deferred income.

28- Trade payables

8 25 33

Euro

27- Other liabilities

* On July 16, 2009 Middle East and North Africa Submarine Cable Systems – MENA Cable (fully owned subsidiary) signed an agreement with Gulf Bridge International –GBI to sell fiber pair and Indefeasible Right of Use (IRU) in an amount of US$ 97 million.

43

4 10 10 24 US$

Other Borrowings

5 15 22 42

During 2009 the Company entered into a sale and leaseback agreement in relation to the headquarter premises at Nile City Towers in Cairo. The Company sold the building with a net book value of US$ 10 million for an amount of US$ 25 million. The Company will lease back the premises under a finance lease for a period of 8 years and has the option to repurchase the building at the end of the lease for an amount of US$ 13 million. The gain of US$ 15 million is recorded in deferred income and will be released over the life of the finance lease.

4,232

361

483

575

102

27

37

55

5,872

(178)

(276)

-

454

-

-

-

-

-

4,054

85

483

1,029

102

27

37

55

5,872

1,663 2,391

83 2

402 81

1,029 -

102 -

27 -

36 1

55

3,342 2,530

4,022

421

539

576

61

52

55

9

5,735

(315)

(305)

-

620

-

-

-

-

-

3,707

116

539

1,196

61

52

55

9

5,735

1,110 2,597

108 8

458 81

1,195 1

61 -

52 -

53 2

9

3,037 2,698

Financial liabilities include secured liabilities of US$ 4,091 million as of December 31, 2009 and US$ 3,897 million as of December 31, 2008. In general, the financial liabilities are secured on property

and equipment of the relevant subsidiary, pledged shares and receivables.

2008

470

 

654

269

260

97

74

207

198

Profit attributable to equity holders of the Company (in millions of US$) Weighted average number of shares in issue (in millions of shares) Adjustments for:

Trade payables are all due within one year.

- Shares granted (in millions of shares) Weighted average number of shares for diluted earnings per share (in Million of shares)

29- Earnings per share

Earnings per share – diluted (in US$)

1,043

1,186

2009

2008

 

  318

431

878

937  

4

2

882

939

0.36

0.46

(a) Basic

30- Business combinations

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Company and held as treasury shares or for the purposes of the share based compensation.

During 2009 the Group acquired 100% of share capital of PowerCOM (Cell One) in Namibia, a GSM telecommunications operator in Namibia through its subsidiary Telecel Globe, for a cash consideration of US$ 60 million. The acquired business contributed revenues of US$ 14 million and net loss of US$ 19 million to the Group in the period since acquisition.

2009 Profit attributable to equity holders of the Company (in million of US$) Weighted average number of shares (in millions of shares) Earnings per share – basic (in US$)

 

2008  

318

431

878

937

0.36

0.46

(b) Diluted Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. During 2008 and 2009 the dilutive potential ordinary shares relate to the share based compensation plan.

The purchase price for this acquisition was US$ 60 million of which US$ 30 million was paid during 2009 and the remaining portion will be paid in 2010. The purchase price allocation was finalized on December 2009.

56

The following table provides details of this acquisition

Orascom Telecom Tunisia S.A. (“OTT”)

33- Share based compensation

  Cash and cash equivalents Property and equipment Intangible assets Deferred tax assets Inventories Trade receivables Other current assets Non-current borrowings Other non-current liabilities Trade payables  

OTT operates a GSM network in Tunisia and provides a range of pre-paid and postpaid voice and data telecommunication services under the brand name “Tunisiana”. The Company has a 50% shareholding in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT. The remaining 50% interest is held by National Mobile Telecommunications Company KSC which is owned by Qatar Telecom.

The following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of December 31, 2009:

Cell One

31 15 17 1 3 1 (32) (6) (15)

Net identifiable assets acquired Goodwill

15 45

Purchase price Cash and cash equivalents in subsidiary acquired Cash outflow on acquisition

60

Property and equipment Intangible assets

60

PPA adjustment

December 31, 2008 (adjusted)

5,057

(4)

5,053

2,371

12

2,383

249

8

257

Deferred tax liabilities

31- Interest in joint ventures The Group has the following interest in its joint ventures: Joint venture Egyptian Company for Mobile Services S.A.E. Orascom Telecom Tunisia S.A. Consortium Algerian Telecommunication S.P.A.

CAT was formerly a landline operator in Algeria which ceased operations during the period. The current intention of the management of CAT is to liquidate this company. Therefore the Group has fully written down all assets relating to this business. The following amounts represent the assets, liabilities, revenues and profit for the year of the joint ventures. They are included in the balance sheet and income statement of the Group’s consolidated financial statements according to its shareholding in each joint venture.

-

In the third quarter of 2009 the purchase price allocation was finalized for the acquisition of U-com Burundi SA and Telecel Afrique SA which were purchased in July 2008. The comparative amounts for 2008 were restated compared to those reported in the 2008 annual consolidated financial statements as follows: December 31, 2008 (as reported)

Consortium Algerian Telecommunication S.P.A. “CAT)

Shareholding

Country of domiciliation

34.67%

Egypt

50.00%

Tunisia

50.00%

Algeria

Egyptian Company for Mobile Services S.A.E. (“ECMS”) ECMS is a mobile telecommunication operator in Egypt and provides a range of prepaid and postpaid voice and data telecommunication services under the brand name of Mobinil. The Company has an investment of 34.67% in ECMS and the France Telecom Group also has an investment of 36.34%. The remaining shareholding is publicly traded on the Cairo and Alexandria Stock Exchange. Legal proceedings are currently in progress relating to a disagreement regarding the Shareholders Agreement entered into by the Company and France Telecom, Further details are included in Note 32 “Commitments”.

Revenues Profit for the year Current assets Non-current assets Current liabilities Non-current liabilities

 

2009 2,651 501 563 2,980 1,641 991

32- Commitments

 

 

2008 2,554 247 476 2,867 1,324 1,337

July 1, 2005

July 1, 2005

July 1, 2006

January 1, 2007

January 1, 2007

July 1, 2007

July 1, 2007

July 1, 2007

January 1, 2008

January 1, 2008

July 1, 2008

July 1, 2008

July 1, 2008

January 1, 2009

January 1, 2009

As of December 31, 2009

As of December 31, 2008

136 205 341

138 338 109 585

Commitments for the purchase of intangible assets mainly relate to commitments of Egyptian Company for Mobile and Service amounting to US$ 108.4 million primarily relating to costs connected with the 3G license.. Commitments for purchase of property and equipment mainly relate to commitments of Mena cable amounting to US$ 84 million relating to the purchase of marine cables and related equipment and US$ 60 million for Egyptian Company for Mobile and Service relating to the purchase of equipment. The following table provides the future aggregate minimum lease payments under non-cancellable operating leases: 2009 Within one year Between 1-5 years After 5 years

July 1, 2004

January 1, 2009

The commitments as of December 31, 2009 and 2008 are provided in the table below:

Intangible assets Property and equipment Others Total

Grant date

39 151 15 205

2008 27 117 41 185

July 1, 2009

July 1, 2009

July 1, 2009

Tranche

3

GDRs granted (thousands) 4

2

20

3

31

3

35

2

44

3

2

1

3

2

3

1

2

3

2

7

9

36

Vesting period (months) 42

30

42

18

30

42

18

36

30

42

314

3

50

36

2

15

30

1

3

50 4

23

9.20

9.29

4.79

66

-

54

60

24

1

2

66

36

8

18

Fair value of GDRs at grant date in US$

66

24

14

GDR market price at grant date in US $

42

21

22

GDR price at grant date in US$

Contractual term (months)

12

24

18

42

The ESOP was introduced in 2003 and the Company since then uses treasury shares bought from the market to cover the plan. The Board of Directors of the Company has appointed a Committee that can grant GDR options or GDRs to employees of the Company and its subsidiaries through Orascom Telecom ESOP Limited., Malta, a wholly owned subsidiary. Such GDRs of the Company are listed on the London Stock Exchange and denominated in US$. Awards under the ESOP are generally reserved for employees at a senior management level and above that have spent at least one full year of services in the Company and that have a satisfactory performance according to their appraisal reports. The Company has made annual grants on July 1 each year since 2003; from 2007 onwards additional GDRs were granted on January 1 to existing employees. The GDRs granted vest in three installments over the

48

42

54

66

48

60 42

54

66

36

48

60

42

54

66

-

-

-

50.70

49.20

40.80

39.20

50.70 66.00

48.71

62.98

-

66.00

-

64.90

-

83.00

-

62.90

60.81

62.90

58.90

-

-

-

-

-

-

64.90

64.90

83.00

62.90 27.29

27.29

-

27.29

-

28.40

-

-

28.40

28.40

62.36 63.61

62.98

62.36 79.07

78.19

59.84 26.39

25.44 24.53 26.25

25.18

24.41

vesting periods that vary from 12 to 42 months. Starting from 2005 GDRs are granted for free and must be exercised within two years after the end of the vesting period. Exercise of an award is subject to employment in the Group at the exercise date. The Group has no legal obligation to repurchase or settle the awards in cash. GDRs were valued using the Black-Scholes option-pricing model. The assumptions for calculations of the fair value per GDR at the grant date include the GDR price at each grant date, nil exercise price, a GDR price volatility between 29.0% and 72.6%, a dividend yield of between 1% and 3.5% and an annual risk free rate between 1.7% and 6.4%.

57

The following table provides a breakdown of the movements of outstanding GDR options and GDRs granted and their weighted average exercise price:  

 

2009 Average exercise price in US$ per GDR option granted

At January 1

GDR options (thousands)

9.20

Granted Forfeited Exercised Expired   At December 31

4

-

4

723

-

4

198

Range of exercise price in US$ 9.20 Nil

Weighted average exercise price in US$

December 31, 2009

9.20 Nil

4 723

  2010 2011 2012 2013 2014 2015 Total

 

-

Telecel Globe Limited  established a share option programme that entitles two key management personnel to purchase shares in the Company. In accordance with this programme, the employees are being granted an option to purchase all of the “Option Shares” in consideration of the payment of USD1.  The Option shares represent the number of shares, at a nominal value of USD1 each, in the capital of the Company which shall be equivalent to 3% of the capital of the Company calculated immediately upon its capitalization by an amount of USD50,000,000.  Based on these terms, the value of both options amounts to USD1,500,000 for each employee respectively.  The fair value of the two options at grant date is, therefore, equivalent to USD3,000,000, to be settled in shares. During 2009, both employees have exercised their respective share options. In order to satisfy these options, Telecel Globe Limited would buy 3,000,000 shares at a nominal value of USD1 each, currently held by Orascom Telecom Holding and deliver them to these employees in accordance with the share option plan. Accordingly, the percentage of ownership of the Company in Telecel Globe Limited was diluted by 6% . 

(76) -

140 (6) (108) -

9.20

4

504

4

20

December 31, 2008 Number of GDRs (thousands)

9.20 Nil

Weighted average remaining life in months

4 504

12 36

0 - 9.20

2009

GDRs (thousands)

24 18 453 130 79 23 727

  Weather Investments Group Weather Investments Wind Telecomunicazioni SpA WIS sarl

Joint ventures

Sale of services and goods 2009

2008

 

 

34- Related party transactions Transactions with subsidiaries, associates, with the Parent Company and its subsidiaries and other related parties are not considered atypical or unusual, as they fall within the Group’s normal course of business and are conducted under market conditions that would be performed by independent third parties.

Interest income

2008

 

2009

 

2008

 

 

- 

-

- 

-

3

36

1

6

- 

-

78

- 

65

- 

- 

- 

 

 

 

 

 

 

ECMS

8

3

-

-

- 

-

OTT

4

17

-

37

- 

-

 

 

 

 

 

 

GWMC

- 

-

- 

-

32

9

Other related parties

 

 

 

 

 

 

Orascom Construction Industries

- 

-

2

3

- 

-

Summit Technology (Orascom Technology Solution)

- 

-

7

5

- 

-

Orascom Trading

- 

-

12

10

- 

-

Contrack facilities management

-

-

1

-

-

-

Orascom Training & Technology

- 

-

-

3

- 

-

105

68

88

64

32

9

Associate

Total  

 

Wind Telecomunicazioni SpA

179 180 100 25 484

2009

12

Weather Investments 2008

Purchase of services and goods

12

Weather Investments Group

31, 2009 and their expiry dates:

Exercise price in US$ per GDR

Expiry date - December 31

478

9.20 -

Weighted average exercise price in US$

29

The table below sets forth the awards outstanding as of December

80

The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2009 and 2008:

Weighted average remaining life in months

Number of GDRs (thousands)

GDRs granted for free (thousands)

GDR options (thousands)

9.20

467 (90) (158)

The weighted average GDR price during 2009 amounted to US$ 25.14 (2008; US$ 48.65).  

Average exercise price in US$ per GDR option granted

504

9.20

thereof exercisable

 

2008 GDRs granted for free (thousands)

The main related party transactions are summarized as follows:

Receivables

2009  

Payables

2008

5

 

2009 14

2008

 

-

 

1

1

6

4

4

WIS sarl

26

- 

16

- 

Rain Srl

1

- 

2

- 

 

 

 

 

ECMS

1

5

-

1

OTT

-

2

-

5

 

 

 

 

643

401

- 

-

Joint ventures

Associate GWMC

Other related parties

 

 

 

 

Orascom Construction Industries

- 

-

- 

1

Summit Technology (Orascom Technology Solution)

1

1

1

1

Orascom Trading Total Transactions with Weather Investments Group The Group is directly controlled by Weather Investments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Company and interconnection traffic between the Group and the subsidiaries of Weather Investments, and particularly Wind Telecomunicazioni SpA. In addition to the information presented above, in January 2009 the Company sold its investment in M-Link to TLC SERVIZI S.p.A now (Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A for a cash consideration of US$ 78

- 

-

1

2

678

429

24

15

million. Following the acquisition the name was changed to WIS sarl. Transactions with M-Link since the sale are disclosed in the line “WIS Sarl”. Transactions with Joint Ventures of the Group Transactions with joint ventures of the Group mainly refer to transactions with OTT and ECMS relating to interconnection traffic and the sale of handsets. Transactions with Associates of the Group OTH provided financing to GWMC, an associate of the Group,

58

in connection with the funding of the acquisition of the spectrum licenses. For further details see Note 20 “Other financial assets”. Transactions with other related parties The Group is indirectly controlled by the Sawiris family. Transactions with entities under the control of the Sawiris family mainly refer to transactions with Orascom Construction Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology. Transactions with Orascom Technology Solutions mainly refer to maintenance activities of electronic hardware and software carried out for the Group. Orascom Construction Industries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technology mainly include management training programs. A balance of US$ 6 million is outstanding from one member of the board of directors and this amount will be settled against his ESOP plan entitlements on exercise and vested. Key management compensation Key management includes executive and non executive directors of the Board of Directors of the Company, the Company’s chief financial officer, other managing directors considered key personnel and the chief executive officers of significant subsidiaries and joint ventures. The compensation paid or payable to key management for employee services is shown below:     Salaries and other short-term employee benefits Equity settled share based payments

2009  

2008   11

11

9

2

35- Contingent assets and liabilities The Group is subject to various legal proceedings and claims which arise in the ordinary course of business due to the nature of the operations of the Group and the nature of the markets where the Group operates. The Group recognizes a provision for losses and liabilities when the existence is certain or probable. As of December 31, 2009 the Company is a party in a number of legal cases which resulted from carrying out its activities. Based on the legal advice obtained, the Company’s management believe that the outcome of these lawsuits, individually or in aggregate, would not be material to the Group’s results. PMCL tax claims PMCL is involved in proceedings regarding tax claims up to the year 2007 whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. PMCL has a tax claims up to the year 2007 that the tax authorities either framed or assessed. However, the company has field appeals to the appellate authorities against the re-assessment orders. The disputed demand against the assessments framed/aggregates to Rs 1,921 million equivalent to US$ 22.8 million .The company has made a provision a provision for such assessments with an amount of Rs 163 million equivalent to US$ 1.82 million.

OTA tax claims OTA has received a final tax assessment relating to 2004 tax year amounted to DZD 3,948 million equivalent to US$ 54.3 million. OTA filed an appeal after the payment of 20% of final tax assessment. In January 2010 OTA received a refusal of its appeal and OTA has 4 months from date of receipt to make a further appeal. A provision with an amount of DZD 709 million equivalent to US$ 9.8 million was accounted for. In November 2009, OTA received a final tax assessment for 2005 to 2007, amounting to 43,910 M DZD equivalent to US$ 603.7 million. Approximately 85% of the assessed amount is due to a rejection of OTA’s accounts by the DGE (Tax Department for Large Scale Companies). OTA has appealed the assessment after the payment of 20% of the assessed amount. OTA accrued a provision of 2,957 M DZD equivalent to Euro 28.3 million, equivalent to US $ 41 million, relying on an external expert report. The external expert’s report considers that the DGE’s rejection of the accounts On March 7, 2010 OTA received a notice of the rejection of its administrative appeal filed on December 2009. In order to file a second appeal, OTA is required to pay a further 20% of the remaining outstanding balance of the taxes and penalties assessed by the DGE, this amounts to approximately $110 million and willbe paid by OTA from its own resources. Fastlink Jordanian tax dispute: The Jordanian Tax Authority claims JD 49.2 million (approximately US$ 69.39 million)for income tax allegedly due from Pioneer Investment Ltd. (a wholly owned subsidiary of the Company) in connection with the sale of Fastlink (Jordan Mobile Telecommunication Services) to MTC in 2002 . Pioneer has claimed that the tax assessment is without foundation. Orascom Telecom Iraq Disposal Warranties Orascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile Services-subsidiary) the company provided warranty to the purchaser of the investment. This warranty, which in respect of tax covenant claims, of which no more than USD 60 million equivalent 41.8 million Euro shall be payable in relation to tax covenant claim. Dispute with France Telecom (and subsidiaries) regarding Mobinil: France Telecom (and subsidiaries) has been in a dispute with the Company regarding the shareholders agreement for Mobinil and this dispute was subject to ICC arbitration. An award was issued by the ICC on March 10, 2009 (the “Award”) and it is the Company’s position, relying on legal advice, that the deadline for concluding the sale ordered by the Award has time-expired as a matter of Egyptian law in light of the failure of France Telecom’s (or subsidiaries thereof) to conclude the sale during the 30 day period stipulated in the Award. OTH Management cannot currently estimate any financial impact that this dispute might have on the financial statements of the Company Telecom Egypt Interconnection Prices Telecom Egypt filed a complaint with the dispute resolution committee of the National Telecommunication Regulatory Authority (NTRA), with the purpose of changing its interconnect prices with the mobile operators, with which it has existing contracts. ECMS filed a complaint requesting that the existing effective contract between ECMS and Telecom Egypt be honored. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnect prices between the fixed and mobile networks to be effective from that date. ECMS informed the NTRA that it objects to the decision as it has no legal or contractual basis and that we intend to bring the matter

to the courts in order to protect our interest. On November 01, 2008 a law suit against the NTRA was filed in the Administrative Court at the State Counsel asking that the NTRA’s decision be stayed or nullified. On September 3, 2009 and based on the interconnect agreement, ECMS filed an arbitration proceeding against Telecom Egypt according to the rules of The Cairo Regional Center for International Commercial Arbitration in order to settle the existing dispute between the two parties. On October 9, 2009 Telecom Egypt sent an initial response and a counterparty claim related to the arbitration notification filed against it. On January 5, 2010 a letter from NTRA was received with the purpose of making new changes in the interconnect prices between the different operators to be applied retroactively from September 1, 2009. The letter was based on the September 03, 2008 decision. On January 14, 2010 ECMS sent a letter to NTRA refusing this decision. ECMS considers that it has a strong legal position and continues to record interconnect revenue and costs based on the existing agreement with Telecom Egypt and other mobile operators. If ECMS applied the NTRA decisions it would have reported less interconnect revenue the group proportionate share amounts to EGP 49 equivalent to US$ 9M, less interconnect cost the group proportionate share amounts to EGP 17M equivalent to US$3 M, for the financial year ended December 31, 2008 and less interconnect revenue the group proportionate share amounts to EGP 168M equivalent to US$ 30.5 M and less interconnect cost the group proportionate share amounts to EGP 40M equivalents to US$ 7.3M for the financial year ended December 31, 2009. Intouch tax claims Mobizone Algeria received a tax claim amounting to DZD 204 million in addition to penalties and default interest amounting to DZD 51 million (equivalent to US$ 3.5 million). On January, 2009 Mobizone Algeria paid 20% of the total tax claim in order to appeal . The tax disclosure in Mobizone Algeria’s audited financials for the period ended Dec. 31, 2009 mentioned that the company was granted a tax exemption amounting DZD205 Million and the remaining amount of DZD 51 million was recorded as a provision. Letters of credit and guarantees The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following: - Letters of guarantee provided by ECMS to National Telecom Regulatory Authority. The Company’s share in such letters of guarantee is equal to L.E 54.1 million equivalents to US$ 9.8 million. - Letters of guarantee provided by Ring Egypt to suppliers’ .The Company’s share in letters of guarantee is L.E 65.45 million equivalents to US$ 11.8 million. - Letter of Guarantee amounting to US$ 1 million in favor of NTRA to guarantee MENA Cable execution of its entire obligation related to constructing, operating and renting sea cables networks and its infrastructure for international communications. - Letter of guarantee in a favor of Lebanon Ministry of Telecommunication (ROL) to guarantee OTH in the payment of any amount due by the selected Participant to ROL amount with US$ 30 million. - Guarantee provided by Orascom Telecom Bangladesh in favor of Ministry of Post & Telecommunication, the Chief Controller of Exports and Imports and Power development board existed of BDT 99 million equivalents to L.E 7.83million equivalent US$ 1.42 million.

36- Subsequent events Share transactions The Extra-ordinary General Assembly of the Company on December 27, 2009, delegated the Board of Directors members to proceed with all necessary legal procedures to increase the authorized capital from LE. 2.5 billion to LE. 7.5 billion and authorized a rights issue to further strengthen the balance sheet and ensure the Company’s liquidity. On January 13, 2010 in accordance with the Egyptian Financial Supervisory Authority’s (“EFSA”) requirements, OTH published a Public Subscription Notice in connection with the rights issue and in March 2010 the Company issued 4,356,590,515 new shares at the nominal price of LE. 1 per share, to raise a total of LE. 4,356,590,515 or approximately US$800 million (without issuing fees). Financing Egyptian mobile telephone operator Egyptian Company for Mobile Services (ECMS) issued 1.5 billion Egyptian pounds ($273.3 million) in 5-year bonds with Fixed annual yield hits 12.25 % payable once every six months starting mid-January. ECMS will use the proceeds of the Bonds to finance the expansion of its network. The bonds are divided into two tranches: the first tranche is valued at L.E 1.4 billion and allocated for private offering and institutions while the second tranche of L.E 100 Million is allocated for public offering. On February 17, 2010 Orascom Telecom Holding S.A.E. received a non interest bearing loan of US$ 225 million from its shareholder, Weather Capital Special Purpose 1 S.A This loan was converted into GDRs by way of participation in the rights issue described above. On March 8, 2010 the Company and Orascom Telecom Bangladesh has signed an agreement with Standard Chartered Bank, London –as intercreditor agent- to issue amortizing senior secured bond with an amount 7.5 billion BDT equivalent to USD 108 million due in 2014. Other events On January 21 2010,Orascom Telecom Holding announce that it has obtained Majority Senior Secured Lenders consent on the proposed permanent waiver related to the existence of a  material tax claim under its US$2.5 billion credit agreement. The waiver obtained is specific to the Algerian tax claim against Orascom Telecom Algeria in respect of years 2004 to 2007. On February 4, 2010, Orascom Telecom Holding (OTH) has been awarded an extension to the management contract of Alfa with the Republic of Lebanon, for a period of 6 months ending on July, 31, 2010. Under this contract, OTH receives a monthly sum of US$ 2.5 million in addition to 8.5% of total revenues. Out of these amounts, OTH is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The Republic of Lebanon is fully responsible for the CAPEX during the contract period. 37- Cash flow statements Starting from the third quarter ended September 30, 2009 the company has reclassified the advances and loans made to associates and third parties from the “financing activities” to the “investing activities” caption. The reclassification was adopted in order to adhere to IAS7 par. 16 (e). Hence, the previous classification for the periods, March 2009 and June 2009 shall be reclassified accordingly.

59

 

Current

Non-current

  Orascom Telecom Holding S.A.E.

Total

Currency

Millions of USD  

 

NATIONAL SOCIETE GENERALE BANK

Nominal

Line of credit

Millions of contract currency  

 

 

 

Maturity

Securities

 

 

 

   

Current

  Egyptian Company for Mobile Services

Non-current

Total

Currency

 

 

Millions of USD  

 

 

9

-

9

USD

9

10

19-8-2010

Unsecured

Credit Agricole Indo Suez Ban

11

-

11

USD

11

22

30-6-2010

Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans)

4

97

101

National Bank Of Abu Dhabi

10

-

10

USD

10

10

21-2-2010

Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans)

13

186

199

NATIONAL SOCIETE GENERALE BANK

50

-

50

USD

50

50

18-2-2010

Unsecured

BNP

5

-

5

3

-

3

EURO

2

20

14-6-2010

Unsecured

BB

4

-

15

-

15

USD

15

15

7/1/10

Unsecured

H.S.B.C

2

NSGB-Car Loan

-

2

2

EGP

11

15

2-2-2013

Unsecured

CAE

NSGB-Car Loan

-

1

1

EGP

5

6

8-3-2014

Unsecured

A1 Term Loan Supplemnt

104

863

967

USD

987

987

17-4-2013

Secured

A2 Term Loan Supplemnt

54

448

502

USD

513

513

17-4-2013

Secured

1

1,000

1,001

USD

1,000

1,000

17-4-2013

Secured

38

-

38

USD

38

50

3/28/10

Unsecured

 

Within one Year

Unsecured

Orascom Telecom Bangladesh Limited

Fortis Banque HSBC

Revolving Credit Supplemnt Audi Bank Citi bank

10

-

10

USD

10

10

Egyptian Gulf Bank

5

-

5

USD

5

5

31-5-2010

Unsecured

Pireaus

5

-

5

USD

5

5

Within one Year

Unsecured

315

  Pakistan Mobile Communications Limited

 

2,314  

2,629

 

 

 

 

 

 

 

 

 

 

 

Misr/CIB/NBE (Syndicated loans)

31

Nominal

72

Maturity

Millions of contract currency  

 

 

30/04/2013

Unsecured

 

 

878

EGP

541

1,121

14/08/2014

Unsecured

EGP

1,073

1,073

26/02/2015

Unsecured

EGP

42

59

30/04/2010

Unsecured

4

EGP

24

27

under renewal

Unsecured

-

2

EGP

-

41

9/01/10

Unsecured

14

-

14

EGP

83

88

31/03/2010

Unsecured

NSGB

12

-

12

EGP

73

74

30/04/2010

Unsecured

Scotia

6

-

6

EGP

34

44

9/12/10

Unsecured

CIB

3

-

3

EGP

15

24

16/09/2010

Unsecured

17

12 months revolving

Unsecured

3

-

97  

355  

Hermes Facility

16

USD Commercial Faciilty

3 452  

60

76

EGP

 

Securities

558

AUB

103

Line of credit

EGP

17

 

 

 

 

 

 

 

 

USD

79

79

    7/1/14

Secured

32

86

118

USD

122

122

8/1/13

Secured

DFI Facility

3

25

28

USD

30

30

6/15/14

Secured

BDT A Facility

9

13

22

BDT

1,575

1,575

6/30/12

Secured

BDT B Facility

3

10

13

BDT

918

918

6/30/14

Secured

Standard Chartered Bank, London

5

15

20

USD

25

50

9/30/16

Secured

Citibank N.A - Islamabad - Pakistan

4

4

8

PKR

633

1,740

02/07/2011

Secured

Royal Bank of Scotland (Formerly ABN AMRO Bank)- IslamabadPakistan

-

42

42

PKR

3,548

3,548

18/12/2012

Secured

Habib Bank Limited - Islamabad - Pakistan (2007)

-

36

36

PKR

3,000

3,000

18/12/2013

Secured

Royal Bank of Scotland, London - Citibank London - ECGD - ECA

7

10

17

USD

17

48

28/02/2012

Secured

Royal Bank of Scotland, London - Citibank London COFACE Loan - ECA

30

26

56

EUR

39

125

30/12/2011

Secured

Standard Chartered Bank

4

-

4

BDT

290

290

1/27/10

Unsecured

BRAC Bank Ltd.

6

-

6

BDT

400

570

3/28/10

Unsecured

Royal Bank of Scotland, London -AB Svensk ExportKredit Sweeden - Hermes - ECA

11

5

16

EUR

12

46

29/03/2011

Secured

Eastern Bank Ltd.

4

-

4

BDT

280

292

6/25/10

Unsecured

Eastern Bank Ltd.

2

-

2

BDT

160

160

5/9/10

Unsecured

4

3

7

EUR

5

10

15/12/2011

Secured

Eastern Bank Ltd.

1

-

1

BDT

100

200

5/31/10

Unsecured

The City Bank

4

-

4

BDT

240

240

5/3/10

Unsecured

The City Bank

2

-

2

BDT

150

150

4/9/10

Unsecured

12

37

49

USD

51

70

28/02/2014

Secured

National BankLtd

1

-

1

BDT

102

200

10/30/10

Unsecured

Royal Bank of Scotland, London -The OPEC Fund for international Development  - ECA Royal Bank of Scotland, London;  Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - ECGD - ECA Round II Royal Bank of Scotland London;  Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Coface - ECA Round II

21

Royal Bank of Scotland, London;  Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Hermes - ECA Round II

25

45

70

EUR

50

110

3/16/12

Secured

DEG - Germany

8

21

29

EUR

20

20

15/08/2013

Secured

FMO - Netherlands

8

21

29

EUR

20

20

15/08/2013

Secured

MCB Bank Limited (PKR 22.060  Billion) - Islamabad - Pakistan

18

261

279

PKR

22,060

22,060

04/01/2014

Secured

SCB Bank Limited STFA (PKR 5.1 Billion) - Islamabad Pakistan

11

50

61

PKR

5,100

5,100

09/05/2013

Secured

Dubai Islamic Bank (Pakistan) Ltd Ijara Facility PKR 700 Million

-

8

8

PKR

700

700

09/05/2012

Secured

PAK Kuwait Investment Company Limited - Karachi - Pakistan

4

-

4

PKR

300

300

08/07/2010

Secured

PKR

Within one year

Secured

HSBC Bank Middle East Limited- Islamabad - Pakistan  

48

69

1

-

1

164

617

781

EUR

 

51

85

101  

31/12/2013

600  

 

Secured

 

Commercial Bank of Ceylon

1

-

1

BDT

100

100

3/20/10

Unsecured

Citibank, N.A.

9

-

9

BDT

620

620

2/1/10

Unsecured

Standard Chartered Bank

4

-

4

BDT

290

290

1/9/10

Unsecured

Standard Chartered Bank

3

-

3

BDT

200

200

1/24/10

Unsecured

Standard Chartered Bank (Working Capital Syndication)

5

-

5

BDT

360

360

3/17/10

Unsecured

National Bank Ltd (Working Capital Syndication)

1

-

1

BDT

100

100

3/17/10

Unsecured

Pubali Bank Limted (Working Capital Syndication)

5

-

5

BDT

350

350

3/17/10

Unsecured

Standard Bank Limited (Working Capital Syndication)

1

-

1

BDT

100

100

3/17/10

Unsecured

Uttara Bank Ltd. (Working Capital Syndication)

2

-

2

BDT

150

150

3/17/10

Unsecured

Dutch Bangla Bank Limited

4

-

4

BDT

250

250

3/23/10

Unsecured

BDT

3/30/10

Unsecured

Dutch Bangla Bank Limited  

4

-

4

131

209

340

 

300  

530  

 

 

60

Current

    Orascom Telecom Algeria S.P.A.

Non-current

Total

Currency

Millions of USD  

 

Nominal

Line of credit

Maturity

Millions of contract currency  

 

 

 

 

 

Securities  

 

 

Hermes loan 2006

21

39

60

USD

62

86

15/11/12

Secured

Coface Loan 2006

26

-

26

DZD

1,904

9,724

15/11/10

Secured

 

47

39

86

 

 

 

 

 

 

 

 

 

 

Orascom Telecom Tunisie S.A.

 

 

 

International refinancing

24

23

47

Euro

100

100

March-2011

Secured

Local refinancing

18

18

36

TND

105

105

March-2011

Secured

 

42

41

83

 

 

 

 

 

 

 

 

 

 

15/8/2010

Secured

Moga Holding Limited

 

 

 

CDC Mezzanine shareholder loan

29

-

29

EUR

 

29

-

29

 

 

 

 

 

 

 

 

 

 

13/9/11

Guaranteed

 

 

Med Cable Limited

 

 

 

18

Export Credit Calyon

3

3

6

EUR

 

3

3

6

 

 

 

 

Intouch for Telecommunication Services

18

6

12  

 

 

NBAD

2

1

3

L.E

35

35

1/4/11

Secured

Barclays

2

-

2

L.E

35

35

1/10/10

Secured

 

 

4

  Telecel Globe Limited Banque de development des etats de l›afrique Central 2007 Commercial Bank Centrafrique 2008

 

1

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

1

4

5

XAF

2,305

2,500

30/06/2014

Guaranteed

1

-

1

XAF

398

750

30/06/2011

Secured

Ecobank Centrafrique - Local Loans

1

5

6

XAF

2,929

3,000

IBB - Bank Overdrafts

2

-

2

USD

2

2

Nedbank Limited and Investec Bank Limited

-

42

42

NAD

 

5

51

56

 

8/10/14 12 months revolving 12 months revolving  

Trans World Associates (Private) Limited

 

 

 

311

311

   

 

 

 

Other - various banks

1

7

8

PKR

 

1

7

8

 

 

 

838

3,637

4,475

 

 

 

Total - liabilities to banks

643

1,608

  November 27, 2013    

Secured Unsecured Secured     Secured    

Current

  Pakistan Mobile Communications Limited

Non-current

Total

Millions of USD  

 

 

 

Nominal

Maturity

Securities

Currency

Millions

 

 

 

 

 

 

Royal Bank of Scotland and Deutsche Bank Securities Inc. (Euro Bond)

1

111

112

USD

112

13/11/2013

Unsecured

Pak Oman Investment Company Limited - Karachi - Pakistan (Trustee - Public Listed TFC)

7

32

39

PKR

3,257

31/05/2013

Secured

41

-

41

PKR

3,325

01/10/2010

Unsecured

1

46

47

PKR

3,905

28/10/2013

Unsecured

Allied Bank Limited - Islamabad - Pakistan (2007) Allied Bank Limited - Karachi - Pakistan (2007)  

 

 

 

 

 

 

 

Orascom Telecom Finance SCA

 

 

 

 

 

 

 

24

739

763

8/2/14

Unsecured

 

 

 

 

 

18/2/13

Secured

 

 

Senior Notes OTFSCA Orascom Telecom Oscar Indexed linked notes Total Bonds

2

251

253

76

1,179

1,255

USD

750

 

 

USD  

230  

61

Selected subsidiaries, joint ventures and associates     Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding North Africa Algeria Orascom Telecom Algeria S.P.A.   Algeria Orascom Telecom Service Algeria   Algeria Data Base Management services Algeria   Algeria Ring Algeria LLC   Algeria Caring Algeria   Algeria MobiZone Algeria   Algeria Algeria Win Call   Algeria Consortium Algerian Telecommunication S.P.A.   Morocco Kenza Telecom Morocco   Tunisia Ring Tunisia   Tunisia Ring Distribution Tunisia   Tunisia Ring Retail Tunisia   Tunisia R&D Tunisia   Tunisia Orascom Telecom Tunisie S.A. Asia Bangladesh Orascom Telecom Bangladesh Limited   Bangladesh Ring Bangladesh   Bangladesh MobiZone Bangladesh   North Korea CHEO Technology JV (DPKR)   Pakistan Pakistan Mobile Communications Limited   Pakistan Business & Communications   Pakistan Link Direct International Limited   Pakistan Mobitalk Limited   Pakistan MobiZone Pakistan (Pvt.) Limited   Pakistan PMDL Limited   Pakistan Trans World Associates (Private) Limited   Pakistan Ring Pakistan   Pakistan Ring Pakistan Service   Pakistan WOL Telecom Limited   Pakistan Call Pack Pakistan Middle East Dubai Global Entity for Telecom Trade   Dubai Global Entity for Telecom Trade -FZE   Dubai Ring Dubai   Dubai LinkDotNet Dubai   Dubai MobiZone Dubai   Egypt Middle East and North Africa Submarine Cable System –Mena Cable   Egypt Cortex Egypt   Egypt Ring for Distributions   Egypt Advanced Electronic Industries   Egypt Caring Egypt   Egypt Connect   Egypt MMMS   Egypt Intouch for Telecommunication Services   Egypt Link Egypt   Egypt Into Net   Egypt LINKdotNET   Egypt Arab Finance Securities   Egypt Link Development   Egypt Link Online Egypt   Egypt Arpu for Telecommunication Services   Egypt Global Telecom   Egypt Egypt Call   Egypt Mobinil Services Egypt   Egypt Mobinil for Telecommunication S.A.E.   Egypt Egyptian Company for Mobile Services S.A.E.   Iraq Ring Iraq   Palestine Pal Call Palestine   Qatar LDN Qatar

96.81% 96.81% 100.00% 98.01% 97.03% 100.00% 100.00% 49.83% 100.00% 78.21% 77.43% 76.65% 96.53% 50.00% 100.00% 98.98% 100.00% 75.00% 100.00% 100.00% 100.00% 100.00% 100.00% 16.70% 51.00% 94.59% 94.59% 100.00% 100.00% 100.00% 100.00% 96.53% 100.00% 100.00% 100.00% 94.00% 99.00% 96.53% 97.02% 50.49% 98.80% 100.00% 99.96% 55.78% 100.00% 100.00% 99.80% 100.00% 100.00% 95.80% 99.98% 35.86% 28.75% 34.67% 96.53% 99.90% 49.00%

Selected subsidiaries, joint ventures and associates     Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding Saudi Arabia Link Dot Net Saudi Arabia   Saudi Arabia Mobi Zone Saudi Arabia Central Africa Burundi U-Com Burundi S.A.   Central Africa Telecel Centrafrique S.A.   Sudan Sudan Call Namibia Power-com Cell one North America Canada Globalive Investment Holdings   Canada Globalive Canada Holdings   Canada Globalive Wireless Management   Canada Gloablive Wireless LP (GELP)   Canada Globalive Telecom Holdings   Canada Orascom Telecom Holding (Canada) Limited Europe France Orascom Telecom Services Europe   France Orascom Telecom Wireless Europe   Italy MobiZone Italy   Luxembourg M Link Sarl   Luxembourg Orascom Luxembourg Sarl   Luxembourg Orascom Luxembourg Finance SCA   Luxembourg Orascom Telecom Sarl   Luxembourg Orascom Telecom Finance SCA   Luxembourg M Link Teleport   Malta Sawyer Limited   Malta Orascom Telecom Eurasia Limited   Malta Oratel International Inc plc   Malta Moga Holding Limited   Malta International Wireless Communications Pakistan Limited   Malta TMGL   Malta Telecel International Limited   Malta Orascom Tunisia Holding   Malta Carthage Consortium Limited   Malta Orascom Iraq Holding   Malta Orascom Telecom Iraq Corporation   Malta Orascom Telecom Ventures Limited   Malta Telecel Globe Limited   Malta Orascom Telecom Holding (Malta) Canada Limited   Malta M Link Limited   Malta Minimax Ventures   Malta Financial Powers Plan Limited   Malta Orascom Telecom ESOP Limited   Malta Orascom for International Investment Holding   Malta Data Base Management services Limited   Malta Orascom Telecom CS   Malta Mcube   Netherland Orascom Telecom Netherland   Switzerland Telecel International S.A. Switzerland   United Kingdom Med Cable Limited   United Kingdom Orascom Telecom WiMax   United Kingdom International Telecommunication Consortium Limited

*see note (33)

100.00% 100.00% 100.00% 100.00% 70.00% 100.00% 47.60% 65.40% 65.40% 65.40% 65.40% 100.00% 100.00% 100.00% 99.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% *94% 100.00% 100.00% 100.00% 100.00% 100.00% 99.90% 100.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 50.00%

62

Auditor’s report To the shareholders of Orascom Telecom Holding S.A.E We have audited the accompanying consolidated financial statements of Orascom Telecom Holding S.A.E. which comprise the consolidated balance sheet as at 31 December 2009, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and statement of consolidated cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s responsibility for the financial statements These consolidated financial statements are the responsibility of Company’s management. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Egyptian Accounting Standards and in the light of the prevailing Egyptian laws, management responsibility includes, designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; management responsibility also includes selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit and we conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

Consolidated financial statements and auditor’s report

(in EAS/EGP)

• • • • • • • • •

Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Appendix A - Liabilities to Banks Appendix B - Bonds Appendix C - Scope of Consolidation

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers 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 on the financial statements. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Orascom Telecom Holding S.A.E as of 31 December 2009, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the Egyptian Accounting Standards and the Egyptian laws and regulations relating to the preparation of these consolidated financial statements. Emphasis of a matter Without qualifying our opinion, we draw attention to note (35) “Contingent Assets and Liabilities” for the following: 1- Some subsidiaries received tax assessment from the tax authorities in the territories in which they operate. Management believes that these assessments are excessive, and intends to challenge the assessments through the proper legal channels. Currently, the management of these subsidiaries cannot make reliable estimate of tax exposures. 2-   Egyptian Company for Mobile Services (ECMS) “Jointly controlled entity” filed a lawsuit against the National Telecommunication Regulatory Authority (NTRA) to cancel NTRA’s decision relating to the amendments of the interconnect prices between the fixed and mobile networks. The Company and its external legal counselor believe that the possibility of winning the lawsuit is probable as NTRA’s decision does not have legal or contractual ground, therefore the Company continued to recognize interconnect revenue and cost from and to Telecom Egypt based on the existing agreement.



Cairo, 15 March, 2010

KPMG Hazem Hassan

63 Consolidated Income Statement

Consolidated Balance Sheet As at December (in million of EGP)

Note

Assets Property and equipment Intangible assets Other non-current financial assets Deferred tax assets Total non-current assets

18 19 20 21

Inventories Trade receivables Other current financial assets Current income tax receivables Other current assets Cash and cash equivalents Assets held for sale Total current assets Total assets

22 20 17 23 24 6

2009

For the year ended 31 December

2008

27,526 12,262 4,657 654 45,099

27,908 12,996 3,541 486 44,931

304 1,828 629 553 2,084 4,184 606 10,188 55,287

584 1,813 1,535 416 1,377 3,608 445 9,778 54,709

Equity and liabilities Share capital Reserves Retained earnings Equity attributable to equity holders of the Company Minority interest Total equity Liabilities Non-current borrowings Other non-current liabilities Provisions Non-current income tax liabilities Deferred tax liabilities Total non-current liabilities Current borrowings Trade payables Other current liabilities Current income tax liabilities Provisions Liabilities held for sale Total current liabilities Total liabilities Total equity and liabilities

25

26 27 17 21

26 28 27 17 6

Note

(in million of EGP)

889 (968) 6,885 6,806 763 7,569

899 (1,405) 6,298 5,792 633 6,425

26,747 662 35 1,191 28,635

28,794 1,217 21 237 1,424 31,693

5,483 5,745 6,006 1,032 517 300 19,083 47,718 55,287

2,930 6,567 4,737 1,887 334 136 16,591 48,284 54,709

(The notes from (1) to (37) are an integral part of these consolidated financial statements) Group CFO Chief Executive Officer Chairman & Managing Director Aldo Mareuse Khaled Bichara Naguib Onsi Sawiris Auditor’s report ‘attached’

Revenues Other income Purchases and services Other expenses Personnel costs Net unusual inventory loss Depreciation and amortization Impairment charges Net unusual capital loss Disposal of non-current assets

7 8 9 10 13 11 12 13

Operating income

2009

2008

28,262 173 (13,196) (1,203) (1,780) (73) (5,477) (214) (84) 232

29,153 226 (13,747) (955) (1,554) (4,981) (216) 363

6,640

8,289 291 (2,562) (1,101) (3,372)

Financial income Financial expense Net foreign exchange gain /(loss) Net financing costs

15

533 (2,852) 151 (2,168)

Share of (loss) of associates Gain on disposal of associates

16 16

(263) -

(16) 149

4,209

5,050

(2,013)

(2,208)

Profit for the year

2,196

2,842

Attributable to: - Equity holders of the Company - Minority interest

1,845 351

2,464 378

2.10

2.63

Profit before income tax Income tax expense

17

Basic and diluted earnings per share in EGP

29

)The notes from (1) to (37) are an integral part of these consolidated financial statements(

64 Consolidated Statement of Changes in Equity

Consolidated Statement of Comprehensive Income For the year ended 31 December (in million of EGP)

2009

Profit for the year Other comprehensive income: Changes in fair value of available-for-sale financial assets Cash flow hedges, net of tax Currency translation differences Share of profit recognized directly in equity of associates Other comprehensive income for the year, net of tax Total comprehensive income for the year Attributable to: - Equity holders of the Company - Minority interest

2008 2,196

2,842

(9) 138 (366) (237) 1,959

(19) (484) (1,161) 27 (1,637) 1,205

1,596 363

848 357

)The notes from (1) to (37) are an integral part of these consolidated financial statements(

(in million of EGP) As of January 1, 2009 Comprehensive income Profit for the year Other comprehensive income Total comprehensive income Transactions with owners Change in minority interest Dividends Employees Dividends Share based compensation Cancellation of shares Purchase of treasury shares Sale of treasury shares Total transactions with owners As of December 31, 2009

(in million of EGP) As of January 1, 2008 Comprehensive income Profit for the year Other comprehensive income Total recognized income Transactions with owners Dividends Employees dividends Share based compensation Cancellation of shares Purchase of treasury shares Sale of treasury shares Capital increase in subsidiaries Total transactions with owners As of December 31, 2008

Attributable to Equity holders of the Company Share Treasury Other Retained capital shares reserves earnings

Total

Minority Interest

Total equity

899

(865)

(540)

6,298

5,792

633

6,425

-

-

(249)

1,845 -

1,845 (249)

351 12

2196 (237)

-

-

(249)

1,845

1,596

363

1,959

(10) (10) 889

310 28 422 (186) 125 699 (166)

56 (12) (94) 37 (13) (802)

(878) (62) (318) (1,258) 6,885

(512) (62) 16 (186) 162 (582) 6,806

(34) (199) (233) 763

(34) (711) (62) 16 (186) 162 (815) 7,569

Attributable to Equity holders of the Company Share Treasury Other Retained capital shares reserves earnings

Total

Minority interest

Total equity

1,090

(4,965)

1,104

20,071

17,300

522

17,822

-

-

(1,616) (1,616)

2,464 2,464

2,464 (1,616) 848

378 (21) 357

2,842 (1,637) 1,205

(191) (191) 899

15,526 (12,058) 632 4,100 (865)

71 (95) (4) (28) (540)

(909) (88) (15,240) (16,237) 6,298

(909) (88) 71 (12,058) 628 (12,356) 5,792

(331) 85 (246) 633

(1,240) (88) 71 (12,058) 628 85 (12,602) 6,425

65 Consolidated Statement of Cash Flows For the year ended December 31 (in million of EGP) Profit for the year Adjustments for : Depreciation, amortization and impairment of non current assets Net unusual inventory loss and capital loss items Income tax expense Share based compensation Net financial charges Unrealized foreign exchange difference Loss on disposal of non-current assets (Gain) from sale of subsidiaries and financial assets Share of loss of associates Gain on disposal of associates Change in provisions and allowances Change in assets carried as working capital Change in other liabilities carried as working capital Income tax paid Interest expense paid Net cash generated by operating activities Cash outflow for investments in: - Property and equipment - Intangible assets - Consolidated subsidiaries - Financial assets and associates Proceeds from disposals of: - Property and equipment - Subsidiaries - Associates -Financial assets Dividends and interest received Net investments in financial assets held for trading Advances and loans made to associate and other parties Net cash (used in) investing activities Proceeds from non-current borrowings Repayment of non-current borrowings Net proceeds (payments) from current financial liabilities Net change in cash collateral Dividend payments Net payments for treasury shares Change in minority interest Net cash generated by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash included in assets held for sale Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

Note

(37)

2009

1-

2008 2,196

2,842

5,691 157 2,013 69 2,319 (237) 10 (242) 263 407 (1,131) 1,157 (3,470) (2,635) 6,567

5,197 2,208 71 2,271 786 8 (371) 16 (149) 192 (847) 521 (2,632) (2,345) 7,768

(6,104) (661) (169) (422)

(8,063) (802) (564) (112)

288 1,206 180 (227) (755) (6,664)

62 386 5,234 5,739 188 (2,419) (351)

4,638 (4,470) 919 464 (509) (23) (193) 826 729 (70) (83) 3,608

13,805 (10,801) (310) (421) ( 909) (11,418) (357) (10,411) (2,994) (44) (247) 6,893

4,184

3,608

(The notes from (1) to (37) are an integral part of these consolidated financial statements)

General A- Legal status

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes: • Measurement of the recoverable amount of intangible assets and goodwill. • Valuation of financial instruments • Recognition of deferred tax assets. • Provisions and contingencies.

Orascom Telecom Holding S.A.E “the Company” is an Egyptian Joint Stock Company subject to the provisions of the Capital Market Law No. 95 of 1992 and its executive regulations. The Company is a majority owned subsidiary of Weather Investments S.P.A registered in Italy. The Company’s registered office is located in Nile City Towers, Ramlet Beaulac, Cairo, Egypt. B-

Purpose of the company The Company’s purpose is to participate in companies issuing securities or to increase its share capital of these companies. The Company may have interest or participate in, by any mean, in companies and other enterprises that have activities similar to those of the Company or those that may assist the Company to achieve its objective in Egypt or abroad. It may also merge into those companies and enterprises purchase them or affiliate them, pursuant to the provisions of the law and its executive regulations. The company and its subsidiaries from the biggest companies in providing the mobile services in Middle East companies, Africa and South Asia, it covers a geographic area containing for 510 million citizens.

C-

Financial statement authorization The financial statements were approved by the board of directors on March 15, 2010.

2-

Basis of preparation 2-1 Statement of compliance These Consolidated financial statements have been prepared in accordance with the Egyptian Accounting Standards (EASs) and relevant Egyptian laws and regulations. 2-2 Basis of measurement The financial statements are prepared on the historical cost convention, except for the following assets and liabilities which are measured as fair value • Derivative financial instruments. • Financial instruments at fair value through profit and loss. • Available-for-sale financial assets. 2-3 Functional and presentation currency These financial statements are presented in Egyptian pounds (EGP), which is the Company’s functional currency. All financial information presented in Egyptian pounds has been rounded to the nearest million. 2-4 Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

3 -

Significant accounting policies applied The main accounting principles and policies adopted in preparing these Consolidated Financial Statements are set our below. These policies have been consistently applied to all periods in those consolidated financial statements, and have been applied consistently by the group entities. The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial information to international investors, the information presented in this document has been presented in million of Egyptian Pounds (“EGP.”), except earnings per share information and unless otherwise stated. 3-1 Basis of consolidation The consolidated financial statements include the following companies: 3-1-1 Subsidiary companies

- The consolidated financial statements include all subsidiaries that are controlled by the parent company and which the management intends to continue to control. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. - Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognized in assets, such as inventory and fixed assets, are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. EAS 24 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions. - Minority interests shall be presented in the consolidated balance sheet within equity, separately from the parent shareholder’s equity. Minority interests in the profit or loss of the group shall also be separately disclosed.

- A parent loses control when it loses the power to govern the financial and operating policies of an investee so as to obtain benefit from its activities. 3-1-2 Joint venture companies

Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the ventures). Proportion consolidation is a method of accounting

66

whereby a venture’s share of each of the assets, liabilities, income and expenses of a jointly controlled entity is combined line by line with similar items in the venture’s financial statements or reported as separate line items in the venture’s financial statements.

3-4

Investments in associates are stated at equity method. Under the equity method the investment in associates is initially recognize at cost and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the associates after the date of acquisition. Distributions received from associates reduce the carrying amount of the investment. Losses of an associate in excess of the Company’s interest in that associate (which includes any long-term interests that, in substance, form part of the Company’s net investment in the associate) are not recognized, unless the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of the acquisition over the Company’s share of the net faire value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. The license of the Group’s associated undertaking in the Canada, Globalive Wireless Management Corp, are indefinite lived assets. Although the spectrum licenses have an initial term of 10 years, based on available information, the management believes that they are subject to perfunctory renewal and the renewal cost will not be significant. Accordingly, they are not subject to amortization but are tested annually for impairment, or when indicators exist that the carrying value is not recoverable.

3-2 Translation of the foreign currencies transactions

3-3

Translation of the foreign subsidiaries’ financials



As at the balance sheet date the assets and liabilities of these consolidated subsidiaries are translated to Egyptian Pound at the prevailing rate as at the period end, and the shareholders’ equity accounts are translated at historical rates, where as the income statement items are translated at the average exchange rate prevailing during the period of the consolidated financial statements. Currency translation differences are recorded in the shareholders’ equity section of the balance sheet as translation reserves adjustments.

Expenditure incurred to replace a component of an item of property and equipment that is accounted for separately, including major inspection and overhaul expenditure, is capitalized. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the property and equipment. All other expenditure is recognized in the income statement as an expense as incurred.

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financial and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in equity remains in place until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognized in equity is transferred to the carrying amount of the asset when it is recognized. In other cases the amount recognized in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss. Fair value hedges Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The hedged item also is stated at faire value in respect of the risk being hedged, with any gain or loss being recognized in profit or loss.

3-1-3 Investments in associates

Orascom Telecom Holding and some of its subsidiaries maintain their accounting books in Egyptian Pound. Transactions denominated in foreign currencies are recorded at the prevailing exchange rate at the date of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the prevailing exchange rates at that date. The foreign currencies exchange differences arising on the settlement of transactions and the translation at the balance sheet date are recognized in the income statement.

Derivative financial instruments

3-5

Property & equipment and depreciation Property & equipment are stated at historical cost and presented in the balance sheet net of accumulated depreciation and impairment (Note 3-9b). Depreciation is charged to the income statement over the estimated useful-life of each asset using the straight-line method. The following are the estimated useful lives, Estimate in respect of certain items of “Cell Sites” were revised in 2009 ( see note 18) for each class of assets, for depreciation calculation purposes:

Assets Buildings

Cell sites Tools Computers equipment Furniture and Fixtures Vehicles Leasehold improvements and renovations

Depreciation period 50 years 8-15 years 5-10 years 3-5 years 5-10 years 3-6 years 3-8 years

3-6

3-7

Property and equipment under construction Property and equipment under construction are recognized initially at cost. Cost includes all expenditures directly attributable to bringing the asset to a working condition for its intended use. Property and equipment under construction are transferred to property and equipment caption when they are completed and are ready for their intended use. Intangible assets A- Goodwill Goodwill (positive and negative) represents amounts arising on acquisition of subsidiaries, associates and joint ventures. Goodwill (positive and negative) represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired at acquisition date. - Positive goodwill is stated at cost less impairment losses. - While negative goodwill arose will be recognized directly in the income statement. - Goodwill resulting from further acquisitions after control is obtained is determined on the basis of the cost of the additional investment and the carrying amount of net assets at the date of acquisition, accordingly. B- Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortization and impairment losses. Amortization is recognized in the income statement on a straight – line basis over the estimated useful lives of intangible assets. License fees are amortized over the period of the licenses, concessions and computers software are amortized from the date they are available for use. The estimated useful lives are as follows:

Assets

Amortization period

-

Licenses Fees

-

Concessions and Computers software

Over the remaining period of the licenses 3-15 years

C- Subsequent expenditure Subsequent expenditure on capitalized intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. 3-8

fair value, with any resultant gain or loss being recognized in equity, except for impairment losses which is recognized in the income statement. When these investments are derecognized, the cumulative gain or loss previously recognized directly in equity is recognized in the income statement. The fair value of investments available for sale, identifies based on quoted price of the exchange market at the balance sheet date, investments that are not quoted, and whose fair value can not be measured reliably, are stated at cost less impairment loss.

Investments at fair value a- Available-for-sale financial assets

Available-for-sale financial assets are valued at

b- Investments at fair value through profit and loss

An instrument is classified as at fair value through income statement if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through income statement if the Company manages such investments and makes purchase and sale decisions based on their fair value.

3-9

Impairment a- Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-forsale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognized in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognized previously in equity is transferred profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and availablefor-sale financial assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity.

b- Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than biological assets, investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-

67

generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in profit or loss. The recoverable amount of an asset or cashgenerating unit is the greater of its value in use and its fair value less costs to sell. Impairment losses recognized 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 amortization, if no impairment loss had been recognized. 3-10 Cash and cash equivalents For the purpose of preparing the Statement of Cash Flows, the Company considers all cash on hands and bank on demand deposits with banks and short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value with original maturities of three months or less are considered as cash and cash equivalents. The Statement of Cash Flows is prepared according to the indirect method. 3-11 Trade and other receivables Trade and other receivables are stated at their cost less impairment losses. 3-12 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average method and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and other addition expenses.

3-13 Non-current assets held for sale

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use is classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property and biological assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

3-14 Taxation

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3-15 Provisions

Provisions are recognized when the Company has a legal or constructive obligation as a result of a past event and it’s probable that a flow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pretax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Provisions are reviewed at the balance sheet date and amended (when necessary) to represent the best current estimate.

3-16 Earning per share

The Company presents basic earnings per share (EPS) data 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.

3-17 Interest-bearing borrowings

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, Interest-bearing borrowings are stated at amortized cost with any difference between cost and redemption value being recognized in the income statement over the period of the borrowings on an effective interest basis.

3-18 Issued capital a- Repurchase of share capital

When share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a change in equity. Repurchased shares are classified as treasury stock and presented as a deduction from total equity.

b- Dividends

Dividends are recognized as a liability in the year in which they are declared.

for use. b- Employees’ pension The Company contributes to the government social insurance system for the benefit of its personnel in accordance with the social insurance law. Under this law, the employees and the employers contribute into the system on a fixed percentage-ofsalaries basis. The Company’s liability is confined to the amount of its contribution. Contributions are charged to income statement using the accrual basis of accounting.

3-19 Legal reserve

As per the Company’s statutes 5% of net profit for the year is set aside to form a legal reserve, the transfer to such reserve ceases once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized in covering losses or increasing the Company’s share capital.

3-20 Revenue recognition (i) Cellular operations revenue GSM revenue is recognized when services rendered to the customers based on the actual usage airtime from the following activities: - Prepaid cards is recognized based on the actual used calls minutes while the unused call minutes at the end of the period are deferred. - Monthly and connection fees are recognized in the income statement on a straight-line basis over the period or the terms of the contract. - Other GSM telecommunications services and facilities when provided. (ii) Telecommunications services revenue Revenue from the provision of telecommunications services includes the following: - - - - -

Goods sold Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer. Construction contracts Revenue is recognized in proportion to the stage of completion of the contract. Satellite services Revenue is recognized once the services delivered to the client. VAS revenue Value added services (VAS) revenue is recognized once the services are delivered, or used by the customers. Space segment revenue Space segment rental fees are recognized in the income statement on a straight-line basis over the terms of the lease.

(iii) Internet and fixed lines revenue Revenue is recognized once the service delivered to the client. 3-21 Expenses a- Borrowing costs Borrowing costs are recognized as expenses in the income statement when incurred, with the exception of borrowing cost directly attributable to the construction and acquisition of new assets which is capitalized as part of the relevant assets cost and depreciated over assets’ estimated useful lives. This capitalization ceases once the assets become in operational condition and ready

3-22 Segment reporting A segment is a distinguishable component of the group that is engaged either in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subjected to risks and rewards that are different from those of other segments. The group’s primary format for segment reporting is based on business segment. 3-23 Discontinued operations A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period. 4. Financial Risk Management Financial Risk Factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and cash flow interest risk), credit risk and liquidity risk. In particular the Group is exposed to risks from movements in exchange rates, interest rates and market prices. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s performance through ongoing operational and finance activities. Depending on the risk assessment, the Group uses selected derivative hedging instruments. The management has overall responsibility for the establishment and oversight of the group’s risk management framework. Market Risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising when its business transactions are in currencies other than its functional currency. The main currencies to which the Group is exposed are the US dollar, the Canadian Dollar and the Euro. In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a natural hedge of the exchange rate of such financing. However, as some transactions are executed in foreign currencies, and in particular in US$, CAD and Euro, the Group may be subject to the risk of

68

exchange rate fluctuations which, in certain instances the Group manages through the use of hedging strategies. As of December 31, 2009 the Group’s borrowings included US$ borrowings amounting to EGP 23,313 million (equivalent to US$ 4,232 million) and Euro borrowings amounting to EGP 1,988 (equivalent to Euro 248 million). In certain instances the Group has entered into economic hedging agreements to manage the risk of fluctuations relating to these financing operations. In particular, Pakistan Mobile Communication Limited (PMCL) had borrowings for EGP 975 million (equivalent to US$ 177 million) and EGP 1,523 (equivalent to Euro 190 million) as of December 31, 2009. Such borrowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani Rupee. The Group subsidiaries generally execute their operating activities in their respective functional currencies. Some Group subsidiaries are, however, exposed to foreign currency risks in connection with scheduled payments in currencies that are not their functional currencies. In general this relates to foreign currency denominated supplier payables and receivables. The Group monitors the exposure to foreign currency risk arising from operating activities and, where relevant, enters into hedging transactions in order to manage the exposure. As of December 31, 2009, if the functional currencies had weakened / strengthened by 3% against the US$, the Euro and CAD, with all other variables held constant, the translation of foreign currency receivables and payables would have resulted in a decrease/ increase in profit for the year (after tax) of EGP 363 million, mainly relating to US$ denominated borrowings. Additionally, the Group has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure to such risk is not hedged. Cash flow and fair value interest rate risk

The Group is exposed to market risks as a result of changes in interest rates particularly in relation to borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floating interest rate borrowings based on the Group’s perception of future interest rate movements. In particular, the risk monitored relates to the impact of movements in floating rate indices on the Group’s finance costs. When considered appropriate, the Group manages its cash flow interest rate risk by using floating-to fixed interest rate swaps. In particular, as of December 31, 2009 the Group had two interest rate derivative contracts. The first contract is a floating-to-fixed interest rate swap with a notional value of US$ 1.5 billion and the other contract is a switchable interest rate swap with a notional value of US$ 500 million. After considering such derivative transactions approximately 57% of the Group’s total borrowings had a floating rate of interest. The Group considers the sensitivity of its finance costs to movements in interest rates. In particular an increase / decrease of 1.0% in interest rates as of December 31, 2009 would have resulted in an increase / decrease in finance costs of EGP 182 million and a decrease / increase in the cash flow hedge reserve of EGP 187 million.

Price risk

The Group has limited exposure to equity securities price risk on investments held by the Group. Credit Risk

The Group considers that it is not exposed to major concentrations of credit risk in relation to trade receivables. However, credit risk can arise in the event of non-performance of a counterparty, particularly in relation to credit exposures for trade and other receivables, financial instruments and cash and cash equivalents. The Group considers that the concentration of credit risk with respect to trade receivables is limited given that the Group’s customer base is largely pre-paid subscribers. Post paid subscribers generally represent a small portion of the subscriber base and therefore the credit exposure is limited. In addition, the Group tries to mitigate credit risk by adopting specific control procedures, including assessing the credit worthiness of the counterparty and limiting the exposure to any one counterparty. Credit risk relating to cash and cash equivalents, derivative financial instruments and financial deposits arises from the risk that the counterparty becomes insolvent and accordingly is unable to return the deposited funds or execute the obligations under the derivative transactions as a result of the insolvency. To mitigate this risk, wherever possible the Group conducts transactions and deposits funds with financial institutions with a minimum of investment grade rating. The Group is exposed to credit risk relating to financial receivables as follows: • During 2008 the Company entered into two loans agreements to provide a total amount of EGP 2,695 million (equivalent to CAD 508 million) to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment Holdings Corp (“Globalive”). The amount of these loans was further increased to EGP 3,225 million (equivalent to CAD 608 million) during 2009. As of December 31, 2009 the amount outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to EGP 3,833 million). The loans were primarily provided to GWMC to fund the acquisition of spectrum licenses in Canada. The licenses were awarded to GWMC during March 2009 by Industry Canada and GWMC became fully operational in early 2010. During the start-up phase of operations Globalive has incurred losses and as a result the Group’s share of losses exceeds the carrying value of the investment. The Group considers the loan provided as part of the investment and has therefore deducted the excess losses from the receivable. After considering such losses an amount of EGP 3,542 million is recorded in financial receivables. (see Note 20 “Other financial assets” for further details). • In November 2008 the Company sold its investment in Orasinvest Holding Inc. (“OrasInvest”). The total receivable from the sale amounted to EGP 985 million (equivalent to US$ 180 million), prior to price adjustments. Of this EGP 985 million, EGP 487 million (equivalent to US$ 90 million) was received in 2008 and a further EGP 413 million (equivalent to US$ 75 million) was received and settled in 2009. As of December 31, 2009 the amount outstanding was EGP 83 million (equivalent to US$ 15 million). The remaining receivable is expected to be settled during 2010. In general the remaining other receivables and financial receivables included in financial assets generally relate to a variety of smaller

amounts due from a wide range of counterparties, therefore, the Group does not consider that it has a significant concentration of credit risk. Liquidity Risk

The Group monitors and mitigates liquidity risk arising from the uncertainty of cash inflows and outflows by maintaining sufficient liquidity of cash balances as well as undrawn credit lines and by diversifying its sources of finance. In general, liquidity risk is As of December 31, 2009 Liabilities Liabilities to banks Bonds Other borrowings Telecommunication license payable Trade payables

Carrying amount

monitored at entity level whereby each subsidiary is responsible for managing and monitoring its cash flows and rolling liquidity reserve forecast in order to ensure that it has sufficient committed facilities to meet its liquidity needs. The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Expected cash flows (*)

24,652 6,914 119 2,003 5,745 39,433

Less than 1 year

27,595 9,224 128 2,313 5,745 45,005

5,625 875 108 1,575 5,745 13,928

Between 1 and 5 years

More than 5 years

21,850 8,349 20 332 30,551

120 406 526

Carrying amount

Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

More than 5 years

24,467 6,377 250

30,526 9,003 300

4,060 630 105

25,257 4,058 195

1,209 4,315 -

Telecommunication licence payable

2,190

2,640

1,127

1,021

492

Trade payables

6,567 39,851

6,567 49,036

6,567 12,489

30,531

6,016

As of December 31, 2008 Liabilities Liabilities to banks Bonds Other borrowings

* Expected cash flows are the gross contractual undiscounted cash flows including interest, changes and other fees. The table below analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. As of December 31, 2009 Cash outflow / (cash inflow) Interest rate derivatives Foreign exchange derivatives Other Derivative instruments- Cash inflow Total As of December 31, 2008 Cash outflow / (cash inflow) Interest rate derivatives Foreign exchange derivatives Other derivative instruments cash outflow Other derivative instruments cash inflow Total

Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

More than 5 years

540 (1,131)

357 (178)

183 (953)

-

(152)

(50)

(102)

-

(743)

129

(872)

-

Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

More than 5 years

641

236

405

-

(5)

57

(59)

(3)

31

31

-

-

(31) 636

(31) 293

346

(3)

* Derivative cash flows for interest rate derivatives and foreign exchange derivatives represent the net cash flow from the relevant swap transaction as such derivatives are net settled. Cash inflow and cash outflow for other derivative instruments are shown separately as such derivatives are gross settled.

69

Derivative cash outflows do not include the potential cash outflows should the share warrants of My Screen and Lingo be exercised. The exercise of such warrants is at the option of the Group. Details of such warrants are provided in note 19 “Other financial assets”. Additionally the put and call option for the purchase of the investment in Namibia has not been included in the contractual cash flows. Contractual cash flows are divided based on the relevant index as of the balance sheet date. Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders through share buyback transactions, issue new shares or sell assets to reduce debt. Other risks Political and economic risk in emerging countries A significant amount of the Group’s operations are conducted in Algeria, Pakistan, Egypt and Tunisia. The operations of the Group depend on the market economies of the countries in which the subsidiaries operate. In particular, these markets are characterized by economies that are in various stages of development or are undergoing restructuring. Therefore the operating results of the Group are affected by the current and future economic and political developments in these countries. In particular, the results of operations could be unfavorably affected by changes in the political or governmental structures or weaknesses in the local economies in the countries where it operates. These changes could also have an unfavorable impact on financial condition, performance and business prospects. Regulatory risk in emerging countries Due to the nature of the legal and tax jurisdictions in the emerging countries where the Group operates, it is possible that laws and regulations could be amended. This could include factors such as the current tendency to withhold tax on the dividends of these subsidiaries, receiving excessive tax assessments,the granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable effect on the financial activities of the Group and on the ability to receive funds from the subsidiaries. Revenue generated by the majority of the Group subsidiaries is expressed in local currency. The Group expects to receive most of this revenue from its subsidiaries and therefore it relies on their

ability to be able to transfer funds. The regulations in the various countries where the subsidiaries operate could reduce the ability to pay interest and dividends and to repay loans, credit instruments and securities expressed in foreign currency through the transfer of currency. In addition, in some countries it could be difficult to convert large amounts of foreign currency due to central bank regulations. The central banks may amend regulations in the future and therefore the ability of the company to receive funds from its subsidiaries may be restricted. 5- Segment reporting

The Company considers primary segment information by business activity. The method used to identify the business segments include the factors used by management to direct the Group and assign managerial responsibilities. The methodology adopted to identify the components of revenues and cost attributable to each business segment is based on the identification of each component of cost and revenues directly attributable to each segment. The operating activities of the Group are organized and managed separately based on the nature of the products and services provided. Each segment offers different products and services to different markets and is controlled by different legal entities. The following primary business segments have been identified: • GSM covering the mobile telecommunications services activities of the Group, including the sale of pre-paid telephone cards, post-paid and monthly subscriptions packages, telephone packages and roaming included in this segment are ; • Telecom services relating to the sale of handsets, including ring tones and other cell phone products and activities relating to the rental of portals to allow satellite roaming calls and value added service activities; and • Internet & fixed line covering the internet and fixed telecommunications services of the Group. The Group also reports geographical segments based on the geographical location of the legal entity controlling the operation, which is the same as the location of the major customers. The following geographical segments have been identified: • North Africa – comprising Algeria and Tunisia • Middle East – comprising Egypt • South Asia – comprising Pakistan and Bangladesh • Others – comprising, North Korea, Central Africa, Namibia, Burundi, Malta, Belgium, the United Kingdom and other countries

Primary segment information (in million of LE)

GSM

Telecom services

Internet & fixed line

Unallocated

Total

26,513

1,448

549

-

28,510

26,738

3,822

521

-

31,081

(16)

(178)

(54)

-

(248)

(581)

(1,248)

(99)

-

(1,928)

26,497

1,270

495

-

28,262

26,157

2,574

422

-

29,153

(136)

-

(78)

-

(214)

(41)

-

(175)

-

(216)

(5,321)

(39)

(94)

(23)

(5,477)

(4,809)

(63)

(88)

(21)

(4,981)

7,125

147

(223)

(409)

6,640

8,127

(36)

(393)

591

8,289

5,571

123

(256)

(1,229)

4,209

6,153

(103)

(435)

(565)

5,050

3,882

33

(269)

(1,450)

2,196

4,525

(348)

(446)

(889)

2,842

46,284

2,314

880

5,809

55,287

46,251

2,275

1,091

5,092

54,709

5,115

515

31

32

5,693

9,318

597

349

28

10,292

24,473

2,231

598

20,416

47,718

26,317

985

590

20,392

48,284

2009 2008 Gross revenues Intersegment revenues Net revenues Impairment Charges Depreciation and amortization Operating income Profit before income tax Profit for the Year Total Segment assets Total Capital expenditure Total segment liabilities

**Unallocated represents revenues and costs relating to activities provided centrally from headquarters to subsidiaries across the group. These activities include staff functions with group wide responsibilities such as internal audit, financial advisory, legal services, communications and investor relations. Unallocated

assets and liabilities mainly include borrowings of the Company and deferred tax assets and liabilities. ** Segment capital expenditure is the total cost incurred during the period to acquire property and equipment and intangible assets other than goodwill.

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Secondary segment information (in million of LE)

12,418

7,137

7,978

977

-

28,510

carrier M-Link in January 2009. (See Note 34 “Related party transactions” for further information) Revenue from international and national roaming decreased in 2009 due to the agreement of discounts with many operators and low prices offered to compete in the challenging markets across the territories during 2009. In general revenues during 2009 were negatively impacted by the movements in local currencies compared to the EGP and in particular movements in the Algerian Dinar and Pakistan Rupee.

13,413

7,670

8,375

1,623

-

31,081

(5)

(197)

(20)

(26)

-

(248)

8-

(454)

(923)

(133)

(418)

-

(1,928)

12,413

6,940

7,958

951

-

28,262

12,959

6,747

8,242

1,205

-

29,153

4,822

1,311

705

222

(420)

6,640

5,703

1,059

760

176

591

8,289

4,657

971

(332)

155

(1,242)

4,209

5,466

732

(618)

136

(666)

5,050

3,135

604

(278)

196

(1,461)

2,196

3,911

310

(453)

65

(991)

2,842

17,249

10,746

18,551

2,847

5,894

55,287

17,024

20,999

10,004

1,556

5,126

54,709

1,717

1,817

1,619

508

32

5,693

1,203

5,504

3,406

151

28

10,292

North Africa

Middle East

South Asia

Other

Unallocated

Total

2009 2008 Gross revenues Intersegment revenues Net revenues Operating income Profit before income tax Profit for the year Total Segment assets Total Capital expenditure

6- Assets and liabilities classified as held for sale The following provides a breakdown of assets and liabilities held for sale as of December 31, 2009: Property, plant and equipment Intangible assets Trade receivables Other current assets Cash and cash equivalents Assets held for sale Current and non current borrowings Trade payables Other current liabilities Current income tax liabilities Deferred tax liabilities Liabilities held for sale

2009

261 166 67 42 70 606  

2008

61 111 221 8 44 445  

128

-

81 83 1 7 300

119 11 6 136

Assets and liabilities held for sale include the following: Link Egypt and Link Dot Net In February 2009 the Company stated that they had received an indicative non-binding offer for the acquisition of 100% of the shares of LINKdotNET and Link Egypt. In accordance with EAS 32 the assets and liabilities held for sale in disposal groups have been separately shown in specific captions on the consolidated balance sheet. The income statement effects of these entities have not been shown as discontinued operations as they do not represent a separate major line of business.

Oracap Far East Ltd reclassified as held for use. Orascom Telecom Holding management decided to stop the process of sale of Oracap Far East Ltd. and reclassified as held for use. Sale of M-link S.a.r.l (Luxemburg) (M-Link) The assets and liabilities of M-Link were presented as held for sale in 2008, following the decision of management of the Company to focus on GSM business and dispose of non-core assets. On January 13 th, 2009 the Company announced the sale of 100% of M-Link to TLC SERVIZI S.p.A (now renamed Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A., for a total consideration of approximately EGP 435 million in cash. (See Note 34 “Related party transactions”).

Total revenues from services

Total revenues from sale of goods Total

Interconnection traffic and roaming Cost of handsets, scratch cards, sim cards, bundle cost Advertising and promotional services Internet and fixed line costs Customer acquisition costs Maintenance costs Utilities Rental of network Other leases and rentals Rental of civil and technical sites Consulting and professional services Consumable materials, equipment and goods Cost for security service Cost for printing & collection services Other service expenses Total

2009

  22,178 3,342 730 666 26,916 1,346

28,262

2008

  21,861 4,731 820 411 27,823 1,330

29,153

Revenues from telephony services decreased in 2009 compared to 2008 mainly as a result of a decrease in calling rates as part of a marketing campaign due to competition with the other operators. Revenues from interconnection traffic decreased in 2009 compared to 2008 mainly due to the sale of the Group’s gateway

2009 3,287

2008 3,899

1,747

1,704

1,055 1,347 1,293 1,301 762 392 409 431 363

1,382 1,336 1,215 1,038 721 466 417 388 318

110

264

195 110 394 13,196

205 64 330 13,747

Purchases and services costs decreased during 2009 primarily due to the weakening of the local currencies compared to the US$. As a percentage of revenues, purchase and service costs were substantially consistent, amounting to 46.7% in 2009 and to 47.1% in 2008. In particular, interconnection traffic and roaming costs decreased in 2009 compared to 2008 mainly due to the sale of M-Link in January 2009. Advertising and promotional expenses decreased in 2009 compared to 2008 mainly due to a change in policy in Bangladesh. Consumable materials, equipment and goods decreased in 2009 due to the sale Orasinvest. These items were partially offset by an increase in maintenance costs due to an increase in the number of cell sites and general utilities costs and an increase in costs of handsets, scratch cards, sim cards, bundle cost mainly due to the increased sales of Ring. 9- Other expenses

7- Revenues Revenues from services Telephony services Interconnection traffic International and national roaming Other services

Purchases and services

License costs Travel costs Accruals for provisions Allowance for doubtful receivables Taxes (other than income tax) Training expenses Other operating expenses Total

2009 320 87 181 218 21 48 328 1,203

2008 304 113 78 102 93 58 207 955

The increase in other expenses was primarily attributable to the increase in accruals for provisions, allowance for doubtful receivables and other operating expenses during 2009. The increase in the allowance for doubtful receivables was mainly related to a revision of allowance for doubtful debts policy in OTA. While accruals for provisions included EGP 106 million relating to the accruals for the tax dispute in Algeria. Taxes (other than income tax) decreased mainly due to the sale of M-Link.

10- Personnel costs Wages and salaries Bonuses given to management and employees Social security Share based compensation Pension costs Board of Directors remuneration Other personnel costs Total

2009 1,173

2008 1,078

257

146

95 69 48 20 118

86 61 41 15 127

1,554

1,780

The increase in personnel cost was primarily due to the increase in the number of employees in 2009 compared to 2008 as well as restructuring and an increase in salaries mainly in the Company and Egyptian Company for Mobile Services S.A.E. (“ECMS”). Bonuses increased in 2009 compared to 2008 mainly relating to bonuses paid in PMCL in 2009 as a result of reaching operational targets. The table below provides a breakdown of the number of employees as of December 31: As of December 31, 2009 2008     294 216 1,701 1,447 15,218 14,859 17,213 16,522

(in number of employees)

Senior management Middle management Staff Total

The table below provides a breakdown of the average number of employees for the years ended December 31, 2009 and 2008:

(in number of employees) Senior management Middle management Staff Total

Average for the year ended December 31, 2009 2008     255 205 1,574 1,355 15,039 15,012 16,868 16,572

11- Depreciation and amortization Depreciation of property and   equipment: -Cell sites -Computers, fixtures and other equipment -Buildings Amortization of intangible assets -Licences

-Other intangible assets

Total

2009

2008  

4,142

3,747

321 133

338 127

639

613

5,477

4,981

242

 

156

Depreciation and amortization increased due to the increase in cell sites depreciation primarily as a result of an increase in investments in the network.

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12- Impairment charges

Impairment charges amounting to EGP 214 million in 2009 mainly relate to the impairment of EGP 96 million for plant and equipment in PMCL in Pakistan and Link Dot Net Telecom, a subsidiary of PMCL operating in Pakistan as well as impairment of goodwill amounting to EGP 33 million in Link Dot Net Telecom. The impairments in Link Dot Net Telecom are mainly as a result of the uncertainties for the future expectations of this business. 13- Unusual Items

During November 2009 Orascom Telecom Algeria S.p.A. and Ring Algeria LLC, subsidiaries of the Company, experienced damages to shops, warehouses and infrastructure, as well as break-in to premises and theft of equipment, during football related disturbances in Algeria. The cost of damaged inventories, as a result of such disturbances, amounted to EGP 100 million, whilst the damage to property and equipment amounted to EGP 134 million. Both entities have submitted formal claims to their insurance companies relating to this incident. Furthermore, a technical assessment performed by an independent insurance expert stated that the minimum expected recovery from the insurance company is 1 billion DZD (equivalent to EGP 78 million). This incident is considered as an exceptional event which is out with the normal course of operations and has been recorded in the income statement as unusual items. After considering the expected minimum insurance proceeds, an amount of EGP 73 million has been recorded as unusual inventory loss relating to the damaged inventories and an amount of EGP 84 million has been recorded as unusual capital loss relating to the damaged property and equipment. 14- Disposal of non-current assets

The gain on disposal of non-current assets amounting to EGP 232 million in 2009 mainly relates to the gain of EGP 196 million on disposal of M-Link which was sold to Wind Telecomunicazioni SpA for a cash consideration of EGP 435 million during January 2009. (See Note 34 “Related party transactions”) Gain on disposal of non-current assets amounting to EGP 363 million in 2008 mainly relates to the gain on the disposal of the subsidiary OrasInvest. During 2009 a further gain of EGP 43 million was recorded relating to a post acquisition sale price adjustment. 15- Net financing costs Interest on deposits and bank accounts Interest on non-current financial receivables Other financial income Gain on extinguishment of debt Dividends from investments Financial income Interest on bonds Interest on other borrowings Interest on other liabilities and other financial expense Financial expense Foreign exchange gain /(loss) Fair value changes of FX derivative instruments Net foreign exchange gain /(loss) Total

Gain from extinguishment of debt in 2009 relates to the tender offer by PMCL which was completed in May 2009 to repurchase a portion of its senior notes. As a result of this tender offer, PMCL repurchased the notes at a repurchase price of US$ 730 per US$ 1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million (equivalent to EGP 770 million) for cash consideration of US$ 101 million (equivalent to EGP 564 million). The difference between the repurchase price and carrying value of the debt was recorded as gain from extinguishment of debt, net of the effects of closing out derivatives associated with this debt. Financial income increased in 2009 mainly relating to the interest accrued on the loans to Globalive. (See Note 20 “Other financial assets” for further information). Financial expense increased mainly due to an increase in interest on bonds which related to the issuance of a US$ 230 million bond (equivalent to EGP 1,267 million) (“Oscar Bond”) in February 2009 (see Note 26 “Borrowings”). The gain in foreign exchange is mainly due to unrealized gain on translation of supplier facilities, telecommunication license payables and borrowings due to the strengthening of the EGP,PKR and DZD against the US$. Fair value changes on FX derivative instruments relates to the changes in the fair value of the cross currency swaps held by PMCL in connection with the economic hedge of borrowings 16- Share of loss of associates and gain on disposal of associates

Share of loss of associates in 2009 and 2008 relates to the investment in Globalive Canada Investment Holdings Corp. and Globalive Canada Holdings Corp. (collectively “Globalive”). The Group holds a 65.4% investment in Globalive which comprises a combination of voting and non-voting rights. Considering direct and indirect interests, the Group holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The Group has significant influence over this investment and does not have control over the financial and operating policies of Globalive. Therefore the investment is equity accounted. The following table provides selected financial information of Globalive as of December 31, 2009 and 2008 and for each of the years then ended. 2009

2009

2008

133

162

63

84

209 128 530

36 9 291

(592) (1,913)

(500) (1,743)

(347)

(319)

(2,850)

(2,562)

188

(1,936)

(37)

151 (2,168)

835

(1,101) (3,372)

Current assets Non-current assets Current liabilities Non-current liabilities Revenue Net loss % shareholding proportional share of net loss Amortization expense of identifiable assets Elimination of proportional share of intra group interest expense Share of loss in associate

2008

353 4,198 1,080 3,977 262 (513) 65.4%

2,065 11 2,242 0 0 (159) 65.4%

(17)

0

89

88

(263)

(16)

(335) 0

(104)

Gain on disposal of associates in 2008 amounting to US$ 27 million relates to the disposal of the remaining investment in Hutchison Telecommunications International Limited (“Hutchison Telecommunications”). In October and November 2007 the Group

sold 5% of its investment in this associate and the remaining investment was sold in January 2008. 17- Income tax expense

Current income tax expense Deferred taxes Income tax expense

2009

2008

(2,270)

(2,339 ) 131

257

(2,013)

(2,208)

Current income tax receivables and liabilities in the consolidated balance sheet are as follows:

Current income tax receivable Current and non current income tax liabilities

2009   553 (1.032)

2008 416 (2,124)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: Profit from continuing operations Tax calculated at Company›s income tax rate Different income tax rates in subsidiaries Theoretical income tax for the year Permanent differences Unrecognized deferred tax for tax losses Reversal of expired deferred tax assets for tax losses Utilization of previously unrecognized deferred tax assets Unrecognized deferred tax liabilities on unremitted earnings Prior period tax Other differences Income tax for the year

2009 4,209

2008 5,050

824

1,010 456

536 1,378 123

1,466 87

279

493

-

47

-

(89)

-

101

250 (17) 2,013

103 2,208

The Group’s income tax expense decreased from EGP 2,208 million in 2008 to EGP 2,013 million in 2009 while the effective tax rate increased from 44% to 48%, respectively. The increase in the effective tax rate was primarily attributable to the provision charged to Income tax expense during 2009 with an amount of US$ 30 million against the tax claims 2004-2007 which has been received by Orascom Telecom Algeria S.P.A. (“OTA”).

72

18- Property and equipment Land and Buildings Cost

As of January 1, 2009 Additions

Change in the scope of consolidation Assets held for sale Disposals

Currency translation differences Reclassifications

As of December 31, 2009

Accumulated Depreciation and Impairment As of January 1, 2009

Cell Sites

994

107

5

3,494

19

5,369

28

207

(420)

(21)

(1,037)

(39)

(118)

(1,215)

942

36,934

1,916

4,578

44,370

325

11,567

1,020

86

12,998

(145)

2

1

(69)

1

Currency translation differences

(11)

Net book value as of December 31, 2008

669

Net book value as of December 31, 2009

291

40,906

(15)

-

As of December 31, 2009

155

5,289

(92)

Assets held for sale

Impairment loss

1,477

1,811

Total

(313)

133

Disposals

32,812

Assets Under Construction

-

Charge for the year

Change in the scope of consolidation

Computers, fixtures and other equipment

Additions to property and equipment in 2009 mainly relate to cell site investments and assets under construction relating to new base stations, predominantly in GSM companies in Pakistan, Bangladesh and Algeria. Those investments are mainly due to the expansion of the business, increased capacity and the change in GSM technology.

380

562

(158)

3,998

4,142

25

(87)

13

(87)

(477)

(4,013)

321

-

-

3

4,596

-

(39)

-

(159)

26

11

95

133

1,182

181

(108)

(431)

15,101

21,245

21,833

(74)

-

(60)

(251)

-

791

(502)

16,844

5,203

734

27,908

4,397

27,526

  Cost

As of January 1, 2008

Land and Buildings

Cell Sites

In the year ended December 31, 2009 and 2008 the Group capitalized borrowing costs of EGP 201 million and EGP 344

Cost

As of January 1, 2009 Additions

Change in the scope of consolidation Assets held for sale Disposals

Currency translation differences

 

 

 

910

29,915

1,591

Change in the scope of consolidation

(17)

302

(61)

Disposals

(30)

(224)

(32)

Additions

Assets held for sale

Currency translation differences

214

(15)

1,752 (86)

454

(17)

 

4,432

6,479 (22)

As of January 1, 2009

Total  

Charge for the year

Change in the scope of consolidation

36,848 8,899 202

(8)

(126)

(487)

(4,586)

5,289

40,906

(45)

(331)

(90)

(3,860)

(149)

As of December 31, 2008

994

32,812

1,811

As of January 1, 2008

247

9,044

819

49

10,159

3

140

(40)

-

103

(3)

(158)

(16)

-

(177)

(47)

(1,156)

-

(1,275)

4,383

26,689

Reclassifications

Accumulated Depreciation and Impairment

Charge for the year

Change in the scope of consolidation Assets held for sale

Disposals

Impairment loss

Currency translation differences

As of December 31, 2008

Net book value as of December 31, 2007

Net book value as of December 31, 2008

22  

127

(4) 2

325

663

669

5,013

 

3,747 (51) 1

25

 

338

(10)

(5,060)  

-

-

1

37

11,567

1,020

86

21,245

791

20,871

(72) 772

5,203

 

4,212 (65) 41

12,998

27,908

(in million of EGP)

2009

From 2010 to 2017

Later

(Decrease) increase in depreciation expense

(45)

(485)

530

19- Intangible assets

Accumulated Amortization

Assets Under Construction

During the year ended 31 December 2009 the Group conducted an operational efficiency review at one of its subsidiaries – Orascom Telecom Bangladesh Limited – which resulted in changes in the expected useful lives of certain items in cell sites equipments. These equipments, which management previously intended to depreciate over eight years of use, is now expected to remain in use for fifteen years from the date of acquisition. The effect of these changes on depreciation expense, recognized in income statement, in current and future periods as follows:

Property and equipment pledged as security for bank borrowings amount to EGP 7.2 billion as of December 31, 2009 and primarily relate to securities for borrowings of PMCL, Trans World Associated Private Limited (“TWA”), Orascom Telecom Tunisie S.A.(“OTT”) and Telecel Namibia “Cell one” .

As of December 31, 2009

Computers, fixtures and other equipment

Change in estimates

Property and equipment transferred to assets held for sale in 2009 relates to the property and equipment of Link-Egypt and Link dot net See Note 6 “Assets and liabilities classified as held for sale” for further information.

29

(120)

million, respectively, relating to the acquisition of property and equipment.

Assets held for sale

Disposals

Impairment Loss

Currency translation differences

Licences

Goodwill

Total

 

10,302

6,741

1,518

18,561

46

265

55

366

-

-

(173)

-

(48) -

(10)

257

(191)

(38)

(26)

257

(239) (38)

(209)

10,175

6,948

1,575

18,698

4,006

813

746

5,565

5

-

5

10

639 -

-

-

(79)

As of December 31, 2009

4,571

Net book value as of December 31, 2009

5,604

Net book value as of December 31, 2008

Others

6,296

-

-

-

72

(2)

242

(73) -

9

53

883

982

6,065

593

5,928

772

881

(73) -

81

(28)

6,436

12,996

12,262

73

Licences

Cost

As of January 1, 2008

Additions

Goodwill

9,465

6,475

1,115

101

393

210

1,105

Change in the scope of consolidation Assets held for sale

-

(4)

Disposals

(365)

As of December 31, 2008

Accumulated Amortization

 

1,346 704

(115) (38)

(38)

(34)

(391)

8

10,302

6,741

1,518

18,561

3,415

810

643

4,868

As of January 1, 2008

Charge for the year

613

Change in the scope of consolidation

-

17

Impairment loss

Assets held for sale

5

-

-

-

Disposals

As of December 31, 2008

4,006

Net book value as of December 31, 2008

6,296

2

176

(2)

(2)

(4)

(4)

( 2)

(54)

5,665

472

813

6,050

Net book value as of December 31, 2007

22

5

-

(208)

Currency translation differences

769

156

-

169

(264)

746

5,928

5,565

12,187

772

12,996

Additions to others in 2009 mainly relate to software licenses.

control purposes.

Additions to intangible assets in 2008 primarily relate to the acquisition of a 3G license in Egypt, by Egyptian Company for Mobile Services S.A.E. (“ECMS”) with a duration of 14 years validity, the group’s proportionate share is EGP 941 million and the acquisition of a WiMax License by PMCL.

The carrying amount as of December 31, 2009 was subject to an impairment test to compare the carrying amount with value in use and the recoverable amount. The goodwill of LinkDotNet Telecom was impaired during the year prior to performing this test. After having considered this previous impairment, no further evidence of impairment arose. Value in use was determined by discounting the expected cash flows, resulting from business plans approved by the respective Board of Directors, using the post-tax weighted average cost of capital (WACC) as the discount rate.

Intangible assets pledged as security for bank borrowings amount to EGP 6.9 billion and primarily relate to securities for borrowings of PMCL and OTT. Impairment tests for goodwill Goodwill is allocated to the individual CGU which reflects the minimum level at which the units are monitored for management

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carry forwards of the Group’s subsidiaries in Pakistan with no expiry date.

2009 Algeria

GSM

Telecom Services

Internet & Fixed Line

Pakistan

Egypt

Tunisia

Bangladesh

Central and South Africa

North Korea

814 

175 

59 

573 

- 

6,010 

-

-

41

-

-

-

-

41

2,925

1,469

9

864

-

175

1,471 5 1,476

-

59

-

573

-

Tunisia

814 6 123 943

Bangladesh

Central and South Africa

59 59

350 350

175 175

North Korea

Total -

5,794 11 123 5,928

20- Other financial assets Non-current Financial receivables Derivative financial instruments Deposits Financial assets held for trading Financial assets available for sale

2009 Current

Total

2008 Current

Non-current

Total

3,729

101

3,830

2,302

940

3,242

601

234

835

885

136

1,021

224

78

302

240

459

699

-

191

191

-

-

-

103

25

128

114

-

114

4,657

629

5,286

3,541

1,535

5,076

20.1 Financial Receivables

As of December 31, 2008 and 2009 financial receivables mainly relate to loans provided to Globalive Management Corp (“GWMC”), a subsidiary of Globalive (see Note 16 “Share of loss of associates and gain on disposal of associates”). During 2008 the Company entered into two loan agreements with Globalive Management Corp (“GWMC”, a subsidiary of Globalive) to borrow an amount of up to CAD 508 million (equivalent to EGP 2,335 million ). Both loans are non-revolving term loans bearing interest of Libor plus 18%. In 2009 the loan agreements were amended to increase the facility to CAD 608 million (equivalent to EGP 3,225 million ). As of December 31, 2008 the amount outstanding under such loan agreements, including accrued interest, amounted to CAD 483 million (equivalent to EGP 2,220 million). During 2009 a further amount of CAD 138 million (equivalent to EGP 732 million) was advanced under the original loan agreements.

and has incurred losses to date. The Group’s share of these losses is in excess of the carrying value of the investment. The loans provided to Globalive are long term loans and have been considered to be a long-term interest forming part of the net investment in Globalive. As of December 31, 2009 the amount outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to EGP 3,833 million), the Group’s share of the excess losses of Globalive compared to the carrying value of the investment have therefore been deducted from the long term receivable. After considering the share of such losses the amount recorded in financial receivables is US$ 643 million (equivalent to EGP 3,410 million). Financial receivables as of December 31, 2008 also include an amount of US$ 165 million (equivalent to EGP 913 million). relating to receivables from the sale of subsidiaries. This primarily relates to the receivable from the sale of OrasInvest amounting to US$ 90 million, of which US$ 75 million (equivalent to EGP 413 million) was settled in December 2009 and the residual receivable of US$ 75 million (equivalent to EGP 413 million) from the sale of Iraqna which was settled during 2009. As of December 31, 2009, the residual receivable from the sale of OrasInvest of US$ 15 million (equivalent to EGP 83 million) is due to be settled in 2010

20.2 Derivative financial instruments

1,464

5

2,925 2,925

Egypt

Globalive launched its wireless network to the Canadian market in December 2009 and is therefore in the start-up phase of operations

Total

 2,925 -

GSM Telecom Services Internet & Fixed Line

Pakistan

Globalive was awarded CAD 442 million of spectrum licenses in March 2009 and the loans are secured on a subordinated basis by an assignment of these licenses and are guaranteed on a non recourse basis.

The following table provides an analysis of goodwill by segment

 

Algeria

17,055

(18)

-

2008

Total

241

(93)

-

Currency translation differences

Others

14

6,065

Interest rate derivatives Foreign exchange derivatives Other derivative instruments Total Less non-current portion Interest rate derivatives

Assets

2009 6 738 88   832  

Liabilities

545   545  

Assets

2008 981 40

Liabilities

624 6

1,241

630

-

195

-

399

Foreign exchange derivatives

515

-

851

-

Other derivative instruments

83

-

34

-

Current portion

234

350

136

231

74

Interest rate derivatives

2010. As of December 31, 2009 the fair value of this derivative asset was EGP 50 million. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement.

The notional principal amounts of the outstanding interest rate swaps that qualify for hedge accounting amounts to US$ 1.5 billion, relating to the A1 and A2 term loan supplements of the Company. Under the derivative contract the Company pays fixed interest rate and receives 6 month Libor. Gains and losses are recognized in the cash flow hedge reserve in equity. As of December 31, 2009 the fair value of the derivative liability was EGP 529 million. The gain recognized in the cash flow hedge reserve, net of deferred tax during the year ended December 31, 2009, amounts to EGP 138 million.

Other derivative instruments

Other derivative instruments mainly include the warrants to purchase shares of My Screen Mobile Inc and Lingo Media Corporation amounting to EGP 11 million and EGP 2 million, respectively as of December 31, 2009. The details of these warrants are provided below in the section “Financial assets available for sale”.

Additionally, during 2009 the Company entered into a switchable interest rate swap for a notional amount of US$ 500 million to cover a portion of the syndication loan. Under the derivative contract the Company receives a 25 basis point reduction in the floating interest rate and at the end of the first year (September 23, 2010) the bank has the right to either switch to a fixed rate swap (whereby the Company will pay fixed rate interest and receive floating) or switch to a floating rate with a cap (whereby the Company will pay floating rates up to a cap strike of 4.15%). As of December 31, 2009 the fair value of the derivative liability was EGP 16 million. .The changes in the fair value of the derivative are recognized in financial income and expense in the income statement. The fair value of this derivative asset as of December 31, 2009 was EGP 6 million.

In February 2009 the Company issued equity indexed notes with a nominal amount of US$ 230 million which mature in 2013. The notes have a redemption price on maturity which is indexed to the Company’s GDR price. This feature of the debt is considered as an embedded derivative which is valued at fair value through profit and loss. As of December 31, 2009 the fair value of this embedded derivative asset was EGP 77 million.

Foreign exchange derivatives

Deposits

CDC Fennec Ltd, a lender to Moga has the option to convert all amounts payable under the loan agreement into shares of the Company until the debt is extinguished. As of December 31, 2009 the amount due, recorded as liabilities to banks, amounted to EGP 160 million. As of December 31, 2009 and 2008 the fair value of this option was zero.

Foreign exchange derivatives primarily relate to the economic hedge of PMCL. The cross currency swap relates to certain borrowings of PMCL, which are swapped from US$ to PKR and from Euro to PKR, whilst the associated interest is swapped from LIBOR to KIBOR and from Euribor to KIBOR. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement. As of December 31, 2009 the fair value of this derivative asset was EGP 689 million

Deposits primarily relate to letters of guarantee and other restricted cash held as security for the performance of Group obligations. The decrease in deposits in 2009 mainly relates to the liquidation of deposits in Algeria for the payments of the dividend and the tax appeal.

Telecel Globe entered into a currency forward to hedge exposures to movements in Namibian Dollars in relation to the purchase price to be paid for the investment in PowerCom Namibia. The final installment of the purchase price was due to be paid in January

The following table shows the ageing analysis of financial receivables and long term deposits as of December 31, 2009 and 2008:

Deposits are partially pledged as security against related bank borrowings.

2009 302

Financial receivables 3,830

302

3,830

Deposits Not past due Past due 0-30 days Past due 31-120 days

Financial assets available for sale Company name

Smart Village (ECDMIV) My Screen Mobile Inc Lingo Media Corporation Top Level Domain Co. Other investments

ownership % 10% 9% 23% 5%

2008 699

Financial receivables 2,827

699

415 3,242

Deposits

December 31, 2009  

44 12 15 6 51 128

December 31, 2008 44 22 17 6 25 114

My Screen Mobile Inc

In May 2008, the Company concluded a “Restricted Stock Purchase Agreement” with My Screen Mobile Inc, an entity specializing in the delivery of advertising to mobile phones, to acquire 12.5 million shares which represents approximately 9% of the total share capital and existing voting rights. Additionally, the Company purchased share warrants to acquire up to 20 million shares at an exercise price of US$ 2 per share. The warrants can be exercised from the date of the agreement until May 23, 2012. The total purchase price of the shares and warrants was US$ 10 million. Upon exercise of the warrants, the Company would hold approximately 20% of the existing and potential voting rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009 the fair value of the investment amounted to US$ 2 million (equivalent to EGP 12 million) and the fair value of the warrant amounted to US$ 2 million (equivalent to EGP11 million). In August 2008, the Company entered into a subscription agreement to acquire 2,857,143 common shares of Lingo Media Corporation, a media entity focusing on online advertising. The investment represents approximately 23% of the total share capital and existing voting rights. The Company also purchased share warrants to acquire up to 2,142,857 shares of this entity. The warrants can be exercised from the date of the agreement for a period of two years, at an increasing price from US$4 up to US$8. The total purchase price of the shares and warrants was US$ 5 million. Assuming exercise of the warrants, the Company would have an interest of approximately 34% in this entity. Based on an assessment of the contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009, the fair value of the investment amounted to US$ 3 million (equivalent to EGP15 million) and the fair value of the warrants, which is recorded in derivative financial assets, amounted to US$ 0.4 million ( equivalent to EGP2 million ).

As of December 31, 2008 Charged / (credited) to the income statement Exchange differences Change in scope As of December 31, 2009 Accrued expense

As of December 31, 2008

840

195

Charged / (credited) to the income statement

413

28

-

-

100 (25)

(7)

1,328

216

Exchange differences As of December 31, 2009

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes due to the same tax authority. The following table provides a reconciliation of deferred tax assets and liabilities of the Group to the amounts included in the face of the balance sheet. 2009

Deferred tax liabilities, gross

2008

2,370

2,337

(1,179)

Deferred tax assets offset Deferred tax liabilities

Deferred tax assets, gross

(913)

1,191

1,424

(1,179)

(916)

1,833

Deferred tax assets of which recognized directly in equity

1,402

654

486

28

(121)

The gross movement in the deferred income tax account is as follows: 2009

As of January 1,

Exchange differences

2008

938

1,393

(68)

Change in scope

(250)

(105)

Income statement charge

47

(256)

(131)

537

938

28

Tax charged directly to equity As of December 31,

(121)

The movement of deferred tax assets and liabilities during the year, without taking into consideration any offsetting is provided in the tables below: Unremitted earnings

1,850 100 (167) (5) 1,778

Tax losses

Change in scope

21- Deferred taxes

Depreciation and amortization

Deferred tax liabilities

Charged directly to equity

Financial assets held for trading relate to government treasury bills and investment bonds purchased by PMCL.

Deferred tax liabilities offset

Lingo Media Corporation

Deferred tax assets

Financial assets held for trading

Depreciation and amortization

Other

443 (95) (17) 331 Impairment of assets

Total 44 184 33 261

Provisions

122

46

42

(33)

11

-

-

-

-

-

-

-

-

(7)

89

50

2,337 189 (151) (5) 2,370

Fair value

Other

Total

121

36

1,402

6

17

442

(28)

-

(28)

-

-

(44)

100 (83)

42

99

9

1833

75

No deferred tax assets were recognized on income tax loss carry forwards for some foreign subsidiaries, mainly Orascom Telecom Bangladesh Limited (“OTB”) and CAT, as it is currently not probable that taxable profit will be available in the near future against which such tax loss carry forwards might be utilized. Generally the Group does not recognize deferred tax assets for temporary differences related to accruals for provisions, due to uncertainties in connection with the tax treatment of such expenses, as they might be challenged by local tax authorities. No liability has been recognized in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. The following table provides a breakdown by estimated recoverability of recognized deferred tax assets and liabilities:

within 1 year within 1 - 5 years after 5 years

Deferred tax liabilities 2009 2008 77 276

Deferred tax assets 2009 2008 33 4

1,339

1873

1,800

1391

954 2,370

188 2,337

1,833

7 1402

2009 975

2008 916

539

506

437

422

64

92

277 (464) 1,828

250 (373) 1,813

22- Trade receivables Receivables due from customers Receivables due from telephone operators Accrued revenue (unbilled) Receivables due from authorized dealers Other trade receivables Allowance for doubtful receivables Total

The following table shows the movement in the allowance for doubtful receivables At January 1 Exchange differences Additions (allowances recognized as an expense) Change in scope Use Reversal Reclassifications At December 31,

2009 373 (15)

2008 484 (30)

218

102

(27) (59) (26) 464

(1) (73) (11) (98) 373

The following table shows the ageing analysis of trade receivables as of December 31, 2009 and 2008, net of the relevant provision for doubtful receivables: Not past due Past due 0-30 days Past due 31-120 days Past due 121 - 150 days Past due more than 150 days Trade receivables

2009 677 476 449 22 204 1828

2008 852 393 353 50 165 1,813

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any collateral as security. 23- Other current assets Prepaid expenses Advances to suppliers Receivables due from tax authority Deferred cost Other receivables Allowance for doubtful current assets Total

2009 494 67 1,018 777 (272) 2,084

2008 428 89 84 78 953 (255) 1,377

The increase in receivables due from tax authority is mainly related to down payments against the tax claim received by OTA covering the years 2004-2007. The following table shows the movement in the allowance for other current assets: 2009 2008 At January 1 255 148 Exchange differences (3) (1) Additions (allowances recognized as 29 11 an expense) Use  (9) 97 Reclassifications At December 31, 272 255 24. Cash and cash equivalents 2009 Bank accounts 2,277 Deposits 1,893 Treasury bills 14 Cash on hand Total 4,184

2008 2,929 387 277 15 3,608

Cash and cash equivalents as of December 31, 2009 were unusually high mainly due to undistributed dividends at Orascom telecom Algeria “OTA” and Mobinil amounted to EGP 1,339 million. Deposits includes an amount of DZD 10,201M equivalent to EGP 772 million representing the remaining agreed amount not to be repatriated until the Algerian tax authority “DGE” issue a clearance certificate in relation to the tax position of OTA (see note 35).

On October 22, 2009, the Extraordinary General Meeting approved a share capital reduction through the cancellation of 10,302,769 treasury shares (856,624 local shares and 1,889,229 GDR’s) amounting to EGP 424 million. The legal reserve connected with the cancelled shares including currency translation differences was reclassified from other reserves to retained earnings.

As of December 31, 2008 the Company had 17,681,700 shares which were held as treasury shares, during 2009 the following movements took place:

Accordingly, as a result of the above transactions, as of December 31, 2009 the issued and paid up share capital amounted to EGP 889 million (comprising 889,100,105 shares) of a nominal value of EGP 1 per share.

•

As previously explained, the Company cancelled 10,302,769 treasury shares on October 22, 2009 (comprising 856,624 local shares and 1,889,229 GDR’s) and distributed the equivalent of 10,168,861 local shares from treasury stock as payment of the dividend.

•

During the year ended December 31, 2009 the Company also purchased the equivalent of 7,240,310 local shares from the market to be held as treasury shares and sold the equivalent of 4,450,380 local shares to the market.

25-2 Dividends

The shareholder’s meeting of the Company held on June 7, 2009 approved a dividend distribution of EGP 1 per share in the form of cash and/or shares. Based on the announced distribution ratio of 36:1; on August 27, 2009 the Company distributed 243,376 shares to local shareholders and 1,985,097 shares to the GDR holders (equivalent to 9,925,487 local shares). Consequently, the Company distributed in cash an amount of EGP 180 million for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of US$ 60 million for a total number of 66,337,438 GDRs (equivalent to 331,687,192 local shares) (around US$ 0.9022/GDR). The dividend distribution in 2008 amounted to EGP 1 per share (EGP 5 per GDR) and was paid in cash on June 5, 2008. 26- Borrowings within one year

1-2 years

As a result of the above transactions there were no treasury shares as of December 31, 2009. 25-4 Share based compensation plan

As of December 31, 2008 the Company had 3,661,785 shares which were held for the purposes of the share based compensation plan. During the year ended December 31, 2009 the Group acquired 1,235,735 of its own shares for the purposes of the share based compensation. Share grants exercised during 2009 resulted in 950,220 shares. As a result of the above transactions, as of December 31, 2009 the Company had 3,947,300 shares held as treasury shares for the purposes of the share based compensation plan. The fair market value of such shares was EGP 501 million. 2-3 years

3-4 years

4-5 years

after 5 years

Total

As of December 31, 2009 As of December 31, 2008 Liabilities to banks Bonds

4,616

2,588

196

282

417

Derivative instruments

350

Other borrowings

100

Total as of December 31, 2009

Total as of December 31, 2008

4,573

2,390

231 113

5,483

2,930

70

177

5,352

4,130

4,839

3,100

Liabilities to banks Appendix A includes a detailed analysis of liabilities to banks as of December 31, 2009.

25- Share Capital 25-1 Authorized and issued share capital and legal reserves

Pakistan Mobile Communication Limited

PMCL entered into a syndicate loan agreement with Pakistani banks for a facility amounting to PKR 5.1 billion equivalent to US$ 61 million ,equivalent to EGP 336 million to dealing with standard

-

6,463

4,371

24,652

24,467

346

1,398

4,080

6,377

64

8

-

630

32

36

(5)

39

114

1,162

23

30

880

8,966

1,267

75

127

19

9,117

5,231

1,088

200

In addition to the normal scheduled repayments of borrowing facilities, in accordance with the relevant agreements, various Group companies (mainly OTH, PMCL, ECMS and Bangladesh) entered into new borrowings during the year in order to finance license payments, ongoing operations and capital expenditure programs.

As of December 31, 2008 the issued and fully paid share capital amounted to L.E. 899 million (equivalent US$ 261 million) comprising 899,402,874 shares of a nominal value of L.E. 1 per

25-3 Treasury shares

-

10,379 5,673

4,072 -

-

4,952

10,408

-

-

-

-

114

5,242

6,914 545 119

250

32,230

31,724

chartered bank Pakistan as the agent, repayments of principal amount starts from November 9, 2010 and the financing period will last for 4 years. In addition, during the 2009, OTH and some of its subsidiaries obtained new short term facilities. As in OTH obtained a nominal of US$ 140 million, equivalent to EGP 771 million. Bonds Appendix B includes a detailed analysis of Bonds as of December 31, 2009. Changes in bond liabilities during 2009 primarily relate to the repurchase by PMCL of a portion of its Senior Notes and the issuance of an equity indexed bond Orascom Telecom Oscar Luxembourg (the “Oscar Bond”).

76

Pakistan Mobile Communication Limited

facility with accession to the security pool under the Security Share Agreement. The notes have a redemption price at maturity

In May 2009 PMCL completed a tender offer to repurchase a portion of its 8 5/8% Senior Notes amounting US $ 250 million, equivalent to EGP 1,377 million due 2013. PMCL repurchased the notes at a repurchase price of US$730 per US$1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million for cash consideration of US$ 101 million.

indexed to Orascom Telecoms’ GDR which may potentially allow the Group to further reduce financing costs of the notes. Derivatives

Orascom Telecom Oscar

In February 2009 the Oscar Bond was issued with a nominal amount of US$ 230 million, equivalent to EGP 1,267 million maturing in 2013, through a fully subscribed private placement. The notes carry a coupon of US$ Libor plus a margin of 500bps and rank pari-passu to the existing US$2.5bn senior secured credit

As of December 31, 2009

Euro

Total borrowings by currency of issue

23,314

Borrowings after derivative effect

22,339

Notional amount of currency derivatives

of which (after derivative effect): floating rate borrowings

(975)

Trade payables are all due within one year.

Other Borrowings

29. Earnings per share (a) Basic

Other borrowings mainly include promissory notes and loans from minority shareholders in subsidiaries.

9,165

fixed rate borrowings

13,174

Total borrowings by currency of issue

22,266

As of December 31, 2008

Notional amount of currency derivatives

Borrowings after derivative effect

of which (after derivative effect): floating rate borrowings

fixed rate borrowings

Egyptian Pakistan Bangladeshi Algerian Tunisian Others Pound Rupee Taka Dinar Dinar

1,989

2,543

469 455

(1,520)

Total

562

148

204

302

32,230

2,543

5,663

562

148

204

302

32,230

2,215

5,663

562

148

198

-

18,406

328

2,332

2,963

-

-

-

-

-

-

-

-

6

302

13,824

3,187

336

287

304

49

31,724

(1,687) 645

2,963

6,620

336

287

304

49

31,724

6,141

601

2,537

6,616

335

287

295

-

16,812

14,379

44

426

Financial liabilities include secured liabilities of EGP 22,537 million as of December 31, 2009 and 21,566 million as of December 31, 2008. In general, the financial liabilities are secured on property

3,433

-

4

-

1

-

-

-

-

(1,746) 20,520

-

2,495

9

49

14,912

and equipment of the relevant subsidiary, pledged shares and receivables.

27- Other liabilities Current Telecommunication license payable Taxes (Other than income taxes)

Prepaid Traffic and deferred income Due to local authorities Personnel payables Other Total

 

1,561

2009

Non-current  

1,257

1,307

716 425

740

6,006

* On July 16, 2009 Middle East and North Africa Submarine Cable Systems – MENA Cable ( fully owned subsidiary ) signed an agreement with Gulf Bridge International –GBI to sell fiber pair and Indefeasible Right of Use (IRU) with an amount of US$ 97 million equivalent to EGP 534 million. Under this agreement GBI should pay a milestone payments against a commitments from MENA Cable to fulfill certain conditions. As of the date of the financials the amounts received from GBI amounted to US$

442

-

-

-

220

662

Total  

Current

2008

Non-current

2,003

1,120

1,070

2,190

1,307

1,065

-

1,065

1,257 716 425

960

6,668

1,051 346

293

862

4,737

-

-

-

147

1,217

2009

1,051 346

293

1,009

5,954

29 million equivalent to EGP 160 million recorded as a deferred income.

2008 3,622 1,438 409 1,098 6,567

2008

Profit Attributable to the equity holders of the Company (in million of EGP)

1,845

2,464

Weighted average number of shares (in millions of shares)

878

937

2.10

2.63

Earnings per share – basic (in EGP)

(b) Diluted Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. During 2008 and 2009 the dilutive potential ordinary shares relate to the share based compensation plan. 2009 2008 Profit Attributable to the equity holders of 1,845 2,464 the Company (in million of EGP) Weighted average number of shares in 878 937 issue (in million of shares) Adjustments for: 4 2 - Shares granted (in millions of shares) Weighted average number of shares for diluted earnings per share (in millions of shares) Earnings per share – diluted (in EGP)

Total

2009 2,591 1,480 535 1,139 5,745

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Company and held as treasury shares or for the purposes of the share based compensation.  

3,168

-

14

Capex payables Trade payables due to suppliers Trade payables to telephone operators Other trade payables Total

Details of the derivative liabilities are provided in Note 20 “Other financial assets”.

Currency and Interest Rate Information of Borrowings US$

28- Trade payables

Property and equipment Intangible assets Deferred tax liabilities

882

 939

2.10

2.63

December 31, 2008 (as reported) 27,930 12,927 1,377

share. The Company is listed on the Egyptian Stock Exchange and also has GDR’s (where one GDR is equivalent to 5 local shares) listed on the London Stock Exchange.

30- Business combinations

During 2009 the Group acquired 100% of share capital of Power-COM (Cell One) in Namibia, a GSM telecommunications operator in Namibia through its subsidiary Telecel Globe, for a cash consideration of US$ 60 million. The acquired business contributed revenues of US$ 14 million and net loss of US$ 19 million to the Group in the period since acquisition. The purchase price for this acquisition was US$ 60 million of which US$ 30 million was paid during 2009 and the remaining portion will be paid in 2010. The purchase price allocation was finalized on December 2009. The following table provides details of this acquisition The following table provides details of main acquisitions during 2009:   Cell One Cash and cash equivalents Property and equipment 179 Intangible assets 84 Deferred tax assets 100 Inventories 6 Trade receivables 17 Other current assets 6 Non-current borrowings (179) Other non-current liabilities (33) Current borrowings Other current liabilities Trade payables (95) Current income tax liabilities Net identifiable assets acquired 84 Goodwill 251 Purchase price 335 Cash and cash equivalents in subsidiary acquired   Cash outflow on acquisition 335 In the third quarter of 2009 the purchase price allocation was finalized for the acquisition of U-com Burundi SA and Telecel Afrique SA which were purchased in July 2008. The comparative amounts for 2008 were restated compared to those reported in the 2008 annual consolidated financial statements as follows:

PPA adjustment (22) 69 47

December 31, 2008 (adjusted) 27,908 12,996 1,424

31- Interest in joint ventures The Group has the following interest in its joint ventures: Country of Joint venture Shareholding domiciliation Egyptian Company for Mobile 34.67% Egypt Services S.A.E. Orascom Telecom Tunisie S.A. 50.00% Tunisia Consortium Algerian 50.00% Algeria Telecommunication S.P.A.

77

Orascom Telecom Tunisia S.A. (“OTT”)

32.

OTT operates a GSM network in Tunisia and provides a range of pre-paid and postpaid voice and data telecommunication services under the brand name “Tunisiana”. The Company has a 50% shareholding in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT. The remaining 50% interest is held by National Mobile Telecommunications Company KSC which is owned by Qatar Telecom.

The commitments as of December 31, 2009 and 2008 are provided in the table below:

Intangible assets Property and equipment Others

Consortium Algerian Telecommunication S.P.A. “CAT) CAT is a landline operator in Algeria. The current intention of the management of CAT is to liquidate this business. Therefore the Group has fully written down all assets relating to this business.

Total

2009 14,793 2,793 3,104 16,414 9,039 5,457

As of December31, 2009 750 1,129 1,879

As of December 31, 2008 766 1,870 604 3,240

Commitments for the purchase of intangible assets mainly relate to commitments of Egyptian Company for Mobile and Service amounting to EGP 597 million primarily relating to costs connected with the 3G license .

The following amounts represent the assets, liabilities, revenues and profit for the year of the joint ventures. They are included in the balance sheet and income statement of the Group’s consolidated financial statements according to its shareholding in each joint venture. Revenues Profit for the year Current assets Non-current assets Current liabilities Non-current liabilities

Commitments

Commitments for purchase of property and equipment mainly relate to commitments of Menacable amounting to EGP 463 million relating to the purchase of marine cables and related equipment and EGP 331 million for Egyptian Company for Mobile and Service relating to the purchase of equipment.

2008 13,979 1,352 2,635 15,869 7,328 7,400

The following table provides the future aggregate minimum lease payments under non-cancellable operating leases: 2009

Within one year Between 1-5 years After 5 years

215 832 83 1,129

33. Share based compensation

2008

152 650 227 1029

The following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of December 31, 2009:

Grant date July 1, 2004 July 1, 2005 July 1, 2005 July 1, 2006 January 1, 2007 January 1, 2007 July 1, 2007 July 1, 2007 July 1, 2007 January 1, 2008 January 1, 2008 July 1, 2008 July 1, 2008 July 1, 2008 January 1, 2009 January 1, 2009 January 1, 2009 July 1, 2009 July 1, 2009 July 1, 2009

GDRs granted (thousands)

Tranche 3 2 3 3 2 3 1 2 3 2 3 1 2 3 1 2 3 1 2 3

4 20 2 31 7 35 9 44 36 21 22 8 18 14 314 50 50 4 15 23

Vesting period (months) 42 30 42 42 24 36 18 30 42 24 36 18 30 42 12 24 36 18 30 42

Contractual term (months)

GDR price at grant date in US$

66 54 66 66 48 60 42 54 66 48 60 42 54 66 36 48 60 42 54 66

9.20 -

GDR market price at grant date in US $ 9.29 50.70 50.70 40.80 66.00 66.00 64.90 64.90 64.90 83.00 83.00 62.90 62.90 62.90 27.29 27.29 27.29 28.40 28.40 28.40

Fair value of GDRs at grant date in US$ 4.79 49.20 48.71 39.20 62.98 62.36 63.61 62.98 62.36 79.07 78.19 60.81 59.84 58.90 26.39 25.44 24.53 26.25 25.18 24.41

GDRs are granted for free and must be exercised within two years after the end of the vesting period. Exercise of an award is subject to employment in the Group at the exercise date. The Group has no legal obligation to repurchase or settle the awards in cash. GDRs were valued using the Black-Scholes option-pricing model. The assumptions for calculations of the fair value per GDR at the grant date include the GDR price at each grant date, nil exercise price, a GDR price volatility between 29.0% and 72.6%, a dividend yield of between 1% and 3.5% and an annual risk free rate between 1.7% and 6.4%.

The ESOP was introduced in 2003 and the Company since then uses treasury shares bought from the market to cover the plan. The Board of Directors of the Company has appointed a Committee that can grant GDR options or GDRs to employees of the Company and its subsidiaries through Orascom Telecom ESOP Limited., Malta, a wholly owned subsidiary. Such GDRs of the Company are listed on the London Stock Exchange and denominated in US$. Awards under the ESOP are generally reserved for employees at a senior management level and above that have spent at least one full year of services in the Company and that have a satisfactory performance according to their appraisal reports. The Company has made annual grants on July 1 each year since 2003; from 2007 onwards additional GDRs were granted on January 1 to existing employees. The GDRs granted vest in three installments over the vesting periods that vary from 12 to 42 months. Starting from 2005  

 

At January 1 Granted Forfeited Exercised Expired   At December 31 thereof exercisable

Average exercise price in US$ per GDR option granted 9.20

The following table provides a breakdown of the movements of outstanding GDR options and GDRs granted and their weighted average exercise price:

2009 GDRs granted for free (thousa nds)

GDR options (thousands) 4

504 467 (90) (158)

4 4

723 198

9.20 -

The weighted average GDR price during 2009 amounted to US$ 25.14 (2008; US$ 48.65).

Average exercise price in US$ per GDR option granted 9.20 9.20 -

Range of exercise price in US$ 9.20 nil

Weighted average exercise price in US$

Number of GDRs (thousands)

9.20 Nil

GDRs granted for free (thousands)

GDR options (thousands) 80 (76) -

478 140 (6) (108) -

4 4

504 20

9.20

The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2009 and 2008:

December 31, 2009

 

2008

December 31, 2008 Weighted average remaining life in months

4 723

Weighted average exercise price in US$

29

9.20 nil

Number of GDRs (thousands)

Weighted average remaining life in months

4 504

12 36

The table below sets forth the awards outstanding as of December 31, 2009 and their expiry dates: Expiry date - December 31   2010 2011 2012 2013 2014 2015 Total

Exercise price in US$ per GDR

 

-

Telecel Globe Limited established a share option program that entitles two key management personnel to purchase shares in the Company. In accordance with this program, the employees are being granted an option to purchase all of the “Option Shares” in consideration of the payment of USD1.  The Option shares represent the number of shares, at a nominal value of USD1 each, in the capital of the Company which shall be equivalent to 3% of the capital of the Company calculated immediately upon its

0 - 9.20

2008 24 18 453 130 79 23 727

GDRs (thousands)

2007 179 180 100 25 484

capitalization by an amount of USD 50,000,000. Based on these terms, the value of both options amounts to USD 1,500,000 for each employee respectively.  The fair value of the two options at grant date is, therefore, equivalent to USD 3,000,000, to be settled in shares. During 2009, both employees have exercised their respective

78

share options. In order to satisfy these options, Telecel Globe Limited would buy 3,000,000 shares at a nominal value of USD1 each, currently held by Orascom Telecom Holding and deliver them to these employees in accordance with the share option plan. Accordingly, the percentage of ownership of Orascom Telecom Holding in Telecel Globe Limited diluted by 6%.”     34. Related party transactions

    Weather Investments Group Weather Investments Wind Telecomunicazioni SpA WIS sarl Joint ventures ECMS OTT Associate GWMC Other related parties Orascom Construction Industries Summit Technology (Orascom Technology Solution) Orascom Trading Orascom Training & Technology Contrack Facilities Management Total

Sale of services and goods 2009 2008

Transactions with other related parties

Interest income 2009

2008

69 17 437

66 197 -

6 364

1 33 -

-

-

42 20

16 93

3

203

-

-

-

-

-

-

179

49

-

-

11

16

-

-

-

-

41

27

-

-

585

372

64 1 4 494

55 66 401

179

49

2009 Weather Investments Group Weather Investments Wind Telecomunicazioni SpA WIS sarl Rain Srl Joint ventures ECMS OTT Associate GWMC Other related parties Orascom Construction Industries Summit Technology (Orascom Technology Solution) Orascom Trading Gemini Total

Purchase of services and goods 2009 2008

Receivables

Payables

2008

2009

26 4 147 8

77 33 -

2 20 90 9

6 22 -

6 2

28 11

1 -

6 28

3,542

2,220

-

-

-

-

2

6

5

5

5

6

1 1 3,742

2,374

7 136

11 85

Transactions with Weather Investments Group The Group is directly controlled by Weather Investments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Company and interconnection traffic between the Group and the subsidiaries of Weather Investments, and particularly Wind Telecomunicazioni SpA. In addition to the information presented above, in January 2009 the

Transactions with Associates of the Group OTH provided financing to GWMC, an associate of the Group, in connection with the funding of the acquisition of the spectrum licenses. For further details see Note 20 “Other financial assets”.

Transactions with subsidiaries, associates, with the Parent Company and its subsidiaries and other related parties are not considered atypical or unusual, as they fall within the Group’s normal course of business and are conducted under market conditions that would be performed by independent third parties. The main related party transactions are summarized as follows:

transactions with OTT and ECMS relating to interconnection traffic and the sale of handsets.

2008

Company sold its investment in M-Link to TLC SERVIZI S.p.A now (Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A for a cash consideration of EGP 435 million. Following the acquisition the name was changed to WIS sarl. Transactions with M-Link since the sale are disclosed in the line “WIS Sarl Transactions with Joint Ventures of the Group Transactions with joint ventures of the Group mainly refer to

The Group is indirectly controlled by the Sawiris family. Transactions with entities under the control of the Sawiris family mainly refer to transactions with Orascom Constructions Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology. Transactions with Orascom Technology Solutions mainly refer to maintenance activities of electronic hard- and software carried out for the Group. Orascom Constructions Industries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technology mainly include management training programs. A balance of EGP 33 million is outstanding due form on of the board members which will be settled against his esop plan when vested Key management compensation Key management includes executive and non executive directors of the Board of Directors of the Company, the Company’s chief financial officer, other managing directors considered key personnel and the chief executive officers of significant subsidiaries and joint ventures. The compensation paid or payable to key management for employee services is shown below: Key management compensation Salaries and other short-term employee benefits Equity settled share based payments

2009

2008 61

60 11

Egyptian Company for Mobile Services S.A.E. (“ECMS”) ECMS is a mobile telecommunication operator in Egypt and provides a range of prepaid and postpaid voice and data telecommunication services under the brand name of Mobinil. The Company has an investment of 34.67% in ECMS and the France Telecom Group also has an investment of 36.34%. The remaining shareholding is publicly traded on the Cairo and Alexandria Stock Exchange. Legal proceedings are currently in progress relating to a disagreement regarding the Shareholders Agreement entered into by the Company and France Telecom, Further details are included in Note 32 “Commitments”. 35- Contingent assets and liabilities The Group is subject to various legal proceedings and claims which arise in the ordinary course of business due to the nature of the operations of the Group and the nature of the markets where the Group operates. The Group recognizes a provision for losses and liabilities when the existence is certain or probable. As of December 31, 2009

the Company is a party in a number of legal cases which resulted from carrying out its activities. Based on the legal advice obtained, the Company’s management believe that the outcome of these lawsuits, individually or in aggregate, would not be material to the Group’s results. PMCL tax claims PMCL is involved in proceedings regarding tax claims up to the year 2007 whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. PMCL has a tax claims up to the year 2007 that the tax authorities either framed or assessed. However, the company has field appeals to the appellate authorities against the re-assessment orders. The disputed demand against the assessments framed/aggregates to Rs 1,921 million equivalent to US$ 22.8 million, equivalent to EGP 126 million .The company has provide a provision for such assessments with an amount of Rs 163 million equivalent to US$ 1.82 million ,equivalent to EGP 10 million. OTA tax claims OTA has received a final tax assessment relating to 2004 tax year amounted to DZD 3,948 million equivalent to US$ 54.3 million ,equivalent to EGP 299 million .The Company field a claim against the tax authority after the payment of 20% of final tax assessment . On January 2010 the company received a refusal on it’s objection dated June 2009 according to the Algerian tax laws and procedures the company has 4 months from date of receipt to re-object the refusal .A provision with an amount of DZD 709 million equivalent to US$ 9.8 million, equivalent to EGP 54 EGP was accounted for, considering that most of the tax assessment is excessive. On November, 2009, OTA received a final tax assessment of the years 2005 until 2007, amounting to 43,910 M DZD equivalent to US$ 603.7 million, equivalent to EGP 3,325 million (Most of the amount (85%) is due to the reject of accountancy), The DGE (Tax Department for large scale companies ) reject the books and reconstituted the revenue on a unilateral basis .OTA has appealed the assessments after the payment of 20% of final tax assessment. OTA accrued a provision of 2,957 M DZD equivalent to EGP 225 million, equivalent to US $ 41 million , according to an external expert report. The report assumes that the reject of accounting is arbitrary and the related tax assessment has been disregarded by the expert its own estimate. The assessed 2,957 MDZD amount refers to formal tax miscomputation made by OTA. On March 7, 2010 OTA received a rejection on its submitted administrative appeal filed on December 2009 . In order to file its second appeal, Algerian law requires OTA to pay another 20% of the remaining balance of the taxes and penalties alleged to be owing in order to appeal the decision before the Commission Central, this shall amount to approximately $110 million, equivalent to EGP 606 million and shall be paid shortly by OTA from its own resources. Pioneer Investment Ltd Fastlink Jordanian tax dispute:

The Jordanian Tax Authority initiated court claims for JD 49.2 million (approximately EGP 353 million), equivalent to Euro 44 million, equivalent to USD 64 million in income tax against Pioneer Investment Ltd. In connection with the sale of fast link (Jordanian Mobile Telecommunication service) in 2002 to MTC, a wholly owned subsidiary of OTH.

79

Orascom Telecom Iraq Disposal Warranties

US$ 7.3M for the financial year ended December 31, 2009.

Financing

Orascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile Services-subsidiary) the company provided warranty to the purchaser of the investment. This warranty, which in respect of tax covenant claims, of which no more than USD 60 million equivalent to EGP 331 million shall be payable in relation to tax covenant claim.

Intouch tax claims

Egyptian mobile telephone operator “Egyptian Company for Mobile Services (ECMS)” issued 1.5 billion Egyptian pounds ($273.3 million) in 5-year bonds with Fixed annual yield hits 12.25 % payable once every six months starting mid-January. The bonds, which (ECMS) will use to finance the expansion of its network, Such bonds are divided into two tranches. The first one values L.E 1.4 billion and allocated for private offering and institutions while the other L.E 100 Million tranche will be allocated for public offering.

Mobinil Dispute with France Telecom (and subsidiaries) regarding Mobinil: OTH’s position, relaying on the legal advice, is that the deadline for concluding the sale ordered by ICC award issued on March 10, 2009 (the ‘Award’) has time-expired as a matter of Egyptian law in light of the failure of France Telecom’s (or subsidiaries thereof) to conclude the sale during the 30 day period stipulated in the Award. Currently OTH Management cannot estimate the financial impact of this event on the financial statements of the Company. Telecom Egypt Interconnection Prices Telecom Egypt filed a complaint with the dispute resolution committee of the National Telecommunication Regulatory Authority (NTRA), with the purpose of changing its interconnect prices with the mobile operators, with which it has existing contracts. We responded to the complaint in front of the committee asking to honor the existing effective contract between the Company and Telecom Egypt. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnect prices between the fixed and mobile networks to be effective from that date. The Company informed the NTRA of objection and rejection of the decision as it has no legal or contractual basis and that we intend to bring the matter to the courts in order to protect our interest. On November 01, 2008 a law suit against the NTRA was filed in the Administrative Court at the State Counsel asking for staying and nullifying the NTRA decision. On September 3, 2009 and based on the interconnect agreement (article (25) first paragraph) the Company filed an arbitration against Telecom Egypt according to the rules of The Cairo Regional Center for International Commercial Arbitration in order to settle the existing dispute between the two parties. On October 9, 2009 Telecom Egypt sent an initial response and a counterparty claim related to the arbitration notification filed against it. On January 5, 2010 a letter from NTRA was received with the purpose of making new changes in the interconnect prices between the different operators to be applied retroactively from September 1, 2009. The letter was based on the September 03, 2008 decision. On January 14, 2010 the company sent a letter to NTRA refusing this decision. The company and its external legal counsel believe that the Company has a strong legal position as the NTRA’s decision does not have legal or contractual ground, hence we continue to record interconnect revenue and costs based on the existing agreement with Telecom Egypt and other mobile operators. The company applied these decisions would have recorded less interconnect revenue the group proportionate share amounts to EGP 49 equivalent to 9M US$ , less interconnect cost the group proportionate share amounts to EGP 17M equivalent to 3M US$, for the financial year ended December 31, 2008 and less interconnect revenue the group proportionate share amounts to EGP 168M equivalent to US$ 30.5 million and less interconnect cost the group proportionate share amounts to EGP 40M equivalents to

Intouch group received a tax claim amounting to DZD 204 million in addition to penalties and default interest amounting to DZD 51 million (equivalent to US$ 3.5 million ,equivalent to EGP 19 million). On January, 2009 the company paid 20% from total tax claim in order to be able to appeal against that claim. The Tax Disclosure in Mobizone Algeria Audited Financials for the period ended Dec. 31, 2009 mentioned that the company was granted a tax exemption amounting DZD205 Million and the remaining amount of DZD 51 million was recorded as Provision. Letters of credit and guarantees The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following: - Letters of guarantee provided by ECMS to National Telecom Regulatory Authority. The Company’s share in such letters of guarantee is equal to L.E 54.1 million equivalents to US$ 9.8 million. - Letters of guarantee provided by Ring Egypt to suppliers’ .The Company’s share in letters of guarantee is L.E 65.45 million equivalents to US$ 11.8 million. - Letter of Guarantee amounting to US$ 1 million, equivalent to EGP 6 million in favor of NTRA to guarantee MENA Cable execution of its entire obligation related to constructing, operating and renting sea cables networks and its infrastructure for international communications. - Letter of guarantee in a favor of Lebanon Ministry of Telecommunication (ROL) to guarantee OTH in the payment of any amount due by the selected Participant to ROL amount with US$ 30 million, equivalent to EGP 165 million. - Guarantee provided by Orascom Telecom Bangladesh in favor of Ministry of Post & Telecommunication, the Chief Controller of Exports and Imports and Power development board existed of BDT 99 million equivalents to L.E 7.83million equivalent US$ 1.42 million. 36- Subsequent events Share transactions The Extra-ordinary General Assembly dated December 27,2009, delegated the Board of Directors members to proceed with all necessary legal procedures to increase the authorized capital from EGP. 2.5 to EGP. 7.5 Billion. The proposed Rights Issue is intended to further strengthen the financial position and ensure OTH’s liquidity including financing needs for the Group in the case where there is no immediate resolution of the tax dispute in Algeria. On January 13, 2010 in accordance with the Egyptian Financial Supervisory Authority’s (“EFSA”) requirements, OTH published a Public Subscription Notice in connection with the proposed rights issue (the “Rights Issue”). The Company currently issued up to 4,356,590,515 shares at the nominal price of EGP. 1 per share, to raise a total of EGP. 4,356,590,515 or approximately US$800 million (without issuing fees). Based on the above the issued and paid up share capital will reach 5,245,690.620EGP comprising 5,245,690,620 share.

On February 17 2010, Orascom Telecom Holding received US$ 225 million from Weather Capital Special Purpose 1 S.A. as shareholders not bearing interest  loan, , Where Weather Capital Special Purpose 1 S.A. has agreed that in the event the Rights Issue is successful, the Loan under this Agreement will, automatically, be converted into new Shares (to be issued in the form of GDRs by the Depositary) at the share subscription price. Other events On January 21 2010,Orascom Telecom Holding announce that it has obtained Majority Senior Secured Lenders consent on the proposed permanent waiver related to the existence of a  material tax claim under its US$2.5 billion credit agreement. The waiver obtained is specific to the Algerian tax claim against Orascom Telecom Algeria in respect of years 2004 to

2007. The waiver is conditional to the successful completion of a forthcoming capital increase of OTH. On February 4, 2010, Orascom Telecom Holding (OTH) has been awarded an extension to the management contract of Alfa with the Republic of Lebanon, for a period of 6 months ending on July, 31, 2010. Under this contract, OTH receives a monthly sum of US$ 2.5 million in addition to 8.5% of total revenues. Out of these amounts, OTH is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The Republic of Lebanon is fully responsible for the CAPEX during the contract period. 37. Cash flow statements Starting from the third quarter ended September 30, 2009 the company has reclassified the advances and loans made to associates and third parties from the “financing activities” to the “investing activities” caption. The reclassification was adopted in order to adhere to IAS7 par. 16 (e). Hence, the previous classification for the periods, March 2009 and June 2009 shall be reclassified accordingly.

80

Appendix A

Appendix A Noncurrent

Current

    Orascom Telecom Holding S.A.E.

Total

Currency

Millions of EGP  

 

Line of credit

Nominal

Millions of contract currency  

 

 

 

Maturity

Securities

 

 

 

 

 

 

NATIONAL SOCIETE GENERALE BANK

47

-

47

USD

9

10

19-8-2010

Unsecured

Credit Agricole Indo Suez Ban

63

-

63

USD

11

22

30-6-2010

Unsecured

Egyptian Company for Mobile Services

Noncurrent Millions of EGP

Current  

Misr/CIB/NBE (Syndicated loans)

  169

Total

Currency

Nominal

Line of credit

Millions of contract currency  

396

  565

EGP

 

 

Maturity

Securities

 

 

 

 

558

878

30/04/2013

Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans)

23

533

556

EGP

541

1,121

14/08/2014

Unsecured

66

1,027

1,093

EGP

1,073

1,073

Unsecured

54

-

54

USD

10

10

21-2-2010

Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans)

275

-

275

USD

50

50

18-2-2010

Unsecured

Misr

1

-

1

EGP

-

12

Fortis Banque

15

-

15

EURO

2

20

14-6-2010

Unsecured

BNP

27

-

27

EGP

42

59

26/02/2015 14/10/2009 (Under renewal) 30/4/2010

HSBC

80

-

80

USD

15

15

1/7/10

Unsecured

BB

24

-

24

EGP

24

27

under renewal

Unsecured

NSGB-Car Loan

2

9

11

EGP

11

15

2-2-2013

Unsecured

H.S.B.C

12

-

12

EGP

-

41

9/1/10

Unsecured

NSGB-Car Loan

1

4

5

EGP

5

6

8-3-2014

Unsecured

CAE

76

-

76

EGP

83

88

31/3/2010

Unsecured

NSGB-Car Loan

-

1

1

EGP

1

1

8/3/14

Unsecured

NSGB

68

-

68

EGP

73

74

30/4/2010

Unsecured

A1 Term Loan Supplemnt

571

4,758

5,329

USD

987

987

17-4-2013

Secured

Scotia

34

-

34

EGP

34

44

9/12/10

Unsecured

A2 Term Loan Supplemnt

297

2,473

2,770

USD

513

513

17-4-2013

Secured

CIB

14

-

14

EGP

15

24

16/09/2010

Unsecured

7

5,509

5,516

USD

1,000

1,000

17-4-2013

Secured

AUB

17

-

17

EGP

17

17

12 months revolving

Unsecured

207

-

207

USD

38

50

28/3/10

Unsecured

 

531

1,956

2,487

 

 

 

 

 

Citi bank

53

-

53

USD

10

10

Within one Year

Unsecured

Orascom Telecom Bangladesh Limited

 

 

 

 

 

 

Egyptian Gulf Bank

26

-

26

USD

5

5

31-5-2010

Unsecured

Hermes Facility

Pireaus

28

-

28

USD

5

5

Within one Year

Unsecured

USD Commercial Faciilty

 

1,726

12,754

14,480

Pakistan Mobile Communications Limited

 

 

National Bank Of Abu Dhabi NATIONAL SOCIETE GENERALE BANK

Revolving Credit Supplemnt Audi Bank

Citibank N.A - Islamabad - Pakistan

Royal Bank of Scotland (Formerly ABN AMRO Bank)Islamabad- Pakistan

Habib Bank Limited - Islamabad - Pakistan (2007)

Royal Bank of Scotland, London - Citibank London - ECGD - ECA Royal Bank of Scotland, London - Citibank London COFACE Loan - ECA Royal Bank of Scotland, London -AB Svensk ExportKredit Sweeden - Hermes - ECA Royal Bank of Scotland, London -The OPEC Fund for international Development  - ECA

Royal Bank of Scotland, London;  Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - ECGD - ECA Round II Royal Bank of Scotland London;  Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Coface - ECA Round II Royal Bank of Scotland, London;  Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Hermes - ECA Round II DEG - Germany

 

86

322

408

USD

79

79

1/7/14

Secured

174

472

646

USD

122

122

1/8/13

Secured

 

 

 

 

DFI Facility

18

138

156

USD

30

30

15/6/14

Secured

 

 

 

 

 

BDT A Facility

48

73

121

BDT

1,575

1,575

30/6/12

Secured Secured

24

21

45

PKR

633

1,740

02/07/2011

Secured

BDT B Facility

16

54

70

BDT

918

918

30/6/14

1

231

232

PKR

3,548

3,548

18/12/2012

Secured

Standard Chartered Bank, London

27

82

109

USD

25

50

30/9/16

Secured

1

196

197

PKR

3,000

3,000

18/12/2013

Secured

8

-

8

BDT

100

100

20/3/10

Unsecured

38

55

93

USD

17

48

28/02/2012

Secured

Citibank, N.A.

49

-

49

BDT

620

620

1/2/10

Unsecured

Standard Chartered Bank

24

-

24

BDT

290

290

9/1/10

Unsecured

163

142

305

EUR

39

125

30/12/2011

Secured

Standard Chartered Bank

16

-

16

BDT

200

200

24/1/10

Unsecured

61

29

90

EUR

12

46

29/03/2011

Secured

Standard Chartered Bank

23

-

23

BDT

290

290

27/1/10

Unsecured

20

19

39

EUR

5

10

15/12/2011

Secured

BRAC Bank Ltd.

32

-

32

BDT

400

570

28/3/10

Unsecured

Eastern Bank Ltd.

22

-

22

BDT

280

292

25/6/10

Unsecured

Secured

Eastern Bank Ltd.

13

-

13

BDT

160

160

9/5/10

Unsecured

Eastern Bank Ltd.

8

-

8

BDT

100

200

31/5/10

Unsecured

The City Bank

19

-

19

BDT

240

240

3/5/10

Unsecured

The City Bank

12

-

12

BDT

150

150

9/4/10

Unsecured

8

-

8

BDT

102

200

30/10/10

Unsecured

28

-

28

BDT

360

360

17/3/10

Unsecured

8

-

8

BDT

100

100

17/3/10

Unsecured

28

-

28

BDT

350

350

17/3/10

Unsecured

8

-

8

BDT

100

100

17/3/10

Unsecured

Uttara Bank Ltd. (Working Capital Syndication)

12

-

12

BDT

150

150

17/3/10

Unsecured

Dutch Bangla Bank Limited

20

-

20

BDT

250

250

23/3/10

Unsecured

Dutch Bangla Bank Limited

24

-

24

BDT

300

530

30/3/10

Unsecured

731

1,141

1,872

64

202

266

USD

51

70

28/02/2014

267

383

EUR

51

85

31/12/2013

Secured

140

246

386

EUR

50

110

3/16/12

Secured

42

117

159

EUR

20

20

15/08/2013

Secured

FMO - Netherlands

42

117

159

EUR

20

20

15/08/2013

Secured

MCB Bank Limited (PKR 22.060  Billion) - Islamabad - Pakistan

98

1,439

1,537

PKR

22,060

22,060

04/01/2014

Secured

SCB Bank Limited STFA (PKR 5.1 Billion) - Islamabad Pakistan

63

275

338

PKR

5,100

5,100

09/05/2013

Secured

Dubai Islamic Bank (Pakistan) Ltd Ijara Facility PKR 700 Million

1

45

46

PKR

700

700

09/05/2012

Secured

PAK Kuwait Investment Company Limited - Karachi - Pakistan

21

-

21

PKR

300

300

08/07/2010

Secured

7

-

7

PKR

101

600

Within one year

Secured

902

3,401

4,303

 

 

Unsecured

 

116

HSBC Bank Middle East Limited- Islamabad - Pakistan

 

Unsecured

 

 

 

 

 

Commercial Bank of Ceylon

National BankLtd Standard Chartered Bank (Working Capital Syndication) National Bank Ltd (Working Capital Syndication) Pubali Bank Limted (Working Capital Syndication) Standard Bank Limited (Working Capital Syndication)

 

 

 

 

 

 

81

Appendix A

Appendix B Current

    Orascom Telecom Algeria S.P.A. Hermes loan 2006 Coface Loan 2006 BNP Parisbas Overdraft 2009   Orascom Telecom Tunisie S.A. International refinancing Local refinancing   Moga Holding Limited CDC Mezzanine shareholder loan   Med Cable Limited Export Credit Calyon   Intouch for Telecommunication Services NBAD Barclays Barclays   Telecel Globe Limited Banque de development des etats de l›afrique Central 2007 Commercial Bank Centrafrique 2008 Commercial Bank Centrafrique 2007 Ecobank Centrafrique - Local Loans Commercial Bank Centrafrique Overdraft 2009 IBB - Bank Overdrafts Nedbank Limited and Investec Bank Limited     Trans World Associates (Private) Limited Other - various banks   Ring for Distributions Loan from Arab African Bank - Egypt     Total - liabilities to banks

Noncurrent

Total

Currency

Millions of EGP  

 

 

 

 

 

   

 

114 145 2 261

 

 

132 99 231

 

161 161

 

16 16

 

9 10 1 20

 

214 214

Nominal

Line of credit

Millions of contract currency  

 

129 97 226

 

-

 

16 16

 

4 4

 

328 145 2 475

USD DZD DZD     Euro TND     EUR     EUR     L.E L.E L.E    

261 196 457 161 161 32 32 13 10 1 24

 

 

62 1,904     100 105     18     6     35 35 1    

 

   

           

   

86 9,724 2,200

100 105

18

12

35 35 1

Maturity

 

Securities  

 

  15/11/12 15/11/10 15/12/09     March-2011 March-2011     15/8/2010     13/9/11     1/4/11 1/10/10 less than one year    

  Secured Secured Secured     Secured Secured     Secured     Guaranteed     Secured Secured Unsecured    

4

24

28

XAF

2,305

2,500

30/06/2014

Guaranteed

3 1 6 1 14 29

2 3 29 228 286

5 4 35 1 14 228 315

XAF XAF XAF XAF USD NAD  

398 327 2,929 72 2 311  

750 500 3,000 250 2 311

30/06/2011 31/07/2012 8/10/14 12 months revolving 12 months revolving 12 months revolving       November 27, 2013     17/12/10      

Secured Guaranteed Secured Unsecured Unsecured Secured       Secured     Unsecured      

6 6 2 2

  4,616

   

 

38 38 -

  20,036

   

 

44 44 2 2

  24,652

 

PKR     EGP      

 

   

         

643

2

   

 

         

1,608

3

Current

Non-current

  Pakistan Mobile Communications Limited Royal Bank of Scotland and Deutsche Bank Securities Inc. (Euro Bond) Pak Oman Investment Company Limited - Karachi - Pakistan (Trustee - Public Listed TFC) Allied Bank Limited - Islamabad - Pakistan (2007)

Total

Millions of EGP  

 

 

 

Nominal

Maturity

Currency

Millions

 

Securities  

 

 

 

 

7

612

619

USD

112

13/11/2013

Unsecured

38

176

214

PKR

3,257

31/05/2013

Secured

225

-

225

PKR

3,325

01/10/2010

Unsecured

Allied Bank Limited - Karachi - Pakistan (2007)

7

254

261

PKR

3,905

28/10/2013

Unsecured

 

 

 

 

 

 

 

 

Orascom Telecom Finance SCA

 

 

 

 

 

 

 

128

4,072

4,200

8/2/14

Unsecured

Senior Notes OTFSCA Orascom Telecom Oscar Indexed linked notes Total Bonds

USD

 

 

 

12

1,383

1,395

USD

417

6,497

6,914

 

750

 

  230  

 

 

18/2/13

Secured

 

 

82

Appendix C – Scope of Consolidation

Appendix C – Scope of Consolidation

Selected subsidiaries, joint ventures and associates   Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding

North Africa                           Asia                             Middle East                                                      

Algeria Algeria Algeria Algeria Algeria Algeria Algeria Algeria Morocco Tunisia Tunisia Tunisia Tunisia Tunisia Bangladesh Bangladesh Bangladesh North Korea Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Dubai Dubai Dubai Dubai Dubai Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Iraq Palestine

Orascom Telecom Algeria S.P.A. Orascom Telecom Service Algeria Data Base Management services Algeria Ring Algeria LLC Caring Algeria MobiZone Algeria Algeria Win Call Consortium Algerian Telecommunication S.P.A. Kenza Telecom Morocco Ring Tunisia Ring Distribution Tunisia Ring Retail Tunisia R&D Tunisia Orascom Telecom Tunisie S.A. Orascom Telecom Bangladesh Limited Ring Bangladesh MobiZone Bangladesh CHEO Technology JV (DPKR) Pakistan Mobile Communications Limited Business & Communications Link Direct International Limited Mobitalk Limited MobiZone Pakistan (Pvt.) Limited PMDL Limited Trans World Assoicates (Private) Limited Ring Pakistan Ring Pakistan Service WOL Telecom Limited Call Pack Pakistan Gloabl Entity for Telecom Trade Global Entity for Telecom Trade -FZE Ring Dubai LinkDotNet Dubai MobiZone Dubai

Middle East and North Africa Submarine Cable System –Mena Cable

Cortex Egypt Ring for Distributions Advanced Electronic Industries Caring Egypt Connect MMMS Intouch for Telecommunication Services Link Egypt Into Net LINKdotNET Arab Finance Securities Link Development Link Online Egypt Arpu for Telecommunication Services Global Telecom Egypt Call Mobinil Services Egypt Mobinil for Telecommunication S.A.E. Egyptian Company for Mobile Services S.A.E. Egyptian French Company for Finance Lease Ring Iraq Pal Call Palestine

96.81% 96.81% 100.00% 98.01% 97.03% 100.00% 100.00% 49.83% 100.00% 78.21% 77.43% 76.65% 96.53% 50.00% 100.00% 98.98% 100.00% 75.00% 100.00% 100.00% 100.00% 100.00% 100.00% 16.70% 51.00% 94.59% 94.59% 100.00% 100.00% 100.00% 100.00% 96.53% 100.00% 100.00% 100.00% 94.00% 99.00% 96.53% 97.02% 50.49% 98.80% 100.00% 99.96% 55.78% 100.00% 100.00% 99.80% 100.00% 100.00% 95.80% 99.98% 35.86% 28.75% 34.67% 4.91% 96.53% 99.90%

Selected subsidiaries, joint ventures and associates     Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding  Middle East Qatar LDN Qatar 49.00%   Saudi Arabia LinkDotNet Saudi Arabia 100.00%   Saudi Arabia MobiZone Saudi Arabia 100.00% Central Africa Burundi U-Com Burundi S.A. 100.00%   Central Africa Telecel Centrafrique S.A. 100.00% Namibia Power-com Cell one 100.00%   Sudan Sudan Call 70.00% North America Canada Globablive Investment Holdings 47.60%   Canada Globalive Canada Holdings 65.40%   Canada Globalive Wireless Management 65.40%   Canada Gloablive Wireless LP (GELP) 65.40%   Canada Globalive Telecom Holdings 65.40%   Canada Orascom Telecom Holding (Canada) Limited 100.00% Europe France Orascom Telecom Services Europe 100.00%   France Orascom Telecom Wireless Europe 100.00%   Italy MobiZone Italy 99.00%   Luxembourg M Link Sarl 100.00%   Luxembourg Orascom Luxrembourg Sarl 100.00%   Luxembourg Orascom Luxembourg Finance SCA 100.00%   Luxembourg Orascom Telecom Sarl 100.00%   Luxembourg Orascom Telecom Finance SCA 100.00%   Luxembourg M Link Teleport 100.00%   Malta Sawyer Limited 100.00%   Malta Orascom Telecom Eurasia Limited 100.00%   Malta Oratel International Inc plc 100.00%   Malta Moga Holding Limited 100.00%   Malta International Wireless Communications Pakistan Limited 100.00%   Malta TMGL 100.00%   Malta Telecel International Limited 100.00%   Malta Orascom Tunisia Holding 100.00%   Malta Carthage Consortium Limited 100.00%   Malta Orascom Iraq Holding 100.00%   Malta Orascom Telecom Iraq Corporation 100.00%   Malta Orascom Telecom Ventures Limited 100.00%   Malta Telecel Globe Limited *94%   Malta Orascom Telecom Holding (Malta) Canada Limited 100.00%   Malta M Link Limited 100.00%   Malta Minimax Ventures 100.00%   Malta Financial Powers Plan Limited 100.00%   Malta Orascom Telecom ESOP Limited 100.00%   Malta Orascom for International Investment Holding 99.90%   Malta Data Base Management services Limited 100.00%   Malta Orascom Telecom CS 100.00%   Malta Mcube 51.00%   Netherland Orascom Telecom Netherland 100.00%   Switzerland Telecel International S.A. Switzerland 100.00%   United Kingdom Med Cable Limited 100.00%   United Kingdom Orascom Telecom WiMax 100.00%   United Kingdom International Telecommunication Consortium Limited 50.00% *see note (32)