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Corporate Presentation 1 Contents Company snapshot 4 Macro overview 5 Redefining our strategy 8 Our growth potential 12 Financial highlights 28 FY 2020 highlights 34 2 Disclaimer This document has been prepared by Telecom Egypt (the “Company”) solely for the use at the analyst/investor presentation, held in connection with the Company. The information contained in this document has not been independently verified. This document contains statements related to our future business and financial performance and future events or developments involving Telecom Egypt that may constitute forward-looking statements. Such statements are based on the current expectations and certain assumptions of Telecom Egypt's management, of which many are beyond Telecom Egypt's control. Such assumptions are subject to a number of risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Telecom Egypt neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments, which differ from those anticipated. This document does not constitute an offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares of the Company and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. This presentation has been made to you solely for information purposes and is subject to amendment. This presentation (or any part of it) may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person or published in whole or in part for any purpose without the prior written consent of the Company. 3 Company snapshot Heritage transformed TE’s incorporation • Founded in 1854 with the first telegraph line in Egypt • Incorporated in 1998, replacing the former Arab Republic of Egypt National Telecommunication Organization (ARENTO) • Listed in 2005 on Egypt and London Stock Exchanges • Acquired a 45% stake in Vodafone Egypt in 2003 to 2006 • Rebranded the retail business to WE in 2017 with the launch of mobile services Ownership: Highly diversified solid institutional shareholder base Market Cap of USD 1.3bn | ETEL EY/ ETEL.CA (as of 31 January 2021) Free float Breakdown of composition institutions ROW South 3.9% Africa 6.5% Egypt GCC 27.1% 17.0% Government, Free float, 80% 20% Institutional, Retail, 5% 15% Europe 18.7% USA 26.9% 4 Macro overview 5 Demographic indicators Young population to continue driving growth Population (mn) 101.4 Age distribution (% of population) 99.8 2% 5% 98.2 9-0 8% 24% 19-10 c2mn new customers in 96.2 10% 29-20 the market every year 94.2 39-30 49-40 60% of population 15% 59-50 19% below 30 years 69-60 17% +70 2016 2017 2018 2019 2020 Source: CAPMAS 2020 census Source: CAPMAS 2019 census Educational attainment (% of population) Unemployment rate (% of population) 12.7% 12.0% 12% 9.6% Illiterate 8.9% 3% 26% 7.5% Literate Illiteracy ↓ from 30% in 2016 Primary 74% of population is literate Secondary 29% 11% High school 2015/16 2016/17 2017/18 2018/19 2019/20 University degree 19% Source: CAPMAS 2017 census Source: Ministry of Finance 6 Macro indicators A broad set of healthy indicators Real GDP growth (%) * Average USD to EGP rate 5.6 5.3 5.0 17.9 18.1 17.8 17.8 17.7 17.8 18.0 17.6 17.1 17.8 16.6 16.2 16.0 4.3 4.1 15.8 16.0 14.8 15.8 3.5 2.8 8.9 8.9 8.1 * 2020 and 2021 growth forecasts were 5.9% and 6%, respectively, preceding the Covid-19 pandemic Source: Central Bank of Egypt Source: IMF CBE discount rate Core inflation (YoY) 19.3% 17.3% 18.3% 17.3% 31.9% 33.3% 16.3% 32.3% 15.3% 14.8% 13.8% 12.3% 12.8% 25.9% 11.3% 9.8% 9.3% 8.8% 19.9% 13.9% 11.6% 10.9% 12.4% 8.3% 8.4% 8.6% 8.9% 6.4% 2.6% 2.4% 1.9% 3.3% 3.8% 1.0% Source: Central Bank of Egypt Source: Central Bank of Egypt 7 Redefining our strategy 8 Our leadership team Caliber from the mobile & fixed industries with local & int’l experience Adel Hamed Mohamed Shamroukh Mohamed Abo-Taleb Antar Kandil Managing Director & Senior Vice President Vice President Vice President Chief Executive Officer Chief Financial Officer Chief Commercial Officer Chief Information Officer Essam Abdeldayem Seif Allah Mounib Abdelsatar Elsheikh Mohamed Alfowey Vice President Vice President Vice President Vice President 9 Chief Human Resources Officer Chief International & Wholesale Officer Chief Regional Affairs Officer Chief Technology Officer Heading towards… A telco demonstrating its ability to seize new opportunities The leading The premium Financial & ICT provider digital hub Digital WE Operational Excellence Offering our customers best Expanding from an Embracing digital Expanding efficiency & value, data-centric value established international transformation internally to optimization measures to propositions route to an eminent regional empower our customers & enhance profitability digital hub employees 10 WE digital transformation Our strategy is built by creating a comprehensive digital ecosystem to optimize resources and boost the economic impact of the ICT sector Digital transformation ecosystem Digital transformation process Capitalizing on our assets Apps & solutions Cloud platforms Complete digital Digital inclusion World-class data center facilities market Internal digital disruption transformation Digital team & Network connectivity governance WE digital strategy & Submarine cables & fiber connectivity objectives ‘WE Digital’ Data centers Digital & cloud IOT platforms OTT 11 Our growth potential 12 Retail segment Growth drivers at a glance Voice Data • Growing mobile customer base • Underpenetrated data market leading to a • Growing fixed voice customer base * growing fixed & mobile customer base driven by fixed broadband connectivity EGP 12.9bn • Improved broadband connectivity and the EGP 4.4bn continuous demand for higher usage enhances FY 2020 +37% YoY +23% YoY ARPU EGP 18.3bn +28% YoY Retail revenue growth ( in EGP mn) EGP 1bn** Other -20% YoY 30% CAGR 28% • Managed Services • Complimentary Access Services - Governmental entities - Private sector 18,313 18,313 • Subsidiaries i.e. MERC, Xceed and Centra 14,283 8,290 2017 2020 2019 2020 13 *The Managed Services revenue is included in the data revenue. **The decline in other revenues is specifically related to infrastructure projects, which are due to be recognized in Q1 2021. Measures taken in response to the Covid-19 outbreak Keeping all members of society connected Health Government & Education enterprises • Providing free fixed broadband • Offering free access to all e-learning • Linking Egyptian Cabinet HQs to connectivity to all quarantine hospitals websites ministries using secure solutions • Dedicating free hotline numbers to • Providing full technical support for first- • Proactively supporting SMEs and reach the Ministry of Health and year secondary school online impacted companies by extending various clinics for consultations examinations billing cycles Customers CSR Employees Encouraging employees to work from • Extending the grace period for • Participating in the #Hemaya initiative • customers to pay landline invoices to support the homes of the elderly home • Promoting digital platforms and and orphans to protect them against • Sterilizing all buildings and transportation providing some free transactions on ‘WE Covid-19 vehicles Doubling fixed broadband and mobile Pay’ • Distributing 62,500 food boxes to • • Increasing fixed broadband quotas by needy families quotas for employees Raising security measures on TE’s intranet 20% for 1 month through a government • subsidy in March 2020. and VPN 14 Post Covid-19 operational indicators Positive indicators across the board FBB data traffic 2020 FBB and mobile data traffic 2020 110% 90% 70% 50% 23% 35% 30% 10% -10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YoY MoM Fixed data traffic Mobile data traffic Selected operational KPIs Average internet speed Mbps x x 35 2 88% 14 25% based on global YoY* growth in average Q1-Q4 2020 growth of our total fixed and -18% -10% 23% Ookla speed-4% test internet35% speed in digital payments mobile customer base index as of Dec. installed ‘WE app’ as of 2020 Dec. 2020 15 Widening our retail portfolio Moving beyond traditional telecom services 4G mobile Prepaid Best value license mobile recharge acquisition launch platform Sep 2016 Sep 2017 Feb 2018 ‘WE Internet’ ‘Level Up’ Fully convergent (1st FBB revamp) + PlayStation product postpaid mobile packages ‘Indigo Plus’ launch Nov 2018 Aug 2018 Apr 2018 ‘WE Bonus’ ‘WE SPACE’ ‘WE Pay’ WE Loyalty (2nd FBB revamp) WE digital wallet program July 2019 Nov 2019 Jan 2021 16 WE SPACE A new shift in our fixed broadband offering Comparison of the entry level bundle Launch date April 2018 July 2019 Speed Up to 5 Mbps Up to 30 Mbps Price EGP 110 EGP 120 Quota 100 GB 140 GB 17 Fixed services Growing customer base with healthy ARPU Market fixed voice and data household penetration Market fixed broadband subscribers (in 000’s) Fixed line TE Broadband Others 8,812 7,296 6,535 6,947 39.3% 35.1% 5,807 32.4% 5,197 30.0% 5,237 27.7% 4,439 35.1% 4,070 3,382 29.5% 26.9% 1,866 21.8% 1,489 19.0% 1,057 1,127 1,297 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 WE fixed voice subscribers WE fixed broadband subscribers 8,000 160.0 Subscribers ( in 000's ) 6,947 Subscribers ( in 000's ) 150.0 7,000 12,000 ARPU ARPU 39.
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