ORASCOM TELECOM GIVING THE WORLD HOLDING A VOICE
Fourth Quarter 2011
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CONTENT
Highlights 3
Chairman’s Comment 4
CEO’s Comment 5
Operational Performance 6
Main Financial Events 11
Financial Review 14
Financial Statements 20
Operational Overview 25
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Orascom Telecom Holding Fourth Quarter 2011 Results
Cairo, March 12th , 2012: Orascom Telecom Holding (OTH) (Ticker: ORTE.CA, ORTEq.L, ORAT EY, OTLD LI), announces its fourth quarter 2011 consolidated results demonstrating a 13% YoY subscriber growth, a 2% YoY GSM revenue increase and a 4% YoY increase in GSM EBITDA. The Demerger has already been reflected in the consolidated balance sheet as of December 31, 2011, whilst, for income statement purposes, the results of operations have been classified as discontinued operations.
Highlights
• Total subscribers exceeded 78 million , an increase of 13% over the same period last year, after the exclusion of Alfa, Mobinil and koryolink subscribers for comparative purposes.
• Revenues reached US$ 896 million 1, decreasing by 2% compared to 4Q 2010, as a result of the liquidation of the handset business of “Ring” as well as unfavourable currency movements. GSM revenues showed almost 2% growth for the quarter. Revenues for the full year showed an increase of 2% compared to 31 December 2010.
• EBITDA reached US$ 346 million 1, a decrease of 4% compared to the same period last year, mainly driven by an increase in corporate contingent liability provisions at the OT Holding level, in addition to unfavourable currency movements. GSM EBITDA increased by 4% YoY. EBITDA for the full year increased 10% compared to the previous year, driven by strong GSM performance of 11%.
• Group EBITDA margin stood at 38.7%, stable over 4Q 2010. EBITDA margins for the major subsidiaries were: Djezzy 58.6%, Mobilink 41.4%, and banglalink 19.2%.
• Net Income before minority interest for the quarter was negative for US$ 83 million 1 compared to a loss of US$ 170 million recorded during the same period last year. The improvement is due to a three-fold boost in operating income, which was adversely impacted by the impairment of the company’s assets in Namibia the previous year. Net income attributable to equity holders for the year 2011 was US$ 661 million 1.
• Net Debt 2 as of December 31, 2011 stood at US$ 3,022 million 1, a decrease of over 25% compared to 31 December 2010; with a Net Debt/EBITDA of 1.8x.
1. US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (IFRS). 2. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
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Jo Lunder, Chairman, commented on the results:
“Given the strategic importance In my new capacity as Chairman of OTH, I look of Orascom Telecom Holding forward to working closely with Ahmed Abou after the successful merger Doma and the management team to deliver between VimpelCom Ltd. and maximum value to all our shareholders and Wind contribute to OTH’s Telecom, I “Our focus will be on executing our successful role as a major am very operational strategy which will deliver an player in the global excited to increase in cash flows through driving telecommunications have been profitable growth, operational excellence arena.” appointed Chairman of the and capital efficiency.” company. Our focus will be on executing our operational strategy which will deliver an increase in cash flows through driving profitable growth, operational excellence and capital efficiency.
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Ahmed Abou Doma, Chief Executive Officer, commented on the results:
“After an incredibly exciting year, margin, the Algerian unit continues to face severe Orascom Telecom ends 2011 limitations, such as the ban on foreign currency poised to capture the growth transfers, which challenges network expansion and momentum across its dynamic capacity needs. markets. With our operators In Pakistan, the subscriber base of over 34 million showing impressive growth for the has contributed to a healthy revenue growth of 4% fourth quarter of 2011, Orascom in local currency terms compared to the previous Telecom now counts over 78 million customers, an year. Mobilink’s EBITDA increased 10% YoY, as a increase of almost 13% compared to the closing result of lower sales costs, base of 2010. While the “After an incredibly exciting year, Orascom leading to an improved depreciation of local Telecom ends 2011 poised to capture the EBITDA margin for 4Q currencies in Algeria, Pakistan, growth momentum across its dynamic 2011. Bangladesh and Burundi markets.” impacted US dollar revenues In Bangladesh, for the quarter, performance banglalink’s aggressive indicators show expansion and development in focus on VAS has helped drive subscriber growth. most of our operations. Additionally, EBITDA growth A 23% increase in subscribers was reflected by surpassed revenue growth in most operations as a nearly 17% revenue growth in local currency result of our focus on driving profitable growth, as compared to the same period last year. well as our operational excellence and capital Telecel Globe subscribers have exceeded 3 efficiency programs. million, with high additions to the networks in In Algeria, OTA continues to lead the market with a Burundi and Zimbabwe. growth in subscribers of 10% over the course of In Canada, WIND Mobile subscribers have 2011. While revenues were up by 3% in local continued to grow, as a result of innovative currency, EBITDA increased 18% YoY as a result of offerings and an expanded coverage across Opex savings in 4Q 2011. Despite the healthy Canada’s urban centers.”
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Operational Performance
Subscribers
Orascom Telecom ended the year 2011 with a In Bangladesh the subscriber base showed an subscriber base of over 78 million, showing an increase impressive growth of 23% compared to the previous of almost 13% compared to the previous year. For year, driven by an aggressive acquisition strategy comparative purposes, the subscriber figure for 2010 following the SIM Tax reduction in June 2011, as well as has been adjusted to reflect the demerger of Mobinil, loyalty programs and reactivation promotions. koryolink and Alfa, as well as the sale of Powercom Ltd Telecel Globe subscribers showed an increase of 6% in in Namibia. comparison to December 2010, as well as an Algeria’s subscribers increased 10% in comparison to improvement in subscriber growth QoQ. The subscriber December 2010, as a result of controlling churn growth is mostly driven by a surge in Burundi’s and alongside successful customer acquisitions. Zimbabwe’s customer bases, as a result of increased penetration into rural areas, as well as improved sales In Pakistan, Mobilink’s subscriber base grew almost 8% and distribution channels performance. It is also worth YoY after expanding its portfolio of location-based noting the impressive growth in subscribers compared promotions and focusing on high-quality acquisitions to 3Q 2011, which was boosted by Zimbabwe’s by introducing new pre-paid and post-paid sales recapturing of subscribers after a dip in 1H 2011. promotions. In addition, reactivation promotions were launched to help control churn, which culminated in In Canada, WIND Mobile subscribers increased 73% successful customer retention. compared to the closing base of 2010.
Table 1: Total Subscribers 1
Inc/(dec) 31 Dec 30 Sept. 31 Dec. Subsidiary Dec 2011 vs. 2010 2011 2011 Dec 2010 Djezzy (Algeria) 15,087,393 16,288,615 16,595,233 10.0%
Mobilink (Pakistan) 31,794,292 33,415,696 34,213,552 7.6%
banglalink (Bangladesh) 19,327,005 22,139,953 23,753,552 22.9%
Telecel Globe2 2,974,000 2,825,000 3,140,000 5.6%
Total 69,182,690 74,669,264 77,702,337 12.3%
Inc/(dec) Operations accounted for under 31 Dec 30 Sept. 31 Dec. Dec 2011 vs. the equity method 2010 2011 2011 Dec 2010 Wind Canada (Canada) 232,641 358,000 403,000 73.2% Total 232,641 358,000 403,000 73.2%
Grand Total 69,415,331 75,027,264 78,105,337 12.5%
1. For comparative purposes, the subscriber figures for 2010 and September 2011 have been adjusted to reflect the demerger of Mobinil, koryolink and Alfa 2. Including Zimbabwe; after excluding Powercom Ltd (Namibia) subscribers in December 2010.
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ARPU
In Algeria, ARPU for 4Q 2011 showed a decline of 7% in levels were stable in comparison to the previous US$ and local currency terms as compared to 4Q 2010. quarter. The decrease is due to the penetration of lower In Bangladesh, ARPU showed a decline in both US$ income segments within the customer base, in addition and local currency terms, decreasing 14% and 6% to an accounting provision concerning the “Imtiyaz” respectively. Accelerated growth of subscribers in rural loyalty program. and youth market segments led to some ARPU dilution, In Pakistan, Mobilink’s ARPU decreased by 7% YoY in while the continuing devaluation of the local currency US$ terms and by 4% in local currency terms amidst a against the US$ also had an adverse impact on ARPU highly competitive environment. The decline is due to for 4Q 2011. the penetration of lower-end segments in the market In Canada, WIND Mobile experienced a 13% decline in through location based promotions in most of the ARPU YoY, while showing stability compared to the major cities in Pakistan. It is worth noting that ARPU previous quarter.
Table 2: Blended Average Revenue Per User (ARPU) 1
30 Sept 31 Dec 31 Dec 2010 Inc/(dec) 2011 2011 Subsidiary US$ Dec 2011 vs. US$ US$ (3 months) Dec 2010 (3 months) (3 months) Djezzy (Algeria) 9.7 9.9 9.0 (7.2%)
Mobilink (Pakistan) 2.9 2.7 2.7 (6.9%)
banglalink (Bangladesh) 2.1 1.9 1.8 (14.3%)
Wind Canada (Canada) 30.0 25.9 26.0 (13.3%)
2 Global ARPU (YTD) 4.2 4.2 4.1 (2.8%)
Global ARPU (3 months) 4.2 4.2 4.1 (2.8%)
Table 3: Blended Average Revenue Per User (ARPU) (Local Currency)
31 Dec 30 Sept 31 Dec Inc/(dec) Subsidiary 2010 2011 2011 Dec 2011 vs. (3 months) (3 months) (3 months) Dec 2010 Djezzy (Algeria) (DZD) 724.1 714.9 673.1 (7.0%)
Mobilink (Pakistan) (PKR) 244.6 235.6 234.9 (4.0%)
banglalink (Bangladesh) (BDT) 148.9 147.1 140.3 (5.8%)
1. After excluding Mobinil and koryolink subscribers from December 2010. 2. Global ARPU is calculated on a year to date basis, taking into account the weighted average subscribers for calculation.
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Market Share & Competition
During the fourth quarter of 2011, Orascom Telecom equipment, and the undertaking of critical network continued to lead in its core operating markets, with maintenance. the exception of Bangladesh where banglalink In Pakistan, the market share of Mobilink dropped continues to maintain its second largest market 0.2 p.p. as measured on internal traffic patterns, as a share position. result of the continued market-wide focus on MNP In Algeria, market share declined by 2.2 p.p. in and aggressive competitive pressures. comparison to 3Q 2011 as a result of aggressive In Bangladesh, banglalink witnessed an increase in competitive pressures surrounding channel market share of 0.7 p.p. as a result of its successful acquisitions, and the ongoing adverse operating customer acquisition strategy. conditions resulting from the ban on foreign currency transfers and other Government actions, which have restricted the import of essential
Table 4: Market Share & Competition
Market Share (%) Market Names of additional Country Brand name 30 Sept 31 Dec Position network operations 2011 2011 Algeria Djezzy 57.7% 55.5% 1 AMN, Qtel
1 2 U-Fone, Paktel, Telenor, Pakistan Mobilink 30.3% n.a. 1 Al Warid
1 Grameen, Aktel, Citycell, Bangladesh banglalink 27.2% 27.9% 2 BTTB, Airtel
1. Market share, as announced by the national Regulator is based on information disclosed by the other operators which use different subscriber recognition policies. 2. Market share for December 2011 had not been disclosed by the Pakistani Regulator prior to this release.
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CAPEX
Total consolidated capital expenditures for 4Q 2011 In Bangladesh, CAPEX decreased 16% in showed a 24% increase compared to the previous comparison to the aggressive network roll-out plan year, in line with strategic investment plans. of the previous year. It is worth noting that the 2G license renewal fee was booked as accrued In Algeria, CAPEX declined 41% in comparison to (accounting) CAPEX since the company received 4Q 2010, as a result of the ongoing ban on foreign the title for the license while the payment will be currency transfers preventing the payment of made in instalments. From a cash flow perspective, essential suppliers, as well as the importing of however, the actual amount paid in Q4 was equipment critical to network maintenance and US$118 million and the remaining part of necessary expansion. approximately US$138 million is deferred. In Pakistan, CAPEX increased 129% YoY due to the “Other” CAPEX increased by 112% compared to continued focus on network and IT development the same period last year. The increase is mainly for Mobilink. due to investments made in Telecel Globe for the purpose of network expansion and 3G.
Table 5: Capital Expenditure of OTH Subsidiaries 1
Total Total Subsidiary 4Q 2010 4Q 2011 Inc/(dec) US$ million US$ million Inc/(dec) 2010 2011 Djezzy (Algeria) 35 21 (41%) 90 40 (56%)
Mobilink (Pakistan) 48 110 129% 143 261 83%
banglalink (Bangladesh) 82 69 (16%) 235 161 (32%) 2 Other 6 13 112% 27 28 2%
Total Consolidated 172 213 24% 495 490 (1%)
Consolidated Capex/Sales 18.7% 23.8% 5 p.p. 13.9% 13.5% (0.4) p.p.
1. CAPEX figures excluding license fees. 2. “Other” companies include OT Holding, Ring and Telecel Globe.
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Main Financial Events
VimpelCom combines with WIND TELECOM to create new global telecom group
In October 2010, WIND TELECOM S.p.A (WIND TELECOM), the parent company of Orascom Telecom Holding S.A.E. (“OTH”) announced that it signed an agreement with VimpelCom Ltd. (“VimpelCom”) to combine the two groups creating the world’s sixth largest mobile telecommunications carrier by subscribers. In March 2011, WIND TELECOM announced that the shareholders of VimpelCom Ltd. voted in their Special General Meeting in favor of the combination with WIND TELECOM. On April 15 th , 2011, VimpelCom and WIND TELECOM announced the closing of the transaction that combines the two entities to create a new global telecom group.
Over 97% of The Voting Shares that Participated in OTH’s OGM/EGM Approve Demerger, Refinancing Plan and Internal Reorganization
On April 14 th , 2011, Orascom Telecom Holding S.A.E. (“OTH” or the “Company”) announced that the Company’s shareholders overwhelmingly approved all of the items on the agenda of the Ordinary and Extraordinary General Assembly Meetings, paving the way to implement the Company’s refinancing plan and the demerger of the Company into two separate entities, Orascom Telecom Holding S.A.E. and Orascom Telecom Media and Technology Holding S.A.E., in connection with the “VimpelCom-WIND TELECOM” transaction.
Shareholders approved the following significant resolutions, among others:
1. the approval of a refinancing plan to refinance the Company’s outstanding secured and high yield debt together with certain derivative transactions in an amount of approximately US$2.7BN.
2. an increase in OTH’s authorized share capital to EGP 14BN (with the issued and paid-in capital remaining unchanged).
3. the approval of the planned demerger from OTH of Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”), a company to be formed at the time of the demerger. OTMT will hold certain assets of OTH that are not intended to form part of the VimpelCom-WIND TELECOM group going forward, including OTH’s interests in Egyptian Company for Mobile Services (“ECMS”), CHEO Technology Joint Venture company (“koryolink”) in North Korea, Orascom Telecom Ventures S.A.E. (formerly Intouch Communication Services S.A.E.), as well as other investments in the media and technology sectors, including undersea cable assets.
On June 29 th , 2011, the Company informed its shareholders that the Egyptian authorities requested, as part of their verifications and in the best interest of OTH’s shareholders, that a committee reviews some underlying accounting documents that will serve as a basis for the Demerger. This additional step has created some delays in the implementation of the Demerger.
In September 2011 , GAFI issued its report introducing certain adjustments to the demerger accounts that principally entail applying retroactively impairments recorded by OTH in its December 31, 2010 financial statements, with an impact of EGP1,279 million on the September 30, 2010 pro-forma accounts thus increasing the impairment of OTH’s investments in one of its subsidiaries, OTA , by EGP356 million, fully provisioning the withholding tax balance amounting to EGP9 million.
As a result of these changes, the basis of the split has been revised, and the new split ratio determined between OTH and OTMT based on their NAV contribution according to the “GAFI” recommended adjusted financials is 58% and 42% respectively. The nominal value per share of OTH and OTMT shall be EGP0.58 and EGP0.42 respectively. Each OTH shareholder will still receive one OTMT share for each share of OTH held as of record date (subject to applicable legal restrictions), while the number of shares for OTH and OTMT remain the same.
On October 23 rd , 2011 , the Company’s shareholders approved all of the items on the agenda at its EGM, paving the way to implement the Company’s demerger into two separate entities, OTH and OTMT. The shareholders also approved authorizing the Chairman of the Company to change the internal ownership structure of OTH’s stake in each of Mobinil and ECMS, in order to preserve the continuation of the control of the Sawiris Family over such assets, as an interim measure until the completion of the demerger procedures, as per the demerger plan and as contemplated by the Interim Control Agreement previously approved by the Extraordinary General Meeting of the Company held on April 14, 2011.
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Shareholders representing 60.90% of the Company’s voting shares participated in the Extraordinary General Assembly Meeting. The resolutions were approved by 99.99% of the voting shares that participated or were duly represented in the Extraordinary Assembly Meeting.
Orascom Telecom Announces Appointment of New Chief Executive Officer
On May 16 th , 2011, Orascom Telecom Holding S.A.E. (“OTH” or the “Company”) announced that the Board of Directors appointed Mr. Ahmed Abou Doma to the position of Chief Executive Officer reporting to Mr. Khaled Bichara, who is nominated to the position of Executive Chairman (subject to board and general assembly approval and appointment) to ensure the smooth transition of the company within the newly formed VimpelCom merged entity, while overlooking the company’s continued implementation of its strategy.
In his new capacity as President and Chief Operating Officer of VimpelCom Ltd. (“VimpelCom”), the company created through the combination of VimpelCom Ltd. and WIND TELECOM S.p.A., Mr. Khaled Bichara, will also be focused on executing VimpelCom synergy roadmap and achieving the targets for technology procurement and commercial development, a key benefit resulting from the merger to OTH and its minority shareholders.
Weather Capital Special Purpose 1 (the majority shareholder of the Company) has also decided to recommend the election of the following board candidates to the General Assembly of the Company following the expiry of the term of the existing board members: Khaled Bichara, Ahmed Abou Doma, Aldo Mareuse, Alexander Shalaby, Emad Farid, Mohamed Shaker, Henk Van Dalen, Jeffery McGhie and Ragy Soliman. The General Assembly took place on May 17, 2011.
Orascom Telecom Holding Announces The Sale of Powercom (Pty) Limited Orascom
On June 2 nd , 2011, Orascom Telecom Holding S.A.E. (“OTH” or the “Company”) announced that its fully owned subsidiary Telecel Globe (“Telecel”) finalized an agreement to sell Powercom (Pty) Limited (“Powercom”), Telecel’s subsidiary in Namibia, to Investec and Nedbank. The consideration for the sale consists of all liabilities of Powercom of around US$60 Million.
Successful Refinancing of OTH’s Capital Structure
The Refinancing Plan disclosed to shareholders during the AGM dated April 14 th , 2011 was successfully completed in June 2011 which resulted in the obligations of OTH under debt agreements with banks or financial institutions being fully refinanced by VimpelCom (USD 2.7bn).
The Refinancing Plan entailed the purchase by VimpelCom in full of the interests of the creditors under the Senior Credit Facility, and the interest of the holder of the Equity Linked Notes followed by the redemption of the High Yield Notes and the termination and close out the hedging transactions.
Orascom Telecom Bangladesh Receives Its 2G License Renewal Guidelines
In September 2011, Orascom Telecom Holding S.A.E. (“OTH”) announced that its Bangladeshi subsidiary Orascom Telecom Bangladesh (“OTB”) has received the final 2G license renewal guidelines. According to the terms and conditions outlined by the Bangladesh Telecommunication Regulatory Commission (“BTRC”) within the received guidelines, OTB is to pay approximately BDT 19.8 Billion (equivalent to approximately US$ 263 Million*) over three years as spectrum and license renewal fees. In addition, according to the received guidelines, the validity of the license renewal is for 15 years.
* Based on an exchange rate of: US$ 1 = BDT 75.13
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Orascom Telecom Announces Appointment of New Chief Financial Officer
In October 2011, Orascom Telecom Holding S.A.E. (“OTH”) announced that the Company appointed Mr. Khalid Ellaicy to the position of Chief Financial Officer reporting to Mr. Ahmed Abou Doma. Effective 17 October 2011, Mr. Ellaicy succeeded Mr. Aldo Mareuse who joined OTH as Group Chief Financial Officer in 2002.
Orascom Telecom Announces Stepping Down of Executive Chairman and Appointment of New Chairman
In November 2011, Orascom Telecom Holding S.A.E. (“OTH”) announced that Khaled Bichara, Executive Chairman, submitted his resignation from his position as Executive Chairman and Board of Directors Member, effective by the end of December 2011.
In January 2012, the Board of Directors elected Mr. Jo Lunder to the position of Chairman replacing Mr. Khaled Bichara. The appointment will be submitted in the next General Assembly for ratification. In his new capacity as Chairman of Orascom Telecom Holding, Mr. Lunder will focus on executing a strategy to increase cash flows through driving profitable growth, operational excellence and capital efficiency.
Orascom Telecom Completes Demerger
Under the terms of the VimpelCom transaction, VimpelCom, Weather II and OTH agreed on a demerger plan (the Demerger”) pursuant to which the Company’s investments in certain telecom, media and technology assets (the “Spin-Off Assets”), which were not intended to form part of the VimpelCom business going forward, would be transferred to a new company, Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”). The Demerger was performed in accordance with the guidelines of the Egyptian Financial Supervisory Authority and in particular decree no. 124 of 2010 and was completed in December 2011. The split of OTH shares by the way of the Demerger resulted in OTH shareholders holding the same percentage interest in OTMT as they held in the Company. The Demerger plan was initially approved in a shareholders meeting dated 14 April 2011 and subsequently on 23 October 2011. Approval from the Egyptian Financial Supervisory Authority was received in December 2011.
As a result of the Demerger, during November and December 2011, ownership of the following Spin-Off Assets were transferred from the Company to OTMT:
28.755% ownership stake in Mobinil for Telecommunications S.A.E.;
20.00% ownership stake in the Egyptian Company for Mobile Services;
75% ownership in CHEO Technology Joint Venture Company, together with all other assets and businesses located in North Korea;
95% ownership in Orabank NK;
100% directly and indirectly held ownership stake in Middle East and North Africa for Sea Cables;
51% ownership of Trans World Associate (Private) Limited (Pakistan);
100% ownership of Med Cable Limited (UK);
99.99% ownership stake in Intouch Communications Services S.A.E. (aka OT Ventures Internet portals and other ventures in Egypt including Link Development, ARPU+ and LINKonLine); and
1% ownership stake in ARPU for Telecommunications Services S.A.E.
The Demerger was performed based on the book value of the Spin-Off Assets, taking into consideration the terms and conditions of a separation agreement entered into between the relevant parties, which requires among others, OTH to
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reimburse OTMT for certain revenue items pertaining to the Spin-Off Assets. The effect of the Demerger was a reduction of total equity of US$ 1,610 million, including a reduction of US$ 433 million in share capital.
The Demerger was effected through a reduction in the issued capital of the Company. In particular, the nominal value of the Company’s shares was reduced from L.E. 1 to L.E. 0.58.
As the Demerger took place before the balance sheet date, the Demerger, including the transfer of the Spin-Off Assets has already been reflected in the consolidated balance sheet as of 31 December 2011, whilst for income statement purposes, the results of operations relating to the Spin –Off Assets have been classified as “discontinued operations” in 2010 and 2011.
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Financial Review Revenues
Total Consolidated Revenues for 4Q 2011 declined In Bangladesh, the ongoing devaluation of the by 2% compared to the previous year, as a result of local currency against the US$ was responsible for modest growth in GSM revenues countered by the the difference in revenue growth in US$ vs. local liquidation of the handset business of “Ring”, as well currency, up 5% and 16.5% respectively for the as local currency devaluation against the US$ in quarter. The growth in revenues is attributable to OTH’s main operating countries. For the full year, tariff revisions, aggressive competitive moves, and consolidated revenues improved by 2%, driven by a strong focus on VAS, which contributed to solid nearly 6% increase in GSM revenues. additions to the subscriber base of banglalink.
In Algeria, revenues remained stable for the quarter Telecel Globe revenues declined by 5% in showing 1% growth in comparison to 4Q 2010. In comparison to 4Q 2010 as a result of the sale of the local currency terms, revenues increased 3% YoY, operation in Namibia, in addition to currency mostly driven by the growth in OTA’s subscriber devaluation in Burundi. On a comparable basis, base. excluding the sale of Powercom Ltd. in Namibia, revenues display an increase of 8.6% YoY. In Pakistan, revenues increased 1.5% in US$ terms, impacted by currency devaluation. In local currency terms, revenues were up 4% in 4Q 2011 compared to the previous year, mainly due to an increase in subscribers, steady VAS uptake, as well as higher administrative fees on scratch cards. Table 6: Consolidated Revenues YoY
Represented Represented 4Q - 2010 1 4Q - 2011 Inc/ 31 Dec 31 Dec Inc/ Subsidiary 1 (3 months) (3 months) (dec) 2010 2011 (dec) US$ (000) US$ (000) US$ (000) US$ (000) GSM Djezzy (Algeria) 452,911 457,085 0.9% 1,746,566 1,859,804 6.5% Mobilink (Pakistan) 280,863 285,175 1.5% 1,107,067 1,133,704 2.4% banglalink (Bangladesh) 122,285 128,278 4.9% 456,984 511,291 11.9% Telecel Globe (Africa)2 25,007 23,743 (5.1%) 101,830 93,683 (8.0%) Total GSM 881,068 894,282 1.5% 3,412,447 3,598,482 5.5%
Telecom Services Ring 37,121 1,432 (96.1%) 152,278 37,096 (75.6%) Total Telecom Services 37,121 1,432 (96.1%) 152,278 37,096 (75.6%)
Total Consolidated 918,188 895,714 (2.4%) 3,564,725 3,635,578 2.0%
1. 2010 figures have been represented to reflect the completion of the demerger process. 2. As per IFRS rules, Telecel Globe figures have not been represented in 2010 and H1 2011to reflect the disposal of Powercom Ltd. in 2Q 2011.
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Table 7: Consolidated Revenues QoQ
Represented 3Q - 2011 4Q - 2011 Inc/ Subsidiary (3 months) (3 months) (dec) US$ (000) US$ (000) GSM Djezzy (Algeria) 486,671 457,085 (6.1%) Mobilink (Pakistan) 281,490 285,175 1.3% banglalink (Bangladesh) 129,306 128,278 (0.8%) Telecel Globe (Africa) 21,340 23,743 11.3% Total GSM 918,807 894,282 (2.7%)
Telecom Services Ring 6,644 1,432 (78.4%) Total Telecom Services 6,644 1,432 (78.4%)
Total Consolidated 925,451 895,714 (3.2%)
Total consolidated revenues for 4Q 2011 In Bangladesh, revenues increased 3% in local decreased 3% compared to 3Q 2011, mostly currency terms, mostly due to tariff revisions, VAS impacted by a drop in GSM revenues for the and MFS offerings, as well as additions to the quarter. subscriber base. Revenues were partially slowed by disconnection regulations concerning the post- In Algeria, revenues declined 6% in US$ terms and paid base. 4% in local currency terms. The decrease is a result of an accounting provision concerning the Telecel Globe revenues grew by 11% compared to “Imtiyaz” loyalty program. the previous quarter, driven by increases in the ARPU of CAR, as well as a significant subscriber In Pakistan, revenues increased 1% in US$ terms and increase in Burundi for 4Q 2011. 2% in local currency terms, in line with subscriber usage and VAS growth.
Table 8: Proforma Consolidated Revenues (Local Currency) 1
4Q - 2010 4Q - 2011 Inc/ 3Q - 2011 Inc/ 31 Dec 31 Dec. Inc/ Subsidiary (3 months) (3 months) (dec) (3 months) (dec) 2010 2011 (dec) GSM Djezzy (Algeria) (DZD bn) 32.8 33.9 3.1% 35.4 (4.3%) 129.2 135.6 5.0% Mobilink (Pakistan) (PKR bn) 23.9 25.0 4.3% 24.5 2.0% 94.3 97.9 3.8% banglalink (Bangladesh)(BDT bn) 8.5 9.9 16.5% 9.6 2.9% 31.8 37.9 19.0%
1. Un-audited Figures.
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EBITDA
Consolidated EBITDA for 4Q 2011 decreased 4% YoY, while increasing 10% in local currency. EBITDA was mainly driven by an increase in corporate positively impacted by higher revenues, and contingent liability provisions at the OT Holding level, declining cost of sales, such as lower interconnect in addition to unfavourable currency movements. and SIM card costs. GSM EBITDA increased by 4% YoY. On a year-to-date basis, consolidated EBITDA increased over 10%, as a In Bangladesh, EBITDA in local currency declined 4% result of the operational excellence program, which as a result of rising SIM tax subsidies related to strong helped boost GSM EBITDA by nearly 11%. customer acquisitions. In US$ terms, EBITDA declined by 20% as a result of the devaluation of the local In Algeria, EBITDA increased 11% in US$ terms while currency against the US$. showing an 18% increase in local currency terms, as a result of currency devaluation against the US$. The Telecel Globe’s EBITDA experienced a significant increase is mainly attributable to OPEX savings decline compared to 4Q 2010 due to retroactive tax coupled with strong top line performance in the adjustments in CAR, in addition to an exceptional tax quarter. assessment and a bad debt provision in Burundi.
In Pakistan, EBITDA was impacted by currency devaluation, leading to a 6% increase in US$ terms,
Table 9: Consolidated EBITDA 1, 2 YoY
Represented Represented 4Q - 2010 4Q - 2011 31 Dec 31 Dec Subsidiary (3 months) (3 months) Inc/ 2010 2011 Inc/ US$ (000) US$ (000) (dec) US$ (000) US$ (000) (dec) GSM Djezzy (Algeria) 241,355 267,660 10.9% 982,167 1,100,663 12.1% Mobilink (Pakistan) 111,221 118,186 6.3% 438,071 463,406 5.8% banglalink (Bangladesh) 30,772 24,670 (19.8%) 127,686 168,630 32.1% Telecel Globe (Africa)3 6,643 (5,291) n.m. 23,505 7,776 (66.9%) Total GSM 389,991 405,225 3.9% 1,571,428 1,740,475 10.8%
Telecom Services Ring (9,878) 6,790 n.m. (6,885) (3,167) 54.0% Other4 (88) (1) 98.3% (204) (40) 80.6% Total Telecom Services (9,966) 6,789 n.m. (7,090) (3,207) 54.8%
OT Holding & Other5 (19,307) (65,569)6 n.m. (69,255) (90,525) (30.7%)
Total Consolidated 360,718 346,444 (4.0%) 1,495,084 1,646,743 10.1%
1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding. 2. 2010 figures have been represented to reflect the completion of the demerger process. 3. As per IFRS rules, Telecel Globe figures have not been represented in 2010 and H1 2011 to reflect the disposal of Powercom Ltd. in 2Q 2011. 4. Other Telecom Services Companies include: C.A.T. and OTWIMAX. 5. Other non operating companies include: OTH, C.C., OTUH, OTV, OIH, OTI Malta, OTN, OIIH, Cortex, Eurasia, FPPL, ITCL, IWCPL, Moga, Oratel, OT Finance, Swyer, OT Holding Canada, OT Asia, Oscar, OT ESOP, OT Services Europe, TMGL, Pioneers, OT Wireless Europe, TIL and TILSA. 6. Mainly driven by an increase in corporate contingent liability provisions at the OT Holding level.
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Table 10: Consolidated EBITDA QoQ
Represented 3Q - 2011 4Q - 2011 Inc/ Subsidiary (3 months) (3 months) (dec) US$ (000) US$ (000) GSM Djezzy (Algeria) 289,763 267,660 (7.6%) Mobilink (Pakistan) 116,456 118,186 1.5% banglalink (Bangladesh) 44,401 24,670 (44.4%) Telecel Globe (Africa) 7,009 (5,291) n.m. Total GSM 457,629 405,225 (11.5%)
Telecom Services Ring (1,281) 6,790 n.m. Other (1.00) (1.47) (47.2%) Total Telecom Services (1,282) 6,789 n.m.
OT Holding & Other (8,173) (65,569) n.m.
Total Consolidated 448,174 346,444 (22.7%)
Consolidated EBITDA for 4Q 2011 decreased by 23% and 4% in local currency terms. The increase is mostly compared to the previous quarter, heavily impacted attributable to higher revenues and lower cost of by the 11.5% drop in GSM EBITDA caused by local sales. currency devaluation in our main operating countries, as well as an increase in corporate Due to further local currency devaluation against the contingent liability provisions at the OT Holding level. US$, banglalink’s EBITDA dropped 44% QoQ in US$ terms, while in local currency terms it decreased 36% In Algeria, the 8% decrease in EBITDA is a result of the QoQ. The decline was mainly due to an adjustment devaluation of the local currency against the US$, in SIM tax subsidy allocation. while in local currency terms OTA’s EBITDA decreased almost 4%, as a result of lower revenues Telecel Globe’s EBITDA showed a substantial decline for the quarter. QoQ, as a result of the retroactive tax in CAR, in addition to a bad debt provision and tax In Pakistan, EBITDA increased despite pressures on reassessment in Burundi. the local currency, growing nearly 2% in US$ terms
Table 11: Proforma Consolidated EBITDA (Local Currency) 1
4Q - 2010 4Q - 2011 Inc/ 3Q - 2011 Inc/ 31 Dec 31 Dec. Inc/ Subsidiary (3 months) (3 months) (dec) (3 months) (dec) 2010 2011 (dec) GSM Djezzy (Algeria) (DZD bn) 17.1 20.1 18.1% 20.9 (3.6%) 72.5 80.4 10.9% Mobilink (Pakistan) (PKR bn) 9.5 10.4 10.1% 10.0 4.0% 37.3 40.0 7.2% banglalink (Bangladesh)(BDT bn) 2.13 2.05 (3.6%) 3.2 (35.8%) 8.9 12.5 40.5%
1. Un-audited Figures.
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EBITDA MARGIN
The Consolidated EBITDA margin for the fourth In Bangladesh, banglalink’s EBITDA margin quarter of 2011 stood at 38.7% showing relative decreased by 6.0 p.p. compared to the same stability compared to the same period last year. period last year as a result of higher SIM tax costs related to subscriber acquisitions. In Algeria, Djezzy’s margin increased by 5.3 p.p. compared to 4Q 2010, as a result of the improved Telecel Globe’s EBITDA margin decreased 48.9 p.p. in EBITDA level for this quarter countering the comparison to 4Q 2010, mainly due to declining limitations imposed upon the operation by the EBITDA levels. Algerian government.
In Pakistan, the EBITDA margin of Mobilink showed an increase of 1.8 p.p. as a result of healthy revenue growth and a solid EBITDA for the quarter.
Table 12: Consolidated EBITDA Margin
Represented Represented 4Q - 2010 4Q - 2011 31 Dec 31 Dec Subsidiary Change Change (3 months) (3 months) 2010 2011 US$ (000) US$ (000) US$ (000) US$ (000) GSM Djezzy (Algeria) 53.3% 58.6% 5.3 56.2% 59.2% 3.0 Mobilink (Pakistan) 39.6% 41.4% 1.8 39.6% 40.9% 1.3 banglalink (Bangladesh) 25.2% 19.2% (6.0) 27.9% 33.0% 5.1 Telecel Globe (Africa)1 26.6% (48.9) 23.1% 8.3% (14.8) (22.3%)
Total GSM 44.3% 45.3% 1.0 46.0% 48.4% 2.4
Total Telecom Services (26.8%) 474.1% 500.9 (4.7%) (8.6%) (4.0)
EBITDA Margin 39.3% 38.7% (0.6) 41.9% 45.3% 3.4
1. As per IFRS rules, Telecel Globe figures have not been represented in 2010 and H1 2011to reflect the disposal of Powercom Ltd. in 2Q 2011.
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Foreign Exchange Rates Table 13: Foreign Exchange Rates used in the Income Statement & Balance Sheet
% Chg 3 % Chg 3 Dec 2011 Dec 2011 Currency Dec. 2010 Sept. 2011 Dec. 2011 vs vs Dec. 2010 Sept. 2011 Egyptian Pound/USD 1 Income Statement 5.6359 5.9306 5.9449 5.5 0.2 2 Balance Sheet 5.8057 5.9658 6.0308 3.9 1.1
Algerian Dinar/USD 1 Income Statement 73.9910 72.5542 72.9327 (1.4) 0.5 2 Balance Sheet 74.2862 74.1680 75.3273 1.4 1.6
Pakistan Rupee/USD
Income Statement 1 85.6721 85.8751 86.3331 0.8 0.5
2 Balance Sheet 85.1836 87.4806 89.9467 5.6 2.8
Bangladeshi Taka/USD 1 Income Statement 69.6256 73.1028 74.0699 6.4 1.3 2 Balance Sheet 70.5983 75.1685 81.8348 15.9 8.9
Canadian Dollar/USD
Income Statement 1 1.0297 0.9778 0.9886 (4.0) 1.1
2 Balance Sheet 0.9970 1.0446 1.0213 2.4 (2.2)
1- Represents the average monthly exchange rate from the start of the year until the end of the period. 2- Represents the spot exchange rate at the end of the period. 3- Appreciation / (Depreciation) of USD vs. Local Currency.
Net Income
Net Income before minority interest for 4Q 2011 was operating income, which increased three-fold negative for US$ 83 million, improving 51% compared compared to 4Q 2010. The Net Income in 4Q 2011 to the previous year. While Net Income attributable to was impacted by an increase in unrealized FX losses equity holders of the parent declined by 11% for the in Bangladesh and in OT Holding, driven by currency full year, it is worth noting that profit from continuing devaluations vs. the US$, in relation to certain loans operations was up 81%. The decline is a result of the and payables in foreign currencies; this was partially non-recurring extraordinary gains related to the sale compensated by FX gains in relation to financial of operations in Tunisia in 2010. receivables from Wind Canada as a result of the appreciation of the Canadian dollar. Net Income for 2010 was adversely impacted by the impairment of the company’s assets in Namibia. As a Net Income for the full year of 2011 stood at US$701 result, Net Income for 4Q 2011 showed an increase million with an EPS of US$ 0.63 per GDR. compared to the previous year, boosted by a strong
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Table 14: Income Statement in IFRS/US$
Represented Represented 4Q - 2010 4Q - 2011 31 Dec. 2010 31 Dec. 2011 (3 months) (3 months) US$ Inc/ Inc/ US$ (000) (000) (dec) US$ (000) US$ (000) (dec) Revenues 918,188 895,714 (2%) 3,564,725 3,635,578 2%
Other Income 7,693 9,279 29,363 30,252
Total Expense (565,434) (558,502) (2,099,166) (2,019,087)
Net unusual Items 272 (46) 161 (0)
1 EBITDA 360,718 346,444 (4%) 1,495,084 1,646,743 10%
Depreciation & Amortization (231,762) (191,354) (777,740) (773,472)
Impairment of Non Current Assets (78,048) 2 (6,522) (96,154) 2 (10,026) Gain (Loss) on Disposal of Non Current 81 (360) (149) 58,085 3 Assets Operating Income 50,989 148,208 191% 621,040 921,331 48%
Financial Expense (95,909) (92,408) (456,558) (535,732)
Financial Income (2,207) 4 19,215 53,664 79,625
Foreign Exchange Gain (Loss) 10,768 (50,494)5 (74,051) (150,359)
Net Financing Cost (87,348) (123,687) (476,944) (606,466)
Share of Profit (Loss) of Associates (40,543) (51,696) (142,562) (135,280)
Impairment of Financial Recievables (18,142) (21,888) (18,142) (21,888)
Profit Before Tax (95,044) (49,063) 48% (16,608) 157,696 n.m.
Income Tax (78,129) (65,830) (225,350) (202,960)
Profit from Continuing Operations (173,173) (114,894) 34% (241,958) (45,264) 81%
Gains or losses from discontinued operations 3,597 31,977 1,023,406 6 746,169
Profit for the Period (169,576) (82,916) 51% 781,448 700,905 (10%)
Attributable to:
Equity Holders of the Parent7 (178,877) (91,275) 49% 743,095 661,489 (11%)
Earnings Per Share (US$/GDR)8 (0.19) (0.09) 52% 0.73 0.63 (14%)
Minority Interest 9,301 8,359 38,353 39,416
Net Income (169,576) (82,916) 51% 781,448 700,905 (10%)
1- Management Presentation developed from IFRS financials. 2- Due to the impairment of Telecel Globe’s investment in Namibia and the impairment of MedCable in Algeria. 3- Due to the disposal of Powercom Ltd (Namibia). 4- Due to the resettlement of the intercompany loan to Globalive Wireless Corp. Canada 5- Mainly unrealized FX losses due to devaluation of BDT and EGP vs. US$; partially offset by the appreciation of CAD. 6- a) 2010 figures include the accounting treatment of Mobinil as a discontinued operation as a result of the amended and restated shareholders’ and settlement agreements concluded with France Telecom which entered into force on July 13, 2010. b) On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia (“OTT”). As a result the proportionate consolidation of OTT during Q4 2010 was no longer applicable under IFRS as it renders the entity an investment held for sale, and consequently a discontinued operation under IFRS rules. Figures for 2010 have been restated to reflect the accounting treatment of OTT. 7- Equates to Net Income after Minority Interest. 8- Based on a weighted average for the outstanding number of GDRs of 1,046,278,130 GDRs for 4Q 2011. The weighted average for the outstanding number of GDRs for 4Q 2010, FY 2010 and FY 2011 is 1,046,501,539 GDRs, 1,015,240,054 GDRs and 1,046,175,604 GDRs respectively.
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Table 15: Balance Sheet in IFRS/US$ IFRS/US$ IFRS/US$ 31 December 31 December 2010 2011 US$ (000) US$ (000) Assets
Property and Equipment (net) 3,763,359 2,901,831
Intangible Assets 1,486,662 1,557,590
Investment in Associates 1,029,294 -
Other Non-Current Assets 1,104,740 1,089,077
Total Non-Current Assets 7,384,055 5,548,498
Cash and Cash Equivalents 824,085 1,013,543
Trade Receivables 258,820 255,188
Assets Held for Sale 422,604 -
Other Current Assets 1,090,912 1,428,272
Total Current Assets 2,596,421 2,697,003
Total Assets 9,980,476 8,245,501
Equity Attributable to Equity Holders of the Company 2,726,524 1,884,511
Minority Share 74,639 63,166
Total Equity 2,801,163 1,947,677
Liabilities
Long Term Debt 3,859,447 3,492,164
Other Non-Current Liabilities 354,225 420,628
Total Non-Current Liabilities 4,213,672 3,912,792
Short Term Debt 973,454 543,826
Trade Payables 811,443 738,289
Other Current Liabilities 1,180,744 1,102,917
Total Current Liabilities 2,965,641 2,385,032
Total Liabilities 7,179,313 6,297,824
Total Liabilities & Shareholder’s Equity 9,980,476 8,245,501
Net Debt 1 4,008,816 3,022,447
1- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
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Table 16: Cash Flow Statement in IFRS/US$
IFRS/Represented IFRS
December 31, 2010 December 31, 2011
US$ (000) US$ (000) Cash Flows from Operating Activities Profit for the Period (241,958) (45,264) Depreciation, Amortization & Impairment of Non-Current Assets 873,894 783,498 Income Tax Expense 225,350 202,960 Net Financial Charges 476,783 606,466 Share of Loss (Profit) of Associates Accounted for Using the Equity 142,562 135,280 Method Impairment of Financial Assets 18,142 21,888 Other 58,170 (7,567) Changes in Assets Carried as Working Capital (574,009) (187,731) Changes in Other Liabilities Carried as Working Capital 17,574 (53,007) Income Tax Paid (300,686) (199,393) Interest Expense Paid (351,990) (217,029) Net Cash Generated by Operating Activities 343,832 1,040,101
Cash Flows from Investing Activities Cash Outflow for Investments in Property & Equipment, Intangible (503,022) (648,061) Assets, and Financial Assets & Consolidated Subsidiaries Net (Payments) for Current Financial Assets - - Proceeds from Disposal of Property & Equipment, Subsidiaries and 38,374 26,713 Financial Assets Advances & Loans made to Associates & other parties (300,348) (202,886) Dividends & Interest Received 18,101 14,940 Net Cash Used in Investing Activities (746,895) (809,294)
Cash Flows from Financing Activities Proceeds from loans, banks' facilities and bonds 332,320 874,508 Payments for loans, banks' facilities and bonds (855,108) (1,619,030) Net Proceeds (Payments) from Current Financial Liabilities - - Advances & Loans made to Associates & Other Parties - - Net Payments from financial liabilities (14,290) 1,800 Net Change in Cash Collateral (668) (129,195) Dividend Payments - - Payments for Treasury Shares (460) - Capital injection 765,233 - Change in non-controlling interest - - Net Cash generated by Financing Activities 227,027 (871,917)
Discontinued operations Net cash generated by operating activities 202,935 90,242 Net cash (used in) generated by investing activities 61,389 1,044,128 Net cash (used in) generated by financing activities 30,884 (9,025) Net cash generated from discontinued operations 295,208 1,125,345
Net Increase in Cash & Cash Equivalents 119,172 484,235
Cash included in Assets Held for Sale (44,559) (262,657) Effect of Exchange Rate Changes on Cash & Cash Equivalents (10,079) (32,115) Cash & Cash Equivalents at the Beginning of the Period 759,546 824,080 Cash & Cash Equivalents at the End of the Period 824,080 1,013,543
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Table 17: Income Statement in EAS/Egyptian Pounds
Represented Represented 4Q-2010 4Q - 2011 Inc/ 31 Dec 31 Dec Inc/ (3 months) (3 months) (dec) 2010 2011 (dec)
LE (000) LE (000) LE (000) LE (000) Revenues 3,731,234 5,363,890 44% 20,090,371 21,613,060 8%
Other Income 43,759 55,458 165,489 179,844
Total Expense (2,466,480) (3,234,520) (11,839,852) (12,018,608) 1 EBITDA 1,308,513 2,184,828 67% 8,416,008 9,774,295 16%
Depreciation & Amortization (1,071,449) (1,145,492) (4,380,659) (4,594,293)
Other (439,046) (40,085) (542,426) 285,878
Operating Income (201,982) 999,251 n.m. 3,492,922 5,465,880 56%
Financial Expense (633,838) (555,742) (2,660,994) (3,170,905)
Financial Income (18,848) 115,090 302,447 473,358
Foreign Exchange Gain (Loss) 68,449 (302,829) (417,327) (893,868)
Net Financing Cost (584,237) (743,481) (2,775,874) (3,591,415)
Share of Profit (Loss) of Associates (246,803) (308,514) (803,465) (804,225)
Impairment of Financial Recievables (102) (130,121) (102) (130,121)
Profit Before Tax (1,033,124) (182,865) 82% (86,518) 940,119 n.m.
Income Tax (264,839) (393,304) (1,293,231) (1,206,572)
Profit from Continuing Operations (1,297,962) (576,169) 56% (1,379,749) (266,453) 81%
Gains or losses from discontinued operations 427,055 88,629 2,505,889 4,689,321
Profit for the Period (870,907) (487,540) 44% 1,126,140 4,422,867 n.m.
Attributable to:
Equity Holders of the Parent (924,337) (537,664) 42% 881,709 4,188,431 n.m. 2 Earnings Per Share (EGP/Share) (0.18) (0.10) 44% 0.17 0.80 n.m.
Minority Interest 53,430 50,124 244,431 234,436
Net Income (870,907) (487,540) 44% 1,126,140 4,422,867 n.m.
1- Management Presentation developed from EAS financials. 2- Based on a weighted average for the outstanding number of ordinary shares of 5,230,878,022 for 4Q11. The weighted average for the outstanding number of ordinary shares for 4Q10, 2010 and 2011 is 5,076,200,270; 5,232,507,695 and 5,231,390,650 respectively.
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Table 18: Balance Sheet in EAS/Egyptian Pounds 1
EAS/LE EAS/LE 31 December 31 December 2010 2011 LE (000) LE (000) Assets
Property and Equipment (net) 21,710,070 17,367,279
Intangible Assets 8,584,912 9,347,975
Other Non-Current Assets 8,558,597 6,590,484
Total Non-Current Assets 38,853,579 33,305,738
Cash and Cash Equivalents 4,784,360 6,112,496
Trade Receivables 1,502,624 1,538,994
Assets Held for Sale 2,430,567 -
Other Current Assets 6,332,816 8,617,426
Total Current Assets 15,050,367 16,268,916
Total Assets 53,903,946 49,574,654
Equity Attributable to Equity Holders of the Company 12,246,749 11,359,381
Minority Share 458,581 380,942
Total Equity 12,705,330 11,740,323
Liabilities
Long Term Debt 22,314,854 20,972,669
Other Non-Current Liabilities 1,735,569 2,536,315
Total Non-Current Liabilities 24,050,423 23,508,983
Short Term Debt 5,639,775 3,269,496
Trade Payables 4,710,968 4,452,491
Other Current Liabilities 6,797,450 6,603,362
Total Current Liabilities 17,148,193 14,325,348
Total Liabilities 41,198,616 37,834,332
Total Liabilities & Shareholder’s Equity 53,903,946 49,574,654
Net Debt 2 23,170,269 18,129,668
1- Management presentation developed from EAS financials. 2- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
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Presence in Countries with Favourable Dynamics:
Operations owned by Orascom Telecom (OTH has 65% indirect equity ownership in Globalive Canada but a minority voting stake)
OTH serves a population of 415 million* with an average penetration of 48%
CANADA PAKISTAN ALGERIA BANGLADESH Population: 34 million Population: 190 million Population: 35 million Population: 162 million GDP Growth: 2.2% GDP Growth: 2.4% GDP Growth: 2.9% GDP Growth: 6.3% GDP/Capita PPP ($): 40,300 GDP/Capita PPP ($): 2,800 GDP/Capita PPP ($): 7,200 GDP/Capita PPP ($): 1,700 Pop. Under 15 years: 16% Pop. Under 15 years: 35% Pop. Under 15 years: 24% Pop. Under 15 years: 34% Mobile Penetration: 70% Mobile Penetration: 58% Mobile Penetration: 83% Mobile Penetration: 49%
ZIMBABWE CENTRAL AFRICA REPUBLIC BURUNDI Population: 13 million Population: 5 million Population: 11 million GDP Growth: 6% GDP Growth: 4.1% GDP Growth: 4.2% Pop. Under 15 years3: 42% Pop. Under 15 years3: 41% Pop. Under 15 years: 46% Mobile Penetration: 56% Mobile Penetration: 19% Mobile Penetration: 24%
Population Figures from CIA Factbook (est. July 2012). Mobile Penetration is based on December 31, 2011 subscriber figures & market share
*excluding Canada
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Operational Overview
Djezzy – Algeria
Financial Data Operational Data
4Q - 2010 4Q - 2011 Inc/ Dec Sept Dec Inc/(dec) Dec 2011 vs. (3 months) (3 months) (dec) 2010 2011 2011 Dec 2010
Financial Data Operational Data Subscribers 15,087,393 16,288,615 16,595,233 10.0% Revenues (US$ 000) 452,911 457,085 0.9% Revenues (DZD bn) 32.84 33.86 3.1% Market Share 57.6% 57.7% 55.5% (2.1%)
ARPU (US$) EBITDA (US$ 000) 241,355 267,660 10.9% 9.7 9.9 9.0 (7.2%) (3 months) ARPU (DZD) EBITDA (DZD bn) 17.05 20.14 18.1% 724 715 673 (7.0%) (3 months)
EBITDA Margin 53.3% 58.6% 5.3 MOU (3 months) 288 286 278 (3.5%)
Capex (US$ m) 35 21 (41%) Churn (3 months) 5.7% 5.5% 5.5% -0.2
During the last quarter of 2011, Orascom Telecom On the sales side, OTA continued to market its mobile Algerie (OTA) continued to face a number of telecommunication services through indirect channels challenges. The Bank of Algeria’s detrimental decision (distributors) and through the 87 owned “Djezzy” issued in 2Q 2010, which is being challenged by OTA, branded shops. The nine exclusive national distributors instructing the banks not to process any overseas foreign cover all the 48 Wilayas and are distributing OTA’s currency transfer by OTA, is having devastating effects products through 19,000 authorized points of sale on OTA’s network and reputation. For example, it is (“POS”). During 4Q 2011, OTA continued to focus on preventing the importation of goods which are expanding the network of POS selling post-paid from 87 necessary for maintenance purposes and for network (owned shops) in 1Q 2011 to +5,200 in 4Q 2011 (through capacity expansion. This factor continues to exert authorized POS) in order to increase post-paid gross significant pressure on the network especially in terms of adds. OTA has branded 1,000 authorized points of sale quality, capacity and expansion. This factor is also (“POS”) in order to reinforce its presence and expand its prejudicing international roaming agreements and 87 owned “Djezzy” shops network. jeopardizing the possibility of launching any new Despite the extremely challenging conditions described products which would ultimately require new above, the overall customer base increased by 10% to technological platforms. Despite these major obstacles reach 16.6 million customers by the end of December OTA is seeking to serve its customers with the best 2011. OTA managed to maintain its leadership position in possible network quality. terms of market share of gross adds, controlling the During 4Q 2011, OTA has continued to reinforce its largest distribution across all 48 Wilayas and operating brand leadership through several initiatives. OTA the largest network with 7,552 BTS by the end of the launched a new initiative called “Prodiges” aiming to quarter. Customer base and market share would have promote young Algerian talents active in all disciplines been significantly further improved without the (music, cinema, writing, sport, dance, entrepreneurship, detrimental effect of the adverse Governmental action etc). This project will last 50 weeks, will involve famous against OTA. Algerian ambassadors (like Yasmina Khadra), has a OTA also continued to control churn through the dedicated web site (www.djezzy.tv) and is broadcasted continued enhancement of the “Imtyaz” loyalty on radio, billboard and press. OTA has also launched a program with a special focus on high value customers. leadership campaign (Being number one) reinforcing Churn rate for 3 months dropped to historically low levels OTA’s leadership on network, products and customer from 5.7% in 4Q 2010 to 5.5% in 4Q 2011. relationship.
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OTA’s revenue evolution in the second half of 2011 to 2010. Capex dropped from US$35m to US$ 21m mostly followed a parallel trend to the actions undertaken by due to the ban on overseas foreign currency transfers by OTA to mitigate operational handicaps. Revenues for OTA, which is preventing the payment of essential 4Q 2011 showed a positive increase of 3% over the same suppliers and creditors, the import of essential period of 2010, from DZD 32.8bn to DZD 33.9bn in line equipment, and the undertaking of critical network with the recovery trend seen in previous quarters. By maintenance. The inability to carry out those carefully monitoring the value of customers being maintenance and expansion works and to secure acquired and not launching value destructive essential goods and services for the network represent a promotions, OTA's EBITDA value (in DZD) increased by key source of high operational uncertainty for the 18% and EBITDA margin increased by 5.3 p.p. compared months to come.
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Mobilink – Pakistan
Financial Data Operational Data
4Q - 2010 4Q - 2011 Inc/ Dec Sept Dec Inc/(dec) Dec 2011 vs. (3 months) (3 months) (dec) 2010 2011 2011 Dec 2010
Financial Data Operational Data Subscribers 31,794,292 33,415,696 34,213,552 7.6% Revenues (US$ 000) 280,863 285,175 1.5% Revenues (PKR bn) 23.94 24.98 4.3% Market Share* 31.4% 30.3% n.a. n.a.
ARPU (US$) EBITDA (US$ 000) 111,221 118,186 6.3% 2.9 2.7 2.7 (6.9%) (3 months) ARPU (PKR) EBITDA (PKR bn) 9.47 10.43 10.1% 245 236 235 (4.0%) (3 months)
EBITDA Margin 39.6% 41.4% 1.8 MOU (3 months) 221 197 209 (5.4%)
Capex (US$ m) 48 110 129% Churn (3 months) 8.2% 8.8% 7.2% -1
* Market share, as announced by the Pakistani Regulator is based on information disclosed by the other operators which use different subscriber recognition policies.
The Pakistani mobile market remained very competitive Building on its tradition of offering the latest handsets to in the period, with all the operators introducing multiple its customers, Mobilink further expanded its portfolio of campaigns with heavy media support. Mobilink kept its handsets and devices enabling its subscribers to choose product portfolio competitive through introducing new the device that would best suit their professional and products as well as investing in various platform personal communications needs. The new handset capacities to address the growing demand of services offerings in Q4 included ‘Blackberry® Bold 9900’, HTC from its existing and potential subscribers. Radar; Pakistan’s first Windows® OS 7.5 smart phone and HTC Explorer; an affordable Android 2.3 OS smart phone. Mobilink increased its total closing subscriber base by Customers buying these handsets were also offered free 7.6% during 2011 by adding 2.4 million subscribers. In internet for three months. local currency, the year over year revenue growth was at 4% while EBITDA increased by 10% YoY. Remaining competitive in the international calling arena continued to be one of Mobilink’s areas of focus. In Mobilink maintained its focus on high quality subscriber addition to the attractive international offers to Canada acquisitions by introducing new sales promotions for and the UK that were launched in Q3, a new IDD offer both pre-paid and post-paid customers in the last for Saudi Arabia was introduced in Q4, offering a quarter of 2011. Moreover, Mobilink’s regional offers discounted call rate during the festivals of Eid and Hajj. portfolio was expanded to cover additional cities, in line with the growing industry trend of acquisition focused on The passion for cricket runs deep in Pakistan and Jazz specific regions on the back of location based decided to be an integral part of this passion by aggressive pricing offers. becoming the title sponsor of international series between Pakistan and Bangladesh. During this series a Mobilink’s youth portfolio continued to grow. In the thematic TVC was launched from the Jazz platform fourth quarter of 2011 ‘Such Baat Offer’ was launched featuring a popular cricket star. on Jazba, Mobilink’s youth tariff, enabling subscribers to make hour long calls at a discounted rate. In addition to that, a limited time offer was launched to mark the celebration of Jazba’s first anniversary.
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banglalink – Bangladesh
Financial Data Operational Data
4Q - 2010 4Q - 2011 Inc/ Dec Sept Dec Inc/(dec) Dec 2011 vs. (3 months) (3 months) (dec) 2010 2011 2011 Dec 2010
Financial Data Operational Data Subscribers 19,327,005 22,139,953 23,753,552 22.9% Revenues (US$ 000) 122,285 128,278 4.9% Revenues (BDT bn) 8.5 9.9 16.5% Market Share* 28.5% 27.2% 27.9% (0.6%)
ARPU (US$) EBITDA (US$ 000) 30,772 24,670 (19.8%) 2.1 1.9 1.8 (14.3%) (3 months) ARPU (BDT) EBITDA (BDT bn) 2.13 2.05 (3.6%) 149 147 140 (5.8%) (3 months)
EBITDA Margin 25.2% 19.2% (6.0) MOU (3 months) 221 214 207 (6.3%) Capex (US$ m) 82 69 (16%) Churn (3 months) 4.6% 4.2% 5.4% 0.8
* Market share, as announced by the Regulator in Bangladesh is based on information disclosed by the other operators which use different subscriber recognition policies. banglalink has surpassed the 20 million subscriber mark alert’, ‘matrimony alert’ and foreign employment info- this year having reached 23.8 million customers as of service and added to its mobile financial services the December 31 st , 2011, up 23% YoY. The company mobile based insurance premium collection in maintained a selective acquisition strategy from collaboration with Jiban Bima Corporation. February till June in anticipation of SIM tax reduction, banglalink Mobile Cash service won the mBillionth South which was effective in June – Government reduced SIM Asia Award 2011 in the category m-Business and tax by Tk. 194. banglalink started aggressive acquisition Commerce/Banking. BPO (Bangladesh Post Office)’s from the end of 2Q 2011. As a result, the market share at EMTS service which runs with banglalink support has won the end of 2011 increased to 27.9%. the mBillionth award in the same category this year. BPO banglalink’s revenue has grown by 5% compared to has also been nominated for The UN’s World Summit 2010. The 4Q 2011 revenue was BDT 9.9 billion showing a Award (WSA) for the same service which is another 16.5% increase in comparison with 4Q 2010. prestigious global award. AIS (Agriculture Information Services – a Government body under Ministry of EBITDA in 4Q 2011 was US$ 25 million which is 20% lower Agriculture of Bangladesh) got the nomination for than the same period last year. EBITDA margin dropped mBillionth award for the ‘Mobile based Agriculture to 19.2% compared to 25.2% in previous year, due to SIM Information Service’ where banglalink is the partner of tax subsidy as the company had aggressive acquisition the project. The service has won National Digital during 4Q 2011. Capital expenditure in 2011 was US$ 69 Innovation Award 2011. ‘Banglalink Krishi Bazaar’ (agro million, a 16% decline compared to 4Q 2010. market service) has achieved World Communication In 4Q 2011, banglalink enriched its portfolio with the per Award 2011 in the category of Best New Consumer second tariff and the new version of its post-paid tariff Service. “inspire”. In an effort to increase revenue and to face The Government of Bangladesh has reduced SIM Tax by the currency devaluation, banglalink started several Tk.194 in the national budget declared in June 2011. The revenue enhancement initiatives coupled with targeted Government has finalized the 2G license renewal promotions along with the usual loyalty programs, guideline for 4 major operators in November 2011. handset bundles, bonus on usage, and reactivation banglalink, along with 3 other renewing operators, promotions. banglalink is maintaining the leadership submitted an application with necessary fees for position in VAS services in terms of breadth of offer. In 4Q renewal of which 49% have been paid and rest is 2011, banglalink launched new services such as ‘job
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payable in 3 installments each being 17%. Under the The regulator, BTRC, has formulated guideline to issue guideline, banglalink has to pay approximately US$ 256 more IGW, IIG, submarine cable, ICX and satellite million for a 15 years license. Bangladesh Bank, the licenses in 2011. The government has also issued 6 central bank of the country, has published the guideline licenses for international terrestrial cable (ITCs) to local for mobile financial services and approved all types of entities. MNOs were barred from getting a license for mobile based financial services, but MNOs are required ITC. The regulator also decided that all of the five PSTN to get approval through a bank. operators who were forced to shut down would get back their licenses and two operators already received The unilateral directive from regulator to stop building them. The government has given permission to state and leasing FON from Nov 2011 has been postponed till owned operator Teletalk for pilot launch of 3G service, the NTTN (National Telecom Transmission Network) which is to be launched by June 2012. The 3G license licensees are ready to provide service to the ISPs. awarding process is likely to happen in 2012, with the 3G banglalink with other operators are pursuing to withdraw Spectrum auction tentatively planned in June 2012. this directive. On the other hand, the Government, as There will be separate guidelines for SMP and MNP as part of its vision of Digital Bangladesh by 2021, has taken has been mentioned in the 2G renewal guidelines. MNP up aggressive data infrastructure projects of 1500 km is also expected to be introduced sometime later this fiber cable and additional international bandwidth of year, but SMP timeline has no visibility till now. 145 Gbps.
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Equity Method WIND Mobile– Canada
Dec Sept Dec Inc/(dec) Dec 2011 vs. 2010 2011 2011 Dec 2010 Operational Data Subscribers 232,641 358,000 403,000 73.2%
ARPU (US$)(3 months) 30.0 25.9 26.0 (13.3%)
ARPU (CAD)(3 months) 29.0 27.1 26.4 (9.0%)
Globalive Wireless Management Corp. (“Company” or WIND grew its distribution materially, ending 2011 with “GWMC”), a Canadian wireless operation jointly owned 211 WIND Mobile-branded locations and a total of 453 by AAL Holdings Corporation and Orascom Telecom points of sale. operating under the brand name WIND Mobile, WIND has successfully completed a series of changes celebrated its second year of operations in the during the second half of 2011 to accommodate the Canadian market. above strategic shifts, in a reaffirmation of its Following WIND’s re-launching its “WIND Mobile” brand commitment to being Canada’s fourth national targeting the “Value Plus” customer segment in Canada operator. Management replacements or additions during Q3, WIND successfully executed on its new post- included Chief Executive Officer, Chief Operating paid strategy by extending its handset program (“TAB”) Officer, Chief Technical Officer, Chief Marketing Officer, to a new TAB+ program. This new program includes Chief Regulatory Officer and head of Customer Care. larger subsidies and a broader range of high-end WIND management focused heavily on retooling Android, Blackberry and Windows 7 handsets; this has its network rollout processes and approach with a clear directly expanded WIND’s target market to overlap goal to speed up site deployment, quality, and data more directly with the incumbents Canadian operators speed by upgrading the network to HSPA+. Accordingly across all their brands, including in their higher value WIND has successfully increased its coverage to over customer segments (and thus lower churn, higher ARPU, 12.7 million people (representing 37% of Canada’s total better credit quality and higher lifetime value populace and 47% of the licensed populace) with more customers). The effect has been positive, as greater than 1,060 sites on Air. Geographical expansion in than 50% of WIND Canada’s gross additions in Q4 2011 Ontario included St. Catharines, Welland, Niagara Falls, were post-paid sales. WIND had post-paid net additions London, Kitchener, Waterloo, Guelph and Cambridge, of 41,000 in Q4 2011. Alberta in Fort Saskatchewan and British Columbia in WIND continued to play a significant role in shaping the Abbotsford. This also reflected WIND continuing pre-paid market in Canada during Q4 2011 as the most commitment to lower density communities. competitive quarter on record, pre-paid net additions Two major announcements from the Canadian for the Canadian incumbent operators collectively Government are expected in Q1 2012. The first remained negative. Although WIND had positive pre- concerns its policy regarding an upcoming auction paid net additions in Q4 2011, WIND elected not to (expected to take place in H1 2013) of 700MHz follow unreasonably aggressive pricing waves adopted spectrum. Most critically, the government will answer by low end market entrants proven to have no financial whether that policy will include a set-aside of one of the feasibility and in fact unsustainable in the mid-term for two key useable blocks of such spectrum from the three the high dormancy and churn rates coupled by large incumbent operators. WIND Canada, strongly significantly lower ARPU and negative lifetime value of supported by independent consumer advocacy groups, such customers. WIND’s commitment to the pre-paid has been actively lobbying for such a set-aside (since it market in Canada continued, but reflected a conscious is expected the Incumbent operators, which operate as and disciplined mandate not to match competition a cozy oligopoly, would, in either in an open auction or purely on lower prices.
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in an auction with a cap, ensure by overbidding that no- recommendations of three key multi-party policy reports one but one of them acquired the key blocks of useable over the last decade, been actively lobbying for the spectrum). removal of these antiquated and unnecessary foreign ownership restrictions, which serve no policy objective Secondly, the government is expected to announce its and which act purely as a barrier to the much-needed long-awaited decision whether to lift (for at least capital required to build out and operate as a facilities- companies other than the three large incumbent based competitor to the incumbent operators in operators) the existing restrictions on non-Canadian Canada. ownership and control of telecommunications companies operating in Canada. WIND Canada has, in line with global standards and the conclusions and
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Table 19: Ownership Structure & Consolidation Methods
Ownership Consolidation Method Subsidiary December 31 December 31 2010 2011 2010 2011 GSM Operations 1 Mobinil (Egypt) 28.75% 28.75% Equity Method Demerged Egyptian Co. for Mobile Services 20.00% 20.00% Equity Method Demerged IWCPL (Pakistan) 100.00% 100.00% Full Consolidation Full Consolidation Orascom Telecom Algeria2 96.81% 96.81% Full Consolidation Full Consolidation Telecel (Africa) 100.00% 100.00% Full Consolidation Full Consolidation Orascom Telecom Tunisia 50.00% Divested Proportionate Consolidation Divested Telecel Globe 94.00% 100.00% Full Consolidation Full Consolidation OT Ventures3 100.00% 100.00% Full Consolidation Full Consolidation CHEO 75.00% 75.00% Full Consolidation Demerged Internet Service Intouch 100.00% 100.00% Full Consolidation Demerged Non GSM Operations Ring 99.00% 99.00% Full Consolidation Full Consolidation OTCS 100.00% 100.00% Full Consolidation Full Consolidation OT ESOP 100.00% 100.00% Full Consolidation Full Consolidation OT Services Europe 100.00% 100.00% Full Consolidation Full Consolidation MedCable 100.00% 100.00% Full Consolidation Demerged Mena Cable 100.00% 100.00% Full Consolidation Demerged Moga Holding 100.00% 100.00% Full Consolidation Full Consolidation Oratel 100.00% 100.00% Full Consolidation Full Consolidation 4 C.A.T. 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation OT Wireless Europe 100.00% 100.00% Full Consolidation Full Consolidation OT WIMAX 100.00% 100.00% Full Consolidation Divested TWA 51.00% 51.00% Full Consolidation Demerged OIIH 100.00% 100.00% Full Consolidation Demerged OT Holding 100.00% 100.00% Full Consolidation Full Consolidation FPPL 100.00% 100.00% Full Consolidation Full Consolidation MinMax Ventures 100.00% 100.00% Full Consolidation Full Consolidation OIH 5 100.00% 100.00% Full Consolidation Full Consolidation OTFCSA 100.00% 100.00% Full Consolidation Full Consolidation 6 OT Holding Canada 100.00% 100.00% Full Consolidation Full Consolidation ITCL 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation SAWLTD 100.00% 100.00% Full Consolidation Full Consolidation OT_OSCAR 100.00% 100.00% Full Consolidation Full Consolidation OTLB 100.00% 100.00% Full Consolidation Demerged TMGL 100.00% 100.00% Full Consolidation Full Consolidation OTO 100.00% 100.00% Full Consolidation Full Consolidation C.C 100.00% 100.00% Full Consolidation Divested OTUH 100.00% 0.00% Full Consolidation Divested Waselabank 100.00% 100.00% Full Consolidation Full Consolidation CORTEX 100.00% 100.00% Full Consolidation Full Consolidation
1. Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS. 2. Direct and Indirect stake through Moga Holding Ltd. and Oratel. 3. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink. 4. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL). 5. OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007. 6. Holding company for OTH’s Share in Globalive which has been accounted for under the equity method.
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Appendix
Glossary
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. 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 and Mobinil 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.
For more information: Investor Relations Orascom Telecom Holding S.A.E. Nile City Towers – South Tower - 27th Floor – Ramlet Beaulac Tel: +202 2461 5050 / 51 Fax: +202 2461 5055 / 54 Email: [email protected] Website: www.orascomtelecom.com
This presentation contains statements that could be construed as forward looking. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the subscriber base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the company.
Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors.
You are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation, which is not intended to reflect Orascom Telecom’s business or acquisition strategy or the occurrence of unanticipated events.
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