Important Notice

IMPORTANT NOTICE

THE ATTACHED BASE PROSPECTUS MAY NOT BE DISTRIBUTED DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES.

IMPORTANT: You must read the following before continuing. The following applies to the base prospectus (the ‘‘Base Prospectus’’) following this notice, and you are therefore advised to read this carefully before reading, accessing or making any other use of the attached Base Prospectus. In accessing the attached Base Prospectus, you agree to be bound by the following terms and conditions, including any modiﬁcations to them any time you receive any information from the Issuer or from the Arrangers and Dealers (each as deﬁned in the attached Base Prospectus) as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES DESCRIBED IN THE ATTACHED BASE PROSPECTUS HAVE NOT BEEN AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTIONS AND MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (‘‘REGULATION S’’)), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE ATTACHED BASE PROSPECTUS IS NOT BEING DISTRIBUTED TO, AND MUST NOT BE PASSED ON TO, THE GENERAL PUBLIC IN THE UNITED KINGDOM. RATHER, THE COMMUNICATION OF THE ATTACHED BASE PROSPECTUS AS A FINANCIAL PROMOTION IS ONLY BEING MADE TO THOSE PERSONS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE ‘‘ORDER’’) OR HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED, FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER (EACH SUCH PERSON BEING REFERRED TO AS A ‘‘RELEVANT PERSON’’). THIS COMMUNICATION IS BEING DIRECTED ONLY AT RELEVANT PERSONS AND ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS COMMUNICATION RELATES WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. NO PERSON OTHER THAN A RELEVANT PERSON SHOULD RELY ON IT.

THE FOLLOWING BASE PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE ATTACHED DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED THEREIN.

Conﬁrmation of your representation: By accessing the attached Base Prospectus you conﬁrm to us that: (i) you understand and agree to the terms set out herein; (ii) you consent to delivery of the attached Base Prospectus and any amendments or supplements thereto by electronic transmission; (iii) you will not transmit the attached Base Prospectus (or any copy of it or part thereof) or disclose, whether orally or in writing, any of its contents to any other person; and (iv) you acknowledge that you will make your own assessment regarding any credit, investment, legal, taxation or other economic considerations with respect to your decision to subscribe or purchase any of the Notes.

You are reminded that the attached Base Prospectus has been delivered to you on the basis that you are a person into whose possession the attached Base Prospectus may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver the attached Base Prospectus to any other person. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions. The attached Base Prospectus does not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that an offering of securities described herein be made by a licensed broker or dealer and the Arrangers and Dealers or any affiliate of the relevant Arrangers or Dealers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by such Arranger or Dealer or such affiliate on behalf of the Issuer or holders of the applicable securities in such jurisdiction. Under no circumstances shall the attached Base Prospectus constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Recipients of the attached document who intend to subscribe for or purchase the Notes are reminded that any subscription or purchase may only be made on the basis of the information contained in the attached Base Prospectus as completed by the applicable Final Terms and/or supplement(s) to the Base Prospectus (if any). The distribution of the attached Base Prospectus in certain jurisdictions may be restricted by law. Persons into whose possession the attached document comes are required by the Issuer, the Arrangers and Dealers to inform themselves about, and to observe, any such restrictions. The attached Base Prospectus has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither the Issuer, the Arrangers and Dealers nor any person who controls them nor any director, officer, employee nor agent of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the attached Base Prospectus distributed to you in electronic format and the hard copy version available to you on request from the Issuer, the Arrangers and Dealers. Please ensure that your copy is complete. If you received the attached Base Prospectus by e-mail, you should not reply by e-mail to this announcement. Any reply e-mail communications, including those you generate by using the ‘‘reply’’ function on your e-mail software, will be ignored or rejected. You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk, and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. BASE PROSPECTUS

EMIRATES TELECOMMUNICATIONS CORPORATION (incorporated with limited liability in the United Arab Emirates)

U.S.$7,000,000,000 Global Medium Term Note Programme

Under this U.S.$7,000,000,000 Global Medium Term Note Programme (the ‘‘Programme’’), Emirates Telecommunications Corporation (‘‘Etisalat’’ or the ‘‘Issuer’’) may from time to time issue notes (the ‘‘Notes’’) denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below). Notes may be issued in bearer or registered form (respectively ‘‘Bearer Notes’’ and ‘‘Registered Notes’’). The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed U.S.$7,000,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement (described herein)), subject to increase as described herein. The Notes may be issued on a continuing basis to one or more of the Dealers specified under ‘‘Overview of the Programme’’ and any additional Dealer appointed under the Programme from time to time by the Issuer (each a ‘‘Dealer’’ and, together, the ‘‘Dealers’’), which appointment may be for a specific issue or on an ongoing basis. References in this Base Prospectus to the ‘‘relevant Dealer’’ shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes. An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks, see ‘‘Risk Factors’’ beginning on page 5. This Base Prospectus has been approved by the Central Bank of Ireland, as competent authority under Directive 2003/71/EC, as amended (which includes the amendments made by Directive 2010/73/EU) (the ‘‘Prospectus Directive’’). The Central Bank of Ireland only approves this Base Prospectus as meeting the requirements imposed under Irish and European Union law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange for the Notes issued under the Programme during the period of 12 months from the date of this Base Prospectus to be admitted to the official list (the ‘‘Official List’’) and to trading on its regulated market (the ‘‘Main Securities Market’’). Such approval relates only to the Notes which are to be admitted to trading on a regulated market for the purposes of Directive 2004/39/EC (‘‘MiFID’’) and/or which are to be offered to the public in any member state of the European Economic Area. References in this Base Prospectus to Notes being ‘‘listed’’ (and all related references) shall mean that such Notes have been admitted to the Official List and to trading on the Main Securities Market or have been admitted to trading on such further stock exchanges or markets as may be specified in the applicable Final Terms (as defined below). The Main Securities Market is a regulated market for the purposes of MiFID. Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes and the issue price of Notes which are applicable to each Tranche (as defined under ‘‘Terms and Conditions of the Notes’’) of Notes will be set out in a final terms document (the ‘‘Final Terms’’) which, with respect to Notes to be listed on the Irish Stock Exchange, will be delivered to the Central Bank of Ireland and to the Irish Stock Exchange. The Programme also permits Notes to be issued on the basis that they will not be admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation by such other or further competent authorities, stock exchanges and/or quotation systems as may be agreed between the Issuer and the relevant Dealer. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’) or any U.S. state securities laws and the Notes may not be offered or sold in the United States or to, or for the account or the benefit of, U.S. persons, unless an exemption from the registration requirements of the Securities Act is available and the offer or sale is made in accordance with all applicable securities laws of any state of the United States and any other jurisdiction. The Notes are being offered and sold outside the United States to persons that are not U.S. persons in reliance on Regulation S (‘‘Regulation S’’) under the Securities Act and within the United States only to persons who are reasonably believed to be ‘‘qualified institutional buyers’’ (‘‘QIBs’’) in reliance on Rule 144A (‘‘Rule 144A’’) under the Securities Act. See ‘‘Form of the Notes’’ for a description of the manner in which Notes will be issued. Registered Notes are subject to certain restrictions on transfer, see ‘‘Subscription and Sale and Transfer and Selling Restrictions’’ The Issuer has been assigned a corporate rating of A+, with a stable outlook, by Fitch Ratings Limited (‘‘Fitch’’), Aa3, with a stable outlook, by Moody’s Investors Service Ltd. (‘‘Moody’s’’) and AA-, with a stable outlook, by Standard & Poor’s Credit Market Services Europe Limited (‘‘S&P’’), respectively. The Programme has been assigned a rating of A+, with a stable outlook, by Fitch, Aa3, with a stable outlook, by Moody’s and AA-, with a stable outlook, by S&P. The United Arab Emirates has been assigned a credit rating of Aa2 with a stable outlook, by Moody’s Investors Service, Inc. Notes issued under the Programme may be rated or unrated. Where a Series (as defined under ‘‘Terms and Conditions of the Notes’’) of Notes is rated, such rating, and the credit rating agency issuing such rating, will be disclosed in the applicable Final Terms and will not necessarily be the same as the rating assigned to the Programme by the relevant credit rating agency. Each of Fitch, Moody’s and S&P is established in the European Union and is registered under Regulation (EC) No. 1060/2009, as amended (the ‘‘CRA Regulation’’). Accordingly, each of Fitch, Moody’s and S&P is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website in accordance with the CRA Regulation. Moody’s Investors Service, Inc. is not established in the European Union and has not applied for registration under the CRA Regulation. The rating has been endorsed by Moody’s in accordance with the CRA Regulation. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Arrangers Goldman Sachs International HSBC Dealers Goldman Sachs International HSBC

The date of this Base Prospectus is 16 April 2015 IMPORTANT NOTICES

This Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of the Prospectus Directive and for the purpose of giving information with regard to the Group (as defined herein) and the Notes which, according to the particular nature of the Issuer, the Group and the Notes, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Issuer and the Group. The Issuer accepts responsibility for the information contained in this Base Prospectus and the applicable Final Terms for each Tranche of Notes issued under the Programme. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Base Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Each Tranche of Notes will be issued on the terms set out herein under ‘‘Terms and Conditions of the Notes’’ as completed by the applicable Final Terms. This Base Prospectus must be read and construed together with any amendments or supplements hereto and with any information incorporated by reference herein and, in relation to any Tranche of Notes, the applicable Final Terms. The only persons authorised to use this Base Prospectus in connection with an offer of Notes are the relevant Dealer or the Managers (as defined in the relevant subscription agreement), as the case may be. Copies of the applicable Final Terms will be available from the registered office of the Issuer and the specified office set out below of each of the Paying Agents (as defined in ‘‘Terms and Conditions of the Notes’’). Certain information under the headings ‘‘Risk Factors’’, ‘‘Overview of the UAE’’, ‘‘Operating and Financial Review’’, ‘‘Description of the Group’’ and ‘‘Book-Entry Clearance Systems’’ has been extracted from information provided by the United Arab Emirates (‘‘UAE’’) National Bureau of Statistics (the ‘‘NBS’’), the Statistics Centre – Abu Dhabi (the ‘‘SCAD’’), the International Monetary Fund (the ‘‘IMF’’) and the Organisation of Petroleum Exporting Countries (‘‘OPEC’’) (in the case of ‘‘Overview of the UAE’’), the clearing systems referred to therein (in the case of ‘‘Book-Entry Clearance Systems’’) and from various national telecommunications regulators (in the case of ‘‘Risk Factors’’, ‘‘Operating and Financial Review’’ and ‘‘Description of the Group’’. The Issuer confirms that all such third party information contained in this Base Prospectus has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by the sources referred to above, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of any third party information contained in this Base Prospectus is stated where such information appears in this Base Prospectus. Neither the Arrangers, the Dealers nor Deutsche Trustee Company Limited (the ‘‘Trustee’’) have independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Arrangers, the Dealers or the Trustee as to the accuracy or completeness of the information contained in this Base Prospectus or any other information provided by the Issuer in connection with the Programme. No Arranger, Dealer or the Trustee accepts any liability in relation to the information contained in this Base Prospectus or any other information provided by the Issuer in connection with the Programme. No person is or has been authorised by the Issuer, any of the Arrangers, the Dealers or the Trustee to give any information or to make any representation not contained in or not consistent with this Base Prospectus or any other information supplied in connection with the Programme or the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, any of the Arrangers, the Dealers or the Trustee. Neither this Base Prospectus, any Final Terms nor any other information supplied in connection with the Programme or any Notes: (i) is intended to provide the basis of any credit or other evaluation; or (ii) should be considered as a recommendation by the Issuer, any of the Arrangers, the Dealers or the Trustee that any recipient of this Base Prospectus or any other information supplied in connection with the Programme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and the Group. Neither this Base Prospectus nor any other information supplied in connection with the Programme or the issue of any

ii Notes constitutes an offer or invitation by or on behalf of the Issuer, any of the Arrangers, the Dealers or the Trustee to any person to subscribe for or to purchase any Notes. Neither the delivery of this Base Prospectus, any Final Terms nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuer or the Group is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Arrangers, the Dealers and the Trustee expressly do not undertake to review the financial condition or affairs of the Issuer or the Group during the life of the Programme or to advise any investor in the Notes of any information coming to their attention. This Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Base Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Issuer, the Arrangers, the Dealers and the Trustee do not represent that this Base Prospectus may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular no action has been taken by the Issuer, any of the Arrangers, the Dealers or the Trustee which is intended to permit a public offering of any Notes or distribution of this Base Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Base Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Base Prospectus or any Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this Base Prospectus and the offering and sale of Notes. In particular, there are restrictions on the distribution of this Base Prospectus and the offer or sale of Notes in the United States, the European Economic Area (including the United Kingdom), Japan, the United Arab Emirates (excluding the Dubai International Financial Centre), the Dubai International Financial Centre, the Kingdom of Saudi Arabia, the Kingdom of Bahrain, the State of Qatar, Hong Kong and Singapore. See ‘‘Subscription and Sale and Transfer and Selling Restrictions’’. In making an investment decision, investors must rely on their own independent examination of the Issuer, the Group and the terms of the Notes being offered, including the merits and risks involved. The Notes have not been approved or disapproved by the United States Securities and Exchange Commission or any other securities commission or other regulatory authority in the United States, nor have the foregoing authorities approved this Base Prospectus or confirmed the accuracy or determined the adequacy of the information contained in this Base Prospectus. Any representation to the contrary is unlawful. None of the Arrangers, the Dealers, the Issuer or the Trustee makes any representation to any investor in the Notes regarding the legality of its investment under any applicable laws. Any investor in the Notes should be able to bear the economic risk of an investment in the Notes for an indefinite period of time.

U.S. INFORMATION

This Base Prospectus is being submitted on a conﬁdential basis in the United States to a limited number of persons reasonably believed to be QIBs for informational use solely in connection with the consideration of the purchase of certain Notes issued under the Programme. Its use for any other purpose in the United States is not authorised. It may not be copied or reproduced in whole or in part nor may it be distributed or any of its contents disclosed to anyone other than the prospective investors to whom it is originally submitted. The Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to United States persons, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986, as amended (the ‘‘Code’’) and the U.S. Treasury regulations promulgated thereunder. Registered Notes may be offered or sold in the United States only to persons reasonably believed to be QIBs in transactions exempt from registration under the Securities Act in reliance on Rule 144A

iii or pursuant to any other applicable exemption. Prospective purchasers are hereby notiﬁed that sellers of Registered Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Each purchaser or holder of Notes represented by a Rule 144A Global Note (as deﬁned under ‘‘Form of the Notes’’) or any Notes issued in registered form in exchange or substitution therefor (together ‘‘Legended Notes’’) will be deemed, by its acceptance or purchase of any such Legended Notes, to have made certain representations and agreements intended to restrict the resale or other transfer of such Notes as set out in ‘‘Subscription and Sale and Transfer and Selling Restrictions’’. Unless otherwise stated, terms used in this paragraph have the meanings given to them in ‘‘Form of the Notes’’.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

AVAILABLE INFORMATION

To permit compliance with Rule 144A in connection with any resales or other transfers of Notes that are ‘‘restricted securities’’ within the meaning of the Securities Act, the Issuer has undertaken in an amended and restated trust deed dated 16 April 2015 (the ‘‘Trust Deed’’) to furnish, upon the request of a holder of such Notes or any beneﬁcial interest therein, to such holder or to a prospective purchaser designated by him, the information required to be delivered under Rule 144A(d)(4) under the Securities Act if, at the time of the request, any of the Notes remain outstanding as ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) of the Securities Act and the Issuer is neither a reporting company under Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, (the ‘‘Exchange Act’’) nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder.

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

The Issuer is a corporation organised under the laws of the UAE. All of the officers and directors named herein reside outside the United States and all or a substantial portion of the assets of the Issuer and of its officers and directors are located outside the United States. As a result, it may not be possible for investors to effect service of process outside the UAE upon the Issuer or its officers or directors, or to enforce judgments against them predicated upon United States federal securities laws or the securities laws of any state or territory within the United States. The Notes are governed by English law and disputes in respect of them may be settled by arbitration under the Arbitration Rules of the London Court of International Arbitration (the ‘‘LCIA Rules’’) in London, England. In addition, actions in respect of the Notes may be brought in the English courts. Investors may have difficulties in enforcing any arbitration awards against the Issuer in the courts of the UAE. Further, in the absence of any bilateral treaty for the reciprocal enforcement of foreign judgements, the UAE courts are unlikely to enforce an English court judgement without re-examining the merits of the claim and may not observe the choice by the parties of English law as the governing law of the Notes. In addition, even if English law is accepted as the governing law, this will only be applied to the extent that it is compatible with applicable federal law of the UAE and public policy. Moreover, judicial precedent in the UAE has no binding effect on subsequent decisions

iv and there is no formal system of reporting court decisions in the UAE. These factors create greater judicial uncertainty. See ‘‘Risk Factors – Risks Related To Enforcement – Investors may experience difﬁculty in enforcing arbitration awards and foreign judgments in the UAE’’.

NOTICE TO RESIDENTS OF THE KINGDOM OF BAHRAIN

In relation to investors in the Kingdom of Bahrain, Notes issued in connection with this Base Prospectus and related offering documents may only be offered in registered form to existing accountholders and accredited investors as deﬁned by the Central Bank of Bahrain (‘‘CBB’’) in the Kingdom of Bahrain where such investors make a minimum investment of at least U.S.$100,000 or any equivalent amount in other currency or such other amount as the CBB may determine. This Base Prospectus does not constitute an offer of securities in the Kingdom of Bahrain pursuant to the terms of Article (81) of the Central Bank and Financial Institutions Law 2006 (decree Law No. 64 of 2006). This Base Prospectus and related offering documents have not been and will not be registered as a prospectus with the CBB. Accordingly, no securities may be offered, sold or made the subject of an invitation for subscription or purchase nor will this Base Prospectus or any other related document or material be used in connection with any offer, sale or invitation to subscribe or purchase securities, whether directly or indirectly, to persons in the Kingdom of Bahrain, other than to accredited investors for an offer outside the Kingdom of Bahrain. The CBB has not reviewed, approved or registered the Base Prospectus or related offering documents and it has not in any way considered the merits of the securities to be offered for investment, whether in or outside the Kingdom of Bahrain. Therefore, the CBB assumes no responsibility for the accuracy and completeness of the statements and information contained in this Base Prospectus and expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the content of this Base Prospectus. No offer of securities will be made to the public in the Kingdom of Bahrain and this Base Prospectus must be read by the addressee only and must not be issued, passed to, or made available to the public generally.

NOTICE TO RESIDENTS OF THE KINGDOM OF SAUDI ARABIA

This Base Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority of the Kingdom of Saudi Arabia (the ‘‘Capital Market Authority’’). The Capital Market Authority does not make any representations as to the accuracy or completeness of this Base Prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Base Prospectus. Prospective purchasers of Notes issued under the Programme should conduct their own due diligence on the accuracy of the information relating to the Notes. If a prospective purchaser does not understand the contents of this Base Prospectus he or she should consult an authorised ﬁnancial adviser.

NOTICE TO RESIDENTS OF THE STATE OF QATAR

Any Notes to be issued under the Programme will not be offered, sold or delivered, at any time, directly or indirectly, in the State of Qatar (including the Qatar Financial Centre) in a manner that would constitute a public offering. This Base Prospectus has not been and will not be reviewed or approved by or registered with the Qatar Central Bank, the Qatar Exchange, the Qatar Financial Centre Regulatory Authority or the Qatar Financial Markets Authority. The Notes are not and will not be traded on the Qatar Exchange.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

PRESENTATION OF FINANCIAL INFORMATION References in this Base Prospectus to the ‘‘Group’’ are: (i) unless otherwise speciﬁed or the context otherwise requires, to the Issuer, its consolidated subsidiaries and its associated companies and joint ventures; or (ii) with respect to the presentation of ﬁnancial information, to the Issuer and its subsidiaries, and such references do not refer to an independent legal entity.

v The ﬁnancial statements and information presented for the Group in this Base Prospectus are, unless otherwise speciﬁed or the context otherwise requires, for the Issuer and its consolidated subsidiaries.

The audited consolidated financial statements of the Group as of and for the financial year ended 31 December 2014 (the ‘‘Etisalat 2014 Financial Statements’’) and the audited consolidated financial statements of the Group as of and for the financial year ended 31 December 2013 (the ‘‘Etisalat 2013 Financial Statements’’ and, together with the Etisalat 2014 Financial Statements, the ‘‘Etisalat Financial Statements’’) were prepared in accordance with International Financial Reporting Standards (‘‘IFRS’’) as issued by the International Accounting Standards Board. Any information or other documents incorporated by reference, either expressly or implicitly, in the Etisalat Financial Statements presented in this Base Prospectus shall not form part of this Base Prospectus.

The Etisalat Financial Statements are prepared in United Arab Emirates dirham, which has been pegged to the U.S. dollar since 22 November 1980. The mid-point between the ofﬁcial buying and selling rates for the dirham is at a ﬁxed rate of AED 3.6725 = U.S.$1.00.

The audited consolidated ﬁnancial statements of Itissalat Al Maghrib (‘‘Maroc Telecom’’) as of and for the ﬁnancial year ended 31 December 2014 (the ‘‘Maroc Telecom Financial Statements’’) were jointly audited by KPMG Maroc and Mr. Abdelaziz Almechatt in accordance with IFRS as issued by the International Accounting Standards Board, applicable on 31 December 2014, as endorsed by the European Union.

The ﬁnancial statements and information presented for Maroc Telecom in this Base Prospectus are, unless otherwise speciﬁed or the context otherwise requires, for Maroc Telecom, its consolidated subsidiaries and its share of associated companies.

On 14 May 2014, Etisalat completed the acquisition of Vivendi’s 53 per cent. stake in Maroc Telecom. For the period from 14 May 2014, Maroc Telecom is fully consolidated into the Etisalat 2014 Financial Statements. For the period from 1 January 2014 to 13 May 2014, Maroc Telecom was not consolidated into the Etisalat Financial Statements and the English translation of the Maroc Telecom Financial Statements is presented in this Base Prospectus for information purposes only. See ‘‘Unaudited pro forma condensed consolidated financial information’’. Furthermore, the Maroc Telecom Financial Statements have not been audited by the auditors of Etisalat. Neither the Arrangers, the Dealers nor the Trustee nor any person who controls them nor any director, officer, employee or agent of any of them nor any affiliate of any such person accepts any liability or responsibility whatsoever in respect of the Maroc Telecom Financial Statements. Any information or other documents incorporated by reference, either expressly or implicitly, in the Maroc Telecom Financial Statements presented in this Base Prospectus shall not form part of this Base Prospectus.

Each of the Group’s and Maroc Telecom’s ﬁnancial years end on 31 December, and references in this Base Prospectus to any speciﬁc year are to the 12-month period ended on 31 December of such year.

Comparability of Etisalat’s Financial Information The financial information corresponding to the financial year ended 31 December 2013 included in the Etisalat 2013 Financial Statements differs from the financial information corresponding to the financial year ended 31 December 2013 included, for comparative purposes, in the Etisalat 2014 Financial Statements. The financial information for the financial year ended 31 December 2013 incorporated in the Etisalat 2014 Financial Statements includes restatements to conform with the 31 December 2014 presentation as stated in Note 36 (‘‘Disposal Group held for sale/Discontinued operations’’) to the Etisalat 2014 Financial Statements. See ‘‘Selected Financial Information for the Group’’.

The financial information corresponding to the financial year ended 31 December 2013, included elsewhere in this Base Prospectus, (except where stated in this Base Prospectus and other than in the Etisalat 2013 Financial Statements) is extracted from the comparative information contained in the Etisalat 2014 Financial Statements. Additionally, the financial information corresponding to the financial year ended 31 December 2012 included in this Base Prospectus is extracted from the Etisalat 2013 Financial Statements. The financial information corresponding to the financial year ended 31 December 2012 has not been amended to reflect the impact of applying the abovementioned changes to the financial information corresponding to the financial years ended 31 December 2014 and 2013, respectively, presented in the Etisalat 2014 Financial Statements.

vi Presentation of Sub-Segments For the purpose of monitoring performance and allocating resources, the Group’s segments are the UAE, Morocco, Egypt, Pakistan and ‘‘Others’’. The Group further monitors operating performance by each operating business and with respect to revenue from the following sub-segments: * Mobile: Mobile includes revenue from SIM rental, handset rental and voice services (including local, national and IDD calling, as well as revenue attributable to roaming). * Fixed-line: Fixed-line includes revenue from fixed-line rental (including the line rental revenue associated with fixed-lines used for voice and/or internet services), connection fees and fixed-line voice and television services (such as video-on-demand). * Internet: Internet includes revenue from fixed-line internet services, including dial-up and broadband services. * Mobile data services: Mobile data services include revenue from all data communications services, including SMS, MMS, GPRS, 3G and 4G LTE mobile services and other value-added services (from both mobile and fixed-lines), as well as revenue from both SMB and enterprise services. * Interconnect: Interconnect includes revenue from the connection between the Group’s network and other third-party operators, and includes revenue generated from termination of third-party operator calls on the Group’s network. In certain cases, there may be differences between the Group’s accounting of sub-segment revenue and its operating businesses’ accounting of sub-segment revenue required for internal reporting or regulatory obligations.

Non-IFRS Financial Measures In this Base Prospectus, certain financial measures are presented that are not recognised by IFRS. These include EBITDA and Adjusted EBITDA. The Group’s definition of EBITDA includes revenue, staff costs, direct cost of sales, regulatory expenses, operating lease rentals, network and other related costs, marketing expenses and other operating expenses. The Group calculates Adjusted EBITDA as EBITDA including the effects of federal royalty and the share of results of associates and joint ventures. For a reconciliation of EBITDA and Adjusted EBITDA to profit for each relevant period, see ‘‘Selected Financial Information for the Group’’. EBITDA and Adjusted EBITDA are not defined by or presented in accordance with IFRS, are not a measure of performance and should not be considered as alternatives to: * profit after tax from continuing operations (as determined in accordance with IFRS), or as a measure of operating performance; * cash flows from operating, investing or financing activities (as determined in accordance with IFRS), or as a measure of the Group’s ability to meet its cash needs; or * any other measures of performance under IFRS. EBITDA and Adjusted EBITDA have limitations as analytical tools, and an investor should not consider these measures in isolation from, or as a substitute for, analysis of the Group’s results of operations. Some limitations of these measures are that: * they do not reflect the Group’s cash expenditures or future requirements for capital expenditure or contractual commitments; * they do not reflect changes in, or cash requirements for, the Group’s working capital needs; * they do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments in respect of any borrowings;

vii * although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised will often have to be replaced in the future, and these measures do not reﬂect any cash requirements for such replacements; and * other companies in the Group’s industry may calculate these measures differently from how the Group does, limiting their usefulness as a comparative measure. EBITDA and Adjusted EBITDA may not be indicative of the Group’s historical operating results, nor are they meant to be a projection or forecast of future results. The Group believes that EBITDA and Adjusted EBITDA provide useful information to investors because these measures are used by management in analysing the Group’s core performance excluding the impact of certain non-operating factors, as they remove the results of certain decisions that are outside the control of operating management and can differ signiﬁcantly from company to company depending on long-term strategic decisions regarding capital structure, the stage of growth development, capital expenditure requirements and the jurisdictions in which certain of its companies operate and make capital investments. In addition, the Group believes EBITDA and Adjusted EBITDA are measures commonly used by investors, analysts and other interested parties in the Group’s industry. EBITDA and Adjusted EBITDA are not subject to audit or review by any independent auditors.

PRESENTATION OF INDUSTRY, MARKET AND CUSTOMER DATA The customer data included in this Base Prospectus, including penetration rates, ARPU, churn rates and market shares, are derived from management estimates of such customer data for Etisalat and, where relevant, its operating subsidiaries. The Group’s use or computation of ARPU may not be comparable with the use or computation of similarly titled measures reported by other companies in the telecommunications industry, including its competitors. How the Group calculates its number of customers, churn and ARPU in relation to its UAE telecommunications businesses is described in more detail below. In certain cases, there may be differences between the Group’s methodology described below and that of its operating businesses for their internal reporting or regulatory obligations. Where these differences affect data disclosed in this Base Prospectus, they are also identified below. The subscriber, market share, churn rates and ARPU data included in this Base Prospectus are not part of the Group’s financial statements or financial accounting records and have not been audited or otherwise reviewed by independent auditors, consultants or independent experts.

Customers Mobile customers who pay in advance of services provided are counted as ‘‘prepaid’’ customers and mobile customers who pay periodically following the provision of services are counted as ‘‘postpaid’’ customers. The Group further delineates its customer base in the UAE by the annual revenue contribution per customer. Customers contributing up to AED 25,000 per year are ‘‘consumer’’ customers; those contributing AED 25,000 to AED 250,000 per year are SMB customers, and those contributing more than AED 250,000 per year are ‘‘enterprise’’ customers. The Group calculates active mobile subscribers (customers) on a monthly basis in each of its operating businesses by deducting the total number of subscribers that ceased their subscription for the relevant service in the relevant month from the total number of new subscribers for that service in that month and adding or subtracting the resulting ﬁgure, as applicable, from the total number of subscribers for the service as of the previous month end. A mobile customer is counted from the date of the activation of such mobile customer’s SIM card. A mobile subscriber is considered to have ceased its subscription if: (1) the subscriber itself terminates the subscription; (2) the operator terminates the subscription; or (3) in the case of prepaid customers, the subscriber has not made any outgoing activity (voice, text or multimedia) or received any incoming calls within a 90-day period. Fixed-line and internet customers are calculated by the number of active lines at the end of the period. In general, a customer is no longer counted as a ﬁxed-line customer if: (1) the customer has voluntarily terminated the contract; or (2) the customer has not made a payment on an outstanding balance within approximately 60 days. Customers who subscribe to Etisalat’s eLife bundled services (including ‘‘Double Play’’ and ‘‘Triple Play’’ packages) are categorised uniquely as eLife customers.

viii Unless otherwise indicated, all subscriber figures presented in this Base Prospectus are calculated using the methods described above. However, some of the Group’s operating businesses report subscriber numbers to their respective regulator based on another method of calculation. For example, the Egyptian telecommunications regulator requires operators to report subscriber statistics using a method similar to the method outlined above, but requires operators to consider prepaid and postpaid customers terminated if a subscriber has not made any outgoing activity or received any incoming calls within 125 days rather than 90 days. Where subscriber numbers are presented in this Base Prospectus, the figures refer to the total number of subscribers and not to the proportionate number of subscribers, unless otherwise specifically stated. The term proportionate subscribers denotes the total number of subscribers in each of the Group’s mobile operations calculated by multiplying the total number of subscribers by the Issuer’s economic interest in the respective operator.

Churn The rate at which mobile customers are disconnected from a network or are removed from an operating company’s customer count due to inactivity is referred to as the company’s ‘‘churn’’ rate. The Group calculates churn by dividing the number of voluntary and involuntary deactivations in a given period by the average number of customers for the same period. See ‘‘– Customers’’.

ARPU The Group believes that ARPU provides useful information concerning the appeal and usage patterns of its rate plans and service offerings and its performance in attracting and retaining high-value customers. ARPU is the measure of total service revenues for a given period, divided by the number of months in that period and divided again by that period’s average total customers (calculated by dividing the aggregate number of customers at the beginning and end of the relevant period by two). The Group’s calculation of mobile ARPU includes outgoing voice revenue, subscription fees and net customer roaming revenue. Interconnect revenue is not included in mobile ARPU. The Group calculates mobile ARPU for both prepaid and postpaid customers. Blended mobile ARPU is calculated by multiplying each of prepaid mobile ARPU and postpaid mobile ARPU by the number of prepaid and postpaid mobile subscribers for the period, respectively, adding the resulting ﬁgures together and then dividing by the total number of mobile subscribers for the period. Fixed-line ARPU includes outgoing voice revenue and line rental charges. Both ARPU measures are calculated monthly and include residential as well as business customers.

Market Share The market share data of Etisalat’s and the Group’s competitors as calculated by management and included in this Base Prospectus may differ from the market share data obtained from the telecommunications authorities in the UAE and other jurisdictions in which the Group operates, which is reported to those authorities by Etisalat’s and the Group’s competitors. In certain markets, the regulatory authority provides no uniform deﬁnition or criteria for measuring either prepaid or postpaid subscribers within the market, and therefore the market share data provided to the regulatory authority by the Group’s operating subsidiaries’ competitors may not be measured by the same deﬁnitions and criteria which management applies in measuring the market share and subscriber data of Etisalat’s and the Group’s competitors (especially if the competitor is using a different or more relaxed churn rule). In Pakistan and Egypt, the Group’s operations use the market share data of their competitors in those markets as provided by these competitors to the relevant national regulatory authority. However, other of the Group’s operations use their own methods of calculating the market share of their competitors. The Issuer cannot assure prospective investors of the comparability of Etisalat’s or the Group’s competitors’ criteria for measuring market share data to the methods used by management, as a third party using different methods to assemble, analyse or calculate market data may not obtain or generate the same results.

No Representation or Warranty Market data and certain industry data, forecasts and statements regarding the position of Etisalat and its subsidiaries and associates in the telecommunications industry in its various markets included in this Base Prospectus are based on the internal estimates of Etisalat and its subsidiaries and associates and, in some cases, on industry data collected by the relevant national regulator or the industry.

ix While the Issuer believes the statements contained in this Base Prospectus, including customer and market share information, to be reliable and to provide fair and adequate estimates of the size of its markets and fairly reflect the Group’s competitive position within those markets, these statements have not been independently verified, and the Issuer does not make any representation or warranty as to the accuracy or completeness of such information set forth in this Base Prospectus. In addition, the Issuer has made statements in this Base Prospectus regarding the telecommunications industry, the markets in which its operating businesses operate, the position of those operating businesses in the industry and the market shares of various industry participants based on the Group’s experience and its own investigation of market conditions (in particular, based on its internal data collected from its operating businesses’ networks, monitoring traffic and customer activations). The Issuer cannot assure prospective investors that any of its assumptions are accurate or correctly reflect the operating businesses’ position in the industry, and none of the Group’s internal surveys or information has been verified by any independent sources.

PRESENTATION OF STATISTICAL INFORMATION The statistical information in the section entitled ‘‘Overview of the UAE’’ has been derived from a number of different identiﬁed sources. All statistical information provided in that section may differ from that produced by other sources for a variety of reasons, including the use of different deﬁnitions and cut-off times. The data set out in the section entitled ‘‘Overview of the UAE’’ relating to the UAE’s gross domestic product (‘‘GDP’’) for 2012 and 2013 is subject to change and certain other historical GDP data set out in that section may also be subject to future adjustment.

CERTAIN DEFINED TERMS AND CONVENTIONS Capitalised terms which are used but not defined in any particular section of this Base Prospectus will have the meaning attributed thereto in ‘‘Terms and Conditions of the Notes’’ or any other section of this Base Prospectus, including the section entitled ‘‘Glossary’’. Certain figures and percentages included in this Base Prospectus have been subject to rounding adjustments; accordingly figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures that precede them. References in this Base Prospectus to one gender shall be deemed to include the other except where the context does not permit. All references in this Base Prospectus to ‘‘U.S. dollars’’, ‘‘U.S.$ ‘‘ and ‘‘$’’ refer to United States dollars, being the legal currency for the time being of the United States of America; all references to ‘‘UAE dirham’’ and ‘‘AED’’ refer to United Arab Emirates dirham, being the legal currency for the time being of the UAE; all references to ‘‘MAD’’ refer to Moroccan dirham, being the legal currency for the time being of the Kingdom of Morocco (‘‘Morocco’’); all references to ‘‘SAR’’ refer to Saudian Arabian Riyals, being the legal currency for the time being of the Kingdom of Saudi Arabia (‘‘Saudia Arabia’’); all references to ‘‘Egyptian pounds’’ refer to Egyptian pounds, being the legal currency for the time being of Egypt; all references to ‘‘Pakistani rupee’’ refer to Pakistani rupee, being the legal currency for the time being of Pakistan; all references to ‘‘naira’’ refer to the Nigerian naira, being the legal currency for the time being of Nigeria; all references to ‘‘Sterling’’ and ‘‘£’’ refer to pounds sterling, being the legal currency for the time being of the United Kingdom; and all references to ‘‘Euro’’, ‘‘euro’’ and ‘‘E’’ refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended. References to a ‘‘billion’’ are to a thousand million. ’’We’’, ‘‘us’’ and ’’our’’ are references to the Group or Etisalat, as the context requires.

x CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some statements in this Base Prospectus are or may be deemed to be forward-looking statements. Forward-looking statements are all statements in this Base Prospectus that do not relate to historical facts and events. Forward-looking statements include statements concerning the Issuer’s and the Group’s plans, objectives, goals, strategies, future operations and performance, and the assumptions underlying these forward-looking statements. When used in this Base Prospectus, the words ‘‘anticipates’’, ‘‘estimates’’, ‘‘expects’’, ‘‘believes’’, ‘‘intends’’, ‘‘plans’’, ‘‘aims’’, ‘‘seeks’’, ‘‘may’’, ‘‘will’’, ‘‘should’’ and any similar expressions generally identify forward-looking statements. These forward- looking statements are contained in the sections entitled ‘‘Risk Factors’’, ‘‘Operating and Financial Review’’, ‘‘Description of the Group’’ and other sections of this Base Prospectus. The Issuer has based these forward-looking statements on the current view of its management with respect to future events and financial performance. Such forward-looking statements are based on assumptions and current factors and are subject to risks and uncertainties, the non-occurrence or occurrence of which could cause the Group’s actual results, including the Group’s financial condition and profitability, to differ materially from or be more negative than those expressly or implicitly assumed or described by such forward-looking statements. Although the Issuer believes that the expectations, estimates and projections reflected in its forward-looking statements are reasonable as of the date of this Base Prospectus, if one or more of the risks or uncertainties materialise, including those identified below or which the Issuer has otherwise identified in this Base Prospectus, or if any of the Issuer’s underlying assumptions prove to be incomplete or inaccurate, the Group’s actual results of operations may vary from those expected, estimated or predicted. You are therefore strongly advised to read the sections ‘‘Risk Factors’’, ‘‘Operating and Financial Review’’ and ‘‘Description of the Group’’, which include a more detailed description of the factors that might have an impact on the Group’s business development and on the industry sector in which the Group operates. The risks and uncertainties referred to above include: * changes in economic, financial and political conditions or changes in the regulatory and competitive environments in markets served by operations of the Group that would adversely affect the level of demand for telecommunications services; * greater than anticipated competitive activity, from both existing competitors and new market entrants; * the impact of investment in network capacity and the deployment of new technologies, or the obsolescence of existing technologies; * the Group’s ability successfully to execute its investments, whether in greenfield development or update of incumbent operations; * the effects of, and changes in, laws, regulations or governmental policies affecting the Group’s business activities; * slower than expected customer growth, increased churn and reduced customer retention; * changes in the spending patterns of new and existing customers; * any unfavourable conditions, regulatory or otherwise, imposed in connection with pending or future acquisitions or dispositions and the integration of acquired companies and investments into the Group’s existing operations; * the Group’s ability to obtain and maintain necessary regulatory approvals and licences for its businesses; * the Group’s ability to realise the benefits it expects from existing and future investments it is undertaking or plans to or may undertake; * the Group’s ability to obtain external financing or maintain sufficient capital to fund its existing and future investments; * the Group’s ability to stabilise churn and ARPU; and * changes in tax legislation in the jurisdictions in which the Group operates. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under ‘‘Risk Factors’’. Any forward-looking statements contained in this Base Prospectus speak only as of the date of this Base Prospectus. Without prejudice to any requirements under applicable laws and regulations, the

xi Issuer expressly disclaims any obligation or undertaking to disseminate after the date of this Base Prospectus any updates or revisions to any forward-looking statements contained herein to reﬂect any change in expectations thereof or any change in events, conditions or circumstances on which any such forward-looking statement is based.

STABILISATION

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the relevant subscription agreement may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action or over-allotment may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.

xii CONTENTS

Page OVERVIEW OF THE PROGRAMME ...... 1 RISK FACTORS ...... 5 DOCUMENTS INCORPORATED BY REFERENCE ...... 32 FORM OF THE NOTES ...... 33 APPLICABLE FINAL TERMS...... 37 TERMS AND CONDITIONS OF THE NOTES ...... 42 USE OF PROCEEDS...... 73 OVERVIEW OF THE UAE ...... 74 CAPITALISATION OF THE GROUP...... 78 SELECTED FINANCIAL INFORMATION FOR THE GROUP ...... 79 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION...... 82 OPERATING AND FINANCIAL REVIEW ...... 85 DESCRIPTION OF THE GROUP ...... 101 MANAGEMENT AND EMPLOYEES ...... 143 BOOK-ENTRY CLEARANCE SYSTEMS ...... 152 TAXATION ...... 156 CERTAIN ERISA AND OTHER CONSIDERATIONS...... 165 SUBSCRIPTION AND SALE AND TRANSFER AND SELLING RESTRICTIONS...... 166 GENERAL INFORMATION...... 174 GLOSSARY...... 177 INDEX TO FINANCIAL STATEMENTS...... F-1 APPENDIX – AUDITOR’S REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION ...... A-1

xiii OVERVIEW OF THE PROGRAMME

The following overview does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Base Prospectus and, in relation to the terms and conditions of any particular Tranche of Notes, is completed by the applicable Final Terms. The Issuer and any relevant Dealer(s) may agree that Notes shall be issued in a form other than that contemplated in the Terms and Conditions, in which event a new Base Prospectus or a supplement to the Base Prospectus, if appropriate, will be made available which will describe the effect of the agreement reached in relation to such Notes. This overview constitutes a general description of the Programme for the purposes of Article 22.5(3) of Commission Regulation (EC) No. 809/2004 implementing the Prospectus Directive. Words and expressions defined in ‘‘Form of the Notes’’ and ‘‘Terms and Conditions of the Notes’’ shall have the same meanings in this overview. Issuer: Emirates Telecommunications Corporation. Emirates Telecommunications Corporation is a federal entity incorporated in the United Arab Emirates with limited liability on 30 August 1976 by the UAE Federal Government Decree No. 78, which was revised by the UAE Federal Law No. 1 of 1991 and further amended by Federal Law by Decree No. 3 of 2003 Regarding the Organisation of the Telecommunications Sector. The address of the Issuer’s registered office is P.O. Box 3838, Abu Dhabi, United Arab Emirates. The Issuer’s telephone number is +971 2 6283333. Risk Factors: There are certain factors that may affect the Issuer’s ability to fulfil its obligations in respect of any Notes issued under the Programme. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme. See ‘‘Risk Factors’’. Description: Global Medium Term Note Programme. Arrangers: Goldman Sachs International and HSBC Bank plc. Dealers: Goldman Sachs International and HSBC Bank plc and any other Dealers appointed in accordance with the terms of the Programme Agreement. Certain Restrictions: Each issue of Notes denominated in a currency in respect of which particular laws, guidelines, regulations, restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time (see ‘‘Subscription and Sale and Transfer and Selling Restrictions’’) including the following restrictions applicable as at the date of this Base Prospectus. Notes having a maturity of less than one year Notes having a maturity of less than one year will, if the proceeds of the issue are accepted in the United Kingdom, constitute deposits for the purposes of the prohibition on accepting deposits contained in Section 19 of the Financial Services and Markets Act 2000 (the ‘‘FSMA’’) unless they are issued to a limited class of professional investors and have a denomination of at least £100,000 (or, if the Notes are denominated in a currency other than sterling, the equivalent amount in such currency). See ‘‘Subscription and Sale and Transfer and Selling Restrictions’’. Bearer Notes Notes in bearer form are subject to certain restrictions on transfer. See ‘‘Subscription and Sale and Transfer and Selling Restrictions – Transfer Restrictions’’. Trustee: Deutsche Trustee Company Limited.

1 Principal Paying Agent and Deutsche Bank AG, London Branch. Transfer Agent: Paying Agent, Registrar and Deutsche Bank Luxembourg S.A. Transfer Agent: Irish Listing Agent: Deutsche Bank Luxembourg S.A. Programme Size: Up to U.S.$7,000,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement) outstanding at any time. The Issuer may increase the amount of the Programme in accordance with the terms of the Programme Agreement. Notes will be issued in series (each a ‘‘Series’’). Each Series may comprise one or more Tranches issued on different issue dates. The Notes of each Series will all be subject to identical terms, except that the issue date and the amount of the first payment of interest may be different in respect of the different Tranches. The Notes of each Tranche will all be subject to identical terms in all respects, save that a Tranche may comprise Notes of different denominations. Distribution: Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis. Currencies: Notes may be denominated in, subject to any applicable legal or regulatory restrictions or any restrictions imposed by the depositary from time to time, any currency agreed between the Issuer and the relevant Dealer(s). Payments in respect of Notes may, subject to such compliance, be made in any currency or currencies other than the currency in which such Notes are denominated. Redenomination: The applicable Final Terms may provide that certain Notes may be redenominated in euro. The relevant provisions applicable to any such redenomination are contained in Condition 5 (Redenomination). Maturities: The Notes will have such maturities as may be agreed between the Issuer and the relevant Dealer(s), subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant Specified Currency. Issue Price: Notes may be issued on a fully-paid or a partly paid basis and at an issue price which is at par or at a discount to, or premium over, par. The price and amount of Notes to be issued will be determined by the Issuer and the relevant Dealer(s) at the time of issue in accordance with prevailing market conditions. Form of Notes: The Notes will be issued in bearer or registered form as described in ‘‘Form of the Notes’’. Registered Notes will not be exchangeable for Bearer Notes and vice versa. Notes offered in the United States or to, or for the account or benefit of, U.S. persons will only be issued in registered form. Fixed Rate Notes: Fixed interest will be payable in arrear on the date or dates in each year specified in the applicable Final Terms. Interest on Fixed Rate Notes in bearer form will only be payable outside the United States and its possessions, subject to Condition 7.5 (Payments – General provisions applicable to payments). Floating Rate Notes: Floating Rate Notes will bear interest at a rate determined: (a) on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions (as published by the International Swaps and

2 Derivatives Association, Inc., and as amended and updated as of the Issue Date of the first Tranche of the Notes of the relevant Series); or (b) on the basis of a reference rate appearing on the agreed screen page of a commercial quotation service. The margin (if any) relating to such floating rate will be agreed between the Issuer and the relevant Dealer(s) for each Series of Floating Rate Notes. Interest on Floating Rate Notes in bearer form will only be payable outside the United States and its possessions, subject to Condition 7.5 (Payments – General provisions applicable to payments). Other provisions in relation to Floating Rate Notes may also have a maximum interest rate, a Floating Rate Notes: minimum interest rate or both. Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to their nominal amount and will not bear interest. Redemption: The applicable Final Terms will indicate either that the relevant Notes cannot be redeemed prior to their stated maturity (other than in specified instalments, if applicable, or for taxation reasons or following an Event of Default) or that such Notes will be redeemable at the option of the Issuer and/or the Noteholders upon giving notice to the Noteholders or the Issuer, as the case may be, on a date or dates specified in the applicable Final Terms prior to such stated maturity and at a price or prices specified in the applicable Final Terms and on such other terms as may be agreed between the Issuer and the relevant Dealer(s). The applicable Final Terms may provide that Notes may be redeemable in two or more instalments of such amounts and on such dates as are indicated in the applicable Final Terms. Notes having a maturity of less than one year may be subject to restrictions on their denomination and distribution, see ‘‘Certain Restrictions’’ above. Denomination of Notes: The Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Dealer(s) and specified in the applicable Final Terms subject to compliance with then-current laws and regulations and the provisions of the following sentence. Notes will have a minimum denomination of A100,000 (or its equivalent in other currencies), save that in case of any Notes (including Notes denominated in Sterling) which have a maturity of less than one year and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue would otherwise constitute a contravention of Section 19 of the FSMA, the minimum specified denomination shall be £100,000 (or its equivalent in other currencies), unless otherwise permitted by then current law and regulations. The minimum denomination of each Note which may be purchased by a QIB pursuant to Rule 144A will be U.S.$200,000 or its approximate equivalent in other Specified Currencies. Taxation: All payments in respect of the Notes will be made without deduction for or on account of withholding taxes imposed by any Tax Jurisdiction as provided in Condition 9 (Taxation). In the event that any such deduction is made, the Issuer will, save in certain limited circumstances provided in Condition 9 (Taxation), be required to pay additional amounts to cover the amounts so deducted. ERISA: Notes (or any interest therein) may generally be purchased by Benefit Plan Investors (as defined in Section 3(42) of the U.S.

3 Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’)) and certain other plans that are subject to Similar Law (as defined herein), unless the terms of the Note provide otherwise. See ‘‘Certain ERISA and Other Considerations’’. Negative Pledge: The terms of the Notes will contain a negative pledge provision as further described in Condition 4 (Negative Pledge and Other Covenants). Cross-Default: The terms of the Notes will contain a cross-default provision as further described in Condition 11 (Events of Default and Enforcement). Status of the Notes: The Notes will constitute direct, unconditional, unsubordinated and (subject to the provisions of Condition 4 (Negative Pledge and Other Covenants)) unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding. Rating: Tranches of Notes will be rated or unrated. Where a tranche of Notes is to be rated, such rating (and the credit rating agency issuing such rating) will be specified in the applicable Final Terms. A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organisation and each rating should be evaluated independently of any other rating. Listing and admission to trading: Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Main Securities Market. Notes may be listed or admitted to trading, as the case may be, on other or further stock exchanges or markets agreed between the Issuer and the relevant Dealer(s) in relation to the Series. Notes which are neither listed nor admitted to trading on any market may also be issued. The applicable Final Terms will state whether or not the relevant Notes are to be listed and/or admitted to trading and, if so, on which stock exchanges and/or markets. Governing Law: The Notes, the Programme Agreement, the Agency Agreement and the Trust Deed, and any non-contractual obligations arising out of or in connection with the same will be governed by, and shall be construed in accordance with, English law. Clearing Systems: Euroclear and/or Clearstream, Luxembourg and/or DTC or, in relation to any Tranche of Notes, any other clearing system. Selling Restrictions: There are restrictions on the offer, sale and transfer of the Notes in the United States, the European Economic Area (including the United Kingdom), Japan, the United Arab Emirates (excluding the Dubai International Financial Centre), the Dubai International Financial Centre, the Kingdom of Saudi Arabia, the Kingdom of Bahrain, the State of Qatar, Hong Kong and Singapore and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes. See ‘‘Subscription and Sale and Transfer and Selling Restrictions’’. United States Selling Restrictions: Regulation S, Category 2. Rule 144A. TEFRA C/TEFRA D/ TEFRA not applicable, as specified in the applicable Final Terms. ERISA restrictions.

4 RISK FACTORS

The Issuer believes that the following non-exhaustive list of factors may affect its ability to fulfil its obligations under Notes issued under the Programme. All of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. In addition, a list of factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme is also described below. Additional risks and uncertainties not presently known or currently deemed immaterial may also have a material adverse effect on the Group’s business, results of operations, financial condition or prospects. If any of the risks described below actually materialise, the Group’s business, financial condition, results of operations or prospects could be materially adversely affected. If that were to happen, the trading price of the Notes could decline and investors could lose all or part of their investment. The Issuer believes that the factors described below represent the principal risks of investing in Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons which may not be considered significant risks by the Issuer based on information currently available to it or which it does not or may not currently anticipate. Prospective investors should read the detailed information set out elsewhere in this Base Prospectus and reach their own views prior to making any investment decision. See ‘‘Presentation of Financial and Other Information – Cautionary Statement Regarding Forward-Looking Statements’’.

FACTORS THAT MAY AFFECT THE ISSUER’S ABILITY TO FULFIL ITS OBLIGATIONS UNDER NOTES ISSUED UNDER THE PROGRAMME Risks Relating to Etisalat and the Group Etisalat’s financial obligations are not guaranteed by the UAE Government The Federal Government of the UAE (the ‘‘UAE Government’’) is Etisalat’s largest shareholder, holding 60 per cent. of Etisalat’s ordinary shares through the Emirates Investment Authority as of the date of this Base Prospectus. Pursuant to Article 7 of UAE Federal Law No. 1 of 1991 (the ‘‘Etisalat Law’’), the UAE Government’s shareholding in Etisalat may not be less than 60 per cent. Although the UAE Government is a majority shareholder, Etisalat is an independent commercial enterprise and, in the absence of an explicit guarantee from the UAE Government in respect of any of its borrowings, none of its financial obligations (including its obligations under the Notes) or those of its subsidiaries, associates or joint ventures are guaranteed by the UAE Government. Accordingly, Etisalat’s financial obligations, including its obligations under the Notes, are not and should not be regarded as obligations of the UAE Government. Etisalat’s ability to meet its financial obligations under the Notes is solely dependent on the Group’s ability to fund such amounts from its profits and cash flows, or from other, non-UAE Government, sources of financing. Therefore, any decline in the Group’s operations, its profits or cash flows, or any difficulty in securing external funding, may have a material adverse effect on Etisalat’s ability to satisfy its payment obligations to Noteholders irrespective of UAE Government ownership.

A significant proportion of the Group’s revenues, profits and cash flows are derived from its operations in the UAE A significant proportion of the Group’s revenues, profits and cash flows are derived from its operations in the UAE. The Group relies on such revenues, profits and cash flows to make principal and interest payments on its indebtedness, which would include the Notes upon issuance, to pay operating expenses, fund its international expansion and capital expenditures and meet its other obligations that may arise from time to time. Whilst the proportion of the Group’s revenue derived from the Group’s operations in the UAE, and therefore the Group’s reliance on its UAE operations, has decreased as a result of the Group’s acquisition of Maroc Telecom in May 2014, the UAE is expected to remain as the Group’s most significant market by revenue and profitability. In the year ended 31 December 2014, 55.3 per cent. of the Group’s revenue was derived from the provision of telecommunications services in the UAE, compared to 63.9 per cent. in the year ended 31 December 2013 and 68.9 per cent. in the year ended 31 December 2012 (based on external sales). Although the Group’s recent international acquisitions and investments, such as Maroc Telecom, have reduced its UAE operations’ relative contribution to the Group’s revenue, the Group’s UAE operations continue to be a significant contributor to the Group’s revenue and profitability and the Group expects this situation to continue to be the case in the short and medium-term. Consequently,

5 any future economic downturn in the UAE could materially and adversely affect the Group’s overall performance. Whilst macroeconomic indicators in the UAE have significantly improved since the global financial crisis from 2008 to 2011, there can be no assurance that the economic performance of the UAE can or will be sustained in the future. In addition, given that the oil and gas industry has traditionally been the principal contributor to the UAE economy, the recent decline in crude oil prices (with the OPEC reference basket price falling from U.S.$107.9 per barrel in June 2014 to U.S.$55.86 per barrel as at 13 April 2015) may potentially adversely affect economic activity in the UAE. To the extent that economic growth or performance in the UAE slows or begins to decline, this could have an adverse effect on the Group’s UAE operations. See ‘‘– A downgrade in Etisalat’s credit ratings could adversely affect the Group’s ability to access the debt capital markets and may increase its borrowing costs’’, ‘‘– Risks Relating to the Countries in Which the Group Operates – The Group is subject to political and economic conditions in the key markets in which it operates’’ and ‘‘Overview of the UAE’’. Because a significant proportion of the Group’s revenues, profits and cash flows are derived from its operations in the UAE, any material adverse effect on the Group’s operations in the UAE may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group may face increased competition from established telecommunications operations or new entrants in the markets in which it operates, both in the UAE and in its international operations The Group operates in an increasingly competitive environment across its markets. The Group’s competitors fall into four broad categories: (1) international diversified telecommunications companies; (2) state-owned and partly state-owned telecommunications companies; (3) local and regional telecommunications companies; and (4) ‘‘Over-the-Top’’ (‘‘OTT’’) providers of telecommunications services (such as Skype and Whatsapp). Some of the Group’s global competitors have substantially greater financial, personnel, technical, marketing and other resources. In a number of countries, the Group’s competitors are also state-owned entities or major local business participants, and may have the advantage of being an incumbent service provider. Local and regional operators may be able to leverage their knowledge of the local markets more efficiently than the Group. The continuing trend toward business combinations, strategic alliances and new forms of services in the telecommunications industry may create increased competition. Although new laws and regulatory initiatives may provide the Group with increased business opportunities by removing or substantially reducing certain barriers to competition, in so doing they also create a more competitive business environment and may encourage new entrants, which could adversely affect the Group’s key performance indicators such as ARPU. In addition, OTT services enable users to rely on the internet for their communication rather than the traditional services offered by telecommunications providers, such as SMS and voice services. The recent shift from traditional telecommunications services to OTT services has resulted in declines in voice and SMS revenues for telecommunications providers, which are not necessarily offset by the increase in revenue resulting from the increased data consumption required for using OTT services. Increased competition may also lead to increased churn, a reduction in the rate at which the Group is able to add new customers or to a decline in customer numbers and a decrease in the Group’s market share as customers purchase telecommunications services, or other competing services, from other providers and/or increasingly switch between providers based on pricing and the products and services that are offered. Increasing competition has also led, in certain markets, to declines in the prices the Group’s operating companies are able to charge for their services and may lead to further price declines in the future, which could adversely affect the Group’s overall profitability. The competitive focus in certain markets in which the Group operates, including the UAE (as discussed further below) continues to shift from acquiring new customers to retaining existing high- value customers and increasing usage by existing customers as a result of increased penetration of the mobile telecommunications market and increased competition. There can be no assurance that the Group’s operating companies will not experience increases in churn rates, reflecting increased numbers of customer deactivations, particularly as competition for existing customers intensifies. The cost of acquiring a new subscriber is much higher than the cost of maintaining an existing subscriber. Accordingly, increased churn rates could have a material negative impact on the Group’s operating income, even if the Group’s operating companies are able to obtain one new subscriber for each lost subscriber. An increase in churn rates may result in lower revenue and higher costs resulting from the

6 need to replace customers and may consequently have a material adverse effect on the Group’s business, ﬁnancial condition, results of operations and prospects.

The UAE Etisalat had the exclusive right to provide domestic and international fixed-line and mobile telecommunications services throughout the UAE until the introduction of Federal Law by Decree No. 3 of 2003 Regarding the Organisation of the Telecommunications Sector, which was subsequently amended by Federal Laws by Decree No.1 of 2005 and No.5 of 2008 (the ‘‘Telecom Law’’). In February 2007, Emirates Integrated Telecommunication Company PJSC, operating under the brand name ‘‘du’’ (‘‘du’’), began operations as the UAE’s second telecommunications network operator. Competition from du has resulted in Etisalat facing competition for customers in the UAE, and has resulted in the Group incurring increased costs to maintain its customer base or to maintain revenues from such customer base. Each of these factors has adversely affected the Group’s revenues in the UAE. In order to maintain and grow its current level of profitability in the UAE following du’s entry into the market, Etisalat has been, and will continue to be, required to provide its customers in the UAE with attractive services and pricing policies and to adapt its pricing, bundling, service and branding strategies to respond to competitive pressure. However, as the UAE is a heavily regulated market, Etisalat is required to obtain regulatory pre-approval for most of its tariffs and service offerings, which may limit its ability to rapidly adapt its products and services to changing market conditions. For example, Etisalat does not currently have regulatory approval to offer mobile and fixed-line services in a single bundled tariff; however, regulatory approvals have been obtained for other types of bundled services, such as bundles with fixed-line and internet services. See ‘‘– Significant Factors Affecting Financial Condition and Results of Operations – Royalties and Tax in the UAE’’. Accordingly, sustained price competition with du may lead to price deterioration and/or increased marketing costs, increased competition for personnel, the loss of market share, or Etisalat’s failure to adequately respond to competition from du more generally, which may negatively impact the Group’s profitability in the UAE and may have a material adverse effect on its business, financial condition, results of operations and prospects. In the UAE fixed services retail market, Etisalat and du currently provide services on largely non- overlapping networks. However, following discussions with the Telecommunications Regulatory Authority (‘‘TRA’’) to open wholesale access (bitstream) between the two networks, fixed services competition is expected to be launched in 2015. Fixed line business and residential customers will be able to choose their voice and internet services from any provider. Although the introduction of wholesale access could result in increased competition for its services and products, management believes that this risk may be mitigated to a certain extent, as described further in ‘‘Description of the Group – UAE Operations – Regulation – Anticipated development of UAE regulation’’. In addition to du, Etisalat also faces competition from illegal, unlicensed VoIP services that are accessible in the UAE and which permit customers in the UAE to make fixed-line and mobile phone calls at very low rates or without cost. Although the UAE Government and Etisalat actively seek to restrict access to these illegal and unlicensed services, there is no assurance their efforts will be successful, particularly as such services typically rapidly update their access points and any broad- based attempt to restrict such services would likely lead to blocking access to permitted services.

Etisalat’s IDD services also face competition from international fixed-line and mobile operators that offer lower per minute rates to the UAE than Etisalat is currently able to offer for IDD to such countries. The total number of IDD minutes used by Etisalat customers has increased over the past three years, and was approximately 3.0 billion minutes as of 31 December 2012, increasing to approximately 4.3 billion minutes as of 31 December 2013 and further increasing to approximately 5.9 billion minutes as of 31 December 2014 (noting that that the above figures relate to UAE subscriber IDD traffic only and not overall IDD traffic, which is greater as a result of inbound roaming calls). IDD usage by mobile customer has, however, been negatively impacted by the increasing use of unlicensed VoIP services in the UAE. However, Etisalat, as a licensed telecommunications provider, is permitted to offer its own VoIP services in the UAE, including international VoIP services. Nevertheless, if customers continue to utilise illegal and unlicensed VoIP services and/or if Etisalat cannot offer competitive IDD rates compared with its international and local competitors, this may have a material adverse effect on its business, financial condition, results of operations and prospects.

7 International Operations The Group has telecommunications operations in 18 countries outside the UAE. The Group is subject to various levels of competition in each of these jurisdictions. In Egypt, for example, the Group’s competitors comprise Egyptian Company for Mobile Services S.A.E. (‘‘Mobinil’’) and Vodafone Egypt Telecommunications S.A.E. (‘‘Vodafone Egypt’’), both of which have major international diversified company shareholders, Orange S.A. (‘‘Orange’’) and Vodafone Group Plc (‘‘Vodafone’’), respectively; and each has a greater market share than that of the Group in Egypt. It is envisaged, under the Unified License Regime for telecommunications outlined by the Egyptian government in April 2014, that a fourth mobile telecommunications licence shall be awarded to Telecom Egypt, the fixed-line incumbent operator, which could result in further increased competition to the Group’s operations in Egypt when this fourth mobile license is awarded. In other markets, competition in advanced mobile services is increasing through the licensing of 3G supporting spectrum, and to a limited extent, 4G spectrum authorisation. For example, in Pakistan, which has five mobile operators (Pakistan Mobile Communication Limited (‘‘Mobilink’’), China Mobile Pakistan (formerly known as Paktel (Pvt.) Limited and operating under the brand name Zong) (‘‘Zong’’), Pakistan Telecom Mobile Limited (‘‘Ufone’’), Telenor and Warid Telecom) providing digital GSM-based services, spectrum was auctioned for 3G and 4G based mobile services in early 2014. Zong acquired spectrum allocations for both 3G and 4G, while Ufone, Mobilink and Telenor each acquired spectrum for 3G-based services. Accordingly, the mobile telecommunications market in Pakistan is very competitive, in particular given Zong’s competitive advantage in being the only provider in Pakistan to have been awarded a 4G licence to date. In Morocco, while Maroc Telecom is the leading provider in Morocco of services for fixed-line telephony, internet and data transmission, Maroc Telecom now faces competition in all segments. Maroc Telecom’s main competitors are Medi Telecom (‘‘Me´ditel’’), which is partially owned by France Telecom Group, and Inwi. In March 2015, the Telecommunications Regulatory National Agency (‘‘ANRT’’) awarded 4G mobile broadband licences to Maroc Telecom, Me´ditel and Inwi, which is likely to increase competition to the Group’s operations in Morocco. The risk of increased competition also exists in the Group’s smaller markets, in particular as local regulators grant new licences. For example, in 2013, the regulator in Afghanistan granted Etisalat Afghanistan a 3G licence. Later in the same year, a 3G licence was granted to two other mobile operators and then to a fourth operator in early 2014. Generally, as a new entrant in its international markets (other than with respect to the past acquisitions in Pakistan and Morocco) the Group seeks to compete aggressively to gain market share as it does not have the benefit of an incumbent customer base (entry into Pakistan and Morocco being the exceptions). In addition, the Group typically faces start-up costs in terms of paying for licence and/or acquisition costs, network development and marketing. Together, the effect of competition and the high roll-out investment costs may create a situation where the Group incurs losses beyond those historically experienced in the telecommunications industry, and margins may be reduced in new markets whilst a new operating company of the Group becomes established. Any failure of the Group to compete successfully in its international markets may have a material adverse effect on its business, financial condition, results of operations and prospects.

The Group has rapidly expanded internationally in recent years Since 2004, the Group has significantly expanded its international operations (in terms of geography and scope) through both its subsidiary and associate entities as a result of: (1) the acquisition of new licences and building its own network infrastructure; and (2) purchasing interests in existing businesses. For example, the Group commenced telecommunications operations in the Kingdom of Saudi Arabia (‘‘Saudi Arabia’’) in 2005 with the acquisition of a new licence (through its associate Etihad Etisalat Company (‘‘Mobily’’)) and in Egypt in 2007 with the acquisition of a new licence (through its subsidiary Etisalat Misr S.A.E. (‘‘Etisalat Misr’’)). On 14 May 2014, the Group completed its acquisition of Vivendi’s 53 per cent. stake in Maroc Telecom. See ‘‘Description of the Group – International Operations’’. The Group’s ability to manage its increased scope of operations and to achieve future growth and profitability depends upon a number of factors, including: * effectively increasing the scope of its management, operational and financial systems and controls to handle the increased complexity, expanded breadth and geographic area of its operations;

8 * recruiting, training and retaining qualified staff to manage and operate its growing business; * accurately evaluating the contractual, financial, regulatory, environmental and other obligations and liabilities associated with its international acquisitions and investments, including the appropriate implementation of financial oversight and internal controls and the timely preparation of financial statements that are in conformity with the Group’s accounting policies, based on IFRS; * accurately judging market dynamics, demographics, growth potential and competitive environment; * effectively determining, evaluating and managing the risks and uncertainties in entering new markets and acquiring new businesses through its due diligence and other processes, particularly given the heightened risks in emerging markets (see ‘‘– Risks Relating to the Countries in Which the Group Operates – The Group is subject to the risks of political, social and economic instability associated with countries and regions in which it operates or may seek to operate’’); and * maintaining and obtaining necessary permits, licences, spectrum allocation and approvals from governmental and regulatory authorities and agencies. Any difficulties in addressing these issues or integrating one or more of its existing or future international operations could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. In addition, the value of the Group’s investments in associates (operating companies in which it has less than a controlling stake) could decline, requiring the Group to record impairments to those assets in its financial statements.

The Group’s continued growth in profitability depends in part on its ability to continue to grow internationally through organic expansion and/or further acquisitions For the year ended 31 December 2014, of the Group’s international telecommunications subsidiaries, only Maroc Telecom, Etisalat Misr, Pakistan Telecommunications Company Limited (‘‘PTCL’’), Atlantique Telecom, S.A. (‘‘Atlantique Telecom’’) and Etisalat Lanka made positive contributions to the Group’s consolidated operating profit. A significant proportion of the Group’s revenues, profits and cash flows are derived from its operations in the UAE, and if profits from the Group’s operations in the UAE were to decrease, the Group’s continued growth in profitability would depend, to a certain extent, on its ability to continue to grow its international operations through organic expansion and/or further acquisitions. The success of the Group’s acquisition and investment strategy depends on the ability of management to identify and compete for suitable acquisition and investment targets, to assess the value, strengths, weaknesses, contingent or other liabilities and potential profitability of such acquisitions and investments, to negotiate acceptable purchase terms and, in some cases, the selection of appropriate international and local partners, and the continued contributions by certain of its key management and technical personnel. The Group’s acquisition and investment strategy also depends on its ability to obtain the appropriate regulatory and governmental approvals, licences, spectrum allocation and registrations and may be limited by regulatory constraints in the countries in which it operates due to competition laws and regulatory decisions, asset control laws or political conflicts. See ‘‘– Current and future antitrust and competition laws in the countries in which the Group operates may limit its growth and subject it to competition and other investigation or legal proceedings’’. In addition, the success of the Group’s acquisitions and investments will depend on, and may be limited by, the Group’s ability to finance acquisitions and investments, which may be limited by restrictions contained in its debt instruments and its other existing and future financing arrangements. For a description of the Group’s primary credit facilities, see ‘‘Operating and Financial Review – Liquidity and Capital Resources – Indebtedness’’. Once acquisitions are made, the success of the Group’s investments is dependent on the ability of the Group’s management and employees to integrate the acquired businesses and/or implement an effective management structure given the terms of the investment (particularly in cases where Etisalat has only a minority interest), realise the benefits of expected planned synergies (such as branding, marketing and equipment sourcing) and successfully execute operations in new jurisdictions (such as rolling out a new network, managing vendors, establishing billing systems and addressing security concerns). These risks can be particularly significant in emerging markets, where it is difficult to assess and ensure a predictable regulatory environment given limited history and precedent and other economic and political factors. See ‘‘– Risks Relating to the Countries in Which the Group Operates – The Group is subject to the risks of political, social and economic instability associated with countries and regions in which it operates or may seek to operate’’.

9 There can be no assurance that the Group will be able to identify and complete future acquisitions or investments on appropriate terms and at an acceptable cost or that it will successfully execute its acquisition, investment or roll-out plans. The Group cannot give any assurance that its recent rate of growth will be maintained in the future or that demand for the Group’s services will continue to grow at rates sufficient to achieve a satisfactory return on any acquisitions or investments that it makes. The Group’s inability to expand its existing business internationally, or to find and complete suitable acquisitions or investments, could have a material adverse effect on its business growth, financial condition, results of operations and prospects.

The Group’s ability to exercise control over its subsidiaries and influence over its associates and joint ventures is, in some cases, dependent upon the consent and cooperation of other participants who are not under its control. Disagreements or terms in the agreements governing the Group’s subsidiaries, associates and joint ventures could adversely affect its business, financial condition, results of operations and prospects The Group currently conducts operations through subsidiaries, associates and joint ventures, both in and outside the UAE. The Group’s level of ownership of each of its subsidiaries, associates and joint ventures varies from market to market, and it does not always have a majority interest. Although the terms of its investments vary, the Group’s business, financial condition, results of operations and prospects may be materially and adversely affected if disagreements develop with its partners. The Group’s ability to withdraw funds, including dividends, from its participation in, and to exercise management control over its subsidiaries and influence over its associates and joint ventures depends, in some cases, on the consent of its other partners in these entities. Further, failure to resolve any disputes with its partners in certain of the Group’s operating subsidiaries, associates and joint ventures could restrict payments made by these operating entities to Etisalat and have a material adverse effect on Etisalat’s business, financial condition, results of operations and prospects. Etisalat enters into management agreements and/or technical services agreements with certain of its subsidiaries, associates and joint ventures, and accrues annual fees for the services it provides under those agreements. For the year ended 31 December 2014, Etisalat accrued AED 725 million in management fee income, including AED 164.6 million from PTCL, AED 36.7 million from Mobily, AED 75.1 million from Etisalat Misr and AED 107.2 million from Emerging Markets Telecommunications Services (‘‘EMTS’’). Management fees from subsidiaries are eliminated in Etisalat’s consolidated financial statements. In addition, agreements governing these management arrangements and/or technical services contain, in some cases, change of control and similar provisions which if triggered could give other participants in these investments the ability to purchase the Group’s interests or enact other penalties. Any failure of the Group to achieve or maintain positive working relationships with its business partners could have a material adverse effect on its business, financial condition, results of operations and prospects.

Current and future antitrust and competition laws in the countries in which the Group operates may limit its growth and subject it to competition and other investigations or legal proceedings The antitrust and competition laws and related regulatory policies in many of the countries in which the Group operates generally favour increased competition in the telecommunications industry and may impact its operating entities’ commercial decisions and ability to maximise competitiveness and prohibit the Group from making further acquisitions; or impact its operating entities’ ability to continue to engage in particular practices to the extent that such entitiy holds a significant market share in such countries. In addition, violations of such laws and policies could expose the Group’s operating entities to administrative proceedings, regulatory measures, civil lawsuits or criminal prosecution, including fines and imprisonment, and to the payment of punitive damages. Regulators in many of the countries in which the Group operates are particularly focused on establishing rules and a regulatory framework for interconnection between telecommunications networks, including mobile termination (i.e., the ability of a telecommunications provider to terminate a call on another operator’s network (i.e., calling between networks)) and the related pricing mechanisms (i.e., mobile termination rates). In fixed-line networks, although the incumbent provider has generally been obliged by the regulator to offer access to its network for the purposes of interconnection or call termination at prices which have usually been set by the regulator to equal cost, such pricing could also be set well below cost. Decisions by any of the Group’s operating entities’ relevant regulators requiring the relevant entity to provide mobile termination and interconnection services well below current rates, which is more likely to be required in countries in which the Group is viewed or designated by the local regulator as having significant market power, could prevent the Group from realising a significant amount of revenue and have a material adverse

10 effect on the Group’s business, financial condition, results of operations and prospects. See ‘‘Description of the Group – UAE Operations – Regulation’’ and ‘‘Description of the Group – International Operations’’. In addition, antitrust and competition laws are subject to change, and existing or future laws may be implemented or enforced in a manner that is materially detrimental to the Group. The Group cannot predict the effect that current or any future lawsuits, appeals or investigations by regulatory bodies or by any third party in any of the countries in which it operates will have on its business, financial condition, results of operations or prospects. Although to date the Group’s operating entities have not been subject to any material antitrust or competition related lawsuits, there can be no assurance that these lawsuits will not occur and as a result cause the Group material losses and expenses. In addition, any fines, or other penalties on an operating entity imposed by an antitrust or competition authority as a result of any such investigation, or any prohibition on such entity’s engaging in certain types of business in one or more of the regions in which it operates, could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

If the Group does not continue to provide telecommunications or related services that are useful and attractive to customers, it may not remain competitive, and its business, financial condition, results of operations and prospects may be adversely affected The telecommunications industry is characterised by technological changes, including an increasing pace of change in existing mobile systems, industry standards and ongoing improvements in the capacity and quality of technology. The Group’s commercial success depends on providing telecommunications services that provide its customers with attractive products and services at a competitive price. As new technologies develop, the Group’s operating entities’ equipment may need to be replaced or upgraded, or its networks may need to be rebuilt in whole or in part in order to sustain a competitive position as a market leader. Continuing technological advances, ongoing improvements in the capacity and quality of digital technology and short development cycles also contribute to the need for continual upgrading and development of the operating entities’ equipment, technology and operations. To respond successfully to technological advances, the Group may require substantial capital expenditures and access to related or enabling technologies in order to integrate the new technology with its existing technology. If the Group is unable to anticipate customer preferences or industry changes, or if it is unable to modify its networks on a timely and cost-effective basis, it may lose customers. Many of the services the Group’s operating entities offer are technology-intensive and the development or acceptance of new technologies may render such services non-competitive, replace such services or reduce prices for such services. In addition, as convergence of services accelerates, the Group has made and will have to continue to make additional investments in new technologies to remain competitive. The Group’s operating results would also suffer if its new products and services are not responsive to the needs of its customers, are not appropriately timed with market opportunities or are not effectively brought to market. The new technologies the Group chooses may not prove to be commercially successful or profitable. For example, WiMAX technology, a wireless broadband network designed to provide significantly higher data transport speeds, has not proven to be as popular or cost-effective as the Group had initially hoped. As telecommunications technology continues to develop, the Group’s competitors may be able to offer telecommunications products and services that are, or that are perceived to be, substantially similar or better than those offered by the Group. This could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. If the Group is not successful in anticipating and responding to technological change and resulting consumer preferences in a timely and cost-effective manner, the Group’s quality of services, business, financial condition, results of operations and prospects could be materially adversely affected. As a result, the Group cannot be certain that existing, proposed or as yet undeveloped technologies will not become dominant in the future and render the technologies it uses less commercially viable or profitable or that the Group will be successful in responding in a timely and cost-effective way to keep up with new developments.

If the Group fails to attract and retain qualiﬁed and experienced employees, its business may be harmed If the Group is unable to attract and retain experienced, capable and reliable personnel, especially senior and middle management with appropriate professional qualiﬁcations, or if the Group fails to recruit skilled professional and technical staff at a pace consistent with its growth, its business,

11 financial condition, results of operations and prospects may be materially adversely affected. Experienced and capable personnel in the telecommunications industry remain in high demand and there is continuous competition for their talents. The Group may not be able to successfully recruit, train or retain the necessary qualified personnel in the future. The loss of some members of the Group’s senior management team or any significant number of its mid-level managers and skilled professionals may result in a loss of organisational focus, poor execution of operations and corporate strategy or an inability to identify and execute potential strategic initiatives such as expansion of capacity or acquisitions and investments. These adverse consequences could, individually or in the aggregate, have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Telecommunications businesses require substantial capital investment and the Group may not have sufficient capital to make future capital expenditure and other investments that the Group deems necessary or desirable The Group operates in a capital-intensive industry that requires substantial amounts of capital and other long- term expenditures, including those relating to the deployment, development or acquisition of networks and the expansion or improvement of existing networks. In the past, the Group has financed these expenditures through a variety of means, primarily through internally generated cash flows, and to a lesser extent, through joint ventures and partnerships, external borrowings and capital contributions from Etisalat, as the parent company of the Group, to its subsidiary operations. In the future, the Group expects to utilise a combination of these sources, including banking and capital markets transactions, to manage its balance sheet and meet its financing requirements. Some of the Group’s operating companies, such as EMTS, which trades as Etisalat Nigeria, have entered into financing agreements on their own. However, if these international operations are unable to acquire external financing on their own, the Group may be required to supply additional funding to these and any of its other international operations. There can be no assurance that such sources of capital will be available to the Group on acceptable terms, if at all. The Group’s ability to arrange external financing, and the cost of such financing, depends on numerous factors, including the Group’s future financial condition and results of operations, general economic and capital markets conditions, interest rates, credit availability from banks or other lenders, investor confidence in the Group, applicable provisions of tax and securities laws and political and economic conditions in any relevant jurisdiction. There can be no assurance that the Group will be able to arrange external financing on commercially reasonable terms, if at all.

The Group is exposed to certain risks in respect of the development, expansion and maintenance of its telecommunications networks The Group’s ability to increase its subscriber base depends in part upon the success of the expansion and management of its telecommunications networks and upon its ability to obtain sufficient financing to facilitate these plans. The build-out of the Group’s networks is subject to risks and uncertainties which could delay the introduction of services in some areas and increase the cost of network construction. Among the Group’s recent projects are an expansion of the 3G network in Pakistan after being awarded a 3G licence by the Pakistan Telecommunications Authority (the ‘‘PTA’’) and the roll-out of LTE technology in certain markets, such as the UAE, Saudi Arabia and Morocco. Network expansion and infrastructure projects, including those in the Group’s development pipeline, typically require substantial capital expenditure throughout the planning and construction phases and it may take months or years before the Group can obtain the necessary permits and approvals and the new sites become operational. During the planning and expansion process, the Group is subject to a number of construction, financing, operating, regulatory and other risks beyond its control, including, but not limited to: * shortages or unavailability of materials from suppliers, equipment and skilled and unskilled labour; * an inability on the operating entities’ part to obtain necessary and favourable financing terms , if at all; * increases in capital and/or operating costs, including as a result of foreign exchange rate movements; * changes in demand for services; * labour disputes and disputes with contractors and sub-contractors;

12 * inadequate engineering, project management, capacity or infrastructure, including as a result of failure by third parties to fulfil their obligations relating to the provision of utilities and transportation links that are necessary or desirable for the successful operation of a project; * electricity and power interruptions due to electricity load shedding and/or blackouts, and energy shortages; * failure to complete projects according to specifications; * failure to meet licence obligations; * adverse weather conditions and natural disasters; * environmental regulations, including the need to perform feasibility studies and conduct remedial activities; * political, social and economic conditions; * fraud; * theft; * accidents; * terrorist action; * changes in laws, rules, regulations, governmental priorities and regulatory regimes; and * an inability to obtain and maintain project development permission or requisite governmental licences, permits or approvals. The occurrence of one or more of these events may have a material adverse effect on the Group’s ability to complete its current or future network expansion projects on schedule or within budget, if at all, and may prevent the Group from achieving the projected revenues, internal rates of return or capacity associated with such projects. There can be no assurance that the Group will be able to generate revenues or profits from its expansion projects that meet its planned targets and objectives, or that such revenues will be sufficient to cover the associated construction and development costs, either of which could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group’s investment plans are based on models that are themselves based on management’s predictions of market conditions in the markets in which the Group seeks to operate. There can be no assurance that such models will correctly anticipate actual investment results The Group’s investment plans, including, in particular, its acquisitions and greenfield roll-out plans are influenced by its modelling of anticipated investment returns. The Group uses the results of its modelling to identify and execute potential investment strategies, such as acquisitions or greenfield network development. These models rely on certain assumptions of market fundamentals, such as pricing and competition in the relevant markets, in determining a given investment’s timing, cost and expected profitability for the Group. If actual market conditions deviate from the assumptions underlying these models, the Group could be required to modify, scale-back or delay its acquisition and expansion plans. For example, the Group had conducted in recent years numerous assessments in greenfield markets such as Libya, but due to difficult operational conditions the Group decided not to participate in those investment opportunities. The Group continues to monitor its existing business operations but in some cases its business plan must be adjusted to reflect market changes, such as the proliferation of 3G licences in the Group’s portfolio. In respect of future M&A activity, the Group’s ability to continue to generate sufficient funds is important. If a regulator in one or more key markets in which the Group operates were to further liberalise the telecommunications market by authorising new entrants in that market, the Group’s cash generation capabilities could be reduced, putting pressure on the Group’s future M&A activity. To a certain extent, the global economic environment may also impact the Group’s M&A activity and growth prospects. Additionally, international telecommunications regulatory policies could have an impact on the Group’s operations given the strong influence on regional regulators of trends in Europe and the U.S., where market liberalisation is promoted. Changing market fundamentals in other regions could likewise affect the Group’s ability to adhere to its acquisition and expansion plans in ways that could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

13 A failure in the continuing operations of the Group’s networks, gateways to its networks or the networks of other operators could adversely affect the Group’s business, financial condition, results of operations and prospects The Group depends to a significant degree on the uninterrupted operation of its networks to provide its services. From time to time, customers of certain operating companies within the Group have experienced blocked or dropped calls because of network capacity constraints. The Group cannot assure investors that these relevant networks can be improved or maintained at current levels. The Group also relies to a certain extent on interconnection to the networks of other telecommunications operators to carry calls from its customers to the customers of fixed-line operators and other mobile operators, both within a given country and internationally. While the Group has interconnection and international roaming agreements in place with many other telecommunications operators, it has no direct control over the quality of these networks and the interconnections and international roaming services they provide. Any difficulties or delays in interconnecting with other networks and services, or the failure of any operator to provide reliable interconnections or roaming services to the Group on a consistent basis, could result in a loss of subscribers or a decrease in traffic, which could adversely affect the Group’s business, financial condition, results of operations and prospects. In addition, the Group’s network, including its information systems, information technology and infrastructure and the networks of other operators with whom its customers interconnect, are vulnerable to damage or interruptions in operation from a variety of sources including earthquake, fire, flood, power loss, equipment failure, network software flaws, transmission cable disruption or similar events. Any interruption of the Group’s operations or the provision of any service, whether from operational disruption, natural disaster or otherwise, could damage the Group’s ability to attract and retain customers, cause significant customer dissatisfaction and have a material adverse effect on its business, financial condition, results of operations and prospects.

Continued cooperation between the Group and its equipment and service providers is important to maintain the Group’s telecommunications operations Once a manufacturer of telecommunications equipment has designed and installed its equipment within a system, the operator of the system will often be reliant on such manufacturer for continued service and supply. The Group’s ability to maintain and grow its subscriber base depends in part on its ability to source adequate supplies of network equipment and on its ability to source adequate supplies of mobile handsets, software and content on a timely basis. For example, the Group has made substantial equipment purchases from, and has entered into vendor financing arrangements with Samsung, Apple, Ericsson, Huawei and Alcatel-Lucent. Continued cooperation with these equipment and service providers is essential for the Group to maintain its operations. The Group does not have direct operational or financial control over its key suppliers and has limited influence with respect to the manner in which its key suppliers conduct their businesses. The Group’s subsidiaries’, associates’ and joint ventures’ reliance on these suppliers subjects them and the Group to risks resulting from any delays in the delivery of services. The Group cannot assure investors that its suppliers will continue to provide equipment and services to its subsidiaries, associates and joint ventures at attractive prices or that the Group will be able to obtain such equipment and services in the future from these or other providers on the scale and within the time frames required, if at all. The inability or unwillingness of key suppliers to provide the Group’s operations with adequate equipment and supplies on a timely basis and at attractive prices could materially and adversely impact these operations’ ability to retain and attract subscribers or offer attractive product offerings, either of which could materially and negatively impact the Group’s business, financial condition, results of operations and prospects.

The Group may not be able to adequately protect its intellectual property, which could harm the value of the Group’s brand and branded products and adversely affect its business, ﬁnancial condition, results of operations and prospects The Group depends on its brands and branded products described under ‘‘Description of the Group – Intellectual Property’’ and believes that these brands are important to its business. The Group relies primarily on trademarks and similar intellectual property rights to protect its brands and branded products. The success of the Group’s business depends on its ability to use its existing trademarks in order to increase brand awareness and further develop its branded products and services in its markets. The Group is currently assessing the registration status of its trademarks and other

14 intellectual property rights, has registered certain trademarks and has other trademark registrations pending. The Group has sought to register all of the trademarks that it currently uses in the markets in which they are used, though in many cases, the Group cannot be certain that these trademarks have not been registered by another party in the past. The Group may not be able to adequately protect its trademarks and its use of these trademarks may result in liability for trademark infringement, trademark dilution or unfair competition.

The UAE Government exerts significant control over Etisalat and its interests may conflict with those of Noteholders and/or of Etisalat itself The UAE Government is Etisalat’s most significant shareholder, owning 60 per cent. of Etisalat’s outstanding ordinary shares as of the date of this Base Prospectus, through the Emirates Investment Authority. Pursuant to the Etisalat Law, the UAE Government’s shareholding in Etisalat may not be less than 60 per cent. In addition, the Group is required to pay an annual royalty payment to the UAE Government of 15 per cent. of its revenues derived from TRA-regulated activities in the UAE and 35 per cent. of its net profit after deduction of the 15 per cent. royalty fee on the revenues derived from TRA-regulated activities in the UAE. In respect of profit from international operations, the 35 per cent. royalty is reduced by the amount that the profit from international operations has already been subject to foreign taxes. Prior to the financial year ended 31 December 2012, the royalty payment was imposed at a rate of 50 per cent. of the Group’s consolidated profit. This royalty payment represents a significant proportion of the UAE Government’s total revenues. The royalty charge in respect of the financial year ended 31 December 2014 amounted to AED 5.3 billion, representing 11.5 per cent. of the UAE Government’s budget for 2014 (source: Etisalat). The current royalty scheme is scheduled to be in place until 2016, following which the UAE Government may increase the royalty payable by the Group or impose more stringent terms on the Group in connection therewith. In relation to the current royalty scheme, on 25 February 2015, the UAE Government issued revised guidelines for the calculation of the royalty payments for the financial years ending 31 December 2014, 2015 and 2016, which were received by the Group on 1 March 2015. Etisalat responded to the UAE Government with a letter dated 23 March 2015 and is currently in discussions with the UAE Government to seek clarification regarding the revised guidelines. Etisalat has assumed that the revised guidelines would not apply to the financial year ended 31 December 2014, which was closed at the time the revised guidelines were issued. Notwithstanding the foregoing, the UAE Government retains the power to review and/or change the royalty payment scheme at any time. Such a change could be adverse to the Group and could have a material adverse effect on its business, financial condition, results of operations and prospects. See Note 3(viii) (‘‘Federal Royalty’’) to the Etisalat 2014 Financial Statements for details of critical accounting estimates and judgments in relation to the royalty payment. The composition of Etisalat’s Board of Directors (the ‘‘Board’’) is provided for in the Etisalat Law, and has been amended by the Telecom Law. The Board comprises 11 directors of which seven (including the Chairman of the Board) represent the UAE Government and are appointed by Federal Decree. The four remaining directors are elected by Etisalat’s non-UAE Government shareholders. Amendments to Etisalat’s Articles of Association require both a resolution of a General Meeting of shareholders, with a 66 per cent. majority of total votes of the shareholders, as well as a resolution of the UAE Federal Cabinet. Given the UAE Government’s ownership of 60 per cent. of Etisalat’s shares, and that the UAE Government controls amendments to the Etisalat Law and Etisalat’s Articles of Association, the UAE Government has the ability to determine the outcome of certain votes by shareholders of Etisalat, including but not limited to, the appointment of a majority of Etisalat’s directors and, in turn, the selection of Etisalat’s management, Etisalat’s business policies and strategies, budget approval, the issuance of equity and debt securities, mergers, acquisitions and disposals of Etisalat’s assets or businesses, the payment of dividends and other matters. The interests of the UAE Government and investors in the Notes may conflict, and there can be no assurance that the resolution of any matter that may involve the interests of the UAE Government will be resolved in what investors would consider to be their best interests or the best interests of the Group. In addition, the UAE Government could make changes to the Etisalat Law that would enable it to change or eliminate any minimum shareholding requirement. There can be no assurance that the UAE Government will not change such law, and the impact of any such change on investors in the Notes cannot be predicted. In addition, investors in the Notes do not have the benefit of a restriction on change of control of the Group in the Transaction Documents. See ‘‘Management and Employees – Management – Board of Directors’’.

15 The Group is involved in disputes, litigation and/or ongoing discussions with regulators, shareholders in its subsidiaries, associates and joint ventures, competitors and other parties, the ultimate outcome of which is uncertain The Group is subject to numerous risks relating to legal and regulatory proceedings to which it or its subsidiaries, associates and joint ventures are currently a party or which could develop in the future. The Group is currently engaged in a number of formal legal disputes with its former and existing partners in respect of various of its international operations. In particular, two members of the executive management of the Group are subject to Foreign Exchange Management Act 1999 (‘‘FEMA’’) proceedings in India in their capacity as directors of Etisalat DB Telecom India Private Limited (‘‘Etisalat DB’’), a former subsidiary of the Group. Should there be an adverse finding in these proceedings, the penalty for the alleged breach carries a theoretical exposure in excess of U.S.$1.0 billion. Whilst Etisalat is confident these proceedings will be resolved in a satisfactory manner, there can be no assurance in this respect, or as to how such a fine, if imposed, would be apportioned. See ‘‘Description of the Group – Litigation, Arbitration and Disputes – FEMA proceedings against Etisalat DB and its directors’’. Etisalat is currently involved in discussions with the Government of Pakistan relating to certain properties which the Government of Pakistan had agreed to transfer to PTCL, under the terms of the acquisition of Etisalat’s stake in PTCL from the Government of Pakistan in 2005, a number of which have not yet been transferred. Etisalat has withheld part of the purchase price for its stake in PTCL until these discussions come to a successful conclusion. See ‘‘Description of the Group – Litigation, Arbitration and Disputes – Discussions with the Government of Pakistan relating to PTCL property’’. On 3 November 2014, Mobily, pursuant to its results announcement for the third quarter of 2014, announced that it had restated its financial statements for the prior year-and-a-half, mainly as a result of changing the timing of revenue recognition. Following this announcement, the Capital Market Authority (‘‘CMA’’) suspended Mobily’s shares from trading on the Saudi Stock Exchange (‘‘Tadawul’’). Subsequently, on 25 February 2015, Mobily announced revised results earnings for the year ended 31 December 2014, showing a significantly increased fourth quarter loss as compared to that stated in its unaudited results announcement on 21 January 2015. Following Mobily’s announcement of its revised earnings, the CMA suspended Mobily’s shares from trading on Tadawul on 25 February 2015. In light of this restatement and revised earnings announcement on 2 March 2015, the CMA announced that it had assigned a specialised team to review Mobily’s financial statements, conduct site visits, obtain documents and hear concerned parties’ statements. These investigations are currently ongoing and there can be no assurance as to their outcome. The suspension of Mobily’s shares from trading on Tadawul was lifted by the CMA on 5 March 2015. See ‘‘Description of the Group – Litigation, Arbitration and Disputes – Mobily accounting issues’’. The Group’s involvement in the disputes described above and other litigation and regulatory proceedings may adversely affect its reputation. Furthermore, litigation and regulatory proceedings are unpredictable and legal or regulatory proceedings in which the Group is or becomes involved (or settlements thereof) may have a material adverse effect on its business, financial condition, results of operations and prospects. For a description of current litigation and disputes, see ‘‘Description of the Group – Litigation, Arbitration and Disputes’’ and ‘‘– Current and future antitrust and competition laws in the countries in which the Group operates may limit its growth and subject it to antitrust and other investigations or legal proceedings’’.

A downgrade in Etisalat’s credit ratings could adversely affect the Group’s ability to access the debt capital markets and may increase its borrowing costs Etisalat’s credit ratings, which are intended to measure its ability to meet its debt obligations as they mature, are an important factor in determining Etisalat’s cost of borrowings. The interest rates of the Group’s borrowings are partly dependent on its credit ratings. As of the date of this Base Prospectus, Etisalat’s corporate ratings were assessed A+ (stable) by Fitch, Aa3 (stable) by Moody’s and AA- (stable) by S&P. Etisalat’s corporate ratings have not otherwise changed in the three years preceding the date of this Base Prospectus. However, there can be no assurance that Fitch, Moody’s or S&P will not reassess their ratings of Etisalat or that any of Etisalat’s ratings will remain the same in the future. A downgrade of Etisalat’s credit ratings (or announcement of a negative ratings watch) may increase its cost of borrowing and may also limit its or its subsidiaries’ or associates’ ability to raise capital. Moreover, actual or anticipated changes in Etisalat’s credit ratings or the credit ratings of the Notes (if applicable) generally may affect the market value of the Notes. In addition, ratings assigned to the

16 Notes (if applicable) may not reﬂect the potential impact of all risks related to the transaction, the market or any additional factors discussed in this Base Prospectus and other factors may affect the value of the Notes. A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organisation and each rating should be evaluated independently of any other rating.

Fluctuations in currency exchange rates could materially and adversely affect the Group’s business, financial condition, results of operations and prospects As the Group presents its financial statements in UAE dirhams, it is exposed to risks related to the translation of assets and liabilities denominated in other currencies, particularly given that none of the Group’s operations outside the UAE uses the dirham as their reporting or transactional currency. As a result, the Group is exposed to risks related to the translation of assets and liabilities denominated in foreign currencies and currency fluctuations could have an impact on its balance sheet. Further, the movement in the value of the UAE dirham against other currencies may materially adversely affect the Group’s business, financial condition, results of operations and prospects, as the Group is exposed to transactional foreign exchange risk as well as risk upon the translation of the Group’s foreign subsidiaries into UAE dirhams. The Group’s revenues, expenses, assets and liabilities comprise a number of different currencies, which are exposed to foreign exchange rate fluctuations. Fluctuations in exchange rates could also significantly impact the comparability of the Group’s operating results between financial periods. For the year ended 31 December 2014, based on external sales, the Group derived 16.6 per cent. of its revenue from Maroc Telecom, whose revenues are largely denominated in the Moroccan dirham, 9.9 per cent. of its revenue from Etisalat Misr, whose revenues are largely denominated in the Egyptian pound and 9.1 per cent. of its revenue from PTCL, whose revenues are largely denominated in the Pakistani rupee. Fluctuations in these currencies, in particular, may have a material impact on the Group’s revenue and profit. In particular, in 2013, the Egyptian pound fell by approximately 9 per cent., which was a key factor resulting in a 6.6 per cent. decrease in total revenue from the Group’s operations in Egypt for the year ended 31 December 2013. The Group’s operations in Egypt saw an increase in revenues by just 2.2 per cent. in the year ended 31 December 2014, which was offset by a further 10 per cent. fall in the Egyptian pound during the period. In addition, in Nigeria, where the Group operates through its associate EMTS, the Nigerian naira has devalued by over 20 per cent. since September 2014 and further decline may occur in 2015. See ‘‘– The Group is subject to the risks of political, social and economic instability associated with countries and regions in which it operates or may seek to operate – Political climate’’. The Group does not currently have foreign currency hedging contracts, and if it enters such contracts in the future, it cannot guarantee that these arrangements will fully protect its results of operations, assets and liabilities and cash flows from the effect of exchange rate fluctuations. There can be no assurance that future exchange rate fluctuations between the UAE dirham and the currencies of countries in which the Group operates will not have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group’s business may be adversely affected if the UAE dirham/U.S. dollar peg were to be removed or adjusted The Group maintains its accounts, and reports its results, in UAE dirham. Currently, the UAE dirham remains pegged to the U.S. dollar. However, there can be no assurance that the UAE dirham will not be de-pegged in the future or that the existing peg will not be adjusted in a manner that negatively impacts the valuation of Etisalat’s international investments. Any such de-pegging or adjustment could have a material adverse effect on the Group’s business, ﬁnancial condition, results of operations and prospects which could therefore affect the ability of the Issuer to perform its obligations in respect of any Notes.

Fluctuations in interest rates could increase debt service costs to Etisalat and its subsidiaries, associates and joint ventures Interest rates are highly sensitive to many factors beyond the Group’s control, including the interest rate, exchange rate and other monetary policies of governments and central banks in the jurisdictions in which the Group operates. The floating rate portion of the Group’s loans and borrowings is subject to interest rate risk resulting from fluctuations in the relevant reference rates underlying such debt. Based on the Group’s borrowings outstanding at 31 December 2014, if interest rates had been 2 per cent. higher or lower during the year and all other variables were held constant, the Group’s net profit and equity would have decreased or increased by AED 87 million, compared to AED

17 91 million as at 31 December 2013. This impact is primarily attributable to the Group’s exposure to interest rates on its variable rate borrowings. The Group’s sensitivity to increases in interest rates has reduced significantly during the year due to its issuance of fixed coupon bonds issued in June 2014. Nevertheless, any increase in such reference rates will result in an increase in the Group’s interest rate expense and may have a material adverse effect on the Group’s financial condition, results of operations and prospects. Any future unhedged interest rate risk may result in an increase in the Group’s interest expense and may have a material adverse effect on the Group’s business, its financial conditions and results of operations.

Persons investing in Notes may have indirect contact with sanctioned countries as a result of the Group’s activities in and business with countries on sanctions lists Certain governmental entities and international organisations, including the Office of Foreign Assets Control of the U.S. Department of Treasury (‘‘OFAC’’), the U.S. Department of State, Her Majesty’s Treasury, the European Union and the United Nations administer sanctions regulations (‘‘Economic Sanctions’’) that restrict the ability to invest in, or otherwise engage in business in, or with the governments of, certain countries, including the Islamic Republic of Iran (‘‘Iran’’), Syria and Sudan, and specially designated nationals (together ‘‘Sanction Targets’’). As the Group is not itself a Sanction Target, Economic Sanctions do not prohibit investment in, or engagement in business with, the Group. However, to the extent that the Group has invested in, or otherwise engaged in business with, Sanction Targets, persons investing in the Group may incur the risk of indirect contact with Sanction Targets. The Group’s current practice is to segregate any funding from U.S. persons from its operations in Sanction Targets. The Group has generated 1.2 per cent., 0.8 per cent. and 0.6 per cent. of its revenues in each of 2012, 2013 and 2014, respectively, from Sanction Targets, primarily through its licensed fixed access network operations in Sudan. The Group is currently conducting a comprehensive review of existing policies and procedures in respect of sanctions-related issues across all entities in the Group. This review is being conducted with the aim of implementing best practices that are intended to be standardised across the Group. Etisalat has undertaken in the Programme Agreement (as defined herein) that it will ensure that proceeds raised in connection with the issue of any Notes under the Programme will not directly or indirectly be used for any purpose that would have the aim or effect of financing or supporting the activities of any government, person or entity that are the subject of any Economic Sanctions.

RISKS RELATING TO THE TELECOMMUNICATIONS INDUSTRY Because the Group operates in heavily regulated business environments, the implementation of existing laws by regulators and government authorities as well as changes in laws, regulations or governmental policy affecting its business activities could adversely affect the Group’s business, financial condition, results of operations and prospects Because the Group has ventures in a large number of jurisdictions, it must comply with an extensive range of laws and regulations pertaining to the licensing, construction and operation of telecommunications networks and services, as implemented by relevant agencies or other regulatory bodies. Among the most significant of these laws and regulations are those governing tariffs, the ability to offer and/or bundle products and services, the allocation of frequency spectrum, interconnection and access, and those governing the regulatory agencies that monitor and enforce regulation and competition laws that apply to the telecommunications industry. In particular, in the UAE, the TRA has significant power and latitude to regulate all aspects of Etisalat’s business, from pricing and competition to network infrastructure. In the UAE fixed services retail market, Etisalat and du currently provide services on largely non-overlapping networks. However, following discussions with the TRA to open wholesale access (bitstream) between the two networks, fixed services competition is expected to be launched in 2015. Fixed line business and residential customers will be able to choose their voice and internet services from any provider. Although the introduction of wholesale access could result in increased competition for its services and products, management believes that this risk may be mitigated to a certain extent, as described further in ‘‘Description of the Group – UAE Operations – Regulation – Anticipated development of UAE regulation’’. In many of the countries in which the Group operates, local regulators have significant latitude in the administration and interpretation of telecommunications licences and laws, rules and regulations. In addition, the actions taken by these regulators in the administration and interpretation of these licences and laws, rules and regulations may be influenced by local political and economic pressures. Decisions by regulators regarding the grant, amendment or renewal of licences, to the Group or to third parties, or regarding laws, rules, and regulations, could materially and adversely affect the

18 Group’s operations in these geographic areas. The Group cannot provide any assurance that governments or regulatory bodies in the countries in which it operates will not issue telecommunications licences to new operators whose services will compete with those services provided by the Group. For example, in the UAE, the TRA has issued a public telecommunications license to du (2006), a public access mobile radio licence to Nedaa Corporation (2009), a satellite services licence to Al Yah Satellite Communications Company (2010), a satellite services licence to Alyah Advanced Satellite Communications Services (2010), a satellite services and broadcasting satellite services licence to Star Satellite Communications Company (2010), a broadcasting satellite transmission services licence to Al Maisan Communications Company (2011) and a broadcasting satellite transmission services licence to Media Zone Intaj FZ LLC (2011). In Egypt, it is envisaged under the Unified License Regime for telecommunications outlined by the Egyptian government in April 2014, that a fourth mobile telecommunications licence is proposed to be awarded to Telecom Egypt, the fixed-line incumbent operator, which could result in further increased competition to the Group’s operations in Egypt. In February 2015, the Egyptian government announced that each of the existing three mobile operators would be eligible for fixed-line licences. Both of these developments are likely to result in further increased competition to the Group’s operations in Egypt if such an award is made.The Group cannot provide any assurance that governments or regulatory bodies in the countries in which it operates will not issue telecommunications licences to new operators whose services will compete with those services provided by the Group, which may lead to increased competition and adversely affect the Group’s revenue. In addition, other changes in the regulatory environment concerning the use of mobile phones may lead to a reduction in the usage of mobile phones or otherwise adversely affect the Group. Decisions by regulators and new legislation, including in relation to retail, wholesale and interconnect price regulation, could adversely affect the pricing of, or adversely affect the revenue from, the services the Group offers. Decisions by regulators may include limiting the Group’s pricing flexibility, raising its costs, reducing its retail or wholesale revenues or conferring greater pricing flexibility on the Group’s competitors. See ‘‘Description of the Group – UAE Operations – Regulation’’ and ‘‘Description of the Group – International Operations’’.

The Group’s telecommunications licences, permits and frequency allocations are subject to finite terms, ongoing review and/or periodic renewal, any of which may result in modification or early termination. In addition, the Group’s inability to obtain new licences and permits could adversely affect its business The terms of the Group’s licences, permits and frequency allocations are subject to finite terms, ongoing review and/or periodic renewal and, in some cases, are subject to modification or early termination or may require renewal with the applicable government authorities. While Etisalat does not expect that it or any of its subsidiaries, associates or joint ventures will be required to cease operations at the end of the term of their business arrangements or licences, and while many of these licences provide for terms on which they may be renewed, there can be no assurance that these business arrangements or licences will in all cases be renewed on equivalent or satisfactory terms, or at all. Upon termination, the licences and assets of these companies may revert to the local governments or local telecommunications operators, in some cases without any or adequate compensation being paid. The Group has in the past paid significant amounts for certain of its telecommunications licences and the competition for these licences has historically been high. Most recently, in March 2015, Maroc Telecom was awarded a 4G licence by the ANRT, and in April 2014, Ufone was awarded a 3G licence by the PTA. The Group anticipates that it may have to continue to pay substantial licence fees in certain markets, particularly those with high anticipated growth rates, and incur substantial costs to meet specified network build-out requirements that the relevant operating entity commits to in acquiring such licences. There can be no assurance that the Group will be successful in obtaining or funding these licences, or, if licences are awarded, that they can be obtained on terms acceptable to the Group. If the Group obtains or renews further licences, it may need to seek future funding through additional borrowings or equity offerings and there can be no assurance that such funding will be obtained on satisfactory terms, or at all. Failure to obtain financing on satisfactory terms or at all may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

A downturn in the domestic, regional or global economy may adversely affect the Group’s businesses The Group is exposed to risks associated with any future downturn in the domestic, regional or global economy. Whilst macroeconomic indicators have signiﬁcantly improved since the global

19 financial crisis from 2008 to 2011, there can be no assurance that economic performance, whether globally or in the regions in which the Group operates, can or will be sustained in the future. To the extent that economic growth or performance, either globally or in the regions in which the Group operates, slows or begins to decline, this could have an adverse effect on the Group’s operations. Many of the Group’s strategic partners and suppliers, who are based overseas may, in the event of a global downturn or a downturn in any specific region, experience financial difficulties that could affect their ability to service the Group in a timely and efficient manner. Any future global downturn, such as that experienced from 2008 to 2011, could have a material and adverse effect on the Group’s revenues, financial position, results of operations and continued growth. In addition, the Group operates in several countries that are highly dependent on the price of oil to support their economies, including, without limitation, the UAE and Nigeria. Any sustained decline in global oil and gas prices may potentially adversely affect economic activity in these countries and could have a direct impact in the operations of the Group. Economic conditions can have a material adverse effect on telecommunications businesses, including a material adverse effect on the quality and growth of their customer base and service offerings. For example, customers may decide that they can no longer afford mobile services, or that they can no longer afford the data services and value-added services that are instrumental in maintaining or increasing total revenue generated per subscriber, and, in turn, increasing the Group’s revenues. Subject to differing levels of price elasticity of demand in each market in which the Group operates, any future economic downturn in those markets could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. High rates of inflation in some of the countries in which the Group operates, particularly in Egypt and West Africa, may also cause consumer purchasing power to decrease, which may reduce consumer demand for the Group’s services. A loss of investor confidence in the financial systems of emerging as well as mature markets may cause increased volatility in the financial markets in the countries and regions in which the Group operates and a slowdown in economic growth or economic contraction in those countries and regions. Any such increased volatility or slowdown could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group’s operations could be adversely affected by natural disasters or other catastrophic events beyond the Group’s control The Group’s business operations, technical infrastructure (including its network infrastructure) and development projects could be adversely affected or disrupted by natural disasters (such as earthquakes, floods, tsunamis, hurricanes, fires or typhoons) or other catastrophic or otherwise disruptive events, including, but not limited to: * changes to predominant natural weather, hydrologic and climatic patterns; * major accidents, including chemical or other material environmental contamination; * acts of terrorism; * power loss; and * strike or lock-out or other industrial action by workers or employers. The occurrence of any of these events, or a similar such event, in the regions in which the Group operates or affecting any part of the Group’s telecommunications network may cause disruptions to the Group’s operations in part or in whole, may increase the costs associated with providing services as a result of, among other things, costs associated with remedial work, may subject the Group to liability or impact the Group’s brands and reputation and may otherwise hinder the normal operation of the Group’s business, which could materially adversely affect its business, financial condition, results of operations and prospects. In addition, the Group’s technical infrastructure is vulnerable to damage or interruption from information and telecommunications technology failures, acts of war, terrorism, intentional wrongdoing, human error and similar events. Unanticipated problems affecting any part of the Group’s telecommunications network, such as system failures, hardware or software failures, computer viruses or hacker attacks could affect the quality of its services and cause service interruptions. Any of these occurrences could result in reduced user traffic and reduced revenues and could harm the Group’s operations.

20 The effect of any of these events on the Group’s business, ﬁnancial condition, results of operations and prospects may be worsened to the extent that any such event involves risks for which the Group is uninsured or not fully insured, or which are not currently insurable, such as acts of war and terrorism. See ‘‘Description of the Group – Insurance’’.

Failure in the Group’s information and technology systems could result in interruptions of the Group’s business operations The Group’s information and technology systems are designed to enable the Group to use its infrastructure resources as effectively as possible and to monitor and control all aspects of its operations. Although the Group’s critical systems are designed with high availability to avoid any downtime, any failure or breakdown in these systems could interrupt the normal business operations and result in a significant slowdown in operational and management efficiency for the duration of such failure or breakdown. Any prolonged failure or breakdown could dramatically impact the Group’s ability to offer services to its customers, which could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. For example, the Group depends on certain technologically sophisticated management information systems and other systems, such as its customer billing system, to enable it to conduct its operations. Any significant delays or interruptions in providing services could negatively impact the Group’s reputation as an efficient and reliable telecommunications provider. In addition, the Group relies on third-party vendors to supply and maintain much of its information technology. In the event that one or more of the third-party vendors that the Group engages to provide support and upgrades with respect to components of the Group’s information technology ceased operations or became otherwise unable or unwilling to meet its needs, the Group cannot assure investors that it would be able to replace any such vendor promptly or on commercially reasonable terms, if at all. Delay or failure in finding a suitable replacement could materially adversely affect the Group’s business, financial condition, results of operations and prospects.

Actual or perceived health risks or other problems relating to mobile handsets or transmission and/or network infrastructure could lead to litigation or decreased mobile communications usage The effects of any damage caused by exposure to an electromagnetic field have been and continue to be the subject of careful evaluations by the international scientific community, but to date there is no conclusive scientific evidence of harmful effects on health. However, the Group cannot rule out that exposure to electromagnetic fields or other emissions originating from wireless handsets or transmission infrastructure is not, or will not be found to be, a health risk. The Group’s mobile communications business may be harmed as a result of these alleged or actual health risks. For example, the perception alone of these health risks could result in a lower number of customers, reduced usage per customer or potential customer liability. In addition, these concerns may cause regulators to impose greater restrictions on the construction of base station towers or other infrastructure, which may hinder the completion of network build-outs and the commercial availability of new services and may require additional investments.

Industrial action or adverse labour relations could disrupt the Group’s business operations and have an adverse effect on operating results Certain of the Group’s non-UAE operations are currently and may in the future be subject to collective bargaining, union or similar labour agreements. For example, the Group’s operations in Pakistan depend on employees who have established a union and signed a collective labour agreement with strong unions representing over 85 per cent. of total staff. In addition, the Group’s employees also benefit from local laws regarding employee rights and benefits. If the Group is unable to negotiate acceptable labour agreements or maintain satisfactory employee relations, the results could include work stoppages, strikes or other industrial action or labour difficulties (including higher labour costs), which individually or in the aggregate, could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

RISKS RELATING TO THE COUNTRIES IN WHICH THE GROUP OPERATES The Group is subject to political and economic conditions in the key markets in which it operates The Group’s key operations are located in the UAE, Morocco, Egypt, Pakistan, Saudi Arabia and Nigeria. The Group’s results of operations are, and will continue to be, signiﬁcantly affected by ﬁnancial, economic and political developments in or affecting those markets and, in particular, by the level of economic activity in those markets. It is not possible to predict the occurrence of events or

21 circumstances, such as war or hostilities, or the impact of such occurrences, and no assurance can be given that the Group would be able to sustain the operation of its business if adverse financial, economic, political or other events or circumstances were to occur. Any future economic downturn, either regionally or domestically in any of the key markets in which the Group operates, could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. Investors should also note that the Group’s business and financial performance could be adversely affected by political, financial, economic or related developments both within and outside the key markets in which the Group operates because of inter-relationships within the global financial markets. In addition, the implementation by a national or local government in any of the key markets in which the Group operates of regulations adverse to the Group’s interests, including changes with respect to royalty payments, taxation or telecommunications regulations, or changes to grants and licences of properties used by the Group in those markets, could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects and thereby adversely affect the Group’s ability to perform its obligations in respect of any Notes. Certain countries in which the Group operates, such as Egypt, Pakistan, Nigeria, Sudan, Mali and Afghanistan do not have particularly stable political environments. Instability in any of these countries may result from a number of factors, including government or military regime change, civil unrest or terrorism. To a varying extent in each of these countries, extremists have engaged in a campaign, sometimes violent, against various governments in the region and terrorists have struck both military and civilian targets. There can be no assurance that extremists or terrorist groups will not escalate violent activities in the countries in which the Group operates or that the governments of those countries will be successful in maintaining the prevailing levels of domestic order and stability. In recent years, there has been significant political and social unrest, including violent protests in a number of countries in which the Group operates, including Morocco, where the Group operates through Maroc Telecom, Egypt, where the Group operates through Etisalat Misr, Pakistan, where the Group operates through PTCL and Nigeria, where the Group operates through EMTS. There can be no assurance that such significant political and social unrest will not escalate or that the governments of countries in which the Group operates will be successful in maintaining domestic order and stability. Other potential sources of instability in the Middle East and North Africa (‘‘MENA’’) region include a worsening of the current situation in Iraq and Syria, where a large amount of territory is controlled by jihadist rebel groups, the ongoing conflict in Yemen, fragile relations between the United States and Iran, and the ongoing Israeli-Palestinian conflict. Each of these situations, alone or in combinations, has the potential to adversely affect regional security as well as global oil and gas prices. Such a deterioration in relations, should it materialise, could adversely impact the UAE and broader regional security, potentially including the outbreak of a regional conflict. Any of the foregoing circumstances could have a material adverse effect on the political and economic stability of the countries in which the Group operates and, in particular, could impact the level of economic activity in those countries and, consequently, could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects, and thereby adversely affect the Group’s ability to perform its obligations in respect of any Notes.

The Group is subject to the risks of political, social and economic instability associated with countries and regions in which it operates or may seek to operate Overview The Group conducts its business in a number of countries and regions with developing economies, many of which do not have firmly established legal and regulatory systems and some of which from time to time have experienced economic, social or political instability. In particular, Maroc Telecom in Morocco, Etisalat Misr in Egypt and PTCL in Pakistan were the most significant of the Group’s subsidiaries in terms of revenue for the year ended 31 December 2014, generating 16.6 per cent., 9.9 per cent. and 9.1 per cent., respectively, of the Group’s consolidated revenue during that period (based on external sales). In addition, the Group also operates in Nigeria, Sudan, Mali and Afghanistan, each of which have suffered in recent years or are suffering from regional political instability, armed conflict and general social and civil unrest. Some of these countries are also in the process of transitioning to a market economy and, as a result, are experiencing changes in their economies and their government policies that can affect the Group’s investments in these countries. For example, in 2013, the government of Pakistan introduced new taxes on the telecommunications industry that reduced the effective revenue generation for the Group’s operations in that market. In 2014, the government of Pakistan removed the import duty concession that had been applied to the

22 telecommunications sector, thereby increasing the effective import duty rate from 5 per cent. to the standard rate of 25 per cent., as well as imposing an additional specific tax on new SIM card sales and IMEI registrations. Management estimates that this will result in around 10 per cent. to 15 per cent. of SIM cards in the market being disconnected. In Egypt, it is envisaged under the Unified License Regime for telecommunications outlined by the Egyptian government in April 2014, that a fourth mobile telecommunications licence is proposed to be awarded to Telecom Egypt, the fixed-line incumbent operator, which could result in further increased competition to the Group’s operations in Egypt. In February 2015, the Egyptian government announced that each of the existing three mobile operators would be eligible for fixed-line licences. Both of these developments are likely to result in further increased competition to the Group’s operations in Egypt if such an award is made. In March 2015, the ANRT awarded 4G mobile broadband licences to Maroc Telecom and two other telecommunications operators in Morocco, Me´ditel and Inwi, which is likely to increase competition to the Group’s operations in Morocco. There is also a risk that the Group’s operations in certain of the countries in which it operates could be expropriated by the relevant government or regulatory authorities, either by formal change in ownership, revocation of an operating licence or by changes in regulatory or financial policies that have an equivalent effect. Governments in these jurisdictions and countries, as well as in more developed jurisdictions and countries, may be influenced by political or commercial considerations outside of the Group’s control, and may act arbitrarily, selectively or unlawfully, including in a manner that benefits the Group’s competitors. In addition, the Group may from time to time enter into business relationships with entities subject to European, United States, United Nations or other international sanctions. By doing so, the Group could experience adverse publicity, which may in turn result in reputational harm in certain jurisdictions. Specific country risks that may have a material adverse effect on the Group’s business, financial condition, results of operations and prospects include, among other things: * political instability, riots or other forms of civil disturbance or violence; * war, terrorism, invasion, rebellion or revolution; * government interventions, including expropriation or nationalisation of assets, increased protectionism and the introduction of tariffs or subsidies; * changing fiscal, regulatory and tax regimes; * arbitrary or inconsistent government action, including capricious application of tax laws and selective tax audits; * inflation in local economies; * difficulties and delays in obtaining requisite governmental licences, permits or approvals; * cancellation, nullification or unenforceability of contractual rights; and * underdeveloped industrial and economic infrastructure. Changes in investment policies or shifts in the prevailing political climate in any of the countries in which the Group operates, or seeks to operate, could result in the introduction of increased government regulations with respect to, among other things: * price controls; * export and import controls; * income and other taxes; * environmental legislation; * customs and immigration; * foreign ownership restrictions; * foreign exchange and currency controls; and * labour and welfare benefit policies.

Political climate Various countries in the Middle East, North Africa, West Africa and South Asia have experienced varying degrees of political instability in recent years. Future armed conﬂicts or political instability in those regions could impact the Group’s operations. For example, in Afghanistan and Pakistan, terrorist groups have engaged in campaigns against their respective governments and allies, including

23 the United States, and have struck both military and civilian targets resulting in continued risk to the Group’s operations. There can be no assurance that terrorist groups will not escalate violent activities or that the relevant governments will be successful in maintaining the prevailing levels of domestic order and stability. In addition, Egypt has suffered from political instability and general social and civil unrest since early 2011, including the removal of two presidents and the suspension of the Egyptian constitution during this period. Although a new constitution was approved in January 2014 and Egypt elected a new President in May 2014, this period of instability continues to have a destabilising effect on political and economic conditions in Egypt. In particular, in 2013, the Egyptian pound fell by approximately 9 per cent., which was a key factor resulting in a 6.6 per cent. decrease in total revenue from the Group’s operations in Egypt for the year ended 31 December 2013. The Group’s operations in Egypt saw an increase in revenues by just 2.2 per cent. in the year ended 31 December 2014, which was offset by a further 10 per cent. fall in the Egyptian pound during the period. In addition, the number of tourists visiting Egypt has fallen dramatically, which has resulted in a material reduction in revenues from mobile roaming services collected by Etisalat Misr. Although Egypt’s economy has shown signs of improvement since electing a new President in May 2014, any further decline in economic conditions and turmoil in the ﬁnancial markets in Egypt may lead to certain labour and social unrest that may continue or escalate in the future and which may have widespread political, social and economic consequences, including restrictions on foreign involvement in the Egyptian economy, and increased tension between the Egyptian government and the Egyptian population. Any of these consequences could restrict Etisalat Misr’s operations and lead to a loss of revenue, materially adversely affecting the Group. Investing in countries that are politically and economically undeveloped or developing, as the Group has and expects to continue to do, is risky and uncertain. Any changes in the political, social, economic or other conditions in such countries, or in countries that neighbour such countries, could have a material adverse effect on the investments that the Group has made or may make in the future, which in turn could have a material adverse effect on the Group’s business, ﬁnancial condition, results of operations and prospects.

The Group may pursue investment opportunities in countries in which it has no previous investment experience or in jurisdictions that are subject to greater social, economic and political risks The Group may not be able to adequately assess the risks of investing in new jurisdictions irrespective of advice from its advisers. Investments made by the Group in emerging markets may involve a greater degree of risk than investments in developed countries. For example, emerging market investments may carry the risk of more volatile equity markets, less favourable and less sophisticated fiscal and commercial regulation, a greater likelihood of severe inflation, unstable currency, exchange controls, restrictions on repatriation of profits and capital, corruption, political, social and economic instability (including warfare and civil unrest) and government actions or interventions, including tariffs, royalties, protectionism, subsidies, expropriation of assets and cancellation of contractual rights, than investments in companies based in developed countries. An occurrence of any of the foregoing risks or failure by the Group to correctly identify the risks associated with an investment could have a material adverse effect on its business, financial condition and results of operations.

The Group operates in locations where there are high security risks, which could result in harm to its employees and contractors or substantial costs Some of the Group’s subsidiaries and associates operate in high-risk locations, such as Egypt, Pakistan, Nigeria, Sudan, Mali and Afghanistan, where the country or location has suffered, or is suffering from political, social or economic instability, or war or civil unrest. In those locations where the Group has employees, assets or operations, those subsidiaries, associates and joint ventures may incur substantial costs to maintain the safety of their personnel and to protect their assets. Despite these precautions, the safety of the Group’s personnel in these locations may continue to be at risk. In addition, network maintenance and expansion projects in these areas could be delayed or cancelled due to the need for heightened security for employees and contractors operating in these areas. The security situation in Egypt, Pakistan, Nigeria, Sudan, Mali, Afghanistan and other regions in which the Group operates remains unstable and could have a material adverse effect on the Group’s business, ﬁnancial condition, results of operations and prospects.

24 FACTORS WHICH ARE MATERIAL FOR THE PURPOSE OF ASSESSING THE MARKET RISKS ASSOCIATED WITH NOTES ISSUED UNDER THE PROGRAMME The Notes May Not Be a Suitable Investment for All Investors Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: * have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this Base Prospectus or any applicable supplement; * have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact the Notes will have on its overall investment portfolio; * have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including Notes where the currency for principal or interest payments is different from the potential investor’s currency; * understand thoroughly the terms of the Notes and be familiar with the behaviour of financial markets; and * be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor’s overall investment portfolio.

Risks Related to the Structure of a Particular Issue of Notes A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:

The Notes may be subject to optional redemption by the Issuer An optional redemption feature of Notes is likely to limit their market value. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period. The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor may not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a signiﬁcantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.

The Notes may be Redeemed prior to their Final Maturity Date for Tax Reasons If the Issuer becomes obliged to pay any additional amounts in respect of the Notes as provided or referred to in Condition 9 (Taxation) of the Notes as a result of any change in, or amendment to, the laws or regulations of a Tax Jurisdiction (as defined in Condition 9 (Taxation)) or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes, the Issuer may redeem all but not some only of the outstanding Notes of such Tranche in accordance with Condition 8.2 (Redemption and Purchase – Redemption for tax reasons) of the Notes.

Partly-paid Notes are subject to additional risks The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of his investment.

25 Inverse Floating Rate Notes are subject to increased volatility Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such as LIBOR. The market values of those Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes.

Fixed/Floating Rate Notes are subject to additional risks Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where the Issuer has the right to effect such a conversion, this will affect the secondary market and the market value of the Notes since the Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable than the prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than the prevailing rates on its Notes.

Notes issued at a substantial discount or premium are subject to increased volatility The market values of securities issued at a substantial discount or premium from their principal amount tend to ﬂuctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.

Risks Related to the Notes Generally Set out below is a brief description of certain risks relating to the Notes generally:

The Notes are subject to modiﬁcation by a majority of Noteholders without the consent of all Noteholders The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit deﬁned majorities to bind all Noteholders including Noteholders who did not attend or vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

The Trustee may exercise certain discretions in relation to the Notes without the consent of all Noteholders The conditions of the Notes also provide that the Trustee may, without the consent of Noteholders, agree to: (i) any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of Notes subject as provided in the Trust Deed; or (ii) determine without the consent of the Noteholders that any Event of Default or potential Event of Default shall not be treated as such; or (iii) the substitution of another company, being a Subsidiary of the Issuer, as principal debtor under any Notes in place of the Issuer, if in the opinion of the Trustee such modification, waiver, authorisation or determination or substitution is not materially prejudicial to the interests of the Noteholders in the circumstances described in Condition 16 (Meetings of Noteholders, Modification, Waiver and Substitution).

European Monetary Union may cause Notes denominated in certain currencies to be redenominated in euro If Notes are issued under the Programme which are denominated in the currency of a country which, at the time of issue, has not adopted the euro as its sole currency and, before the relevant Notes are redeemed, the euro becomes the sole currency of that country, a number of consequences may follow including, but not limited to: (i) all amounts payable in respect of the relevant Notes may become payable in euro; (ii) applicable law may allow or require such Notes to be redenominated into euro and additional measures to be taken in respect of such Notes; and (iii) there may no longer be available published or displayed rates for deposits in such currency used to determine the rates of interest on such Notes. Any of these or any other consequences could adversely affect the holders of the relevant Notes.

26 The EU Savings Directive may give rise to withholding on certain Notes Under EC Council Directive 2003/48/EC (the ‘‘EU Savings Directive’’) on the taxation of savings income, each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in that other Member State; however, for a transitional period, Austria may instead apply a withholding system in relation to such payments, deducting tax at a rate of 35 per cent. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments. The Council of the European Union formally adopted a Council Directive amending the EU Savings Directive on 24 March 2014 (the ‘‘Amending Directive’’). The Amending Directive broadens the scope of the requirements described above. Member States have until 1 January 2016 to adopt the national legislation necessary to comply with the Amending Directive. The changes made under the Amending Directive include extending the scope of the EU Savings Directive to payments made to, or collected for, certain other entities and legal arrangements. They also broaden the definition of ‘‘interest payment’’ to cover income that is equivalent to interest. However, the European Commission has proposed the repeal of the EU Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to ongoing requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates). This is to prevent overlap between the EU Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required to apply the new requirements of the Amending Directive. If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment pursuant to the EU Savings Directive or any other directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such directive, neither the Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer is required to maintain a Paying Agent in a Member State that will not be obliged to withhold or deduct tax pursuant to any law implementing or complying with, or introduced in order to conform to, the EU Savings Directive or any other directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000.

Payments made on or with respect to the Notes may be subject to U.S. withholding tax In certain circumstances payments made on or with respect to the Notes after 31 December 2016 may be subject to U.S. withholding tax under Sections 1471 through 1474 of the Code (commonly referred to as ‘‘FATCA’’). This withholding does not apply to payments on Notes that are issued prior to 1 July 2014 (or, if later, the date that is six months after the date on which the final regulations that define ‘‘foreign passthru payments’’ are published) unless the Notes are ‘‘materially modified’’ after that date or are characterised as equity for U.S. federal income tax purposes. Whilst the Notes are in global form and held within Euroclear and Clearstream, Luxembourg (together, the ‘‘ICSDs’’), in all but the most remote circumstances, it is not expected that FATCA will affect the amount of any payment received by the ICSDs (see ‘‘Taxation – U.S. Foreign Account Tax Compliance Act’’). However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain leading to the ultimate investor if any such custodian or intermediary generally is unable to receive payments free of FATCA withholding. It also may affect payment to any ultimate investor that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA), and provide each custodian or intermediary with any information, forms, other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA withholding. Investors should

27 consult their own tax adviser to obtain a more detailed explanation of FATCA and how FATCA may affect them. The Issuer’s obligations under the Notes are discharged once it has paid the common depositary for the ICSDs (as holder of the Notes) and therefore, the Issuer has therefore no responsibility for any amount thereafter transmitted through the hands of the ICSDs and custodians or intermediaries.

A change of law may adversely affect the Notes The conditions of the Notes are based on English law in effect as at the date of this Base Prospectus. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of this Base Prospectus.

Certain Bearer Notes the denominations of which involve integral multiples may be illiquid and difficult to trade In relation to any issue of Bearer Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Bearer Note form in respect of such holding (should such Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to a Specified Denomination. If definitive Bearer Notes are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.

Investors in the Notes must rely on DTC, Euroclear and Clearstream, Luxembourg procedures Notes issued under the Programme will be represented on issue by one or more Global Notes that may be deposited with a common depositary for Euroclear and Clearstream, Luxembourg or may be deposited with a nominee for DTC (each as defined under ‘‘Form of the Notes’’). Except in the circumstances described in each Global Note, investors will not be entitled to receive Notes in definitive form. Each of DTC, Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants will maintain records of the beneficial interests in each Global Note held through it. While the Notes are represented by a Global Note, investors will be able to trade their beneficial interests only through the relevant clearing systems and their respective participants. While the Notes are represented by Global Notes, the Issuer will discharge its payment obligations under the Notes by making payments through the relevant clearing systems. A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant clearing system and its participants in relation to payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in any Global Note. Holders of beneficial interests in a Global Note will not have a direct right to vote in respect of the Notes so represented. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant clearing system and its participants to appoint appropriate proxies.

Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent: (1) Notes are legal investments for it; (2) Notes can be used as collateral for various types of borrowing; and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.

Risks Related to Enforcement Investors may experience difﬁculty in enforcing arbitration awards and foreign judgments in the UAE The payments under the Notes are dependent upon the Issuer making payments to investors in the manner contemplated under the Notes. If the Issuer fails to do so, it may be necessary to bring an action against the Issuer to enforce its obligations and/or to claim damages, as appropriate, which may be costly and time-consuming.

28 Under current UAE law, the UAE courts are unlikely to enforce an English court judgement without re-examining the merits of the claim, to which they may simply apply UAE law; thus ignoring the choice by the parties of English law as the governing law of the transaction. In the unlikely event that the parties’ choice was respected, it is important to note that in the UAE, foreign law is required to be established as a question of fact. Therefore, the interpretation of English law by a court in the UAE may not accord with that of an English court. In principle, courts in the UAE recognise the choice of foreign law if they are satisfied that an appropriate connection exists between the relevant transaction agreement and the foreign law which has been chosen. They will not, however, honour any provision of foreign law which is contrary to public policy, order or morals in the UAE, or which is contrary to any mandatory law of, or applicable in, the UAE. The UAE is a civil law jurisdiction and judicial precedents in the UAE have no binding effect. In addition, court decisions in the UAE are generally not recorded. These factors create greater judicial uncertainty. The Notes, the Trust Deed, the Agency Agreement and the Programme Agreement are governed by English law and the parties to such documents have agreed to refer any unresolved dispute in relation to such documents to arbitration under the LCIA Rules, with an arbitral tribunal with its seat in London (or, subject to the exercise of an option to litigate given to certain parties (other than the Issuer) the courts of England are stated to have jurisdiction to settle any disputes). The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the ‘‘New York Convention’’) entered into force in the UAE on 19 November 2006. In the absence of any other multilateral or bilateral enforcement convention, an arbitration award rendered in London should be enforceable in the UAE as a foreign award in accordance with the terms of the New York Convention. Under the New York Convention, the UAE has an obligation to recognise and enforce foreign arbitration awards, unless the party opposing enforcement can prove one of the grounds under Article V of the New York Convention to refuse enforcement, or the UAE courts find that the subject matter of the dispute is not capable of settlement by arbitration or enforcement would be contrary to the public policy of the UAE. There have been limited instances where the UAE courts, most notably the Fujairah Court of First Instance and the Dubai Court of Cassation, have ratified or ordered the recognition and enforcement of foreign arbitration awards under the New York Convention. How the New York Convention provisions would be interpreted and applied by the UAE courts in practice and whether the UAE courts will enforce a foreign arbitration award in accordance with the New York Convention (or any other multilateral or bilateral enforcement convention), remains largely untested. This is reinforced by the lack of a system of binding judicial precedent in the UAE and the independent existence of different Emirates within the UAE, some with their own court systems independent of the federal system, and whose rulings may have no more than persuasive force cross- border. Although there are examples of foreign arbitral awards being enforced in the UAE under the New York Convention, there are other cases where the enforcement of foreign arbitral awards have been refused, with, for example, the relevant judge confusing the requirements for the enforcement of domestic awards with the requirements for the enforcement of foreign awards under the UAE Federal Law No. 1 of 1992 as amended, or ignoring the provisions of Article 238 of Federal Law No. 11 of 1992 (as amended by Federal Law No. 30 of 2005) (the ‘‘Law of Civil Procedure’’). Article 238 of the Law of Civil Procedure provides that Articles 235 to 237 (which deal with enforcement of foreign judgments, orders and instruments and which contain onerous requirements which must be satisfied before enforcement will be considered by the UAE courts) apply only in the absence of multilateral or bilateral conventions such as the New York Convention. Therefore, there remains a risk that when faced with an action for enforcement of a foreign arbitration award under the New York Convention, the UAE courts might continue to ignore Article 238 of the Law of Civil Procedure and instead apply Articles 235 to 237. If Article 238 is ignored, there is a risk that a foreign arbitration award will be refused enforcement by the UAE courts.

The Issuer’s waiver of immunity may not be effective under UAE law The Issuer has waived its rights in relation to sovereign immunity; however, there can be no assurance as to whether such waivers of immunity from execution or attachment or other legal process by it under the Trust Deed, the Agency Agreement, the Programme Agreement and the Notes are valid and binding under the laws of the UAE.

29 Risks Related to the Market Generally Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:

A secondary market may not develop for any Notes Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be liquid. The liquidity of any market for the Notes that may develop depends on a number of factors, including: * the method of calculating the principal and interest in respect of the Notes; * the time remaining to the maturity of the Notes; * the outstanding amount of the Notes; * the redemption features of the Notes; and * the level, direction and volatility of market interest rates generally. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for speciﬁc investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes.

Notes may be subject to exchange rate risks and exchange controls The Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risks relating to currency conversions if an investor’s financial activities are denominated principally in a currency or currency unit (the ‘‘Investor’s Currency’’) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls which could adversely affect an applicable exchange rate. The Issuer does not have any control over the factors that generally affect these risks, such as economic, financial and political events and the supply and demand for applicable currencies. In recent years, exchange rates between certain currencies have been volatile and volatility between such currencies or with other currencies may be expected in the future. However, fluctuations between currencies in the past are not necessarily indicative of fluctuations that may occur in the future. An appreciation in the value of the Investor’s Currency relative to the Specified Currency would decrease: (i) the Investor’s Currency-equivalent yield on the Notes; (ii) the Investor’s Currency-equivalent value of the principal payable on the Notes; and (iii) the Investor’s Currency equivalent market value of the Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate as well as the availability of a specified foreign currency at the time of any payment. As a result, investors may receive less interest or principal than expected, or no interest or principal. Even if there are no actual exchange controls, it is possible that the Specified Currency for any particular Note may not be available at such Note’s maturity.

Fixed Rate Notes are subject to interest rate risks Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes.

Credit ratings may not reﬂect all risks One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reﬂect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by its assigning rating agency at any time. In general, European regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and such registration has not been withdrawn or suspended). Such general restriction will also apply in the case of credit ratings issued by non-EU

30 credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certiﬁed in accordance with the CRA Regulation (and such endorsement action or certiﬁcation, as the case may be, has not been withdrawn or suspended). Certain information with respect to the credit rating agencies and ratings will be set out in the applicable Final Terms.

31 DOCUMENTS INCORPORATED BY REFERENCE

The Terms and Conditions of the Notes contained in the Base Prospectus dated 22 May 2014 (the ‘‘2014 Terms and Conditions’’), pages 40 to 70 (inclusive) (an electronic copy of which is available at http://www.ise.ie/debt_documents/Base%20Prospectus_02084e89-7d4c-4c9d-bf3c- 8fab48f21ca5.pdf?v=1722015) prepared by the Issuer in connection with the Programme, which have previously been published and have been filed with the Central Bank of Ireland shall be incorporated in, and form part of, this Base Prospectus. Copies of the 2014 Terms and Conditions incorporated by reference in this Base Prospectus can be obtained from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London. Any documents themselves incorporated by reference in the documents incorporated by reference in this Base Prospectus shall not form part of this Base Prospectus. If at any time the Issuer shall be required to prepare a supplement to the Base Prospectus pursuant to Part 8, Paragraph 51 of the Prospectus (Directive 2003/71/EC) Regulations 2005 of the Republic of Ireland (S.I. No. 324 of 2005) (the ‘‘Irish Prospectus Regulations’’), the Issuer will prepare and make available a supplement to this Base Prospectus or a further base prospectus which, in respect of any subsequent issue of Notes to be listed on the Official List and admitted to trading on the Main Securities Market, shall constitute a supplemental base prospectus as required by Part 8, Paragraph 51 of the Irish Prospectus Regulations. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Base Prospectus or in a document which is incorporated by reference in this Base Prospectus. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Base Prospectus.

32 FORM OF THE NOTES

The Notes of each Series will be in either bearer form, with or without interest coupons attached, or registered form, without interest coupons attached. Bearer Notes will be issued outside the United States in reliance on Regulation S and Registered Notes will be issued both outside the United States in reliance on the exemption from registration provided by Regulation S and within the United States in reliance on Rule 144A or otherwise in private transactions that are exempt from the registration requirements of the Securities Act.

Bearer Notes Each Tranche of Bearer Notes will be initially issued in the form of a temporary global note (a ‘‘Temporary Bearer Global Note’’) or, if so specified in the applicable Final Terms, a permanent global note (a ‘‘Permanent Bearer Global Note’’ and, together with a Temporary Bearer Global Note, each a ‘‘Bearer Global Note’’) which, in either case, will be delivered on or prior to the original issue date of the Tranche to a common depositary (the ‘‘Common Depositary’’) for Euroclear Bank S.A./ N.V. (‘‘Euroclear’’) and Clearstream Banking, socie´te´ anonyme (‘‘Clearstream, Luxembourg’’). Bearer Notes will only be delivered outside the United States and its possessions. Whilst any Bearer Note is represented by a Temporary Bearer Global Note, payments of principal, interest (if any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will be made against presentation of the Temporary Bearer Global Note only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in the Temporary Bearer Global Note are not U.S. persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream, Luxembourg and Euroclear and/or Clearstream, Luxembourg, as applicable, has given a like certification (based on the certifications it has received) to the Principal Paying Agent. On and after the date (the ‘‘Exchange Date’’) which is 40 days after a Temporary Bearer Global Note is issued, interests in such Temporary Bearer Global Note will be exchangeable (free of charge) upon a request as described therein either for: (i) interests in a Permanent Bearer Global Note of the same Series; or (ii) for definitive Bearer Notes of the same Series with, where applicable, receipts, interest, coupons and talons attached (as indicated in the applicable Final Terms and subject, in the case of definitive Bearer Notes, to such notice period as is specified in the applicable Final Terms), in each case against certification of beneficial ownership as described above unless such certification has already been given, provided that purchasers in the United States and certain U.S. persons will not be able to receive definitive Bearer Notes. The holder of a Temporary Bearer Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Bearer Global Note for an interest in a Permanent Bearer Global Note or for definitive Bearer Notes is improperly withheld or refused. Payments of principal, interest (if any) or any other amounts on a Permanent Bearer Global Note will be made through Euroclear and/or Clearstream, Luxembourg against presentation or surrender (as the case may be) of the Permanent Bearer Global Note without any requirement for certification if such Note is being issued in accordance with TEFRA C Rules or if certification has already been given (as described in the preceding paragraph). Each Permanent Bearer Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Bearer Notes with, where applicable, receipts, interest coupons and talons attached upon either: (a) where the applicable Final Terms specifies that such Permanent Bearer Global Note is exchangeable at the request of a holder, not less than 60 days’ written notice given at any time from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) to the Principal Paying Agent as described therein; or (b) only upon the occurrence of an Exchange Event. For these purposes, ‘‘Exchange Event’’ means that: (i) the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system satisfactory to the Trustee is available; or (ii) the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Permanent Bearer Global Note in definitive form and a certificate to such effect signed by two Directors of the Issuer is given to the Trustee. The Issuer will promptly give notice to Noteholders in accordance with Condition 15 (Notices) if an Exchange Event occurs. In the event of the occurrence

33 of an Exchange Event, Euroclear and/or Clearstream, Luxembourg or the common depositary on their behalf (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) or the Trustee may give notice to the Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (ii) above, the Issuer may also give notice to the Principal Paying Agent requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first relevant notice by the Principal Paying Agent. The exchange of a Permanent Bearer Global Note for definitive Bearer Notes upon notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder) should not be expressed to be applicable in the applicable Final Terms if the Notes are issued with a minimum Specified Denomination such as A100,000 (or its equivalent in another currency) plus one or more higher integral multiples of another smaller amount such as A1,000 (or its equivalent in another currency). Furthermore, such Specified Denomination construction is not permitted in relation to any issue of Notes which is to be represented on issue by a Temporary Bearer Global Note exchangeable for definitive Bearer Notes. The following legend will appear on all Bearer Notes which have an original maturity of more than one year and on all receipts and interest coupons relating to such Notes: ‘‘ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE 1986, AS AMENDED.’’ The sections referred to provide that U.S. Holders (as defined in ‘‘Taxation – United States Federal Income Tax Considerations’’) with certain exceptions, will not be entitled to deduct any loss on Bearer Notes, receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition, redemption or payment of principal in respect of such Notes, receipts or interest coupons. Notes which are represented by a Bearer Global Note will only be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be.

Registered Notes The Registered Notes of each Tranche offered and sold in reliance on Regulation S, which will be sold to persons who are not U.S. persons outside the United States, will initially be represented by a global note in registered form (a ‘‘Regulation S Global Note’’). Prior to expiry of the distribution compliance period (as defined in Regulation S) applicable to each Tranche of Notes, beneficial interests in a Regulation S Global Note may not be offered or sold to, or for the account or benefit of, a U.S. person save as otherwise provided in Condition 2 (Transfers of Registered Notes) and may not be held otherwise than through Euroclear or Clearstream, Luxembourg and such Regulation S Global Note will bear a legend regarding such restrictions on transfer. The Registered Notes of each Tranche offered and sold in the United States or to U.S. persons may only be offered and sold in private transactions to persons reasonably believed to be QIBs. The Registered Notes of each Tranche sold to QIBs will be represented by a global note in registered form (a ‘‘Rule 144A Global Note’’ and, together with a Regulation S Global Note, each a ‘‘Registered Global Note’’). Registered Global Notes will either: (i) be deposited with a custodian for, and registered in the name of a nominee of, the Depository Trust Company (‘‘DTC’’); or (ii) be deposited with a common depositary for, and registered in the name of a common nominee of, Euroclear and Clearstream, Luxembourg, as specified in the applicable Final Terms. Persons holding beneficial interests in Registered Global Notes will be entitled or required, as the case may be, under the circumstances described below, to receive physical delivery of definitive Notes in fully registered form. Payments of principal, interest and any other amount in respect of the Registered Global Notes will, in the absence of provision to the contrary, be made to the person shown on the Register (as defined in Condition 7.4 (Payments – Payments in respect of Registered Notes)) as the registered holder of the Registered Global Notes. All amounts payable to DTC or its nominee as registered holder of a Registered Global Note in respect of Notes denominated in a Specified Currency other than U.S. dollars shall be paid by transfer by the Registrar to an account in the relevant Specified Currency of the relevant exchange agent on behalf of DTC or its nominee for conversion into and payment in U.S. dollars in accordance with the provisions of the Agency Agreement. None of the Issuer, any

34 Paying Agent, the Trustee or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments or deliveries made on account of beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Payments of principal, interest or any other amount in respect of the Registered Notes in definitive form will, in the absence of provision to the contrary, be made to the persons shown on the Register on the relevant Record Date (as defined in Condition 7.4 (Payments – Payments in respect of Registered Notes)) immediately preceding the due date for payment in the manner provided in that Condition. Interests in a Registered Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Registered Notes without receipts, interest coupons or talons attached only upon the occurrence of an Exchange Event. For these purposes, ‘‘Exchange Event’’ means that: (i) in the case of Notes registered in the name of a nominee for DTC, either DTC has notified the Issuer that it is unwilling or unable to continue to act as depository for the Notes or DTC has ceased to constitute a clearing agency registered under the Exchange Act and, in either case, no alternative clearing system satisfactory to the Trustee is available; (ii) in the case of Notes registered in the name of a nominee for a common depositary for Euroclear and Clearstream, Luxembourg, the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and, in any such case, no successor clearing system satisfactory to the Trustee is available; or (iii) the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Registered Global Note in definitive form and a certificate to that effect signed by two Directors of the Issuer is given to the Trustee. The Issuer will promptly give notice to Noteholders in accordance with Condition 15 (Notices) if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, DTC, Euroclear and/or Clearstream, Luxembourg or any person acting on their behalf (acting on the instructions of any holder of an interest in such Registered Global Note) or the Trustee may give notice to the Registrar requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Registrar requesting exchange. Any such exchange shall occur not later than ten days after the date of receipt of the first relevant notice by the Registrar.

Transfer of Interests Interests in a Registered Global Note may, subject to compliance with all applicable restrictions, be transferred to a person who wishes to hold such interest in another Registered Global Note. No beneﬁcial owner of an interest in a Registered Global Note will be able to transfer such interest, except in accordance with the applicable procedures of DTC, Euroclear and Clearstream, Luxembourg, in each case to the extent applicable.

Registered Notes are also subject to the restrictions on transfer set forth therein and will bear a legend regarding such restrictions. See ‘‘Subscription and Sale and Transfer and Selling Restrictions’’. General Pursuant to the Agency Agreement, the Principal Paying Agent shall arrange that, where a further Tranche of Notes is issued which is intended to form a single Series with an existing Tranche of Notes, the Notes of such further Tranche shall be assigned a common code and ISIN and, where applicable, a CUSIP and CINS number which are different from the common code, ISIN, CUSIP and CINS assigned to Notes of any other Tranche of the same Series until at least the expiry of the distribution compliance period (as deﬁned in Regulation S) applicable to the Notes of such Tranche. Any reference herein to Euroclear and/or Clearstream, Luxembourg and/or DTC shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system as may be approved by the Issuer, the Principal Paying Agent and the Trustee. No Noteholder, Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing. In addition, holders of interests in such Global Note credited to their accounts with DTC may require DTC to deliver deﬁnitive Notes in registered form in exchange for their interest in such Global Note in accordance with DTC’s standard operating procedures.

35 The Issuer may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes herein, in which event a new Base Prospectus or a supplement to the Base Prospectus, if appropriate, will be made available which will describe the effect of the agreement reached in relation to such Notes.

36 APPLICABLE FINAL TERMS

Final Terms which will be completed for each Tranche of Notes issued under the Programme. [Date] Emirates Telecommunications Corporation

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]

under the U.S.$7,000,000,000 Global Medium Term Note Programme

PART A – CONTRACTUAL TERMS [Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Notes (the ‘‘Conditions’’) set forth in the base prospectus dated 16 April 2015 (the ‘‘Base Prospectus’’) [and the supplement(s) to it dated [*] [and [*]] which [together] constitute[s] a base prospectus for the purposes of Directive 2003/71/EC, as amended (which includes the amendments made by Directive 2010/73/EU) (the ‘‘Prospectus Directive’’). [This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Base Prospectus [as so supplemented]]1. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus [as so supplemented]. Copies of the Base Prospectus[, the supplement(s) to it] and the Final Terms are available for viewing in accordance with Article 14 of the Prospectus Directive on the website of the Central Bank of Ireland (http://www.centralbank.ie) and copies may be obtained during normal business hours from the registered office of the Principal Paying Agent at Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom.] [Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Notes (the ‘‘Conditions’’) contained in the Trust Deed dated 22 May 2014 and set forth in the base prospectus dated 22 May 2014 and the supplement(s) to it dated [*]] which are incorporated by reference into the base prospectus dated 16 April 2015 (the ‘‘Base Prospectus’’). [This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of Directive 2003/71/EC, as amended (which includes the amendments made by Directive 2010/73/EU) (the ‘‘Prospectus Directive’’) and must be read in conjunction with the Base Prospectus dated 16 April 2015 [and the supplemental prospectus dated [*]], which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive]2, save in respect of the Conditions. The Base Prospectus [and the supplemental prospectus] [is] [are] available for viewing in accordance with Article 14 of the Prospectus Directive on the website of the Central Bank of Ireland (http://www.centralbank.ie)and copies may be obtained during normal business hours from the registered office of the Principal Paying Agent at Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom.]

1. Issuer: Emirates Telecommunications Corporation (a) Series Number: [*] (b) Tranche Number: [*] (c) Date on which the Notes become [*] fungible: 2. Speciﬁed Currency or Currencies: [*] 3. Aggregate Nominal Amount of Notes admitted to trading: (a) Series: [*] (b) Tranche: [*]

1 Delete where the Notes are neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive. 2 Delete where the Notes are neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive.

37 4. Issue Price: [*] per cent. of the Aggregate Nominal Amount [plus accrued interest from [*]] 5. (a) Speciﬁed Denominations: [*] (b) Calculation Amount: [*] 6. (a) Issue Date: [*] (b) Interest Commencement Date: [*]/[Issue Date]/[Not Applicable] 7. Maturity Date: [*] 8. Interest Basis: [[*] per cent. Fixed Rate] [[*] +/- [*] per cent. Floating Rate] [Zero Coupon] 9. Redemption/Payment Basis: Subject to any purchase and cancellation or early redemption, the Notes will be redeemed on the Maturity Date at 100 per cent. of their nominal amount 10. Change of Interest Basis or Redemption/ [Applicable]/[Not Applicable] Payment Basis: 11. Put/Call Options: [Investor Put] [Issuer Call] 12. (a) Status of the Notes: Senior (b) [Date [Board] Approval for Issuance of [*]] Notes Obtained:

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 13. Fixed Rate Note Provisions: [Applicable]/[Not Applicable] (a) Rate(s) of Interest: [*] per cent. per annum payable [annually]/[semi- annually]/[quarterly] in arrear on each Interest Payment Date (b) Interest Payment Date(s): [*] [and [*]] in each year [up to and including the Maturity Date] (c) Fixed Coupon Amount(s): [[*] per Calculation Amount]/[Not Applicable] (d) Broken Amount(s): [[*] per Calculation Amount, payable on the Interest Payment Date falling [in]/[on] [*]]/[Not Applicable] (e) Day Count Fraction: [30/360]/[Actual/Actual (ICMA)] (f) Determination Date(s): [[*] in each year]/[Not Applicable] 14. Floating Rate Note Provisions: [Applicable]/[Not Applicable] (a) Specified Period(s)/Specified Interest [*] Payment Dates: (b) Interest Payment Date(s): [*] [and [*]] in each year [up to and including the Maturity Date] (c) Business Day Convention: [Floating Rate Convention]/[Following Business Day Convention]/[Modified Following Business Day Convention]/[Preceding Business Day Convention] (d) Additional Business Centre(s): [*]/[Not Applicable]

38 (e) Manner in which the Rate of Interest [Screen Rate Determination]/[ISDA and Interest Amount is to be Determination] determined: (f) Party responsible for calculating the [*] Rate of Interest and Interest Amount (if not the Principal Paying Agent): (g) Screen Rate Determination: * Reference Rate: [LIBOR]/[EURIBOR] * Interest Determination Date(s): [*] * Relevant Screen Page: [*] (h) ISDA Determination: * Floating Rate Option: [*] * Designated Maturity: [*] * Reset Date: [*] * ISDA Deﬁnitions: [2000]/[2006] (i) Linear Interpolation: [Applicable – the Rate of Interest for the [long]/ [short]/[ﬁrst]/[last] Interest Period shall be calculated using Linear Interpolation]/[Not Applicable] (j) Margin(s): [+/-][*] per cent. per annum (k) Minimum Rate of Interest: [*] per cent. per annum (l) Maximum Rate of Interest: [*] per cent. per annum (m) Day Count Fraction: [Actual/Actual (ISDA) Actual/365 (Fixed) Actual/365 (Sterling) Actual/360 30/360 30E/360 30E/360 (ISDA)] 15. Zero Coupon Note Provisions: [Applicable]/[Not Applicable] (a) Accrual Yield: [*] per cent. per annum (b) Reference Price: [*] (c) Day Count Fraction in relation to [*] Early Redemption Amounts and late payment:

PROVISIONS RELATING TO REDEMPTION 16. Issuer Call: [Applicable]/[Not Applicable] (a) Optional Redemption Date(s): [*] (b) Optional Redemption Amount: [*] per Calculation Amount (c) If redeemable in part: (i) Minimum Redemption Amount: [*] per Calculation Amount (ii) Maximum Redemption Amount: [*] per Calculation Amount 17. Investor Put: [Applicable]/[Not Applicable] (a) Optional Redemption Date(s): [*]

39 (b) Optional Redemption Amount: [*] per Calculation Amount 18. Final Redemption Amount: [*] per Calculation Amount 19. Early Redemption Amount payable on [Not Applicable]/[Final Redemption Amount]/ redemption for taxation reasons or on event [[*] per Calculation Amount]] of default:

GENERAL PROVISIONS APPLICABLE TO THE NOTES 20. Form of Notes: Form: [Bearer Notes: [Temporary Bearer Global Note exchangeable for a Permanent Bearer Global Note which is exchangeable for Definitive Notes [on 60 days’ notice given at any time]/[upon an Exchange Event]] [Temporary Bearer Global Note exchangeable for Definitive Notes on and after the Exchange Date] [Permanent Bearer Global Note exchangeable for Definitive Notes [on 60 days’ notice given at any time]/[upon an Exchange Event]] [Registered Notes: [Regulation S Global Note [U.S.$[*] nominal amount] registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg]] [Rule 144A Global Note [U.S.$[*] nominal amount] registered in the name of a nominee for [DTC/a common depositary for Euroclear and Clearstream, Luxembourg] 21. U.S. Selling Restrictions: [Reg. S Category 2; TEFRA D/TEFRA C/ TEFRA not applicable] [Not] Rule 144A Eligible 22. Additional Financial Centre(s): [Not Applicable]/[*] 23. Talons for future Coupons or Receipts to be [Yes]/[No] attached to Definitive Notes in bearer form (and dates on which such Talons mature): 24. Details relating to Partly Paid Notes: (a) Instalment Amount: [Not Applicable]/[*] (b) Instalment Date(s): [Not Applicable]/[*] 25. Redenomination applicable: Redenomination [not] applicable

Signed on behalf of Emirates Telecommunications Corporation:

By: ...... Duly authorised

40 PART B – OTHER INFORMATION

1. LISTING AND ADMISSION TO TRADING (a) Listing and admission to trading: [Application [has been]/[is expected to be] made by the Issuer (or on its behalf) to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Main Securities Market with effect from [*]]/[Not Applicable] (b) Estimate of total Expenses related to [*]/[Not Applicable] Admission to trading: 2. RATINGS Ratings: [[The Notes to be issued [have been]/[are expected to be] rated]: [Fitch: [*]] [Moody’s: [*]] [Standard & Poor’s: [*]] 3. INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE [Save for any fees payable to the [Managers]/[Dealers], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer. The [Managers]/[Dealers] and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform other services for, the Issuer and its affiliates in the ordinary course of business for which they may receive fees] 4. YIELD (Fixed Rate Notes only) Indication of yield: [*] per cent. per annum 5. OPERATIONAL INFORMATION (a) ISIN Code: [*] (b) Common Code: [*] (c) CUSIP: [*] (d) CINS: [*] (e) Names and addresses of additional [*]/[Not Applicable] Paying Agent(s) (if any): (f) Any clearing system(s) other than DTC, [*]/[Not Applicable] Euroclear Bank S.A./N.V. and Clearstream Banking, socie´te´ anonyme and the relevant identification number(s): 6. THIRD PARTY INFORMATION [[*] has been extracted from [*]. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by [*], no facts have been omitted which would render the reproduced information inaccurate or misleading]/[Not Applicable]

41 TERMS AND CONDITIONS OF THE NOTES

The following are the Terms and Conditions of the Notes which will be incorporated by reference into each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the relevant stock exchange or other relevant authority (if any) and agreed by the Issuer and the relevant Dealer(s) at the time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Final Terms in relation to any Tranche of Notes shall complete the following Terms and Conditions for the purposes of such Notes. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and definitive Note. Reference should be made to ‘‘Applicable Final Terms’’ for a description of the content of the Final Terms which will specify which of such terms are to apply in relation to the relevant Notes. This Note is one of a Series (as defined below) of Notes issued by Emirates Telecommunications Corporation (the ‘‘Issuer’’) constituted by a trust deed (such trust deed as modified and/or supplemented and/or restated from time to time, the ‘‘Trust Deed’’) dated 16 April 2015 made between the Issuer and Deutsche Trustee Company Limited (the ‘‘Trustee’’, which expression shall include any successor as Trustee). References herein to the ‘‘Notes’’ shall be references to the Notes of this Series and shall mean: (a) in relation to any Notes represented by a global Note (a ‘‘Global Note’’), units of each Specified Denomination in the Specified Currency; (b) any Global Note; (c) any definitive Notes in bearer form (‘‘Bearer Notes’’) issued in exchange for a Global Note in bearer form; and (d) any definitive Notes in registered form (‘‘Registered Notes’’) (whether or not issued in exchange for a Global Note in registered form). The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit of an agency agreement (such agency agreement as amended and/or supplemented and/or restated from time to time, the ‘‘Agency Agreement’’) dated 16 April 2015 and made between the Issuer, the Trustee, Deutsche Bank AG, London Branch as issuing and principal paying agent and agent bank (the ‘‘Principal Paying Agent’’, which expression shall include any successor principal paying agent) and the other paying agents named therein (together with the Principal Paying Agent, the ‘‘Paying Agents’’, which expression shall include any additional or successor paying agents) and Deutsche Bank Luxembourg S.A. as registrar (the ‘‘Registrar’’, which expression shall include any successor registrar) and a transfer agent and the other transfer agents named therein (together with the Registrar, the ‘‘Transfer Agents’’, which expression shall include any additional or successor transfer agents). References in these Conditions to ‘‘Agents’’ shall mean the Paying Agents and the Transfer Agents. Interest bearing definitive Bearer Notes have interest coupons (‘‘Coupons’’) and, if indicated in the applicable Final Terms, talons for further Coupons (‘‘Talons’’) attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons. Definitive Bearer Notes repayable in instalments have receipts (‘‘Receipts’’) for the payment of the instalments of principal (other than the final instalment) attached on issue. Registered Notes and Global Notes do not have Receipts, Coupons or Talons attached on issue. The final terms for this Note (or the relevant provisions thereof) are set out in Part A of the Final Terms attached to or endorsed on this Note which complete these Terms and Conditions (the ‘‘Conditions’’). References to the ‘‘applicable Final Terms’’ are to Part A of the Final Terms (or the relevant provisions thereof) attached to or endorsed on this Note. The Trustee acts for the benefit of the ‘‘Noteholders’’ (which expression shall mean (in the case of Bearer Notes) the bearers of the Notes and (in the case of Registered Notes) the persons in whose name the Notes are registered and shall, in relation to any Notes represented by a Global Note, be construed as provided below), the holders of the Receipts (the ‘‘Receiptholders’’) and the holders of the Coupons (the ‘‘Couponholders’’, which expression shall, unless the context otherwise requires, include the holders of the Talons), in accordance with the provisions of the Trust Deed. As used herein, ‘‘Tranche’’ means Notes which are identical in all respects (including as to listing and admission to trading) and ‘‘Series’’ means a Tranche of Notes together with any further Tranche or Tranches of Notes which are: (a) expressed to be consolidated and form a single series; and (b)

42 identical in all respects (including as to listing and admission to trading) except for their respective Issue Dates (unless this is a Zero Coupon Note), Interest Commencement Dates and/or Issue Prices. Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the registered office for the time being of the Trustee being at Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom and at the specified office of each of the Paying Agents. Copies of the applicable Final Terms are available for viewing at the registered office of the Issuer and of the Principal Paying Agent and copies may be obtained from those offices save that, if this Note is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive, the applicable Final Terms will only be obtainable by a Noteholder holding one or more Notes and such Noteholder must produce evidence satisfactory to the Issuer, the Trustee and the relevant Agent as to its holding of such Notes and identity. The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Trust Deed, the Agency Agreement and the applicable Final Terms which are applicable to them. The statements in the Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed and the Agency Agreement. Words and expressions defined in the Trust Deed, the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used in the Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the Agency Agreement, the Trust Deed will prevail and, in the event of inconsistency between the Trust Deed or the Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail.

1. FORM, DENOMINATION AND TITLE The Notes are in bearer form or in registered form as specified in the applicable Final Terms and in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified Denomination(s). Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice versa. This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note or a combination of any of the foregoing, depending upon the Interest Basis specified in the applicable Final Terms. This Note may be an Instalment Note, a Partly Paid Note or a combination of any of the foregoing, depending upon the Redemption/Payment Basis shown in the applicable Final Terms. Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in the Conditions are not applicable. Subject as set out below, title to the Bearer Notes, Receipts and Coupons will pass by delivery and title to the Registered Notes will pass upon registration of transfers in accordance with the provisions of the Agency Agreement. The Issuer, the Trustee and any Agent will (except as otherwise required by law) deem and treat the bearer of any Bearer Note, Receipt or Coupon and the registered holder of any Registered Note as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any Global Note, without prejudice to the provisions set out in the next succeeding paragraph. For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank S.A./N.V. (‘‘Euroclear’’) and/or Clearstream Banking, socie´te´ anonyme (‘‘Clearstream, Luxembourg’’), each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Trustee and the Agents as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer Global Note or the registered holder of the relevant Registered Global Note shall be treated by the Issuer, the Trustee and any Agent as the holder of such

43 nominal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the expressions ‘‘Noteholder’’ and ‘‘holder of Notes’’ and related expressions shall be construed accordingly. For so long as the Depository Trust Company (‘‘DTC’’) or its nominee is the registered owner or holder of a Registered Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Registered Global Note for all purposes under the Trust Deed and the Agency Agreement and the Notes except to the extent that in accordance with DTC’s published rules and procedures any ownership rights may be exercised by its participants or beneficial owners through participants. In determining whether a particular person is entitled to a particular nominal amount of Notes as aforesaid, the Trustee may rely on such evidence and/or information and/or certification as it shall, in its absolute discretion, think fit and, if it does so rely, such evidence and/or information and/or certification shall, in the absence of manifest error, be conclusive and binding on all concerned. Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of DTC, Euroclear and Clearstream, Luxembourg, as the case may be. References to DTC, Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Final Terms or as may otherwise be approved by the Issuer, the Principal Paying Agent and the Trustee.

2. TRANSFERS OF REGISTERED NOTES 2.1 Transfers of interests in Registered Global Notes Transfers of beneficial interests in Registered Global Notes will be effected by DTC, Euroclear or Clearstream, Luxembourg, as the case may be, and, in turn, by other participants and, if appropriate, indirect participants in such clearing systems acting on behalf of transferors and transferees of such interests. A beneficial interest in a Registered Global Note will, subject to compliance with all applicable legal and regulatory restrictions, be transferable for Notes in definitive form or for a beneficial interest in another Registered Global Note only in the authorised denominations set out in the applicable Final Terms and only in accordance with the rules and operating procedures for the time being of DTC, Euroclear or Clearstream, Luxembourg, as the case may be, and in accordance with the terms and conditions specified in the Trust Deed and the Agency Agreement. Transfers of a Registered Global Note registered in the name of a nominee for DTC shall be limited to transfers of such Registered Global Note, in whole but not in part, to another nominee of DTC or to a successor of DTC or such successor’s nominee.

2.2 Transfers of Registered Notes in definitive form Subject as provided in Conditions 2.5 (Transfers of Registered Notes – Transfers of interests in Regulation S Global Notes), 2.6 (Transfers of Registered Notes – Transfers of interests in Legended Notes) and 2.7 (Transfers of Registered Notes – Exchanges and transfers of Registered Notes generally) below, upon the terms and subject to the conditions set forth in the Trust Deed and the Agency Agreement, a Registered Note in definitive form may be transferred in whole or in part (in the authorised denominations set out in the applicable Final Terms). In order to effect any such transfer; (a) the holder or holders must; (i) surrender the Registered Note for registration of the transfer of the Registered Note (or the relevant part of the Registered Note) at the specified office of any Transfer Agent, with the form of transfer thereon duly executed by the holder or holders thereof or his or their attorney or attorneys duly authorised in writing; and (ii) complete and deposit such other certifications as may be required by the relevant Transfer Agent; and (b) the relevant Transfer Agent must, after due and careful enquiry, be satisfied with the documents of title and the identity of the person making the request. Any such transfer will be subject to such reasonable regulations as the Issuer, the Trustee and the Registrar may from time to time prescribe (the initial such regulations being set out in Schedule 4 to the Agency Agreement). Subject as provided above, the relevant Transfer Agent will, within three business days (being for this purpose a day on which banks are open for business in the city where the specified office of the relevant Transfer Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations), deliver, or procure the delivery of, at its specified office to the

44 transferee or (at the risk of the transferee) send by uninsured mail, to such address as the transferee may request, a new Registered Note in definitive form of a like aggregate nominal amount to the Registered Note (or the relevant part of the Registered Note) transferred. In the case of the transfer of part only of a Registered Note in definitive form, a new Registered Note in definitive form in respect of the balance of the Registered Note not transferred will be so delivered or (at the risk of the transferor) sent to the transferor.

2.3 Registration of transfer upon partial redemption In the event of a partial redemption of Notes under Condition 8 (Redemption and Purchase), the Issuer shall not be required to register the transfer of any Registered Note, or part of a Registered Note, called for partial redemption.

2.4 Costs of registration Noteholders will not be required to bear the costs and expenses of effecting any registration of transfer as provided above, except for any costs or expenses of delivery other than by regular uninsured mail and except that the Issuer may require the payment of a sum sufﬁcient to cover any stamp duty, tax or other governmental charge that may be imposed in relation to the registration.

2.5 Transfers of interests in Regulation S Global Notes Prior to expiry of the applicable Distribution Compliance Period, transfers by the holder of, or of a beneﬁcial interest in, a Regulation S Global Note to a transferee in the United States or who is a U.S. person will only be made:

(a) upon receipt by the Registrar of a written certification substantially in the form set out in the Agency Agreement, amended as appropriate (a ‘‘Transfer Certificate’’), copies of which are available from the specified office of any Transfer Agent, from the transferor of the Note or beneficial interest therein to the effect that such transfer is being made to a person whom the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A; or

(b) otherwise pursuant to the Securities Act or an exemption therefrom, subject to receipt by the Issuer of such satisfactory evidence as the Issuer may reasonably require, which may include an opinion of U.S. counsel, that such transfer is in compliance with any applicable securities laws of any State of the United States,

and, in each case, in accordance with any applicable securities laws of any State of the United States or any other jurisdiction.

In the case of (a) above, such transferee may take delivery through a Legended Note in global or definitive form. After expiry of the applicable Distribution Compliance Period: (A) beneficial interests in Regulation S Global Notes registered in the name of a nominee for DTC may be held through DTC directly, by a participant in DTC, or indirectly through a participant in DTC; and (B) such certification requirements will no longer apply to such transfers.

2.6 Transfers of interests in Legended Notes Transfers of Legended Notes or beneﬁcial interests therein may be made:

(a) to a transferee who takes delivery of such interest through a Regulation S Global Note, upon receipt by the Registrar of a duly completed Transfer Certiﬁcate from the transferor to the effect that such transfer is being made in accordance with Regulation S and that in the case of a Regulation S Global Note registered in the name of a nominee for DTC, if such transfer is being made prior to expiry of the applicable Distribution Compliance Period, the interests in the Notes being transferred will be held immediately thereafter through Euroclear and/or Clearstream, Luxembourg; or

(b) to a transferee who takes delivery of such interest through a Legended Note where the transferee is a person whom the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, without certiﬁcation; or

45 (c) otherwise pursuant to the Securities Act or an exemption therefrom, subject to receipt by the Issuer of such satisfactory evidence as the Issuer may reasonably require, which may include an opinion of U.S. counsel, that such transfer is in compliance with any applicable securities laws of any State of the United States, and, in each case, in accordance with any applicable securities laws of any State of the United States or any other jurisdiction. Upon the transfer, exchange or replacement of Legended Notes, or upon speciﬁc request for removal of the Legend, the Registrar shall deliver only Legended Notes or refuse to remove the Legend, as the case may be, unless there is delivered to the Issuer such satisfactory evidence as may reasonably be required by the Issuer, which may include an opinion of U.S. counsel, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act.

2.7 Exchanges and transfers of Registered Notes generally Holders of interests in a Registered Global Note may exchange such interests for Registered Notes in deﬁnitive form of the same type upon the occurrence of an Exchange Event (as deﬁned in the Registered Global Note).

2.8 Definitions In this Condition, the following expressions shall have the following meanings: ‘‘Distribution Compliance Period’’ means the period that ends 40 days after the completion of the distribution of each Tranche of Notes, as certified by the relevant Dealer (in the case of a non- syndicated issue) or the relevant Lead Manager (in the case of a syndicated issue); ‘‘Legended Note’’ means Registered Notes (whether in definitive form or represented by a Registered Global Note) sold in private transactions to QIBs in accordance with the requirements of Rule 144A which bear a legend specifying certain restrictions on transfer (a ‘‘Legend’’); ‘‘QIB’’ means a ‘‘qualified institutional buyer’’ within the meaning of Rule 144A; ‘‘Regulation S’’ means Regulation S under the Securities Act; ‘‘Regulation S Global Note’’ means a Registered Global Note representing Notes sold outside the United States in reliance on Regulation S; ‘‘Rule 144A’’ means Rule 144A under the Securities Act; ‘‘Rule 144A Global Note’’ means a Registered Global Note representing Notes sold in the United States or to QIBs; and ‘‘Securities Act’’ means the United States Securities Act of 1933, as amended.

3. STATUS OF THE NOTES The Notes and any relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 4 (Negative Pledge and Other Covenants)) unsecured obligations of the Issuer and rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding.

4. NEGATIVE PLEDGE AND OTHER COVENANTS 4.1 Negative Pledge So long as any Note remains outstanding, the Issuer will not and will procure that no Principal Subsidiary will create, or have outstanding, any mortgage, charge, lien, pledge or other security interest (each a ‘‘Security Interest’’), other than a Permitted Security Interest, upon the whole or any part of its present or future undertaking, assets or revenues to secure any Relevant Indebtedness, or any guarantee or indemnity in respect of any Relevant Indebtedness, without at the same time or prior thereto according to the Notes the same security as is created or subsisting to secure any such Relevant Indebtedness, guarantee or indemnity or such other security as shall be approved by an Extraordinary Resolution of the Noteholders.

46 4.2 Transfer of Telecommunications Licence So long as any Note remains outstanding: (a) the Issuer will not and will procure that no Prior Transferee will transfer the Licence to any person other than a Subsidiary (the ‘‘Licence Transferee’’); and (b) at the same time or prior to any such transfer the Issuer will procure that the payment of principal and interest on the Notes and all other amounts payable by the Issuer under or pursuant to the Trust Deed or otherwise in respect of the Notes has been irrevocably and unconditionally guaranteed by the Licence Transferee by its entry into of the Guarantee.

4.3 Definitions In these Conditions: ‘‘EBIT’’ means Net Revenues minus operating expenses before any federal royalty charge; ‘‘Guarantee’’ means a guarantee substantially in the form of the supplemental trust deed set out in schedule 5 to the Trust Deed; ‘‘Guarantor’’ means any Licence Transferee from time to time with an outstanding Guarantee; ‘‘Licence’’ means the licence dated 9 May 2006 issued to the Issuer by the Telecommunications Regulatory Authority of the United Arab Emirates under the Telecom Law; ‘‘Net Revenues’’ means gross revenues minus any sales taxes, discounts or rebates; ‘‘Non-recourse Project Financing’’ means any financing of all or part of the costs of the acquisition, construction or development of any project, provided that: (i) any Security Interest given by the Issuer or any Principal Subsidiary is limited solely to assets of the project; (ii) the person providing such financing expressly agrees to limit its recourse to the project financed and the revenues derived from such project as the principal source of repayment for the moneys advanced; and (iii) there is no other recourse to the Issuer or any Principal Subsidiary in respect of any default by any person under the financing; ‘‘Permitted Security Interest’’ means: (i) any Security Interest existing on the date on which agreement is reached to issue the first Tranche of the Notes; (ii) any Security Interest securing Relevant Indebtedness of a person existing at the time that such person is merged into, or consolidated with, the Issuer or any Principal Subsidiary, provided that such Security Interest was not created in contemplation of such merger or consolidation and does not extend to any other assets or property of the Issuer or any Principal Subsidiary; (iii) any Security Interest existing on any property or assets prior to the acquisition thereof by the Issuer or any Principal Subsidiary and not created in contemplation of such acquisition; or (iv) any renewal of or substitution for any Security Interest permitted by any of paragraphs (i) to (iii) (inclusive) of this definition, provided that with respect to any such Security Interest the principal amount secured has not increased and the Security Interest has not been extended to any additional assets (other than the proceeds of such assets); ‘‘Principal Subsidiary’’ means at any time a Subsidiary of the Issuer: (a) whose EBIT (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose total assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent in each case (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited consolidated accounts of the Issuer and its Subsidiaries relate, are equal to) not less than 10 per cent. of the consolidated EBIT of the Issuer or, as the case may be, 10 per cent. of the consolidated total assets of the Issuer and its Subsidiaries taken as a whole, all as calculated respectively by reference to the then latest audited accounts (consolidated or, as the case may be, non-consolidated) of such Subsidiary and the then latest audited consolidated accounts of the Issuer and its Subsidiaries, provided that in the case of a Subsidiary of the Issuer acquired after the end of the financial period to which the then latest audited consolidated accounts of the Issuer and its Subsidiaries relate, the reference to the then latest audited consolidated accounts of the Issuer and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts for the financial period in which the acquisition is made have been

47 prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to its then latest relevant audited accounts, adjusted as deemed appropriate by the Issuer; (b) to which is transferred all or substantially all of the undertaking and assets of a Subsidiary of the Issuer which immediately prior to such transfer is a Principal Subsidiary, provided that the transferor Subsidiary shall upon such transfer forthwith cease to be a Principal Subsidiary and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this subparagraph (b) on the date on which the consolidated accounts of the Issuer and its Subsidiaries for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date, by virtue of any other applicable provision of this definition; or (c) to which is transferred an undertaking or assets which, taken together with the undertaking or assets of the transferee Subsidiary, generated (or, in the case of the transferee Subsidiary being acquired after the end of the financial period to which the then latest audited consolidated accounts of the Issuer and its Subsidiaries relate, generate EBIT equal to) not less than 10 per cent. of the consolidated EBIT of the Issuer, or represent (or, in the case aforesaid, are equal to) not less than 10 per cent. of the consolidated total assets of the Issuer and its Subsidiaries taken as a whole, all as calculated as referred to in subparagraph (a) above, provided that the transferor Subsidiary (if a Principal Subsidiary) shall upon such transfer forthwith cease to be a Principal Subsidiary unless immediately following such transfer its undertaking and assets generate (or, in the case aforesaid, generate EBIT equal to) not less than 10 per cent. of the consolidated EBIT of the Issuer, or its assets represent (or, in the case aforesaid, are equal to) not less than 10 per cent. of the consolidated total assets of the Issuer and its Subsidiaries taken as a whole, all as calculated as referred to in subparagraph (a) above, and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this subparagraph (c) on the date on which the consolidated accounts of the Issuer and its Subsidiaries for the financial period current at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date, by virtue of any other applicable provision of this definition, all as more particularly defined in the Trust Deed. A report by two Authorised Signatories of the Issuer whether or not addressed to the Trustee that in their opinion a Subsidiary of the Issuer is or is not or was or was not at any particular time or throughout any specified period a Principal Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error, be conclusive and binding on all parties. ‘‘Prior Transferee’’ means any Subsidiary to whom the Licence has been transferred in accordance with Condition 4.2 (Negative Pledge and Other Covenants – Transfer of Telecommunications Licence) provided such Subsidiary shall forthwith cease to be a Prior Transferee on any further transfer of the Licence pursuant to Condition 4.2 (Negative Pledge and Other Covenants – Transfer of Telecommunications Licence) and shall be released from its obligations under the Guarantee it has entered into on any such further transfer. ‘‘Relevant Indebtedness’’ means any indebtedness, other than indebtedness incurred in connection with a Non-recourse Project Financing or a Securitisation, which is in the form of, or represented or evidenced by, bonds, notes, debentures, loan stock, sukuk obligations in respect of trust certificates or other securities which for the time being are, or are intended to be or are capable of being, quoted, listed, dealt in or traded on any stock exchange, over-the-counter or other securities market; ‘‘Securitisation’’ means any securitisation of existing or future assets and/or revenues, provided that: (i) any Security Interest given by the Issuer or any Principal Subsidiary in connection therewith is limited solely to the assets and/or revenues which are the subject of the securitisation; (ii) each person participating in such securitisation expressly agrees to limit its

48 recourse to the assets and/or revenues so securitised as the principal source of repayment for the money advanced or payment of any other liability; and (iii) there is no other recourse to the Issuer or any Principal Subsidiary in respect of any default by any person under the securitisation; ‘‘Subsidiary’’ in relation to the Issuer means, at any particular time, any person (the ‘‘first person’’): (a) which is then directly or indirectly controlled by the Issuer; or (b) more than 50 per cent. of whose issued equity share capital (or equivalent) is then beneficially owned by the Issuer; or (c) whose financial statements at any time are required by law or in accordance with generally accepted accounting principles to be fully consolidated with those of the Issuer. For the first person to be ‘‘controlled’’ by the Issuer means that the Issuer (whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract, trust or otherwise) has the power to appoint and/or remove all or the majority of the members of the board of directors or other governing body of that first person or otherwise controls, or has the power to control, the affairs and policies of the first person; and ‘‘Telecom Law’’ means Federal Decree No. 78 of 1976, as repealed and replaced by Federal Law No. 1 of 1991, as amended by Federal Law by Decree No. 3 of 2003 Regarding the Organisation of the Telecommunications Sector, Federal Law by Decree No. 1 of 2005 and Federal Law by Decree No. 5 of 2008, in each case of the United Arab Emirates and as further amended or replaced from time to time.

5. REDENOMINATION 5.1 Redenomination Where redenomination is specified in the applicable Final Terms as being applicable, the Issuer may, without the consent of the Noteholders, the Receiptholders and the Couponholders but after prior consultation with the Trustee, on giving prior notice to the Principal Paying Agent, Euroclear and Clearstream, Luxembourg and at least 30 days’ prior notice to the Noteholders in accordance with Condition 15 (Notices), elect that, with effect from the Redenomination Date specified in the notice, the Notes shall be redenominated in euro. The election will have effect as follows: (a) the Notes and the Receipts shall be deemed to be redenominated in euro in the denomination of euro 0.01 with a nominal amount for each Note and Receipt equal to the nominal amount of that Note or Receipt in the Specified Currency, converted into euro at the Established Rate, provided that, if the Issuer determines, with the agreement of the Principal Paying Agent and the Trustee, that the then market practice in respect of the redenomination in euro of internationally offered securities is different from the provisions specified above, such provisions shall be deemed to be amended so as to comply with such market practice and the Issuer shall promptly notify the Noteholders, the stock exchange (if any) on which the Notes may be listed and the Agents of such deemed amendments; (b) save to the extent that an Exchange Notice has been given in accordance with paragraph (d) below, the amount of interest due in respect of the Notes will be calculated by reference to the aggregate nominal amount of Notes presented (or, as the case may be, in respect of which Coupons are presented) for payment by the relevant holder and the amount of such payment shall be rounded down to the nearest euro 0.01; (c) if definitive Notes are required to be issued after the Redenomination Date, they shall be issued at the expense of the Issuer: (i) in the case of Relevant Notes in the denomination of euro 100,000 and/or such higher amounts as the Principal Paying Agent may determine and notify to the Noteholders and any remaining amounts less than euro 100,000 shall be redeemed by the Issuer and paid to the Noteholders in euro in accordance with Condition 7(Payments); and (ii) in the case of Notes which are not Relevant Notes, in the denominations of euro 1,000, euro 10,000, euro 100,000 and (but only to the extent of any remaining amounts less than euro 1,000 or such smaller denominations as the Principal Paying Agent and the Trustee may approve) euro 0.01 and such other denominations as the Principal Paying Agent shall determine and notify to the Noteholders;

49 (d) if issued prior to the Redenomination Date, all unmatured Coupons denominated in the Specified Currency (whether or not attached to the Notes) will become void with effect from the date on which the Issuer gives notice (the ‘‘Exchange Notice’’) that replacement euro-denominated Notes, Receipts and Coupons are available for exchange (provided that such securities are so available) and no payments will be made in respect of them. The payment obligations contained in any Notes and Receipts so issued will also become void on that date although those Notes and Receipts will continue to constitute valid exchange obligations of the Issuer. New euro-denominated Notes, Receipts and Coupons will be issued in exchange for Notes, Receipts and Coupons denominated in the Specified Currency in such manner as the Principal Paying Agent may specify and as shall be notified to the Noteholders in the Exchange Notice. No Exchange Notice may be given less than 15 days prior to any date for payment of principal or interest on the Notes; (e) after the Redenomination Date, all payments in respect of the Notes, the Receipts and the Coupons, other than payments of interest in respect of periods commencing before the Redenomination Date, will be made solely in euro as though references in the Notes to the Specified Currency were to euro. Payments will be made in euro by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque; (f) if the Notes are Fixed Rate Notes and interest for any period ending on or after the Redenomination Date is required to be calculated for a period ending other than on an Interest Payment Date, it will be calculated: (i) in the case of the Notes represented by a Global Note, by applying the Rate of Interest to the aggregate outstanding nominal amount of the Notes represented by such Global Note; and (ii) in the case of definitive Notes, by applying the Rate of Interest to the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination without any further rounding; and (g) if the Notes are Floating Rate Notes, the applicable Final Terms will complete the provisions relating to interest.

5.2 Definitions In these Conditions, the following expressions have the following meanings: ‘‘Established Rate’’ means the rate for the conversion of the Specified Currency (including compliance with rules relating to roundings in accordance with applicable European Community regulations) into euro established by the Council of the European Union pursuant to Article 123 of the Treaty; ‘‘euro’’ means the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty; ‘‘Redenomination Date’’ means (in the case of interest bearing Notes) any date for payment of interest under the Notes or (in the case of Zero Coupon Notes) any date, in each case specified by the Issuer in the notice given to the Noteholders pursuant to Condition 5.1 (Redenomination – Redenomination) above and which falls on or after the date on which the country of the Specified Currency first participates in the third stage of European economic and monetary union; ‘‘Relevant Notes’’ means all Notes where the applicable Final Terms provide for a minimum Specified Denomination in the Specified Currency which is equivalent to at least euro 100,000 and which are admitted to trading on a regulated market in the European Economic Area; and ‘‘Treaty’’ means the Treaty establishing the European Community, as amended.

50 6. INTEREST 6.1 Interest on Fixed Rate Notes Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date. If the Notes are in definitive form, except as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified. As used in the Conditions, ‘‘Fixed Interest Period’’ means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date. Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to: (a) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Fixed Rate Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or (b) in the case of Fixed Rate Notes in definitive form, the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding. ‘‘Day Count Fraction’’ means, in respect of the calculation of an amount of interest, in accordance with this Condition 6.1 (Interest – Interest on Fixed Rate Notes): (i) if ‘‘Actual/Actual (ICMA)’’ is specified in the applicable Final Terms: (A) in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the ‘‘Accrual Period’’) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of: (1) the number of days in such Determination Period; and (2) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; or (B) in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of: (1) the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of: (x) the number of days in such Determination Period; and (y) the number of Determination Dates that would occur in one calendar year; and (2) the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year; and (ii) if ‘‘30/360’’ is specified in the applicable Final Terms, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360.

51 In these Conditions: ‘‘Determination Period’’ means each period from (and including) a Determination Date to but excluding the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date); and ‘‘sub-unit’’ means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, one cent.

6.2 Interest on Floating Rate Notes (a) Interest Payment Dates Each Floating Rate Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either: (i) the Specified Interest Payment Date(s) in each year specified in the applicable Final Terms; or (ii) if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each such date, together with each Specified Interest Payment Date, an ‘‘Interest Payment Date’’) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. Such interest will be payable in respect of each Interest Period (which expression shall, in these Conditions, mean the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date). If a Business Day Convention is specified in the applicable Final Terms: and (x) if there is no numerically corresponding day on the calendar month in which an Interest Payment Date should occur; or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is: (A) in any case where Specified Periods are specified in accordance with Condition 6.2(a)(ii) (Interest – Interest on Floating Rate Notes – Interest Payment Dates) above, the Floating Rate Convention, such Interest Payment Date: (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (b) below shall apply mutatis mutandis; or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event: (1) such Interest Payment Date shall be brought forward to the immediately preceding Business Day; and (2) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the Specified Period after the preceding applicable Interest Payment Date occurred; or (B) the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or (C) the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or (D) the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day. In these Conditions, ‘‘Business Day’’ means a day which is both: (a) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in each Additional Business Centre specified in the applicable Final Terms; and

52 (b) either: (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which if the Specified Currency is Australian dollars or New Zealand dollars shall be Sydney and Auckland, respectively); or (2) in relation to any sum payable in euro, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET 2) System (the ‘‘TARGET 2 System’’) is open.

(b) Rate of Interest The Rate of Interest payable from time to time in respect of Floating Rate Notes will be determined in the manner speciﬁed in the applicable Final Terms.

(i) ISDA Determination for Floating Rate Notes Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this subparagraph (i), ‘‘ISDA Rate’’ for an Interest Period means a rate equal to the Floating Rate that would be determined by the Principal Paying Agent under an interest rate swap transaction if the Principal Paying Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as of the Issue Date of the first Tranche of the Notes (the ‘‘ISDA Definitions’’) and under which: (A) the Floating Rate Option is as specified in the applicable Final Terms; (B) the Designated Maturity is a period specified in the applicable Final Terms; and (C) the relevant Reset Date is either: (1) if the applicable Floating Rate Option is based on the London interbank offered rate (‘‘LIBOR’’) or on the Euro-zone interbank offered rate (‘‘EURIBOR’’), the first day of that Interest Period; or (2) in any other case, as specified in the applicable Final Terms. For the purposes of this subparagraph (i), ‘‘Floating Rate’’, ‘‘Calculation Agent’’, ‘‘Floating Rate Option’’, ‘‘Designated Maturity’’ and ‘‘Reset Date’’ have the meanings given to those terms in the ISDA Definitions. Unless otherwise stated in the applicable Final Terms, the Minimum Rate of Interest shall be deemed to be zero.

(ii) Screen Rate Determination for Floating Rate Notes Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either: (A) the offered quotation; or (B) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations, (expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as of 11.00 a.m. (London time, in the case of LIBOR, or Brussels time, in the case of EURIBOR) (the ‘‘Specified Time’’) on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Principal Paying Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Principal Paying Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.

53 If the Relevant Screen Page is not available or if: (i) no offered quotation appears; or (ii) fewer than three offered quotations appear, in each case as at the Specified Time, the Principal Paying Agent shall request each of the Reference Banks to provide the Principal Paying Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate at approximately the Specified Time on the Interest Determination Date in question. If two or more of the Reference Banks provide the Principal Paying Agent with offered quotations, the Rate of Interest for the Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place with 0.000005 being rounded upwards) of the offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Principal Paying Agent. For the purposes of this subparagraph (ii), ‘‘Reference Banks’’ means, in the case of a determination of LIBOR, the principal London office of four major banks in the London inter-bank market and, in the case of a determination of EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank market, in each case selected by the Principal Paying Agent and approved in writing by the Trustee or as specified in the applicable Final Terms.

(c) Minimum Rate of Interest and/or Maximum Rate of Interest If the applicable Final Terms speciﬁes a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (b) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest. If the applicable Final Terms speciﬁes a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (b) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.

(d) Determination of Rate of Interest and calculation of Interest Amounts The Principal Paying Agent will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period. The Principal Paying Agent will calculate the amount of interest (the ‘‘Interest Amount’’) payable on the Floating Rate Notes for the relevant Interest Period by applying the Rate of Interest to: (i) in the case of Floating Rate Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or (ii) in the case of Floating Rate Notes in definitive form, the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate in definitive form is a multiple of the Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination without any further rounding. ‘‘Day Count Fraction’’ means, in respect of the calculation of an amount of interest in accordance with this Condition 6.2 (Interest – Interest on Floating Rate Notes): (i) if ‘‘Actual/Actual (ISDA)’’ or ‘‘Actual/Actual’’ is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of: (I) the actual number of days in that portion of the Interest Period falling in a leap year divided by 366; and (II) the actual number of days in that portion of the Interest Period falling in a non-leap year divided by 365);

54 (ii) if ‘‘Actual/365 (Fixed)’’ is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365; (iii) if ‘‘Actual/365 (Sterling)’’ is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; (iv) if ‘‘Actual/360’’ is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 360; (v) if ‘‘30/360’’, ‘‘360/360’’ or ‘‘Bond Basis’’ is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2 -Y1)] + [30 x (M2 -M1)] + (D2 -D1) Day Count Fraction = 360 where:

‘‘Y1’’ is the year, expressed as a number, in which the ﬁrst day of the Interest Period falls;

‘‘Y2’’ is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

‘‘M1’’ is the calendar month, expressed as a number, in which the ﬁrst day of the Interest Period falls;

‘‘M2’’ is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

‘‘D1’’ is the ﬁrst calendar day, expressed as a number, of the Interest Period, unless such number is 31, in which case D1 will be 30; and

‘‘D2’’ is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30; (vi) if ‘‘30E/360’’ or ‘‘Eurobond Basis’’ is speciﬁed in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2 -Y1)] + [30 x (M2 -M1)] + (D2 -D1) Day Count Fraction = 360 where:

‘‘Y1’’ is the year, expressed as a number, in which the ﬁrst day of the Interest Period falls;

‘‘Y2’’ is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

‘‘M1’’ is the calendar month, expressed as a number, in which the ﬁrst day of the Interest Period falls;

‘‘M2’’ is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

‘‘D1’’ is the ﬁrst calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1 will be 30; and

‘‘D2’’ is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31, in which case D2 will be 30; (vii) if ‘‘30E/360 (ISDA)’’ is speciﬁed in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2 -Y1)] + [30 x (M2 -M1)] + (D2 -D1) Day Count Fraction = 360

55 where:

‘‘Y1’’ is the year, expressed as a number, in which the ﬁrst day of the Interest Period falls;

‘‘Y2’’ is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

‘‘M1’’ is the calendar month, expressed as a number, in which the ﬁrst day of the Interest Period falls;

‘‘M2’’ is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;

‘‘D1’’ is the ﬁrst calendar day, expressed as a number, of the Interest Period, unless: (i) that day is the last day of February; or (ii) such number would be 31, in which case D1 will be 30; and

‘‘D2’’ is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless: (i) that day is the last day of February but not the Maturity Date; or (ii) such number would be 31, in which case D2 will be 30. (e) Linear Interpolation Where Linear Interpolation is specified hereon as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified hereon as applicable) or the relevant Floating Rate Option (where ISDA Determination is specified hereon as applicable), one of which shall be determined as if the Applicable Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which shall be determined as if the Applicable Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period provided however that if there is no rate available for the period of time next shorter or, as the case may be, next longer, then the Calculation Agent shall determine such rate at such time and by reference to such sources as it determines appropriate. ‘‘Applicable Maturity’’ means: (i) in relation to Screen Rate Determination, the period of time designated in the Reference Rate; and (ii) in relation to ISDA Determination, the Designated Maturity. (f) Notification of Rate of Interest and Interest Amounts The Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer, the Trustee, the other Paying Agents and any stock exchange on which the relevant Floating Rate Notes are for the time being listed and notice thereof to be published in accordance with Condition 15 (Notices) as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange on which the relevant Floating Rate Notes are for the time being listed and to the Noteholders in accordance with Condition 15 (Notices). For the purposes of this paragraph, the expression ‘‘London Business Day’’ means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for general business in London. (g) Determination or Calculation by Trustee If for any reason at any relevant time the Principal Paying Agent or, as the case may be, the Calculation Agent defaults in its obligation to determine the Rate of Interest or the Principal Paying Agent defaults in its obligation to calculate any Interest Amount in accordance with subparagraph (b)(i) or subparagraph (b) (ii) above or as otherwise specified in the applicable Final Terms, as the case may be, and in each case in accordance with paragraph (d) above, the Trustee shall determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the foregoing provisions of this Condition, but subject always to any Minimum Rate of Interest or

56 Maximum Rate of Interest specified in the applicable Final Terms), it shall deem fair and reasonable in all the circumstances or, as the case may be, the Trustee shall calculate the Interest Amount(s) in such manner as it shall deem fair and reasonable in all the circumstances and each such determination or calculation shall be deemed to have been made by the Principal Paying Agent or the Calculation Agent, as applicable. (h) Certificates to be final All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 6.2 (Interest – Interest on Floating Rate Notes), whether by the Principal Paying Agent or the Calculation Agent, shall (in the absence of wilful default, bad faith or manifest or proven error) be binding on the Issuer, the Principal Paying Agent, the Calculation Agent, the other Agents and all Noteholders, Receiptholders and Couponholders and (in the absence of wilful default or bad faith) no liability to the Issuer, any Guarantor, the Noteholders, Receiptholders or the Couponholders shall attach to the Principal Paying Agent, the Calculation Agent or the Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.

6.3 Interest on Partly Paid Notes In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid up nominal amount of such Notes.

6.4 Accrual of interest Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue until whichever is the earlier of: (a) the date on which all amounts due in respect of such Note have been paid; and (b) the date on which the full amount of the moneys payable in respect of such Note has been received by the Principal Paying Agent or the Registrar, as the case may be, and notice to that effect has been given to the Noteholders in accordance with Condition 15 (Notices)as provided in the Trust Deed.

7. PAYMENTS 7.1 Method of payment Subject as provided below: (a) payments in a Specified Currency other than euro will be made by credit or transfer to an account in the relevant Specified Currency maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively); and (b) payments in euro will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque. Payments will be subject in all cases to: (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9 (Taxation); and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 9 (Taxation)) any law implementing an intergovernmental approach thereto.

7.2 Presentation of deﬁnitive Bearer Notes, Receipts and Coupons Payments of principal in respect of deﬁnitive Bearer Notes will (subject as provided below) be made in the manner provided in Condition 7.1 (Payments – Method of payment) above only against presentation and surrender (or, in the case of part payment of any sum due,

57 endorsement) of definitive Bearer Notes, and payments of interest in respect of definitive Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)). Payments of instalments of principal (if any) in respect of definitive Bearer Notes, other than the final instalment, will (subject as provided below) be made in the manner provided in Condition 7.1 (Payments – Method of payment) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of the final instalment will be made in the manner provided in Condition 7.1 (Payments – Method of payment) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Bearer Note in accordance with the preceding paragraph. Each Receipt must be presented for payment of the relevant instalment together with the definitive Bearer Note to which it appertains. Receipts presented without the definitive Bearer Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date on which any definitive Bearer Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof. Fixed Rate Notes in definitive bearer form (other than Long Maturity Notes (as defined below)) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 9 (Taxation)) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 10 (Prescription)) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter. Upon any Fixed Rate Note in definitive bearer form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof. Upon the date on which any Floating Rate Note or Long Maturity Note in definitive bearer form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A ‘‘Long Maturity Note’’ is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note. If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Bearer Note.

7.3 Payments in respect of Bearer Global Notes Payments of principal and interest (if any) in respect of Notes represented by any Global Note in bearer form will (subject as provided below) be made in the manner specified above in relation to definitive Bearer Notes and otherwise in the manner specified in the relevant Global Note against presentation or surrender, as the case may be, of such Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made against presentation or surrender of any Global Note in bearer form, distinguishing between any payment of principal and any payment of interest, will be made on such Global Note by the Paying Agent to which it was presented and such record shall be prima facie evidence that the payment in question has been made.

58 7.4 Payments in respect of Registered Notes Payments of principal (other than instalments of principal prior to the final instalment) in respect of each Registered Note (whether or not in global form) will be made against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the Registered Note at the specified office of the Registrar or any of the Paying Agents. Such payments will be made by transfer to the Designated Account (as defined below) of the holder (or the first named of joint holders) of the Registered Note appearing in the register of holders of the Registered Notes maintained by the Registrar (the ‘‘Register’’) at the close of business on the third business day (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) before the relevant due date. Notwithstanding the previous sentence, if: (a) a holder does not have a Designated Account; or (b) the principal amount of the Notes held by a holder is less than U.S.$250,000 (or its approximate equivalent in any other Specified Currency), payment will instead be made by a cheque in the Specified Currency drawn on a Designated Bank (as defined below). For these purposes, ‘‘Designated Account’’ means the account (which, in the case of a payment in Japanese yen to a non-resident of Japan, shall be a non-resident account) maintained by a holder with a Designated Bank and identified as such in the Register and ‘‘Designated Bank’’ means (in the case of payment in a Specified Currency other than euro) a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively) and (in the case of a payment in euro) any bank which processes payments in euro. Payments of interest and payments of instalments of principal (other than the final instalment) in respect of each Registered Note (whether or not in global form) will be made by a cheque in the Specified Currency drawn on a Designated Bank and mailed by uninsured mail on the business day in the city where the specified office of the Registrar is located immediately preceding the relevant due date to the holder (or the first named of joint holders) of the Registered Note appearing in the Register at the close of business (in the relevant clearing system) on the day prior (whether or not such day is a business day) to the relevant due date (the ‘‘Record Date’’) at his address shown in the Register on the Record Date and at his risk. Upon application of the holder to the specified office of the Registrar in the city where the specified office of the Registrar is located not less than three business days before the due date for any payment of interest in respect of a Registered Note, the payment may be made by transfer on the due date in the manner provided in the preceding paragraph. Any such application for transfer shall be deemed to relate to all future payments of interest (other than interest due on redemption) and instalments of principal (other than the final instalment) in respect of the Registered Notes which become payable to the holder who has made the initial application until such time as the Registrar is notified in writing to the contrary by such holder. Payment of the interest due in respect of each Registered Note on redemption and the final instalment of principal will be made in the same manner as payment of the principal amount of such Registered Note. Holders of Registered Notes will not be entitled to any interest or other payment for any delay in receiving any amount due in respect of any Registered Note as a result of a cheque posted in accordance with this Condition arriving after the due date for payment or being lost in the post. No commissions or expenses shall be charged to such holders by the Registrar in respect of any payments of principal or interest in respect of the Registered Notes. All amounts payable to DTC or its nominee as registered holder of a Registered Global Note in respect of Notes denominated in a Specified Currency other than U.S. dollars shall be paid by transfer by the Registrar to an account in the relevant Specified Currency of the relevant exchange agent on behalf of DTC or its nominee for conversion into and payment in U.S. dollars in accordance with the provisions of the Agency Agreement. None of the Issuer, the Trustee or the Agents will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

59 7.5 General provisions applicable to payments The holder of a Global Note shall be the only person entitled to receive payments in respect of Notes represented by such Global Note and the Issuer and any Guarantor will be discharged by payment to, or to the order of, the holder of such Global Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the beneficial holder of a particular nominal amount of Notes represented by such Global Note must look solely to Euroclear, Clearstream, Luxembourg or DTC, as the case may be, for his share of each payment so made by the Issuer or any Guarantor to, or to the order of, the holder of such Global Note. Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States if: (a) the Issuer has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Bearer Notes in the manner provided above when due; (b) payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and (c) such payment is then permitted under United States law without involving, in the opinion of the Issuer or the Guarantor, as the case may be, adverse tax consequences to the Issuer or the Guarantor, respectively.

7.6 Payment Day If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, ‘‘Payment Day’’ means any day which (subject to Condition 10 (Prescription)) is: (a) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: (i) in the case of Notes in definitive form only, the relevant place of presentation; and (ii) each Additional Financial Centre specified in the applicable Final Terms; (b) either: (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which if the Specified Currency is Australian dollars or New Zealand dollars shall be Sydney and Auckland, respectively); or (2) in relation to any sum payable in euro, a day on which the TARGET 2 System is open; and (c) in the case of any payment in respect of a Registered Global Note denominated in a Specified Currency other than U.S. dollars and registered in the name of DTC or its nominee and in respect of which an accountholder of DTC (with an interest in such Registered Global Note) has elected to receive any part of such payment in U.S. dollars, a day on which commercial banks are not authorised or required by law or regulation to be closed in New York City.

7.7 Interpretation of principal and interest Any reference in the Conditions to principal in respect of the Notes shall be deemed to include, as applicable: (a) any additional amounts which may be payable with respect to principal under Condition 9 (Taxation) or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed;

60 (b) the Final Redemption Amount of the Notes; (c) the Early Redemption Amount of the Notes; (d) the Optional Redemption Amount(s) (if any) of the Notes; (e) in relation to Notes redeemable in instalments, the Instalment Amounts; (f) in relation to Zero Coupon Notes, the Amortised Face Amount (as deﬁned in Condition 8.5 (Redemption and Purchase – Early Redemption Amounts)); and (g) any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes. Any reference in the Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 9 (Taxation) or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed.

8. REDEMPTION AND PURCHASE 8.1 Redemption at maturity Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in the applicable Final Terms in the relevant Specified Currency on the Maturity Date.

8.2 Redemption for tax reasons The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this Note is not a Floating Rate Note) or on any Interest Payment Date (if this Note is a Floating Rate Note), on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Principal Paying Agent and, in accordance with Condition 15 (Notices), the Noteholders (which notice shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice that: (a) on the occasion of the next payment due under the Notes, the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 9 (Taxation)or any Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such additional amounts, in each case as a result of any change in, or amendment to, the laws or regulations of a Tax Jurisdiction (as defined in Condition 9 (Taxation)) or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and (b) such obligation cannot be avoided by the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by an Authorised Signatory of the Issuer or, as the case may be, the Guarantor stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer or, as the case may be, the Guarantor has or will become obliged to pay such additional amounts as a result of such change or amendment and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders, the Receiptholders and the Couponholders. Notes redeemed pursuant to this Condition 8.2 (Redemption and Purchase – Redemption for tax reasons) will be redeemed at their Early Redemption Amount referred to in Condition 8.5 (Redemption and Purchase – Early Redemption Amounts) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.

61 8.3 Redemption at the option of the Issuer (Issuer Call) If Issuer Call is speciﬁed in the applicable Final Terms, the Issuer may, having given:

(a) not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition 15 (Notices); and

(b) not less than 15 days before the giving of the notice referred to in (a) above, notice to the Trustee and the Principal Paying Agent and, in the case of a redemption of Registered Notes, the Registrar;

(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the Optional Redemption Amount(s) specified in the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the relevant Optional Redemption Date. Any such redemption must be of a nominal amount not less than the Minimum Redemption Amount and not more than the Maximum Redemption Amount in each case as may be specified in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes to be redeemed (‘‘Redeemed Notes’’) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg and/or DTC, in the case of Redeemed Notes represented by a Global Note, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the ‘‘Selection Date’’). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 15 (Notices) not less than 15 days prior to the date fixed for redemption. No exchange of the relevant Global Note will be permitted during the period from (and including) the Selection Date to (and including) the date fixed for redemption pursuant to this Condition 8.3 (Redemption and Purchase – Redemption at the option of the Issuer (Issuer Call)) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 15 (Notices) at least five days prior to the Selection Date.

8.4 Redemption at the option of the Noteholders

(a) Optional Investor Put If Investor Put is specified in the applicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition 15 (Notices) not less than 15 nor more than 30 days’ notice the Issuer will, upon the expiry of such notice, redeem such Note on the Optional Redemption Date and at the Optional Redemption Amount (each as specified in the applicable Final Terms) together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date. Registered Notes may be redeemed under this Condition 8.4 (Redemption and Purchase – Redemption at the option of the Noteholders)in any multiple of their lowest Specified Denomination.

(b) Procedures to Exercise Put To exercise the right to require redemption of this Note the holder of this Note must, if this Note is in definitive form and held outside Euroclear and Clearstream, Luxembourg, deliver, at the specified office of any Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) at any time during normal business hours of such Paying Agent or, as the case may be, the Registrar falling within the notice period, a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent or, as the case may be, the Registrar (a ‘‘Put Notice’’) and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an address) to which payment is to be made under this Condition and, in the case of Registered Notes, the nominal amount thereof to be redeemed and, if less than the full nominal amount of the Registered Notes so surrendered is to be redeemed, an address to which a new Registered Note in respect of the balance of such Registered Notes is to be sent subject to and in accordance with the provisions of Condition 2.2 (Transfers of Registered Notes – Transfers of Registered Notes in definitive form). If this Note is in definitive bearer form, the Put Notice must be accompanied by this Note or evidence satisfactory to the Paying Agent concerned that this Note will, following delivery of the Put Notice, be held to its order or under its control.

62 If this Note is represented by a Global Note or is in deﬁnitive form and held through Euroclear, Clearstream, Luxembourg or DTC, to exercise the right to require redemption of this Note the holder of this Note must, within the notice period, give notice to the Principal Paying Agent of such exercise in accordance with the standard procedures of Euroclear, Clearstream, Luxembourg and DTC (which may include notice being given on his instruction by Euroclear, Clearstream, Luxembourg, DTC or any depositary for them to the Principal Paying Agent by electronic means) in a form acceptable to Euroclear, Clearstream, Luxembourg and DTC from time to time and, if this Note is represented by a Global Note, at the same time present or procure the presentation of the relevant Global Note to the Principal Paying Agent for notation accordingly. Any Put Notice or other notice given in accordance with the standard procedures of Euroclear, Clearstream, Luxembourg and DTC given by a holder of any Note pursuant to this Condition 8.4 (Redemption and Purchase – Redemption at the option of the Noteholders) shall be irrevocable except where, prior to the due date of redemption, an Event of Default has occurred and the Trustee has declared the Notes to be due and payable pursuant to Condition 11 (Events of Default and Enforcement), in which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given pursuant to this Condition 8.4 (Redemption and Purchase – Redemption at the option of the Noteholders) and instead to declare such Note forthwith due and payable pursuant to Condition 11 (Events of Default and Enforcement).

8.5 Early Redemption Amounts For the purpose of Condition 8.2 (Redemption and Purchase – Redemption for tax reasons) above and Condition 11 (Events of Default and Enforcement), each Note will be redeemed at its Early Redemption Amount calculated as follows: (a) in the case of a Note with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof; (b) in the case of a Note (other than a Zero Coupon Note but including an Instalment Note and a Partly Paid Note) with a Final Redemption Amount which is or may be less or greater than the Issue Price at the amount specified in, or determined in the manner specified in, the applicable Final Terms or, if no such amount or manner is so specified in the applicable Final Terms, at its nominal amount; or (c) in the case of a Zero Coupon Note, at an amount (the ‘‘Amortised Face Amount’’) calculated in accordance with the following formula: Early Redemption Amount = RP x (1 + AY)y where: RP means the Reference Price; AY means the Accrual Yield expressed as a decimal; and y is a fraction the numerator of which is equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator of which is 360, (the ‘‘Early Redemption Amount’’).

8.6 Instalments Instalment Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In the case of early redemption, the Early Redemption Amount will be determined pursuant to Condition 8.5 (Redemption and Purchase – Early Redemption Amounts) above.

8.7 Partly Paid Notes Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition, as completed by the applicable Final Terms.

63 8.8 Purchases The Issuer or any Subsidiary may at any time purchase Notes (provided that, in the case of deﬁnitive Bearer Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. Such Notes may be held, reissued, resold or, at the option of the Issuer, surrendered to any Paying Agent and/or the Registrar for cancellation.

8.9 Cancellation All Notes which are redeemed will forthwith be cancelled (together with all unmatured Receipts, Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and any Notes purchased and cancelled pursuant to Condition 8.8 (Redemption and Purchase – Purchases) above (together with all unmatured Receipts, Coupons and Talons cancelled therewith) shall be forwarded to the Principal Paying Agent for cancellation and cannot be reissued or resold.

8.10 Late payment on Zero Coupon Notes If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to Condition 8.1 (Redemption and Purchase – Redemption at maturity), 8.2 (Redemption and Purchase – Redemption for tax reasons), 8.3 (Redemption and Purchase – Redemption at the option of the Issuer (Issuer Call)) or 8.4 (Redemption and Purchase – Redemption at the option of the Noteholders) above or upon its becoming due and repayable as provided in Condition 11 (Events of Default and Enforcement) is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in Condition 8.5(c) (Redemption and Purchase – Early Redemption Amounts) above as though the references therein to the date ﬁxed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of: (a) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and (b) the date on which the full amount of the moneys payable in respect of such Zero Coupon Notes has been received by the Principal Paying Agent or the Registrar or the Trustee and notice to that effect has been given to the Noteholders in accordance with Condition 15 (Notices).

9. TAXATION All payments of principal and interest in respect of the Notes, Receipts and Coupons by the Issuer will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature imposed or levied by or on behalf of any Tax Jurisdiction unless such withholding or deduction is required by law. In such event, the Issuer will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes, Receipts or Coupons after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note, Receipt or Coupon: (a) presented for payment in a Tax Jurisdiction; or (b) presented for payment by or on behalf of a holder who is liable for such taxes or duties in respect of such Note, Receipt or Coupon by reason of his having some connection with a Tax Jurisdiction other than the mere holding of such Note, Receipt or Coupon; or (c) presented for payment more than 30 days after the Relevant Date (as deﬁned below) except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day assuming that day to have been a Payment Day (as deﬁned in Condition 7.6 (Payments – Payment Day)); or

64 (d) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC (the ‘‘EU Savings Directive’’) or any other directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or (e) presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note, Receipt or Coupon to another Paying Agent in a Member State of the European Union. As used herein: (i) ‘‘Tax Jurisdiction’’ means: (a) in the case of payments by the Issuer, the United Arab Emirates or any Emirate therein or any political subdivision or any authority thereof or therein having power to tax; or (b) in the case of payments by any Guarantor, the jurisdiction of incorporation of such Guarantor or any political subdivision or any authority thereof or therein having power to tax; and (ii) the ‘‘Relevant Date’’ means the date on which such payment ﬁrst becomes due, except that, if the full amount of the moneys payable has not been duly received by the Trustee or the Principal Paying Agent or the Registrar, as the case may be, on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 15 (Notices).

10. PRESCRIPTION The Notes (whether in bearer or registered form), Receipts and Coupons will become void unless presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 9 (Taxation)) therefor. There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 7.2 (Payments – Presentation of definitive Bearer Notes, Receipts and Coupons) or any Talon which would be void pursuant to Condition 7.2 (Payments – Presentation of definitive Bearer Notes, Receipts and Coupons).

11. EVENTS OF DEFAULT AND ENFORCEMENT 11.1 Events of Default The Trustee at its discretion may, and if so requested in writing by the holders of at least one- fifth in aggregate nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall (subject in each case to being indemnified and/or prefunded and/ or secured to its satisfaction) (but, in the case of the happening of any of the events described in paragraph (b), only if the Trustee shall have certified in writing to the Issuer that such event is, in its sole opinion, materially prejudicial to the interests of the Noteholders) give notice in writing to the Issuer that each Note is, and each Note shall thereupon immediately become, due and repayable at its Early Redemption Amount together with accrued interest as provided in the Trust Deed if any of the following events (each an ‘‘Event of Default’’) shall occur and be continuing: (a) if default is made in the payment of any principal or interest due in respect of the Notes or any of them and the default continues for a period of seven days in the case of principal and 14 days in the case of interest; or (b) if the Issuer or any Guarantor fails to perform or observe any of its other obligations under: (i) these Conditions or the Trust Deed; or (ii) the Guarantee it has entered into, respectively and (except in any case where, in the opinion of the Trustee, the failure is incapable of remedy when no such continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days next following the service by the Trustee on the Issuer of notice requiring the same to be remedied; or (c) (i) the holders of any Indebtedness of the Issuer, any Guarantor or any Principal Subsidiary accelerate such Indebtedness or declare such Indebtedness to be due and payable or required to be prepaid (other than by a regularly scheduled required prepayment or pursuant to an option granted to the holders by the terms of such

65 Indebtedness), prior to the stated maturity thereof; or (ii) the Issuer, any Guarantor or any Principal Subsidiary fails to pay in full any principal of, or interest on, any of its Indebtedness when due (after expiration of any applicable grace period); or (iii) any Security Interest given by the Issuer, any Guarantor or a Principal Subsidiary for any Indebtedness becomes enforceable and any step is taken to enforce the Security Interest (including the taking of possession or the appointment of a receiver, manager or other similar person, but excluding the issue of any notiﬁcation to the Issuer, the Guarantor or the relevant Principal Subsidiary, as the case may be, that such Security Interest has become enforceable); or (iv) any guarantee or indemnity of any Indebtedness of others given by the Issuer, any Guarantor or any Principal Subsidiary shall not be honoured when due and called upon; provided that no event described in this paragraph (c) shall constitute an Event of Default unless the Indebtedness or other relative liability due and unpaid, either alone or when aggregated (without duplication) with other amounts of Indebtedness and/or liabilities due and unpaid relating to all (if any) of the events speciﬁed in (i) to (iv) (inclusive) above which have occurred and are continuing, amounts to at least U.S.$50,000,000 (or its equivalent in any other currency); or

(d) if any Governmental Authority takes any deﬁnitive action to deprive the Issuer of the use or ownership of all or any material part of the assets of the Issuer and its subsidiaries (taken as a whole) through the seizure, expropriation, nationalisation or acquisition of such assets, other than: (a) any such action in respect of which the consideration or compensation paid to the Issuer is: (i) at least equal to the fair market value of such assets (as determined by an Independent Financial Advisor); and (ii) paid in cash at the time of such action; or (b) where such action has been, or subsequently within 90 days thereof, is approved, adopted or ratiﬁed by the Board of Directors of the Issuer; or

(e) if any order is made by any competent court or resolution passed for the winding up or dissolution of the Issuer, any Guarantor or any Principal Subsidiary, save in connection with a Permitted Reorganisation; or

(f) if: (i) proceedings are initiated against the Issuer, any Guarantor or any Principal Subsidiary under any applicable liquidation, insolvency, composition, reorganisation or other similar laws, or an application is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator or other similar official, or an administrative or other receiver, manager, administrator or other similar official is appointed, in relation to the Issuer, any Guarantor or any Principal Subsidiary or, as the case may be, in relation to all or substantially all of the undertaking or assets of any of them, or an encumbrancer takes possession of all or substantially all of the undertaking or assets of any of them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against all or substantially all of the undertaking or assets of any of them; and (ii) in any case (other than the appointment of an administrator) is not discharged within 14 days, save in connection with a Permitted Reorganisation; or

(g) if the Issuer, any Guarantor or any Principal Subsidiary initiates or consents to judicial proceedings relating to itself under any applicable liquidation, insolvency, composition, reorganisation or other similar laws (including the obtaining of a moratorium) or makes a conveyance or assignment for the beneﬁt of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors), save in connection with a Permitted Reorganisation; or

(h) if: (i) the validity of the Notes or any Guarantee is contested by the Issuer or the Guarantor, respectively; or (ii) the Issuer or any Guarantor shall deny any of its obligations under the Notes or the Guarantee, respectively; or (iii) as a result of any change in, or amendment to, the laws or regulations in the United Arab Emirates or any Emirate therein or, as the case may be, the jurisdiction of incorporation of any Guarantor, which change or amendment takes place after the date on which agreement is reached to issue the ﬁrst Tranche of the Notes or of the relevant Guarantee, as the case may be: (A) it becomes unlawful for the Issuer or the Guarantor to perform or comply with any of its

66 obligations under or in respect of: (I) the Notes or the Agency Agreement; or (II) Guarantee, respectively; or (B) any of such obligations becomes unenforceable or invalid; or (i) if any event occurs which, under the laws of any relevant jurisdiction, has or may have, in the Trustee’s sole opinion, an analogous effect to any of the events referred to in paragraphs (e) to (g) above.

11.2 Enforcement The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes, the Receipts and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes, the Receipts or the Coupons unless: (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by the holders of at least one-fifth in aggregate nominal amount of the Notes then outstanding; and (b) it shall have been indemnified and/or prefunded and/or secured to its satisfaction. No Noteholder, Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing.

11.3 Definitions For the purposes of the Conditions: ‘‘Indebtedness’’ means all obligations, and guarantees or indemnities in respect of obligations, for moneys borrowed or raised (whether or not evidenced by bonds, debentures, notes or other similar instruments) other than any such obligations, guarantees or indemnities owing or given by one member of the Group to another member of the Group; ‘‘Group’’ means the Issuer, its consolidated subsidiaries and its associated companies and joint ventures; ‘‘Permitted Reorganisation’’ means: (a) any winding-up or dissolution of a Principal Subsidiary or any Guarantor whereby the undertaking or assets of that Principal Subsidiary or Guarantor are transferred to or otherwise vested in the Issuer and/or any of its other Subsidiaries provided that, in the case of any Guarantor and such transfer to or vesting in another Subsidiary, at the same time or prior to any such transfer or vesting the payment of principal and interest on the Notes and all other amounts payable by the Issuer under or pursuant to the Trust Deed has been guaranteed by such other Subsidiary by its assumption of the Guarantor’s obligations under the Guarantee it has entered into; or (b) any composition or other similar arrangement on terms previously approved by the Trustee or by an Extraordinary Resolution. ‘‘Government Authority’’ means the government or any political subdivision of the government of the United Arab Emirates, any agency, department or any other administrative authority or instrumentality thereof, including, without limitation, any local or other governmental agency or other authority within the United Arab Emirates; and ‘‘Independent Financial Adviser’’ means any accounting firm of internationally recognised standing or any independent investment banking firm of internationally recognised standing, as appointed by the Issuer.

12. REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the speciﬁed ofﬁce of the Principal Paying Agent (in the case of Bearer Notes, Receipts or Coupons) or the Registrar (in the case of Registered Notes) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued.

67 13. AGENTS The names of the initial Agents and their initial specified offices are set out below. The Issuer is entitled, with the prior written approval of the Trustee, to vary or terminate the appointment of any Agent and/or appoint additional or other Agents and/or approve any change in the specified office through which any Agent acts, provided that: (a) there will at all times be a Principal Paying Agent and a Registrar; (b) so long as the Notes are listed on any stock exchange or admitted to trading by any other relevant authority, there will at all times be a Paying Agent (in the case of Bearer Notes) and a Transfer Agent (in the case of Registered Notes) with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority; (c) so long as any of the Registered Global Notes payable in a Specified Currency other than U.S. dollars are held through DTC or its nominee, there will at all times be an exchange agent with a specified office in New York City; and (d) there will at all times be a Paying Agent in a Member State of the European Union that will not be obliged to withhold or deduct tax pursuant to the EU Savings Directive or any other directive implementing the conclusions of the ECOFIN Council meeting of 26- 27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive. In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 7.5 (Payments – General provisions applicable to payments). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 15 (Notices). In acting under the Agency Agreement, the Agents act solely as agents of the Issuer and any Guarantor and, in certain circumstances specified therein, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholder, Receiptholder or Couponholder. The Agency Agreement contains provisions permitting any entity into which any Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor agent.

14. EXCHANGE OF TALONS On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of any Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 10 (Prescription).

15. NOTICES All notices regarding the Bearer Notes will be deemed to be validly given if published in a leading English language daily newspaper of general circulation in London. It is expected that any such publication in a newspaper will be made in the Financial Times in London. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules of any stock exchange or other relevant authority on which the Bearer Notes are for the time being listed or by which they have been admitted to trading. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers. If publication as provided above is not practicable, a notice will be given in such other manner, and will be deemed to have been given on such date, as the Trustee shall approve. All notices regarding the Registered Notes will be deemed to be validly given if sent by first class mail or (if posted to an address overseas) by airmail to the holders (or the first named of joint holders) at their respective addresses recorded in the Register and will be deemed to have been given on the fourth day after mailing and, in addition, for so long as any Registered Notes

68 are listed on a stock exchange or are admitted to trading by another relevant authority and the rules of that stock exchange or relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules. Until such time as any deﬁnitive Notes are issued, there may, so long as any Global Notes representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream, Luxembourg and/or DTC, be substituted for such publication in such newspaper(s) the delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or DTC for communication by them to the holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange or are admitted to trading by another relevant authority and the rules of that stock exchange or relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules. Any such notice shall be deemed to have been given to the holders of the Notes on the third day after the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg and/or DTC. Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in deﬁnitive form) with the relative Note or Notes, with the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the Principal Paying Agent or the Registrar through Euroclear and/or Clearstream, Luxembourg and/or DTC, as the case may be, in such manner as the Principal Paying Agent, the Registrar and Euroclear and/or Clearstream, Luxembourg and/or DTC, as the case may be, may approve for this purpose.

16. MEETINGS OF NOTEHOLDERS, MODIFICATION, WAIVER AND SUBSTITUTION The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Receipts, the Coupons or any of the provisions of the Trust Deed. Such a meeting may be convened by the Issuer, any Guarantor or the Trustee and shall be convened by the Issuer if required in writing by Noteholders holding not less than ten per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes, the Receipts or the Coupons or the Trust Deed (including reducing or cancelling the amount payable or, where applicable, modifying, except where such modification is in the opinion of the Trustee bound to result in an increase, the method of calculating the amount payable or modifying the date of payment or, where applicable, the method of calculating the date of payment in respect of any principal or interest in respect of the Notes or altering the currency of payment of the Notes, the Receipts or the Coupons), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not less than one-third in nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting, and on all Receiptholders and Couponholders. The expression ‘‘Extraordinary Resolution’’ is defined in the Trust Deed to mean either: (i) a resolution passed at a meeting duly convened and held by a majority consisting of not less than three-fourths of the votes cast; or (ii) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes. The Trustee may agree, without the consent of the Noteholders, the Receiptholders or the Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of the Notes or the Trust Deed, the Agency Agreement or the Calculation Agency Agreement (other than in respect of those matters set out in paragraph 7 of Schedule 3 to the Trust Deed), or determine, without any such consent as aforesaid, that any Event of Default or potential Event of Default shall not be treated as such, where, in any such case, it is not, in the sole opinion of the Trustee, materially prejudicial to

69 the interests of the Noteholders so to do or may agree, without any such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest error. Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders and any such modification shall be notified to the Noteholders in accordance with Condition 15 (Notices) as soon as practicable thereafter. In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation or determination), the Trustee shall have regard to the general interests of the Noteholders as a class (but shall not have regard to any interests arising from circumstances particular to individual Noteholders, Receiptholders or Couponholders whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders, Receiptholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder, Receiptholder or Couponholder be entitled to claim, from the Issuer, any Guarantor, the Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon individual Noteholders, Receiptholders or Couponholders except to the extent already provided for in Condition 9 (Taxation) and/or any undertaking or covenant given in addition to, or in substitution for, Condition 9 (Taxation) pursuant to the Trust Deed. The Trustee may, without the consent of the Noteholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition) as the principal debtor under the Notes, the Receipts, the Coupons and the Trust Deed of another company, being a Subsidiary of the Issuer, subject to: (i) the Notes being unconditionally and irrevocably guaranteed by the Issuer; (ii) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution; and (iii) certain other conditions set out in the Trust Deed being complied with.

17. INDEMNIFICATION OF THE TRUSTEE AND TRUSTEE CONTRACTING WITH THE ISSUER The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified and/or prefunded and/or secured to its satisfaction. The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia: (a) to enter into business transactions with the Issuer and/or any of its Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of its Subsidiaries; (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders, Receiptholders or Couponholders; and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

18. FURTHER ISSUES The Issuer shall be at liberty from time to time without the consent of the Noteholders, the Receiptholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the ﬁrst payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding Notes. The Issuer may offer additional notes with original issue discount (the ‘‘OID’’) for U.S. federal income tax purposes as part of a further issue. Purchasers of notes after the date of any further issue may not be able to differentiate between notes sold as part of the further issue and previously issued notes. If the Issuer were to issue additional notes with OID, purchasers of notes after such further issue may be required to accrue OID (or greater amounts of OID than they would have otherwise accrued) with respect to their notes. This may affect the price of outstanding Notes following a further issuance.

70 19. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 Other than any Guarantor, no person shall have any right to enforce any term or condition of this Note under the Contracts (Rights of Third Parties) Act 1999, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

20. GOVERNING LAW AND DISPUTE RESOLUTION 20.1 Governing law The Trust Deed, the Agency Agreement, the Notes, the Receipts and the Coupons and any non- contractual obligations arising out of or in connection with the Trust Deed, the Agency Agreement, the Notes (including the remaining provisions of this Condition) the Receipts and the Coupons, are and shall be governed by, and construed in accordance with, English law.

20.2 Agreement to arbitrate Subject to Condition 20.3 (Governing Law and Dispute Resolution – Option to litigate), any dispute, claim, difference or controversy arising out of, relating to or having any connection with the Notes (including any dispute as to their existence, validity, interpretation, performance, breach or termination or the consequences of their nullity and any dispute relating to any non- contractual obligations arising out of or in connection with them) (a ‘‘Dispute’’) shall be referred to and ﬁnally resolved by arbitration in accordance with the Arbitration Rules (the ‘‘Rules’’) of the London Court of International Arbitration (the ‘‘LCIA’’), which Rules (as amended from time to time) are deemed to be incorporated by reference into this Condition. For these purposes: (a) the seat of arbitration shall be London; (b) there shall be three arbitrators, each of whom shall be disinterested in the arbitration, shall have no connection with any party thereto and shall be an attorney experienced in international securities transactions. The parties to the Dispute shall each nominate one arbitrator and both arbitrators in turn shall appoint a further arbitrator who shall be the chairman of the tribunal. In cases where there are multiple claimants and/or multiple respondents, the class of claimants jointly, and the class of respondents jointly shall each nominate one arbitrator. In the event that one party or both fails to nominate an arbitrator within the time limits speciﬁed by the Rules, such arbitrator(s) shall be appointed by the LCIA. If the party nominated arbitrators fail to nominate the third arbitrator within 15 days of the appointment of the second arbitrator, such arbitrator shall be appointed by the LCIA; and (c) the language of the arbitration shall be English.

20.3 Option to litigate Notwithstanding Condition 20.2 (Governing Law and Dispute Resolution – Agreement to arbitrate) above, the Trustee may, in the alternative, and at its sole discretion, by notice in writing to the Issuer: (a) within 28 days of service of a Request for Arbitration (as defined in the Rules); or (b) in the event no arbitration is commenced, require that a Dispute be heard by a court of law. If the Trustee gives such notice, the Dispute to which such notice refers shall be determined in accordance with Condition 20.4 (Governing Law and Dispute Resolution – Effect of exercise of option to litigate) and, subject as provided below, any arbitration commenced under Condition 20.2 (Governing Law and Dispute Resolution – Agreement to arbitrate) in respect of that Dispute will be terminated. Each of the Trustee and the recipient of such notice will bear its own costs in relation to the terminated arbitration. If any notice to terminate is given after service of any Request for Arbitration in respect of any Dispute, the Trustee must also promptly give notice to the LCIA Court and to any Tribunal (each as defined in the Rules) already appointed in relation to the Dispute that such Dispute will be settled by the courts. Upon receipt of such notice by the LCIA Court, the arbitration and any appointment of any arbitrator in relation to such Dispute will immediately terminate. Any such arbitrator will be deemed to be functus officio. The termination is without prejudice to:

71 (i) the validity of any act done or order made by that arbitrator or by the court in support of that arbitration before his appointment is terminated; (ii) his entitlement to be paid his proper fees and disbursements; and (iii) the date when any claim or defence was raised for the purpose of applying any limitation bar or any similar rule or provision.

20.4 Effect of exercise of option to litigate In the event that a notice pursuant to Condition 20.3 (Governing Law and Dispute Resolution – Option to litigate) is issued, the following provisions shall apply: (a) subject to paragraph (c) below, the courts of England shall have exclusive jurisdiction to settle any Dispute and the Issuer submits to the exclusive jurisdiction of such courts; (b) the Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary; and (c) this Condition 20.4 (Governing Law and Dispute Resolution – Effect of exercise of option to litigate) and, subject as provided below, any arbitration commenced under Condition 20.2 (Governing Law and Dispute Resolution – Agreement to arbitrate) is for the beneﬁt of the Trustee, the Noteholders, the Receiptholders and the Couponholders only. As a result, and notwithstanding paragraph (a) above, the Trustee may take proceedings relating to a Dispute (‘‘Proceedings’’) in any other courts with jurisdiction. To the extent allowed by law, the Trustee may take concurrent Proceedings in any number of jurisdictions.

20.5 Appointment of Process Agent The Issuer appoints Law Debenture Corporate Services Limited, at its registered ofﬁce at Fifth Floor, 100 Wood Street, London EC2V 7EX, as its agent for service of process, and undertakes that, in the event of such agent ceasing so to act or ceasing to be registered in England, it will appoint another person approved by the Trustee as its agent for service of process in England in respect of any Proceedings. Nothing herein shall affect the right to serve proceedings in any other manner permitted by law.

20.6 Waiver of immunity The Issuer hereby irrevocably and unconditionally waives with respect to the Notes, the Receipts and the Coupons any right to claim sovereign or other immunity from jurisdiction or execution and any similar defence and irrevocably and unconditionally consents to the giving of any relief or the issue of any process, including without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment made or given in connection with any Proceedings.

20.7 Other documents The Issuer has in the Trust Deed and the Agency Agreement made provision for arbitration and appointed an agent for service of process in terms substantially similar to those set out above.

72 USE OF PROCEEDS

The net proceeds from each issue of Notes will be applied by the Issuer for its general corporate purposes.

73 OVERVIEW OF THE UAE

Introduction The UAE is a federation of seven Emirates, Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah and Ras Al Khaimah. Formerly known as the Trucial States, the Emirates were British protectorates until they achieved independence in December 1971 and merged to form the federation of the UAE. Each Emirate has a local government headed by the Ruler of the Emirate. There is a UAE Government which is headed by the President. The federal budget is principally funded by Abu Dhabi. The UAE as a whole extends along the West coast of the Arabian Gulf, from the coast of Saudi Arabia near the base of the Qatar peninsula in the West to Ras Al Khaimah in the North and across the Mussandum peninsula to the Gulf of Oman in the East, covering an area of 83,699 square kilometres in total. Abu Dhabi is located in the western and south western part of the UAE along the southern coast of the Arabian Gulf. The total area of the Emirate is 59,402 square kilometres, which represents approximately 87 per cent. of the total area of the UAE. The territorial waters of the Emirate include approximately 200 islands off its coastline.

Governance, Legislation and Judiciary UAE Constitution The original constitution of the UAE (the ‘‘Constitution’’) was initially provisional and provided the legal framework for the Federation. The Constitution was made permanent pursuant to a constitutional amendment in May 1996. The major principle adopted by the Constitution was that jurisdiction for enacting substantive legislation was confined to the UAE Government, but the local governments of the seven Emirates were authorised to regulate those matters that were not the subject of legislation by the UAE Government. Pursuant to Articles 120 and 121 of the Constitution, the UAE Government is responsible for foreign affairs; security and defence; nationality and immigration; education; public health; the currency; postal, telephone and other communications services; air traffic control and the licensing of aircraft and a number of other matters including labour relations; banking; the delimitation of territorial waters; and the extradition of criminals. Federal matters are regulated through a number of specially created federal ministries which include the Ministries of Foreign Affairs, Defence, Justice, Finance and Economy. Although most of the UAE Government ministries are based in Abu Dhabi, many also maintain offices in Dubai. The UAE’s monetary and exchange rate policy is managed on a federal basis by the UAE Central Bank. Article 122 of the Constitution states that the Emirates shall have jurisdiction in all matters not assigned to the exclusive jurisdiction of the Federation, in accordance with the provision of the preceding two Articles. The individual Emirates are given flexibility in the governance and management of their own Emirates. The Constitution permits individual Emirates to elect to maintain their own competencies in certain sectors. The natural resources and wealth in each Emirate are considered to be the public property of that Emirate. Each Emirate manages its own budget on an independent basis and no Emirate has any obligation to contribute to the budget of any other Emirate. Each Emirate makes contributions to the federal budget in agreed amounts.

Governance The governance of the UAE is split between: (i) the Federal Supreme Council of the Rulers of all the Emirates (the ‘‘Supreme Council’’); (ii) the Federal Council of Ministers (the ‘‘Cabinet’’); and (iii) the Federal National Council (the ‘‘Council’’).

Federal Supreme Council The Supreme Council is the highest federal governing body and consists of the Rulers of the seven Emirates. The Supreme Council elects from its own membership the President and the Vice President of the UAE (for renewable ﬁve-year terms). Decisions relating to substantive matters are decided by a

74 majority vote of five Emirates, provided that the votes of both Dubai and Abu Dhabi are included in that majority, but matters that are purely procedural are decided by a simple majority vote. The Supreme Council is vested with legislative as well as executive powers. It ratifies federal laws and decrees, plans general policy and approves the nomination of the Prime Minister and accepts his resignation. It also relieves him from his post upon the recommendation of the President. The then Ruler of Abu Dhabi, Sheikh Zayed bin Sultan Al Nahyan, was elected in 1971 as the first President of the UAE and was re-elected as President for successive five-year terms until his death in November 2004. Sheikh Zayed bin Sultan Al Nahyan was succeeded by his son Sheikh Khalifa bin Zayed Al Nahyan as Ruler of Abu Dhabi and was elected as President of the UAE in November 2004 by the members of the Supreme Council.

Federal Council of Ministers The Cabinet is described in the Constitution as the executive authority for the UAE and is responsible for implementing policy decisions of the Supreme Council. The Cabinet is the principal executive body of the UAE. The Constitution deﬁnes the responsibilities of the Cabinet, which include the issuing of regulations, the preparation of draft laws and the drawing up of the annual federal budget. Based in Abu Dhabi, the Cabinet is headed by the Prime Minister and consists of two Deputy Prime Ministers and a number of other Ministers. These Ministers are normally selected (for no ﬁxed term) by the approval of the Supreme Council on the recommendation of the Prime Minister.

Federal National Council The Council is a parliamentary body which comprises 40 members who are UAE nationals. From 1972 to 2006, each Emirate appointed members for a particular number of seats based on such Emirate’s population and size. Abu Dhabi and Dubai have eight members each, Sharjah and Ras Al Khaimah have six members each and the other Emirates have four members each. The nomination of representative members is left to the discretion of each Emirate, and the members’ legislative term is four calendar years. The members represent the UAE as a whole rather than their individual Emirates. Presided over by a speaker, or either of two deputy speakers elected from amongst its members, the Council has both a legislative and supervisory role under the Constitution. This means that it is responsible for examining and, if required, amending, all proposed federal legislation, and is empowered to summon and to question any federal minister regarding ministry performance. One of the main duties of the Council is to discuss the annual budget of the UAE. Although the Council can monitor and debate government policy, it has no veto or amendment power and cannot initiate any legislation by itself. During 2006, reforms were made with a view to enhancing public participation in indirect elections to the Council. Under these reforms, the Ruler of each Emirate selects an electoral college whose members are at least 100 times the number of Council members for the Emirate. The members of each electoral college elect half of the Council members for their Emirate, with the remainder being appointed by the Ruler. A second round of elections to the Council was successfully held in 2011, with an electoral college that had tripled in size relative to the electoral college of the ﬁrst election in 2006. The third round of elections is scheduled to take place in September 2015.

Legal and Court System There are three primary sources of law in the UAE, namely: (i) federal laws and decrees (applicable in all seven Emirates); (ii) local laws and decrees (i.e. laws and regulations enacted by the Emirates individually); and (iii) the Shari’a (Islamic law). The secondary form of law is trade custom or practice. In the absence of federal legislation on areas speciﬁcally reserved to federal authority, the Ruler or local government of each Emirate can apply his or its own rules, regulations and practices. The federal judiciary, whose independence is guaranteed under the Constitution, includes the Federal Supreme Court and Courts of First Instance. The Federal Supreme Court consists of ﬁve judges appointed by the Supreme Council. The judges decide on the constitutionality of federal laws and arbitrate on inter-Emirate disputes and disputes between the UAE Government and the Emirates. In accordance with the Constitution, three of the seven Emirates (Abu Dhabi, Dubai and Ras Al Khaimah) have elected to maintain their own court system, separate from that of the UAE, and these courts have sole jurisdiction to hear cases brought in the respective Emirates.

75 Economy of the UAE The UAE is the second largest economy in the Gulf Cooperation Council (‘‘GCC’’) after Saudi Arabia. According to data published by OPEC, at the end of 2013, the UAE had approximately 8.1 per cent. of the world’s proven crude oil reserves (giving it the sixth largest oil reserves in the world). According to data produced by the NBS, the UAE’s crude oil and natural gas sector accounted for approximately 39.6 per cent., 39.6 per cent. and 39.1 per cent. of the UAE’s real GDP in 2011, 2012 and 2013, respectively. The NBS has estimated that real GDP in the UAE was AED 987.3 billion, AED 1,033.5 billion and AED 1,087.2 billion in 2011, 2012 and 2013, respectively, representing real GDP growth rates of 4.9 per cent., 4.7 per cent. and 5.2 per cent., respectively, reﬂecting the general economic recovery in the wake of the global economic crisis and the increase in oil prices during 2012, 2013 and 2014. The table below shows the UAE’s nominal and real GDP and their GDP growth rates for each of the years indicated.

2010 2011 2012 2013

UAE Nominal GDP (AED billion)...... 1,050,516 1,276,025 1,367,323 1,477,594 UAE Nominal Growth Rate (%) ...... 12.8 21.5 7.3 8.1 UAE Real GDP (AED billion) ...... 941,331 987,318 1,033,504 1,087,246 UAE Real GDP Growth Rate (%)...... 1.5 4.9 4.7 5.2

Source: NBS Although it has one of the most diversified economies in the GCC, the UAE’s wealth remains largely based on oil and gas. Whilst fluctuations in energy prices do have a bearing on economic growth, the UAE is generally viewed as being less vulnerable than some of its GCC neighbours, due to the growth in the non-oil sector, particularly trading, finance, construction, real estate and tourism. The UAE’s economy remains heavily protected and nearly all utilities and most major industries are controlled by the state. However, tight restrictions placed on foreign investment are gradually being relaxed. For example, whilst foreigners are not permitted to have a controlling interest in UAE businesses or corporates, many of the Emirates have established trade and industry free zones (in which 100 per cent. foreign ownership is permitted) as a means of attracting overseas investment and diversifying the economy. Despite the UAE’s membership of the WTO, progress towards economic liberalisation has been slow, although trade agreements with Europe and the United States are being negotiated.

Credit Ratings On 26 November 2014, Moody’s Investors Service, Inc. reaffirmed the UAE’s long-term rating of Aa2 with a stable outlook. In its report, Moody’s assumed that the Federal Government of the UAE is fully supported by the Government of Abu Dhabi. The UAE is not rated by any of the other major rating agencies. The Government of Abu Dhabi’s long-term foreign and local currency issuer ratings were also affirmed by Moody’s at Aa2 (with a stable outlook) and its short-term foreign and local currency issuer ratings at Prime-1 (with a stable outlook) in a report on 16 January 2014. The factors cited as supporting this high investment grade rating were a strong Abu Dhabi Government balance sheet, abundant hydrocarbon resources, high per capita income, domestic political stability and strong international relations. The factors cited as constraining the ratings were a troubled regional political environment, lower World Bank governance scores than other highly rated countries, volatile GDP caused by concentration on hydrocarbons and substantial debt of Abu Dhabi Government-related enterprises. Abu Dhabi’s long-term sovereign credit ratings were affirmed at AA (long-term) (with a stable outlook) and A-1+ (short-term) (with a stable outlook) by S&P on 6 April 2014. The ratings are supported by the Abu Dhabi Government’s strong fiscal and external positions which afford it fiscal policy flexibility. The strength of the Abu Dhabi Government’s net asset position also provides a buffer to counter the negative impact of oil price volatility on economic growth, Abu Dhabi Government revenue and the external account. The ratings are, however, constrained by less- developed political institutions and bigger structural weaknesses than non-regional peers in the same ratings category. They are also constrained by contingent liabilities from state-owned enterprises and,

76 to a lesser extent, liabilities more broadly related to the UAE. Limited monetary policy flexibility also constrains the ratings. Abu Dhabi’s long-term foreign and local currency issuer default ratings were affirmed at AA (with a stable outlook) and its short-term foreign currency issuer default ratings were affirmed at F1+ (with a stable outlook) by Fitch on 16 August 2014. Fitch cited the following rating factors as strengths: Abu Dhabi’s sovereign balance sheet is the second-strongest of any sovereign rated by Fitch; Abu Dhabi is one of the world’s largest hydrocarbon producers on a per capita basis; economic growth is above the peer median and non-oil growth is stronger and less volatile than the peer group; and GDP per capita is the highest of all Fitch-rated sovereigns. Fitch also cited the following rating factors as weaknesses: the Abu Dhabi Government relies on oil for around 90 per cent. of fiscal and external revenue; a weaker economic policy outlook than for peers; contingent liabilities from its state-owned enterprises, banks and other emirates; there is a lack of information on the absolute size of foreign assets and significant gaps in economic data; and financial market development is weak compared to peers.

Population The IMF estimated that the population of the UAE was approximately 9.0 million at the end of 2013, with the SCAD giving an estimate of the population of Abu Dhabi of approximately 2.45 million as of mid-year 2013. The populations of both the UAE and Abu Dhabi have grown significantly in recent years, reflecting an influx of foreign labour, principally from Asia, as the Emirates have developed and the table below illustrates this growth using the 2010 NBS and SCAD estimates, official census data for 1985, 1995, 2005 and 2010 (the most recent census) and IMF estimates.

1985 1995 2005 2010 2013

Total UAE population...... 1,379,303 2,411,041 4,106,427 8,264,070 9,000,000 Total Abu Dhabi population...... 451,848 566,036 1,374,169 1,967,659 2,453,096

Source: NBS, SCAD, IMF The majority of the population of the UAE are estimated to be non-UAE nationals, mainly drawn from the Indian subcontinent, Europe and other Arab countries. Approximately 75 per cent. of the population is estimated to be male and 25 per cent. female, reﬂecting the large male expatriate workforce.

Relations with Other Countries The UAE enjoys good relations with the other states in the GCC and its regional neighbours. The UAE does have, however, a long-standing territorial dispute with Iran over three islands in the Gulf and, as such, is not immune to the political risks and volatility in the region, particularly in recent years.

77 CAPITALISATION OF THE GROUP

The following table sets out the consolidated debt and capitalisation of the Group as of 31 December 2014. The information has been extracted without material adjustment from the Etisalat 2014 Financial Statements and should be read in conjunction with ‘‘Selected Financial Information for the Group’’, ‘‘Operating and Financial Review’’ and the Etisalat 2014 Financial Statements included elsewhere in this Base Prospectus.

As of 31 December 2014

(AED thousands) Debt: Borrowings – bank overdrafts ...... 2,416,452 Borrowings – bank loans ...... 4,909,289 Bonds ...... 14,164,803 Loans from non-controlling interest ...... 56,562 Advances from non-controlling interest...... 570,715 Vendor ﬁnancing...... 366,057 Other borrowings ...... 8,671

Total debt(1) ...... 22,492,549

Equity: Share capital...... 7,906,140 Reserves...... 26,852,704 Retained earnings...... 7,517,339 Non-controlling interests...... 18,650,688

Total equity ...... 60,926,871

Total capitalisation(2) ...... 83,419,420

Notes: (1) ‘‘Total debt’’ is defined as the sum of the Group’s bank borrowings (comprising bank overdrafts and bank loans), bonds, loans and advances from non-controlling interests, vendor financing and other borrowings. (2) ‘‘Total capitalisation’’ is defined as the sum of the Group’s total debt and total equity. Save as described in ‘‘Operating and Financial Review’’, there have been no significant changes in the total debt, total equity or total capitalisation of the Group since 31 December 2014.

78 SELECTED FINANCIAL INFORMATION FOR THE GROUP

The following tables set forth the Group’s selected consolidated financial information for the periods or dates indicated and contain financial data extracted from the Etisalat Financial Statements set out elsewhere in this Base Prospectus as described in ‘‘Presentation of Financial and Other Information’’. The selected historical consolidated income statement, statement of financial position and cash flows data as of and for the years ended 31 December 2012, 2013 and 2014 have been derived from the Etisalat Financial Statements, which are prepared in accordance with IFRS. The selected historical consolidated income statement, statement of financial position and cash flows data as of and for the years ended 31 December 2013 and 2014 has been extracted from the Etisalat 2014 Financial Statements. The comparable financial information for the year ended 31 December 2012 has been extracted from the financial information corresponding to the financial year ended 31 December 2012 included, for comparative purposes, in the Etisalat 2013 Financial Statements, as explained in the section entitled ‘‘Presentation of Financial and Other Information – Presentation of Financial Information – Comparability of Etisalat’s Financial Information’’. For the avoidance of doubt, the financial information corresponding to the financial years ended 31 December 2013 and 2012 (as presented within the Etisalat 2014 Financial Statements and the Etisalat 2013 Financial Statements, respectively) is not comparable to the financial information corresponding to the financial years ended 31 December 2013 and 2012 as presented within the Etisalat 2013 Financial Statements and the audited consolidated financial statements of the Group as of and for the financial year ended 31 December 2012, respectively. The results of operations for any period are not necessarily indicative of the results to be expected for any future period. The Etisalat Financial Statements incorporate the financial statements of Etisalat and entities controlled by Etisalat. Control is achieved when the Group: (i) has power over the entity; (ii) is exposed, or has rights, to variable returns from its involvement; and (iii) has the ability to use its power to affect its returns. See Note 2 (‘‘Significant accounting policies – Basis of consolidation’’) to the Etisalat 2014 Financial Statements. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are excluded from the date that consolidation ceases. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. The selected historical consolidated financial information below should be read in conjunction with the Etisalat Financial Statements, including the notes thereto, included elsewhere in this Base Prospectus. See also ‘‘Presentation of Financial and Other Information’’, ‘‘Risk Factors’’, ‘‘Capitalisation of the Group’’ and ‘‘Operating and Financial Review’’. During the year ended 31 December 2013, the Group reassessed its accounting treatment for share of results of one of its associates, EMTS. Consequently, the Group discontinued the recognition of the share of results of EMTS with effect from 1 January 2013. For additional details, please see Note 13 (‘‘Share of results of associates and joint ventures’’) to the Etisalat 2014 Financial Statements. During the year ended 31 December 2014, the Group classified operations of one of its subsidiaries, Zantel, as held-for-sale under IFRS 5. The comparative financial results as of and for the year ended 31 December 2013 contained in the Etisalat 2014 Financial Statements have therefore been restated as required under IFRS 5. For additional details, please see Note 36 (‘‘Disposal Group held for sale/ Discontinued operations’’) to the Etisalat 2014 Financial Statements. The comparative figures corresponding to the financial year ended 31 December 2012 as presented in the Etisalat 2013 Financial Statements have been restated mainly due to: (i) changes in accounting policy relating to provision for end of service benefits (IAS 19 Employee benefits); (ii) purchase price allocation of PTCL resulting in fair value adjustments to assets, related deferred tax liabilities and revision of goodwill; and (iii) current tax assets and current tax liabilities being reclassified from trade and other receivables and trade and other payables, respectively, and presented separately in the consolidated statement of financial position. See Note 35 (‘‘Restatement and reclassification of comparative figures’’) to the Etisalat 2013 Financial Statements.

79 Income Statement Data

Year ended 31 December

2012 2013 2014

Restated Restated (AED thousands) Revenue ...... 32,946,300 38,564,181 48,766,875 Operating expenses ...... (19,533,493) (24,397,205) (31,832,583) Impairment and other losses ...... (2,825,365) (1,374,176) (931,963) Share of results of associates and joint ventures...... 1,263,155 1,754,341 (461,065)

Operating proﬁt before federal royalty ...... 11,850,597 14,547,141 15,541,264 Federal royalty ...... (6,451,252) (6,115,016) (5,333,084)

Operating proﬁt...... 5,399,345 8,432,125 10,208,180 Gain on partial disposal of investment in an associate...... 860,138 — — Finance and other income...... 721,111 468,558 2,653,494 Finance and other costs...... (322,938) (437,572) (1,736,511) Taxation...... (85,910) (648,647) (1,153,576) Loss from discontinued operations ...... — (63,516) (118,108)

Proﬁt for the year ...... 6,571,746 7,750,948 9,853,479

Proﬁt attributable to: Non-controlling interests ...... (170,073) 672,560 961,460 Equity holders ...... 6,741,819 7,078,388 8,892,019

EBITDA Data Year ended 31 December

2012(2) 2013 2014

Restated Restated (AED thousands) Proﬁt for the year...... 6,571,746 7,750,948 9,853,479 Plus: Federal royalty...... 6,451,252 6,115,016 5,333,084 Plus: Tax...... 85,910 648,647 1,153,576 Plus: Finance and other costs...... 322,938 437,572 1,736,511 Less: Finance and other income...... (721,111) (468,558) (2,653,494) Plus: Depreciation ...... 2,670,013 3,732,211 5,111,162 Plus: Amortisation...... 714,726 807,181 1,685,022 Plus: Foreign exchange (gains)/losses ...... 57,669 193,450 (365,664) Less: Share of (proﬁt)/loss of associates and joint ventures...... (1,263,155) (1,754,341) 461,065 Less: Gain on partial disposal of investment in an associate ...... (860,138) —— Plus: Impairment and other losses ...... 2,825,365 1,374,176 931,963 Add: Loss from discontinued operations...... — 63,516 118,108

EBITDA(1) ...... 16,855,215 18,899,818 23,364,812

Less: Federal royalty ...... (6,451,252) (6,115,016) (5,333,084) Plus/(less): Share of results of associates and joint ventures...... 1,263,155 1,754,341 (461,065)

Adjusted EBITDA...... 11,667,118 14,539,143 17,570,663

Notes: (1) EBITDA and Adjusted EBITDA are non-IFRS financial measures that are used by management as an additional measure of performance. EBITDA and Adjusted EBITDA are not defined by or presented in accordance with IFRS, are not a measure of performance and should not be considered as an alternative to other IFRS measures. The Group’s definition of EBITDA includes revenue, staff costs, direct cost of sales, regulatory expenses, operating lease rentals, network and other related costs, marketing expenses and other operating expenses. The Group calculates Adjusted EBITDA as EBITDA including the effects of federal royalty and the share of results of associates and joint ventures. (2) The figures for the year ended 31 December 2012 represent restated comparatives, as set out in the Etisalat 2013 Financial Statements. This restatement was primarily due to changes in accounting policy relating to provision for end of service benefits (IAS 19 Employee Benefits) and purchase price allocation of PTCL resulting in fair value adjustments to assets, related deferred tax liabilities and revision of goodwill and current tax assets and current tax liabilities being reclassified from trade and other receivables and trade and other payables, respectively, and presented separately in the consolidated statement of financial position.

80 Statement of Financial Position Data

As of 31 December

2012 2013 2014

Restated Restated (AED thousands) Goodwill ...... 5,929,087 5,552,266 15,690,382 Other intangible assets...... 10,226,108 9,447,281 19,094,776 Property, plant and equipment...... 31,040,677 31,319,161 45,972,612 Investments in associates and joint ventures...... 6,325,335 7,062,009 5,822,453 Total non-current assets ...... 58,362,110 57,518,129 91,410,587 Total current assets...... 26,244,036 28,197,405 37,641,214 Trade and other payables (current and non-current)...... 20,956,159 21,992,976 32,063,728 Current borrowings ...... 1,323,597 1,404,543 3,609,711 Total current liabilities ...... 25,567,020 26,893,239 39,970,681 Non-current borrowings ...... 4,482,841 4,467,122 18,619,459 Total non-current liabilities...... 9,126,554 9,229,599 27,560,489 Total equity ...... 49,912,572 49,592,696 60,926,871 Statement of Cash Flows Data

Year ended 31 December

2012 2013 2014

Restated Restated (AED thousands) Net cash generated from operating activities ...... 10,485,956 12,973,561 17,208,525 Net cash used in investing activities...... (225,007) (4,853,487) (24,102,407) Net cash used in ﬁnancing activities...... (6,326,725) (6,585,123) 9,161,558

Net increase in cash and cash equivalents...... 3,934,224 1,534,951 2,267,676 Cash and cash equivalents at the beginning of the year...... 9,971,647 13,934,076 15,450,248 Effect of foreign exchange rate changes...... 28,205 (18,779) 833,849

Cash and cash equivalents at the end of the year...... 13,934,076 15,450,248 18,551,773

81 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information, which comprises the unaudited pro forma condensed consolidated statement of profit or loss for the year ended 31 December 2014, has been prepared based on the assumptions described in the notes hereto and in compliance with the recognition and measurement principles of IFRS. On 14 May 2014, Etisalat completed the acquisition of Vivendi’s 53 per cent. stake in Maroc Telecom (the ‘‘Acquisition’’) at a net adjusted price of A4.1 billion (equivalent to AED 20.9 billion). This amount included the cash value of the 2012 dividend, amounting to A0.3 billion (AED 1.5 billion). The unaudited pro forma condensed consolidated financial information has been prepared only and exclusively for illustrative purposes and in light of its hypothetical nature, it does not represent the actual financial result of Etisalat. Also, it does not form the basis for any forecasts, comparisons or budgets. It is not intended to be indicative of future results. This unaudited pro forma condensed consolidated financial information has been prepared on a basis consistent with Etisalat’s accounting policies as set out in Note 2 (‘‘Significant accounting policies’’) to the Etisalat 2014 Financial Statements. Unless otherwise indicated, all the financial information relating to the companies covered by the unaudited pro forma condensed consolidated financial information is based on the Etisalat 2014 Financial Statements and the Maroc Telecom Financial Statements, to which the adjustments were made as indicated below. The unaudited pro forma condensed consolidated statement of profit or loss gives effect to the Acquisition as if it had occurred on 1 January 2014. The unaudited pro forma adjustments are described in the accompanying notes set out below. The unaudited pro forma condensed consolidated financial information has been prepared based on the following: – the Etisalat 2014 Financial Statements, presented in thousands of AED, which have been prepared in accordance with IFRS; – the Maroc Telecom Financial Statements, presented in millions of MAD, which have been prepared in accordance with IFRS; and – the consolidated financial information of Maroc Telecom for the period from 14 May 2014 to 31 December 2014, presented in millions of MAD, which have been prepared in accordance with IFRS. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the relevant separately published audited consolidated financial statements included elsewhere in this Base Prospectus. The Acquisition is being accounted for using the acquisition method of accounting in accordance with IFRS 3 ‘‘Business combination’’ (‘‘IFRS 3’’). Under the acquisition method of accounting, the aggregate consideration paid is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their fair values on the transaction date. Goodwill is measured as the excess, if any, of the sum of the consideration paid over the net amounts of identifiable assets acquired and liabilities assumed at the acquisition date. This unaudited pro forma condensed consolidated financial information has been prepared based on the historical financial information of Maroc Telecom, as adjusted for impacts of translation into AED, and for the harmonisation of accounting policies and presentation as well as the effects of the allocation of the consideration paid to the fair value of assets acquired and liabilities assumed. No account has been taken within this unaudited pro forma condensed consolidated financial information of any future changes in accounting policies or any synergies (including cost savings), all of which may or may not occur as a result of the Acquisition. The adjustments made in order to present this unaudited pro forma condensed consolidated financial information have been made based upon available information and assumptions that Etisalat believes are reasonable, that are directly attributable to the Acquisition, and that are factually supportable. The unaudited pro forma condensed consolidated financial information does not purport to present Etisalat’s financial position or results of operations for any future period.

82 Etisalat unaudited pro forma condensed consolidated statement of proﬁt or loss for the year ended 31 December 2014

Maroc Telecom pro forma Etisalat adjusted IFRS historical income income statement for Pro forma statement the period results of the for the year from 1 Group for the ended January 2014 year ended 31 December to 13 May Pro forma 31 December In AED millions 2014 2014 adjustments 2014

Note (1) Note (2) Note (3) Revenue...... 48,767 4,141 — 52,908 Operating expenses ...... (31,833) (2,522) (332) (34,687) Impairment and other losses...... (932) — — (932) Share of results of associates and joint ventures...... (461) — — (461) Operating profit before federal royalty...... 15,541 1,619 (332) 16,828 Federal royalty...... (5,333) — — (5,333) Operating profit...... 10,208 1,619 (332) 11,495 Finance and other income ...... 2,653 — — 2,653 Finance and other costs...... (1,737) (45) — (1,782) Profit before tax...... 11,124 1,574 (332) 12,366 Taxation...... (1,154) (540) 98 (1,596) Profit for the year from continuing operations...... 9,970 1,034 (234) 10,770 Loss from discontinued operations...... (118) — — (118) Profit for the year...... 9,852 1,034 (234) 10,652

83 Notes to unaudited pro forma condensed consolidated financial information 1. Amounts have been extracted from the Etisalat 2014 Financial Statements, included elsewhere in this Base Prospectus. 2. Financial information of Maroc Telecom has been extracted from the Maroc Telecom Financial Statements, included elsewhere in this Base Prospectus. For the purposes of the unaudited pro forma condensed consolidated financial information, the historical financial information of Maroc Telecom has been adjusted to include the estimated impacts of translation of the financial information into AED, and to adjust the financial information to harmonise the accounting policies of Maroc Telecom with those of Etisalat as of and for the year ended 31 December 2014. Maroc Telecom Maroc Telecom IFRS historical Maroc Telecom IFRS historical income pro forma income statement adjusted IFRS statement for the period income for the year from 14 May statement for ended 2014 to Harmonization Foreign the period from 31 December 31 December of accounting currency 1 January 2014 2014 2014 policies impacts to 13 May 2014 (MAD millions) (MAD millions) (MAD millions) (AED millions)

Note (2.1) Note (2.2) Note (2.3) Note (2.4) Revenues...... 29,144 19,512 (391) (5,100) 4,141 Operating expenses ...... (18,915) (12,896) 391 3,106 (2,522) Operating profit...... 10,229 6,616 — (1,994) 1,619 Finance and other costs...... (345) (245) — 55 (45) Profit before tax...... 9,884 6,371 — (1,939) 1,574 Income tax ...... (3,246) (2,040) — 666 (540) Profit for the period...... 6,638 4,331 — (1,273) 1,034 2.1 Amounts have been extracted from the Maroc Telecom Financial Statements, included elsewhere in this Base Prospectus. 2.2 Amounts have been obtained from management of Etisalat. This represents income and expenses of Maroc Telecom for the period from 14 May 2014 to 31 December 2014, as included in the Etisalat 2014 Financial Statements. 2.3 Adjustment of MAD 391 million represents the reclassification of commission paid to third party distributors, classified in the Maroc Telecom Financial Statements as ‘‘Operating expenses’’ to be presented as a deduction from ‘‘Revenue’’ to conform to the accounting policies of revenue recognition used in the Etisalat 2014 Financial Statements. 2.4 Income and expense items of Maroc Telecom are translated at the average exchange rate for the period from 1 January 2014 to 13 May 2014 equal to AED 0.4481 for MAD 1. 3. Certain adjustments have been made to the Etisalat 2014 Financial Statements related to the effects of amortisation of the fair value adjustments made to intangible assets and property, plant and equipment further to the ‘‘purchase price allocation’’ exercise performed in order to allocate the consideration paid to the fair value of assets acquired and liabilities assumed in the Acquisition, as if the Acquisition occurred on 1 January 2014.

84 OPERATING AND FINANCIAL REVIEW

The following operating and financial review is based on the Etisalat Financial Statements. The Etisalat Financial Statements have been audited by Deloitte & Touche (M.E.), independent auditors of the Group, to the extent and for the periods indicated in its reports thereon. The Etisalat Financial Statements were prepared in accordance with IFRS issued by the International Accounting Standards Board. Except where stated, the financial information as of and for the years ended 31 December 2013 and 2014 has been extracted from the Etisalat 2014 Financial Statements. The comparable financial information for the year ended 31 December 2012 has been extracted from the financial information corresponding to the financial year ended 31 December 2012 included, for comparative purposes, in the Etisalat 2013 Financial Statements, as explained in the section entitled ‘‘Presentation of Financial and Other Information – Presentation of Financial Information-Comparability of Etisalat’s Financial Information’’. Investors should read the following information together with the sections entitled ‘‘Selected Financial Information for the Group’’ and ‘‘Capitalisation of the Group’’ and the Etisalat Financial Statements included elsewhere in this Base Prospectus. This review may include forward-looking statements, including those described under the heading ‘‘Cautionary Statement Regarding Forward-Looking Statements’’, that involve risks and uncertainties. The Group’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Base Prospectus, particularly under the headings ‘‘Cautionary Statement Regarding Forward-Looking Statements’’ and ‘‘Risk Factors’’. Except as may be required by applicable law, the Group does not intend to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. During the year ended 31 December 2013, the Group reassessed its accounting treatment for share of results of one of its associates, EMTS. Consequently, the Group discontinued the recognition of the share of results of EMTS with effect from 1 January 2013. For additional details, please see Note 13 (‘‘Share of results of associates and joint ventures’’) to the Etisalat 2014 Financial Statements. During the year ended 31 December 2014, the Group classified operations of one of its subsidiaries, Zantel, as held-for-sale under IFRS 5. The comparative financial results as of and for the year ended 31 December 2013 contained in the Etisalat 2014 Financial Statements have therefore been restated as required under IFRS 5. For additional details, please see Note 36 (‘‘Disposal Group held for sale/ Discontinued operations’’) to the Etisalat 2014 Financial Statements. In order that an appropriate comparison can be made between the results of operations for the years ended 31 December 2012 and 2013, the comparative figures for results of operations in 2013 appearing in the section entitled ‘‘Results of Operations – Comparison of results of operations for the years ended 2012 and 2013’’ correspond to those appearing in the Etisalat 2013 Financial Statements (i.e., before restatement as required under IFRS 5).

OVERVIEW Etisalat was established in 1976 and is the leading and incumbent telecommunications provider in the UAE, offering a wide range of mobile, fixed-line, internet and data telecommunications services to business, residential and government customers. A significant proportion of the Group’s revenues, profits and cash flows are derived from its operations in the UAE. For the years ended 31 December 2012, 2013 and 2014, the Group had consolidated revenue of AED 32,946.3 million, AED 38,564.2 million and AED 48,766.9 million, respectively, of which 68.9 per cent, 63.9 per cent. and 55.3 per cent., respectively, was contributed by the Group’s UAE telecommunications operations carried out by Etisalat (based on external sales). In 2004, Etisalat began forming and acquiring interests in subsidiaries, associates and joint ventures in order to grow and carry out its international operations. Since then, the Group has significantly expanded its international telecommunications operations through acquisitions of existing operators as well as by acquiring new licences and building its own operations. The Group has a presence in 18 countries outside the UAE, through its subsidiaries, associates and joint ventures in Morocco, Egypt, Pakistan, Saudi Arabia, Nigeria, Sudan, Tanzania, Afghanistan, Sri Lanka, Benin, the Central African Republic (‘‘CAR’’), Gabon, Coˆte d’Ivoire, Niger, Togo, Mauritania, Burkina Faso and Mali.

85 The table below provides summary information on the Group’s operating subsidiaries and their contribution to the Group’s consolidated revenue for the years ended 31 December 2013 and 2014. All of these subsidiaries are controlled by the Group and therefore fully consolidated in the Etisalat 2014 Financial Statements.

Year ended 31 December

2013 2014

Contribution Contribution to to Country of Equity consolidated consolidated Operating business operation interest (%)(2) revenue (%)(3) revenue (%)(3)

Maroc Telecom(1)...... Morocco 48.4 — 16.6 Etisalat Misr ...... Egypt 66.0 12.2 9.9 PTCL ...... Pakistan 23.4 11.5 9.1 Canar ...... Sudan 90.5 0.8 0.6 Etisalat Afghanistan ...... Afghanistan 100.0 2.6 1.7 Zantel(5)...... Tanzania 85.0 — — Etisalat Lanka...... Sri Lanka 100.0 1.3 1.0 Coˆte d’Ivoire, Togo, CAR, Gabon, Niger Atlantique Telecom...... and Benin 100.0(4) 5.6 4.3

Notes: (1) Following the completion of its acquisition by the Group, Maroc Telecom was consolidated into the Group on and from 14 May 2014. (2) Includes direct and indirect interests as of 31 December 2014. (3) Based on external sales only. (4) On 26 January 2015, Maroc Telecom completed the acquisition of the Group’s operations in Benin, CAR, Gabon, Coˆte d’Ivoire, Niger and Togo and Prestige Telecom. Following this acquisition, the Group still maintains control of these operations through its controlling stake in Maroc Telecom. (5) Zantel discontinued operations in 2014. For the year ended 31 December 2014, Maroc Telecom, Etisalat Misr and PTCL were the most signiﬁcant of the Group’s international operations in terms of contribution to consolidated revenue, contributing 16.6 per cent., 9.9 per cent. and 9.1 per cent, respectively, to the Group’s consolidated revenue for the year ended 31 December 2014.

RECENT DEVELOPMENTS On 3 November 2014, Mobily, pursuant to its results announcement for the third quarter of 2014, announced that it had restated its financial statements for the prior year-and-a-half, mainly as a result of changing the timing of revenue recognition. Following this announcement, the CMA suspended Mobily’s shares from trading on Tadawul. Subsequently, on 25 February 2015, Mobily announced revised results earnings for the year ended 31 December 2014, showing a significantly increased fourth quarter loss as compared to that stated in its unaudited results announcement on 21 January 2015. In light of this restatement and revised earnings announcement, on 2 March 2015, the CMA announced that it had assigned a specialised team to review Mobily’s financial statements, conduct site visits, obtain documents and hear concerned parties’ statements. These investigations are currently ongoing and there can be no assurance as to their outcome. See ‘‘Description of the Group – Litigation, Arbitration and Disputes – Mobily accounting issues’’. On 26 January 2015, Maroc Telecom completed the acquisition of the Group’s operations in Benin, CAR, Gabon, Coˆte d’Ivoire, Niger and Togo and Prestige Telecom. For further details, please see ‘‘Description of the Group – International Operations – Morocco – Maroc Telecom’’ and ‘‘Description of the Group – International Operations – Sub-Saharan Africa – Moov’’.

SIGNIFICANT FACTORS AFFECTING FINANCIAL CONDITION AND RESULTS OF OPERATIONS Revenue Principally Derived from UAE Telecommunications Businesses A significant proportion of the Group’s revenues, profits and cash flows are derived from its operations in the UAE and the UAE remains the Group’s most significant market by revenue.

86 As of 31 December 2014, the UAE was the Group’s principal operating market in terms of revenue, operating cash flow and profitability, and it is this revenue that has provided the financing that historically allowed the Group to pursue expansion opportunities in other markets. In the year ended 31 December 2014, 55.3 per cent. of the Group’s revenue was derived from the provision of telecommunications services in the UAE by Etisalat, compared to 63.9 per cent. for the year ended 31 December 2013 and 68.9 per cent. for the year ended 31 December 2012 (in each case, based on external sales).

Mobile telecommunications services Revenue from mobile telecommunications services is primarily affected by: (i) the number of the Group’s active mobile customers in the countries in which it operates, which in turn is affected by the churn among those customers; and (ii) the amount spent by those customers, as measured by ARPU. Mobile customer growth in any market depends on a number of factors, including competition, pricing, quality of service, availability of new services, population growth, churn, regulatory environment and general economic conditions. Revenue from mobile customers is driven by a combination of trafﬁc volume and tariffs. In the UAE in particular, tariffs are driven both by the competitive environment and the regulator, as all tariffs (including promotions) in the UAE are subject to pre-approval by the regulator. In the UAE, increasing competition from du has exerted increased pressure on Etisalat to propose lower tariff structures and promotions to the regulator, though management believes that mobile tariffs will stabilise in the near to medium-term. See ‘‘Description of the Group – UAE Operations – Regulation’’.

Fixed-line services The Group also derives telecommunications revenue in the UAE from the provision of fixed-line services by Etisalat. Etisalat’s fixed-line services in the UAE generated revenue of AED 9.5 billion, or 20 per cent. of the Group’s total revenue in 2014, compared to AED 8.5 billion, or 22 per cent. of the Group’s total revenue in 2013. Penetration rates for fixed-lines in the UAE were 25.2 per cent. as of 30 November 2014 (source: TRA). Penetration rates for broadband internet services in the UAE were 13.1 per cent. as of 30 November 2014 (source: TRA). These penetration rates are relatively low compared to North America and Western Europe. In order to increase the penetration of internet services, Etisalat has invested and continues to invest in network infrastructure to deploy new technologies. See ‘‘– Significant Capital and Investment Expenditure’’ and ‘‘Description of the Group – UAE Operations- Customers, products and services’’.

Mobile and fixed-line ARPU among customer base In addition to the number of customers, revenue generated by the Group’s mobile and fixed-line telecommunications services is influenced by the amount of revenue generated by each of those customers for voice services, as measured by ARPU. See ‘‘Presentation of Financial and Other Information – Presentation of Industry, Market and Customer Data’’. The tables below show ARPU for the Group’s UAE mobile and fixed-line businesses for the years ended 31 December 2012, 2013 and 2014 (source: Etisalat).

Year ended 31 December(1)

2012 2013 2014

AED Blended mobile ARPU...... 135 128 119 Fixed-line ARPU...... 115 115 132

Note: (1) Mobile ARPU is calculated as total mobile voice, data and roaming revenues divided by the average number of mobile subscribers. Fixed ARPU is based on fixed-line revenues divided by the average number of fixed subscribers. ARPU figures are unaudited. Market penetration for mobile customers in the UAE is high, with penetration rates of 201.2 per cent. as of 30 November 2014 (source: TRA). In addition, enhanced competition in the market resulted in decreasing tariffs on local, national and international calls. The high penetration level in the UAE, along with increased competition, caused a decline in mobile ARPU from 31 December 2013 to 31 December 2014. To counter this trend, Etisalat is focused on introducing more value-

87 added services, such as specialised media content and enhanced mobile internet services, which management expects will help Etisalat to increase its revenue from data services in an effort to offset the decline in its mobile ARPU and to retain its high customer-value subscribers in a competitive market environment. See ‘‘Description of the Group – UAE Operations – Mobile’’. Fixed-line ARPU rose from 31 December 2013 to 31 December 2014. This was due to a rise in fixed- line rentals. Competition from du, the second operator in the UAE telecommunications market, has been a less significant factor in the level of fixed-line ARPU as du only has fixed-line operations in a limited number of regions within the UAE. See ‘‘Description of the Group – UAE Operations – Regulation’’. Tariffs, both fixed-line and mobile, are required to be pre-approved by the TRA, and any changes must also be pre-approved by the TRA. The introduction of du in 2007 led to significant changes in Etisalat’s mobile tariff structure in the UAE market, including segment-targeted promotions and tariffs (such as one-country international calling plans, peak and off-peak plans). In addition, the significant number of new promotional offers introduced by du and Etisalat during the period from 31 December 2012 to 31 December 2014 led to a decline in effective tariffs (or net tariffs after spreading the value of any promotional offers over the applicable contract term), resulting in declines in Etisalat’s mobile ARPU during this period.

Growth in International Telecommunications Businesses Although historically, the Group has derived most of its revenues from operations in the UAE, the portion of its revenues derived from international operations has increased significantly over the past three years, and the Group expects that revenue from international operations as a percentage of consolidated revenue will continue to increase in the future. Outside of the UAE, the Group primarily provides mobile telecommunications services (including data), although it also provides fixed-line services in Morocco, Mauritania, Burkina Faso, Gabon, Mali, Pakistan and Sudan and has deployed internet services in markets such as Egypt and Saudi Arabia. Revenue from external sales from the Group’s consolidated international operations has increased both in absolute and proportional terms over the periods under review, from AED 9,348.3 million (28.4 per cent. of the Group’s total consolidated revenues) to AED 13,110.7 million (34 per cent. of the Group’s total consolidated revenues) to AED 20,959.2 million (43 per cent. of the Group’s total consolidated revenues) for the years ended 31 December 2012, 2013 and 2014, respectively. The increase between 2013 and 2014 was principally due to the consolidation of Maroc Telecom into the results of the Group and the increase between 2012 and 2013 was principally due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. The Group’s growth in international operations has been primarily funded through operating cash flow generated by the Group’s UAE business, and, to a lesser extent, through financing at the level of the Group’s subsidiaries and associates. The Group’s capital expenditures in its international operations have principally comprised network infrastructure construction, expansion and maintenance and licence acquisition. Most recently, in March 2015, Maroc Telecom was awarded a 4G licence by the ANRT, and in April 2014, Ufone was awarded a 3G licence by the PTA. See ‘‘– Significant Factors Affecting Financial Condition and Results of Operations – Significant Capital and Investment Expenditure’’ and ‘‘– Liquidity and Capital Resources – Cash Flow’’.

Network development and maintenance Growth in the Group’s revenue has been partially driven by expansion of capacity in its existing networks and the increase in coverage across the markets in which the Group operates, in addition to maintenance of, and, where required, improvements in network quality. The Group’s strategy is to increase its capacity in targeted regions if it believes that there is or will be demand in that region for its telecommunications services, in particular, in the Group’s key markets such as the UAE, Morocco, Pakistan, Egypt, Saudi Arabia and Nigeria. When the Group makes decisions with respect to capacity development it also considers whether the expansion in areas for which coverage is provided will have a signiﬁcant impact on its ability to attract new customers and retain existing customers. For a discussion of the Group’s capital expenditures, see ‘‘– Capital Expenditures’’.

Segmental Analysis The Group presents information relating to its international operating segments in accordance with IFRS 8. See Note 4 (‘‘Segmental information’’) to the Etisalat 2014 Financial Statements. The Group views its business as being divided into UAE and international business segments. Segment results

88 represent operating profit before federal royalty and without allocation of finance income and finance costs. The following table shows the Group’s revenue and results by segment for the years ended 31 December 2013 and 2014.

Year ended 31 December 2014

UAE Morocco Egypt Pakistan Others Eliminations Consolidated

(AED thousands) External sales ...... 27,807,689 6,061,090 4,814,366 4,436,395 5,647,335 — 48,766,875

Inter-segment sales..... 454,367 38,089 29,983 282,143 175,469 (980,051) —

Total revenue ...... 28,262,056 6,099,179 4,844,349 4,718,538 5,822,804 (980,051) 48,766,875 Segment result ...... 13,234,681 2,114,237 834,616 126,922 (769,192) — 15,541,264

Federal royalty...... (5,333,084) Finance income ...... 2,653,494 Finance cost ...... (1,736,511) Proﬁt before tax ...... 11,125,163

Year ended 31 December 2013

UAE Morocco Egypt Pakistan Others Eliminations Consolidated

(AED thousands) External sales ...... 25,453,493 — 4,715,665 4,425,863 3,969,160 — 38,564,181 Inter-segment sales..... 510,041 — 25,855 335,065 107,661 (978,622) —

Total revenue ...... 25,963,534 — 4,741,520 4,760,928 4,076,821 (978,622) 38,564,181 Segment result ...... 11,543,769 — 581,998 697,448 1,723,926 — 14,547,141

Federal royalty...... (6,115,016) Finance income ...... 468,558 Finance cost ...... (437,572) Proﬁt before tax ...... 8,463,111

For the year ended 31 December 2014, the UAE segment recorded total revenue, including internal and external sales, of AED 28,262.1 million, an increase of AED 2,298.5 million, or 8.9 per cent. from revenue of AED 25,963.5 million for the year ended 31 December 2013. In terms of segment results, the UAE segment result was AED 13,234.7 million for the year ended 31 December 2014, compared to AED 11,543.8 million for the year ended 31 December 2013, an increase of AED 1,691 million, or 14.6 per cent. For the year ended 31 December 2014, the Morocco segment recorded total revenue, including internal and external sales, of AED 6,099.2 million. In terms of segment results, the Morocco segment result was AED 2,114.2 million for the year ended 31 December 2014. For the year ended 31 December 2014, the Egypt segment recorded total revenue, including internal and external sales, of AED 4,844.3 million, an increase of AED 102.8 million, or 2.2 per cent. from revenue of AED 4,741.5 million for the year ended 31 December 2013. In terms of segment results, the Egypt segment result was AED 834.6 million for the year ended 31 December 2014, compared to AED 582.0 million for the year ended 31 December 2013, an increase of AED 252.6 million, or 43.4 per cent. For the year ended 31 December 2014, the Pakistan segment recorded total revenue, including internal and external sales, of AED 4,718.5 million, a decrease of AED 42.4 million, or 0.9 per cent. from revenue of AED 4,760.9 million for the year ended 31 December 2013. In terms of segment results, the Pakistan segment result was AED 126.9 million for the year ended 31 December 2014, compared to AED 697.4 million for the year ended 31 December 2013, a decrease of AED 570.5 million, or 81.8 per cent. For the year ended 31 December 2014, the segment designated as ‘‘Others’’ within the Group’s international operations recorded total revenue, including internal and external sales, of AED 5,822.8 million, an increase of AED 1,746.0 million, or 42.8 per cent. from revenue of

89 AED 4,076.8 million for the year ended 31 December 2013. In terms of segment results, the ‘‘Others’’ segment result saw a loss of AED 769.2 million for the year ended 31 December 2014, compared to AED 1,723.9 million for the year ended 31 December 2013, a decrease of AED 2,493.1 million, or 144.6 per cent.

Royalties and Tax in the UAE The Group pays an annual royalty to the UAE Government, pursuant to decision no. 320/15/23 of 2012 of the Cabinet of the UAE. Under this royalty mechanism, a distinction is made between revenue earned from services regulated by the TRA and non-regulated services, as well as between international and UAE profits. The Group is required to pay a 15 per cent. royalty fee on its revenues derived from TRA-regulated activities in the UAE and 35 per cent. of its net profit after deduction of the 15 per cent. royalty fee on the revenues derived from TRA-regulated activities in the UAE. In respect of profit from international operations, the 35 per cent. royalty is reduced by the amount that the profit from international operations has already been subject to foreign taxes.

The royalty liability is accrued monthly, and the aggregate accrued amount for a ﬁscal year is paid to the Ministry of Finance in the following year, on or before 30 April.

The table below summarises the Group’s royalty charges incurred for the years ended 31 December 2012, 2013 and 2014:

Year ended 31 December

2012 2013 2014

(AED thousands) Royalty charges ...... 6,451,252 6,115,016 5,333,084 The Group’s operations in the UAE are not presently subject to any tax liability in the UAE on income or assets.

The Group incurs regulatory costs in the UAE, which include licence fees, a contribution to the UAE Information and Communication Technology (‘‘ICT’’) Fund, spectrum fees, numbering fees, a share of costs relating to the mobile number portability system and domain name registration fees. See ‘‘Description of the Group – UAE Operations – Regulation – Regulation of Etisalat’s Conduct’’.

The Group incurs taxes in respect of its international operations on a country-by-country basis in accordance with local tax laws.

Significant Capital and Investment Expenditure The Group has a strong commitment to maintenance of and, where required, improving network quality and new technologies, as reflected in the construction and upgrading of its network infrastructure, as well as making significant investment expenditures to increase its ownership in subsidiaries, associated companies and other entities and the renewal and acquisition of telecommunications licences in its various markets. See ‘‘– Liquidity and Capital Resources – Cash Flow’’ and ‘‘– Capital Expenditures’’. As a result, its capital and investment expenditures, including in the UAE, have been substantial.

Demographic and Economic Trends The Group’s revenue is driven by overall market demand for telecommunications services in the markets served by the Group, which is in turn directly affected by a number of macroeconomic and other trends. In particular, demand for the Group’s services depends primarily on a number of demographic and economic factors, all of which are outside of its control, such as population growth and GDP. These factors vary substantially across the markets in which the Group operates and have historically impacted the Group’s results of operations. Future changes in these demographic and economic factors could have a material effect on the Group’s business, ﬁnancial condition, results of operations and prospects.

Management believes that the UAE has a favourable demographic proﬁle for a telecommunications operator. It has been among the fastest growing societies in the MENA region in terms of population during the periods under review.

90 CRITICAL ESTIMATES AND JUDGMENTS The preparation of the Group’s financial statements in conformity with IFRS requires the use of certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates and judgments on historical experience, available information, future expectations and other factors and assumptions that management believes are reasonable under the circumstances and provide a basis for making judgments about the carrying value of assets and liabilities. Management reviews its estimates and judgments on an ongoing basis and revises them when necessary. Actual results may differ from those estimates under different assumptions or conditions. Management has identified accounting estimates and judgments in respect of the below key items that they believe could potentially produce materially different results under different underlying assumptions, estimates, judgments and conditions: * fair value of other intangible assets; * business combinations; * impairment of goodwill and associates; * impairment of intangibles; * property, plant and equipment; * impairment of trade receivables; * classification of associates, joint ventures and subsidiaries; * federal royalty; * regulatory expenses; * valuation of derivative financial instruments; and * recognition of deferred tax asset. For further details in respect of the accounting estimates and judgments by management in respect of the above items, please refer to the Notes to the Etisalat Financial Statements included herein.

91 RESULTS OF OPERATIONS

The following is a review of the Group’s results of operations for the years ended 31 December 2012, 2013 and 2014. The following review should be read in conjunction with the information in ‘‘Presentation of Financial and Other Information’’ and the Etisalat Financial Statements included herein. The following table sets forth certain consolidated income statement information for the years ended 31 December 2012, 2013 and 2014.

Year ended 31 December

2012 2013 2014

(Restated) (AED thousands) Revenue ...... 32,946,300 38,564,181 48,766,875 Operating expenses ...... (19,533,493) (24,397,205) (31,832,583) Impairment and other losses ...... (2,825,365) (1,374,176) (931,963) Share of results of associates and joint ventures...... 1,263,155 1,754,341 (461,065)

Operating proﬁt before federal royalty ...... 11,850,597 14,547,141 15,541,264 Federal royalty ...... (6,451,252) (6,115,016) (5,333,084)

Operating proﬁt...... 5,399,345 8,432,125 10,208,180 Gain on disposal of shares in an associate ...... 860,138 — — Finance and other income...... 721,111 468,558 2,653,494 Finance and other costs...... (322,938) (437,572) (1,736,511) Taxation...... (85,910) (648,647) (1,153,576)

Loss from discontinued operations ...... — (63,516) (118,108) Proﬁt for the year ...... 6,571,746 7,750,948 9,853,479

Proﬁt attributable to: Non-controlling interests ...... (170,073) 672,560 961,460 Proﬁt for the year attributable to equityholders ...... 6,741,819 7,078,388 8,892,019

Note: (1) The figures for results of operations in 2013 appearing in this table correspond to those appearing in the Etisalat 2014 Financial Statements (i.e., after restatement as required under IFRS 5). The figures for results of operations in 2012 appearing in this table have not been restated in the same manner and, accordingly, a like-to-like comparison between the figures for results of operations in 2012 and 2013 in this table may not necessarily be made.

Comparison of results of operations for the years ended 31 December 2013 and 2014

Revenue The Group’s revenue for the year ended 31 December 2014 was AED 48,766.9 million, compared to AED 38,564.2 million for the year ended 31 December 2013, an increase of AED 10,202.7 million, or 26.5 per cent. This increase was primarily due to strong performance in the UAE and the consolidation of Maroc Telecom during this period.

Revenue, including internal and external sales, from the Group’s operations in the UAE, including telecommunications and other operations, for the year ended 31 December 2014 was AED 28,262.1 million, compared to AED 25,963.5 million for the year ended 31 December 2013, an increase of AED 2,298.6 million, or 8.9 per cent. This increase was primarily due to an increase in data revenues and strong performance in Etisalat’s ﬁxed-line and post-paid businesses.

Revenue, including internal and external sales, from the Group’s operations outside the UAE for the year ended 31 December 2014 was AED 21,484.9 million, compared to AED 13,579.3 million for the year ended 31 December 2013, an increase of AED 7,905.6 million, or 58.2 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period.

Operating expenses The following table sets forth the Group’s operating expenses (before federal royalty) for the years ended 31 December 2013 and 2014.

92 Year ended 31 December

2013(1) 2014 Change

(Restated) (AED thousands) (%) Direct cost of sales ...... 8,613,096 10,453,322 21.4 Network and other related costs ...... 2,136,261 2,813,011 31.7 Staff costs ...... 5,095,467 6,156,004 20.8 Depreciation ...... 3,732,211 5,111,162 36.9 Amortisation...... 807,181 1,685,022 108.8 Regulatory expenses ...... 661,795 721,214 9.0 Other operating expenses...... 3,351,194 4,892,848 46.0

Total operating expenses (before federal royalty)...... 24,397,205 31,832,583 30.5

Note: (1) In order that an appropriate comparison can be made between results of operations for 2013 and 2014, the comparative figures for results of operations in 2013 appearing in this table correspond to those appearing in the Etisalat 2014 Financial Statements (i.e., after restatement as required under IFRS 5). Direct cost of sales: Direct cost of sales for the year ended 31 December 2014 was AED 10,453.3 million, compared to AED 8,613.1 million for the year ended 31 December 2013, an increase of AED 1,840.2 million, or 21.4 per cent. per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period. As a percentage of revenue, direct cost of sales declined 1 per cent. from 22 per cent. in 2013 to 21 per cent. in 2014. Network and other related costs: Network costs for the year ended 31 December 2014 was AED 2,813.0 million, compared to AED 2,136.3 million for the year ended 31 December 2013, an increase of AED 676.7 million, or 31.7 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period. As a percentage of revenue, network costs remained flat over the year at 6 per cent. Staff costs: Staff costs, which include salaries, pensions and provision for end of service benefits, for the year ended 31 December 2014 was AED 6,156.0 million, compared to AED 5,095.5 million for the year ended 31 December 2013, an increase of AED 1,060.5 million, or 20.8 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period. As a percentage of revenue, staff costs remained flat year over the year at 13 per cent. Depreciation: Depreciation for the year ended 31 December 2014 was AED 5,111.2 million, compared to AED 3,732.2 million for the year ended 31 December 2013, an increase of AED 1,379.0 million, or 36.9 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period. As a percentage of revenue, depreciation remained flat over the year at 10 per cent. Amortisation: Amortisation for the year ended 31 December 2014 was AED 1,685.0 million, compared to AED 807.2 million for the year ended 31 December 2013, an increase of AED 877.8 million, or 108.8 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period. Regulatory expenses: Regulatory expenses for the year ended 31 December 2014 was AED 721.2 million, compared to AED 661.8 million for the year ended 31 December 2013, an increase of AED 59.4 million, or 9.0 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period. Other operating expenses: Other operating expenses for the year ended 31 December 2014 was AED 4,892.8 million, compared to AED 3,351.2 million for the year ended 31 December 2013, an increase of AED 1,541.6 million, or 46.0 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period.

Impairment and other losses Impairment and other losses for the year ended 31 December 2014 was AED 932.0 million, compared to AED 1,374.2 million for the year ended 31 December 2013, a decrease of AED 442.2 million, or 32.2 per cent. This decrease was primarily driven by improved performance and recovering economic conditions in respect of certain operating companies within the Group.

93 Share of results of associates and joint ventures Share of losses of associates and joint ventures for the year ended 31 December 2014 was AED 461.1 million, compared to share of proﬁts of AED 1,754.3 million for the year ended 31 December 2013, a decrease of AED 2,215.4 million, or 126 per cent. This decrease was primarily due to the Group’s share of loss from Mobily (see ‘‘– Recent Developments’’ above). The resulting impact of the restatement along with the current year share of losses from Mobily were accounted for in the Etisalat 2014 Financial Statements.

Operating proﬁt before federal royalty Taking these operating costs into account, the Group’s operating proﬁt before federal royalty for the year ended 31 December 2014 was AED 15,541.3 million, compared to AED 14,547.1 million for the year ended 31 December 2013, an increase of AED 994.2 million, or 6.8 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period, and was offset by a decline in share of results from Mobily.

Federal royalty Federal royalty for the year ended 31 December 2014 was AED 5,333.1 million, compared to AED 6,115.0 million for the year ended 31 December 2013, a decrease of AED 781.9 million, or 12.8 per cent. See ‘‘– Signiﬁcant Factors Affecting Financial Condition and Results of Operations – Royalties and Tax in the UAE’’.

Operating Proﬁt Finance and other income Finance and other income for the year ended 31 December 2014 was AED 2,653.5 million, compared to AED 468.6 million for the year ended 31 December 2013, an increase of AED 2,184.9 million, or 466.3 per cent.

Finance and other costs Finance and other costs for the year ended 31 December 2014 was AED 1,736.5 million, compared to AED 437.6 million for the year ended 31 December 2013, an increase of AED 1,298.9 million, or 296.9 per cent. This increase was primarily driven by increased interest costs on bank loans, bonds and cross-currency swap and acquisition related costs associated with the acquisition of Maroc Telecom.

Taxation Taxation for the year ended 31 December 2014 was AED 1,153.6 million, compared to AED 648.6 million for the year ended 31 December 2013, an increase of AED 505.0 million, or 77.8 per cent. This increase was primarily due to the consolidation of Maroc Telecom during this period.

Net profit The Group’s net profit for the year ended 31 December 2014 was AED 9,853.5 million, compared to AED 7,750.9 million for the year ended 31 December 2013, an increase of AED 2,102.6 million, or 27.1 per cent. Profit attributable to equity holders for the year ended 31 December 2014 was AED 8,892.0 million, compared to AED 7,078.4 million for the year ended 31 December 2013, an increase of AED 1,813.6 million, or 25.6 per cent.

Comparison of results of operations for the years ended 2012 and 2013 Revenue The Group’s revenue for the year ended 31 December 2013 was AED 38,853.2 million, compared to AED 32,946.3 million for the year ended 31 December 2012, an increase of AED 5,906.9 million, or 17.9 per cent. This increase was primarily due to the strong performance of the Group’s operations in the UAE and the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. Revenue, including internal and external sales, from the Group’s operations in the UAE, including telecommunications and other operations, for the year ended 31 December 2013 was

94 AED 25,955.5 million, compared to AED 23,838.3 million for the year ended 31 December 2012, an increase of AED 2,117.2 million, or 8.9 per cent. This increase was primarily due to subscriber growth, increase in demand for data services and higher sales of handsets. Revenue, including internal and external sales, from the Group’s operations outside the UAE for the year ended 31 December 2013 was AED 13,876.4 million, compared to AED 9,469.4 million for the year ended 31 December 2012, an increase of AED 4,407.0 million, or 46.5 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. This increase was offset by a decrease in revenue from the Group’s operations in Egypt, which decreased by 6.6 per cent., principally due to devaluation of the Egyptian pound and disruption to Etisalat Misr’s business due to the ongoing political situation in Egypt, and the resulting impact on tourism which, in particular, impacted revenues from roaming services. However, revenue from the Group’s operations in Egypt in local currency saw single-digit growth during the same period due to an increase in the post-paid customer base, growth in the data segment and increased handset sales.

Operating expenses The following table sets forth the Group’s operating expenses (before federal royalty) for the years ended 31 December 2012 and 2013.

Year ended 31 December

2012 2013(1) % Change

(AED thousands) (%) Direct cost of sales ...... 7,165,626 8,730,519 21.8 Network costs...... 1,329,038 2,187,302 64.6 Staff costs ...... 4,475,420 5,149,391 15.1 Depreciation ...... 2,670,013 3,798,455 42.3 Amortisation...... 714,726 809,093 13.2 Regulatory expenses ...... 537,879 674,042 25.3 Other operating expenses...... 2,640,791 3,351,582 26.9

Total operating expenses (before federal royalty)...... 19,533,493 24,700,384 26.5

Note: (1) In order that an appropriate comparison can be made between results of operations for 2012 and 2013, the comparative ﬁgures for results of operations in 2013 appearing in this table correspond to those appearing in the Etisalat 2013 Financial Statements (i.e., before restatement as required under IFRS 5 and as presented in the Etisalat 2014 Financial Statements). Direct cost of sales: Direct cost of sales for the year ended 31 December 2013 was AED 8,730.5 million, compared to AED 7,165.6 million for the year ended 31 December 2012, an increase of AED 1,564.9 million, or 21.8 per cent. This increase was primarily due to the consolidation of PTCL’s results in 2013, as well as due to increases in Etisalat UAE relating to higher cost of handsets sold and interconnection/termination costs. Network costs: Network costs for the year ended 31 December 2013 was AED 2,187.3 million, compared to AED 1,329.0 million for the year ended 31 December 2012, an increase of AED 858.3 million, or 64.6 per cent. This increase was due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. Staff costs: Staff costs, which include salaries, pensions and provision for end of service beneﬁts, for the year ended 31 December 2013 was AED 5,149.4 million, compared to AED 4,475.4 million for the year ended 31 December 2012, an increase of AED 674.0 million, or 15.1 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. Depreciation: Depreciation for the year ended 31 December 2013 was AED 3,798.5 million, compared to AED 2,670.0 million for the year ended 31 December 2012, an increase of AED 1,128.5 million, or 42.3 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. Amortisation: Amortisation for the year ended 31 December 2013 was AED 809.1 million, compared to AED 714.7 million for the year ended 31 December 2012, an increase of AED 94.4 million, or 13.2 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards.

95 Regulatory expenses: Regulatory expenses for the year ended 31 December 2013 was AED 674.0 million, compared to AED 537.9 million for the year ended 31 December 2012, an increase of AED 136.1 million, or 25.3 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards. Other operating expenses: Other operating expenses for the year ended 31 December 2013 was AED 3,351.6 million, compared to AED 2,640.8 million for the year ended 31 December 2012, an increase of AED 710.8 million, or 26.9 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards, and increased marketing expenses.

Impairment and other losses Impairment and other losses for the year ended 31 December 2013 was AED 1,374.2 million, compared to AED 2,825.4 million for the year ended 31 December 2012, a decrease of AED 1,451.2 million, or 51.4 per cent. This decrease was primarily driven by improved performance and recovering economic conditions in respect of certain operating companies within the Group.

Share of results of associates and joint ventures Share of results of associates and joint ventures for the year ended 31 December 2013 was AED 1,754.3 million, compared to AED 1,263.2 million for the year ended 31 December 2012, an increase of AED 491.1 million, or 38.9 per cent. This increase was primarily due to the Group’s reassessment of its accounting treatment for share of results of one of its associates during this period. Consequently, the Group discontinued the recognition of the share of results of that associate from 1 January 2013. The net cumulative unrecognised share of losses in the associate as at 31 December 2013 amounted to AED 630 million.

Operating proﬁt before federal royalty Taking these operating costs into account, the Group’s operating proﬁt before federal royalty for the year ended 31 December 2013 was AED 14,533.0 million, compared to AED 11,850.6 million for the year ended 31 December 2012, an increase of AED 2,682.4 million, or 22.6 per cent. This increase was primarily due to the growth in consolidated revenues, supported by cost control (despite an increase in aggregate operating costs) and lower impairment charges.

Federal royalty Federal royalty for the year ended 31 December 2013 was AED 6,115.0 million, compared to AED 6,451.3 million for the year ended 31 December 2012, a decrease of AED 336.3 million, or 5.2 per cent. See ‘‘– Signiﬁcant Factors Affecting Financial Condition and Results of Operations – Royalties and Tax in the UAE’’.

Operating Proﬁt Finance income Finance income for the year ended 31 December 2013 was AED 440.2 million, compared to AED 721.1 million for the year ended 31 December 2012, a decrease of AED 280.9 million, or 39.0 per cent. This decrease was primarily due to a bullet payment being made by Etisalat in respect of the federal royalty and reduced income from loans to a related party.

Finance costs Finance costs for the year ended 31 December 2013 was AED 458.6 million, compared to AED 322.9 million for the year ended 31 December 2012, an increase of AED 135.7 million, or 42.0 per cent. This increase was primarily due to unwinding of interest costs in 2012 following deconsolidation of the Group’s operations in India.

Taxation Taxation for the year ended 31 December 2013 was AED 648.6 million, compared to AED 85.9 million for the year ended 31 December 2012, an increase of AED 562.7 million, or 655.0 per cent. This increase was primarily due to the consolidation of PTCL into the results of the Group from 31 December 2012 onwards, and the unwinding of provisions in an international subsidiary of the Group in 2012.

96 Net profit The Group’s net profit for the year ended 31 December 2013 was AED 7,750.9 million, compared to AED 6,571.7 million for the year ended 31 December 2012, an increase of AED 1,179.2 million, or 17.9 per cent. Profit attributable to equity holders for the year ended 31 December 2013 was AED 7,078.4 million, compared to AED 6,741.8 million for the year ended 31 December 2012, an increase of AED 336.6 million, or 5.0 per cent.

LIQUIDITY AND CAPITAL RESOURCES The Group’s principal source of funding for each of the periods under review has been cash ﬂow from operations.

Cash Flows The following table sets out certain information about the Group’s consolidated cash ﬂows for the years ended 31 December 2012, 2013 and 2014.

Year ended 31 December

2012 2013 2014

(Restated) (AED thousands) Net cash from operating activities...... 10,485,956 12,973,561 17,208,525 Net cash used in investing activities...... (225,007) (4,853,487) (24,102,407) Net cash used in ﬁnancing activities...... (6,326,725) (6,585,123) 9,161,558 Net increase in cash and cash equivalents...... 3,934,224 1,534,951 2,267,676 Cash and cash equivalents at the beginning of the year...... 9,971,647 13,934,076 15,450,248 Effect of foreign exchange rate changes...... 28,205 (18,779) 833,849

Cash and cash equivalents at the end of the year ...... 13,934,076 15,450,248 18,551,773

Net cash from operating activities Net cash from operating activities principally reflects operating profit and working capital management. Net cash from operating activities for the year ended 31 December 2014 was AED 17,208.5 million, compared to AED 12,973.6 million for the year ended 31 December 2013, an increase of AED 4,234.9 million, or 32.6 per cent. This increase was primarily due to improved performance in the UAE and the consolidation of Maroc Telecom during this period. Net cash from operating activities for the year ended 31 December 2013 was AED 12,973.6 million, compared to AED 10,486.0 million for the year ended 31 December 2012, an increase of AED 2,487.6 million, or 23.7 per cent. This increase was principally due to an increase in operating profit.

Net cash used in investing activities Net cash used in investing activities for the year ended 31 December 2014 was AED 24,102.4 million compared to AED 4,853.5 million for the year ended 31 December 2013, an increase of AED 19,248.9 million, or 396.6 per cent. This increase was primarily due to the acquisition of Maroc Telecom during this period, as well as increased capital expenditures. Net cash used in investing activities for the year ended 31 December 2013 was AED 4,853.5 million, compared to AED 225.0 million for the year ended 31 December 2012, an increase of AED 4,628.5 million, or 2,057.0 per cent. This increase was principally due to an increase in capital expenditure in 2013 and one-off cash inﬂows in 2012 relating to the consolidation of PTCL and the proceeds from the partial disposal by the Group of PT XL Axiata Tbk (‘‘XL’’), which was previously classiﬁed as an associate of the Group.

Net cash used in financing activities Net cash from financing activities for the year ended 31 December 2014 was AED 9,161.6 million, compared to net cash used in financing activities of AED 6,585.1 million for the year ended 31 December 2013, an increase of AED 15,746.7 million, or 239.1 per cent. This increase was

97 primarily due to proceeds from issuance of bonds, raised for the acquisition of Maroc Telecom. See ‘‘Indebtedness’’. Net cash used in ﬁnancing activities for the year ended 31 December 2013 was AED 6,585.1 million, compared to AED 6,326.7 million for the year ended 31 December 2012, an increase of AED 258.4 million, or 4.1 per cent. This increase was principally due to increased dividend pay-outs, which was offset by net cash inﬂows from borrowings.

Indebtedness As of 31 December 2014, the Group had outstanding borrowings of AED 22,492.5 million, compared to AED 5,871.7 million as of 31 December 2013. On 22 May 2014, Etisalat completed the listing of the Programme on the Irish Stock Exchange. The Programme was rated Aa3 by Moody’s, AA- by S&P and A+ by Fitch. On 18 June 2014, Etisalat issued the inaugural bonds under the Programme. The bonds were denominated in U.S. dollars and Euros and consisted of four series: (i) a U.S.$500 million ﬁve-year series with coupon rate of 2.375 per cent. per annum; (ii) a A1.2 billion seven-year series with coupon rate of 1.750 per cent. per annum; (iii) a U.S.$500 million 10-year series with coupon rate of 3.500 per cent. per annum; and (iv) a A1.2 billion 12-year series with coupon rate of 2.750 per cent. per annum. The net proceeds from the issuance of the bonds were used for repayment of outstanding facilities of A3.15 billion utilised for the acquisition of Maroc Telecom. The following table presents the Group’s outstanding indebtedness (at carrying value) as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013 2014

(AED thousands) Notes under the Programme ...... — — 14,164,803 Bank overdrafts ...... 51,298 105,895 2,416,452 Bank loans...... 4,203,791 4,576,106 4,909,289 Other borrowings: Loans from non-controlling interests ...... 62,340 60,382 56,562 Advances from non-controlling interests...... 583,311 579,186 570,715 Vendor ﬁnancing ...... 871,362 541,676 366,057 Other...... 34,336 8,420 8,671

Total...... 5,806,438 5,871,665 22,492,549

Contractual Obligations The following table sets out the payments due by period under the Group’s contractual obligations excluding: (i) trade and other payables; (ii) derivative ﬁnancial instruments; (iii) end of service beneﬁts; (iv) capital projects and investment expenditures; and (v) guarantees, in each case as of 31 December 2014.

Payments due by period as of 31 December 2014(1)

Less than More than Total(1) 1 year 1-5 years 5 Years

(AED thousands) Borrowings...... 22,492,549 3,952,158 5,916,441 12,623,950 Finance leases ...... 24,266 6,983 17,283 — Licence costs payable...... 1,122,818 186,119 936,699 —

Total...... 23,639,633 4,145,260 6,870,423 12,623,950

Note: (1) All ﬁgures are unaudited and are derived from management accounts.

98 CAPITAL EXPENDITURES The following table sets out the capital expenditures (which include amounts used for purchases of ﬁxed assets and intangible assets (including the acquisition of licences)) made by the Group for the years ended 31 December 2012, 2013 and 2014.

Year ended 31 December

2012 2013 2014

Capital Capital Capital expenditure expenditure expenditure (AED (AED (AED thousands)(1) % of total thousands)(1) % of total thousands)(1) % of total UAE ...... 1,939,353 46.6 2,063,453 32.6 2,598,158 29.1 International...... 2,224,995 53.4 4,270,433 67.4 6,315,400 70.9

Total ...... 4,164,348 100.0 6,333,886 100.0 8,913,558 100.0

Note: (1) Includes the Group’s net expenditures on the purchase of ﬁxed and intangible assets.

The Group’s total capital expenditure for the year ended 31 December 2014 was AED 8,913.6 million, compared to AED 6,333.9 million for the year ended 31 December 2013, an increase of AED 2,579.7 million, or 41 per cent. Capital expenditures for the year ended 31 December 2014 were principally driven by 2G and 3G license renewals/acquisitions (as applicable) in Ufone in Pakistan and the impact of the consolidation of Maroc Telecom.

The Group’s capital expenditure in the UAE for the year ended 31 December 2014 was AED 2,598.1 million, compared to AED 2,063.5 million during the year ended 31 December 2013, an increase of AED 534.7 million, or 26 per cent. Capital expenditures in the UAE for the year ended 31 December 2014 were principally driven by network modernisation and coverage, in addition to expanding Etisalat’s FTTH/eLife footprint. The Group’s capital expenditure related to international operations for the year ended 31 December 2014 was AED 6,315.4 million, compared to AED 4,270.4 million for the year ended 31 December 2013, an increase of AED 2,044.9 million, or 48 per cent. Capital expenditures on international operations for the year ended 31 December 2014 were principally driven by the renewal of Ufone’s 2G licence and its 3G licence acquisition, as well as the consolidation of Maroc Telecom. The Group expects to incur substantial capital expenditures in future periods for network construction, expansion and maintenance. As of 31 December 2014, the Group had approved future capital projects and investment commitments amounting to 19.2 per cent. of revenue.

OFF-BALANCE SHEET ARRANGEMENTS The Group does not have any off-balance sheet arrangements that have or are reasonably expected to have a material current or future effect on its ﬁnancial condition, revenue, expenses, results of operations, liquidity, capital expenditures or capital resources. See ‘‘Liquidity and Capital Resources – Contractual Obligations’’ for a description of the Group’s outstanding contractual obligations.

RELATED PARTY TRANSACTIONS Transactions between Etisalat and its subsidiaries, which are related parties, have been eliminated on consolidation in the Etisalat Financial Statements. See Note 16 (‘‘Related party transactions’’) to the Etisalat 2014 Financial Statements.

UAE Government and State-Controlled Entities The Group provides telecommunications services to the UAE Government (including Ministries and local bodies). These transactions are carried out at arm’s length on normal commercial terms. The credit period allowed to UAE Government customers ranges from 90 to 120 days. As of 31 December 2014, trade receivables included an amount of AED 1,073 million receivable from UAE Government Ministries and local bodies.

99 Joint Ventures and Associates Sales to related parties comprise management fees and the provision of telecommunications products and services (primarily voice trafﬁc and leased circuits) by the Group. Purchases relate exclusively to the provision of telecommunications products and services by associates to the Group. The principal management and other services provided to the Group’s associates as of 31 December 2014 are set out below: * Mobily: Pursuant to the Communications and Information Technology Commission’s licensing requirements, Mobily (then under incorporation) entered into a management agreement with Etisalat as its operator from 23 December 2004. Amounts invoiced by the Group relate to annual management fees, fees for staff secondments and other services provided under the management agreement. The term of the management agreement is for a period of seven years and can be automatically renewed for successive periods of ﬁve years unless Etisalat serves a 12 month notice of termination or Mobily serves a six-month notice of termination prior to the expiry of the applicable period. * Thuraya: The Group provides a primary gateway facility to Thuraya Telecommunications Company PJSC (‘‘Thuraya’’) including maintenance and support services. The Group receives annual income from Thuraya in respect of these services. * Emerging Markets Telecommunications Services B.V.: Amounts invoiced by the Group relate to annual management fees, fees for staff secondments, interest on loan and other services.

Compensation of Directors The total compensation paid to the Board as a group for the year ended 31 December 2014 was AED 15.7 million, compared to AED 17.0 million for the year ended 31 December 2013.

DISCLOSURES ABOUT RISK Financial Risk Management Objectives The Group’s corporate finance function has overall responsibility for monitoring the domestic and international financial markets and managing the financial risks relating to the Group and providing recommendations for financial risk management of the Group’s operating companies. Any significant decisions about whether to invest, borrow funds or purchase derivative financial instruments are approved by either the Board or the relevant authority of the relevant member of the Group. The Group’s risk includes market risk, credit risk and liquidity risk. See ‘‘Risk Factors – Fluctuations in currency exchange rates could materially and adversely affect the Group’s business, financial condition, results of operations and prospects’’ and ‘‘Risk Factors – A downgrade in Etisalat’s credit ratings could adversely affect the Group’s ability to access the debt capital markets and may increase its borrowing costs’’. The Group takes into consideration several factors when determining its capital structure, with the aim of ensuring sustainability of the business and maximising the value to shareholders. The Group monitors its cost of capital with a goal of optimising its capital structure. In order to do this, the Group monitors the financial markets and any movement in standard industry approaches for calculating weighted average cost of capital. The Group also monitors its net financial debt ratio to obtain and maintain a strong credit rating, which enables the Group to match potential cash flow generation with the possible investments that could arise at any time. The Group also considers other variables such as country risk, volatility in cash flow generation or applicable tax rules, when determining the Group’s financial structure.

100 DESCRIPTION OF THE GROUP

Overview Etisalat was founded in 1976 and is the leading and incumbent telecommunications provider in the UAE, offering a wide range of mobile, fixed-line, internet and data telecommunications services to business, residential and government customers. Etisalat was the sole provider of mobile and fixed-line telecommunications services in the UAE until February 2007. As of 31 December 2014, its share of the UAE mobile and fixed-line service markets was 55.2 per cent. and 85.1 per cent., respectively, in terms of numbers of subscribers (source: Etisalat and du). The Group is listed on the Abu Dhabi Securities Exchange and its market capitalisation was AED 97.4 billion (U.S.$26.5 billion) as of 14 April 2015 (source: Bloomberg). In 2004, Etisalat began forming and acquiring interests in subsidiaries and associates in order to grow and carry out its international operations. Since then, the Group has significantly expanded its international telecommunications operations through acquisitions of existing operators as well as by acquiring new licences and building its own operations. The Group has telecommunications operations in 18 countries outside the UAE, through its subsidiaries and associates in Morocco, Egypt, Pakistan, Saudi Arabia, Nigeria, Sudan, Tanzania, Afghanistan, Sri Lanka, Benin, CAR, Gabon, Coˆte d’Ivoire, Niger, Togo, Mauritania, Burkina Faso and Mali. A significant proportion of the Group’s revenues, profits and cash flows are derived from Etisalat’s operations in the UAE. For the years ended 31 December 2012, 2013 and 2014, the Group had consolidated revenue of AED 32,946.3 million, AED 38,564.2 million and AED 48,766.9 million, respectively, of which 68.9 per cent., 63.9 per cent., and 55.3 per cent., respectively, was contributed by the Group’s UAE telecommunications operations carried out by Etisalat (based on external sales). Whilst the proportion of the Group’s revenue derived from the Group’s operations in the UAE, and therefore the Group’s reliance on its UAE operations, has decreased as a result of the Group’s recent acquisition of Maroc Telecom, the UAE is expected to remain as the Group’s most significant market by revenue. Outside the UAE, Maroc Telecom in Morocco, Etisalat Misr in Egypt and PTCL in Pakistan were the most significant of the Group’s subsidiaries in terms of contribution to consolidated revenue as of 31 December 2014. Maroc Telecom generated 16.6 per cent. of the Group’s consolidated revenue for the year ended 31 December 2014 (based on external sales), having been consolidated with the Group since the completion of its acquisition by the Group on 14 May 2014. Etisalat Misr generated 15.3 per cent., 12.2 per cent. and 9.9 per cent. of the Group’s consolidated revenue for the years ended 31 December 2012, 2013 and 2014, respectively (based on external sales). PTCL generated 11.5 per cent. and 9.1 per cent. of the Group’s consolidated revenue for the years ended 31 December 2013 and 2014, respectively (based on external sales), 2013 being the first year in which PTCL was consolidated with the Group, having been previously accounted for as an associate of the Group. At 31 December 2012, the Group reassessed its ability to control PTCL following the falling away of certain prevailing existing control impediments. The total mobile and fixed-line subscriber base of the Group as of 31 December 2014 was approximately 11 million in the UAE and 158 million for its international subsidiaries and associates. Under the Group’s current structure, Etisalat is both the operating company in the UAE as well as the ultimate holding company for the Group’s subsidiaries, associates and joint ventures. As of the date of this Base Prospectus, the UAE Government is Etisalat’s controlling shareholder, holding 60 per cent. of Etisalat’s ordinary shares through the Emirates Investment Authority. Pursuant to Article 7 of the Etisalat Law, the UAE Government’s shareholding in Etisalat may not be less than 60 per cent. The composition of Etisalat’s Board is provided for in the Etisalat Law, and has been amended by the Telecom Law. The Board comprises 11 directors, of which seven (including the Chairman of the Board) represent the UAE Government and are appointed by Federal Decree. The four remaining directors are elected by Etisalat’s non-UAE Government shareholders. See ‘‘– UAE Operations – Regulation’’. The table below lists Etisalat and its subsidiaries and associates involved in its telecommunications operations, the effective economic ownership interest of Etisalat in these entities, as of the date of this Base Prospectus, and data regarding each entity’s operations, as of 31 December 2014 (unless stated otherwise).

101 Population of country Number of Country of Current (network subscribers in Licence types (expiry Operating Company operation ownership(1) coverage)(2) Penetration rate(2) millions(3) Market share(4) dates)

Middle East Etisalat(5)...... UAE N/A 9 million Mobile: 201.2% Mobile: 9.0 Mobile: Mobile (2G/3G/ (100%) Fixed-line: Fixed-line: 55.2% 4G) 25.2% 1.0 Fixed-line Fixed-line Internet Internet: 13.1% Broadband voice: 85.1% (all 2026) Internet: 1.0 Broadband Internet: 84.9% Mobily(6) ...... Saudi Arabia 27.5% 31 milion Mobile: 186% Mobile: 18.9 Mobile: Mobile (2G/3G/ (99%) 29.6% 4G) (2029) Etisalat Misr(7) ...... Egypt 66% 85 million Mobile: 116% Mobile: 31.8 Mobile: Mobile (2G/3G) (99%) 30.7% (2031) Africa Maroc Telecom(8)..... Morocco 48.4% 34 million Mobile: 133% Mobile: 18.2 Mobile: Mobile (2G) (97%) Fixed-line: Fixed-line: 41.3% (Unlimited) 7.5% 1.5 Fixed-line: (3G)(2031) 52.3% Fixed-line (Unlimited) Mauritel(9) ...... Mauritania 19.9% 4 million Mobile: 90.1% Mobile: 1.9 Mobile: Mobile (2G)(2015) Fixed-line: Fixed-line: 53.3% (3G) (2021) 2.7% 0.04 Fixed-line: Fixed-line (2021) 46.1% Onatel(10)...... Burkina Faso 24.7% 17 million Mobile: 71.8% Mobile: 5.5 Mobile: 46% Mobile (2G)(2020) Fixed-line: Fixed-line: Fixed-line: (3G) (2023) 0.5% 0.08 100% Fixed-line (2026) Gabon Telecom(11)... Gabon 24.7% 2 million Mobile: 195% Mobile: 1.18 Mobile: Mobile (2G)(2017) Fixed-line: Fixed-line: 35.2% (3G/4G) (2024) 1.2% 0.02 Fixed-line: Fixed-line (2022) 100% Sotelma(12)...... Mali 24.7% 17 million Mobile: 124% Mobile: 10.7 Mobile: Mobile (2G/3G) Fixed-line: Fixed-line: 45.5% (2024) 0.8% 0.13 Fixed-line: Fixed-line (2024) 95% Various (each Coˆte d’Ivoire, Various 66 million Mobile: 74% Mobile: 9.8 Varies by Mobile (2G) operating under Togo, CAR, (see note (59%) (average across market (various) and (3G) ‘‘Moov’’ brand)(13) ... Gabon, Niger 13 below) (across all all countries) (in CDI and Benin) and Benin markets) EMTS(14)...... Nigeria 40% 174 million Mobile: 72% Mobile: 21.1 Mobile: Mobile (2G/3G) (82%) 16.5% (2022) Canar(15)...... Sudan 90.5% 34 million Fixed-line: 2% Fixed-line: Fixed-line: Fixed, wireless (31%) 0.3 60% (2020) Zantel(16) ...... Tanzania 85% 51 million Mobile: 67% Mobile: 2.0 Mobile: 6% Mobile (2G with (40%) ability to offer 3G and 3.5G)(2032) Fixed (2032) Asia PTCL and Ufone(17) Pakistan 23.4% 186 million Mobile: 73.1% Mobile: 21.9 Mobile: 16% Mobile (2G)(2029) (77%) Fixed-line: Fixed-line: Fixed-line: (3G)(2029) 3.4% 4.18 67% Fixed-line (2020) Internet: 4.8% Internet: 28% Internet (2024) Etisalat Afghanistan 100% 31 million Mobile: 74% Mobile: 4.1 Mobile: 20% Mobile (2G)(2022) Afghanistan(18) ...... (78%) and (3G)(2027) Etisalat Lanka(19)..... Sri Lanka 100% 21 million Mobile: 99.4% Mobile: 4.2 Mobile: Mobile (2G/3G) (98%) 18.9% (2018)

Notes: (1) Figures include aggregate direct and indirect holdings as of the date of this Base Prospectus calculated on an effective ownership basis, and are rounded to the nearest whole number. (2) Population and penetration rate reﬂect public data as of 31 December 2014 unless otherwise indicated. Network coverage refers to the percentage of the population under licence that receives services from the operating company’s existing telecommunications network in each jurisdiction or region in which the Group operates. Network coverage is based on public information, if available. If network coverage information is not publicly available, the information is based on management estimates. (3) See ‘‘Presentation of Financial and Other Information – Presentation of Industry, Market and Customer Data – Customers’’ for a description of how the Group calculates subscribers. Figures are as of 31 December 2014 unless otherwise indicated. (4) Market share is based on publicly available information provided by regulators, if available, as of 31 December 2014 unless otherwise indicated. If such information is not available, market share is based on a number of factors, including public statements by the Group’s competitors and management estimates. See ‘‘Presentation of Financial and Other Information – Presentation of Industry, Market and Customer Data – Market Share’’.

102 (5) Figures for penetration rates are as of 31 December 2014. Figures for number of subscribers and market share are as of 31 December 2014. (6) Etisalat holds a direct 27.5 per cent. interest in Mobily. (7) Etisalat owns its interest in Etisalat Misr through its 100 per cent. ownership interest in its subsidiary Etisalat International Egypt LLC (‘‘EIEL’’). (8) Etisalat owns its controlling interest in Maroc Telecom through its 91.33 per cent. ownership interest in its subsidiary Etisalat Investment North Africa LLC (‘‘EINA’’), which holds a 100 per cent. ownership interest in Socie´te´ de Participation dans les Te´lećommunications (‘‘SPT’’), which in turn holds a 53 per cent. ownership interest in Maroc Telecom. (9) Etisalat owns its controlling interest in Mauritel through Maroc Telecom. The holding company of Mauritel, Compagnie Mauritanienne de Communications (‘‘CMC’’), in which Maroc Telecom holds an 80 per cent. equity stake, holds a 51.5 per cent. direct interest in Mauritel. (10) Etisalat owns its controlling interest in Onatel through Maroc Telecom, which holds a 51.0 per cent. direct shareholding in Onatel. (11) Etisalat owns its controlling interest in Gabon Telecom through Maroc Telecom, which holds a 51.0 per cent. direct shareholding in Gabon Telecom. (12) Etisalat owns its controlling interest in Sotelma through Maroc Telecom, which holds a 51.0 per cent. direct shareholding in Sotelma. (13) Prior to 26 January 2015, the Group conducted operations in CAR, Gabon, Coˆte d’Ivoire, Niger and Togo under the ‘‘Moov’’ brand through Atlantique Telecom, a wholly-owned subsidiary of Etisalat. In the case of Gabon, this should be distinguished from Maroc Telecom’s pre-existing operations through Gabon Telecom (see note 11 above). Prior to 26 January 2015, Etisalat Benin, a wholly-owned subsidiary of Etisalat, was also consolidated with Atlantique Telecom for presentation purposes in Etisalat’s consolidated financial statements. On 26 January 2015, Maroc Telecom completed the acquisition of the Group’s operations in Benin, CAR, Gabon, Coˆte d’Ivoire, Niger and Togo. Maroc Telecom holds a 100 per cent. direct shareholding in its subsidiaries in CAR and Niger, a 100 per cent. direct shareholding in Etisalat Benin, a direct shareholding of 96 per cent. in its subsidiary in Togo, a direct shareholding of 90 per cent. in its subsidiary in Gabon and a direct shareholding of 85 per cent. in its subsidiary in Coˆte d’Ivoire. Atlantique Telecom no longer conducts any operations. (14) Etisalat holds an indirect interest in EMTS through its 40 per cent. ownership interest in EMTS Holdings B.V. (‘‘EMTS Holdings’’), which is held through Etisalat’s 100 per cent. interest in Etisalat Cooperatief U.A. (‘‘Etisalat Cooperatief’’). Etisalat Cooperatief is 95 per cent. held by Etisalat International Nigeria Limited (‘‘EINL’’) and 5 per cent. held by Etisalat International Netherland Limited (‘‘EINtL’’). Both EINL and EINtL are wholly-owned by Etisalat. Figures for penetration rates are as of 31 December 2014, based on total customer numbers across all network operators against country population. Figures for number of subscribers and market share are as of 31 December 2014. (15) Etisalat holds a direct 90.5 per cent. interest in Canar Telecommunications Co. Limited (‘‘Canar’’). Figures for number of subscribers and market share are as of 31 December 2014. (16) Etisalat holds a direct 85 per cent. interest in Zanzibar Telecom Ltd (‘‘Zantel’’). Figures for number of subscribers and market share are as of 31 December 2014. (17) Etisalat holds its interest in PTCL through Etisalat International Pakistan LLC (‘‘EIPL’’), which is 90 per cent. owned by Etisalat. EIPL holds a 26.0 per cent. interest in PTCL, giving Etisalat a 23.4 per cent. economic interest in PTCL. PTCL has a 100 per cent. interest in Ufone. Figures for number of fixed-line subscribers includes internet subscribers. Figures for number of subscribers include mobile broadband subscribers. (18) Etisalat owns its interest in Etisalat Afghanistan through its 100 per cent. interest in its subsidiary Etisalat International Afghanistan Limited (‘‘EIAL’’). The market share figure presented for Etisalat Afghanistan is as of 31 December 2014. Figures for number of subscribers and market share are as of 31 December 2014. (19) Etisalat holds its interest in Etisalat Lanka (Pvt.) Ltd. (‘‘Etisalat Lanka’’) through its 100 per cent. interest in its subsidiary Etisalat International Sri Lanka Limited (‘‘EISLL’’). EISLL holds its interest in Etisalat Lanka through its 100 per cent. interest in Sark Corporation N.V. (‘‘Sark’’). The market share figure for Etisalat Lanka is as of 31 December 2014. Figures for number of subscribers are as of 31 December 2014.

Strengths The Group believes that it beneﬁts from the following competitive strengths that position it to achieve its strategic objectives:

Leading and incumbent position in UAE; investment for future growth Etisalat is the market leader in telecommunications services in the UAE with market shares of 55.2 per cent. in mobile and 85.1 per cent. in fixed-line services, in each case measured by numbers of subscribers as of 31 December 2014. The Group believes that the UAE is a relatively mature telecommunications market that provides a stable foundation for both shareholder remuneration and the Group’s cash flow generation needs to support its international growth. Despite the high penetration of telecommunications services in the UAE, the country still has growth opportunities for the Group’s UAE operations. Some of the key growth drivers are the relatively young and affluent population in the country, as well as increasing population and growth in tourism. Additionally, the UAE population has demonstrated a large propensity for ICT solutions in both the consumer and business segments (for example, increasing demand for broadband services, value-added services and digital services) and the UAE Government is undertaking various initiatives to provide online and mobile access to all of its services. To support its leading position, growth potential and cash flow generation in the UAE, Etisalat has invested heavily in new technologies in order to be able to offer higher-quality, data-intensive ICT services, with capital expenditures of AED 2.6 billion in the year ended 31 December 2014. Etisalat’s fibre-optic network and advanced mobile infrastructure (2G, 3G and 4G LTE) allow it to offer multiple ICT services, including voice, high-speed data access and media services. Etisalat’s strong investment and customer-centric approach has helped to attract new customers and retain existing ones in an increasingly competitive environment. The revenue

103 performance of the Group’s UAE telecommunications operations was temporarily affected by competitive and market challenges during 2010 and 2011, including intense competition from du and the global economic crisis which impacted the overall UAE economy. Since this period, the performance of the operations has increased signiﬁcantly, registering 9.4 per cent. external revenue growth in 2014 and increasing its ICT leadership in the UAE.

Diversified and balanced international portfolio; proven track record of establishing new telecommunications operations in emerging markets with significant growth potential In addition to its leading position in its home market of the UAE, the Group has established a diversified and balanced international portfolio of telecommunications assets. The Group has telecommunications operations in 18 countries outside the UAE, through its subsidiaries and associates in Morocco, Egypt, Pakistan, Saudi Arabia, Nigeria, Sudan, Tanzania, Afghanistan, Sri Lanka, Benin, CAR, Gabon, Coˆte d’Ivoire, Niger, Togo, Mauritania, Burkina Faso and Mali. Accordingly, the Group has significant experience in all facets of building, managing and operating successful telecommunications businesses in high-growth and emerging markets in Africa, the Middle East and Asia. The Group’s successful international operations in some of the most populous countries in these regions, including its key markets of Morocco, Egypt, Pakistan, Saudi Arabia and Nigeria, are testament to its strong management capabilities. Given the Group’s recent acquisition of Maroc Telecom, the Group intends to further utilise this experience in developing telecommunications businesses in Morocco and each of the other countries in which Maroc Telecom’s subsidiaries operate.

As a result of the Group’s international diversification, the absolute and relative revenue contribution from external sales of the Group’s international operations has increased, from consolidated revenues of AED 9,348.3 million (28.4 per cent. of the Group’s total consolidated revenues) to AED 13,110.7 million (34 per cent. of the Group’s total consolidated revenues) to AED 20,959.2 million (43 per cent. of the Group’s total consolidated revenues) for the years ended 31 December 2012, 2013 and 2014, respectively. Coupled with the strong cash flow generated by more mature operations in the UAE, the Group believes it is well positioned for future growth and expansion of its operations in emerging telecommunications markets in Africa, the Middle East and Asia. The Group also expects that the diversification of its operations should reduce the potential effect of unfavourable developments in a single market or currency.

Strong and conservative financial profile; low leverage; prudent financial policy The Group has maintained a conservative financial profile and low indebtedness levels. The conservative approach has enabled the Group to maintain its domestic and international investment strategy and take advantage of opportunities to grow its business through challenging global financial market and economic conditions. The Group generated cash flow from operations of AED 10.5 billion, AED 13.0 billion and AED 17.2 billion for the years ended 31 December 2012, 2013 and 2014, respectively. The cash flow generation allowed the Group to maintain a net cash position at the end of the years ended 31 December 2012 and 2013. Total consolidated debt amounted to AED 22.5 billion as of December 2014, as compared to AED 5.9 billion as of 31 December 2013; an increase of AED 16.6 billion reflecting primarily the issuance of bonds to finance the acquisition of Maroc Telecom in May 2014. The Group had AED 18.6 billion in cash and cash equivalents as of 31 December 2014 and a net debt position of AED 3.9 billion.

Experienced international management team The Group’s management team of industry professionals has significant experience in the telecommunications sector and has a proven track record in growing its business, through both making and subsequently integrating acquisitions, and by implementing initiatives leading to organic growth. In addition, the Group continues to appoint key personnel to better position its business for its next growth phase and has strengthened key management positions in line with its corporate structure. The Group believes that the composition of its management team puts it in a strong position to successfully implement its growth strategy, as well as to focus on improving its operating performance as the Group encounters opportunities to generate benefits from its significant investments in infrastructure to date. Senior executives of the Group sit on the boards of directors of most of the Group’s subsidiaries, ensuring consistency and compliance with the Group’s overall strategy.

104 Economies of scale and synergies across its operations As the Group has expanded internationally, it has pursued economies of scale and synergies from operating and standardising telecommunications networks in numerous markets. In particular, the Group is able to leverage its scale and expertise across all functional areas to support its operating companies. The Group’s support has created significant value in several areas, including procurement optimisation (for example, network, device and media purchasing), to commercial offers (for example, preferential roaming offers and new digital services), financial capabilities (for example, capital restructuring and enhancement of financing terms), and regulatory and technology support, amongst others.

Strong relationship with the UAE Government The UAE Government currently owns 60 per cent. of Etisalat’s share capital and, pursuant to the Etisalat Law, the UAE Government’s shareholding may not be less than 60 per cent. In addition, seven of the Group’s 11 board members, including the Chairman, are appointed by Federal Decree and represent the UAE Government. This working relationship with the UAE Government has helped support the Group in its international expansion by, among other things, helping it address and mitigate political risk in the emerging markets in which it operates. Management believes that Etisalat is an integral part of the UAE’s economy and growth strategy. Etisalat continues to support the forward-looking ICT strategy of the UAE Government through various initiatives, including the deployment of the latest telecommunications infrastructure in the country (for example, FTTH and 4G LTE). Additionally, Etisalat is a significant contributor to the UAE Government’s finances, with the royalty charge of AED 5.3 billion for the financial year ended 31 December 2014, representing approximately 11.5 per cent. of the UAE Government’s total budgeted revenues for 2014 (source: Etisalat).

Strategy The Group aims to be the leading and most admired emerging markets telecommunications group. The key components of the Group’s business strategy are as follows:

Maintain position as leading integrated operator in the UAE Etisalat intends to maintain its position as the leading integrated telecommunications provider in the UAE. Etisalat’s strategic intent has several underlying goals, including providing the best ICT infrastructure, offering strong value propositions to all segments of the market, and providing the best customer support. Etisalat intends to continue to maintain or increase its market share in the UAE, particularly with respect to the highest customer value segments, without eroding proﬁtability. Etisalat intends to continue to tailor its product offerings to customers in the UAE where it believes growth (both in terms of subscriber numbers and revenue) will be possible in the future. See ‘‘– UAE Operations’’.

Diversify revenue sources and continue revenue growth through international expansion and consolidation The Group’s international strategy is to maximise the enterprise value of its existing international businesses, in particular, in its key international markets, Morocco, Egypt, Pakistan, Saudi Arabia and Nigeria. The Group could seek to expand to new markets where it believes there is potential for profitable growth and where such markets could provide value to the Group’s operations. The Group will continue to consider stake increases, in-market consolidation or merger opportunities in the existing markets where it operates. The Group may also, in future, seek to divest select subsidiary operations which are sub-scale and non-accretive to the Group’s consolidated revenue. In Africa and Asia, the Group’s strategy is to target markets with high growth potential where it believes there are favourable economic and demographic profiles. In the Middle East, the Group is targeting markets that generally exhibit favourable economic characteristics by either acquiring new licences or existing, profitable operations. In evaluating investment opportunities, the Group does not focus solely on having a majority equity or voting interest in international opportunities (although that is an important consideration), but also considers control over management, strategy, operations and the board (or the ability to potentially obtain such control in the future), which can drive value creation, and the ability to take advantage of synergies. The Group has implemented this strategy through its controlled subsidiaries Maroc Telecom in Morocco, Etisalat Misr in Egypt and PTCL in Pakistan, as well as associates such as Mobily in Saudi Arabia. While the Group intends to continue to assess further expansion opportunities as they arise, on an opportunistic basis, it plans to consolidate its existing international assets. The Group may increase

105 its ownership in its existing international operations where possible and cost-effective and improve or stabilise its position in these markets. Management also believes that the recent sale of the Group’s shareholdings in its operations in Benin, CAR, Gabon, Coˆte D’Ivoire, Niger and Togo (each operating under ‘‘Moov’’ brand) to Maroc Telecom, which was completed on 26 January 2015, will invigorate growth in the markets in which Maroc Telecom will operate, with cost, revenue and operational synergies between the Group’s operations across these six West African countries and Maroc Telecom’s other subsidiaries, especially given Maroc Telecom’s demonstrable experience in operating in the predominantly French-speaking markets in West Africa.

Continue to be an innovation and service leader in each of its markets The Group seeks to provide its customers with the most technologically advanced telecommunications services appropriate to each of the markets in which it operates in a cost-effective manner, adapted to the relevant markets. In 1982, it was the first operator to provide mobile phone services in the Middle East, and in 2003 it was the first to introduce MMS and 3G services. The Group was the first mobile phone operator in the Middle East to launch a roaming alliance between Saudi Arabia and Egypt with a fixed rate for outbound roaming between the two countries. Etisalat Misr was the first provider to offer 3G services in Egypt. The Group is also continuing to innovate with respect to its business customers, especially in the UAE. To maintain its leading telecommunications services, the Group continues to upgrade its infrastructure in order to improve the quality of its service and provide customers with additional value-added and complementary products and services based on market maturity and need.

UAE Operations In recent years, Etisalat’s operations in the UAE have contributed a significant portion of the Group’s revenue and profit, although the Group expects that Etisalat’s UAE operations’ revenue as a percentage of consolidated revenue will continue to decrease in the future. For the year ended 31 December 2014, 55.3 per cent. of the Group’s consolidated revenue was contributed by the Group’s UAE telecommunications operations carried out by Etisalat (based on external sales). Etisalat was incorporated in the UAE with limited liability in 1976 by UAE Federal Government Decree No. 78, which was replaced by the Etisalat Law in 1991 and further amended by the Telecom Law in 2003, 2005 and 2008. The Etisalat Law provides that the UAE Government (represented by the Emirates Investment Authority) is required to hold at least 60 per cent. of Etisalat’s shares and the remaining shares may only be owned by UAE national individuals. Etisalat’s shares have been listed on the Abu Dhabi Securities Exchange since June 2002. The Group believes that the UAE is a mature market that provides a stable foundation for the Group’s cash flow generation needs to support its international growth. Etisalat’s customer base in the UAE comprises consumers, SMBs, enterprise customers, carrier customers and government entities. Etisalat delineates its customer base by reference to the nature of the services provided: mobile (prepaid and postpaid), fixed-line, internet and mobile data services. As a full-service telecommunications operator in the UAE, Etisalat seeks to maximise its competitive advantage by bundling services within different product lines (for example, by offering inclusive minutes and cheaper international call rates in return for increased line rentals) and offering multiple devices with different value-added services. It focuses on providing a high-quality service and building on its historical high-value client relationships, while simultaneously addressing the lower end of the market with appropriately priced propositions. Within the UAE, Etisalat provides a full range of telecommunications services and its revenue is derived from four principal areas: * Mobile: Includes revenue from SIM rental, handset rental and voice services (including local, national and IDD calling, as well as revenue attributable to roaming). * Fixed-line: Includes revenue from fixed-line rental (including the line rental revenue associated with fixed-lines used for voice and/or internet services), connection fees and fixed-line voice and television services (such as video-on-demand). * Internet: Includes revenue from fixed internet services, including dial-up and broadband services. * Mobile Data Services: Includes revenue from all data communications services, including SMS, MMS, GPRS, 3G and 4G LTE mobile services and other value-added services (from both mobile and fixed-lines), as well as revenue from SMB and enterprise services.

106 Mobile Overview Etisalat was the sole provider of mobile services in the UAE until February 2007, when du commenced commercial operations. Etisalat’s share of the mobile services market in the UAE as of 31 December 2014 was 55.2 per cent. based on numbers of subscribers (source: Etisalat and du). As of 31 December 2014, Etisalat had 7.53 million prepaid subscribers and 1.51 million postpaid subscribers in the UAE. Etisalat offers voice services, including local, national and international calls, as well as data connectivity services using FTTH, GPRS, EDGE, HSPA, 3G and LTE technologies. In addition, Etisalat provides value-added services such as MMS, SMS, ring-back, voicemail, missed call notiﬁcation and BlackBerry services. Although these value-added services are developed and sold by the mobile operations units, revenue generated by these services is accounted for under mobile data services. See ‘‘– Mobile data services’’.

Customers, products and services Etisalat offers prepaid mobile services which require the payment of a non-refundable subscription fee (that includes connection charges and a charge for a SIM card). Prepaid customers then pay in advance for a fixed amount of airtime and services and need to recharge their account every time they run out of credit in order to keep using the service. Etisalat offers postpaid services to UAE nationals, GCC nationals and UAE residents (including expatriates). The customer is required to pay an initial one-time non-refundable subscription fee and then is billed on a monthly basis (including a monthly rental charge which is dependent upon the plan to which the customer subscribes). Etisalat offers a number of different plans, depending on the individual needs of the customer, which include smartphone plans offering discounted smartphones. Etisalat also offers specially designed postpaid tariff plans to its business customers under the brand name ‘‘Business Ultimate’’, through which it offers four different bundled offerings depending on the size of the organisation. Etisalat also offers add-on services, including tariffs to cater to the data and calling needs of the customers. The business packages can also be bundled with smartphones. Etisalat actively encourages prepaid customers to migrate to postpaid plans and those who migrate are eligible for a number of benefits that prepaid users do not have access to, including subsidised handsets and more attractive mobile data rates. Demand for mobile services is mainly driven by price, network quality and customer service, although recently customers have increasingly focused on purchasing handsets that will enable them to access an increasing number of value-added data services. Etisalat offers the latest handsets such as the Apple iPhone, BlackBerry, Samsung Galaxy, HTC One, Sony Experia and Nokia Lumia. In addition, Etisalat services the low income segments of the UAE population (which includes a significant number of expatriate labourers and others) through various initiatives, including prepaid mobile services and VoIP calling cards. The following table presents information about the number of Etisalat’s active mobile subscribers in the UAE as of 31 December 2012, 2013 and 2014 (source: Etisalat).

As of 31 December

2012 2013 2014

(millions) Mobile subscribers Prepaid subscribers...... 5.96 7.14 7.53 Postpaid subscribers ...... 1.11 1.31 1.51 Total...... 7.07 8.45 9.04 See ‘‘Operating and Financial Review – Signiﬁcant Factors affecting Financial Condition and Results of Operations – Mobile and ﬁxed-line ARPU among customer base’’ for a description of Etisalat’s mobile ARPU.

Churn among UAE mobile customers ‘‘Churn’’ refers to how the Group measures mobile customer disconnections over a given period of time. Customer disconnections can occur on a voluntary basis when customers either leave the country, switch to competing telecommunications operators (which can be caused by a number of factors, such as pricing, service offerings and the quality of service) or when a customer decides that it no longer requires that mobile telecommunications service, including when a customer migrates

107 from a prepaid to a postpaid plan (or vice versa). Customer disconnections can also occur on an involuntary basis, through termination for non-payment. Etisalat considers a mobile subscriber to have ceased its subscription if: (1) the customer terminates the subscription; (2) Etisalat terminates the subscription; or (3) in the case of prepaid customers, if the subscriber has not made any outgoing activity (voice, text or multimedia) or received any incoming calls within a 90-day period. Etisalat calculates churn by dividing the number of disconnections in a given period by the average number of customers for the same period. As a result, a certain proportion of churn occurs with a lag, as a decision by a customer to cease using Etisalat’s services in the UAE may only be reﬂected in the following year after the prepaid annual subscription has expired. Historically, Etisalat has been protected to some extent from customer churn by the fact that mobile telephone numbers in the UAE have not been transferable between service providers. A customer switching from one service provider to another would therefore have had to change his or her mobile telephone number. The inconvenience associated with this acts as a disincentive to customers considering switching service providers and thus mitigates churn. In order to provide greater consumer choice and promote competition, in December 2013, mobile number portability was introduced in the UAE, a system which allows customers to retain the same mobile telephone number when switching networks. However, management does not believe that the introduction of mobile number portability has contributed to any material increase in Etisalat’s churn rate. The table below shows the churn rate among the Group’s UAE mobile subscribers for the years ended 31 December 2012, 2013 and 2014 (source: Etisalat).

Year ended 31 December

2012 2013 2014

Prepaid churn rate (%) ...... 21.9 23.0 29.8 Postpaid churn rate (%)...... 16.4 16.4 17.0 Blended (%)...... 21.2 22.2 28.0 The increase in pre-paid churn rates between 2012 and 2014 was primarily due to increasing commercial activity aimed at improving product availability in the market, as well as cessations of unregistered subscribers resulting from certain TRA policies. Management believes that collecting better data on customers and improved channel ﬁll will further support Etisalat’s commercial base. Etisalat is actively engaged in developing new initiatives to retain its existing customers. These incentives include targeted promotions such as a reduction in international rates to countries a subscriber typically calls and iPhone offers to a limited number of Etisalat’s highest customer-value subscribers to incentivise them to switch from prepaid to postpaid calling plans.

Fixed-line Etisalat’s share of the fixed-line voice services market in the UAE as of 31 December 2014 was approximately 85.1 per cent. in terms of numbers of subscribers. Etisalat’s fixed-line business encompasses traditional fixed-line services for residential and business customers and line rental for internet customers (through dial-up, ADSL and FTTH). Etisalat’s fixed- line services are offered under three distinct packages, which depend on the services the customer requires, eLife Triple Play, under which Etisalat provides the customer with television services, broadband services and a fixed-line telephone service, 2Play, pursuant to which Etisalat provides only broadband and a fixed-line telephone service and 1Play, pursuant to which the customer can select either television service, broadband service or a fixed-line telephone service on a stand-alone basis. Etisalat’s television offering is marketed under the ‘‘eLife TV’’ brand and provides a number of basic channels, as well as allowing users to select a range of TV packages depending on the channels they would like to access, with access to over 480 channels, including over 90 high definition channels. Subscriber growth for fixed-line services in the UAE has been slowly declining for the last three years, although Etisalat has introduced certain offers, such as unlimited fixed-line calls, in order to halt this decline. Fixed-line penetration rates and the overall number of fixed-line customers in the UAE have remained relatively stable over the same period at 25.2 per cent. and 2.1 million subscribers, respectively, as of 30 November 2014 (source: TRA). This stability has been driven primarily by increased demand for broadband services from existing subscribers who have maintained an existing or added an additional fixed-line in order to subscribe for internet services, offset in part by fixed-to-

108 mobile substitution. For example, broadband internet subscribers in the UAE increased by 8.0 per cent. from 31 December 2013 to 31 December 2014, which contributed to higher telecommunications spending by business and consumer customers in terms of line rental. Fixed-line services are offered on the basis of a retail or business contract. The service is typically provided on a monthly basis and can be cancelled at any time by the customer. The customer pays an installation fee as well as a monthly rental. Etisalat also offers prepaid fixed-line services through its ‘‘Maysour’’ branded product. For business customers, different billing periods are available depending on the services provided, but most services are billed monthly. The minimum term for a business fixed-line service is one month with no obligation period but with a two-week notice period if the service is to be cancelled. Business customers also have the option to receive discounts on their services if they commit to maintaining the services for a specific period of time. The most significant recent development for Etisalat’s fixed-line business in the UAE was the installation of a fibre optic network. As of the date of this Base Prospectus, the installation of the fibre optic network in the UAE has been substantially completed, with a penetration rate of 86.2 per cent. The following table presents the number of Etisalat’s fixed-line customers in the UAE as of 31 December 2012, 2013 and 2014 (source: Etisalat).

As of 31 December

2012 2013 2014

(thousands) Total ﬁxed-line voice subscribers(1) ...... 1,104 1,045 991

Note: (1) Fixed-line customers are calculated by the number of active lines at the end of the period. In general, a customer is no longer counted as a ﬁxed-line customer if: (1) the customer has voluntarily terminated the contract; or (2) the customer has not made a payment on an outstanding balance within approximately 60 days.

The majority of Etisalat’s ﬁxed-line customers are located in Abu Dhabi and Dubai, although over one-quarter of Etisalat’s total ﬁxed-line subscribers are located in the northern Emirates (i.e., Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al-Quwain).

Broadband Internet Etisalat was the ﬁrst operator to introduce internet services into the UAE in August 1995. Etisalat’s share of the broadband internet services market in the UAE as of 31 December 2014 was approximately 84.9 per cent. based on numbers of subscribers (source: Etisalat and du). The broadband internet penetration rate in the UAE as of 30 November 2014 was estimated to be 13.1 per cent. (source: TRA). The following table presents information about the number of Etisalat’s broadband internet subscribers in the UAE as of 31 December 2012, 2013 and 2014 (source: Etisalat).

As of 31 December

2012 2013 2014

(thousands) Broadband internet subscribers ...... 818 904 980 Etisalat provides internet services through dial-up, ADSL, leased lines and its fibre optic network. Etisalat introduced fibre optic technology, which allows for an enhanced standard for data transmission and enables Etisalat to offer a wider range of products such as television services, since digital television services can be delivered through the same network infrastructure as that used for internet access. In addition to increasing penetration rates, Etisalat believes that the offering of television services has increased revenue generated per subscriber and reduced churn in its fixed-line and internet subscriber base. Etisalat currently offers various bandwidth options as part of its fibre optic technology, with speeds up to 300Mbps and various bandwidth options through its ADSL and leased lines, with speeds up to 1Mbps.

109 Mobile data services Mobile data services include all data communications services, including SMS, MMS, GPRS, 3G and 4G LTE data packages, BlackBerry service and other value-added services for mobile customers, as well as providing ICT services to SMB and enterprise customers. Etisalat’s mobile data services offerings in the UAE focus on mobile broadband offerings over its 3G and 4G LTE network. The customer can use mobile broadband either on a prepaid basis or under a mobile data postpaid subscription package. Etisalat launched 4G LTE mobile services in the UAE in 2011, operating an LTE network where population coverage exceeds 82 per cent. Etisalat offers mobile broadband speeds of up to 150 Mbps. In 2014, Etisalat announced that it had tested and started a phased upgrade of its network to ‘‘LTE Advanced’’ (LTE-A) tri-band technology based on carrier aggregation technology, a first of its kind in the region. A live testing on the network has successfully concluded, making way for ultra-speeds of 750 Mbps mobile broadband connectivity and ensuring network readiness once handsets are commercially available. LTE carrier aggregation is the next step in the evolution of high-speed mobile broadband services, enabling operators to make the most of their existing spectrum assets by combining multiple spectrum bands to enable higher mobile broadband download speeds. Etisalat also provides a range of WiFi product offerings, on either a prepaid basis or a postpaid subscription basis, including hotspots which use the Etisalat WiFi network. Etisalat provides ICT services to SMB, enterprise and government customers. ICT services involve the combination of network, hardware, software and service solutions together with support functions to achieve a customer’s business objectives or provide a particular business solution. These services include hosting, managed security, cloud services, managed LAN and various IT and network managed services, all of which are charged by Etisalat at a daily rate or on a project basis. Etisalat does not undertake software development or hardware manufacture but it works with various partners to fulfil customers’ requirements in these areas. Etisalat aims to become a business partner to its enterprise customers by developing solutions tailored to customers’ specific needs rather than acting as a commodity services provider. Etisalat has a dedicated business solutions unit in the UAE that works closely with enterprise customers to provide complete end-to-end telecommunications solutions, including on-site and on-going evaluation and consultations regarding customers’ needs and requirements, implementation and roll-out of solutions and ongoing post-installation servicing (for example, connecting UAE public schools for e-learning through the deployment of WiFi technology).

Other non-core services In addition to its telecommunications operations set out above, the Group provides a number of non- core services, through the following entities: Etisalat Services Holding LLC (‘‘Etisalat Services’’): Etisalat Services is wholly-owned by the Group. The key businesses under Etisalat Services are: Emirates Data Clearing House FZE, which provides roaming settlement services to over 76 GSM operators in 42 countries; Ebtikar Card Systems LLC, which manufactures SIM cards and recharge (scratch) cards for the Group and third parties; Etisalat Facilities Management LLC; Etisalat Academy LLC; and Etisalat Directory Services LLC. Emirates Telecommunications and Marine Services PJSC (‘‘E-Marine’’): E-Marine, which is wholly- owned by the Group, operates a submarine cable installation, maintenance and repair business, offering services in marine project management, consultancy, marine route survey, cable freight management and storage and chartering, as well as solutions to the offshore oil and gas industry. E- Marine has a maintenance contract in respect of more than 80,000 kilometres of submarine cable, through the Arabian Gulf, the Indian Ocean, East Africa and the Red Sea. Emirates Cable TV and Multimedia LLC (‘‘E-Vision’’): E-Vision, which is wholly-owned by the Group, was created to meet demand in the UAE for high-quality television and multimedia technology and services. E-Vision launched the ﬁrst cable TV network in the UAE and offers entertainment, information, education and interactive multimedia services which are transmitted digitally throughout the UAE. E-Vision has entered into strategic alliances with television networks such as OSN, ART, TFC, and Pinoy. Thuraya: Etisalat owns a 28.0 per cent. interest in Thuraya, a private joint stock company incorporated in the UAE, which it acquired in 1999. Thuraya provides mobile satellite services in more than 140 countries in Asia, Africa, Europe and the Middle East using three satellites. Services

110 provided by Thuraya include mobile voice services that support dual GSM and satellite modes, broadband, maritime, rural telephony, ﬂeet management and other advanced applications. Joint ventures: Etisalat is a 50 per cent. participant in two joint ventures: Ubiquitous Telecommunications Technology LLC, which installs and manages network systems and Smart Technology Services DWC – LLC, which provides ICT services.

Regulation Etisalat’s core business in the UAE, including most of the services it provides and most of the activities it conducts, is regulated by statute and subject to the supervision of a regulatory authority, as is the case for Etisalat’s businesses in other countries.

Telecom Legislation The 1976 Law which established Etisalat Emirates Telecommunication Corporation (Etisalat) was incorporated in the UAE in 1976 by Federal Decree No. 78 of 1976, with a share capital of AED 200,000,000.

The 1991 Etisalat Law Federal Decree No. 78 of 1976 was repealed and replaced by the Etisalat Law, which established Etisalat as a corporation under law. The Etisalat Law gave Etisalat an exclusive right to provide ﬁxed and wireless telecommunications services in the UAE and to provide such services between the UAE and other countries. The Etisalat Law also gave Etisalat the right to issue licences for manufacturing, owning, importing, using, ﬁxing or operating telecommunications equipment (i.e., a regulatory function). Etisalat’s authorised share capital as of the date of the Etisalat Law was set at AED 3,000,000,000 and the paid up capital of AED 1,500,000,000. The Etisalat Law allows the capital to be reduced or recapitalised in accordance with the procedures stipulated in the Articles of Association. Under the Articles of Association, these changes to Etisalat’s capital require ministerial approval. The Etisalat Law provided that the UAE Government is required to hold at least 60 per cent. of the share capital of Etisalat and shares may otherwise only be owned by UAE national individuals. The Etisalat Law exempted Etisalat from taxes and customs duties on machinery, equipment, raw materials, parts and accessories and all that it requires in order to carry out its operations, and from duties and taxes on rights of way on land which it requires for the extension of service lines or the construction of buildings or installations necessary for the management or supervision of these lines.

The Telecom Law of 2003 and its amendments The Etisalat Law was amended by the Telecom Law in 2003, 2005 and 2008. The Telecom Law is also the law on which regulation of Etisalat’s telecommunications networks and services in the UAE is based. Under the Telecom Law, Etisalat lost its monopoly on delivering ﬁxed and wireless communications and operating, maintaining and developing the public telecommunications system in the UAE and providing communication services between the UAE and other countries, which it had originally been granted by the Etisalat Law. The Telecom Law speciﬁes that a number of activities are to be considered regulated activities (‘‘Regulated Activities’’), and therefore require a licence issued under the Telecom Law. The Telecom Law also provides for the establishment of the regulator for the telecommunications industry, being the TRA. The Telecom Law gives very broad authority to the TRA to establish regulatory policy, issue directives, instructions and regulations, to make decisions relating to regulated activities, licence fees, the services to be offered by licensees and the prices at which they may be offered, and to issue and revoke licences.

Regulated activities Under the Telecom Law, the Regulated Activities that require a licence include the operation of a public telecommunications network and the supply of telecommunications services to subscribers. The deﬁnition of ‘‘telecommunications services’’ under the Telecom Law is very broad, extending to transmitting, switching, broadcasting and receiving telecommunications, audio and visual signals, signals used in radio and TV broadcasting, and signals used to operate or control apparatus, and also extends to installation, maintenance and repair of network equipment, and construction, maintenance and operation of networks. The basic licensing requirement under the Telecom Law states that no one is permitted to conduct any Regulated Activity unless authorised by a licence or exempted in

111 accordance with the Telecom Law. As of the date of this Base Prospectus, there are two principal licensees under the Telecom Law: Etisalat and du. In 2008, the TRA published a new framework for the issue of ‘‘individual licences’’ and ‘‘class licences’’, suggesting that the TRA may further liberalise the telecommunications sector in the UAE by issuing additional licences. According to the TRA, it has issued seven further licences under this new framework, a public access mobile radio licence to Nedaa Corporation (in 2009), a satellite services licence to Al Yah Satellite Communications Company (in 2010), a satellite services licence to Alyah Advanced Satellite Communications Services (in 2010), a satellite services and broadcasting satellite services licence to Star Satellite Communications Company (in 2010), a broadcasting satellite transmission services licence to Al Maisan Communications Company (in 2011), a broadcasting satellite transmission services licence to Media Zone Intaj FZ LLC (in 2011) and a global mobile personal communications by satellite licence to Thuraya (in 2013).

The TRA The TRA is established as an independent legal personality (so that it is not part of a UAE Government ministry), with financial and administrative independence. The principal organ of the TRA is the board of directors, which is appointed by a Federal Decree for four years and has the authority to carry out the functions and powers of the TRA. The Telecom Law, the Executive Order made under the Telecom Law, and Etisalat’s licence dated 9 May 2006 issued under the Telecom Law (the ‘‘Licence’’) all provide for the TRA to make specific rules relating to: the quality of the services which Etisalat provides; the prices and other terms and conditions on which Etisalat provides its services; obligations in respect of universal service; reporting of financial accounts to the TRA; the provision of interconnection with other operators on fair and non-discriminatory terms (including a Reference Interconnection Offer, a standardised contract for use by UAE licensed operators); anti-competitive conduct in the telecommunications industry; the use of VoIP technology in the UAE and the management of content accessible via the internet in the UAE; the provision of co-location, sharing of sites, infrastructure and facilities; the provision of national roaming to other licensed operators; technical specifications for interoperability between telecommunications networks; allocation of numbers/spectrum; number portability (both fixed and mobile); carrier selection and carrier pre-selection; procedures for type approval of apparatus to be provided to Etisalat’s customers; and technical matters relating to the use of radio frequency spectrum. The Telecom Law, from which these specific rules are derived, is technology-neutral, so these rules and their application are adapted by the TRA as new technologies are implemented in the telecommunications industry in the UAE.

Etisalat’s licence The Licence held by Etisalat was issued to Etisalat on 9 May 2006. It is a broad licence, permitting Etisalat to provide, inter alia, a wide range of telecommunications services (specifically including fixed, international, mobile and 3G and 4G LTE services) and to operate a public telecommunications network. The Licence is technology neutral, although Etisalat is required to obtain UAE Government security approval through the TRA for the introduction of new products, which reflects an obligation in its Licence to obtain TRA approval before using a new technology in its network or for the provision of a service. In addition to the matters stated in the Licence that are subject to regulation by the TRA, Etisalat’s Licence also contains prohibitions on anti-competitive conduct and obliges Etisalat to prepare and publish a code of practice for customers (which requires approval by the TRA). The terms of the Licence also require Etisalat to pay an annual licence fee (currently AED 1 million), fees for the use of radio frequency spectrum (which are standardised) and fees based on a percentage of Etisalat’s total revenues (currently 1 per cent. of total revenues) towards the establishment and operation of a telecommunications and ICT development fund. Etisalat is also required to pay a royalty to the UAE Government based on its annual consolidated profit. See ‘‘– Significant Factors Affecting Financial Condition and Results of Operations – Royalties and Tax in the UAE’’. Etisalat may provide any of its licensed services through its wholly-owned affiliated companies upon providing notification of the arrangement to the TRA, and may subcontract to third parties upon obtaining the prior written consent of the TRA. The Licence may only be transferred, sold, assigned or pledged as a security with the TRA’s prior approval, and any change in control of Etisalat also requires the prior written approval of the TRA. As is usual with telecommunications licences, the Licence may be suspended or revoked if Etisalat does not comply with its terms.

112 The Licence is valid for a period of 20 years from the date of its issuance on 9 May 2006, and is subject to automatic renewal for an additional term to be determined, if Etisalat complies with certain of its key terms, including payment of fees in a full and timely manner, compliance with competition and other regulatory requirements and provision of telecommunications services according to the Licence.

Executive Order The Telecom Law also provides for an executive order to be made by the Board of the TRA, after approval of the UAE Cabinet. The current executive order (the ‘‘Executive Order’’) was put into effect by the Supreme Committee, an entity that was established under the Telecom Law but was abolished by subsequent amendment to the Telecom Law in 2008. The current Executive Order was issued in 2004, and is largely concerned with specific matters relating to the operations of the TRA, including the composition and proceedings of the TRA. The Executive Order provides specific powers to the TRA to: issue instructions or directives to licensed operators; specify regulatory and licensing fees to be paid; specify the circumstances in which a licence can be revoked or suspended; require the licensee to do (or not to do) specific things which are provided for in the regulatory framework; deal with the settlement of disputes arising from a licence; limit the shareholdings in a licensee; and require the provision of information to the TRA. The Executive Order also extends the investigatory powers of the TRA by providing specific obligations on licensees to cooperate with information requests. It also contains detailed technical procedures for type approval, numbering, radio frequency spectrum management and the conduct by licensees of civil works.

Regulation of Etisalat’s conduct One of the most signiﬁcant aspects of the UAE telecommunications regulatory regime that affects the conduct of Etisalat’s business relates to the regulation of the tariffs that licencees may charge their customers, including requirements for prior approval of promotions offered by licencees. The regulation of procedures and pricing for interconnection of Etisalat’s network with other UAE- licensed operators, sharing of Etisalat’s sites, infrastructure and facilities and provision of wholesale services also has the potential to impact on Etisalat’s network operations and pricing. However, Etisalat already has agreed interconnection arrangements with du, which is currently the only other licenced commercial operator with which Etisalat is interconnected. See ‘‘Risk Factors – Because the Group operates in heavily regulated business environments, the implementation of existing laws by regulators and government authorities as well as changes in laws, regulations or governmental policy affecting its business activities could adversely affect the Group’s business, ﬁnancial condition, results of operations and prospects’’.

Mobile number portability was launched in the UAE in December 2013. This will allow a mobile subscriber to retain its mobile number when switching provider, between Etisalat and du, and vice- versa. Since its launch, management believes that mobile number portability has not had a material impact on Etisalat’s business.

Regulatory costs The Group incurred an aggregate of AED 537.9 million of regulatory costs in the financial year ended 31 December 2012, AED 661.8 million in the financial year ended 2013 and AED 721.2 million in the financial year ended 2014. The Group’s regulatory costs in the UAE comprise the items set out below.

* Licence Fee is an annual fee of AED 1,000,000 for the Licence.

* ICT Fund Contribution is an annual fee of 1 per cent. of total revenues earned from licensed services in the UAE for the purpose of supporting research and development of the UAE telecommunications sector, payable in accordance with payment procedures determined by the TRA.

* Numbering Fee is a fee for the utilisation of numbering resources such as preﬁxes, ranges, blocks of numbers or individual numbers.

* Spectrum Fee is a fee imposed on the issue or renewal by the TRA of a radio frequency spectrum authorisation. This authorisation allows the authorised user to use assigned frequency and wireless equipment in accordance with its terms.

113 * Share of Costs of Number Portability System while the initial costs of the implementation have been funded over the last few years, Etisalat will continue to pay its share of the cost to support the number portability system and associated annual on-going expenses, as agreed and billed by the TRA. * Domain Name Registration Fee is a fee imposed for registration of ‘‘.ae’’ domain names.

Anticipated development of UAE regulation Although the regulatory measures imposed by the TRA are implemented by a variety of regulatory instruments, their subject matter is generally consistent with telecommunications regulatory regimes in other developed telecommunications markets. The scope of the powers given to the TRA under the Telecom Law and the Executive Order is very broad, as is its discretion to make regulatory orders. The regulatory environment in the UAE is evolving. With only two principal licensed commercial operators providing telecommunications services, it is less liberalised than many other markets in the GCC region. The TRA has the power under the current regulatory orders to issue further licences, and to introduce new policies and procedures for regulating the conduct of Etisalat’s business. In 2008, the TRA issued a new licensing framework providing for ‘‘individual’’ and ‘‘class’’ licences. The TRA utilised this new framework when issuing a telecommunications licence to Nedaa Corporation, Al Yah Satellite Communications Company, Alyah Advanced Satellite Communications Services, Star Satellite Communications Company, Al Maisan Satellite Communications Company, Media Zone Intaj FZ LLC and Thuraya. The TRA may also make changes to the regulatory environment, including by replacing the existing variety of regulatory order with consolidated regulatory orders, which may follow international standards more closely. The TRA also has extensive powers to impose structural solutions on the telecommunications market in the UAE. Etisalat and du currently provide services on largely non-overlapping networks. However, following discussions to open wholesale access (bitstream) between the two networks, fixed services competition is expected to be launched in 2015. This will allow Etisalat and du to access each other’s fixed networks to enable the provisioning of retail voice and internet services to consumers and businesses. While Etisalat’s coverage network is larger than du’s, the access risk is tempered by the fact that bitstream is being launched in phases. The first phase of fixed line competition is expected to launch in 2015 for voice and high-speed internet (‘‘2 play’’ services) and the second phase is expected to include TV (‘‘3 play’’ services) and symmetric data products for the medium to large business segment. The second phase is expected to lag the first phase by a period of at least a year. In relation to the risk of competition access impacting business customers, Etisalat has a strong history of product development and service delivery for the business segment. For Etisalat’s medium and larger-sized business customers, there is a wide portfolio of products, services and solutions from voice to data, internet to managed services to data centres and international connectivity. Management believes that these capabilities will mitigate the downside impact of bitstream access.

Competition in the UAE As of the date of this Base Prospectus, the sole competitor for Etisalat’s core products in the UAE is du. Etisalat does not anticipate that there will be further licensees which will compete with its core products in the UAE telecommunications market in the near term. Both Etisalat and du are majority owned by UAE Government-related entities. Competition in the UAE market is based on product offering and is driven primarily by price and network quality. Other variables considered by customers are network coverage and customer service. In the business segment, customers consider technical feasibility and quality of service as important factors to assess before subscribing to a service, rather than only relying on price. In the UAE, the provision and use of VoIP services are illegal unless conducted by a licensed operator or the subject of an exemption. Under a VoIP policy issued in December 2009, the TRA allows businesses under common ownership to utilise VoIP technology for their internal calls within the UAE, and allows certain academic institutions and government entities to use the technology to communicate internationally, but also only within a closed network, which does not connect to any public telecommunications network. Individuals and businesses alike can also use VoIP if it is a service provided by a licensed operator, which includes Etisalat and du. There are currently no cable operators other than Etisalat and du, and no mobile virtual network operators (i.e., a mobile service provider that does not own its own spectrum or have its own network infrastructure) in the UAE.

114 Etisalat expects the effect of increasing competition to continue to justify reduced regulatory intervention and price-control policies by the TRA, such as regulations issued by the TRA in October 2013 in relation to mobile pre-pay voice and data services and prior tariff approval and regulatory financial reporting obligations. Mobile telecommunications services Etisalat had the exclusive right to provide mobile telecommunications services in the UAE until the introduction of the Telecom Law at the end of 2003. Etisalat ceased in practice to be the monopoly provider of mobile telecommunications services in February 2007, when du commenced commercial operations under its licence. As a result of the entry of du, Etisalat’s market share as measured by numbers of subscribers has declined from 100 per cent. at the end of 2006 to 52 per cent. at the end of 2012, 54 per cent. at the end of 2013 and 55 per cent. at the end of 2014 (source: Etisalat and du). To address the competitive dynamics in the UAE, Etisalat intends to continue its strategy of targeting high customer-value segments through the provision of smartphones such as the Apple iPhone, BlackBerry, Samsung Galaxy, HTC One, Sony Experia and Nokia Lumia. In addition, Etisalat has launched a series of promotional offers and new services such as discounted rates on off-peak international calls, bonus airtime offers on mobile recharges and new connections. Competition since the entry of du into the UAE market has had an effect on market share, with some decrease of effective tariffs, in particular in relation to international rates. In line with the decision of the Arab Telecommunications & Investor Council of Ministers taken in June 2010, the TRA has also issued a directive imposing on Etisalat and du a ceiling limit for wholesale and retail international roaming rates (local calls and calls to the GCC) in relation to GCC countries. Fixed-line and internet services In February 2007, du commenced its fixed-line operations, including the operations it acquired from an existing operator that had been operating in the Dubai Internet City and Dubai Media City free zone residential areas. du’s licence extends to providing fixed-line and internet services throughout the UAE. Some fixed-line competition is also offered by du via carrier selection. As of the date of this Base Prospectus, du primarily competes with Etisalat for fixed-line subscribers in the limited geographic areas where du has its own fixed-line networks. The market share of Etisalat’s fixed-line business in the UAE has remained steady at 87 per cent. at the end of 2012, 86 per cent. at the end of 2013 and 85 per cent. at the end of 2014 (source: Etisalat and du). Notwithstanding fixed-to-mobile substitution, fixed-line penetration in the UAE has been relatively stable. The number of Etisalat’s fixed-line subscribers remained steady at approximately 1.0 million as of 31 December 2012, 2013 and 2014, implying a stagnant fixed-line penetration level of around 25 per cent. over the same period. Future growth in fixed-line services is expected to be driven by an increase in the population of the UAE and the continued provision of fixed-line services bundled with other services using the FTTH network.

Customers, products and services Etisalat’s total customer base in the UAE (comprising mobile subscribers, fixed-line subscribers and broadband internet subscribers) grew from 9 million subscribers as of 31 December 2012 to 10 million subscribers as of 31 December 2013 and to 11 million subscribers as of 31 December 2014. While management believes that voice communications services will remain a significant revenue generator for Etisalat in the medium-term, management also expects data and value-added services to play a role in differentiating Etisalat from its competitors and increasing the loyalty of its fixed-line and mobile subscribers, notably among those in the higher customer-value segments.

115 The table below shows the number of Etisalat’s mobile, ﬁxed-line and broadband internet subscribers in the UAE as of 31 December 2012, 2013 and 2014, together with the associated percentage growth rates from the prior period end (source: Etisalat).

As of 31 December

2012 2013 2014

Subscribers Subscribers Subscribers (thousands) % growth (thousands) % growth (thousands) % growth Mobile postpaid ...... 1,106 18 1,307 18 1,509 15 Mobile prepaid...... 5,963 10 7,139 20 7,526 5

Total mobile(1)...... 7,068 12 8,446 19 9,035 7

Fixed-line...... 1,104 6 1,045 (5) 991 (5) Broadband internet ...... 818 8 904 11 980 8

Total ...... 8,990 10 10,395 16 11,006 6

Note: (1) Mobile subscribers include active subscribers only. Active is deﬁned to include any subscriber who has made or received a voice or video call in the preceding 90 days, or has sent an SMS or MMS during that period. The table below shows the total UAE penetration rates (taking into account all service providers) for mobile, ﬁxed-line and internet subscribers as a percentage of the population in the UAE as of 31 December 2012 and 2013 and 30 November 2014 (source: TRA).

As of As of 31 December 30 November

2012 2013 2014

Mobile penetration (%)(1) ...... 167.8 192.9 201.2 Fixed-line penetration (%)...... 24.0 25.0 25.2 Internet penetration (%) ...... 11.6 12.5 13.1

Note: (1) Mobile subscribers include active subscribers only. Active is defined to include any subscriber who has made or received a voice or video call in the preceding 90 days, or has sent an SMS or MMS during that period. As of 30 November 2014, mobile, fixed-line and broadband internet penetration rates in the UAE were 201.2 per cent., 25.2 per cent. and 13.1 per cent., respectively (source: TRA). An increase in the number of Etisalat’s customers in the UAE has been a significant factor in the growth of its mobile services and internet services revenues in the UAE over the period from 2012 to 2014. This increase has been driven primarily by growth in the UAE population over the same period. In the face of a competitive telecom market in the UAE, Etisalat’s high quality of network and services has enabled it to maintain its market leadership in 2013 and 2014, with gains in prepaid and postpaid mobile customers and relatively stable fixed-line subscriber growth. Etisalat’s subscriber base in the UAE outpaced population growth in the UAE over the period from 2013 to 2014. The UAE mobile market is characterised by a high percentage of prepaid mobile subscribers and high IDD usage. The total number of IDD minutes used by Etisalat customers has increased over the past three years, and was approximately 3.0 billion minutes as of 31 December 2012, increasing to approximately 4.3 billion minutes as of 31 December 2013 and further increasing to approximately 5.9 billion minutes as of 31 December 2014 (noting that the above figures relate to UAE subscriber IDD traffic only and not overall IDD traffic, which is greater as a result of inbound roaming calls). IDD usage by mobile customer has been negatively impacted by the increasing use of unlicensed VoIP services in the UAE. However, Etisalat is now permitted to offer its own VoIP services, including international VoIP services. Etisalat had 1.0 million fixed-line subscribers in the UAE as of 31 December 2014. Etisalat’s UAE fixed-line subscriber base declined by 5 per cent. during 2014. IDD usage by fixed-line subscribers also decreased during this period. The decline in fixed-line subscribers and IDD usage was driven primarily by fixed-to-mobile substitution, increased competition for subscribers and the use of unlicensed VoIP services.

116 Etisalat’s broadband internet subscriber base increased to 1.0 million subscribers as of 31 December 2014. Etisalat’s principal focus in 2012, 2013 and 2014 was to increase the broadband subscriber base through aggressive marketing and higher-speed internet offerings. During the year ended 31 December 2014, Etisalat continued to focus on offering higher-speed internet services and increasing the internet usage of its existing subscribers as a means of increasing revenue. Etisalat believes that broadband and data markets will continue to present growth opportunities in the UAE telecommunications market, especially as mobile market growth slows. Internet and mobile data services have been important contributors to revenue growth. Growth in internet subscribers has contributed to higher telecommunications revenues from commercial and retail customers in the UAE. Internet subscribers in the UAE have generally shifted over the last few years from dial-up access toward broadband, which generates higher revenue from monthly subscription fees.

Marketing and distribution In the UAE, Etisalat’s direct sales channels consist of physical service centres and retail stores together with a ‘‘virtual’’ customer care centre on Etisalat’s website. Etisalat’s indirect sales channels consist of key retailers (which are business partners with wide coverage across the UAE, such as Carrefour and Jumbo Electronics, that offer Etisalat’s products and services at their premises), mass distributors or dealers (which are commercial providers of mobile services with distribution networks across the UAE) and mass resellers (which are registered agents that purchase Etisalat’s products such as SIM cards and payphone cards in bulk and distribute them across a geographic area to small businesses, such as grocery and convenience stores). Etisalat has created a Business Solutions Unit in the UAE, which has its own direct sales channel segmented by industry, such as government and education, energy and oil, airline and logistics. See ‘‘– Mobile Data Services’’ above.

Network infrastructure Mobile networks Etisalat’s mobile network is designed using 2G, 3G and 4G LTE technologies. Etisalat implements the latest LTE technology, with speeds of up to 150Mbps on its 4G network. Etisalat also deploys high- performance mobile data technologies including HSUPA, HSDPA and HSPA+ with speeds of up to 84Mbps on its 3G network. In addition, Etisalat deploys GPRS, EDGE and EDGE Evolution, with speeds of up to 1Mbps on its 2G network. Etisalat has designed a cost-efficient radio access network which aims to minimise the impact of network infrastructure on the environment by utilising extended cell features that require fewer base stations per cell, as well as technologies that conserve energy by shutting down hardware during periods of low mobile traffic. Etisalat uses a common technology platform to deploy over 20,000 radio base stations, all of which are capable of supporting mixed configurations of 2G, 3G, 4G, 2G/ 3G or 2G/3G/4G. The common technology platform is designed to help ensure that 2G-only sites can easily be upgraded to include 3G when required. Sharing radio base stations between the 2G and 3G networks reduces capital expenditure and operating expenditure, as well as power consumption and the physical impact on the environment. Etisalat’s radio resource control features enable its 2G and 3G networks to operate as a common resource, allowing traffic to be switched between networks to provide greater network availability and higher data transmission rates to Etisalat’s subscribers. In the event that users find themselves outside 3G coverage, the network automatically switches users to the 2G network. As part of its network expansion initiative, Etisalat has invested heavily in fibre optic networks connecting Etisalat’s 4G LTE base stations. Etisalat is currently in the process of introducing additional stations allocated to cover main roads, buildings, airports and shopping centres. In 2014, Etisalat’s 4G LTE coverage increased to 90 per cent. of populated areas across the UAE. Etisalat also commenced a phased upgrade to deploy its 350 Mbps ‘‘LTE Advanced’’ technology, having partnered with Alcatel Lucent, Ericsson and Huawei to use the technology globally on 1800 MHz and 800 MHz bands. LTE Advanced technology allows operators to make the most of their existing spectrum assets by combining multiple spectrum bands to enable higher mobile broadband download speeds.

117 Fixed-line and internet networks Etisalat has upgraded the majority of its fixed-line network in the UAE to fibre optic technology, with an advanced fibre optic network linked to the majority of homes and businesses in the UAE, with over 2.8 million kilometres of cable. Etisalat has also developed additional advanced fixed-line technologies, including all IP networks to provide enhanced and interactive content and VPN secure internet networks for enterprise customers. Etisalat has also deployed a state-of-the-art NGN to replace the legacy public switched telephone network. The NGN supports dual homing functionality to enhance the reliability of the service and is at the core of Etisalat’s new fibre network in the UAE.

International Operations Since 2004, the Group has significantly expanded its international operations. The Group has telecommunications operations in 18 countries outside the UAE, through its subsidiaries and associates in Morocco, Egypt, Pakistan, Saudi Arabia, Nigeria, Sudan, Tanzania, Afghanistan, Sri Lanka, Benin, CAR, Gabon, Coˆte d’Ivoire, Niger, Togo, Mauritania, Burkina Faso and Mali. Although the Group has historically derived most of its revenue from operations in the UAE, the portion of its revenue derived from international operations increased significantly between 2012 and 2014, particularly due to the acquisition of Maroc Telecom, which was completed on 14 May 2014, and the consolidation of PTCL as a subsidiary of the Group, which took effect from 31 December 2012. The Group expects that international operations revenue as a percentage of consolidated revenue will continue to increase in the future as a result of the Maroc Telecom acquisition as well as the relative maturity of the UAE market and the growth potential of Etisalat’s other international operations. Subsidiaries are controlled by the Group and are consolidated in its financial statements, while associates and joint ventures represent minority positions and are accounted for on an equity basis. Cash from the Group’s operating subsidiaries is repatriated to Etisalat after considering the following factors: (i) prevailing regulatory environment and local central bank regulations in the country where the relevant subsidiary is operating, including local tax regulations; (ii) macroeconomic factors prevailing in the country where the relevant subsidiary is operating, in terms of availability of foreign exchange for repatriation; (iii) in the case of a subsidiary where Etisalat is not a 100 per cent. shareholder, the consent of other shareholders has to be sought for repatriation; (iv) covenants imposed on the relevant subsidiary in respect of its indebtedness; and (v) availability of surplus cash of the relevant subsidiary for repatriation purposes. The Group provides telecommunications services through controlled subsidiaries in Morocco (through Maroc Telecom), Egypt (through Etisalat Misr), Pakistan (through PTCL and Ufone), Sudan (through Canar), Tanzania (through Zantel), Afghanistan (through Etisalat Afghanistan), Sri Lanka (through Etisalat Lanka), Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin (through subsidiaries held by Maroc Telecom), Mauritania (through Mauritel), Burkina Faso (through Onatel), Gabon (through Gabon Telecom) and Mali (through Sotelma). Each of the subsidiaries described above is fully consolidated in the Group’s financial statements and contributed in aggregate 28.4 per cent. of the Group’s consolidated revenue for the year ended 31 December 2012, 34.0 per cent. for the year ended 31 December 2013 and 42.9 per cent. for the year ended 31 December 2014 (based on external sales). Although certain of the Group’s international subsidiaries have fixed-line operations, the vast majority of the Group’s consolidated revenue from its international operations for the years ended 31 December 2012, 2013 and 2014 was generated by providing mobile telecommunications services. As of 31 December 2014, the Group also held minority positions in telecommunications providers located in Saudi Arabia (Mobily) and Nigeria (EMTS). These associates are not controlled by the Group and the results of their operations are accounted for on an equity basis. The Group’s share of results of associates and joint ventures was AED 1,263.2 million, AED 1,754.3 million and a loss of AED 461,065 million for the years ended 31 December 2012, 2013 and 2014, respectively. For additional information regarding the loss in the year ended 31 December 2014, see ‘‘Operating and Financial Review – Results of Operations’’. Where the Group has acquired existing operators it has often initially acquired less than a controlling interest and then increased its interest over time, as was the case in respect of its interests in Atlantique Telecom and is the case as regards Zantel. Internationally, the Group operates in markets with significant competition but relatively low penetration rates compared to major western markets and, as demonstrated by the Group in Egypt,

118 the Group has been successful in the past in entering new markets despite the presence of an existing dominant market participant. The Group’s competitive position varies widely among its subsidiaries, associates and joint ventures, depending on the number of operators in the relevant market as well as the timing of entry of the Group’s operations relative to its competitors. As of 31 December 2014, Maroc Telecom, Etisalat Misr and PTCL were the most signiﬁcant of the Group’s subsidiaries in terms of revenue. Maroc Telecom generated 16.6 per cent. of the Group’s consolidated revenue for the year ended 31 December 2014 (based on external sales), having been consolidated with the Group since the completion of its acquisition by the Group on 14 May 2014. Etisalat Misr generated 15.3 per cent., 12.2 per cent. and 9.9 per cent. of the Group’s consolidated revenue for the years ended 31 December 2012, 2013 and 2014, respectively (based on external sales). PTCL generated 11.5 per cent. and 9.1 per cent. of the Group’s consolidated revenue for the years ended 31 December 2013 and 2014, respectively (based on external sales), 2013 being the ﬁrst year in which PTCL was consolidated with the Group, having been previously accounted for as an associate of the Group. At 31 December 2012, the Group reassessed its ability to control PTCL following the falling away of certain prevailing existing control impediments. See Note 29 (‘‘Consolidation of PTCL’’) to the Etisalat 2013 Financial Statements.

Morocco – Maroc Telecom On 14 May 2014, the Group acquired Vivendi’s 53 per cent. stake in Maroc Telecom. The acquisition was effected through the Group’s 91.33 per cent. ownership interest in EINA, which acquired Vivendi’s 100 per cent. ownership interest in SPT, which, in turn, holds a 53 per cent. ownership interest in Maroc Telecom. The Group therefore holds an effective shareholding of 48.4 per cent. in Maroc Telecom, whilst controlling 53 per cent. of the shareholder votes of Maroc Telecom through its indirect ownership interest in SPT. The remainder of the shares in EINA, amounting to 8.67 per cent., are held by the Abu Dhabi Fund for Development. Maroc Telecom was incorporated in 1998 following the break-up of the Office National des Postes et Te´lećommunications (the ‘‘ONPT’’) pursuant to the enactment of Act 24-96 and the implementing decrees relating to telecommunications. As the incumbent telecommunications operator in Morocco, Maroc Telecom operates in fixed-line, mobile and internet business segments. As of 31 December 2014, its shares, in terms of numbers of subscribers, of the Moroccan mobile and fixed-line markets were 41.3 per cent. and 59.6 per cent., respectively (including restricted mobility). Maroc Telecom shares have been listed on the Casablanca Stock Exchange and Euronext Paris since 2004. Morocco remains Maroc Telecom’s principal market in terms of revenue, cash flow and profitability. For the years ended 31 December 2012, 2013 and 2014, Maroc Telecom had consolidated revenue of, MAD 29,849 million (AED 12,883 million), MAD 28,559 million (AED 12,814 million) and MAD 29,144 million (AED 12,727 million), respectively. As part of its international development, Maroc Telecom has also made acquisitions outside of Morocco. Maroc Telecom historically has had, and currently has, operations in Mauritania, Burkina Faso, Gabon and Mali, with strong operating positions and profitability in all of the markets where it is active. The total mobile, fixed-line and broadband subscriber base of Maroc Telecom as of 31 December 2014 was 20.7 million in Morocco and 19.6 million for its international subsidiaries (source: Maroc Telecom 2014 Annual Results). On 26 January 2015, Maroc Telecom completed the acquisition of the Group’s operations in Benin, CAR, Gabon, Coˆte d’Ivoire, Niger and Togo (each operating under ‘‘Moov’’ brand), for consideration of A474 million. This acquisition also involves Prestige Telecom, which provides IT services to these subsidiaries. Prior to this acquisition, these operations were conducted through Atlantique Telecom (other than Etisalat Benin, which was wholly-owned by Etisalat but consolidated with Atlantique Telecom for presentation purposes). The purchase price will be paid in four annual instalments of A102 million each (the first having been paid on 26 January 2015), and a fifth and final installment of A66 million. In addition, to contribute to the investments necessary in these six operators, Etisalat is providing Maroc Telecom with interest-free financing in the amount of U.S.$200 million over four years. The Group expects this acquisition to boost the strategic positioning of Maroc Telecom as a leader in Africa with, post-acquisition, a total of 10 countries with future growth potential. Following the completion of the acquisition by Maroc Telecom, Atlantique Telecom no longer conducts any operations.

119 The following table sets out the total revenue and subscriber base by segment of Maroc Telecom and each of its international subsidiaries as of 31 December 2013 and 2014:

As of 31 December

2013 2014

Morocco Revenues (MAD millions)...... 21,294 21,133 Mobile subscribers (thousands)...... 18,193 18,230 Fixed-line subscribers (thousands) ...... 1,379 1,483 Internet subscribers (thousands)...... 837 984 Mauritania Revenues (MAD millions)...... 1,476 1,646 Mobile subscribers (thousands)...... 1,872 1,922 Fixed-line subscribers (thousands) ...... 42 43 Internet subscribers (thousands)...... 7 8 Burkina Faso Revenues (MAD millions)...... 2,211 2,354 Mobile subscribers (thousands)...... 4,643 5,468 Fixed-line subscribers (thousands) ...... 94 81 Internet subscribers (thousands)...... 25 16 Gabon Revenues (MAD millions)...... 1,478 1,788 Mobile subscribers (thousands)...... 1,041 1,183 Fixed-line subscribers (thousands) ...... 19 18 Internet subscribers (thousands)...... 10 11 Mali Revenues (MAD millions)...... 2,658 2,929 Mobile subscribers (thousands)...... 8,923 10,673 Fixed-line subscribers (thousands) ...... 110 130 Internet subscribers (thousands)...... 50 64 Moroccan Operations Within Morocco, Maroc Telecom provides a full range of telecommunications services and its revenue is derived from four principal areas: * Mobile: Includes revenue from voice services (including local, national and IDD calling, as well as revenue attributable to roaming), handset rental and SIM sales. * Fixed-line: Includes revenue from fixed-line rental (including the line rental revenue associated with fixed-lines used for voice and/or internet services), fixed-line voice services and connection fees. * Internet: Includes revenue from fixed internet services, including broadband and dial up services. * Data Services: Includes revenue from all data communications services, including 3G, GPRS, SMS, MMS mobile services and other value-added services (from both mobile and fixed-lines), as well as revenue from SMB and enterprise services. Mobile Maroc Telecom offers prepaid and postpaid services for consumers, professionals and business customers. Maroc Telecom’s share of the mobile services market in Morocco as of 31 December 2014 was 41.3 per cent. based on numbers of subscribers. Mobile services in Morocco contributed 52.2 per cent. of Maroc Telecom’s consolidated revenue for the year ended 31 December 2014. As of 31 December 2014, Maroc Telecom had 16.7 million prepaid subscribers and 1.5 million postpaid subscribers in Morocco.

120 The following table presents information about the number of Maroc Telecom’s active mobile subscribers in Morocco as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013 2014

(millions) Mobile subscribers Prepaid subscribers...... 16.7 16.8 16.7 Postpaid subscribers ...... 1.2 1.4 1.5 Maroc Telecom provides prepaid services under the ‘‘Jawal’’ brand. Prepaid services are aimed primarily at the consumer market, which demands affordable SIM-only and handset offers with frequent promotions on top-ups and calls. Maroc Telecom’s prepaid plans are marketed as packages (handset and SIM card) and SIM-only offers. Prepaid formulas are valid initially for six months, corresponding to the duration of the card’s account balance, followed by a second six-month period during which the customer may continue to receive calls and purchase top-ups. Maroc Telecom offers a wide range of postpaid rate plans, with optional rate caps and digressive tariffs on the basis of the duration of the rate plan. Depending on the plan sought, the plans may be enhanced with free add-ons, including free minutes, promotional offers for handsets and plan upgrades. Maroc Telecom offers three types of plans to consumers: standard subscription (a monthly subscription with peak and off-peak billing rates for calls); individual rate plans (a range of rate plans based on call time, with a ﬂat rate for calls, regardless of domestic destination and time of call); and capped rate plans (controlled version of individual rate plans which allow consumers to block outgoing calls once their monthly allotment has been exceeded with customers recharging their accounts with Jawal top-up cards). Maroc Telecom offers mobile broadband services to both prepaid and postpaid customers, utilising HSDPA 3G+ technology and providing internet access via a 3G-compatible mobile, PDA or smartphone, or a laptop ﬁtted with a USB 3G+ modem. In areas not covered by the 3G+ network, Maroc Telecom’s GPRS network provides access to the internet. The postpaid service is available in two options (voice and data or data only) and in three bandwidths, while the prepaid plan is available on a pay-as-you-go basis with no monthly bill through the use of Jawal top-up cards.

Fixed-Line After a period of relative stability until 2006, the fixed-line market entered a growth phase, resulting mainly from the launch of prepaid plans with restricted mobility. As of 31 December 2014, Maroc Telecom had 1.5 million fixed-line subscribers in Morocco. Fixed-line services in Morocco contributed 27.6 per cent. of Maroc Telecom’s consolidated revenue for the year ended 31 December 2014. The following table presents information about the number of Maroc Telecom’s fixed-line subscribers in Morocco as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013 2014

(millions) Fixed-line subscribers ...... 1.3 1.4 1.5 Broadband subscribers ...... 0.7 0.8 1.0 The main ﬁxed-line telecommunications services provided by Maroc Telecom in Morocco are: * telephony services; * interconnection services with domestic and international operators; * data-transmission services for businesses, internet service providers and other telecommunications operators; * internet services, which include internet access provision and related services, such as hosting; * ADSL TV; and * MT Box.

121 Competition in Morocco At 31 December 2014, a total of 19 telecommunications licences had been awarded in Morocco: three licences for operators of public fixed-line telecommunications networks (Maroc Telecom, Me´ditel and Inwi), three 2G mobile Licences (Maroc Telecom, Me´ditel and Inwi), three 3G mobile licences (Maroc Telecom, Me´ditel and Inwi), five licences for operators of GMPCS-type satellite telecommunications networks, three licences for operators of VSAT satellite telecommunications networks, and two licences for operators of shared-resources radio-electronic networks (3RP). In March 2015, the ANRT awarded 4G mobile broadband licences to Maroc Telecom, Me´ditel and Inwi. While Maroc Telecom is the leading provider in Morocco of services for fixed-line telephony, internet and data transmission, and is the only provider of ADSL TV, Maroc Telecom now faces competition in all segments: residential, public telephony and business in respect of the fixed-line and mobile services market. Maroc Telecom’s main competitors are Me´ditel, which has had a mobile license since August 1999 and is partially owned by Orange Group and Inwi. Maroc Telecom’s total mobile customer base in Morocco grew from 17.9 million subscribers as of 31 December 2012, to 18.2 million subscribers as of 31 December 2013, remaining fairly steady at 18.2 million subscribers as of 31 December 2014.

Regulation Maroc Telecom’s core business in Morocco, including most of the services it provides and most of the activities it conducts, is regulated by statute and subject to the supervision of a regulatory authority, as is the case for Maroc Telecom’s businesses in other countries. Since the adoption of Act 24-96, dated 7 August, 1997, abolishing the ONPT, Morocco has acquired a modern regulatory framework, laying down the conditions for liberalisation of the telecommunications sector. The dissolution of the ONPT led to the creation of three separate legal entities: Maroc Telecom; Barid Al Maghrib (the post office), a public agency organised as a financially independent legal entity; and the ANRT, another public, financially independent legal entity. At the regulatory level, liberalisation has proceeded with the adoption of a series of implementing decrees mainly concerning the operation of the ANRT, interconnection, the general terms of operation for public telephony networks, the provision of value-added services and the provision of leased lines. The role of the ANRT is to define the legal and regulatory environment of the telecommunications sector, draft decrees and ministerial decisions concerning telecommunications, provide specifications for the operators, monitor and ensure compliance with the competition laws applying to telecommunications operators and resolve disputes. The ANRT prepares the procedures for the award of licences by competitive bids and processes the applications for telecommunications licences. It also sets the technical rules applicable to telecommunications networks and services generally, including providing the technical and administrative specifications for the approval of handsets and wireless equipment. Pursuant to its responsibility to monitor regulatory compliance, the ANRT is responsible for ensuring that operators comply with the terms of their licences and it has extensive investigative rights and disciplinary powers. If an operator fails to furnish required information or does not provide such information within the required time frame, ANRT can impose fines. Whilst license suspension is formally pronounced by the appropriate government authority and revocation is announced by decree, both actions are carried out at the request of the ANRT. The ANRT also intervenes in legal action undertaken against telecommunications operators that fail to comply with current regulations. It is also the ANRT’s duty to resolve disputes over interconnection and infrastructure sharing. Operators seeking to establish public telephony networks using the public domain or the radio- frequency spectrum are required to obtain a license, which is granted by decree and may be granted only in response to an invitation to tender administered by the ANRT. Pursuant to Act 24-96, the telecommunications networks and services previously operated by the ONPT, which mainly comprised fixed-line and mobile telecommunications networks and services and the right to use the radio frequencies allocated or assigned to the ONPT, were transferred to Maroc Telecom. As the incumbent operator, Maroc Telecom is subject to contract specifications approved by Decree 2-97-1028, dated 25 February 1998, amended by Decree 2-00-1333, dated 9 October 2000, and by

122 Decree 2-05-1455, dated 21 April 2006, which define conditions for the operation of all the networks and services initially operated by the ONPT and sets out the conditions in accordance with which Maroc Telecom is to establish and operate, for an unlimited duration: * local and nationwide fixed landline telecommunications services (including data-transmission services, leased lines and the integrated-services digital network); * telegraph service; * telex service; * maritime radio-communications services; * mobile telecommunications on the GSM standard; and * international telecommunications services. Maroc Telecom also holds a license to deploy and operate public telephony networks with 3G technologies and was granted this license by Decree 2-06-498 on 29 December 2006. Marketing and Distribution Maroc Telecom has the largest telecommunications distribution network in Morocco, with a direct sales channel and an indirect sales channel comprising more than 71,000 outlets. The scale and organisation of Maroc Telecom’s distribution network are a key competitive advantage for the company. As of 31 December 2014, Maroc Telecom’s direct distribution channel comprised 407 branches in Morocco, structured and organised to best meet local needs and to ensure the widest possible coverage of customer segments. These branches comprise 380 retail branches and 27 branches for business customers. This channel also includes four dedicated branches (with nationwide coverage) for key accounts. Maroc Telecom’s indirect sales channels consists of more than 75,000 resellers who are licensed by Maroc Telecom to retail prepaid phone cards (almost 65,000 of which are able to use the rapid top- up service), as well as telestore operators and regional and national distributors. The reseller sales channel consists mainly of tobacconists, convenience stores, newsagents and other distributors of telecommunications and electronics products that have entered into agreements for the distribution of Maroc Telecom products and services. The telestores network, whose main business activity is the operation of public telephony services licensed by Maroc Telecom, also distribute prepaid fixed-line and mobile cards and subscriptions for fixed-line telecommunications. Telestore operators are remunerated through commissions for sales and services. As one of the largest advertisers in Morocco, Maroc Telecom spends a significant part of its advertising budget on its mobile, fixed-line and internet products, targeting the consumer and business segments; it also spends on institutional, financial and internal advertising. Below-the-line advertising and direct marketing, particularly text messages, are also used to carry out targeted direct-marketing initiatives on the basis of product and service promotions, thereby providing customers with a steady flow of information and to optimise costs efficiency. Web media is used to enhance traditional media with media campaigns on websites that generate significant traffic. To boost sales of handsets and promote new services, such as GPS and mobile TV, Maroc Telecom has also launched several co-branding initiatives in collaboration with the handset providers. Network Infrastructure Maroc Telecom’s mobile network is based on GSM technology, which has been rolled out across almost the entire territory of Morocco. The network has a well-developed infrastructure, high international connectivity and a service quality comparable to that of other major international operators. Maroc Telecom’s 2G network covered around 99.3 per cent. and its 3G network covered around 83 per cent. of the Moroccan population as of 31 December 2014, with over 7,713 2G base stations and 5,521 3G base stations. Fixed-line network infrastructure Maroc Telecom has developed a state-of-the-art network enabling it to deliver a wide range of services. This network comprises a transmission backbone, switching centres, service platforms and an access network. Maroc Telecom’s transmission network incorporates NG SDH and WDM technologies, mainly comprising optical fibre, which covers a distance of approximately 40,000 kilometres for local and

123 long-distance calls. An IP MPLS backbone has been implemented to carry voice, VoIP and broadband internet trafﬁc. It also supports migration to all-IP networks. The NGN has been deployed to enable the provision of the following innovative, high-quality services: VoIP and migration of TDM trafﬁc to all-IP networks, thus simplifying the network optimisation process.

Through approximately 240 agreements with foreign operators as of 31 December 2014, Maroc Telecom ensures Morocco’s connections to all countries worldwide via two international transit centres in Casablanca and Rabat, ﬁve optical-ﬁbre submarine cables and satellite connections via Intelsat and Arabsat that link Morocco’s most remote regions to the Maroc Telecom backbone.

Subsidiaries of Maroc Telecom As part of its international development, Maroc Telecom has made acquisitions outside of Morocco and, as of 31 December 2014, provided telecommunications services through controlled subsidiaries in Mauritania (Mauritel), Burkina Faso (Onatel), Gabon (Gabon Telecom) and Mali (Sotelma). These subsidiaries are fully consolidated into Maroc Telecom’s ﬁnancial statements and contributed to aggregated revenues 23 per cent. for the year ended 31 December 2012, 27 per cent. for the year ended 31 December 2013 and 29 per cent. for the year ended 31 December 2014.

On 26 January 2015, Maroc Telecom completed the acquisition of the Group’s operations in Benin, CAR, Gabon, Coˆte d’Ivoire, Niger and Togo (each operating under ‘‘Moov’’ brand), for consideration of A474 million. This acquisition also involves Prestige Telecom, which provides IT services to these subsidiaries. Prior to this acquisition, these operations were conducted through Atlantique Telecom (other than Etisalat Benin, which was wholly-owned by Etisalat but consolidated with Atlantique Telecom for presentation purposes). The Group expects this acquisition to boost the strategic positioning of Maroc Telecom as a leader in Africa with, post-acquisition, a total of 10 countries with future growth potential. Following the completion of the acquisition by Maroc Telecom, Atlantique Telecom no longer conducts any operations.

Maroc Telecom actively supports its international subsidiaries by participating throughout the development phases of their activities, especially in service offers for roaming, trafﬁc management, development of new services, billing, payment collection for international services and anti-fraud measures. A brief summary of each of Maroc Telecom’s international subsidiaries as of 31 December 2014 (i.e., before the acquisition by Maroc Telecom on 26 January 2015 of the Group’s operations previously conducted through Atlantique Telecom) is provided below. For a summary of the Group’s operations conducted through Atlantique Telecom, as well as Etisalat Benin, which were acquired by Maroc Telecom in January 2015, please see ‘‘– Sub-Saharan Africa – Moov’’ below.

* Mauritania. Maroc Telecom indirectly holds a 41.2 per cent. interest in Mauritel, the incumbent operator in Mauritania and operator of a ﬁxed-line and mobile telecommunications network, subsequent to the merger of Mauritel S.A. (ﬁxed-line) and Mauritel Mobile. The holding company CMC, in which Maroc Telecom holds an 80 per cent. equity stake, holds a 51.5 per cent. direct interest in Mauritel, giving Maroc Telecom an effective shareholding of 41.2 per cent. in Mauritel. Maroc Telecom therefore controls 51.5 per cent. of the voting rights in Mauritel via its controlling interest in CMC. Mauritel’s revenues for the year ended 31 December 2012, 2013 and 2014 were MAD 1,375 million, MAD 1,476 million and MAD 1,646 million respectively.

* Burkina Faso. Maroc Telecom holds a 51 per cent. interest in Onatel. Onatel has been listed on the Bourse Re´gionale des Valeurs Mobilie`res SA regional stock exchange in Abidjan, Coˆte D’Ivoire since 2009. As of 31 December 2014, the other shares of Onatel were owned by the Government of Burkina Faso (26 per cent.), the International Finance Corporation (3 per cent.) and the remainder by the public. Onatel is a full-service operator, operating ﬁxed-line, mobile and internet operations. Onatel’s revenues for the year ended 31 December 2012, 2013 and 2014 were MAD 2,067 million, MAD 2,211 million and MAD 2,354 million, respectively.

* Gabon. Maroc Telecom holds a 51 per cent. interest in Gabon Telecom. As of 31 December 2014, the other shares of Gabon Telecom (49 per cent.) were owned by the Government of Gabon. Gabon Telecom is a full-service operator, operating ﬁxed-line, mobile and internet operations. Gabon Telecom’s revenues for the year ended 31 December 2012, 2013 and 2014 were MAD 1,291 million, MAD 1,478 million and MAD 1,788 million, respectively.

124 * Mali. Maroc Telecom holds a 51 per cent. interest in Sotelma. As of 31 December 2014, the other shares of Sotelma were owned by the Government of Mali (49 per cent.). Sotelma is a full-service operator, operating fixed-line, mobile and internet operations. Sotelma’s revenues for the year ended 31 December 2012, 2013 and 2014 were MAD 2,422 million, MAD 2,658 million and MAD 2,929 million, respectively. Other Operations Casanet. Casanet is a wholly-owned subsidiary of Maroc Telecom and is one of the leading internet service providers in Morocco. In addition to providing internet access for business customers and portal administration services, Casanet also hosts the ‘‘Menara’’ portal. Casanet has two main operating segments: the IT services segment, comprising integration and commercialisation of IT infrastructure, storing, hosting, networks, telecommunications and web development and the media segment, comprising production of digital content and online services and support of growing Moroccan businesses through e- marketing. Sub-Saharan Africa – Moov Overview The Group operates in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin under the brand ‘‘Moov’’. Each of these six operations are currently held through the Group’s controlling interest in Maroc Telecom, which acquired the Group’s operations in these countries on 26 January 2015. Prior to their acquisition by Maroc Telecom on 26 January 2015, the Group’s operations in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger under the ‘‘Moov’’ brand were held by Atlantique Telecom, a wholly- owned subsidiary of Etisalat, and the Group’s operations in Benin were carried out though Etisalat Benin, which was wholly-owned by Etisalat prior to the acquisition. Management believes that this acquisition will bring significant cost, revenue and operational synergies between the Group’s operations across these six West African countries and Maroc Telecom’s subsidiaries, especially given Maroc Telecom’s experience in operating in the predominantly French-speaking markets in West Africa. For the year ended 31 December 2014, the Group’s operations in these six countries (including Etisalat Benin, despite being wholly-owned by Etisalat and not Atlantique Telecom) were consolidated with Atlantique Telecom for presentation purposes, which was wholly-owned by Etisalat. These six countries have a total population of over 66 million and, as of 31 December 2014, the network of these operations covered approximately 59 per cent. of that population. Macroeconomic conditions in the region have been challenging, although the Group believes there is potential for substantial growth. The Group’s operations in Sub-Saharan Africa utilise the ‘‘Moov’’ brand and offer both mobile voice and data services over its 2G networks to areas with high population density. Atlantique Telecom’s revenue for the years ended 31 December 2012, 2013 and 2014 was AED 2,106 million, AED 2,167 million and AED 2,095 million, respectively. Atlantique Telecom contributed 6.4 per cent., 5.6 per cent. and 4.3 per cent. of the Group’s consolidated revenue for each of the years ended 31 December 2012, 2013 and 2014, respectively (based on external sales). Regulation The Group’s operations in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin are each subject to regulation. Each of these countries have laws specifically regulating telecommunications businesses, and requiring those businesses to hold licences to conduct their operations and provide services. In each of these countries, the telecommunications regulatory authorities are not independent of government, either as a statutory matter, or as a matter of practice. The regulatory environments that apply to the Group’s operations in these countries require the payment of annual licence fees (often representing a significant percentage of the local operation’s revenues) in addition to upfront licence fees to operate and contain discretion for the regulatory authorities to regulate the telecommunications market in their country. This generally includes regulation of interconnection agreements between service providers and both wholesale and retail pricing. Certain of the Group’s licences in these countries contain roll-out conditions requiring the licence holder to provide service or network coverage to a specified percentage of the population or geographical area of each country within a specified timetable. As of the date of this Base Prospectus, each of the Group’s subsidiaries are in compliance, or in the process of becoming fully compliant, with these licence obligations. The licences that the Group holds in relation to its operations in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin are of limited duration and do not contain automatic renewal provisions (either in

125 the statutory rules or in the terms of the licence itself). In these markets, there is a risk of expropriation by the government or regulatory authorities, either simply by revoking the licence or by making changes to the regulatory or ﬁnancial conditions in which it operates that have an equivalent effect. In these countries, the legal environment is not sufﬁciently robust to provide assurance that a challenge against such an expropriation or change in regulation would be successful. Competition Competition in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin is high. Customers have a choice of, on average, four to six mobile service providers in each of these markets. Mobile penetration, however, remains low compared to major western markets, averaging 74 per cent. across these six markets as of 31 December 2014. The Group’s operations in these countries compete against three pan-African operators: Mobile Telephone Networks, operating under the brand MTN (‘‘MTN’’); Bharti Airtel Limited (‘‘Bharti Airtel’’), which recently purchased certain African operations of Zain and still utilises the Zain brand; and France Telecom, operating under the brand Orange. MTN is present in Coˆte d’Ivoire and Benin, where they have the largest share of subscribers, Bharti Airtel dominates the market in each of Gabon and Niger with a market share (based on subscriber numbers) above 50 per cent. and Orange is present in Coˆte d’Ivoire (the largest provider ahead of MTN) and entered the markets of Niger and CAR in 2008. Other smaller operators are also present in most of these countries. Customers, products and services As of 31 December 2014, prepaid subscribers represented more than 99 per cent. of the Group’s customer base in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin, with postpaid and corporate customers representing less than 1 per cent. Apart from voice telephony, which is the main activity in its product portfolio, the Group also offers SMS and a range of value-added services in these markets, including SMS and BlackBerry services, adapted to the market conditions of the region. In these markets, the Group also offers a tariff targeted at the youth market that offers free calls and SMS for a minimum charge. For the years ended 31 December 2012, 2013 and 2014, the Group’s operations in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin were consolidated with Atlantique Telecom, which was wholly- owned by Etisalat. The following table presents information about Atlantique Telecom’s mobile subscribers as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013(1) 2014

(millions) Mobile subscribers Prepaid subscribers...... 7.5 9.5 9.7 Postpaid subscribers ...... 1.5 0.1 0.1

Total...... 9.0 9.6 9.8

Note: (1) In January 2013, 1.4 million customers were reclassiﬁed from postpaid to prepaid following a review of the contractual characteristics of the ‘‘hybrid’’ customer segment. Marketing and distribution In Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin, the Group operates under the brand ‘‘Moov’’. The Moov brand was initially launched in Coˆte d’Ivoire in mid-2006 and then rolled out to the other Sub-Saharan African countries from December 2006 to March 2011. This uniﬁed brand allows the Group to centrally manage the brand strategy, awareness campaigns and marketing for these markets. Most of the Group’s sales in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin are channelled through a network of key distributors and it owns only a limited number of sales outlets which are used for brand visibility. Network infrastructure As of 31 December 2014, the Group’s 2G network covered, on average, approximately 66 per cent. of the population in Coˆte d’Ivoire, Togo, Gabon, CAR, Niger and Benin. Ericsson is the main supplier

126 of network equipment to the Group’s operations in these countries and the network architecture is similar in all its markets. The business in Coˆte d’Ivoire has Huawei network equipment in the northern and western parts of the country. In 2013, the Group entered into an infrastructure sharing agreement in Coˆte d’Ivoire with IHS Nigeria, with the aim of increasing operational efﬁciency.

Egypt – Etisalat Misr

Overview EIEL, which holds the Group’s investment in Etisalat Misr, was incorporated as an offshore company with limited liability in the Jebel Ali Free Zone, Dubai on 6 August 2006. Etisalat has a 100 per cent. interest in EIEL. EIEL holds the Group’s 66 per cent. interest in Etisalat Misr, which Etisalat acquired in August 2006 when Etisalat Misr was awarded the ﬁrst 3G licence in Egypt (which also included rights to operate a 2G network) for a bid of U.S.$2.9 billion (AED 10.7 billion). Etisalat Misr subsequently constructed a 2G and 3G network in Egypt.

Etisalat Misr commenced commercial operations in May 2007 and within four months had approximately 2.5 million mobile subscribers. Etisalat Misr’s active subscribers increased from 32.9 million as of 31 December 2012 to 34.6 million as of 31 December 2013 and decreased to 31.8 million as of 31 December 2014, representing a market share of approximately 30.7 per cent. on the basis of numbers of subscribers in Egypt as of 31 December 2014.

Etisalat Misr’s 2G network covered approximately 99.5 per cent. of Egypt’s population, including 441 cities, towns and villages, while its 3G network had population coverage of approximately 95.3 per cent., including 422 cities, towns and villages, as of 31 December 2014. By expanding its 3G coverage to this level, Etisalat Misr fulﬁlled the coverage obligations of its 3G licence. Etisalat Misr was the ﬁrst mobile services provider to operate a 3G network in Egypt and, unlike other operators in Egypt, it offers EDGE and 3.75G services in all areas having 2G and 3G coverage, respectively.

Etisalat Misr’s revenue for the years ended 31 December 2012, 2013 and 2014 was AED 5,050.1 million, AED 4,715.7 million and AED 4,814.4 million, respectively (based on external sales). Etisalat Misr generated 15.3 per cent., 12.2 per cent., and 9.9 per cent., of the Group’s consolidated revenue for the years ended 31 December 2012, 2013 and 2014, respectively. See ‘‘Risk Factors – The Group is subject to the risks of political, social and economic instability associated with countries and regions in which it operates or may seek to operate – Political climate’’.

Regulation Law 10, issued in February 2003 (the ‘‘Egyptian Telecommunications Law’’), regulates the telecommunications sector in Egypt. The law established the National Telecom Regulatory Authority (the ‘‘NTRA’’), the entity charged with regulating all aspects of the telecommunications industry, including spectrum management, interconnection, numbers, national roaming and mobile number portability. Among other things, the Egyptian Telecommunications Law stipulates that a licence is needed in order to provide telecommunications services or operate a telecommunications network and sets out the terms that each licence must contain. It also establishes general rules relating to the management, licensing and use of the frequency spectrum. Under the Egyptian Telecommunications Law, all telecommunications tariffs must be approved by the NTRA. The NTRA validates the tariffs for various telecommunications services proposed by the licensee and may elect to subsidise tariffs through a telecommunications service fund.

Licensees in Egypt are required to provide interconnection between their networks by adopting the general framework required by the interconnection rules and regulations and either entering into an interconnection agreement ratiﬁed by the NTRA or acceding to an existing interconnection agreement. The Egyptian Telecommunications Law stipulates the basics of interconnection and provides a dispute resolution process. In the case of a dispute, the NTRA is authorised to determine the terms of the interconnection agreement and to arbitrate between service providers.

Etisalat Misr had previously entered into a national roaming agreement with Vodafone and the Egyptian Company for Mobile Services S.A.E. (‘‘Mobinil’’) to ensure network coverage in areas not covered by Etisalat Misr’s network under rules and regulations imposed by the NTRA. As of June 2010, Etisalat Misr’s network had sufﬁciently expanded to no longer require a national roaming agreement with Vodafone and Mobinil. Mobile number portability exists between the mobile operators for the beneﬁt of individual customers.

127 Management agreements Etisalat Misr and Etisalat have signed a Technical Assistance Agreement effective as of 5 July 2006, whereby Etisalat Misr obtains such services from Etisalat in respect of its Egyptian mobile network. The Technical Assistance Agreement is for a term of seven years from 5 July 2006 with an automatic five-year renewal, subject to certain conditions. Etisalat may terminate the agreement if it no longer holds shares in Etisalat Misr or by six months’ notice prior to the end of any contract year. Etisalat’s liability for services performed under the agreement is limited to the fee it receives under the agreement for the year in which the liability arises. Etisalat is entitled to 2 per cent. of Etisalat Misr’s gross revenue annually from this agreement as technical assistance fees. Competition In May 2007, Etisalat Misr commenced operations as the third mobile telecommunications services provider in Egypt. As of 31 December 2014, mobile penetration in Egypt was approximately 116 per cent. Telecommunications services in Egypt are provided principally by Telecom Egypt, the incumbent government-owned fixed-line operator, with respect to fixed-line services, and by three GSM mobile operators, Mobinil, Vodafone Egypt and Etisalat Misr. Telecom Egypt owns 44.95 per cent. of Vodafone Egypt. A fourth mobile telecommunications licence is expected to be awarded to Telecom Egypt during 2015. In addition, in February 2015, the Egyptian government announced that each of the existing three mobile operators would be eligible for fixed-line licences. Both of these developments are likely to result in further increased competition to the Group’s operations in Egypt. According to releases of the various mobile operators, as of 31 December 2014, Mobinil had a 31.3 per cent. market share, Vodafone Egypt had a 38.0 per cent. market share and Etisalat Misr had a 30.7 per cent. market share, in each case based on numbers of subscribers. Egypt is a very competitive market, with a high degree of price competition. To effectively compete in this region, Etisalat Misr is focusing on growing its share of the voice market. Etisalat Misr is also aggressively building its Business-to-Business (B2B) capabilities while complementing its offerings with state-of-the-art digital services, as well as aiming to increase and maintain its leadership in data service revenues. Customers, products and services Etisalat Misr offers a range of tariffs that are intended to appeal to a variety of customers. These include the prepaid weekly tariff ‘‘Ahlan 3pt. All Week’’, which gives customers a flat rate for voice, data and SMS for a weekly fee. Etisalat Misr has also launched the ‘‘20 EGP Monthly Bonus’’ tariff, which aims to maximise revivals and increase Etisalat Misr’s active base. Etisalat Misr also offers the Egyptian market the postpaid lifestyle portfolio ‘‘My Life’’, which allows customers to benefit from several lifestyle benefits based on their chosen tariffs, without spending any extra money. In addition to its broad range of prepaid and postpaid tariffs, Etisalat Misr also provides a wide range of mobile broadband and other mobile services to its customers. As the first 3G network provider in Egypt, Etisalat Misr aims to provide its customers with innovative offerings, such as offering streaming add-ons on YouTube, free Facebook access to non-users, promotional re-pricing of ‘‘pay-as-you-go’’ bundles and out-of-credit services. Etisalat Misr has also capitalised on the revenue stream opportunity offered by mobile ads by launching the ‘‘in-browser notification’’ as a communication channel for Etisalat products. Etisalat Misr has also introduced discounted mobile broadband modems for prepaid and postpaid customers, in addition to corporate discounts on certain of its rates plans. In order to further its strategy of offering integrated services, Etisalat Misr has introduced six-month discounts for its ‘‘Unlimited’’ and ‘‘Tornado’’ fixed broadband packages, as well as double speed and free routers. Etisalat Misr has also acquired two established internet service providers: the Egyptian Company for Internet and Digital Infrastructure S.A.E. (‘‘Nile Online’’) and the Egyptian Company for Networks S.A.E. (‘‘EgyNet’’). Etisalat Misr expects these acquisitions will support the offering of fixed and mobile broadband services to its customers.

128 The following table presents information about Etisalat Misr’s mobile subscribers in Egypt as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013 2014

(millions) Mobile subscribers Prepaid subscribers ...... 30.6 30.7 26.4 Postpaid subscribers...... 0.8 2.1 3.5 Broadband subscribers...... 1.4 1.8 1.9

Total...... 32.9 34.6 31.8

Marketing and distribution Etisalat Misr has an extensive nationwide sales channel that extends its reach to all regions and market segments in Egypt. Etisalat Misr’s sales channel consists of 134 self-managed and owned ﬂagship stores and franchise outlets throughout Egypt, 250 ‘‘mini-franchise’’ outlets, 888 authorised controlled dealers approved by the NTRA selling voice and data lines, and an additional 7,506 dealers and over 70,000 non-traditional outlets and 244,000 street sellers selling Etisalat Misr airtime.

Pakistan – PTCL Overview EIPL holds the Group’s investment in PTCL. As of 31 December 2014, the Group held a 90 per cent. interest in EIPL, and EIPL held 26 per cent. of PTCL’s shares, in the form of Class B shares, giving the Group a 23.4 per cent. effective economic interest in PTCL. As of 31 December 2013, the other shares of PTCL were owned by the Pakistani government (62 per cent.) and the public (12 per cent.), in the form of Class A shares. PTCL owns a 100 per cent. stake in Ufone, the Group’s mobile operator in Pakistan. Ufone was incorporated on 18 July 1998 and started commercial operations in Pakistan on 29 January 2001. PTCL’s consolidated revenue, including internal and external sales, for the years ended 31 December 2012, 2013 and 2014 was AED 4,521 million, AED 4,761 million and AED 4,719 million, respectively. PTCL has been listed on the Karachi Stock Exchange since October 1995.

Management arrangements The Group, through EIPL, holds all the Class B Shares of PTCL while all other shareholders hold Class A Shares. The Class B Shares, which constitute 26 per cent. of the total share capital of PTCL, differ from Class A Shares in that they entitle their holder, on account of quadruple voting rights, to appoint the majority of the board of directors of PTCL. The Group also has the right to appoint certain key management personnel under the terms of a shareholders’ agreement relating to PTCL. Until 31 December 2012, management of the Group assessed that there were certain control impediments, including restrictions on the Group’s ﬁnancial and operating decision-making ability, as a result of which PTCL was accounted for as an associate. During the fourth quarter of 2012, as a result of the alleviation of certain of these control impediments, management of the Group reassessed this position and concluded that PTCL should be accounted for as a subsidiary from 31 December 2012 onwards. Pursuant to the shareholders’ agreement, the Group entered into an agreement for the provision of technical services and know-how with PTCL (the ‘‘PTCL Services Agreement’’). Under the terms of the PTCL Services Agreement, Etisalat is entitled to an annual service fee of 3.5 per cent. of the gross consolidated revenue of PTCL subject to a cap of U.S.$50 million (AED 184 million) per year. For the years ended 31 December 2012, 2013 and 2014, the service fee was AED 156 million, AED 174 million and AED 165 million, respectively.

Competition Both fixed-line and mobile services markets in Pakistan are highly competitive, though penetration rates remain relatively low compared to those in major western European markets. The PTA estimates that, as of 31 December 2014, fixed-line penetration (fixed and wireless local loop) in Pakistan was 3.4 per cent. and mobile penetration was 73.1 per cent. PTCL enjoyed a monopoly with respect to basic fixed-line services until 2003. The PTA has since issued 14 new licences that allow

129 holders to provide long distance and international services, 14 wireless local loop licences and 36 fixed-line licences. Despite these new entrants, as of 30 June 2014, PTCL’s market share in the fixed- line and wireless local loop segment was approximately 67 per cent. based on numbers of subscribers (source: PTA). Pakistan has six mobile operators, of which one is currently defunct and five, Mobilink, Zong, Ufone, Telenor and Warid Telecom, provide digital GSM services. Accordingly, the mobile telecommunications market is very competitive. Ufone is the fourth largest mobile operator in Pakistan, with approximately 22 million subscribers as of 31 December 2014. As of 31 December 2014, the PTA reported that Mobilink had an estimated 28 per cent. share in the Pakistani mobile market, Telenor an estimated 27 per cent., Ufone an estimated 16 per cent., Warid Telecom an estimated 9 per cent. and Zong an estimated 19 per cent. based on numbers of subscribers. (source: PTA). In April 2014, the PTA completed an auction for 3G and 4G spectrum in Pakistan. Ufone, having bid for both 3G and 4G licences, was awarded a 3G licence only, whilst its bid for a 4G licence was deemed ineligible on technical grounds. Mobilink and Telenor were each awarded a 3G licence, whilst Zong was awarded both 3G and 4G licences. Management does not expect that the ineligibility of PTCL’s bid for a 4G licence will have any material impact on PTCL’s business in the short- to medium-term.

Customers, products and services PTCL’s business strategy focuses on achieving high levels of customer satisfaction by deploying innovative products and services based on the latest technologies. PTCL’s fixed-line operations are its core business and PTCL had 3.2 million fixed-line and wireless local loop customers as of 31 December 2014. PTCL seeks to increase its fixed-line revenues by encouraging customers to subscribe to offers bundling fixed-line and broadband services. Ufone’s mobile telecommunications network covered approximately 77.1 per cent. of Pakistan’s population as of 31 December 2014. Ufone provides both prepaid and postpaid mobile services, including BlackBerry, GPRS enabled WAP, MMS and internet access. In addition, in June 2012, PTCL was the first operator in Pakistan to launch 3G EVO wireless broadband, offering speeds of up to 9.3 Mbps. Internet services are a growing part of PTCL’s business and since the launch of its broadband services, PTCL has acquired approximately 39 per cent. of broadband customers (including 3G connectivity from mobile companies) in more than 170 cities and towns across Pakistan. PTCL also operates a fixed wireless network, covering over 10,000 urban, suburban and rural villages, and having 1.4 million subscribers across Pakistan. The following table presents information about PTCL’s fixed-line subscribers and Ufone’s mobile subscribers in Pakistan as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013 2014

(millions) Fixed-line subscribers(1) ...... 3.8 4.0 4.3 Mobile subscribers...... 23.8 24.2 22.0 Prepaid subscribers ...... 23.4 23.7 21.4 Postpaid subscribers...... 0.5 0.5 0.5

Total...... 27.6 28.2 26.3

Note: (1) Includes internet subscribers.

Marketing and distribution PTCL’s current marketing strategy focuses on promoting PTCL’s services, products and initiatives, generating awareness about PTCL’s transformation from a basic voice service provider to a multi- faceted telecommunications operator offering a strong brand presence and innovation in pricing and products, and developing a widespread sales and distribution network.

130 Ufone has developed a pricing strategy that offers tariffs that it believes are attractive to a broad range of customers, including prepaid and postpaid price plans targeted at corporate, youth, long caller and mass market customers. Ufone seeks to provide value to its subscribers through the bundling of services and tariffs. In addition to its broad range of tariffs, Ufone offers value-added services to its customers, such as caller line identiﬁcation (CLI), conference calling, call waiting, mobile banking and VPN services. Ufone reaches its customers through customer service centres, franchises and thousands of retail outlets. In 2014, Ufone introduced the concept of Ushop, which seeks to ensure a quality service for its subscribers by providing retail outlets with tools and services that were once available only at the service centres and franchises.

Network infrastructure PTCL established itself as the first 3G wireless service provider in Pakistan by upgrading its existing fixed wireless platform in major cities to EvDO, which is a CDMA based 3G technology (i.e., not GSM). PTCL then executed several broadband projects, increasing its capacity in more than 200 cities across Pakistan. To serve rural and scattered populations with broadband services, PTCL laid optical fibre cable across Pakistan. In addition to broadband services, PTCL expanded its TV offering in 15 different cities and increased its content offering from 125 to 150 channels. In February 2008, PTCL signed a construction and maintenance agreement for the planned India- Middle East-Western Europe Submarine Cable System which will establish a new submarine cable network linking Mumbai, India and Marseilles, France. PTCL has made investments in three existing submarine cables, IMEWE, SEAMEWE3 and SEAMEWE4. In order to accommodate increasing customer bandwidth demand, PTCL is considering further investment in new submarine cable systems. PTCL’s Carrier Services & Wholesale (‘‘CS&W’’) business unit is PTCL’s key revenue generating strategic business unit. The CS&W unit provides fast-track provisioning of products and services to communications service providers and wholesale customers. Since its inception in 2007, the CS&W unit has significantly contributed towards PTCL’s strategic and financial goals. The CS&W unit provides wholesale customers with access to PTCL platforms, skills and technology, promoting competition and innovation, increasing economies of scale and avoiding infrastructure duplication. Management believes that opportunity lies in exploiting the lack of high quality telecommunications infrastructure in emerging urban centres and rural areas in Pakistan. Service providers in Pakistan generally incur significant costs to reach certain rural areas, whereas PTCL has a robust infrastructure already laid down. The lack of passive infrastructure such as towers and fibre-optic network used by other operators in Pakistan provides an opportunity for the CS&W unit to expand its business in the future by offering access to PTCL’s infrastructure to other service providers. As of 31 December 2014, Ufone has launched approximately 2,000 3G sites in Pakistan, with population and geographical coverage of 25 per cent. and 0.2 per cent. respectively.

Saudi Arabia – Mobily Overview The Group conducts its operations in Saudi Arabia through its associate Mobily. Mobily was incorporated on 14 December 2004, with Etisalat as one of its founding shareholders. In accordance with the Saudi Royal Decree establishing Mobily, its founding shareholders were required to offer 20 per cent. of the initial shares to the public within the ﬁrst three years of Mobily’s incorporation. Accordingly, in the ﬁrst quarter of 2008, Etisalat reduced its interest in Mobily from 35 per cent. to 26.25 per cent. In October 2008, Etisalat participated in Mobily’s rights issue, increasing its stake to 27.5 per cent. Mobily acquired the second GSM licence (after the incumbent, Saudi Telecom Company (‘‘STC’’)) to be awarded in Saudi Arabia following a competitive auction, and commenced commercial operations in May 2005. Mobily subsequently constructed and launched its 3G and 3.5G networks in 2006, and launched its 4G LTE network in 2011. Etisalat is the largest single shareholder in Mobily, followed by the General Organisation for Social Insurance (GOSI). The remaining shares are held by public shareholders via Mobily’s listing on Tadawul.

131 Saudi Arabia has one of the highest mobile phone penetration rates in the world, at around 186 per cent. as of 31 December 2014. As of 31 December 2014, Mobily’s 2G and 3G networks covered 99 per cent. and 97 per cent., respectively, of the total populated area in Saudi Arabia, whilst its 4G LTE network covered around 78 per cent. of the population. The Group sees Saudi Arabia as a key market and intends to continue to maintain or increase Mobily’s market share in Saudi Arabia, particularly with respect to the highest customer value segments, without eroding profitability or revenue. Mobily’s revenue for the years ended 31 December 2012, 2013 and 2014 was SAR 23,585 million (AED 23,255 million), SAR 19,180 million (AED 18,911 million) and SAR 15,749 million (AED 15,422 million) respectively (as calculated under the accounting standards of the Saudi Organization for Certified Public Accountants (‘‘SOCPA’’)). Management arrangements Mobily and the Group entered into a management agreement dated 23 December 2004 (the ‘‘Mobily Management Agreement’’) whereby the Group provides Mobily with technical and management services in respect of its Saudi mobile network licence. Pursuant to this agreement, the Group receives an annual management fee from Mobily of U.S.$10 million (AED 36.7 million) plus a variable performance fee of up to 1 per cent. per year of net revenue. The Mobily Management Agreement was originally for a term of seven years from 23 December 2004 and includes a provision for automatic renewal for successive periods of five years subject to notice of termination not being given by either party. The Mobily Management Agreement was renewed on 23 December 2011 for a further period of five years. The Group may terminate the Mobily Management Agreement by giving notice at least 12 months prior to the end of any contract period or if it no longer holds shares in Mobily, while Mobily can terminate the agreement by serving a six-month notice of termination prior to the expiry under the applicable contract period. Pursuant to the Mobily Management Agreement, Etisalat must own at least a 15 per cent. interest in Mobily for the duration of the Mobily Management Agreement. The Group is represented by four members of the board of directors of Mobily (out of ten total members of the board of directors). Competition Both the fixed-line and mobile telecommunications markets in Saudi Arabia are highly competitive. STC is the incumbent fixed-line operator and three operators provide mobile services: STC, Zain KSA and Mobily. In addition, there are several smaller operators competing with Mobily in fixed wireless services. There are also two MVNOs that have recently commenced operations in the Saudi Arabian market: Virgin Mobile/FRiENDi, which went live on STC’s network in September 2014, and Lebara, which went live on Mobily’s network in December 2014. As of 31 December 2014, Mobily’s market share of the mobile services in Saudi Arabia was 29.6 per cent. in terms of numbers of subscribers. Customers, products and services Mobily currently offers services for both residential and corporate customers, including prepaid and postpaid mobile services as well as wireless broadband. Mobily also offers broadband services using fixed wireless technologies through its interests in Bayanat al Oula and Zajil Internet Services, which allows it to provide bundled offers and unique data services to its customers. Mobily seeks to target its services to various demographic markets in Saudi Arabia. Mobily initially attracted the lower-value segments of the market, offering prepaid tariffs designed specifically for students, as well as postpaid customers. Since then, its strategy has been to increase its share of the middle- and high-value users through product offerings designed to promote mobile content as an addition to voice-only services. For example, Mobily was the first operator in Saudi Arabia to offer the iPhone 3G and the only operator to offer a prepaid fixed broadband service for residential customers. In addition, Mobily works with its business customers to help tailor their use of new telecommunications technologies to reach consumers in their respective markets. Given relatively limited entertainment opportunities in Saudi Arabia, the Saudi market has high potential in respect of home entertainment services. Mobily intends to take advantage of this potential by improving and expanding its offerings in this area, such as FTTH services. By the end of 2014, Mobily had connected over 500,000 households to its fibre-optic infrastructure, with a further 300,000 to be added during 2015.

132 The following table presents information about Mobily’s mobile subscribers in Saudi Arabia as of 31 December 2012, 2013 and 2014.

As of 31 December

2012 2013 2014

(millions) Mobile subscribers Prepaid subscribers ...... 31.0 34.3 16.3 Postpaid subscribers...... 3.3 3.5 2.6

Total...... 34.3 37.8 18.9

Marketing and distribution Mobily’s distribution model is based on owned and operated ﬂagship stores, franchise locations, fully branded outlets and co-branded outlets, plus a network of dealers and preferred dealers. By the end of 2014, Mobily had 46 ﬂagship stores in 22 cities and more than 4,742 customer access points including fully branded and co-branded outlets, dealers and preferred dealers spread over more than 98 cities.

Network infrastructure As of 31 December 2014, Mobily had 2G and 3G network coverage of 39 per cent. and 24 per cent., respectively, throughout Saudi Arabia. As of 31 December 2014, Mobily’s 4G LTE network covered 39 cities, with population coverage of around 78 per cent. Mobily had 9,327 2G technical sites and 7,988 3G technical sites as of 31 December 2014. Mobily was the ﬁrst operator in the Middle East to launch LTE roaming services, with 62 LTE roaming agreements covering 35 countries, as of 31 December 2014. As of 31 December 2014, Mobily had six data centres across Saudi Arabia, covering 15,254 square metres and with a total operating capacity of 46.5 kW. Mobily is one of 17 global operators who have signed an agreement to build and maintain a 25,000 kilometre submarine cable linking the Far East to Europe, which is due to be operational in 2016. The cable begins in Hong Kong and ends in France, linking Vietnam, Malaysia, Singapore, Thailand, India, Pakistan, Saudi Arabia, Oman, UAE, Qatar, Yemen, Djibouti, Egypt, Greece, and Italy. In 2013, Mobily entered into a U.S.$650 million long-term Islamic ﬁnancing arranged with Nokia Siemens and Ericsson and their respective Finnish and Swedish export credit agencies in order to fund infrastructure expansion.

Nigeria – EMTS Overview The Group’s operations in Nigeria are carried out by EMTS, in which the Group holds a 40 per cent. indirect ownership interest through EMTS Holdings, a company incorporated in The Netherlands. EMTS Holdings is held through Etisalat’s 100 per cent. interest in Etisalat Cooperatief, a company also incorporated in The Netherlands. Etisalat Cooperatief is 95 per cent. held by EINL and 5 per cent. held by EINtL, both of which are wholly-owned by Etisalat. The remaining 60 per cent. interest in EMTS Holdings is split equally between Mubadala Holdings Cyprus Limited and Myacinth Cooperatief U.A. EMTS holds a Uniﬁed Access Service Licence from the Nigerian Communications Commission. EMTS commenced commercial operations in October 2008, offering 2G and 3G mobile services, and its network currently covers 76 major cities across the country. Nigeria is the most populous country in Africa, with its current population estimated to be around 179 million, and is now the largest mobile telecommunications market in Africa, with mobile (GSM and CDMA) subscribers estimated at more than 188 million as of 31 December 2014. The median age of the population in Nigeria is low, at 17.8 years, which EMTS believes is favorable for it as a new mobile entrant, on the basis that young people are generally quick to adopt new technologies and more likely to switch to a newer entrant operator. The Group sees Nigeria as a key market and intends to continue to maintain or increase EMTS’ market share in Nigeria.

133 Management Arrangements EMTS Holdings entered into a management services agreement with Etisalat in 2008 for the provision of technical and management services to EMTS Holdings and EMTS. By virtue of these arrangements, Etisalat has provided management and technical support services to EMTS since 2008. Etisalat subsequently entered into technical and management service agreements with EMTS directly in 2010, which are currently before the National Ofﬁce of Technology and Promotion for consideration of EMTS’s application for their registration. Competition As of 31 December 2014, EMTS was fourth in terms of mobile market share in Nigeria, behind MTN, GloMobile and Airtel. As of 31 December 2014, EMTS had a market share of 16.5 per cent. in Nigeria, based on numbers of GSM mobile subscribers (source: Nigerian Communications Commission). Nigeria’s mobile telecommunications market can be characterised as an emerging market. In particular, data services are becoming the focal area for all operators due to the decline in ARPU for voice services. The uneven performance of existing networks in Nigeria offers an opportunity for EMTS to attract customers away from the established operators through offering better customer service and network quality. EMTS believes that developing a high-quality network is a critical success factor in the Nigerian market, and intends to roll out its 3G network in a number of phases as part of its strategy to maximise targeted coverage, while maintaining high network quality. To this end, EMTS has recently completed a national ﬁbre roll-out project to service its customers better and to reduce lease line transmission operating expenditure. Customers, products and services EMTS aims to be a leader in innovation in the Nigerian market and has developed various packages to cater to the different segments of the Nigerian subscriber base. These include ‘‘Easy Starter’’ for the mass market; ‘‘Easy Cliq’’ for the youth market; ‘‘Enuff Yarn’’ for telecentres; ‘‘Easylife’’ for high-value customers; ‘‘Easy Net’’ mobile data plans with USB modems; mobile money and BlackBerry plans for professionals and corporations. The following table presents information about EMTS’ mobile subscribers in Nigeria as of 31 December 2013 and 2014.

As of December 31

2013 2014

Mobile subscribers Prepaid subscribers ...... 16,808,836 20,787,974 Postpaid subscribers ...... 222,244 315,775

Total ...... 17,031,080 21,103,749

Marketing and distribution EMTS has a relationship with around 72 reputable dealers across Nigeria, split into territories and zones. EMTS has developed an attractive commission scheme with a variety of incentives paid to dealers monthly to continue to distribute EMTS’ products. As of 31 December 2014, EMTS had 210 retail outlets from where it offers customer services to its subscribers. These outlets comprise experience centres, kiosks and mobile points of sales. EMTS’ marketing campaign is intended to build brand preference and loyalty through youthful, quality-conscious and innovative branding, customer care, identifying with Nigerian culture and ensuring a consistent and thoughtful deployment of communication materials.

Other subsidiaries The Group’s other subsidiaries consist of operations in Sudan, Tanzania, Afghanistan and Sri Lanka. These businesses operate in markets with signiﬁcant competition but relatively low penetration rates compared to major western markets. The Group’s competitive position varies widely among these operations, depending on the number of operators in the relevant market as well as the timing of entry of the Group’s operations relative to its competitors. The countries in which the Group operates have laws speciﬁcally regulating telecommunications businesses, and requiring those businesses to hold licences to conduct their operations and provide services. In many of these

134 markets, the telecommunications regulatory authorities are not independent of government, either as a statutory matter or as a matter of practice. The regulatory environments require the payment of licence fees (often representing a signiﬁcant percentage of the local operation’s revenues) and regulatory authorities have signiﬁcant discretion in how they regulate the telecommunications market in their country. This typically includes regulation of interconnection agreements between service providers and both wholesale and retail pricing.

Africa * Sudan. Canar was incorporated in Sudan on 20 April 2005 and Etisalat is one of its ten founding shareholders. Etisalat initially held a 37 per cent. interest in Canar but increased this to 82 per cent. in September 2007, to 89 per cent. in 2010 and to 90 per cent. in 2013. Canar was granted its licence to provide fixed wireless services with limited mobility on 10 November 2004, and the licence expires in August 2020. The other shareholders in Canar are: Dubai Investment Group, Dubai Islamic Bank, Mubadala Development Company, Al Batriq, the Armed Forces Welfare Support Organization, Mr. Al Attabani, Al Faris Al Arabi Ltd. and Al Rawabi Holding Company. Canar commenced commercial operations in Sudan on 18 January 2006, and it currently provides a fixed-line wireless service (including voice and data) with limited mobility for the consumer and enterprise segments as well as internet broadband services, enterprise services and national/international operator services. Canar’s network covered approximately 42 per cent. of the population of Sudan as of 31 December 2014 and its market share in the fixed-line segment as of 31 December 2014 was approximately 60 per cent. based on numbers of subscribers. Canar entered into a management services agreement with Etisalat in 2005 for the provision of technical and management services to Canar in relation to Canar’s licence to operate its network in Sudan. In addition to the Group’s telecommunications operations through Canar, the Group also holds a small stake in the Sudan Telecommunications Company Limited (‘‘Sudatel’’). As of 31 December 2014, the net book value of the Group’s investment in Sudatel was AED 32 million. * Tanzania. The Group directly holds its 85 per cent. interest in Zantel. The Group acquired its initial 34 per cent. interest in Zantel in January 1999 and increased this to 51 per cent. in July 2007 and 65 per cent. in March 2010. In July 2014, the Group acquired an additional 17 per cent. interest in Zantel, followed by an additional 3 per cent. following a rights issue in September 2014. The remaining shares are held by the Government of Zanzibar. Zantel began operations in 1999 on the islands of Zanzibar and in 2005 entered mainland Tanzania. Zantel provides both fixed and mobile services utilising a single GSM platform, with 97 per cent. of the subscriber base using mobile services, and also provides data services through a CDMA platform. The current licence was granted in 2006 for a term of 25 years. Zantel also operates an international gateway, which allows it to carry international calls directly (as opposed to through another operator). As of 31 December 2014, Zantel’s market share in Tanzania was approximately 6 per cent. based on numbers of mobile subscribers (source: Tanzania Communications Regulatory Authority). Zantel entered into a five-year management services agreement with Etisalat on 11 January 1999. Following its expiry, this agreement was renewed on 8 March 2005 for another three years, expiring in 2008. Thereafter, the management services agreement has been renewed annually to date. Pursuant to this agreement, Etisalat accrues a fixed annual management fee from Zantel of U.S.$1.4 million per annum.

Asia * Afghanistan. Etisalat holds a 100 per cent. interest in EIAL, which was incorporated as an offshore company with limited liability in the Jebel Ali Free Zone, Dubai on 31 October 2006. EIAL holds the Group’s 100 per cent. interest in Etisalat Afghanistan. Etisalat Afghanistan was awarded the fourth GSM licence in Afghanistan in May 2006 and commenced commercial 2G operations in August 2007 and 3G operations in 2012. Etisalat Afghanistan provides prepaid and postpaid mobile services via both 2G and 3G networks and is one of ﬁve mobile operators presently active in Afghanistan, with approximately 20 per cent. of the market share as of 31 December 2014, based on numbers of mobile subscribers. Etisalat Afghanistan’s operations cover 34 provinces on its 2G network and 20 provinces on its 3G (HSPA+) network. * Sri Lanka. Etisalat has a 100 per cent. interest in EISLL, the subsidiary through which it owns its interest in Etisalat Lanka. On 15 October 2009, the Group, through EISLL, acquired a 100 per cent. interest in Sark, the holding company of Etisalat Lanka, a mobile telecom operator in Sri Lanka. Etisalat Lanka provides prepaid and postpaid mobile telecommunications services

135 through its GSM network and 3G data communications through HSPA+ technology. In addition, Etisalat Lanka provides a number of enterprise solutions and value-added services for both corporates and individuals. As of January 2015, Etisalat Lanka’s 2G network covered around 98 per cent. (at -102 dBm) and 75 per cent. (at -85 dBm) of Sri Lanka’s population, and its 3G network covered around 42 per cent. (at -102 dBm) and 16 per cent. (at 85 dBm) of Sri Lanka’s population. Etisalat Lanka is one of ﬁve mobile operators in the country (the others being Bharti Airtel, Dialog, Hutchison and Mobitel) and held an approximate 18.9 per cent. market share as of January 2015. Etisalat Lanka has entered into a management services agreement with Etisalat for the provision of technical and management services to Etisalat Lanka, under which Etisalat accrued a management fee from Etisalat Lanka of AED 10 million in 2014.

Employees See ‘‘Management and Employees – Employees’’.

Network Infrastructure The Group has developed an integrated network infrastructure providing extensive coverage throughout the countries in which it operates. The Group’s network infrastructure is fundamental to its ability to provide mobile and ﬁxed-line (including internet) services to its customers. The Group uses a variety of suppliers for its infrastructure throughout its operations.

Mobile networks The Group offers mobile telecommunications services in every country in which it operates. When a voice call or a data transmission is made on a mobile device, voice or data is transmitted by radio signals to the nearest base station, which in turn is connected to the core network of the relevant Group operating company via the access transmission infrastructure (wired or wireless). Each base station provides coverage over a given geographic area, often referred to as a cell. Standard cells can be as small as an individual building or up to 100 square kilometres using extended cell features. Each cell is equipped with its own radio transmitter and receiver antenna. This network of cells provides, within certain limitations, coverage over the service area. When a customer using a mobile device approaches the boundary of one cell, the mobile network senses that the signal is becoming weak and automatically hands over the call to the base station with the strongest signal in the area. The principal components of a mobile telecommunications network are: * base stations (either BTS or NodeB), a transmitter and receiver, which serve as a bridge between mobile users in one cell and the mobile core via BSCs in the 2G network and RNCs in the 3G network, whilst in the 4G network each eNodeB site is connected directly to a mobile management entity and unified gateway; * BSCs and RNCs: devices that connect and control the base station within each cell site; * MSCs: devices that control the BSCs and the routing of telephone calls; * transmission lines: lines that link the MSCs, BSCs, BTSs, other mobile network elements and fixed telecommunications networks; * home location register: a database residing in a local wireless network that contains service profiles and checks the identity of a local customer and the services allowed; * visitor location register: a network database that holds temporary information about each customer in a smaller geographic area within a network; * value-added service platforms for other mobile services: for example the SMS centre, the MMS centre and other application services; and * billing centre: a network database holding information about customer accounts and, for prepaid customers, a real time accounting of airtime and services used. Although these components are utilised in all of the countries in which the Group operates a mobile telecommunications network, each operating company maintains its own network infrastructure. In addition, the Group continues to explore the evolution of fixed wireless technology, such as CDMA and Fixed LTE that enables the provision of high-speed wireless broadband services on a similar coverage basis to other wireless networks (2G/3G) in markets where fixed-line broadband coverage is not extensive. In 2007, the Group received regulatory approval for the development of

136 WiMAX infrastructure in the UAE, where it is presently used on a limited basis, predominantly in sparsely populated areas. In 2004, the Group also received an EvDO and WiMAX licence in Pakistan, where EvDO has become the technology of choice for deployment.

Fixed-line networks The Group offers fixed-line telecommunications services in the UAE, Morocco, Mauritania, Burkina Faso, Gabon, Mali, Pakistan and Sudan. When communication takes place over fixed-line networks, the traffic flows over a traditional wired infrastructure until the point at which it reaches the Group’s access gateway where it connects to the Group’s core transmission infrastructure. The Group also owns international gateways in the UAE, Egypt and Tanzania. The Group’s network is connected to all submarine cables crossing the MENA region, and the Group owns capacity on (or has access to) submarine cables indirectly connecting the UAE to the western and eastern coasts of North America.

Marketing and Distribution The key objective of the Group in marketing its products and services is to convey the Etisalat brand where it is used (primarily in the UAE, Egypt, Nigeria, Afghanistan and Sri Lanka) and project the Group’s values and subscriber proposals in a positive, empathetic and proactive manner in order to differentiate Etisalat from its competitors. The guiding principles of the Group’s marketing include consolidating and aligning its brand and services portfolio, enhancing customer experience and realising Group-wide marketing cost synergies. Every communication from the Group into the public domain aims to convey the message that Etisalat delivers competence, transparency, world class services and innovative excellence. The Group seeks to do this by identifying the objectives of the relevant target markets and offering solutions to address those objectives. In the UAE, Etisalat uses advanced marketing practices based on a multi-point proﬁling process to analyse customer behaviour and requirements and to provide targeted products and customer solutions. In order to provide a consistent message and to realise Group-wide marketing synergies, Etisalat provides marketing services to its international operations. By providing such services it has been able to establish a more uniform marketing programme and facilitate international operations in coordinating or moving into other jurisdictions. The Group also evaluates, in consultation with its subsidiaries, associates and joint venture partners whether to re-brand non-Etisalat branded international operations under the Etisalat brand, with a view to maintaining certain strong local brands such as Moov in Africa and Mobily in Saudi Arabia. International operations operating under the Etisalat brand are subject to branding fees. See ‘‘– Intellectual Property’’.

Insurance The Group’s operations are subject to a wide variety of operational and other risks, including accidents, fire and weather-related hazards. The Group maintains various types of insurance policies customary in the industry in which it operates to protect against the financial impact arising from unexpected events when the amount of the potential loss would be significant enough to prevent normal business operations. The Group cannot, however, give any assurance that this insurance will be adequate to protect it from all expenses related to potential future claims for personal injury and property damage or that these levels of insurance will be available in the future at commercially reasonable prices. The Group does not fully insure against certain risks to the extent that such risks may not be fully insurable or related coverage is unavailable at what it considers to be appropriate price levels. The Group has not historically experienced difficulty renewing its insurance policies and it believes that its insurance is sufficient in light of its risks and consistent with industry standards based upon its regions and scope of operations. In general, the Group’s operating subsidiaries have independently taken out insurance policies covering their individual businesses, although the Group is intending, in future, to move towards more centralised insurance coverage at Group level.

Intellectual Property In general, each of the Group’s operations has sought to legally protect its trademarks and copyrights for its name, logos and services in each individual market. Etisalat currently uses the ‘‘Etisalat’’ brand name in ﬁve jurisdictions (the UAE, Egypt, Nigeria, Afghanistan and Sri Lanka). The Group, to the extent possible, is moving towards a policy of central ownership and registration of trademarks with Etisalat for those trademarks which are Group-relevant (i.e., those which are used in more than one

137 country), and then licensing such trademarks to its subsidiaries and associates. Such an approach was not previously in place, with certain key trademarks (such as Mobily) owned by the relevant subsidiary or associate. From time to time, the Group deals with challenges to its registration or ownership of the Etisalat brand. The Group aggressively defends its brands in these disputes, but cannot be certain that it will always be successful in defending its ownership and use of its brands in all locations. See ‘‘Risk Factors – Risks Relating to Etisalat and the Group – The Group may not be able to adequately protect its intellectual property, which could harm the value of the Group’s brand and branded products and adversely affect its business, ﬁnancial condition, results of operations and prospects’’.

Risk Management The Group’s business requires the identification, measurement, aggregation and effective management of risk. The Group manages its risks through a comprehensive risk management framework which assists the Group in achieving its operating and financial objectives, complying with its regulatory and legal obligations, managing risk and delivering reliable reporting. The Group’s risk management framework includes: * management controls to manage the day-to-day operations and decision making within the business with controls in place to ensure compliance; * a Group Enterprise Risk Management Committee to provide senior executive management with a structured view of the key risks facing the business and the status of any actions to mitigate such risks; and * an internal audit team to assist with verifying, at a transactional level, that policies and procedures are being adhered to and management controls are operating in an effective and efficient manner. The internal audit teams function at both the Group level and, for the majority of the subsidiaries, at an operating company level and report directly to the Group Audit Committee on the collective findings across the Group and with internal audit teams in the individual operating companies reporting to their respective audit committees. Notwithstanding the risk management measures outlined above, such measures cannot completely eliminate the likelihood of the risks outlined in ‘‘Risk Factors’’ from materialising or having an adverse effect on the Group’s business, financial condition, results of operations or prospects.

Litigation, Arbitration and Disputes The Group is, from time to time, party to various legal actions arising in the ordinary course of its business. The Group does not believe that the resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on its ﬁnancial condition or results of operations, except as noted below. In addition to those matters noted below, the Group is disputing certain charges from the regulatory agencies in the UAE, Pakistan and certain other jurisdictions, but does not expect any material adverse effect on the Group’s ﬁnancial position resulting from the resolution of these.

Relating to Etisalat DB Just and equitable winding up proceedings In February 2012, the Supreme Court of India cancelled all of the licences held by Etisalat DB, at the time a subsidiary of the Group, removing Etisalat DB’s ability to operate its mobile telecommunications business. Following this cancellation, the board of Etisalat DB resolved to shut down its telecommunications network in India and gave the appropriate notices to the Indian authorities. Furthermore, the resignation of the directors of Etisalat DB appointed by the majority shareholders, without replacement, adversely affected the ability of Etisalat DB’s board of directors to take decisions. The parent of Etisalat DB, Etisalat Mauritius Limited, which is wholly-owned by Etisalat, subsequently filed a petition in March 2012 for the just and equitable winding up of Etisalat DB. The just and equitable winding up petition was finally admitted by the Bombay High Court after multiple appeals, on 22 February 2015. The Official Liquidator has been appointed by the Bombay High Court and initial reports of the Official Liquidator have been heard.

138 FEMA proceedings against Etisalat DB and its directors In July 2011, Etisalat DB, at the time a subsidiary of the Group, received a show cause notice from the Directorate of Enforcement (‘‘ED’’) of India alleging certain breaches of FEMA by Etisalat DB and its directors (at the time of the alleged breach), which include current members of the senior executive management of the Group. Etisalat DB and its directors have filed their responses to the notice and the cases of each of the noticees have been part heard by the ED. The potential liability for the Etisalat nominee directors of Etisalat DB arises only in the context of their roles as directors of Etisalat DB, and no specific allegations have been made against them in relation to their conduct. Should there be an adverse finding by the ED, the penalty for a breach of FEMA carries a theoretical exposure in excess of US$1.0 billion; however, there is no clarity on how such a fine would be apportioned between the respondents. Etisalat will not be liable for any fine imposed on Etisalat DB. Proceedings are ongoing and the Group is confident that these will be resolved in a satisfactory manner. See ‘‘Risk Factors – the Group is involved in disputes, litigation and/ or ongoing discussions with regulators, shareholders in its subsidiaries, associates and joint ventures, competitors and other parties, the ultimate outcome of which is uncertain’’.

Relating to PTCL Discussions with the Government of Pakistan relating to PTCL property Etisalat is currently involved in discussions with the Government of Pakistan relating to certain properties which the Government of Pakistan had agreed to transfer to PTCL, under the terms of the acquisition of Etisalat’s stake in PTCL from the Government of Pakistan in 2005, a number of which have not yet been transferred. Etisalat has withheld part of the purchase price for its stake in PTCL until these discussions come to a successful conclusion. See ‘‘Risk Factors – the Group is involved in disputes, litigation and/or ongoing discussions with regulators, shareholders in its subsidiaries, associates and joint ventures, competitors and other parties, the ultimate outcome of which is uncertain’’.

Private petitions in relation to privatisation of PTCL Three constitutional petitions have been ﬁled in various court jurisdictions alleging that the privatisation of PTCL and the sale by the Government of Pakistan of 26 per cent. of PTCL’s shares to EIPL in 2005 was invalid and unlawful under the constitution of Pakistan. EIPL (the entity holding the Group’s investment in PTCL), has been named as a respondent in the 2006 Sind High Court case being heard in Karachi and the April 2014 Peshawar High Court case being heard in Abbottabad. The third case was initiated in April 2014 in the Islamabad High Court and nominated PTCL as a respondent but did not include EIPL. The Group has appointed counsel to contest the merits of each of these cases. In March 2015, the Sind High Court dismissed the case being heard in Karachi, although this decision remains subject to appeal.

Private petitions in relation to pension entitlements of former PTCL employees Numerous claims have been ﬁled by former employees of PTCL against PTCL in various court jurisdictions alleging that the rights attached to their pension remain the same as before the privatisation of PTCL and requesting increases in pension beneﬁts in accordance with those granted to Federal Government civil servants. Some of these cases are currently being reviewed by the Supreme Court of Pakistan.

Relating to Maroc Telecom and its subsidiaries Dispute between Sotelma and Seaquest Sotelma, a 51 per cent. subsidiary of Maroc Telecom, is currently involved in a dispute with Seaquest-Infotel Mali (‘‘Seaquest’’) following the termination by Sotelma, prior to its privatisation in 2007, of a project for the development of the telecommunications network of Mali. In 2010, Seaquest brought an action against Sotelma before the arbitration tribunal (known as the CCJA) of the Organisation for the Harmonisation of Business Law in Africa, a supranational organisation adopted by seventeen West and Central African nations. The CCJA has granted Seaquest an award of approximately A7.5 million as compensation but under a hold harmless provision between the Republic of Mali and Maroc Telecom, the Government of Mali which is conducting Sotelma’s defence has ﬁled a motion to cancel the award.

Tax claims against Maroc Telecom Following a tax audit in Morocco in respect of the years 2005 to 2008, Maroc Telecom entered into a settlement agreement with the Moroccan tax authority in December 2013, principally in respect of

139 value added tax and corporate income tax on international interconnection and roaming revenues and deductibility of bad debts. Tax audits are, in the normal course of business, conducted from time to time for various entities, including some of Maroc Telecom’s subsidiaries. Whilst the findings of some of these audits may result in financial consequences for the relevant subsidiary, none of these are expected to have a material impact on Maroc Telecom’s business or financial results taken as a whole.

Mobily accounting issues On 3 November 2014, Mobily, pursuant to its results announcement for the third quarter of 2014, announced that it had restated its financial statements for the prior year-and-a-half, mainly as a result of changing the timing of revenue recognition. Following this announcement, the CMA suspended Mobily’s shares from trading on Tadawul. On 23 November 2014, Mobily announced that it had suspended the responsibilities of its Managing Director and Chief Executive Officer in connection with these accounting errors. Subsequently, on 24 February 2015, Mobily announced that it had discharged him from the positions. On 21 January 2015, Mobily announced its unaudited results for the year ended 31 December 2014, which showed that it made a full-year profit of SAR 220 million (AED 215 million), despite a fourth quarter loss of SAR 2,277 million (AED 2,230 million). Subsequently, however, on 25 February 2015, Mobily announced its audited results for the year ended 31 December 2014, which showed a loss of SAR 913 million (AED 894 million), including an increased fourth quarter loss of SAR 3,410 million (AED 3,340 million). Following Mobily’s announcement of its revised earnings, the CMA suspended Mobily’s shares from trading on Tadawul on 25 February 2015. In light of the above restatement and revised earnings, on 2 March 2015, the CMA announced that it had assigned a specialised team to review Mobily’s financial statements, conduct site visits, obtain documents and hear concerned parties’ statements. These investigations are currently ongoing. The suspension of Mobily’s shares from trading on Tadawul was lifted by the CMA on 5 March 2015. The resulting impact of the restatement to the Etisalat 2014 Financial Statements before federal royalty amounted to AED 200 million, which the Group considers to be immaterial and was accounted for in the Group’s share of results in Mobily (an associate of the Group) for the year ended 31 December 2014.

Environmental Matters The Group is subject to a broad range of environmental laws and regulations. These laws and regulations impose increasingly stringent environmental obligations in relation to, among other things, radiation emissions, zoning, the protection of employees’ health and safety, noise, and historic and artistic preservation. The Group could therefore be exposed to costs and liabilities, including liabilities associated with past activities. The Group’s operations are subject to obligations to obtain environmental permits, licences and/or authorisations, or to provide prior notiﬁcation to the appropriate authorities. The Group’s objective is to comply in all material respects with applicable environmental and health control laws and all related permit requirements. The Group believes that the principal environmental risks arising from its current operations relate to the potential for electromagnetic pollution and for damage to cultural and environmental assets. In the UAE, the regulations for use of radio frequencies in Etisalat’s mobile telecommunications business follow the guidelines of the International Commission on Non- Ionizing Radiation Protection, which is one of the most commonly-accepted standards for radio frequency emissions. The Group deploys various network infrastructure strategies in order to achieve radiation emission ranges lower than the maximum levels required by applicable regulations.

Commercial Property The principal property, plant and equipment of the Group consist of all of the assets located throughout the jurisdictions in which it operates. This includes administrative and commercial ofﬁce buildings, business centres and technical properties, which consist of switching, international exchanges, MSCs, transmission equipment, satellite earth stations, mobile base stations, data centres, cabling, power plant and other technical ancillaries. Other properties include stores and warehouses, technical workshops, a training centre, a customer call centre, a smart card factory and submarine cable depots.

140 In the UAE, the Group uses its properties for operational purposes through grants and ownership from the respective local governments. Generally, land in the UAE is owned by the individual emirates and is granted to users as these emirates deem appropriate, typically for a particular use or enjoyment. Although there is no centralised or standard method of recording such grants across the UAE, land granted by individual emirates is subject to registration with the relevant land department or land registration division. The Group has such licences and grants to use properties in the UAE, including its corporate headquarters and the sites used for its network infrastructure, as it believes to be necessary. Although no assurance can be given, management does not anticipate that these land use arrangements will change, and expects to be able to continue using these properties in its operations in the future.

Corporate Social Responsibility The Group is involved in a number of corporate social responsibility initiatives in relation to local economic development, education, environment, health and personal finance in developing countries. Examples include: * In the UAE, the ‘‘Go Green’’ initiative converted over 99 per cent. of post-paid customers to e- Bill. Additionally, Etisalat has contributed the net proceeds from 21 auctioning campaigns that support charitable activities, including the H.H Sheikh Mohammed bin Rashid Ramadan Yearly Charity Campaign to provide clean drinking water to 5 million people. Etisalat’s CSR activities support the UAE’s vision to be ‘‘the world’s capital for humanitarian relief work’’. * Etisalat’s ‘mobile for development’ programme, ‘‘Weena’’, expanded rapidly in 2014 and is now available in Togo, Benin, Cote d’Ivoire, Nigeria, Afghanistan and Pakistan. Throughout 2014, Weena positively impacted the lives of over 93,000 women employed as selling agents. The largest impact Weena has had is on the lives of resource-poor women, organised in associations, who own and use mobile phones and are rewarded for that usage through a unique, community-focused programme based on Etisalat’s mobile money platform. Since the service launch, over 1.3 million women have been reached through Weena. * In 2014, as part of its continuing efforts to develop ICT knowledge among school children, Etisalat Lanka successfully completed two additional ‘‘knowledge centres’’ in Angulana and Welimada, bringing the total number of knowledge centres to six. ICT education has been an integral part of Etisalat Lanka’s corporate social responsibility initiatives over the years, encapsulating its vision of giving students access to knowledge through various platforms, including the donation of a fully-equipped library and other educational materials. * In an effort to combat maternal and infant mortality while sustaining an innovative edge, Etisalat Nigeria has introduced the use of mobile technology in the provision of health services. The ‘‘mHealth’’ service provides a solution where midwives and healthcare providers use technology to capture, analyse, diagnose and ultimately prevent clinical conditions that lead to maternal and infant mortality. * In an effort to assist in a quick response to the Ebola crisis, Etisalat Nigeria teamed up with Samsung Electronics in September 2014 in a bid to curb the spread of the deadly virus by providing healthcare crews devices with Etisalat SIM cards equipped with data and airtime bundles. These measures are to assist in the collection of data on individuals who have been potentially exposed to the virus. In addition, seven Group companies in Benin, Coˆte d’Ivoire, Gabon, Niger, CAR, Togo and Nigeria partnered with the African Union and other telecommunications operators in a drive to support the fight against Ebola in West Africa. The drive is envisaged to combat the virus by using an SMS-dedicated platform to raise funds for the deployment of African health workers to affected countries. * Maroc Telecom has focused on reaching the remote areas of Morocco to ensure accessibility to low-income communities. By the end of October 2014, Maroc Telecom provided coverage to over 7,000 isolated areas within the framework of the Program for Universal Telecom Access (‘‘PACTE’’) and over 20,000 areas beyond the PACTE programme in Morocco. This initiative is in addition to other corporate social responsibility programmes Maroc Telecom has conducted including internship programmes, environmental initiatives, and community support throughout its footprint. * In Pakistan, Ufone and PTCL have also made a valuable contribution to the Group’s corporate social responsibility mission, with efforts focused on healthcare initiatives, humanitarian responses to the flood crisis in Sindh and Tharparker relief operations. Ufone and PTCL have

141 been involved in a number of educational initiatives for underprivileged communities in Pakistan, in addition to introducing innovative power management and green management programmes.

142 MANAGEMENT AND EMPLOYEES

Management Board of Directors Etisalat is managed by a Board of Directors which comprises 11 members, including the Chairman, seven of whom, including the Chairman, are appointed by and represent the UAE Government, and the remaining four of whom are elected by and represent Etisalat’s remaining (non-UAE Government) shareholders. The term of ofﬁce of both groups of directors is three years from the date of their appointment or election, as the case may be, renewable for one or more terms. Etisalat’s Articles of Association provide that the Board carries out Etisalat’s business and, for that purpose, exercises all of Etisalat’s powers except those reserved by law or the Articles of Association for the General Assembly of Etisalat. The Board currently comprises the 11 directors listed below:

Name Title Date of Birth Term Expires

Mr. Eissa Mohamed Ghanem Al Suwaidi...... Chairman 6 June 1957 11 June 2015 Mr. Hesham Abdulla Qassim Al Qassim...... Director 18 August 1973 24 March 2018 Sheikh Ahmed Mohd Sultan Al Dhahiri...... Director 3 May 1971 24 March 2018 Mr. Abdulla Salem Obaid Salem Al Dhaheri...... Director 30 January 1969 11 June 2015 Mr. Mohamed Hadi Ahmed Abdulla Al Hussaini...... Director 12 December 1976 11 June 2015 Mr. Mohamed Sultan Abdulla Mohamed Alhameli ...... Director 11 May 1972 24 March 2018 Mr. Abdulfattah Sayed Mansoor Sharaf...... Director 31 January 1968 11 June 2015 Mr. Khalid Abdulwahid Hassan Alrustamani...... Director 15 March 1967 24 March 2018 Mr. Abdelmonem Bin Eisa Bin Nasser Alserkal ...... Director 19 April 1969 24 March 2018 Mr. Essa Abdulfattah Kazim Al Mulla...... Director 1 January 1959 11 June 2015 Mr. Otaiba Khalaf Ahmed Khalaf Al Otaiba ...... Director 21 August 1974 24 March 2018 Etisalat’s Articles of Association require that at least four Board meetings should be held in each year. The quorum at each meeting is six directors. The business address of each of the members of the Board is P.O. Box 3838, Corporate Secretariat, Etisalat Group, Abu Dhabi, UAE. The Board guides the strategic direction of Etisalat and regularly reviews Etisalat’s operating and ﬁnancial position. The Board is responsible for ensuring that the necessary resources are in place to enable Etisalat to meet its strategic objectives. The Board also monitors the performance of management and aims to ensure that the strategy, policies and procedures adopted by Etisalat are in accordance with UAE law as well as Etisalat’s long-term corporate vision. Brief biographies of each of the members of the Board are set out below. Mr. Eissa Mohamed Ghanem Al Suwaidi Mr. Eissa Mohamed Ghanem Al Suwaidi has been the Chairman of the Board since June 2012. Mr. Al Suwaidi is also the Chairman of Abu Dhabi Commercial Bank, an Executive Director of Abu Dhabi Investment Council and Vice Chairman of Maroc Telecom. He is also a member of the board of directors of Abu Dhabi National Oil Company for Distribution, International Petroleum Investment Company, Abu Dhabi Fund for Development and Emirates Investment Authority. Mr. Al Suwaidi holds a Bachelor’s degree in economics from Northwestern University, U.S.A. Mr. Hesham Abdulla Qassim Al Qassim Mr. Hesham Abdulla Qassim Al Qassim has been a member of the Board since March 2015. Mr. Al Qassim is also the Chairman of Emirates Islamic Bank, Chairman of Emirates NBD Egypt, Vice Chairman of Emirates NBD Bank, Chief Executive Ofﬁcer for wasl Asset Management Group and one of the founders of the Young Arab Leaders Organisation. He also sits on the Boards of the National Human Resources Development Committee in the Banking and Financial Sector, Dubai International Financial Centre (‘‘DIFC’’), DIFC Authority, DIFC Investments LLC, National General Insurance Co., Amlak Finance and Emirates Institute for Banking and Financial Studies (EIBFS), as well as the International Humanitarian City. Mr. Al Qassim holds a Bachelor’s degree in Banking and Finance and a Master’s degree in International Business Management and in Executive Leadership Development. Sheikh Ahmed Mohd Sultan Al Dhahiri Sheikh Ahmed Mohd Sultan Al Dhahiri has been a member of the Board since March 2000. Sheikh Ahmed is the Vice Chairman of Abu Dhabi National Hotels Company and Abu Dhabi Aviation,

143 Board Director of National Bank of Abu Dhabi, and a Member of the National Advisory Consultative Council in Abu Dhabi. He is also the Chairman of Bin Suroor Engineering Development. Sheikh Ahmed graduated from the UAE University in Al Ain with a Bachelor’s degree in Civil Engineering Science in 1993. Mr. Abdulla Salem Obaid Salem Al Dhaheri Mr. Abdulla Salem Obaid Salem Al Dhaheri has been a member of the Board since June 2012. Mr. Al Dhaheri is also the Chief Executive Officer of Abu Dhabi National Oil Company for Distribution and is a Member of the Board of Directors of Abu Dhabi National Oil Refining Company. Mr. Al Dhaheri obtained a Bachelor’s degree in Business Administration from the U.S.A. in 1992. Mr. Mohamed Hadi Ahmed Abdulla Al Hussaini Mr. Mohamed Hadi Ahmed Abdulla Al Hussaini has been a member of the Board since June 2012. Mr. Al Hussaini currently sits on the Board of Directors of three other publicly listed entities: Emirates NBD, Emirates Islamic Bank and Dubai Refreshments Company. He also sits on the Board of Directors of Dubai Real Estate Corporation and Emaar Malls Group. Mr. Al Hussaini graduated with a Master’s degree in International Business from Switzerland. Mr. Mohamed Sultan Abdulla Mohamed Alhameli Mr. Mohamed Sultan Abdulla Mohamed Alhameli has been a member of the Board since March 2015. Mr. Alhameli is currently the Chairman of National Health Insurance Company (Daman), Vice Chairman of Abu Dhabi Commercial Bank and Director General of Abu Dhabi Department of Finance. He also sits on the Board of Directors of Abu Dhabi Public Service Co. and Social Welfare and Minor Affairs Foundation. Mr. Alhameli holds a Bachelor’s degree in Finance from Boston University, USA, and he is also a Chartered Financial Analyst (CFA). He has also successfully completed several Executive Programmes at Harvard Business School, U.S.A. Mr. Abdulfattah Sayed Mansoor Sharaf Mr. Abdulfattah Sayed Mansoor Sharaf has been a member of the Board since April 2013. Mr. Sharaf also sits on the Board of Directors of HSBC Bank Middle East Limited, HSBC Bank Oman, HSBC Saudi Arabia Limited and Noor Dubai Foundation. He is also a Member of the Higher Board of Directors of the DIFC. He graduated from the University of Denver, U.S.A., with a Bachelor’s Degree in Political Science and Special Education. Mr. Khalid Abdulwahid Hassan Alrustamani Mr. Khalid Abdulwahid Hassan Alrustamani has been a member of the Board since March 2015. Mr. Alrustamani has held the position of Vice Chairman of the A.W. Rostamani Group of Companies since 2007, and he is the Founder and Chairman of BCD Travel and KAR Transport and Freight Forwarding. He is also the Vice Chairman of the Commercial Bank of Dubai. Mr. Alrustamani holds a Bachelor’s degree in finance from George Washington University, Washington D.C., U.S.A. Mr. Abdelmonem Bin Eisa Bin Nasser Alserkal Mr. Abdelmonem Bin Eisa Bin Nasser Alserkal has been a member of the Board since March 2012. Mr. Alserkal is also the Managing Director of Nasser Bin Abdullatif Alserkal Est. and a Board Member of Al Mal Capital. He is also an Advisory Board Member of Tharawat Family Business Forum, President of Business Entrepreneurs Forum and the Developer of Alserkal Avenue (an arts and cultural hub in Dubai). Mr. Alserkal graduated from Point Loma Nazarene University, San Diego, California, U.S.A., in 1993 with a Bachelor’s Degree in Business Administration, majoring in Economics. Mr. Essa Abdulfattah Kazim Al Mulla Mr. Essa Abdulfattah Kazim Al Mulla has been a member of the Board since June 2012. He is also the Chairman of Borse Dubai, Dubai Financial Market, DIFC Authority Board of Directors and DIFC Investments Board of Directors. Mr. Al Mulla also serves as the Governor of the DIFC and is a Member of the Higher Board of Directors of the DIFC and a Member of Dubai Economic Council. Mr. Al Mulla also sits on the Board of Directors of NASDAQ Dubai, Noor Bank. and Rochester Institute of Technology. In addition, Mr. Al Mulla is a Member of the Supreme Fiscal Committee of Dubai, Board Member and Secretary General of Dubai Islamic Economy Development Center and a Member of the Board of Governors of Hamdan Bin Mohammed E-University.

144 Mr. Mulla holds an Honorary Doctorate from Coe College, U.S.A., a Master’s Degree in Economics from the University of Iowa, U.S.A., a Master’s degree in Total Quality Management from the University of Wollongong and a Bachelor’s degree in Maths, Economics and Computer Science from Coe College, U.S.A.

Mr. Otaiba Khalaf Ahmed Khalaf Al Otaiba Mr. Otaiba Khalaf Ahmed Khalaf Al Otaiba has been a member of the Board since March 2015. Mr. Al Otaiba is a practising lawyer, having worked in the Legal Department of National Bank of Abu Dhabi for two years, before establishing Al Otaiba Advocates & Legal Consultants in 2004. He graduated from Damascus University Faculty of Law with a Bachelor’s degree in Law in 2001.

Corporate Secretary The Corporate Secretary is appointed by the Board, according to article 23 of Etisalat’s Articles of Association. The primary responsibility of the Corporate Secretary is to provide legal and administrative support to the Board and to ensure that the Board and its committees are functioning in accordance with applicable laws and regulations. As of the date of this Base Prospectus, Etisalat’s Corporate Secretary is Mr. Hassan Mohamed Al Hosani. Mr. Al Hosani is a licensed lawyer with the UAE Ministry of Justice and a licensed arbitrator with the Abu Dhabi Commercial Conciliation and Arbitration Centre. Mr. Al Hosani has also worked as a Legal Advisor for National Petroleum Construction Company, as well as Property Laws Expert, Manager of Property Regulations Department and General Counsel of Department of Municipal Affairs, Abu Dhabi. Mr. Al Hosani holds a Bachelor’s degree in Law from the UAE University in Al Ain.

Senior Executive Management The Group Chief Executive Officer is authorised to represent Etisalat in all matters relating to the proper management, supervision and direction of Etisalat’s business and affairs. The Group Chief Executive Officer of Etisalat provides direction and leadership toward the achievement of Etisalat’s mission, vision, strategy, goals and objectives. He defines and guides the implementation of the strategy for development, marketing, sales and provisioning of Etisalat’s services and the required network and IT infrastructure. He acts as the representative of Etisalat to ensure that the mission, programmes, products and services of Etisalat are consistently presented in a strong and positive image to relevant stakeholders. He is also accountable to the Board for running Etisalat’s affairs in accordance with the policies determined by the Board. The business address of each of the members of senior executive management named below is P.O. Box 3838, Abu Dhabi, UAE. The members of the Group’s senior executive management comprise:

Name Title Date of Birth

Mr. Ahmad Abdulkarim Julfar...... Group Chief Executive Officer 11 September 1961 Mr. Serkan Okandan ...... Group Chief Financial Officer 8 July 1970 Mr. Rainer Rathgeber...... Group Chief Commercial Officer 7 February 1964 Dr. Daniel Ritz ...... Group Chief Strategy Officer 6 February 1966 Mr. Khalifa Al Shamsi...... Group Chief Digital Services Officer 31 October 1970 Mr. Abdul Aziz Ahmed Saleh Al Sawaleh ...... Group Chief Human Resources Officer 21 March 1960 Mr. Obaid Bokisha ...... Group Chief Procurement Officer 20 October 1975 Mr. Javier Garcia...... Group Chief Internal Auditor 2 December 1966 Mr. John Wilkes...... Group Chief Internal Control Officer 23 October 1967 Dr. Kamal Shehadi ...... Group Chief Legal & Regulatory Officer 16 August 1964 Mr. Hatem Bamatraf ...... Group Chief Technology Officer 28 April 1972 Brief biographies of each of the members of senior executive management are set out below.

Mr. Ahmad Abdulkarim Julfar Mr. Julfar is the Group Chief Executive Officer. He commenced his career at Etisalat in 1986 and held various positions, including General Manager – Dubai and Group Chief Operating Officer prior to becoming Group Chief Executive Officer in 2011. In his role as Group Chief Executive Officer, Mr. Julfar reports to the Board and is responsible for directing, leading and setting the Group’s mission, vision, strategy and its goals and objectives. Mr. Julfar holds a Bachelor’s degree in Civil Engineering and Computer Science from Gonzaga University, Washington, U.S.A., and is also a graduate of the Mohammed Bin Rashid Programme for Leadership Development.

145 Mr. Serkan Okandan Mr. Okandan joined Etisalat in January 2012 as Group Chief Financial Officer. Mr. Okandan is also the Deputy Chief Executive Officer of Mobily. Prior to his appointment as Group Chief Financial Officer, he was the Group Chief Financial Officer of Turkcell. Mr. Okandan started his professional career at PricewaterhouseCoopers in 1992, and worked for DHL and Frito Lay as a Financial Controller, before joining Turkcell. In his role as Group Chief Financial Officer, Mr. Okandan is responsible for developing and implementing the Group’s finance strategy. Mr. Okandan graduated from Bosphorus University, Turkey, with a degree in Economics.

Mr. Rainer Rathgeber Mr. Rathgeber was appointed as Group Chief Commercial Officer in January 2013. Mr. Rathgeber has over 20 years of experience in the telecommunications industry in consulting and industry roles. Prior to joining Etisalat, Mr. Rathgeber was Senior Vice President Marketing – Europe at Deutsche Telekom Group, as well as holding area management responsibility (equivalent to the role of Chief Regional Officer), for OTE Group Deutsche Telekom’s six-entity subsidiary covering Greece, Romania, Bulgaria and Albania. In 2006 he was appointed as Chief Executive Officer of T-Mobile Croatia whilst remaining a Member of the Executive Management Committee of T-Mobile International. In his role as Group Chief Commercial Officer, Mr. Rathgeber is responsible for developing the Group’s commercial strategy and leading the commercial department in order to attract, develop and retain customers. Mr. Rathgeber holds a Diplom-Kaufman degree in Economics from The University of Passau, Germany.

Dr. Daniel Ritz Dr. Ritz was appointed as Group Chief Strategy Officer in February 2012. Prior to this appointment, he was the Chief Strategy Officer at Swisscom Group, where he held various positions including being a board member of each of Swisscom Group’s Executive Board, Fastweb, Belgacom and Swisscom IT Services. Dr. Ritz also served as Chairman of Swisscom’s Hospitality Services and as Chief Executive Officer of Swisscom (Central & Eastern Europe). Prior to joining Swisscom, he was a partner at Boston Consulting Group. In his role as Group Chief Strategy Officer, Dr. Ritz is responsible for leading the Group-wide strategic planning process. Dr. Ritz holds a Ph.D from the Hochschule St. Gallen in Switzerland.

Mr. Khalifa Al Shamsi Mr. Al Shamsi was appointed as Group Chief Digital Services Ofﬁcer in 2012. Prior to this role, Mr. Al Shamsi held the position of Senior Vice President of Technology Strategy. Since joining Etisalat in 1993, Mr. Al Shamsi has held various key senior positions including Vice President and Senior Vice President of Marketing of Etisalat UAE. In his role as Group Chief Digital Services Ofﬁcer, Mr. Al Shamsi is responsible for providing leadership and direction to implement plans, policies and strategies for digital services across the Group. Mr. Al Shamsi holds a Bachelor’s degree in Electrical Engineering from the University of Kentucky, U.S.A.

Mr. Abdul Aziz Ahmed Saleh Al Sawaleh Mr. Al Sawaleh is the Group Chief Human Resources Officer. He commenced his career at Etisalat in 1986 and held various positions, including Executive Vice President – Human Resources, prior to becoming Group Chief Human Resources Officer in 2006. In his role as Group Chief Human Resources Officer, Mr. Al Sawaleh is responsible for defining overall strategies and overseeing the proper management of all aspects of the Group’s human resources functions, such as talent management, recruitment, training and development, performance management, compensation and benefits. Mr. Al Sawaleh holds a Master of business administration degree in global leadership and management from the UAE University in Al Ain and a Bachelor’s degree in Business Administration from Columbus College, U.S.A.

Mr. Obaid Bokisha Mr. Bokisha was appointed as Group Chief Procurement Ofﬁcer in June 2012. Since joining Etisalat in September 1998, his responsibilities have included the network implementation of all existing systems covering GSM, UMTS, LTE and WiFi networks. His previous positions include Vice President – Mobile Networks Planning & International Support of Etisalat UAE and Senior Vice President – Mobile Networks Optimisation of the Group. In his role as Group Chief Procurement Ofﬁcer, Mr. Bokisha is responsible for providing leadership and direction in strengthening the

146 Group’s capabilities in strategic sourcing, procurement and contracts administration. Mr. Bokisha holds a degree in Communications Engineering from the Etisalat College of Engineering in Sharjah, UAE.

Mr. Javier Garcia Mr. Garcia joined Etisalat in December 2012 as Group Chief Internal Auditor. Mr. Garcia was the head of Internal Audit at Telefonica Group before joining Etisalat. He held various positions with Telefonica including Business Process Audit Director and Vice President of Internal Audit (Chile) before becoming the Group Chief Internal Auditor. In his role as Group Chief Internal Auditor, Mr. Garcia is responsible for articulating and directing the development and implementation of the Group’s internal audit strategy. Mr. Garcia holds a Bachelor’s degree in economics and a Master’s degree in Financial Markets from the Autonomous University of Madrid, Spain.

Mr. John Wilkes Mr. Wilkes was appointed as Group Chief Internal Control Officer in January 2013. Prior to this, Mr. Wilkes was the General Manager of Risk & Supply Chain of the Vodafone Hutchison Company. He has more than 25 years of experience in companies such as KPMG Air in New Zealand where he was the Group Internal Auditor and Stockland in Australia, where he held the position of Chief Risk Officer. In his role as Group Chief Internal Control Officer, Mr. Wilkes is responsible for articulating and directing the development and implementation of the Group’s internal control framework. Mr. Wilkes is a qualified chartered accountant, and holds a Bachelor’s degree in Commerce from the University of Queensland in Australia.

Dr. Kamal Shehadi Dr. Shehadi is Group Chief Legal & Regulatory Officer. Prior to joining Etisalat in May 2010, Dr. Shehadi was the Chairman and Chief Executive Officer of the Telecommunications Regulatory Authority of the Republic of Lebanon. From 2000 to 2007, Dr. Shehadi was Managing Director of Connexus Consulting. In his role as Group Chief Legal & Regulatory Officer, Dr. Shehadi is responsible for strategic regulatory engagement at Group level and overseeing the performance of Etisalat’s operating companies’ regulatory activities. Dr. Shehadi holds a Bachelor’s degree from Harvard University, U.S.A., in economics and a Ph.D. from Columbia University, U.S.A., in International Political Economy.

Mr. Hatem Bamatraf Mr. Bamatraf is Group Chief Technology Ofﬁcer. Mr. Bamatraf originally joined Etisalat in 1995, with responsibility for GSM Mobile System Planning. In 2004, Mr. Bamatraf was seconded to Mobily’s launch team as Director – Mobile Network Development in the Central Region of Saudi Arabia. In this capacity he was responsible for all mobile network activities including planning, implementation and operations. Mr. Bamatraf joined du in 2007, serving as Senior Vice President – Network Development and, subsequently, Executive Vice President – Network Development and Operation. Mr. Bamatraf rejoined Etisalat in September 2013. Mr. Bamatraf holds a Bachelor’s degree in Engineering in Communication from Etisalat College of Engineering, Sharjah, UAE. He was also named as one of the ‘‘40 under 40 telecom leaders in the world’’ by Global Telecom Business.

Conﬂicts There are no actual or potential conﬂicts of interest between the duties of the members of the Board and senior executive management listed above to Etisalat and their respective private interests or other duties.

Corporate Governance The Board believes that the governance of the Group is best achieved through the delegation of certain elements of its authority to the senior executive management, subject to monitoring by the Board and its respective committees.

147 The Board’s governance mandate addresses the Board’s relationship with the shareholders and senior executive management, the conduct of the Boards’ affairs and the duties and requirements of the Board’s committees. The Board also monitors the Group’s focus and commitment to activities that promote its shareholders’ interests, including, in particular, the active consideration of strategy, risk management and compliance. Etisalat has developed a standard set of comprehensive corporate governance and compliance principles to govern Etisalat and its subsidiaries and associate companies, based on best practice. As of the date of this Base Prospectus, Etisalat is in compliance with the UAE Corporate Governance Regulations.

The General Assembly The General Assembly comprises all the shareholders of Etisalat, and it exercises all its powers in accordance with UAE law and the Articles of Association of Etisalat. The General Assembly is entrusted with approving the Board’s Annual Report on the Group’s activities and financial position during the preceding financial year. The General Assembly is also entrusted with appointing external auditors and approving their reports, discussing and approving the balance sheet and the profit and loss account for the previous year, as well as appraising the Board’s recommendation with regards to the distribution of dividends. In addition, the General Assembly reviews any other matters included in its agenda, including approvals of increases or decreases in share capital and amendments to the Articles of Association, which are also required to be approved by the UAE Cabinet.

The Board The Group is committed to take into account best international standards and the applicable laws and regulations in the UAE in relation to its corporate governance. The Board fulﬁlls the requirements of Ministerial Resolution No. 518 of 2009, as amended, Concerning Governance Rules and Corporate Discipline Standards with respect to the capacity of Board members. All current Board members are non-executive and independent.

Board Committees The Group has three Board committees: the Audit Committee, the Nomination & Remuneration Committee and the Investment & Finance Committee, which were established to assist the Board in discharging its responsibilities. The Audit Committee The Audit Committee comprises four members, three of whom are members of the Board, and one who is an external member experienced in accounting and finance. The Audit Committee meets not less than once every three months. The primary responsibility of the Audit Committee is to monitor Etisalat’s overall financial performance and the integrity of its financial statements. Further, it oversees and monitors the effectiveness of the internal audit function, oversees the performance and independence of the external auditors and recommends their appointment or service termination to the Board. In fulfilling its role, the Audit Committee maintains free and open communications with the Board, the external auditors, the internal auditors, and the senior members of the finance department of Etisalat. As of the date of this Base Prospectus, the members of the Audit Committee are as follows:

Name Title

Mr. Essa Abdulfattah Kazim Al Mulla...... Chairman Sheikh Ahmed Mohd Sultan Al Dhahiri...... Member Mr. Khalid Abdulwahid Hassan Alrustamani...... Member Mr. Salim Sultan Al Dhaheri...... External Member The Nomination & Remuneration Committee The Nomination & Remuneration Committee comprises four members of the Board. The Nomination & Remuneration Committee is required to meet at least four times per year. The primary responsibility of the Nomination & Remuneration Committee is to develop policies with respect to recruitment, remuneration and incentives at the senior executive management level, as well as to provide comprehensive direction on all compensation and beneﬁts matters for Etisalat’s staff. The Nomination & Remuneration Committee aims to ensure that Etisalat’s employment packages are externally competitive and internally equitable to support Etisalat’s strategy to attract, retain and motivate a competent and result-oriented workforce. The Nomination & Remuneration Committee

148 also ensures that the Board complies with applicable corporate governance rules and that the independence of the Board is maintained.

As of the date of this Base Prospectus, the members of the Nomination & Remuneration Committee are as follows:

Name Title

Mr. Mohamed Sultan Abdulla Mohamed Alhameli...... Chairman Mr. Abdulla Salem Obaid Salem Al Dhaheri...... Member Mr. Abdelmonem Bin Eisa Bin Nasser Alserkal ...... Member Mr. Hesham Abdulla Qassim Al Qassim...... Member The Investment & Finance Committee The Investment & Finance Committee comprises four members of the Board, and is responsible for making certain decisions in connection with Etisalat’s investments and projects, whether in the UAE or abroad. The Investment & Finance Committee meets no less than four times per year.

The main duties of the Investment & Finance Committee are to develop and review the Group’s investment strategy, review progress on all investment projects, ensure the continuous healthy ﬁnancial position of Etisalat, review proposed investment opportunities and submit appropriate recommendations to the Board for approval.

As of the date of this Base Prospectus, the members of the Investment & Finance Committee are as follows:

Name Title

Mr. Eissa Mohamed Ghanem Al Suwaidi...... Chairman Mr. Otaiba Khalaf Ahmed Khalaf Al Otaiba ...... Member Mr. Abdulfattah Sayed Mansoor Sharaf...... Member Mr. Mohamed Hadi Ahmed Abdulla Al Hussaini...... Member Employees

Group employee headcount The following table sets out the number of employees of Etisalat and each of its subsidiary operations, as of 31 December 2013 and 2014:

Operating entity(1) Headcount(2)

2013 2014

Etisalat (Group)(3) ...... 292 205 Etisalat (UAE)(3) ...... 5,449 4,648 Maroc Telecom (and its subsidiaries) ...... — 11,561 Etisalat Misr...... 2,817 2,752 PTCL (including Ufone) ...... 23,205 19,945 Atlantique Telecom ...... 1,192 1,183 Etisalat Afghanistan ...... 724 551 Etisalat Lanka ...... 680 732 Zantel ...... 578 352 Canar...... 238 198

Total ...... 35,175 42,127

Note: (1) The Group’s associates, including EMTS and Mobily, are not included in Group employee headcount ﬁgures. (2) Excluding outsourced employees. (3) The Group splits employees of Etisalat into ‘‘Group’’ and ‘‘UAE’’ business units.

The total headcount of the Group increased by 20 per cent. from 35,175 as of 31 December 2013 to 42,127 as of 31 December 2014, primarily due to the acquisition of Maroc Telecom in May 2014. Excluding the impact of the Maroc Telecom acquisition, total headcount of the rest of the Group decreased by 13 per cent. from 35,175 as of 31 December 2013 to 30,556, primarily due to outsourcing and cost optimisation across the Group’s operations.

149 Employee training, development and leadership Leadership development framework Leadership development is an important element of the Group’s strategy. The Group aims to ensure that all levels of its leadership are trained and developed in the context of the Group’s key strategic objectives and corporate culture, in order to promote the Group’s service offerings, customer experience and operational excellence. The Group has established a number of programmes with this purpose in mind, in each case with a focus relevant to the level of leadership, with an emphasis on the expectations, responsibilities and the impact their role has as it applies to the Group’s vision and strategy. The Group has conducted extensive research and discussions with various business schools and consulting firms to determine the most relevant contents for each programme, in the context of the Group’s strategy and challenges faced by each different level of leadership. Programmes that the Group currently has in place include: * Board Director Development; * Leading the Enterprise for Profitable Growth; * Advanced Global Strategic Leadership; * Telecom Strategic Leadership; * Advanced Leadership: Leading Your Organisation; * Etisalat Core Leadership Programme; and * MIT Sloan School of Management – Executive Certificate in Management & Leadership. Each of the above programmes is targeted at the appropriate level of management within the Group. Succession management Succession management is in place for all executive positions across the Group, including the Group’s international subsidiaries. The Group has established certain criteria for succession, and has created and updated initial succession plans and generated development plans for those identified as potential successors to prepare them for a future leadership role. The Group aims to ensure a robust and consistent approach and timeline to succession management activities, including the population of an in-house developed talent management system, external assessment to validate suitability, regular talent reviews and verification of the succession plans by operating companies and Group senior executives and progress monitoring against development plan implementation. Leadership development The Group’s ‘‘High-Potential Leaders’’ Programme aims to develop the Group’s most valuable talent for the future and strengthen the pipeline of leaders to meet the Group’s growth ambitions. This programme plays a major role in the Group’s talent management policy, including succession management and development across the Group. The selection process is rigorous as the Group utilises a comprehensive assessment process to drive selection. In addition, the Group’s ‘‘Top 100 Talent’’ is a strategic initiative driven by the Group Chief Executive Officer with the purpose of strategically identifying and managing the top talent across the Group by developing, engaging and retaining those individuals. Global mobility The Group talent management strategy includes the deployment of talented employees to and from operating companies across the countries in which the Group operates, in recognition of the fact that significant numbers of the members of executive management in multinational companies have been on foreign assignment at least once during their careers. The aim of this mobility strategy is to match the right talent with the right role in order to meet the Group’s business needs whilst developing and engaging those individuals. The mobility programme has been designed to cover all aspects of global mobility, from strategic leadership and provision of core skills to targeted development assignments, for example, short-term and long-term assignments and global talent exchange programmes.

UAE employees In the UAE, Etisalat has a performance-linked bonus programme for employees which depends on corporate, department and individual performance, set against targets. There is also a long-term incentive programme aimed at retaining key and critical talent and this programme is also linked to corporate performance indicators. All employees are subject to employment contracts in compliance with UAE labour law requirements.

150 Etisalat is committed to increasing the proportion of staff who are UAE nationals and to develop their training and expertise. For the year ended 31 December 2014, UAE nationals made up approximately 46.6 per cent. of Etisalat’s workforce in the UAE and approximately 32.0 per cent. throughout the Group. Although the UAE Government does not impose a mandatory quota on the number of UAE nationals Etisalat must employ, Etisalat has taken initiatives to involve more UAE nationals in its business. For example, Etisalat has developed training programmes for different levels of graduates, and these last from one to two years. These training courses equip the trainees with the skills required for a fulfilling career at Etisalat. In accordance with the laws of the UAE, Etisalat provides end of service benefits to non-UAE national employees. Under UAE law, the entitlement to these benefits is based upon the employee’s length of service and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. With respect to UAE national employees, Etisalat contributes to the UAE Federal Pension Scheme an amount calculated as a percentage of the UAE national employees’ salaries. These obligations are limited to these contributions, which are expensed when due.

151 BOOK-ENTRY CLEARANCE SYSTEMS

The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of DTC, Euroclear or Clearstream, Luxembourg (together, the ‘‘Clearing Systems’’) currently in effect. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. None of the Issuer, the Trustee or any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

BOOK-ENTRY SYSTEMS DTC DTC has advised the Issuer that it is a limited purpose trust company organised under the New York Banking Law, a member of the Federal Reserve System, a ‘‘banking organisation’’ within the meaning of the New York Banking Law, a ‘‘clearing corporation’’ within the meaning of the New York Uniform Commercial Code and a ‘‘clearing agency’’ registered pursuant to Section 17A of the Exchange Act. DTC holds securities that its participants (‘‘Direct Participants’’) deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerised book-entry changes in Direct Participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. DTC is a wholly-owned subsidiary of The Depository Trust and Clearing Corporation (‘‘DTCC’’). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC System is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (‘‘Indirect Participants’’ and, together with Direct Participants, ‘‘Participants’’). More information about DTC can be found at www.dtcc.com and www.dtc.org. Under the rules, regulations and procedures creating and affecting DTC and its operations (the ‘‘DTC Rules’’), DTC makes book-entry transfers of Registered Notes among Direct Participants on whose behalf it acts with respect to Notes accepted into DTC’s book-entry settlement system (‘‘DTC Notes’’), as described below, and receives and transmits distributions of principal and interest on DTC Notes. The DTC Rules are on file with the Securities and Exchange Commission. Direct Participants and Indirect Participants with which beneficial owners of DTC Notes (‘‘Owners’’) have accounts with respect to the DTC Notes are similarly required to make book-entry transfers and receive and transmit such payments on behalf of their respective Owners. Accordingly, although Owners who hold DTC Notes through Direct Participants or Indirect Participants will not possess Registered Notes, the DTC Rules, by virtue of the requirements described above, provide a mechanism by which Direct Participants will receive payments and will be able to transfer their interest in respect of the DTC Notes. Purchases of DTC Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the DTC Notes on DTC’s records. The ownership interest of each actual purchaser of each DTC Note (‘‘Beneficial Owner’’) is in turn to be recorded on the Direct Participant’s and Indirect Participant’s records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct Participant or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the DTC Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in DTC Notes, except in the event that use of the book-entry system for the DTC Notes is discontinued. To facilitate subsequent transfers, all DTC Notes deposited by Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorised representative of DTC. The deposit of DTC Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the DTC Notes; DTC’s records reflect only the

152 identity of the Direct Participants to whose accounts such DTC Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the DTC Notes within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to DTC Notes unless authorised by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the DTC Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the DTC Notes will be made to Cede & Co., or such other nominee as may be requested by an authorised representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Issuer or the relevant agent (or such other nominee as may be requested by an authorised representative of DTC), on the relevant payment date in accordance with their respective holdings shown in DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in ‘‘street name’’, and will be the responsibility of such Participant and not of DTC or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct Participants and Indirect Participants. Under certain circumstances, including if there is an Event of Default under the Notes, DTC will exchange the DTC Notes for definitive Registered Notes, which it will distribute to its Participants in accordance with their proportionate entitlements and which, if representing interests in a Rule 144A Global Note, will be legended as set forth under ‘‘Subscription and Sale and Transfer and Selling Restrictions’’. A Beneficial Owner shall give notice to elect to have its DTC Notes purchased or tendered, through its Participant, to the relevant agent, and shall effect delivery of such DTC Notes by causing the Direct Participant to transfer the Participant’s interest in the DTC Notes, on DTC’s records, to the relevant agent. The requirement for physical delivery of DTC Notes in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the DTC Notes are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered DTC Notes to the relevant agent’s DTC account. DTC may discontinue providing its services as depository with respect to the DTC Notes at any time by giving reasonable notice to the Issuer or the relevant agent. Under such circumstances, in the event that a successor depository is not obtained, DTC Note certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, DTC Note certificates will be printed and delivered to DTC. Since DTC may only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants, any Owner desiring to pledge DTC Notes to persons or entities that do not participate in DTC, or otherwise take actions with respect to such DTC Notes, will be required to withdraw its Registered Notes from DTC as described below.

Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg each holds securities for its customers and facilitates the clearance and settlement of securities transactions by electronic book-entry transfer between their respective accountholders. Euroclear and Clearstream, Luxembourg provide various services including

153 safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depository and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective participants may settle trades with each other. Euroclear and Clearstream, Luxembourg customers are world-wide ﬁnancial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an accountholder of either system.

BOOK-ENTRY OWNERSHIP OF AND PAYMENTS IN RESPECT OF DTC NOTES The Issuer may apply to DTC in order to have any Tranche of Notes represented by a Registered Global Note accepted in its book-entry settlement system. Upon the issue of any such Registered Global Note, DTC or its custodian will credit, on its internal book-entry system, the respective nominal amounts of the individual beneficial interests represented by such Registered Global Note to the accounts of persons who have accounts with DTC. Such accounts will initially be designated by or on behalf of the relevant Dealer. Ownership of beneficial interests in such a Registered Global Note will be limited to Direct Participants or Indirect Participants, including, in the case of any Regulation S Global Note, the respective depositories of Euroclear and Clearstream, Luxembourg. Ownership of beneficial interests in a Registered Global Note accepted by DTC will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to the interests of Direct Participants) and the records of Direct Participants (with respect to interests of Indirect Participants). Payments in U.S. dollars of principal and interest in respect of a Registered Global Note accepted by DTC will be made to the order of DTC or its nominee as the registered holder of such Note. In the case of any payment in a currency other than U.S. dollars, payment will be made to the relevant exchange agent on behalf of DTC or its nominee and the relevant exchange agent will (in accordance with instructions received by it) remit all or a portion of such payment for credit directly to the beneficial holders of interests in the Registered Global Note in the currency in which such payment was made and/or cause all or a portion of such payment to be converted into U.S. dollars and credited to the applicable Participants’ account. The Issuer expects DTC to credit accounts of Direct Participants on the applicable payment date in accordance with their respective holdings as shown in the records of DTC unless DTC has reason to believe that it will not receive payment on such payment date. The Issuer also expects that payments by Participants to beneficial owners of Notes will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers, and will be the responsibility of such Participant and not the responsibility of DTC, the Principal Paying Agent, the Registrar or the Issuer. Payment of principal, premium, if any, and interest, if any, on Notes to DTC is the responsibility of the Issuer.

TRANSFERS OF NOTES REPRESENTED BY REGISTERED GLOBAL NOTES Transfers of any interests in Notes represented by a Registered Global Note within DTC, Euroclear and Clearstream, Luxembourg will be effected in accordance with the customary rules and operating procedures of the relevant clearing system. The laws in some States within the United States require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer Notes represented by a Registered Global Note to such persons may depend upon the ability to exchange such Notes for Notes in definitive form. Similarly, because DTC can only act on behalf of Direct Participants in the DTC system who in turn act on behalf of Indirect Participants, the ability of a person having an interest in Notes represented by a Registered Global Note accepted by DTC to pledge such Notes to persons or entities that do not participate in the DTC system or otherwise to take action in respect of such Notes may depend upon the ability to exchange such Notes for Notes in definitive form. The ability of any holder of Notes represented by a Registered Global Note accepted by DTC to resell, pledge or otherwise transfer such Notes may be impaired if the proposed transferee of such Notes is not eligible to hold such Notes through a Direct Participant or Indirect Participant in the DTC system. Subject to compliance with the transfer restrictions applicable to the Registered Notes described under ‘‘Subscription and Sale and Transfer and Selling Restrictions’’, cross-market transfers between DTC, on the one hand, and directly or indirectly through Clearstream, Luxembourg or Euroclear

154 accountholders, on the other hand, will be effected by the relevant clearing system in accordance with its rules and through action taken by the Registrar, the Principal Paying Agent and any custodian (‘‘Custodian’’) with whom the relevant Registered Global Notes have been deposited. On or after the Issue Date for any Series, transfers of Notes of such Series between accountholders in Clearstream, Luxembourg and Euroclear and transfers of Notes of such Series between participants in DTC will generally have a settlement date three business days after the trade date (T+3). The customary arrangements for delivery versus payment will apply to such transfers. Cross-market transfers between accountholders in Clearstream, Luxembourg or Euroclear and DTC participants will need to have an agreed settlement date between the parties to such transfer. Because there is no direct link between DTC, on the one hand, and Clearstream, Luxembourg and Euroclear, on the other, transfers of interests in the relevant Registered Global Notes will be effected through the Registrar, the Principal Paying Agent and the Custodian receiving instructions (and, where appropriate, certification) from the transferor and arranging for delivery of the interests being transferred to the credit of the designated account for the transferee. In the case of cross-market transfers, settlement between Euroclear or Clearstream, Luxembourg accountholders and DTC participants cannot be made on a delivery versus payment basis. The securities will be delivered on a free delivery basis and arrangements for payment must be made separately. DTC, Clearstream, Luxembourg and Euroclear have each published rules and operating procedures designed to facilitate transfers of beneficial interests in Registered Global Notes among participants and accountholders of DTC, Clearstream, Luxembourg and Euroclear. However, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued or changed at any time. None of the Issuer, the Trustee, the Agents or any Dealer will be responsible for any performance by DTC, Clearstream, Luxembourg or Euroclear or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations and none of them will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the Notes represented by Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial interests.

SETTLEMENT OF PRE-ISSUE TRADES It is expected that delivery of Notes will be made against payment therefor on the Issue Date, which could be more than three business days following the date of pricing. Under Rule 15c6-1 under the Exchange Act, trades in the United States secondary market generally are required to settle within three business days (T+3), unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes in the United States on the date of pricing or the next succeeding business days until three days prior to the Issue Date will be required, by virtue of the fact the Notes initially will settle beyond T+3, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Settlement procedures in other countries will vary. Purchasers of Notes may be affected by such local settlement practices and purchasers of Notes between the relevant date of pricing and the Issue Date should consult their own advisers.

155 TAXATION

General Prospective purchasers of Notes are advised to consult their tax advisers as to the consequences, under the tax laws of the countries of their respective citizenship, residence or domicile, of a purchase of Notes, including, but not limited to, the consequences of receipt of payments under the Notes and their disposal or redemption.

United Arab Emirates The following summary of the anticipated tax treatment in the UAE in relation to payments on the Notes is based on the taxation law and practice in force at the date of this Base Prospectus and does not constitute legal or tax advice and prospective investors should be aware that the relevant ﬁscal rules and practice and their interpretation may change. Prospective investors should consult their own professional advisers on the implications of subscribing for, buying, holding, selling, redeeming or disposing of Notes and the receipt of any payments with respect to such Notes under the laws of the jurisdictions in which they may be liable to taxation. There is currently in force in the Emirate of Abu Dhabi legislation establishing a general corporate taxation regime (the Abu Dhabi Income Tax Decree 1965 (as amended)). The regime is, however, not enforced save in respect of companies active in the hydrocarbon industry, some related service industries and branches of foreign banks operating in the UAE. It is not known whether the legislation will or will not be enforced more generally or within other industry sectors in the future. Under current legislation, there is no requirement for withholding or deduction for or on account of UAE or Abu Dhabi taxation in respect of payments made under the Notes. In the event of the imposition of any such withholding, the Issuer has undertaken to gross-up any payments subject to certain limited exceptions. The Constitution of the UAE speciﬁcally reserves to the UAE Government the right to raise taxes on a federal basis for purposes of funding its budget. It is not known whether this right will be exercised in the future. The UAE has entered into double taxation arrangements with certain other countries, but these are not extensive in number.

United States Federal Income Tax Considerations The following is a summary of certain U.S. federal income tax considerations relevant to U.S. Holders (as defined below) acquiring, holding and disposing of Notes. This summary addresses only the U.S. federal income tax considerations for initial purchasers of Notes at their issue price (as defined below) that will hold the Notes as capital assets (generally, property held for investment). This summary is based on the Code, final, temporary and proposed U.S. Treasury regulations, administrative and judicial interpretations, all of which are subject to change, possibly with retroactive effect. This summary does not address the material U.S. federal income tax consequences of every type of Note which may be issued under the Programme. This summary does not discuss all aspects of U.S. federal income taxation that may be relevant to investors in light of their particular circumstances, such as investors subject to special tax rules (including, without limitation: (i) financial institutions; (ii) insurance companies; (iii) dealers or traders in stocks, securities, or currencies or notional principal contracts; (iv) regulated investment companies; (v) real estate investment trusts; (vi) tax-exempt organisations; (vii) partnerships, pass-through entities, or persons that hold Notes through pass-through entities; (viii) investors that hold Notes as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; (ix) investors that have a functional currency other than the U.S. Dollar; and (x) U.S. expatriates and former long- term residents of the United States), all of whom may be subject to tax rules that differ significantly from those summarised below. This summary does not address U.S. federal estate, gift, Medicare contribution or alternative minimum tax considerations, or non-U.S. , state or local tax considerations. This discussion applies only to holders of Registered Notes. Moreover, the summary deals only with Notes with a term of 30 years or less. The U.S. federal income tax consequences of owning Notes with a longer term may be discussed in a supplement to the Base Prospectus. For the purposes of this summary, a ‘‘U.S. Holder’’ is a beneficial owner of Notes that is for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States;

156 (ii) a corporation created in, or organised under, the laws of the United States or any state thereof, including the District of Columbia; (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source or (iv) a trust that is subject to U.S. tax on its worldwide income regardless of its source. The Issuer generally intends to treat Notes issued under the Programme as debt. Certain Notes may be treated as equity for U.S. federal income tax purposes. The tax treatment of Notes to which a treatment other than as debt may apply may be discussed in a supplement to the Base Prospectus. The following disclosure applies only to Notes that are treated as debt for U.S. federal income tax purposes. Bearer Notes are not being offered to U.S. Holders. A U.S. Holder who owns a Bearer Note may be subject to limitations under U.S. federal income tax laws, including the limitations provided in Section 165(j) and 1287 of the Code.

Payments of Interest General Interest on a Note, including the payment of any additional amounts, whether payable in U.S. Dollars or a currency, composite currency or basket of currencies other than U.S. Dollars (a foreign currency), other than interest on a Discount Note that is not qualified stated interest (each as defined below under ‘‘Original Issue Discount – General’’), will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, in accordance with the holder’s method of accounting for tax purposes. Interest paid by the Issuer on the Notes and OID (as defined below), if any, accrued with respect to the Notes (as described below under ‘‘Original Issue Discount’’) and payments of any additional amounts will generally constitute income from sources outside the United States.

Foreign Currency Denominated Interest If a qualified stated interest payment is denominated in, or determined by reference to, a foreign currency, the amount of income recognised by a cash basis U.S. Holder will be the U.S. Dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. Dollars. An accrual basis U.S. Holder may determine the amount of income recognised with respect to an interest payment denominated in, or determined by reference to, a foreign currency in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, with respect to an accrual period that spans two taxable years of a U.S. Holder, the part of the period within the taxable year). Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year. Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period or taxable year, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. Dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the IRS. Upon receipt of the interest payment (including a payment attributable to accrued but unpaid interest upon the sale or other disposition of a Note) denominated in, or determined by reference to, a foreign currency, the U.S. Holder will recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference, if any, between the amount received (translated into U.S. Dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars.

Original Issue Discount General The following is a summary of the principal U.S. federal income tax consequences of the ownership of Notes issued with original issue discount (‘‘OID’’). The following summary does not discuss Notes that are characterised as contingent payment debt instruments for U.S. federal income tax purposes. In the event that the Issuer issues contingent payment debt instruments, a supplement to the Base

157 Prospectus for such debt instruments will address the material U.S. federal income tax consequences thereof. A Note, other than a Note with a term of one year or less (a ‘‘Short-Term Note’’), will be treated as issued with OID (a ‘‘Discount Note’’) if the excess of the Note’s ‘‘stated redemption price at maturity’’ over its issue price is at least a de minimis amount (0.25 per cent. of the Note’s stated redemption price at maturity multiplied by the number of complete years to its maturity). An obligation that provides for the payment of amounts other than qualified stated interest before maturity (an ‘‘instalment obligation’’) will be treated as a Discount Note if the excess of the Note’s stated redemption price at maturity over its issue price is equal to or greater than 0.25 per cent. of the Note’s stated redemption price at maturity multiplied by the weighted average maturity of the Note. A Note’s weighted average maturity is the sum of the following amounts determined for each payment on a Note (other than a payment of qualified stated interest): (i) the number of complete years from the issue date until the payment is made multiplied by; (ii) a fraction, the numerator of which is the amount of the payment and the denominator of which is the Note’s stated redemption price at maturity. Generally, the issue price of a Note under the applicable Final Terms will be the first price at which a substantial amount of such Notes included in the issue of which the Note is a part is sold to persons other than bond houses, brokers or similar persons or organisations acting in the capacity of underwriters, placement agents, or wholesalers. The ‘‘stated redemption price at maturity’’ of a Note is the total of all payments provided by the Note that are not payments of ‘‘qualified stated interest’’. A ‘‘qualified stated interest’’ payment is generally any one of a series of stated interest payments on a Note that are unconditionally payable at least annually at a single fixed rate (with certain exceptions for lower rates paid during some periods), or a variable rate (in the circumstances described below under ‘‘Variable Interest Rate Notes’’), applied to the outstanding principal amount of the Note. Solely for the purpose of determining whether a Note has OID, the Issuer will be deemed to exercise any call option that has the effect of decreasing the yield on the Note, and the U.S. Holder will be deemed to exercise any put option that has the effect of increasing the yield on the Note. If a Note has de minimis OID, a U.S. Holder must include the de minimis amount in income as stated principal payments are made on the Note, unless the holder makes the election described below under ‘‘– Election to Treat All Interest as Original Issue Discount’’. A U.S. Holder can determine the includible amount with respect to each such payment by multiplying the total amount of the Note’s de minimis OID by a fraction equal to the amount of the principal payment made divided by the stated principal amount of the Note. U.S. Holders of Discount Notes must generally include OID in income calculated on a constant-yield method before the receipt of cash attributable to the income, and will generally have to include in income increasingly greater amounts of OID over the life of the Discount Notes. The amount of OID includible in income by a U.S. Holder of a Discount Note is the sum of the daily portions of OID with respect to the Discount Note for each day during the taxable year or portion of the taxable year on which the U.S. Holder holds the Discount Note (‘‘accrued OID’’). The daily portion is determined by allocating to each day in any ‘‘accrual period’’ a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to a Note may be of any length selected by the U.S. Holder and may vary in length over the term of the Discount Note as long as: (i) no accrual period is longer than one year; and (ii) each scheduled payment of interest or principal on the Note occurs on either the final or first day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Note’s adjusted issue price at the beginning of the accrual period and the Discount Note’s yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); over (b) the sum of the payments of qualified stated interest on the Discount Note allocable to the accrual period. The ‘‘adjusted issue price’’ of a Discount Note at the beginning of any accrual period is the issue price of the Note increased by: (x) the amount of accrued OID for each prior accrual period and decreased; by (y) the amount of any payments previously made on the Note that were not qualified stated interest payments.

Acquisition Premium A U.S. Holder that purchases a Discount Note for an amount less than or equal to the sum of all amounts payable on the Note after the purchase date, other than payments of qualiﬁed stated interest, but in excess of its adjusted issue price (any such excess being ‘‘acquisition premium’’) and that does not make the election described below under ‘‘Election to Treat All Interest as Original Issue Discount’’, is permitted to reduce the daily portions of OID by a fraction, the numerator of which is the excess of the U.S. Holder’s adjusted basis in the Note immediately after its purchase

158 over the Note’s adjusted issue price, and the denominator of which is the excess of the sum of all amounts payable on the Note after the purchase date, other than payments of qualiﬁed stated interest, over the Note’s adjusted issue price.

Further Issuances The Issuer may, from time to time, without notice to or the consent of the holders of the outstanding Notes, create and issue additional debt securities with identical terms and ranking pari passu with the Notes in all respects. The Issuer may consolidate such additional debt securities with the outstanding Notes to form a single series. The Issuer may offer additional debt securities with OID for U.S. federal income tax purposes as part of a further issue. Purchasers of debt securities in any further issue may not be able to differentiate between debt securities sold as part of the further issue and previously issued Notes. If the Issuer were to issue additional debt securities with OID, purchasers of debt securities after such further issue may be required to accrue OID (or greater amounts of OID than they would have otherwise accrued) with respect to their debt securities. This may affect the price of outstanding Notes following a further issuance.

Election to Treat All Interest as Original Issue Discount A U.S. Holder may elect to include in gross income all interest that accrues on a Note using the constant-yield method described above under ‘‘Original Issue Discount – General’’ with certain modiﬁcations. For purposes of this election, interest includes stated interest, OID, de minimis OID, as adjusted by any acquisition premium. If a U.S. Holder makes this election for the Note, then, when the constant-yield method is applied, the issue price of the Note will equal its cost, the issue date of the Note will be the date of acquisition, and no payments on the Note will be treated as payments of qualiﬁed stated interest. This election will generally apply only to the Note with respect to which it is made and may not be revoked without the consent of the IRS.

Variable Interest Rate Notes Notes that provide for interest at variable rates (‘‘Variable Interest Rate Notes’’) will generally bear interest at a ‘‘qualified floating rate’’ and thus will be treated as ‘‘variable rate debt instruments’’ under U.S. Treasury regulations governing accrual of OID. A Variable Interest Rate Note will qualify as a ‘‘variable rate debt instrument’’ if: (a) its issue price does not exceed the total non-contingent principal payments due under the Variable Interest Rate Note by more than a specified de minimis amount; and (b) it provides for stated interest, paid or compounded at least annually, at: (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates; (iii) a single objective rate; or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate. A‘‘qualified floating rate’’ is any variable rate where variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Variable Interest Rate Note is denominated. A fixed multiple of a qualified floating rate will constitute a qualified floating rate only if the multiple is greater than 0.65 but not more than 1.35. A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Variable Interest Rate Note (e.g., two or more qualified floating rates with values within 25 basis points of each other as determined on the Variable Interest Rate Note’s issue date) will be treated as a single qualified floating rate. Notwithstanding the foregoing, a variable rate that would otherwise constitute a qualified floating rate but which is subject to one or more restrictions such as a maximum numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a floor) may, under certain circumstances, fail to be treated as a qualified floating rate unless the cap or floor is fixed throughout the term of the Note. An ‘‘objective rate’’ is a rate that is not itself a qualified floating rate but which is determined using a single fixed formula and which is based on objective financial or economic information (e.g., one or more qualified floating rates or the yield of actively traded personal property). Other variable interest rates may be treated as objective rates if so designated by the IRS in the future. Despite the foregoing, a variable rate of interest on a Variable Interest Rate Note will not constitute an objective rate if it is reasonably expected that the average value of the rate during the first half of the Variable Interest Rate Note’s term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Variable Interest Rate Note’s term. A ‘‘qualified inverse

159 floating rate’’ is any objective rate where the rate is equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the qualified floating rate. If a Variable Interest Rate Note provides for stated interest at a fixed rate for an initial period of one year or less followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period and if the variable rate on the Variable Interest Rate Note’s issue date is intended to approximate the fixed rate (e.g., the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points), then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be. A qualified floating rate or objective rate in effect at any time during the term of the instrument must be set at a ‘‘current value’’ of that rate. A current value of a rate is the value of the rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that first day. If a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof qualifies as a ‘‘variable rate debt instrument’’, then any stated interest on the Note which is unconditionally payable in cash or property (other than debt instruments of the Issuer) at least annually will constitute qualified stated interest and will be taxed accordingly. Thus, a Variable Interest Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof and that qualifies as a ‘‘variable rate debt instrument’’ will generally not be treated as having been issued with OID unless the Variable Interest Rate Note is issued at a ‘‘true’’ discount (i.e., at a price below the Note’s stated principal amount) in excess of a specified de minimis amount. OID on a Variable Interest Rate Note arising from ‘‘true’’ discount is allocated to an accrual period using the constant yield method described above by assuming that the variable rate is a fixed rate equal to: (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate; or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note. In general, any other Variable Interest Rate Note that qualifies as a ‘‘variable rate debt instrument’’ will be converted into an ‘‘equivalent’’ fixed rate debt instrument for purposes of determining the amount and accrual of OID and qualified stated interest on the Variable Interest Rate Note. Such a Variable Interest Rate Note must be converted into an ‘‘equivalent’’ fixed rate debt instrument by substituting any qualified floating rate or qualified inverse floating rate provided for under the terms of the Variable Interest Rate Note with a fixed rate equal to the value of the qualified floating rate or qualified inverse floating rate, as the case may be, as of the Variable Interest Rate Note’s issue date. Any objective rate (other than a qualified inverse floating rate) provided for under the terms of the Variable Interest Rate Note is converted into a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Note. In the case of a Variable Interest Rate Note that qualifies as a ‘‘variable rate debt instrument’’ and provides for stated interest at a fixed rate in addition to either one or more qualified floating rates or a qualified inverse floating rate, the fixed rate is initially converted into a qualified floating rate (or a qualified inverse floating rate, if the Variable Interest Rate Note provides for a qualified inverse floating rate). Under these circumstances, the qualified floating rate or qualified inverse floating rate that replaces the fixed rate must be such that the fair market value of the Variable Interest Rate Note as of the Variable Interest Rate Note’s issue date is approximately the same as the fair market value of an otherwise identical debt instrument that provides for either the qualified floating rate or qualified inverse floating rate rather than the fixed rate. Subsequent to converting the fixed rate into either a qualified floating rate or a qualified inverse floating rate, the Variable Interest Rate Note is converted into an ‘‘equivalent’’ fixed rate debt instrument in the manner described above. Once the Variable Interest Rate Note is converted into an ‘‘equivalent’’ fixed rate debt instrument pursuant to the foregoing rules, the amount of OID and qualified stated interest, if any, are determined for the ‘‘equivalent’’ fixed rate debt instrument by applying the general OID rules to the ‘‘equivalent’’ fixed rate debt instrument and a U.S. Holder of the Variable Interest Rate Note will account for the OID and qualified stated interest as if the U.S. Holder held the ‘‘equivalent’’ fixed rate debt instrument. In each accrual period, appropriate adjustments will be made to the amount of qualified stated interest or OID assumed to have been accrued or paid with respect to the ‘‘equivalent’’ fixed rate debt instrument in the event that these amounts differ from the actual amount of interest accrued or paid on the Variable Interest Rate Note during the accrual period.

160 Short-Term Notes In general, an individual or other cash basis U.S. Holder of a Short-Term Note is not required to accrue OID (calculated as set forth below for the purposes of this paragraph) for U.S. federal income tax purposes unless it elects to do so (but may be required to include any stated interest in income as the interest is received). Accrual basis U.S. Holders and certain other U.S. Holders are required to accrue OID on Short-Term Notes on a straight-line basis or, if the U.S. Holder so elects, under the constant-yield method (based on daily compounding). In the case of a U.S. Holder not required and not electing to include OID in income currently, any gain realised on the sale or other disposition of the Short-Term Note will be ordinary income to the extent of the OID accrued on a straight-line basis (unless an election is made to accrue the OID under the constant-yield method) through the date of sale or other disposition. U.S. Holders who are not required and do not elect to accrue OID on Short-Term Notes will be required to defer deductions for interest on borrowings allocable to Short-Term Notes in an amount not exceeding the deferred income until the deferred income is realised. For purposes of determining the amount of OID subject to these rules, all interest payments on a Short-Term Note are included in the Short-Term Note’s stated redemption price at maturity. A U.S. Holder may elect to determine OID on a Short-Term Note as if the Short Term Note had been originally issued to the U.S. Holder at the U.S. Holder’s purchase price for the Short-Term Note. This election shall apply to all obligations with a maturity of one year or less acquired by the U.S. Holder on or after the ﬁrst day of the ﬁrst taxable year to which the election applies, and may not be revoked without the consent of the IRS.

Foreign Currency Notes OID for any accrual period on a Discount Note that is denominated in, or determined by reference to, a foreign currency will be determined in the foreign currency and then translated into U.S. Dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder, as described above under ‘‘Payments of Interest’’. Upon receipt of an amount attributable to OID (whether in connection with a payment of interest or the sale or other disposition of a Note), a U.S. Holder will generally recognise exchange gain or loss, which will be ordinary gain or loss measured by the difference between the amount received (translated into U.S. Dollars at the exchange rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars.

Substitution of the Issuer The terms of the Notes provide that, in certain circumstances, the obligations of the Issuer under the Notes may be assumed by another entity. Any such assumption might be treated for U.S. federal income tax purposes as a deemed disposition of Notes by a U.S. Holder in exchange for new notes issued by the new obligor. As a result of this deemed disposition, a U.S. Holder could be required to recognise capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the issue price of the new notes (as determined for U.S. federal income tax purposes), and the U.S. Holder’s tax basis in the Notes.

Sale or Other Disposition of Notes A U.S. Holder’s tax basis in a Note will generally be its cost, increased by the amount of any OID included in the U.S. Holder’s income with respect to the Note and the amount, if any, of income attributable to de minimis OID included in the U.S. Holder’s income with respect to the Note, and reduced by the amount of any payments that are not qualified stated interest payments. A U.S. Holder’s tax basis in a Foreign Currency Note will be determined by reference to the U.S. Dollar cost of the Notes. The U.S. Dollar cost of a Note purchased with a foreign currency will generally be the U.S. Dollar value of the purchase price on the date of purchase or, in the case of Notes traded on an established securities market, as defined in the applicable U.S. Treasury regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the settlement date for the purchase. A U.S. Holder will generally recognise gain or loss on the sale or other disposition of a Note equal to the difference between the amount realised on the sale or other disposition and the tax basis of the Note. The amount realised on a sale or other disposition for an amount in foreign currency will be the U.S. Dollar value of this amount on the date of sale or other disposition or, in the case of Notes traded on an established securities market, as defined in the applicable U.S. Treasury regulations, sold

161 by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the settlement date for the sale. Such an election by an accrual basis U.S. Holder must be applied consistently from year to year and cannot be revoked without the consent of the IRS. Except to the extent described above under ‘‘Original Issue Discount – Short-Term Notes’’ or attributable to accrued but unpaid interest or changes in exchange rates, gain or loss recognised on the sale or other disposition of a Note will be capital gain or loss and will generally be treated as from U.S. sources for purposes of the U.S. foreign tax credit limitation. In the case of a U.S. Holder that is an individual, estate or trust, the maximum marginal federal income tax rate applicable to capital gains is currently lower than the maximum marginal rate applicable to ordinary income if the Notes are held for more than one year. The deductibility of capital losses is subject to signiﬁcant limitations. Gain or loss recognised by a U.S. Holder on the sale or other disposition of a Note that is attributable to changes in exchange rates will be treated as U.S. source ordinary income or loss. However, exchange gain or loss is taken into account only to the extent of total gain or loss realised on the transaction.

Disposition of Foreign Currency Foreign currency received as interest on a Note or on the sale or other disposition of a Note will have a tax basis equal to its U.S. Dollar value at the time the interest is received or at the time of the sale or other disposition. Foreign currency that is purchased will generally have a tax basis equal to the U.S. Dollar value of the foreign currency on the date of purchase. Any gain or loss recognised on a sale or other disposition of a foreign currency (including its use to purchase Notes or an exchange for U.S. Dollars) will be U.S. source ordinary income or loss.

Backup Withholding and Information Reporting In general, payments of principal, interest and accrued OID on, and the proceeds of a sale, redemption or other disposition of, the Notes, payable to a U.S. Holder by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding will apply to these payments if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or otherwise to comply with the applicable backup withholding requirements. Certain U.S. Holders are not subject to backup withholding. U.S. Holders that are individuals may be required to report to the IRS certain information with respect to their beneficial ownership of Notes not held through an account with a financial institution. Investors who fail to report required information could be subject to substantial penalties.

Disclosure Requirements U.S. Treasury regulations meant to require the reporting of certain tax shelter transactions (‘‘Reportable Transactions’’) could be interpreted to cover transactions generally not regarded as tax shelters, including certain foreign currency transactions. Under U.S. Treasury regulations, certain transactions with respect to the Notes may be characterised as Reportable Transactions including, in certain circumstances, a sale, exchange, retirement or other taxable disposition of a Foreign Currency Note. Persons considering the purchase of such Notes should consult with their tax advisers to determine the tax return obligations, if any, with respect to an investment in such Notes, including any requirement to ﬁle IRS Form 8886 (Reportable Transaction Disclosure Statement).

EU Savings Directive Under the EU Savings Directive on the taxation of savings income, each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in that other Member State; however, for a transitional period, Austria may instead apply a withholding system in relation to such payments, deducting tax at a rate of 35 per cent. The transitional period is to terminate at the end of the ﬁrst full ﬁscal year following agreement by certain non-EU countries to the exchange of information relating to such payments. The Council of the European Union formally adopted the Amending Directive on 24 March 2014. The Amending Directive broadens the scope of the requirements described above. Member States have until 1 January 2016 to adopt the national legislation necessary to comply with the Amending Directive. The changes made under the Amending Directive include extending the scope of the EU

162 Savings Directive to payments made to, or collected for, certain other entities and legal arrangements. They also broaden the definition of ‘‘interest payment’’ to cover income that is equivalent to interest. However, the European Commission has proposed the repeal of the EU Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to ongoing requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates). This is to prevent overlap between the EU Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required to apply the new requirements of the Amending Directive.

U.S. Foreign Account Tax Compliance Act Sections 1471 through 1474 of FATCA impose a new reporting regime and potentially a 30 per cent. withholding tax with respect to certain payments to: (i) any non-U.S. financial institution (a ‘‘foreign financial institution’’, or ‘‘FFI’’ (as defined by FATCA)) that does not become a ‘‘Participating FFI’’ by entering into an agreement with the U.S. Internal Revenue Service (‘‘IRS’’) to provide the IRS with certain information in respect of its account holders and investors or is not otherwise exempt from or in deemed compliance with FATCA; and (ii) any investor (unless otherwise exempt from FATCA) that does not provide information sufficient to determine whether the investor is a U.S. person or should otherwise be treated as holding a ‘‘United States Account’’ of the Issuer (a ‘‘Recalcitrant Holder’’). The Issuer may be classified as an FFI. The new withholding regime will be phased in beginning 1 January 2014 for payments from sources within the United States and will apply to ‘‘foreign passthru payments’’ (a term not yet defined) no earlier than 1 January 2017. This withholding would potentially apply to payments in respect of: (i) any Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or after the ‘‘grandfathering date’’, which is the later of: (a) 1 January 2014; and (b) the date that is six months after the date on which final U.S. Treasury regulations defining the term foreign passthru payment are filed with the Federal Register, or which are materially modified on or after the grandfathering date; and (ii) any Notes characterised as equity or which do not have a fixed term for U.S. federal tax purposes, whenever issued. If Notes are issued before the grandfathering date, and additional Notes of the same series are issued on or after that date, the additional Notes may not be treated as grandfathered, which may have negative consequences for the existing Notes, including a negative impact on market price. The United States and a number of other jurisdictions have announced their intention to negotiate intergovernmental agreements to facilitate the implementation of FATCA (each, an ‘‘IGA’’). Pursuant to FATCA and the ‘‘Model 1’’ and ‘‘Model 2’’ IGAs released by the United States, an FFI in an IGA signatory country could be treated as a ‘‘Reporting FI’’ not subject to withholding under FATCA on any payments it receives. Further, an FFI in a Model 1 IGA jurisdiction would not be required to withhold under FATCA or an IGA (or any law implementing an IGA) (any such withholding being ‘‘FATCA Withholding’’) from payments it makes (unless it has agreed to do so under the U.S. ‘‘qualified intermediary’’, ‘‘withholding foreign partnership’’ or ‘‘withholding foreign trust’’ regimes). The Model 2 IGA leaves open the possibility that a Reporting FI might in the future be required to withhold as a Participating FFI on foreign passthru payments and payments that it makes to Recalcitrant Holders. Under each Model IGA, a Reporting FI would still be required to report certain information in respect of its account holders and investors to its home government or to the IRS. If the Issuer becomes a Participating FFI under FATCA, the Issuer and financial institutions through which payments on the Notes are made may be required to withhold FATCA Withholding if: (i) any FFI through or to which payment on such Notes is made is not a Participating FFI, a Reporting FI or otherwise exempt from or in deemed compliance with FATCA; or (ii) an investor is a Recalcitrant Holder. If an amount in respect of FATCA Withholding were to be deducted or withheld from interest, principal or other payments made in respect of the Notes, neither the Issuer nor any paying agent nor any other person would, pursuant to the conditions of the Notes, be required to pay additional amounts as a result of the deduction or withholding. As a result, investors may receive less interest or principal than expected.

163 FATCA is particularly complex and its application is uncertain at this time. The above description is based in part on regulations, ofﬁcial guidance and model IGAs, all of which are subject to change or may be implemented in a materially different form. Prospective investors should consult their tax advisers on how these rules may apply to the Issuer and to payments they may receive in connection with the Notes.

The proposed financial transactions tax On 14 February 2013, the European Commission issued a proposal (the ‘‘Commission’s Proposal’’), including a draft directive, for a financial transaction tax (‘‘FTT’’) to be adopted in certain participating EU Member States (Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia) (the ‘‘participating Member States’’). The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of Notes should, however, be exempt. Under the Commission’s Proposal, the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, ‘‘established’’ in a participating Member State in a broad range of circumstances, including: (i) by transacting with a person established in a participating Member State; or (ii) where the financial instrument which is subject to the dealings is issued in a participating Member State. The Joint statements issued by participating Member States indicate an intention to implement the FTT by 1 January 2016. However, the FTT proposal remains subject to negotiation between the participating Member States and the scope of any such tax is uncertain. Additional EU Member States may decide to participate. Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

164 CERTAIN ERISA AND OTHER CONSIDERATIONS

The U.S. Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’), imposes certain requirements on ‘‘employee benefit plans’’ (as defined in section 3(3) of ERISA) subject to Title I of ERISA, including entities such as collective investment funds and separate accounts whose underlying assets include the assets of such plans (collectively, ‘‘ERISA Plans’’) and on those persons who are fiduciaries with respect to ERISA Plans. Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (Section 4975 of the Code also imposes prohibitions for certain plans that are not subject to Title I of ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, ‘‘Plans’’)) and certain persons (referred to as ‘‘parties in interest’’ or ‘‘disqualified persons’’) having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise in connection with the purchase and holding of Notes (or any interest therein), particularly if any Notes are acquired by a Plan with respect to which any of the Issuer, the Arrangers or the Dealers or any of their respective affiliates are a party in interest or a disqualified person. Certain exemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may be applicable, however, depending in part on the type of Plan fiduciary making the decision to acquire Notes and the circumstances under which such decision is made. There can be no assurance that any exemption will be available with respect to any particular transaction involving the Notes, or that, if an exemption is available, it will cover all aspects of any particular transaction. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code. Accordingly, by its purchase of any Notes each original or subsequent purchaser or transferee of a Note will be deemed to have represented and agreed either that: (i) it is not and for so long as it holds a Note (or any interest therein) will not be a Plan, an entity whose underlying assets include the assets of any such Plan, or a governmental or other employee benefit plan which is subject to any U.S. federal, state, local or non-U.S. law, that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code; or (ii) its purchase and holding of a Note will not constitute or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of such a governmental or other employee benefit plan, any such substantially similar U.S. federal, state, local or non-U.S. law) for which an exemption is not available. Governmental plans and certain church and other U.S. or non-U.S. plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state, other federal or non-U.S. laws that are substantially similar to ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing any Notes. THE PRECEDING DISCUSSION IS ONLY A SUMMARY OF CERTAIN ERISA IMPLICATIONS OF AN INVESTMENT IN THE NOTES AND DOES NOT PURPORT TO BE COMPLETE. PROSPECTIVE INVESTORS SHOULD CONSULT WITH THEIR OWN LEGAL, TAX, FINANCIAL AND OTHER ADVISORS PRIOR TO INVESTING IN THE NOTES TO REVIEW THESE IMPLICATIONS IN LIGHT OF SUCH INVESTOR’S PARTICULAR CIRCUMSTANCES. THE SALE OF NOTES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY THE ISSUER, THE ARRANGERS OR THE DEALERS THAT SUCH AN INVESTMENT MEETS ALL RELEVANT REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH AN INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN.

165 SUBSCRIPTION AND SALE AND TRANSFER AND SELLING RESTRICTIONS

The Dealers have, in a programme agreement (the ‘‘Programme Agreement’’) dated 16 April 2015, agreed with the Issuer a basis upon which they or any of them may from time to time agree to purchase Notes. Any such agreement will extend to those matters stated under ‘‘Form of the Notes’’ and ‘‘Terms and Conditions of the Notes’’. In the Programme Agreement, the Issuer has agreed to reimburse the Dealers for certain of their expenses in connection with the establishment and any future update of the Programme and the issue of Notes under the Programme and to indemnify the Dealers against certain liabilities incurred by them in connection therewith. In order to facilitate the offering of any Tranche of the Notes, certain persons participating in the offering of the Tranche may engage in transactions that stabilise, maintain or otherwise affect the market price of the relevant Notes during and after the offering of the Tranche. Speciﬁcally such persons may over-allot or create a short position in the Notes for their own account by selling more Notes than have been sold to them by the Issuer. Such persons may also elect to cover any such short position by purchasing Notes in the open market. In addition, such persons may stabilise or maintain the price of the Notes by bidding for or purchasing Notes in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker- dealers participating in the offering of the Notes are reclaimed if Notes previously distributed in the offering are repurchased in connection with stabilisation transactions or otherwise. The effect of these transactions may be to stabilise or maintain the market price of the Notes at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the Notes to the extent that it discourages resales thereof. No representation is made as to the magnitude or effect of any such stabilising or other transactions. Such transactions, if commenced, may be discontinued at any time. Under United Kingdom laws and regulations stabilising activities may only be carried on by the Stabilising Manager(s) named in the applicable subscription agreement (or persons acting on behalf of any Stabilising Manager(s)) and only for a limited period following the Issue Date of the relevant Tranche of Notes.

Transfer Restrictions As a result of the following restrictions, purchasers of Notes in the United States are advised to consult legal counsel prior to making any purchase, offer, sale, resale or other transfer of such Notes Each purchaser of definitive Registered Notes or a person wishing to transfer an interest from one Registered Global Note to another or from global to definitive form or vice versa, will be required to acknowledge, represent and agree, and each person purchasing an interest in a Registered Global Note will be deemed to have acknowledged, represented and agreed, as follows (terms used in this paragraph that are defined in Rule 144A or in Regulation S are used herein as defined therein): (a) that either: (i) it is a QIB, purchasing (or holding) the Notes for its own account or for the account of one or more QIBs and it is aware that any sale to it is being made in reliance on Rule 144A; or (ii) it is outside the United States and is not a U.S. person; (b) that it, and each account for which it is purchasing, will hold and transfer at least the minimum denomination of the Notes; (c) that the Notes are being offered and sold in a transaction not involving a public offering in the United States within the meaning of the Securities Act, and that the Notes have not been and will not be registered under the Securities Act or any other applicable U.S. State securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below; (d) that, except to the extent it holds an interest in a Regulation S Global Note and is a person located outside the United States that is not a U.S. person, if in the future it decides to resell, pledge or otherwise transfer the Notes or any beneficial interests in the Notes, it will do so, prior to the expiration of the applicable required holding period determined pursuant to Rule 144 of the Securities Act from the later of the most recent Issue Date for the Series of Notes of which such Notes form a part and the last date on which the Issuer or an affiliate of the Issuer was the owner of such Notes, only: (i) to the Issuer or any affiliate thereof; (ii) inside the United States to a person whom the seller reasonably believes is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A; (iii) outside the United States in compliance with Rule 903 or Rule 904 under the Securities Act;

166 (iv) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available); or (v) pursuant to an effective registration statement under the Securities Act, in each case in accordance with all applicable U.S. State securities laws;

(e) it will, and will require each subsequent holder to, notify any purchaser or transferee, as applicable, of the Notes from it of the resale and transfer restrictions referred to in paragraph (d) above, if then applicable;

(f) that Notes initially offered in the United States to QIBs will be represented by one or more Rule 144A Global Notes, and that Notes offered outside the United States in reliance on Regulation S will be represented by one or more Regulation S Global Notes;

(g) that the Notes in registered form, other than the Regulation S Global Notes, will bear a legend to the following effect unless otherwise agreed to by the Issuer:

‘‘THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR ANY OTHER APPLICABLE U.S. STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER: (A) REPRESENTS THAT IT IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QUALIFIED INSTITUTIONAL BUYERS; (B) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITIES EXCEPT IN ACCORDANCE WITH THE AGENCY AGREEMENT AND, PRIOR TO THE EXPIRATION OF THE APPLICABLE REQUIRED HOLDING PERIOD DETERMINED PURSUANT TO RULE 144 OF THE SECURITIES ACT FROM THE LATER OF THE MOST RECENT ISSUE DATE FOR THE SERIES OF NOTES OF WHICH SUCH NOTES FORM A PART AND THE LAST DATE ON WHICH THE ISSUER OR AN AFFILIATE OF THE ISSUER WAS THE OWNER OF SUCH SECURITIES OTHER THAN: (1) TO THE ISSUER OR ANY AFFILIATE THEREOF; (2) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A; (3) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT; (4) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE); OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND ANY OTHER JURISDICTION; AND (C) IT AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE SECURITY.

THIS SECURITY AND RELATED DOCUMENTATION (INCLUDING, WITHOUT LIMITATION, THE AGENCY AGREEMENT REFERRED TO HEREIN) MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WITHOUT THE CONSENT OF, BUT UPON NOTICE TO, THE HOLDERS OF SUCH SECURITIES SENT TO THEIR REGISTERED ADDRESSES, TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE HEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER

167 HEREOF AND ALL FUTURE HOLDERS OF THIS SECURITY AND ANY SECURITIES ISSUED IN EXCHANGE OR SUBSTITUTION THEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS MADE HEREON).’’; EACH PURCHASER OR TRANSFEREE OF THIS NOTE WILL BE REQUIRED OR DEEMED TO REPRESENT AND WARRANT THAT: (A) IF IT IS, OR IS ACTING ON BEHALF OF, A BENEFIT PLAN INVESTOR, ITS ACQUISITION, HOLDING AND DISPOSITION OF SUCH NOTES WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (‘‘ERISA’’) OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE ‘‘CODE’’); AND (B) IF IT IS A GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN WHICH IS SUBJECT TO ANY STATE, LOCAL, OTHER FEDERAL OR NON-U.S. LAW OR REGULATION THAT IS SUBSTANTIALLY SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (ANY SUCH LAW OR REGULATION, A ‘‘SIMILAR LAW’’), ITS ACQUISITION, HOLDING AND DISPOSITION OF SUCH NOTES WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT VIOLATION OF ANY SUCH SIMILAR LAW. ‘‘BENEFIT PLAN INVESTOR’’ MEANS A BENEFIT PLAN INVESTOR, AS DEFINED IN SECTION 3(42) OF ERISA AND INCLUDES: (A) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF TITLE I OF ERISA) THAT IS SUBJECT TO PART 4 OF TITLE I OF ERISA; (B) A PLAN AS DEFINED IN SECTION 4975(E)(1) OF THE CODE THAT IS SUBJECT TO SECTION 4975 OF THE CODE; OR (C) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE ‘‘PLAN ASSETS’’ BY REASON OF ANY SUCH EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN THE ENTITY. (h) each purchaser or transferee of a Note or an interest therein will be deemed to represent and warrant that: (i) if it is, or is acting on behalf of, a Benefit Plan Investor, its acquisition, holding and disposition of such Note will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code; and (ii) if it is a governmental, church, non-U.S. or other plan, its acquisition, holding and disposition of such Note will not constitute or result in a non-exempt violation of any similar law; (i) that the Notes in registered form which are registered in the name of a nominee of DTC will bear an additional legend to the following effect unless otherwise agreed to by the Issuer: ‘‘UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORISED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, (‘‘DTC’’), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY REGISTERED NOTE ISSUED IN EXCHANGE FOR THIS SECURITY OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUIRED BY AN AUTHORISED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORISED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A SECURITY REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF EXCEPT IN THE LIMITED CIRCUMSTANCES SET FORTH IN THIS SECURITY, AND MAY NOT BE TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THIS LEGEND. BENEFICIAL INTERESTS IN THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THIS LEGEND.’’; (j) if it holds an interest in a Regulation S Global Note and is outside the United States and is not a U.S. person, that if it should resell or otherwise transfer the Notes prior to the expiration of the distribution compliance period (defined as 40 days after the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Notes

168 are a part), it will do so only: (i)(A) outside the United States in compliance with Rule 903 or 904 under the Securities Act; or (B) to a QIB in compliance with Rule 144A; and (ii) in accordance with all applicable U.S. State securities laws; and it acknowledges that the Regulation S Global Notes will bear a legend to the following effect unless otherwise agreed to by the Issuer: ‘‘THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR ANY OTHER APPLICABLE U.S. STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE AGENCY AGREEMENT AND PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THIS LEGEND SHALL CEASE TO APPLY UPON THE EXPIRY OF THE PERIOD OF 40 DAYS AFTER THE COMPLETION OF THE DISTRIBUTION OF ALL THE NOTES OF THE TRANCHE OF WHICH THIS NOTE FORMS PART.’’; AND (k) that the Issuer and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that if any of such acknowledgements, representations or agreements made by it are no longer accurate, it shall promptly notify the Issuer; and if it is acquiring any Notes as a ﬁduciary or agent for one or more accounts it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account. No sale of Legended Notes in the United States to any one purchaser will be for less than U.S.$200,000 (or its foreign currency equivalent) principal amount and no Legended Note will be issued in connection with such a sale in a smaller principal amount. If the purchaser is a non-bank ﬁduciary acting on behalf of others, each person for whom it is acting must purchase at least U.S.$200,000 (or its foreign currency equivalent) of Registered Notes.

Selling Restrictions General Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it will (to the best of its knowledge and belief) comply with all applicable securities laws, regulations and directives in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this Base Prospectus and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and neither the Issuer, the Trustee nor any of the other Dealers shall have any responsibility therefor. None of the Issuer, the Trustee and the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale. With regard to each Tranche, the relevant Dealer will be required to comply with any such other restrictions as the Issuer and the relevant Dealer shall agree and as shall be set out in the relevant subscription agreement.

United States The Notes have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or beneﬁt of, U.S. persons except in certain transactions exempt from, or not subject to the registration requirements of the Securities Act. In connection with any Notes which are offered or sold outside the United States in reliance on an exemption from the registration requirements of the Securities Act provided under Regulation S (‘‘Regulation S Notes’’), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer or sell such Regulation S Notes: (i) as part of their distribution at any time; or (ii) otherwise until 40 days after

169 the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Regulation S Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has further agreed, and each further Dealer appointed under the Programme will be required to agree, that it will send to each dealer to which it sells any Regulation S Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Regulation S Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in the two preceding paragraphs have the meanings given to them by Regulation S under the Securities Act. The Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to United States persons, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the Code and the U.S. Treasury regulations promulgated thereunder. Until 40 days after the commencement of the offering of any Tranche of Notes, an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A. Dealers may arrange for the resale of Notes to persons reasonably believed to be QIBs pursuant to Rule 144A and each such purchaser of Notes is hereby notified that the Dealers may be relying on the exemption from the registration requirements of the Securities Act provided by Rule 144A. The minimum aggregate principal amount of Notes which may be purchased by a QIB pursuant to Rule 144A is U.S.$200,000 (or the approximate equivalent thereof in any other currency).

Public offer selling restriction under the Prospectus Directive In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a ‘‘Relevant Member State’’), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the ‘‘Relevant Implementation Date’’) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Base Prospectus as completed by the applicable final terms in relation thereto to the public in that Relevant Member State, except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State: (a) at any time to any legal entity which is a qualified investor under the Prospectus Directive; (b) at any time to fewer than 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or (c) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes referred to above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an ‘‘offer of Notes to the public’’ in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive) and includes any relevant implementing measure in the Relevant Member State and the expression ‘‘2010 PD Amending Directive’’ means Directive 2010/73/EU.

United Kingdom Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that: (a) in relation to any Notes which have a maturity of less than one year: (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business; and (ii) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in

170 acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer; (b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and (c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

Japan The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended; the ‘‘FIEA’’). Accordingly, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the beneﬁt of, any resident of Japan (which term as used herein means any person resident in Japan including any corporation or other entity organised under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the beneﬁt of, a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws and regulations of Japan.

United Arab Emirates (excluding the Dubai International Financial Centre) Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that the Notes to be issued under the Programme have not been and will not be offered, sold or publicly promoted or advertised by it in the United Arab Emirates other than in compliance with any laws applicable in the United Arab Emirates governing the issue, offering and sale of securities.

Dubai International Financial Centre Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered and will not offer the Notes to be issued under the Programme to any person in the Dubai International Financial Centre unless such offer is: (a) an ‘‘Exempt Offer’’ in accordance with the Markets Rules (MKT Module) of the Dubai Financial Services Authority (the ‘‘DFSA’’); and (b) made only to persons who meet the Professional Client criteria set out in Rule 2.3.2 of the DFSA Conduct of Business Module.

Kingdom of Saudi Arabia No action has been or will be taken in the Kingdom of Saudi Arabia that would permit a public offering of the Notes. Any investor in the Kingdom of Saudi Arabia or who is a Saudi person (a ‘‘Saudi Investor’’) who acquires any Notes pursuant to an offering should note that the offer of Notes is a private placement under Article 10 or Article 11 of the Offers of Securities Regulations as issued by the Board of the Capital Market Authority resolution number 2-11-2004 dated 4 October 2004 and amended by the Board of the Capital Market Authority resolution number 1-28-2008 dated 18 August 2008 (the ‘‘KSA Regulations’’). The Notes may thus not be advertised, offered or sold to any person in the Kingdom of Saudi Arabia other than to ‘‘sophisticated investors’’ under Article 10 of the KSA Regulations or by way of a limited offer under Article 11 of the KSA Regulations. Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that any offer of Notes to a Saudi Investor will comply with the KSA Regulations. The offer of Notes shall not therefore constitute a public offer pursuant to the KSA Regulations, but is subject to the restrictions on secondary market activity under Article 17 of the KSA Regulations. Any Saudi Investor who has acquired Notes pursuant to a private placement may not offer or sell

171 those Notes to any person unless the offer or sale is made through an authorised person appropriately licensed by the Saudi Arabian Capital Market Authority and: (a) the Notes are offered or sold to a ‘‘sophisticated investor’’ (as deﬁned in Article 10 of the KSA Regulations); (b) the price to be paid for the Notes in any one transaction is equal to or exceeds Saudi Riyal 1 million or an equivalent amount; or (c) the offer or sale is otherwise in compliance with Article 17 of the KSA Regulations.

Kingdom of Bahrain Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will only make this offer available on a private placement basis to persons in the Kingdom of Bahrain who are ‘‘accredited investors’’. For this purpose, an ‘‘accredited investor’’ means: (a) an individual holding financial assets (either singly or jointly with a spouse) of U.S.$1,000,000 or more; (b) a company, partnership, trust or other commercial undertaking which has financial assets available for investment of not less than U.S.$1,000,000; or (c) a government, supranational organisation, central bank or other national monetary authority or a state organisation whose main activity is to invest in financial instruments (such as a state pension fund).

State of Qatar (excluding the Qatar Financial Centre) Each of the Dealers has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, delivered or sold, and will not offer, deliver or sell at any time, directly or indirectly, any Notes in the State of Qatar (including the Qatar Financial Centre), except: (a) in compliance with all applicable laws and regulations of the State of Qatar; and (b) through persons or corporate entities authorised and licensed to provide investment advice and/or engage in brokerage activity and/or trade in respect of foreign securities in the State of Qatar. This Base Prospectus has not been reviewed or approved by the Qatar Central Bank or the Qatar Financial Markets Authority and is only intended for speciﬁc recipients, in compliance with the foregoing.

Hong Kong Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that: (a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than: (i) to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the ‘‘SFO’’) and any rules made under the SFO; or (ii) in other circumstances which do not result in the document being a ‘‘prospectus’’ as deﬁned in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue (in each case, whether in Hong Kong or elsewhere) any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to any Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ within the meaning of the SFO and any rules made under the SFO.

Singapore This Base Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that it has not offered or sold and that it will not offer or sell any Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, nor will it circulate or distribute this Base Prospectus or any other document or material in connection with the offer or sale or invitation for subscription or purchase of the Notes, whether directly or indirectly, to any person in Singapore other than: (i) to an institutional investor pursuant to Section 274 of the Securities and Futures Act

172 Chapter 289, of Singapore (the ‘‘Securities and Futures Act’’); (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A) of the Securities and Futures Act and in accordance with the conditions specified in Section 275 of the Securities and Futures Act; or (iii) pursuant to, and in accordance with the conditions of, any other applicable provisions of the Securities and Futures Act. Where the Notes are subscribed or purchased under Section 275 of the Securities and Futures Act by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the Securities and Futures Act)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the Securities and Futures Act) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the Securities and Futures Act except: (i) to an institutional investor or to a relevant person defined in Section 275(2) of the Securities and Futures Act, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the Securities and Futures Act; (ii) where no consideration is or will be given for the transfer; (iii) where the transfer is by operation of law; or (iv) pursuant to Section 276(7) of the Securities and Futures Act or Regulation 32 of the Securities and Futures (Offer of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

173 GENERAL INFORMATION

Authorisation The establishment of the Programme was authorised by resolutions of the Board of the Issuer dated 19 October 2009 and 18 August 2010. The update of the Programme has been duly authorised by a resolution of the Board of the Issuer dated 27 April 2014. The Issuer has obtained or will obtain from time to time, all necessary consents, approvals and authorisations in connection with the issue and performance of the Notes.

Listing of Notes It is expected that each Tranche of Notes which is to be admitted to the Official List and to trading on the Main Securities Market will be admitted separately as and when issued, subject only to the issue of one or more Global Notes initially representing the Notes of such Tranche. Application has been made to the Irish Stock Exchange for Notes issued under the Programme to be admitted to the Official List and to trading on the Main Securities Market. The listing of the Programme in respect of Notes is expected to be granted on or around 16 April 2015. Prior to the official listing and admission to trading however, dealings will be permitted by the Irish Stock Exchange in accordance with its rules. Transactions on the Main Securities Market will normally be effected for delivery on the third working day after the day of the transaction. However, unlisted Notes may be issued pursuant to the Programme. In respect of the above applications to the Irish Stock Exchange, Deutsche Bank Luxembourg S.A. is acting solely in its capacity as listing agent for the Issuer in connection with the Notes and is not itself seeking admission of the Notes to the Official List or to trading on the Main Securities Market for the purposes of the Prospectus Directive.

Documents Available For the period of 12 months following the date of this Base Prospectus, physical copies of the following documents will, when published, be available for inspection and/or collection from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London: (a) the Articles of Association (with an English translation thereof) of the Issuer; (b) the Etisalat Financial Statements, together with the audit reports prepared in connection therewith. The Issuer currently prepares audited consolidated accounts on an annual basis; (c) the most recently published audited consolidated financial statements of the Issuer and the most recently published unaudited interim condensed consolidated financial statements (if any) of the Issuer, together with any audit or review reports prepared in connection therewith. The Issuer currently prepares unaudited interim condensed consolidated accounts on a quarterly basis; (d) the Trust Deed, the Agency Agreement and the forms of the Global Notes, the Notes in definitive form, the Receipts, the Coupons and the Talons; (e) a copy of this Base Prospectus; and (f) any future Base Prospectuses, prospectuses, information memoranda and supplements including Final Terms (save that the Final Terms relating to a Note which is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the Issuer and the Paying Agent as to its holding of Notes and identity) to this Base Prospectus and any other documents incorporated herein or therein by reference. The English language translations of the Articles of Association of the Issuer are accurate and direct translations of the original foreign language documents. In the event of a discrepancy between the English language translation and the foreign language version, the foreign language version will prevail. This Base Prospectus and the applicable Final Terms for Notes that are listed on the Official List and admitted to trading on the Main Securities Market will be published on the website of the Central Bank of Ireland (http://www.centralbank.ie).

174 Clearing Systems The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg which are the entities in charge of keeping the records. The appropriate Common Code and ISIN for each Tranche of Notes allocated by Euroclear and Clearstream, Luxembourg will be speciﬁed in the applicable Final Terms. In addition, the Issuer may make an application for any Notes in registered form to be accepted for trading in book-entry form by DTC. The CUSIP and/or CINS numbers for each Tranche of such Registered Notes, together with the relevant ISIN and (if applicable) common code, will be speciﬁed in the applicable Final Terms. The address of Euroclear is Euroclear Bank S.A./N.V., 1 Boulevard du Roi Albert II, B-1210 Brussels. The address of Clearstream, Luxembourg is Clearstream Banking, socie´te´ anonyme,42 Avenue JF Kennedy, L-1855 Luxembourg. The address of DTC is 55 Water Street, New York, New York 10041, United States of America.

Conditions for Determining Price The price and amount of Notes to be issued under the Programme will be determined by the Issuer and the relevant Dealer at the time of issue in accordance with prevailing market conditions.

Significant or Material Change Other than as disclosed in ‘‘Operating and Financial Review’’ on page 86 of this Base Prospectus and in ‘‘Description of the Group’’ on pages 119, 125 and 139 to 140 (inclusive) of this Base Prospectus, there has been no significant change in the financial or trading position of the Group since 31 December 2014 and no material adverse change in the prospects of the Group since 31 December 2014.

Litigation Save as disclosed in this Base Prospectus on pages 138 to 140 (inclusive), neither the Issuer nor any other member of the Group is or has been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) in the 12 months preceding the date of this Base Prospectus which may have, or have in such period had, a significant effect on the Issuer and/or the Group’s financial position or profitability.

Auditors The Etisalat Financial Statements have been audited by Deloitte & Touche (M.E.), independent auditors, as stated in their report included herein. The Maroc Telecom Financial Statements have been jointly audited by KPMG Maroc and Mr. Abdelaziz Almechatt, as stated in their report included herein.

Auditor’s report on the compilation of pro forma financial information Deloitte & Touche (M.E.), a firm of independent auditors registered to practice as auditors with the Ministry of Economy in the UAE whose business address is Al Sila Tower, Abu Dhabi Global Market Square, P.O. Box 990, Abu Dhabi, UAE, has given and not withdrawn its written consent to the inclusion in this Base Prospectus of the auditor’s report on the compilation of pro forma financial information, in the form appended to this Base Prospectus, as well as references to its name and has authorised the contents of such part of this Base Prospectus.

Dealers Transacting with the Issuer Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services to the Issuer and its affiliates in the ordinary course of business for which they may receive fees. In particular, in the ordinary course of their business activities, the Dealers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of the Issuer and its affiliates. Certain of the Dealers or their affiliates that have a lending relationship with the Issuer and its affiliates routinely hedge their credit exposure to the Issuer and its affiliates consistent with their customary risk management policies. Typically, such Dealers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit

175 default swaps or the creation of short positions in securities, including potentially the Notes issued under the Programme. Any such short positions could adversely affect future trading prices of Notes issued under the Programme. The Dealers and their afﬁliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or ﬁnancial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

176 GLOSSARY

The following technical terms and abbreviations when used in this Base Prospectus have the definitions ascribed to them below: ‘‘2G’’ refers to the second generation of mobile telecommunications standards. ‘‘3G’’ refers to the third generation of mobile telecommunications standards. ‘‘3.5G’’ and ‘‘3.75G’’ refers to a grouping of mobile telecommunications technologies designed to provide better performance than 3G systems, as an interim step towards deployment of 4G technology. ‘‘4G’’ refers to the fourth generation of mobile telecommunications standards. ‘‘accessories’’ means the additional pieces of equipment designed to enhance mobile phones, including covers, batteries, chargers, headsets, car kits and carrying cases. ‘‘ADSL’’ refers to asymmetric digital subscriber line, a data communications technology that enables faster data transmission over copper telephone lines than a conventional modem can provide by utilising frequencies that are not used by voice telephone calls. ‘‘airtime’’ refers to the time that has elapsed between the start of a call achieved by connecting to the service provider’s network and the termination of a call achieved by pressing the end button. Network connection time includes signals received prior to voice transmission, such as busy signals and ringing. ‘‘analogue’’ refers to the first generation of mobile telecommunications technology in which radio signals are modulated proportionally by the strength and frequency of audio sounds. ‘‘ARPU’’ refers to average revenue per user, the measure of total service revenues for a given period, divided by the number of months in that period and divided again by that period’s average total customers (calculated by dividing the aggregate number of customers at the beginning and end of the relevant period by two). The Group’s calculation of mobile ARPU includes outgoing voice revenue, subscription fees and net customer roaming revenue. Interconnect revenue is not included in mobile ARPU. Fixed-line ARPU includes outgoing voice revenue and line rental charges. Both ARPU measures include residential as well as business customers. ‘‘associates’’ refers to investments in companies where the Group exercises a significant influence. ‘‘band’’ in wireless communication, band refers to a frequency or contiguous range of frequencies. ‘‘base station’’ or ‘‘BSC’’ refers to equipment in a mobile telecommunications network for controlling call set-up, signalling and maintenance functions and the use of radio channels or one or more base stations. ‘‘base transceiver station’’, ‘‘BTS’’ means the fixed transmitter/receiver equipment in each cell of a or ‘‘sites’’ mobile telecommunications network that communicates by radio signal with mobile telephones in the cell. ‘‘bit’’ refers to the smallest unit of binary information. ‘‘broadband’’ refers to a connection to exchange data at higher speeds than through analogue lines. The most common broadband technologies are cable modems (up to 3Mbps), DSL (up to 8Mbps), satellite (up to 10Mbps), wireless (up to 1.54Mbps) and optical fibre (up to 155Mbps).

177 ‘‘carrier’’ refers to a generic term for a network operator. ‘‘CDMA’’ refers to code division multiple access, also known as spread spectrum, a cellular system utilising a single frequency band for all traffic, differentiating the individual transmissions by assigning them unique codes before transmission. There are a number of variants of CDMA (for example, W-CDMA, B-CDMA and TD- SCDMA). ‘‘cell’’ means the geographic area covered by a single base station in a mobile communications network. ‘‘cellular’’ refers most basically to the structure of the wireless transmission networks that comprise cells or transmission sites. ‘‘churn’’ refers to the rate at which mobile customers are disconnected from a network or are removed from an operating company’s customer count due to inactivity. The Group calculates churn by dividing the number of voluntary and involuntary deactivations in a given period by the average number of customers for the same period. ‘‘cloud services’’ refer to services made available to users on-demand via the Internet from the cloud service provider’s servers as opposed to being provided from one’s own on-premises servers. ‘‘coverage’’ means the geographical area encompassing a wireless network. This is the area in which a network service provider offers cellular service for a customer’s phone. ‘‘digital’’ refers to a signalling technology in which a signal is encoded into digits for transmission. ‘‘DSL’’ refers to digital subscriber line, a technology enabling a local loop copper pair to transport high-speed data between a central office and the subscriber’s premises. ‘‘EDGE’’ refers to enhanced data rates for GSM evolution, the final stage in the evolution of the GSM standard, using a new modulation scheme to enable theoretical data speeds of up to 384kbps within the existing GSM spectrum. ‘‘eNodeB’’ refers to Evolved Node B, the element of LTE that is the evolution of NodeB. ‘‘EvDO’’ refers to enhanced voice-data optimised, a CDMA-based 3G technology for the wireless transmission of data through radio signals, typically for broadband Internet access. ‘‘fibre optic cable’’ refers to a transmission medium made from pure and consistent glass. Digital signals are transmitted across fibre optic cable as pulses of light. While signals transmitted over fibre optic cable travel at the same speed as those transmitted over traditional copper cable, fibre optic cable benefits from greater transmission capacity and lower distortion of signals transmitted. ‘‘fixed-line’’ refers to a physical line connecting the subscriber to the telephone exchange. In addition, fixed-line includes fixed wireless systems, in which the users are in fixed locations using a wireless connection to the telephone exchange. ‘‘fixed-to-mobile substitution’’ refers to the use of a mobile telephone instead of a fixed-line telephone as the result of a customer (most often a young or new customer) either eliminating or never entering into a subscription for fixed-line services in favour of relying solely on mobile services. ‘‘fixed wireless’’ refers to a network of wireless devices or systems that connects two fixed locations (for example, buildings) through a radio or other wireless link. Typically, fixed wireless networks are part of a

178 wireless LAN infrastructure and utilise large directional radio antennae designed for outdoor use. ‘‘frequency’’ means the rate at which an electrical current alternates, usually measured in Hertz. Also the way to note a general location on the radio frequency spectrum such as 800 MHz, 900 MHz or 1900 MHz. ‘‘FTTH’’ refers to fibre-to-the-home, a broadband network that uses fibre optic cable to replace all or part of the usual metal local loop by extending the fibre optic cable network to the subscriber’s living or working space. ‘‘gateway’’ refers to a facility which adapts signals and the messages of one network to the protocols and conventions of other networks or services. ‘‘GMPCS’’ refers to Global Mobile Personal Communications by Satellite, satellite systems that can provide a wide range of communication services such as mobile and fixed voice telephony, paging, data, messaging or broadband multimedia services on a regional or global basis, using low earth orbit, medium earth orbit or geostationary orbit satellite technologies. ‘‘GPRS’’ refers to general packet radio service, a packet based telecommunications service designed to send and receive data at rates from 56kbps to 114kbps that allows continuous connection to the internet for mobile phone and computer users. GPRS is a specification for data transfer over GSM networks. ‘‘GPS’’ refers to the Global Positioning System, a space-based satellite navigation system that provides location and time information, anywhere on or near the Earth where there is an unobstructed line of sight to four or more GPS satellites. ‘‘GSM’’ refers to the global system for mobile communications, a comprehensive digital network for the operation of all aspects of a cellular telephone system. ‘‘HSDPA’’ refers to high-speed downlink packet access, a system which allows networks based on UMTS to have higher data transfer speeds and capacity. Current HSDPA systems support download speeds of 1.8, 3.6, 7.2 and 14.0Mbps. ‘‘HSPA+’’ refers to advanced high-speed packet access, a wireless broadband standard based on UMTS, which has higher data transfer speeds and capacity providing download speeds of up to 42Mbps. Etisalat’s next-generation network in the UAE utilises this technology. ‘‘HSUPA’’ refers to high-speed uplink packet access, a system which allows networks based on UMTS to improve the performance of uplink dedicated transport channels. Current HSUPA systems support uplink speeds of up to 5.76Mbps. ‘‘ICT’’ refers to internet and communication technology, all technologies used to facilitate and enhance internet and telecommunications services. ‘‘IDD’’ refers to international direct dialling, calls made directly from one mobile or fixed-line customer located in a particular country to another mobile or fixed-line number located in a different country. ‘‘interconnection’’ means the way in which networks are connected to each other and the charges payable for accepting traffic from or delivering traffic to another. ‘‘Internet Protocol’’ or ‘‘IP’’ refers to a standard procedure whereby internet-user data is divided into packets to be sent onto the correct network pathway. In

179 addition, IP gives each packet an assigned number so that the message completion can be verified. Before packets are delivered to their destination, the protocol carries out unifying procedures so that they are delivered in their original form. ‘‘Internet Service Provider’’ refers to a service provider who provides access to internet services. ‘‘LAN’’ refers to local area network, a telecommunications network covering a small physical area, like a home, office, or small group of buildings, such as a school, or an airport. ‘‘leased line’’ refers to a voice or data circuit leased to connect two or more locations for the exclusive use of the subscriber. ‘‘LTE’’ refers to long-term evolution, a standard for wireless communication of high-speed data for mobile phones and data terminals, based on GSM/EDGE and UMTS/HSPA network technologies. ‘‘LTE Advanced’’ or ‘‘LTE-A’’ refers to a mobile telecommunications standard that is an enhancement of LTE, based on carrier aggregation technology. ‘‘Mbps’’ refers to the data transfer rate equalling 1,000,000 bits (or one megabit) per second. ‘‘MHz’’ refers to a unit of frequency of one million Hertz. ‘‘MMS’’ a text messaging service offering various kinds of multimedia content, including images, audio and video clips. ‘‘MPLS’’ refers to multiprotocol label switching, a mechanism in high- performance telecommunications networks that directs data from one network node to the next based on short path labels rather than long network addresses. ‘‘MSC’’ refers to mobile switching centre, an exchange used in a cellular network to switch incoming traffic to the required base station nearest to the user. Whereas the local exchange in a fixed network will always deliver calls to an assigned circuit denoted by the telephone number, mobile switching centres route calls for a particular number according to location information received from a network of base stations. Since a user’s location may change during a call, MSCs also perform the switching function required to transfer a call from one base station to the next. ‘‘network’’ refers to an interconnected collection of components which would, in a telecommunications network, consist of switches connected to each other and to customer equipment by real or virtual links. Transmission links may be based on fibre optic or metallic cable or point-to-point radio connections. ‘‘NGN’’ refers to Next Generation Network, in which one network transports all information and services in packets. ‘‘NG SDH’’ refers to next generation synchronous optical networking, standardised protocols that transfer multiple digital bit streams over optical fibre using lasers or highly coherent light from light- emitting diodes. ‘‘NodeB’’ refers to the term which is the UMTS equivalent of base transceiver stations, used in relation to GSM. ‘‘number portability’’ refers to a facility provided by telecommunications operators which enables customers to keep their full telephone numbers when they change operators. ‘‘operator’’ means any company building and running its own network facilities.

180 ‘‘over-the-top’’ or ‘‘OTT’’ refers to services that enable the transmission of video, audio, images and text, via the internet, which does not require a mobile operator to distribute and control the content. ‘‘penetration’’ refers to a measurement of access to telecommunications, normally calculated by dividing the number of subscribers to a particular service by the population and multiplying by 100. Also referred to as teledensity (for fixed-line networks) or mobile density (for cellular networks). ‘‘postpaid’’ refers to a type of service plan which is billed after the service has been provided, usually monthly. ‘‘prepaid’’ refers to a service plan requiring subscribers to pay for wireless services in advance. ‘‘recharge’’ means adding credit onto a prepaid account that is depleted as airtime is used. ‘‘Reference Interconnection Offer’’ refers to certain interconnection related services to an operator supplied by another operator. ‘‘roaming’’ means the ability to make and receive calls on the same mobile phone when travelling outside the area of the home network operator. ‘‘RNCs’’ refers to radio network controllers, the devices that connect and control base stations within each cell site in a 3G network. ‘‘scratch cards’’ refers to cards with a special opaque strip on the surface of the card and covered password, code or other type of information. It is necessary to scratch the strip to retrieve the information underneath it. Widely used in the activation of prepaid services. ‘‘service provider’’ refers to a term usually employed to distinguish a company which offers telecommunications services over another company’s infrastructure from one which owns and operates its own network. ‘‘SIM card’’ refers to subscriber identity module cards that contain a smart chip with memory that allows for data storage and software applications. ‘‘SMB’’ refers to small and medium-sized businesses. For customers of Etisalat, it specifically refers to those customers contributing AED 25,000 to AED 250,000 to Etisalat’s annual revenue. ‘‘SMS’’ refers to a text message service which enables users to send short messages (160 characters) to other users. ‘‘software’’ means the detailed instructions to operate a computer, differentiating instructions (i.e., the program) from the hardware. ‘‘spectrum’’ refers to a continuous range of frequencies, usually wide in extent within which waves have some specific common characteristics. ‘‘switch’’ means communications equipment which enables calls made by one user to another user to be routed, either directly or through other switches, through a network for delivery to the intended recipient. ‘‘switching centre’’ refers to a system which directs radio signals (telephone calls) to telephone users or other networks. If the intended recipient is another mobile customer on the same network, the signal is directed by the message switching centre to the base transceiver station serving the cell in which the recipient is located. Otherwise the signal is passed by the message switching centre to another telecommunications network through an interconnection point to that network. ‘‘TDM’’ refers to time-division multiplexing, a method of transmitting and receiving independent signals over a common signal path by means of synchronised switches at each end of the transmission line so that

181 each signal appears on the line only a fraction of time in an alternating pattern. ‘‘UMTS’’ refers to the universal mobile telecommunications system, a 3G network designed to provide a wide range of voice, high-speed data and multimedia services. ‘‘Value-added services’’ refers to a service which provides a higher level of functionality than the basic transmission services offered by a telecommunications network for the transfer of information among its terminals, as well as enhanced media content offerings. ‘‘VoIP’’ refers to voice over internet protocol, a telephone service via internet, or via TCP/IP protocol, which can be accessed using a computer, a sound card, adequate software and a modem. ‘‘VPN’’ refers to virtual private network, a network that is layered on top of an underlying network. The private nature of a VPN means that the data travelling over the VPN is not generally visible to, or is encapsulated from, the underlying network traffic. ‘‘VSAT’’ refers to a very small aperture terminal, a two-way satellite ground station or a stabilised maritime antenna with a dish antenna that is smaller than three meters. ‘‘WDM’’ refers to wavelength-division multiplexing, a technology which multiplexes a number of optical carrier signals onto a single optical fibre by using different wavelengths of laser light. ‘‘web’’ is an abbreviation for the internet’s World Wide Web. ‘‘WiFi’’ is a technology for wireless networking that employs the IEEE 802.11 family of standards; WiFi is a common enabling technology for wireless local area networks. ‘‘WiMAX’’ refers to Worldwide Interoperability for Microwave Access, a telecommunications technology that provides fixed and fully mobile internet access.

182 INDEX TO FINANCIAL STATEMENTS

Auditors’ report in respect of the audited consolidated financial statements of the Group as of and for the financial year ended 31 December 2014 ...... F-5 Consolidated financial statements of the Group as of and for the financial year ended 31 December 2014 ...... F-6 Auditors’ report in respect of the audited consolidated financial statements of the Group as of and for the financial year ended 31 December 2013 ...... F-63 Consolidated financial statements of the Group as of and for the financial year ended 31 December 2013 ...... F-64 Statutory auditors’ report on the audited consolidated financial statements of Maroc Telecom as of and for the financial year ended 31 December 2014 ...... F-118 Consolidated financial statements of Maroc Telecom as of and for the financial year ended 31 December 2014 ...... F-120

F-1 Emirates Telecommunications Corporation

Reports and consolidated financial statements for the year ended 31 December 2014

F-2 BOARD OF DIRECTORS

Chairman Mr. Eissa Mohammad Al Suwaidi

Vice Chairman H.E. Khalaf Bin Ahmed Al Otaiba

Members Mr. Abdulfattah Sayed Mansoor Sharaf Mr. Mubarak Rashed Al Mansoori Sheikh Ahmed Mohammad Sultan Bin Suroor Al Dhaheri Mr. Abdelmonem Bin Eisa Bin Nasser Alserkal Mr. Mana Mohammed Saeed Al Mulla Mr. Shoaib Mir Hashim Khoory Mr. Essa Abdulfattah Kazim Mr. Mohammed Hadi Ahmed Abdulla Al Hussaini Mr. Abdulla Salem Al Dhaheri

Corporation Secretary Mr. Hasan Mohamed Hasan Ahmed Al Hosani

AUDIT COMMITTEE Chairman Mr. Essa Abdulfattah Kazim

Members Mr. Mana Mohammed Saeed Al Mulla Sheikh Ahmed Mohammad Sultan Bin Suroor Al Dhaheri Mr. Salem Sultan Al Dhaheri (external member)

NOMINATIONS AND REMUNERATION COMMITTEE

Chairman Mr. Abdulla Salem Al Dhaheri

Members Mr. Mubarak Rashed Al Mansoori Mr. Shoaib Mir Hashim Khoory Mr. Abdelmonem Bin Eisa Bin Nasser Alserkal

INVESTMENT AND FINANCE COMMITTEE

Chairman Mr. Eissa Mohammad Al Suwaidi

Members H.E. Khalaf Bin Ahmed Al Otaiba Mr. Mubarak Rashed Al Mansoori Mr. Mohammed Hadi Ahmed Abdulla Al Hussaini Mr. Abdulfattah Sayed Mansoor Sharaf

HEAD OFFICE: Etisalat Building Intersection of Zayed, The 1st Street and Sheikh Rashid Bin Saeed Al Maktoum Street P.O. Box 3838 Abu Dhabi Telephone: +971 2 6283333 Fax: +971 2 6317000 Telex: 22135 ETCHO EM www.etisalat.ae

REGIONAL OFFICES: Abu Dhabi, Dubai, Northern Emirates

F-3 Reports and consolidated financial statements for the year ended 31 December 2014

Contents Pages

Independent auditor's report to the shareholders 1

Consolidated statement of profit or loss 2

Consolidated statement of comprehensive income 3

Consolidated statement of financial position 4

Consolidated statement of changes in equity 5

Consolidated statement of cash flows 6

Notes to the consolidated financial statements 7 - 55

F-4 F-5 F-6 Emirates Telecommunications Corporation Consolidated statement of comprehensive income for the year ended 31 December 2014 2014 2013 Notes AED’000 AED’000

Profit for the year 9,853,479 7,750,948

Other comprehensive income / (loss)

Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligations - net of tax (141,593) (126,618)

Items that may be reclassified subsequently to profit or loss:

Exchange differences arising during the year

Exchange differences on translation of foreign operations (2,376,730) (1,969,056)

Gain on hedging instruments designated in hedges of the 22 1,301,869 - net assets of foreign operations

Available-for-sale financial assets

Loss on revaluation of financial assets during the year (27,969) (138,909)

Reclassification adjustment relating to available-for-sale - 264,310 financial assets impaired during the year

Reclassification adjustment relating to available-for-sale 29 (284,991) - financial assets on disposal

Total other comprehensive loss (1,529,414) (1,970,273)

Total comprehensive income for the year 8,324,065 5,780,675

Attributable to:

The equity holders of the Corporation 7,426,551 6,063,592

Non-controlling interests 897,514 (282,917)

8,324,065 5,780,675

The accompanying notes on pages 7 to 55 form an integral part of these consolidated financial statements. The Independent Auditor's report is set out on page 1.

F-7 F-8 Emirates Telecommunications Corporation Consolidated statement of changes in equity for the year ended 31 December 2014

Attributable to equity holders of the Corporation Non- Share Retained Owners' controlling Total capital Reserves earnings equity interests equity Notes AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Balance at 1 January 2013 7,906,140 29,115,839 3,492,333 40,514,312 9,398,260 49,912,572 Total comprehensive income for - (985,167) 7,048,759 6,063,592 (282,917) 5,780,675 the year Transfer to reserves 29 - 136,308 (136,308) - - - Transaction with owners: Disposal of partial interest in a 12 - - 284,220 284,220 87,233 371,453 subsidiary Acquisition of non-controlling 12 - - (7,804) (7,804) (5,782) (13,586) interests Additional equity from non- 12 - - - - 16,835 16,835 controlling interests Dividends 34 - - (6,322,176) (6,322,176) (153,077) (6,475,253)

Balance at 31 December 2013 7,906,140 28,266,980 4,359,024 40,532,144 9,060,552 49,592,696

Balance at 1 January 2014 7,906,140 28,266,980 4,359,024 40,532,144 9,060,552 49,592,696

Total comprehensive income for - (1,432,516) 8,859,068 7,426,552 897,514 8,324,066 the year Other movements in equity - - 325 325 362 687 Transfer to reserves 29 - 18,240 (18,240) - - - Acquisition of a subsidiary 30 - - - - 8,159,944 8,159,944 Transaction with owners: Acquisition of non-controlling 12 - - (150,933) (150,933) 132,563 (18,370) interests Equity contribution from non- controlling interests for 12 - - - - 1,791,831 1,791,831 acquisition of a subsidiary Dividends 34 - - (5,531,905) (5,531,905) (1,392,078) (6,923,983)

Balance at 31 December 2014 7,906,140 26,852,704 7,517,339 42,276,183 18,650,688 60,926,871

The accompanying notes on pages 7 to 55 form an integral part of these consolidated financial statements. The Independent Auditor's report is set out on page 1.

F-9 Emirates Telecommunications Corporation Consolidated statement of cash flows for the year ended 31 December 2014 Nine months ended 30 September 2014 2013 Notes AED’000 AED’000 Operating profit 10,099,333 8,418,003 Adjustments for: Depreciation 10, 11 5,163,502 3,798,455 Amortisation 9 1,694,716 809,093 Impairment and other losses 9,10 931,963 1,374,176 Share of results of associates and joint ventures 13 461,065 (1,754,341) Provisions and allowances 965,915 300,806 Other non-cash movements (21,694) - Operating profit before changes in working capital 19,294,800 12,946,192 Changes in working capital: Inventories 51,816 (75,475) Due from associates and joint ventures 223,979 (175,392) Trade and other receivables (2,560,724) 210,436 Trade and other payables 3,171,317 995,923 Cash generated from operations 20,181,188 13,901,684 Income taxes paid (2,266,300) (490,317) Payment of end of service benefits 27 (706,363) (437,806) Net cash generated from operating activities 17,208,525 12,973,561

Cash flows from investing activities Net proceeds from disposal / (acquisition) of other investments 486,928 (71,038) Proceeds from capital reduction of a joint venture 14 - 40,000 Purchase of property, plant and equipment (6,874,794) (5,567,248) Proceeds from disposal of property, plant and equipment 239,141 73,586 Purchase of other intangible assets (2,038,764) (766,638) Proceeds from disposal of other intangible assets 25 - Dividend income received from associates and other investments 797,559 1,010,169 Acquisition of Maroc Telecom, net of cash acquired 30 (18,660,985) - Acquisition of additional equity in subsidiary (18,370) - Finance and other income received 1,966,853 427,682 Net cash used in investing activities (24,102,407) (4,853,487)

Cash flows from financing activities Proceeds from borrowings and finance lease obligations 34,636,255 3,491,716 Repayments of borrowings and finance lease obligations (18,608,720) (3,142,979) Equity contribution from non-controlling interests for acquisition of a subsidiary 1,813,528 - Dividends paid (6,923,983) (6,475,253) Finance and other costs paid (1,755,522) (458,607) Net cash generated from/ (used) in financing activities 9,161,558 (6,585,123)

Net increase in cash and cash equivalents 2,267,676 1,534,951 Cash and cash equivalents at the beginning of the year 15,450,248 13,934,076 Effect of foreign exchange rate changes 833,849 (18,779) Cash and cash equivalents at the end of the year 19 18,551,773 15,450,248

The accompanying notes on pages 7 to 55 form an integral part of these consolidated financial statements. The Independent Auditor's report is set out on page 1.

F-10 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

1. General information

The Emirates Telecommunications Corporation Group (“the Group”) comprises the holding company Emirates Telecommunications Corporation (“the Corporation”) and its subsidiaries. The Corporation was incorporated in the United Arab Emirates (“UAE”), with limited liability; in 1976 by UAE Federal Government decree No. 78, which was revised by the UAE Federal Act No. (1) of 1991 and further amended by Decretal Federal Code No. 3 of 2003 concerning the regulation of the telecommunications sector in the UAE. In accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE transferred its 60% holding in the Corporation to the Emirates Investment Authority with effect from 1 January 2008, which is ultimately controlled by the UAE Federal Government. The address of the registered office is P.O. Box 3838, Abu Dhabi, United Arab Emirates. The Corporation’s shares are listed on the Abu Dhabi Securities Exchange.

The principal activities of the Group are to provide telecommunications services, media and related equipment including the provision of related contracting and consultancy services to international telecommunications companies and consortia. These activities are carried out through the Corporation (which holds a full service license from the UAE Telecommunications Regulatory Authority valid until 2025), its subsidiaries, associates and joint ventures.

These consolidated financial statements were approved by the Board of Directors and authorised for issue on 25 February 2015.

2. Significant accounting policies

The significant accounting policies adopted in the preparation of these consolidated financial statements are set out below.

Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to companies reporting under IFRS. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. The consolidated financial statements are prepared under the historical cost convention except for the revaluation of certain financial instruments and in accordance with the accounting policies set out herein.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether the price is directly observable or estimated using another valuation technique.

The consolidated financial statements are presented in UAE Dirhams (AED) which is the Corporation's functional and presentational currency, rounded to the nearest thousand except where otherwise indicated.

Acquisition of Maroc Telecom On 14 May 2014, the Group acquired 53% stake in Maroc Telecom at a net adjusted price of EUR 4.1 billion (AED 20.9 billion). This amount included the cash value of the 2012 dividend amounting to EUR 0.3 billion (AED 1.5 billion). Maroc Telecom is accordingly consolidated in this consolidated financial information from the date of acquisition, as aforesaid.

The acquisition is effected by the Group through an entity specifically created to acquire and hold the shares of Maroc Telecom. Abu Dhabi Fund for Development acquired 8.7 per cent. of the shareholding of this entity. Information about the acquisition is detailed in note 30.

7 F-11 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

New and amended standards adopted

The following revised IFRSs have been adopted in these consolidated financial statements. The application of these revised IFRSs has not had any material impact on the amounts reported for the current and prior periods but may affect the accounting for future transactions or arrangements.

• Amendments to IAS 32 Financial Instruments: Presentation relating to offsetting financial assets and liabilities • Amendments to IFRS 10 Consolidated Financial Statements • IFRS 12 Disclosure of Interests in Other Entities • IAS 27 Separate Financial Statements relating to investment entities and exemption of consolidation of particular subsidiaries • Amendments to IAS 36 Impairment of Assets relating to recoverable amount disclosures for non-financial assets • Amendments to IAS 39 Financial instruments relating to recognition and Measurement amendments for novations of derivatives and continuation of hedge accounting • IFRIC 21 Levies relating to guidance on when to recognize a levy imposed by a government

New and amended standards in issue but not yet effective At the date of the consolidated financial statements, the following Standards, Amendments and Interpretations have not been effective but have not been early adopted:

Effective date

IFRS 9 Financial Instruments (as amended in 2010) 1 January 2018

Amendment to IFRS 7 Financial Instruments: Disclosures relating to transition to IFRS 9 (or When IFRS 9 is otherwise when IFRS 9 is first applied) first applied IFRS 14 Regulatory deferral accounts 1 January 2016 Amendments to IAS 39 Financial instruments – Continuation of hedge accounting When IFRS 9 is first applied Amendments to IFRS 11 - Accounting for acquisitions of Interests in Joint operations 1 January 2016 Amendments to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and 1 January 2016 amortisation Amendments to IAS 16 and IAS 41 - Agriculture: Bearer plants 1 January 2016 IFRS 15 – Revenue from contracts with customers 1 January 2017

Amendment to IAS 27 Separate Financial Statements (as amended in 2011) relating to 1 July 2016 reinstating the equity method as an accounting option for investments in in subsidiaries, joint ventures and associates in an entity's separate financial statements Amendments resulting from September 2014 Annual Improvements to IFRS 5 Non-current 1 July 2016 Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting Amendments to IFRS 10 and IAS 28 clarify that the recognition of the gain or loss on the sale 1 January 2016 or contribution of assets between an investor and its associate or joint venture depends on whether the assets sold or contributed constitute a business Annual Improvements 2010-2012 Cycle, IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and 38 and IAS 1 July 2014 24 Amendments to IAS 19 Defined Benefit Plans relating to employee contributions 1 July 2014

Annual Improvements 2011-2013 Cycle, IFRS 1, IFRS 3, IFRS 13 and IAS 40 1 July 2014

Management anticipates that the application of the above Standards and Interpretations in future periods will have no material impact on the consolidated financial statements of the Group in the period of initial application with the exception of IFRS 15 revenue from contracts with customers and IFRS 9 financial Instruments which management is currently assessing. However, it is not practicable to provide a reasonable estimate of effects of the application of these standards until the Group performs a detailed review.

8 F-12 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Basis of consolidation

These consolidated financial statements incorporate the financial statements of the Corporation and entities controlled by the Corporation. Control is achieved when the Group has: • has power over the investee; • is exposed , or has rights, to variable returns from its involvement; • has the ability to use its power to affect its returns.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has the power to control another entity.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interests share of changes in equity since the date of the business combination. Total comprehensive income within subsidiaries is attributed to the Group and to the non-controlling interest even if this results in non-controlling interests having a deficit balance.

Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are excluded from consolidation from the date that control ceases. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Intercompany transactions, balances and any unrealised gains/losses between Group entities have been eliminated in the consolidated financial statements.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.

Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the fair value, at the date of exchange, of the assets given, equity instruments issued and liabilities incurred or assumed. The acquiree’s identifiable assets and liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair values at the acquisition date. Acquisition-related costs are recognised in the consolidated statement of profit or loss as incurred.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the acquisition-date net fair value of the acquiree’s identifiable assets and liabilities exceeds the cost of the business combination, the excess is recognised immediately in the consolidated statement of profit or loss.

The non-controlling interest in the acquire is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Step acquisition

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquire is re-measured to fair value at the acquisition date; any gains or losses arising from such remeasurement are recognised in the consolidated statement of profit or loss. Amounts arising from interests in the acquire prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

9 F-13 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Associates and joint ventures

A joint venture is a joint arrangement whereby the Group has joint control of the arrangement and has corresponding rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Associates are those companies over which Group exercises significant influence but it does not control or have joint control over those companies. Investments in associates and joint ventures are accounted for using the equity method of accounting except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Investments in associates and joint ventures are carried in the consolidated statement of financial position at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associates and joint ventures less any impairment in the value of individual investments. Losses of the associates and joint ventures in excess of the Group’s interest are not recognised unless the Group has incurred legal or constructive obligations.

The carrying values of investments in associates and joint ventures are reviewed on a regular basis and if impairment in the value has occurred, it is written off in the period in which those circumstances are identified.

Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associates at the date of acquisition is recognised as goodwill and included as part of the cost of investment. Any deficiency of the cost of acquisition below the Group’s share of the fair values of the identifiable net assets of the associates at the date of acquisition is credited to the consolidated statement of profit or loss in the year of acquisition.

The Group’s share of associates’ and joint ventures’ results is based on the most recent financial statements or interim financial statements drawn up to the Group’s reporting date. Accounting policies of associates and joint ventures have been adjusted, where necessary, to ensure consistency with the policies adopted by the Group.

Profits and losses resulting from upstream and downstream transactions between the Groups (including its consolidated subsidiaries) and its associate or joint ventures are recognised in the Group’s financial statements only to the extent of unrelated group’s interests in the associates or joint ventures. Losses may provide evidence of an impairment of the asset transferred, in which case appropriate provision is made for impairment.

Dilution gains and losses arising on deemed disposal of investments in associates and joint ventures are recognised in the consolidated statement of profit or loss.

Revenue

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for telecommunication products and services provided in the normal course of business. Revenue is recognised, net of sales taxes, discounts and rebates, when it is probable that the economic benefits associated with a transaction will flow to the Group and the amount of revenue and associated cost can be measured reliably. Revenue from telecommunication services comprises amounts charged to customers in respect of monthly access charges, airtime usage, messaging, the provision of other mobile telecommunications services, including data services and information provision and fees for connecting users of other fixed line and mobile networks to the Group’s network.

Access charges and airtime used by contract customers are invoiced and recorded as part of a periodic billing cycle and recognised as revenue over the related access period, with unbilled revenue resulting from services already provided from the billing cycle date to the end of each period accrued and unearned revenue from services provided in periods after each accounting period deferred. Revenue from the sale of prepaid credit is recognised on the actual utilisation of the prepaid credit and is deferred as deferred income until such time as the customer uses the airtime, or the credit expires.

Revenue from data services and information provision is recognised when the Group has performed the related service and, depending on the nature of the service, is recognised either at the gross amount billed to the customer or the amount receivable by the Group as commission for facilitating the service.

10 F-14 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Revenue (continued)

Incentives are provided to customers in various forms and are usually offered on signing a new contract or as part of a promotional offering. Where such incentives are provided on connection of a new customer or the upgrade of an existing customer, revenue representing the fair value of the incentive, relative to other deliverables provided to the customer as part of the same arrangement, is deferred and recognised in line with the Group’s performance of its obligations relating to the incentive.

In revenue arrangements including more than one deliverable that have value to a customer on standalone basis, the arrangement consideration is allocated to each deliverable based on the relative fair value of the individual elements. The Group generally determines the fair value of individual elements based on prices at which the deliverable is regularly sold on a standalone basis.

Contract revenue is recognised under the percentage of completion method. Profit on contracts is recognised only when the outcome of the contracts can be reliably estimated. Provision is made for foreseeable losses estimated to complete contracts.

Revenue from interconnection of voice and data traffic with other telecommunications operators is recognised at the time the services are performed based on the actual recorded traffic.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset’s net carrying amount.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. i) The Group as lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Revenues from the sale of transmission capacity on terrestrial and submarine cables are recognised on a straight-line basis over the life of the contract. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. ii) The Group as lessee

Rentals payable under operating leases are charged to the consolidated statement of profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

11 F-15 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Foreign currencies i) Functional currencies

The individual financial statements of each of the Group’s subsidiaries, associates and joint ventures are presented in the currency of the primary economic environment in which they operate (its functional currency). For the purpose of the consolidated financial statements, the results, financial position and cash flows of each Group company are expressed in UAE Dirhams, which is the functional currency of the Corporation, and the presentation currency of the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency are recorded at exchange rates prevailing at the dates of the transactions. At end of reporting period, monetary items that are denominated in foreign currencies are retranslated into the entity’s functional currency at rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. ii) Consolidation

On consolidation, the assets and liabilities of the Group’s foreign operations are translated into UAE Dirhams at exchange rates prevailing on the date of end of each reporting period. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are also translated at exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences are recognised in other comprehensive income and are presented in the translation reserve in equity. On disposal of overseas subsidiaries or when significant influence is lost, the cumulative translation differences are recognised as income or expense in the period in which they are disposed of. iii) Foreign exchange differences

Exchange differences are recognised in the consolidated statement of profit or loss in the period in which they arise except for exchange differences that relate to assets under construction for future productive use. These are included in the cost of those assets when they are regarded as an adjustment to interest costs on foreign currency borrowings. Exchange differences on transactions entered into to hedge certain foreign currency risks; and exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation are recognised initially in other comprehensive income and reclassified from equity to the consolidated statement of profit or loss on disposal of net investment.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the consolidated statement of profit or loss in the period in which they are incurred.

12 F-16 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Government grants

Government grants relating to non-monetary assets are recognised at nominal value. Grants that compensate the Group for expenses are recognised in the consolidated statement of profit or loss on a systematic basis in the same period in which the expenses are recognised. Grants that compensate the Group for the cost of an asset are recognised in the consolidated statement of profit or loss on a systematic basis over the expected useful life of the related asset upon capitalisation.

End of service benefits

Payments to defined contribution schemes are charged as an expense as they fall due. Payments made to state-managed pension schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution scheme.

Provision for employees’ end of service benefits for non-UAE nationals is made in accordance with the Projected Unit Cost method as per IAS 19 Employee Benefits taking into consideration the UAE Labour Laws. The provision is recognised based on the present value of the defined benefit obligations.

The present value of the defined benefit obligations is calculated using assumptions on the average annual rate of increase in salaries, average period of employment of non-UAE nationals and an appropriate discount rate. The assumptions used are calculated on a consistent basis for each period and reflect management’s best estimate. The discount rates are set in line with the best available estimate of market yields currently available at the reporting date with reference to high quality corporate bonds or other basis, if applicable.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by end of the reporting period.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method.

Deferred tax is calculated using relevant tax rates and laws that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax is charged or credited in the consolidated statement of profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that sufficient taxable profits will be available in the future against which deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable profit nor the accounting profit.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. 13 F-17 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Taxation (Continued)

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Property, plant and equipment

Property, plant and equipment are only measured at cost, less accumulated depreciation and any impairment. Cost comprises the cost of equipment and materials, including freight and insurance, charges from contractors for installation and building works, direct labour costs, capitalised borrowing costs and an estimate of the costs of dismantling and removing the equipment and restoring the site on which it is located.

Assets in the course of construction are carried at cost, less any impairment. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets commences when the assets are ready for their intended use.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to consolidated statement of profit or loss during the period in which they are incurred.

Other than land (which is not depreciated), the cost of property, plant and equipment is depreciated on a straight line basis over the estimated useful lives of the assets as follows:

Buildings: Permanent – the lesser of 20 – 30 years and the period of the land lease. Temporary – the lesser of 4 – 10 years and the period of the land lease.

Plant and equipment: Years Submarine – fibre optic cables 20 – coaxial cables 10 Cable ships 15 Coaxial and fibre optic cables 15 – 25 Line plant 15 – 25 Exchanges 5 – 10 Switches 15 Radios/towers 10 – 15 Earth stations/VSAT 5 – 10 Multiplex equipment 10 Power plant 5 – 7 Subscribers’ apparatus 3 – 5 General plant 2 – 7

Other assets: Motor vehicles 5 Computers 5 Furniture and fittings 4-6

The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of the reporting period.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the consolidated statement of profit or loss.

14 F-18 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is carried at cost less accumulated depreciation and impairment loss.

Investment properties are depreciated on a straight-line basis over the lesser of 20 years and the period of the lease.

Intangible assets

(i) Goodwill Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the Group’s share of net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (CGUs) expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other non-financial assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of an associate, joint venture, or a subsidiary or where Group ceases to exercise control, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(II) Licenses Acquired telecommunication licenses are initially recorded at cost or, if part of a business combination, at fair value. Licenses are amortised on a straight line basis over their estimated useful lives from when the related networks are available for use. The estimated useful lives range between 10 and 25 years and are determined primarily by reference to the unexpired license period, the conditions for license renewal and whether licenses are dependent on specific technologies.

(III) Internally-generated intangible assets An internally-generated intangible asset arising from the Group’s IT development is recognised at cost only if all of the following conditions are met: • an asset is created that can be identified (such as software and new processes); • it is probable that the asset created will generate future economic benefits; and • the development cost of the asset can be measured reliably.

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives of 3-10 years. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

(IV) Indefeasible Rights of Use (“IRU”) IRUs correspond to the right to use a portion of the capacity of a terrestrial or submarine transmission cable granted for a fixed period. IRUs are recognised at cost as an asset when the Group has the specific indefeasible right to use an identified portion of the underlying asset, generally optical fibres or dedicated wavelength bandwidth, and the duration of the right is for the major part of the underlying asset’s economic life. They are amortised on a straight line basis over the shorter of the expected period of use and the life of the contract which ranges between 10 to 20 years.

(V) Other intangible assets Customer relationships and trade names are recognised on acquisition at fair values. They are amortised on a straight line basis over their estimated useful lives. The useful lives of customer relationships range from 3-13 years and trade names have a useful life of 15-25 years.

15 F-19 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Impairment of tangible and intangible assets excluding goodwill

The Group reviews the carrying amounts of its tangible and intangible assets whenever there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life (including goodwill) is tested for impairment annually.

Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Inventory

Inventory is measured at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, directs labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Allowance is made, where appropriate, for deterioration and obsolescence. Cost is determined in accordance with the weighted average cost method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. i) Fair value Financial assets and financial liabilities are initially measured at fair value The fair values of financial assets and financial liabilities are determined as follows: • the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and • the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions. ii) Financial assets Financial assets are classified into the following specified categories: ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

16 F-20 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Financial instruments (continued)

All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and

are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

iii) Effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments that are held-to-maturity, are available-for- sale, or are loans and receivables iv) Held-to-maturity investments Bonds and Sukuk bonds with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis. The Group considers the credit risk of counterparties in its assessment of whether such financial instruments are impaired. v) Available-for-sale financial assets (“AFS”) Listed securities held by the Group that are quoted in an active market are classified as being AFS and are stated at fair value at the end of each reporting period. Gains and losses arising from changes in fair value are recognised directly in equity in the investment revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included in the consolidated statement of profit or loss.

Dividends on AFS equity instruments are recognised in the consolidated statement of profit or loss when the Group’s right to receive the dividends is established.

The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the exchange rate prevailing at the end of each reporting period. The foreign exchange gains/losses that are recognised in the consolidated statement of profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains/losses are recognised in other comprehensive income.

The Group assesses at the end of each reporting period. whether there is objective evidence that AFS assets are impaired. In the case of equity securities, 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. Impairment losses recognised in the consolidated statement of profit or loss on equity instruments are not reversed through the consolidated statement of profit or loss.

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period. vi) Loans and receivables Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

17 F-21 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Financial instruments (continued)

Appropriate allowances for estimated irrecoverable amounts are recognised in the consolidated statement of profit or loss where there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the assets’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The allowance for doubtful debts reflects estimates of losses arising from the failure or inability of the Group’s customers to make required payments. The estimates are based on the ageing of customer’s accounts and the Group’s historical write-off experience. vii) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

viii) Financial liabilities Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ (“FVTPL”) or other financial liabilities.

ix) Financial guarantee contract liabilities Financial guarantee contract liabilities are measured initially at their fair values and are subsequently measured at the higher of: • the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and • the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies set out above.

x) Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as such. A financial liability is classified as held for trading if it has been incurred principally for the purpose of disposal in the near future or it is a derivative that is not designated and effective as a hedging instrument. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the consolidated statement of profit or loss.

xi) Other financial liabilities Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

xii) Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

xiii) Derivative financial instruments The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including forward foreign exchange contracts, interest rate swaps and cross currency swaps.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability.

18 F-22 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Financial instruments (continued) xiv) Embedded derivatives Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in fair value recognised in the consolidated statement of profit or loss.

xv) Hedge accounting The Group may designate certain hedging instruments, which include derivatives, embedded derivatives and non- derivatives in respect of foreign exchange risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges where appropriate criteria are met.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item. xvi) Put option arrangements The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed amount of cash or another financial asset for a fixed number of shares in the subsidiary.

The amount that may become payable under the option on exercise is initially recognised at fair value within borrowings with a corresponding charge directly to equity. The charge to equity is recognised separately as written put options over non-controlling interests, adjacent to non-controlling interests in the net assets of consolidated subsidiaries. For options that involve a fixed amount of cash for a fixed number of shares in the subsidiary, the Group recognises the cost of writing such put options, determined as the excess of the fair value of the option over any consideration received, as a financing cost.

Such options are subsequently measured at amortised cost, using the effective interest rate method, in order to accrete the liability up to the amount payable under the option at the date at which it first becomes exercisable. The charge arising is recorded as a financing cost. In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment to equity. xvii) Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset or substantially all the risk and rewards of ownership to another entity. If the Group neither transfer nor retains substantially all the risks and reward of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

xviii) Financial asset at fair value through profit or loss

A financial asset at fair value through profit or loss is a financial asset that meets either of the following conditions:

a) It is classified as held for trading, i.e. it is:

(i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term; (ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking; or (iii) a derivative (except for a derivative that is a designated and effective hedging instrument).

19 F-23 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

2. Significant accounting policies (continued)

Financial instruments (continued)

b) Upon initial recognition it is designated by the entity as “at fair value through profit or loss” (FVTPL). An entity may use this designation only when doing so results in more relevant information (i.e. it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities and their gains and losses on different basis; or a group of financial assets and/or financial liabilities is both managed and its performance is evaluated on a fair value basis; or if the instrument contains one or more embedded derivatives)

Provisions Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the reporting date, and are discounted to present value where the effect is material.

Transactions with non-controlling interests The Group applies a policy of treating transactions with non-controlling interest holders as transactions with parties external to the Group. Disposals to non-controlling interest holders result in gains and losses for the Group and are recorded in the consolidated statement of profit or loss. Purchases from non-controlling interest holders result in goodwill, being the difference between any considerations paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

Dividends Dividend distributions to the Group’s shareholders are recognised as a liability in the consolidated financial statements in the period in which the dividends are approved.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in Note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are disclosed below. i) Fair value of other intangible assets On the acquisition of mobile network operators, the identifiable intangible assets may include licenses, customer bases and brands. The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset, where no active market for the assets exists. The use of different assumptions for the expectations of future cash flows and the discount rate would change the valuation of the intangible assets.

The relative size of the Group’s intangible assets, excluding goodwill, makes the judgements surrounding the estimated useful lives critical to the Group’s financial position and performance.

The useful lives used to amortise intangible assets relate to the future performance of the assets acquired and management’s judgement of the period over which economic benefit will be derived from the asset.

20 F-24 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

3. Critical accounting judgements and key sources of estimation uncertainty (Continued) ii) Business combinations The recognition of business combinations requires the purchase price of acquisitions to be allocated to the identifiable assets acquired and the liabilities assumed measured at their acquisition-date fair values. The Group makes judgments and estimates in relation to the fair value determination of the assets acquired and liabilities assumed and allocation of the purchase price. If any unallocated portion is positive it is recognised as goodwill and if negative, it is recognised in the statement of profit or loss. iii) Impairment of goodwill and associates Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating unit to which the goodwill has been allocated. The value-in-use calculation for goodwill and associates requires the Group to calculate the net present value of the future cash flows for which certain assumptions are required, including management’s expectations of: • long term growth rates in cash flows; • timing and quantum of future capital expenditure; and • the selection of discount rates to reflect the risks involved.

The key assumptions used and sensitivities are detailed on Note 9 of the consolidated financial statements. A change in the key assumptions or forecasts might result in an impairment of goodwill and investment in associates. iv) Impairment of intangibles Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of: • long term growth rates in cash flows; • timing and quantum of future capital expenditure; and • the selection of discount rates to reflect the risks involved. v) Property, plant and equipment Property, plant and equipment represent a significant proportion of the total assets of the Group. Therefore, the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Group’s financial position and performance. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. Increasing/decreasing an asset’s expected life or its residual value would result in a reduced/increased depreciation charge in the consolidated statement of profit or loss. vi) Impairment of trade receivables The Group determines the impairment of trade receivables based on their ageing when objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the trade receivables. Management exercises significant judgments in assessing the impact of adverse indicators and events on recoverability of trade receivables. vii) Classification of associates, joint ventures and subsidiaries The appropriate classification of certain investments as subsidiaries, associates and joint ventures requires significant analysis and management judgement as to whether the Group exercises control, significant influence or joint control over these investments. This may involve consideration of a number of factors, including ownership and voting rights, the extent of Board representation, contractual arrangements and indicators of defacto control.

Changes to these indicators and management’s assessment of the power to control or influence may have a material impact on the classification of such investments and the Group’s consolidated financial position, revenue and results.

21 F-25 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

3. Critical accounting judgements and key sources of estimation uncertainty (Continued) viii) Federal royalty The computation of Federal Royalty in accordance with the Cabinet of Ministers of UAE decision No. 320/15/23 of 2012 and guidelines issued by the UAE Ministry of Finance (“the MoF”) dated 21 January 2013 and subsequent clarification letters dated 24 April 2013, 30 October 2013 and 29 January 2014 requires a number of calculations. In performing these calculations, management has made certain critical judgments, interpretations and assumptions. These mainly relate to the segregation of items between regulated and other activities and items which the Corporation judges as not subject to Federal royalty or which may be set off against profits which are subject to Federal royalty.

In addition, during the year, certain clarifications have been received from Ministry of Finance vide its letter dated 23 December 2014 on the mechanism of computation of federal royalty for the prior years. These clarifications have been considered for the computation of federal royalty for the year ended 31 December 2014.

The calculation basis and methodology to be applied for future periods is still subject to ongoing discussion and may change.

ix) Regulatory expenses The Corporation is required to pay the UAE Telecommunication Regulatory Authority (TRA) 1% of its revenues annually as regulatory expenses towards ICT contributions. In the computation of the regulatory expenses, the Corporation has made certain critical judgments and assumptions relating mainly to the interpretation of revenues, which the Corporation contends to include UAE regulated revenues only and not revenues in other UAE entities as well as overseas subsidiaries. x) Valuation of derivative financial instruments

The fair values of derivative financial instruments measured at fair value or generally obtained by reference to quoted market prices, discounted cash flow models and recognized pricing models as appropriate. Information about the valuation techniques and inputs used in determining the fair value of derivative are disclosed in note 22. xi) Recognition of deferred tax asset

The recognition of deferred tax asset is based upon whether it is more likely than not that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. Judgement is required when determining probable future taxable profits, which are estimated using the latest available profit forecasts. Prior to recording deferred tax assets for tax losses, relevant tax law is considered to determine the availability of the losses to offset against the future taxable profit.

22 F-26 Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

4. Segmental information

Information regarding the Group’s operating segments is set out below in accordance with IFRS 8 Operating Segments. IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Group’s chief operating decision maker and used to allocate resources to the segments and to assess their performance. a) Products and services from which reportable segments derive their revenues The Group is engaged in a single line of business, being the supply of telecommunications services and related products. The majority of the Group’s revenues, profits and assets relate to its operations in the UAE. Outside of the UAE, the Group operates through its subsidiaries and associates in nineteen countries which are divided in to the following operating segments: • Pakistan • Egypt • Morocco • International - others

Revenue is attributed to an operating segment based on the location of the Group Company reporting the revenue. Inter- segment sales are charged at arms’ length prices. b) Segment revenues and results Segment results represent operating profit earned by each segment without allocation of finance income, finance costs and federal royalty. This is the measure reported to the Group’s Board of Directors (“Board of Directors”) for the purposes of resource allocation and assessment of segment performance.

The Group’s share of results from associates and joint ventures has been allocated to the segments based on the geographical location of the operations of the associate and joint venture investments. The allocation is in line with how results from investments in associates and joint ventures are reported to the Board of Directors.

c) Segment assets For the purposes of monitoring segment performance and allocating resources between segments, the Board of Directors monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments. Goodwill is allocated to reportable segments. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

The segment information has been provided on the following page.

23 F-27 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

4. Segmental information International UAE Morocco Egypt Pakistan Others Eliminations Consolidated AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 31 December 2014 Revenue External sales 27,807,689 6,061,090 4,814,366 4,436,395 5,647,335 - 48,766,875 Inter-segment sales 454,367 38,089 29,983 282,143 175,469 (980,051) - Total revenue 28,262,056 6,099,179 4,844,349 4,718,538 5,822,804 (980,051) 48,766,875 Segment result 13,234,681 2,114,237 834,616 126,922 (769,192) - 15,541,264 Federal royalty (5,333,084) Finance and other income 2,653,494 Finance and other costs (1,736,511) Profit before tax 11,125,163 Taxation (1,153,576) Profit for the year from continuing operations 9,971,587 Total assets 54,041,272 34,685,813 13,907,277 20,868,347 17,022,290 (10,940,441) 129,584,558 Depreciation and amortisation 1,767,218 2,254,830 926,980 1,079,446 829,744 - 6,858,218 Impairment - - - - 931,963 - 931,963 Additions to non-current assets 2,598,158 1,631,061 1,028,923 2,965,269 690,147 - 8,913,558

31 December 2013 Revenue External sales 25,453,493 - 4,715,665 4,425,863 3,969,160 - 38,564,181 Inter-segment sales 510,041 - 25,855 335,065 107,661 (978,622) - Total revenue 25,963,534 - 4,741,520 4,760,928 4,076,821 (978,622) 38,564,181 Segment result 11,543,769 - 581,998 697,448 1,723,926 - 14,547,141 Federal royalty (6,115,016) Finance and other income 468,558 Finance and other costs (437,572) Profit before tax 8,463,111 Taxation (648,647) Profit for the period 7,814,464 Total assets 48,787,000 - 13,766,144 18,117,964 16,717,794 (11,673,368) 85,715,534 Depreciation and amortisation 1,889,102 - 992,416 967,020 759,010 - 4,607,548 Impairment - - - 16,293 1,357,883 - 1,374,176 Additions to non-current assets 2,063,453 - 1,228,969 1,391,760 1,649,704 - 6,333,886

UAE Segment revenue breakup: 2014 2013 AED million AED million UAE Revenue - TRA regulated 23,741 22,758 UAE Revenue - Non-regulated 4,521 3,206 28,262 25,964

Impairment detail 2014 2013 AED million AED million of which relating to goodwill 540,328 43,063 of which relating to property, plant and equipment 6,818 40,620 (Note 10) of which relating to other financial assets 384,817 4,325 of which relating to loans to related party - 515,875 of which relating to available-for-sale financial 264,309 assets (quoted equity instruments) (Note 29) - of which other losses - 505,984 931,963 1,374,176

There are no comparative amounts disclosed for Morocco segment as Maroc Telecom was acquired during the period. The comparative figures for total assets for 2013 have been reclassified to conform with current period’s presentation.

F-28 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

5. Operating expenses and federal royalty a) Operating expenses (before federal royalty) 2014 2013 AED’000 AED’000 Direct cost of sales 10,453,322 8,613,096 Staff costs 6,156,004 5,095,467 Depreciation (Notes 10,11) 5,111,162 3,732,211 Network and other related costs 2,813,011 2,136,261 Amortisation (Note 9) 1,685,022 807,181 Marketing expenses 1,278,317 876,933 Regulatory expenses 721,214 661,795 Operating lease rentals 120,443 255,373 Foreign exchange (losses)/gains (365,664) 193,450 Other operating expenses 3,859,752 2,025,438 Operating expenses (before federal royalty) 31,832,583 24,397,205 b) Federal Royalty

In accordance with the Cabinet decision No. 558/1 for the year 1991, the Corporation was required to pay a federal royalty, equivalent to 40% of its annual net profit before such federal royalty, to the UAE Government for use of federal facilities. With effect from 1 June 1998, Cabinet decision No. 325/28M for 1998 increased the federal royalty payable to 50%.

On 9 December 2012, the Cabinet of Ministers of UAE issued decision no. 320/15/23 of 2012 in respect of a new royalty mechanism applicable to Etisalat.

Under the new mechanism a distinction is made between revenue earned from services regulated by Telecommunications Regulatory Authority (“TRA”) and non-regulated services as well as between foreign and local profits.

Etisalat is required to pay 15 % royalty fee on the UAE regulated revenues and 35 % of net profit after deduction of the 15 % royalty fee on the UAE regulated revenues. In respect of foreign profit, the 35 % royalty is reduced by the amount that the foreign profit has already been subject to foreign taxes.

Ministry of Finance have confirmed via their letter dated 29 January 2014 that the mechanism of calculating the royalty fee for the year ended 31 December 2013 was to follow the same principles that were applicable for the calculation of royalty fees for the year ended 31 December 2012. The mechanism for computation of federal royalty for the period ended 31 December 2014 is consistent with the mechanism followed for the computation of the federal royalty for the year ended 31 December 2013.

In addition, during the year, certain clarifications have been received from Ministry of Finance on the mechanism of computation of federal royalty for the prior years. These clarifications have been considered for the computation of federal royalty for the year ended 31 December 2014. The Corporation is engaged in discussions with Ministry of finance on items which it considers as not subject to Royalty.

The federal royalty has been treated as an operating expense in the consolidated statement of profit or loss on the basis that the expenses the Corporation would otherwise have had to incur for the use of the federal facilities would have been classified as operating expenses.

6. Finance and other income 2014 2013 AED’000 AED’000 Interest on bank deposits and held-to-maturity investment 388,899 315,416 Other income 2,264,595 153,142 2,653,494 468,558

F-29 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

7. Finance and other costs 2014 2013 AED’000 AED’000 Interest on bank overdrafts, loans and other financial liabilities 431,990 293,569 Interest on other borrowings 662,292 96,091 Other costs (Note 30) 620,964 - Unwinding of discount 21,265 47,912 1,736,511 437,572 Total borrowing costs 1,763,011 461,898 Less: amounts included in the cost of qualifying assets (Note 10) (26,500) (24,326) 1,736,511 437,572

All interest charges are generated on the Group’s financial liabilities measured at amortised cost. Borrowing costs included in the cost of qualifying assets during the year arose on specific and general borrowing pools. Borrowing costs attributable to general borrowing pools are calculated by applying a capitalisation rate of 9.28% (2013: 10.0%) to expenditure on such assets. Borrowing costs have been capitalised in relation to loans by certain of the Group’s subsidiaries.

8. Taxation 2014 2013 AED’000 AED’000 Current tax expense 1,506,816 496,907 Deferred tax (credit) / expense (353,240) 151,740 1,153,576 648,647 a) Current tax Corporate income tax is not levied in the UAE for telecommunication companies and accordingly the effective tax rate for the Corporation is 0% (2013: 0%). The table below reconciles the difference between the expected tax expense, (based on the UAE effective tax rate) and the Group’s tax charge for the year. 2014 2013 AED’000 AED’000 Profit before tax 11,125,163 8,463,111

Tax at the UAE corporation tax rate of 0% (2013: 0%) - - Effect of different tax rates of subsidiaries operating in other jurisdictions 1,506,816 496,907 Current tax expense for the year 1,506,816 496,907 b) Current income tax assets and liabilities

The current income tax assets represent refunds receivable from tax authorities and current income tax liabilities represent income tax payable. c) Deferred tax Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when these relate to the same income tax authority. The amounts recognised in the consolidated statement of financial position after such offset are as follows: 2014 2013 AED’000 AED’000 Deferred tax assets 317,383 243,042 Deferred tax liabilities (4,740,292) (1,749,839) (4,422,909) (1,506,797)

F-30 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

8. Taxation (continued)

The following represent the major deferred tax liabilities and deferred tax assets recognised by the Group and movements thereon without taking into consideration the offsetting of balances within the same tax jurisdiction.

Accelerated tax Deferred tax on Deferred tax liabilities depreciation overseas earnings Others Total AED’000 AED’000 AED’000 AED’000 At 1 January 2013 1,976,983 159,582 41,194 2,177,759

(Credit)/charge to the consolidated statement of profit or loss 6,121 21,661 (6,223) 21,559

(Credit)/charge to other comprehensive income - - (53) (53) Exchange differences (173,723) - 14,838 (158,885) At 31 December 2013 1,809,381 181,243 49,756 2,040,380

(Credit)/charge to the consolidated statement of profit or loss 70,150 (22,882) (205,012) (157,744)

(Credit)/charge to other comprehensive income - - 3,494 3,494 Acquisition of Maroc Telecom (Note 30) - - 3,637,635 3,637,635 Exchange differences 85,296 - (381,403) (296,107) At 31 December 2014 1,964,827 158,361 3,104,470 5,227,658

Retirement benefit Deferred tax assets obligations Tax losses Others Total AED’000 AED’000 AED’000 AED’000 At 1 January 2013 167,821 331,522 146,970 646,313

Charge/(Credit) to the consolidated statement of profit or loss (44,107) (73,906) (12,168) (130,181)

(Credit)/charge to other comprehensive income 62,913 2,407 165 65,485

Exchange differences (13,160) (25,566) (9,308) (48,034) At 31 December 2013 173,467 234,457 125,659 533,583

(Credit)/charge to the consolidated statement of profit or loss 1,262 66,869 79,572 147,703

(Credit)/charge to other comprehensive income 74,497 - 1,572 76,069 Acquisition of Maroc Telecom (Note 30) - - 46,955 46,955 Exchange differences 8,596 (7,860) (298) 438 At 31 December 2014 257,822 293,466 253,461 804,749

Unused tax losses 2014 2013 AED million AED million Total unused tax losses 1,554 1,642 of which deferred tax assets recognised for 1,272 1,153

of which no deferred tax asset recognised, due to unpredictability of future taxable profit streams 251 489

of the unrecognized tax losses, losses that will expire in the next three years are 30 71

F-31 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

9. Goodwill, other intangible assets, impairment and other losses Other intangible Goodwill assets Total AED’000 AED’000 AED’000 Cost At 1 January 2013 7,507,405 16,024,057 23,531,462 Additions - 766,638 766,638 Exchange differences (332,498) (944,227) (1,276,725) At 31 December 2013 7,174,907 15,846,468 23,021,375

Amortisation and impairment At 1 January 2013 1,578,318 5,797,949 7,376,267 Charge for the year - 809,093 809,093 Impairment losses 43,063 - 43,063 Exchange differences 1,260 (207,855) (206,595) At 31 December 2013 1,622,641 6,399,187 8,021,828 Carrying amount At 31 December 2013 5,552,266 9,447,281 14,999,547

Cost At 1 January 2014 7,174,907 15,846,468 23,021,375 Additions - 2,038,764 2,038,764 Acquisition of Maroc Telecom (Note 30) 11,761,694 10,729,232 22,490,926 Reclassified as held for sale (Note 36) (44,896) (114,539) (159,435) Disposals - (25,660) (25,660) Exchange differences (1,047,116) (2,054,310) (3,101,426) At 31 December 2014 17,844,589 26,419,955 44,264,544

Amortisation and impairment At 1 January 2014 1,622,641 6,399,187 8,021,828 Charge for the year - 1,694,716 1,694,716 Impairment losses 540,328 - 540,328 Elimination on items reclassified as held for sale (Note 36) - (40,464) (40,464) Disposals - (25,635) (25,635) Exchange differences (8,762) (702,625) (711,387) At 31 December 2014 2,154,207 7,325,179 9,479,386

Carrying amount At 31 December 2014 15,690,382 19,094,776 34,785,158

Other intangible assets - net book values 2014 2013 AED’000 AED’000 Licenses 14,066,257 8,046,956 IRU 564,917 387,804 Computer software 890,352 231,933 Customer relationships 1,099,868 405,005 Trade names 2,155,596 221,206 Others 317,786 154,377 19,094,776 9,447,281

F-32 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

9. Goodwill, other intangible assets, impairment and other losses (continued) a) Impairment and other losses The net impairment losses recognised in the consolidated statement of profit or loss in respect of the carrying amounts of investments, goodwill, licenses and property, plant and equipment are as follows:

2014 2013 AED’000 AED’000 Pakistan Telecommunication Company Limited (PTCL) - 16,293 of which relating to carrying amount of investment in associate (Note 14b) - - of which relating to property, plant and equipment (Note 10) - 16,293

Atlantique Telecom S.A (AT) 923,339 71,715 of which relating to goodwill 540,328 43,063 of which relating to property, plant and equipment (Note 10) - 24,327 of which relating to other financial assets 383,011 4,325

Others 8,624 1,286,168 of which relating to loans to related party - 515,875 of which relating to available-for-sale financial assets (quoted equity instruments) (Note 29) - 264,309

of which relating to property, plant and equipment (Note 10) 6,818 -

of which relating to other financial assets 1,806 - of which other losses - 505,984

Total impairment and other losses for the year 931,963 1,374,176

Impairment losses were primarily driven by increased discount rates as a result of increases in inflation in the operating countries and challenging economic and political conditions, as well as negative local currency fluctuation. Impairment losses of Group's investment in available-for-sale financial assets was triggered by a significant decline in the fair value of the quoted investment.

F-33 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

9. Goodwill, other intangible assets, impairment and other losses (continued) b) Cash generating units

Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business combination. The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The carrying amount of goodwill (all relating to operations within the Group’s International reportable segment) is allocated to the following CGUs:

Cash generating units (CGU) to which goodwill is allocated 2014 2013 AED’000 AED’000 Maroc Telecom 9,246,613 - Maroc Telecom International Subsidiaries 1,291,211 - Pakistan Telecommunication Company Limited (PTCL) 4,252,905 4,055,239 Atlantique Telecom, S.A. (AT) 667,224 1,218,897 Etisalat Misr (Etisalat) S.A.E. 26,306 27,111 Zanzibar Telecom Limited (Zantel) - 44,896 Etisalat Lanka (Pvt) Limited (Etisalat Lanka) 206,123 206,123 15,690,382 5,552,266 c) Key assumptions for the value in use calculations

The key assumptions for the value in use calculations are those regarding the long term forecast cash flows, discount rates and capital expenditure.

Long term cash flows

The Group prepares cash flow forecasts derived from the most recent annual business plan approved by management for each location for the next five years. The business plans take into account local market considerations such as the revenues and costs associated with future customer growth, the impact of local market competition and consideration of the local macro-economic and political trading environment. This rate does not exceed the average long-term growth rate for the relevant markets and it ranges between 3.09% to 6.7% (2013: 2.6% to 6.3%).

Discount rates The discount rates applied to the cash flows of each of the Group’s operations are based on an internal study conducted by the management. The study utilized market data and information from comparable listed mobile telecommunications companies and where available and appropriate, across a specific territory. The pre-tax discount rates use a forward looking equity market risk premium and ranges between 11.0% to 18.1% (2013: 13.9% to 19.3%).

Capital expenditure

The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to continue rolling out networks in emerging markets, providing enhanced voice and data products and services, and meeting the population coverage requirements of certain licenses of the Group. Capital expenditure includes cash outflows for the purchase of property, plant and equipment and other intangible assets.

F-34 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

10. Property, plant and equipment

Land and Plant and Motor vehicles, Assets under buildings equipment computer, furniture construction Total AED’000 AED’000 AED’000 AED’000 AED’000 Cost At 1 January 2013 8,566,580 44,833,427 3,421,778 6,073,394 62,895,179 Additions 17,576 1,178,689 104,735 4,263,687 5,564,687 Transfers 187,069 4,007,140 1,052,034 (5,246,243) - Disposals (239) (158,289) (29,351) (44,430) (232,309) Exchange differences (393,731) (1,609,659) (180,586) (111,091) (2,295,067) At 31 December 2013 8,377,255 48,251,308 4,368,610 4,935,317 65,932,490

Depreciation and impairment At 1 January 2013 2,597,893 26,761,597 2,435,245 59,767 31,854,502 Charge for the year 109,735 2,962,777 722,912 - 3,795,424 Impairment losses - 40,620 - - 40,620 Disposals (27) (134,902) (23,791) - (158,720) Exchange differences (20,264) (799,800) (98,433) - (918,497) At 31 December 2013 2,687,337 28,830,292 3,035,933 59,767 34,613,329

Carrying amount At 31 December 2013 5,689,918 19,421,016 1,332,677 4,875,550 31,319,161

Cost At 1 January 2014 8,377,255 48,251,308 4,368,610 4,935,317 65,932,490 Additions 195,113 1,267,828 118,640 5,290,561 6,872,142 Acquisition of Maroc Telecom (Note 30) 2,092,884 12,325,579 393,038 75,457 14,886,958 Transfers 154,711 4,591,962 790,718 (5,537,391) - Disposals (95,811) (739,352) (186,530) (28,258) (1,049,951) Reclassified as held for sale (Note 36) (14,032) (499,415) (55,271) (78,138) (646,856) Exchange differences (241,164) (3,046,779) (276,947) (79,127) (3,644,017) At 31 December 2014 10,468,956 62,151,131 5,152,257 4,578,421 82,350,766

Depreciation and impairment At 1 January 2014 2,687,337 28,830,292 3,035,933 59,767 34,613,329 Charge for the year 186,961 4,195,564 778,490 - 5,161,015 Impairment losses - - 6,818 - 6,818 Disposals (63,626) (607,979) (139,206) - (810,811) Elimination on items reclassified as held for sale (Note 36) (11,850) (328,525) (51,236) - (391,611) Exchange differences (227,978) (1,748,506) (224,102) - (2,200,586) At 31 December 2014 2,570,844 30,340,846 3,406,697 59,767 36,378,154

Carrying amount At 31 December 2014 7,898,112 31,810,285 1,745,559 4,518,654 45,972,612

F-35 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

10. Property, plant and equipment (continued)

The carrying amount of the Group’s land and buildings includes a nominal amount of AED 1 (2013: AED 1) in relation to land granted to the Group by the Government. There are no contingencies attached to this grant and as such no additional amounts have been included in the consolidated statement of profit or loss or the consolidated statement of financial position in relation to this.

An amount of AED 26.5 million (2013: AED 24.3 million) is included in property, plant and equipment on account of capitalisation of borrowing costs for the year.

Borrowings are secured against property, plant and equipment with a net book value of AED 3,195 million (2013: AED 2,781 million).

Assets under construction include building, multiplex equipment, line plant, exchange and network equipment.

11. Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is stated at depreciated cost and included separately under non-current assets in the consolidated statement of financial position. 2014 2013 AED’000 AED’000 Cost At 1 January 56,771 54,210 Additions 2,654 2,561 At 31 December 59,425 56,771

Depreciation At 1 January 15,560 12,529 Additions 2,487 3,031 At 31 December 18,047 15,560

Carrying amount at 31 December 41,378 41,211

Fair value at 31 December 70,450 65,842

Investment property rental income and direct operating expenses 2014 2013 AED million AED million Property rental income 10.9 12.0 Direct operating expenses 1.3 1.0

The fair values of the Group’s investment property has been arrived at on the basis of a valuation carried out by internal valuers. The valuation technique is considered as “cost approach” based on “market corroborated inputs” and is classified as “Level-2” fair value.

F-36 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

12. Subsidiaries a) The Group’s principal subsidiaries are as follows: Country of Name incorporation Principal activity Percentage shareholding

2014 2013 Emirates Telecommunications and Marine Services FZE UAE Telecommunications services 100% 100% Emirates Cable TV and Multimedia LLC UAE Cable television services 100% 100% Holds investment in Pakistan Etisalat International Pakistan LLC UAE 90% 90% Telecommunication Co. Ltd E-Marine PJSC UAE Submarine cable activities 100% 100% Etisalat Services Holding LLC UAE Infrastructure services 100% 100% Etisalat Software Solutions (Private) Limited India Technology solutions 100% 100% Zanzibar Telecom Limited Tanzania Telecommunications services 85% 65% Republic of Canar Telecommunications Co. Limited Telecommunications services 90% 90% Sudan Holds investment in Emerging Etisalat International Nigeria Limited UAE Market Telecommunications Services 100% 100% B.V. (Netherlands) Etisalat Afghanistan Afghanistan Telecommunications services 100% 100% Etisalat Misr S.A.E. Egypt Telecommunications services 66% 66% Atlantique Telecom S.A. Cote d’Ivoire Telecommunications services 100% 100% Etisalat Benin Benin Telecommunications services 100% 100% Etisalat Lanka (Pvt.) Limited Sri Lanka Telecommunications services 100% 100% Pakistan Telecommunication Company Limited Pakistan Telecommunications services 23% 23% Holds investment Société de Etisalat Investment North Africa LLC UAE Participation dans les 91.3% 0% Télécommunications (SPT) Kingdom of Société de Participation dans les Télécommunications (SPT) Holds investment in Maroc Telecom 100% - Morocco Kingdom of Etisalat Al Maghrib S.A (Maroc Telecom) Telecommunications services 48% - Morocco Holds investment in Etisalat DB Etisalat Mauritius Private Limited Mauritius 100% 100% Telecom Private Limited

On 14 May 2014, the Group completed the acquisition at a net adjusted price of EUR 4.1 billion (AED 20.9 billion), which was primarily financed through external borrowings under the facilities agreements noted above. This amount includes the cash value of the 2012 dividend, amounting to EUR 0.3 billion (AED 1.5 billion).

In July 2014, the Group acquired additional 17% equity in Zantel from non-controlling interests ("NCI"). In September 2014, the Group acquired an additional 3% in Zantel which was issued through right shares.

On 4 May 2014, the Group announced the signing of an agreement with Maroc Telecom for the sale of the Group's shareholdings in its operations in Benin, CAR, Gabon, Cote d’Ivoire, Niger and Togo to Maroc Telecom, for a total consideration of EUR 474 million.

The transaction was closed on 26 January 2015 (Note 37) and will be accounted for by the Group as a transaction under common control.

F-37 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

12. Subsidiaries (continued) During the year ended 31 December 2013, Atlantique Telecom S.A. (AT), a 100% subsidiary of the Group, disposed 15% shares of its subsidiary (Moov CDI) in Ivory Coast for a consideration of AED 371 million.

AT transferred 3.98% of its shareholding in another subsidiary (Moov Gabon) to comply with the local regulations to increase the shareholding of local shareholder to 10%.

During the year ended 31 December 2013, the Group also acquired additional shareholding in Canar Telecommunications Co. Limited and consequently Group’s shareholding increased from 89% to 90%. b) Disclosures relating to subsidiaries Information relating to subsidiaries that have non-controlling interests that are material to the group are provided below: Maroc Telecom PTCL Etisalat Misr

AED'000 2014 Information relating to non-controlling interest: Non-controlling interest (shareholding %) 51.6% 76.6% 34% Profit 828,140 88,622 162,138 Dividends (1,215,766) (291,237) - Non-controlling interests as at 31 December 3,839,633 4,977,393 2,716,757

Summarized information relating to subsidiary: Current assets 4,270,395 2,761,353 1,561,629 Non-current assets 16,968,960 11,066,726 12,345,648 Current liabilities 10,082,959 2,849,027 4,177,413 Non-current liabilities 3,714,540 4,481,150 1,581,349

AED'000 2013 Information relating to non-controlling interest: Non-controlling interest (shareholding %) n/a* 76.6% 34% Profit n/a* 618,382 95,504 Total comprehensive income/(loss) n/a* (265,036) (134,873) Dividends n/a* (141,106) - Non-controlling interests as at 31 December n/a* 4,820,564 2,635,964

Summarized information relating to subsidiary: Current assets n/a* 2,546,468 1,093,194 Non-current assets n/a* 8,578,638 12,672,950 Current liabilities n/a* 2,051,623 3,675,356 Non-current liabilities n/a* 2,780,319 2,169,319

* Etisalat Group acquired Maroc Telecom on 14th May 2014 c) Movement in non-controlling interests

The movement in non-controlling interests is provided below: 2014 2013 AED’000 AED’000 As at 1 January 9,060,552 9,398,260 Total comprehensive income: Profit for the year 961,461 672,560 Remeasurement of defined benefit obligations - net of tax (108,642) (96,989) Exchange differences on translation of foreign operations 37,759 (859,520) Loss on revaluation of available-for-sale financial assets 6,936 1,032 Other movement in equity 362 - Acquition of a subsidiary 8,159,944 - Transaction with owners: Disposal of partial interest in subsidiaries - 87,233 Acquisition of non-controlling interests 132,563 (5,782) Equity contribution from non-controlling interests for acquisition of a subsidiary 1,791,831 16,835 Dividends (1,392,078) (153,077) As at 31 December 18,650,688 9,060,552

F-38 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

13. Share of results of associates and joint ventures

2014 2013 AED’000 AED’000 Associates excluding EMTS (Note 14 b) (473,001) 1,743,379 Joint ventures (Note 14 f) 11,936 10,962 Total (461,065) 1,754,341

During the previous year, the Group has reassessed its accounting treatment for share of results of one of its associates. Consequently, the Group has discontinued the recognition of the share of results of that associate with effect from 1 January 2013. Accordingly, no share of losses have been offset against loans due from associates as the investment in associate has already been fully written down by prior year losses. The amount receivable towards interest on loan to the associate of AED 718 million (2013: AED 633 million) has been impaired during the year. The net unrecognised share of losses in the associate for the year ended 31 December 2014 amounts to AED 1,636 million (2013: AED 630 million). The cumulative net unrecognised share of losses as at 31 December 2014 amounts to AED 2,266 million (2013: AED 630 million).

During the year, Etihad Etisalat Company (Mobily) has restated it's prior year financial statements as a result of an error in the timing of revenue recognition resulting from a promotional program. The resulting impact of the restatement to the consolidated financial statements of the Group before federal royalty amounted to AED 200 million which is considered as immaterial and has been accounted for in the current year share of results.

14. Investment in associates and joint ventures a) Associates Country of Percentage Name incorporation Principal activity shareholding Etihad Etisalat Company ("Mobily") Saudi Arabia Telecommunications services 27%

Thuraya Telecommunications Company PJSC ("Thuraya") UAE Satellite communication services 28%

Emerging Markets Telecommunications Services Limited ("EMTS Nigeria") Nigeria Telecommunications services 40% b) Movement in investments in associates Mobily All Associates 2014 2013 2014 2013 AED’000 AED’000 AED’000 AED’000 Carrying amount at 1 January 6,795,949 5,961,612 7,001,701 6,231,988 Share of results (Note 13) (445,846) 1,807,648 (473,001) 1,743,379 Other movements - - 40 (356) Dividends (776,531) (973,311) (776,531) (973,311) Carrying amount at 31 December 5,573,572 6,795,949 5,752,209 7,001,701

c) Aggregated amounts relating to associates Mobily All Associates 2013 2013 2014 2014 (Restated) (Restated) AED’000 AED’000 AED’000 AED’000 Current assets 12,262,830 14,383,036 13,134,348 15,204,318 Non-current assets 34,220,161 31,102,917 41,015,802 38,766,386 Current liabilities (27,276,983) (12,285,770) (31,272,340) (14,638,751) Non-current liabilities (195,663) (10,455,078) (15,724,817) (25,117,047) Net assets 19,010,346 22,745,106 7,152,993 14,214,906 Revenue 15,422,108 18,911,033 20,284,080 22,758,961 (Loss) / Profit (894,481) 5,853,620 (6,008,153) 1,205,629 Total comprehensive (loss) / income (894,481) 5,853,620 (6,008,153) 1,205,629 Dividends received 776,531 973,311 776,531 973,311 d) Market value of an associate The shares of one of the Group’s associates are quoted on public stock markets and it is classified as “Level-1” fair value. The market value of the Group’s shareholding based on the quoted prices is as follows: 2014 2013 AED’000 AED’000 Etihad Etisalat Company ("Mobily") 9,082,335 17,654,107

F-39 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

14. Investment in associates and joint ventures (continued) e) Joint ventures Country of Percentage Name incorporation Principal activity shareholding Installation and management‎ of Ubiquitous Telecommunications‎ Technology‎ LLC UAE 50% network‎ systems Smart Technology Services DWC‎ – LLC ‎ UAE ICT Services 50% f) Movement in investment in joint ventures 2014 2013 AED’000 AED’000 Carrying amount at 1 January 60,309 93,347 Share of results 11,936 10,962 Capital reduction - (40,000) Dividends (2,000) (4,000) Carrying amount at 31 December 70,245 60,309 g) Aggregated amounts relating to joint ventures 2014 2013 AED’000 AED’000 Current assets 165,252 93,176 Non-current assets 83,112 77,549 Current liabilities (107,877) (50,107) Net assets 140,487 120,618 Revenue 157,277 99,282 Profit or loss 27,157 21,924

The Group has not identified any contingent liabilities or capital commitments in relation to its interest in joint ventures.

F-40 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

15. Other investments

Other investments comprise of the following, all of which are classified as available-for-sale, with the exception of the Sukuk, which are classified as held-to-maturity investments. Fair value through Profit Quoted equity Un-quoted equity and loss investments investments Sukuks Total AED’000 AED’000 AED’000 AED’000 AED’000 At 1 January 2013 - 1,213,264 92,707 145,524 1,451,495 Additions - - 19,117 53,495 72,612 Transfer to other receivables - - (65,286) - (65,286) Investment revaluation - (138,909) - - (138,909) Sukuk redemption - - - (1,856) (1,856) Unwinding of discount - - - (1,578) (1,578) Exchange differences - - (1,046) - (1,046) At 31 December 2013 - 1,074,355 45,492 195,585 1,315,432 Additions 937 44,595 29,529 - 75,061 Acquisition of Maroc Telecom (Note 30) 49,271 46,562 33,509 - 129,342 Disposal - (453,731) (561) - (454,292) Investment revaluation - (56,588) - - (56,588) Impairment - - (3,061) - (3,061) Reclassified as held for sale (Note 36) - - (3,570) - (3,570) Exchange differences (5,583) (7,158) (1,992) (3,594) (18,327) At 31 December 2014 44,625 648,035 99,346 191,991 983,997

Quoted equity investments represent investments in listed equity securities that present the Group with opportunity for return through dividend income and capital growth. These shares are not held for trading. The fair values of these equity securities are derived from quoted prices in active markets for identical assets, which, in accordance with the fair value hierarchy within IFRS 7 Financial Instruments: Disclosure, represent Level 1 fair values.

Non-quoted equity investments are carried at cost as they are unquoted equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured.

The Sukuk is a bond structured to conform with the principles of Islamic Sharia law. At 31 December 2014, the market value of the investment in Sukuk was AED 194.0 million (2013: AED 196.8 million) which in accordance with the fair value hierarchy within IFRS 7 Financial Instruments: Disclosure, represents Level 1 fair values.

F-41 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

16. Related party transactions Transactions between the Corporation and its subsidiaries, which are related parties, have been eliminated on consolidation‎ and are not disclosed in this note. Transactions between the Group and its associates are disclosed below‎ .‎ a) ‎ Federal Government and state controlled entities

As stated in Note 1, in accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE transferred‎ its 60% holding in the Corporation to the Emirates Investment Authority with effect from 1 January 2008‎‎ , which is ultimately controlled by the UAE Federal Government. The Group provides telecommunication services‎ to the Federal Government (including Ministries and local bodies). These transactions are at normal commercial terms. The credit period allowed to Government customers ranges from 90 to 120 days. Trade receivables include an amount of AED 1,073 million (2013: AED 1,041 million), which are net of allowance for doubtful debts of AED 101 million (2013: AED 82 million), receivable from Federal‎ Ministries and local bodies. See Note 5 for disclosure of the royalty payable to the Federal Government of the‎ UAE.

In accordance with IAS 24 (revised 2009) Related Party Disclosures the Group has elected not to disclose transactions‎ with the UAE Federal Government and other entities over which the Federal Government exerts control‎ , joint control or significant influence. The nature of the transactions that the Group has with such related parties‎ is the provision of telecommunication services.‎

b) ‎ Joint ventures and associates

Associates Joint Ventures 2014 2013 2014 2013 AED millions AED millions AED millions AED millions Trading transactions Telecommunication services – sales 136.8 123.0 - - Telecommunication services – purchases 99.6 105.0 - - Management and other services 272.9 234.5 7.3 - Net amount due from related parties as at 31 December 451.5 670.2 8.4 13.6 Loans to related party Loans due from related party as at 31 December 2,390.2 2,390.2 - -

Sales to related parties comprise management fees and the provision of telecommunication products and services (‎‎ primarily voice traffic and leased circuits) by the Group. Purchases relate exclusively to the provision of telecommunication‎ products and services by associates to the Group. The‎ loans due from related party is subordinated to external borrowings.

The principal management and other services provided to the Group’s associates are set out below:‎ i. Etihad Etisalat Company

Pursuant to the Communications and Information Technology Commission’s (CITC) licensing requirements, Mobily (‎‎ then under incorporation) entered into a management agreement (“the Agreement”) with the Corporation as its operator‎ from 23 December 2004. Amounts invoiced by the Corporation relate to annual management fees, fees for‎ staff secondments and other services provided under the Agreement. The term of the Agreement is for a period‎ of seven years and can be automatically renewed for successive periods of five years unless the Corporation‎ serves a 12 month notice of termination or Mobily serves a 6 month notice of termination prior to the expiry‎ of the applicable period.‎ ii. Thuraya Telecommunications Company PJSC

The Corporation provides a primary gateway facility to Thuraya including maintenance and support services. The Corporation‎ receives annual income from Thuraya in respect of these services.‎ iii. Emerging Markets Telecommunications Services B.V.

Amounts invoiced by the Corporation relate to annual management fees, fees for staff secondments, interest on loan and other services.‎ ‎ c) Remuneration of key management personnel The remuneration of the Board of Directors, who are the key management personnel of the Group, is set out below‎ in aggregate for the category specified in IAS 24 Related Party Disclosures.‎ 2014 2013 AED’000 AED’000 Short-term benefits 17,272 35,141

F-42 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

17. Inventories 2014 2013 AED’000 AED’000 Subscriber equipment 400,464 263,536 Maintenance and consumables 224,188 234,696 624,652 498,232

18. Trade and other receivables 2014 2013 AED’000 AED’000 Amount receivable for services rendered 12,069,550 6,623,754 Allowance for doubtful debts (4,333,450) (1,550,560) Net trade receivables 7,736,100 5,073,194

Amounts due from other telecommunication operators/carriers 5,310,370 2,984,878 Prepayments 666,822 506,203 Accrued income 954,840 499,734 Other receivables 3,512,245 2,145,220 At 31 December 18,180,377 11,209,229

Total trade and other receivables 18,180,377 11,209,229 of which current trade and other receivables 17,376,549 10,613,248 of which non-current other receivables 803,828 595,981

The Group’s normal credit terms ranges between 30 and 120 days (2013: 30 and 120 days).‎

Ageing of net trade receivables, including amounts due from other telecommunication operators/carriers 2014 2013 AED’000 AED’000 Upto 60 days 8,905,884 4,640,536 61-90 days 622,006 538,219 90-365 days 1,492,935 1,400,590 Over one year 2,025,645 1,478,727 Net trade receivables 13,046,470 8,058,072

Movement in allowance for doubtful debts 2014 2013 AED’000 AED’000 At 1 January 1,550,560 1,555,738 Net increase/ (decrease) in allowance for doubtful debts 109,513 (5,178) Acquisition of Maroc Telecom (Note 30) 2,687,329 - Reclassified as held for sale (Note 36) (13,952) - At 31 December 4,333,450 1,550,560

No interest is charged on the trade receivable balances. With respect to the amounts receivable from the services rendered the Group‎ holds AED 299 million (2013: AED 266 million) of collateral in the form of cash deposits from customers. Amounts‎‎ due from other telecommunication operators/carriers include interconnect balances with related parties. ‎

F-43 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

19. Cash and cash equivalents 2014 2013 AED’000 AED’000 Maintained locally 15,924,323 13,834,412 Maintained overseas, unrestricted in use 2,335,947 1,448,825 Maintained overseas, restricted in use 291,504 167,011 Cash and cash equivalents 18,551,774 15,450,248 Reclassified as held for sale (Note 36) (8,915) - Cash and cash equivalents from continued operations 18,542,859 15,450,248

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or‎ less. These are denominated primarily in UAE Dirham, with financial institutions and banks. Interest is earned on these deposits at prevailing market rates. The carrying amount of‎ these assets approximates to their fair value.‎

20. Trade and other payables 2014 2013 AED’000 AED’000 Current Federal royalty 5,661,415 6,129,150 Trade payables 12,890,068 4,955,221 Amounts due to other telecommunication administrations 3,558,866 2,472,950 Deferred revenue 1,810,399 1,487,470 Other payables and accruals 7,067,500 6,119,620 At 31 December 30,988,248 21,164,411

Non-current Other payables and accruals 1,075,480 828,565 At 31 December 1,075,480 828,565

Amounts due to other telecommunication administrations include interconnect balances with related parties.

Federal royalty for the year ended 31 December 2014 is to be paid as soon as the consolidated financial statements have been approved but not later than 4 months from the year ended 31 December 2014.

F-44 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

21. Borrowings

The carrying value of the Group’s bank and other borrowings are‎ as follows:‎ Fair Value Carrying Value 2014 2013 2014 2013 AED’000 AED’000 AED’000 AED’000 Bank borrowings Bank overdrafts 2,416,452 105,895 2,416,452 105,895 Bank loans 4,966,465 4,579,854 4,909,289 4,576,106 Other borrowings Bonds 14,901,901 - 14,164,803 - Loans from non controlling interest 52,705 60,382 56,562 60,382 Vendor financing 389,831 541,676 366,057 541,676 Others 8,189 8,420 8,671 8,420 22,735,543 5,296,227 21,921,834 5,292,479 Advances from non controlling interest 570,715 579,186 Total Borrowings 22,492,549 5,871,665 Reclassified as held for sale (Note 36) (263,379) - Borrowings from continuing operations 22,229,170 5,871,665 of which due within 12 months 3,609,711 1,404,543 of which due after 12 months 18,619,459 4,467,122 The fair values of the Group’s borrowings excluding bonds and advances from investment partners are calculated using present value techniques and represents Level 2 fair values. Fair values of bonds are calculated using quoted market prices which represent Level 1 fair values.

Advances from non-controlling interests represent advances paid by the minority shareholder of Etisalat International Pakistan LLC (EIP) towards the Group's acquisition of its 26% stake in PTCL, net of repayments. The amount is interest free and is not repayable within 12 months of the statement of financial position date and accordingly the full amount is carried in non-current liabilities. The fair value of advances is not equivalent to its carrying value as it is interest-free. However, as the repayment dates are variable, a fair value cannot be reasonably determined.

External borrowings of AED 4,274 million (2013: AED 4,563 million) are secured by property, plant and equipment.

During the current year, one of the Group’s subsidiaries has breached the covenants on the external borrowings facility of CFA 42,637 million (AED 290 million) . The carrying value of the above facility as at 31 December 2014 amounted to CFA 7,954 million (AED 54 million). The lender has been notified regarding the breach. The lender did not request for accelerated repayment of the loan and the terms of the loan were not rescheduled. The loan is repayable within 12 months.

On 28 April 2014, the Group entered into multi-currency facilities agreement for EUR 3.15 billion (AED 15.9 billion) with a syndicate of local and international banks for the purpose of financing the Maroc Telecom's acquisition. Financing consisted of two facilities: Tranche A was a twelve months bridge loan amounting to EUR 2.1 billion (AED 10.6 billion) at a price of Euribor plus 45 basis points for the first six months increased by 15 basis points in each of the following three months. Tranche B was a three years term loan amounting to EUR 1.05 billion (AED 5.3 billion) at a price of Euribor plus 87 basis points. Both these tranches have been settled in June 2014 following issuance of bonds as mentioned below.

On 22 May 2014, the Group has completed the listing of USD 7 billion (AED 25.7 billion) Global medium term note programme which will be used to meet medium to long-term funding requirements on the Irish Stock Exchange ("ISE"). Under the programme, Etisalat can issue one or more series of conventional bonds in any currency and amount up to USD 7 billion. The listed programme was rated Aa3 by Moody's, AA- by Standard & Poor's and A+ by Fitch.

On 11 June 2014, the Group issued the inaugural bonds under the GMTN programme. The issued bonds were denominated in US Dollars and Euros and consisted of four tranches: a. 5 years tranche: USD 500 million with coupon rate of 2.375% per annum b. 7 years tranche: EUR 1,200 million with coupon rate of 1.750% per annum c. 10 years tranche: USD 500 million with coupon rate of 3.500% per annum d. 12 years tranche: EUR 1,200 million with coupon rate of 2.750% per annum

The effective date for the bonds term was 18 June 2014. Net proceeds from the issuance of the bonds were used for repayment of outstanding facilities of EUR 3.15 billion, as above, utilized for the acquisition of Maroc Telecom.

F-45 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

21. Borrowings (continued)

As at 31 December 2014, the total amounts in issue under this programme split by currency are USD 1.0 billion (AED 3.674 billion) and Euro 2.4 billion (AED 10.7 billion) as follows:

Fair Carrying Nominal Value Value Value 2014 2014 2014 AED’000 AED’000 AED’000 Bonds 2.375% US dollar 500 million notes due 2019 1,837,000 1,841,225 1,824,285 3.500% US dollar 500 million notes due 2024 1,837,000 1,879,618 1,812,709 Bonds in net investment hedge relationship 1.750% Euro 1,200 million notes due 2021 5,354,400 5,495,221 5,283,174 2.750% Euro 1,200 million notes due 2026 5,354,400 5,685,837 5,244,635 At 31 December 2014 14,382,800 14,901,901 14,164,803 of which due within 12 months - of which due after 12 months 14,164,803

The terms and conditions of the Group’s bank and other borrowings are as follows:‎ Carrying Value Nominal interest 2014 2013 Year of maturity Currency rate AED’000 AED’000 Variable interest borrowings Secured bank loan 2014-2016 EGP Mid Corridor +1.4% 1,207,849 1,345,355

Secured bank loan 2014-2017 EURO EURIBOR +0.8% 334,650 504,520

Secured bank loan 2014-2015 USD LIBOR +2.9% - 367,798 Secured bank loan 2014 USD LIBOR +4.8% 263,379 351,002 Unsecured bank loan 2016-2018 USD LIBOR +1.3% 29,316 33,155 Secured bank loan 2014-2020 USD LIBOR + 1.6% 206,176 -

Secured bank loan 2014-2015 EURO EURIBOR +4.9% 54,107 137,189

Secured bank loan 2014-2019 PKR KIBOR + 70 BP 109,800 - Secured bank loan 2014-2019 PKR KIBOR + 80 BP 329,400 -

Secured bank loan 2014-2019 USD month LIBOR +.1.52% 720,972 -

Secured bank loan 2014-2019 PKR KIBOR + 50 BP 109,800 - Secured bank loan 2014-2019 EUR onth EURIBOR+.1.4% 545,749 685,669 Secured bank loan 2014-2016 USD months LIBOR+3.5% 19,099 - Secured bank loan 2014-2019 LKR months SLIBOR+4% 64,256 - Secured bank loan 2015-2020 USD KIBOR+0.2% - 661,232 Secured bank loan 2014-2019 USD KIBOR+0.2% - 271,273

Fixed interest borrowings Secured vendor financing 2014-2014 USD 5.0% - 74,795 Unsecured bank overdrafts 2014-2015 MAD 3.8% 2,080,295 - Secured bank loan 2014-2017 CFA 8.0% 44,791 65,803

Unsecured loans from non-controlling interests 2014-2015 EGP 10.0% 56,562 60,382

Other borrowings Advances from non-controlling interests N/A USD Interest free 570,715 579,186 Unsecured vendor financing 2014-2015 PKR Interest free - 296,375 Bonds 2019 USD 2.5% 1,824,285 - Bonds 2024 USD 3.7% 1,812,710 - Bonds 2021 EUR 2.0% 5,283,174 - Bonds 2016 EUR 2.8% 5,244,633 - Others Various Various Various 1,580,831 437,931 Total Borrowings 22,492,549 5,871,665 Reclassified as held for sale (Note 36) (263,379) - Borrowings from continuing operations 22,229,170 5,871,665

F-46 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

21. Borrowings (continued) a) ‎ Interest rates The weighted average interest rate paid during the year on bank and other borrowings is set out below:‎ 2014 2013 Bank borrowings 5.1% 5.4% Other borrowings 2.9% 4.9% b) ‎ Available facilities ‎

At 31 December 2014, the Group had AED 2,000 million (2013: AED 1,966 million) of undrawn committed borrowing‎ facilities in respect of which all conditions precedent had been met.‎

22. Net investment hedge relationships During the year, Euro bonds issued (refer to note 21) and cross currency swaps have been designated as net investment hedges. There was no material ineffectiveness of these hedges recorded as of the reporting date. 2014 AED’000 Effective part directly recognised in other comprehensive income 1,301,869

During the year, the Group has entered into cross currency USD-EUR swaps which are designated as hedges of net investment. The fair value of the cross currency swaps are calculated by discounting the future cash flows to net present value using appropriate market interest and prevailing foreign currency rates. The fair value of swaps is as follows: 2014 AED’000 Fair value of swaps designated as net investment hedge 293,584 The fair value of bonds designated as hedge is disclosed in note 21.

23. Payables related to investments and licenses Current Non-current Total AED’000 AED’000 AED’000 At 31 December 2014 Investments Etisalat International Pakistan LLC 2,936,653 - 2,936,653 Atlantique Telecom S.A. 11,022 - 11,022 Licenses Republic of Benin 24,828 - 24,828 Pakistan Telecommunication Company Limited 161,291 936,699 1,097,990 3,133,794 936,699 4,070,493 At 31 December 2013 Investments Etisalat International Pakistan LLC 2,936,653 - 2,936,653 Atlantique Telecom S.A. 11,022 - 11,022 Licenses Republic of Benin 14,179 65,476 79,655 Pakistan Telecommunication Company Limited 1,769 3,275 5,044 2,963,623 68,751 3,032,374

According to the terms of the share purchase agreement between Etisalat International Pakistan LLC and the Government‎ of Pakistan (“GOP”) payments of AED 6,612 million (2013: AED 6,612 million) have been made to GOP with‎ the balance of AED 2,937 million (2013: AED 2,937 million) to be paid. The amounts payable are being withheld‎ pending completion of certain conditions in the share purchase agreement related to the transfer of certain‎ assets to PTCL.‎

All amounts payable on acquisitions are financial liabilities measured at amortised cost and are mostly denominated‎ in either USD, AED or PKR.‎

F-47 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

24. Finance lease obligations

Present value of minimum lease Minimum lease payments payments 2014 2013 2014 2013 AED’000 AED’000 AED’000 AED’000 Amounts payable under finance lease Within one year 7,150 2,724 6,983 2,564 Between 2 and 5 years 18,182 4,012 17,283 2,460 25,332 6,736 24,266 5,024 Less: future finance charges (1,066) (1,711) - - Present value of lease obligations 24,266 5,025 24,266 5,024 of which due within 12 months 6,983 2,565 6,983 2,564 of which due after 12 months 17,283 2,460 17,283 2,460

It is the Group policy to lease certain of its plant and machinery under finance leases. For the year ended 31 December‎ 2014, the average effective borrowing rate was 25% (2013: 20.8%). The fair value of the Group’s lease obligations‎ is approximately equal to their carrying value.‎

25. Provisions

Asset retirement obligations Other Total AED’000 AED’000 AED’000 At 1 January 2013 33,677 779,863 813,540 Additional provision during the year 2,719 1,001,252 1,003,971 Utilization of provision - (208,067) (208,067) Release of provision (16,167) (184,150) (200,317) Reclassification - (5,890) (5,890) Unwinding of discount (162) - (162) Exchange differences (346) (29,354) (29,700) At 31 December 2013 19,721 1,353,654 1,373,375 Included in current liabilities 1,172,286 Included in non-current liabilities 201,089 At 31 December 2013 19,721 1,353,654 1,373,375 Additional provision during the year 20,718 737,070 757,788 Acquisition of Maroc Telecom (Note 30) - 197,061 197,061 Utilization of provision (6) (46,511) (46,517) Release of provision (6,025) (243,774) (249,799) Adjustment for change in discount rate (549) (1,188) (1,737) Unwinding of discount 673 - 673 Exchange differences (426) (41,116) (41,542) At 31 December 2014 34,106 1,955,196 1,989,302 Included in current liabilities - - 1,862,566 Included in non-current liabilities - - 126,736 At 31 December 2014 34,106 1,955,196 1,989,302

Asset retirement obligations relate to certain assets held by certain Group’s overseas subsidiaries that will require restoration‎ at a future date that has been approximated to be equal to the end of the useful economic life of the assets‎ . There are no expected reimbursements for these amounts. ‎

“Other”‎ includes provisions relating to certain indirect tax liabilities and other regulatory related items, including provisions relating to certain‎ Group’s overseas subsidiaries.‎

F-48 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

26. Financial instruments

Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of‎ measurement and the bases of recognition of income and expenses) for each class of financial asset and financial‎ liability are disclosed in Note 2.‎

Capital management

The Group’s capital structure is as follows:‎ 2014 2013 AED’000 AED’000 Bank borrowings (7,325,741) (4,682,001) Bonds (14,164,803) - Other borrowings (1,002,005) (1,189,664) Finance lease obligations (24,266) (5,024) Cash and cash equivalents 18,542,859 15,450,248 Net funds (3,973,956) 9,573,559 Total equity 60,926,871 49,592,696 Net equity 64,900,827 40,019,137

The capital structure of the Group consists of bonds, bank and other borrowings, finance lease obligations, cash and cash equivalents‎ and total equity comprising share capital, reserves and retained earnings.‎

The Group monitors the balance between equity and debt financing and establishes internal limits on the maximum‎ amount of debt relative to earnings. The limits are assessed, and revised as deemed appropriate, based on‎ various considerations including the anticipated funding requirements of the Group and the weighted average cost‎ of capital. The overall objective is to maximise returns to its shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.‎

Categories of financial instruments

The Group’s financial assets and liabilities consist of the following:‎ 2014 2013 AED’000 AED’000 Financial assets Loans and receivables, held at amortised cost: Loans to/due from associates and joint ventures 2,850,049 3,074,027 Trade and other receivables, excluding prepayments 17,513,554 10,703,026 20,363,603 13,777,053 Available-for-sale financial assets (including other investments held for sale) 747,381 1,119,847 Fair value through Profit or loss 44,625 - Held-to-maturity investments 191,991 195,585 Cash and cash equivalents 18,542,859 15,450,248 Derivative financial instruments 293,584 - 40,184,043 30,542,733 Financial liabilities Other financial liabilities held at amortised cost: Trade and other payables, excluding deferred revenue 30,253,329 20,505,506 Borrowings 22,492,549 5,871,665 Payables related to investments and licenses 4,070,493 3,032,374 Finance lease obligations 24,266 5,024 56,840,637 29,414,569

F-49 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

26. Financial instruments (continued)

Financial risk management objectives‎ The Group’s corporate finance function monitors the domestic and international financial‎ markets relevant to managing the financial risks relating to the operations of the Group. Any significant decisions about‎ whether to invest, borrow funds or purchase derivative financial instruments are approved by either the Board‎ of Directors or the relevant authority of either the Corporation or of the individual subsidiary. The Group’s risk‎ includes market risk, credit risk and liquidity risk.‎

The Group takes into consideration several factors when determining its capital structure, with the aim of ensuring sustainability‎ of the business and maximizing the value to shareholders. The Group monitors its cost of capital with‎ a goal of optimizing its capital structure. In order to do this, the Group monitors the financial markets and updates‎ to standard industry approaches for calculating weighted average cost of capital, or WACC. The Group also monitors‎ a net financial debt ratio to obtain and maintain the desired credit rating over the medium term, and with which‎ the Group can match the potential cash flow generation with the alternative uses that could arise at all times. These‎ general principles are refined by other considerations and the application of specific variables, such as country‎ risk in the broadest sense, or the volatility in cash flow generation, or the applicable tax rules, when determining‎ the Group’s financial structure.‎ a) Market risk The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, interest‎ rates and price risks on equity investments. From time to time, the Group will use derivative financial instruments‎ to hedge its exposure to currency risk. There has been no material change to the Group’s exposure to market risks‎ or the manner in which it manages and measures the risk during the year.‎

Foreign currency risk

The Group’s presentation/functional currency is United Arab Emirates Dirham (“AED”). Foreign currency risk arises from transactions denominated in foreign currencies and net investments in foreign operations.

The Group has foreign currency transactional exposure to exchange rate risk as it enters into contracts in other than the functional‎ currency of the entity (mainly USD and Euro). The Group entities also enter into contract in the functional currencies including Nigerian Naira, Egyptian Pounds, Pakistani Rupee‎ , Sri Lankan Rupee, Afghani, Tanzanian Shilling CFA Francs and Moroccan Dirham. Etisalat UAE also enters into contracts in USD which is pegged to AED. Atlantique Telecom Group enters into Euros contracts as CFA is pegged to Euro and Maroc Telecom also enters into Euro contracts as Moroccan Dirham is 80% pegged to Euro. The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including forward foreign exchange contracts, interest rate swaps and cross currency swaps.

In addition to transactional foreign currency exposure, a foreign currency exposure arises from net investments in Group entities whose functional currency differs from the Group’s presentation currency (AED). The risk is defined as the risk of fluctuation in spot exchange rates between the functional currency of the net investments and the Group’s presentation currency. This will cause the amount of the net investment to vary. Such a risk may have a significant impact on the Group’s consolidated financial statements.

This translation risk does not give rise to a cash flow exposure. Its impact arises only from the translation of the net investment into the group’s presentation currency. This procedure is required in preparing the Group’s consolidated financial statements as per the applicable IFRS.

The cross currency swaps involve the exchange of principal and floating or fixed interest receipts in the foreign currency in which the issued bonds are denominated, for principal and floating or fixed interest payments in the Group’s functional currency. The fair value of a cross currency is determined using standard methods to value cross currency swaps and is the estimated amount that the swap contract can be exchanged for or settled with under normal market conditions. The key inputs are the yield curves, basis curves and foreign exchange rates. In accordance with the fair value hierarchy within IFRS 7 Financial Instruments: Disclosure, the fair value of cross currency swaps represent Level 2 fair values. Foreign currency sensitivity

The following table presents the Group’s sensitivity to a 10 per cent change in the Dirham against the Egyptian Pound‎ , the Euro, the Pakistani Rupees and Marccon dirham. These four currencies account for a significant portion of the impact of net‎ profit, which is considered to materially occur through cash and borrowings within the Group’s financial statements‎ in respect of subsidiaries and associates whose functional currency is not the Dirham. The impact has been‎ determined by assuming a weakening in the foreign currency exchange of 10% upon closing foreign exchange‎ rates. A positive number indicates an increase in the net cash and borrowings balance if the AED/USD were‎ to strengthen against the foreign currency.‎

2014 2013 AED’000 AED’000 Increase in profit/(loss) and increase/(decrease) in equity Egyptian pounds 112,074 108,489 Euros 1,164,144 52,808 Pakistani rupees 12,187 7,569 MAD 156,556 -

F-50 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

26. Financial instruments (continued)

Interest rate risk The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates‎ . The Group monitors the market interest rates in comparison to its current borrowing rates and determines whether‎ or not it believes it should take action related to the current interest rates. This includes a consideration of‎ the current cost of borrowing, the projected future interest rates, the cost and availability of derivate financial instruments‎ that could be used to alter the nature of the interest and the term of the debt and, if applicable, the period‎ for which the interest rate is currently fixed.‎

Interest rate sensitivity Based on the borrowings outstanding at 31 December 2014, if interest rates had been 2% higher or lower during the‎ year and all other variables were held constant, the Group’s net profit and equity would have decreased or increased‎ by AED 87 million (2013: AED 91 million). This impact is primarily attributable to the Group’s exposure to interest‎ rates on its variable rate borrowings. ‎

The Group’s sensitivity to interest rate has reduced significantly during the year due to the fixed coupon bonds issued in June 2014.

Other price risk

The Group is exposed to equity price risks arising from its equity investments. Equity investments are held for strategic‎ rather than trading purposes. The Group does not actively trade these investments. See Note 15 for further‎ details on the carrying value of these investments.‎

If equity price had been 5% higher or lower: • profit for the year ended 31 December 2014 would increase/decrease by AED 15 million (2013: nil) due to profit realised on disposal of investments in available-for-sale shares • other comprehensive income for the year ended 31 December 2014 would increase/decrease by AED 28 million (2013: increase/decrease by AED 67 million) as a result of the changes in fair value of available-for-sale shares. b) Credit risk management

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss‎ to the Group and arises principally from the Group’s bank balances and trade and other receivables. The Group has‎ adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate‎ , as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings‎ of its counterparties are monitored and the aggregate value of transactions concluded is spread amongst approved‎ counterparties.‎

For its surplus cash investments, the Group considers various factors in determining with which banks and /corporate to invest its money including‎ but not limited to the financial health, Government ownership (if any), the rating of the bank by rating agencies‎ The assessment of the banks and the‎ amount to be invested in each bank is assessed annually or when there are significant changes in the marketplace‎ .‎

Group's bank balance 2014 2013 Investment in UAE 86% 99% Investment outside of the UAE 14% 1%

Bank rating for Investment in UAE 2014 2013 AED Rating AED Rating By Fitch 7.0 billion A+ 5.9 billion A+ 1.7 billion A 1.6 billion A By Standard and Poor‎ 's - NA 1.5 billion A

The Group’s trade receivables consist of a large number of customers, spread across diverse industries and geographical‎ areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where‎ appropriate, collateral is received from customers usually in the form of a cash deposit.‎

The carrying amount of financial assets recorded in the consolidated financial statements, net of any allowances for‎ losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral‎ obtained.‎

F-51 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

26. Financial instruments (continued) c) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate‎ liquidity risk management framework for the management of the Group’s short, medium and long-term funding‎ and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,‎ banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows‎ and matching the maturity profiles of financial assets and liabilities. The details of the available undrawn facilities‎ that the Group has at its disposal at 31 December 2014 to further reduce liquidity risk is included in Note 21‎‎ . The majority of the Group’s financial liabilities as detailed in the consolidated statement of financial position are due‎ within one year.

Financial liabilities are repayable as follows: Trade and other payables, Payables related Finance lease AED’000 excluding Borrowings to investments Total obligations deferred and licenses revenue On demand or within one year 29,389,497 3,952,158 3,133,794 6,983 36,482,432 In the second year 1,075,533 1,034,817 936,699 17,283 3,064,332 In the third to fifth years inclusive 12,451 4,881,624 - - 4,894,075 After the fifth year 336 12,623,950 - - 12,624,286 As At 31 December 2014 30,477,817 22,492,549 4,070,493 24,266 57,065,125

On demand or within one year 19,663,755 1,404,543 2,963,623 2,564 24,034,485 In the second year 1,012,431 1,112,335 68,751 2,460 2,195,977 In the third to fifth years inclusive 15,520 2,999,402 3,014,922 After the fifth year 33,799 355,385 389,184

As At 31 December 2013 20,725,505 5,871,665 3,032,374 5,024 29,634,568 The above table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest‎ date on which the Group can be required to pay. The table includes both interest and principal cash flows.‎

Fair value of financial instruments

Borrowings are measured and recorded in the consolidated statement of financial position at amortised cost and their‎ fair values are disclosed in Note 21. The carrying amounts of the other financial assets and liabilities recorded in‎ the consolidated financial statements approximate their fair values.‎

27. Provision for end of service benefits

The liabilities recognised in the consolidated statement of financial position are:‎ 2014 2013 AED’000 AED’000 Funded Plans Present value of defined benefit obligations 3,541,336 3,025,327 Less: Fair value of plan assets (3,089,390) (2,555,736) 451,946 469,591 Unfunded Plans Present value of defined benefit obligations and other employee benefits 1,592,594 1,442,182 Total 2,044,540 1,911,773

The movement in defined benefit obligations for funded and unfunded plans is as follows: 2014 2013 AED’000 AED’000 As at 1 January 4,467,509 4,376,946 Acquisition of Maroc Telecom (Note 30) 162,946 - Reclassified as held for sale (Note 36) (2,276) - Service cost 146,761 132,541 Interest cost 447,896 382,308 Actuarial gain 11,754 4,712 Remeasurements 210,071 208,290 Benefits paid (706,363) (344,296) Gain and loss on settlement 233,420 - Exchange difference 162,212 (292,992) As at 31 December 5,133,930 4,467,509

The movement in the fair value of plan assets is as follows: 2014 2013 AED’000 AED’000 As at 1 January 2,555,736 2,390,283 Return on plan assets 318,868 268,676 Contributions received 458,295 308,449 Benefits paid (371,355) (214,939) Exchange difference 127,846 (196,733)

As at 31 December 3,089,390 2,555,736 48

F-52 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

27. Provision for end of service benefits (continued)

The amount recognised in statement of profit or loss is as follows:‎ 2014 2013 AED’000 AED’000 Service cost 146,766 132,419 Interest cost 54,911 130,075 Others 10,739 3,715 212,416 266,209

Following are the significant assumptions used relating to the major plans 2014 2013 AED’000 AED’000 Discount rate UAE 2.80% 3.07% Pakistan 11.25%- 12.5% 11% - 12.5% Morocco 4% - Average annual rate of salary UAE 4.0% 4.0% Pakistan 7% - 11.5% 7% - 11.5% Morocco 3%-5% -

Plan assets for funded plan are comprised as follows: 2014 2013 AED’000 AED’000 Debt instruments - unquoted 2,469,808 1,922,083 Cash and cash equivalents 477,771 393,635 Investment property 292,957 250,206 Fixed assets 175 170 Other assets 4,555 5,092 less: liabilities (155,876) (15,450) 3,089,390 2,555,736 The expense recognised in profit or loss relating to contribution plan at the rate specified in the rules of the plans amounting to AED 124 million (2013: AED 123 million).

28. Share capital

2014 2013 AED’000 AED’000 Authorised: 8,000 million (2013: 8,000 million) ordinary shares of AED 1 each 8,000,000 8,000,000

Issued and fully paid up: 7,906.1 million (2013: 7,906.1 million) ordinary shares of AED 1 each 7,906,140 7,906,140

The Board of Directors in their meeting held on 25 February 2015 proposed an increase in the authorized share capital of the Corporation to AED 10,000 million. This is subject to the approval of the shareholders in the extraordinary general assembly meeting to be held on 24 March 2015. The Board of Directors also proposed the issue of bonus shares in the ratio of 1 share for every 10 registered shares held by the shareholders of the Corporation. This is also subject to the approval of the shareholders in the annual general assembly meeting to be held on 24 March 2015.

29. Reserves

The movement in the Reserves is provided below: 2014 2013 AED’000 AED’000 As at 1 January 28,266,980 29,115,839 Total comprehensive income for the year (1,432,516) (985,167) Transfer from retained earnings 18,240 136,308 As at 31 December 26,852,704 28,266,980

F-53 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

29. Reserves (continued)

The movement for each type of reserves is provided below: 2014 2013 AED’000 AED’000 Translation reserve As at 1 January (2,209,881) (1,100,345) Total comprehensive income for the year (1,112,621) (1,109,536) As at 31 December (3,322,502) (2,209,881)

Investment revaluation reserve As at 1 January 204,477 80,108 Loss on revaluation (34,904) (139,940) Reclassification adjustment relating to available-for-sale financial assets (disposed)/impaired during the year (284,991) 264,309 As at 31 December (115,418) 204,477

Development reserve As at 1 January and 31 December 7,850,000 7,850,000

Asset replacement reserve As at 1 January 8,166,000 8,108,000 Transfer from retained earnings - 58,000 As at 31 December 8,166,000 8,166,000

Statutory reserve As at 1 January 165,077 97,561 Transfer from retained earnings 24,580 67,516 As at 31 December 189,657 165,077

General reserve As at 1 January 14,091,307 14,080,515 Transfer from retained earnings (6,340) 10,792 As at 31 December 14,084,967 14,091,307 a) ‎ Development reserve, asset replacement reserve and general reserve ‎ These reserves are all distributable reserves and comprise amounts transferred from unappropriated profit at the discretion‎ of the Group to hold reserve amounts for future activities including the issuance of bonus shares.‎ b) ‎ Statutory reserve In accordance with the UAE Federal Law No. 8 of 1984, as amended, and the respective Memoranda of Association of‎ some of the Group’s subsidiaries, 10% of their respective annual profits should be transferred to a non-distributable‎ statutory reserve. The Corporation’s share of the reserve has accordingly been disclosed in the consolidated‎ statement of changes in equity.‎ c) ‎ Translation reserve

Cumulative foreign exchange differences arising on the translation of overseas operations are taken to the translation‎ reserve. ‎ d) ‎ Investment revaluation reserve The cumulative difference between the cost and carrying value of available-for-sale financial assets is recorded in the‎ Investment revaluation reserve. ‎ The balance at 31 December 2014 includes AED 28 million (2013 AED 259 million) being the cumulative gain recognised in other comprehensive income relating to quoted investment which is classified as held for sale.

F-54 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

30. Acquisition of Maroc Telecom On 22 July 2013, the Group made a binding offer for Vivendi's 53 percent stake in Maroc Telecom, amounting to consideration of EUR 3.9 billion (at that time equivalent to AED 19.3 billion). This consideration did not include the dividend received by Vivendi from Maroc Telecom in respect of the 2012 financial year, equivalent to MAD 7.40 per share, which would be for the benefit of the Group. At closing, the Group would pay Vivendi the cash value of 2012 dividend of EUR 0.3 billion (AED 1.5 billion).

On 4 November 2013, the Group signed a share purchase agreement for the acquisition of Vivendi's stake in Maroc Telecom. The acquition is in line with the group's strategy to reach out to new customers and markets.

On 28 April 2014, the Group entered into a multi-currency facilities agreement with a syndicate of local and international banks for the purpose of financing the acquisition.

On 14 May 2014, the Group completed the acquisition at a net adjusted price of EUR 4.1 billion (AED 20.9 billion) which was primarily financed through external borrowings. This amount included the cash value of the 2012 dividend, amounting to EUR 0.3 billion (AED 1.5 billion). The transaction was effected through the acquisition by Etisalat International North Africa LLC (“EINA”) of Vivendi’s 100% shareholding in Société de Participation dans les Télécommunications (“SPT”) established in the Kingdom of Morocco, which directly holds 53% of the shares in Maroc Telecom. The effective interests in the capital of EINA are Etisalat (91.33%) and Abu Dhabi Fund for Development (8.67%).

The application of acquisition accounting under IFRS 3 requires that the total purchase price to be allocated to the fair‎ value of the assets acquired and liabilities assumed based on their fair values at the acquisition date, with amount‎ exceeding the fair values being recorded as goodwill. Accordingly, on 14th May 2014, the assets and liabilities of Maroc Telecom have been‎ appraised, based on third party valuations, for inclusion in the consolidated statement of financial position.

The purchase price allocation process (PPA) requires an analysis of acquired fixed assets, licenses, customer relationships‎ , brands, contractual commitments and contingencies to identify and record the fair values of all assets‎ acquired and liabilities assumed. In valuing acquired assets and liabilities assumed, fair values were based on‎ but not limited to: future expected discounted cash flows for customer relationships, current replacement cost for‎ similar capacity and obsolescence for certain fixed assets, comparable market rates for real estate and appropriate‎ discount rates and growth rates.‎

The following table summarises the fair values of the assets acquired, liabilities assumed, related‎ deferred taxes and goodwill as of the acquisition date further to the purchase price allocation process (PPA). Fair values based on purchase price allocation AED’000 Intangible assets 10,729,232 Property, plant and equipment 14,886,958 Investments 129,342 Inventory 191,419 Trade and other receivables 4,303,344 Deferred tax assets 46,955 Cash and cash equivalents 2,261,948 Trade and other payables (8,664,357) Provision for end of service benefits (162,946) Provision (197,061) Obligations under finance leases (22,450) Bank loans (2,543,565) Deferred tax liabilities (3,637,635) Net identifiable assets acquired 17,321,184 Non-controlling interests in the acquiree (8,159,944) Goodwill 11,761,694 Fair value of investment 20,922,933 Net cash inflow arising on acquisition: Cash and cash equivalents acquired 2,261,948

F-55 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

30. Acquisition of Maroc Telecom (continued)

Included in the profit for the year is AED 796 million attributable to the business generated by Maroc Telecom Group. Revenue for the year includes AED 7,934 million in respect of Maroc Telecom. Had this business combination been effected at 1 January 2014, the revenue of the Group would have been AED 53,084 million and the profit for the year would have been AED 9,965 million.

The receivable acquired in these transaction are treated at their fair value and have a gross contractual amount of AED 5,167 million. Their best estimate at acquition date of the contractual cash flows not expected to be collected are amounting to AED 2,777 million.

Following the acquisition in May 2014, the Group has received a dividend of AED 1,249.1 million (MAD 2,795.6 million) from Maroc Telecom relating to the year 2013.

Goodwill resulting from the acquisition has been assigned to Maroc Telecom and Maroc Telecom's international subsidiaries as a CGU. Acquisition accounting allows for‎ recognition of deferred tax liabilities on acquired intangibles (other than goodwill) which is expected to be reflected‎ as a tax benefit on Group’s future consolidated statement of profit or loss in proportion to and over the‎ amortization period of the related intangible asset. There is no deferred tax liability recorded for fair value adjustment‎ relating to land as this is not depreciated.

Goodwill arose in the acquisition of Maroc Telecom because the cost of the combination included:

► Limited competition of the fixed line business in North and Western Africa; and ► Long-term ability to retain mobile customers and maintain market share in its key markets; ► Ability to participate in the consolidation of telecommunications industry in North Africa and Western Africa; and ► Trained and skilled workforce. These benefits are not recognised separately from Goodwill because that do not meet recognition criteria for identifiable intangible assets.

Acquisition related costs amounting to AED 621 million (Note 7) have been excluded from the consideration transferred and have been recognised as an expense in profit and loss of the current year.

31. Significant events

On 22 February 2012, the Supreme Court of India cancelled all of Etisalat DB Telecom Private Limited's (the Company) licenses, removing the Company's ability to operate its current mobile telecommunications business. Following the cancellation, the Board of the Company unanimously agreed to shut down its telecommunications network and gave the appropriate notices to the Indian authorities. Furthermore, the resignation of the directors of the Company appointed by the majority shareholders without replacement adversely affected the ability of the Company's Board of Directors to take decisions. Subsequently, Etisalat Mauritius Limited (which is wholly owned by Etisalat) filed proceedings on 12 March 2012 for the just and equitable winding up of the Company (the Company Petition). The Company Petition was admitted by the Company Court by its judgment dated 18 November 2013. However, the decision was appealed to the Appeal Court by one of the Company’s shareholders but dismissed by an order dated 8 April 2014. The decision of the Appeal Court was further appealed to the Supreme Court but finally dismissed by an order dated 14 July 2014.

The final arguments in the Company Petition have been heard by the Company Court and orders remain reserved, at the consolidated statement of financial position date.

32. Commitments a) Capital commitments

The Group has approved future capital projects and investments commitments to the extent of AED 9,377 million (‎‎ 2013: AED 5,448 million).‎ b) Lease commitments i) The Group as lessee 2014 2013 AED’000 AED’000

Minimum lease payments under operating leases recognised as an expense in the year (Note 5) 227,777 258,458

At the end of the reporting period, the Group had outstanding commitments for future minimum lease payments under non-cancellable‎ operating leases, which fall due as follows:‎ 2014 2013 AED’000 AED’000 Within one year 272,814 275,839 Between 2 to 5 years 1,040,687 1,330,078 After 5 years 1,159,391 722,640 2,472,892 2,328,557

Operating lease payments represent rentals payable by the Group for certain of its office and retail properties. Leases‎ are negotiated for an average term of two years.‎

F-56 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

32. Commitments (continued) ii) The Group as lessor Property rental income earned during the year was AED 11 million (2013: AED 12 million). All of the properties held have‎ committed tenants for the next 4 years.‎ At the reporting date, the Group had contracted with tenants for the following future minimum lease payments:‎ 2014 2013 AED’000 AED’000 Within one year 8,269 10,207 Between 2 to 5 years 8,224 29,673 16,493 39,880

33. Contingent liabilities a) Bank guarantees 2014 2013 AED million AED million i) Performance bonds and guarantees in relation to contracts 949.0 527.0 Corporation Overseas investments 771.3 393.0 ii) Promissory notes and letter of credit 39.4 228.0 b) ‎ Foreign exchange regulations

On 23 July 2011, Etisalat DB Telecom Pvt Limited (the Company) received a show cause notice from the Enforcement Directorate (the ED) of India alleging certain breaches of the Foreign Exchange Management Act 1999 (FEMA), by the Company and its Directors. The Company and its Directors have filed their response(s) to the notice and the cases of each of the notices have been part heard by the ED. The proceedings of the case have been adjourned, pending the hearing of an appeal to the Supreme Court on procedural matters which has not been heard as at the consolidated statement of financial position date. c) ‎ Other contingent liabilities i) The Group is disputing certain charges from the governmental and telecom regulatory agencies in the UAE and certain other jurisdictions but does not‎ expect any material adverse effect on the Group's financial position and results from resolution of these.‎ ii) With reference to ongoing litigation at various courts in Pakistan regarding pension increases and pertinent medical allowance cases, pertaining to the Group's subsidiary Pakistan Telecommunication Company Limited (PTCL), the Honorable Supreme Court of Pakistan suspended the operation of the related order passed by the divisional bench of Honorable Islamabad High Court. On completion of proceedings, the decision is reserved by the Honorable Supreme Court of Pakistan. Since the subject matter is complex and uncertain in nature, the financial implications cannot presently be ascertained with finality.

F-57 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

34. Dividends

Amounts recognised as distribution to equity holders: AED’000 31 December 2013 Final dividend for the year ended 31 December 2012 of AED 0.45 per share 3,556,224 Interim dividend for the year ended 31 December 2013 of AED 0.35 per share 2,765,952 6,322,176 31 December 2014 Final dividend for the year ended 31 December 2013 of AED 0.35 per share 2,765,953 Interim dividend for the year ended 31 December 2014 of AED 0.35 per share 2,765,952 5,531,905

A final dividend of AED 0.35 per share was declared by the Board of Directors on 4 March 2014, bringing the total dividend‎ to AED 0.70 per share for the year ended 31 December 2013.‎

An interim dividend of AED 0.35 per share was declared by the Board of Directors on 20 July 2014 for the year ended 31 December‎ 2014.‎

A final dividend of AED 0.35 per share was declared by the Board of Directors on 25 February 2015, bringing the total dividend‎ to AED 0.70 per share for the year ended 31 December 2014.‎

35. Earnings per share 2014 2013 Earnings (AED'000) Earnings for the purposes of basic earnings per share being the profit attributable to the equity 8,892,019 7,078,388 holders of the Corporation

Number of shares ('000)

Weighted average number of ordinary shares for the purposes of basic earnings per share 7,906,140 7,906,140

The Group does not have potentially dilutive shares and accordingly, diluted earnings per share equals to basic earnings‎ per share.‎

F-58 Emirates Telecommunications Corporation Notes to the consolidated financial statements for the year ended 31 December 2014

36.Disposal Group held for sale/ Discontinued operations

On 3rd June 2014 the directors approved a plan to dispose of the Group’s interest in one of the subsidiary of the group. The disposal is in line with the Group's strategy to optimise its returns on investments in the international segment. The Group is currently in negotiation with some potential buyers.

The results of operations included in the profit for the year from discontinued operations are set out below.

2014 2013 AED’000 AED’000

Revenue 299,666 297,121 Operating expenses (408,513) (311,243) Operating profit (108,847) (14,122) Finance and other income 41,001 (257) Finance costs (50,262) (49,137) Loss for the year from a discontinued operation (118,108) (63,516)

At 31 December 2014 the disposal group comprised the following assets and liabilities 2014 Assets classified as held for sale AED’000 Goodwill 44,896 Other intangible assets 74,075 Property, plant and equipment 255,245 Other investments 3,570 Inventories 11,374 Trade and other receivables 134,682 Cash and cash equivalents 8,915 Assets classified as held for sale 532,757

2014 Liabilities classified as held for sale AED’000 Trade and other payables 860,862 Borrowings 263,379 Provision for end of service benefits 2,276 Liabilities associated with assets classified as held for sale 1,126,517

Net liabilities classified as held for sale 593,760

2014 Cash flows from discontinued operations AED’000 Net cash inflows from operating activities 24,861 Net cash outflows from investing activities (309) Net cash outflows from financing activities (89,055)

Net cash outflows (64,503)

Cumulative income or expense recognised in other comprehensive income There are no cumulative income or expenses recognised in other comprehensive income relating to the disposal group

37. Subsequent events

On 26 January 2015, Emirates Telecommunications Corporation ("Etisalat"), Atlantique Telecom SA ("AT") and Etisalat International Benin Limited ("EffiL") successfully completed the sale of Etisalat's shareholdings in its operations in Benin, the Central African Republic, Gabon, the Ivory Coast, Niger , Togo and Prestige Telecom to Etisalat AI Maghrib ("Maroc Telecom").

The final consideration in return for Etisalat' s equity in and receivables (including shareholder loans) from these seven companies amounted to Euro 474 million.

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STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS - YEAR ENDED DECEMBER 31, 2014 To the shareholders of Itissalat Al Maghrib “IAM” SA Avenue Annakhil, Hay Riad Rabat, Morocco,

To the Chairman and shareholders,

We have audited the accompanying consolidated financial statements of ITISSALAT AL-MAGHRIB (IAM) S.A., including the statement of financial position as at December 31, 2014, the statement of comprehensive income, statement of changes in equity, and statement of cash flows for the fiscal year ended December 31, 2014, and a summary of significant accounting policies and other explanatory notes. These financial statements show an amount of consolidated shareholders'equity of 20,163 million dirhams including consolidated net earnings of 6,638 million dirhams.

Management’s responsibility

Management is responsible for the preparation and presentation of these financial statements, in accordance with international financial reporting standards. This responsibility includes planning, implementing, and monitoring internal controls relating to the preparation and presentation of financial statements that are free of material misstatement, whether due to fraud or error, and selecting accounting estimates that are appropriate for the circumstances.

Auditors’ responsibility

Our responsibility is to render an opinion on these financial statements on the basis of our audit. We have conducted our audit in accordance with the audit standards applicable in Morocco. These standards require that we comply with ethical guidelines and that we plan and perform the audit in order to obtain reasonable assurance that the summary financial statements are free of material misstatement.

An audit involves procedures that are intended to gather meaningful information about the amounts and data provided in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of risk that the financial statements contain material misstatements, whether because of fraud or error. In carrying out such risk assessments, the auditors take into consideration the entity’s current internal controls relating to the preparation and presentation of the financial statements, in order to define audit procedures that fit the circumstances, but not for the purpose of stating an opinion on the effectiveness of the internal control.

An audit also involves evaluating the appropriateness of the accounting policies used, the soundness of the accounting estimates made by management, and the overall presentation of the financial statements.

We believe that the information gathered is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion on the financial statements

In our opinion, the consolidated financial statements referred to in the first paragraph above provide in all material aspects a true and fair view of the financial position of the group comprising the persons and entities of ITISSALAT AL-MAGHRIB (IAM) S.A. at December 31, 2014, and the financial performance and cash flows for the fiscal year ended December 31, 2014, in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union.

February 23, 2015

THE STATUTORY AUDITORS

KPMG ABDELAZIZ ALMECHATT

FOUAD LAHGAZI ABDELAZIZ ALMECHATT

PARTNER PARTNER

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1. CONSLIDATED RESULTS OF THE PAST THREE YEARS

Maroc Telecom Group’s consolidated financial data is summarized in the following table. Selected financial data from the three fiscal years ended December 31, 2012, 2013, and 2014, were drawn from Group consolidated financial statements prepared in compliance with International Financial Reporting Standards (IFRS) and audited by the statutory auditors Abdelaziz ALMECHATT and Fouad LAHGAZI of KPMG Maroc.

1.1 CHIFFRES CONSOLIDES EN DIRHAM

Statement of comprehensive income

(In MAD millions) 2012 2013 2014

Revenues 29,849 28,559 29,144

Operating expenses 18,881 17,580 18,878

Earnings from operations 10,968 10,978 10,266

Earnings from continuing operations 10,941 10,937 10,229

Net earnings 7,287 6,359 6,638 Attributable to equity holders of the parent 6,709 5,540 5,850

Earnings per share (in MAD) 7.6 6.3 6.7

Diluted earnings per share (in MAD) 7.6 6.3 6.7

Statement of financial position

ASSETS (In MAD millions) 2012 2013 2014

Non-current assets 36,159 35,919 35,286

Current assets 11,825 11,248 10,539

Total assets 47,985 47,167 45,824

SHAREHOLDERS’ EQUITY AND LIABILITIES (In MAD millions) 2012 2013 2014

Share capital 5,275 5,275 5,275

Shareholders’equity, attributable to equity holders of the parent 16,250 15,331 15,884

Non-controlling interests 4,356 4,602 4,278

Shareholders'equity 20,606 19,933 20,163

Non-current liabilities 2,078 994 893

Current liabilities 25,302 26,241 24,768

Total Shareholders’ Equity And Liabilities 47,985 47,167 45,824

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1.2 CONSOLIDATED FINANCIAL DATA IN EUROS

The Group reports its financial data in Moroccan dirhams. This section is intended to provide investors with comparable data in euros.

For 1 Euro 2012 2013 2014

The closing rate at the balance sheet 11.15160 11.23600 10.96045

Average rate used for the income statement 11.10095 11.15856 11.16404

(Source : Vivendi for 2012 et 2013)

(Source : Etisalat for 2014))

The above table shows the average dirham/euro conversion rates used in preparing the financial statements for fiscal years 2012, 2013 and 2014.

The exchange rates are shown for indicative purposes only, to aid the reader. The Group does not guarantee that the amounts expressed in dirhams were, could have been or could be converted to euros at those exchange rates or at any other rate. For an explanation of the impact of exchange rates on the Group’s results, see Section 2.3 “Qualitative and quantitative information on market risk” below.

The following table shows selected financial data for Maroc Telecom Group, presented in euros at the exchange rate used in preparing the Group’s consolidated statement of financial position and income statement for fiscal years 2012, 2013 and 2014.

Statement of comprehensive income

(In € millions) 2012 2013 2014

Revenues 2,689 2,559 2,611

Cost of purchases 1,701 1,576 1,691

Earnings from operations 988 984 920

Earnings from continuing operations 986 980 916

Net earnings 656 570 595

Attributable to equity holders of parent 604 497 524

Earnings per share (in euro) 0.7 0.6 0.6

Diluted earnings per share (in euro) 0.7 0.6 0.6

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Statement of financial position

ASSETS (In € millions) 2012 2013 2014

Non-current assets 3,242 3,197 3,219

Current assets 1,060 1,001 962

TOTAL ASSETS 4,303 4,198 4,181

SHAREHOLDERS’ EQUITY AND LIABILITIES (In € millions) 2012 2013 2014

Share capital 473 469 481

Shareholders’equity, attributable to equity holders of the parent 1,457 1,364 1,449

Non-controlling interests 391 410 390

Shareholders'equity 1,848 1,774 1,840

Non-current liabilities 186 88 82

Current liabilities 2,269 2,335 2,260

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 4,303 4,198 4,181

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1. OVERVIEW

The discussion and analysis that follow should be read in conjunction with the entire document, particularly with the audited consolidated financial statements that comprise the statement of financial position, the statement of comprehensive income, the statement of cash flows, the statement of changes in equity, and the notes to the financial statements for the years ended December 31, 2012, 2013, and 2014.

2.1 SCOPE OF CONSOLIDATION At December 31, 2014, Maroc Telecom consolidated in its financial statements the entities:

Mauritel

Maroc Telecom holds 51.5% of the voting rights of Mauritel, the incumbent operator in Mauritania and operator of a fixed-line and mobile telecommunications network, subsequent to the merger of Mauritel SA (fixed line) and Mauritel Mobile. Mauritel S.A. is owned by the holding company Compagnie Mauritanienne de Communications (CMC), in which Maroc Telecom holds an 80% equity stake and consequently a 41.2% interest in Mauritel. Mauritel has been fully consolidated by Maroc Telecom since July 1, 2004.

Onatel On December 29, 2006, Maroc Telecom acquired 51% of the capital of the Burkina Faso operator Onatel, and 100% of its mobile subsidiary, Telmob. Onatel has been fully consolidated by Maroc Telecom since January 1, 2007.

The merger of Onatel and Telmob, its mobile subsidiary, has been completed. Postmerger financial statements were prepared for FY 2011, with retroactive effect for FY 2010.

Gabon Telecom On February 9, 2007, Maroc Telecom acquired 51% of the capital of Gabon Telecom and 100% of its mobile subsidiary, Libertis. Gabon Telecom has been fully consolidated by Maroc Telecom since March 1, 2007.

The merger of Gabon Telecom and Libertis, its mobile subsidiary, has been completed. Postmerger financial statements have been prepared for FY 2012, with retroactive effect for FY 2011.

Sotelma

On July 31, 2009, Maroc Telecom acquired a 51% stake in Mali’s incumbent operator, Sotelma. Sotelma has been fully consolidated by Maroc Telecom since August 1, 2009.

Casanet

Casanet is a Moroccan Internet provider established in 1995. In 2008, the company became a 100% subsidiary of Maroc Telecom and expands its activities by specializing in information engineering. Casanet has been fully consolidated by Maroc Telecom since January 1, 2011.

Other nonconsolidated investments

Maroc Telecom’s other unconsolidated interests include a participation on ArabSat, MT FLY, a company that operates airplanes for the transport of passengers and merchandise, Medi 1 TV and other non- controlling interests.

Investments in which Morocco Telecom does not directly or indirectly exercises exclusive control, joint control or significant influence and investments their results do not have a material impact on Maroc Telecom Group’s financial statements, are not consolidated and are accounted for in "Non-current financial assets".

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2.2 COMPARISON OF RESULTS BY GEOGRAPHICAL AREA Note :

The comparable basis reflects constant exchange rates among the MAD, Mauritanian Ouguiya, and CFA Franc currencies. Results by geographical area are as follows:

(En millions MAD) 2012 2013 2014

Revenues* 29,849 28,559 29,144

Morocco 23,178 21,294 21,133

International 7,079 7,754 8,630

Mauritania 1,375 1,476 1,646

Burkina Faso 2,067 2,211 2,354

Gabon 1,291 1,478 1,788

Mali 2,422 2,658 2,929

Earnings from operations before depreciation 16,720 16,213 15,691 and amortization **

Morocco 13,414 12,308 11,578

International 3,307 3,904 4,113

% Revenues 56.0% 56.8% 53.8%

Earnings from operations ** 10,968 10,978 10,266

Morocco 9,219 8,595 7,734

International** 1,749 2,383 2,532

% Revenues 36.7% 38.4% 35.2%

Net earnings, Group share ** 6,709 5,540 5,850

% Revenues 22.5% 19.4% 20.1%

Capex 5,385 4,796 4,901

Morocco 3,792 3,601 3,359

International 1,592 1,195 1,542

*Group revenues net of eliminations.

**Maroc Telecom adopted IAS 19 (amended) Employee Benefits as of January 1, 2013, with retroactive effect to January 1, 2012.

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2.2.1 Comparison of financial data for fiscal years 2014 and 2013

2.2.1.1 Group Consolidated results

Revenues

Maroc Telecom Group consolidated revenues for the full year 2014 amounted to MAD 29,144 million, up 2.1% (+2.1% at constant exchange rate) compared to 2013. This improvement mainly reflects an 11.3% growth in international business and a slight decline of 0.8% in revenues in Morocco.

Earnings from operations before depreciation and amortization

At 2014-end, Maroc Telecom Group earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 15,691 million, down 3.2% compared to 2013 (-3.2% at constant exchange rate). The decline reflects a 5.9% drop in EBITDA in Morocco, partially offset by a 5.3% increase (+5.4% at constant exchange rate) in EBITDA internationally. Despite a 2.9 points decline, the EBITDA margin remained high at 53.8%.

Earnings from operations

At 2014-end, Maroc Telecom Group earnings from operations (EBITA) amounted to MAD 10,266 million, down 6.5% compared to 2013 (-6.5% at constant exchange rate). This drop reflects the decline in EBITDA and the 7.6% increase in depreciation charges connected with major capital investment. The operating margin slipped 3.2 points to 35.2%.

Net earnings

Maroc Telecom net earnings, Group share, for the full year 2014 amounted to MAD 5,850 million, up 5.6% compared to 2013 (+5.6% at constant exchange rate), mainly reflecting a favorable basis of comparison due to the recognition in 2013 of a nonrecurring expense connected with the settlement of a tax dispute.

Capital expenditure

Capital expenditure in 2014 amounted to MAD 4,901 million, up by MAD 106 million. This increase mainly reflects the acquisition of 3G and 4G licenses by Gabon Telecom as well as continuing investment in infrastructure.

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2.2.1.2 Activities in Morocco

IFRS in MAD millions 2013 2014

Revenues 21,294 21,133

Mobile 15,719 15,214

Services 15,416 14,781

Equipment 303 433

Fixe line 7,391 8,041

o/w Fixed-line1 Data 1,865 2,058

Elimination (1,816) (2,122)

Earnings from operations before 12,308 11,578 depreciation and amortization

Margin (%) 57.8% 54.8%

Earnings from operations 8,595 7,734

The Moroccan business activities generated revenues of MAD 21,133 million during the financial year 2014, a limited 0.8% decrease compared with 2013. This performance reflects the strong growth in Fixed-line and Internet revenues (8.8%), and the slowdown in the decrease in Mobile revenues (-3.2% in 2014 compared with -10.1% in 2013) driven by significant growth in voice and data traffic.

Earnings from operations before depreciation and amortization (EBITDA) registered a 5.9% decrease to MAD 11,578 million, a margin of 54.8%, down 3.0 points compared with 2013. This performance reflects the increase in interconnection costs with other operators, as well as a limited increase in operating costs.

Earnings from operations (EBITA) amounted to MAD 7,734 million, a year-on-year decrease of 10.0%, as a result of the fall in EBITDA, a 9.4% increase in depreciation and amortization expense due to the substantial capital expenditure programs implemented over the past few years, and to an exceptional impact related to network modernization. The EBITA margin remained at a high level of 36.6%.

1 La Data Fixe regroupe l’Internet, la TV sur ADSL et les services Data aux entreprises

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Mobile

Mobile Unit 2013 2014

Customer base (000) 18,193 18,230

Prepaid (000) 16,813 16,734

Postpaid (000) 1,380 1,496

o/w 3G internet (000) 2,346 4,771

ARPU (MAD/month) 69.1 65.6

Data in % of ARPU (%) 14.2% 16.0%

MOU (Min/month) 146 176

The Mobile customer base increased by 0.2% year-on-year, reaching 18.2 million customers. The limited 0.5% fall in the prepaid customer base, despite the ban on the sale of prepaid pre-activated SIM cards imposed by the regulatory authorities, and the increase in the price of the Jawal package, was more than offset by an 8.4% increase in the postpaid customer base, which benefited from the ongoing enhancement of the offers.

Revenues for the Mobile activities in Morocco were down 3.2% to MAD 15,214 million for the year ended December 31, 2014, against the backdrop of a competitive environment that remained very intense.

Mobile Services revenues decreased by 4.1% compared with 2013, primarily as a result of the competitive pressure on both prices and the prepaid and postpaid segments.

The combined ARPU for 2014 amounted to MAD 65.6, which was down 5.1% compared with 2013, as the strong growth in voice traffic (23%) did not offset the fall in prices (-24%).

Data services continued to grow strongly, and reached 16% of the Mobile ARPU thanks to the success encountered by 3G Mobile Internet, where the customer base more than doubled in one year, reaching 4.8 million customers at the end of 2014.

Fixed line and Internet

Fixe Unit 2013 2014

Fixed line (000) 1,379 1,483

Broadband access (000) 837 984

As at the end of 2014, the Fixed-line customer base increased by 7.6% to 1,483,000 lines, while the ADSL customer base increased by 17.6% to 984,000 customers. This performance was due to the success of the double-play offers, and to the enhancement of the Phony offers via an increase in the number of free hours of calls to mobile phones.

The Fixed-line and Internet activities in Morocco continued their strong growth (8.8%) for the year ended December 31, 2014, with the growth in Data more than offset the stabilization in Voice revenues. Fixed-line Data revenues rose by 10.3% to MAD 2,058 million, driven by the success of the double-play offers in the residential segment and the VPN IP solutions for companies.

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2.2.1.3 International activities

IFRS in MAD millions 2013 2014

Revenues 7,754 8,630

Mauritania 1,476 1,646

o/w Mobile services 1,357 1,517

Burkina Faso 2,211 2,354

o/w Mobile services 1,848 1,936

Gabon 1,478 1,788

o/w Mobile services 883 1,220

Mali 2,658 2,929

o/w Mobile services 2,283 2,546

Elimination (69) (87)

Earnings from operations before 3,904 4,113 depreciation and amortization

Margin (%) 50.4% 47.7%

Earnings from operations 2,383 2,532

Margin (%) 30.7% 29.3%

During 2014, the Maroc Telecom Group’s International Operations posted an 11.3% (11.3% at constant exchange rates) increase in revenues, which amounted to MAD 8,630 million driven by the increase in the Mobile customer base (17%).

Earnings from operations before depreciation and amortization (EBITDA) over the same period increased by 5.3% (5.4% at constant exchange rates) to MAD 4,113 million compared with 2013. The EBITDA margin, which remained at a high level of 47.7%, was down 2.7 points due to the sharp increase in taxes and regulatory fees, including the introduction of a 5% tax on revenues in Burkina Faso as from January 1, 2014.

Earnings from operations (EBITA) amounted to MAD 2,532 million, an increase of 6.3% (6.3% at constant exchange rates) compared with 2013. The increase in earnings from operations before depreciation and amortization (EBITDA) more than offset the 3.7% increase in depreciation and amortization charges. The operating margin fell by 1.4 point to 29.3%.

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Mauritania

Unit 2013 2014

Mobile

Customer base (000) 1,872 1,922

ARPU (MAD/month) 56.6 66.5

Fixed lines (000) 42 43

Broadband access (000) 7 8

The business activities in Mauritania generated revenues of MAD 1,646 million for the year 2014, an increase of 11.6% (12% at constant exchange rates), driven by Mobile, where service revenues increased by 11.8% (12.2% at constant exchange rates), driven by the increase in outgoing traffic (33%).

As a result of a ban on the sale of unidentified SIM cards by the Regulatory Authorities, the Mobile customer base experienced limited growth of 2.7% compared with 2013, and amounted to 1.9 million customers.

Meanwhile, the Fixed-line and Internet customer bases increased by 2.5% and 9.7% respectively over 12 months.

Burkina Faso

Unit 2013 2014

Mobile

Customer base (000) 4,643 5,468

ARPU (MAD/month) 36.1 29.5

Fixed lines (000) 94 81

Broadband access (000) 25 16

Despite the slowdown in economic activity and the impact of the political crisis that the country is experiencing, the business activities in Burkina Faso generated revenues of MAD 2,354 million for the year 2014, an increase of 6.5% (6.4% at constant exchange rates) compared with 2013. Mobile service revenues rose by 4.8% (+4.7% at constant exchange rates), as a result of the increase in the Mobile customer base (+18%).

The Fixed-line and Internet customer bases decreased by 14.2% and 34% respectively, due to strong competition from 2G and 3G offers.

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Gabon

Unit 2013 2014

Mobile

Customer base (000) 1,041 1,183

ARPU (MAD/month) 80.7 92.3

Fixed lines (000) 19 18

Broadband access (000) 10 11

Revenues in Gabon amounted to MAD 1,788 million for the year 2014, an increase of 20.9% (20.9% at constant exchange rates) compared with 2013, driven by the strong growth in the Mobile activity, where service revenues increased by 38.2% (38.1% at constant exchange rates). This performance is explained by the strong growth in outgoing traffic (+39%), boosted by the switch to per-second billing.

The Internet customer base continued to post growth of 8.5%, despite the launch of 4G offers on the Gabon Telecom network, while the Fixed-line customer base registered a decrease of 3.9% due to the rationalization of government spending.

Mali

Unit 2013 2014

Mobile

Customer base (000) 8,923 10,673

ARPU (MAD/month) 25.9 21.3

Fixed lines (000) 110 130

Broadband access (000) 50 64

Revenues generated by the activities in Mali for the year 2014 increased by 10.2% (10.1% at constant exchange rates) to MAD 2,929 million, driven by growth in the Mobile activity, where service revenues increased by 11.5% (+11.5% at constant exchange rates) due to a 20% increase in the Mobile customer base.

Meanwhile, the Fixed-line and Internet customer bases registered sustained growth of 18% and 26% respectively.

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2.2.2 Comparison of financial Data for 2013 and 2012

2.2.2.1 Group Consolidated results

Revenues

In 2013, Maroc Telecom Group generated consolidated revenues of MAD 28,559 million, 4.3% less than revenues in 2012 (-4.3% like for like). This was caused by lower revenues in Morocco (-8.1%), where mobile services and mobile termination rates experienced sharp price cuts. Strong growth (+9.5%) in international revenues compensated partially for these declines.

The Group customer base grew to more than 37 million customers, a strong rise of 13.3% from the previous year. This excellent momentum is due mainly to growth in the international customer base, up 28.8% year on year, to 16.8 million customers.

Earnings from operations before depreciation and amortization

In 2013, Maroc Telecom Group’s earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 16,213 million, 3.0% less than in 2012 (-3.0% like for like). The 8.2% decline in EBITDA in Morocco was partially compensated for by growth of 18.1% (+18.0% like for like) in international EBITDA. However, with gross margin up 2.0 pts and operating expenses stable, the EBITDA margin improved by 0.8 pts from the previous year, to a substantial 56.8%.

Earnings from operations

At December 31, 2013, Maroc Telecom Group’s consolidated earnings from operations (EBITA) stood at MAD 10,978 million, up 0.1% (+0.1% like for like) from a year earlier. Excluding restructuring costs recorded in 2012 (MAD 877 million) and in 2013 (MAD 200 million), EBITA fell 5.6% year on year (-5.6% like for like), with a substantial operating margin of 39.1%, only 0.5 pts less than the previous year’s. Higher depreciation charges (+3.3%) for major capital-expenditure programs carried out in Morocco and in subsidiaries outside Morocco explain the slight decline in earnings from operations.

Net earnings

In 2013, Maroc Telecom Group’s had net earnings of MAD 5,540 million, down 17.4% (-17.4% like for like) from net earnings in 2012. This decline was the result of a MAD 1 billion expense taken for the settlement of a tax audit.

Capital expenditure

In 2013, capital expenditure declined by 10.9%, to MAD 4,796 million. The focus in 2013 was on offers for high-speed and ultra-high-speed broadband. This development was implemented mainly through the rollout of next-generation Single RAN base stations, and the deployment of MSANs for wireline internet.

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2.2.2.2 Activities in Morocco

(In MAD millions) 2012 2013

Revenue 23,178 21,294

Mobile 17,477 15,719

Services 16,979 15,416

Equipment 498 303

Fixed line 6,669 7,391

o/w fixed line data 1,757 1,865

Elimination (968) (1,816)

Earnings from operations before 13,414 12,308 depreciation and amortization

Margin (%) 57.9% 57.8%

Earnings from operations – before 10,020 8,795 restructuring

Margin (%) 43.2% 41.3%

Earnings from operations 9,219 8,595

Activities in Morocco in 2013 generated revenues of MAD 21,294 million, a decrease of 8.1% year on year. This performance was the result of the prepaid mobile rates, whose continuous decline is due mainly to the adoption of a per-second billing and more frequent promotional offers.

Earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 12,308 million, 8.2% less than in 2012. The substantial EBITDA margin of 57.8% was nearly unchanged (-0.1% year on year), because of stable operating expenses and a 1.8 pt rise in gross operating margin.

Earnings from operations (EBITA) declined 6.8%, totaling MAD 8,595 million. Excluding restructuring charges accounted for in 2012 and 2013, EBITA declined by 12.2%, resulting in a 41.3% margin. This change can be explained by the decline in EBITDA and by the 3.5% rise in depreciation charges for significant capital expenditures carried out in recent years.

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Mobile

Unit 2012 2013

Mobile

Customer base (000) 17,855 18,193

Prepaid (000) 16,656 16,813

Postpaid (000) 1,199 1,380

o/w 3G internet (000) 1,546 2,346

ARPU (MAD/month) 78.6 69.1

Data in % of ARPU (%) 11.1% 14.2%

MOU (Min/month) 122 146

Churn (%) 20.8% 22.2%

Postpaid (%) 15.5% 23.7%

Prepaid (%) 22.2% 16.5%

In 2013, mobile-segment revenues generated in Morocco fell 10.1%, to MAD 15,719 million. Because of fierce competition, fourth-quarter mobile revenues declined by 9.7% year on year, to MAD 3,778 million.

The mobile customer base continued to grow, however, expanding 1.9% year on year, to 18,193 million customers. This rise was due to growth of 0.9% in the prepaid customer base (+157,000 customers) and to solid momentum from the high-value postpaid customer base (+15.1%), each the result of continually enhanced product offers and of migration of prepaid customers to subscription plans. The churn rate increased slightly, to 22.2% (+1.4 pts from 2012).

Outgoing mobile revenues declined year on year by 9.5%. The 19.4% increase in outgoing call traffic was not enough to compensate for the 27% fall in prices. Revenues from mobile services fell by 9.2% because of the 8% decline in incoming revenues resulting from reductions in mobile termination rates effective January 1, 2013. Equipment revenues continued to decline (-39.2% year on year) as a consequence of Maroc Telecom’s decision to reduce acquisition costs through a more targeted policy for handset subsidies.

In 2013, blended ARPU fell by 12.1% year on year, to MAD 69. The impact of severe price cuts in the mobile segment and of reduced mobile termination rates was partially compensated for by a rise in voice consumption (+19.4%) and by growth in data services, which account for 14.2% of ARPU (+3.1 pts more than in 2012).

The 3G mobile internet customer base grew by 51.7%, to 2.3 million customers at December 31, 2013.

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Fixed line and Internet

Unit 2012 2013

Fixed line

Fixed lines (000) 1,269 1,379

Broadband access (000) 683 837

At December 31, 2013, annual revenues from fixed-line and internet activities in Morocco amounted to MAD 7,391 million, a rise of 10.8% year on year. Much of this performance reflects the increase in lines leased by Maroc Telecom’s mobile segment from its fixed-line segment (+91.6%). Excluding this effect, fixed- line and internet revenues declined by 2.1%. Since June 2013, however, fixed-line revenues excluding lines leased by the mobile segment have risen slightly (+0.6% in the second half of 2013). The impetus from the double play rate plans and enhanced unlimited offers has underpinned the improvement in fixed-line business.

Revenues from fixed-line data rose to MAD 1,865 million (+6.2%), driven by customer-base growth, particularly in broadband internet.

Growth of the fixed-line customer base in Morocco continued to accelerate (+8.7% year on year), with 1,379 thousand lines at December 31, 2013. The fixed-line business was boosted by price cuts, enhanced offers (particularly the inclusion in rate plans of free minutes to mobiles), and continuing strong growth in the ADSL customer base (+22.6% in 2013).

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2.2.2.3 International activities

IFRS in MAD million 2012 (*) 2013

Revenue 7,079 7,754

Mauritania 1,375 1,476

o/w Mobile services 1,257 1,357

Burkina Faso 2,067 2,211

o/w Mobile services 1,694 1,848

Gabon 1,291 1,478

o/w Mobile services 688 883

Mali 2,422 2,658

o/w Mobile services 2,055 2,283

Elimination (76) (69)

Earnings from operations before depreciation 3,307 3,904 and amortization

Margin (%) 46.7% 50.4%

Earnings from operations 1,749 2,383

Margin (%) 24.7% 30.7%

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012

Maroc Telecom Group’s international business grew 9.5% in 2013 (+9.5% like for like), with revenues totaling MAD 7,754 million. A result of growth in mobile customer bases (+30.0%), this performance was also underpinned by significant capital expenditure carried out to expand coverage and to improve network quality.

In 2013, earnings from operations before depreciation and amortization (EBITDA) increased by 18.1% (+18.0% like for like), to MAD 3,904 million. EBITDA margin (50.4%) rose sharply by 3.7 pts as a consequence of gross-margin growth of 1.2 pts and a rise in operating expenses of only 1.3%.

EBITA amounted to MAD 2,383 million, up 36.3% (+36.3% like for like) from the previous year. Excluding restructuring charges booked in 2012, EBITA rose 30.5% (+30.6% like for like) and the operating margin gained 5.0 pts, to 30.7%. This change can be explained by growth in earnings from operations before depreciation and amortization (EBITDA) and by cost-optimization efforts, despite a 2.9% rise in depreciation charges (+2.7% like for like) for significant capital expenditure in recent years.

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Mauritania

Unit 2012 2013

Mobile

Customer base (000) 2,013 1,872

ARPU (MAD/month) 53.3 56.6

Fixed lines (000) 41 42

Broadband access (000) 7 7

At December 31, 2013, activities in Mauritania had generated annual revenues of MAD 1,476, an increase of 7.4% (+9.4% like for like) reinforced by the mobile segment, whose service revenues grew 7.9% (+10.0% like for like) subsequent to higher outgoing consumption (+24.6%).

The mobile customer base came to 1,872 thousand customers, 7.0% lower than a year earlier because of increasingly intense competition. The fixed-line and internet customer bases grew 2.5% and 6.8% respectively on an annual basis.

Burkina Faso

Unit 2012 2013

Mobile

Customer base (000) 3,872 4,643

ARPU (MAD/month) 39.5 36.1

Fixed lines (000) 141 94

Broadband access (000) 30 25

In 2013, activities in Burkina Faso generated revenues of MAD 2,211 million, 7.0% (+6.4% like for like) more than in 2012. This performance was driven by steady revenue growth in mobile services (+9.0% and +8.5% like for like) and by expansion of the mobile customer base (+19.9%).

The fixed-line customer base declined by 33.5%, to just under 94,000 customers, because of the update of the CDMA customer base carried out in March 2013. Similarly, the internet customer base shrank by 17.3% in 2013, to nearly 25,000 clients.

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Gabon

Unit 2012 2013

Mobile

Customer base (000) 777 1,041

ARPU (MAD/month) 79.2 80.7

Fixed lines (000) 18 19

Broadband access (000) 8 10

Revenues in Gabon amounted to MAD 1,478 million in 2013, 14.5% more than in 2012 (+13.9% like for like). Revenue growth stemmed mainly from strong growth in the mobile segment, whose service revenues rose 28.5% (+27.8% like for like) because of solid growth in the mobile customer base (+33.9%). The latter was attributable to a new pricing policy and to continual improvement in service quality.

The fixed-line (+6.9%) and internet (+26.4%) customer bases resumed growth thanks to enhanced rate plans (free fixed-to-fixed calls, free doubling of internet capacity). Mali

Unit 2012 2013

Mobile

Customer base (000) 6,023 8,923

ARPU (MAD/month) 33.2 25.9

Fixed lines (000) 98 110

Broadband access (000) 45 50

Activities in Mali generated revenues of MAD 2,658 in 2013 for year-on-year growth of 9.7% (+9.1% like for like). Growth was driven by mobile activity, whose service revenues improved by 11.1% (+10.5% like for like) as a result of substantial growth in the mobile customer base (+48.1%) and despite lukewarm economic recovery.

The fixed-line and internet customer bases continued to show steady growth of 12.0% and 12.9% respectively.

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2.3 QUALITATIVE AND QUANTITATIVE INFORMATION ON MARKET RISK

The Group is exposed to various market risks related to its business.

Foreign-exchange risk Maroc Telecom is exposed to exchange rate fluctuations to the extent that inflows and outflows are in different currencies.

Maroc Telecom receives inflows in foreign currencies in the form of international revenues, and makes expenditures in foreign currencies in the form of payments to international suppliers (notably, as capital expenditure and when buying terminals) and payments for interconnections with foreign operators. These outflows are mainly denominated in euros.

At December 31, 2014, euro-denominated outflows in foreign currencies by Maroc Telecom subsidiaries accounted for 53% of all outflows in foreign currencies and amounted to 2,095 million. In 2014. these outflows were less than inflows in foreign currencies, which were of the order of MAD 3,720 million. Maroc Telecom cannot fully offset its inflows against outflows or vice-versa as Moroccan regulations allow only 70% of its telecoms’ receipts in foreign currencies to be kept in a foreign-currency account, the remaining 30% having to be settled in dirhams.

In 2014, the foreign currency disbursements subsidiaries of Morocco Telecom, denominated in euros represents 75% of all disbursements in foreign currencies. Moreover, the foreign currency disbursements denominated in Ouguiya remains important and represent 25% of total disbursements. These totaling 5,391 million dirhams and are equivalent to the amount of foreign currency receipts which are of the order of 5,585 million dirhams in 2014.

Maroc Telecom results may therefore be sensitive to fluctuations in exchange rates, particularly in terms of the dirham, US dollar and euro.

In 2014, the euro slipped by 2% against the dirham (from 11.2305 dirhams per euro on December 31, 2013 to 10.9695 on December 31, 2014). Over the same period, the US dollar rose by 11%, from 8.1506 dirhams per dollar in 2013 to 9.0425 in 2014.

The following table sets out the Group’s principal foreign-currency positions at December 31, 2014.

Total Total (In millions Euro/FCFA USD MRO foreign MAD balance MAD) currencies sheet

Total assests 15,014 23 2,118 17,156 28, 669 45,824

Total liabilities (14,903) (381) (1,960) (17,244) (28,581) (45,824)

Net position 112 (358) 158 -88 88 0

Maroc Telecom’s currency assets are composed mainly of receivables from foreign operators. The Group’s currency liabilities are made up primarily of payables to foreign suppliers and operators.

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The following table shows the Company’s (excluding subsidiaries) net foreign-currency positions in euros and US dollars, and the aggregate of other currencies, at December 31, 2014.

Other currencies (In millions) Euro (2) USD (2) (against the euro)* (1)

Assets 104 9 0

Liabilities (124) (75) (2)

Net position (20) (66) (2)

Commitments (3) (118) (75) (3)

Net aggregate position (137) (141) (5)

*Based on 1 euro = 11.002 dirhams, the Bank-Al Maghrib average rate on December 31, 2014. NB: (1) Other currencies are mainly the Japanese yen (YEN), Swiss franc (CHF) and Swedish krona (SEK). (2) The foreign-currency position in euros and in dollars is calculated by applying, to receivables and debts expressed in Special Drawing Rights (SDR) of foreign operators at December 31, 2014, the proportion per currency of outflows made in 2014. (3) For the balance of commitments owed on contracts in progress, the breakdown by currency corresponds to the actual remaining part of the contracts signed. Interest-risk

Net cash position by maturity:

2014

>5 (In millions MAD) <1 year 1-5 years Total years

Bank loans 1,099 297 27 1,423

Bank overdrafts 5,207 5,207

Borrowings and financial liabilities 6,306 297 27 6,631

Cash and cash equivalents 1,259 1,259

Cash held for repayment of bank loans 5 5

Net cash (5,042) (297) (27) (5,366)

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2013

>5 (En millions MAD) <1 year 1-5 years Total years

Bank loans 1,400 305 13 1,719

Bank overdrafts 6,264 0 0 6,264

Borrowings and financial liabilities 7,664 305 13 7,982

Cash and cash equivalents 1,084 0 0 1,084

Cash held for repayment of bank loans 8 0 0 8

Net cash (6,571) (305) (13) (6,890)

2012

>5 (In millions MAD) <1 year 1-5 years Total years

Bank loans 2,592 857 29 3,478

Bank overdrafts 4,667 0 0 4,667

Borrowings and financial liabilities 7,259 857 29 8,145

Cash and cash equivalents 964 0 0 964

Cash held for repayment of bank loans 70 0 0 70

Net cash (6,225) (857) (29) (7,111)

In accordance with Company policy, Maroc Telecom’s financial debt is essentially on fixed-rate terms on a year, and therefore the Company does not have significant exposure to interest-rate fluctuations, favorable or unfavorable. In addition, the Company does not use interest-rate hedging instruments. Equity risk

The Group does not have a significant portfolio of listed equities. As a result, there is no significant risk relating to fluctuations in the prices of securities or shareholdings.

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2.4 TRANSITION FROM SEPARATE FINANCIAL STATEMENTS TO CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements are derived from the separate financial statements of Maroc Telecom and its subsidiaries, as prepared under the generally accepted accounting principles of each country. Various adjustments have been made to these separate financial statements, in compliance with IFRS consolidation and presentation requirements.

The main adjustments to the presentation of the statement of comprehensive income are the:

- elimination of revenues related to cancelled subscriptions between the date of cancellation and the end of the subscription period; - recognition of resellers’ commissions as consolidated operating expenses (these costs were initially netted against revenues in the separate financial statements; - reclassification of noncurrent items to earnings from operations, with the exception of adjustments of fixed-asset values; - reclassification of the Fidelio (loyalty awards program) provision, which is netted against revenues; - reclassification under net financial income of noncurrent financial items; - activation of payroll costs relating to the deployment of fixed assets.

The main adjustments to the statement of financial position relate to current assets:

- SIM cards: recording under fixed assets ; - nonactivated handsets: inventory values of handsets sold but not activated are adjusted to account for the recognition of revenues upon activation ; - regarding trade payables, the main adjustment entails reclassifying certain payables under provisions for contingencies and losses.

Change in presentation form has no impact on the group results.

Other consolidation adjustments concern the elimination of statutory provisions, the calculation of deferred taxes, and all consolidation-related operations (e.g., elimination of interest in equity affiliates).

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3. CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBRE 31, 2012, 2013 AND 2014

Pursuant to regulation (EC) no. 1606/2002 of the European Parliament and of the Council of July 19, 2002, Maroc Telecom Group’s consolidated financial statements have been prepared in accordance with international financial reporting standards (IAS/IFRS), as endorsed by the European Union.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS (In MAD millions) Note Dec,31-12(*) Dec,31-13 Dec,31-14

Goodwill 3 6,877 6,913 6,796 Other intangible assets 4 3,445 3,147 2,958 Property, plant, and equipment 5 25,476 25,548 25,135 Investments in equity affiliates 6 0 0 0 Noncurrent financial assets 7 266 204 293 Deferred tax assets 8 96 107 104 Noncurrent assets 36,159 35,919 35,286 Inventories 9 468 433 400 Trade accounts receivable and other 10 10,291 9,621 8,713 Short term financial assets 11 47 55 112 Cash and cash equivalents 12 964 1,084 1,259 Assets available for sale 56 55 55 Current assets 11,825 11,248 10,539 TOTAL ASSETS 47,985 47,167 45,824

SHAREHOLDERS’ EQUITY AND LIABILITIES (In Note Dec,31-12(*) Dec,31-13 Dec,31-14 MAD millions) Share capital 5,275 5,275 5,275 Retained earnings 4,266 4,515 4,760 Net earnings 6,709 5,540 5,850 Shareholders’equity attributable to equity 13 16,250 15,331 15,884 holders of the parent Noncontrolling interests 4,356 4,602 4,278 Shareholders’equity 20,606 19,933 20,163 Noncurrent provisions 14 816 376 366 Borrowings and other long-term financial liabilities 15 886 319 325 Deferred tax liabilities 8 244 199 203 Other noncurrent liabilities 132 100 0 Noncurrent liabilities 2,078 994 893 Trade accounts payable 16 17,394 17,539 17,429 Current tax liabilities 369 575 461 Current provisions 14 279 463 572 Borrowings and other short term financial liabilities 15 7,259 7,664 6,307 Current liabilities 25,302 26,241 24,768 TOTAL SHAREHOLDERS’EQUITY AND 47,985 47,167 45,824 LIABILITIES

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CONSOLIDATE STATEMENT OF COMPREHENSIVE INCOME

(In MAD millions) Note 2012 (*) 2013 2014

Revenues 17 29,849 28,559 29,144 Cost of purchases 18 (5,042) (4,296) (4,654) Payroll costs 19 (2,848) (2,723) (2,818) Taxes and duties 20 (1,429) (1,428) (1,782) Other operating income (expenses) 21 (4,541) (3,693) (3,865) Net depreciation, amortization, and provisions 22 (5,021) (5,440) (5,759) Earnings from operations 10,968 10,978 10,266 Other income and charges from ordinary activities (27) (42) (37) Income from equity affiliates 23 0 0 0 Earnings from continuing operations 10,941 10,937 10,229 Income from cash and cash equivalents 8 16 6 Gross borrowing costs (352) (341) (323) Net borrowing costs (344) (326) (317) Other financial income and expenses (36) (49) (29) Net financial income (expense) 24 (380) (374) (345) Income tax 25 (3,275) (4,203) (3,246) Net income 7,287 6,359 6,638 Exchange gain or loss from foreign activities (38) 75 (106) Other income and expenses (29) (17) 12 Total comprehensive income for the period 7,220 6,418 6,544 Net income 7,287 6,359 6,638 Attributable to equity holders of the parent 6,709 5,540 5,850 Noncontrolling interests 26 578 819 788 Total comprehensive income for the period 7,220 6,418 6,544 Attributable to equity holders of the parent 6,683 5,573 5,775 Noncontrolling interests 26 538 845 769 EARNINGS PER SHARE 2012 2013 2014

Net earnings attributable to equity holders of the parent 6,709 5,540 5,850 (in MAD millions)

Number of shares at December 31 879,095,340 879,095,340 879,095,340

Net earnings per share (in MAD) 27 7.6 6.3 6.7

Diluted net earnings per share (in MAD) 27 7.6 6.3 6.7

(*) Effective January 1, 2013, and retroactive to January 1, 2012, Maroc Telecom has adopted application of IAS 19 (amended) Employee Benefits.

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CONSOLIDATED STATEMENT OF CASH FLOW (In millions MAD) Note 2012 (*) 2013 2014

Earnings from operations 10,968 10,978 10,266 Depreciation, amortization and other non-cash movements 5,038 5,184 5,759 Gross cash from operating activities 16,007 16,163 16,026 Other changes in net working capital 896 327 238 Net cash from operating activities before tax 16,902 16,490 16,264 Income tax paid (3,028) (3,988) (3,303) Net cash from operating activities (a) 12 13,874 12,502 12,960 Purchase of PP&E and intangible assets (5,106) (4,849) (4,727) Purchases of consolidated investments after acquired cash 0 0 0 Investments in equity affiliates 0 0 0 Increase in financial assets (29) (16) (108) Disposals of PP&E and intangible assets 37 3 3 Decrease in financial assets 99 72 5 Dividends received from nonconsolidated investments 1 1 3 Net cash used in investing activities (b) (4,998) (4,790) (4,825) Capital increase 0 Dividends paid by Maroc Telecom 13 (8,137) (6,502) (5,274) Dividends paid by subsidiaries to their noncontrolling interests (480) (595) (1,062) Changes in equity (8,617) (7,097) (6,336) Proceeds from borrowings and increase in other long-term 287 85 153 financial liabilities Payments on borrowings and decrease in other noncurrent financial (72) 0 0 liabilities Proceeds from borrowings and increase in other short-term 1,991 2,219 865 financial liabilities Payments on borrowings and decrease in other current financial (1,362) (1,616) (2,331) liabilities Change in net current accounts (383) (841) 0 Net interest paid (cash only) (344) (327) (316) Other cash expenses (income) used in financing activities (19) (18) (21) Change in borrowings and other financial liabilities 97 (496) (1 651) Net cash used in financing activities (d) 12 (8,520) (7,593) (7,987) Translation adjustment and other noncash items (g) (11) 2 26 Total cash flows (a)+(b)+(d)+(g) 12 346 121 175 Cash and cash equivalents at beginning of period 617 964 1,084 Cash and cash equivalents at end of period 12 964 1,084 1,259 (*) Maroc Telecom adopted IAS 19 (amended) Employee Benefits on January 1, 2013, with retroactive effect to January 1, 2012.

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Consolidated statement of changes in equity

(In millions MAD) Share Earnings Other Total Noncontrolling Total capital and comprehensiv group interests retained e income share earnings Restated position at January 1, 2012 5,275 12,631 (159) 17,747 4,272 22,019 Total comprehensive income for the 6,705 (22) 6,683 538 7,220 period Change in gains and losses recognized 0 0 (12) (12) (26) (38) directly in equity and recyclable in profit or loss Gains and losses on translation (12) (12) (26) (38) Change in gains and losses recognized 0 0 (10) (10) (10) (21) directly in equity and not recyclable in profit or loss Actuarial gains and losses (10) (10) (10) (21) Capital increase 0 0 Capital decrease 0 0 Share-based compensation 0 0 Change in percentage without 0 0 assumption/loss of control Change in percentage with 0 0 assumption/loss of control Dividends (8,137) (8,137) (453) (8,590) Trading in own shares (43) (43) (43) Other changes 0 0 Restated position at December 31, 5,275 11,156 (181) 16,251 4,356 20,607 2012 Comprehensive net income 5,540 33 5,573 845 6,418 Change in gains and losses recognized 41 41 34 75 directly in equity and recyclable in profit or loss Gains and losses on translation 41 41 34 75 Change in gains and losses recognized (9) (9) (8) (17) directly in equity and not recyclable in profit or loss Actuarial gains and losses (9) (9) (8) (17) Dividends (6,502) (6,502) (598) (7,099) Trading in own shares 0 0 Other changes 9 9 (0,4) 9 Position at December 31, 2013 5,275 10,205 (149) 15,331 4,602 19,933 Comprehensive net income 5,850 (75) 5,775 769 6,544 Change in gains and losses recognized (79) (79) (79) directly in equity and recyclable in profit or loss Gains and losses on translation (83) (83) (23) (106) Change in gains and losses recognized 4 4 4 8 directly in equity and not recyclable in profit or loss Actuarial gains and losses 4 4 4 Capital increase 0 0 Capital decrease 0 0 Share-based compensation 0 0 Change in percentage without 0 0 assumption/loss of control Change in percentage with 0 0 assumption/loss of control Dividends (5,274) (5,274) (966) (6,240) Trading in own shares 52 52 (126) (74) Other changes 0 0 Position at 31 December 2014 5,275 10,833 (223) 15,885 4,278 20,163

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(*) Maroc Telecom adopted IAS 19 (amended) Employee Benefits on January 1, 2013, with retroactive effect to January 1, 2012. The adoption of IAS 19 mandatory in the European Union as from this date At December 31, 2014, Maroc Telecom’s share capital comprised 879,095,340 ordinary shares. Ownership of the shares was divided as follows:

- Etisalat: 53% through a holding company 91.3%-owned by Etisalat and 8.7%-owned by the Abu Dhabi Development Fund; - Kingdom of Morocco: 30%; - Other: 17%. Retained earnings comprise mainly undistributed earnings from previous periods, including MAD 3,424 million at December 31, 2014, and net earnings (attributable to equity holders of the parent) from the current period.

NOTE 1. ACCOUNTING PRINCIPLES AND VALUATION METHODS Accounting principles and valuation methods

Group companies are consolidated on the basis of their fiscal year ending December 31, except for CMC, whose fiscal year ends March 31, 2014.

The financial statements and notes thereto were approved by the Management Board on February 19, 2015.

1. Basis of preparation for the consolidated financial statements for 2014, 2013, and 2012

Pursuant to regulation (EC) no. 1606/2002 of the European Parliament and the Council of July 19, 2002, concerning the adoption of international accounting standards, the consolidated financial statements of Maroc Telecom Group for the year ended December 31, 2014, were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), applicable on December 31, 2014, as endorsed by the European Union (EU). For purposes of comparison, the 2014 financial statements also include financial information on 2013 and 2012.

2. COMPLIANCE WITH ACCOUNTING STANDARDS

The consolidated financial statements of Itissalat Al-Marghrib S.A. have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union and mandatory at December 31, 2014. The accounting standards applied to the consolidated financial statements do not differ from those issued by the International Accounting Standards Board (IASB). 2.1 Standards and interpretations applied by Maroc Telecom for fiscal year 2014

All the new standards, interpretations and amendments published by the IASB and mandatory in the European Union since January 1, 2014 have been applied.

The following standards came into effect on January 1, 2014:

- Amendments to IAS 32 – “Offsetting Financial Assets and Financial Liabilities” - Amendments to IAS 36 – “Recoverable Amount Disclosures for Non-Financial Assets” - Amendments to IAS 39 – “Eligible Hedged Items” The amendments are to be applied retrospectively to reporting periods starting on or after January 1, 2014.

Interpretation IFRIC 21 – “Levies” was applied by Maroc Telecom Group from the first quarter of 2014.

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2.2 Impact of application of the standards and interpretations adopted in 2014

The application of interpretation IFRIC 21, amendments to IAS 32, amendments to IAS 36, amendments to IAS 39 and amendments to the various IFRS standards in the Annual Improvements 2012–2014 cycle have no material impact on Maroc Telecom’s annual financial statements.

3. PRESENTATION AND PRONCIPLES GOVERNING THE PREPARATION OF THE CONSOLODATED FINANCIAL STATEMENT

Pursuant to IFRS principles, the consolidated financial statements have been prepared on an historical-cost basis, with the exception of certain asset and liability categories described in the following notes. The consolidated financial statements are presented in Moroccan dirhams, and all figures are rounded to the nearest million, unless otherwise indicated. The consolidated financial statements include the separate financial statements of Maroc Telecom and its subsidiaries, after elimination of intragroup transactions. 3.1 Statement of comprehensive income

Maroc Telecom has chosen to present its statement of comprehensive income in a format that breaks down income and expenses by type.

3.1.1 Earnings from operations and earnings from continuing operations

Earnings from operations, which in documents previously issued by Maroc Telecom was called operating income, includes revenues, cost of purchases, payroll costs, taxes and duties, other operating income and expenses, as well as net depreciation, amortization and provisions.

Earnings from continuing operations includes earnings from operations, other income from continuing operations, other expenses on continuing operations (including impairment of goodwill and other intangible assets), as well as the share of net earnings of equity associates.

3.1.2 Financing costs and other financial income and expenses

Net financing costs comprise:

- Gross financing costs which includes interest payable on loans calculated using the effective-interest rate method;

- Financial income received from cash investments.

Other financial income and expenses mainly include gains and losses on currency translation (other than those relating to operating activities recognized under earnings from operations), dividends received from nonconsolidated companies, earnings from consolidated activities or companies not recognized under earnings from discontinued activities or in the process of being discontinued. 3.2 Statement of financial position

Assets and liabilities with maturities shorter than the operating cycle, i.e. generally less then 12 months, are recognized under current assets or liabilities. If their maturities are longer than this, they are recognized under noncurrent assets or liabilities, except for operating expenses.

3.3 Consolidated statement of cash flows

Maroc Telecom prepares its consolidated statement of cash flows using the indirect method.

Working capital requirements correspond to changes in items on the statement of financial position related to trade receivables, inventories, provisions, and accounts payable.

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3.4 Use of estimates and assumptions

The preparation of consolidated financial assets in accordance with IFRS requires Maroc Telecom to make certain estimates and assumptions that it deems reasonable and realistic. Despite regular reviews of these estimates and assumptions based on past or anticipated achievements, facts and circumstances may lead to changes in these estimates and assumptions that could have an impact on the carrying value of Group assets, liabilities, equity, or earnings.

The main estimates and assumptions concern changes in the following items:

- provisions: risk estimates, performed on an individual basis; the occurrence of events during risk- measurement procedures may lead at any time to a reassessment of the risk in question (see Note 14); - impairment of trade receivables and inventories: estimates of nonrecovery risk for trade receivables and obsolescence risk for inventories; - employee benefits: assumptions, updated annually, include the probability of employees remaining with the Group until retirement, expected changes in future compensation, the discount rate, and the inflation rate (see Note 14); - revenue recognition: estimates of benefits granted as part of customer-loyalty programs, to be deducted from certain revenue items, and of deferred revenue relating to distributors (see Note 17); - goodwill: valuation methods adopted for the identification of intangible assets acquired through business combinations (see Note 3); - goodwill, indefinite useful lives of intangible assets, and assets in progress: assumptions are updated annually for impairment tests performed on each of the Group's cash-generating units (CGUs), determined by future cash flows and discount rates; - deferred taxes: estimates concerning the recognition of deferred tax assets are updated annually; estimates include the Group's future tax results and expected changes in temporary differences between assets and liabilities (see Note 8). 3.5 Consolidation methods

The generic name Maroc Telecom refers to the group of companies composed of the parent company Itissalat Al- Maghrib S.A. and its subsidiaries.

A list of the Group’s principal subsidiaries is presented in Note 2, “Scope of consolidation at December 31, 2014, 2013, and 2012. Maroc Telecom’s scope of consolidation comprises wholly owned companies exclusively; therefore the only consolidation method employed by the Group is that of full consolidation. The accounting method described below was applied consistently to all the periods presented in the consolidated financial statements. This accounting method was applied consistently by all Group entities.

Full consolidation

All companies in which Maroc Telecom has a controlling interest, namely those in which it has the power to govern financial and operational policies to obtain benefits from their operations, are fully consolidated. The new standard for consolidation, introduced by IFRS 10 as replacement of IAS 27 (amended) Consolidated and Separate Financial Statements and by SIC 12 Special Purpose Vehicles, is based on the following three criteria that must be met simultaneously for Maroc Telecom to assume control :

- Maroc Telecom has power over the subsidiary when it has existing rights that give it the ability to direct the relevant activities (i.e., the activities that significantly affect the investee’s returns); Power arises from existing and/or potential voting rights and/or contractual arrangements. The voting rights must be substantial (i.e., they may be employed at any time and without limitation, particularly during votes on important activities). Assessment of whether a parent has power over a subsidiary depends on the relevant activities of the subsidiary, it’s decision-making procedures, and the breakdown of votes among the other shareholders.

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- Maroc Telecom has exposure or rights to variable returns from its involvement with the subsidiary. These returns may vary in accordance with the subsidiary’s performance. The notion of return is defined broadly and includes dividends and other forms of distributed economic benefits, the investment’s valuation, cost savings, synergies, etc. ;

- Maroc Telecom has the ability to exercise its power to affect the returns. Any power that cannot affect returns is considered non-controlling.

The Group’s consolidated financial statements are presented as those of a single economic entity with two types of owners: 1. the owners of Maroc Telecom Group (shareholders of Maroc Telecom SA), and 2. holders of non-controlling interests (minority shareholders of the subsidiaries). A non-controlling interest is defined as a stake in a subsidiary that cannot be directly or indirectly attributed to a parent company (hereinafter “non- controlling interests”). Consequently any changes in percentage of ownership of a parent company in a subsidiary that do not result in the loss of control affects only equity, because control is not changed within the economic entity. Transaction eliminated in the consolidated financial statements

Revenues, expenses, and balance-sheet positions resulting from intragroup transactions are eliminated during the preparation of the consolidated financial statements.

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3.6 Goodwill and Business combinations Business combinations concluded since January 1, 2009

The acquisition method is used to account for business combinations. Under this method, upon the initial consolidation of an entity over which the Group has acquired exclusive control: - the identifiable assets acquired and the liabilities assumed are measured at their fair value on the acquisition date; - the noncontrolling interests are measured either at fair value or at their proportionate share of the acquiree’s identifiable net assets (this option is available on a transaction-by-transaction basis). On the acquisition date, goodwill is measured as the difference between: (i) the fair value of the consideration transferred plus the amount of noncontrolling interest in the acquiree, and, in a business combination achieved in stages, the acquisition-date fair value of the equity interest held previously by the acquirer in the acquiree; (ii) the net amount on the acquisition date for identifiable assets acquired and liabilities assumed. The fair-value measurement of noncontrolling interests increases goodwill up to the share attributable to the noncontrolling interests, thereby resulting in the recognition of full goodwill. The purchase price and its allocation must be completed within 12 months of the acquisition date. If goodwill is negative, it is recognized as profit directly in profit or loss. After the acquisition date, goodwill is measured at its initial amount, less any recorded impairment losses. The following principles also apply to business combinations: - beginning on and after the acquisition date, to the extent possible, goodwill is allocated to each cash- generating unit likely to benefit from the business combination; - any adjustment to the purchase price is recorded at fair value on the acquisition date, and any subsequent adjustment after the purchase-price allocation period is recognized in profit or loss; - acquisition-related costs are recognized as expenses when incurred; - in the event of acquisition of an additional interest in a consolidated subsidiary, Maroc Telecom recognizes the difference between the acquisition cost and the carrying value of noncontrolling interests as a change in equity attributable to shareholders of Maroc Telecom; - goodwill is not amortized. Maroc Telecom recognizes under “Other financial income and expenses” the impact on the statement of comprehensive income of the application of IFRS 3 (amended) and IAS 27 (amended).

Business combinations prior to January 1, 2009

Pursuant to IFRS 1, Maroc Telecom elected not to restate business combinations that occurred before January 1, 2004. IFRS 3, as published by the IASB in March 2004, had already retained the acquisition method. Its provisions, however, differed from those of the revised standard on the following main points:

- noncontrolling interests were measured on the basis of their proportionate share in the acquired net identifiable assets; the option of fair-value measurement did not exist; - contingent consideration was recognized in the cost of acquisition only if payment was likely to occur and the amounts could be measured reliably; - costs attributable directly to the acquisition were recognized under the cost of the business combination. - In the event of acquisition of an additional interest in a consolidated subsidiary, Maroc Telecom recognizes as goodwill the difference between the acquisition cost and the carrying value of acquired noncontrolling interests.

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3.7 Foreign-currency translation

Foreign-currency transactions are initially recorded in the functional currency at the exchange rate prevailing on the date of the transaction. At the end of the period, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency at the exchange rate prevailing on that date. All translation differences are recognized in profit or loss for the period. 3.8 Translation of financial statements for foreign activities

Assets and liabilities relating to foreign activities, including goodwill and fair-value adjustments arising from consolidation, are translated into Moroccan dirhams at the exchange rate prevailing at the end of the period.

Income and expenses are translated into dirhams at the average exchange rate over the period.

Net translation differences are recognized in other comprehensive income and accumulated in a separate component of equity. 3.9 Assets

3.9.1 Other intangible assets Intangible assets acquired separately are recorded at cost, and intangible assets acquired in connection with a business combination are recorded at their fair value at the acquisition date. The historical-cost model is applied to intangible assets after their initial recognition; amortization begins as soon as the assets are available for use. Assets with a finite useful life are amortized.

Useful life is reviewed at the end of each reporting period and is estimated at between two and five years.

Trade names, subscriber bases, and market shares generated internally are not recognized as intangible assets.

Licenses to operate telecom networks are recorded at historical cost and amortized on a straight-line basis from their effective service start date until the expiry of the corresponding license.

Maroc Telecom has elected not to apply the option provided in IFRS 1 to remeasure certain intangible assets at their fair value at January 1, 2004.

Subsequent expenditure for intangible assets is activated only where it increases the probable future economic benefits specific to the corresponding asset. All other expenditure is expensed in the period in which it is incurred.

3.9.2 Research and development costs Research costs are expensed when incurred. Development expenses are capitalized when the project can reasonably be considered feasible.

Pursuant to IAS 38 Intangible Assets, development costs are capitalized only after the technical and financial feasibility of the asset for sale or use have been established, where it is likely that the future economic benefits attributable to the asset will flow to the company, and where the cost of the asset can be measured reliably.

3.9.3 Property, plant, and equipment Property, plant, and equipment are carried at historical cost less any accumulated depreciation and impairment losses. Historical cost includes acquisition or production costs as well as costs directly attributable to transporting the asset to its physical location and to preparing it for use in operations. For the purposes of IAS 23, borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset are included in the cost of the asset. Other borrowing costs are recognized as an expense for the period in which they are incurred. When property, plant, and equipment include significant components with various useful lives, the components are recorded and depreciated separately.

Property assets comprising the items “land” and “buildings” are derived in part from the contribution in kind granted in 1998 by the Moroccan government (in connection with the breakup of ONPT) to Maroc Telecom when it was established.

When these assets were transferred, the property titles could not be registered with the property registry.

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Fully 93% of such assets had been assigned property titles at the end of 2014. Although uncertainty over the property titles remains, the risk is limited, because the Moroccan government has guaranteed Maroc Telecom use of the transferred property as at the end of 2013, and because to date there have been no significant incidents related to this situation.

The assets transferred by the Moroccan government on February 26, 1998, to establish Maroc Telecom as a public operator were recorded as a net amount in the opening statement of financial position, as approved by:

- the Postal Services and Information Technology Act no. 24-96;

- the joint order no. 341-98 of the Ministry of Telecommunications and the Ministry of Finance, Commerce, and Industry, approving the inventory of assets transferred to Maroc Telecom Group.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives are reviewed at the end of each reporting period and are as follows:

- Construction and buildings 20 years

- Civil engineering projects 15 years

- Network equipment:

o Transmission (mobile) 10 years

o Switching 8 years

o Transmission (fixed line) 10 years

- Fixtures and fittings 10 years for various facilities

- ears for the fitting out of buildings o Computer equipment 5 years - Office equipment 10 years

- Transportation equipment 5 years

Assets not yet in service are recorded as assets in progress. Assets financed through finance leases are recorded at the lower of the fair value of the asset and the present value of the minimum lease payments, and related debt is recorded under “Borrowings and other financial liabilities.” These assets are depreciated on a straight-line basis over their estimated useful lives.

Depreciation of assets acquired under finance leases is recorded as a general depreciation expense.

Maroc Telecom has elected not to apply the option provided in IFRS 1 to remeasure property, plant, and equipment at fair value as at January 1, 2004.

The carrying value of an item of property, plant, and equipment includes the replacement cost of a component of such an item if this cost is incurred, if it is probable that the future economic benefits associated with the asset will flow to Maroc Telecom Group, and if the cost can be measured reliably.

All maintenance costs are expensed when incurred.

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3.9.4 Impairment of fixed assets Goodwill and other intangible assets with indefinite useful lives are subject to an impairment test at the close of each annual period, and are also tested whenever there is an indication that they may be impaired. The carrying value of other fixed assets is also subject to an impairment test whenever events or circumstances indicate that the carrying value of such assets may not be recoverable. The impairment test compares the asset’s carrying amount with its recoverable amount (i.e., the higher of fair value less disposal costs and value in use).

The recoverable amount is determined for an individual asset as long as the asset generates cash inflows that are largely independent of those from other assets or groups of assets. If such is the case, as it is for goodwill, the recoverable amount is determined for the cash-generating unit. Maroc Telecom has deemed its fixed-line and mobile businesses to be cash-generating units. 3.9.5 Financial assets Financial assets with a maturity of more than three months are classified in one of the following four categories: - assets at fair value through profit or loss;

- held-to-maturity assets;

- loans and receivables;

- available-for-sale assets.

Financial assets measured at fair value through profit or loss

This category comprises financial assets held for trading that Maroc Telecom intends to sell in the near future.

Gains and losses arising from changes in the fair value of financial assets in this category are recognized in profit or loss in the period in which they occur.

Financial assets at fair value through profit or loss comprise mainly term deposits. Held-to-maturity financial assets

Held-to-maturity financial assets are nonderivative financial assets (other than loans and receivables) with fixed or determinable payments and fixed maturities that the Group intends and is able to hold to maturity. These assets are initially recognized at fair value including directly attributable transaction costs. After initial recognition these assets are measured at amortized cost using the effective-interest method.

They are subject to impairment tests when there is evidence of impairment loss. Impairment is recognized if the asset’s carrying value is greater then the present value of its estimated future cash flows. Loans and receivables

This category comprises nonderivative financial assets whose payment is fixed or determinable and which are not traded on any active market. These assets are recognized at amortized cost using the effective-interest method, and they are subject to impairment tests if there is evidence of impairment loss. Impairment loss is recognized if the asset’s carrying value is greater then the present value of its estimated future cash flows, discounted at the original effective interest rate. Available-for-sale financial assets

Available-for-sale securities include nonderivative financial assets that are classified either as available for sale or as unallocated to any other category of financial assets.

Available-for-sale financial assets are recognized at fair value. Gains and losses resulting from available-for-sale financial assets are recognized in equity until the financial asset is sold, redeemed, or otherwise removed from the balance sheet, or until there is objective evidence that the investment is impaired indefinitely, whether partially or wholly, at which time the accumulated gain or loss previously recognized in equity is expensed in the statement of earnings.

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For financial assets actively traded on organized financial markets, fair value is determined by reference to the market price at the end of the reporting period.

If the fair value cannot be determined accurately, available-for-sale securities are recognized at cost. Where there is objective evidence that the investment is impaired indefinitely, irreversible impairment is expensed.

When an available-for-sale security generates interest, the amount of interest is calculated in accordance with the effective-interest method and is reported as income.

The principal available-for-sale securities comprise unconsolidated equity investments in unlisted companies. 3.9.6 Inventories

Inventories comprise :

- goods held for sale to customers upon line activation, comprising fixed and mobile handsets and accessories (inventories are accounted for using the weighted average cost method);

- handsets delivered to distributors and not activated at year-end are recorded as inventory;

- handsets not activated within nine months of the delivery date are recorded as revenue;

- equipment and supplies corresponding to general nonnetwork equipment (these inventories are measured at their average purchase price).

Inventories are valued at the lower of cost and net realizable value. An impairment loss is recognized on the basis of the prospects for selling or using the inventory items (GSM or technical assets). 3.9.7 Trade accounts receivable and other receivables

This item comprises trade receivables and other receivables, initially recognized at fair value and subsequently at amortized cost less impairment losses.

Trade accounts receivable includes trade receivables and government receivables:

- trade receivables: held against individuals, distributors, businesses, and international operators;

- government receivables: held against local authorities and the Moroccan government.

Impairment is recognized when the carrying value of an asset exceeds the present value of its estimated future cash flows. 3.9.8 Cash and cash equivalents

Cash and cash equivalents include cash on hand, sight deposits, current accounts, and short-term, highly liquid investments with maturities of three months or less.

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3.10 Assets held for sale and discontinued operations

A noncurrent asset or a group of assets and liabilities qualifies as held for sale when its carrying value may be recovered principally through its disposal and not by its continued utilization. To qualify as held for sale, the asset must be available for immediate sale and the disposal must be highly probable. Such assets and liabilities are reclassified as assets held for sale and as liabilities associated with assets held for sale, without possibility of offset. The reclassified assets are recorded at the lower of fair value (net of disposal fees) and cost less accumulated depreciation and impairment losses, and are no longer depreciated.

An operation is qualified as discontinued when the criteria for classification as an asset held for sale have been met or when Maroc Telecom has sold the operation. Discontinued operations are reported on a single line of the statement of comprehensive income for the periods reported, comprising the earnings after tax of the discontinued operations until the divestiture date and the gain or loss after tax on the sale or fair-value measurement, less costs to sell the assets and liabilities of the discontinued operations. In addition, operating, investing, and financing cash flows generated by discontinued operations are reported on the statement of cash flows.

Financial liabilities

Financial liabilities comprise borrowings, accounts payable, and bank overdrafts.

Borrowings

All borrowings are initially accounted for at fair value of the amount received, net of borrowing costs.

The allocation of borrowings to current and noncurrent liabilities is performed on the basis of contractual maturity.

Derivative financial instruments

Maroc Telecom Group does not use derivatives or currency hedges. 3.11 Provisions

Provisions are recognized when, at the end of the reporting period, the Group has a legal, regulatory, or contractual obligation as a result of past events, when it is probable that an outflow of resources (without any expected related inflow) will be required to settle the obligation, and when the obligation can be estimated reliably. Where the effect of the time value of money is material, provisions are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money. If no reliable estimate can be made of the amount of the obligation, no provision is recorded and a disclosure is made in the notes to the consolidated financial statements.

Restructuring provisions are recorded when the Group has approved a formal and detailed restructuring program and has either begun to implement the program or has announced the program publicly. Future operating expenses are not provisioned.

A provision for pension obligations has been recorded for senior executives of Maroc Telecom. For the subsidiaries, this provision is estimated using the actuarial method.

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3.12 Deferred taxes

Deferred taxes are accounted for using the liability method, for differences at closing between the tax-base value of assets and liabilities and their carrying value on the statement of financial position.

Deferred tax liabilities are recognized for all taxable temporary differences:

- except for temporary differences generated by the initial recognition of goodwill;

- for taxable temporary differences arising from investments in subsidiaries, affiliates, and joint ventures, unless the date on which the temporary difference will reverse can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, tax-loss carryforwards, and unused tax credits, insofar as it is probable that a taxable profit will be available, or when a current tax liability exists to make use of those deductible temporary differences, tax-loss carryforwards, and unused tax credits:

- except where the deferred tax asset associated with the deductible temporary difference is generated by initial recognition of an asset or liability in a transaction that is not a business combination and that at the transaction date does not impact accounting earnings, taxable income, or taxable losses;

- for deductible temporary differences arising from investments in subsidiaries, affiliates, and joint ventures, deferred tax assets are recorded to the extent that it is probable that the temporary difference will reverse in the foreseeable future and that taxable profit will be available against which the temporary difference can be utilized.

The carrying value of deferred tax assets is reviewed at each closing date and reduced to the extent that it is no longer probable that a taxable profit will be available to allow the deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the expected tax rates for the year during which the asset will be realized or the liability settled, on the basis of tax rates (and tax regulations) enacted or substantially enacted by the closing date.

Taxes for items credited or charged directly to equity are recognized in equity, not in profit or loss.

3.13 Trade accounts payable

Trade accounts payable include trade payables and other accounts payable, These are measured initially at historical cost and subsequently at amortized cost. 3.14 Share-based compensation

Pursuant to IFRS 2, share-based compensation is recorded as a payroll cost at the value of the equity instruments granted, which are assessed using a binomial model. However, depending on whether the equity instruments granted are settled through the issuance of Maroc Telecom shares or in cash, the valuation of the expense differs:

- For equity-settled instruments, the value of the instruments granted is initially estimated and fixed at grant date, then allocated over the vesting period on the basis of features of equity-settled instruments. The obligation is recorded in equity.

- For cash-settled instruments, the value of the instruments granted is initially estimated and fixed at grant date and is then re-estimated at each reporting date; the expense is adjusted pro rata for subsequent changes in the value of the vested rights. The obligation is allocated over the vesting period on the basis of features of cash-settled instruments. The corresponding obligation is recorded as a noncurrent provision.

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Pursuant to the transitional provisions of IFRS 1 for IFRS 2, Maroc Telecom elected to apply IFRS 2 retroactively, to January 1, 2004.

3.15 Revenues

Revenues from continuing operations are recorded when it is probable that the risks and future economic benefits incident to ownership of fixed assets will flow to the Group, and when the revenues can be measured reliably.

Revenues comprise sales of telecommunications services in mobile, fixed-line, and internet activities, as well as the sale of telecommunications products, essentially mobile and fixed-line handsets and multimedia equipment. Almost all of Maroc Telecom’s revenues are generated by services.

Revenues from telephone subscriptions are recognized on a straight-line basis over the subscription contract period. Revenues from incoming and outgoing call traffic are recognized when the service in provided. For prepaid services, revenues are recognized as calls are made.

Revenues from fixed-line, internet, and mobile activities comprise:

- revenue from domestic and international outbound and inbound calls under postpaid plans (such revenue is recorded when generated);

- income from subscriptions;

- income from prepaid services (such income is recognized as calls are made);

- income from data-transmission services provided to businesses, internet service providers, and other telecommunications operators;

- income from advertising in paper and electronic telephone directories (such income is recognized when the directories are published).

Revenues from the sale of handsets, net of customer discounts and connection charges, are recognized upon line activation. Customer acquisition and loyalty costs are expensed for mobile and fixed-line services, principally consisting of customer rebates for handsets sold through distributors.

Sales of services provided to customers managed by Maroc Telecom on behalf of content providers (mainly premium-rate numbers) are accounted for net of related expenses.

When sales are made via a third-party distributor supplied by the Group and involve a discount from the retail price, revenues are recorded as gross revenues and commissions granted are recognized as operating expenses.

Awards granted by Maroc Telecom and its subsidiary companies to their customers in connection with customer loyalty programs, in the form of free or discounted goods or services are recorded in accordance with IFRIC 13 and IAS 18.

The IFRIC 13 interpretation is based on the principle of measuring customer-loyalty award credits at fair value (defined as the excess price over the sales incentive that would be granted to any new customer) and that would result (should any such excess price exist) in deferred recognition of the portion of the revenue associated with the subscription in the amount of such excess price. 3.16 Cost of purchases

Cost of purchases comprises the purchase of mobile and fixed-line handsets and interconnection costs. 3.17 Other operating income and expenses

This item comprises mainly commissions to distributors, network-maintenance expenses, advertising and marketing costs, and restructuring charges.

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3.18 Net financing costs

Net financing costs include interest payable on loans (calculated using the effective-interest method) and interest on investments.

Investment income is recognized in the statement of earnings when acquired. 3.19 Taxe expense

Tax expense includes income tax payable and deferred tax expense (or income). Tax is expensed unless it applies to items recorded directly to equity. 4. CONTRACTUAL COMMITMENTS AND CONTINGENT ASSETS AND LIABILITIES

Once a year, Maroc Telecom and its subsidiaries prepare detailed reports on all contractual obligations, commercial and financial commitments, and contingent obligations for which they are jointly and severally liable. These detailed reports are updated regularly by the relevant departments and reviewed by Group senior management.

The assessment of off-balance-sheet commitments relating to suppliers of fixed assets is bears on the following:

- for master service agreements and associated supplemental agreements valued at more than MAD 25 million, the difference between minimum commitments and commitments actually fulfilled; - for all other contracts, the difference between firm orders and orders actually fulfilled.

Commitments arising from real-estate leases are estimated on the basis of one month’s rental expense, because virtually all termination clauses require one month’s notice. 5. SEGMENT DATA

A segment is a distinguishable component of the Group that is engaged in providing a product or service in a specific economic environment (geographical segment), or in providing products or related services (business segment) that are subject to risks and rewards different from those of other business segments.

In order to benchmark the performance indicators used for internal reporting, as required by IFRS 8, Maroc Telecom has opted to report key financial and operating indicators by geographical area. This reporting has been achieved through the creation of a new international segment—separate from the Morocco segment— that regroups the four existing subsidiaries in Mauritania, Burkina Faso, Gabon, and Mali.

6. NET CASH POSITION

This corresponds to cash and cash equivalents minus borrowings, cash equivalents and cash earmarked for borrowings repayable in more than 3 months’ time. 7. EARNINGS PER SHARE

Earnings per share, as presented in the statement of comprehensive income, are calculated by dividing earnings (Group share) for the period by the average number of shares outstanding over the period.

Diluted earnings per share are calculated by dividing:

- the earnings attributable to the equity holders of the parent - by the average number of shares outstanding over the period plus the average number of ordinary shares that would have been issued upon conversion of all potentially dilutive instruments that are convertible into ordinary shares.

At December 31, 2014, there were no potentially dilutive instruments.

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NOTE 2. SCOPE OF CONSOLIDATION Company Legal % Group % Capital Consolidati form interest held on method

Maroc Telecom S.A. 100% 100% FC Avenue Annakhil Hay Riad Rabat - Morocco Compagnie Mauritanienne de Communication (CMC) S.A. Avenue Roi Fayçal 7000 Nouakchott - Mauritania December 31, 2014 80% 80% FC December 31, 2013 80% 80% FC December 31, 2012 80% 80% FC Mauritel SA S.A. Avenue Roi Fayçal 7000 Nouakchott - Mauritania December 31, 2014 41% 52% FC December 31, 2013 41% 52% FC December 31, 2012 41% 52% FC Onatel S.A. 705, AV. de la nation 01 BP 10000 Ouagadougou - Burkina Faso December 31, 2014 51% 51% FC December 31, 2013 51% 51% FC December 31, 2012 51% 51% FC Gabon Telecom S.A. B.P.40 000 LIBREVILLE – Gabon December 31, 2014 51% 51% FC December 31, 2013 51% 51% FC December 31, 2012 51% 51% FC Sotelma S.A. Route de Koulikoro, quartier Hippodrome, BP 740, Bamako - Mali December 31, 2014 51% 51% FC December 31, 2013 51% 51% FC December 31, 2012 51% 51% FC Casanet S.A. Avenue Annakhil Hay Riad Rabat-Maroc December 31, 2014 100% 100% FC December 31, 2013 100% 100% FC December 31, 2012 100% 100% FC

Maroc Telecom is a Moroccan corporation (société anonyme) whose principal activity is the sale and provision of telecommunications goods and services. Its registered office is located at Avenue Annakhil, Hay Riad, Rabat (Morocco).

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NOTE 3. GOODWILL (In millions MAD) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Mauritel 137 137 137

Onatel 1,838 1,838 1,838

Gabon Telecom 142 142 142

Sotelma* 4,755 4,791 4,674

Casanet 5 5 5

Total net 6,877 6,913 6,796

(*) SOTELMA’s goodwill was calculated by applying IFRS 3 (revised), using the full goodwill method (see Note 1).

Goodwill is tested for impairment at least once a year and whenever there is evidence of loss of value.

For those tests, goodwill is broken down by identifiable cash generating units (CGUs).

A value test consists of comparing the carrying value of each CGU against its market value. For Mauritel, Onatel, Gabon Telecom and Sotelma, the market value is estimated by discounting the future cash flows based on a 5 years business plans. For Casanet, the market value is estimated by the market multiples method on 2014 results and the 2015 budget.

Goodwill-impairment tests are based on the following assumptions:

Perpetual growth rate in local CGU Valuation method Discount rate in local currency currency

Mauritel DCF 16,5% 3,0%

Onatel DCF 12,5% 3,0%

Gabon Telecom DCF 11,0% 3,0%

Sotelma DCF 16,0% 3,0%

CGU Valuation method

Casanet Market multiple Average of 10.1x 2014 EBITDA method and 9.0 x 2015 EBITDA

DCF : Discounted Cash Flows.

The Goodwil value of Casanet was evaluated by using the market multiples method, which did not require the discount rate.

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(In millions Beginning Impairment Translation Reclassification Change in End of MAD) of period adjustment scope of period consolidation 2012 6,863 14 6,877 Mauritel 137 137 Onatel 1,838 1,838 Gabon Telecom 142 142 Sotelma 4,741 14 4,755 Casanet 5 5 2013 6,877 0 36 0 0 6,913 Mauritel 137 137 Onatel 1,838 1,838 Gabon Telecom 142 142 Sotelma 4,755 36 4,791 Casanet 5 5 2014 6,913 6,796 Mauritel 137 1 137 Onatel 1,838 1,838 Gabon Telecom 142 142 Sotelma 4,791 (117) 4,674 Casanet 5 5

In 2014, the increase in goodwill for Sotelma, accounted for in local currency, was due to change in the MAD/FCFA exchange rate.

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NOTE 4. OTHER INTANGIBLE ASSETS

(In millions MAD) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Software 2,034 1,859 1,611

Telecom license 824 701 673

Other intangible assets 587 587 674

Net total 3,445 3,147 2,958

The item “Telecom license” includes the 2G licenses of Mauritel, Onatel and Gabon Telecom and the 3G licenses of Maroc Telecom, Mauritel, Onatel, Gabon Telecom and Sotelma as well as the 4G license of Gabon Telecom.

“Other intangible assets” includes mainly patents, brands, and other items identified during goodwill valuation of subsidiaries, namely the customer bases of Onatel, Gabon Telecom, and Sotelma, and the global license of Sotelma.

2014

Disposals Change in (In millions MAD) Acquisitions Translation 2013 and scope of Reclassification 2014 and additions adjustment withdrawals consolidation

Gross 11,884 924 8 (26) 12,789

Software 7,310 488 16 (128) 7, 685

Telecom license 1,464 94 (2) 1,556

Other intangible 3,111 343 (7) 102 3,548 assets

Amortization and (8,738) (1,098) (9) 13 (9,831) impairment

Software (5,451) (630) (7) 14 (6,074)

Telecom license (763) (113) (7) (883)

Other intangible (2,524) (355) 5 (2,874) assets

Net total 3,147 (174) (1) (13) 2,958

Total capital investment in intangible assets in 2014 increased by 12.7% mainly reflecting the granting of 3G and 4G licenses by Gabon Telecom plus the continued investment in infrastructure.

Net intangible assets declined by MAD 189 million in 2014 due to the depreciation of major investments made in previous years (MAD 1,098 million in 2014).

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2013

(In millions MAD) Disposals Change in Acquisitions Translation 2012 and scope of Reclassification 2013 and additions adjustment withdrawals consolidation

Gross 11,208 820 16 (161) 11,884

Land 7,002 418 6 (116) 7,310

Buildings 1,463 8 (8) 1,464

Technical plant, machinery, and 2,743 403 0 2 0 (37) 3,111 equipment

Transportation (7,764) (997) (11) 34 (8,738) equipment

Office equipment, furniture, and (4,968) (518) (5) 40 (5,451) fittings

Other property, plant, and (640) (121) (5) 3 (763) equipment

Depreciation and (2,156) (358) 0 (1) 0 (9) (2,524) impairment

Land 3,445 (177) 0 6 0 (127) 3,147

2012

Acquisitions Disposals translation Change in and additions and adjustments scope of (In millions MAD) 2011 2012 withdrawals consolidatio Reclassiication n

Gross 10,457 616 0 (26) 0 161 11,208

Software 6,715 318 (16) (14) 7,002

Telecom license 1,441 25 (11) 8 1,463

Other intangible 2,302 273 1 167 2,743 assets

Amortization and (6,774) (1,064) 0 19 0 56 (7,764) impairment

Software (4,426) (609) 10 57 (4,968)

Telecom license (523) (125) 9 (2) (640)

Other intangible (1,825) (331) 0 (2,156) assets

Net total 3,683 (449) 0 (7) 0 216 3,445

The reclassification column concerns transfers between line items of intangible assets.

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NOTE 5. PROPERTY, PLANT, AND EQUIPMENT (In millions MAD) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Land 1,442 1,461 1,460

Buildings 3,508 3,238 2,955

Technical plant, machinery, and equipment 19,479 19,884 19,822

Transportation equipment 123 110 167

Office equipment, furniture, and fittings 906 842 703

Other property, plant, and equipment 19 14 27

Net total 25,476 25,548 25,135

The “Other property, plant, and equipment” comprised mainly advances and deposits for fixed assets.

2014

(In millions MAD) 2013 Disposals Change in Assets 2014 Acquisitions Translation and scope of Reclassification held for and additions adjustment withdrawals consolidation sale

Gross 74,531 3,978 (65) (254) (13) 78,177

Land 1,470 8 (9) 1,469 Buildings 8,150 25 (6) (20) (9) 8,139 Technical plant, machinery 60,427 3,761 0 (225) (94) 63,869 and equipment Transportation, equipment 432 24 (24) 4 71 508 Office equipment furniture and 4,003 153 (34) (3) 34 4,153 fittings Other property, plant, and 49 7 (1) (15) 39 equipment Depreciation and (48,983) (4,362) 63 222 17 1 (53,043) impairment Land (9) (1) 1 0 0 (9)

Buildings (4,914) (296) 4 22 0 (5,184) Technical plant, machinery, (40,539) (3,794) 0 195 92 (44,046) and equipment Transportation equipment (322) (28) 24 1 (17) 1 (341) Office equipment, furniture, (3,186) (242) 34 3 (59) (3,450) and fittings Other property, plant, and (12) 0 0 (12) equipment Net total 25,548 (383) (1) (33) 3 1 25,135

Total investment in property, plant and equipment in 2014 increased slightly by MAD 2.5 million mainly reflecting capital expenditure in subisidiaries’ infrastructures.

Reflecting investments made in recent years, depreciation charges on property, plant and equipment rose in 2014 (MAD 4,362 million in 2014 vs. MAD 4,082 million in 2013), exceeding the total acquisitions for the year, resulting in a net decrease in property, plant and equipment of 1.6%.

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2013

(In millions MAD) 2012 Disposals Change in Assets 2013 Acquisitions Translation and scope of Reclassification held for and additions adjustment withdrawals consolidation sale

Gross 70,412 3,976 (1) 165 0 (22) 0 74,531

Land 1,450 16 0 4 0 0 0 1,470 Buildings 8,118 21 0 12 0 4 0 8,154 Technical plant, 56,537 3,659 0 144 0 82 0 60,422 machinery, and equipment Transportation 427 18 0 2 0 (13) 0 433 equipment Office equipment, 3,863 271 0 3 0 (96) 0 4,040 furniture, and fittings Other property, 19 (8) 0 0 2 0 14 plant, and equipment Depreciation and (44,936) (4,082) 0 (110) 0 145 1 (48,983) impairment Land (8) (1) 0 0 0 0 0 (9) Gross (4,610) (296) 0 (9) 0 (2) 1 (4,917)

Land (37,058) (3,515) 0 (97) 0 133 0 (40 538) Buildings (304) (20) 0 (2) 0 3 0 (322) Technical plant, (2,956) (250) 0 (2) 0 11 0 (3 197) machinery, and equipment Transportation 0 0 0 0 0 0 0 0 equipment Office equipment, 25,476 (106) (1) 55 0 123 1 25,548 furniture, and fittings

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2012

(In millions MAD) 2011 Translatio 2012 Disposals Change in Assets Acquisitions n and scope of Reclassification held for and additions adjustme withdrawals consolidation sale nt Gross 66,126 4,776 (41) (81) 0 (369) 0 70,412

Land 1 444 6 0 1,450 Buildings 7,247 836 (1) (4) 40 8,118 Technical plant, 53,173 3,680 (32) (69) (215) 56,537 machinery, and equipment Transportation equipment 430 21 0 (1) (23) 427 Office equipment, 3,549 233 0 (2) 83 3,863 furniture, and fittings Other property, plant, and 284 (7) (4) (254) 19 equipment Depreciation and (41,276) (3,852) 0 29 0 162 1 (44,936) impairment Land (8) 0 0 (8) Buildings (4,314) (299) 0 2 1 (4,610) Technical plant, (33,933) (3,282) 26 131 (37,058) machinery, and equipment Transportation equipment (307) (18) 1 21 (304) Office equipment, (2,697) (253) 2 (8) (2,956) furniture, and fittings Other property, plant, and (17) 0 17 0 equipment Net total 24,850 924 (41) (51) 0 (207) 1 25,476

The reclassification column concerns transfers between line items of property, plant, and equipment.

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NOTE 6. INVESTMENTS IN EQUITY AFFILIATES No equity interest was accounting for by the equity method in 2012, 2013, or 2014.

NOTE 7. NONCURRENT FINANCIAL ASSETS

(In millions MAD) Dec. 31, Dec. 31, Dec. 31, Notes 2012 2013 2014

Unconsolidated investments 7.1 97 97 209

Other financial assets 169 106 84

Net total 266 204 293

At December 31, 2014, other financial assets mainly included loans granted by Maroc Telecom in the amount of MAD 34 million and by Mauritel in the amount of MAD 47 million.

Deposits and guarantees in the amount of MAD 28 million have been reclassified under current operating receivables and others.

At December 31, 2014, the maturities of other financial assets were as follows:

(In millions MAD) Dec. 31, Dec. 31, Dec. 31, Note 2012 2013 2014

Due in less than 12 months 84 33

Due in 1 to 5 years 65 73 78

Due in more than 5 years 20 0 6

Net total 169 106 84

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7.1 Unconsolidated interests

2014

(In millions MAD) Percentage held Gross value Impairment Carrying amount

Arabsat NS 13 0 13 Autoroute du Maroc NS 20 4 16 Thuraya NS 10 0 10 Fond d’amorçage 10% 5 5 0 Sindbad Médi1 SAT NS 169 64 105 RASCOM NS 46 6 39 Sonatel NS 11 0 11 CMTL NS 6 4 2 INMARSAT NS 12 0 12 IMT/GIE 20% 1 1 0 MT Fly 100% 20 20 0 Total 313 104 209

In 2014, the component consisting of unconsolidated listed companies increased by MAD 112 million mainly due to the acquisition of the unconsolidated stock of Médi1 SAT in the amount of MAD 103 million.

2013

(In millions MAD) Percentage held Gross value Impairment Carrying amount

Arabsat NS 13 0 13 Autoroute du Maroc NS 20 4 16 Thuraya NS 10 0 10 Fond d’amorçage 10% 5 5 0 Sindbad Médi1 SAT NS 66 65 1 RASCOM NS 46 9 37 Sonatel NS 6 0 6 CMTL NS 6 4 2 INMARSAT NS 12 0 12 IMT/GIE 20% 1 1 0 MT Fly 100% 20 20 0 Total 205 108 97

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2012

(In millions MAD) Percentage held Gross value Impairment Carrying amount

Arabsat NS 13 0 13 Autoroute du Maroc NS 20 4 16 Thuraya NS 10 0 10 Fond d’amorçage 10% 5 5 0 Sindbad Médi1 SAT 3% 62 62 0 RASCOM NS 46 8 38 Sonatel NS 6 0 6 CMTL NS 6 4 2 INMARSAT NS 12 0 12 IMT/GIE 20% 1 1 0 MT Fly 100% 0 0 0 Total 181 84 97

NOTE 8. CHANGE IN DEFERRED TAXES

8.1 Net position

(In millions MAD) Dec. 31, 2012* Dec. 31, 2013 Dec. 31, 2014

Assets 96 107 104

Liabilities 244 199 203

Net position (148) (93) (99)

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

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8.2 Components of deferred and liabilities

2014

(In millions Dec. 31, Charge to Impact on Change in Dec. 31, Translation MAD) profit or shareholders' scope of Reclassifications 2013 adjustment 2014 loss equity consolidation

Assets 107 (4) 2 (1) 104

Liabilities 199 (4) 8 0 203

Net position (93) 0 (6) 0 0 0 (99)

Deferred tax assets rose by MAD 4 million mainly due to the use of deductible temporary differences during the period.

Deferred tax liabilities rose by MAD 4 million. This rise was mainly due to the reduction in provision for lump- sum retirement payments having a positive impact on net position. 2013

(In millions December Charge to Impact on Change in Translation December MAD) 31, 2012 profit or shareholders' scope of Reclassifications adjustment 31, 2013 (*) loss equity consolidation

Assets 96 30 7 (27) 0 107

Liabilities 244 (18) (27) 0 199

Net position (148) 48 7 0 0 0 (93)

2012

(In millions December Charge to Impact on Change in Translation December MAD) 31, 2011 profit or shareholders' scope of Reclassifications adjustment 31, 2012 (*) loss equity consolidation

Assets 51 6 40 (1) 96

Liabilities 218 26 0 244

Net position (167) (19) 40 0 0 (1) (148)

Components of deferred taxes

(In millions MAD) Dec. 31, 2012* Dec. 31, 2013 Dec. 31, 2014

Impairment deductible in later period 81 81 68

Restatement (IFRS) of revenues (80) (73) (68)

Deferred losses other (149) (101) (98)

Net Position (148) (93) (99)

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

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NOTE 9. INVENTORIES (In millions MAD) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Inventories 633 606 591

Impairment (-) (165) (173) (191)

Net total 468 433 400

Gross inventories at December 31, 2014, comprised mainly Morocco's inventories (MAD 420 million), including:

- MAD 169 million in mobile handsets ; - MAD 43 million in fixed-line handsets ; - MAD 71 million in multimedia handsets ; - MAD 136 million in consumable materials and supplies (including MAD 112 million in SIM cards).

Changes in inventories are recorded in cost of purchases.

Inventory impairment is recorded under “Amortization, depreciation, and charges to provisions.”

NOTE 10. TRADE ACCOUNTS RECEIVABLE AND OTHER (In millions MAD) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Trade receivables and related accounts 7,267 6,981 5,871

Other receivables and accruals 3,024 2,640 2,842

Net total 10,291 9,621 8,713

10.1 Trade receivables and related accounts

(In millions MAD) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Trade receivables 11,256 11,470 11,017

Government receivables 2,314 2,001 1,676

Depreciation of trade receivables (-) (6,303) (6 489) (6,822)

Net total 7,267 6,981 5,871

Net trade receivables declined by 15,9 % largely as a result of collection of substantial government receivables in Morocco.

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10.2 Other receivables and accruals

(In MAD millions) Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Trade receivables, advances, and deposits 110 43 4

Employee receivables 57 79 71

Tax receivables 1,692 1,021 1,366

Other receivables 1,052 1,336 1,234

Accruals 114 161 167

Net total 3,024 2,640 2,842

Trade receivables, advances and deposits, receivables from employees, government receivables, and other receivables are due in less than one year.

The item "Tax receivables" mainly refers to VAT and corporation income tax receivables. In 2014, total tax receivables amounted to MAD 1,366 million (versus MAD 1,021 million in 2013), up 33.8% mainly due to accrued recoverable VAT in international.

"Accruals” consisted mainly of prepaid expenses on vehicle leasing agreements and insurance policies.

NOTE 11. CURRENT FINANCIAL ASSETS

(In MAD millions) Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Term deposit > 90 days - - -

Escrow account 47 55 112

Marketable securities - - -

Net total 47 55 112

Maroc Telecom commissioned Rothschild & Cie to execute a liquidity contract on the Paris stock exchange and a share price adjustment agreement on the Casablanca stock exchange to maintain the liquidity of its stock. The cash available to Rothschild third parties amounted to MAD 112 million at 31 December 2014.

NOTE 12. CASH AND CASH EQUIVALENTS

(In MAD millions) Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Cash 864 871 1,028

Cash equivalents 99 213 231

Cash and cash equivalents 964 1,084 1,259

Cash and cash equivalents increased by MAD 175 million. This improvement mainly came from Maroc Telecom in the amount of MAD 105 million.

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Change in cash and cash equivalents

(In MAD millions) Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Net cash from operating activities 13,874 12,502 12,960 Net cash used in investing activities (4,998) (4,790) (4,825) Net cash used in financing activities (8,520) (7,593) (7,987) Foreign-currency translation adjustments (11) 2 26 Change in cash and cash equivalents 346 121 175 Cash and cash equivalents at beginning of period 617 963 1,084 Cash and cash equivalents at end of period 963 1,084 1,258 Change in cash and cash equivalents 346 121 175

Cash and cash equivalents increased by MAD 175 million in 2014. This rise mainly reflects net cash flow from operating activities in the amount of MAD 12,960 million which permitted the funding of capital expenditure in the period (MAD 4,825 million outflow), the payment of dividends to shareholders (MAD 6,336 million outflow) and Group financial debt repayments (MAD 1,651 million outflow).

Net cash from operating activities

In 2014, net cash flow from operating activities amounted to MAD 12,960 million, up MAD 459 million on the previous year. This increase was due mainly to the decrease in tax paid by Maroc Telecom over the full year 2014.

In 2013, net cash flow from operating activities amounted to MAD 12,502 million, a decrease of MAD 1,372 million from a year earlier. The decrease was due mainly to operating revenues decrease and disbursement to settle a tax dispute in Morocco.

Net cash used in investing activities

Net cash flow from investing activities was a net outflow of MAD 4,825 million, MAD 35 million more than the previous year. This change was mainly due to increased capital expenditure in Morocco.

In 2013, net cash flow from investing activities amounted to −MAD 4,790 million, a decrease of MAD 208 million from 2012. The change is due to lower capital expenditure since 2011.

Net cash used in financing activities

Net cash flow from financing activities was a net outflow of MAD 7,987 million in 2014, versus a net outflow of MAD 7,593 million the previous year. This rise was mainly due to a MAD 1,154 million increase in borrowing operations and a MAD 761 million reduction in dividends paid during fiscal year 2014.

Net cash flow from financing activities was a net outflow of MAD 7,593 million in 2013, versus a net outflow of MAD 8,520 million the previous year. This decrease is mainly due to lower dividends paid to Maroc Telecom's shareholders for the 2012 fiscal year.

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NOTE 13. DIVIDENDS 13.1 Dividends

Dec 31, Dec 31, Dec 31, (In MAD millions) 2012 2013 2014 Dividends paid by subsidiaries to their noncontrolling interests (a) -Mauritel 154 172 219 -Onatel 79 150 322 -Gabon Telecom 16 56 73 -Sotelma 204 220 352 Total (a) 453 598 966 Dividends paid by Maroc Telecom to its shareholders (b) -Kingdom of Morocco 2,442 1,952 1,582 -Vivendi 4,314 3,448 2,796 -Other 1,381 1,102 896 Total (b) 8,137 6,502 5,274 Total dividends paid (a)+(b) 8,590 7,099 6,240

13.2 Dividend proposed for 2014

In the process to approve the 2014 financial statements and determine profit allocation, the Management Board of ITISSALAT AL MAGHRIB at its meeting of February 19, 2015 decided to propose to the shareholders a dividend payment of MAD 6.90 per share corresponding to a total distribution in the amount of MAD 6,066 million. This proposal was submitted to the Supervisory Board at its meeting of February 20, 2015.

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NOTE 14. PROVISIONS

Provisions for liabilities relate mainly to disputes with employees and third parties. They are evaluated on a case-by-case basis. Provisions for contingencies and losses are analyzed as follows:

2014

(In millions MAD) Dec 31, 2012* Dec 31, 2013 Dec 31, 2014

Noncurrent provisions 816 376 366 Provisions for life annuities 22 21 20 Provisions for termination benefits 318 351 337 Provisions for disputes with third parties 8 5 9 Other provisions 468 0 0 Current provisions 279 463 572 Provisions for voluntary redundancy plan 15 205 134 Provisions for employee-related expenses 0 0 0 Provisions for disputes with third parties 236 258 328 Other provisions 28 0 109 Total 1,095 839 938

The decline in noncurrent provisions mainly reflects the reversal of the provision for lump-sum retirement payments at subsidiaries in the amount of MAD 33 million.

The increase in current provisions in 2014 mainly reflects:

- The provision for disputes in the amount of MAD 104 million in Gabon;

- The provision for taxes in the amount of MAD 111 million.

This increase was offset by a decline in current provisions. This decrease mainly reflects the reversal of the provision for taxes in the amount of MAD 88 million at Gabon Telecom as well as the reversal of provision for restructuring expenses in the amount of MAD 71 million in Morocco.

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2014

(In millions MAD) 2013 charges Used change in Translation Reversals Reclassification 2014 scope of adjustment consolidation

Noncurrent provisions 376 25 (34) 0 (7) 0 6 366

Provisions for life annuities 21 (1) 0 20

Provisions for termination 351 19 (33) (7) 6 337 benefits Provisions for disputes with 5 5 0 9 third parties Other provisions 0 0

Current provisions 463 274 (71) 0 3 (107) 9 572 Provisions for voluntary 205 (71) 134 redundancy plan Provisions for employee- 0 0 related expenses Provisions for disputes with 258 164 4 (107) 9 328 third parties Other provisions 0 111 (1) 109

Total 839 299 (105) 0 (4) (107) 15 938

2013

(In millions MAD) 2012 (*) Charges Used Change in Translation Reversals Reclassification 2013 scope of adjustments consolidation

Noncurrent 816 29 (468) 0 0 (25) 25 376 provisions Provisions for life 22 (1) 0 21 annuities Provisions for 318 29 0 (21) 25 351 termination benefits Provisions for 8 (3) 5 disputes with third parties Other provisions 468 (468) 0

Current provisions 279 280 (41) 0 0 (14) (42) 463

Provisions for 15 200 (10) (1) 205 voluntary redundancy plan Provisions for 0 0 employee-related expenses Provisions for 236 80 (32) (13) (14) 258 disputes with third parties Other provisions 28 (28) 0

Total 1,095 309 (510) 0 0 (39) (17) 839

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2012

(In millions MAD) 2011 Charges Used Changes Translation Reversal Reclassification 2012 (*) adjustments s

Noncurrent provisions 701 167 (18) 0 0 (28) (6) 816 Provisions for life 23 0 (1) 0 0 0 0 22 annuities Provisions for 166 163 (17) 0 1 (11) 17 318 termination benefits Provisions for disputes 18 4 0 0 (1) 0 (14) 8 with third parties Other provisions 494 0 0 0 0 (17) (9) 468

Current provisions 145 140 (18) 0 (2) (1) 15 279

Provisions for voluntary 0 15 0 0 0 0 0 15 redundancy plan Provisions for employee- 0 0 0 0 0 0 0 0 related expenses Provisions for disputes 145 82 (18) 0 (1) (1) 29 236 with third parties Other provisions 0 42 0 0 0 0 (14) 28 Total 846 307 (36) 0 (2) (29) 8 1,095

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

NOTE 15. BORROWINGS AND OTHER FINANCIAL LIABILITIES 15.1. Net cash position

(In millions MAD) Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Bank loans due in more than one year 886 319 325

Bank loans due in less than one year 2,592 1,400 1,099

Bank overdrafts 4,667 6,264 5,207

Borrowing and other financial liabilities 8,145 7,982 6,631

Cash and cash equivalents 964 1,084 1,259

Cash held in escrow for repayment of bank loans 70 8 5

Net cash position (7,111) (6,890) (5,366)

(In millions MAD) Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Outstanding debt and accrued interest (a) 8,145 7,982 6,631 Cash assets (b) 1,034 1,092 1,264 Net cash position (b)-(a) (7,111) (6,890) (5,366)

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15.2. Net cash by maturity The breakdown by maturity is based on the repayment terms and conditions of the borrowings.

2014

(In millions MAD) <1 year 1-5 years >5 years Total

Borrowings from credit institutions 1,099 297 27 1,423 Bank overdrafts 5,207 5,207 Borrowings and financial liabilities 6,306 297 27 6,631 Cash and cash equivalents 1,259 1,259 Cash held in escrow for repayment of bank loans 5 5 Net cash position (5,042) (297) (27) (5,366)

2013

(In millions MAD) <1 year 1-5 years >5 years Total

Borrowings from credit institutions 1,400 305 13 1,719 Bank overdrafts 6,264 0 0 6,264 Borrowings and financial liabilities 7,664 305 13 7,982 Cash and cash equivalents 1,084 0 0 1,084 Cash held in escrow for repayment of bank loans 8 0 0 8 Net cash position (6,571) (305) (13) (6,890)

2012

(In millions MAD) Total <1 year 1-5 years >5 years

Borrowings from credit institutions 2,592 857 29 3,478 Bank overdrafts 4,667 0 0 4,667 Borrowings and financial liabilities 7,259 857 29 8,145 Cash and cash equivalents 964 0 0 964 Cash held in escrow for repayment of bank loans 70 0 0 70 Net cash position (6,225) (857) (29) (7,111)

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15.3 Tableau of analysis

Company Borrowing (In MAD millions ) Maturity Dec 31, 2012 Dec 31, 2013 Dec 31, 2014

Maroc Telecom Loan Attijari wafabank July - 14 1,058 453 0 Maroc Telecom Advances on current accounts - SPT February-12 841 0 0 Maroc Telecom Banks, overdrafts IAM May-13 4,543 6,206 5,110 Mauritel Leasing Contract ZTE 42 solar site May-17 22 18 15 Mauritel Leasing Contract ZTE 12 solar site April -18 8 7 6 Mauritel Leasing Contract ZTE 50 solar site August-19 35 31 30 Mauritel Short-term loan GBM January -13 9 0 0 Onatel Loan AFD1110-1111 October -18 12 10 8 Onatel Loan SGBB 2008 November -13 24 0 0 Onatel Loan BOA 2008 December -14 34 17 0 Onatel Loan BIB 2008 December -13 12 5 1 Onatel Loan SFI 2008 July -13 22 0 17 Onatel Loan BICA 2008 September -15 52 35 17 Onatel Spot credits Onatel - 124 145 309 Onatel Loan BICIA 2010 Telmob December -13 28 0 0 Onatel Loan BICIA 2011 Telmob July -16 70 53 23 Onatel LOAN SGBB 2012(2 MLRS) May -17 31 24 20 Onatel LOAN SGBB 2012(3 MLRS) November -17 51 41 20 Onatel LOAN BIB 2013 October -18 0 87 84 Onatel Investment credit December -14 148 75 10 Onatel Banks, overdrafts ONATEL December -19 68 3 63 Onatel LOAN BICIA B 2014 December -19 0 0 168 Gabon Télécom Loan AFD - 2 2 2 Gabon Télécom Loan COMMERZBANK December -13 0 0 0 Gabon Télécom BGFI Bank November -15 104 72 35 Gabon Télécom Loan HUAWEI December -13 70 0 0 Gabon Télécom Banks, credit balances GT - 56 50 35 Sotelma Loan DGDP/CFD OP April-20 2 1 1 Sotelma Loan DGDP/CFD OD October -14 6 3 0 Sotelma Loan AFD OE/CML 1026 01 S April -18 18 15 11 Sotelma Loan AFD OY/CML 1065 03 X October -16 12 9 6 Sotelma Loan RASCOM/GPTC - 9 0 0 Sotelma Loan DGDP/NKF September -15 20 14 15 Sotelma Loan ECOBANK February -11 0 9 0 Sotelma Loan HUAWEI PHASE I December -13 157 40 0 Sotelma Third-party accounts - 66 0 0 Sotelma Dividend loan November -12 384 0 0 Sotelma Loan BDM 5 billion June -14 0 86 0 Sotelma Loan BIM 7.5 billion May -14 0 82 0 Sotelma Loan BIM 15 billion May -14 0 165 0 Sotelma Loan BIM 2.5 billion August-14 0 44 0 Sotelma Loan BAM 7.5 billion July -14 0 100 0 Sotelma Loan BAM 5 billion July -14 0 66 0 Sotelma Loan BIM 22 billion July -15 0 0 248 Sotelma Loan BDM 20 billion July -15 0 0 197 Sotelma Loan BIM 14 billion September -15 0 0 177 Sotelma Loan BDM SA PHASE II January -13 2627 0 0 Sotelma Banks, overdrafts Sotelma - 0 4 0 Casanet Banks, financial debt Casanet - 19 11 0 Total borrowings and other financial 8,145 7,982 6,631

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NOTE 16. TRADE ACCOUNTS PAYABLE (in millions MAD) 2012 2013 2014

Trade payables and related accounts 9,149 9,318 9,242 Other payables 2,093 2,409 2,218 Accruals 6,152 5,812 5,970 Total 17,394 17,539 17,429

In 2014, operating debt declined by MAD 110 million versus the previous year. This change was mainly due to the decline in trade payables.

The item “Other operating debts” mainly reflects tax debts consisting of income tax and VAT owed in the amount of MAD 3,448 million, social security contributions relating to staff and management bodies in the amount of MAD 846 million as well as various creditors in the amount of MAD 1,635 million.

NOTE 17. REVENUES

(In millions MAD) 2012 2013 2014

Morocco 23,178 21,294 21,132 International 7,079 7,754 8,630 Mauritania 1,375 1,476 1,646 Burkina Faso 2,067 2,211 2,354 Gabon 1,291 1,478 1,788 Mali 2,422 2,658 2,929 Elimination of intersubsidiary transactions (76) (69) (87) Elimination of transactions between the parent company (408) (489) (618) and subsidiaries Total consolidated revenues 29,849 28,559 29,144

Maroc Telecom Group consolidated revenues for the full year 2014 amounted to MAD 29,144 million, up 2,1% (+2.1% at constant exchange rate) versus 2013. This improvement mainly reflects an 11.3% growth in international business and a slight decline of 0.8% in revenues in Morocco.

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NOTE 18. COST OF SALES (In millions MAD) 2012 2013 2014

Cost of handsets 1,178 998 895 Domestic and international interconnection charges 2,893 2,458 2,869 Other cost of sales 972 840 890 Total 5,042 4,296 4,654

Cost of sales comprises the cost of handsets, interconnection costs charged by domestic and international operators, and other cost of sales. “Other cost of sales” comprises mainly purchases of energy (fuel and electricity), the cost of purchasing phone cards, and other consumables. Cost of sales rose from MAD 4,296 million in 2013 to MAD 4,654 million in 2014, an 8.3% increase, mainly in Morocco due to the increase in national interconnection charges (up by MAD 427 million) reflecting the growth in outgoing traffic.

NOTE 19. PAYROLL COSTS (In millions MAD) 2012 2013 2014

Wages 2,370 2,309 2,413 Payroll taxes 447 386 405 Wages and taxes 2,817 2,695 2,818 Share-based compensation 31 29 0 Payroll costs 2,848 2,723 2,818 Average headcount (in number of employees) 12,979 11,912 11,554

This item includes the payroll costs for the period (wages, payroll taxes, training costs, and transportation) but excludes redundancy costs, which were recognized as other operating expenses

In 2014, payroll costs declined slightly relative to 2013 by some 3.5%, mainly in Morocco.

In 2013, payroll costs declined 4.4% from a year earlier, from MAD 2,848 million in 2012 to MAD 2,723 million in 2013, because of savings achieved through various restructuring plans in 2012 in Morocco, Mauritania, and Mali.

NOTE 20. TAXES, DUTIES, AND FEES (In millions MAD) 2012 2013 2014

Taxes and duties 358 439 661 Fees 1,071 989 1,121 Total 1,429 1,428 1,782

Taxes and duties include local taxes (business registration fees, various municipal taxes), fees for public rights-of-way, and other taxes (stamp duty, motor-vehicle tax).

Fees correspond to amounts paid to the telecommunications regulatory authority with respect to universal service and training.

In 2014, total taxes and levies increased by 24.8% relative to 2013 (mainly reflecting the 50.6% increase in taxes and levies and 13.6% increase in regulator royalties).

The increase in taxes and levies was mainly due to the introduction of a new special tax on

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telecommunications companies in Burkina Faso corresponding to 5% of Mobile revenues excluding terminals and incoming international connections and the impact of the tax on income from stock market investments in Gabon (IRVM) which rose from 15% to 20%.

The increase in regulator royalties was mainly due to the uncapping of regulator royalties in Burkina Faso and the revenue growth of other subsidiaries.

In 2013, taxes, duties, and fees were nearly unchanged. Taxes and duties rose 22.6% because of a new tax levied for access to the public telecommunications network (TARTOP) in Mali, the settlement of a tax dispute in Mauritania, and the tax on international traffic generated by the business increase in Gabon.

This increase was offset by the decrease in regulator royalties due to reversals of provisions no longer needed in Mauritania, Burkina Faso and Gabon, despite the uncapping of regulator royalties in Burkina Faso.

NOTE 21. OTHER OPERATING INCOME AND EXPENSES (In millions MAD) 2012 2013 2014

Communication 615 647 678 Commissions 1,261 1,209 1,227 Other including: 2,665 1,838 1,960 Rental expenses 597 548 495 Maintenance, repair, and property-service 685 757 708 charges Fees 461 422 409 Postage and banking services: 125 134 137 Voluntary redundancy plan 862 10 71 Other (65) (34) 141 Total 4,540 3,693 3,865

In 2014, other operating income and expenses declined by 4.6% relative to 2013. The most significant changes were the following items:

- Increase in commissions, mainly internationally, reflecting the revenue growth of subsidiaries. - Increase in communication expenses, mainly internationally, reflecting increasingly fierce competition. - Decrease in fees, mainly internationally, reflecting cost-reduction efforts.

In 2013, other operating income and expenses decreased 18.7% from 2012. The most significant changes concerned the following items:

- lower restructuring expenses, subsequent to the recognition of most of Maroc Telecom's restructuring cost in 2012; - lower fees, mainly in Morocco, as a result of cost optimization; - lower commissions, mainly in Morocco, in correlation with the decline in prepaid revenues; - higher maintenance and repair expenses, mainly in Mali, after the expiration of numerous guarantees for capital goods acquired through expenditures undertaken since Maroc Telecom’s arrival in Sotelma’s capital structure; - higher advertising expenses, mainly in Morocco, because of increased competition.

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NOTE 22. DEPRECIATION, IMPAIRMENT AND PROVISIONS The following table sets out changes in this item for the fiscal years ended December 31, 2012, 2013, and 2014 :

(In millions MAD) 2012(*) 2013 2014

Depreciation and impairment of fixed assets 4,876 5,037 5,421

Net provisions and impairment 145 402 339

Total 5,021 5,440 5,759

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

Net charges to depreciation, impairment and provisions amounted to MAD 5,759 million at end December 2014, versus MAD 5,440 million at end December 2013, a rise of 5.9%, mainly reflecting the increase in depreciation and impairment charges on assets (up MAD 384 million) following major capital investment undertaken in Morocco and internationally.

Depreciation and impairment of fixed assets

The following table sets out the depreciation and impairment of Maroc Telecom Group’s fixed assets for the fiscal years ended December 31, 2012, 2013, and 2014.

(In millions MAD) 2012 (*) 2013 2014

Other intangible assets 1,023 955 1,060

Building and civil engineering 299 297 296

Technical plant and pylons 3,282 3,515 3,794

Other property, plant, and equipment 271 270 271

Total 4,876 5,037 5,421

Net charges to provisions and impairment

The following table sets out the net charges to provisions and impairment of Maroc Telecom Group for the fiscal years ended December 31, 2012, 2013, and 2014.

(In millions MAD) 2012 (*) 2013 2014

Impairment of trade receivables 72 169 335

Impairment of inventories (1) 8 18

Impairment of other receivables (30) 15 8

Provisions 105 211 (23)

Net charges and reversals 145 402 339

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

Net charges to provisions and impairment fell by MAD 63 million from MAD 402 million in 2013 to MAD 339 million in 2014. This net change mainly reflects the following items:

- "Provisions”: MAD 234 million decrease relative to 2013. This decrease is mainly due to the recognition of a reversal of the provision to clear the VAT and withholding tax accounts at Gabon Telecom in the amount of MAD 88 million as well as the reversal of the provision for restructuring expenses in the amount of MAD 71 million.

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- “Impairment of trade receivables”: MAD 166 million increase relative to 2013, mainly in Morocco, reflecting reversals of large provisions in 2013.

Net charges to provisions and impairment rose by MAD 257 million from MAD 145 million in 2012 to MAD 402 million in 2013. This net change mainly reflects the following items:

- “Impairment of trade receivables”: MAD 97 million increase relative to 2012, mainly in Morocco, reflecting reversals of large provisions in 2012. - "Provisions”: MAD 106 million increase relative to 2012, mainly reflecting the recognition of an additional provision for restructuring in Morocco.

NOTE 23. INCOME FROM EQUITY AFFILIATES No equity interest was accounted for by the equity method in 2012, 2013, or 2014.

NOTE 24. NET FINANCIAL INCOME OR EXPENSE 24.1 Borrowing costs

(In millions MAD) 2012 2013 2014

Income from cash and cash equivalents 8 16 6 Interest expense on loans (352) (341) (323) Net borrowing costs (344) (326) (317)

Net borrowing costs include income from cash and cash equivalents (current investment income) minus mainly interest and prepaid-loan expenses. Maroc Telecom Group’s cash assets are deposited with banks or with the national treasury, in either interest-bearing sight deposits or term deposits not exceeding three months.

In 2014, the MAD 9 million decline in net borrowing costs mainly reflects the 5.3% decrease in Maroc Telecom expenses.

In 2013, lower net borrowing costs (MAD 18 million) were attributable to the 3.1% decline in interest expense, with a decrease in international debt neutralizing a slight rise in debt in Morocco.

24.2 Other financial income and expense

(In millions MAD) 2012 2013 2014

Foreign-exchange gains and losses (12) (15) (24) Other financial income (+) 2 10 18 Other financial expenses (-) (26) (43) (23) Other financial income and expenses (36) (49) (29)

“Other financial income and expense” takes into account revenues from unconsolidated investments and the proceeds from their disposal.

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NOTE 25. TAX EXPENSE Like all Moroccan corporations (sociétés anonymes), Maroc Telecom is subject to income tax.

“Income tax expense” includes current and deferred taxes.

Deferred tax reflects temporary differences between the carrying value of assets and liabilities and their tax-base value.

The following table shows Maroc Telecom Group’s payable and deferred taxes for the years ended December 31, 2012, 2013, and 2014:

(In millions MAD) 2012 (*) 2013 2014

Income tax expense 3,273 4,719 3,135 Deferred tax 19 (48) 0 Provisions for tax (17) (468) 111 Current tax 3,275 4,203 3,246 Consolidated effective tax rate** 31% 40% 33%

(In millions MAD) 2012 (*) 2013 2014

Net earnings 7,287 6,359 6,638 Income tax expense 3,292 4,671 3,135 Provision for tax (17) (468) 111 Pretax earnings 10,562 10,562 9,884 Moroccan statutory tax rate 30% 30% 30% Theoretical income tax expense 3,168 3,169 2,965 Impact of changes in tax rate (27) (47) (52) Other differences*** 134 1,081 333 Effective income tax expense 3,275 4,203 3,246

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

(**) Tax expense / pretax earnings.

(***) Other net differences mainly include the contribution to the solidarity fund in the amount of MAD 120 million in Morocco, the withholding tax of MAD 112 million and the allocations to provisions for income tax in the amount of MAD 111 million.

A provision for tax in the amount of MAD 111 million was constituted in 2014 for risks related to tax audits.

The deferred tax rate at Maroc Telecom was: 30%

The deferred tax rate at Mauritel was: 25%

The deferred tax rate at Onatel was: 27.5%

The deferred tax rate at Gabon Telecom was: 30%

The deferred tax rate at Sotelma was: 30%

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NOTE 26. NONCONTROLLING INTERESTS (In millions MAD) 2012 (*) 2013 2014

Mauritel 174 224 172 Onatel 112 164 137 Gabon Telecom 61 91 121 Sotelma 231 341 358 Casanet 0 0 0 Total noncontrolling interests 578 819 788

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

Non-controlling interests represent the claims of shareholders other than Maroc Telecom to the earnings of Mauritel, Onatel, Gabon Telecom, Sotelma, and Casanet.

In 2014, noncontrolling interests decreased by 3.8% reflecting the decline in profits of the two subsidiaries Mauritel and Onatel.

In 2013, noncontrolling interests rose 42% because of higher earnings in all African subsidiaries.

NOTE 27. EARNINGS PER SHARE 27.1 Earnings per share

(In MAD millions)) 2012 (*) 2013 2014 basic diluted basic diluted basic diluted Net earnings, Group share 6,709 6,709 5,541 5,541 5,850 5,850 Adjusted net earnings, Group share 6,709 6,709 5,541 5,541 5,850 5,850 Number of shares (millions) 879 879 879 879 879 879 Earnings per share (in MAD) 7,6 7,6 6,3 6,3 6,7 6,7

27.2 Change in the number of shares

Number of shares 2012 (*) 2013 2014

Weighted average number of shares outstanding for the period 879,095,340 879,095,340 879,095,340

Adjusted weighted average number of shares outstanding for 879,095,340 879,095,340 879,095,340 the period

Potential dilutive effect of financial instruments outstanding

Number of shares including potential dilutive effect 879,095,340 879,095,340 879,095,340

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

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NOTE 28. SEGMENT DATA 28.1 Statement of financial position: items by geographical area

2014

Total Maroc (In millions MAD) Morocco International Eliminations Telecom Group Noncurrent assets 29,133 12,603 (6,450) 35,286 Current assets 6,559 4,643 (664) 10,539 Total assets 35,692 17,246 (7,113) 45,824 Shareholders’equity 17,097 9,499 (6,434) 20,163 Noncurrent liabilities 219 690 (16) 893 Current liabilities 18,376 7,056 (664) 24,768 Total shareholders’equity and liabilities 35,692 17,246 (7,113) 45,824

Acquisitions of PP&E and intangible assets 3,359 1,543 4,902

2013

(In millions MAD) Morocco International Eliminations Total Maroc Telecom Group

Noncurrent assets (*) 29,661 12,824 (6,566) 35,919 Current assets 7,032 4,544 (327) 11,249 Total assets 36,692 17,368 (6,893) 47,167 Shareholders’equity (*) 16,315 10,184 (6,566) 19,933 Noncurrent liabilities (*) 202 792 0 994 Current liabilities 20,175 6,392 (327) 26,241 Total shareholders’equity and liabilities 36,692 17,368 (6,893) 47,167 3,601 1,195 4,796 Acquisitions of PP&E and intangible assets

2012

(In millions MAD) Morocco International Eliminations Total Maroc Telecom Group Noncurrent assets (*) 27,475 15,266 (6,581) 36,159 Current assets 8,090 4,047 (312) 11,825 Total assets 35,565 19,313 (6,893) 47,985 Shareholders’equity (*) 15,358 11,812 (6,564) 20,606 Noncurrent liabilities (*) 1,156 939 (16) 2,078 Current liabilities 19,052 6,562 (313) 25,302

Total shareholders’equity and liabilities 35,565 19,313 (6,893) 47,985 3,792 1,592 5,385 Acquisitions of PP&E and intangible assets

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

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28.2 Segment earnings by geographical area 2014

(In millions MAD) Morocco International Eliminations Total Maroc Telecom Group Revenues 21,132 8,630 (618) 29,144 Earnings from operations 7,734 2,532 10,266 3,845 1,578 5,423 Net depreciation and impairment

Voluntary redundancy plan 71 71

2013

(In millions MAD) Morocco International Eliminations Total Maroc Telecom Group Revenues 21,294 7,754 (489) 28,559 Earnings from operations 8,595 2,383 10,978

Net depreciation and impairment 3,516 1,522 5,038

Voluntary redundancy plan 10 0 10

2012

(In millions MAD) Maroc International Eliminations Total groupe Maroc Telecom

Revenues 23,178 7,079 (408) 29,849 Earnings from operations 9,219 1,749 10,968

Net depreciation and impairment 3,397 1,479 4,876

Voluntary redundancy plan 785 76 862

(*) The data for 2012 have been adjusted to take into account the impact of IAS 19 (amended), effective since January 1, 2013, with retroactive effect to January 1, 2012.

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NOTE 29. RESTRUCTURING PROVISIONS

(In millions MAD) Morocco International Total Maroc Telecom group

Balance at Jan. 1, 2012 Change in scope and adjustment of allocation of acquisition price Allocated 800 1 801 Used (785 ) 0 (785 ) Reversed 0 0 Balance at Dec. 31, 2012 15 1 15 Change in scope and adjustment of allocation of acquisition price Allocated 200 0 200 Used (10) 0 (10) Reversed (1) (1) Balance at Dec. 31, 2013 205 0 205 Change in scope and adjustment of allocation of acquisition price Allocated Used (71) (71) Reversed Balance at Dec. 31, 2014 134 0 134

The restructuring plan set up by Maroc Telecom in June 2012 was completed on January 31, 2014. MAD 71 million of the restructuring provision was reversed over the course of fiscal year 2014.

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NOTE 30. RELATED-PARTY TRANSACTIONS 30.1. Compensation of corporate officers, senior managers, and directors in 2012, 2013, and 2014

(In millions MAD) 2012 2013 2014

Short-term benefits (1) 32 38 47

Termination benefits (2) 38 48 59

(1) Wages and salaries, compensation, incentives and bonuses paid, social security contributions, paid leave and nonmonetary benefits recognized

(2) Severance pay

30.2. Equity affiliates In 2012, 2013 and 2014 no company is consolidated by the equity method.

30.3. Other related parties Etisalat- Atlantique-Mobily : Following the introduction of Etisalat in the shareholding of Maroc Telecom, the new related companies are: Emirates Telecommunications Corporation, Atlantique Telecom and Etihad Etisalat Company (Mobily). In 2014, as part of the strategic corporation with Etisalat, the main transactions with these related companies are summarized below:

2014

(In millions MAD) Etisalat Atlantique Mobily

Revenues 8 0 2 Expenses 1 0 0 Receivables 32 2 6 Payables 1 0 0

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NOTE 31. CONTRACTUAL COMMITMENTS AND CONTINGENT ASSETS AND LIABILITIES 31.1. Contractual obligations and commercial commitments recorded in the balance sheet

(In millions MAD) Total Less than 12 1-5 years >5 years months Long-term debt 325 0 297 27 Capital lease obligations 0 0 0 0 Operating leases 0 0 0 0 Irrevocable purchase commitments 0 0 0 0 Other long-term commitments 0 0 0 0 TOTAL 325 0 297 27

31.2. Other commitments given and received as part of the current activity Commitments given Commitments given comprise the following: 2014 :

 an investment commitment of MAD 3 990 million distributed as follows : - MAD 3,408 million for Maroc Telecom in connection with the agreement signed with the Moroccan state; - MAD 119.5 million for Mauritel ; - MAD 337.3 million for Onatel ; - MAD 63.7 million for Gabon Telecom ; - MAD 61.7 million for Sotelma ;

Maroc Telecom signed a new investment agreement with the state of Morocco whereby Maroc Telecom promised to undertake a capital investment program during the years 2013-3015 amounting to more than MAD 10.08 billion (approximately €908 million) and to create 500 direct jobs. This program is intended to modernize and extend infrastructures to meet the growing needs of mobile and high-speed Internet traffic as well as to deploy a fiber-optic network for very-high-speed traffic.

 Commitments in the form of endorsements and bank agreements in the amount of MAD 161.1 million;  A leasing commitment in the amount of MAD 36.6 million;  A long-term satellite leasing commitment in the amount of MAD 63.9 million;  Commitments of MAD 5,236 million for the acquisition from Etisalat companies for its shares and shareholders’ loans from : - Etisalat Benin; - Atlantique Telecom Gabon; - Atlantique Telecom Ivory Coast; - Atlantique Telecom Niger; - Atlantic Telecom Centrafrica; - Atlantic Telecom Togo; - Prestige Telecom Ivory Coast.  Commitment of MAD 337 million for the takeover of Etisalat companies’ liabilities and guaranties on the acquired subsidiaries;  Other commitments amounting to MAD 39.3 million.

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2013

 an investment commitment of MAD 6,919 million, distributed as follows - MAD 6,635 million for Maroc Telecom in connection with the agreement signed with the Moroccan state; - MAD 7.6 million for Mauritel; - MAD 98.3 million for Onatel; - MAD 46.7 million for Gabon Telecom; - MAD 131.1 million for Sotelma; In January 2013, Maroc Telecom signed a new investment agreement with the Kingdom of Morocco in which Maroc Telecom committed to undertake capital expenditures of more than MAD 10 billion (approximately €908 million) and to create 500 direct jobs from 2013 to 2015. The purpose of these expenditures is to modernize and expand infrastructure in order to meet the increased demands of mobile and high-speed internet traffic and to deploy a fiber-optic network for ultra-high-speed internet. - a commitment by Mauritel for MAD 0.6 million, in connection with its acquisition of a 3G license; - commitments through guarantees and endorsements issued to banks for MAD 231 million; - a commitment for operating leases of MAD 35 million; - a commitment for a long-term satellite lease of MAD 84 million; - various commitments for MAD 99 million.

Maroc Telecom is committed irrevocably and on first application by FIPAR Holding to buy back the 9.75% Medi-1-Sat interest sold to FIPAR Holding, plus the cost of invested capital (6.03% per year).

In the event of disposal to a third party of an interest larger than 40.25% of the share capital of Medi-1-Sat and subsequent capital loss, Maroc Telecom is committed to paying Fipar Holding an amount equal to 9.75% of the capital loss plus the cost of invested capital (6.03% per year).

2012

 An investment commitment of MAD 3,340 million, distributed as follows: - MAD 2,737 million for Maroc Telecom in connection with the agreement signed with the Moroccan state; - MAD 95.3 million for Mauritel; - MAD 98.1 million for Onatel; - MAD 89 million for Gabon Telecom; - MAD 318.4 million for Sotelma;  A commitment by Mauritel for MAD 2 million, in connection with its acquisition of a 3G license;  Commitments through guarantees and endorsements issued to banks for MAD 300 million;  A commitment for operating leases of MAD 16 million;  A commitment for a long-term satellite lease of MAD 140 million;  A commitment of MAD 21 million concerning the disposal of Maroc Telecom Belgique;  Various commitments for MAD 26 million.

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Commitments received Commitments received comprise the following:

2014

 Endorsements and guarantees amounting to MAD 1,187 million at December 31, 2014 versus MAD 1,778 million at December 31, 2013.  Commitments received in connection with the acquisition of Etisalat subsidiaries: - to contribute to the investments necessary in these six operators, Etisalat is giving Maroc Telecom interest- free financing in the amount of $ 200 million over four years; - Etisalat granted to Maroc Telecom representations and warranties relating to those subsidiaries, standard for this type of transactions, as well as specific indemnities.  Other commitments received: - Commitment by the Moroccan Government to social welfare.  Investment Convention: - Exemption of the customs duties on the imports relating to the investments.

2013

 Guarantees and endorsements received for MAD 1,778 million at December 31, 2013.

In the event of disposal to a third party of an interest larger than 40.25% of the share capital of Medi-1-Sat and subsequent capital gain, Fipar Holding is committed to paying Maroc Telecom an amount equal to 9.75% of the capital gain minus the cost of invested capital (6.03% per year). 2012

 Guarantees and endorsements received for MAD 2,113 million at December 31, 2012 vs. MAD 2,274 million at December 31, 2011.

In connection with the PACTE universal-service program, Maroc Telecom committed to extending mobile coverage to 7,338 remote rural areas in Morocco over the 2008–2011 period. This program entailed aggregate capital expenditure estimated at MAD 1,159 million (€103 million). In consideration for its commitment, Maroc Telecom received a MAD 109 million exemption from its contribution to the universal- service fund in respect of the 2011 fiscal year (MAD 320 million exemption in respect of the 2010 fiscal year).

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NOTE 32. RISK MANAGEMENT

Credit risk :

Maroc Telecom minimizes its credit risk by committing solely to credit transactions with merchant banks or financial institutions that have a high credit rating and by splitting its transactions among selected institutions.

Maroc Telecom’s receivables show no major concentration of credit risk, as their dilution ratio is high. Currency risk:

Maroc Telecom Group is exposed to exchange rate fluctuations to the extent that inflows and outflows are in different currencies.

Maroc Telecom receives inflows in foreign currencies in the form of international operator’s revenues, and makes expenditures in foreign currencies in the form of payments to international suppliers (notably, as capital expenditure and when buying terminals) and payments for interconnections with foreign operators. These outflows are mainly denominated in euros.

At December 31, 2014, excluding subsidiaries, euro-denominated outflows in foreign currencies accounted for 53% of total outflows in foreign currencies (total outflows MAD 2,095 million). In 2014, these outflows in foreign currencies were less than inflows in foreign currencies amounting to MAD 3,720 million.

In addition, Maroc Telecom Group held debt of MAD 6,631 million at December 31, 2014. The bulk of this debt is denominated in Moroccan dirhams, euros, and CFA francs.

(In millions MAD) 2012 2013 2014 Euro 293 61 16 Moroccan dirham 6,456 6,659 5,108 Other (mainly CFA franc) 1,381 1,250 1,505 Current debt 8,130 7,969 6,629 Accrued interest 15 13 2 Total financial debt 8,145 7,982 6,631

Maroc Telecom Group cannot fully offset its inflows against outflows or vice-versa as Moroccan regulations allow only 70% of its telecoms receipts in foreign currencies to be kept in a foreign-currency account, the remaining 30% having to be settled in dirhams. Maroc Telecom Group results may therefore be sensitive to fluctuations in exchange rates, particularly in terms of dirham, US dollars and euros.

The subsidiaries whose accounting currency is the CFA franc and the Mauritanian subsidiary whose currency is the ouguiya increase the Group's exposure to currency risk, particularly as regards fluctuations in the exchange rate of the euro and the ouguiya against the dirham.

However, based on the Group's 2014 financial statements, a 1% devaluation of the dirham against the euro would have the following limited impacts:

- revenues = + MAD 87 million

- earnings from operations = + MAD 27 million

- net earnings, Group share = + MAD 7 million

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(In millions of local Euro /FCFA USD MRO Total foreign MAD Total currency) currencies Bilan

Total assets 15,014 23 2,118 17,156 28,669 45,824 Total shareholders’ (14,903) (381) (1,960) (17,244) (28,581) (45,824) equity and liabilities Net position 112 (358) 158 (88) 88 0

The Group does not use currency hedges.

At Maroc Telecom, assets in foreign currencies consist mainly of receivables against foreign operators. Liabilities in foreign currencies consist mainly of debts to suppliers and operators.

At Maroc Telecom, a 1% appreciation of the euro and the US dollar against the dirham would have the following impacts as at December 31, 2014:

+ MAD 12 million on Asset items,

- MAD 21 million on Liabilities items,

- MAD 8 million on net position,

- MAD 20 million on commitments, and

- MAD 29 million on comprehensive net position.

Conversely, a 1% depreciation of the euro and the US dollar against the dirham would have the following impact as at December 31, 2014:

- MAD 12 million on Asset items,

+ MAD 21 million on Liabilities items,

+ MAD 8 million on net position,

+ MAD 20 million on commitments, and

+ MAD 29 million on comprehensive net position.

Liquidity risk:

Maroc Telecom estimates that the cash flows generated by its operating activities, its holdings of cash and cash equivalents, and funds available via lines of credit, will be sufficient to cover the disbursements and capital expenditures necessary for its operations, for servicing its debt, for dividend payments, and for external growth operations in progress on December 31, 2014.

Interest-risk risk

Maroc Telecom Group’s debt is mainly at a fixed rate of interest. As the variable-rate component of its debt is relatively small, Maroc Telecom Group is not significantly exposed to favorable or unfavorable fluctuations in interest rates.

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NOTE 33. EVENTS AFTER THE END OF THE REPORTING PERIOD

33.1 Highlights

Maroc Telecom finalized on January 26, 2015, the acquisition of the Etisalat subsidiaries in Benin, Ivory Coast, Gabon, Niger, Central African Republic, and Togo This acquisition also involves Prestige Telecom, which provides IT services to these subsidiaries.

The transaction, with a price tag of € 474 million, is for the acquisition of Etisalat's stake in these operators and outstanding shareholder loans. It will be paid in four annual tranches of € 102 million each (the first was paid on the closing date), and a fifth and final installment of € 66 million. In addition, to contribute to the investments necessary in these six operators, Etisalat is giving Maroc Telecom interest-free financing in the amount of $ 200 million over four years.

Etisalat granted to Maroc Telecom representations and warranties relating to those subsidiaries, standard for this type of transactions, as well as specific indemnities. In addition, concerning a few financial undertakings of certain subsidiaries for which Etisalat gave a guarantee, Maroc Telecom agreed to indemnify Etisalat against all costs arising after January 26, 2015 under such guarantees

This acquisition is intended to boost the strategic positioning of Maroc Telecom as a leader in Africa telecom operations in 10 countries with fast growth potential. With this transaction Maroc Telecom supports the South-South economic cooperation policy of Morocco in Africa.

The percentage of voting rights acquired in each of the new subsidiaries is as follows: • Atlantic Telecom S.A. Ivory Coast: 85% • Etisalat Benin S.A.: 100% • Atlantic Telecom S.A Togo: 95.06% • Atlantic Telecom S.A. Niger: 100% • Atlantic Telecom S.A Gabon: 90% • Atlantic Telecom S.A Centrafrica: 100% • Prestige Telecom S.A. Ivory Coast: 100%

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33.2 The main information on the acquisition of new subsidiaries within "Alysse" project is detailed as follows: - Consolidated comprehensive income at 12/31/2014 and at 01/31/2015:

(In millions MAD) 12.31.2014 01.31.2015 Revenues 4,862 407 Net income- Share of the Group (264) (27)

- Consolidated financial statement at 12/31/2014 and at 01/31//2015:

(In millions MAD) 2014 2015 (*)

Non-current assets 5,979 5,867 Current assets 4,538 3,193 Total Assets 10,518 9,060

(In millions MAD) 2014 2015(*) Shareholders’ equity 370 333

Non-current liabilities 4,186 3,116

Current liabilities 5,961 5,611

Total sharholders’ equity 10,518 9,060 and liabilities (*) Consolidated data for the year 2015 cover the period from January 1 to 31. The information presented above correspond to the sum of the individual data of the acquired entities and before the elimination of intra-group transactions.

F-197 A-1 A-2 A-3 ISSUER Emirates Telecommunications Corporation P.O. Box 3838 Abu Dhabi United Arab Emirates

PRINCIPAL PAYING AGENT AND TRANSFER AGENT Deutsche Bank AG, London Branch Winchester House 1 Great Winchester Street London EC2N 2DB United Kingdom

PAYING AGENT, REGISTRAR AND TRANSFER AGENT Deutsche Bank Luxembourg S.A. 2, Boulevard Konrad Adenauer L-1115 Luxembourg Luxembourg

TRUSTEE Deutsche Trustee Company Limited Winchester House 1 Great Winchester Street London EC2N 2DB United Kingdom

LEGAL ADVISERS To the Issuer as to English law, UAE and To the Arrangers and Dealers as to English law, United States law UAE and United States law Latham & Watkins LLP Clifford Chance LLP Dubai International Financial Centre 9th Floor Precinct Building 1 Al Sila Tower Level 3 Abu Dhabi Global Market Square P.O. Box 506698 P.O. Box 26492 Dubai Abu Dhabi United Arab Emirates United Arab Emirates To the Trustee as to English law Clifford Chance LLP 10 Upper Bank Street London E14 5JJ United Kingdom AUDITORS To the Issuer Deloitte & Touche (M.E.) Al Sila Tower Abu Dhabi Global Market Square P.O. Box 990 Abu Dhabi United Arab Emirates

ARRANGERS Goldman Sachs International HSBC Bank plc Peterborough Court 8 Canada Square 133 Fleet Street London E14 5HQ London EC4A 2BB United Kingdom United Kingdom

DEALERS Goldman Sachs International HSBC Bank plc Peterborough Court 8 Canada Square 133 Fleet Street London E14 5HQ London EC4A 2BB United Kingdom United Kingdom

LISTING AGENT Deutsche Bank Luxembourg S.A. 2, Boulevard Konrad Adenauer L-1115 Luxembourg Luxembourg imprimafp — c110987