COMPANY PROFILE 1 COMPANY PROFILE COMPANY PROFILE

002 COMPANY PROFILE

003 COMPANY PROFILE THE HISTORY OF ANGOLA CABLES

The history of Angola Cables is intrinsically linked The change in the market forced this young company, still in to Angola’s need for an active and structured the learning phase of its business, to adapt to that change Telecommunications sector, capable of accomplishing the from the start, having realized quickly that being a mere government’s development plan as it is outlined in the manager of an underwater infrastructure would not be White Paper on Telecommunications. Creating an entity that sufficient for its sustainability. The demand for added-value is neutral and equidistant from the main market players was services was therefore one of the factors of attractiveness critical. However, it would also have to be another active embraced by the Company during the year 2013. member in the same market, able to effectively manage its assets (WACS’ submarine infrastructure), thus bringing more Focused on the government’s strategic plan of advantages for the sector. turning Angola into one of the regional Hubs in the Telecommunications sector, together with the support of Angola Cables was established in 2009 by five major its shareholders, the company outlined and structured two national operators, in order to manage their participation new defining and arge investment projects: the SACS and in the WACS submarine cable, the largest and most the Cable of the Americas. The infrastructure to support advanced African submarine infrastructure at the time of the Internet and basic equipment for the existence of the its inauguration. Angola Cables is Tier 1 in WACS and holds national IXPs have been created and put into production. 11.4 % of its capacity. Its creation is proof that the sharing Angola is now a reference in the region, something many of infrastructures is an efficient way to create value in this have previously tried to achieve without success. highly competitive industry. The company’s commercial launch came with the conclusion of the Sangano station, However, since these conditions are already in place, it where the cable lands, and that of the Angonap, where all is necessary to present to the market the gains that the agents using the company’s services are present. company will bring to each of its customers, so it can actually add value. The 2013 year was for Angola Cables a year of staff capacitation, as well as a year of affirmation in the national and international markets.

The commercialization of international circuits has undergone significant changes, coupled with increased available capacity for underwater infrastructures installed on the African coasts, changed the values of international circuits significantly.

004 COMPANY PROFILE SERVICES PORTFOLIO

Currently, the Company markets services based on the Angola Cables features a Core IP system, able to provide capacity it holds in the WACS cable. Its core business is the IP Transit and BGP services with different international wholesale market, with special focus on the sale of capacity Internet operators. This way, the company sells web access for international voice and data circuits, the wholesale to ISPs and large customers with advanced technologies, commercialization of the Internet and Colocation for the IT over a optical fiber transmission infrastructure at the market agents in the Angonap. speed of light, thus ensuring high quality and reliability in the transmission and reception of data, voice and video As a carrier of carriers, the company sells primarily with worldwide standards. Additionally, the Colocation or especially for the countries where the WACS is available, Datacenter management service is part of the services but also supplies point-to-point connections between portfolio provided by the Company. This service enables domestic and foreign customers outside that infrastructure. third parties to make use of rental space for IT and Telecom Internally, in the commercialization of Last Mile, the equipment, as well as selling digital content from our shareholders are the fundamental source of supply for infrastructure. these services, while the major international carriers supply any external needs.

SERVICES

Circuits establish communication Colocation allows the access to The Internet services allow web links at the speed of light over optical Datacenter services to third parties connection and access to international fiber systems with large transmission by renting space for IT equipment content with the desired quantity and capacity between different points, and Telecommunications. speed to operators and customers. at an international level, according to the origin and desired destination.

005 COMPANY PROFILE INFRASTRUCTURES

In order to develop its business and maintenance of and damage to the infrastructure was also taken into services portfolio, Angola Cables is in charge of managing consideration. To ensure efficient and good quality of the infrastructures and equipments that are essential operation, all the necessary support infrastructures for the for the operation of the network. activity at Sangano were also secured. These range from generators and fuel tanks, the heating, ventilating and air The following infrastructures can be highlighted: conditioning and uninterruptible power supply systems for the transmission systems, the security systems (passive SUBMARINE CABLE - WACS and active) and the residential area.

The WACS (West Africa Cable System) is a submarine cable with a high capacity optical fiber system interconnecting 15 stations from 11 different operators along the west coast of Africa, from South Africa to the United Kingdom, through the Canaries and Portugal. It comprises a system of four fiber pairs with a total length of about 14,000 km and a current theoretical capacity of 5.12 Tbps. The WACS allows connectivity between Angola and the rest of the world through links with other submarine systems at various mooring points.

Currently, this system is the most advanced and with largest capacity in Africa. SANGANO STATION

The Sangano Station is an essential infrastructure for the operation of submarine systems landing in Angola. With the main purpose of serving as the first anchor point and entry for the WACS submarine cable, the station is ready to receive at least six submarine cables. The choice of the landing site for the cable is critical for its proper functionality and so a study was made which pointed the beach of Sangano as the place with the best conditions for the this purpose.

Environmental risks associated with the implementation of the cable were taken into account while defining the strategic location for the Cable Landing Station. The risk probability of the location in terms of interruptions

006 COMPANY PROFILE

ANGONAP BACKHAUL

The Angonap is where the whole Angola Cables network Between Sangano and the Angonap, Angola Cables holds begins. This Datacenter houses the company’s central an infrastructure that ensures the interconnection between communication infrastructures such as the IP Core, the these two crucial points of the national network. The servers and transmission elements, as well as all national Angonap being a leading national gateway for international operators infrastructure allowing its interconnection with traffic, its connection to the cable station is guaranteed by the Angola Cables network interconnected in the Angola Angola Cables through a redundant DWDM transmission Cables network. The central switch of the national Internet system, supported by two dark fiber pairs, provided by (IXP) and part of the support equipment for the .AO domain different operators. This system assures a highly reliable are also based there. The Angola Cables Datacenter is service to the network, because since it avoids fiber service a modular shelter with a 233 m2 area, ready with all the interruption. necessary equipment for operation. It is located in the south of Luanda, with easy access and ample possibilities for the connection of optical fiber infrastructures to the building. The complex has permanent vigilance, both in personnel and in active safety controls, and was designed and prepared for further expansion, so as not to hamper future growth. The Angonap complex was planned according to a strategy and a vision of future and, accordingly, its infrastructure is set to accommodate growth.

• Start of commercial operation in Angonap • Start of Sangano • Construction of the Angonap • Launch of the SACS Station construction project

2009 2010 2011 2012 2013

• Definition ofBackhaul • Inauguration of WACS • Inauguration of Sangano Station • Inauguration of Angonap • Inauguration of Backhaul

007 COMPANY PROFILE GOVERNANCE

The corporate governance elected in July 2012 for the four-year period 2012-2015 was in charge during the year 2013. However, some changes were made in the composition of the management bodies, by virtue of the replacement of representatives from some shareholders, particularly in the General Assembly. CORPORATE GOVERNANCE

General Assembly Board

Supervisory Board

Board of Directors

Executive Board

THE GENERAL ASSEMBLY BOARD

The Angola Cables’ General Assembly Board deliberates on matters assigned to it by the Statutes of the Company, as well as on any matters that are not included in the competencies of the other corporate bodies. It is composed of a Chairman, a Vice-Chairman and a Secretary, as defined in the Statutes.

COMPOSITION OF THE CHAIR OF THE GENERAL ASSEMBLY BOARD NAME TITLE SHAREHOLDER Engº. João Adolfo Martins President Angola Telecom

Engº Javier Rodriguez Martin Vice-Chairman Movicel

Dra. Tidiane dos Santos Secretary Unitel

008 COMPANY PROFILE

SUPERVISORY BOARD

The Supervisory Board has an oversight function, and is composed by two full members and two substitute members.

COMPOSITION OF THE SUPERVISORY BOARD NAME TITLE SHAREHOLDER Dr. João Salvador Chairman MS Telcom

Dr. João Ebo Full Member Movicel

Dr. Diamantino Carvalho Substitute Member Startel

Dra. Yolanda Guerreiro Member Unitel

BOARD OF DIRECTORS

The Board of Directors is the body in which all Angola Cables’ shareholders are represented; with the support of the Supervisory Board, it monitors the activities of the Executive Board. In late 2013, the Angola Cables’ Board of Directors consisted of seven directors, three of whom were executive and four non-executive.

COMPOSITION OF THE BOARD OF DIRECTORS NAME TITLE SHAREHOLDER Dra. Naiole Cristina Cohen dos Santos Guedes Chairman Angola Telecom

Engº. António José Nunes Vice-Chairman

Dr. Pedro José Manuel Member Angola Telecom

Dr. João Filipe Melão Dias Member Unitel

Engº. Roger Alexandre Ferreira Member Angola Telecom

Dr. Paulo Jorge dos Santos Abreu Member Movicel

Dra. Laura Tchinizolle Ferreira Carneiro Member Startel

009 COMPANY PROFILE

EXECUTIVE BOARD SHAREHOLDER STRUCTURE

The Executive Board is responsible for daily management Angola Cables’ shareholder structure consists of five and reports to the Angola Cables’ Board of Directors, major national telecom operators: Angola Telecom, Unitel, formally and periodically, all the developments and the MSTelcom, Movicel and Startel. Angola Telecom is the performance of the Company’s business. majority shareholder, with 51% of the Company’s capital, followed by the mobile operator Unitel, with 31%; the fixed- line operator MSTelcom, with 9%; the mobile operator Movicel, with 6%; and the fixed-line operator Startel, with 3 %. António Nunes Chief Executive Officer Administrator in charge of the Marketing and Sales Management, the Human Talent Office and the Planning and Reporting Office. Holds a degree in Electrical Engineering from the University of Dresden, Germany, obtained in 1992.

Laura Carneiro Administrator Administrator in charge of Administrative and Financial Management and the Security Office. Holds a degree in Financial Management from the Catholic University of Angola, obtained in 2007.

Pedro Manuel Administrator Administrator in charge of the Technical and Engineering Management and the Legal Office. Holds a degree in Law from the Law Faculty of the Agostinho Neto University, with a specialization in legal and economic sciences, obtained in 2007.

010 COMPANY PROFILE

6% Angola Telecom is a Public Company that aims to provide access 9% 3% to telecommunication services throughout the country, with clear commitment to social responsibility.

Service provider of mobile Telecommunications, Unitel is in the market since 2001 and has at present more than 9 million customers, providing coverage in all municipalities.

The MS Telcom is a subsidiary of Sonangol Group and is, since 2001, an operator for the public service of fixed-line Telecommunications. 51%

31% Movicel is in the market since 2003, providing mobile Telecommunications services and has at present more than 3 million customers.

A fixed-line Telecommunications Operator since 2009, Startel aims ‘to be the preferred choice of the customer’ through integrated quality solutions. ANGOLA TELECOM STARTEL MOVICEL MSTELECOM UNITEL

ORGANIZATIONAL STRUCTURE

Executive committee Non-Executive Board

Executive Secretariat

Human Talent Office Planning and Reporting Office

Legal Office Security Office

Technical and Engineering Administrative and Financial Management por Directorate Management Management

Commercial Engineering Finances

Marketing Infrastructures Accounting

Technical and Commercial Support Information systems General Services

Supervision Logistics and Purchasing

011 COMPANY PROFILE ANGOLA CABLES CULTURE

Angola Cables’ Culture aims to align its employees with a common goal, keeping in mind the development and well-being of the Company. At Angola Cables, this Culture is most evident in the interaction of employees MISSION with internal and external customers. VISION

To be recognized in Angola, in Africa and in the World as a leading Telecommunications Operator.

To transform Angola into one of the main Telecommunication Hubs in Africa.

012 COMPANY PROFILE

CORPORATE VALUES Angola Cables understands that efficiency is a fundamental value in the organization. Only by using The quality of products and services, as well as of the best available means, avoiding as much as possible the work done by employees, plays a major part in our task duplication and waste time, will the best possible commitment to ensure Angola Cables’ sustained growth. efficiency objectives be achieved. Efficiency is directly Only this way the company will be recognized as a leader related with sound management of all human and material in its area of business and in its interaction with the resources for the achievement of corporate goals. community.

QUALITY

EFFICIENCY KNOWLEDGE TRANSPARENCY

Knowledge is the source of progress. As such, Angola Angola Cables is committed to an ethical and transparent Cables is oriented towards the future, and the investment relationship with the community. Thus, any person or in knowledge and learning continues to be one of the organization is able to know what is being done and how. Company’s core values. By obtaining knowledge, teams Thus, it is understood that the company’s recognition can build on their competences and, consequently, involves not only the quality of its service but also its incorporate more value into their work. transparent business practice.

013 2 EVOLUTION OF THE SURROUNDING ENVIRONMENT EVOLUTION OF THE SURROUNDING ENVIRONMENT EVOLUTION OF THE SURROUNDING ENVIRONMENT MACROECONOMIC OVERVIEW

INTERNATIONAL EVOLUTION OF REAL GDP 2011 - 2013 | % Over the past few years, the World economy has been slowing as a result of the financial crisis that so many countries have been facing. 5,49 4,86 4,96 Thus, the International Monetary Fund estimates that the 3,91 world economy has registered a growth of 2.87% in 2013. 3,18 2,87 This slowdown in growth was recorded both in countries 1,69 1,47 1,17 with developed economies and in emerging countries, for which a growth of 1.17% and 4.55%, respectively, was 2011 2012 2013 estimated in 2013. However, the trend observed in recent years is still in place, with significant growth rates in WORLD SUBSAHARAN AFRICA DEVELOPED ECONOMIES emerging markets in comparison to developed economies. SOURCE: INTERNATIONAL MONETARY FUND Sub-Saharan Africa continues to occupy a prominent position in terms of economic growth, with an unequivocal contribution to the growth of the world economy. In 2013 the growth was more pronounced than in 2012, registering ANGOLA a GDP growth of about 4.96%. The growth potential of the Angolan economy, For 2014, the IMF predicts an increase in GDP growth rates together with the latest developments, point toward a worldwide, both for developed economies and emerging strengthening of Angola’s role as a strategic power in countries. This growth will be associated with the Africa. The geographical position of the country, the pace acceleration of U.S. growth, a return to moderate growth of population growth and the institutional effort towards in the Eurozone and growth in the UK and Japan. the development of the national economy are some of the factors underlying this optimistic scenario. Regarding inflation rates, these have slowed down, and, for 2013, the average inflation rates recorded were lower According to the World Bank, gone are the times than in 2012 and 2011. The global inflation rate was of shrinking oil GDP; growth is expected to register a rate 3.76% in 2013, a lower value by about 0.22 percentage of 6% in 2013. points compared to 2012 and lower by 1.08 pp when compared to 2011.

016 EVOLUTION OF THE SURROUNDING ENVIRONMENT

Over the past three years, loan interest rates have been OIL AND NON-OIL GDP GROWTH RATE declining, registering the maximum value of 22.5% in 2010. 2011 - 2013 | % The Economist Intelligence Unit estimates that in 2013 they have risen to about 15%.

Due to Angola’s growth potential, the country continues 8,1 7,2 to benefit from a strong program of public investment and 8,9 increasing flows of foreign capital, significantly boosting 9,5 6,0 7,8 the national economy. 3,4 5,2 -5,6

2011 2012 E 2013 P

OIL BASED NON-OIL BASED REAL E - ESTIMATED P - PREDICTED

SOURCE: WORLD BANK

In 2013 the non-oil sector has also experienced a positive growth rate, equivalente to 7.8%, although there is a slight slowdown compared to the growth rate of 2012 (9.5%). The process of diversification of the economy plays a major role, not only in reducing the weight of the oil sector in budget revenues and in the country’s productive structure (increasing resistance to external shocks), but also through job creation.

According to the Angolan National Bank, there was a reduction in the inflation rate in Angola, which in 2013 stood at 7.7%, even if still above global rates; these historic lows were influenced by factors such as improved management of public accounts and the stability of the exchange rate.

017 EVOLUTION OF THE SURROUNDING ENVIRONMENT CONTEXT OF THE TELECOMMUNICATIONS SECTOR

INTERNATIONAL The penetration rates of Internet users in Europe are far superior when compared with other regions; they are estimated to reach 74% in 2013. At the opposite extreme INTERNET is Africa, presenting the lowest rate of penetration (16 % in 2013). However, it was the region with the highest growth In 2013, approximately 2.8 billion people were using the rate of penetration compared to 2012 (as much as 14%). Internet, which accounts for about 38.8% of the world The penetration rates of Internet users, as well as the total population. Over the past 6 years, the number of users number of Internet users in developing countries doubled over almost doubled, registering an increase of 1.192 million the past 6 years, from 14.7% in 2008 to 30.7% in 2013 and users between 2008 and 2013. from 807 million users in 2008 to 1.791 million users in 2013, respectively. EVOLUTION OF THE NUMBER OF INTERNET SUBMARINE CABLES USERS BY TYPE OF ECONOMY Optical fiber is currently the transmission medium capable 2008-2013E | MILLIONS of responding optimally to existing needs, being a reliable and durable means of transmission that outperforms other 2.749 solutions, not only in terms of Internet use but also of 2.497 2.273 television and telephone. 2.023 1.791 1.556 1.747 1.398 1.584 1.193 974 807 INVESTMENT IN NEW OPTICAL 913 958 750 773 830 875 FIBER CABLES 2008 2009 2010 2011 2012E 2013E 2008-2013E | BILLION USD

DEVELOPED ECONOMIES DEVELOPING ECONOMIES WORLD E - ESTIMATED SOURCE: INTERNATIONAL TELECOMMUNICATIONS UNION 2,70 2,80 1,90 In 2013, the growth of Internet users, compared to the previous 1,50 1,20 year, was higher in developing countries (about 13.0%) than in developed countries (about 4.9%), resulting from the focus on 0,0% 26,7% 34,2% -7,2% 16,9% Internet development in the Telecommunications sector and the existence of a greater potential for growth in this sector, 2008 2009 2010 2011 2012 E when compared to developed economies. In this context, the difference between high penetration rates in developed INVESTMENT IN SUBMARINE CABLES AAGR [Average Annual Growth Rate] E - ESTIMATED countries (about 76.8%) and developing countries SOURCE: SUBMARINE TELECOMS FORUM (about 30.7%) in 2013 is understandable.

018 EVOLUTION OF THE SURROUNDING ENVIRONMENT

DEVELOPMENT OF NEW OPTICAL FIBER TOTAL INVESTMENTS IN SUBMARINE OPTICAL SUBMARINE CABLES FIBER CABLES BY REGION 2008-2012 | km 2008 - 2012 | %

82.000 3,0% 62.500 3,0% 58.000 4,0% 37.500 4,0% 25.000 29,0% 0,0% 54,7% 47,9% -12,6% 13,6% 10,0% 2008 2009 2010 2011 2012 TOTAL INVESTMENT:

SUBMARINE CABLES (Km) AAGR [Average Annual Growth Rate] 10 BILLION USD SOURCE: SUBMARINE TELECOMS FORUM 12,0%

Between 2008 and 2012, there was an investment of 18,0% around 10 billion USD in submarine optical fiber systems, 17,0% 2012 being the year with the highest concentration of investment (2.8 billion USD). NORTH AMERICA LATIN AMERICA AND THE CARIBBEAN PACIFIC ISLANDS AUSTRALIA EUROPE AND MEDITERRANEAN EAST ASIA TRANSPACIFIC Furthermore, the same period saw the development of SOUTH ASIA AND MIDDLE EAST AFRICA approximately 265,000 km of submarine optical fiber SOURCE: SUBMARINE TELECOMS FORUM cables internationally.

Geographically, between 2008 and 2012, 2.9 billion USD were invested in new systems in sub-Saharan Africa, including four new long distance systems along continent’s west coast and three along the eastern coast.

In 2013, the submarine communications sector marked its 25th anniversary as transoceanic optical fiber communications provider. This quarter-century was marked by strong variations in the sector’s performance, registering an average investment of 2.25 billion USD and 50,000 kms deployed per year.

019 EVOLUTION OF THE SURROUNDING ENVIRONMENT

In this context, according to a study by Terabit Consulting, the investment amounts and total annual kms deployed EVLUTION OF ACTIVATED CAPACITY IN expected for the future of this industry are close to those THE SUBSAHARAN AFRICA REGION observed in the past 25 years, centered mostly in the 2008-2012 | Gbps markets of Brazil, India, China and sub-Saharan Africa. ACTIVATION OF NEW SUBMARINE CABLE 1.780 SYSTEMS - READY FOR SERVICE 2011 - 2016 | # 720 620 230 100 18 18 14 2008 2009 2010 2011 2012 SOURCE: SUBMARINE TELECOMS FORUM 9 7 5 However, realization of investment in recent years has led to a very significant increase in the capacity for data transmission in sub-Saharan Africa. 2011 2012 2013 2014 2015 2016 SOURCE: SUBMARINE TELECOMS FORUM The activation of submarine cables gave rise to the growth of broadband, allowing, between 2008 and 2012, an increase of transmission capacity at an average annual rate Internationally, a strong evolution in the activation of new of around 105%. submarine cable systems is anticipated; looking ahead to 2014 and 2015, 14 and 18 new submarine cables systems Additionally, once the Telecommunications sector was seen are ready to enter service, respectively. as a major driver for economic and social development of African countries, a project was approved by the World Until a few years ago, the sub-Saharan Africa region was Bank called ‘Central African Backbone’, in 2009. one of the areas in the world with less access to optical fiber, especially East Africa. This project aims at the development of modern Telecommunications infrastructures in Central Africa, particularly in the landlocked countries, aiming to provide broadband connectivity to improve the quality and coverage of Telecommunications services, as well as allowing the integration of these countries in the global context.

020 EVOLUTION OF THE SURROUNDING ENVIRONMENT

According to the ITU (International Telecommunications NATIONAL Union), in 2012, the number of Internet users in Angola reached around 17% of the total population, equivalent Angola’s strong economic growth has had an impact in the to more than 3 million people. infrastructure and technologies of the Telecommunications sector. The development of the sector is a major priority in In this context, there was a positive trend in the internet the National Development Plan (NDP) traced by the Angolan penetration rate in Angola and the number of Internet users Government for the period 2013 to 2017, with the objective increased around 18%, between 2011 and 2012. of ensuring the availability of information exchange between economic agents and the dissemination of the SUBMARINE CABLES latest information technologies. The arrival of submarine cables to Angola in 2002 should INTERNET have solved the problem of international connectivity in the country. However, even after the accelerated development of national Telecommunications, access to submarine Internet services have improved and several solutions have optical fiber infrastructure remained rather limited by been sold to the many existing customers in Angola. the market players. The coming into service of the WACS completely transformed this paradigm in the domestic EVOLUTION OF THE INTERNET market. Today, Vsat connections seem quite distant from PENETRATION RATE IN ANGOLA the problems of the past, with regard to capacity and prices. 2008-2012 | % Currently, submarine transmission systems play a fundamental role in the economic life of the country and allow for the development of the supply from telecom 17% operators in the market. 15%

10%

5% 6% 19.549 20.180 20.821 3.527 18.314 18.927 1.955 2.983 842 1.136 2008 2009 2010 2011 2012

INTERNET USERS % Angolan population SOURCE: INTERNATIONAL TELECOMMUNICATIONS UNION

021 EVOLUTION OF THE SURROUNDING ENVIRONMENT

The following list comprises the undersea cable systems with current connection to Angola:

TOTAL DESIGN SYSTEMS RFS LENGTH (kms) CAPACITY SAT-3 2002 13.000 340 Gbps

Adones 2009 1.800 80 Gbps

WACS 2012 14.000 5,12 Tbps

Additionally, the deployment of two new cables is anticipated: the SACS and the Cable of the Americas.

The SACS is an exclusive initiative by Angola Cables which will link Angola to Brazil, being the first and only cable to be installed in the South Atlantic.

On the other hand, the Cable of the Americas (COTA), even though it has no direct link with Angola, is indeed a sequential project in relation to the SACS, since it is expected that both become interlinked, directly connecting Africa to the Americas and changing the current paradigm in the Telecommunications sector.

Thus, the following cables are planned:

TOTAL DESIGN SYSTEMS RFS LENGTH (kms) CAPACITY SACS 2016 6.000 40 Tbps

COTA 2016 11.000 To be defined

022 EVOLUTION OF THE SURROUNDING ENVIRONMENT BUSINESS ANALYSIS 3 BUSINESS ANALYSIS BUSINESS ANALYSIS BUSINESS ANALYSIS ANGOLA CABLES VALUE CHAIN

The strong growth of the economy and the need for In addition to co-owning the WACS submarine cable, greater connectivity between Angola and the world have Angola Cables owns a Datacenter (ANGONAP) where all led to increased demand for Telecommunications services major domestic operators are stationed, as well as the and infrastructures, which not only generated the need Angolan IXP and .AO domain. to operate the existing infrastructure efficiently but also the realization of investment in innovations able to meet At this location, Angola Cables ensures the provision the needs of the market. Angola Cables took upon itself of services to its clients, both national and international. the task of creating these new infrastructures with new standards of modernity, efficiency and quality. The Angola Cables value chain is based on the entire network infrastructure and the services associated Angola Cables was created to manage the Angolan with Submarine Telecommunications cable, from its participation in WACS submarine infrastructure, as well conceptualization and business model study to the as other cable-related projects in which it may eventually services associated with the management and participate and develop international wholesale business. marketing of available capacity.

Wholesale Telecom Customers / Submarine Cables Wholesale Brokers Operators Companies

Owners of usage Owners of the rights of cable Trading In charge of the submarine cable capacity. intermediaries in the resale of purchased Players interested and its sales Trading Telecommunications traffic to operators in developing rights. Engaged intermediaries in the market. or wholesale economic activities in the cable’s Telecommunications Engaged in the bulk brokers, or to the in various sectors construction/ market. purchase and resale end user, according and international maintenance and Engaged in the bulk of data and voice to the needs of each markets. sale of the usage purchase and resale traffic. client. rights. of data and voice traffic.

Angola Cables Other players in the value chain

026 BUSINESS ANALYSIS BUSINESS DESCRIPTION

Angola Cables’ business is aligned with the Government’s strategy to develop one of the Telecommunications Hubs EVOLUTION OF THE PRICE OF WHOLESALE STM-1 in Africa, aiming to be the focal point for operators in the CIRCUITS, BETWEEN LONDON AND JOHANNESBURG region and connecting them with the rest of the world. 2009-2013 | THOUSAND USD

One of Angola Cables’ purposes, as an operator of submarine cables, is to increase bandwidth and 142 international connectivity, as well as the reduction of connection costs, investing in partnerships and consortia with international operators. 49 This way, the Company aims to conquer international 51 28 18 prestige and worldwide recognition as a reference in the sector, a provider of high quality international connectivity, 2009 2010 2011 2012 2013 with constant availability and adequate capacity for the SOURCE: TELEGEOGRAPHY growing needs of the market.

Angola Cables is a company dedicated particularly This factor put Angola Cables immediately on notice, aware at the wholesale business, based on the optical fiber of the need to diversify its business and no longer restrict submarine cables technology, with a privileged position its activity to the marketing of international circuits over in the commercial chain as a carrier in the international submarine cables. Telecommunications market. Accordingly, the Company began to look at the market as There has been a sharp fall in the prices of international a trader, not only of submarine cables, but also of data wholesale circuits, as a result of the dynamics and general centers, and as an Internet provider. evolution of the Telecommunications market. By taking the creation of a regional Hub as its mission, the This decrease was also reflected in the African market, Company opted for the strategy of generating an iterative with a direct impact on Angola Cables’ activity. According development in order to achieve these goals. The first step to the market research firm Telegeography, the average was the creation of a national IXP. This point of connectivity price of an STM-1 circuit between Johannesburg and will give Angola a so far nonexistent Telecommunications London declined sharply between 2009 and 2013, ecosystem. presenting a negative average annual growth rate, equivalent to -40%, falling from approximately 142 The emergence of content providers and software houses will thousand USD in 2009 to about 18 thousand USD in 2013. bring value to the market and stimulate co-related businesses.

Subsequently, once the regional IXP is recognized as an asset for the region, the mission will become more tangible to all players. The increase in value brought by the new market will catapult the Hub initiative.

027 BUSINESS ANALYSIS CONTEXT OF THE TELECOMMUNICATIONS SECTOR

OPTICAL FIBER SYSTEM Main advantages of optical fiber submarine cables: • High reliability, with a redundant system, for the continuity of services in case of rupture The submarine optical fiber system is a transmission • Traffic speed and full load capacity (with the technology system based on optical fiber cable technology. Submarine in place) is in the order of terabytes per second and much optical fiber cables are currently the most widely used in the higher than the current satellites Telecommunications market worldwide. • Quick access availability

Protected by special insulation and special mechanical safeguards, these cables are mainly used in international Telecommunications networks interconnecting countries and continents.

028 BUSINESS ANALYSIS CORPORATE PERFORMANCE

4 CORPORATE PERFORMANCE CORPORATE PERFORMANCE CORPORATE PERFORMANCE RELEVANT ACTIVITIES OF THE YEAR 2013

Angola Cables takes care to ensure the sustainability The year 2013 was the first full year of Angola Cables’ and constant evolution of its business. Consequently, operational activity. Many actions have been developed to it is committed to continuously create value through capacitate Company employees and create a true top team, the proactive management of the organization and its well as internationally promote the company and its strategy portfolio of products and services. In order to guarantee and give visibility to it’s products and services quality. this commitment, it was essential, during the year 2013, to implement a set of planned activities with a strongly The following is a non-exhaustive list of some of the key positive impact on the organization. events that shaped Angola Cables’s activity during 2013:

• Angola Cables presence at the PTC Conference JAN

FEB

MAR

APR • Angola Cables presence at the Globalcom Conference 2013 • SACS negotiation • Angola Cables presence at the ITW in Chicago MAY • Angola Cables presence at the EXPO TIC 2013 • Signing of Agreement with Epsilon JUN • Angola Cables’s first team building

• Angola Cables presence at the Broadband in Latin America in 2013 JUL

AUG • Cape to Rio Race - Lisbon Event • WACS Meeting - Investment & Agreements Sub-Committee • Angola Cables presence at the Carriers World SEP • Award for Quality and Efficiency - ISAQ • WACS Meeting - Assignment, Routing & Restoration Sub-Committee OCT • Cape to Rio Race - Luanda Event • Angola Cables presence at the Submarine Networks World • Telecommunication Boat Race and Employees’ Tour NOV • 2nd Angola Cables Team Building • Angola Cables presence at the AfricaCom 2013 DEC • Cape to Rio Race - Cape Town Event

032 CORPORATE PERFORMANCE

SUMMARY OF MAIN ACTIVITIES JANUARY 2013

PTC Conference - Honolulu

At this conference, held in Honolulu, Hawaii, January 19-22, new and innovative ideas and strategies were presented and discussed, which enable a more effective response to market trends and customer expectations. Estas imagens não têm Angola Cables attended the event and obtained relevant knowledge about the submarine cable industry’s challenges, qualidade new technological developments and new implementation initiatives. APRIL 2013

Globalcom Conference

On April 16th and 17th, the Globalcom conference was held in Luanda. This conference aims to bring together key players in the national Telecommunications sector: operators in particular, the Telecom regulator (INACOM), the MTTI and also several suppliers, so that they can share expertise and develop new business opportunities.

Angola Cables not only attended the event but also participated in it by conducting a presentation dedicated to Angola’s aim of becoming a Telecommunications Hub in Africa.

033 CORPORATE PERFORMANCE

MAY 2013

SACS Negotiation

During May, the negotiation process for the SACS supply contract was carried out. To that end, an international tender was launched, enabling Angola Cables to select a limited number of suppliers for the last round of negotiations. For bureaucratic reasons, the negotiating meetings took place in Lisbon (Portugal).

ITW Chicago - International Telecom Week

Between May 13th and 15th, Angola Cables once again took part in Chicago convention’s. ITW is an annual event where the foremost members of the global wholesale community in the Telecommunications sector come to meet. The participation in this event was another opportunity to seek out new business opportunities with other global wholesale players and promote Angola Cables’ products and services.

EXPO TIC 2013 – Angola

The EXPO TIC 2013, promoted by the Ministry of Telecommunications and Information Technologies in partnership with the Luanda International Fair (FIL), opened from May 16th to 19th in Angola’s capital. Angola’s second Internacional exhibition of information and communication technologies, with the participation of Brazilian, South African and Portuguese companies. This international fair allowed Angola Cables to show and promote its products and services among the community.

034 CORPORATE PERFORMANCE

JUNE 2013

Agreement with Epsilon

An agreement was signed with Epsilon, a leading provider of global interconnectivity, allowing Angola Cables to connect to the main PoPs in the world and to the whole network connecting them.

Angola Cables is thus able to offer its customers several alternatives for interconnection in the various PoPs where Epsilon is present.

Angola Cables’s first team building

On June 7th and 8th, the Angola Cables’s first team building initiative was set in motion. The event took place at Paradise Kilunda, in Funda.

During the two days of team building the employees shared Angola Cables’s various achievements and future prospects, in order to reinforce and integrate the entire team in the Company’s diverse activities.

Additionally, during that period, the Angola Cables employees held meetings with the aim of promoting teamwork, developing team spirit and improving communication skills.

035 CORPORATE PERFORMANCE

JULy 2013

Broadband Latin America 2013

This conference took place in São Paulo between July 2nd and 3rd. The event provided an opportunity for the meeting between Telecommunications operators, service and infrastructure providers, governments and regulators. There was a special focus on the development of major Telecommunications projects throughout Latin America. Angola Cables had the opportunity to attend a series of workshops where topics on the sector and detailed knowledge of the trends in the South American market were discussed. There was also a chance to show the Brazilian market all the progress made in the new SACS submarine cable and in the Cable of the Americas projects. AUGUST 2013

Cape to Rio Race - Lisbon Event

On August 30th and 31th, the event of Angola Cables’s sailboat baptism, the Bille, took place in Cascais, together with the presentation of the Angola Cables Team.

The presence in the Cape to Rio Race promoted Angola as a country, as well as the Angola Cables’s Brand and its business capability.

036 CORPORATE PERFORMANCE

SEPTEMBER 2013

WACS Meeting - Assignment, Routing & Restoration Sub-Committee

Between September 3rd and 5th, a regular meeting of the WACS cable was held in Luanda, which was attended by most members in the consortium.

During this meeting, a range of topics related to technical aspects of the cable were discussed, Particularly cable’s overhauling agreements, as well as landing stations upgrade, which will greatly increase data transmission capacity, among other topics.

Submarine Networks World - Singapore

Angola Cables was present at the Submarine Networks World Conference on September 10th to 12th, in Singapore. This is an event of great importance for networking at the highest level, gathering the major players in the global submarine cable industry.

In the 2013 edition, the event brought together representatives of over 100 companies in the submarine cable industry, from more than 40 countries.

This presence allowed Angola Cables to obtain relevant information about market opportunities, discuss with its peers the challenges of the business, and publicize Angola Cables’ name and brand.

Award for Quality and Efficiency International Star Award for Quality (ISAQ) - Geneva

On September 28th and 29th, another ISAQ awards ceremony took place in Switzerland. Angola Cables was awarded the trophy for the Gold category, acknowledging the Company’s commitment to Quality, Leadership, Technology and Innovation.

037 CORPORATE PERFORMANCE

OCTOBER 2013

WACS meeting - Investment & Agreements Sub-Committee

The WACS meeting occurred between October 8th and 10th at the Continental Hotel in Luanda, and was attended by 10 members of the consortium.

A range of topics was covered in the meeting, with the following highlights:

• Upgrade of the WACS system - analysis of the process for carrying out the cable’s upgrade, and of the criteria for choosing the supplier. It is anticipated that the upgrade process will be completed in January 2016.

• Camtel’s admission into the WACS consortium - analysis of the alterations to the original contract allowing Camtel to integrate the WACS consortium, as well as the purchase by Camtel of the WACS station in Limbe (Cameroon), property of MTV.

Carriers World - London

On October 15th and 16th, Angola Cables attended the 17th edition of the Carriers World Convention, held in London. This is an event dedicated to wholesale market players which allowed Angola Cables to know more about new transport business models and discuss future trends for the IP transit market.

038 CORPORATE PERFORMANCE

NOVEMBER 2013

Cape to Rio Race - Luanda Event

The boat trace’s second event took place between November 1st and 3rd, bringing together all Angola Cables employees and shareholders to watch the arrival in Luanda of the sailboat Bille and Angola’s Team. The event brought Angola Cables the attention of the Angolan press, publicizing the company’s importance in the development of the Telecommunications sector, both in Angola and in Africa.

Telecommunications Boat Race and Employees Tour

Angola Cables promoted a race among all shareholders integrated in the 2nd event of the Cape to Rio Race, in order to involve them in the project, encouraging conviviality and interaction between all.

The Company also promoted a tour aimed at all employees, so they could see the Bille up close, meet its crew and learn more about the Cape to Rio project.

Angola Cables’s second Team Building

The second Angola Cables team building was held on November 16th. The event took place at the BarSulo, in Mussulo Island. For one day, the Angola Cables employees gathered with the aim of developing team cohesion and suggesting improvements for 2014.

039 CORPORATE PERFORMANCE

AFRICAcom 2013

The AfricaCom is the largest African communications conference and exhibition. It was held in Cape Town, South Africa, on November 13th, 2013. On its 16th birthday, the conference featured more than 300 exhibitors representing the entire communications market in the African continent. Angola Cables made its mark at this conference, whose program included the most strategic issues affecting businesses in the digital market on the African continent, especially in terms of services, efficiency, profitability, customer experience, partnerships and policies. DECEMBER 2013

Cape to Rio Race - Lisbon Event

Between December 29th and January 4th, 2014, Cape to Rio’s third event took place in Cape Town. This event allowed Angola Cables to promote the brand internationally, and also bring together diverse Angola Cables partners to watch the launch of the Bille and Mussulo III sailboats at the famous race.

040 CORPORATE PERFORMANCE ACTIVITY PERFORMANCE

Angola Cables, backed up by its management, sought to develop its business through its infrastructure, according to the best market practices.

The human structure is undoubtedly the cornerstone of an organization. The recruitment and capacitation of human resources has been one of the Company’s most important activities.

The recruitment of resources in the market has been quite complex, since Angola Cables and its own Shareholders (the major players in the market) compete in the same market, trying to retain the employees in their organizations; moreover, outside of this core of companies, there is an acute shortage of qualified resources.

Whenever expert human resources are available in the sector, and demonstrate interest in Angola Cables, the fact is that most frequently those employees happen to work for one of the shareholders or are undergoing untying processes. To avoid cannibalization of employees from corporate shareholders, Angola Cables has sought to undertake recruitment of new talents, focusing the search on potential rather than actual experience in the field. The future is bright; however, the present is proving to be quite complex.

More than a reference standard for us, the provision of quality services is a matter of survival in our activity. Our competitors are mature and have been active in the business for a long time. The international market is extremely competitive and demanding, particularly with regard to the quality of the services delivered.

During 2013, several actions were implemented in order to deepen awareness of our business and provide the necessary conditions for a good Company performance. A broad overview of the major projects undertaken by the different departments in the Company is listed below.

041 CORPORATE PERFORMANCE TECHNICAL DIRECTORATE

The role of the Technical Directorate is of particular relevance within the company, since numerous processes TECHNICAL DIRECTORATE PROJECTS depends on it, involving the operation of the entire system supporting the business. IP Core project

All products and services developed and delivered by This project has provided technological support for the Angola Cables, as well as its new projects, are technological development of the Internet business, through the design in nature, involving an extensive and qualified technical and implementation of an IP Core infrastructure based team, with a significant degree of differentiation. on state-of-the-art CISCO equipment, as well as on connections to major international IXPs, in order to improve The year 2013 was the Company’s first full year of Angola’s Internet connectivity. operations, and was mainly dedicated to the enhancement and fine-tuning of many infrastructures and to the evolution The devices are already in operation; however, the project’s of the available services. implementation has been delayed due to unforeseen circumstances, namely factors attributable to the solution The following were the main structural projects of the provider. working year: The fact that the Company does not yet have a • IP Core Project; consolidated technical staff, with tried expertise in the field, • IXP Project; was surely one of the causes for the existence of faults at • Completion of the ANGONAP and maintenance and the level of project management, leading to slippages in the support routines’s implementation; project’s timetable. The Company is currently able to ensure • NOC’s struturing; the start of the provision of service, guaranteeing quality • Enterprise Systems; through short and quick access to contents and operators. • Backbone’s optimization; The next step will be the expansion of the service, • Development of routines associated to WACS’s operation; establishing connectivity to the extant IXPs, through a • SACS’ submarine cables project; process of peering (with no traffic exchange costs). • ‘Cable of the Americas’ submarine cable project.

042 CORPORATE PERFORMANCE

IXP PROJECT - INTERNET EXCHANGE POINT providers has been notable. With proper management of the national domain .AO, whose support equipment (DNA) The necessary equipment’s for the operation of this important is already in operation at Angola Cables’ premises, it is infrastructure are installed and functioning. The projects in expected that the conditions for the increase of content terms of setup is finalized. However, its use by the market is not creators and the effective emergence of an active market yet up to expectations. will be in place.

The market has not yet identified the real IXP’s usefulness. The Management worked on the IXP name and agreed to call This is evident in the fact that not even the operators who it ANGONIX - Angolan Internet Exchange. The ANGONIX will are shareholders And have their own infrastructure in the be the embryo of our future African Telecommunications Hub. ANGONAP for their connections to the WACS have shown any interest in connecting to the IXP. As a result of this scenario, ANGONAP’S CONCLUSION Angola Cables hired a German consulting company DE-CIX, Europe’s largest IXP management company, in order to The project to create the Angola Cables Datacenter - understand the IXP business and its real potential. DE-CIX is Angonap - gained particular relevance in the Company’s equally supporting the development of Dubai’s IXPs, which has business model; this infrastructure allows Angola Cables to been evolving in a very interesting way since last year. provide capacity to all the entities that form its customer base, enabling them to accommodate equipment and Advantages of the Angola Cables IXP: content.

• Operators, shareholders and other market agents Aiming to affirm itself as a regional IXP, Angola Cables must connected to the IXP will be able to exchange traffic with turn its Datacenter into an infrastructure of reference. Only each other quickly and reliably at low cost; this way it will be able to ensure a comprehensive range of • Operators, shareholders and other market agents will be products and services to all entities who wish to connect to able to enjoy access to: national and global content, as the IXP. well as connections to other African and global operators, with high capacity and low latencies. The Angonap is an operational Datacenter, ready to provide the service for which it was created: connecting With IXP’s development, Angola Cables aims to become Sangano cable station to the city. However, a study of the the relevant IXP in Angola on an early stage, and Company’s real needs concluded that the expansion of subsequently an IXP for the whole Southern African region, this infrastructure is required in order to allocate operators where operators and content providers come together to (those using the cable) and also content providers and exchange information. Then the results of this project may other customers, ensuring the Company’s readiness for the be notable because it will significantly improve access to implementation of this new phase. content and reduce costs for operators as IXP customers. At present, the interconnection between national operators has no significant prospects in itself. On the one hand, each shareholder operator sells contents on its own, and there are no incentives for the sale of third party content between operators. However, the increase in content

043 CORPORATE PERFORMANCE

NOC’S STRUTURING In 2013, the Technical directorate conducted an assessment of needs, designed the whole system and selected and The Technical directorate is also the responsible area bought equipment. for 24/7 monitoring of Angola Cables’s whole technical network, particularly in terms of its subsystems, taking BACKBONE’S OPTIMIZATION responsibility for solving certain events or escalate them to the relevant area. Later this year, the Technical directorate promoted the optimization of the backbone between Sangano and the Until 2013, most monitored incidents whose resolution Angonap, aiming to improve network sustainability and would entail intervention beyond the use of software, were assess the need for growth, as well as the flexibility of delegated to subcontractors. the configurations. The system is currently undergoing expansion since it has already exhausted its originally However, in 2013 the supervision area evolved to a installed capacity. Routines for the maintenance and concept of a veritable center of operations, developing and operation of equipment were also set up. capacitating itself to carry out its full duties. During 2013, the NOC team was strengthened both in headcount and WACS CABLE - WEST AFRICA CABLE SYSTEM in terms of know-how (specific training), so that it could partly ensure physical interventions on the equipment. During this year of activity, our teams created various This restructuring allowed for the termination of some reaction routines to WACS’s requests, which involved staff maintenance contracts with external providers, contributing training in Alcatel equipment, installed in the station by to significant savings across Angola Cables’ structure. the consortium; cable equipment inspection and station inspection routines have also been developed. Thus, the Network Operations Center started to develop proactive activity on actual and potential incidents, as well In 2013, the training schedule was reinforced and now the team is ready and able to answer the current requests of as a genuine supervision and intervention across the whole cable activity. Angola Cables operational network. Also with regard to the actions concerning the WACS CORPORATE SYSTEMS cable, the implementation of a protection system for the cable was contemplated, consisting in the incorporation In 2013, the Technical directorate also developed the of a receiving antenna tracking vessels in the area where corporate systems project. This project created the necessary the cable is placed. This system emits an alert signal when a vessel is detected sufficiently close to the cable, conditions for Angola Cables to have a reliable network, allowing for a rapid response from the team at the station, essential to the continued provision of its services. The high keeping them under notice. However, in order to ensure availability of Email Server, DNS and File Server services was proper system operation, the vessel must emit a standard assured with this project, as well as other indispensable frequency for commercial navigation. services for the Company’s operation.

044 CORPORATE PERFORMANCE

WACS SUBMARINE CABLE’S STRUCTURE SHAREHOLDERT

Angola Cables 11,4%

Broadband Infraco 11,4%

Cable&Wireless Worldwide 11,4%

MTN 11,4%

Vodacom / Vodafone 10,0%

Tata Communications / Neotel 9,5%

Telecom Namibia 9,5%

Telkom SA 9,5%

Portugal Telecom 6,3%

Togo Telecom 3,2%

Congo Telecom 3,2%

OCPT 3,2%

SACS (SOUTH ATLANTIC CABLE SYSTEM)

The South Atlantic Cable System (SACS) will be the first submarine cable to be installed in the South Atlantic and will make the connection between Sangano (Angola) and Fortaleza (Brazil).

The adoption of this type of system will avoid disturbances The choice of Fortaleza in Brazil for the landing station had to the cable that may affect connectivity and, consequently, an underlying set of reasons, including the fact that it is the the quality of service. shortest route between Angola and Brazil and there are no other submarine cables connected in the area. Studies were also developed in 2013 to examine the intended upgrade on the WACS cable system; the The cable will be approximately 6,000 km long, consisting consortium in its entirety considered the upgrade of the of four fiber pairs, with a capacity of around 40 Tbps and a landing stations, which will enable a significant increase in data transmission capacity. bandwidth of 100x100 Gbps on each fiber pair.

As a general rule, the upgrades on the WACS are made At present, Africa has one of the highest growth rates every three years over the lifetime of the cable, or whenever of Internet users in the world, and this project will there is an occupation rate higher than 65%. position Angola as a strategic location for the African

045 CORPORATE PERFORMANCE

Telecommunications sector. The total investment will amount to around 160 million USD and will continue to drive the development of Telecommunications in Africa as well as the whole regional economy. It is anticipated that the SACS will be operational in 2016.

Being the first transatlantic system in the southern hemisphere, the SACS is an initiative long awaited by the market, because it will allow Brazil to have direct connections to one of the Hubs in Africa, giving it privileged access to the region.

This cable will also allow Brazil to have a valid alternative connection to Europe as well as low latency connectivity with Asia.

CABLE OF THE AMERICAS (COTA)

The study on the Cable of the Americas was made and consolidated in 2013. This cable will connect Brazil (Santos) to the United States (Miami), going across a Brazilian region This project serves the strategic intent of turning Angola (Fortaleza). into a regional Telecommunications Hub, strengthening the relationship between the governments of Angola and Brazil, In this context, it is expected that the Cable of the Americas and promoting the development of Telecommunications will connect South America to North America, besides demand in both countries. interconnecting with the SACS, which in itself constitutes another Angola Cables project. Advantages of the SACS: As a result, through the combination of the Cable of • Brazil and South America will have alternative the Americas and the SACS, Angola will have direct and connections to Europe; exclusive connections with the United States, avoiding the • Angola and Africa will have direct connections to the channeling of information through Europe. American continent; • Possibility of connectivity with Asia through a new Since the submarine cable is a more advantageous alternative route; transmission medium for voice and data than satellite • Synergies with the new project, the Cable of the Americas; connections, due to its greater capacity and transmission

046 CORPORATE PERFORMANCE

efficiency, Angola Cables intends to participate in international submarine cable partnerships/consortia in a planned and structured way, so as to optimize as much as possible the cost of the circuits it wants to resell.

The Cable of the Americas will be around 11,000 km long, with a capacity exceeding 20 Tbps and will probably be developed under a consortium model with other international players.

Advantages of the Cape of the Americas:

• This is a project that comes in sequence with the SACS, as it is integrated in Angola Cables’ strategy of connecting Africa with the Americas; • Once interconnected with the SACS, the Cable of the Americas will bring advantages in terms of costs; • The Cable of the Americas will use state-of-the-art technology to increase the existing capacity in the market.

047 CORPORATE PERFORMANCE PERFORMANCE OF THE TECHNICAL DIRECTORATE

After the first full year of activity, Angola Cables can now Most service availability failures were of a non-scheduled present the operational indicators of its technical structure. origin, unequivocally contributing to the increased difficulty in meeting our service availability objectives. In 2013, in terms of service availability, Angola Cables was slightly below the objectives, a result that was influenced by the less positive performance of the services provided by SERVICE AVAILABILITY FAILURES third parties. 2013 | # FAILURES

SERVICE AVAILABILITY 33 2013 | %

8 Objective 99.950% 9 2 2 1

WACS BACKHAUL INTERNET 99.8% 98.7% 99.0% NON-SCHEDULED SCHEDULED

The backhaul was the infrastructure with the highest number of failures (33 in total), largely above the rest. Since WACS BACKHAUL INTERNET this infrastructure is contracted to third parties, there is a need to raise the quality and excellence standards of these service providers.

These service failures translated into time during which Angola Cables and its customers were deprived of infrastructure and services’s use. The accumulated value of some of the faults, in terms of minutes, totaled significant figures, undermining the standards of service and excellence sought by the Company.

048 CORPORATE PERFORMANCE

The following table estimates the total time during which Throughout 2013, 29 circuits were activated, April and the services have failed. August being the months with the higher number of activations. Out of the total of activated circuits, 17 (59%) did not include the Last Mile component, while the SERVICE FAILURE DURATION remaining 12 (41%) included it. 2013 | # MINUTES MONTHLY DISTRIBUTION OF CIRCUIT 13.698 ACTIVATION Jan/13 - DeC/13 | # CIRCUITS

4.169 2.626 2.186 1.650 17 203

WACS BACKHAUL INTERNET 1 10 NON-SCHEDULED SCHEDULED 5 12 9 2 It should be emphasized that the unscheduled failures 1 1 caused the backhaul to be inoperable for more than 13,000 minutes over the whole year (about 9 days in total), total jul-13 jun-13 feb-13 jan-13 seP-13 oCt-13 deC-13 apr-13 aUG-13 nov-13 may-13 with consequent impact on the services that depend on mar-13 it. It must also be emphasized that the external services CIRCUIT WITH LAST MILE CIRCUIT WITHOUT LAST MILE are provided by the shareholders who are consumers of the service we provide. The SLAs should be subject to penalties in the future, in order to ensure that the objectives are met by all parties.

049 CORPORATE PERFORMANCE

The activation of a circuit can be the the sole Angola In terms of Internet services, as can be seen in the following Cables’s responsibility, or multiparty, depending on the chart, until August 2013 there was a growing demand. Last Mile terminal. However, the presence of third-party interventions implies distinct processes and consequently differentiated activation times, as can be seen from WEB TRAFFIC - TRAFFIC VOLUME the graph. Jan/13 – DeC/13 | # GB

AVERAGE TIME FOR CIRCUIT ACTIVATION 176.128 2013 | # DAYS

8 119.800 117.858

94.200

4 3 59.222

CIRCUIT WITH CIRCUIT WITHOUT 3.408 4.121 3.725 4.042 4.200 LAST MILE LAST MILE jul-13 jun-13 feb-13 jan-13 seP-13 oCt-13 deC-13 aPr-13 aUG-13 nov-13 maY-13 ANGOLA CABLES’ TIME RESPONSABILITY ANGOLA CABLES’ TIME RESPONSIBILITY mar-13

It can be seen that there is a significant difference in However, for reasons beyond Angola Cables’ control, performance between the different entities for circuit in mid-October an untimely termination of a supply activation with Last Mile, and that third party interventions agreement with a major customer occurred, and due to are much more time-consuming than those by Angola that the year 2013 ended without any activity related to Cables. that service.

050 CORPORATE PERFORMANCE

Speed is naturally associated with Internet traffic; while the above mentioned contract was active, this indicator attained reference values, which may be seen in the graph below. WEB TRAFFIC - DOWNLOAD PEAKS PERCENTILE 95% Jan/13 – DeC/13 | # Mbps

1.100

840 838 800 747

43 52 47 51 53 jul-13 jun-13 feb-13 jan-13 seP-13 oCt-13 deC-13 aPr-13 aUG-13 nov-13 may-13 mar-13

051 CORPORATE PERFORMANCE MARKETING AND SALES DIRECTORATE

Angola Cables’ Marketing and Sales Directorateis responsible for the sales of products and services, as well MARKETING PROJECTS as for the Company’s brand management, taking care of the it’s image and reputation in domestic and international SPONSORSHIP OF TEAM ANGOLA markets, including its visibility among employees and AT THE CAPE TO RIO RACE shareholders. This was the project that generated greater visibility for The year 2013 was the first full year of operational activity the company and its brand, having obtained an important for Angola Cables. The priority of this directorate was to projection worldwide, since Angola Cables sponsored Team ensure all the necessary conditions for the beginning of the Angola and the sailboats Bille and Mussulo III in the race Company’s business. The teams were especially focused on that connected Cape Town to Rio de Janeiro. the customers’ needs, on understanding the market and its agents and on promoting networking. The project’s main objective was to make Angola Cables and its mission known to the world. The Company’s Learning about the business was undoubtedly one of the association with a high-risk international event activities which called for more resources, both human unambiguously demonstrated the ambitions motivating the and financial. The Company is in the process of entering Company. the market, treading a path towards a prominent position. In this context, all the knowledge that may be gained will A variety of media were used to ensure the desired success contribute greatly to the first impression we want to give in brand promotion. In terms of content, the history of about our brand in our sector. The Marketing and Sales Angolan sailing was presented together with the narrative Directorate has developed a set of actions, of which the of how this complex event was prepared. In terms of the following stand out: promotion, after a visit to the factory building the boats, an association was proposed, in order to optimize marketing • Sponsorship of Team Angola at the Cape to Rio Race; costs. • Development of Angola Cables’ brand and image; • Creating the Angola Cables Institutional Website; A first event was held in Lisbon, including one of the vessels, • Development of Angola Cables’ Facebook/Instagram page; showcasing Angola Cables’ spirit to Portugal and Europe. • Internal E-newsletter: Angola Cables’ Team; • Participation in the Naval Club of Luanda Anniversary event; The Luanda event, followed by the Telecommunications • Participation in the Expo TIC; Race, revealed the Company to the domestic public, raising • Southern Africa Internet Governance Forum - Inacom event; interest around its activity. The challenge of sailing across • ITU Fair; the Atlantic allowed us to affirm Angola Cables’ spirit of • Other commercial projects. adventure, making their fearless teams known as people who face setbacks with perseverance.

052 CORPORATE PERFORMANCE

During the Bille’s journey to Luanda, Angola Cables was in INTERNAL E-NEWSLETTER: TEAM ANGOLA CABLES the limelight, and the Company was presented in a relaxed and informal way. Aiming to create a tool for internal communication within the reach of all employees, Angola Cables has set up The arrival of the two vessels in Cape Town was marked an e-newsletter designed to keep the entire team well by challenges to the marketing team’s resolution skills, in informed about: order to preserve the integrity of the Angola Cables image associated with the vessels. • what the company is doing business-wise; • internal news about Company life; ANGOLA CABLES BRAND AND IMAGE DEVELOPMENT • national and international news from the sector; • the Company’s accomplishments; In 2013, Angola Cables revamped its logo and its brand • the relevant moments experienced by the team; image. This rebranding was necessary, due to the similarity of the previous Angola Cables logo with other brands in the NAVAL CLUB OF LUANDA ANNIVERSARY sector, while also enabling the following: Angola Cables participated in the event to celebrate the • differentiating Angola Cables’ positioning; 130th anniversary of Club Naval de Luanda, attended by the • modernizing the Company’s image; Telecommunications and Information Technology Minister • reaffirming its African character; José Rocha and by the Minister and Secretary of State for • reflecting the Company’s vision and mission. Sports, as an official sponsor of Team Angola for the Cape to Rio Race. CREATING THE ANGOLA CABLES INSTITUTIONAL WEBSITE Expo TIC The creation of the company’s institutional site was also Angola Cables participated in the Expo TIC’s second edition, undertaken in 2013, enabling brand awareness of Angola held between May 16th and 19th at the FIL. Cables and promoting its products and services, while publicizing the company internationally. This event was attended by most Angolan operators, government agencies and suppliers in the sector. FACEBOOK / INSTAGRAM Additionally, Angola Cables marked its presence through a 193,76 stand, which allowed the company to make its The Angola Cables’ Marketing team was responsible business known to the domestic market. for designing the Company’s presence on Facebook and Instragram. These media allowed for the promotion SOUTHERN AFRICA INTERNET GOVERNANCE FORUM - INACOM EVENT of the various stages of the Cape to Rio Race, with the journey of the vessels Bille and Mussulo III during the race, Angola Cables participated in the organization of the forum as well as for sharing news about Angola Cables and the by preparing a visit to Sangano station. This visit was submarine cable business. attended by about 100 experts from the 15 SADC countries and major Internet managing organizations.

053 CORPORATE PERFORMANCE

ITU FAIR COMMERCIAL PROJECTS

In November, Angola Cables was present at the ITU The Angola Cables’ Commercial team focuses its activity Telecom World fair, in Bangkok, which functions as a on the sales strategy, as well as on the analysis and platform for debate and high-level knowledge sharing, development of market research, for price and products. in which networking is essential to drive the success Its activities focus mainly on accomplishing sales and of ICT companies and present decisive socio-economic customer acquisition. challenges to the world. The year 2013 was the first full year of commercial activity This event aims to promote constructive debate on at Angola Cables and, alongside all the efforts made by policies, strategies, models and markets, facilitate the teams to achieve sales and customer acquisition, was connections between individuals, identify key market also a year of intense learning. players and enable the formation of important partnerships and investment opportunities, highlighting The training and structuring of the sales team, in the importance of collaboration and cooperation across particular, directed towards the knowledge of the business the sector. and its agents and the type of activities they develop, were the focal points of the activity. The support provided by the Marketing team to Angola Cables’ participation in a variety of conferences and Angola Cables’ success will always be intrinsically linked to events, both national and international, should also be the efforts of its teams, to its pricing policies, to the way noted. These conferences and events are especially it treats its customers and to the quality of the products relevant for networking, conducting business contacts and services delivered. and improving know-how on various topics related to the company’s business. Concerning the commercial team, in order to ensure the success of their approach, the right conditions had to be created:

• Sales procedures’s delineation; • Sales team skills’s development; • Participation in events and conferences, allowing for: - Business know-how and development; - Networking with market players; - Knowing the best market practices.

054 CORPORATE PERFORMANCE

The markets in which Angola Cables operates are On the subject of sales achieved, it should be noted that extremely competitive, with very active and knowledgeable the values of exploration for the WACS were calculated agents. Considering this fact, the Company’s management from theoretical values for operating costs. The Company needed to identify the competition’s price levels, in had to understand its real cost structure, as well as its addition to building capacity, in order to adjust each case competition, in order to reformulate its offer in the market. to a specific negotiation. The commercial team had a leading role in this activity, So as not to compromise Angola Cables’s image and searching for prices and understanding their composition ensure its long-term sustainability, due caution was taken and characteristics. This required a careful approach to in managing the process. Accordingly, in 2013, Angola the market, on the one hand, to avoid any destruction of Cables revised the prices for the international division of value, and on the other to show an active and dynamic its business. This adaptation to market levels, combined positioning. Angola Cables is currently one of the most with the possibility of adjusting the sales values in each active WACS operators in terms of the number of active and case, brought instant positive results, with an increase in running circuits. requests for service quotation. The Internet is another business the company is developing; During 2013’s activity, the sales team was faced with 2013 was marked by the development of the support the issue of the request for proposals for global values. infrastructure, both technically and commercially. This However, this type of contract is dependent on the price of business has the particularity of being understood by the services provided by third parties, including shareholders. shareholder companies as an area of possible collision of The related problems include failure in keeping to the interests, which increases the level of complexity in our timetable of those commitments, in pricing and in the slow approach to business. Identifying the type of action to be response to requests and proposals. taken was one of the tasks performed by the commercial team in order to understand the intent of corporate Regarding the quality of services provided to the market, shareholders, since there was no previous alignment or it is undeniable that Angola Cables has been investing in guidance from the Administration. Thus, Angola Cables was an infrastructure that is in line with the most reliable and not able to persuade the major consumers of Internet (its modern solutions in the market. Only this way it is possible shareholder companies) to make use of its infrastructure, to create a solid foundation to start providing quality an indication that the company is still at an early stage of services to international clients. However, not only the the business. Company has not yet attained the desirable quality levels, but also maintains a strong reliance on services provided However, not even with efforts to sell to other non- by third parties. For this motive, the overall quality level of shareholding agents was the team able to achieve its the services provided by Angola Cables suffered numerous objectives. There were even customers with assets on the setbacks. network who decided to cooperate and give credibility to the Company by using its services.

055 CORPORATE PERFORMANCE PERFORMANCE DA ÁREA COMERCIAL

Although quite satisfied with the service provided by Angola Throughout 2013, the commercial team conducted a total of Cables, both in quality and price, the customer cancelled 229 meetings, of which 60% (137) generated from outbound the services. The justification was that one of our mutual contacts and the remaining 40% (92) were originated in shareholders had required the cancellation. This draining of inbound contacts. Angola Cables’ customer base caused the loss of its one and only client, as well as reducing its income, taking the Company back to the ground zero of the Internet providing BUSINESS MEETINGS HELD business. 2013 | # MEETINGS

The business year of 2013 was once again a time for intense learning concerning the rules and forms of action 229 of the market in this particular business.

In search for more knowledge about the Internet business 137 and IXP management, the DE-CIX consulting services 92 were hired to ensure the Company’s sustainability in 60% terms of information and expertise for the development 40% of the above mentioned lines of business, as well as for assistance in the construction of the regional IXP. The TOTAL MEETINGS INBOUND OUTBOUND connection to the world’s major IXPs should be completed HELD CONTACTS CONTACTS during 2014.

The business of colocation in the Angonap is still under development and therefore its potential is not yet maximized. Nevertheless, Angola Cables has received many applications and requests that point to a growing trend in the future business of the Company.

The commercial team is developing other types of services related to colocation at the Angonap Datacenter that may also contribute to the expansion of the business.

056 CORPORATE PERFORMANCE

With the offer of more competitive prices in domestic and Between January and December, a total of 386 requests international markets, there was an increase in requests for for service quotation were recorded, with special emphasis service quotation. on the month of June, when the aforementioned change in pricing was carried out. MONTHLY TREND OF REQUESTS FOR QUOTATION REQUESTS FOR QUOTATION, BY SERVICE Jan/13 - Dec/13 | # REQUESTS 2013 | # REQUESTS

386 386 337

128

76 31 18 34 35 19 17 18 19 13 11 7 9 TOTAL CIRCUITS COLOCATION INTERNET total jul-13 jun-13 feb-13 jan-13 sep-13 oct-13 dec-13 apr-13 aug-13 nov-13 may-13 mar-13

057 CORPORATE PERFORMANCE

As can be observed, the requests for quotation materialized By late 2013, Angola Cables had 15 contracts in place for mainly for circuits. service provision:

From these quotation requests, 102 were service proposals, 26 of which were awarded. COMMERCIAL OFFERS, BY SERVICE CONTRACTS, BY TYPE OF SERVICE 2013 | # PROPOSALS 31/DeC/13 | # CONTRACTS

102 7 7

74

19 9

TOTAL CIRCUITS COLOCATION INTERNET 1

CIRCUITS colocation internet

058 CORPORATE PERFORMANCE

However, there was a stage in the year when 18 contracts were in force (3 more significant contracts than in the year’s CUSTOMER PORTFOLIO final result), involving the provision of Internet services and 31/DeC/13 | # CLIENTS capacity activation services at the landing station to its shareholders. 9 The typology of the contracts signed by Angola Cables was divided between IRU and Leases. The first involved the purchase of a very large capacity in the circuits and the 6 signing of a long-term contract - usually 15 years. 3 The second type of service contract has a typical duration of around 1 to 3 years. The IRU implies the initial payment of a contractually specified value and the annual payment of operation and maintenance services, while leases give total LOCAL CUSTOMERS INTERNATIONAL rise to monthly invoicing of the services delivered. CUSTOMERS

Of all the commercial contracts in force at the end of 2013, one of them (related to circuits), was a IRU contract type, for 180 months and around 182,000 MAUS; all the remaining contracts were Leases.

It should also be noted that the sales cycle of the services offered by Angola Cables is typically long, as it requires a lengthy negotiation time and a later phase, when a bureaucratic stage of the process is carried out, involving the participation of diverse relevant authorities. However, given the constraints in terms of the lack of response on the part of the Company’s partners, this cycle often tended to stretch even further, which contributed for the negotiation process to have exceeded 4 months on a regular basis.

Despite all the constraints, Angola Cables finished the year with 9 customers in the portfolio, of which 6 were local and 3 international.

059 CORPORATE PERFORMANCE FINANCIAL PERFORMANCE OF 2013 economic situation

INDICATOR (MILLION KWANZAS) 2013 ∆ 2013-2012 2012 Revenue 1.925,21 - -

Operating Costs (1.968,87) 212% (631,63)

Depreciation (383,45) 552% (58,80)

Operating Results (427,11) 38% (690,43)

Financial Result 42,18 -164% (66,29)

Non-Operating Income (65,38) 74% (37,65)

Net income for the Financial Year (450,32) 43% (794,37)

In the financial year of 2013, Angola Cables’ first year Thus, the Operating Results /(Loss) amounted to -427.11 M Akz. of commercial activity, revenue of 1925.21 M Akz was Regarding the Financial Results, there was a growth to recorded, mainly from ‘Provision of services’. 42.18 M Akz, to which the gains recorded in the captions The Operating Costs showed an increase when compared ‘Bank Interest’ and ‘Favorable Exchange Rate Differences’ to 2012, which is explained by the beginning of the have contributed. company’s operational activity and, consequently, the The Non-Operating Income amounted to - 65.38 M Akz, growing cost structure. to which the caption ‘Shareholder Loans Interest’ and the The Company also recorded a significant increase in the reversal of an adjustment made at the end of 2013 have Depreciation caption, when compared to 2012, due to the contributed. significant increase in tangible fixed assets, particularly All taken into account, the Company recorded a Net Income under the caption ‘Buildings and other structures.’ of - 450.32 M Akz in 2013.

060 CORPORATE PERFORMANCE

REVENUE In 2013, Angola Cables started its commercial activity, with revenue of 1.925.21 M Akz.

OPERATING REVENUE 2013 ∆ 2013-2012 2012 (MILLION KWANZAS) Provision of services 1.826,92 - -

Shareholder Agreement 1.476,65 - -

Other services 350,27 - -

Other Operating Revenue 98,29 - -

Total 1.925,21 - -

TheRevenue of 2013 originated in the captions ‘Provision Looking at the ‘Provision of services’ breakdown, it can be of services’ and ‘Other Operating Revenue’. However, the seen that the majority of revenues (93%) were derived from main component of income was the ‘Provision of services’ the WACS. caption (95%), corresponding to 1826.92 M Akz. The caption ‘Other Operating Revenue’ refers to receipts on This value is divided into 1476.65 M Akz, from the account of costs incurred with Sangano Terminal Station, ‘Shareholder Agreement’ for the concession of ‘wholesale’ these values being determined by the WACS Consortium capacity in the WACS, as well as 350.27 M Akz from services and paid to the entity responsible for the landing station. provided to both operators and investors. SOURCE OF OPERATING REVENUE PROVISION OF SERVICES (SALES) 2013 | MILLION KWANZAS | % 2013 | MILLION KWANZAS | %

1.826,92 1.694,50 95% 93%

TOTAL: TOTAL: 1.925,21 M Akz 1.826,92 M Akz

0,27 0% 98,29 0,96 5% 0% 73,28 17,91 40,00 4% PROVISION OF SERVICES (SALES) OTHER OPERATING REVENUE 1% 2% WACS BACKBONE COLOCATION INTERNET LAST MILE OTHER

061 CORPORATE PERFORMANCE

OPERATING COSTS Angola Cables’ first full year of activity also meant the growth of its cost structure, which has contributed to an Operating Costs total amounting to 1968.87 M Akz.

OPERATING COSTS 2013 ∆ 2013-2012 2012 (MILLION KWANZAS) Personnel Expenses (513,78) 186% (179,82)

Other Operating Costs and Losses (1.455,09) 222% (451,81)

Total (1.968,87) 212% (631,63)

The main: captions that contributed to the ‘Operating Costs’ The captions ‘Training’ refers to the costs incurred in training of the Company were the ‘Personnel Expenses’ and ‘Other employees to develop general, technical, leadership and Operating Costs and Losses.’ team management skills. The caption ‘Personnel Expenses’ was composed of The caption ‘Other Personnel Expenses’ includes the cost ‘Salaries’ and respective ‘Social Contributions’, ‘Accident of health insurance, which is extended to all Company Insurance and Occupational Diseases’, ‘Training’ and employees, as well as the allowances granted to employees ‘Other Personnel Expenses’. on their missions.

SOURCE OF THE OPERATING COSTS PERSONNEL EXPENSES 2013 | MILLION KWANZAS | % 2013 | MILLION KWANZAS | %

1.455,09 277,38 74% 54%

TOTAL: TOTAL: 1.968,87 M Akz 513,78 M Akz 513,78 26% 113,88 22% 20,44 4% 2,13 48,66 0% OTHER OPERATING COSTS AND LOSSES PERSONNEL EXPENSES 51,29 10% 10% SALARIES SOCIAL CONTRIBUTIONS ACCIDENT INSURANCE AND OCCUPATIONAL DISEASES TRAINING OTHER PERSONNEL EXPENSES SALARIES GOVERNING BODIES

062 CORPORATE PERFORMANCE

The caption ‘Other Operating Costs and Losses’ was Company’s infrastructure, including the WACS, Sangano responsible for 74% of total Operating Costs in 2013. This landing station and the Angonap; caption had the contribution of the dark fiber connectivity • Travelling and accommodation (179,25 M Akz), concerning rental contract with third parties, in the amount of 26.99 M travel and accommodation by employees in their missions; Akz; the Outsourced Services and Services, with 1424.88 M Akz; and Taxes, which amounted to 3.22 M Akz. • Technical Support (162.46 M Akz), concerning specialized technical services for the maintenance and management The Supplies and Outsourced Services included, among others: of the infrastructure, recruitment of employees and • Fees and Adjustments (358.22 M Akz), concerning financial commercial representation abroad; advisory, legal consultancy and financial audit services • Advertising and Marketing (M Akz 134.61), concerning required for the Company’s start of activity and internal the promotion of the Company’s image, including the structuring; sponsorship of the sailboat that took part in the Cape to • Maintenance and Repairs (M Akz 308,37), concerning Rio Race, as well as several participations in international to costs incurred for preventive maintenance of the Telecommunications trade fairs.

OTHER OPERATING EXPENSES AND LOSSES OUTSOURCED SERVICES AND SERVICES 2013 | MILLION KWANZAS | % 2013 | MILLION KWANZAS | %

26,99 281,97 358,22 2% 20% 3,22 25% 0%

TOTAL: 1.424,88 134,61 TOTAL: 1.455,09 M Akz 98% 9% 1.424,88 M Akz

308,37 179,25 22% 13%

SUPPLIES AND OUTSOURCED SERVICES SUBCONTRACTORS TAXES 162,46 11% FEES AND COVENANTS MAINTENANCE AND REPAIRS TECHNICAL SUPPORT TRAVELLING AND ACCOMMODATION ADVERTISING AND PUBLICITY OTHER

063 CORPORATE PERFORMANCE

DEPRECIATION This being the first full year of Angola Cables’ activity, there was also an increase in depreciation costs, which amounted to 383.45 M Akz.

DEPRECIATION (MILLION KWANZAS) 2013 ∆ 2013-2012 2012 Tangible Fixed Assets (382,50) 551% (58,80)

Intangible Fixed Assets (0,95) - -

Total (383,45) 552% (58,80)

The main captions that contributed to the Company’s The caption ‘Buildings and Other Structures’ refers primarily ‘Depreciation’ component were the ‘Tangible Fixed Assets’ to investment in optical fiber submarine cable, the WACS. and ‘Intangible Fixed Assets’. The category ‘Cargo and Transportation Equipment’ refers The caption ‘Tangible Fixed Assets’ was composed by to the acquisition of twenty-two vehicles, allocated to the ‘Buildings and Other Structures’; ‘Cargo and Transportation Company’s service and needs. Equipment’; ‘Basic Equipment’; ‘Office Equipment’ and ‘Other The caption ‘Basic Equipment’ includes investment in Tangible Fixed Assets’. transmission equipment, particularly the Backbone.

SOURCES OF DEPRECIATION TANGIBLE FIXED ASSETS 2013 | MILLION KWANZAS | % 2013 | MILLION KWANZAS | %

382,50 331,32 99,8% 87%

TOTAL: TOTAL: 383,45 M Akz 382,50 M Akz

0,14 0,95 0% 3,39 0,2% 1% 23,72 23,94 6% 6% TANGIBLE FIXED ASSETS INTANGIBLE FIXED ASSETS BUILDINGS AND OTHER CONSTRUCTIONS CARGO AND TRANSPORTATION EQUIPMENT BASIC EQUIPMENT OFFICE EQUIPMENT OTHER TANGIBLE FIXED ASSETS

064 CORPORATE PERFORMANCE

OPERATING INCOME NET INCOME FOR THE FINANCIAL YEAR 2012-2013 | MILLION KWANZAS | % 2012-2013 | MILLION KWANZAS | %

-427,11 38% -450,32 -690,43 -794,37 43%

2012 2013 2012 2013

The Operating Income for 2013 was - 427.11 M Akz, representing an improved outcome compared with 2012, In 2013, Angola Cables registered a Net Loss of 450.32 M Akz. although it has remained negative. Although the Net Income has not been positive, it The value obtained in the Operating Income for 2013 is registered a decrease, as a result of positive Operating mainly due to the fact that the Company has started its Revenues, and also due to the Financial Results, which were operating activities and therefore shows Operating Revenue. also positive.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION 2012-2013 | MILLION KWANZAS | %

-43,66 93% -631,63

2012 2013

In 2013, Angola Cables registered Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA) of -43.66 M Akz, which represented an improvement on the 2012 result.

065 CORPORATE PERFORMANCE FINANCIAL SITUATION

CAPITAL STRUCTURE Compared to the year2012, Equity fell by 6% and the On December 31th, 2013, the capital structure of Angola Liabilities increased by 77%, according to data presented Cables consisted of 62% Equity and 38% of Liabilities. in the following table:

INDICATOR (MILLION KWANZAS) 2013 ∆ 2013-2012 2012 Equity 7.518,54 -6% 7.968,86

Liabilities 4.533,56 77% 2.559,70

Total 12.052,10 14% 10.528,56

COMPOSITION OF EQUITY

Angola Cables Equity in the 2013 financial year was 7518.54 Akz M, a decrease of 450.32 M Akz when compared to 2012. Its composition was as follows:

EQUITY (MILLION KWANZAS) 2013 ∆ 2013-2012 2012 Share Capital 390,00 - 390,00

Supplementary Supplementary provisions 9.000,00 - 9.000,00

Retained Earnings (1.421,14) -127% (626,79)

Net Income for the Financial Year (450,32) 43% (794,37)

Total 7.518,54 -6% 7.968,86

The decrease of Equity, when compared with the previous year, was due to the negative growth of Retained Earnings in 2013. COMPOSITION OF LIABILITIES

Angola Cables’ Liabilities in the 2013 financial year were 4533.56 Akz M, with the following composition:

LIABILITIES (MILLION KWANZAS) 2013 ∆ 2013-2012 2012 Medium and Long Term Loans 3.271,22 79% 1.827,13

Provisions for Other Risks and Charges 178,44 0% 179,19

Accounts Payable 811,82 98% 409,64

Other Current Liabilities 272,08 89% 143,74

Total 4.533,56 77% 2.559,70

066 CORPORATE PERFORMANCE

The caption Medium and Long Term Loans accounted Akz ceiling for supplementary installments. These values for 72% of total Liabilities recorded in 2013 and was were requested to shareholders through calls of funds, originated in the amounts paid by the shareholders by way the shareholder Startel having not realized the amount of of supplies, which exceeded their quota under the 9.000 M 141.8 M Akz.

COMPOSITION OF ASSETS

Angola Cables’ total Net Assets for the year 2013 compared to 2012. In its origin are the Non-Current Assets amounted to 12.052.11 M Akz, an increase of 14% when and Current Assets as follows:

NET ASSETS (MILLION KWANZAS) 2013 ∆ 2013-2012 2012 Non-Current Assets 9.143,20 6% 8.645,46

Tangible Fixed Assets 9.008,77 4% 8.645,46

Intangible Fixed Assets 2,48 - -

Other Non-Current Assets 131,95 - -

Current Assets 2.908,90 54% 1.883,11

Accounts receivable 1.770,82 129% 771,65

Cash and Bank Deposits 1.051,40 0% 1.055,57

Other Current Assets 86,69 55% 55,89

Total 12.052,11 14% 10.528,57

In the total Net assets of Angola Cables Tangible Fixed contributed with 93% of the total, with emphasis on the Assets had the greatest weight, and included both ‘Tangible investment in the optical fiber submarine cable WACS, given Fixed Assets’ and ‘Fixed assets in Progress’. that it has been completed and became operational.

These captions register all investment values necessary for The component Tangible Fixed Assets, among others, also the Company’s operational functioning. includes the captions ‘Basic Equipment’, registering the investment in transmission equipment, and the caption Regarding the Tangible Fixed Assets component, and ‘Cargo and Transportation Equipment’, which registers considering gross values, ‘Buildings and Other Structures’ vehicles acquired to serve the Company’s business needs.

067 CORPORATE PERFORMANCE

SOURCES OF CURRENT AND NON-CURRENT ASSETS TANGIBLE FIXED ASSETS (GROSS) 2013 | MILLION KWANZAS | % 2013 | MILLION KWANZAS | %

86,69 1.051,40 2,03 1% 9% 180,42 0% 36,07 2% 1% 1.770,82 116,23 14% 1% 261,43 131,95 TOTAL: 9.008,77 3% TOTAL: 1% 12.052,11 M Akz 75% 8.885,72 M Akz 8.289,54 2,48 93% 0%

TANGIBLE FIXED ASSETS INTANGIBLE FIXED ASSETS OTHER NON-CURRENT ASSETS BUILDINGS AND OTHER BASIC EQUIPMENT Loading and transportation CONSTRUCTIONS equipment ACCOUNTS RECEIVABLE CASH AND BANK DEPOSITS OTHER CURRENT ASSETS OFFICE EQUIPMENT LAND AND NATURAL RESOURCES OTHER TANGIBLE FIXED ASSETS

068 CORPORATE PERFORMANCE

FIXED ASSETS IN PROGRESS 2013 | MILLION KWANZAS | %

0,05 7,43 0,01% 1,32% 51,66 9,15% 311,34 55,17%

TOTAL: 564,36 M Akz

193,88 34,35%

ANGONAP SACS CABLE OF THE AMERICAS SAP LICENSES FURNITURE

The caption with the greatest weight in the ‘Fixed Assets in Progress’ diagram was the Angonap, whose value regards the acquisition and installation of transmission and connectivity equipment for the Company’s business development and service availability. This was followed by investments related to the SACS and the Cable of the Americas, which relate to costs incurred in the design and implementation of these new submarine cables.

The investment related to the SAP must also be mentioned, involving the acquisition of the installation and use licenses for the ERP supporting the processes and procedures of the functional areas.

069 CORPORATE PERFORMANCE FINANCIAL INDICATORS

The main indicators for the immediate liquidity, solvency, debt capacity and financial autonomy are detailed as follows:

IMMEDIATE LIQUIDITY INDEX SOLVENCY INDEX

The immediate liquidity index reflects the financial ability The solvency index indicates the company’s ability to meet of the Company to pay its short-term obligations (Working its commitments with third parties in the medium and long Liabilities), through its availability in short term Cash and term, reflecting a position of independence from lenders. Cash Equivalents. In 2013, Angola Cables’ solvency index amounted to 1.7, In 2013, the immediate liquidity ratio was 1.0, which meant indicating that Angola Cables could meet its obligations by that Angola Cables had enough cash to fulfill its short-term its own means. obligations. The reason for this decrease is related to the fact that The reason for the change when compared to 2012 was Angola Cables increased its Liabilities from the figures due essentially to the fact that the debt to suppliers has recorded in 2012, mainly due to the increase in the value of increased. Medium and Long Term Loans. IMMEDIATE LIQUIDITY INDEX SOLVENCY INDEX 2012-2013 | # 2012-2013 | #

3,1 1,9 -1,4 -0,9 1,7 1,0

2012 2013 2012 2013

070 CORPORATE PERFORMANCE

DEBT INDEX FINANCIAL AUTONOMY DEGREE INDEX

The debt index shows the ratio between Angola Cables’ The degree of financial autonomy expresses the ability Liabilities and Net Assets, establishing the amount of debt of the Company to meet its obligations through its Total capital in the total investment. Equity, which is calculated by the ratio of the Company’s Total Equity over Total Assets. In 2013, this index stood at 0.38, registering an increase of 0.14 percentage points over the previous year. Thus, the Company’s level of solvency can be measured, expressing the Company’s ability to finance its Total Assets From a strategic point of view, this demonstrates that the without resorting to outside financing. Company continues to present a low risk and a reduced dependence on debt capital. The value recorded for this index in 2013 shows that Angola Cables enjoys a healthy situation and presents low values of Liabilities to third parties.

DEBT INDEX FINANCIAL AUTONOMY INDEX 2012-2013 | # 2012-2013 | #

0,38 0,76 0,14 0,24 -0,14

0,62

2012 2013 2012 2013

071 CORPORATE PERFORMANCE

and the Cable of the Americas. It should be noted that, BUSINESS CHALLENGES with the coming into operation of these cables, Angola In its activity, Angola Cables meets great challenges, on Cables will grow considerably in size, which will give rise to the one hand due to its emerging status as a company and, considerable synergies, with two major impacts: on the side on the other, as a result of the specific industry in which it of costs, a greater efficiency with reduced operating costs; operates. and on the side of sales, a leverage of the business through the combination of sales in circuits over the several routes. It should be noted that the submarine cables industry is integrated by active agents with extensive know-how of the market, and is characterized by the significant decline CONDITIONED OPERATING PERFORMANCE in sales prices, a result of the rapid technological evolution, In addition to the specificity of the industry, Angola which has the effect of flooding the market with capacity, Cables faces another major challenge with regard to the causing excess supply. This excess supply results in a establishment of an experienced team. Indeed, the young decrease of the average annual price of around -20%, some Angola Cables Team is in a learning phase of a business with markets showing even sharper declines. high technical and commercial complexity. On the other hand, there is great difficulty in recruiting people with experience so In order for a Company to conquer an attractive position, that an additional effort and investment in training and staff a set of critical success factors have to be met, such as retention is necessary. As a consequence, there is a heavy the development of credibility in the market, achieved reliance on external consultancy, which Angola Cables aims to through quality of service, networking, customer proximity reduce next year. and competitive pricing, only possible through operational efficiency and synergies. A) International Market - a remarkable performance in 2013, however conditioned for 2014 Angola Cables has invested in the development of these critical success factors but the way to go is still long. The Despite strong competition from agents with greater Company’s efforts throughout 2013 have earned it the experience, greater scale and greater efficiency compared to recognition of its excellence in the market, which was Angola Cables, which is still in a startup phase, the Company acknowledged by the International Star Award for Quality is in the top 5 ranking of operators with more capacity sold in (ISAQ). the WACS cable. Indeed, 2013 was the year for the Company to enter into However, sales in international markets are limited by the Modus Operandi, through a learning process with the available capacity on WACS cable, of which Angola Cables WACS cable; the development of Technical and commercial must take into account the reservation of 75% of capacity to team’s skills; and the big challenge of increasing brand- its shareholders, and its limited influence over the selling price awareness for Angola Cables in the market, through its in this highly competitive sector, which affects the Company’s strategic positioning in pricing and the strong development profitability. Given the limitations in terms of efficiency of of relationships with customers and with the market as a Angola Cables’ cost structure, justified by its recent launch whole, in order to deepen the Company’s know-how. In this of activity and still underdeveloped scale, the limitation of sense, this strategy developed around the WACS cable price and sales volume has a major impact on operational maximizes leverage on future sales of the SACS cable efficiency, negatively affecting Income.

072 CORPORATE PERFORMANCE

As of December 2013, the occupancy rate in the WACS cable • The Company’s credibility on the market - Angola is 53%, taking into account the capacity under use, and Cables is a newcomer in the international market and 78% taking into account the capacity reserved for potential has some image building to make in order to ensure its contracts already under negotiation. sustainability in the future. The limitations in the sales value of the backbone position put Angola Cables at The capacity increase in the WACS is anticipated by the a disadvantage, compared to its competitors, since Consortium only for 2015, limiting the business opportunities there are more competitive values in the market for the in the International market; so the focus for 2014 will be commercialization of this segment. The consequence of to develop business in the internal market, driven by the this factor was Angola Cables’ loss of brand credibility on commercialization of the Internet, only possible with the the market, once again resulting in loss of business. support of the Company’s shareholders. B) Internal Market - a weak performance in 2013 due to the following aspects: EFFECTING THE SHAREHOLDER SUPPORT TO ANGOLA CABLES • Provision of Last Mile Services - Angola Cables’ service From the point of view of efficiency, the company providers, most of them shareholders, have been demonstrated ability to create value for its shareholders in inefficient, both in the submission of propositions and the International market during its first year of commercial in new circuit launching, and failures in the delivery activity, in spite of all the challenges. With the necessary of services already scheduled have happened. These support of its shareholders, the internal market may be the issues have resulted in negative income with loss of necessary means for the Company to capacitate itself and business for the Company; mature as much as it needs to grow and succeed in the • Conflicts of interest - the fact that Angola Cables has International market, where competition is very intense. lost its main Internet customer in the beginning of 2013, At this critical phase of growth and affirmation for the removed from its customer base by one of its own company, it will necessarily have to count with the support shareholders, caused a significant negative impact on and effective alignment of their shareholders. the final results for this service’s sales. In addition to the The Shareholder support’s to leverage its position in the loss of the client in question, the company has also lost internal market, reflecting that leverage internationally the ability to present itself in the market as a provider of in order to develop its mission, be recognized in Angola, quality services recognized by the market; Africa and the world as a Telecommunications Operator of • Limitations on Sales Value - At the beginning of the reference and achieve its Vision of turning Angola into one operating year, the Board of Directors defined sales values of the main Telecommunication Hubs in Africa. for the circuits that limited the Company’s performance. Subsequently, in face of the lack of profitability, the price limitation for sales in the international market ended. However, the decision of the shareholders was to keep the price limit for the backbone connection between Sangano and the ANGONAP. It should be noted that this value is still fairly restrictive in terms of business opportunities;

073 CORPORATE PERFORMANCE

For this purpose, Shareholder support will materialize in a EXPECTATIONS FOR THE YEAR 2014 situation of partnership with added value for both parties, through various collaborative actions, among which are: With the support of its shareholders, the focus will be on developing Internal market’s business and the major • Quick and efficient response to requests for services to emphasis on projects to enhance the Hub, such as third parties made by the Company to its shareholders. developing the Angonix, the SACS cable and the Cable of This results in a greater number of closed deals for the the Americas, the International PoPs, the National border’s shareholders, and at the same time a larger volume of connections and the ADC Datacenter. business for the Company; At the operational level, next year will be focused on • The shareholders can use the knowledge and skills efficiency through further training of human talents developed by Angola Cables internationally, such as the (technical and commercial teams); resources recruitment use of their international PoPs, to develop their business with proven business know-how; continued effort in abroad. In this way, they will optimize their costs optimizing the cost structure; implementation of the ERP considerably, while simultaneously boosting Angola system; developing the relationship with existing customers Cables’ business; and conquering new markets, maintaining a strong • Provision of land connections to Angola’s neighboring commitment to providing quality service. countries - this way Angola Cables will achieve a good position in the regional market, since it will sell connectivity to countries without sea borders and, on the other hand, the shareholders will get leverage for their business by selling long distance circuits over their transmission structures; • Internet Carrier of Carriers - Angola Cables’ mission includes the provision of Internet service to the Internal and Regional market, Being currently also in the process of developing the national IXP. There are two ways to proceed in order to achieve this: • Sell only to operators, providers and large customers, it requires its Shareholders , in the role of large Internet operators, use its infrastructure; • Alternatively, revise its commercial strategy and sell to the wholesale market in general, thereby engaging in direct competition with its shareholders.

074 CORPORATE PERFORMANCE CORPORATE STRATEGY 5 CORPORATE STRATEGY CORPORATE STRATEGY CORPORATE STRATEGY FUTURE PROSPECTS

INTERNATIONAL PRIVATE INVESTMENT - TELECOMMUNICATIONS 1990-2012 | BILLION USD

EMERGING MARKETS: THE ENGINE FOR GROWTH INVESTMENT IN TELECOMMUNICATIONS: USD 102.6 BILLION IN TELECOMMUNICATIONS 0% 13% 14 In recent years there has been a slowdown in economic 10% 12 growth worldwide. However, emerging markets continue 10 to have higher growth rates than those of the developed 77% 8 economies. 6 4 TELECOM 2 The higher growth rates in emerging countries indicate that, ENERGY 0 despite the global economic context, the expansion of these 2012 2010 1992 1990 1996 1998 1994 2002 2000 2006 2008 SHIPPING 2004 economies is stronger and more pronounced. SANITATION The growing of demand and the increasing penetration rate of Telecommunication services and products is directly associated with this stronger growth in emerging economies. AVERAGE ANNUAL GROWTH OF INTERNET USE

It is verified that emerging economies have led the 2012-2019 | % investment in information and communication technologies worldwide. Broadband, fixed and mobile, has been and will 51,5% remain the main driver of this investment and Africa leads 38% 37,5% 36,5% with high penetration rates in the mobile component, while 33% 30,5% 29,5% 28,5% still maintaining a large potential for market growth.

The Telecommunications sector undergoes constant change and development, stimulated by the emergence of new AFRICA MIDDLE LATIN OCEANIA ASIA GLOBAL USA AND EUROPE devices, faster networks and the proliferation of new and EAST AMERICA CANADA innovative players in the market, creating new needs and SOURCE: WORLD BANK changing consumer habits.

For their part, consumers are becoming increasingly more demanding and expect mobility, speed and reliability of access to digital content. The consumer of today will continue to demand up-to-date and innovative products, making it essential for operators to continuously invest in infrastructure and services associated with the broadband network.

078 CORPORATE STRATEGY

Additionally, the Angolan Government itself has an ANGOLA ongoing plan for better governance in Angola, based on more intense and better use of ICT: the Strategic Plan for THE NEXT AFRICAN TELECOMMUNICATIONS HUB Electronic Governance (PEGE) 2013-2017. The aim is to make public services more oriented to the common citizen, In terms of geographical setting, potential for growth and with particular attention to the disadvantaged, helping to recent developments in its economy, Angola is increasingly modernize the Public Administration of the State based via seen as a strategic power in Africa. However, for that the use of ICT. growth to be sustainable, a whole range of infrastructures and services must be ensured, among which the Information All this contributes to an increase in demand for voice, and Communication Technologies (ICT) stand out. data and image Telecommunication services, and the consequent commitment to the investment and evolution The Angolan economy and their agents need to access of the Telecommunications infrastructure is crucial for the and transmit information with enough volume, speed and positioning of Angola as one of the countries with the best reliability, since only then can they aspire to assume a offer in Telecommunications on the African continent. position of prominence on the global economic front. For this purpose, the Angolan Government has in place Angola aims to become the Telecommunications Hub in a National Plan for the Information Society (PNSI) Africa, and that is why the emergence of Angola Cables 2013-2017. The PNSI is aligned with the general planning and its international circuits business, management of the for the country and the sector and key legislation, with the national IXP and provision of Internet services and access objective of filling gaps in terms of infrastructure, skilled to digital content via submarine cables, increasingly goes human resources, content and services for citizens and hand in hand with the plans for the development of the businesses. Above all, the PNSI aims to eliminate barriers economy and the country as a whole. to access and value creation through ICT and thus promote the country’s development.

The Government aims to increase youth training in ICT and invite foreign companies to invest in this sector in Angola, thus promoting the consolidation of the internal industry. To achieve these goals, the Government has a number of infrastructure-focused initiatives and projects in place, which are to be implemented nationwide, with particular emphasis on local development.

079 CORPORATE STRATEGY

ANGOLA CABLES CONNECTING ANGOLA TO THE WORLD VIA THE OCEANS

The foundation of Angola Cables aligned with the Executive’s strategic plan for the development of infrastructure support to Telecommunications and the economy. It is with this purpose that the Company, fully supported by its shareholder companies, has developed its activity and sought to materialize the Government’s vision of numerous initiatives and projects aiming to turn Angola into a regional Telecommunications Hub.

In order to achieve this purpose, Angola Cables has been committed to developing its portfolio of products and services, and also the network of associated infrastructures, especially in terms of submarine cables, This is an infrastructure of about 11,000 kilometers with the aim of becoming a true Tier 1 operator. conneting the cities of Santos (Brazil) and Miami (USA), interconnecting with the SACS in its passage through In addition to the current management of its participation Fortaleza. in the WACS cable, the connection between Angola and Brazil through SACS cable is expected in the near future, These two new submarine cable systems, together with the a project extending over 6,000 km, of which Angola Cables current participation’s and management of the WACS, will will be the sole promoter. When the project is finished, provide the Company and Angola with a strategic position the SACS will be the only means of connectivity via in the region, by enabling the formation of a Hub with direct transatlantic submarine optical fiber in the hemisphere connectivity and unconstrained access and capacity. and between South Africa and South America, filling a gap in the market. Thus, Angola will become a point of entry and exit from Africa to the world, guaranteeing direct connections to the The SACS will also be an alternative route to the systems main traffic management centers in North America, South in the North Atlantic. America and Europe.

Simultaneously with the SACS, and to ensure Angola direct Angola Cables is also planning to participate, together links to the US, Angola Cables will also participate in the with the Government, in the creation of an internationally project of the submarine cable linking the US to Brazil: the certified Tier 3 Datacenter, thus ensuring the goals already Cable of the Americas. set for the Hub. From the point of view of managing the switch for the internal and regional Internet, the Company is developing the necessary support for the real implementation of the IXP by bringing in the major worldwide content operators.

080 CORPORATE STRATEGY 6 SUSTAINABILITY SUSTAINABILITY SUSTAINABILITY SUSTAINABILITY PRINCIPLES

Angola Cables intends to position itself as a company generating added value for both shareholders and Human customers, affirming its position in the market for offering Talents high quality service focused on results, for the efficient management of its resources, for the transparency of its business and commitment to innovation and knowledge.

Angola Cables’ objectives incorporate a commitment to sustainability principles which promote the best practices in the industry and enable the Company’s development in a responsible and sustainable manner.

For that end, the company Is striving to carry out a

future-oriented vision, which is based on investing in its

Human Talents, in line with the objective of developing sustainability

Social Social

Environmental Environmental an organizational culture that endorses the professional Community development of each employee and maximizing everyone’s talent, creativity and passion.

The embracing of environmental responsibility principles and the involvement in the local community are central to the achievement of the Company’s business strategy.

In line with this view, Angola Cables’s culture is committed to promoting policies based on the defense of basic principles of business sustainability in the long run, particularly in terms of Human Talents, Social and Environmental Responsibility.

084 SUSTAINABILITY

HUMAN TALENTS POLICY Recruitment and Selection Angola Cables’s employees are our most valuable asset, since it is through them that the Company commits itself Training to providing quality services to its local and international clients. Team spirit By viewing people as Talents, Angola Cables recognizes the existence of a potential that must be developed in the name of knowledge, work and the future. Focus on objectives and results

To support this understanding and the sustainable Leadership development of the Company and its business, Angola Cables relies on a careful recruitment and selection process, as well as on the ongoing training of its Human Customer culture Talents.

Additionally, Angola Cables is committed to the Angola Cables Attitude development and implementation of a set of policies and initiatives to foster team spirit and align all employees toward common goals and results.

Only this way can the Company provide a clear and objective model of leadership, ensuring the development of a customer-oriented culture and, above all, uphold the Angola Cables Attitude.

Angola Cables’ success resides in people

with a positive and proactive attitude.

085 SUSTAINABILITY ANGOLA CABLES EMPLOYEE PROFILE

NUMBER OF EMPLOYEES ABSENTEEISM

In 2013, Angola Cables continued to invest in talent In 2013, Angola Cables registered a cumulative annual recruiting, with a view to strengthening its organizational absenteeism rate of 1.71%, which is aligned with what is structure, and in late 2013 a total of 62 employees was expected and desirable. reached. WORK CONTRACTS

NUMBER OF EMPLOYEES On its recruitment, Angola Cables offers two types of DeC/12 – DeC/13 | # EMPLOYEES | % CHANGE contracts: fixed-term contracts and indefinite duration contracts. 62 48% The fixed-term contract applies, among other situations, 42 to foreign employees; in 2013 there were three employees in this situation. All the other employees were tied to the Company through indefinite duration contracts.

2012 2013 EDUCATIONAL QUALIFICATIONS

Note: 7 employees belonging to the Executive and Non-Executive Committees were included in this analysis. Due to the demanding duties performed by Angola Cables n the following analysis, only the total of 55 employees will be considered. employees, our recruitment focuses mainly on people with higher education. In 2013, the company witnessed a growth of approximately 48% in the total number of employees. EDUCATIONAL QUALIFICATIONS OF EMPLOYEES

All through 2013, 98 candidates were submitted to Dec/13 | # EMPLOYEES preliminary tests; 57 of them underwent a personal screening interview. Subsequently, 41 individual 55 interviews were conducted by the Technical, Financial and Commercial managements. This whole process has 39 resulted in the hiring of 23 new Talents.

It should be noted that Angola Cables has an ongoing 12 commitment to the development and retention of its 4 employees, a fact that is proved by the ‘General Retention Index’, which in 2013 stood at 93.65%. TOTAL HIGHER HIGH BASIC EDUCATION SCHOOL EDUCATION

086 SUSTAINABILITY

In 2013, more than half of Angola Cables employees had an In 2013, the largest number of resources working in university degree (71%). The remaining 16 employees had a the Company was concentrated at the level of senior high school education (22%) or elementary education (7%). technicians (45%), followed by employees who support the activity (31%). The result of this distribution structure DISTRIBUTION BY FUNCTIONAL GROUP by functional group is intrinsically related to the needs of Angola Cables’ business, since the largest number of Angola Cables’ structure of employees is divided into senior technicians belongs to the Technical Management, four distinct functional groups, according to the functions given the primary need to ensure the operability of the performed by each employee. Company’s entire infrastructure.

Between 2012 and 2013, the number of employees DISTRIBUTION BY FUNCTIONAL AREA increased from 35 to 55 professionals; their distribution according to their functional groups is illustrated below: In 2013, Angola Cables introduced an organizational structure divided into three managements (Technical, Commercial and Marketing, Administrative and Financial), DISTRIBUTION BY FUNCTIONAL GROUP four offices (Human Talents, Legal, Planning and Reporting, DeC/12 - DeC/13 | # EMPLOYEES | % WEIGHT ON STRUCTURE and Security) and an Executive Secretariat.

4% 20% 45% 31% DISTRIBUTION BY FUNCTIONAL AREA 3% 29% 46% 22% DeC/13 | # EMPLOYEES | % WEIGHT ON STRUCTURE 25

47% 27% 14% 4% 4% 2% 2% 17 16 26 10 11 8 15 2 1 8

MANAGERS LEADERS SENIOR SUPPORT 2 2 1 1 AND TOP EXPERTS AND TOP TECHNICAL TECHNICIANS EXPERTS 2012 2013 OFFICE EXECUTIVE TECHNICAL LEGAL OFFICE LEGAL SECRETARIAT SECRETARIAT MANAGEMENT COMMERCIAL DIRECTORATE DIRECTORATE AND FINANCIAL AND MARKETING PLANNING AND ADMINISTRATIVE HUMAN TALENTS HUMAN TALENTS REPORTING OFFICE

087 SUSTAINABILITY

Technical Management was composed of 26 elements, TRAINING being the functional area with the largest number of employees, representing 47% of the total weight of the Angola Cables believes that training is a strategic factor, structure. It was followed by Administrative and Financial providing continuous improvement. Management, with 15 employees (27%) and Commercial and Marketing Management, with 8 employees (14%). Through training, the Company promotes and encourages the acquisition of knowledge and skills necessary to RECRUITMENT AND SELECTION attain a level of excellence. All new employees have at their disposal a training plan tailored to their needs, to the The recruitment and selection of employees is seen by Company’s objectives and to the demands of the market. Angola Cables as the first step toward the Company’s sustainable growth. Only in this way can the Company ensure that each employee’s skills and knowledge are constantly evolving It is by attracting new Talents that the Company may and follow the evolution of the business. ensure the formation of a team composed by individuals aiming for excellence, who materialize its endorsed culture, It is also through training that the Company may ensure values and principles. that the diverse recruited talents turn into a real, dynamic, cohesive and aligned team. Only with properly aligned The recruitment process is composed by a set of sequential team members can the Company ensure that everyone steps which allow for a careful selection of the best and aims to achieve the same goals. most suitable resources. In addition to the initial training, the Company invests in In 2013, following this process, a total of 23 Talents were ongoing training tailored to the needs of the business, recruited, and the company ended the year with a total of with the aim of providing employees with new skills. 62 employees. The Angola Cables training programs are divided into three major areas: Curriculum analysis

Reinforcing skills directly related to the Psychometric Tests Specific Company’s activity and technological equipment

Individual Screening Interviews Reinforcing the personal and structural Behavioral development of the employees and their behavior as part of the organization Individual Interview by the Specific Department Reinforcing the employees’ cohesion as a team and aligning them with common goals, Corporate Selection of the Candidate according to the Company’s mission, vision and values

088 SUSTAINABILITY

As part of its focus on the personal and professional complexity and novelty of the equipment making up the development of its Talent, in 2013, Angola Cables Company’s chain of business. On average, each Technical conducted 23 training sessions, which corresponded to Management employee attended 185 hours of training. 963 hours, offered to various employees in the various functional areas of the Company. It should be noted that much of the training related with the equipment was delivered by its suppliers, so that the The training provided during 2013 focused mainly on the best and most direct know-how for the operation of the development of specific skills (90%), directly related to the equipment could be guaranteed. function performed by the employee. There was also a large emphasis on the training for the Commercial and Marketing Management team, each DISTRIBUTION BY TYPE OF TRAINING employee having benefited, on average, of about 90 hours 2013 | # HOURS | % of training.

69 TRAINING HOURS BY FUNCTIONAL AREA 7% 24 2013 | # HOURS | % 3%

5.379 TOTAL: 963 H

719 870 90% 437 386 137 122 77 8

SPECIFIC BEHAVIORAL CORPORATE EXECUTIVE OFFICE COMMISSION EXECUTIVE LEGAL OFFICE LEGAL SECRETARIAT TECHNICAL COMMERCIA MANAGEMENT MANAGEMENT MANAGEMENT If we consider the number of participants in each AND FINANCIAL AND MARKETING PLANNING AND ADMINISTRATIVE HUMAN TALENTS training session, a total of 7265 hours of knowledge and REPORTING OFFICE opportunities for personal and professional development were offered.

In 2013, a significant investment in training was made by the Technical Management. This was due not only to the initial phase of Angola Cables’ business, but also to the

089 SUSTAINABILITY

This capacitation is key for the best team performance. This event had the main purpose of strengthening: Only with a thorough knowledge of the business and the full • Angola Cables’ organizational culture development of the skills enabling the effective promotion • respect, solicitude, sharing and cooperation between of Angola Cables’ products and services will the employees team members be able to perform their functions in order to achieve the • leadership in the context of teamwork intended objectives. • nternal communication

It follows therefore that 2013 was a year of deep 2nd Angola Cables Team Building commitment to the training of all Talents within the Angola On November 16th, the second Angola Cables team- Cables team. building session was held. This time the event took place at the BarSulo on the island of Mussulo. For one day, the TEAM SPIRIT Angola Cables employees got together with the aim of developing team cohesion and suggest improvements for Angola Cables recognizes that the success of a company is the year 2014. related not only to the quality of services provided, but also to the satisfaction of its employees. This event also allowed the participants to develop their Emotional Intelligence and recognize the role and Valuing relationships and focusing on reinforcement of the importance of each individual in the accomplishment of team spirit is crucial to everyone’s effort and commitment, Angola Cables’ objectives. as well as to the improvement of individual responsibility. Monthly Fridays Still in the area of training, two team-building events were The Company believes that by promoting social and playful organized, so that Angola Cables’ Talents could interact and activities and improving the well-being of employees it will, develop skills, acting as a genuine team. at the same time, reinforce relationships among the group, contributing to the creation of a strong team spirit. Angola Cables’ fist team building On June 7th and 8th, 2013, the first Angola Cables team- In tune with this spirit, Angola Cables promotes a convivial building session was put into motion. This event saw the event among its employees on the last Friday of each participation of 41 employees and took place at the Resort month. The agenda includes the introduction of new Kilunda Paradise, in Funda. employees; a brief and non-exhaustive presentation of already developed and future projects; the presentation Over those two days, the Angola Cables employees and discussion of the conferences or workshops in which got together and participated in various activities, the employees took part, and also the presentation of any demonstrating a fine collaborative and competitive spirit. other topics considered relevant by the employees.

090 SUSTAINABILITY FOCUS ON GOALS AND RESULTS

AIMING TO ALIGN ALL ITS EMPLOYEES WITH THE COMPANY’S OBJECTIVES AND COMMIT THEM TO ACHIEVE INDIVIDUAL AND COLECTIVE RESULTS, IN 2013, ANGOLA CABLES DEVELOPED AND IMPLEMENTED A SET OF TRANSVERSAL POLICIES, NAMELY A PERFORMANCE MANAGEMENT MODEL AND COMPENSATION POLICIES.

PERFORMANCE MANAGEMENT MODEL Talents that is perceived as coherent and stimulating, encouraging the attraction, development and retention of In 2013, Angola Cables developed and began to implement Talent; the Performance Management Model. This tool can be • Maximize employees’ performance by developing their used to: skills and potential in alignment with Angola Cables’ strategic guidelines. • Establish a philosophy of cascading goals, ensuring alignment between the strategy and the commitment of The Performance Management Model is one of the most employees to individual goals; effective management tools in promoting the sharing • Foster a culture of meritocracy by differentiating of objectives in the organization and, simultaneously, performances and competencies that may directly encouraging the evaluator’s role as an advisor of its advance corporate objectives and the organization’s employees, in order to establish within the company a positioning; ‘chain’ of commitment to achieve the objectives set, to the • Develop an Integrated Management of Human extent of each employee’s responsibility and performance.

PERFORMANCE EVALUATION PROCESS

DEFINITION OF OBJECTIVES 1 NOVEMBER DEc JAN 2 COMMUNICATION OF SKILLS AND GOALS MEETING NOV FEb JANUARY MID-TERM MEETING 3 JULY OcT MAR SELF-ASSESSMENT 4 DECEMBER 5 FEEDBACK SEp ApR DECEMBER PROVISIONAL ASSESSMENT 6 FEBRUARY Aug MAy 7 VERIFICATION OF ASSESSMENTS JUL JUN MARCH RESULTS REPORT MEETING 8 APRIL

091 SUSTAINABILITY

COMPENSATION POLICY The variable component translates into an annual performance bonus, awarded on the basis of the In 2013, Angola Cables also developed a compensation performance of each employee and Angola Cables’ results. policy that meets the best practices of leading companies in the market. This component ensures the alignment of employees with the business and encourages improvement in the levels of The implementation of this policy had as primary aims: performance.

• Increase of pay equity among employees PERFORMANCE BONUSES • Attract and retain the best employees • Motivate current employees and obtain their commitment to the Organization Performance • Develop a culture of high performance • Promote a culture of meritocracy

Performance Evaluation Accordingly, compensation now consists of a fixed component, a variable component and further access to other benefits in force. Performance Bonus COMPONENTS

Fixed Considers all amounts received on a regular BONUS component and periodic basis, in return for work done

Budget Prize awarded to employees according Variable component to their performance, individual productivity and Angola Cables’ results Company Results All benefits available to employees, such Benefits as health insurance

Bonus

Performance Evaluation

Individual Goals

092 SUSTAINABILITY ENVIRONMENTAL SUSTAINABILITY

ENVIRONMENTAL POLICY

Angola Cables believes in a sustainable development of the planet and, for that reason, has an environmental policy that adopts the practices of prevention and reduction of pollution, together with the optimization of available resources.

The Company recognizes that economic activities always imply some risk of environmental impact, but commits itself to continuous improvement in preventing pollution and complying with applicable environmental laws and regulations.

INTERNATIONAL STAR AWARD FOR QUALITY (ISAQ) 2013

Angola Cables is committed to the quality and efficiency of services provided, having received in 2013 one of the most prestigious international awards for Quality, Leadership, Technology and Innovation.

PROTECTION OF MARINE TURTLES

Angola Cables is committed to the sustainable development of the planet. The Company’s environmental policy aims to harmonize Telecommunications services with the conservation and management of the Angolan biodiversity.

SOCIAL COMMUNITY

Angola Cables is dedicated to the community that surrounds it, since this community is the future generation. Consequently, the Company intends to develop its approach to the whole community through the development of socially relevant projects.

093 SUSTAINABILITY INTERNATIONAL STAR AWARD FOR QUALITY (ISAQ) 2013

Estas imagens não têm qualidade INTERNATIONAL PRIZE FOR QUALITY AND EFFICIENCY

On September 28th and 29th, Angola Cables attended Angola Cables believes that quality is the cornerstone for the Quality and Efficiency Awards ceremony, sponsored continuous business and management improvement. Upon by the Business Initiative Directions (BID), held at the receiving this award, the Company officially becomes a model InterContinental Hotel in Geneva, Switzerland. to be followed in all sectors. This ceremony was attended by companies from various Our presence at this event was also an opportunity for countries, leaders of various economic sectors, world Angola Cables to establish contact with company Presidents economy, arts and corporate image people, quality experts, and CEOs from around the world and discuss the best academic celebrities and diplomatic representatives. practices in business management. On the other hand, it was still possible to assess possible future partners and This is an event with global news coverage, aiming to customers, as part of the kind of contacts such an event can reward companies according to criteria such as:: easily encourage.

This award represents a triumph and a milestone of Excellence in leadership and management excellence for Angola Cables and for the Country.

Quality and excellence

Business and brand prestige Estas imagens não têm Technology, Innovation and Projection qualidade

Angola Cables was awarded the Gold Trophy, having been recognized for its commitment to Quality, Leadership, Technology and Innovation.

Eng. Angola Cables’ CEO, Eng. António Nunes, received the award from the hands of José E. Prieto, President of BID.

094 SUSTAINABILITY PROTECTION OF SEA TURTLES

KITABANGA PROJECT With this project, Angola Cables hopes that its operational activities will always be conducted in such a way as to The sustainability policy subscribed by Angola Cables minimize their impact on the environment, thus preserving supports and promotes activities of conservation the species that inhabit the surroundings of the Sangano and management of biodiversity, especially regarding station. endangered species. Another short-term commitment of the company will Sea turtles are now an endangered species, threatened by include the construction of an observation and working coastal development on nesting areas, which prevents the post, to raise the awareness of local people regarding the reproduction of this species conservation and protection of species and their habitats, and generate new jobs for the local population. In this context, Angola Cables supports the Kitabanga project, dedicated to the preservation and protection of sea turtles. This project is national in scope, being organized by the Faculty of Sciences of the Agostinho Neto University, of which Angola Cables is a partner.

This project has contributed to a better understanding and protection of marine turtles along the Angolan coast, having already allowed for the identification and protection of 181 nests on a 5 Kms area in Sangano, as well as for the increase of experience and training levels of our technicians, allowing a more intensive action along the coast.

095 SUSTAINABILITY SOCIAL COMMUNITY

Angola Cables is concerned with supporting and developing projects and activities related to education, environment, scientific research and social support.

Under this policy of responsibility towards the surrounding community, the Company intends to advance knowledge and education, with the aim of educating children, who are the future of communications, the country and the world. SPORTS

Sailing is a sport with an old tradition in Angola, and the country has several well-known athletes in this discipline, among which Manuel Filipe, world vice-champion of the sport, stands out.

Recently, conditions to promote the sport by investing in young talents in the sport have been created.

Moreover, the Clube Naval de Luanda, the par excellence operations center of the sport in Angola, has existed for over 130 years and is the 2nd oldest African club.

Considering Angola Cables’ strong connection with the sea, since its business has to do with the acquisition, management and maintenance of submarine optical fiber cables, the company decided to support the development of the sport of sailing.

In this context, Angola Cables also decided to sponsor, exclusively, the Bille sailboat and, in partnership with other companies, the Mussulo III sailboat, both of which were involved in Team Angola’s participation in the Cape to Rio Race, in 2014.

096 SUSTAINABILITY

CAPE TO RIO RACE 2014 Angola’s team was comprised of Bille and Mussulo III, two Bavaria-type sailboats with 16.16 meters in length and In the wake of the new Angola Cables project, the SACS, 23-meter masts, whose mainly Angolan crews included which will cross the South Atlantic, and under the motto such renowned sailors as José Guilherme Caldas, Mario ‘United we go far,’ Angola Cables decided to sponsor Team Fontes, Tita Silva, Rui Sancho and Philip Luvambo, among Angola and the Bille and Mussulo III sailboats in the 2014 others. edition of the Cape to Rio Race.

Our sponsorship of Team Angola and the Bille and Mussulo III sailboats was first and foremost a means of publicity and visibility for the Company and its projects, with particular relevance to the SACS.

This was a perfect opportunity to promote the release of the SACS project and the advantages Angola, other African countries and Brazil will enjoy with this new Telecommunications infrastructure.

This sponsorship allowed Angola Cables global visibility at a business level and as the promoter and manager of international Telecommunications projects, consolidating its presence in the market of submarine cable operators.

Forty-one years after the first Angolan participation in this mythical race, the country once again had a team in the starting line-up for this challenging transatlantic race.

The event saw the participation of thirty-six sailboats that sailed on a similar path as the one that will be covered by the SACS: over 6,000 km to provide the first high- bandwidth link in the South Atlantic between Africa and South America.

097 SUSTAINABILITY

The preparation for this major international challenge included some presentation events, namely:

• Lisbon / Portugal: On August 30th and 31th, Angola Cables invited several partners to attend the presentation of Team Angola and the baptism of the vessel Bille; • Luanda: Between November 1st and 3rd, Angola Cables invited all its shareholders and employees to watch the arrival of the sailboat Bille and Team Angola in Luanda. The event allowed promotion of Angola Cables on the national press and made known its importance in the development of the Telecommunications sector in Angola and in Africa; • Telecommunications Race: Integrated in the 2nd event of the Cape to Rio Race, Angola Cables promoted a sail race among all its shareholders in order to involve them in the project and promote healthy interaction between all; • Employees Tour: The Company also offered a tour to all its employees, so they could see up close the Bille, its whole crew and the project of the Cape to Rio Race; • Cape Town / South Africa: Between December 29th, 2013, and January 4th, 2014, Angola Cables organized an event in Cape Town which brought together various partners and the Bille and Mussulo III sailboats, in order to promote the Angola Cables brand internationally and launch the famous Cape to Rio Race.

The Angola Cables sponsorship of Team Angola made it possible to:

• Promote Angola Cables • Advertise the SACS project • Promote Angola • Develop contacts with customers and partners in various business meetings

098 SUSTAINABILITY 7 FINANCIAL STATEMENTS

BALANCE YEARS ENDED DECEMBER 31st, 2013 AND 2012 (AMOUNTS IN KWANZAS)

Notes 2013 2012 ASSETS

Non-current assets

Tangible fixed assets 4 9.008.772.103 8.645.462.504

Intangible fixed assets 5 2.484.018 -

Investments in subsidiary and associated companies 6 - -

Other financial assets 7 - -

Other non-current assets 9 131.950.695 -

TOTAL NON-CURRENT ASSETS 9.143.206.815 8.645.462.504

Current Assets

Inventory 8 - -

Accounts receivable 9 1.770.818.022 771.652.098

Cash and cash equivalents 10 1.051.395.776 1.055.567.626

Other current assets 11 86.686.391 55.885.600

TOTAL CURRENT ASSETS 2.908.900.189 1.883.105.324

TOTAL ASSETS 12.052.107.004 10.528.567.828

EQUITY AND LIABILITIES

Equity

Capital 12 9.390.000.000 9.390.000.000

Provisions 13 - -

Retained earnings 14 (1.421.140.988) (626.775.634)

Net income for the year (450.315.814) (794.365.354)

TOTAL EQUITY 7.518.543.199 7.968.859.012

Non-current liabilities

Medium and long term loans 15 3.271.222.099 1.827.134.035

Deferred tax liabilities 16 - -

Pension Fund 17 - -

Fund for other liabilities and charges 18 178.442.465 179.190.608

Other non-current liabilities 19 - -

TOTAL NON-CURRENT LIABILITIES 3.449.664.564 2.006.324.643

Current liabilities

Accounts payable 19 811.823.448 409.644.212

Short-term loans 20 - -

Current portion of medium and long term loans 15 - -

Other current liabilities 21 272.075.792 143.739.961

TOTAL CURRENT LIABILITIES 1.083.899.241 553.384.173

TOTAL EQUITY AND LIABILITIES 12.052.107.004 10.528.567.828

102 STATEMENTS OF INCOME YEARS ENDED DECEMBER 31st, 2013 AND 2012 (AMOUNTS IN KWANZAS)

Notes 2013 2012 Sales 22 - -

Services Provided 23 1.826.923.249 -

Other operating revenue 24 98.289.608 -

Changes in finished goods and goods in process of manufacture 25 - -

Work for the Company 26 - -

Cost of goods sold and materials consumed 27 - -

Staff costs 28 (513.780.835) (179.817.857)

Amortizations 29 (383.453.865) (58.800.241)

Other operating expenses and losses 30 (1.455.092.021) (451.810.197)

OPERATING RESULTS (427.113.864) (690.428.294)

Financial results 31 42.176.416 (66.288.037)

Results of subsidiaries and associated 32 - -

Non-operating income 33 (65.378.365) (37.649.023)

PROFIT BEFORE TAX (450.315.814) (794.365.354)

Income tax 35 - -

NET INCOME FROM CURRENT OPERATIONS (450.315.814) (794.365.354)

Extraordinary Results 34 - -

Tax on extraordinary income 35 - -

NET INCOME FOR THE FINANCIAL YEAR (450.315.814) (794.365.354)

103 STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31st, 2013 AND 2012 (AMOUNTS EXPRESSED IN KWANZAS)

Notes 2013 2012 CASH FLOW FROM OPERATING ACTIVITIES

Customers receivables (cash) 23 345.165.474 -

Payments (cash) to suppliers and employees 30 (1.754.786.380) (716.584.428)

Cash from operating activities (1.409.620.906) (716.584.428)

Interest paid - -

Taxes without profits paid - -

Net cash from operating activities (1.409.620.906) (716.584.428)

CASH FLOW FROM INVESTMENT ACTIVITIES

Receivables from:

Tangible Fixed Assets 4 46.082.000 1.092.416

Intangible Fixed Assets - -

Financial investments - -

Investment subsidies - -

Interest and similar income - -

Dividends or profits received - -

Payments in relation to:

Tangible Fixed Assets 4 (682.365.480) (2.135.490.366)

Intangible Fixed Assets 5 (3.439.409) -

Financial investments - -

Net cash used in investing activities (639.722.889) (2.134.397.950)

CASH FLOW FROM FINANCING ACTIVITIES

Receivables from: 15

Capital increases, supplementary provisions and rewards 2.008.026.139 3.180.208.614

Sales of shares or own quotas - -

Coverage of losses - -

Loans obtained - -

Interest and similar income received 31 43.398.918 2.663.307

Payments related to:

Reductions in capital and supplementary provisions - -

Purchases of shares or own quotas - -

Dividends or profits paid - -

Loans obtained - -

Amortization of leasing contracts - -

Interest and similar charges paid 31 (6.253.112) (66.489.009)

Net cash used in financing activities 2.045.171.945 3.116.382.911

Net increase in cash and cash equivalents (4.171.850) 265.400.533

Cash and cash equivalents at beginning of period 1.055.567.626 790.167.093

Cash and cash equivalents at end of period 1.051.395.776 1.055.567.626

104 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31ST, 2013 (AMOUNTS EXPRESSED IN KWANZAS)

1 FOREWORD 2 ACCOUNTING POLICIES ADOPTED IN THE PREPARATION OF THE FINANCIAL STATEMENTS 4 TANGIBLE FIXED ASSETS 5 INTANGIBLE FIXED ASSETS 9 OTHER NON-CURRENT ASSETS AND ACCOUNTS RECEIVABLE 10 CASH AND CASH EQUIVALENTS 11 OTHER CURRENT ASSETS 12 CAPITAL 14 RETAINED EARNINGS 15 MEDIUM AND LONG TERM LOANS 18 PROVISIONS FOR OTHER RISKS AND CHARGES 19 ACCOUNTS PAYABLE 21 OTHER CURRENT LIABILITIES 23 SERVICES PROVIDED 24 OTHER OPERATING REVENUE 28 STAFF COSTS 29 AMORTIZATIONS 30 OTHER OPERATING EXPENSES AND LOSSES 31 FINANCIAL RESULTS 33 NON-OPERATING INCOME 35 INCOME TAXES 38 EVENTS OCCURRED AFTER THE BALANCE SHEET DATE 40 RELATED ENTITIES

105 1. FOREWORD 1.1 CORPORATE PURPOSE AND CONSTITUTION Angola Cables, SA (‘Company’) was incorporated by public deed dated June 4th, 2009, in Luanda, in the Notary ‘Cartório Notarial do Guiché Único da Empresa’. The corporate purpose is to participate as a member of the international consortium for the construction, operation and maintenance of the WACS project, to commercially explore Telecommunications through submarine cables and access to neighboring countries, as well as to exercise all related activities described before. The members of the Governing Bodies of the Company were appointed for the period of four years, from 2012 to 2015. The following notes are numbered as defined in the General Accounting Plan (henceforth ‘PGC’), approved by the Decree 82/01, of November 16th. The notes whose numbers are absent from this annex are not applicable to the Company, or their presentation is not relevant to the interpretation of the accompanying financial statements. 2. ACCOUNTING POLICIES ADOPTED IN THE PREPARATION OF THE FINANCIAL STATEMENTS 2.1 BASIS OF PRESENTATION The financial statements were prepared based on the accounting principles of continuity of operations; expertise or accretion; balancing; effecting of transactions; substance over form; materiality; prudence; objectivity and comparability. The Financial Statements of the Company on December 31st, 2012 are pending approval at the headquarters of the General Meeting of Shareholders. However, the Board believes that they will be approved without significant changes. 2.2 BASIS OF VALUATION ADOPTED IN PREPARING THE FINANCIAL STATEMENTS The bases of valuation used in preparing the financial statements were as follows: A) TANGIBLE AND INTANGIBLE FIXED ASSETS Tangible and intangible fixed assets acquired before December 31st, 2013 are recorded at cost of acquisition. Amortizations were calculated considering constant quotas, on a duodecimal basis, over the value of acquisition. B) Accruals The Company records income and expenses in accordance with the accruals principle, whereby revenue and expenses are recognized as they are generated, regardless of when they are received or paid. The differences between the amounts received and paid and the corresponding income and expenses are recorded in the captions of other assets and liabilities.

106 C) BALANCES AND TRANSACTIONS IN FOREIGN CURRENCY All assets and liabilities denominated in foreign currencies are converted to Kwanza, using the following exchange rates in effect on December 31st, 2013:

CURRENCY 2013 2012 Dollars of the United States of America (USD) 97,62 95,83

European Union Euro (EUR) 134,39 126,38

UK Pound 160,71 154,20

Exchange differences, with gains and losses, arising from differences between the exchange rates prevailing at the transaction date and at the date of collection, payment or the balance sheet date, are recorded as income or expenses in the income statement (Note 31). D) PROVISIONS FOR OTHER LIABILITIES AND EXPENSES Provisions are recognized when the Company has a present obligation (legal or implicit) resulting from a past event. It is likely that for the liquidation of that obligation an outflow of resources occurs, and the amount of the obligation can be reasonably estimated. The amount of provisions recorded is the best estimate, at the reporting date, of the resources required to settle the obligation. This estimate is determined taking into account the risks and uncertainties associated with each obligation. E) TAXATION The Company is subject to the following taxes on a recurring basis: i) SOCIAL SECURITY (‘SS’): This contribution corresponds to 11% the earnings of employees, of which 3% are the responsibility of the employee; ii) TAX ON LABOR INCOME (‘IRT’): This tax is withheld and deducted by the Company in the wages of employees, and is calculated based on their wages. Under Executive Decree n. º 80/09 of August 7th, thirteen successive echelons with variable tax rates were defined, the maximum rate being 17 %; iii) INDUSTRIAL TAX - TAX LAW OF CONSTRUCTION CONTRACTS: The Law n. 7/97 of October 10th, establishes the tax settlement and interim payments based on anticipated Industrial Tax, for construction contracts and supplementary services (3.5 %) and services (5.25 %), taxes collected by withholding; iv) INDUSTRIAL TAX: This tax corresponds to 35 % of taxable income, which is calculated based on the accounting records of the Company adjusted for non-tax deductible costs; v) EXCISE DUTY: Telecommunications services provided by the company are subject to taxation by way of Excise Duty at a rate of 5% under Executive Decree No. 41/99 of December 10th, as revised by Presidential Legislative Decree No. 7/11 of December 30th; vi) STAMP DUTY: the company is taxed at 1% of the received trade values of invoices issued under the contracts with its customers, under the Presidential Legislative Decree No. 6/11 of December 30th; According to the legislation in force in the Republic of Angola, the tax returns are subject to review and correction by the tax authorities for a period of five years. Consequently, the Company’s tax returns for the years 2009 (first year of operations) through 2013 may also be subjected to revision. The Board of Directors believes that the corrections resulting from reviews/inspections by the tax authorities of those tax returns will not have a significant effect on the financial statements for the year ended December 31st, 2013.

107 4. TANGIBLE FIXED ASSETS 4.1 COMPOSITION The composition of the caption ‘Tangible fixed assets’ on December 31st 2013 was as follows:

GROSS ACCUMULATED NET CAPTIONS VALUES AMORTIZATIONS AMOUNTS Tangible Fixed Assets 8.885.713.781 441.298.714 8.444.415.067

Fixed Assets in Progress 564.357.035 - 564.357.035

9.450.070.816 441.298.714 9.008.772.103

4.3 GROSS VALUE MOVEMENTS DURING THE YEAR During the year ended December 31st, 2013, the movement of Tangible Fixed Assets in gross values was as follows:

OPENING CLOSING CAPTIONS INCREASES BALANCES BALANCES Tangible Fixed Assets 1.442.237.562 7.443.476.219 8.885.713.781

Fixed Assets in Progress 7.262.025.182 -6.697.668.147 564.357.035

8.704.262.745 745.808.072 9.450.070.816

The composition of the caption ‘Tangible fixed assets’ at December 31st, 2013 and 2012 was as follows:

CAPTIONS 2013 2012 Land and natural resources 180.419.029 180.419.029

Buildings and other constructions 8.289.542.487 1.225.986.385

Basic equipment 261.426.582 -

Loading and transportation equipmen 116.227.050 23.280.000

Office Equipment 36.067.010 11.671.539

Other tangible fixed assets 2.031.623 880.610

8.885.713.781 1.442.237.562

The caption ‘Buildings and other constructions’ includes investment in the optical fiber submarine cable WACS (West Africa Cable System), started in 2009 and has carried over from Fixed Assets in Progress in the current financial year, following the completion of the investment and its entry into service. The caption ‘Basic equipment’ refers to investment in transmission equipment, namely the ‘Backbone’, which ensures the land connection between Sangano Terminal Station and the Angonap in Talatona, started in 2012, and carried over from Fixed Assets in Progress in the current financial year. The caption ‘Loading and transportation equipment´ relates to the acquisition of twenty-two vehicles, allocated to the Company’s service needs. The caption ‘Office equipment’ includes investment in miscellaneous computer equipment and office furniture for the offices at the Cellwave Building, in order to provide the Company employees with adequate resources.

108 The caption ‘Other tangible assets’ refers to the purchase of a range of equipment for safety and comfort, domestic appliances and other devices supporting office work. The composition of the caption ‘Fixed Assets in Progress’ on December 31st, 2013 and 2012 was comprised as follows:

CAPTIONS 2013 2012 WACS - 6.953.291.506

Sangano - -

Backbone - 213.272.775

Angonap 311.339.702 -

SACS 193.877.270 89.046.849

Cable of the Americas 51.659.669 -

SAP licenses 7.434.795 -

Furniture 45.600 6.414.052

564.357.035 7.262.025.182

The investment relative to the Angonap refers to the acquisition and installation of transmission equipment and connectivity, including equipment for the corporate network, core equipment and other facilities for terrestrial optical fiber, necessary for the development of business and the availability of the Company’s services. The investment for the SACS refers to the costs incurred in the conception and design for the construction of a submarine optical fiber cable, which aims to connect Angola to Brazil. The investment on the Cable of the Americas refers to the costs incurred in the conception and design for the construction of a submarine optical fiber cable, which aims to connect Brazil to the United States of America. The Investment for SAP Licenses refers to the purchase of the installation and use licenses for SAP software in order to provide the Company with an integrated ERP solution to support the processes and procedures of the respective functional areas.

4.4 ACCUMULATED AMORTIZATIONS MOVEMENTS DURING THE YEAR During the year ended December 31st, 2013, the movements in accumulated amortization were as follows:

OPENING REINFORCEMENT CLOSING CAPTIONS BALANCES (Note 29) BALANCES Buildings and other constructions 49.039.455 331.316.195 380.355.651

Basic equipment - 23.720.260 23.720.260

Cargo and transportation equipment 7.760.000 23.938.174 31.698.174

Office Equipment 1.912.724 3.388.834 5.301.559

Other tangible fixed assets 88.061 135.010 223.071

58.800.241 382.498.473 441.298.714

109 5. INTANGIBLE FIXED ASSETS 5.1 COMPOSITION The composition of the caption ‘Intangible Fixed Assets’ on December 31st, 2013, was as follows:

GROSS ACCUMULATED NET CAPTION VALUES DEPRECIATION VALUES Intangible fixed assets 3.439.409 955.391 2.484.018

3.439.409 955.391 2.484.018

5.3 GROSS VALUE MOVEMENTS DURING THE YEAR During the year ended December 31st, 2013, the movements of Intangible Fixed Assets in gross values were as follows:

OPENING CLOSING CAPTIONS INCREASES BALANCES BALANCES Intangible fixed assets - 3.439.409 3.439.409

- 3.439.409 3.439.409

The composition of the caption ‘Other Intangible Fixed Assets’ on December 31st, 2013 and 2012 was as follows:

CAPTIONS 2013 2012 Other intangible fixed assets 3.439.409 -

3.439.409 -

The heading ‘Other intangible fixed assets’ refers to the purchase of the installation and use licenses for Microsoft software, to be used in the Company’s corporate network. 5.4 ACCUMULATED DEPRECICATION MOVEMENTS DURING THE YEAR During the year ended December 31st, 2013, the movements in accumulated depreciation were as follows:

OPENING CLOSING CAPTIONS INCREASE BALANCES BALANCES Intangible Fixed Assets - 955.391 955.391

- 955.391 955.391

110 9. OTHER NON-CURRENT ASSETS AND ACCOUNTS RECEIVABLE 9.1 COMPOSITION On December 31st, 2013 and 2012, the caption ‘Other non-current assets and accounts receivable’ was detailed as follows:

ACCOUNTS RECEIVABLE 2013 2012 Other non-current assets 131.950.695 -

Customers, current account 86.159.460 -

Suppliers, debtor balances 66.190.661 68.900.765

Other debtors 1.618.467.901 702.751.333

1.902.768.717 771.652.098

On December 31st, 2013 and 2012, the caption ‘Other non-current assets’ was as follows:

OTHER NON-CURRENT ASSETS 2013 2012 Activations in the WACS 131.950.695 -

131.950.695 -

The caption ‘Other non-current assets’ refers to the capital values of T segments in the WACS and its terminal stations, relating to activations of Company circuits in the WACS, in terminal stations other than Sangano. On December 31st, 2013 and 2012, the caption ‘Customers, current account’ was detailed as follows:

2012 CUSTOMERS, CURRENT ACCOUNT 2013 (Note 40) Angola Telecom 34.831.730 -

WACS Operation Central Billing Party (OCBP) 18.746.400 -

MTN Kenya 13.650.000 -

Startel 13.046.250 -

MS Telcom 5.437.845 -

Unitel 420.000 -

CMC Networks 20.318 -

WIOCC 6.917 -

86.159.460 -

On December 31st, 2013 and 2012, the caption ‘Suppliers, debtor balances’ was as follows:

SUPPLIERS, DEBTOR BALANCES 2013 2012 Telkom SA Limited 66.190.661 67.805.100

Beijing Construction Engineering Group (Angola) Co, Lda - 679.165

Progest - 416.500

66.190.661 68.900.765

111 The value for the entity Telkom SA Limited, as managing entity of the billing for the Investment in the WACS, refers to the return of the submarine cable’s investment values. On December 31st, 2013 and 2012, the caption ‘Other debtors’ was detailed as follows:

OTHER DEBTORS 2013 2012 Angola Telecom 753.093.867 557.438.074

Unitel 457.762.939 -

MS Telcom 132.898.918 -

Movicel 88.599.279 -

Startel 186.112.898 145.313.259

1.618.467.901 702.751.333

The values relating to the caption ‘Other debtors’ refers to the amounts of income for the provision of 75% of capacity owned by the company in the WACS, to be reserved for its shareholders. The values reflect the distribution of income and amounts to be charged in the following year, according to the participation of each shareholder, as certified in the Company’s Shareholder Agreement. 10. CASH AND CASH EQUIVALENTS 10.1 COMPOSITION On December 31st, 2013 and 2012, this caption was as follows:

CASH AND CASH EQUIVALENTS 2013 2012 Long Term deposits 850.000.000 800.000.000

Demand Deposits 200.772.885 254.552.411

Cash on hand 622.891 1.015.215

1.051.395.776 1.055.567.626

112 The Cash and Cash Equivalents on December 31st, 2013 and 2012, were detailed as follows:

DESCRIPTION BASE CURRENCY 2013 2012 Banco de Fomento Angola, S.A.R.L. (“BFA”) AKZ 250.000.000 800.000.000

Banco Internacional de Crédito (“BIC”) AKZ 600.000.000

Long Term bank deposits 850.000.000 800.000.000

Banco de Fomento Angola, S.A.R.L. (“BFA”) AKZ 14.109.632 195.223.192

Banco Internacional de Crédito (“BIC”) AKZ 43.829.163 53.839.872

Banco de Fomento Angola, S.A.R.L. (“BFA”) USD 170.833 -

Banco Internacional de Crédito (“BIC”) USD 14.512.300 5.485.077

Banco BIC Português (“BIC-PT”) USD 126.477.357 -

Banco de Fomento Angola, S.A.R.L. (“BFA”) EUR 2.240 3.455

Banco BIC Português (“BIC-PT”) EUR 1.670.509 -

Banco de Fomento Angola, S.A.R.L. (“BFA”) GBP 849 814

Bank deposits 200.772.885 254.552.411

Cash AKZ AKZ 622.891 1.015.215

Cash on hand 622.891 1.015.215

Availabilities 1.051.395.776 1.055.567.626 11. OTHER CURRENT ASSETS 11.1 COMPOSITION On December 31st, 2013 and 2012, this caption was detailed as follows:

OTHER CURRENT ASSETS 2013 2012 Personnel - advance payments 4.902.000 -

Charges to be spread over future years 81.784.391 55.885.600

86.686.391 55.885.600

The caption ‘Personnel - advance payments’ refers to amounts paid to employees in advance, in the form of loan, which amount shall be repaid to the Company. The caption ‘Expenses to be spread over future periods’ refers to amounts paid in advance, relating to expenditure on real estate rents, insurances and events, whose costs are allocated to deferred periods.

113 12. CAPITAL 12.1 COMPOSITION OF CAPITAL On December 31st, 2013, the Company’s capital in the amount of 390,000,000.00 AKZ, equivalent to 5.000.000 USD, was fully subscribed and paid. The capital is divided into 1,000,000 shares, worth AKZ 390.00 each, as follows:

NUMBER BUSINESS ENTITIES % OWNED VALUE OF SHARES Angola Telecom – E.P. 51,00% 510.000 198.900.000

Unitel, S.A. 31,00% 310.000 120.900.000

Mercury - Serviços de Telecomunicações, S.A. 9,00% 90.000 35.100.000

Movicel - Telecomunicações, Lda. 6,00% 60.000 23.400.000

Mundo Startel, S.A. 3,00% 30.000 11.700.000

100,00% 1.000.000 390.000.000

12.2 COMPOSITION OF SUPPLEMENTARY PROVISIONS On December 31st, 2013, the caption of ‘Supplementary installments’ was detailed as follows:

BUSINESS ENTITIES 2013 Angola Telecom – E.P. 4.590.000.000

Unitel, S.A. 2.790.000.000

Mercury - Serviços de Telecomunicações, S.A. 810.000.000

Movicel - Telecomunicações, Lda. 540.000.000

Mundo Startel, S.A. 270.000.000

9.000.000.000

12.3 MOVEMENTS DURING THE YEAR During the year ended December 31st, 2013, the movement occured in the value of the Supplementary provisions was as follows:

BUSINESS ENTITIES 2012 INCREASES 2013 Angola Telecom – E.P. 4.590.000.000 - 4.590.000.000

Unitel, S.A. 2.790.000.000 - 2.790.000.000

Mercury - Serviços de Telecomunicações, S.A. 810.000.000 - 810.000.000

Movicel - Telecomunicações, Lda. 540.000.000 - 540.000.000

Mundo Startel, S.A. 270.000.000 - 270.000.000

9.000.000.000 - 9.000.000.000

The caption ‘Supplementary provisions’ refers to to shareholders’ due amounts relating to ancillary installments, supplementary in nature, according to the Company’s statutes, for the reinforcement of the company’s equity, under the ceiling of 90 million United States Dollars in Kwanzas.

114 14. RETAINED EARNINGS On December 31st, 2013, the movement in the caption ‘Retained earnings’ were as follows:

ENTITIES INITIAL BALANCE DECREASES FINAL BALANCE Opening balance 626.775.634 - -

Transfer of the results of the previous year - 794.365.354 1.421.140.988

626.775.634 794.365.354 1.421.140.988 15. MEDIUM AND LONG TERM LOANS On December 31st, 2013, the caption ‘Medium and long term loans’ was detailed as follows:

MEDIUM AND LONG TERM LOANS 2013 Participating Entities

Angola Telecom – E.P. 708.663.403

Unitel, S.A. 1.335.033.320

Mercury - Serviços de Telecomunicações, S.A. 606.049.329

Movicel - Telecomunicações, Lda. 621.476.047

3.271.222.099

The values for the caption ‘Medium and Long Term Loans‘ refer to amounts paid by shareholders by way of supplies, which exceeded their quota to the maximum extent of the supplementary provisions of 9,000,000,000 Kwanzas. These values were requested to shareholders through increased capital, and the shareholder Startel did not fully realize these values, the total of 141,813,259 Kwanza remaining unrealized. 18. PROVISIONS FOR OTHER LIABILITIES AND CHARGES On December 31st, 2013 and 2012, the caption ‘Provisions for other risks and charges’ was detailed as follows:

PROVISIONS FOR OTHER RISKS AND CHARGES 2013 2012 Tax provision - 115.240.917

Interest on shareholders supplies 178.442.465 63.949.691

178.442.465 179.190.608

The caption ‘Interest on shareholders supplies’ refers to anticipated financial costs of interest on shareholder loans by way of supplies.

115 19. ACCOUNTS PAYABLE On December 31st, 2013 and 2012, the caption ‘Accounts payable’ was detailed as follows:

ACCOUNTS PAYABLE 2013 2012 Suppliers, current account 800.625.768 403.160.788

State and other public entities 9.570.180 6.483.424

Customers, credit balances 1.627.500 -

811.823.448 409.644.212

On December 31st, 2013 and 2012, the caption of ‘Suppliers, current account’ was detailed as follows:

SUPPLIERS, CURRENT ACCOUNT 2013 2012 Unitel, SARL (Note 40) 206.939.984 140.180.977

Omnidata 124.684.243 -

Deloitte & Touche - Auditores, Lda. 104.588.818 7.044.830

Inacom - Instituto Angolano das Comunicações 69.825.000 -

OSI - Ocean Specialists, Inc. 63.801.421 27.956.705

Anglobal - Comércio Indústria e Serviços, SA 61.850.050 55.012.489

Alcatel-Lucent Angola 47.951.253 -

TA Turismo, Lda. 23.526.746 14.581.102

MS Telcom 10.882.348 -

NLF Prime Service 10.066.250 -

Startel 8.719.960 1.933.582

ROFFTEC Angola 7.434.795 -

PriceWaterhouseCoopers 6.168.750 -

Multi-Tech - Prestação de Serviço 5.203.869 -

DE-CIX 5.151.843 -

AP Telecom 4.392.855 -

Ogilvy & Mather - Desing Unipessoal, Lda. 3.846.509 -

BFA - Banco de Fomento Angola 3.675.000 -

TSE 3.321.900 -

SSI Angola (Oval Services, Lda) 3.150.000 -

Geração 80 Produções, Lda 2.603.606 -

Guarda Segura 2.517.100 -

HAAG - Sociedade de Advogados, RL 2.415.000 -

Angola Telecom, EP 2.047.437 409.487

LAC - Luanda Antena Comercial 2.000.000 -

Insulana - Profissionais de Limpeza 1.867.000 -

ENSA - Seguros de Angola, SA 1.789.933 3.009.540

Iogene, Inovação Gestão e Tecnologia 1.575.676 -

Shoptech 1.261.260 -

Velonet - Teleinformatica, Lda. 1.200.000 -

Odete Fachada Consultores, Lda. 865.435 2.877.471

ITOne 850.848 -

Complexo Turístico Golfinho 642.840 227.950

116 SUPPLIERS, CURRENT ACCOUNT (continued) 2013 2012 CEGOC-TEA 606.417 -

Tata Communications Transformation Services Ltd 581.028 -

Hermenelgido e Companhia 420.000 -

Vinus - Distribuidor de Vinhos e Bebidas, Lda 341.700 -

Grupo Arena - 100% Arena SGPS, SA 314.451 4.680.300

Pacific Telecomunications Council 278.214 -

Eng.º Sebastião M. Fernando 210.000 -

Vendap 181.104 -

PTA Águas, Lda. 151.800 71.802

Francisco Monteiro - Despachante Oficial 150.723 437.435

Planad - Planeamento e Informática, Lda. 134.663 -

Inboard Marine Center 127.490 -

Transgrua 110.000 -

Global Seguros 96.000 -

Greenline Distribuidora 77.800 -

NCR Angola - Informática, Lda. 26.650 -

Indutelha-Engenharia, Lda - 88.742.505

WACS Operation Central Billing Party (OCBP) - 42.991.977

THG International, Ltd. - 10.691.700

CPC África - 470.053

Alcatel-Lucent International - 394.600

UNINET - 300.000

Pmont Produções, Lda. - 250.000

TV Cabo Angola, Lda. - 246.750

SIDUAP - 200.000

Grupo Rabo de Arraia Capoeira - 191.080

Panzo Consulting Firm - 175.000

Hotel PraiaMar - Lunáfrica, Lda. - 45.600

PT Comunicações, SA - 37.853

800.625.768 403.160.788

On December 31st, 2013 and 2012, the caption ‘State and other public entities’ was detailed as follows:

STATE AND OTHER PUBLIC ENTITIES 2013 2012 Withholding Law 7/97 1.759.098 2.890.682

Income tax 3.134.403 2.161.152

Contributions for Social Security 2.349.802 1.431.590

Excise Duty 1.949.600 -

Stamp Duty 377.277 -

9.570.180 6.483.424

117 On December 31st, 2013 and 2012, the caption ‘Customers, credit balances’ was detailed as follows:

CUSTOMERS, CREDIT BALANCES 2013 2012 Gamezone Angola 1.627.500 -

1.627.500 - 21. OTHER CURRENT LIABILITIES On December 31st, 2013 and 2012, the caption ‘Other current liabilities’ was detailed as follows:

ACCOUNTS PAYABLE 2013 2012 Costs with suppliers 192.508.031 116.739.961

Costs with salaries 79.567.761 27.000.000

272.075.792 143.739.961

The caption ‘Expenses with suppliers’ refers to provisioned values of current debt to suppliers, relating to expenses of the financial year 2013, and documents were issued dated 2014. The caption ‘Expenses with salaries’ refers to values provisioned with the cost relating to salaries. 23. Services Provided 23.1 COMPOSITION BY MARKETS For the years ended December 31st, 2013 and 2012, this caption was detailed as follows:

SERVICES PROVIDED 2013 2012 Domestic market 1.725.654.049 -

Foreign market 101.269.200 -

1.826.923.249 -

23.2 COMPOSITION BY ACTIVITIES: For the years ended December 31st, 2013 and 2012, this caption was detailed as follows:

SERVICES PROVIDED 2013 2012 Main services

WACS 1.694.501.949 -

Backbone 40.000.000 -

Co-location 17.918.200 -

Internet 73.275.000 -

Last-mile 958.900 -

Other 269.200 -

1.826.923.249 -

118 For the years ended December 31st, 2013 and 2012, the caption of services relating to the ‘WACS’ was detailed as follows:

CAPTIONS 2013 2012 Shareholder Agreement 1.476.654.642 -

Other clients 217.847.307

1.694.501.949 -

The values for the caption ‘Shareholder Agreement’ refer to the amounts of income for the provision of 75% of capacity owned by the company in the WACS, to be reserved for its shareholders. 24. OTHER OPERATING REVENUE For the years ended December 31st, 2013 and 2012, this caption was detailed as follows:

OTHER OPERATING REVENUE 2013 2012 Landing provider in the WACS (Sangano) 98.289.608 -

98.289.608 -

The heading ‘ Landing provider in the WACS (Sangano)’ refers to operational revenue, relating to the assignment of Sangano Terminal Station to the WACS Consortium, for the implementation of a point of landing for the optical fiber submarine cable. The amounts correspond to the budgeted annual amount of expenses with the terminal station, as determined by the consortium. 28. STAFF COSTS For the years ended December 31st, 2013 and 2012, this caption is detailed as follows:

STAFF COSTS 2013 2012 Remuneration - Governing Bodies 113.880.000 69.640.000

Remuneration - Employees 277.375.118 61.503.946

Costs with salaries 20.443.134 5.429.534

Work accidents and diseases insurance 2.130.788 4.012.720

Training 48.658.941 31.686.041

Other Staff cost 51.292.855 7.545.616

513.780.835 179.817.857

The caption ‘Training‘ refers to costs incurred with the training of Company employees, and in the regular development of general skills for a Telecommunications operator, in technical training for the management of submarine infrastructures and in the development of leadership and team management skills. The caption ‘Other staff costs ‘ includes costs incurred with Health Insurance, covering all employees of the Company, as well as the allowances granted to employees in their missions abroad.

119 29. AMORTIZATION For the years ended December 31st, 2013 and 2012, this caption was detailed as follows:

AMORTIZATION 2013 2012 Tangible Fixed Assets (Note 4.4)

Buildings and other structures 331.316.195 49.039.455

Basic equipment 23.720.260 -

Loading and transportation equipment 23.938.174 7.760.000

Office Equipment 3.388.834 1.912.724

Other tangible fixed assets 135.010 88.061

Intangible fixed assets (Note 5.4)

Other intangible fixed assets 955.391 -

383.453.865 58.800.241 30. OTHER OPERATING COSTS AND LOSSES For the years ended December 31st, 2013 and 2012, this caption was made up as follows:

CAPTIONS 2013 2012 Subcontracts 26.988.706 -

Supplies and services from third parties 1.424.876.377 451.710.205

Taxes 3.226.939 99.992

1.455.092.021 451.810.197

For the years ended December 31st, 2013 and 2012, the caption ‘Subcontracts’ was detailed as follows:

CAPTIONS 2013 2012 Connectivity 26.988.706 -

26.988.706 -

The caption ‘Connectivity’ includes costs incurred with the rental of connectivity structures owned by other entities, in order to ensure the services provided by the Company to its customers.

120 For the years ended December 31st, 2013 and 2012, the caption ‘Third party supplies and services’ was detailed as follows:

SUPPLIES AND SERVICES FROM THIRD PARTIES 2013 2012 Fees and covenants 358.219.186 153.785.060

Maintenance and repairs 308.369.867 24.121.949

Travelling and accommodation 179.254.377 49.283.972

Technical assistance 162.457.903 25.568.505

Advertising and marketing 134.608.263 54.517.823

Communications 80.559.058 7.183.349

Other services – INACOM Licenses 64.825.000 95.000.000

Leases and rentals 50.596.900 32.118.244

Surveillance and security 40.361.165 -

Cleaning, hygiene and comfort 13.636.219 1.019.695

Office supplies 6.657.921 1.696.124

Other supplies 6.342.958 628.000

Insurances 5.666.522 694.844

Water 4.215.990 235.302

Fuel and other fluids 2.583.151 4.121.872

Intermediary commissions 2.340.000 -

Litigation and Notaries 2.041.662 742.460

Protection, safety and comfort equipment 1.149.276 520.763

Tools and rapid wear utensils 658.978 -

Expense allowances 292.425 -

Books and technical documentation 39.556 6.215

Maintenance and repairing equipment - 466.027

1.424.876.377 451.710.205

The caption ‘Fees and covenants’ refers to expenses incurred with financial advisory, legal consultancy and financial audit services required for the start of activity and internal structuring of the company.

December 31st, 2013

PROVIDERS

MARTA NATURE OF SERVICES DELOITTE PWC BFA HAAG BCG MARTINS

Operational consulting 197.289.935 - - - - 835.673

Financial Consulting - - 18.375.000 - - -

Legal Consulting - - - 30.288.695 - -

Tax Consulting - 3.858.750 - - - -

Process consulting 77.461.133 - - - 27.600.000 -

Financial Audit - 2.510.000 - - - -

274.751.068 6.368.750 18.375.000 30.288.695 27.600.000 835.673

121 The caption ‘Maintenance and repairs’ refers to expenses incurred for the preventive maintenance of the Company’s infrastructure, including Sangano Terminal Station and the Angonap, as well as the maintenance and repairs of the optical fiber submarine cable WACS. The caption ‘Travelling and accommodation’ refers to expenses incurred for travelling and accommodation for the Company’s employees on their missions. The caption ‘Technical Support’ refers to expenses incurred with local specialized technical maintenance and infrastructure management, recruitment of employees and commercial representation abroad. The caption ‘Advertising and Publicity’ refers to expenses incurred with promoting the Company’s image, including the sponsorship of a sailboat participating in the race Cape2Rio, and several participations in international Telecommunications fairs. 31. FINANCIAL RESULTS For the years ended December 31st, 2013 and 2012, the Company’s financial results was determined as follows:

CAPTIONS 2013 2012 COSTS AND LOSSES:

Interest - 63.951.761

Exchange rate losses 6.616.498 59.701.470

Banking services 4.339.748 11.877.520

10.956.246 135.530.751

INCOME AND GAINS:

Exchange rate gains 9.047.695 66.579.700

Banking interest 44.084.967 2.663.014

53.132.662 69.242.714

FINANCIAL INCOME 42.176.416 (66.288.037)

The caption ‘Banking services’ refers to costs incurred with commissions for payments abroad, relocation expenses and man- hours, charged by banking institutions. The caption ‘Unfavorable exchange rate differences’ refers to the costs of buying foreign currency (USD) for payments abroad. The caption ‘Banking interest’ refers to income incurred with short-term treasury applications on the amount of surplus cash values. The caption ‘Favorable exchange rate differences’ refers to the appraisal of foreign currency deposits and the amounts of current debt to foreign suppliers, between the time when the debt is incurred and the current financial year’s closing date.

122 33. NON-OPERATING INCOME For the years ended December 31st, 2013 and 2012, the non-operating income was determined as follows:

CAPTIONS 2013 2012 Tax provision -49.114.408 37.649.023

Interest and shareholder supplies 114.492.773

65.378.365 37.649.023

The caption ‘Tax provision’ refers to income incurred with the reversal of the adjustment made at the end of last year, the Company having proceeded to the full liquidation of tax liabilities in the current year. 35. INCOME TAX In the year ended December 31st, 2013, there was no record of a provision for the payment of industrial tax because the company has incurred negative net income and losses for tax purposes. 38. EVENTS OCURRED AFTER THE BALANCE SHEET DATE There were no significant events after the balance sheet date requiring adjustment and/or disclosure in the financial statements. 40. BALANCES WITH RELATED ENTITIES On December 31st, 2013 and 2012, the Company maintains significant balances with belonging to the group in the group and related entities. The detail of the balances on those dates was as follows:

December 31st, 2013

ASSETS BALANCE LIABILITIES BALANCE

CUSTOMERS, SUPPLIERS, MEDIUM AND OTHER BUSINESS CURRENT TOTAL CURRENT LONG TERM TOTAL DEBTORS ENTITIES ACCOUNTS ASSETS ACCOUNTS LOANS LIABILITIES (Note 9) (Note 9) (Note 19) (Note 15)

Angola Telecom - 34.831.730 34.831.730 2.047.437 710.710.840

Unitel - 420.000 420.000 206.939.984 1.335.033.320 1.541.973.304

MS Telcom - 5.437.845 5.437.845 10.882.348 606.049.329 616.931.677

Movicel - - - - 621.476.047 621.476.047

Startel 141.813.259 13.046.250 154.859.509 8.719.960 - 8.719.960

141.813.259 53.735.825 195.549.085 228.589.728 3.271.222.099 3.499.811.828

123 December 31st, 2013

EQUITY BALANCE

SUPPLEMENTARY SHARE CAPITAL TOTAL EQUITY BUSINESS ENTITIES PROVISIONS (Note 12.1) BALANCE (Note 12.2)

Angola Telecom 198.900.000 4.590.000.000 4.788.900.000

Unitel, SA 120.900.000 2.790.000.000 2.910.900.000

Mercury Serviços de Telecomunicações, SA 35.100.000 810.000.000 845.100.000

Movicel - Telecomunicações, Lda. 23.400.000 540.000.000 563.400.000

Mundo Startel, SA 11.700.000 270.000.000 281.700.000

390.000.000 9.000.000.000 9.390.000.000

December 31st, 2013

ASSETS LIABILITIES BALANCE

SUPPLIERS, MEDIUM AND OTHER TOTAL TOTAL CURRENT LONG TERM BUSINESS ENTITIES DEBTORS ASSETS LIABILITIES ACCOUNTS LOANS (Note 9) BALANCE BALANCE (Note 19) (Note 16)

Angola Telecom - EP 557.438.074 557.438.074 409.487 - 409.487

Unitel, SA - - 140.180.977 936.082.292 1.076.263.269

Mercury Serviços de Telecomunicações, SA - - - 424.008.352 424.008.352

Movicel - Telecomunicações, Lda. - - - 467.043.391 467.043.391

Mundo Startel, SA 145.313.259 145.313.259 1.933.582 - 1.933.582

702.751.333 702.751.333 142.524.047 1.827.134.035 1.969.658.081

December 31st, 2013

EQUITY BALANCE

SUPPLEMENTARY TOTAL SHARE CAPITAL BUSINESS ENTITIES INSTALLMENTS EQUITY (Note 12.1) (Note 12.2) BALANCE

Angola Telecom - EP 198.900.000 4.590.000.000 4.788.900.000

Unitel, SA 120.900.000 2.790.000.000 2.910.900.000

Mercury Serviços de Telecomunicações, SA 35.100.000 810.000.000 845.100.000

Movicel - Telecomunicações, Lda. 23.400.000 540.000.000 563.400.000

Mundo Startel, SA 11.700.000 270.000.000 281.700.000

390.000.000 9.000.000.000 9.390.000.000

124 THE BOARD OF DIRECTORS

Chairwoman: Naiole Cristina Cohne dos Santos Guedes

Vice Chairman: António José Tavares de Almeida Nabais Nunes

Member: Pedro José Manuel

Member: João Filipe Melão Dias

Member: Roger Alexandre Quintino dos Santos Ferreira

Member: Paulo Jorge dos Santos Abreu

Member: Laura Tchinizaele Ferreira Carneiro

THE CERTIFIED ACCOUNTANT (TOC) Luanda, (month), (day), 2014

125 8 REPORT FROM THE EXTERNAL AUDITOR

126 127 FALTA TRADUÇÂO PARA INGLÊS

128 FALTA TRADUÇÂO PARA INGLÊS

129 9 GLOSSARY AND ABBREVIATIONS GLOSSARY AND ABBREVIATIONS GLOSSARY AND ABBREVIATIONS

ACE – Africa Coast to Europe submarine cable based on Debt Ratio Index - States the proportion of total assets optical fiber system. held by the Company funded by third party capital, using the following formula: Debt = Liabilities ÷ Assets. Backbone - system of central connections, typically in a Design Capacity - maximum projected transmission high performance larger system, opened to Internet traffic. capacity in submarine cables.

Backhaul - Telecommunications network responsible for Developed economies - Countries with a high level of making the land connection between the core network, or economic and social development, higher than the average, backbone, and remote subnets. according to the following criteria: per capita income, value of gross domestic product, high level of development of Bandwidth - corresponds to the amount in bits per second industrialization, especially in the tertiary sector (services) supported by the network. and quaternary (computing and information technology) and human development index (HDI). Benchmarking - Process of comparing best practices of excellent companies in the same industry or across DNS (Domain Name System) - hierarchical system for different industries. managing domains in network addresses.

BID - Business Initiative Directions. Download - file transfer from a remote server to a local computer. Broker - intermediary in the purchase of capacity from Wholesalers and sale to a third party in the sector. DWDM (Dense Wavelength-Division Multiplexing) - technology to increase the bandwidth of optical fiber Carrier - the entity responsible for the transmission of Telecommunications networks. products and services to a third party. EASSy (Eastern Africa Submarine Cable System) - optical CEO - chief executive officer. fiber submarine cable linking South Africa to Sudan.

CO2 - Carbon Dioxide. E-newsletter - electronic newsletter.

Colocation - category of services offered in a datacenter ERP - corporate management system. for the housing equipment and content. Ethernet - Network card that performs the interconnection Datacenter - differentiated infrastructure for housing of local networks. equipment and contents, where standards of capability and flexibility, high security and autonomy are guaranteed.

132 GLOSSARY AND ABBREVIATIONS

Feedback - comment. Internet Peering - interconnection between parties, not requiring an explicit agreement for data traffic over the FILDA - International Fair of Luanda. Internet.

File Server - shared disk access service. IP - Internet Protocol.

Financial Autonomy Index - States the participation of IRU - long-term contract legitimizing the possession of a equity in the financing of the Company, using the following given capacity on a Telecommunications cable. formula: Financial Autonomy = Equity ÷ Assets. ISP - Internet Service Providers. Gbps - Gigabytes per second. ITW - International Telecommunications Week. GDP - Gross Domestic Product. IXP - Internet Exchange Point. Glo-1 - submarine cable along the West African coast linking Nigeria and the United Kingdom. Kilobits - unit of measurement for information, with the symbol KB, equivalent to 1024 bits. GMPLS - Generalized Multi-Protocol Label Switching or Multiprotocol Lambde Switching. Landing Station - terminal station for submarine cables.

Hub – focal point or center of reference for an activity, a Last Mile Connections - connections established for the sector or a market. last segment of a contracted network.

ICT - Information and Communication Tecnologies. Layout - Presentation format.

IMF - International Monetary Fund. Leases - short-term service contract for transmission capacity in submarine cable. Immediate Liquidity Index - States the financial ability of the Company to meet short-term obligations, using the Main One - submarine cable between Portugal and South following formula: Immediate Liquidity = Cash and cash Africa equivalents ÷ Short Term Liabilities. MoU - Memorandum of Understanding. INACOM - Angolan Communications Institute. MPLS - Multi Protocol Label Switching - technology for speeding up the flow of traffic in a network.

133 GLOSSARY AND ABBREVIATIONS

Networking - network of contacts. Start-up - new or starting company, with promising projects related to research, study and development of innovative NOC - Networking Operations Center. ideas.

Peering - interconnection of two networks. STM1 / STM16 / STM64 - Synchronous Transport Module; used in SDH technology. (Synchronous Digital Hierarchy). Pege - Strategic Plan for Electronic Government. Synchronous Transport Module, module of synchronous transport used for the SDH technology (Synchronous PNSI - National Plan for the Information Society. Digital Hierarchy). The basic SDH rate is 155 Mbps, while the synchronous transport modules are capable of transmitting PoP - Point of Presence - infrastructure responsible for the at a higher rate (STM-N, where N - 1, 4, 16, 64). connectivity between multiple ISPs. Tbs - terabytes per second. pp - percentage points. Team Building - a set of activities commonly performed in Pricing - the act of pricing of products and services. an outdoor setting aiming at team reinforcement.

PTC - Pacific Telecommunications Council. Terabytes - unit of measure for quantifying volume of data.

Rebranding - process whereby the brand and/or logo of a Tier 1 - Providers of Internet access with an unusual ability service is redesigned with the aim of updating a Company’s to exchange data (in the order of 10 gigabytes/s), directly image or redefine its position. connected by optical fiber to other Tier 1 operators. Each is connected to a second important group of Tiers 2 (ISP RFS - ready for service. level 2) which gives them global coverage with a reliability greater than 99.50%. SACS - South Atlantic Cable System. UPS - Uninterruptible Power Supply. SADC - Southern African Development Community. WACS - Western Africa Submarine Cable linking South SAP - market leader in software and business applications. Africa to the United Kingdom.

SAT-3 - South Atlantic 3/West Africa submarine cable Web surfing – Internet navigation. linking Europe to Asia. Wholesale – bulk sale of products and services to third Solvency Index - sates the Company’s ability to meet its parties. commitments to third parties, by the following formula: Solvency - Equity ÷ Liabilities.

134 GLOSSARY AND ABBREVIATIONS

135 10 CONTACTS

CONTACTS

HEAD OFFICE

Address: Via AL5, Zona ZR6B - Edifício Cellwave – 2.º andar, Talatona – Luanda Sul Estas imagens Phone: (+244) 227 360 006 não têm Website: www.angolacables.co.ao qualidade

SANGANO STATION

Address: Cabo Ledo, Praia de Sangano, Município da Kissama, Luanda – Angola Estas imagens Phone: +244 227 360 005 não têm qualidade

ANGONAP

Address: Avenida Pedro Castro Van Dúnem Loy – Talatona, Luanda – Angola Estas imagens Phone: +244 227 360 004 não têm qualidade

138 139 FAREWELL ANTÓNIO BARTOLOMEU Team Angola and Bille sailboat crew member, fatally injured in the Cape to Rio race accident. 141 THANK YOU

142