annual report 2008 - morningstar, inc

A N N U A L R E P O R T 2 0 0 8

Giving the world a voice

Global Reports LLC

Communication is the process of transfer of information from one person to another person. Communication as an academic disciplinethat relates to all the ways we communicate, so it embraces a large body of study and knowledge. Most babies are born with the physicalability to make sounds, but must learn to speak and communicate effectively. Speaking, listening, and our ability to understand verbaland nonverbal meanings are skills we develop in various ways. Communication: "is the process of exchanging information and ideas. Anactive process, it involves encoding, transmitting, and decoding intended messages. There are many means of communicating and manydifferent language systems. Communication cannot be achieved without words except for a few superficial methods. Real communication,creative communication, communication that can sustain and uplift and inspire, is only possible with words. We all need to express

ourselves, to manifest or convey. In other words, to make known our feelings and opinions. If we believe in something, we need todistribute or extend our thoughts over a wide expanse of space. By spreading our thoughts we are opening a subject to widespreaddiscussion and debate. To transmit is to send a message somewhere. We need to transmit our feelings and emotions to each other to feeland be close to one another. We need to constantly interact and to reveal our emotions and the inner side of ourselves. When we talk toone another, we are helping each other by voice interacting. We are giving each other the possibility to understand ourselves better. Tofeel one another is very precious and is a great support for a good living. Let’s communicate. Let’s imparting or interchange of thoughts,opinions, or information by speech, writing, or signs. Communication can be perceived as a two-way process in which there is an exchange

and progression of thoughts, feelings or ideas towards a mutually accepted goal or direction. Let’s give the world a voice.

Communication is the process of transfer information from one person to another person. Communication as an academic discipline thatrelates to all the ways we communicate, so it embraces a large body of study and knowledge. Most babies are born with the physical abilityto make sounds, but must learn to speak and communicate effectively. Speaking, listening, and our ability to understand verbal andnonverbal meanings are skills we develop in various ways. Communication: "is the process of exchanging information and ideas. An activeprocess, it involves encoding, transmitting, and decoding intended messages. There are many means of communicating and many differentlanguage systems. Communication cannot be achieved without words except for a few superficial methods. Real communication, creative

communication, communication that can sustain and uplift and inspire, is only possible with words. We all need to express ourselves, tomanifest or convey. In other words, to make known our feelings and opinions. If we believe in something, we need to distribute or

extend our thoughts over a wide expanse of space. By spreading our thoughts we are opening a subject to widespread discussion anddebate. To transmit is to send a message somewhere. We need to transmit our feelings and emotions to each other to feel and be close

to one another. We need to constantly interact and to reveal our emotions and the inner side of ourselves. When we talk to one another,we are helping each other by voice interacting. We are giving each other the possibility to understand ourselves better. To feel one anotheris very precious and is a great support for a good living. Let’s communicate. Let’s imparting or interchange of thoughts, opinions, orinformation by speech, writing, or signs. Communication can be perceived as a two-way process in which there is an exchange andprogression of thoughts, feelings or ideas towards a mutually accepted goal or direction. Let ’s give the world a voice.


communication, communication that can sustain and uplift and inspire, is only possible with words. We all need to express ourselves, tomanifest or convey. In other words, to make known our feelings and opinions. If we believe in something, we need to distribute or extend

our thoughts over a wide expanse of space. By spreading our thoughts we are opening a subject to widespread discussion and debate.To transmit is to send a message somewhere. We need to transmit our feelings and emotions to each other to feel and be close to oneanother. We need to constantly interact and to reveal our emotions and the inner side of ourselves. When we talk to one another, we arehelping each other by voice interacting. We are giving each other the possibility to understand ourselves better. To feel one another is veryprecious and is a great support for a good living. Let’s communicate. Let’s imparting or interchange of thoughts, opinions, or informationby speech, writing, or signs. Communication can be perceived as a two-way process in which there is an exchange and progression ofthoughts, feelings or ideas towards a mutua l ly accepted goal or direction . Let ’s give the wor ld a voice.


communication, communication that can sustain and uplift and inspire, is only possible with words. We all need to express ourselves, tomanifest or convey. In other words, to make known our feelings and opinions. If we believe in something, we need to distribute or

extend our thoughts over a wide expanse of space. By spreading our thoughts we are opening a subject to widespread discussion anddebate. To transmit is to send a message somewhere. We need to transmit our feelings and emotions to each other to feel and be close toone another. We need to constantly interact and to reveal our emotions and the inner side of ourselves. When we talk to one another, weare helping each other by voice interacting. We are giving each other the possibility to understand ourselves better. To feel one anotheris very precious and is a great support for a good living. Let’s communicate. Let’s imparting or interchange of thoughts, opinions, orinformation by speech, writing, or signs. Communication can be perceived as a two-way process in which there is an exchange andprogression of thoughts, feelings or ideas towards a mutually accepted goal or direction. Let ’s give the world a voice.

Letter from the Chairman & CEO 2

OTH at a Glance 4

OTH’s Organization 8

Financial Milestones 10

History & Evolution of OTH 12

Board of Directors 14

Corporate Governance Report 18

Corporate Responsibility Report 20

OTA 26

Mobilink 28

Mobinil 30

Tunisiana 32

banglalink 34

Telecel Globe 36

Board Report 40

Financial Statements (EGP) 56

Financial Statements (US$) 104

Subsequent Events in 2009 158

About OTH:

GSM Operations:

2008 Financial Review:

CONTENTS

Global Reports LLC

“2008 demonstrated the strong resilience of our business in

increasingly volatile and challenging global economic conditions.

Most of our businesses, with the exception of Pakistan, have achieved

their target in terms of growth and profitability. In Pakistan the

difficult political, economical and financial conditions combined

with the dramatic devaluation of the Pakistani Rupee have negatively

impacted the strong performance of the rest of the group.

Orascom Telecom has continued to focus on its core strategic goals

of creating shareholder value through the continued growth of its

existing subsidiaries and through selective geographical expansion.

During the course of this challenging year our company has

continued to support and maximise growth for Orascom Telecom

and its main subsidiaries by providing financial, technical and

management resources.

This year Orascom Telecom has exceeded the $5.3 billion turnover

mark, an impressive result which also represents our strongest

performance to date. We have achieved this growth by maintaining

our leadership position in terms of market share in all our main

markets, with the exception of Bangladesh where we have grown

from fourth to second largest operator, and by launching innovative

products and services allowing us to increase our group revenues

and EBITDA by 13% and 15% respectively. It is important to note

however that our underlying growth in local currency terms was in

line with our guidance of 18-20% growth for the year and that the

performance in US Dollars has been negatively influenced by the

sharp devaluation of the Pakistani Rupee against the US Dollar and

by the sharp rise in cost of oil and utilities in Pakistan during Q2 and

Q3. During 2008 most of our operations have continued to exhibit

robust organic growth, with over 7.5 million net subscribers added;

in Pakistan, the slowdown of the economy coupled with our

introduction of a new three month active churn policy has eliminated

from Mobilink’s customer base approximately two million inactive

subscribers. This measure has no impact on our top line. At the end

of 2008 Orascom Telecom provides mobile communications to 78

million subscribers.

Letter from the Chairman & CEO

2

Dear Shareholders,

O T H A N N U A L R E P O R T 2 0 0 8 A B O U T O T H G S M O P E R A T I O N S 2 0 0 8 F I N A N C I A L R E V I E W

Naguib Sawiris, Chairman and CEO

We have continued to actively explore new business opportunities and

have invested only in those where the return on equity is above our

target threshold. The launch of our commercial operations in North Korea,

our participation in the spectrum auction in Canada and recent acquisitions

in Africa through our subsidiary Telecel Globe clearly demonstrate our

drive to continue our long term growth. In December, we launched our

services in North Korea, only 11 months after we were awarded the

license. Our strategy to penetrate countries with high population and

low penetration was also at the base of our decision to participate in

a consortium for the spectrum bid in Canada, which we won in July.

The Canadian market has a mobile penetration level below that of Tunisia

and Algeria and a high population distributed in few large cities. It also

enjoys a cozy competitive environment with very high ARPUs which will

allow us to be highly effective with our low cost pre-paid business model.

Through our dedicated subsidiary Telecel Globe, we have also continued

to actively pursue niche opportunities in countries with low population

and low penetration, and have acquired operations in Burundi, Central

African Republic and, more recently, Namibia. Our strategy to manage

these smaller operations through Telecel Globe has allowed Orascom

Telecom’s management to focus on its core operations while allowing

these smaller operations to benefit from the strong purchasing synergies

of the Weather group. As we had announced at the beginning of the

year, we are also going ahead with our plan to focus on our GSM operations

and to dispose of our non-core assets: the sale of OrasInvest and the

recent sale of M-Link are a part of this strategy and have generated

shareholder value by monetizing assets undervalued by the market.

In 2008 we continued to pursue our strategy of shareholder remuneration

through two tender offers and a buyback program for Orascom Telecom

shares. Including the dividend distribution in May Orascom Telecom

returned over US$2 billion to its shareholders this year.

2009 is a challenging year with economic growth slowing further across

the globe. The markets in which OTH operates will suffer from the

economic downturn but probably less so than the more mature and

developed economies as a result of lower penetration levels and limited

fixed-line coverage which will ensure the mobile remains the key

communication means for large portions of the population.

In 2009, we believe that all our markets, except Pakistan, will continue to

show robust performance. In Pakistan we will remain cautious in our

investments in the country until we see early signs of recovery. We are

on track for the implementation of our $1 billion Free Cash Flow

optimization program that we have announced last quarter. In addition

we have recently initiated a cost reduction program aiming at reducing

operating expenses by 10% across the group which would further solidify

our Free Cash Flow optimization program and strengthen our margins.

The main areas of savings are expected in network, marketing,

administration expenses and human resources.”

3

This year Orascom Telecom has

exceeded the $5.3 billion turnover mark,

an impressive result which also represents

our strongest performance to date. ”

“

Letter from the Chairman & CEO

OTH at a Glance

Global Reports LLC

4

Financial Highlights


* Management View

Subscribers

in millions

Revenues

in US$ millions

EBITDA

in US$ millions

(1) Based on a weighted average for the outstanding number of Shares

of 187,335,132 GDRs in 2008

Main Financial Data

(according to IFRS)

2007 2008

in US$ million in US$ million

Revenues 4,727 5,327

EBITDA 2,073 2,384

EBITDA Margin 43.8% 44.7%

Net Income 2,021 431

Earnings per GDR (US$)(1) 9.69 2.30(1)

CAPEX 1,565 1,576

Net Debt 3,980 5,084

+13%

4,727

2007 2008

5,3272,073

2007

+15%

2008

2,384+11%

2008

7870

2007

OTH at a Glance

5Letter from the Chairman & CEO

OTH at a Glance

Shareholder Information

Ownership StructureWeather Investments S.p.A. directly and indirectly owns approximately

52.1% of the shares of OTH, and 47.9% is public free float.

Buyback Shares & Cancellation of SharesIn April 2008, the Company announced a share buyback program

of up to 106 million of its ordinary shares, including those represented

by GDRs. OTH completed this announced buyback by purchasing

105,999,773 ordinary shares (equivalent to 21,199,955 GDRs) in May

2008. In June 2008, the Company announced a share buyback

program of up to 12 million of its ordinary shares (equivalent to

2,400,000 GDRs). The share buyback was completed in July 2008

when the Company bought back 11,999,403 ordinary shares

(equivalent to 2,399,881 GDRs). In February 2008, the Company had

decided to cancel 61,900,000 ordinary shares (12,380,000 equivalent

GDRs), which was completed in June 2008. After the cancellation,

OTH's issued share capital was 1,028,100,000 shares (equivalent to

205.62 million GDRs). In August 2008 at an EGM of the Company,

it was resolved to reduce the issued capital of the Company by

canceling the Company's treasury shares, by the amount equal to

128,697,126 shares (equivalent to 25,739,425 GDRs), which includes

the shares bought back in the course of the May and June tender

offers. After this reduction the total number of fully paid up shares

of the Company is 899,402,874. In August 2008, the company

announced a potential on-market GDR and local share repurchase

plan of up to 44.9 million shares (equivalent of up to 8.9 million

GDRs). In total as of December 31st, 2008 OTH holds 3,536,340 GDRs

on the LSE; the equivalent of 17,681,700 shares.

Share Ownership Program for EmployeesAs part of its commitment to motivate and retain its key employees,

OTH offers an ESOP plan, having an ownership of approximately 1%

of OTH shares.

Paid up CapitalAs at December 31st, 2008, OTH’s paid up capital was EGP 899,402,874,

divided into 899,402,874 shares, each with a nominal value of EGP 1.

DividendsThe Board of Directors of OTH agreed to distribute dividends to its

shareholders during 2008. In April, 2008 a dividend payment of EGP

1.0 per share (EGP 5.0 per GDR share) was distributed.

Dividend PolicyOTH’s primary goal is to maintain sufficient reserves and liquidity to

ensure its operational and financial needs and to maintain a strong

growth profile of its business. OTH intends to operate a progressive

distribution policy based on what are believed to be sustainable

levels of dividend payments supplemented by variable distribution

to shareholders of any excess cash resources. Consequently, dividends

will vary from year to year.

Share Price PerformanceAt the beginning of 2008, the OTH stock was quoted at EGP 92.74

on CASE. The highest quotation during the year was EGP 93.23, and

the lowest was EGP 21.66. At year end, the quotation price was EGP

30.46; this amounted to a 67.2% decrease in value. The market value

as of December 31st, 2008 was EGP 26.9 billion.

OTH GDRs listed on the London Stock Exchange at the beginning of

2008 were quoted at US$ 83.8. The highest quotation during the year

was US$ 83.8, and the lowest was US$ 19.27. At year end, the quotation

price was US$ 27.29; this amounted to a 67.4% decrease in value. The

market value as of December 31st, 2008 was US$ 4.8 billion.

TradeOTH is traded on both the Egyptian Exchange and on the London

Stock Exchange under the symbols (ORTE.CA, ORAT EY) and (ORTEq.L,

OTLD LI), respectively.

DisclosureTo ensure full disclosure and transparency, OTH reports its Holding

and Consolidated financials on a quarterly basis applying both the

Egyptian Accounting Standards (”EAS”) and US$ consolidated financial

statements in accordance with the International Financial Reporting

Standards (”IFRS”).

Global Reports LLC

About OTH

Global Reports LLC

8



By December 31st 2008, the total headcount of OTH Group was 17,497, of which 241were working at the Holding company.

9OTH’s Organ izat ion

Financia l M i lestones

H istor y & Evolut ion of OTH

Board of Di rec tors

Corporate Governance Repor t

Corporate Respons ib i l i t y Repor t

Naguib Sawiris, Chairman & CEO

OTA Tamer El Mahdy

Mobilink Rashid Khan

Mobinil Hassan Kabbani

Tunisiana Yves Gauthier

banglalink Ahmed A. Doma

Telecel Globe Kai Uebach

Koryolink Ezz Heikal

Subsidiary CEO

GSM Subsidiaries

Corporate Treasury

Officer

Amr Abaza

Corporate Accounting

Officer

Walid Bedair

Corporate Finance

Officer

Karim Nasr

Budgeting, Planning

& Control Officer

Ahmed Halawa

Group Chief Financial

Officer

Aldo Mareuse

Investor Relations

Director

Stefano Songini

Internal Audit & Revenue

Assurance Officer

Mohamed Naguib

General Counsel

Ragy Soliman

VP, HR & Administration

Wafaa Lotaief

Vice Chairman

Emad Farid

PR & Corporate

Communications Director

Manal Abdel Hamid

Business Development

Officer

Khaled Ismail

Corporate Strategy

Senior Director

Ibrahim Karam


General Counsel

Ragy Soliman

GSM Services Officer

Khaled Ismail

PR & Communication

Senior Director

Sabrine El Hossamy

Internal Audit

Senior Director

Walid Bedair

VP HR & Administration

Wafaa Lotaief

Corporate Treasury

Officer

Amr Abaza

Corporate Accounting

Officer

Mohamed Naguib

Corporate Finance

Officer

Karim Nasr

Budgeting, Planning

& Control Officer

Ahmed Halawa

Group Chief Financial

Officer

Aldo Mareuse

Investor Relations

Director

Stefano Songini

Group Chief Operating

Officer

Emad Farid

Chief Commercial

Officer

Ossama Bessada

Network Senior

Director

Mohamed Ghidan

IT Senior Director

Moataz El Sayed

Naguib Sawiris, Chairman & CEO

Group Chief Operating

Officer

Khaled Bichara

Commercial Strategy

Senior Director

Ashraf Halim

COPS Development

Senior Director

Yasser Maher

Technical Senior

Director

Mohamed Ghidan

IT Senior Director

Moataz El Sayed

Regulatory Affairs

Director

Hisham Moafi

Global Reports LLC

10

Financial Milestones

OTH receives first mobile

license in the Democratic

People’s Republic of Korea

(DPRK).

OTH EGM approves the

cancellation of 61.9 million

treasury shares bringing the

total number of fully paid

shares to 1,028 million.

OTH Secures US$ 2.5bn

Committed Bank Facility.

OTH announces US$1.6 billion

tender offer for its own shares.

OTH announces dividend

payment of EGP 1.0 per share

(EGP 5.0 per GDR).

OTH announces US$186

million tender offer for

its own shares.


January

2008

February

2008

April

2008

June

2008

OTH announces

participation in consortium

that provisionally won AWS

spectrum in Canada.

Telecel Globe finalizes

acquisition of mobile

operations in Burundi and

Central African Republic.

11

OTH EGM approves

cancellation of 128,697,126

treasury shares bringing the

total number of fully paid

shares to 899,402,874.

OTH announces potential

on-market GDR and local

shares repurchase plan of up

to 8.9 million GDRs (44.9

million shares) over a period

of 12 months.OTH Announces Sale of

OrasInvest, in line with

stated strategy to focus on

GSM business.

OTH inaugurates the first

3G Mobile Network in

the Democratic People’s

Republic of Korea (DPRK).

OTH’s Organization


Histor y & Evolution of OTH

Board of Directors

Corporate Governance Report

Corporate Responsibil ity Report

July

2008

August

2008

November

2008

December

2008

Global Reports LLC

13OTH’s Organization


History & Evolution of OTH

Board of Directors



• In early 1998GSM operations were launched by acquiring 51% of ECMS. (” Mobinil”)with France Telecom and Motorola.

• In September 1999Purchase of a controlling stake in JMTS-Fastlink in Jordan.

• In March 2000Greenfield license in Yemen was acquired.

• In April 2000OTH purchased a 38.6% stake in PMCL- Mobilink in Pakistan and an 80% stake in Telecel, including 11 licenses in Benin, BurkinaFaso, Burundi, CAR, the Ivory Coast, the Democratic Republic ofCongo, Gabon, Togo, Uganda, Zambia and Zimbabwe. Moreover, in early 2000, Telecel acquired a new GSM 900 license in Niger.

• In July 2000OTH was floated on the Cairo & Alexandria Stock Exchange andthe London Stock Exchange.

• In February 2001BOT contract was awarded in Syria.

OTH acquired Motorola’s stake in Fastlink in Jordan, in ECMS in Egyptand in PMCL in Pakistan, and as a result, increased its stake in Fastlinkto 91.6%, in ECMS to 31.26% and in PMCL to 68.69%.

• In July 2001OTH acquired a Greenfield license in Algeria.

• In August 2001OTH acquired a further 20% stake in PMCL and, as a result, increasedits ownership to 88.69%.

• In March 2002OTH acquired a Greenfield license in Tunisia.

• In October 2002OTH entered into a joint venture with Wataniya Telecom to operate its GSM license in Tunisia.

• In October 2003OTH was awarded a Greenfield license in Iraq’s central region asa result of a competitive bidding process.

• In July 2004OTH agreed to renew the license of its Pakistani GSM subsidiary,Mobilink, for a further 15 years after the expiration of its previouslicense in July 2007 and ending in July 2022.

• In September 2004OTH purchased 100% of a GSM operation in Bangladesh and re-branded it as "banglalink".

• In May 2005OTH acquired additional equity stakes in OTA in Algeria and in Tunisiana in Tunisia to reach 87.66% and 50%, respectively, through a series of transactions.

• In July 2005OTH acquired all minorities in its GSM operations in Iraq.

• In December 2005OTH acquired a strategic stake of 19.3% in Hutchison Telecom-munications International Limited.

• In November 2006OTH acquired additional equity stakes in OTA in Algeria to reach96.81%. In October, OTH acquired 7.91%, and in November afurther stake of 1.21% was added.

• In June 2007OTH acquired all remaining minority stake in PMCL, as a resultOTH indirectly owns 100% of the share capital of Mobilink.

• In January 2008OTH was granted a Greenfield license in the Democratic People’sRepublic of Korea, with a 75% ownership.

• In July 2008OTH announced its participation in a consortium that hasprovisionally won AWS spectrum in Canada to create a newCanadian owned and controlled wireless operator together with Globalive Communications Corporation.

• In July 2008Telecel Globe, a majority owned subsidiary of OTH, finalized theacquisition of telecom operators U-Com in Burundi and Telecelin the Central African Republic.

• In January 2009Telecel Globe, a subsidiary of OTH, announced the acquisition ofmobile telecommunications operator Cell One in Namibia.

OTH was awarded the management contract of Lebanese mobiletelecommunications operator Alfa.

• In January 2002OTH started restructuring its 12 operations in sub-Saharan Africa under Telecel.

• In September 2002SabaFon in Yemen was divested.

• In December 2002OTH sold Fastlink in Jordan for US$ 423 million.

• In May 2003OTH finalized the sale of seven GSM assets in sub-Saharan Africa.

• In February 2004OTH announced the sale of 51.7% equity stake of Telecel Loteny in the Ivory Coast.

• In September 2005OTH closed the sale of Oasis Telecom in the Democratic Republic of Congo.

• In December 2005OTH signed a definitive agreement to sell its GSM operation in Congo Brazzaville, Libertis Telecom ("Liberits").

• In December 2007OTH completes the sale of the remaining stake in HTIL.OTH sold its Iraqi operations Iraqna for US$ 1.2 billion.

• In November 2008OTH announced the sale of 100% of OrasInvest

• In January 2009OTH announced the sale of 100% of M-link

After operating 21 licenses in Africa and the Middle East, OTH decided to divest smaller non-core assets

and focus on its core operations to build value:

OTH entered into the GSM business in 1998 through a series of acquisitions:

12

History and Evolution of the Company


Orascom Telecom

Holding S.A.E. ("OTH")

is part of the Orascom group of companies,

which was established in 1976. Orascom

entered the field of Information Technology

and Telecommunications by trading and

distributing IT and telecom equipment in

Egypt. It became the market leader

representing the most important companies

in these sectors such as Microsoft, Hewlett

Packard, Compaq, IBM, Lucent Technologies

(AT&T), Oracle and Novell.

Orascom built its solid foundations

in IT and telecommunication hardware over

a period of ten years. In 1994, it acquired an

interest in Egypt’s first ISP, InTouch, marking

its first step in offering services in the

communications marketplace. As the

communications sector in Egypt began to

be privatized, Orascom continued to add

more service companies to its portfolio, and

was a participant in a joint venture that was

awarded Egypt’s first license for VSAT

technologies, and a lead member of a

consortium formed to create Egypt’s first

private payphone network. By 1997,

Orascom was in a position to participate in

the bidding process for a GSM license in

Egypt, having proven itself in the market-

place as an IT and telecom hardware leader,

in addition to building up the know-how

and skills in managing large scale projects

and understanding local market conditions.

On July 27th, 1997, OTH was incorporated

to consolidate the telecommunications and

technology interests of the Orascom family

of companies and the controlling share-

holders, the Sawiris family. By 1998, OTH was

the only company in Egypt with licenses in

all three privatized sectors: wireless, fixed

line payphones and VSAT technologies.

Global Reports LLC

14

Board of Directors

Naguib Sawiris

Executive Board Member

Chairman & CEO - Orascom Telecom

Holding S.A.E.

Since joining Orascom, the family business,

in 1979, Naguib Sawiris has continuously

contributed to the growth and

diversification of the company into what

it is today – one of Egypt’s largest and most

diversified conglomerates. The Orascom Group is the country’s largest

private sector employer and has the largest market capitalization on

the Cairo & Alexandria Stock Exchange. Mr. Sawiris established and

built the railway, information technology, and telecommunications

sectors of Orascom. The success of these ventures as well as the other

sectors of the company led to the management’s decision to split

Orascom into separate operating companies: Orascom Telecom

Holding (OTH) www.orascomtelecom.com, Orascom Construction

Industries (OCI) www.orascomci.com, Orascom Hotels & Development

(OHD) www.orascomhd.com and Orascom Technology Systems (OTS)

www.ots.com.eg. Orascom Telecom Holding S.A.E.(OTH) was

established, in late 1997, and since then, has been chaired and led

by Mr. Sawiris.

As Chairman and CEO of Orascom Telecom Holding (OTH), Mr.

Sawiris has dynamically led the growth of the company, to be the

leading regional Telecom player and among the best regarded

Emerging Markets players in the world. OTH operates GSM networks

in seven different countries in the Middle East, Africa, and South

Asia (Egypt, Bangladesh, Pakistan, Algeria, Tunisia, Zimbabwe, and

North Korea ) with 78 million subscribers as at December 2008 . In

addition, it operates a number of leading Internet Service Providers

(ISPs), as well as value added services and handset distribution

companies.

In January 2003, and as a recognition for its regional role in the

telecommunication industry, Orascom Telecom represented by Mr.

Sawiris, was appointed as Board Member of the GSM Association.

The appointment came as an acknowledgement of the group’s

position as one of the largest ten operators based on subscriber

numbers.

After founding Weather Investments in early 2005, Mr. Sawiris led

the landmark leveraged buyout of a majority stake of Wind

Telecommunications in Italy and took over management as its

Chairman in late summer 2005.Almost a year after this important

step, he led Weather Investments’ acquisition of Tim Hellas in Greece

and re-branded it under the name “Wind Hellas“. In November 2006,

Wind Telecommunications floated the largest ever PIK debt in

Europe with proceeds used to complete the buyout of Wind from

ENEL resulting in the Sawiris Family owning 98% of Weather. These

latest acquisitions mark a new milestone in Mr. Sawiris’ long and

successful career journey in leading the international growth of

both Orascom Telecom and Weather Investments.

At international and regional levels, Mr. Sawiris serves on the

following Boards, Committees and Councils:

• Member of the International Advisory Committee to the NYSE

Board of Directors (IAC) since November 2005.

• Board member of the International Advisory Board to the National

Bank of Kuwait.

• President of the German-Arab Chamber of Industry and Commerce

for 2008-2009.

• Board member of the Supreme Council of Sciences and Technology

formed by a presidential decree issued by Egyptian President

Hosni Mubarak. The council's board includes a galaxy of scientists

including Nobel laureate Dr. Ahmed Zewail, Dr. Farouq el-Baz and

Dr. Magdy Yaqoub.

• Co-chair, the Egyptian Italian Business Council .

• Board member on both the Board of Trustees and the Board of

Directors of the Arab Thought Foundation.

• Board of Trustees member of the French University in Cairo.

• Board member of the Egyptian Council for Foreign Affairs.

Mr. Sawiris is also the recipient of numerous honorary degrees,

industry awards and civic honors, including the “Legion d’honneur“

(the highest award given by the French Republic for outstanding

services rendered to France) and the recipient of prestigious

“Sitara-e-Quaid-e-Azam” award (conferred upon Mr. Sawiris in 2006

by General Pervez Musharref for services rendered to the people

of Pakistan in the field of telecommunication, investments and

social sector work) .

Mr. Sawiris holds a Diploma of Mechanical Engineering with a

Masters in Technical Administration from the Swiss Institute of

Technology, ETH Switzerland and a Diploma from the German

Evangelical School, Cairo, Egypt. Mr. Sawiris is married, with four

children and lives in Cairo, Egypt. He speaks Arabic, English, German

and fair French.

O T H A N N U A L R E P O R T 2 0 0 8 A B O U T O T H G S M O P E R A T I O N S 2 0 0 8 F I N A N C I A L R E V I E W 15OTH’s Organization



Board of D irectors



Ahmed Maher El Sayed

Non-Executive Board Member

Born September 14, 1935, graduated from

the Faculty of Law, Cairo University in 1956.

He joined the Foreign Ministry in 1957 and

served in Zurich, Kinshasa and Paris.

Moreover, he served in the departments

of Arab Affairs, Consular Affairs and

European Department. He served in the

Office of the President’s National Security Advisor from 1972-1974,

as Chief of Cabinet of Minister of Foreign Affairs from 1974-1980,

as a member of the Egyptian delegation at the Camp David

negotiations in 1978 and as a member of the Taba arbitration team.

Mr. El Sayed held the following positions:

Ambassador to Portugal (1980-1982), Ambassador to Belgium and

to the European Community (1983-1984), Head of Policy Planning

Department (1984-1986), Head of Legal Department (1987-1988),

participated in negotiations about Taba and arbitration procedures,

Ambassador to the USSR and then Russia (1988-1992), Ambassador

to the USA (1992-1999), Head of the Arab League Fund for Africa

(2000-2001), and Minister of Foreign Affairs (2001-2004). He also

publishes weekly articles in the leading newspaper “Al Sharq Al Awsat”.

Ajit Nedungadi


Mr. Ajit Nedungadi is a Managing Director

at TA Associates, Inc. He serves as the Director

at the firm’s London office and focuses on

recapitalizations, management buyouts, and

minority equity investments in growth

technology companies in Europe, India, and

other emerging markets. Previously, Mr.

Nedungadi worked at Trilogy Software. He also served as an Associate

at Investcorp International, where Mr. Nedungadi specialized in

leverage buyout transactions. He was an Analyst in the Mergers and

Acquisitions Department of Credit Suisse First Boston and a Director

at Drive Assist and SmartStream Technologies. Mr. Nedungadi is

currently a Director at ION Trading Group, Alma Lasers, eDreams,

Sophos and M and M Direct. He is an active investor at Jupiter

International and Idea Cellular. He received an MBA in 1998 from

Harvard Business School, where Mr. Nedungadi was a Baker Scholar.

He has also earned a B.S., magna cum laude, Phi Beta Kappa, in

Electrical Engineering and Economics in 1992 from Yale University

François Dopffer


Mr. Dopffer is a former French Ambassador

to Turkey (1991-96) and to Egypt (2000-2002).

He has extensive knowledge of United States,

North African, Middle Eastern and Asian

countries where he served in different

positions. He holds degrees in political

science (IEP Paris), public management (ENA)

and law (Paris University). In 2008, he has published a book of political

analysis, The Turkish Imbroglio.

Hassan Abdou


Mr. Abdou is currently Chief Executive Officer

of Weather Investments II, which was formed

in 2005 as the majority owner of Weather

Investments, a global telecom company

owning and controlling Orascom Telecom,

Wind Telecommunications in Italy and most

recently TIM Hellas in Greece. Mr. Abdou is

an active board member in Weather, Wind and OTH and in addition,

sits on the board and executive committees of several IT, telecom

and media companies in Europe, Egypt and the Middle East.

Prior to his involvement with the Orascom Group which started in

2003, he was Chief Investment Officer of EFG-Hermes Private Equity

and the Horus Private Equity Fund where he was Fund Manager since

1997. In 1995 and until returning to Egypt, he was a consultant in

the New York office of the Boston Consulting Group where he worked

with Fortune 500 companies in such areas as Telecommunications,

Media & Entertainment, Energy and Pharmaceuticals. Mr. Abdou had

begun his career with Exxon Company where he worked for several

years as a Project Controls Engineer.

In addition to his activities in the region, Mr. Abdou is a member of the

Advisory Board of the New York Private Placement Exchange (”NYPPE”).

Mr. Abdou received his Bachelor of Science in Mechanical

Engineering from the University of Pennsylvania and a Bachelor of

Science in Economics from the Wharton Business School. In addition,

he received his MBA from the Harvard Business School.

Global Reports LLC

16

Iskander N. (Alex) Shalaby


Chairman, The Egyptian Company

for Mobile Services (Mobinil)

On September 1, 2008 Alex Shalaby was

appointed Chairman of the Egyptian

Company for Mobile Services (Mobinil) by

Board consensus, following his

appointment as its President and CEO in 2005. This step came as

a result of Shalaby's remarkable achievements at Mobinil over the

past three years where the company has witnessed continued

market share leadership, tripled the subscriber base from six to 19

million, doubled the revenues and increased net profits by 30%. As

former Executive Vice President of Orascom Telecom Holding (OTH)

and continuing on its board, Shalaby’s regional experience proved

invaluable as OTH continues to expand its global footprint, signaling

the need to keep him as head of Business Development.

Mr. Shalaby was Chief Officer of Regulatory Affairs for Mobinil from

1998 to 2005 and was responsible for helping with the licensing

and regulations required in setting up Mobinil as the first mobile

operator in Egypt. Mobinil is partly owned by OTH and France

Telecom/Orange, a balancing challenge for Shalaby to maintain

the trust and confidence of the two major shareholders as well as

the Company’s thousands of public shareholders.

Mr. Shalaby came to Mobinil from Washington, DC where he was

AT&T Director for Public Affairs as the company’s link to law makers

on Capitol Hill with responsibility for lobbying the executive branch

of the U.S. government. He helped in developing more liberalization

of the telecoms sector both domestically, as well as internationally

for emerging nations of the Middle East, Africa, Eastern Europe and

South Africa through the relevant multi-lateral agencies. It was during

these years that he served on the boards of the American Chamber

of Commerce becoming its president during the period 1991 – 1992

and the Fulbright Commission, as his AT&T responsibilities shifted

from local to regional, with particular focus on North Africa and the

Levant. Between 1993 and 1995, Mr. Shalaby was Regional Director

for International Public Affairs for AT&T, based in Cairo, Egypt, where

he was the principal interface with key agencies within the govern-

ments in the region on matters impacting AT&T’s operations.

Mr. Shalaby started with data communications, moving between

posts in California and New Jersey, where he worked with Bell Labs.

Shalaby then moved to become Managing Director for AT&T in

Egypt, and General Manager for the Middle East and North Africa

region until 1993. He held a variety of technical and managerial

positions involved with AT&T start-ups in the Gulf (1977–1980). In

1977 he moved to Saudi Arabia to help launch the first AT&T

microwave project before moving on to Kuwait and the UAE. Once

again, during this period he established and secured a solid position

for AT&T in the Gulf region.

In 1966, Mr. Shalaby graduated with a Bachelors of Science in

Electrical Engineering from the University of Alexandria and started

his first job with Egypt Air as Radio and Radar Engineer for two

years. In 1969, he emigrated to the United States, where he eventually

settled in San Jose, California and started his first job at Pacific

Telephone and Telegraph Company, a subsidiary of AT&T, at the

time. During this time he earned a Masters of Science in Electrical

Engineering and Computer Science from San Jose State University.

Khaled Bichara


Group Chief Operating officer

Effective April 1, 2009 Khaled Bichara has

been appointed Group Chief Operating

Officer of Orascom Telecom Holding. In this

capacity, Mr. Bichara will be leading the

Technical, IT, Regulatory Affairs, Commercial

and Marketing Communication Departments.

Mr. Bichara brings over 15 years of diversified entrepreneurial and

management experience as the Chief Operating Officer of Wind

Telecomunicazioni S.p.A. in 2006 and heading the fixed line and

portal business unit from 2005. He played a key and instrumental

role in the successful turnaround of WIND from a loss making company

to one of the best performing mobile, fixed line and broadband

integrated operators in Europe in a record time span of three years.

O T H A N N U A L R E P O R T 2 0 0 8 A B O U T O T H G S M O P E R A T I O N S 2 0 0 8 F I N A N C I A L R E V I E W 17

Prior to joining Wind, Khaled was the cofounder, Chairman and CEO

of LINKdotNET (”LDN”), the largest private Internet Service Provider

(”ISP”) in the Middle East. Before starting LINKdotNET, he founded

Micro labs, a software development firm.

Mr. Bichara became Chief Internet Strategist of Orascom Telecom in

2000 and has been a member of the board of directors of OTH since

2003. He was also a board member of WIND Italy, WIND Hellas, MOBI

mtld ltd, the mobile domain company and multiple other boards.

In December 2003, Business Today chose Mr. Bichara among 108

executives as the first ever “Young Executive of the Year”.

Mr. Bichara earned his Bachelor of Science degree from the American

University in Cairo. He is an active member of the Software

Community in the Middle East; a founding member of the Egyptian

Software Association, Internet Society of Egypt and the Egyptian

Electronic Commerce Committee. Bichara is also member of the

Advisory Board for the Department of Computer Science and

Engineering at the American University in Cairo .

Khaled Ismail


GSM Services Officer

Dr. Khaled Ismail is currently the GSM

Services Officer at Orascom Telecom

Holding, in charge of mobile services and

strategic directions for convergence

including Wimax.

Prior to that, Dr. Ismail was the Senior Advisor of the Egyptian

Minister of CIT, responsible for technology development.

Dr. Ismail is the CEO of SySDSoft, a company focused on the design

of wireless digital communication systems. Prior to that, he was

with the IBM Research Center in NY. He is the recipient of the IBM

Invention Achievement Award and the IBM Outstanding Technical

Achievement Award in 1997 and 1995, respectively. He is also the

recipient of the IEEE Honorary Society (Eta Kapa Nu), Best Young

Electrical Engineer in the US Award in 1994, and the Shuman Award

for the Young Arab Engineer in 1995.

Dr. Ismail received his Ph.D. from the Massachusetts Institute of

Technology in 1989. He is an IEEE Fellow since 1997. He has published

over 160 papers in international journals and holds 22 US patents.

Onsi Sawiris


Mr. Sawiris is an Egyptian citizen born in

Egypt in 1930 and holds a Bachelor of

Science degree in Engineering from the

Cairo University.

Mr. Sawiris serves as the Chairman of

Orascom Construction Industries (OCI) and Orascom Trading Co.,

Mr. Sawiris is a Board Member in Orascom for Hotels & Development

(OHD), Orascom Technology Systems (OTS), and Orascom Telecom

Holding (OTH).

He founded Orascom in 1976 as a general contracting and trading

company. By the early 1990s, Mr. Sawiris had established Orascom

as a leading private sector contractor by working in partnership

with international companies pursuing projects in Egypt. He oversaw

the diversification of the business into new areas like tourism and

information technology and its enormous growth and success to

become Egypt’s largest conglomerate operating under three major

operating companies OTH, OCI and OHD.

Mr. Sawiris also serves as a Chairman of the Board of Directors for

Pharaonic AIG Insurance Co, the Egyptian Scandinavian Business

Association and YMCA in Cairo.

In May 2008 Mr. Sawiris was made Commander in the Order of the

Crown from his Majesty the King of Belgium ALBERT II.

In April 2007, he was awarded the Swedish Royal Order of the Polar

Star in the presence of HRH Princess Victoria of Sweden. In November

1998, Mr. Sawiris was awarded L'ORDRE DE LEOPOLD from his

Majesty the King of Belgium ALBERT II.




Board of D irectors



Global Reports LLC

The Company is committed to achieving and maintaining the highest

standards of corporate governance. The Company considers effective

corporate governance essential to enhancing shareholders’ value

and protecting stakeholders’ interests. Accordingly, the Board attributes

a high priority to identifying and implementing appropriate corporate

governance practices to ensure transparency, accountability and

effective internal controls. The Board continued to further its

commitment to corporate governance through reviewing existing

processes and, where appropriate, developing new ones. The

Company substantially complies with the practices enunciated in

the Egypt Code of Corporate Governance and will strive to comply

with these and other appropriate standers and governance guidelines.

The key corporate governance principles and practices are as follows:

The General Assembly

The General Assembly (”GA”) of the Company is the ultimate

governing body of the Company. In summary, the (”GA”):

• includes all the shareholders of the Company;

• takes its decision by voting among shares represented in the

meeting. The voting rule is: 1 share = 1 vote for all shares indifferently;

• holds at least one ordinary meeting per year and may have an

extra-ordinary meeting as needed;

• The responsibilities of the GA are based on the laws and Company

statues;

• It appoints the Board, approves the financial results, appoints the

external auditors, and approves dividends distribution.

Board of Directors

The Board has the responsibility to work to enhance the value of

the Company in the interest of the Company and its shareholders.

In summary, the Board:

• is engaged in active and continuous strategic planning and

approves corporate strategies, including the approval of

transactions relating to acquisitions and divestments, and capital

expenditure above delegated authority limits;

• reviews and approves the corporate plan for the forthcoming year

and following two years, including the capital expenditure and

operating budget, and reviews performance against strategic

objectives;

• assesses business opportunities and risks on an ongoing basis

and oversees the Company's control and accountability systems;

• monitors and approves the Company's financial reporting and

dividend policies;

• appoints and has the authority to remove the Chief Executive

Officer and approves the recommendations of the Human Resources;

• ratifies the appointment and has the authority to remove the

Chief Financial Officer and Group General Counsel and appoints

the Company Corporate Secretary; and

18



• oversees succession planning for the Chief Executive Officer and

senior management.

The Chairman and the Chief Executive Officer establish meeting

agendas to ensure adequate coverage of key issues during the year.

In addition workshops and strategy meetings take place. Executives

and other senior people regularly attend Board meetings and are

also available to be contacted by Directors between meetings.

Composition of the Board of Directors

Chairman & Managing Director

Naguib Sawiris

Board Members

Naguib Sawiris (Executive-Board Member)

Ahmed Maher (Non-Executive Board Member)

François Dopffer (Non-Executive Board Member)

Hassan Abdou (Non-Executive Board Member)

Iskander Shalaby (Executive-Board Member)

Khaled Bichara (Non-Executive Board Member)

Khaled Ezz El-Din Ismail (Executive-Board Member)

Ajit Nedungadi (Non-Executive-Board Member)

Onsi Sawiris (Non-Executive Board Member)

In addition to three Alternate Board Members;

Hythem El-Nazer

Michael Cole

Salim Nathoo

Secretary to the Board

Ragy Soliman

The above Board Members classification is based on the Egyptian

Corporate Governance code. The latter did not specify the criteria

for independent directors that would allow the Company to

benchmark against, yet in our opinion and based on internationally

recognized best practices, a number of our directors would qualify

as independent directors bringing to the company the highest

possible standing from both a personal and professional standpoint.

Committees

• The Committee System of the Company is one of the most

important tools for the management and the operational

integration of the Company.

It has recently been revised to:

• Monitor the implementation of strategies and the development

of plans and results.

• Ensure the overall coordination of business actions and the

management of the relative cross-over business issues.

• Build up the necessary operating synergies between the various

functions involved in the technological, business and support

processes.

• Support the integrated development of the innovation processes

of the Company.

• In particular, the new Committee System of the Company includes:

Executive Committee

The objective of the Executive Committee is to review and, where

appropriate, authorize corporate action with respect to most matters

concerning the Company’s interests, strategy and management of

its business and subsidiaries during intervals between meetings of

the Board of Directors, and generally perform such duties as may

be directed by the Board of Directors from time to time.

Investment Committee

The objective of the Investment Committee is to assist the Board

in reviewing the Company's investment policies, strategies,

transactions and performance, and in overseeing the Company's

capital and financial resources. The Committee has resources and

authority appropriate to discharge its responsibilities, including the

authority to retain experts or consultants.

Audit Committee

The objective of the Audit Committee is to assist the Board in

fulfilling its oversight responsibilities by reviewing (i) proposed

financial plans; (ii) the financial information provided to shareholders

and others; (iii) systems of internal controls which management

and the Board of Directors have established; and (iv) the audit

process, including both internal and external audits. The Audit

Committee interacts directly with the independent auditor to ensure

the independent auditor’s ultimate accountability to the Board and

the Committee, as representatives of the shareholders, and is directly

responsible for the appointment, compensation and oversight of

the independent auditor.

Remuneration Committee

The objective of the Remuneration Committee is to ensure that

the Company has a formal process of considering management

and directors’ remuneration that is, executive directors should play

no part in decisions on their own remuneration, there should be

an alignment of the remuneration schemes and the performance

objectives of the Company, and the remuneration schemes should

attract and retain talented individuals.




Board of Directors



Global Reports LLC

OTH Takes on Human Trafficking

For those of us who have heard the term “Human Trafficking” before,

but are not quite aware what it means in practical terms – it is the

transportation, coercion and exploitation of men, women and

children, typically for sex or labor. For example, when a child is

kidnapped or sold by his parents in a war-torn or impoverished

country, is taken away (often across international borders) and

exploited for cheap labor or sex, this is human trafficking. The US

state department believes that there are roughly 600,000 to 800,000

men, women and children trafficked across international borders

every year and the sexual exploitation of women and children is

estimated to generate $28 billion annually. The figures are mind

boggling and the reality is heartbreaking.

OTH has teamed up with the Suzanne Mubarak Women’s International

Peace Movement (SMWIPM) in the global fight against human

trafficking. SMWIPM is an international non-governmental organization

dedicated to the enhancement of peace in the Middle East by trying

to affect the conditions beneficial for a sustainable peace.

As a first major contribution to the fight, Orascom Telecom Holding,

along with Manpower, a global human resources giant based in

the US, sponsored a Public Service Announcement (PSA - similar

to a TV commercial but without a commercial focus) that was

created by Synergy Advertising, directed by Marwan Hamed (The

Yacoubian Building) and produced by Mayada El Hiraki (Magic Arm

Productions). OTH did this in support of the SMWIPM and worked

closely with them to make sure that the PSA supported their aims

and would be useful to them in their battle against this global

scourge. This international effort managed by OTH resulted in an

intriguing film which has received a lot of praise.

Chairman, Naguib Sawiris, also took part in a panel in Zurich,

Switzerland organized by the Geneva Center for the Democratic

Control of Armed Forces (DFCAF) and SMWIPM to discuss this form

of modern day slavery and the role of business in combating it.

According to OTH Campaign Evaluation conducted by CNN

Research, the Human trafficking Campaign is seen by an estimated

8,231,000 people (Reach 000’s) of the 45,799,000 people involved

in the survey. This equates to 18.0% (Reach %) of all the respondents

in the survey. The frequency of the campaign indicates the number

of times each person will see a spot. On average the campaign will

be seen 1.6 times by each person. The impact of the campaign

shows the total number of times an ad will be seen during the

campaign. As 8,231,000 people are estimated to see the ad, on

average 1.6 times, it will be seen a total of 13,129,000 times.

20

Corporate Responsibility Report


Polio Disease (Joint Project with Mobilink)

WHO called for full eradication of Polio disease from the world and

assigned the Rotary International Board of Directors and the Rotary

Foundation to implement new tailored approaches to reach all

children in 2008 in the remaining endemic pockets of Nigeria, India,

Pakistan and Afghanistan.

Orascom Telecom Holding and Mobilink (Orascom Telecom’s subsidiary

in Pakistan) donated $ 200,000 to help in the complete eradication

of polio disease in the world.

During the course of 2008 the key areas of intervention were: large

scale supplementary immunization campaigns every four weeks,

special attention to infants and very young children, including tracking

of newborn children, increased engagement of religious leaders and

Koranic schools to promote the introduction of “immunization Plus

Days” (IPD), specific polio campaigns to target mobile populations

and mapped population movements, vaccination posts at key

nomadic gathering posts and border crossings.

This joint program between OTH and Mobilink is one of a number

of examples of the Company’s CSR approach to social investment

and aims to establish linkages and opportunities of joint projects to

accelerate their impact and produce rapid results – especially in an

important area such as eradicating Polio – a disease which is still

present in a number of countries.

UNICEF has also collaborated with Mobilink in 2008 through the

organization of a series of cluster launches in the South region for

fighting Polio disease.

Hepatitis B Campaign

Egypt has one of the highest rates of Hepatitis C infections in the world,

as well as a a high rate of Hepatitis B infections. Treatment is expensive

and is putting a strain on the resources of the Ministry of Health. With

the support of USAID and the Communication for Healthy Living

Project, the National Committee for Control of Viral Hepatitis -MOHP

organized a series of campaigns in 2008 for Viral Hepatitis: at Al Azhar

Park, at Universities and at a number of summer destinations. The

campaigns focused on mobilizing youth to adopt preventive behaviors,

to get vaccinated against Hepatitis B, and to spread the word.

The National Committee for the Control of Viral Hepatitis (NCCVH)

has succeeded in attracting partners from the private, public, and

NGO sectors to unite in the campaign against viral hepatitis. Together

with its partners, the committee has coordinated several activities to

raise awareness and improve preventative behaviors among the

general public and target groups, all of which received substantial

media coverage.

A 3-year strategy and work plan for the communication activities of

the NCCVH was finalized in September 2007 in cooperation with the

MOHP and with the support of USAID through the Communication

for Healthy Living project. The campaign focuses on educating people

- with a focus on youth - to spread the word about not sharing

personal equipment that may have come into contact with blood

or bodily fluids (such as syringes, razors, and nail clippers) and reducing

stigma for those infected with viral hepatitis so they can access proper

treatment and support. Celebrities and entertainers, including actors

Amr Waked and Youssra, will continue to support the campaign to

mobilize citizens to take action against the spread of viral hepatitis.

Outreach to the private sector to support campaign activities resulted

in over EGP1,000,000 in cash and in-kind donations from the private

sector. The cooperation of Vacsera has been critical to the success of

the campaign: Vacsera offered Hepatitis B vaccines and vaccination

services at a 60% discount to the campaign. Together with the private

sector support, the campaign was able to offer Hepatitis B vaccinations

to high-risk groups - such as medical students - and the general

public at very low cost.

Campaign Highlights

University Campaign:

A series of outreach activities were held at Ain Shams and Tanta

Universities, including an information booth staffed by trained

volunteer peer educators, seminars, on-site hepatitis B vaccination,

and publicity events with celebrity participation and media coverage.

The campaign at the Universities was under the title “Stop Viral

Hepatitis” focused on educating students to spread the word about

not sharing personal equipment that may have come into contact

with blood or bodily fluid and reducing stigma for those infected

with viral hepatitis so they can get proper treatment and support.

World Hepatitis Day:

Held in Azhar Park, with family entertainment, giveaways, on-site

Hepatitis B and HIV testing and counseling, free hepatitis B vaccination,

free specialist consultation, and free liver ultrasounds by referral. The

hotline was promoted and a number of services were provided such

as free ultra sounds, free HBV vaccination, free consultations and

counseling for patients. A number of entertainment (handicraft,

painting, etc…) for kids were also organized with the purpose of

awareness raising and dissemination of information materials on

prevention, diagnosis and treatment. The event has succeeded to

increase knowledge and dialogue about Viral Hepatitis- its prevalence

and severity in Egypt. Modes of transmission and non-transmission

were discussed and people were advised on how to go about testing,

treatment and vaccination. Prevention is a key factor and therefore

awareness raising and behavioral attitudes are key predispositions

for protecting people.




Board of Directors


Corporate Respons ibility Report

Global Reports LLC

Summer Awareness Program:

During the summer of 2008, under the slogan of "Sehetak Tharwetak":

The program aimed at raising the knowledge and awareness of the

general public in three different locations (Alexandria, Ras Sidr and

Masters Rest House on Cairo-Alex road) towards preventing the

spread of viral hepatitis in Egypt, safe injection practices, immunization

programs highlighting HAV, and HBV vaccination, healthy lifestyles

and proper nutrition and sports.

Cornea Transplantation forEgyptian Children

“For children with blinding diseases of the cornea, a sophisticated

new corneal transplantation technique is necessary to restore their

vision function. This illness ruins the lives of the children and hinders

their physical development. We must all join forces to treat the

blindness of those children”. Naguib Sawiris, CEO and Chairman of OTH

Vision 2020 is the global initiative for the elimination of avoidable

blindness, launched jointly by the World Health Organization (WHO)

and the International Agency for the Prevention of Blindness (IAPB)

with an international membership of NGOs, professional associations,

eye care institutions and corporations.

In response to the UN support to the Vision 2020: the Right to Sight,

Orascom Telecom Holding partnered with the World Health

Organization, the French Embassy, the French Cultural Center, El Kasr

El Eini Hospital and other local NGOs to conduct cornea transplantation

surgical operations for needy children.

Vision 2020 member organizations are working together to eliminate

avoidable blindness, to give everyone in the world the Right to Sight.

The surgical operation takes place at El Kasr El Eini Hospital by

professional French ophthalmologists in collaboration with a team

from El Kasr El Eini Faculty of Medicine. Exchange of the latest scientific

techniques takes place in the presence of French experts from top

French universities and with Egyptian doctors contributing their

expertise. In addition to interactive lectures with French counterparts

who will conduct the operations on a voluntary basis.

HIV/AIDS Campaign on Bicycle

The project supported a team of enthusiastic and adventurous youth

from Bangladesh who has set off for a world tour on bicycle as an

advocacy campaign on HIV/AIDS. The youth in Bangladesh chose to

do this tour using a bicycle in order to connect with people on a

large scale.

Riding on a bicycle provided them access with a large number of

people on and off the road. It also allowed access to remote areas since

most of the rural areas are inaccessible to automatic/large vehicles.

22 O T H A N N U A L R E P O R T 2 0 0 8 A B O U T O T H G S M O P E R A T I O N S 2 0 0 8 F I N A N C I A L R E V I E W

Access to the remotest areas allowed for larger dissemination of

campaign messages and better communication with the locals.

The awareness campaign focused on:

• Delivering awareness messages to the regional and community

based people

• Delivering brief campaign lectures/programs and sharing

information, ideas and thoughts with youth, students at educational

institutes, social clubs or organizations

• Communicating with affected people as well as healthcare

professionals at Hospitals & Rehabilitation Centers and collecting

information on practical scenarios to enhance our campaign resources.

The campaign also included media video and photographic

coverage the purpose of which was for:

• Documenting the social and emotional impact of this epidemic.

• Illuminating the positive human responses

• Identifying & addressing the underlying drivers of the epidemic,

i.e. regional socio-economic and socio-cultural dynamics that create

gender inequality, social stigma and discrimination against AIDS

victims resulting in situations of vulnerability for them.

• Addressing Challenges, prejudices and myths surrounding this epidemic.

• Interviewing people living with HIV/AIDS to highlight and focus

on actual human faces and their lives on top of the statistics

behind the disease.

The campaign also allowed for an opportunity for networking with

peers and reaching out and exchanging ideas and sharing information

with regional people working on the campaign and others regarding

information about HIV/AIDS and its prevention.

OTH Scholarship Program

The Orascom Telecom Holding Scholarship Program, at the University

of Glasgow, offered six scholarships for Egyptian nationals in 2008/09.

The Masters program is taught over one year in the areas of Manage-

ment, Business Administration, International Trade, Economics, Banking

and Finance. The scholarship covers tuition and hospitality on the

condition that scholars return to live and work in Egypt for at least

three years upon finishing their studies.

Discussions about the possibility of establishing the program began

in London during November, 2006, when Naguib Sawiris met with

members of the Egyptian community in England and Glasgow, and

the Principal of Glasgow University, Sir Muir Russell. The aim of the

scholarship program was to provide the opportunity for talented

Egyptian students to develop their knowledge in Business and

Economics and then return to Egypt to utilize this knowledge for the

benefit of the country and its economy. The program proved to be

highly popular with 174 applicants, competing for the six available

vacancies. The chosen students were selected for their strong academic

record and the quality of their work experience.

23OTH’s Organization



Board of Directors


Corporate Respons ibility Report

Global Reports LLC

Tunisia(Tunisiana)

Egypt(Mobinil)

Pakistan(Mobilink)

Zimbabwe(Telecel Zimbabwe)

Bangladesh(banglalink)

North Korea(koryolink)

Burundi(U-COM)

Central AfricanRepublic

(Telecel Centrafrique)

Namibia(Cell One)

Orascom Telecom Holding serves a population of 498 millionwith an average penetration of 46 %Country Population Mobile PenetrationAlgeria (OTA) 33 million 66%Pakistan (Mobilink) 160 million 56%Egypt (Mobinil) 74 million 58%Tunisia (Tunisiana) 10 million 83%Bangladesh (banglalink) 140 million 32%North Korea (koryolink) 23 million 0%Canada (Globalive)* 33 million 65%Central African Republic (Telecel Centrafrique) 4.5 million 12%Namibia (Cell One) 2.1 million 50%Burundi (U-Com) 9 million 11%Population figures from the Economist Intelligence Unit for YE07

Mobile penetration is based on December 31, 2008 subscribers number and market share

* Globalive Wireless expects to launch operations in Canada at the end of 2009

GSM Operations

Algeria(OTA)

Canada(Globalive)

Global Reports LLC

26

Orascom Telecom Algeria SPA (“OTA”) operates a

GSM network in Algeria and provides a range of

prepaid and postpaid products encompassing voice, data and multimedia,

using the corporate brand “Orascom Telecom Algérie” and the dual commercial

brands of “Djezzy” and "Allo". OTA was awarded the second GSM license in

Algeria in 2001 and launched its operations in February 2002. OTA commenced

its operations under the brand “Djezzy” and introduced a second prepaid

brand “Allo” in August 2004.

As of December 31st, 2008, OTA served over 14 million subscribers with a

market share exceeding 64% of total mobile subscribers and its network

covered 96% of the total population of Algeria.

Despite having launched its GSM operation approximately three years after

the launch by the incumbent, Algerian Mobile Network (“AMN” conducting

business under the “Mobilis” name), OTA was able to rapidly grow into Algeria’s

leading and preferred telecommunications operator by far.

While OTA has already invested considerably in its network, it plans to make

further investments to increase its capacity, and to maintain and improve the

quality of its network to meet market demand. Finally, as demand is growing

and local content is beginning to develop, OTA has started to rollout a range

of value-added multimedia services based on GPRS and EDGE technologies,

which are designed to increase customer usage and boost loyalty.


Subsidiary Highlights

December 2007 December 2008 %

Financial Data

Revenues (US$ 000) 1,761,859 2,040,544 15.8%

EBITDA (US$ 000) 1,115,740 1,290,062 15.6%

EBITDA Margin 63.3% 63.2% (0.1%)

Capex (US$ m ) 325 167 (48.6%)


Operational Data

Subscribers 13,382,254 14,108,859 5.4%

Prepaid 13,037,600 13,489,222 3.5%

Postpaid 344,654 619,637 79.8%

Market Share 62.4% 64.7% 2.3%

ARPU (US$) (3 months) 12.1 11.8 (2.5%)

MOU (YTD) 141 164 16.3%

Churn (3 months) 9.7% 12.5% 2.8%

OTA - ALGERIA

27

CEO: Tamer El Mahdy / CFO: Amr El Adawy

Algerian Telecommunications Market

Telecommunications services in Algeria are provided principally by

Algérie Télécom, the incumbent state-owned telecommunications

operator, which provides fixed-line services, and by three GSM

mobile operators, OTA, AMN and Wataniya Telecom Algeria. Algérie

Télécom held a monopoly position with respect to basic fixed-line

services until 2005, when OTH announced the acquisition, jointly

with Telecom Egypt, of a second fixed-line license in Algeria.

License

In July 2001, OTA was granted a license to operate a nationwide

GSM telecommunications network, to provide a range of telecom-

munications services in Algeria, to operate its own backbone and

to share or lease network infrastructure with or to its operators. The

license is a 15-year dual band license expiring 2016 with automatic

renewal for two subsequent five-year terms as long as OTA complies

with the terms of the license. Renewal is at no additional cost.

Network

As of December 31st, 2008, OTA’s network covered approximately

96% of Algeria’s population, spreading its coverage over the 48

wilayas (provinces) in the country and providing on-road coverage

along major highways. The New Generation Network (“NGN”)

equipment introduced at the end of 2006 allowed OTA to further

reduce the capital expenditure and operating expense per subscriber.

Services and Marketing

OTA provides both basic voice and value-added services to its

corporate and retail subscribers. In addition to basic voice services,

OTA provides its subscribers with a wide range of value-added

services and data services such as : Voicemail, CLIP, CLIR, missed call

alert, Voice SMS, Chatting services, Web SMS, Data services, MMS,

e-voucher, Credit transfer, Ring Back Tone, EDGE, BlackBerry /

BlackBerry connect, Wap Portal, Streaming, Directory Service,

Automatic device management, Phonebook backup over GPRS,

STK menus, USSD menus and all roaming services (Prepaid roaming,

GPRS roaming...)

OTA offers prepaid, postpaid and hybrid postpaid-prepaid services

under its “Djezzy” and “Allo” brands and has become the market

leader and trendsetter with the highest brand recognition and

preference. As of December 31st, 2008, prepaid subscribers

represented over 96% of OTA’s total subscribers’ base. OTA offers its

loyalty program “Imtiyaz” to its prepaid and postpaid subscribers

allowing them to accumulate points when using their mobile phone

and convert them into free airtime, handsets or other rewards and

advantages.

Ownership and Governance

Following the completion of an agreement to purchase an additional

1.21% stake in Oratel in November 2006, OTH directly and indirectly

owns 96.81% of OTA.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

Telecel Globe

Global Reports LLC

28

Mobilink-PAKISTAN




Financial Data

Revenues (US$ 000) 1,263,901 1,207,520 (4.4%)

EBITDA (US$ 000) 554,905 491,664 (11.4%)

EBITDA Margin 43.9% 40.7% (3.2%)

Capex (US$ m ) 520 537 3.3%


Operational Data

Subscribers 30,612,630 28,479,600 (7.0%)

Prepaid 30,111,756 27,971,755 (7.1%)

Postpaid 500,874 507,845 1.4%

Market Share* 39.8% 31.7% (8.1%)

ARPU (US$) (3 months) 3.8 3.0 (21.1%)

MOU (YTD) 149 172 15.4%

Churn (3 months) 5.2% 11.8% 6.6%

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

Pakistan Mobile Communications Limited (“Mobilink” or “PMCL”) operates the

leading GSM network in Pakistan and provides a range of prepaid and postpaid

voice and data telecommunication services to both individual and corporate

subscribers. Mobilink launched its operations in August 1994 after it was

founded in 1990 as a joint venture between Motorola and the Saif Group.

Mobilink’s network is the most extensive in Pakistan, reaching over 66% of

the total population and 99% of the urban population as of December 31st,

2008, delivered through 7,915 cell sites and 73 switches. Mobilink enjoys the

most widespread retail channel in the country, with 467 Customer Service

and Franchise centers and over 170 thousand retailers throughout Pakistan.

Mobilink served over 28 million subscribers as of December 31st, 2008,

representing a market share, as calculated by the company, of approximately

41.6% of the total mobile subscribers in Pakistan. According to the Pakistan

Telecommunication Authority Mobilink’s market share is 31.75% but this

market share is based on information disclosed by the operators each of

which use different subscriber recognition polices.

Notwithstanding the entry of two new operators in the Pakistani market in

2005, Mobilink’s recognition within the market, its history of cash generation

and profitability, the support of its majority shareholder, and the existing

coverage and quality of its network provided Mobilink with a strong foundation

to consolidate its market leadership.

Following the launch of China Mobile in early 2008, under the brand name

Zong, the landscape of the telecom market has become even more

competitive. However, Mobilink continues to be the market leader and has

the highest top of the mind brand awareness.

29

CEO: Rashid Khan / CFO (Acting): Arshad Saeed

Pakistani Telecommunications MarketTelecommunication services in Pakistan are provided by Pakistan

Telecommunication Limited (“PTCL”), the incumbent fixed-line operator,

of which 62% is state-owned, 26% is held by Etisalat and the remaining

12% is with the public. Pakistan Telecommunication Authority issued

12 new licenses to provide long distance and international services.

There are currently five mobile operators in Pakistan: Pakistan Mobile

Communication Limited (“Mobilink”), CMPak Limited (“CMPak – formerly

Paktel”), Pakistan Telecom Mobile Limited (“Ufone”), a subsidiary of PTCL,

Telenor Pakistan and Warid Telecom providing GSM services.

Mobilink was awarded a license for mobile telecommunication system

and services in July 1992 and commenced GSM operations in 1994,

becoming the first company in Pakistan to set up and operate a digital

mobile network based on GSM 900 technology.

2008 was a year of political and economic uncertainty for Pakistan. Inflation

in the country reached a record high of 23% and tax on mobile usage

was increased to 21%. Security also remained a major concern for Pakistan

throughout the year, as the country suffered from several terrorist acts.

All these factors affected the telecom business in the country.

LicenseMobilink was awarded a 15-year license in July 1992 to establish and

operate a digital cellular telecommunication system using the GSM 900

standard and to offer telecommunication services in Pakistan. The

license was renewed in 2007 for a further period of 15 years. On June

26th, 2006 Mobilink was granted another Azad Jammu & Kashmir (AJ&K)

and Northern Areas (NAs) license also for a period of 15 years.

NetworkAs of December 31st, 2008, Mobilink’s GSM network covers more than

10,000 cities, towns and villages and provides on-road coverage along

all of the nation’s major highways. In addition to voice, Mobilink also

has the largest data network in the country.

Services and MarketingMobilink markets its prepaid services under the mother brand name

'Jazz', which offers different packages to suit the need of diverse customer

segments. Mobilink markets its postpaid services using the brand name

'Indigo', which offers different packages and value added services for

corporate and individual customers. The brand commands a premium

image in the market and is being used by several leading corporations

of the country.

In 2008, Mobilink launched its “Coverage and Connectivity” campaign,

which reinforced its leadership in nationwide cellular coverage. In a

marketplace which is primarily driven by price perception, this campaign

helped to change the customer focus from only price to the overall

communication experience. In June 2008, Mobilink introduced call set

up for the first time in the industry with the launch of its new prepaid

tariff Jazz One; thereby preserving value while giving a competitive on-

net rate. In addition to basic voice services, Mobilink offers value added

services to its customers such as Voice Portal, Mobile Banking, Caller

Ring Back Tone, Voice Mail and many more. In 2008, Mobilink introduced

several new services including Jazz Karaoke, Comedy Box and Cell

Secure. Mobilink was also the first operator in Pakistan to launch

BlackBerry services in December 2005.

In 2008, Mobilink launched its wireless broadband services under the

brand name of 'Infinity', which offers high speed internet as well as

telephony services through VoIP.

Ownership and GovernanceOrascom Telecom Holding indirectly owns 100% of the share capital of

Mobilink through direct stakes held by wholly owned subsidiaries of OTH.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

Telecel Globe

Global Reports LLC

31

CEO: Hassan Kabbani / CFO: Khaled El Laicy

On October 17th, 2007, Mobinil has signed an agreement with NTRA forthe 3G license and its related components for a consideration of EGP 3,668million and a charge of 2.4% of net service revenue as defined in theagreement. An amount of EGP 318 million was paid at the date of signatureand the remaining amount is payable in installments until the end ofDecember 2010.

NetworkIn September 2008, Mobinil launched its advanced 3G services on itsstate-of-the-art technology, by far the newest and the largest mobilenetwork in Egypt. Mobinil’s network rebirth delivers a new, reliable andhighly advanced network where customers enjoy a variety of new servicesin addition to the 3G standard services like video call and Internet

everywhere with 3G Flybox and USB modems. As of December 31st, 2008,Mobinil’s network covered approximately 22.15% of Egypt’s territory,enabling coverage of approximately 99.66% of the population. Mobiniltakes pride in leading the way towards green technology, as it joined theGreen Power Working Group and is committed to deploy 118,000 basestations with renewable energy within the next four years.

Services and MarketingMobinil provides both voice, data and value-added services to its corporateand retail subscribers, with an overwhelming proportion of the revenuesdriven by voice services. In addition to basic voice services, Mobinil providesits mobile subscribers with value-added services such as voicemail, calleridentification, call waiting/holding, call forwarding and data services suchas SMS, Information Services, MMS and WAP based on GPRS technologies.

2008 witnessed Mobinil’s launch of 3G services in the Egyptian marketunder the initiative “Internet Everywhere” providing consumers with thenecessary tools to fully experience totally new services through a totallynew network.

As of December 31st, 2008, prepaid subscribers represented approximately96.83% of Mobinil’s total subscribers. Mobinil markets its prepaid servicesusing the ‘‘ALO’’ trade name and its postpaid services using the “Star” tradename, in addition to “Mobinil Business” to cater to the corporate andbusiness market.

With the increased competition from Etisalat, and in order to address theongoing rapid growth of mobile services in Egypt, Mobinil developed astrategy to address lower income customers in Egypt. Such lower spendingcustomers will represent an important component of increased mobilemarket penetration in the future.

Among the many products and services that were launched in 2008 werethe Mobile Number Portability (MNP) initiative, enabling consumers tomove freely from one mobile operator to another while maintaining theirnumber, and the on-net tariff which enables Mobinil consumers to speakto one another at a lower per minute rate as well as a wide range ofbundles (handset + line) to cater to customers seeking best value for theircommunication expenditure.

On the value added services front, Mobinil launched several 3G-relatedinitiatives including the ASUS Eee PC, the world’s smallest net-book,coupled with its 3G USB modem as well as the Mobinil Fly Box whichenables consumers to access the Internet anytime, anywhere. MobinilLife, Mobinil’s WAP portal has undergone a facelift making it more visuallyappealing, more user friendly and offering a vast wealth of information tothe Egyptian user.

Ownership and GovernanceMobinil is owned by OTH, FT Group and public market equity investors.Orascom Telecom Holding has a 34.66% economic interest and FT Grouphas a 36.34% economic interest, in ECMS. The remaining shares of ECMS(29%) are publicly traded on the Cairo and Alexandria Stock Exchange.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

Telecel Globe

30

Mobinil-EGYPT

The Egyptian Company for Mobile Services (“Mobinil” or “ECMS”) operates the

leading mobile telecommunications network in Egypt and provides a range

of prepaid and postpaid voice and data telecommunications services, using

the brand name ‘‘Mobinil’’. Mobinil launched its operations in May 1998. As of

December 31st, 2008, Mobinil’s network covered approximately 99.66% of the

total population of Egypt.

Mobinil has been serving over 20 million subscribers as of December 31st, 2008,

becoming the first operator in the Middle East and North Africa region to reach

this figure. This figure represents a market share of approximately 47% of total

mobile subscribers in Egypt as of December 31st, 2008.

Egyptian Telecommunications MarketTelecommunications services in Egypt are provided principally by Telecom

Egypt, the incumbent government-owned fixed-line operator, with respect to

fixed-line services, and by three GSM mobile operators, Mobinil, Vodafone Egypt

and Etisalat. Telecom Egypt’s monopoly on fixed-line services expired at the

end of 2005 and the sector is considering undertaking a progressive liberalization;

however the National Telecom Regulatory Authority (NTRA) has decided to

postpone the auction for the second fixed-line network.

LicenseMobinil was granted a license in 1998 to operate a GSM mobile

telecommunications network and to provide a range of telecommunications

services in Egypt. The license, amended in January 2005 by the National

Telecommunication Regulatory Authority (”NTRA”), is a 15-year dual band license

with automatic renewal for successive five-year periods if Mobinil complies

with the license requirements. As Mobinil signed the 3G license agreement in

October 2007, the 2G license has been extended till 2022 as will the 3G license.




Financial Data

Revenues (US$ 000) 1,454,917 1,827,505 25.6%

EBITDA (US$ 000) 647,872 855,294 32.0%

EBITDA Margin 44.5% 46.8% 2.3%

Capex (US$ m ) 578 524 (9.3%)


Operational Data

Subscribers 15,117,626 20,115,377 33.1%

Prepaid 14,562,595 19,476,772 33.7%

Postpaid1 555,031 638,605 15.1%

Market Share 49.5% 47.2% (2.3%)

ARPU (US$) * (3 months) 8.1 7.6 (6.2%)

MOU (YTD) 161 165 2.5%

Churn (3-month) 5.8% 8.8% 3.0%

* ARPU, MOU & Churn expressed under OTH’s definition may differ from Mobinil’s disclosed figures.

Global Reports LLC

32

Tunisiana-TUNISIA

Orascom Telecom Tunisie (“Tunisiana” or “OTT”) operatesa GSM network in Tunisia and provides a range of pre-paid and postpaid voice and data telecommunicationsservices, under the brand name "Tunisiana". Tunisiana

launched its operations in December 2002 and, as of December 31st, 2008,Its network covered over than 99% of the total population of Tunisia.

In August 2008, Tunisiana became market share leader and ended the yearwith over 4,256 million subscribers, representing a market share ofapproximately 51.11% of total mobile subscribers in Tunisia.

To reach this result, Tunisiana managed to acquire over 66.5% of the totalmarket gross adds and almost 72% of the total market net additions.

Tunisian Telecommunications MarketTelecommunications services in Tunisia are provided principally by 2operators: Tunisie Télécom, the incumbent telecommunications operatorwhich offers mobile, fixed telephony and Internet services, and Tunisianathe only private telecom operator in Tunisia which offers only mobiletelephony services. The Tunisian government has partially privatized TunisieTélécom by selling a 35% stake of the company to Dubai Group TeCom-DIG in March 2006.

Alongside the Ministry of Technologies of Communication, the NTC is alsoinvolved in the development of telecommunications sector by providingthe necessary environment to establish a fair and healthy competitionamong players and actors.

A third player in the market is expected for the beginning of 2010; this Isexpected to be a universal operator thanks to the universal license grantedconcerning fixed and mobile telephony, 3G and Internet access.




Financial Data

Revenues (US$ 000) 558,616 724,091 29.6%

EBITDA (US$ 000) 278,303 378,383 36.0%

EBITDA Margin 49.8% 52.3% 2.5%

Capex (US$ m ) 76 99 30.3%


Operational Data

Subscribers 3,651,813 4,256,573 16.6%

Prepaid 3,601,102 4,177,092 16.0%

Postpaid 50,711 79,481 56.7%

Market Share 47.7% 51.1% 3.4%

ARPU (US$) (3 months) 14.3 12.7 (11.2%)

MOU (YTD) 135 158 17.0%

Churn (YTD) 7.6% 8.0% 0.4%

33

CEO: Yves Gauthier / CFO: Marital Caratti

The new operator, to be selected by the Tunisian authority by the

end of June 2009, will be protected from any new competition for

at least one year for the 3G services and for at least 3 years for fixed

telephony.

LicenseOTT was granted a license in May 2002 to operate a national GSM

telecommunications network and to provide a range of

telecommunications services in Tunisia. The license was granted

for a fee of US$454 million, payable in two equal installments, which

were paid in May 2002 and September 2004. Tunisiana’s license has

a duration of 15 years and is renewable for consecutive five-year

periods, provided that OTT has met its obligations under the license

in the prior period.

NetworkAs of December 31st, 2008, Tunisiana’s network provided coverage

over an area encompassing over than 99% of Tunisia’s population.

Tunisiana’s network consists of 1,940 cell sites and 13 switches.

International traffic is serviced through 4 international gateways.

Services and MarketingTunisiana provides both basic voice and value-added services to

its corporate and residential subscribers. In addition to basic voice

services, Tunisiana provides its subscribers with value-added services

such as voice SMS, voicemail, detailed monthly billing, SMS Billing,

call line identification presentation or restriction, call waiting/holding,

call forwarding, mobile-banking, reversed roaming, international

roaming and data services. Tunisiana’s network offers GPRS

technology, which it launched in February 2006, as well as EDGE

technology. Tunisiana is providing a range of value-added services

based on these technologies including MMS, Internet, WAP portal,

e-mail push and Data.

Tunisiana offers both pre-paid and postpaid telephony services. As

of December 31st, 2008, prepaid subscribers represented

approximately 98.6% of Tunisiana’s total subscribers.

During 2008, Tunisiana focused on community and abundance

concepts such as Friends and Family promotions, unlimited calls,

unlimited SMS, Partners offer, Student offer, Business Group+, Awal

family, progressive bonus for revenues boosting and retention.

In order to reinforce its subscriber’s loyalty, Tunisiana launched the

LP Points transformation's phase (loyalty program) and a Roamers

IN Loyalty Program, both services being exclusive in the Tunisian

mobile market.

Also, to capture the strong potential of the visitor’s business and

further segment the market, Tunisiana launched the tourist line

offer during summer 2008.

Ownership and GovernanceOrascom Telecom Holding has a 50% economic interest in OTT

through two wholly-owned subsidiaries which own 35% and 15%

of the shares in OTT, respectively. During 2005, OTH increased its

economic interest in OTT from 20.27% to 50%. The remaining 50%

interest is held by National Mobile Telecommunications Company

KSC (”Wataniya Telecom”), a Kuwaiti telecommunications company,

which was sold to Qatar Telecom during 2007.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

Telecel Globe

Global Reports LLC

35

CEO: Ahmed A. Doma / CFO: Mohamed Osman

License

banglalink was issued a nationwide 15-year GSM license in November

1996 that is valid until November 2011.

Network

With the help of an aggressive network roll-out since launch, banglalink’s

network extends all across the country in all 64 districts of the country

and covers over 90% of the population. The primary focus in recent

years has been on ensuring continuous improvement in the quality

of the network.

Services and Marketing

banglalink’s marketing strategy has been focused on targeting

different consumer segments with specially designed products and

services that are tailored to the needs of these segments. banglalink’s

prepaid brand, “banglalink desh”, is perceived as the best prepaid

package in the country with innovative and value for money features

and a very strong brand image. “banglalink enterprise” caters to the

needs of the business segment including the thriving SME sector

where banglalink has been the pioneer in the country.

banglalink provides its subscribers with a wide variety of innovative

value-added services including a voice portal, song dedication,

voice chat, caller ring back tone, voice-SMS, to name a few. Banglalink

has a nationwide EDGE/GPRS network serving both postpaid and

prepaid subscribers. banglalink’s international roaming network

comprises of 374 operators across 137 countries and EDGE/GPRS

connectivity is available to roaming customers as well. banglalink

has also launched some highly appreciated call center based services

including “Healthlink”, which is a health counseling service, and

“SME Jiggasha” which provides information for SME related queries.

Such initiatives have helped in differentiating banglalink in the

market as an innovator and have also opened up new revenue

streams.

banglalink’s customer care services are regarded as the best in the

mobile industry of Bangladesh. A state-of-the art call center with

highly trained agents provides round the clock service to customers.

banglalink is also the pioneer in taking customer service closer to

its subscribers through over 1,000 customer care points across the

country – by far the largest customer care network in the industry.

A dedicated team of relationship managers provides personalized

services to enterprise customers.

Ownership and Governance

Orascom Telecom Holding owns 100% of the shares of banglalink.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

Telecel Globe

Orascom Telecom Bangladesh Limited (“banglalink” or

“OTB”) is a GSM telecommunications operator in

Bangladesh and provides a range of prepaid and

postpaid voice and data telecommunications services,

using the brand name “banglalinkTM.” Operating in highly competitive

market populated by six mobile operators, banglalink has managed to

become the second largest operator in less than 3 years of operation.

As of December 31st, 2008, banglalink’s network covered over 90% of the

total population of Bangladesh with over 10.14 million subscribers and a

market share of over 23%. This phenomenal growth is based on the

overwhelming response to banglalink’s products and innovative services,

a strong brand image, an extensive distribution network, and continuous

improvement in service quality.

Bangladeshi Telecommunications MarketTelecommunications services in Bangladesh are provided by 5 GSM and

1 CDMA mobile operators, and 13 land line operators. The oldest mobile

operator is still the only CDMA operator, Pacific Bangladesh Telecom Ltd.

(“Citycell”), in which SingTel recently acquired a minority interest. The five

GSM operators are, in order of launch date, GrameenPhone. GP, the market

leader majority owned by Telenor, TM International Bangladesh Ltd. (“AKTEL”),

the third largest player in which NTT DoCoMo holds a 30% stake, Orascom

Telecom Bangladesh (“banglalink”), Teletalk Bangladesh Ltd. (“Teletalk”),

the state owned mobile operator, and Warid Telecom (“Warid”) that launched

operations in 2007. The Bangladesh Telecommunications Company Limited

(“BTCL”) is the incumbent state-owned fixed-line operator that has been

present from the beginning. The remaining private fixed line operators

were issued licenses a few years ago.

34

banglalink-BANGLADESH




Financial Data

Revenues (US$ 000) 193,144 288,144 49.2%

EBITDA (US$ 000) (42,151) 13,683 132.4%

EBITDA Margin (21.8%) 4.7% 26.5%

Capex (US$ m ) 353 407 15.3%


Operational Data

Subscribers 7,082,348 10,337,128 46.0%

Prepaid 6,577,336 9,699,375 47.5%

Postpaid 505,012 637,753 26.3%

Market Share 20.6% 23.2% 2.6%

ARPU (US$) (3 months) 2.9 2.5 (13.8%)

MOU (YTD) 222 256 15.3%

Churn (3 months) 4.2% 1.9% (2.3%)

Global Reports LLC

36

Telecel Globe, an independent wholly owned subsidiary of Orascom

Telecom Holding, launched its operations in February 2008. It is an inter-

national telecommunications company that manages GSM operators in

small and medium sized developing countries with high growth potential.

It currently owns four GSM networks in the Central African Republic,

Burundi, Namibia and Zimbabwe and plans to continue expanding its

footprint by acquiring or developing other operators. Telecel Globe focuses

on Africa, Asia and Eastern Europe as these are the areas where the majority

of global mobile phone subscriber growth is expected in the coming years.

Telecel Globe positions its networks as market leaders and strives to improve

the quality of life of the people in the markets which it operates by increasing

network coverage, improving network quality and introducing new value

added services such as data services, prepaid roaming and air time credit

transfer. The portfolio of VAS on offer by its operators is being aggressively

expanded as the new state-of-the-art networks allow more innovative

services and promotions to be implemented, increasing customer

satisfaction and ARPUs. Telecel Globe has also established the Telecel Globe

Foundation to serve the local communities in the countries which it

operates. The Foundation regulates all the Group’s CSR activities to ensure

that all operators are responsible corporate citizens that give back to their

communities.



December December Inc/2007 2008 (dec)

Financial Data

Revenues (US$ 000) - 25,345 n.a

EBITDA (US$ 000) - 492 n.a

EBITDA Margin - 1.92% n.a

December December Inc/2007 2008 Dec. 2008

vs. Dec. 2007

Operational Data

Subscribers(1) - 894,822 n.a

Prepaid - 875,039 n.a

Postpaid - 19,783 n.a

(1) Total includes 100% of Telecel Zimbabwe's subscribers

Telecel Globe

37

U-COM (Burundi):

Telecel Globe acquired 100% of the shares of U-COM, the leading

telecommunications network in Burundi. Burundi has an emerging

telephony market with a penetration rate of 5.6%, thus availing

growth opportunities for existing operators. U-COM is currently

competing against Africell, Econet, Onamob, and Lacell is expected

to launch commercially very soon.

U-COM Burundi operates GSM 900/1800, CDMA 800, and WIMAX

(in Bujumbura) networks and is the market leader with around

308,662 subscribers and over 74% market share, as of December

2008. U-COM provides voice and data services to both its pre-paid

and postpaid customers covering around 19% of Burundi. Such

offerings range from basic services to value added services, such

as missed call alerts, 5 numbers for friends and family, roaming,

airtime credit transfer, conference call, credit balance query and call

waiting.

Telecel – RCA (Central African Republic):

Telecel Globe acquired 100% of Telecel-RCA in 2008. Central African

Republic's (CAR) telecommunications market has a penetration rate

of 8.3%, as of December 2008, providing substantial growth

opportunities for Telecel-RCA. Current competitors in CAR are

Nationlink, Orange and Moov.

Telecel-RCA operates GSM 900/1800 networks and is the market

leader with around 143,154 subscribers and over 37% market share,

as of December 2008. Telecel-RCA provides voice services to both

its pre-paid and postpaid customers covering around 17% of the

country. Such services range from basic to value added ones, such

as call waiting/holding, call forward, CLIP/CLIR, friends and family

(CUG) postpaid and prepaid, location based tariffs, SMS, SMS

international, USSD balance enquiry, voicemail, credit alert, credit

transfer and bulk SMS.

Cell One (Namibia):

Telecel Globe acquired Cell One Namibia in January 2009. The

Namibian telephony market has a penetration rate of about 50%.

Cell One is currently competing for the growth opportunities against

MTC, GSM operator partially owned by Namibia Post and

Telecommunications Holding (NPTH) and Portugal Telecom (PT),

and Telecom Namibia, which is wholly owned by the Government

and is a subsidiary of Namibia Post and Telecom Holdings Limited.

Cell One operates GSM 900/1800/3G/HSDPA networks and is

currently the market challenger with around 200,000 subscribers

and about 20% market share, as of January 2009. Cell One offers a

range of basic and value added voice and data services, such as

missed call alert, roaming, 3G, GPRS, airtime credit transfer, conference

call, credit balance query, call waiting/forwarding, voice-fax-to-

email, Internet browser, and email.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

Telecel Globe

CEO: Kai Uebach / CFO: Stephane Ferrie

Global Reports LLC

o become a major player in the telecommunication market. OTH is considered among the largest and most

cense to operate mobile services in North Korea. Orascom Telecom is a leading mobile telecommunications

erage penetration of mobile telephony across all markets of approximately 44%. OTH operates GSM networks

we (Telecel Zimbabwe) and North Korea (Koryolink). OTH had exceeded 79 million subscribers as of September

Mobinil is a market leader serving over 18.9 million subscribers representing a market share of 47.7% (as of

CASE”) in terms of market capitalization. OTH witnessed success as Orascom Telecom Algeria SPA (“Djezzy”)

s well as the quality of telecommunications services provided. Djezzy serves over 14.4 million subscribers on

ched its services in December 2002, and serves more than 4.1 million subscribers on its network with a growing

link”) started its operations in 1994 and, until early 2001, had a market share of 40%. In April 2001, OTH took

ibers, representing a market share of 34.8% (as of September 2008). In September 2004, OTH purchased 100%

n February 2005. Immediately after the launch, OTH started its aggressive plans to develop Banglalink into a

services at affordable prices. Banglalink serves over 10.1 million subscribers with 22.5% market share (as of

ty services to our customers, value to our shareholders and a dynamic, challenging and fun environment for

ets which we serve. It is our belief that there is viable economic model to serve emerging markets while availing

ous countries in the world. We believe that by positioning ourselves as the primary provider of communication

for its diverse GSM operations with various GSM support and Internet operations. One of OTH's main strategies

has achieved this by dedicating financial, technical and management resources for supporting its subsidiaries.

ment and distribution companies, Value Added Services, and Internet operations. OTH is dedicated to providing

nearly 20,000 employees.Orascom Telecom Holding S.A.E. ("Orascom Telecom") or ("OTH") was established

mong the largest and most diversified network operators in the Middle East, Africa, and South Asia, and has

obile telecommunications company operating in seven emerging markets having a population under license

. OTH operates GSM networks in Algeria (Djezzy), Pakistan (Mobilink), Egypt (Mobinil), Tunisia (Tunisiana),

79 million subscribers as of September 2008. OTH's first operation was the Egyptian Company for Mobile

presenting a market share of 47.7% (as of September 2008). Mobinil is one of Egypt's five largest companies

as Orascom Telecom Algeria SPA (“Djezzy”) was launched in February 2002. It grew to become the market

. Djezzy serves over 14.4 million subscribers on its network and has a 63.6% market share (as of Septmeber

han 4.1 million subscribers on its network with a growing market share of 50.8% (as of September 2008). In

rly 2001, had a market share of 40%. In April 2001, OTH took over management control of the company. As

8% (as of September 2008). In September 2004, OTH purchased 100% of Sheba Telecom (Pvt.) Limited in

er the launch, OTH started its aggressive plans to develop Banglalink into a leader in the mobile sector by

Banglalink serves over 10.1 million subscribers with 22.5% market share (as of September 2008). Vision: To

rs, value to our shareholders and a dynamic, challenging and fun environment for our employees. Mission

s our belief that there is viable economic model to serve emerging markets while availing affordable quality.

the world. We believe that by positioning ourselves as the primary provider of communication services, we

verse GSM operations with various GSM support and Internet operations. One of OTH's main strategies is to

as achieved this by dedicating financial, technical and management resources for supporting its subsidiaries.

curement and distribution companies, Value Added Services, and Internet operations. OTH is dedicated to

ment for its nearly 20,000 employees.Orascom Telecom Holding S.A.E. ("Orascom Telecom") or ("OTH") was

onsidered among the largest and most diversified network operators in the Middle East, Africa, and South

s a leading mobile telecommunications company operating in seven emerging markets having a population

ximately 44%. OTH operates GSM networks in Algeria (Djezzy), Pakistan (Mobilink), Egypt (Mobinil), Tunisia

d exceeded 79 million subscribers as of September 2008. OTH's first operation was the Egyptian Company

bscribers representing a market share of 47.7% (as of September 2008). Mobinil is one of Egypt's five largest

sed success as Orascom Telecom Algeria SPA (“Djezzy”) was launched in February 2002. It grew to become

es provided. Djezzy serves over 14.4 million subscribers on its network and has a 63.6% market share (as of

ves more than 4.1 million subscribers on its network with a growing market share of 50.8% (as of September

nd, until early 2001, had a market share of 40%. In April 2001, OTH took over management control of the

ket share of 34.8% (as of September 2008). In September 2004, OTH purchased 100% of Sheba Telecom

05. Immediately after the launch, OTH started its aggressive plans to develop banglalink into a leader in

ices at affordable prices. Banglalink serves over 10.1 million subscribers with 22.5% market share (as of

ality services to our customers, value to our shareholders and a dynamic, challenging and fun environment

ng markets which we serve. It is our belief that there is viable economic model to serve emerging markets

ering the most populous countries in the world. We believe that by positioning ourselves as the primary

ned itself as a leader in the region for its diverse GSM operations with various GSM support and Internet

e of support for its regional GSM operations. OTH has achieved this by dedicating financial, technical and

GSM operations, equipment procurement, handset procurement and distribution companies, Value Added

tomers, value to shareholders and a dynamic working environment for its nearly 20,000 employees.

2008 Financial Review

Orascom Telecom Holding S.A.E. ("Orascom Telecom") or ("OTH") was established in 1998 and has grown to

diversified network operators in the Middle East, Africa, and South Asia, and has acquired in early 2008 a lic

company operating in seven emerging markets having a population under license of 430 million with an ave

in Algeria (Djezzy), Pakistan (Mobilink), Egypt (Mobinil), Tunisia (Tunisiana), Bangladesh (Banglalink), Zimbabw

2008. OTH's first operation was the Egyptian Company for Mobile Services commonly known as ("Mobinil").

September 2008). Mobinil is one of Egypt's five largest companies on Cairo & Alexandria Stock Exchange (“C

was launched in February 2002. It grew to become the market leader in terms of both subscriber numbers as

its network and has a 63.6% market share (as of Septmeber 2008). Orascom Telecom Tunisie (“Tunisiana”) laun

market share of 50.8% (as of September 2008). In Pakistan, the Pakistan Mobile communications Ltd (“Mobil

over management control of the company. As the market leader, Mobilink serves more than 31 million subscr

of Sheba Telecom (Pvt.) Limited in Bangladesh. OTH re-branded and launched its services as "banglalink" in

leader in the mobile sector by rapidly expanding its GSM network to provide high quality communications

September 2008). Vision: To become one of the world’s leading telecom operators providing the best qualit

our employees. Mission statement: Our mission is to satisfy all communication needs of the developing marke

affordable quality. We are racing to serve the largest possible number of customers, covering the most populo

services, we are shaping the future of the markets we serve.OTH has positioned itself as a leader in the region f

is to create its own non- GSM subsidiaries to act as a backbone of support for its regional GSM operations. OTH

This includes network support and installation of GSM operations, equipment procurement, handset procurem

the best quality services to its customers, value to shareholders and a dynamic working environment for its n

in 1998 and has grown to become a major player in the telecommunication market. OTH is considered am

acquired in early 2008 a license to operate mobile services in North Korea. Orascom Telecom is a leading mo

of 430 million with an average penetration of mobile telephony across all markets of approximately 44%.

Bangladesh (Banglalink), Zimbabwe (Telecel Zimbabwe) and North Korea (Koryolink). OTH had exceeded

Services commonly known as ("Mobinil"). Mobinil is a market leader serving over 18.9 million subscribers re

on Cairo & Alexandria Stock Exchange (“CASE”) in terms of market capitalization. OTH witnessed success a

leader in terms of both subscriber numbers as well as the quality of telecommunications services provided

2008). Orascom Telecom Tunisie (“Tunisiana”) launched its services in December 2002, and serves more th

Pakistan, the Pakistan Mobile communications Ltd (“Mobilink”) started its operations in 1994 and, until ea

the market leader, Mobilink serves more than 31 million subscribers, representing a market share of 34.8

Bangladesh. OTH re-branded and launched its services as "Banglalink" in February 2005. Immediately afte

rapidly expanding its GSM network to provide high quality communications services at affordable prices. B

become one of the world’s leading telecom operators providing the best quality services to our customer

statement: Our mission is to satisfy all communication needs of the developing markets which we serve. It is

We are racing to serve the largest possible number of customers, covering the most populous countries in

are shaping the future of the markets we serve.OTH has positioned itself as a leader in the region for its div

create its own non- GSM subsidiaries to act as a backbone of support for its regional GSM operations. OTH ha

This includes network support and installation of GSM operations, equipment procurement, handset proc

providing the best quality services to its customers, value to shareholders and a dynamic working environm

established in 1998 and has grown to become a major player in the telecommunication market. OTH is co

Asia, and has acquired in early 2008 a license to operate mobile services in North Korea. Orascom Telecom is

under license of 430 million with an average penetration of mobile telephony across all markets of approx

(Tunisiana), Bangladesh (Banglalink), Zimbabwe (Telecel Zimbabwe) and North Korea (Koryolink). OTH ha

for Mobile Services commonly known as ("Mobinil"). Mobinil is a market leader serving over 18.9 million sub

companies on Cairo & Alexandria Stock Exchange (“CASE”) in terms of market capitalization. OTH witness

the market leader in terms of both subscriber numbers as well as the quality of telecommunications service

Septmeber 2008). Orascom Telecom Tunisie (“Tunisiana”) launched its services in December 2002, and serv

2008). In Pakistan, the Pakistan Mobile communications Ltd (“Mobilink”) started its operations in 1994 a

company. As the market leader, Mobilink serves more than 31 million subscribers, representing a mark

(Pvt.) Limited in Bangladesh. OTH re-branded and launched its services as "banglalink" in February 200

the mobile sector by rapidly expanding its GSM network to provide high quality communications servi

September 2008). Vision: To become one of the world’s leading telecom operators providing the best qua

for our employees. Mission statement: Our mission is to satisfy all communication needs of the developin

while availing affordable quality. We are racing to serve the largest possible number of customers, cove

provider of communication services, we are shaping the future of the markets we serve.OTH has positio

operations. One of OTH's main strategies is to create its own non- GSM subsidiaries to act as a backbone

management resources for supporting its subsidiaries. This includes network support and installation of G

Services, and Internet operations. OTH is dedicated to providing the best quality services to its custGlobal Reports LLC

40 41

Financial Review 2008Board Report• Financial Statements•

- Egyptian Accounting Standards (in EGP) - International Financial Reporting Standards (in US$)

Orascom Telecom Holding Board Report

Highlights

Total subscribers reached 78 million, an increase of 11% over December 2007.• Revenues of US$ 5,327 million• 1 (EGP 29,153 million), growing 13% over December 2007.EBITDA reached US$ 2,384 million• 1 (EGP 13,123 million), an increase of 15% over December 2007.Group EBITDA margin improved to 44.7%, an increase of 90bp. over December 2007. • GSM EBITDA margin reached 50.5%. EBITDA margins of the major subsidiaries are: Djezzy 63.2%, Mobilink 40.7%, • Mobinil 48.2%, Tunisiana 57.9%, and banglalink 4.7%.Net income for the period reached US$ 431 million• 1 (EGP 2,464 million), an increase of 7% over December 20072 (excluding non-recurring items).Earnings per GDR reached US$ 2.30 (based on a weighted average for the outstanding GDRs of 187 million over • 2008)3. Net Debt stood at US$ 5,084 million• 1 (EGP 28,117 million) resulting in a Net Debt/EBITDA of 2.1x for the period.

US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (IFRS).1. After excluding the non-recurring gain of US$761 million resulting from the sale of HTIL’s share of profit from the sale of its Indian subsidiary recorded using the 2. equity method, and US$920 gain from Iraqna in 2007, and US$66 million gain from the sale of OrasInvest in 2008. As a consequence of the buy back program the outstanding GDRs as of December 313. st, 2008 were reduced to 175.6 million.

Operational Performance

During 2008 OTH continued to pursue its growth strategy further consolidating its leadership position in its markets, with the exception of Pakistan. The total subscribers reached the 78 million mark, up 11% over 2007, driven by strong growth in Egypt, with five million net additions in the year exceeding the 20 million subscriber mark, and Bangladesh, which added over three million customers to reach 10.3 million subscribers. Algeria and Tunisia also performed strongly, the former further consolidat-ing its leadership position and the latter becoming the leading player in the country. Pakistan subscriber growth was negative as a result of the combined effect of the adoption of the new 90 day validity regime and stringent registration policies that forced all operators to disconnect those customers that did not register their personal details within the set deadline. The introduction of a service tax on mobile services in Pakistan further reduced market uptake thereby reducing the number of gross additions. Subscriber growth in Algeria in Q4 08 was also negatively impacted by the mandatory disconnection of unidentified customers; the impact was however industry wide and allowed OTA to actually increase its market share over the previous quarter.

Table 1: Total Subscribers

Subsidiary 31 December2007

30 September2008

31 December 2008

Inc/(dec) Dec. 2008 vs.

Dec. 2007

Djezzy (Algeria) 13,382,254 14,455,123 14,108,859 5%

Mobilink (Pakistan) 30,612,630 31,359,049 28,479,600 (7%)

Mobinil (Egypt) 15,117,626 18,910,861 20,115,377 33%

Tunisiana (Tunisia) 3,651,813 4,155,057 4,256,573 17%

banglalink(Bangladesh) 7,082,348 10,143,274 10,337,128 46%

Telecel Globe1 241,874 244,088 701,647 190%

Grand Total 70,088,545 79,267,452 77,999,184 11%

1. Includes Zimbabwe subscribers in 2007 & Q3 2008 and Burundi, Central African Republic & Zimbabwe subscribers in December 2008.

ARPU in 2008 has declined over 2007 in a number of our markets mainly as a result of increased competition and regulatory pressure on interconnection rates. The increased focus of our on-net offerings in our key markets has also caused ARPU to decline, as these offerings have a lower average price but do not pay away interconnection. In Algeria and Tunisia Q4 ARPU in US Dollars was negatively affected by the appreciation of the US$ against the Algerian and Tunisian Dinar. ARPU in Pakistan increased over the previous quarter as the subscriber base clean-up took its course.

Global Reports LLC

42 43

Table 2: Blended Average Revenue Per User (ARPU)

Subsidiary 31 December2007US$

(3 Months)

30 September2008US$

(3 Months)

31 December 2008US$

(3 Months)

Inc/(dec) Dec. 2008 vs.

Dec. 2007

Djezzy (Algeria) 12.1 12.4 11.8 (2.5%)

Mobilink (Pakistan) 3.8 2.9 3.0 (21.1%)

Mobinil (Egypt)1 8.1 8.4 7.6 (6.2%)

Tunisiana (Tunisia) 14.3 14.7 12.7 (11.2%)

banglalink (Bangladesh) 2.9 2.4 2.5 (13.8%)

Global ARPU (YTD)2 7.0 6.6 6.6 (5.7%)

Global ARPU (3 months) 6.8 6.5 6.3 (7.4%)

ARPU expressed under OTH’s definition may differ from Mobinil’s disclosed ARPU. Please see Appendix for definition.1. Global ARPU is calculated on a Year to date basis, taking into account the weighted average subscribers for calculation.2.

Orascom Telecom Holding continued to remain market leader in all its countries of operation, with the exception of Bangladesh where we are stably the second largest player. Our market share continued to improve in Algeria, Tunisia and Bangladesh while it remained stable in Egypt, where we continue to remain the market leader. In Pakistan the market share as reported by the regulator declined further as our subscriber base was negatively impacted by the implementation of our 3 month active subscrib-er rule and by the mandatory disconnections; the market share calculated on our internal traffic database of active subscribers shows a stable market share over the previous quarter.

Table 3: Market Share & Competition

Country Brand name Market Share (%) Number of ad-ditional network

operations

Names of additional network operations30 September

200831 December

2008

Algeria Djezzy 63.6% 64.7% 2 AMN, QTel

Pakistan Mobilink1 34.8% 31.7% 4 U-Fone, Paktel, Telenor, Al Warid

Egypt Mobinil 47.7% 47.2% 2 Vodafone, Etisalat

Tunisia Tunisiana 50.8% 51.1% 1 Tunisie Telecom

Bangladesh banglalink 22.5% 23.2% 5 Grameen, Aktel, Citycell, BTTB, Al Warid

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

Capital expenditures in 2008 were in line with the previous year. In Bangladesh we have continued to invest extensively in the roll-out of the network, while capex in Pakistan was mainly related to capacity and coverage. In Egypt a significant portion of investment was dedicated to the roll-out of the 3G network, which was launched in September. Capex in Algeria in 2008 was lower than the previous year mainly as a result of the time lag between the purchase order cycle and the accounting recognition of the capex.

Table 4: Capital Expenditure of OTH Subsidiaries for the twelve months to December 311

Country Service name TotalUS$ million

2007

TotalUS$ million

2008

Inc/(dec)

Algeria Djezzy 325 167 (49%)

Pakistan2 Mobilink 520 537 3%

Egypt2 Mobinil 578 524 (9%)

Tunisia Tunisiana 76 99 30%

Bangladesh2 banglalink 353 407 15%

Other3 47 160 240%

Total 1,899 1,894 0%

Total Consolidated4 1,565 1,576 1%

Consolidated Capex/Sales 33.1% 29.6% (3.5%)

Based on 100% ownership of all subsidiaries.1. Excludes intangible Capex of US$ 12 million in Pakistan for WiMax License, US$ 408 million in Egypt related to the 3G license fee and US$ 33 million in Ban-2. gladesh for additional spectrum allocation.“Other” companies include Linkdotnet, M-link, MedCable, OrasInvest, OT Holding, Ring and Telecel in 2007, and Linkdotnet, M-link, MedCable, Mena-Cable, 3. OrasInvest, OT Holding, Ring and Telecel in 2008.Consolidated Capex based on: 48.75% in ECMS and 50% in Tunisiana.4.

Global Reports LLC

44 45

Orascom Telecom Holding receives the first mobile license in the Democratic People’s Republic of KoreaIn January 2008, OTH was granted the first commercial mobile license in the Democratic People’s Republic of Korea using WCDMA (3G) technology. The license was granted toOTH’s subsidiary koryolink Technology JV Company (“koryolink”) which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation.In December 2008, OTH announced the inauguration of koryolink, the first 3G mobile network in the Democratic People’s Republic of Korea (DPRK). koryolink has deployed its network to initially cover Pyongyang with a plan to ex-pand its coverage to the entire country.

Orascom Telecom Holding secures US$ 2.5 bn Committed Bank FacilityIn April 2008, OTH announced the successful closing of the amendment and restatement of its US$ 2.5 billion five year senior secured debt facility. General syndication was launched on February 29th, 2008 and closed on April 14th, 2008. The Facility is used to refinance the outstanding amounts under the company’s existing US$ 2.5bn jumbo facilities and for general corporate purposes and extends the tenor back to five years.

Orascom Telecom Holding completes Two Tender Offers for Its Own Shares, Cancels Treasury Shares, and An-nounces a New Share Buy Back ProgramIn April 2008, OTH announced the commencement of a cash tender offer pursuant to which it offered to purchase up to 106 million of its ordinary shares (including ordinary shares represented by GDRs) at a purchase price of EGP 83 per ordinary share for a total of EGP 8,798 million (ap-proximately US$1.6 billion).In May 2008, OTH announced that a total of 363,337,618 ordinary shares (including ordinary shares represented by GDRs) were validly tendered. OTH purchased shares on a pro-rata basis from all tendering shareholders and, accord-ingly, accepted for payment from each tendering sharehold-er approximately 29.174% of the shares validly tendered by such shareholder.In May 2008, OTH announced a further cash tender offer where it offered to purchase up to 12 million of its ordinary shares (including ordinary shares represented by GDRs) at a purchase price of EGP83 per ordinary share for a total of EGP 996 million (approximately US$186 million).In July 2008, OTH announced that a total of 356,688,019 ordinary shares (including ordinary shares represented by GDRs) were validly tendered. Accordingly, OTH accepted for payment from each tendering shareholder approximately 3.3643% of the shares validly tendered by such shareholder.In August 2008, the EGM decided, in consensus of the votes of shareholders present and represented in the meeting, to approve the reduction of the Company’s issued capital bywriting off the Company’s treasury shares, for an amount equal to 128,697,126 shares (25.7 million GDRs). After this reduction the total number of fully paid up shares is 899,402,874 equivalent to 179.9 million GDRs.

Orascom Telecom Holding announces participation in consortium that has provisionally won AWS spectrum in CanadaIn July 2008, OTH announced its participation in a consor-tium to create a new Canadian owned and controlled wire-less operator. OTH joined forces with Canada’s GlobaliveCommunications Corporation, the parent company of Yak Communications which offers dialaround, home phone, internet and long distance services to more than one million customers across Canada. The new Canadian wireless operator has provisionally won AWS spectrum inCanada.

Telecel Globe finalises acquisition of mobile operations in Burundi and Central African RepublicIn July 2008, Telecel Globe, a majority owned subsidiary of OTH, finalized the acquisition of telecom operators U-Com in Burundi and Telecel in the Central African Republic.Burundi has a population of approximately 8.7 million, of which 51% is between the age of 15 and 64 years, and a mobile penetration of 4% at the end of 2007, while the Central African Republic has a population of 4.4 million, of which 55% is between the age of 15 and 64 years, and a mobile penetration of 6.2% at the end of 2007. U-Com Bu-rundi operates GSM 900/1800, CDMA 800, and WIMAX (in Bujumbura) networks and is the market leader with246,000 subscribers and over 70% market share. Telecel Centrafrique utilizes a GSM 900/1800 network and is the largest operator in the Central African Republic with over113,000 subscribers and 37% market share. The ARPU in U-Com and Telecel RCA are US$9.2 and US$15.6 respec-tively. Both operations are generating positive EBITDA.The total consideration paid was around US$106 million in cash. The acquisition implies an aggregate EV per sub-scriber of US$350 as of June 30th 2008. Both businesses will require, on aggregate, a further equity injection of up to US$25 million over the next 2 years to fund network expan-sion and for general corporate purposes. The debt assumed as part of these two transactions is non-recourse on Telecel Globe.These acquisitions are part of Telecel Globe’s strategy to target licenses and mobile operators in small and medium sized developing countries that have high growth potential.Telecel Globe is already assuming operational management of Telecel Zimbabwe.

Orascom Telecom Holding secures commitments to subscribe for US$230 mln senior bond In November 2008, Orascom Telecom announced that it had secured commitments for a US$230 million financing with a maturity of approximately 3 to 4 years, to be implemented in a fully subscribed private placement.

Orascom Telecom Holding announces sale of OrasInvest In November 2008, OTH announced the sale of its non-GSM subsidiary OrasInvest to The Abu Dhabi Investment Company for a total consideration of US$ 180 million; US$ 90 million was paid in cash in November 2008 while the remaining US$ 90 million is in the form of interest bearing promissory notes due 12 months after the closing of the transaction.

Main Financial Events

Revenues

Revenue growth in 2008 was strong, notwithstanding the adverse developments in Pakistan which caused the revenues from this country to decrease significantly as a result of the depreciation of the local currency versus the US Dollar. Revenues reached $5.33 billion growing 13% over the prior year mainly driven by the growth of the GSM business which was up 14% over the prior year. Performance was especially strong in Algeria, Egypt, Tunisia and Bangladesh but was offset by a decline in the US Dollar revenues from Mobilink in Pakistan. It is worth noting that in local currency terms underlying growth in Pakistan was double digit over the previous year; this is clearly demonstrated by the revenue performance in Q4 which improved over Q3 with of the stabilisation of the Pakistani Rupee against the US Dollar. Organic growth in 2008, net of foreign exchange impacts, was in line with the 18-20% growth guidance provided.

Table 5: Consolidated Revenues


US$ (000)

31 December 2008

US$ (000)

Inc/(dec)

Q3 – 2008(3 months)US$ (000)

Q4 – 2008(3 months)US$ (000)

Inc/(dec)

GSM

Djezzy (Algeria) 1,761,859 2,040,544 16% 543,648 508,922 (6%)

Mobilink (Pakistan) 1,263,901 1,207,520 (4%) 261,166 272,929 5%

Mobinil (Egypt) 705,233 890,949 26% 239,959 231,772 (3%)

Tunisiana (Tunisia) 265,372 326,110 23% 92,064 74,138 (19%)

banglalink (Bangladesh) 193,144 288,144 49% 75,875 80,027 6%

Telecel Globe (Africa) - 25,345 na 13,328 12,017 (10%)

Total GSM 4,189,509 4,778,612 14% 1,226,040 1,179,805 (4%)

Telecom Services

Ring 285,089 228,252 (20%) 55,365 48,043 (13%)

M-Link & MedCable 148,854 194,868 31% 55,817 42,584 (24%)

Other1 51,040 48,741 (5%) 12,549 13,287 6%

Total Telecom Services 484,983 471,861 (3%) 123,731 103,914 (16%)

Internet Services 52,118 76,076 46% 20,318 21,093 4%

Total Consolidated 4,726,610 5,326,549 13% 1,370,089 1,304,812 (5%)

1. Other Telecom Services Companies include C.A.T., koryolink, OrasInvest (for 11 months), and TWA in Q4 2008, C.A.T. OrasInvest, and TWA in Q3 2008 and C.A.T. OrasInvest and ARPU+ in 2007.

Financial Review

Global Reports LLC

46 47

EBITDA

Consolidated EBITDA in the twelve months ended December 31, 2008 grew 15% over the previous year reaching $2,384 mil-lion, as a combined result of top-line growth and further efficiency on the costs side. The performance was strong across all main subsidiaries, with the exception of Pakistan, with Mobinil and Tunisiana delivering an impressive growth and banglalink now in positive EBITDA territory. EBITDA growth was solid also in Algeria although impacted by the devaluation of the local currency against the US Dollar in the fourth quarter of 2008. In local currency terms Mobilink’s EBITDA grew single digit in 2008 and improved significantly during Q4.

Table 6: Consolidated EBITDA1


US$ (000)

31 December 2008

US$ (000)

Inc/(dec)

Q3 – 2008(3 months)US$ (000)

Q4 – 2008(3 months)US$ (000)

Inc/(dec)

GSM

Djezzy (Algeria) 1,115,740 1,290,062 16% 345,630 340,329 (2%)

Mobilink (Pakistan) 554,905 491,664 (11%) 88,603 112,804 27%

Mobinil (Egypt) 317,198 429,683 35% 113,721 119,310 5%

Tunisiana (Tunisia) 135,580 188,912 39% 55,255 41,068 (26%)

banglalink (Bangladesh) (42,151) 13,683 132% 2,835 22,400 690%

Telecel Globe (Africa) - 492 na 3,473 (1,597) na

Total GSM 2,081,272 2,414,496 16% 609,517 634,314 4%

Telecom Services

Ring 5,397 (1,593) (130%) (739) (6,141) (731%)

M-Link & MedCable 23,292 24,985 7% 7,408 4,982 (33%)

Other 2 6,008 9,144 52% 4,990 (2,031) na

Total Telecom Services 34,697 32,536 (6%) 11,659 (3,190) (127%)

Internet Services 3,583 (62) (102%) 1,937 (205) (111%)

OT Holding & Other3 (47,010) (63,411) na (11,376) (19,210) na

Total Consolidated 2,072,542 2,383,559 15% 611,737 611,709 0%

EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Koryolink Holding.1. Other Telecom Services Companies include ARPU+, C.A.T., OrasInvest, OT WIMAX, and TWA in 2007, and C.A.T., koryolink, Mena Cable, OrasInvest (11 2. months), OT WIMAX, and TWA in 2008.Other non operating companies include: Cortex, Eurasia, FPPL, Moga Holding, MinMax, OIIH, Oratel, OTCS, OT ESOP, OTFSCA, OTI Malta, OT Services 3. Europe, OT Wireless Europe, Pioneers, SAWLTD and Telecel.

Consolidated EBITDA margin was up 90 basis point over the previous year reaching 44.7%, mainly driven by the impressive performance of the GSM business which displayed a margin above 50%. Margins were up or stable in all major subsidiar-ies with OTA maintaining a solid 63.2% margin, Mobinil improving its margin by 3 p.p. to 48.2%, Tunisiana up almost 7 p.p. to 57.9% and banglalink achieving a mid-single digit margin. Mobilink’s margin in 2008 suffered from the sharp increase in cost of oil in Q2 and Q3 which significantly impacted its operating expenditures as it had to rely increasingly on fuel powered generators to run its network during blackouts on the national electricity grid; with the utilities cost stabilising in Q4 the margin in Pakistan has improved over Q3. The margin in Tunisiana declined in Q4 over Q3 mainly as a result of the decline in incoming visitor roaming revenues, and as a result of the depreciation of the Tunisian Dinar against the US Dollar.

Table 7: Consolidated EBITDA Margin


31 December2008

Change Q3 2008(3 months)

Q4 2008(3 months)

Change

GSM

Djezzy (Algeria) 63.3% 63.2% (0.1%) 63.6% 66.9% 3.3%

Mobilink (Pakistan) 43.9% 40.7% (3.2%) 33.9% 41.3% 7.4%

Mobinil (Egypt) 45.0% 48.2% 3.2% 47.4% 51.5% 4.1%

Tunisiana (Tunisia) 51.1% 57.9% 6.8% 60.0% 55.4% (4.6%)

banglalink (Bangladesh) (21.8%) 4.7% 26.5% 3.7% 28.0% 24.3%

Telecel Globe (Africa) - 1.9% na 26.1% (13.3%) (39.4%)

Total GSM 49.7% 50.5% 0.8% 49.7% 53.8% 4.1%

Total Telecom Services 7.2% 6.9% (0.3%) 11.0% (3.1%) (14.1%)

Internet Services 6.9% (0.1%) (7.0%) 9.5% (0.1%) (9.6%)

EBITDA Margin 43.8% 44.7% 0.9% 44.6% 46.9% 2.3%

Table 8: Foreign Exchange Rates used in the Income Statement & Balance Sheet

Currency Income Statement1 Balance Sheet2

Dec. 2007

Sept.2008

Dec. 2008

Change Dec. 2008

vs. Dec. 2007

Change Dec. 2008 vs.

Sept. 2008

Dec. 2007

Sept.2008

Dec. 2008

Change Dec. 2008

vs. Dec. 2007

Change Dec. 2008 vs.

Sept. 2008

Egyptian Pound / US Dollar 0.1764 0.1838 0.1827 3.6% (0.6%) 0.1797 0.1818 0.1807 0.56% (0.61%)

Algerian Dinar / US Dollar 0.0144 0.0158 0.0155 7.6% (1.9%) 0.0149 0.0166 0.0141 (5.4%) (15.1%)

Tunisian Dinar / US Dollar 0.7828 0.8396 0.8129 3.8% (3.2%) 0.8062 0.8141 0.7612 (5.6%) (6.5%)

Pakistan Rupee / US Dollar 0.0165 0.0147 0.0141 (14.5%) (4.1%) 0.0163 0.0128 0.0127 (22.1%) (0.78%)

Bangladeshi Taka / US Dollar 0.0144 0.0145 0.0144 0.0% (0.69%) 0.0145 0.0145 0.0144 (0.69%) (0.69%)

Canadian Dollar / US Dollar Na 0.9603 0.8876 na (7.6%) na 0.9652 0.8304 na (14.0%)

Source: BanksRepresents the average monthly exchange rate from the start of the year until the end of the period.1. Represents the spot exchange rate at the end of the period.2.

Global Reports LLC

48 49

Net Income

Net Income in 2008 reached US$431 million (EGP 2,464 million), a 79% decrease over the previous year which was positively impacted by the non-recurring gain of US$761 million recorded in 2007 resulting from HTIL’s share of profit from the sale of its Indian subsidiary recorded using the equity method, and by the US$ 920 million gain from Iraqna in 2007. Operating Income in 2008 increased 15% over the previous year to US$1,498 million. On a quarterly basis Profit Before Tax grew 33% over the previous quarter to US$240 million notwithstanding the increase in Net Financing Costs resulting from foreign exchange losses. Unrealized foreign exchange losses resulted from liabilities to suppliers and remaining license payments in Pakistan that cannot be hedged, from the shareholder loan provided to Globalive Wireless to comply with Canadian legal requirements (loan will be marked to market every quarter in function of the exchange rate), and from the financial liabilities in Algeria. Net Income in the fourth quarter increased by 23% over the previous quarter resulting in a QoQ increase of EPS of 28% to US$ 0.46 per GDR.

Table 9: Income Statement in IFRS/US$

31 December2007

US$ (000)

31 December 2008

US$ (000)

Inc/(dec)

Q3 – 2008(3 months)US$ (000)

Q4 – 2008(3 months)US$ (000)

Inc/(dec)

Revenues 4,726,610 5,326,549 13% 1,370,089 1,304,812 (5%)

Other Income 48,934 41,257 11,279 9,518

Total Expense (2,703,002) (2,984,247) (769,631) (702,621)

EBITDA1 2,072,542 2,383,559 15% 611,737 611,709 0%

Depreciation & Amortization (752,136) (912,173) (234,894) (224,870)

Impairment of Non Current Assets (18,718) (39,464)2 (2,195) (1,480)

Gain (Loss) on Disposal of Non Current Assets (2,605) 66,315 59 65,862

Operating Income 1,299,083 1,498,237 15% 374,707 451,222 20%

Financial Expense (520,320) (468,453) (121,170) (96,642)

Financial Income 38,074 53,110 (3,787) 10,364

Foreign Exchange Gain (Loss) 41,949 (201,083)3 (69,459)3 (121,735)3

Net Financing Cost (440,297) (616,426) (194,416) (208,013)

Share of Profit (Loss) of Associates 761,295 (2,955) - (2,955)

Gain (Loss) on Disposal of Associates (2,592) 27,262 - -

Profit Before Tax 1,617,489 906,118 (44%) 180,291 240,255 33%

Income Tax (453,621) (403,494) (89,836) (135,121)

Profit from Continuing Operations 1,163,868 502,624 (57%) 90,455 105,134 16%

Gain (Loss) from Discontinued Operations4 919,628 - - -

Profit for the Period 2,083,496 502,624 (76%) 90,455 105,134 16%

Attributable to:

Equity Holders of the Parent 5 2,021,353 430,822 (79%) 69,414 85,448 23%

Earnings Per Share (US$/GDR) 9.69 2.30 6 (76%) 0.36 0.46 28%

Minority Interest 62,143 71,802 21,041 19,686

Net Income 2,083,496 502,624 (76%) 90,455 105,134 16%

Management Presentation developed from IFRS financials.1. Includes a full impairment of the license of C.A.T. for US$ 30 million recorded in Q2 2008.2. Mainly due to the FX loss reported in Pakistan, Canada and Algeria as a result of the depreciation of the Pakistani Rupee, the Canadian Dollar and the Algerian 3. Dinar against the US Dollar.Represents Iraqna net profit net of Tax and inter-company transactions.4. Equates to Net Income after Minority Interest5. Based on a weighted average for the outstanding number of shares of 187,335,132 GDRs in 20086.

Balance Sheet

Aldo Mareuse, Group CFO commented: “OTH has no significant debt maturities until 2013 mainly as a result of the successful refinancing of the US$2.5 billion senior secured facility completed in April 2008 which has a five year maturity. We expect the operating subsidiaries of Orascom Telecom Holding to continue to generate substantial cash flow, in particular in Algeria, Egypt and Tunisia thereby allowing for steady cash upstreams to consolidate OTH’s cash position in 2009 and beyond. In Pakistan and Bangladesh we will focus on cash flow optimization through a highly flexible approach to capex spend which will be reduced in line with the slower market demand for mobile services while preserving a highly effective service proposition and quality of service. Orascom Telecom Holding remains committed to these markets and will ensure that both entities, and in particular Pakistan, have sufficient liquidity to respect their financial covenants for 2009 and beyond.

OTH will continue to support the development of its new ventures in North Korea and in Canada. In North Korea we expect the business to become EBITDA positive in the first year of operation thereby significantly reducing our needs to inject equity going forward. In Canada OTH has already invested in Q3 2008 a substantial part of its committed expenditure of US$500 – US$700 million and further liquidity requirements are therefore expected to remain relatively limited.

The overall liquidity profile of Orascom Telecom Holding for 2009 and beyond will be further improved through our US$1 billion free cash flow optimization program. We will also continue to opportunistically monitor attractive financing opportunities, as dem-onstrated by our recent $230 million secured bond issue, to further strengthen our balance sheet.”

Debt Repayment Profile

118

412

530

387

563 405

790 426

1,025

510

1,880

210

947

176385

599

1,370

737

OTH Debt Maturity Profile (US$ millions)

OTH Subsidiaries

2009 2010 2011 2012 2013 After 2013

Global Reports LLC

50 51

Table 10: Balance Sheet in IFRS/US$

IFRS/US$31 December

2007US$ (000)

IFRS/US$31 December

2008US$ (000)

Assets

Property and Equipment (net) 4,803,014 5,056,570

Intangible Assets 2,225,304 2,371,053

Other Non-Current Assets 714,270 727,436

Total Non-Current Assets 7,742,588 8,155,059

Cash and Cash Equivalents 1,238,568 651,783

Trade Receivables 370,345 327,638

Assets Held for Sale 924,3511 80,4712

Other Current Assets 1,067,800 705,409

Total Current Assets 3,601,064 1,765,301

Total Assets 11,343,652 9,920,360

Equity Attributable to Equity Holders of the Company 3,149,069 1,080,2303

Minority Share 93,063 120,994

Total Equity 3,242,132 1,201,224

Liabilities

Long Term Debt 3,378,582 5,205,030

Other Non-Current Liabilities 516,907 515,279

Total Non-Current Liabilities 3,895,489 5,720,309

Short Term Debt 1,839,618 530,315

Trade Payables 1,083,378 1,186,464

Other Current Liabilities 1,283,035 1,282,048

Total Current Liabilities 4,206,031 2,998,827

Total Liabilities 8,101,520 8,719,136

Total Liabilities & Shareholder’s Equity 11,343,652 9,920,360

Net Debt 4 3,979,632 5,083,562

Includes HTIL.1. Includes M-Link.2. Reflects the purchase of approximately 29.3 million GDRs of treasury shares in 2008. 3. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.4.

Cash Flow Statement

Table 11: Cash Flow Statement in US$

IFRS/US$31 December

2007US$ (000)

IFRS/US$31 December

2008US$ (000)

Cash Flows from Operating Activities

Profit for the Period 1,163,869 502,624

Depreciation, Amortization & Impairment of Non-Current Assets 770,996 951,637

Income Tax Expense 453,621 403,498

Net Financial Charges (Income) 482,317 415,074

Share of Loss (Profit) of Associates Accounted for Using the Equity Method (761,295) 2,956

Other 6,174 96,152

Changes in Assets Carried as Working Capital (276,909) (151,775)

Changes in Other Liabilities Carried as Working Capital 110,394 111,808

Income Tax Paid (164,420) (480,807)

Interest Expense Paid (494,927) (428,436)

Net Cash Generated by Operating Activities 1,289,820 1,422,731

Cash Flows from Investing Activities

Cash Outflow for Investments in Property & Equipment, Intangible Assets, and Financial Assets & Consolidated Subsidiaries

(2,009,924) (1,743,441)

Proceeds from Disposal of Property & Equipment, Associates, Subsidiaries and Financial Assets

267,203 2,085,120

Dividends & Interest Received 816,406 34,392

Net Cash Used in Investing Activities (926,315) 376,071

Cash Flows from Financing Activities

Proceeds from Non-Current Borrowings 2,334,307 2,522,216

Repayment of Non-Current Borrowings (987,809) (1,975,760)

Net Proceeds (Payments) from Current Financial Liabilities (480,841) (56,633)

Advances & Loans made to Associates & Other Parties - (441,910)

Net Change in Cash Collateral 36,286 (76,872)

Dividend Payments (131,303) (165,977)

Net Payments for Treasury Shares (855,772) (2,086,224)

Change in Minority Interest (63,677) (62,562)

Net Cash generated by (Used in) Financing Activities (148,809) (2,343,722)

Net Change Generated by Discontinued Operations 234,677 -

Net Increase (Decrease) in Cash & Cash Equivalents 449,373 (544,920)

Cash Included in Assets Held for Sale - (7,805)

Effect of Exchange Rate Changes on Cash & Cash Equivalents 32,997 (34,060)

Cash & Cash Equivalents at the Beginning of the Period 756,198 1,238,568

Cash & Cash Equivalents at the End of the Period 1,238,568 651,783

Global Reports LLC

52 53

Table 12: Income Statement in EAS/Egyptian Pounds

31 December2007

EGP (000)

31 December 2008

EGP (000)

Inc/(dec)

Q3 – 2008(3 months)EGP (000)

Q4 – 2008(3 months)EGP (000)

Inc/(dec)

Net Revenues 26,793,594 29,153,310 9% 7,410,508 7,266,348 (2%)

Other Income 281,754 225,805 61,026 53,082

Total Expense (15,209,824) (16,255,932) (4,133,544) (3,901,172)

EBITDA1 11,865,524 13,123,183 11% 3,337,990 3,418,258 2%

Depreciation & Amortization (4,257,471) (4,980,805) (1,267,457) (1,248,779)

Other (120,879) 146,959 (11,017) 351,219

Operating Income 7,487,174 8,289,337 11% 2,059,516 2,520,698 22%

Financial Expense (2,947,994) (2,562,098) (654,621) (539,956)

Financial Income 215,833 290,682 (21,404) 58,050

Foreign Exchange Gain (Loss) 237,599 (1,100,569) (377,840) (668,742)

Net Financing Cost (2,494,562) (3,371,985) (1,053,865) (1,150,648)

Share of Profit (Loss) of Associates 4,315,530 (16,171) - (16,171)

Gain (Loss) on Disposal of Associates (14,695) 149,210 (470) 845

Profit Before Tax 9,293,447 5,050,392 (46%) 1,005,181 1,354,725 35%

Income Tax (2,571,426) (2,208,409) (485,822) (747,881)

Profit from Continuing Operations 6,722,021 2,841,983 (58%) 519,359 606,844 17%

Gain (Loss) from Discontinued Operations 5,213,066 - - -

Profit for the Period 11,935,087 2,841,983 (76%) 519,359 606,844 17%

Attributable to:

Equity Holders of the Parent 11,563,307 2,463,594 (79%) 414,425 502,944 21%

Earnings Per Share (LE/Share) 11.08 2.63 (76%) 0.43 0.54 26%

Minority Interest 371,780 378,389 104,934 103,900

Net Income 11,935,087 2,841,983 (76%) 519,359 606,844 17%

Management Presentation developed from EAS financials1.

Table 13: Balance Sheet in EAS/Egyptian Pounds1

EAS/LE31 December

2007EGP (000)

EAS/LE31 December

2008EGP (000)

Assets

Property & Equipment 26,688,621 27,929,538

Intangible Assets 12,187,406 12,927,369

Other Non-Current Assets 3,974,910 4,026,358

Total Non-Current Assets 42,850,937 44,883,265

Cash & Cash Equivalents 6,892,630 3,607,620

Trade Receivables 2,060,972 1,813,478

Assets Held for Sale 5,144,015 445,408

Other Current Assets 5,945,949 3,912,554

Total Current Assets 20,043,566 9,779,060

Total Assets 62,894,503 54,662,325

Equity Attributable to Equity Holders of the Company 17,300,808 5,791,788

Minority Share 521,460 632,979

Total Equity 17,822,268 6,424,767

Liabilities

Long Term Debt 18,792,359 28,794,164

Other Non-Current Liabilities 2,876,590 2,852,074

Total Non-Current Liabilities 21,668,949 31,646,238

Short Term Debt 10,234,451 2,929,972

Trade Payables 6,028,997 6,567,076

Other Current Liabilities 7,139,838 7,094,272

Total Current Liabilities 23,403,286 16,591,320

Total Liabilities 45,072,235 48,237,558

Total Liabilities & Shareholder’s Equity 62,894,503 54,662,325

Net Debt2 22,134,180 28,116,516

Management presentation developed from EAS financials.1. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.2.

Global Reports LLC

54 55

Table 14: Ownership Structure & Consolidation Methods

Subsidiaries Ownership December 31 Consolidation Method December 31

2007 2008 2007 2008

GSM Operations

Mobinil (Egypt)1 28.75% 28.75% Proportionate Consolidation Proportionate Consolidation

Egyptian Co. for Mobile Services 20.00% 20.00% Proportionate Consolidation Proportionate Consolidation

IWCPL (Pakistan) 100.00% 100.00% Full Consolidation Full Consolidation

Orascom Telecom Algeria2 96.81% 96.81% Full Consolidation Full Consolidation

Telecel (Africa) 100.00% 100.00% Full Consolidation Full Consolidation

Orascom Telecom Tunisia3 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation

Telecel Globe - 100.00% - Full Consolidation

OT Ventures4 100.00% 100.00% Full Consolidation Full Consolidation

Koryolink - 75.00% - Full Consolidation

Internet Service

Intouch 98.15% 100.00% Full Consolidation Full Consolidation

Non GSM Operations

Ring 99.00% 99.00% Full Consolidation Full Consolidation

Orasinvest 100.00% - Full Consolidation -

OTCS 100.00% 100.00% Full Consolidation Full Consolidation

OT ESOP 100.00% 100.00% Full Consolidation Full Consolidation

Arpu +5 99.07% - Full Consolidation -

M-Link 100.00% 100.00% Full Consolidation Full Consolidation

OT Services Europe 100.00% 100.00% Full Consolidation Full Consolidation

MedCable 100.00% 100.00% Full Consolidation Full Consolidation

Mena Cable - 100.00% - Full Consolidation

Moga Holding 100.00% 100.00% Full Consolidation Full Consolidation

Oratel 100.00% 100.00% Full Consolidation Full Consolidation

C.A.T.6 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation

OT Wireless Europe 100.00% 100.00% - Full Consolidation

OT WIMAX 100.00% 100.00% Full Consolidation Full Consolidation

TWA 51.00% 51.00% Full Consolidation Full Consolidation

OIIH - 100.00% - Full Consolidation

OT Holding 100.00% 100.00% Full Consolidation Full Consolidation

FPPL - 100.00% - Full Consolidation

MinMax Ventures 100.00% 100.00% Full Consolidation Full Consolidation

OIH7 100.00% 100.00% Full Consolidation Full Consolidation

OTFCSA 100.00% 100.00% Full Consolidation Full Consolidation

OT Holding Canada8 - 100.00% - Full Consolidation

ITCL 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation

SAWLTD - 100.00% - Full Consolidation

Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS.1. Direct and Indirect stake through Moga Holding Ltd. and Oratel. 2. Orascom Telecom Tunisia is proportionately consolidated through Orascom Tunisia Holding and Carthage Consortium.3. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink.4. In September 2007, ARPU+ became fully consolidated in Intouch.5. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL). 6. OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007.7. Holding company for OTH’s Share in Globalive which has been accounted for under the equity method.8.

Appendix I

Glossary

ARPU (Average Revenue per User): Average monthly recurrent revenue per customer (excluding visitors roaming revenue & connection fee). This includes airtime revenue (national & international), as well as, monthly subscription fee, SMS, GPRS & data revenue. Quarterly ARPU is calcu-lated as an average of the last three months.

Capex: Tangible & Intangible fixed assets additions during the reporting period, includes work in progress, network, IT, and other tangible and intangible fixed assets additions but excludes license fees.

Churn: Disconnection rate. This is calculated as the number of disconnections during a month divided by the average customer base for that month.

Churn Rule: A subscriber is considered churned (removed from the subscriber base) if he exceeds the 90 days from the end of the grace period without recharging. It is worth noting that the grace period is a function of the scratch card being recharged by the subscriber in case this card has a certain validity and grace period. In cases where scratch cards have open validity, the subscriber is considered churned in case he has not made a single billable event in the last 90 days ( i.e outgoing or incoming call or sms, wap session…). Open cards validity is applied for OTA, Mobilink and banglalink so far.

MOU (Minutes of Usage): Average airtime minutes per customer per month. This includes billable national & inter-national outgoing traffic originated by subscribers (on-net, to land line & to other operators). Also, this includes incoming traffic to subscribers from land line or other operators.

OTH’s Market Share Calculation Method: The market share is calculated through the data warehouse of OTH’s subsidiaries. The number of SIM cards of competitors that appeared in the call detail record of each of OTH’s subsid-iaries is collected. This reflects the number of subscribers of the competition. However, OTH deducts the number of SIM cards that did not appear in the call detail records for the last 90 days to account for churn. The same is applied to OTH subsidiaries. This method is used to calculate the market shares of Djezzy, Mobinil, and Tunisiana only. In Pakistan & Bangladesh, Market share as announced by the Regulators is based on disclosed information by the other operators which may use different subscriber recognition policies.

Disclaimer

This presentation contains statements that could be con-strued as forward looking. These statements appear in a number of places in this presentation and include state-ments regarding the intent, belief or current expectations of the subscriber base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the company.

Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors.

You are cautioned not to place undue reliance on those for-ward looking statements, which speak only as of the date of this presentation, which is not intended to reflect Orascom Telecom’s business or acquisition strategy or the occurrence of unanticipated events.

Global Reports LLC

56 57

Consolidated Financial

Statements and Auditor’s Report(in EGP)

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Statement of Recognized

Income and Expense

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Appendix A - Liabilities to Banks

Appendix B - Bonds

Appendix C - Scope of Consolidation

Auditor’s reportTo the Shareholders of Orascom Telecom Holding S.A.E

We have audited the accompanying consolidated financial statements of Orascom Telecom Holding S.A.E. which comprise the consolidated bal-ance sheet as at 31 December 2008, and the consolidated income statement, consolidated statement of recognized income and expense and state-ment of consolidated cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

These consolidated financial statements are the responsibility of Company’s management. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Egyptian Accounting Standards and in the light of the prevail-ing Egyptian laws, management responsibility includes, designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; management responsibility also includes selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and we conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical re-quirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Orascom Telecom Holding S.A.E as of 31 December 2008, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the Egyptian Accounting Standards and the Egyptian laws and regulations relating to the preparation of these consolidated financial statements.

Emphasis of a matter

Without qualifying our opinion, we draw attention to note (35) “Contingent Assets and Liabilities” for the following:

1- Egyptian Company for Mobile Services (ECMS) “Jointly controlled entity” filed a lawsuit against the National Telecommunication Regu-latory Authority (NTRA) to cancel NTRA’s decision relating to the amendments of the interconnect prices between the fixed and mobile networks. The Company and its external legal counselor believe that the possibility of winning the lawsuit is probable as NTRA’s decision does not have legal or contractual ground, therefore the Company continued to recognize interconnect revenue and cost from and to Tele-com Egypt based on the existing agreement.

2- Some subsidiaries received tax assessment from the tax authorities in the territories in which they operate. Management believes that these assessments are excessive, and intends to challenge the assessments through the proper legal channels. Currently, the management of these subsidiaries can not make reliable estimate of tax exposures.

KPMG Hazem Has-san

Cairo, 13 April 2009

Global Reports LLC

58 59

As at December (in million of EGP) Note 2008 2007

(reclassified)Assets Property and equipment 17 27,930 26,689Intangible assets 18 12,927 12,187Other non-current financial assets 19 3,541 3,571Deferred tax assets 20 486 404Total non-current assets 44,884 42,851

Inventories 584 617Trade receivables 21 1,813 2,061Other current financial assets 19 1,535 3,501Current income tax receivables 16 416 622Other current assets 22 1,377 1,205Cash and cash equivalents 23 3,608 6,893Assets held for sale 6 445 5,144Total current assets 9,778 20,043Total Assets 54,662 62,894

Equity and Liabilities Share capital 899 1,090Reserves (1,405) (3,861)Retained earnings 6,298 20,071Equity attributable to equity holders of the Company 5,792 17,300Minority interest 633 522Total equity 24 6,425 17,822

Liabilities Non-current borrowings 25 28,794 18,792Other non-current liabilities 26 1,217 1,080Provisions 21 - Non-current income tax liabilities 16 237 - Deferred tax liabilities 20 1,377 1,797

Total non-current liabilities 31,646 21,669Current borrowings 25 2,930 10,235Trade payables 27 6,567 6,029Other current liabilities 26 4,737 4,300Current income tax liabilities 16 1,887 2,461Provisions 334 378Liabilities held for sale 6 136 - Total current liabilities 16,591 23,403Total Liabilities 48,237 45,072Total Equity and Liabilities 54,662 62,894

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

Group CFO Chairman & Managing Director Aldo Mareuse Naguib Onsi Sawiris Auditor’s report ‘attached’


For the year ended 31 December (in million of EGP) Note 2008 2007

(reclassified)Continuing operations Revenues 7 29,153 26,794 Other income 226 282 Purchases and services 8 (13,747) (12,971)Other expenses 9 (955) (898)

Personnel costs 10 (1,554) (1,341)Depreciation and amortization 11 (4,981) (4,257)Impairment charges 12 (216) (106)Disposal of non-current assets 13 363 (15)

Operating income 8,289 7,488 Financial income 291 216 Financial expense (2,562) (2,948)Net foreign exchange (loss) /gain (1,101) 238 Net financing costs 14 (3,372) (2,494)

Share of (loss) /profit of associates 15 (16) 4,315 Gain/ (loss) on disposal of associates 15 149 (16)

Profit before income tax 5,050 9,293 Income tax expense 16 (2,208) (2,571)

Profit from continuing operations 2,842 6,722 Discontinuing operations

Profit from discontinued operations, net of tax 6 - 5,213 Profit for the year 2,842 11,935

Attributable to: - Equity holders of the Company 2,464 11,563 - Minority interest 378 372

Basic and diluted earnings per share in EGP 28 - from continuing operations 2.63 6.09- from discontinued operations - 5.00


Consolidated Income Statement

Global Reports LLC

60 61

For the year ended 31 December 2008 2007(in million of EGP) Changes in fair value of available-for-sale financial assets, net of tax

(19) 3

Cash flow hedges, net of tax (484) (21)Currency translation differences (1,161) (166)Share of profit recognized directly in equity of associates 27 14

Net expense recognized directly in equity (1,637) (170)Profit for the year 2,842 11,935 Total recognized income for the year 1,205 11,765 Attributable to: - Equity holders of the Company 848 11,375 - Minority interest 357 390


Consolidated Statement of Recognized Income and Expense

For the year ended 31 December 2008 2007(in million of EGP) (reclassified)Continued operationsProfit for the year 2,842 6,722 Adjustments for :Depreciation, amortization and impairment 5,197 4,363 Income tax expense 2,208 2,571 Equity settled share based payment 71 49

Net financial expenses 2,271 2,732 Unrealized foreign exchange difference 786 (278)Loss on disposal of non-current assets 8 2 (Gain) / loss from sale of subsidiaries and financial assets (371) 13 Share of loss / (profit) of associates 16 (4,315)(Gain) / loss on disposal of associates (149) 16 Change in provisions and allowances 192 235 Change in assets carried as working capital (847) (1,573)Change in other liabilities carried as working capital 521 540 Income tax paid (2,632) (932)Interest expense paid (2,345) (2,806)Net cash generated by operating activities 7,768 7,339

Cash outflow for investments in: - Property and equipment (8,063) (8,711)- Intangible assets (802) (547)- Subsidiaries (564) (2,121)- Other non-current financial assets (112) - Proceeds from disposals of: - Property and equipment 62 32 - Subsidiaries 386 (343)- Associates 5,234 1,827 -Other financial assets 5,739 - Dividends and interest received 188 4,628 Net cash generated/ (used in) by investing activities 2,068 (5,235)

Proceeds from non-current borrowings 13,805 13,232 Repayment of non-current borrowings (10,801) (5,600)Net (payments) from current borrowings (310) (2,726)Advances and loans made to associate and other parties (2,419) - Net change in cash collateral (421) 206 Dividend payments ( 909) (787)Net payments for treasury shares (11,418) (4,851)Change in Minority Interest (357) (364)Net cash (used in) financing activities (12,830) (890)

Discontinued operations Net cash generated by operating activities - 1,465 Net cash used in investing activities - (134)Net cash generated by discontinued operations - 1,331 Net (decrease)/ increase in cash and cash equivalents (2,994) 2,545 Cash included in assets held for sale (44) - Effect of exchange rate changes on cash and cash equivalents (247) 13 Cash and cash equivalents at the beginning of the year 6,893 4,335 Cash and cash equivalents at the end of the year 3,608 6,893



Global Reports LLC

62 63

Notes to the Consolidated Financial StatementsAs of and for the year ended December 31, 2008

1- GeneralLegal status A- Orascom Telecom Holding S.A.E “the Company” is an Egyptian Joint Stock Company subject to the provi-sions of the Capital Market Law No. 95 of 1992 and its executive regulations. The Company is a major-ity owned subsidiary of Weather Investments S.P.A registered in Italy. The Company’s registered office is located in Nile City Towers, Ramlet Beaulac, Cairo, Egypt.Purpose of the companyB- The Company’s purpose is to participate in companies issuing securities or to increase its share capital of these companies. The Company may have interest or participate in, by any mean, in companies and other enterprises that have activities similar to those of the Company or those that may assist the Company to achieve its objective in Egypt or abroad. It may also merge into those companies and enterprises purchase them or affiliate them, pursuant to the provisions of the law and its executive regulations.The company and its subsidiaries from the biggest companies in providing the mobile services in Middle East companies, Africa and South Asia, it covers a geographic area containing for 450 million citizens. Financial statement authorizationC- The financial statements were approved by the board of directors on March 16, 2008.

2- Basis of preparation 2-1 Statement of compliance

These Consolidated financial statements have been prepared in accordance with the Egyptian Accounting Standards (EASs) and relevant Egyptian laws and regulations.

2-2 Basis of measurementThe financial statements are prepared on the historical cost convention, except for the following assets and liabilities which are measured as fair value• Derivative financial instruments.• Financial instruments at fair value through profit and loss.• Available-for-sale financial assets.

2-3 Functional and presentation currencyThese financial statements are presented in Egyptian pounds (L.E), which is the Company’s functional cur-rency. All financial information presented in Egyptian pounds has been rounded to the nearest million.

2-4 Use of estimates and judgmentsThe preparation of financial statements requires man-agement to make judgments, estimates and assump-tions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting esti-mates are recognized in the period in which the esti-mate is revised and in any future periods affected.In particular, information about significant areas of estimation uncertainty and critical judgments in apply-

ing accounting policies that have the most significant effect on the amount recognized in the financial state-ments are described in the following notes:• Measurement of the recoverable amount of intan gible assets and goodwill.• Valuation of financial instruments• Recognition of deferred tax assets.• Provisions and contingencies.

3- Significant accounting policies appliedThe accounting policies adopted for the preparation of the Consolidated Financial Statements are consistent with those used in the preparation of the Consolidated Financial Statements of the Company as of and for the year ended December 31, 2007, except as disclosed below. The accounting policies have been consistently applied to all the years presented.Historically the Company has elected the presentation of costs in the income statement by function. In order to be consistent with the method of presentation adopted by the Parent Company and facilitate the Parent Company financial reporting procedure, the Group has elected the presentation of costs by nature for the preparation of the income statement for the year ending on or after Decem-ber 31, 2008. The Company has reclassified compara-tive amounts disclosed for the prior years reported as if the new disclosure policy had always been applied. In addition, the Group has performed certain reclas-sifications to the balance sheet in order to homogenize classification criteria with that of the Parent Company. Note (37) “Reconciliation of previous disclosure” provide further details regarding the income statement prepared using the “function of expense” method and the reclas-sifications performed on the balance sheet. The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial information to international investors, the infor-mation presented in this document has been presented in million of Egyptian Pounds (“EGP.”), except earnings per share information and unless otherwise stated.

3-1 Basis of consolidationThe consolidated financial statements include the following companies:

3-1-1 Subsidiary companies - The consolidated financial statements include

all subsidiaries that are controlled by the parent company and which the management intends to continue to control. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial state-ments from the date that control commences until the date that control ceases.

- Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognized in assets, such as inventory and fixed assets, are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial


statements. EAS 24 Income Taxes applies to temporary differences that arise from the elimina-tion of profits and losses resulting from intragroup transactions.

- Minority interests shall be presented in the consoli-dated balance sheet within equity, separately from the parent shareholder’s equity. Minority interests in the profit or loss of the group shall also be sepa-rately disclosed.

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

3-1-2 Joint venture companiesJoint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the ventures).Proportion consolidation is a method of accounting whereby a venture’s share of each of the assets, liabilities, income and expenses of a jointly controlled entity is combined line by line with similar items in the venture’s financial statements or reported as separate line items in the venture’s financial state-ments.

3-1-3 Investments in associatesInvestments in associates are stated at equity method. Under the equity method the investment in associates is initially recognize at cost and the car-rying amount is increased or decreased to recog-nize the investor’s share of the profit or loss of the associates after the date of acquisition. Distributions received from associates reduce the carrying amount of the investment.Losses of an associate in excess of the Company’s interest in that associate (which includes any long-term interests that, in substance, form part of the Company’s net investment in the associate) are not recognized, unless the Company has incurred legal or constructive obligations or made payments on behalf of the associate.Any excess of the cost of the acquisition over the Company’s share of the net faire value of the identifi-able assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.

3-2 Translation of the foreign currencies transactionsOrascom Telecom Holding and some of its subsid-iaries maintain their accounting books in Egyptian Pound. Transactions denominated in foreign curren-cies are recorded at the prevailing exchange rate at the date of transactions. Monetary assets and liabili-ties denominated in foreign currencies at the balance sheet date are translated at the prevailing exchange rates at that date. The foreign currencies exchange dif-ferences arising on the settlement of transactions and the translation at the balance sheet date are recog-nized in the income statement.

3-3 Translation of the foreign subsidiaries’ financials As at the balance sheet date the assets and liabilities of these consolidated subsidiaries are translated to Egyptian Pound at the prevailing rate as at the period end, and the shareholders’ equity accounts are trans-lated at historical rates, where as the income state-ment items are translated at the average exchange rate prevailing during the period of the consolidated financial statements. Currency translation differences are recorded in the shareholders’ equity section of the balance sheet as translation reserves adjustments.

3-4 Derivative financial instrumentsThe Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financial and invest-ment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

Cash flow hedgesChanges in the fair value of the derivative hedging instrument designated as a cash flow hedge are rec-ognized directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in equity remains in place until the fore-cast transaction occurs. When the hedged item is a non-financial asset, the amount recognized in equity is transferred to the carrying amount of the asset when it is recognized. In other cases the amount recognized in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss.

Fair value hedgesChanges in the fair value of a derivative hedging instrument designated as a fair value hedge are recog-nized in profit or loss. The hedged item also is stated at faire value in respect of the risk being hedged, with any gain or loss being recognized in profit or loss.

3-5 Property & equipment and depreciationProperty & equipment are stated at historical cost and presented in the balance sheet net of accumulated de-preciation and impairment (Note 3-9-b). Depreciation is charged to the income statement over the estimated useful-life of each asset using the straight-line method. The following are the estimated useful lives, for each class of assets, for depreciation calculation purposes:

Global Reports LLC

64 65

Assets Depreciation period

Buildings 50 years

Cell sites 8-15 years

Tools 5-10 years

Computers equipment 3-5 years

Furniture and Fixtures 5-10 years

Vehicles 3-6 years

Leasehold improvements and renovations

3-8 years

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

3-6 Property and equipment under construction Property and equipment under construction are rec-ognized initially at cost. Cost includes all expenditures directly attributable to bringing the asset to a working condition for its intended use. Property and equipment under construction are transferred to property and equipment caption when they are completed and are ready for their intended use.

3-7 Intangible assetsA- Goodwill

Goodwill (positive and negative) represents amounts arising on acquisition of subsidiaries, associates and joint ventures. Goodwill (positive and negative) represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired at acquisition date. - Positive goodwill is stated at cost less impairment losses.- While negative goodwill arose will be recognized

directly in the income statement.- Goodwill resulting from further acquisitions after

control is obtained is determined on the basis of the cost of the additional investment and the carry-ing amount of net assets at the date of acquisition, accordingly.

B- Other intangible assetsOther intangible assets that are acquired by the Group are stated at cost less accumulated amortiza-tion and impairment losses. Amortization is recog-nized in the income statement on a straight – line basis over the estimated useful lives of intangible assets. License fees are amortized over the period of the licenses, concessions and computers software are amortized from the date they are available for use. The estimated useful lives are as follows:

Assets Amortization period

Licenses Fees Over the remaining period of the licenses

Concessions and Computers software

3-15 years

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

3-8 Investments at fair value a- Available-for-sale financial assets

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

b- Investments at fair value through profit and lossAn instrument is classified as at fair value through income statement if it is held for trading or is des-ignated as such upon initial recognition. Financial instruments are designated at fair value through income statement if the Company manages such investments and makes purchase and sale deci-sions based on their fair value.

3-9 Impairment a- Financial assets

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


b- Non-financial assetsThe carrying amounts of the Group’s non-financial assets, other than biological assets, investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment.An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in profit or loss.The recoverable amount of an asset or cash-gen-erating unit is the greater of its value in use and its fair value less costs to sell.Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the re-coverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amor-tization, if no impairment loss had been recognized.

3-10 Cash and cash equivalentsFor the purpose of preparing the Statement of Cash Flows, the Company considers all cash on hands and bank on demand deposits with banks and short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value with original maturities of three months or less are considered as cash and cash equivalents. The Statement of Cash Flows is prepared accord-ing to the indirect method.

3-11 Trade and other receivables Trade and other receivables are stated at their cost less impairment losses.

3-12 Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average method and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and other addition expenses.

3-13 Non-current assets held for saleNon-current assets (or disposal groups compris-ing assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use is classified as held for sale. Immedi-ately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata

basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property and biological as-sets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

3-14 TaxationIncome tax on the profit or loss for the year compris-es current and deferred tax. Income tax is recog-nized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the tax-able income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabili-ties for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or sub-stantively enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3-15 ProvisionsProvisions are recognized when the Company has a legal or constructive obligation as a result of a past event and it’s probable that a flow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Provisions are reviewed at the balance sheet date and amended (when nec-essary) to represent the best current estimate.

3-16 Earning per shareThe Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weight-ed average number of ordinary shares outstanding during the period.

3-17 Interest-bearing borrowingsInterest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subse-quent to initial recognition, Interest-bearing borrow-ings are stated at amortized cost with any difference between cost and redemption value being recog-


Global Reports LLC

66 67

nized in the income statement over the period of the borrowings on an effective interest basis.

3-18 Issued capitala- Repurchase of share capital

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

b- DividendsDividends are recognized as a liability in the year in which they are declared.

3-19 Legal reserveAs per the Company’s statutes 5% of net profit for the year is set aside to form a legal reserve, the transfer to such reserve ceases once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized in covering losses or increasing the Company’s share capital.

3-20 Revenue recognition(i) Cellular operations revenue

GSM revenue is recognized when services rendered to the customers based on the actual usage airtime from the following activities:- Prepaid cards is recognized based on the actual

used calls minutes while the unused call minutes at the end of the period are deferred.

- Monthly and connection fees are recognized in the income statement on a straight-line basis over the period or the terms of the contract.

- Other GSM telecommunications services and facili-ties when provided.

(ii) Telecommunications services revenueRevenue from the provision of telecommunications services includes the following:

- Goods sold Revenue is recognized when the significant risks

and rewards of ownership have been transferred to the buyer.

- Construction contracts Revenue is recognized in proportion to the stage of

completion of the contract. - Satellite services Revenue is recognized once the services delivered

to the client.- VAS revenue Value added services (VAS) revenue is recognized

once the services are delivered, or used by the customers.

- Space segment revenueSpace segment rental fees are recognized in the income statement on a straight-line basis over the terms of the lease.

(iii) Internet and fixed lines revenueRevenue is recognized once the service delivered to the client.

3-21 Expensesa- Borrowing costs

Borrowing costs are recognized as expenses in the income statement when incurred, with the excep-tion of borrowing cost directly attributable to the construction and acquisition of new assets which is capitalized as part of the relevant assets cost and depreciated over assets’ estimated useful lives. This capitalization ceases once the assets become in operational condition and ready for use.

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

3-22 Segment reportingA segment is a distinguishable component of the group that is engaged either in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subjected to risks and rewards that are different from those of other segments. The group’s primary format for segment reporting is based on business segment.

3-23 Discontinued operationsA discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.

4- Financial Risk Management Financial Risk FactorsThe Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and cash flow interest risk), credit risk and liquidity risk. In particular the Group is exposed to risks from movements in exchange rates, interest rates and market prices. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s performance through ongoing operational and finance activities. Depend-ing on the risk assessment, the Group uses selected deriva-tive hedging instruments. The management has overall responsibility for the establishment and oversight of the group’s risk management framework.

Market RiskForeign exchange riskThe Group operates internationally and is exposed to for-


eign exchange risk arising from various currency exposures in its investing, financing and operating activities. The main currencies to which the Group is exposed are the US dollar and the Euro. In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a natural hedge of the exchange rate of such financing. However, as some transactions are executed in foreign cur-rencies, and in particular in USD and Euro, the Group may be subject to the risk of exchange rate fluctuations. As of December 31, 2008 the Group’s borrowings included USD borrowings amounting to 4,022 million)equivalent to EGP 22,267 million) and Euro borrowings amounting to 298 mil-lion equivalent to ( EGP 2,300 million.) In certain instances the Group has entered into economic hedging agreements to manage the risk of fluctuations relating to these financing operations. In particular, Pakistan Mobile Communication Limited (PMCL) had borrowings for US$ 315 million (equiva-lent to EGP 1,750 million) and Euro 216 million (equivalent to EGP 1,680 million) as of December 31, 2008. Such bor-rowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani Rupee. The Group subsidiaries generally execute their operating activities in their respective functional currencies. Some Group subsidiaries are, however, exposed to foreign cur-rency risks in connection with scheduled payments in cur-rencies that are not their functional currencies. In general this relates to foreign currency denominated supplier pay-ables and receivables. The Group monitors the exposure to foreign currency risk arising from operating activities and, where relevant, enters into hedging transactions in order to manage the exposure. As at December 31, 2008, if the functional currencies had weakened / strengthened by 3% against the US$, the Euro and CAD, with all other variables held constant, profit for the year would have decreased / increased by EGP 370 million, respectively. Additionally, the Group has investments in foreign opera-tions, whose net assets are exposed to foreign currency translation risk. Currency exposure to such risk is not hedged

Cash flow and fair value interest rate riskThe Group is exposed to market risks as a result of changes in interest rates particularly in relation to borrowings. Bor-rowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floating interest rate borrowings based on the Group’s perception of future interest rate movements. In particular, the risk monitored relates to the impact of movements in floating rate indices on the Group’s finance charges. When considered appropriate, the Group manages its cash flow interest rate risk by using floating-to fixed interest rate swaps. In particular , as of December 31, 2008 the Group had outstanding floating-to-fixed interest rate swaps with a notional value of 1.500 million (equivalent to EGP 8,300 mil-lion). After considering such derivative transactions approxi-mately [53%] of the Group’s total borrowings had a floating rate of interest.The Group considers the sensitivity of its finance costs to

movements in interest rates. In particular an increase / decrease of 0.5% in interest rates as of December 31, 2008 would have resulted in an increase / decrease in finance costs of USD 15 million and a decrease / increase in the cash flow hedge reserve of USD 25 million.

Price riskThe Group has limited exposure to equity securities price risk on investments held by the Group.

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

• In December 2007, the Group sold its investment in Iraqna Company for Mobile Phone Services Limited (“Iraqna”) (see note 6 “Assets and liabilities classified as held for sale and discontinuing opera-tions” for further information). The total receivable for the sale amounted to US$ 1.2billion (equivalent to EGP 6.64 billion), which was due to be paid in equal installments in December 2008 and 2009. However, during 2008 the Group entered into a re-ceivable purchase agreement for the sale of these receivables. As of December 31, 2008 an amount of US$ 75 million (equivalent to EGP 415 million) was outstanding which relates to an amount that was withheld for potential claims. On February 26, 2009 Orascom Telecom Iraq Corp. Limited filed a claim in the High Court of Justice, Queen’s Bench Division, Commercial Court, in London, against each of 1) Atheer Telecom Iraq Limited (“Atheer”) and 2) Mobile Telecommunications Company KSC (“MTC”) to recover the remaining unpaid US$ 75 million plus interest from the sale of Iraqna to Atheer, which was guaranteed by MTC. The claim was served on the defendants and on March 13, 2009 each of the defendants filed acknowledg-ments of service and notices of intent to defend. Proceedings are ongoing in this matter. Manage-ment is expecting to receive full settlement of the outstanding balance with in the next month.


Global Reports LLC

68 69

• In November 2008 the Group sold its investment in Orasinvest. The total receivable from the sale amounted to US$ 180 million (equivalent to EGP 985 million), prior to price adjustments. As of De-cember 31, 2008 the amount outstanding was US$ 90 million ( equivalent to EGP 498 million,) prior to price adjustments. The remaining receivable is respected to be settled in December 2009.

• During 2008 the Group entered into two loans agreements to provide a total amount of EGP 2,341 million to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment Holdings Corp (see Note 34 “Related party transactions” for further details). As of December 31, 2008 a total amount of EGP 2,286 million was outstanding under these agree-ments. The loans were primarily provided to GWMC to fund the acquisition of spectrum licences in Canada. The licences were awarded to GWMC during March 2009 by Industry Canada and it is expected that GWMC will become fully operational during the fourth quarter of 2009. Based on busi-ness plan projections it is expected that GWMC,

will be able to repay the loan received when it is fully operational.

• In general the remaining other receivables and financial receivables included in financial assets generally relate to a variety of smaller amounts due from a wide range of counterparties, therefore, the Group does not consider that it has a significant concentration of credit risk.

Liquidity RiskThe Group monitors liquidity risk in order to ensure that it maintains sufficient cash and cash equivalents and avail-ability of funding through an appropriate level of committed credit facilities. In general, liquidity risk is monitored at entity level whereby each subsidiary is responsible for managing and monitoring its cashflows and rolling liquidity reserve forecast in order to ensure that it has sufficient committed facilities to meet its liquidity needs. The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undis-counted cashflows.

As of December 31, 2008 Carrying amount

Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

More than 5 years

Liabilities

Liabilities to banks 24,467 30,526 4,060 25,257 1,209

Bonds 6,377 9,003 630 4,058 4,315

Other borrowings 250 300 105 195 -

Telecommunication licence payable 2,190 2,640 1,127 1,021 492

Trade payables 6,567 6,567 6,567 - -

39,851 49,036 12,489 30,531 6,016



Less than 1 year


More than 5 years

Liabilities

Liabilities to banks 22,017 25,455 10,783 13,294 1,378

Bonds 6,854 10,525 1,009 3,221 6,295


Telecommunication licence payable 1,387 1,880 403 899 578

Trade payables 6,029 6,029 6,029 - -

36,412 44,045 18,362 17,432 8,251

* Expected cashflows are the gross contractual undiscounted cash flows including interest, changes and other fees.

The table below analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contrac-

tual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.


As of December 31, 2008 Expected cash flows (*)

Less than 1 year


More than 5 years

Cash outflow / (cash inflow)

Interest rate derivatives 641 236 405 -

Foreign exchange derivatives (5) 57 (59) (3)

Other derivative instruments - cash outflow 31 31 - -

Other derivative instruments - cash inflow (31) (31) - -

Total 636 293 346 (3)


Less than 1 year Between 1 and 5 years

More than 5 years



Foreign exchange derivatives (320) (68) (229) (23)

Total (286) (47) (216) (23)

* Derivative cashflows for interest rate derivatives and for-eign exchange derivatives represent the net cashflow from the relevant swap transaction as such derivatives are net settled. Cash inflow and cash outflow for other derivative instruments are shown separately as such derivatives are gross settled. Derivative cash outflows do not include the potential cash outflows should the share warrants of My Screen and Lingo be exercised. The exercise of such warrants is at the option of the Group. Details of such warrants are provided in note 19 “Other financial assets”. Additionally the put and call option for the purchase of the investment in Namibia has not been included in the contractual cashflows. Contractual cashflows are divided based on the relevant index as of the balance sheet date.

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

Other risksPolitical and economic risk in emerging countriesA significant amount of the Group’s operations are con-ducted in Algeria, Pakistan, Egypt and Tunisia. The opera-tions of the Group depend on the market economies of the countries in which the subsidiaries operate. In particular, these markets are characterized by economies that are in various stages of development or are undergoing restruc-turing. Therefore the operating results of the Group are affected by the current and future economic and political developments in these countries. In particular, the results of operations could be unfavorably affected by changes in the political or governmental structures or weaknesses in the local economies in the countries where it operates. These changes could also have an unfavorable impact on financial condition, performance and business prospects.

Regulatory risk in emerging countriesDue to the nature of the legal and tax jurisdictions in the emerging countries where the Group operates, it is possible that laws and regulations could be amended. This could include factors such as the current tendency to withhold tax on the dividends of these subsidiaries, the granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavor-able effect on the financial activities of the Group and on the ability to receive funds from the subsidiaries.Revenue generated by the majority of the Group subsid-iaries is expressed in local currency. The Group expects to receive most of this revenue from its subsidiaries and

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

5- Segment reportingThe Company considers primary segment information by business activity. The method used to identify the busi-ness segments include the factors used by management to direct the Group and assign managerial responsibilities. The methodology adopted to identify the components of revenues and cost attributable to each business segment is based on the identification of each component of cost and revenues directly attributable to each segment. The operating activities of the Group are organized and man-aged separately based on the nature of the products and services provided. Each segment offers different products and services to different markets and is controlled by differ-ent legal entities. The following primary business segments have been identified:

• GSM covering the mobile telecommunications services activities of the Group, including the sale of pre-paid telephone cards, post-paid and monthly subscriptions packages, telephone packages and roaming included in this segment are ;

• Telecom services relating to the sale of handsets, including ring tones and other cell phone products and activities relating to the rental of portals to al-low satellite roaming calls and value added service activities; and

• Internet & fixed line covering the internet and fixed telecommunications services of the Group.

The Group also reports geographical segments based on the geographical location of the legal entity controlling the operation, which is the same as the location of the major customers.The following geographical segments have been identified:

• North Africa – comprising Algeria and Tunisia• Middle East – comprising Egypt• South Asia – comprising Pakistan and Bangladesh• Others – comprising, North Korea, Central Africa,

Burundi, Malta, Belgium, the United Kingdom and other countries


Global Reports LLC

70 71

GSM Telecom services

Internet & fixed line

Unallocated * Total

2008

2007

Gross revenues 26,738 3,822 521 - 31,081

24,141 4,534 357 - 29,032

Intersegment revenues (581) (1,248) (99) - (1,928)

(391) (1,800) (47) - (2,238)

Revenues 26,157 2,574 422 - 29,153

23,750 2,734 310 - 26,794

Impairment charges (41) - (175) - (216)

(35) - (71) - (106)

Depreciation and amortization (4,809) (63) (88) (21) (4,981)

(4,090) (61) (82) (24) (4,257)

Operating income 8,127 (36) (393) 591 8,289

8,140 (192) (238) (222) 7,488

Profit before income tax 6,153 (103) (435) (565) 5,050

6,888 (209) (222) 2,836 9,293

Profit/(loss) from continuing operations 4,525 (348) (446) (889) 2,842

5,500 (239) (222) 1,683 6,722

Profit from discontinued operations - - - - -

5,213 - - - 5,213

Profit/(loss) for the year 4,525 (348) (446) (889) 2,842

10,713 (239) (222) 1,683 11,935

Total segment assets 46,204 2,275 1,091 5,092 54,662

49,343 2,199 922 10,430 62,894

Total capital expenditure** 9,271 597 349 30 10,247

9,610 250 244 27 10,131

Total segment liabilities 26,270 985 590 20,392 48,237

25,190 1,143 512 18,227 45,072

Primary segment information

*Unallocated represents revenues and costs relating to activities provided centrally from headquarters to subsidiar-ies across the group. These activities include staff functions with group wide responsibilities such as internal audit, finan-cial advisory, legal services, communications and investor relations. Unallocated assets and liabilities mainly include borrowings of the Company and deferred tax assets and liabilities.

** Segment capital expenditure is the total cost incurred during the period to acquire property and equipment and intangible assets other than goodwill.


North Africa

South Asia Middle East

Other Unallcated Total

2008

2007

Gross revenues 13,413 8,375 7,670 1,623 - 31,081

11,871 8,287 7,448 1,426 - 29,032

Intersegment revenues (454) (133) (923) (418) - (1,928)

(365) (27) (1,264) (582) - (2,238)

Revenues 12,959 8,242 6,747 1,205 - 29,153

11,506 8,260 6,184 844 - 26,794

Operating income 5,855 1,018 1,145 710 (439) 8,289

5,115 1,562 922 114 (225) 7,488

Profit before income tax 5,618 (361) 820 570 (1,597) 5,050

4,808 670 867 116 2,832 9,293

Profit/(loss) from continuing operations 4,062 (196) 398 499 (1,921) 2,842

3,979 364 670 30 1,679 6,722

Profit from discontinued operations - - - - - -

- - 5,213 - - 5,213

Profit /(loss) for the year 4,062 (196) 398 499 (1,921) 2,842

3,979 364 5,883 30 1,679 11,935

Total segment assets 17,024 20,999 10,004 1,509 5,126 54,662

18,466 19,130 8,057 6,810 10,431 62,894

Capital expenditure 1,203 5,504 3,406 104 30 10,247

2,005 5,914 1,967 218 27 10,131

Secondary segment information

6- Assets and liabilities classified as held for sale and discontinuing operations The following table discloses the results of discontinuing operations for the years indicated

2008 2007

Revenues - 6,097

Expenses - (849)

Profit before tax from discontinued operations - 5,248

Income tax expense - (35)

Profit from discontinued operations - 5,213


The following provides a breakdown of assets and liabilities held for sale as of December 31, 2008:

2008 2007

Property, plant and equipment 61 -

Intangible assets 111 -

Investments accounted for using the equity method - 5,144

Trade receivables 221 -

Other current assets 8 -

Cash and cash equivalents 44 -

Assets held for sale 445 5,144

Trade payables 119 -

Other current liabilities 11 -

Current income tax liabilities 6 -

Liabilities held for sale 136 -

Global Reports LLC

72 73

2008 2007

Revenues from services

Telephony services 25,999 23,522

Interconnection traffic 1,046 835

International and national roaming 544 431

Other services 74 67

Total revenues from services 27,663 24,855

Total revenues from sale of goods 1,490 1,939

Total 29,153 26,794

Hutchison TelecommunicationsIn October 2007, management initiated proceedings to dispose of the investment in Hutchison Telecommunications International Limited (“Hutchison Telecommunications”). During October and November 2007, the Company sold 5.0% of the investment in Hutchison Telecommunications, incurring a loss of EGP 16 million which was recorded in the income statement for the year ended December 31, 2007. In January 2008, the Company sold the remaining invest-ment of 14.2% for consideration of EGP 5 billion, generating a gain of EGP 149 million. This gain has been recorded in gain on disposal of associates.As of December 31, 2007 assets held for sale includes the Company’s equity investment in Hutchison Telecommunica-tions which was disposed of in January 2008. In accordance with Egyptian accounting standard 32 assets held for sale in disposal groups have been separately shown in a specific caption on the consolidated balance sheet. As Hutchison Telecommunications is an associate there is no income statement disclosure relating to Hutchison Telecommunica-tions within discontinuing operations.

Operations in Iraq In December 2007, the Company sold its subsidiary Iraqna Company for Mobile Service Ltd (“Iraqna”) for consideration of US$ 1.2 billion equivalent to (EGP 6.64 billion). The purchase consideration is split into two non-interest bear-ing receivables of US$ 600 million each which are due on

December 31, 2008 and 2009, respectively. In June 2008, the Company entered into a receivable purchase agree-ment with the National Bank of Kuwait and various financial institutions for the sale of these receivables. As of December 31, 2008 an amount of US$ 75 million was outstanding relating to the amount withheld as guarantee. In accordance with EAS 32, the results of operations relating to 2007 have been shown separately on the consolidated in-come statement within the caption discontinued operations.

M-LinkThe assets and liabilities related to M-Link, a company part of the Telecom services segment, have been presented as held for sale, following OTH managements’ decision to focus on GSM business and dispose of non-core assets. M-Link has been sold to TLC Servizi S.p.A., a wholly owned subsidiary of Wind Telecomunicazioni S.p.A., in January 2009.

Oracap Far East Ltd.Another company included in assets held for sale is Oracap far East Ltd. The assets and liabilities of this company (mainly relating to EGP 6 million licence to operate a bank and EGP 6 million cash) have been presented as held for sale, following OTH managements’ decision to dispose of the assets. Oracap far East Ltd had a capital commitment amounting to approximately EGP 742 million.

7- Revenues


Total revenues from services increased in 2008 mainly due to the increase in revenues from telephony services as a result of an increase in the subscriber numbers, mainly in Algeria, Egypt, Tunisia and Bangladesh. Revenues from interconnection traffic and international and national roam-ing increased in 2008 compared to 2007 due to the increase in subscriber numbers.

Total revenues from sale of goods decreased in 2008 mainly as a result of the disposal of the subsidiary Ring Jordan in May 2007, in addition to a decrease in sales of goods in Ring Egypt.

2008 2007

License costs 304 232

Travel costs 113 76

Accruals for provisions 78 60

Allowance for doubtful receivables 102 158

Taxes (other than income tax) 93 114

Training expenses 58 56

Other operating expenses 207 202

Total 955 898

Purchases and services costs increased during 2008 primarily due to the increase in operating activities. As a percentage of revenues, purchase and service costs were substantially consistent, amounting to 48% in 2007 and to 47% in 2008.In particular, interconnection traffic and roaming costs increased in 2008 compared to 2007 mainly due to the increase in the subscriber numbers in North Africa.

The increase in other expenses was primarily attributable to the increase in licence costs as a result of the increased ac-

Cost of handsets, scratch cards, sim cards and bundle costs decreased substantially in 2008 compared to 2007 as a result of the disposal of the Ring Jordan subsidiary in May 2007.Maintenance costs, security services and utilities increased in 2008 due to significant investments in the Groups telecommunication network as well as increased fuel and energy prices,

tivity. The annual contribution for licence costs is calculated as a percentage of revenues.

8- Purchases and services

9- Other expenses

2008 2007

Interconnection traffic and roaming 3,894 3,318

Cost of handsets, scratch cards, sim cards, bundle cost 1,538 1,986

Advertising and promotional services 1,382 1,504

Internet and fixed line costs 1,342 1,161

Customer acquisition costs 1,381 1,494

Maintenance costs 1,038 615

Utilities 721 429

Rental of network 466 642

Other leases and rentals 417 371

Rental of civil and technical sites 388 335

Consulting and professional services 318 286

Consumable materials, equipment and goods 264 236

Cost for security service 205 148

Cost for printing & collection services 64 124

Other service expenses 329 322

Total 13,747 12,971


10- Personnel costs

2008 2007

Wages and salaries 1,078 884

Bonuses given to management and employees 146 169

Social security 86 71

Share based compensation 61 48

Pension costs 41 51

Board of Directors remuneration 15 16

Other personnel costs 127 102

Total 1,554 1,341

Global Reports LLC

74 75

Average for the year ended December 31,

(in number of employees) 2008 2007

Senior management 205 188

Middle management 1,355 1,177

Staff 15,012 13,973

Total 16,572 15,338

2008 2007

Depreciation of property and equipment:

-Cell sites 3,747 3,135

-Computers, fixtures and other equipment 338 257

-Buildings 127 92

Amortization of intangible assets

-Licences 613 604

-Other intangible assets 156 169

Total 4,981 4,257

As of December 31,




Staff 14,859 15,164

Total 16,522 16,619

Personnel costs increased in 2008 compared to 2007 due to the increase in the average number of employees during the

12- Impairment chargesImpairment charges amounting to EGP 216 million in 2008 mainly relate to the impairment of EGP 170 million of the CAT telecommunication license in Algeria. Following the decision to liquidate this entity, the license has been fully impaired. Impairment charges also include impairments of EGP 38 million for obsolete property and equipment in Paki-stan and an impairment of EGP 8 million for other intangible assets.

13- Disposal of non-current assetsGain on disposal of non-current assets amounting to EGP 363 million in 2008 mainly relates to the gain on the disposal of the subsidiary Orasinvest EGP 371 million (USD 68 million). In November 2008, the Company disposed of its in-vestment in Orasinvest for consideration of US$ 180 million equivalent to EGP 996 million (USD 180 million). Consid-eration of US$ 90 million equivalent to EGP 498 million was paid in cash on closing of the transaction and a promissory note was issued by the purchasers for the remaining US$ 90 million equivalent to EGP 498 million. The promissory note is due on December 19, 2009 and interest of 12.5%

The table below provides a breakdown of the number of employees as of December 31:

The table below provides a breakdown of the average number of employees for the years ended December 31, 2008 and 2007:

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

year. In particular, the increase in senior and middle man-agement personnel related to the increase in operations.

annually accrues on the outstanding principal. Additionally the sale and purchase agreement includes a potential price adjustment based on Orasinvest’s revenue for the twelve month period following the closing date.

11- Depreciation and amortization


2008 2007

Current income tax expense (2,339) (2,028)

Deferred taxes 131 (543)

Income tax expense (2,208) (2,571)

2008 2007

Interest on deposits and bank accounts 162 200

Interest on non-current financial receivables 84 -

Other financial income 36 9

Dividends from investments 9 7

Financial income 291 216

Impairment of financial assets (3) (1)

Interest on bonds (500) (543)

Interest on other borrowings (1,834) (2,301)

Interest on other liabilities and other financial expense (225) (103)

Financial expense (2,562) (2,948)

Foreign exchange (loss) / gain (1,936) 238

Fair value changes of FX derivative instruments 835 -

Net foreign exchange (loss) / gain (1,101) 238

Total (3,372) (2,494)

Financial expense decreased mainly due to a decrease in interest paid on other borrowings mainly due the restruc-turing and amendment of the Company’s syndicated loan facility, and particularly to the decrease of its spread from 2.5% to 2.0%. Additionally, interest on other liabilities and financial expense increased mainly due to the increase in telecommunication licence payable and the interest effect of non-current income tax liabilities.The increase in foreign exchange loss is mainly due to unre-alized losses on translation of supplier facilities, telecommu-nication licence payables and borrowings due to the devalu-ation of the PKR and DZD against the US$. Furthermore, foreign exchange loss in 2008 also included the unrealized loss on the translation of the loans provided to Globalive Management Corp (“GWMC”) which are denominated in CAD (Note 30).Fair value changes on FX derivative instruments relates to the changes in the fair value of the cross currency swaps held by PMCL in connection with the economic hedge of borrowings.

15- Share of profit / (loss) of associates and gain/(loss) on disposal of associatesHutchison TelecommunicationsAs explained in Note 6 “Assets and liabilities held for sale and discontinuing operations”, during October and Novem-ber 2007, the Group sold 5% of its investment in Hutchison Telecommunications. The remaining investment was sold in January 2008. The Group’s share of profit from the associ-ate, which was recorded in share of profit of associates, amounted to EGP 4,315 million in 2007. The sale of the first portion of the investment in 2007, recorded in gain/(loss) on disposal of associates, generated a loss of EGP 16 million, whilst the gain on disposal of the remaining investment in 2008 amounted to EGP 149 million.

GlobaliveShare of loss of associates amounting to EGP 16 million in 2008 relates to the Group’s investment in Globalive. Further details of this associate are included in Note 30 “Acquisition of Associates”.

14- Net financing costs


16- Income tax expense

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

2008 2007

Current income tax receivable 416 622

Current and non current income tax liabilities (2,124) (2,461)

Global Reports LLC

76 77

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

The Group’s income tax expense decreased from EGP 2,571 million in 2007 to EGP 2,208 million in 2008. While the effective tax rate increased from 28% to 44%, respectively. Income tax expense in 2007 was benefited by a tax exemption for Orascom Telecom Algeria S.P.A. (“OTA”). This tax exemption expired in August 2007.

2008

Profit / (loss) from continuing operations 5,050

Tax calculated at Company's income tax rate 1,010

Different income tax rates in subsidiaries 456

Theoretical income tax for the year 1,466

Permanent differences 87

Unrecognized deferred tax for tax losses 493

Reversal of expired deferred tax assets for tax losses 47

Utilization of previously unrecognized deferred tax assets (89)

Unrecognized deferred tax liabilities on unremitted earnings 101

Other differences 103

Income tax for the year 2,208

17- Property and equipment

Land and Buildings

Cell Sites Computers, fixtures and

other equipment

Assets Under Construction

Total

Cost

As of January 1, 2008 910 29,915 1,591 4,432 36,848

Additions 214 1,752 454 6,479 8,899

Change in the scope of consolidation (17) 324 (61) (22) 224

Assets held for sale (15) (85) (17) (8) (125)

Disposals (30) (224) (32) (45) (331)

Currency translation differences (90) (3,861) (149) (487) (4,587)

Reclassifications 22 5,013 25 (5,060) -

As of December 31, 2008 994 32,834 1,811 5,289 40,928

Accumulated Depreciation and Impairment

As of January 1, 2008 247 9,044 819 49 10,159

Charge for the year 127 3,747 338 - 4,212

Change in the scope of consolidation 3 140 (40) - 103

Assets held for sale (4) (52) (10) - (66)

Disposals (3) (158) (16) - (177)

Impairment loss 2 1 1 37 41

Currency translation differences (47) (1,155) (72) - (1,274)

As of December 31, 2008 325 11,567 1,020 86 12,998

Net book value as of December 31, 2007 663 20,871 772 4,383 26,689



Land and Buildings

Cell Sites Computers, fixtures and

other equipment


Total

Cost

As of January 1, 2007 681 23,945 1,363 4,121 30,110

Additions 241 1,498 313 6,806 8,858

Change in the scope of consolidation (17) (1,494) (90) (86) (1,687)

Disposals (2) (87) (21) (1) (111)

Currency translation differences (2) (289) (8) (23) (322)


As of December 31, 2007 910 29,915 1,591 4,432 36,848


As of January 1, 2007 156 6,151 669 - 6,976

Charge for the year 97 3,280 271 - 3,648

Change in the scope of consolidation (17) (371) (58) - (446)

Disposals (1) (13) (16) - (30)

Impairment loss 4 57 - 49 110

Currency translation differences 8 (60) (47) - (99)

As of December 31, 2007 247 9,044 819 49 10,159



Additions to property and equipment in 2008 mainly relate to cell site investments and assets under construction relat-ing to new base stations, predominantly in GSM companies in Pakistan, Bangladesh and Algeria. Those investments are mainly due to the expansion of the business, increased capacity and the change in GSM technology. Property and equipment transferred to assets held for sale in 2008 relates to the property and equipment of M Link. See Note 6 “Assets and liabilities classified as held for sale and discontinuing operations” for further information. Additionally, depreciation charged during 2007 includes

an amount of EGP 164 million relating to the discontinued operations of Iraqna.Property and equipment pledged as security for bank bor-rowings amount to EGP 7 billion as of December 31, 2008 and primarily relate to securities for borrowings of PMCL, TWA and OTT.In the year ended December 31, 2008 and 2007 the Group capitalized borrowing costs of EGP 344 million and EGP 314 million, respectively, relating to the acquisition of prop-erty and equipment.


Global Reports LLC

78 79

Licences Goodwill Others Total

Cost

As of January 1, 2008 9,465 6,475 1,115 17,055

Additions 1,105 - 241 1,346

Change in the scope of consolidation 101 510 24 635

Assets held for sale (4) (93) (17) (114)

Disposals - - (38) (38)

Currency translation differences (365) (34) 7 (392)

As of December 31, 2008 10,302 6,858 1,332 18,492

Accumulated Amortization

As of January 1, 2008 3,415 810 643 4,868

Charge for the year 613 - 156 769

Change in the scope of consolidation 17 - 5 22

Impairment loss 169 5 2 176

Assets held for sale - - (4) (4)

Disposals - - (2) (2)

Currency translation differences (208) ( 2) (54) (264)

As of December 31, 2008 4,006 813 746 5,565

Net book value as of December 31, 2007 6,050 5,665 472 12,187



Cost

As of January 1, 2007 8,018 4,734 750 13,502

Additions 1,324 - 227 1,551

Change in the scope of consolidation 39 1,819 - 1,858

Currency translation differences 137 (78) 85 144

Reclassifications (53) - 53 -

As of December 31, 2007 9,465 6,475 1,115 17,055


As of January 1, 2007 2,751 810 425 3,986


Change in the scope of consolidation 19 - - 19

Currency translation differences 41 - 49 90

As of December 31, 2007 3,415 810 643 4,868



18- Intangible assets

Additions to intangible assets in 2008 primarily relate to the acquisition of a 3G license in Egypt, by ECMS with a duration of 14 years validity, the group’s proportionate share is EGP 941 million and acquisition of a WiMax License by PMCL.

Intangible assets pledged as security for bank borrowings amount to EGP 7.6 billion and primarily relate to securities for borrowings of PMCL and OTT.


19- Other financial assets

Impairment tests for goodwillGoodwill is allocated to the individual CGU which reflects the minimum level at which the units are monitored for man-agement control purposes.The carrying amount as of December 31, 2008 was subject to an impairment test involving comparing the carrying

amount with value in use and the recoverable amount. No evidence of impairment arose. Value in use was determined by discounting the expected cash flows, resulting from busi-ness plans approved by the respective Board of Directors, using the post-tax weighted average cost of capital (WACC) as the discount rate.

The following table provides an analysis of goodwill by segment

2008 2007

GSM Telecom Services

Internet & Fixed Line

Total GSM Telecom Services


Total

North Africa 3,099 - - 3,099 3,099 - - 3,099

South Asia 1,531 5 - 1,536 1,540 5 - 1,545

Middle East 814 32 123 969 814 4 110 928

Other 441 - - 441 - 93 - 93

5,885 37 123 6,045 5,453 102 110 5,665

2008 2007

Non-curent Current Total Non-curent Current Total

Financial receivables 2,302 940 3,242 3,167 3,154 6,321

Derivative financial instruments 885 136 1,021 251 82 333

Deposits 240 459 699 78 247 325

Financial assets available for sale 114 - 114 75 18 93

3,541 1,535 5,076 3,571 3,501 7,072

19-1 Financial receivablesAs of December 31, 2008 financial receivables mainly include an amount of CAD 483 million equivalent to EGP 2.2 billion relating to a financial receivable due from Globalive Wireless Management Corp, a subsidiary of the associate Globalive Investment Holdings. The Company provided fi-nancing to Globalive Wireless Management Corp in connec-tion with the funding of the acquisition of spectrum licences (further information is provided in Note 30 “Acquisition of associates”). Financial receivables as of December 31, 2008 also include an amount of US$ 165 million equivalent to EGP 913 million relating to receivables from the sale of subsidiaries. This pri-marily relates to the receivable from the sale of Orasinvest

Deposits are partially pledged as security against related bank borrowings

amounting to US$ 90 million equitant to EGP 498 million which is to be settled in December 2009 and the residual receivable of US$ 75 million equivalent to EGP 415 million from the sale of Iraqna. As of December 31, 2007 financial receivables includes an amount of US$ 1.1 billion equivalent to EGP 7,1 billion of which US$ 566 million equivalent to EGP 3 billion is included in current financial receivables and US$ 534 mil-lion equivalent to EGP 3 billion is included in non-current financial receivables) relating to the receivable from the sale of the subsidiary in Iraq. As explained in Note 6 “Assets and liabilities classified as held for sale and discontinuing operations”, the Company entered into receivable purchase agreements, during 2008, for the sale of this receivable.

2008 2007

Assets Liabilities Assets Liabilities

Interest rate derivatives - 624 - 31

Foreign exchange derivatives 981 - 320 -

Other derivative instruments 40 6 13 -

Total 1,021 630 333 31

Less non-current portion

Interest rate derivatives - 399 - -


Other derivative instruments 34 - - -

Current portion 136 231 82 31


19-2 Derivative financial instruments

Global Reports LLC

80 81

Interest rate derivativesThe notional principal amounts of the outstanding interest rate swaps that qualify for hedge accounting amounts to US$ 1.5 billion equivalent to EGP 8.3 billion, relating to the A1 and A2 term loan supplements of the Company. Under the derivative contract the Company pays fixed interest rate of 4.24% and receives 6 month Libor. Gains and losses are recognized in the cash flow hedge reserve in equity. As of December 31, 2008 the fair value of the derivative liability was EGP 634 million. The loss recognized in the cash flow hedge reserve, net of deferred tax as of December 31, 2008, amounts to EGP 484 million. Foreign exchange derivativesForeign exchange derivatives primarily relate to the eco-nomic hedge of PMCL. The cross currency swap relates to certain borrowings of PMCL, under which borrowings are swapped from US$ to PKR and from Euro to PKR, whilst the associated interest is swapped from LIBOR to KIBOR and from Euribor to KIBOR. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement.

My Screen Mobile IncIn May 2008, the Company concluded a “Restricted Stock Purchase Agreement” with My Screen Mobile Inc, an entity specializing in the delivery of advertising to mobile phones, to acquire 12.5 million shares which represents approximately 9% of the total share capital and existing voting rights. Additionally the Company purchased share warrants to acquire up to 20 million shares at an exercise price of US$ 2 per share. The warrants can be exercised from the date of the agreement until May 23, 2012. The total purchase price of the shares and warrants was US$ 10 million. Upon exercise of the warrants, the Company would hold approximately 20% of the existing and potential voting

The following table shows the ageing analysis of financial receivables and long term deposits as of December 31, 2008 and 2007:

* This entity is inactive and has therefore been recorded at cost.

Financial assets available for sale

Other derivative instrumentsOther derivative instruments mainly include the warrants to purchase shares of My Screen Mobile Inc and Lingo Media Corporation amounting to US$ 6 million equivalent to EGP 32 million and EGP 360,000, respectively as of December 31, 2008. The details of these warrants are provided below in the section “Financial assets available for sale”. (Note No. 19-4 financial assets held for sale.)CDC Fennec Ltd, a lender to OTA has the option to convert all amounts payable under the loan agreement into shares of the Company until the debt is extinguished. As of Decem-ber 31, 2008 and 2007 the fair value of this option was zero.

DepositsDeposits primarily relate to letters of guarantee and other re-stricted cash held as security for the performance of Group obligations. The increase in deposits in 2008 mainly relates to an increase in cash deposits in Algeria.

rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has significant influence over the com-pany. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2008 the fair value of the investment amounted to EGP 22 million equivalents to US$ 4 million.

Lingo Media CorporationIn August 2008, the Company entered into a subscription agreement to acquire 2,857,143 common shares of Lingo Media Corporation, a media entity focusing on online adver-tising. The investment represents approximately 23% of the

2008 2007

Deposits Financial receiv-ables

Deposits Financial receiv-ables

Not past due 699 2,827 325 6,321

Past due 0-30 days - - - -

Past due 31-120 days - 415 - -

Past due 121 - 150 days - - - -

Past due more than 150 days - - - -

699 3,242 325 6,321

Company name ownership % December 31, 2008 December 31, 2007

Smart Village (ECDMIV) 10% 44 45

My Screen Mobile Inc 9% 22 -

Lingo Media Corporation 23% 17 -

Top Level Domain Co. 5% 6 6

Other investments 25 42

114 93


total share capital and existing voting rights. The Company also purchased share warrants to acquire up to 2,142,857 shares of this entity. The warrants can be exercised from the date of the agreement for a period of two years, at an increasing price from US$4 up to US$8 per share. The total purchase price of the shares and warrants was US$ 5 million. Assuming exercise of the warrants, the Company would have an interest of approximately 34% in this entity. Based on an assessment of the contractual rights, manage-ment does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2008, the fair value of the in-

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

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

vestment amounted to EGP16 million equivalents to US$ 3 million and the fair value of the warrants, which is recorded in derivative financial assets, amounted to EGP 360,000 equivalents to US$ 65,000 .

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

2008 2007

Deferred tax liabilities, gross 2,290 2,535

Deferred tax assets offset (913) (738)

Deferred tax liabilities 1,377 1,797

Deferred tax assets, gross 1,402 1,143

Deferred tax liabilities offset (916) (739)

Deferred tax assets 486 404

of which recognized directly in equity (121) (5)

2008 2007

As of January 1, 1,393 899

Exchange differences (250) (44)

Income statement charge (131) 543

Tax charged directly to equity (121) (5)

As of December 31, 891 1,393

Deferred tax liabilities Depreciation and amortiza-

tion

Unremitted earnings

Other Total

As of December 31, 2007 2,054 479 2 2,535

Charged / (credited) to the income statement 198 (16) 47 229

Exchange differences (449) (20) (5) (474)

As of December 31, 2008 1,803 443 44 2,290

Deferred tax assets Tax losses

Accrued revenue

Depreciation and amortiza-

tion

Impair-ment of assets

Provi-sions

Fair value

Other Total

As of December 31, 2007 633 181 111 67 53 6 92 1,143

Charged / (credited) to the income statement

382 26 15 (14) (5) (6) (38) 360

Charged directly to equity - - - - - 121 - 121

Change in scope - - - - - - 3 3

Exchange differences (175) (12) (4) (7) (6) - (21) (225)

As of December 31, 2008 840 195 122 46 42 121 36 1,402


Global Reports LLC

82 83

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carryforwards of the Group’s subsid-iaries in Pakistan with no expiry date.No deferred tax assets were recognized on income tax loss carry forwards for some foreign subsidiaries, mainly Ban-glalink and CAT, as it is currently not probable that taxable profit will be available in the near future against which such tax loss carry forwards might be utilized. Generally the Group does not recognize deferred tax assets for temporary differences related to accruals for provisions,

The following table provides a breakdown by estimated recoverability of recognized deferred tax assets and liabilities:

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

The following table shows the ageing analysis of trade receivables as of December 31, 2008 and 2007, net of the relevant provi-sion for doubtful receivables:

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any collateral as security.

due to uncertainties in connection with the tax treatment of such expenses, as they might be challenged by local tax authorities. No liability has been recognized in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

Deferred tax liabilities Deferred tax assets

2008 2007 2008 2007

within 1 year 276 461 4 40

within 1 - 5 years 1,826 697 1,391 1,091

after 5 years 188 1,377 7 12

2,290 2,535 1,402 1,143

21- Trade receivables

2008 2007

Receivables due from customers 916 948

Receivables due from telephone operators 506 423

Accrued revenue (unbilled) 422 694

Receivables due from authorized dealers 92 93

Other trade receivables 250 387

Allowance for doubtful receivables (373) (484)

Total 1,813 2,061

2008 2007

At January 1 484 452

Exchange differences (30) -

Additions (allowances recognized as an expense) 102 175

Change in scope (1) (83)

Use (73) (35)

Reversal (11) (15)

Reclassifications (98) (10)

At December 31, 373 484

2008 2007

Not past due 852 1,158

Past due 0-30 days 393 339

Past due 31-120 days 353 310

Past due 121 - 150 days 50 79

Past due more than 150 days 165 175

Trade receivables 1,813 2,061


The increase in other receivables is mainly related to down payments as a guarantee to issue indexed notes with a nominal amount of US$ 230 (private placement) through a

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

Cash and cash equivalents as of December 31, 2007 were unusually high mainly due to the receipt of the proceeds from the sale of 5% of the investment in Hutchison Telecommunication.

fully owned subsidiary Orascom Telecom Oscar (see note 36 Subsequent events).

22- Other current assets

23- Cash and cash equivalents

2008 2007

Prepaid expenses 428 422

Advances to suppliers 89 95

Receivables due from tax authority 84 253

Deferred cost 78 106

Other receivables 953 477

Allowance for doubtful current assets (255) (148)

Total 1,377 1,205

2008 2007

At January 1 148 144



Reversal - (1)

Reclassifications 97 (1)


2008 2007

Bank accounts 2,929 2,387

Deposits 387 386

Money market fund - 4,110

Treasury bills 277 -

Cash on hand 15 10

Total 3,608 6,893


Global Reports LLC

84 85

Share capital

Treasury shares

Other reserves

Retained earnings

Total Minority interest

Total equity

As of January 1, 2007 1,100 (754) 1,226 10,041 11,613 713 12,326

- available-for-sale financial assets - - 3 - 3 - 3

- cash flow hedges - - (21) - (21) - (21)

Currency translation differences - - (184) - (184) 18 (166)

Share of profit recognized directly inequity of associates - - 14 - 14 - 14

Net income recognized directly in equity

- - (188) - (188) 18 (170)

Profit for the year - - - 11,563 11,563 372 11,935

Total recognized income as of December 31, 2007 - - (188) 11,563 11,375 390 11,765

Dividends paid - - - (787) (787) (364) (1,151)

Dividends paid to employees - - - (103) (103) - (103)

Share based compensation - - 49 - 49 - 49

Cancellation of shares (10) 636 (17) (609) - - -

Purchase of treasury shares - (4,847) - - (4,847) - (4,847)

Acquisition of minority interest - - - - - (217) (217)

Reclassifications - - 34 (34) - - -

As of December 31, 2007 1,090 (4,965) 1,104 20,071 17,300 522 17,822

Share capital

Treasury shares

Other reserves

Retained earnings

Total Minority interest

Total equity

As of January 1, 2008 1,090 (4,965) 1,104 20,071 17,300 522 17,822

- available-for-sale financial assets - - (19) - (19) - (19)

- cash flow hedges - - (484) - (484) - (484)

Currency translation differences - - (1,140) - (1,140) (21) (1,161)

Share of profit recognized directly in equity of associates -

-

27

-

27

-

27


- - (1,616) - (1,616) (21) (1,637)


Total recognized income as of December 31, 2008

-

-

(1,616)

2,464

848

357

1,205

Dividends paid - - - (909) (909) (331) (1,240)

Dividends paid to employees - - - (88) (88) - (88)


Cancellation of shares (191) 15,526 (95) (15,240) - - -


Sale of treasury shares - 632 (4) - 628 - 628

Capital increase in subsidiaries - - - - - 85 85

As of December 31, 2008 899 (865) (540) 6,298 5,792 633 6,425

24-Changes in equity

24-1 Authorized and Issued Share CapitalAs of December 31, 2007 the issued and paid up share cap-ital amounted to LE 1,090 million comprising 1,090,000,000 shares of a nominal value of LE 1 per share. The Company is listed on both the Cairo and Alexandria Stock Exchange and also has GDR’S (where one GDR is equivalent to 5 lo-cal shares) listed on the London Stock Exchange.

On February 24, 2008, the Extraordinary General Meeting approved a share capital reduction through the cancella-tion of 61,900,000 treasury shares (11,612,970 GDR and 3,835,150 local shares) amounted to L.E 4,831 million (867 USD million). The cancellation of the shares took place on June 16, 2008. Accordingly, the issued and paid up share capital became L.E. 1,028 million as of June 30, 2008


within one year

1-2 years

2-3 years

3-4 years

4-5 years

after 5 years

Total

As of December 31, 2008


Liabilities to banks 2,390 2,588 4,130 5,231 8,966 1,162 24,467

9,607 3,178 3,985 2,722 1,194 1,331 22,017

Bonds 196 282 75 346 1,398 4,080 6,377

531 36 364 97 331 5,495 6,854

Derivative instruments 231 200 127 64 8 - 630

31 - - - - - 31

Other borrowings 113 30 39 32 36 - 250

66 18 22 14 5 - 125

Total as of December 31, 2008 2,930 3,100 4,371 5,673 10,408 5,242 31,724

Total as of December 31, 2007 10,235 3,232 4,371 2,833 1,530 6,826 29,027

comprising 1,028,100,000 shares of nominal value L.E. 1 per share. Furthermore, on August 8, 2008, the Extraordinary General Meeting approved a share capital reduction through the can-cellation of 128,697,126 treasury shares (22,891,514 GDR’s and 14,239,556 local shares) amounted to L.E. 10,694 million. The cancellation took place on September 11, 2008. Accordingly, as a result of the above transactions, as of December 31, 2008 the issued and paid up share capital amounted to LE 899 million comprising 899,402,874 shares of a nominal value of LE 1 per share. The legal reserve connected with the cancelled shares including currency translation differences, amounting to LE 95 million, was reclassified from other reserves to retained earnings

24-2 Treasury SharesAs previously explained as of December 31, 2008, the Company cancelled a total of 190,597,126 treasury shares (34,504,484 GDR and 18,074,706 local shares) at total cost of L.E. 15,526 million.On May 14, 2008, the Company purchased 105,999,773 shares (11,177,963 local shares and 18,964,362 GDR’s), through a tender offer at a purchase price of LE 83 per local share and US$ 77.41 per GDR. On July 2, 2008, the Company purchased 11,999,403

Liabilities to banksAppendix A includes a detailed analysis of liabilities to banks as of December 31, 2008. In addition to the normal scheduled repayments of borrow-ing facilities, in accordance with the relevant agreements, the main changes in liabilities to banks during 2008 relates to financing transactions by the Company and PMCL, pri-marily for the purpose of refinancing existing borrowings. As of December 31, 2007 the Company had an amount of EGP 11,600 million outstanding relating to a syndicated loan facility. Following the disposal of Hutchison Telecommunica-tions in January 2008, the Group was required to make a mandatory prepayment of EGP 5,331 million equivalents to US$ 958 million of this facility from the proceeds of the dis-posal. During the year, in accordance with the contractual conditions, the Company also made additional repayments of EGP 770 million of this facility. Following these repay-

shares (3,035,563 local shares and 1,792,768 GDR’s), through a tender offer launched on May 27, 2008 at a pur-chase price of LE 83 per share and US$ 77.77 per GDR.

In addition to the two fixed price tender offers, during the year ended December 31, 2008 the Company purchased from the market 46,560,120 shares to be held as treasury shares and sold 18,206,500 shares to the market.

24-3 Share based compensation planDuring the year ended December 31, 2008 the Group ac-quired 1,383,855 of its own shares Share grants exercised during 2008 resulted in 1,223,148 shares. As a result of the above transactions, as of December 31, 2008 the Company had 21,343,485 shares held as treasury shares and for the purposes of the share based compensa-tion plan, the market value of these shares at 31 December 2008 is L.E 642 million.

24-4 DividendsThe Shareholders’ Meeting of the Company held on April 21, 2008 approved a dividend distribution of LE 1 per share (LE 5 per GDR) which was paid on June 5, 2008. The dividend distribution in 2007 amounted to LE 0.75 per share (LE 3.75 per GDR).

ments the amount outstanding was EGP 5,427 million. During the second quarter of 2008, the Company entered into an agreement to refinance the amount outstanding under this facility using the proceeds from a new five year senior secured syndicated debt facility. The proceeds from the new facility, of EGP 13.8 billion equivalent to US$ 2.5 billion, were partially used to repay previous facilities and to finance the tender offer for the acquisition of treasury shares (see “Treasury shares” for further details on these transac-tions 24-2). The new facility has duration of five years and is due in 2013 with a grace period of two years. Additionally, during 2008 PMCL entered into a syndicated loan for an amount of PKR 22,060 million (equivalent to EGP 1,544 million). The loan, which was fully drawn down in 2008, is repayable in six semi annual installments be-tween July 2011 and January 2014. The proceeds from the loan were used to refinance existing borrowings amounting

25- Borrowings


Global Reports LLC

86 87

to EGP 1,368 million and to finance ongoing capital expen-diture programs.

BondsAppendix B includes a detailed analysis of Bonds as of De-cember 31, 2008. During 2008 PMCL received proceeds of PKR 1,899 million (equivalent to EGP 146 million) from the issuance of new unsecured term finance certificates. The bond bears interest of 6 months KIBOR plus a spread of 1.65% and is repayable on 28 October 2013.

Financial liabilities include secured liabilities of EGP 21,566 million as of December 31, 2008 and EGP 20,195 million as of De-cember 31, 2007. In general, the financial liabilities are secured on property and equipment of the relevant subsidiary, pledged shares and receivables.

The increase in telecommunication license payable relates to the 3G license acquired by ECMS.

DerivativesDetails of the derivative liabilities are provided in Note 19 “Other financial assets”.

Other BorrowingsOther borrowings mainly include notes payable to suppliers and loans from minority shareholders in subsidiaries.

USD Euro Egyptian Pound

Pakistan Rupee

Bangla-deshi Taka

Algerian Dinar

Tunisian Dinar

Others Total


Total borrowings by cur-rency of issue 22,266 2,332 2,963 3,187 336 287 304 49 31,724

Notional amount of cur-rency derivatives (1,746) (1,687) - 3,433 - - - - -

Borrowings after derivative effect 20,520 645 2,963 6,620 336 287 304 49 31,724

of which (after derivative effect):

floating rate borrowings 6,141 601 2,537 6,616 335 287 295 - 16,812

fixed rate borrowings 14,379 44 426 4 1 - 9 49 14,912


Total borrowings by cur-rency of issue 18,562 2,662 2,852 3,485 317 725 424 - 29,027

Notional amount of cur-rency derivatives (1,722) (1,803) - 3,525 - - - - -

Borrowings after derivative effect 16,840 859 2,852 7,010 317 725 424 - 29,027


floating rate borrowings 3,983 781 1,839 7,010 317 725 419 - 15,074

fixed rate borrowings 12,857 78 1,013 - - - 5 - 13,953

26- Other liabilities

2008 2007

Current Non-cur-rent

Total Current Non-cur-rent

Total

Telecommunication license payable 1,120 1,070 2,190 399 988 1,387

Taxes (Other than income taxes) 1,051 - 1,051 1,177 - 1,177

Prepaid Traffic and deferred income 1,065 - 1,065 933 - 933

Due to local authorities 346 - 346 676 - 676

Personnel payables 293 - 293 410 - 410

Other 862 147 1,009 705 92 797

Total 4,737 1,217 5,954 4,300 1,080 5,380


Currency and Interest Rate Information of Borrowings Trade payables are all due within one year.

27- Trade payables

28- Earnings per share

2008 2007

Capex payables 3,622 3,602

Trade payables due to suppliers 1,438 1,214

Trade payables to telephone operators 409 251

Other trade payables 1,098 962

Total 6,567 6,029

2008 2007

Attributable to the equity holders of the Company:

- Profit from continuing operations (in million of EGP) 2464 6350

- Profit from discontinuing operations (in million of EGP) - 5213

2,464 11,563

Weighted average number of shares (in number of shares) 936,675,662 1,043,162,950

Earnings per share – basic (in EGP)

- from continuing operations 2.63 6.09

- from discontinuing operations - 5,00

2.63 11.09

2008 2007


Profit from continuing operations (in million of EGP) 2,464 6,350

Profit from discontinued operations (in million of EGP) - 5,213

2,464 11,563

Weighted average number of shares in issue (in number of shares) 936,675,662 1,043,162,950

Adjustments for:

- Shares granted (in number of shares) 2,245,362 912,162

Weighted average number of shares for diluted earnings per share (in number of shares) 938,921,024 1,044,075,112

Earnings per share – diluted (in EGP)


- from discontinuing operations - 5,00

2.63 11.09

(a) BasicBasic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding

(b) DilutedDiluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to

during the year, excluding ordinary shares purchased by the Company and held as treasury shares or for the purposes of the share based compensation.

assume conversion of all dilutive potential ordinary shares. During 2007 and 2008 the dilutive potential ordinary shares relate to the share based compensation plan.


29- Business combinationsDuring 2008 the Group acquired 100% of share capital of two GSM telecommunications operators in Central African Republic and Burundi through its subsidiary Telecel Globe

and a telecommunication company operating in the soft-ware development, internet and related services through its subsidiary Intouch.

Global Reports LLC

88 89

U-COMThe Group acquired U-COM, a mobile telecommunications operator in Burundi for a cash consideration of US$ 77 mil-lion equivalent to EGP 421 million. U-COM is consolidated from the third quarter 2008 and contributed revenues of EGP 77.5 million and net profits of EGP 16.6 million to the Group during the period.U-Com Burundi operates GSM 900/1800, CDMA 800, and WIMAX (in Bujumbura) networks and is the market leader with 246,000 subscribers and over 70% market share in Burundi. The goodwill is attributable to the strong market position of U-COM in Burundi.

Telecel CentrafriqueThe Group acquired the Central African GSM telecom-munications operator Telecel Centrafirque (“Telecel”)for a cash consideration of US$ 34 million equivalent to EGP 186 million. Telecel Centrafrique is consolidated from the third quarter 2008 and contributed revenues of EGP 60.8 mil-lion and net loss of EGP 27 million to the Group during the period.The goodwill is attributable to Telecel Centrafrique market position. The company utilizes a GSM 900/1800 network and is the largest operator in the Central African Republic with over 113,000 subscribers and 37% market share.

WOL Telecom LimitedThe Group acquired 100% of the share capital of WOL Telecom Limited (“WOL”), a telecommunication company, operating in software development, internet and related ser-vices, for a cash consideration of EGP 93 million equivalents to USD 17 million. WOL is consolidated from January 1,

2008. The goodwill is attributable to WOL’s market position-ing and the synergies expected to arise after its acquisition by the Group. The goodwill is attributable to the internet and fixed line segment. See note 36 “Subsequent events” for the business combina-tion that took place after the balance sheet date but before the approval of these financial statements.

30- Acquisition of AssociatesGlobaliveDuring 2008 Orascom Telecom Holding Canada (Malta) Limited (“OTHCML”) acquired an interest in Globalive Canada Holdings Corp (“Globalive”). This investment comprises a combination of voting and non-voting rights. Including direct and indirect interests, OTHCML holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The investment is equity accounted as the Group only has significant influence and not control over the financial and operating policies of this company.In March 2009, Globalive was awarded CAD 442 mil-lion equivalent to EGP 2 billion of spectrum licences from Industry Canada’s Advances Wireless Services Spectrum Auction. Globalive will offer a wireless service across Canada in a market that is not fully penetrated and which offers relatively high ARPU. Globalive expects to launch its network to consumers in the fourth quarter of 2009. During 2008, Globalive Management Corp (“GWMC”, a subsidiary of Globalive) entered into two loan agreements with the Company to borrow up to a total of CDA 508 million equivalent to EGP 2.3 billion . As of December 31, 2008 the outstanding loan amount, including accrued interest amounts to EGP 2.2 billion (equivalent to US$ 483 million).

The following table provides details of main acquisitions during 2008:

(*) The provisional fair value is approximated with the acquirees’ carrying amounts.

Provisional fair value (*)

U-COM Telecel WOL

Cash and cash equivalents 16 16 49

Property and equipment 93 104 38

Intangible assets 5 - 11

Deferred tax assets 5 - -

Inventories 5 5 -

Trade receivables 16 49 5

Other current assets (16) 16 5

Non-current borrowings - (38) -

Other non-current liabilities - (22) -

Current borrowings - (16) -

Other current liabilities (27) (22) (16)

Trade payables (4) (4) (15)

Current income tax liabilities (11) - -

Net identifiable assets acquired 82 88 77

Provisional goodwill 339 99 16

Cash consideration 421 187 93

Cash and cash equivalents in subsidiary acquired

(16) (16) (49)

Cash outflow on acquisition 405 171 44


Both loans are secured non-revolving term loans, bearing interest of Libor plus 18%. The loans are secured by an assignment of the spectrum licenses and are guaranteed, on a limited recourse basis, by some of the investment held by GWMC.

31- Interest in joint venturesThe Group has the following interest in its joint ventures:

The following amounts represent the assets, liabilities, rev-enues and profit for the year of the joint ventures. They are included in the balance sheet and income statement of the

Group’s consolidated financial statements according to its shareholding in each joint venture.

The following table provides selected financial information of Globalive as of December 31, 2008 and for the year ended De-cember 31, 2008.

Total assets 2,074

Total liabilities 2,243

Revenue -

Net loss (154)

% shareholding 65.4%

proportional share of net loss (101)

Elimination of proportional share of intragroup interest expense 85

Share of loss in associate (16)

Joint venture Shareholding Country of domi-ciliation

Egyptian Company for Mobile Services S.A.E. 34.67% Egypt

Orascom Telecom Tunisie S.A. 50.00% Tunisia

Consortium Algerian Telecommunication S.P.A. 50.00% Algeria

2008 2007

Revenues 13,979 11,394

Profit for the year 1,352 1,151

Current assets 2,635 2,682

Non-current assets 15,869 13,117

Current liabilities 7,328 6,333

Non-current liabilities 7,400 5,776


32- CommitmentsThe commitments as of December 31, 2008 and 2007 are provided in the table below:

As of December31, 2008


Intangible assets 766 1,925

Property and equipment 1,870 2,029

Others 604 237

Total 3,240 4,191

Commitments for the purchase of intangible assets mainly relate to commitments of ECMS amounting to EGP 597 mil-lion primarily relating to the acquisition of the 3G licenceCommitments for purchase of property and equipment mainly relate to commitments of Mena Cable amounting to EGP 842 million relating to the purchase of marine cables and related equipment.

Other purchase commitments mainly relate to the commit-ment of Telecel Globe to purchase Powercom Limited for an amount of EGP 327 million. The first installment of this commitment, amounting to EGP 166 million, is due in Janu-ary 2009 and the remaining installment, of EGP 161 million, is due one year later.

Global Reports LLC

90 91

33- Share based compensationThe following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of December 31, 2008:

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

2008 2007

Within one year 152 138

Between 1-5 years 650 607

After 5 years 227 238

1029 983

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

were granted on January 1 to existing employees. The GDRs granted vest in three installments over the vesting periods that vary from 12 to 42 months. Starting from 2005 GDRs are granted for free and must be exercised within two years after the end of the vesting period. Exercise of an award is subject to employment in the Group at the exercise date. The Group has no legal obligation to repurchase or settle the awards in cash.GDRs were valued using the Black-Scholes option-pricing model. The assumptions for calculations of the fair value per GDR at the grant date include the GDR price at each grant date, nil exercise price, a GDR price volatility between 29% and 69%, a dividend yield of 1% and an annual risk free rate between 3.74% and 6.43%.

Grant date Tranche GDRs granted (thou-

sands)

Vesting pe-riod (months)

Weighted exercise price

in EGP

GDR price at grant date in

EGP

Fair value of GDRs at grant

date in EGP

July 1, 2004 3 4 42 50.92 51.42 26.51

July 1, 2005 2 20 30 - 280.62 272.32

July 1, 2005 3 40 42 - 280.62 269.61

July 1, 2006 2 29 30 - 225.83 219.13

July 1, 2006 3 31 42 - 225.83 216.97

January 1, 2007 2 53 24 - 365.31 348.59

January 1, 2007 3 53 36 - 365.31 395.16

July 1, 2007 1 46 18 - 359.22 352.08

July 1, 2007 2 46 30 - 359.22 348.59

July 1, 2007 3 46 42 - 359.22 345.16

January 1, 2008 1 11 12 - 459.41 442.80

January 1, 2008 2 25 24 - 459.41 437.65

January 1, 2008 3 29 36 - 459.41 432.78

July 1, 2008 1 25 18 - 348.15 336.58

July 1, 2008 2 25 30 - 348.15 331.21

July 1, 2008 3 25 42 - 348.15 326.01


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

The weighted average GDR price during 2008 amounted to US$ 48.65 (2007; US$ 70.33).

The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2008 and 2007:

The table below sets forth the awards outstanding as of December 31, 2008 and their expiry dates:

2008 2007

Average exercise price

in EGP per GDR option

granted

GDR options (thousands)

GDRs grant-ed for free

(thousands)


in EGP per GDR option

granted


GDRs grant-ed for free

(thousands)

At January 1 50.92 80 478 26.35 483 227

Granted - - 140 - - 297

Forfeited - - (6) - - -

Exercised 50.92 (76) (108) 21.48 (403) (46)

Expired - - - - - -

At December 31 9.20 4 504 9.20 80 478

thereof exercisable 4 20 - - -

December 31, 2008 December 31, 2007

Range of exercise price in EGP

Weighted average exer-cise price in

EGP

Number of GDRs (thou-

sands)

Weighted average

remaining life in months

Weighted average exer-cise price in

EGP

Number of GDRs (thou-

sands)

Weighted average


50.92 50.92 4 12 50.92 80 24

nil nil 504 36 nil 478 40

Expiry date - December 31 Exercise price in EGP per GDR

GDRs (thousands)

2008 2007

2009 0 - 50.92 24 208

2010 - 179 174

2011 - 180 130

2012 - 100 46

2013 - 25 -

Total 508 558


34- Related party transactions

Transactions with subsidiaries, associates, with the Parent Company and its subsidiaries and other related parties are not considered atypical or unusual, as they fall within the

Group’s normal course of business and are conducted un-der market conditions that would be performed by indepen-dent third parties.

Global Reports LLC

92 93

Transactions with Weather Investments GroupThe Group is directly controlled by Weather Investments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Com-pany and interconnection traffic between the Group and the subsidiaries of Weather Investments, and particularly Wind Telecomunicazioni SpA.

Transactions with Joint Ventures of the GroupTransactions with joint ventures of the Group mainly refer to transactions with OTT and ECMS relating to interconnection traffic and the sale of handsets.

Transactions with Associates of the GroupOTH provided financing to Globalive Investment Holdings Corp’s subsidiary, Globalive Wireless Management Corp

(“GWMC”), an associate of the Group, in connection with the funding of the acquisition of the spectrum licenses. For further details see Note 30 “Acquisition of associates”.

Transactions with other related partiesThe Group is indirectly controlled by the Sawiris family. Transactions with entities under the control of the Sawiris family mainly refer to transactions with Orascom Construc-tions Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology.Transactions with Orascom Technology Solutions mainly re-fer to maintenance activities of electronic hard- and software carried out for the Group. Orascom Constructions Indus-tries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technol-

The main related party transactions are summarized as follows:

Sale of services and goods

Purchase of services and goods

Interest income

2008 2007 2008 2007 2008 2007

Weather Investments Group

Weather Investments 66 32 1 - - -

Wind Telecomunicazioni SpA 197 137 33 45 - -

Joint ventures

ECMS 16 115 - - - -

OTT 93 72 203 96 - -

Associate

GWMC - - - - 49 -

Other related parties

Orascom Construction Industries - - 16 74 - -

Orascom Technology Solution - - 27 40 - -

Orascom Trading - - 55 68 - -

Orascom Training & Technology - - 66 6 -

Total 372 356 401 329 49 -

Receivables Payables

2008 2007 2008 2007


Weather Investments 77 33 6 -

Wind Telecomunicazioni SpA 33 17 22 11

Joint ventures

ECMS 28 39 6 6

OTT 11 82 28 39

Associate

GWMC 2,220 - - -


Orascom Construction Industries - - 6 -

Orascom Technology Solution 5 6 6 -

Orascom Trading - - 11 11

Total 2,374 177 85 67


ogy mainly include management training programs.Furthermore, during 2008 the Group acquired 98.9% of MMS from companies controlled by the Sawiris family for a total purchase consideration of US$ 7 million through its subsidiary Ring For Distributions.

Key management compensationKey management includes executive and non executive directors of the Board of Directors of the Company, the Company’s chief financial officer, other managing directors considered key personnel and the chief executive officers of significant subsidiaries and joint ventures. The compen-sation paid or payable to key management for employee services is shown below:

35-Contingent assets and liabilitiesThe Group is subject to various legal proceedings and claims which arise in the ordinary course of business due to the nature of the operations of the Group and the nature of the markets where the Group operates. The Group recognizes a provision for losses and liabilities when the existence is certain or probable. As of December 31, 2008 the Company is a party in a number of legal cases which resulted from carrying out its activities. Based on the legal advice obtained, the Company’s management believe that the outcome of these lawsuits, individually or in aggre-gate, would not be material to the Group’s results.PMCL is involved in proceedings regarding tax claims up to the year 2005 whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. The appeals have been decided by the second level tax appellate forum and the assessments have been set aside for fresh consideration. With the exception of the 2005 tax year, the re-assessment has been completed. However, Pac has appealed against the re-assessment. The amount under dispute is equal to approximately PKR 1 709 million equivalent to EGP 110 million.The Jordanian Tax Authority has initiated proceedings against Pioneer Investment Ltd., a wholly owned subsidiary of the Group, in connection with the sale of Fastlink (Jordan Mobile Telecommunication Services). The amount under dispute is approximately Diners 49.2 million equivalent to EGP 343 million. At present the Group is not in a position to assess the status of the case.The Group resorted to the International Chamber of Commerce Arbitration regarding a material breach of the Shareholders’ Agreement entered into between Orascom Telecom and France Telecom in relation to the management of Mobinil for Telecommunications and Egyptian Company for Mobile Services (ECMS). Although no official timeline has been communicated to the management, the manage-ment expects a decision on the matter sometime before end of June 2009. The management is not in a position to opine on the outcome of the arbitration processOrascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile Services-subsidiary) provided war-ranty to the purchaser of the investment. This warranty, for a maximum amount of US$ 120 million,( equivalent EGP 664 million) is in respect of claims and tax covenant claim and includes all legal and other professional fees and expenses payable by the company in respect of all such claims and tax covenant claims, of which no more than US$ 60 million (equivalent to 332 million ) shall be payable in relation to tax covenant claim.Telecom Egypt filed a complaint with the dispute resolution committee of the National Telecommunication Regulatory

(NTRA), with the purpose of changing its interconnection prices with the mobile operators, despite the fact that there are existing contracts with the operators. In response ECMS requested the committee to respect the prices of contracts in effect. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnection prices between the fixed and mobile net-works to be effective from that date. On November 1, 2008 a law suit against the NTRA was filed in the Administrative Court at the State Counsel asking for staying and nullifying the NTRA decision.Based on the legal advice obtained, ECMS’s management believes that ECMS has a strong legal and contractual posi-tion; therefore ECMS recorded interconnection traffic with Telecom Egypt based on the existing agreement. If ECMS had applied Telecom Egypt’s interpretations, it would have negatively impacted the Group’s interconnection revenue by EGP 49 million equivalents to US$ 9 million, and decreased interconnection cost by EGP 34 million equivalents to US$ 3 million for the current financial year.On December 23, 2008 OTA received a provisional corpo-rate tax assessment amounting to EGP 310 million equiva-lents to US$ 56 million relating to year 2004. Management illustrated its position to the tax administration at January 31, 2009. As management considers most of the tax assess-ment challengeable, it did not accrue any provision. InTouch group received a tax claim amounting to EGP 22 million equivalents to US$ 4 million. Management believes that the process is still in its early stages and that at present the Group is not in a position to assess the potential liability in this regard.OTT received a notification on tax investigation during 2006 regarding electronic recharge sales. The total amount claimed by the tax authority is estimated to be EGP 293 mil-lion (the Group’s proportionate share of such claim amounts to approximately EGP 147 million). In 2007 OTT received the first judgment according to which the amount was reduced to EGP 66 million equivalents to US$ 12 million. Management believes to be fully compliant with Tunisian legislation. However, due to uncertainties of the legal envi-ronment, managements provided for the amount fully. The Group’s proportionate share of this provision amounts to EGP 33 million equivalents to US$ 6 million.The tax exposure of U-Com Burundi, a subsidiary of Telecel Globe, amounts approximately to EGP 66 million includ-ing penalties, as of December 31, 2008. As at present the Group is not in a position to assess the status of the case, no provision has been accounted for.The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following:

Key management compensation 2008 2007

Salaries and other short-term employee benefits 60 57

Equity settled share based payments 11 17


Global Reports LLC

94 95

• Letter of guarantee in an amount of EGP 161 equivalent to 29 USD million which represent the unpaid portion in investment in Power Com Com-pany located in Nambia;

• Letter of guarantee in an amount of US$ 2 million equivalent to 11 million provided by OTH to BBG Telecommunication;

• Letter of Guarantee amounting to US$ 1 million equivalent to EGP 5.5 million in favour of NTRA to guarantee MENA Cable execution of its entire obligations related to constructing, operating and renting sea cables networks and its infrastructure for international communication;

• Letters of guarantee provided by Ring Egypt, of which the uncovered portion amounts to EGP 102 million equivalent to 18.5 USD million, provided to mobile handset suppliers;

• Letters of guarantee provided by ECMS to National Telecom Regulatory Authority. The Company’s share in such letters of guarantee is equal to EGP 89 million.

• Guarantee provided by mobilink on behalf of Dancom online with an amount of PKR 148 million equivalents to EGP 11 million.

36- Subsequent eventsAcquisitions and participationsOn January 2009 the Group acquired 100% of the Namibian telecommunications operator, Cell One, through its subsidiary Telecel Globe. This acquisition together with the acquisition of TUCOM and TCAR are part of Telecel Globe’s strategy to tar-get licenses and mobile operators in small and medium sized developing countries that have high growth potential.The total purchase consideration amounted to EGP 327 mil-lion equivalents to US$ 59 million. In March 2009 the company announced that Globalive Wireless Management Corp. (“Globalive Wireless”), in which OTH has a 65.4% indirect equity ownership, has officially been granted its spectrum license from Industry Canada and has received the corresponding spectrum. Globalive Wire-less participated in Industry Canada’s Advanced Wireless Services Spectrum Auction in May 2008, purchasing CAD 442 million in provisional spectrum. Following a standard re-view period, Globalive has been granted its license, having met the eligibility requirements specified by Industry Canada to become a spectrum license.

DisposalsOn January 13, 2009 OTH disposed of 100% of its invest-ment in M-Link to TLC Servizi S.p.A. which is a wholly owned subsidiary of Wind Telecomunicazioni S.p.A. for a total con-sideration of US$ 77 million equivalent to EGP 426 million..On February, 2009 OTH received an indicative non-binding offer from ECMS for the acquisition of 100% of the shares of LINKdotNET and Link Egypt. The offer was approved by the Board of Directors of ECMS on February 20, 2009. The transaction will be subject to standard due diligence proce-dures and the valuation will be based on arm’s length legal requirements which are in line with best practice. The valua-tion will be finalized at the end of the due diligence process and will be subject to approval by the OTH Board of Directors.

Oscar bondOn February 12, 2009 Orascom Telecom issued US$ 230

million secured equity-indexed notes through a private placement. Such secured equity indexed notes mature in 2013 and bear floating rate interest of Libor plus 5%.The minimum/maximum redemption amount is based on the performance of the Company’s GDR’s.

Share transactionsIn February 2009, the Company plans a potential GDR and local shares repurchase from the market of up to 27 million shares (5.4 million GDRs) over the following three months. The potential buy back consist with what was declared in August 2008, to buy 44, 5 million shares (8.9 million GDRs) over twelve month from that date.

Other eventsOn January 13, 2009 the Company was awarded the management contract for one of two Lebanese mobile telecommunications operators. The management contract has duration of one year which can be further extended for another year.

International Chamber of Commerce decision Concern-ing Mobinil Telecom

- Mobinil for Telecommunications S.A.E. (“Mobinil”) (unlisted Company) is a jointly controlled entity between Orascom Telecom Holding S.A.E. (“OTH”) and France Telecom (“FT”). FT owns 71.25% of the shares of Mobinil, and OTH owns the remaining 28.75%. The purpose of Mobinil is to acquire the license of the first Mobile network (GSM) in Egypt through the Egyptian Company for Mobile Services (“ECMS”) “the operator” which is owned by Mobinil at 51%. The shares of ECMS are traded in Egypt Stock Exchange. In addition.

- On August 8th 2007, OTH initiated arbitration against FT at the Arbitration Court of the Inter-national Chamber of Commerce (ICC) regarding the dispute related to determining the identity of the shareholders who are entitled to acquire the interest of another partner in Mobinil based on the provisions of the shareholders agreement.

On March 10th, 2009, the ICC has issued its award which is summarized as follows:-

1-OTH has to sell and transfer the ownership of all its shares in Mobinil amounting to 9 079 shares to FT at the price of L.E. 441.658 per share with a total amount of L.E. 4 009 812 982 which has to be paid on its equivalent in U.S. Dollars at the exchange rate of the payment date.

2-OTH has to execute the sale not later than a 30 days period from arbitration award date, and in case OTH fails to execute the sale within the said period, a delay penalty of U.S.$. 50 000 per day shall be levied against OTH..

3-Rejecting the other claims and the claims of com-pensation presented by the parties in dispute.

On April 7th, 2009, the Capital Market Authority (CMA) issued its decision in regard to the legal effect based on the execution of the arbitration award and its impact on the minority interest of ECMS (a listed company in Egypt Stock Exchange) which stipulated the following:-

- The provision of Article No. (327) of the execu-tive regulations of the Capital Market Law that is relevant to the purchase offers for the purposes of


acquisition stipulates that equality and equal oppor-tunities among the holders of financial securities subject to the purchase offer must be in place.

- The provision of Article No. (353) of the said executive regulations also included the obligatory cases in which a mandatory purchase offer to buy the entire shares and the convertible bonds of the company targeted by the offer, in addition to the stipulation of paragraph No. (3) of the same article.

- Whereas, the execution of the arbitration award results in an indirect acquisition by FT of more than 50% of the capital or voting rights.

- Whereas there is a close relationship between the transfer of the ownership of the shares of Mobinil to FT which results in the acquisition of 51% of the shares of ECMS.

- And whereas the only activity of Mobinil is the ownership of a stake that is more than 50% of the shares of ECMS and exercising its voting rights related thereto, therefore, the execution of the own-ership transfer process relevant to the execution of the arbitration award cannot be separated from the liabilities arising from the said award. Especially, the processes of transferring the ownership of the shares of ECMS in the light of the obligation of presenting a mandatory purchase offer.

In addition to the necessity of execution on the shares of ECMS in a direct and indirect way, through the acquisition of the partner’s stake in the shares of Mobinil, simultaneously. Hence the transfer of ownership of the same share cannot be accepted whether in a direct or an indirect way at two different prices in the same time.

- The Capital Market Authority (CMA) refused the mandatory purchase offer presented by FT to ac-quire all the shares of ECMS as it is to the contrary of the principle of equality and equal opportunities among the securities’ owners.

Due to the fact of not reaching a clear agreement in regard to the minority interest of the shareholders of ECMS, the management of OTH, currently, can-not estimate the financial impact of this event on the financial statements of the company.

37- Reconciliation of previous disclosureThe following table provides a reconciliation between the income statement classified by function as reported in the consolidated financial statements for 2007 and the income statement classified by nature, disclosed for comparative purposes in these annual consolidated financial statements as of and for the year ended December 31, 2008.


(in million of EGP)Year end

31, Decem-ber 2007

as reported

Reclassification due to changingof presentation from functional to nature

Year end 31, Decem-

ber 2007 as reclassified

A B CNet revenues 26,909 - - (115) 26,794 Other income 167 - - 115 282 Operating cost (14,460) - 14,466 (6) - Distribution expenses (1,406) 1,406 - - - Administrative expenses (3,349) 3,349 - - - Remunerations and allowances for Board members

(4) 4 - - -

Purchases and services - (2,603) (10,351) (17) (12,971)Other expenses (385) (299) (374) 160 (898)Personnel costs - (1,341) - - (1,341)Depreciation and amortization - (516) (3,741) - (4,257)Impairment of non-current assets - - - (106) (106)Gains/(losses) on disposal of non-current assets

- - - (15) (15)

Operating income 7,472 - - 16 7,488 Net financing costs (2,494) - 2,494 - - Financial expense - - (2,948) - (2,948)Financial income - - 216 - 216 Foreign exchange gain/(losses) - - 238 - 238 Share of profit/(losses) of associates 4,315 - - - 4,315 Gain / (loss) on disposal of associates - - - (16) (16)Profit before tax 9,293 - - - 9,293 Income tax (2,571) - - - (2,571)Profit from continuing operations 6,722 - - - 6,722 Profit from discontinuing operations (after tax)

5,213 - - - 5,213

Profit for the year 11,935 - - - 11,935 Attributable to: Equity holders of the company 11,563 11,563 Minority interest 372 372

Global Reports LLC

96 97

AAdministrative expenses and distribution expenses have been reclassified according to their nature. In particular an amount of EGP 1,341 million was reclassified to personnel costs, an amount of EGP 2,603 million and to purchase and services, an amount of EGP 516 million to other expenses and an amount of EGP 299 million to depreciation and amortization. The reclassifications to purchase and services mainly relate to consulting and professional services and expenses for maintenance and utilities. The reclassification to other ex-penses mainly relate to taxes other than income taxes and expenses for traveling and staff training.The reclassification of EGP 1,406 million from distribution expenses to purchase and services mainly relates to the reclassification of marketing and promotion expenses.

BNet finance costs have been reallocated to financial expens-es for EGP 2,948 million, to financial income for EGP 215 million and to foreign exchange gains for EGP 238 million.Operating costs have been reclassified according to their

nature. In particular an amount of EGP 10,351 million was reclassified to purchase and services, an amount of EGP 3,741 million to depreciation and amortization and an amount of EGP 374 million to other expenses. The reclassification to purchase and services mainly includes interconnection traffic, roaming, expenses for hand-sets, scratch and sim cards, customer acquisition costs, internet and land line costs. The reclassification to other expenses mainly relates to license fee expenses.

CThe reclassification of EGP 225 million to other expenses mainly relates to accruals for provisions and doubtful receiv-ables.The following table provides reconciliation between the bal-ance sheet classification as of December 31, 2007 included in the annual consolidated financial statements as of and for the year ended December 31, 2007 and the information included for comparative purposes in these annual con-solidated financial statements as of and for the year ended December 31, 2008.


31-Dec-07 Reclassifications 31-Dec-07

(in million of EGP) as reported A B C reclassified

Assets

Property and equipment 26,689 - - - 26,689

Intangible assets 6,521 5,666 - - 12,187

Goodwill 5,666 (5,666) - - -

Investments 94 (94) - - -

Advance payments for investments 174 (174) - - -

Other non-current financial assets 3,303 268 - - 3,571

Deferred tax assets 404 - - - 404

Total non-current assets 42,851 - - - 42,851

Inventories 617 - - - 617

Trade receivables 1,184 (406) 443 840 2,061

Other current financial assets 5,829 - - (2,328) 3,501

Due from related parties 447 - (447) - -

Prepaid expenses 415 - (415) - -

Current income tax receivables - - - 622 622

Other receivables - (80) 419 866 1,205

Cash and cash equivalents 6,893 - - - 6,893

Assets held for sale 5,144 - - - 5,144

Total current assets 20,529 (486) - - 20,043

Total Assets 63,380 (486) - - 62,894

Equity and Liabilities

Equity attributable to equity holders of the Company

17,300 - - - 17,300

Minority interest 522 - - - 522

Total shareholders equity 17,822 - - - 17,822

Liabilities

Non-current borrowings 18,724 - 68 - 18,792

Other non-current liabilities 1,148 - (68) - 1,080

Deferred tax liabilities 1,797 - - - 1,797

Total non-current liabilities 21,669 - - - 21,669

Current borrowings 9,770 365 31 69 10,235

Trade payables 5,427 1,172 - (570) 6,029

Other payables 5,492 463 (2,581) 926 4,300

Due to related parties 110 - - (110) -

Debt due on purchase of investments 315 - - (315) -

Accrued expenses 2775 (2,406) (369) - -

Current income tax liabilities - (80) 2,541 - 2,461

Provisions - - 378 - 378

Total current liabilities 23,889 (486) - - 23,403

Total Liabilities 44,558 (486) - - 45,072

Total Equity and Liabilities 63,380 (486) - - 62,894


Global Reports LLC

98 99

AAn amount of EGP 5,666 million has been reclassified from goodwill to intangible assets. Investments amounting to EGP 94 million have been reclas-sified to other non-current financial assets.Advance payments for investments amounting to EGP 174 million have been reclassified to other non-current financial assets.Accrued expenses have mainly been reclassified to trade payables for an amount of EGP 1,172 million, to other pay-ables for an amount of EGP 463 million and to current bor-rowings for an amount of EGP 365 million. The reclassifica-tion to other payables mainly relates to accrued expenses. The reclassification to trade payables includes payables for property and equipment and the reclassification to current borrowings relates to accrued interest expense.

BTrade receivables due from related parties amounting to EGP 443 million have been reclassified to trade receivables. Prepaid expenses amounting to EGP 415 million have been reclassified to other receivablesAccrued expenses amounting to EGP 369 million relating to provisions have been reclassified to provisions for other liabilities and charges. Current income tax liabilities amount-ing to EGP 2,541 million have been reclassified from other payables to a new line of the balance sheet.

CLiabilities due to related parties amounting to EGP 110 mil-lion and debt due on purchase of investments amounting to EGP 315 million thousand have been reclassified to trade payables. The reclassification from trade payables to other payables is mainly due to payables due to local authorities.


CurrentNon-

currentTotal

Cur-rency

Nomi-nal

Line of credit Maturity Interest rate Securities

Millions of EGP Millions of contract currency

Orascom Telecom Holding S.A.E.

Revolving Credit Supplement 18 5 535 5,553 US$ 1,000 1,000 17/4/2013 Libor + 2% Secured

A1 Term Loan Supplement 73 5 286 5,359 US$ 987 987 17/4/2013 Libor + 2% Secured

A2 Term Loan Supplement 38 2 761 2,799 US$ 513 513 17/4/2013 Libor + 2% Secured

National Societe Generale Bank 55 - 55 US$ 9 10 30/4/2009 Libor +2.5% Unsecured

National Bank Of Abu Dhabi 55 - 55 US$ 9 10 31/12/2009 0.5 plus NBAD base rate for USD Unsecured

Fortis Banque 29 14 43 Euro 6 20 14/6/2010 6.30% Unsecured

Piraeus Bank 19 - 19 US$ 3 5 31/5/2009 Libor + 2% Unsecured

NSGB-Car Loan 2 11 13 EGP 13 15 2/2/2013 11% Unsecured

Credit Agricole Indo Suez Ban 4 - 4 US$ 1 10 31/5/2009 1 mnth Libor + 2.25% p.a. Unsecured

NSGB-Car Loan - 6 6 EGP 6 15 8/3/2014 11% Unsecured

293 13,613 13,906

Pakistan Mobile Communications Limited

MCB Bank Limited - Pakistan 117 1 541 1,658 PKR 22,060 22,060 04/01/2014 6 mnth Kibor + 1.30% Secured

ABN AMRO - COFACE Loan - ECA 161 292 453 Euro 60 125 30/12/2011 6 mnth Euribor + 0.80% Secured

ABN AMRO - Hermes - ECA Round II 149 271 420 Euro 56 110 16/09/2011 6 mnth Euribor + 0.25% Secured

ABN AMRO - Coface - ECA Round II 86 199 285 Euro 40 85 29/06/2013 6 mnth Euribor + 0.25% Secured

Royal Bank of Scotland - Pakistan 2 246 248 PKR 3,548 3,548 18/12/2012 6 mnth Euribor+ 1.30% Secured

ABN AMRO - ECGD - ECA Round II 53 188 241 US$ 50 94 28/02/2014 6 mnth Libor + 0.175% Secured

Habib Bank Limited - Pakistan 1 210 211 PKR 3,000 3,000 18/12/2013 6 mnth Kibor + 1.30% Secured

DEG - Germany 6 155 161 Euro 20 20 15/08/2013 6 mnth Euribor + 3% Secured

FMO - Netherlands 6 155 161 Euro 20 20 15/08/2013 6 mnth Euribor + 3% Secured

ABN AMRO - Hermes - ECA 61 83 144 Euro 19 46 29/03/2011 6 mnth Euribor + 0.78% Secured

ABN AMRO - ECGD - ECA 39 89 128 US$ 24 48 28/02/2012 6 mnth Libor + 0.40% Secured

Citibank N.A - Islamabad - Pakistan 28 44 72 PKR 949 1,740 02/07/2011 6 mnth Kibor + 2.25% Secured

ABN AMRO - ECA 20 37 57 Euro 8 10 15/12/2011 6 mnth Euribor + 2.50% Secured

Standard Chartered Bank-Pakistan 64 - 64 PKR 902 1,000 1 year 3 mnth Kibor + 2% Secured

Habib Bank Limited - Pakistan 52 - 52 PKR 732 750 1 year 1 mnth Kibor + 2% Secured

HSBC Bank Middle East Limited- Pakistan 17 - 17 PKR 244 600 1 year 1 mnth Kibor + 1.25% Secured

Habib Bank Limited - Pakistan 14 - 14 PKR 188 1,500 01/04/2009 6 mnth Kibor + 1% p.a or 3.5% Secured

Faysal Bank Limited - Pakistan 7 - 7 PKR 102 715 01/06/2009 6 mnth Kibor + 1.35% p.a with a floor 3.5%

Secured

883 3,510 4,393

Egyptian Company for Mobile Services S.A.E.

Misr/CIB/NSGB/HSBC (Syndicated loans) - 1,112 1,112 L.E. 1,121 1,121 14/08/2014 The interest rate shall be calculated based on following elements: CBE discount rate (CDR) - the company’s time deposit.

Unsecured

Misr/CIB/NBE (Syndicated loans) 160 554 714 L.E. 718 878 30/04/2013 Return rate - CBE mid corridor rate - 3.75% including highest over down balance.

Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans) - 697 697 L.E. 707 1,072 26/02/2015 commission Unsecured

Credit Agricole Bank 60 - 60 L.E. 59 73 1 year 11.75% Unsecured

Banque Misr 39 - 39 L.E. 40 43 1 year 0.125 Unsecured

Scotiabank Cairo 16 - 16 L.E. 14 43 1 year 12.25% Unsecured

National Societe General Bank 17 - 17 L.E. 17 29 1 year 11.25% Unsecured

HSBC 17 - 17 L.E. 14 41 1 year 13.50% Unsecured

BNP Paribas 17 - 17 L.E. 18 50 1 year 11.75% Unsecured

Barclays 17 - 17 L.E. 17 38 1 year 11.75% Unsecured

343 2,363 2,706 * including highest over

drawn balance commission



Global Reports LLC

100 101

CurrentNon-

currentTotal

Cur-rency

Nomi-nal



Orascom Telecom Bangladesh Limited

USD Commercial Facility 53 646 699 US$ 130 130 1/8/2013 3 mnth Libor +3.45% Secured

Hermes Facility 69 409 478 US$ 91 120 1/7/2014 3 mnth Libor+0.55% Secured

DFI Facility - 160 160 US$ 30 30 15/6/2014 3 mnth Libor +3.60% Secured

BDT A Facility 50 117 167 BDT 2,205 2,520 30/6/2012 14.75% ( Floating) Secured

BDT B Facility 8 69 77 BDT 1,020 1,020 30/6/2014 91days TB rate+ 7.5% Secured

Standard Chartered Bank 28 - 28 BDT 348 348 22/1/2009 14.50% (Floating) Unsecured

Pubali Bank Limited 28 - 28 BDT 350 350 22/1/2009 14.50% (Floating) Unsecured

National Bank Ltd. 8 - 8 BDT 100 100 22/1/2009 14.50% (Floating) Unsecured

National Credit and Commercial Bank 8 - 8 BDT 100 100 22/1/2009 14.50% (Floating) Unsecured

Standard Bank Limited 1 - 1 BDT 12 12 22/1/2009 14.50% (Floating) Unsecured

United Commercial Bank Ltd. 8 - 8 BDT 100 100 22/1/2009 14.50% (Floating) Unsecured

Standard Chartered Bank 1 - 1 BDT 11 25 22/1/2009

Standard Chartered Bank 8 - 8 BDT 100 100 22/1/2009 13.25% (floating) and 14.5% (floating) Unsecured

270 1,401 1,671

Orascom Telecom Algeria S.P.A.

Hermes loan 2006 116 331 447 US$ 83 86 15/11/2012 Libor + 0.6 % Secured

Coface Loan 2006 DZD 149 138 287 DZD 3,808 9,724 15/11/2010 Rediscount rate + 0.60% Secured

265 469 734

Orascom Telecom Tunisie S.A.

International refinancing 129 253 382 Euro 100 100 March-2011 Euribor+1% Secured

Local refinancing 99 195 294 TND 105 105 March-2011 TMM+2% Secured

228 448 676

Moga Holding Limited

CDC loan 28 138 166 Euro 18 18 15/8/2010 Euribor plus 10 % Secured

28 138 166

Med Cable Limited

Export Credit Calyon 17 31 48 Euro 6 12 13/9/2011 Euribor + 0.95 % Guaran-teed

Commercial Loan Calyon 7 - 7 Euro 1 4 17/12/2009 Euribor + 3.5 % Guaran-teed

24 31 55

Intouch for Telecommunication Services

Barclays 10 10 20 L.E 35 35 1/10/2010 14.25% Secured

NBAD 9 12 21 L.E 35 35 1/4/2011 14.50% Secured

Other - various lenders 9 - 9 L.E 11 12 1/4/2011 14% Unsecured

28 22 50

Telecel Globe Limited

Banque de development 4 26 30 XAF 2,500 2,500 30/06/2014 9.25% Unsecured

Commercial Bank Centrafrique 3 5 8 XAF 635 635 30/06/2011 11% Unsecured


Commercial Bank Centrafrique 6 - 6 XAF 379 379 one year 12% Unsecured

popluer Moroco Centrafrique 1 - 1 XAF 109 109 one year 15% Unsecured

15 35 50


Appendix A - Liabilities to Banks (Continued)

CurrentNon-

currentTotal

Cur-rency

Nomi-nal



Trans World Associates (Private) Limited

United Bank Limited - 9 9 PKR 138 345 27/11/13 Kibor + 3% Secured

Habib Bank Limited - 7 7 PKR 101 252 27/11/13 Kibor + 3% Secured

Allied Bank Limited - 6 6 PKR 80 200 27/11/13 Kibor + 3% Secured

Askari Bank Limited - 5 5 PKR 69 172 27/11/13 Kibor + 3% Secured

Standard Chartered Bank Pakistan Limited - 5 5 PKR 69 173 27/11/13 Kibor + 3% Secured

Pak Oman Investment Company Limited - 4 4 PKR 60 150 27/11/13 Kibor + 3% Secured

Ponjub bank - 3 3 PKR 46 115 27/11/13 Kibor + 3% Secured

El Falah Bank - 3 3 PKR 40 100 27/11/13 Kibor + 3% Secured

SAPICO - 3 3 PKR 40 100 27/11/13 Kibor + 3% Secured

- 45 45

Ring for Distributions

Over Draft facility from Arab Bank - Algeria 2 2 4 L.E 3 3 01/12/2011 7.62% Unsecured

Over Draft facility from Abu Dabi Bank - Egypt

7 - 7 US$ 1 2 01/12/2009 7.50% Unsecured

NSGB OverDrafts 1 - 1 L.E 1 1 01/12/2009 7.75% Unsecured

NBAD OverDrafts 3 - 3 US$ 1 1 01/12/2009 7.75% Unsecured

13 2 15

Total - liabilities to banks 2,390 22,077 24,467

Current Non-current Total Nominal Maturity Interest Securities

Millions of GEP Currency Millions of contract currency


ABN Amro Bank and Deutcs bank 16 1,360 1,376 USD 250 13/11/2013 8.625% Unsecured

Pak Oman Investment Company Limited 4 226 230 PKR 3,258 31/05/2013 6 mnth Kibor + 2.85% Secured

United Bank Limited (Trustee) 29 - 29 PKR 400 11/03/2009 "6 mnth' Kibor + 1.6% floor of 4.95% and cap of 12%”

Secured

Allied Bank Limited 10 244 254 PKR 3,500 01/10/2010 6 mnth Kibor + 1.30% Unsecured

Allied Bank Limited 8 271 279 PKR 3,907 28/10/2013 6 mnth Kibor + 1.65%

67 2 101 2 168

Orascom Telecom Finance SCA

Senior Notes OTFSCA 129 4,080 4,209 USD 750 08/02/2014 7.88% Unsecured

129 4 080 4 209

Total Bonds 196 6 181 6 377



Appendix B– Bonds

Global Reports LLC

102 103

Appendix C - Scope Of Consolidation Selected subsidiaries, joint ventures and associates

Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom HoldingNorth Africa Algeria Orascom Telecom Algeria S.P.A. 96.81% Algeria Orascom Telecom Service Algeria 96.81% Algeria Data Base Management services Algeria 100.00% Algeria Ring Algeria LLC 98.01% Algeria Caring Algeria 97.03% Algeria MobiZone Algeria 100.00% Algeria Algeria Win Call 100.00% Algeria Consortium Algerian Telecommunication S.P.A. 49.83% Morocco Kenza Telecom Morocco 100.00% Tunisia Ring Tunisia 78.21% Tunisia Ring Distribution Tunisia 77.43% Tunisia Ring Retail Tunisia 76.65% Tunisia R&D Tunisia 96.53% Tunisia Orascom Telecom Tunisie S.A. 50.00%Asia Bangladesh Orascom Telecom Bangladesh Limited 100.00% Bangladesh Ring Bangladesh 98.98% Bangladesh MobiZone Bangladesh 100.00% North Korea CHEO Technology JV (DPKR) 75.00% Pakistan Pakistan Mobile Communications Limited 100.00% Pakistan Business & Communications 100.00% Pakistan Link Direct International Limited 100.00% Pakistan Mobitalk Limited 100.00% Pakistan MobiZone Pakistan (Pvt.) Limited 100.00% Pakistan PMDL Limited 16.70% Pakistan Trans World Assoicates (Private) Limited 51.00% Pakistan Ring Pakistan 94.59% Pakistan Ring Pakistan Service 94.59% Pakistan WOL Telecom Limited 100.00% Pakistan Call Pack Pakistan 100.00%Middle East Dubai Gloabl Entity for Telecom Trade 100.00% Dubai Global Entity for Telecom Trade -FZE 100.00% Dubai Ring Dubai 96.53% Dubai LinkDotNet Dubai 100.00% Dubai MobiZone Dubai 100.00% Egypt Cortex Egypt 94.00% Egypt Ring for Distributions 99.00% Egypt Advanced Electronic Industries 96.53% Egypt Caring Egypt 97.02% Egypt Connect 50.49% Egypt MMMS 98.80% Egypt Intouch for Telecommunication Services 100.00% Egypt Link Egypt 99.96% Egypt Into Net 55.78% Egypt LINKdotNET 100.00% Egypt Arab Finance Securities 100.00% Egypt Link Development 99.80% Egypt Link Online Egypt 100.00% Egypt Arpu for Telecommunication Services 100.00% Egypt Global Telecom 95.80% Egypt Egypt Call 99.98% Egypt Mobinil Services Egypt 35.86% Egypt Mobinil for Telecommunication S.A.E. 28.75% Egypt Egyptian Company for Mobile Services S.A.E. 34.67% Egypt

EgyptEgyptIraq

Egyptian French Company for Finance LeaseOrascom for International Investment HoldingMiddle East and North Africa Cable SubmarineRing Iraq

4.91%99.9%100%

96.53% Palestine Pal Call Palestine 99.90%


Appendix C - Scope Of Consolidation (Continued)Selected subsidiaries, joint ventures and associates

Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom HoldingQatar LDN Qatar 49.00%Saudi Arabia LinkDotNet Saudi Arabia 100.00%Saudi Arabia MobiZone Saudi Arabia 100.00%

Central Africa Burundi U-Com Burundi S.A. 100.00% Central Africa Telecel Centrafrique S.A. 100.00% Sudan Sudan Call 70.00%North America Canada Globablive Investment Holdings 47.60% Canada Globalive Canada Holdings 65.05% Canada Globalive Wireless Management 65.05% Canada Gloablive Wireless LP (GELP) 65.05% Canada Globalive Telecom Holdings 65.05% Canada Orascom Telecom Holding (Canada) Limited 100.00%Europe France Orascom Telecom Services Europe 100.00% France Orascom Telecom Wireless Europe 100.00% Italy MobiZone Italy 99.00% Luxembourg M Link Sarl 100.00% Luxembourg Orascom Luxrembourg Sarl 100.00% Luxembourg Orascom Luxembourg Finance SCA 100.00% Luxembourg Orascom Telecom Sarl 100.00% Luxembourg Orascom Telecom Finance SCA 100.00% Luxembourg M Link Teleport 100.00% Malta Sawyer Limited 100.00% Malta Orascom Telecom Eurasia Limited 100.00% Malta Oratel International Inc plc 100.00% Malta Moga Holding Limited 100.00% Malta International Wireless Communications Pakistan Limited 100.00% Malta TMGL 100.00% Malta Telecel International Limited 100.00% Malta Orascom Tunisia Holding 100.00% Malta Carthage Consortium Limited 100.00% Malta Orascom Iraq Holding 100.00% Malta Orascom Telecom Iraq Corporation 100.00% Malta Orascom Telecom Ventures Limited 100.00% Malta Telecel Globe Limited 100.00% Malta Orascom Telecom Holding (Malta) Canada Limited 100.00% Malta M Link Limited 100.00% Malta Minimax Ventures 100.00% Malta Financial Powers Plan Limited 100.00% Malta Orascom Telecom ESOP Limited 100.00% Malta Data Base Management services Limited 100.00% Malta Orascom Telecom CS 100.00% Malta Mcube 51.00% Netherland Orascom Telecom Netherland 100.00% Switzerland Telecel International S.A. Switzerland 100.00% United Kingdom Med Cable Limited 100.00% United Kingdom Orascom Telecom WiMax 100.00% United Kingdom International Telecommunication Consortium Limited 50.00%


Global Reports LLC

104 105

Consolidated Financial

Statements and Auditor’s Report(in US$)

Auditor’s Report• Consolidated Balance Sheet• Consolidated Income Statement• Consolidated Statement of Recognized • Income and ExpenseConsolidated Statement of Cash Flows• Notes to the Consolidated Financial • StatementsAppendix A - Liabilities to banks• Appendix B - Bonds• Appendix C - Scope of consolidation•

Independent Auditor’s ReportTo The Board of Directors of Orascom Telecom Holding (S.A.E)

We have audited the accompanying consolidated financial statements of Orascom Telecom Holding (S.A.E), which comprise the consolidated balance sheet as at 31 December 2008, and the consolidated income statement, consolidated statement of recognized income and expense and consolidated cash flows statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the prepara-tion and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Orascom Telecom Holding (S.A.E) as at 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Emphasis of a matter

Without qualifying our opinion, we draw attention to note (35) “Contingent Assets and Liabilities” for the following:

1- Egyptian Company for Mobile Services (ECMS) “Jointly controlled entity” filed a lawsuit against the National 1- Telecommunication Regulatory Authority (NTRA) to cancel NTRA’s decision relating to the amendments of the interconnect prices between the fixed and mobile networks. The Company and its external legal counselor be-lieve that the possibility of winning the lawsuit is probable as NTRA’s decision does not have legal or contractual ground, therefore the Company continued to recognize interconnect revenue and cost from and to Telecom Egypt based on the existing agreement.

2- Some subsidiaries received tax assessment from the tax authorities in the territories in which they 2- operate. Management believes that these assessments are excessive, and intends to challenge the assessments through the proper legal channels. Currently, the management of these subsidiaries can not make reliable estimate of tax exposures.

KPMG Hazem Has-san

Cairo, 13 April 2009

Global Reports LLC

106 107

As at December Note 2008 2007

(in million of US$) (reclassified)

Assets

Property and equipment 17 5,057 4,803

Intangible assets 18 2,371 2,225

Other non-current financial assets 19 639 642

Deferred tax assets 20 88 73

Total non-current assets 8,155 7,743

Inventories 106 111


Other current financial assets 19 277 629

Current income tax receivables 16 75 112

Other current assets 22 247 216

Cash and cash equivalents 23 652 1,239

Assets held for sale 6 80 924

Total current assets 1,765 3,601

Total Assets 9,920 11,344


Share capital 261 316

Reserves (329) (680)

Retained earnings 1,148 3,513

Equity attributable to equity holders of the Company 1,080 3,149

Minority interest 121 93

Total equity 24 1,201 3,242

Liabilities

Non-current borrowings 25 5,205 3,379

Other non-current liabilities 26 220 194

Provisions 3 -

Non-current income tax liabilities 16 43 -

Deferred tax liabilities 20 249 323

Total non-current liabilities 5,720 3,896

Current borrowings 25 530 1,840

Trade payables 27 1,186 1,083

Other current liabilities 26 856 773

Current income tax liabilities 16 341 442

Provisions 61 68

Liabilities held for sale 6 25 -

Total current liabilities 2,999 4,206

Total Liabilities 8,719 8,102

Total Equity and Liabilities 9,920 11,344


Group CFO Chairman & Managing Director Aldo Mareuse Naguib Onsi Sawiris

Auditor’s report ‘attached’


For the year ended 31 December Note 2008 2007


Continuing operations

Revenues 7 5,327 4,727

Other income 41 49

Purchases and services 8 (2,511) (2,288)

Other expenses 9 (174) (158)

Personnel costs 10 (299) (257)

Depreciation and amortization 11 (912) (752)

Impairment charges 12 (39) (19)

Disposal of non-current assets 13 66 (3)

Operating income 1,499 1,299

Financial expense (468) (520)


Net foreign exchange gain /(loss) (201) 42

Net financing costs 14 (617) (440)

Share of profit / (loss) of associates 15 (3) 761

Gain/ (loss) on disposal of associates 15 27 (3)

Profit before income tax 906 1,617

Income tax expense 16 (403) (454)

Profit from continuing operations 503 1,163

Profit from discontinued operations 6 - 920

Profit for the year 503 2,083

Attributable to:

- Equity holders of the Company 431 2,021

- Minority interest 72 62

Basic and diluted earnings per share in US$ 28


- from discontinued operations n.a. 0.88


Consolidated Income Statment

Global Reports LLC

108 109

For the year ended 31 December 2008 2007

(in million of US$)

Changes in fair value of available-for-sale financial assets (2) 1

Cash flow hedges, net of tax (88) (4)

Currency translation differences (176) 71

Share of profit recognized directly in equity of associates 5 3

Net expense recognized directly in equity (261) 71

Profit for the year 503 2,083

Total recognized income for the year 242 2,154

Attributable to:

- Equity holders of the Company 173 2,086

- Minority interest 69 68


Consolidated Statement of Recognized Income and Expense

For the year ended 31 December 2008 2007


Profit for the year from continuing operations 503 1,163

Depreciation, amortization and impairment 951 771

Income tax expense 403 454

Equity settled share-based payment transactions 11 9

Net financial expenses 416 482

Unrealized foreign exchange difference 143 (49)

Loss on disposal of non-current assets 2 1

(Gain) / loss from sale of subsidiaries and financial assets (68) 2

Share of (profit) / loss of associates 3 (761)

(Gain) / loss on disposal of associates (27) 3

Change in provisions and allowances 35 42

Change in assets carried as working capital (152) (278)

Change in other liabilities carried as working capital 112 110

Income tax paid (481) (164)

Interest expense paid (428) (495)

Net cash generated by operating activities 1,423 1,290

Cash outflow for investments in:

- Property and equipment (1,474) (1,540)

- Intangible assets (146) (96)

- Subsidiaries (103) (374)

- Other non-current financial assets (20) -

Proceeds from disposals of:

- Property and equipment 11 6

- Subsidiaries 69 (60)

- Associates 956 322

-Other financial assets 1,049 -

Dividends and interest received 34 816

Net cash generated/(used in) by investing activities 376 (926)

Proceeds from non-current borrowings 2,522 2,334

Repayment of non-current borrowings (1,976) (988)

Net proceeds /(payments) from current borrowings (57) (481)

Advances and loans made to associate and other parties (442) -

Net change in cash collateral (77) 37

Dividend payments (166) (131)

Net payments for treasury shares (2,086) (856)

Change in Minority Interest (61) (64)

Net cash used in financing activities (2,343) (149)

Discontinued operations

Net cash generated by operating activities - 258

Net cash used in investing activities - (23)

Net cash generated by discontinued operations - 235

Cash included in assets held for sale (8) -

Effect of exchange rate changes on cash and cash equivalents (35) 33

Net (decrease) / increase in cash and cash equivalents (587) 483

Cash and cash equivalents at the beginning of the year 1,239 756

Cash and cash equivalents at the end of the year 652 1,239



Global Reports LLC

110 111

Notes to the consolidated financial statementsAs of end for the year ended December 31, 2008

1- General informationOrascom Telecom Holding S.A.E. (the “Company”) is a joint stock company with its head office in Cairo, Egypt. The Company, through its subsidiaries (together the “Group”) is a leading mobile telecommunications company operating in high growth emerging markets in the Middle East, Africa and Asia, having a total popula-tion under license of approximately 450 million. The Company is a subsidiary of Weather Investments S.p.A. (“Weather Investments” or the “Parent Company”). The Company is listed on the Egyptian Stock Exchange and has Global Depository Receipts (“GDR”) listed on the London Stock Exchange. These consolidated financial statements as of and for the year ended December 31, 2008 (the “Consolidated Financial Statements”) were approved for issue by the Board of Directors on March 16, 2009.

2- Significant accounting policies 2-1 Basis of presentation

The Consolidated Financial Statements of the Group, as of and for the year ended December 31, 2008, have been prepared in accordance with International Financial Reporting Standards (IFRS) and its inter-pretations as adopted by the International Accounting Standards Board (IASB) and all interpretations of the International Financial Reporting Interpretations Com-mittee (IFRIC) and all interpretations of the Standing Interpretations Committee (SIC).The consolidated financial statements have been prepared under the historical cost basis except for the following:

derivative financial instruments are measured at • fair value;financial instruments at fair value through profit or • loss are measured at fair value; andavailable-for-sale financial assets are measured at • fair value.

For presentational purposes, the current/non-current distinction has been used for the balance sheet, while expenses are analyzed in the income statement using a classification based on their nature. (See “Change in Accounting Policies” for changes to the classifica-tion of the income statement in 2007). The indirect method has been selected to present the cash flow statement.The information presented in this document has been presented in millions of United States Dollar (US$”), except earnings per share and unless otherwise stated.

2-3 Summary of main accounting principles and policies The main accounting principles and policies adopted in preparing these Consolidated Financial Statements are set below. These policies have been consistently applied to all period in those consolidated financial statements, and have been applied consistently by the group entities.

Basis of consolidationThe Consolidated Financial Statements include the financial statements of the Company and those entities over which the Company exercises control, both directly or indirectly, from the date of acquisition

to the date when such control ceases. Control may be exercised through direct or indirect ownership of shares with majority voting rights, or by exercising a dominant influence expressed as the direct or indirect power, based on contractual agreements or statutory provisions, to determine the financial and operational policies of the entity and obtain the related benefits, regardless of any equity relationships. The existence of potential voting rights that are exercisable or con-vertible at the balance sheet date is also considered when determining whether there is control or not.The financial statements used in the consolidation process are those prepared by the individual Group entities as of and for the year ended December 31, 2008 (the reporting date for these Consolidated Financial Statements) in accordance with IFRS used by the Company in preparing these statements and approved by the respective Boards of Directors.The consolidation procedures used are as follows:

the assets and liabilities and income and expenses • of consolidated subsidiaries are included on a line-by-line basis, allocating to minority interests, where applicable, the share of equity and profit or loss for the year that is attributable to them. The resulting balances are presented separately in consolidated equity and the consolidated income statement;the purchase method of accounting is used to • account for business combinations in which the control of an entity is acquired. The cost of an ac-quisition is measured as the fair value of the assets acquired, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus all other costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the assets, liabilities and contingent liabili-ties acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized immediately in the income statement;business combinations in which all of the combin-• ing entities or businesses are ultimately controlled by the same party or parties both before and after the business combination are considered business combinations involving entities under common control. In the absence of an accounting standard guiding the accounting treatment of these opera-tions the Group applies IAS 8, consolidating the book values of the entity transferred and reporting any gains arising from the transfer in goodwill;the purchase of equity holdings from minority hold-• ers in entities where control is already exercised is considered a purchase. Therefore the differ-ence between the cost incurred for the acquisition and the respective share of the accounting equity acquired is recognized in goodwill; any options to purchase minority interests out-• standing at the end of the year are treated as exercised and are reported as a financial liability or in equity depending on whether the transaction is to be settled in cash or through the exchange of equity instruments;unrealized gains and losses on transactions car-• ried out between companies consolidated on a line-by-line basis and the respective tax effects are

eliminated if material, as are corresponding bal-ances for receivables and payables, income and expense, and finance income and expense;gains and losses arising from the sale of hold-• ings in consolidated entities are recognized in the income statement as the difference between the selling price and the corresponding portion of consolidated equity sold.

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

the Group’s share of the profit or loss of an in-• vestee is recognized in the income statement from the date when significant influence or control be-gins up to the date when that significant influence or control ceases. Investments in associates with negative shareholders’ equity are impaired and a provision for its losses is accrued only if the Group has a legal or constructive obligation to cover such losses. Equity changes in investees accounted for using the equity method that do not result from profit or loss are recognized directly in consoli-dated equity reserves;unrealized gains and losses generated from trans-• actions between the Company or its subsidiaries and its investees accounted for using the equity method are eliminated on consolidation for the por-tion pertaining to the Group; unrealized losses are eliminated unless they represent an impairment.

Joint venturesJoint ventures are those entities over whose activities the Group has joint control, established by contrac-tual agreement and requiring unanimous consent for strategic financial and operating decisions.Interests in joint ventures are consolidated using the proportionate method under which the assets and li-abilities and income and expenses of the joint venture are consolidated on a line-by-line basis in proportion to the share held by the Group in the venture. The carrying amount of the consolidated investment is then eliminated against the respective portion of eq-uity. Transactions, balances and any unrealized gains and losses on intercompany transactions are propor-tionately eliminated.

Unrealised gains arising from transactions with as-sociates (and jointly controlled entities) are eliminated to the extent of the Group’s interest in the enterprise. Unrealised gains resulting from transactions with as-sociates and joint ventures are eliminated against the investment in the associates or joint venture.Appendix 3 includes a list of the entities included in the scope of consolidation.

Foreign currency translationFunctional and presentation currency The functional currency of each subsidiary is the local currency where that entity operates. In order to pres-ent financial information to international investors the Group’s presentation currency is US$.

Transactions and balancesTransactions in foreign currencies are translated into the functional currency of the relevant entity at the exchange rate prevailing at the date of the transac-tion. Monetary assets and liabilities denominated in foreign currencies are translated, at the balance sheet date, into the prevailing exchange rates at that date. Foreign currency exchange differences arising on the settlement of transactions and the translation of the balance sheet are recognized in the income state-ment.

Group companiesThe financial statements of the Group entities are translated into the presentation currency as follows:

assets and liabilities are translated at the closing • exchange rate;income and expenses are translated at the aver-• age exchange rate for the year;all resulting exchange differences are recognized • as a separate component of equity in the “transla-tion reserve”; goodwill and fair value adjustments arising on the • acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are trans-lated at the closing exchange rate; andin the preparation of the consolidated cash flow • statement, the cash flows of foreign subsidiaries are translated at the average exchange rate for the year.

The exchange rates applied in relation to the US$ are as follows:

Average for year ended December 31, Closing rate as of December 31,

2008 2007 2008 2007

Egyptian Pound (LE) 0.1827 0.1764 0.1807 0.1797

Algerian Dinar (DZD) 0.0155 0.0144 0.0141 0.0149

Tunisian (TND) 0.8129 0.7828 0.7612 0.8062

Pakistan Rupee (PKR) 0.0141 0.0165 0.0127 0.0163

Bangladeshi Taka (BDT) 0.0144 0.0144 0.0144 0.0145

Canadian Dollar (CAD) 0.8876 n.a. 0.8304 n.a.

Euro 1.4935 1.4112 1.4113 1.4656


Global Reports LLC

112 113

Property and equipmentProperty and equipment are stated at purchase cost or production cost, net of accumulated depreciation and any impairment losses. Cost includes expendi-ture directly attributable to bringing the asset to the location and condition necessary for use and any dismantling and removal costs which may be incurred as a result of contractual obligations which require the asset to be returned to its original state and condition. Borrowing costs directly associated with the purchase or construction of property and equipment are capital-ized as incurred together with the asset to which they relate.Costs incurred for ordinary and cyclical repairs and maintenance are charged directly to the income statement in the year in which they are incurred. Costs incurred for the expansion, modernization or improvement of the structural elements of owned or leased assets are capitalized to the extent that they have the requisites to be separately identified as an asset or part of an asset, in accordance with the “component approach”. Under this approach each asset is treated separately if it has an autonomously determinable useful life and value. Depreciation is charged at rates calculated to write off the costs over their estimated useful lives on a straight-line basis from the date the asset is available and ready for use.The useful lives of property and equipment and their residual values are reviewed and updated, where necessary, at least at each year end. Land is not de-preciated. When a depreciable asset is composed of identifiable separate components whose useful lives vary significantly from those of other components of the asset, depreciation is calculated for each compo-nent separately, applying the “component approach”. The useful lives estimated by the Group for the vari-ous categories of property and equipment are as follows.

Number of years

Buildings 50

Cell Sites 8-15

Tools 5-10

Computer equipment 3-5

Furniture and Fixtures 5-10

Vehicles 3-6

Leasehold improvements and renovations 3-8

Gains or losses arising from the sale or retirement of assets are determined as the difference between the net disposal proceeds and the net carrying amount of the asset sold or retired and are recognized in the income statement in the period incurred under “Dis-posal of non-current assets”.Finance leases are leases that substantially transfer all the risks and rewards incidental to the ownership of assets to the Group. Property and equipment ac-quired under finance lease are recognized as assets at their fair value or, if lower, at the present value of the minimum lease payments, including any amounts to be paid for exercising a purchase option. The cor-

responding liability due to the lessor is recognized as part of financial liabilities. An asset acquired under a finance lease is depreci-ated over the shorter of the lease term and its useful life. Lease arrangements in which the lessor substantially retains the risks and rewards incidental to owner-ship of the assets are classified as operating leases. Lease payments under operating leases are recog-nized as an expense in the income statement on a straight-line basis over the lease term.

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

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

• GoodwillGoodwill represents the excess of the cost of an acquisition over the interest acquired in the net fair value at the acquisition date of the assets and li-abilities of the entity or business acquired. Goodwill relating to investments accounted for using the equity method is included in the carrying amount of the investment. Goodwill is not systematically amortized but is rather subject to periodic tests to ensure that the carrying amount in the balance sheet is adequate (“impairment testing”). Impair-ment testing is carried out annually or more fre-quently when events or changes in circumstances occur that could lead to an impairment of the cash generating units (“CGUs”) to which the goodwill has been allocated. An impairment loss is recog-nized whenever the recoverable amount of good-will is lower than its carrying amount. The recover-able amount is the higher of the fair value of the CGU less costs to sell and its value in use, which is represented by the present value of the cash flows expected to be derived from the CGU during operations and from its retirement at the end of its useful life. The method for calculating value in use is described in the paragraph below “Impairment of assets”. Once an impairment loss has been recog-nized for goodwill it cannot be reversed.


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

• SoftwareAcquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Software licenses are amortized on a straight-line basis over their useful life (between 3 to 5 years), while software mainte-nance costs are expensed in the income statement in the period in which they are incurred. Costs incurred on development of software prod-ucts are recognized as intangible assets when the Group has intentions to complete and use or sell the assets arising from the project, consider-ing the existence of a market for the asset, its commercial and technological feasibility, its costs can be measured reliably and there are adequate financial resources to complete the development of the asset. Other development expenditures are recognized in the income statement in the period in which they are incurred. Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Develop-ment costs previously recognised as an expense are not recognised as an asset in a subsequent period.

• Customer ListThe customer list as an intangible asset consists of the list of customers identified on allocating the purchase price arising on acquisitions carried out by the Group. Amortization is charged on the basis of the respective estimated useful lives which range from 5 to 10 years.

Impairment of non-financial assetsAt each balance sheet date, property and equipment and intangible assets with finite lives are assessed to determine whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset concerned is es-timated and any impairment loss is recognized in the income statement. Intangible assets with an indefinite useful life are tested for impairment annually or more frequently when events or changes in circumstances occur that could lead to an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use, which is represented by the present value of its estimated future cash flows. In determining an asset’s value in use the estimated future cash flows are discounted using a pre-tax rate that reflects the market’s current

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

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

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

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


Global Reports LLC

114 115

which are expected to be realized within twelve months from the balance sheet date being classi-fied as current assets.The Group does not have any held to maturity financial assets.

Impairment of financial assetsIndividually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the differ-ence between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the income statement. Impairment losses recognized in the income state-ment on equity instruments are not reversed through the income statement.

Financial liabilitiesFinancial liabilities consisting of borrowings, trade payables and other obligations are measured at am-ortized cost using the effective interest method. When there is a change in cash flows which can be reliably estimated, the value of the financial liability is recal-culated to reflect such change based on the present value of expected cash flows and the originally deter-mined internal rate of return. Financial liabilities are classified as current liabilities except where the Group has an unconditional right to defer payment until at least twelve months after the balance sheet date.Financial liabilities are derecognized when settled and the Group has transferred all the related costs and risks relating to an instrument.

Derivative financial instrumentsDerivatives are initially recognized at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group documents at the inception of the transac-tion the relationship between hedging instruments and hedged items, as well as its risk management ob-jectives and strategy for undertaking various hedging transactions. The Group also documents its assess-ment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classi-fied as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Derivatives which do not qualify for hedge accounting are classified as a financial asset at fair value through profit or loss.

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

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

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


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

Current and deferred income taxThe tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries, associates and joint venture operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences aris-ing between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not ac-counted for if it arises from initial recognition of good-will or the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither account-ing nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.Deferred income tax is provided on temporary differ-ences arising on investments in subsidiaries, associ-ates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary dif-ference will not reverse in the foreseeable future.Additional income taxes that arise from the distribu-tion of dividends are recognised at the same time that the liability to pay the related dividend is recognised.

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

• Cash flow hedgeThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity in a specific reserve (the “cash flow hedge reserve”) . The gain or loss relating to the ineffective portion is recog-nized immediately in the income statement. A hedge is normally considered highly effective if from the beginning and throughout its life the changes in the expected cash flows for the hedged item are substantially offset by the changes in the fair value of the hedging instrument. When the eco-nomic effects deriving from the hedged item are realized, the related gains or losses in the reserve are reclassified to the income statement together with the economic effects of the hedged item. Whenever the hedge is not highly effective, the non-effective portion of the change in fair value of the hedging instrument is immediately recognized as part of the net financing cost for the year in the income statement. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ulti-mately recognized in the income statement. When a forecast transaction is no longer expected to oc-cur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

InventoriesInventories are stated at the lower of purchase cost or production cost and net realizable value. Cost is based on the weighted average method. Net realiz-able value is the estimated selling price in the ordi-nary course of business, less the estimated costs of completion and selling expenses. When necessary, obsolescence allowances are made for slow-moving and obsolete inventories. Inventories mainly com-prise handsets and SIM cards.

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

Non-current assets and liabilities held for saleNon-current assets (or disposal groups compris-ing assets and liabilities) that are expected to be recovered primarily through sale rather than through


Global Reports LLC

116 117

holders of the Company.

Legal reserveAs per the Company’s statutes 5% of net profit for the year is set aside to form a legal reserve, the transfer to such reserve ceases once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized for covering losses or for increasing the Com-pany’s share capital. If the reserve falls below the said 50%, the Company should resume setting aside 5% of its annual net profit until the reserve reaches 50% of the Company’s paid in share capital.

Dividend distributionDividend distribution to the Company’s shareholders is recognized as a liability in the Consolidated Finan-cial Statements in the period in which the dividends are approved by the Company’s shareholders.

Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods and ser-vices in the ordinary course of the Group’s activities. Revenue is shown net of value added tax, rebates and discounts and after eliminating sales within the Group.Revenue from the sale of goods is recognized when the Group transfers the risks and rewards of owner-ship of the goods. Revenue from services is recog-nized in the income statement by reference to the stage of completion and only when the outcome can be reliably estimated.More specifically, the criteria followed by the Group in recognizing ordinary revenue are as follows:

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

Dividend income from investments recorded at fair value through profit and loss or as available for sale is recognized when the right to receive payment is established.

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

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

Employee benefits• Short-term benefits

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

• Share-based employee benefitsThe Group recognizes additional benefits to certain managers and other members of person-nel through share based payment plans. IFRS 2 - Share-based Payment considers these plans to represent a component of employee remuneration. The fair value of the employee services received at the grant date in exchange for the grant of options or shares is recognized as an expense with a cor-respondent increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which is the period over which all of the specified vesting condi-tions are to be satisfied.

Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from proceeds.

Treasury sharesWhere any Group company purchases the Com-pany’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to equity holders of the Company until the shares are cancelled or re-issued. Where such shares are subsequently re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to equity


performed certain reclassifications to the balance sheet in order to homogenize classification criteria with that of the Parent Company. Note 37 “Reconcili-ation of previous disclosure” provides further details regarding the income statement prepared using the “function of expense” method and the reclassifications performed on the balance sheet.

Recent accounting pronouncementsThe following new standards, amendments to stan-dards and interpretations have been issued but are not effective for the financial year 2008 and have not been early adopted:IAS 23 (revised), “Borrowing costs” will be effective for the Group from January 1, 2009. This amend-ment requires that borrowing costs directly attribut-able to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. The Group currently capitalizes all such borrowing costs. It therefore does not impact the Group’s consolidated financial statements.IAS 23 (amendment), “Borrowing costs” will be ef-fective for the Group from January 1, 2009. This amendment has changed the definition of borrowing costs so that interest expense is calculated using the effective interest rate method defined in IAS 39 “Financial Instruments: Recognition and Measure-ment”. The Group will apply the IAS 23 (Amendment) prospectively to the capitalization of borrowing costs on qualifying assets from January 1, 2009. IAS 1 (revised), “Presentation of financial statements”, will be effective for the Group from January 1, 2009. The revised standard will prohibit the presentation of items of income and expenses relating to non-owner changes in equity in the statement of changes in equity. Such non-owner changes in equity will be required to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance state-ment (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning of the comparative period, in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The impacts of this standard’s future application are being analyzed. IAS 1 (amendment), “Presentation of financial state-ments”, will be effective for the Group from January 1, 2009. The amendment clarifies that some rather than all financial assets and liabilities classified as held for trading in accordance with IAS 39, “Financial Instru-ments: Recognition and Measurement” are examples of current assets and current liabilities respectively. The impacts of this standard’s future application are being analyzed.IFRS 2 (amendment) “Share-based payment”, will be effective for the Group from January 1, 2009. The amended standard deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share based payment are not

Interest incomeInterest income is recognized on a time-proportion basis using the effective interest rate method.

Earnings per shareBasicBasic earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company, both from continuing and discon-tinued operations, by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.

DilutedDiluted earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average of the num-ber of ordinary shares of the Company outstanding during the year where, compared to basic earnings per share, the weighted average number of shares outstanding is modified to include the conversion of all dilutive potential shares, while the profit for the year is modified to include the effects of such conversion net of taxation. Diluted earnings per share are not calculated when there are losses as any dilutive effect would improve earnings per share.

Discontinued operationsA discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the cri-teria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.

Segment reportingA segment is a distinguishable component of the group that is engaged either in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subjected to risks and rewards that are different from those of other segments. The group’s primary format for segment reporting is based on business segment

Change in accounting policyHistorically the Company has elected the presentation of costs in the income statement by function. In order to be consistent with the method of presentation ad-opted by the Parent Company and facilitate the Par-ent Company financial reporting procedure, the Group has elected the presentation of costs by nature for the preparation of the income statement for periods ending on or after June 30, 2008. The Company has reclassified comparative amounts disclosed for the prior periods reported as if the new disclosure policy had always been applied. In addition, the Group has


Global Reports LLC

118 119

the required disclosure, where applicable, for impair-ment tests from January 1, 2009.IAS 36 (amendment), “Impairment of assets” will be effective for the Group from January 1, 2009. This amendment requires that, where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The Group will apply the IAS 36 (amendment) and provide the required disclosure where applicable for impairment tests from January 1, 2009.IAS 39 (amendment), “Financial instruments: Rec-ognition and measurement” will be effective for the Group from January 1, 2009. The amendment clarifies that it is possible for there to be movements into and out of the fair value through profit and loss category where a derivative commences or ceases to qualify as a hedging instrument in cash flow or net in-vestment hedge. The definition of financial asset and liability at fair value through profit or loss as it relates to items that are held for trading is also amended. It clarifies that a financial asset or liability that is part of a portfolio of financial instruments managed together with evidence of an actual recent pattern of short-term profit-taking is included in such a portfolio on initial recognition. Guidance on designating and document-ing hedges was amended to make the guidance consistent with IFRS 8, “Operating segments,” which requires disclosure for segments to be based on information reported on a “management approach.” When measuring the carrying amount of a debt instru-ment on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge account-ing ceases) are used. The impacts of this standard’s future application are being analyzed.IFRS 8,“Operating segments” will be effective for the Group from January 1, 2009. IFRS 8 replaces IAS 14, “Segment reporting” and requires a “manage-ment approach” under which segment information is presented on the same basis as that used for internal reporting purposes. The adoption of this standard is not expected to have a material impact on the Group’s financial reporting. IFRIC 13, “Customer loyalty programmes”, will be effective for the Group from January 1, 2009. Accord-ing to IFRIC 13, loyalty programs should be valued at their fair value which is defined as the excess price over the sales incentive that would be granted to any new customer. The impacts of this standard’s future application are being analyzed.There are a number of minor amendments to IFRS 7 “Financial Instruments: Disclosures”, IAS 8 “Account-ing Policies, Changes In Accounting Estimates and Errors”, IAS 10 “Events After The Reporting Period”., IAS 18 “Revenue” and IAS 34 “Interim Financial Re-porting” which are part of the IASB’s annual improve-ment project published in May 2008 (not addressed above). These amendments are unlikely to have a material impact on the consolidated financial state-ments of the Group and have therefore not been analyzed in detail.

vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether they result from a deci-sion taken by the entity or by another party, will be accounted for on the same basis. The impacts of this standard’s future application are being analyzed.IAS 27 (revised), “Consolidated and separate financial statements” will be effective for the Group from Janu-ary 1, 2010. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the ac-counting when control is lost. Any remaining interest in the equity is re-measured to fair value, and a gain or loss is recognized in profit or loss. The Group will apply IAS 27 (revised) prospectively to transactions with non-controlling interests from January 1, 2010.IFRS 3 (revised), “Business combinations,” will be effective for the Group from January 1, 2010. The revised standard continues to apply the acquisi-tion method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (revised) prospectively from January 1, 2010. IFRS 5 (amendment) “Non-current assets held for sale and discontinued operations” and consequential amendments to IFRS 1 “First-time adoption” will be effective for the Group from January 1, 2010. The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Rel-evant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS 1 states that these amendments are applied prospectively from the date of transition to IFRS. The Group will apply IFRS 5 (amendment) prospectively to all partial disposals of subsidiaries from January 1, 2010.IAS 28 (amendment), “Investments in associates,” and consequential amendments to IAS 32, “Financial Instruments: Presentation” and IFRS 7, “Financial in-struments: Disclosures” will be effective for the Group from January 1, 2009. The amendment requires an investment in an associate to be treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as an adjust-ment to the investment balance to the extent that the recoverable amount of the associate increases. The Group will apply the IAS 28 (Amendment) and provide


cal and business sector changes, dismantling costs and recoverable amounts in order to update residual useful lives. Such regular updating may entail a change of the depreciation period and consequently a change in the depreciation charged in future years.

Deferred tax assetsThe recognition of deferred tax assets is based on fore-casts of future taxable profit. The measurement of future taxable profit for the purposes of determining whether or not to recognize deferred tax assets depends on factors which may vary over time and which may lead to signifi-cant effects on the measurement of this item.

Income taxThe companies of the Group are subject to different tax legislation. A significant amount of estimates are necessary in order to account for the total tax effects on the financial statements. The Group has a number of operations for which the relevant taxes are difficult to estimate and thus has to accrue some tax liabilities based on estimates. Whenever the actual tax expense is different from the estimated, the difference is recorded in the income statement.

Fair value of derivatives and other financial instru-mentsThe fair value of financial instruments is determined based on quoted market prices, where available, or on estimates using present values or other valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Where market prices are not readily available, fair value is based on either estimates obtained from independent experts or quoted market prices of comparable instruments.

Provisions and contingenciesIn recognizing provisions the Group analyses the extent to which it is probable that a liability will arise from dis-putes with employees, suppliers and third parties and in general the losses it will be required to incur as a result of past obligations. The definition of such provisions en-tails making estimates based on currently known factors which may vary over time and which could actually turn out to be significantly different from those referred to in preparing the financial statements.

4. Financial Risk ManagementFinancial Risk FactorsThe Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value inter-est risk and cash flow interest risk), credit risk and liquidity risk. In particular the Group is exposed to risks from move-ments in exchange rates, interest rates and market prices. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to mini-mize potential adverse effects on the Group’s performance through ongoing operational and finance activities. De-pending on the risk assessment, the Group uses selected derivative hedging instruments. The management has overall responsibility for the establishment and oversight of the group’s risk management framework..

3- Use of EstimatesThe preparation of these Consolidated Financial Statements required management to apply accounting policies and methodologies that are based on complex, subjective judgments, estimates based on past experi-ence and assumptions determined from time to time to be reasonable and realistic based on the related circum-stances. The use of these estimates and assumptions affects the amounts reported in the balance sheet, the income statement and the cash flow statement as well as the notes. The final amounts for items for which esti-mates and assumptions were made in the Consolidated Financial Statements may differ from those reported in these statements due to the uncertainties that char-acterize the assumptions and conditions on which the estimates are based.The accounting principles requiring a higher degree of subjective judgment in making estimates and for which changes in the underlying conditions could significantly affect the Consolidated Financial Statements are briefly described below.

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

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

Depreciation of non-current assetsThe cost of property and equipment is depreciated on a straight-line basis over the useful lives of the assets. The useful life of property and equipment is determined when the assets are purchased and is based on the past experience of similar assets, market conditions and forecasts concerning future events which may affect them, amongst which are changes in technology. The actual useful lives may therefore differ from the esti-mates of these. The Group regularly reviews technologi-


Global Reports LLC

120 121

cash flow interest rate risk by using floating-to fixed interest rate swaps. In particular , as of December 31, 2008 the Group had outstanding floating-to-fixed interest rate swaps with a notional value of US$ 1.5 billion. After considering such derivative transactions approximately 53% of the Group’s total borrowings had a floating rate of interest.The Group considers the sensitivity of its finance costs to movements in interest rates. In particular an increase / decrease of 0.5% in interest rates as of De-cember 31, 2008 would have resulted in an increase/ decrease in finance costs of US$ 15 million and a decrease / increase in the cash flow hedge reserve of US$ 25 million.

Price riskThe Group has limited exposure to equity securities price risk on investments held by the Group.

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

In December 2007, the Company sold its investment • in Iraqna Company for Mobile Phone Services Limited (“Iraqna”) (see Note 6 “Assets and liabilities classi-fied as held for sale and discontinuing operations” for further information). The total receivable for the sale amounted to US$ 1.2 billion, which was due to be paid in equal installments in December 2008 and 2009. However, during 2008 the Group entered into a receivable purchase agreement for the sale of these receivables. As of December 31, 2008 an amount of US$ 75 million was outstanding which relates to an amount that was withheld for potential claims. On February 26, 2009 Orascom Telecom Iraq Corp. Lim-ited filed a claim in the High Court of Justice, Queen’s Bench Division, Commercial Court, in London, against each of 1) Atheer Telecom Iraq Limited (“Atheer”) and 2) Mobile Telecommunications Company KSC (“MTC”) to recover the remaining unpaid US$ 75 million plus

Market RiskForeign exchange riskThe Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures in its investing, financing and operating activities. The main currencies to which the Group is exposed are the US dollar and the Euro. In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a natural hedge of the exchange rate of such financing. However, as some transactions are ex-ecuted in foreign currencies, and in particular in US$ and Euro, the Group may be subject to the risk of exchange rate fluctuations. As of December 31, 2008 the Group’s borrowings included US$ borrowings amounting to US$ 4,022 million and Euro borrowings amounting to Euro 298 million (equivalent to US$ 421 million). In certain instances the Group has entered into economic hedging agreements to manage the risk of fluctuations relating to these financing opera-tions. In particular, Pakistan Mobile Communication Limited (PMCL) had borrowings for US$ 315 million and Euro 216 million (equivalent to US$ 305 million) as of December 31, 2008. Such borrowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani Rupee. The Group subsidiaries generally execute their operating activities in their respective functional currencies. Some Group subsidiaries are, however, exposed to foreign currency risks in connection with scheduled payments in currencies that are not their functional currencies. In general this relates to foreign currency denominated supplier payables and receivables. The Group monitors the exposure to foreign currency risk arising from operating activities and, where relevant, enters into hedging transactions in order to manage the exposure. As at December 31, 2008, if the functional curren-cies had weakened / strengthened by 3% against the US$, the Euro and CAD, with all other variables held constant, profit for the year would have decreased / increased by US$ 67 million, mainly relating to US$ denominated borrowings.Additionally, the Group has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure to such risk is not hedged.

Cash flow and fair value interest rate riskThe Group is exposed to market risks as a result of changes in interest rates particularly in relation to bor-rowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floating interest rate borrowings based on the Group’s perception of future interest rate move-ments. In particular, the risk monitored relates to the impact of movements in floating rate indices on the Group’s finance costs. When considered appropriate, the Group manages its


fully operational during the fourth quarter of 2009. Based on business plan projections it is expected that GWMC, will be able to repay the loan received when it is fully operational.In general the remaining other receivables and finan-• cial receivables included in financial assets generally relate to a variety of smaller amounts due from a wide range of counterparties, therefore, the Group does not consider that it has a significant concentration of credit risk.

Liquidity RiskThe Group monitors liquidity risk in order to ensure that it maintains sufficient cash and cash equivalents and avail-ability of funding through an appropriate level of commit-ted credit facilities. In general, liquidity risk is monitored at entity level whereby each subsidiary is responsible for managing and monitoring its cashflows and rolling liquidity reserve forecast in order to ensure that it has sufficient committed facilities to meet its liquidity needs. The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the con-tractual undiscounted cashflows.

interest from the sale of Iraqna to Atheer, which was guaranteed by MTC. The claim was served on the defendants and on March 13, 2009 each of the defen-dants filed acknowledgments of service and notices of intent to defend. Proceedings are ongoing in this mat-ter. Management is expecting to receive full settlement of the outstanding balance within the next month.In November 2008 the Company sold its investment • in Orasinvest Holding Inc. (“OrasInvest”). The total receivable from the sale amounted to US$ 180 mil-lion, prior to price adjustments. As of December 31, 2008 the amount outstanding was US$ 90 million, prior to price adjustments. The remaining receivable is respected to be settled in December 2009. During 2008 the Company entered into two loans • agreements to provide a total amount of US$ 423 million to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment Holdings Corp (“Globalive”) (see Note 30 “Acquisition of associates” for further details). As of December 31, 2008 a total amount of US$ 401 million was outstanding under these agreements. The loans were primarily provided to GWMC to fund the acquisi-tion of spectrum licences in Canada. The licences were awarded to GWMC during March 2009 by Indus-try Canada and it is expected that GWMC will become



Less than 1 year


More than 5 years

Liabilities

Liabilities to banks 4,421 5,515 734 4,563 218

Bonds 1,153 1,627 114 733 780

Finance lease liability 33 45 12 33 -


Telecommunication licence payable 395 477 204 184 89

Trade payables 1,186 1,186 1,186 - -

7,203 8,865 2,262 5,516 1,087



Less than 1 year


More than 5 years

Liabilities

Liabilities to banks 3,957 4,575 1,938 2,389 248

Bonds 1,230 1,891 181 579 1,131

Finance lease liability 16 19 16 3 -

Other borrowings 10 10 10 - -

Telecommunication licence payable 250 338 72 162 104

Trade payables 1,083 1,083 1,083 - -

6,546 7,916 3,300 3,133 1,483

* Expected cashflows are the gross contractual undiscounted cash flows including interest, charges and other fees.


Global Reports LLC

122 123

Regulatory risk in emerging countriesDue to the nature of the legal and tax jurisdictions in the emerging countries where the Group operates, it is possible that laws and regulations could be amended. This could include factors such as the current tendency to withhold tax on the dividends of these subsidiaries, the granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable effect on the financial activi-ties of the Group and on the ability to receive funds from the subsidiaries.

Revenue generated by the majority of the Group subsidiaries is expressed in local currency. The Group expects to receive most of this revenue from its subsid-iaries and therefore it relies on their ability to be able to transfer funds. The regulations in the various countries where the subsidiaries operate could reduce the ability to pay interest and dividends and to repay loans, credit instruments and securities expressed in foreign currency through the transfer of currency. In addition, in some countries it could be difficult to convert large amounts of foreign currency due to central bank regulations. The central banks may amend regulations in the future and therefore the ability of the Company to receive funds from its subsidiaries may be restricted.

5- Segment reportingThe Company considers primary segment information by business activity. The method used to identify the business segments include the factors used by manage-ment to direct the Group and assign managerial re-sponsibilities. The methodology adopted to identify the components of revenues and cost attributable to each business segment is based on the identification of each component of cost and revenues directly attributable to each segment. The operating activities of the Group are organized and managed separately based on the nature of the products and services provided. Each segment offers different products and services to different markets

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

Derivative cash outflows do not include the potential cash outflows should the share warrants of My Screen and Lingo be exercised. The exercise of such warrants is at the option of the Company. Details of such warrants are provided in Note 19 “Other financial as-sets”. Additionally a put and call option for the purchase of the invest-ment in Namibia has not been included in the contractual cashflows. Contractual cashflows are derived based on the relevant index as of the balance sheet date.

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

Other risksPolitical and economic risk in emerging countriesA significant amount of the Group’s operations are conducted in Algeria, Pakistan, Egypt and Tunisia. The operations of the Group depend on the market econo-mies of the countries in which the subsidiaries operate. In particular, these markets are characterized by econo-mies that are in various stages of development or are undergoing restructuring. Therefore the operating re-sults of the Group are affected by the current and future economic and political developments in these countries. In particular, the results of operations could be unfavor-ably affected by changes in the political or governmental structures or weaknesses in the local economies in the countries where it operates. These changes could also have an unfavorable impact on financial condition, per-formance and business prospects.

The table below analyses the group’s derivative financial instruments into relevant maturity groupings based on the remain-ing period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.


Less than 1 year


More than 5 years



Foreign exchange derivatives (2) 10 (11) (1)

Other derivative instruments - cash outflow 31 31 - -

Other derivative instruments - cash inflow (31) (31) - -

Total 114 53 62 (1)


Less than 1 year


More than 5 years



Foreign exchange derivatives (57) (12) (41) (4)

Total (51) (8) (39) (4)


and is controlled by different legal entities. The following primary business segments have been identified:

GSM• covering the mobile telecommunications services activities of the Group, including the sale of pre-paid telephone cards, post-paid and monthly subscriptions packages, telephone packages and roaming included in this segment are ;Telecom services• relating to the sale of handsets, including ring tones and other cell phone products and activities relating to the rental of portals to allow satellite roaming calls and value added service activi-ties; and

Internet & fixed line• covering the internet and fixed telecommunications services of the Group.

The Group also reports geographical segments based on the geographical location of the legal entity controlling the operation, which is the same as the location of the major customers.The following geographical segments have been identi-fied:

North Africa• – comprising Algeria and TunisiaMiddle East• – comprising EgyptSouth Asia• – comprising Pakistan and BangladeshOthers• – comprising, North Korea, Central Africa, Burundi, Malta, Belgium, the United Kingdom and other countries

Primary segment information

GSM Telecom services

Internet & fixed line

Unallocated * Total

2008

2007

Gross revenues 4,886 698 95 - 5,679

4,259 800 63 - 5,122

Intersegment revenues (106) (228) (18) - (352)

(69) (318) (8) - (395)

Revenues 4,780 470 77 - 5,327

4,190 482 55 - 4,727

Impairment charges (8) - (31) - (39)

(6) - (13) - (19)

Depreciation and amortization (880) (12) (16) (4) (912)

(722) (11) (15) (4) (752)

Operating income 1,574 85 (72) (88) 1,499

1,424 (38) (42) (45) 1,299

Profit before income tax 1,211 72 (79) (298) 906

1,203 (41) (39) 494 1,617

Profit/(loss) from continuing operations 914 27 (81) (357) 503

958 (46) (39) 290 1,163

Profit from discontinued operations - - - - -

920 - - - 920

Profit/(loss) for the year 914 27 (81) (357) 503

1,878 (46) (39) 290 2,083

Total segment assets 8,195 413 197 1,115 9,920

8,667 397 203 2,077 11,344

Total capital expenditure ** 1,689 118 65 6 1,878

1,707 109 42 5 1,863

Total segment liabilities 4,681 167 107 3,764 8,719

4,415 207 129 3,350 8,101

* Unallocated represents revenues and costs relating to activities provided centrally from headquarters to subsidiaries across the group. These activities include staff functions with group wide responsibilities such as internal audit, financial advisory, legal services, communications and investor relations. Unal located assets and liabilities mainly include borrowings of the Company and deferred tax assets and liabilities.

** Segment capital expenditure is the total cost incurred during the period to acquire property and equipment and intangible assets other than goodwill.


Global Reports LLC

124 125

Secondary segment information

North Africa

South Asia Middle East

Other Unallocated * Total

2008

2007

Gross revenues 2,451 1,530 1,401 297 - 5,679

2,094 1,462 1,314 252 - 5,122

Intersegment revenues (83) (24) (169) (76) - (352)

(64) (5) (223) (103) - (395)

Revenues 2,368 1,506 1,232 221 - 5,327

2,030 1,457 1,091 149 - 4,727

Operating income 1,071 186 200 130 (88) 1,499

902 276 146 20 (45) 1,299

Profit before income tax 1,026 (66) 140 104 (298) 906

848 118 137 20 494 1,617

Profit/(loss) from continuing operations 742 (36) 63 91 (357) 503

702 64 102 5 290 1,163

Profit from discontinued operations - - - - - -

- - 920 - - 920

Profit /(loss) for the year 742 (36) 63 91 (357) 503

702 64 1,022 5 290 2,083

Total segment assets 2,890 3,739 1,863 313 1,115 9,920

3,118 3,449 1,476 1,224 2,077 11,344

Capital expenditure 219 960 547 146 6 1,878

354 1,049 417 38 5 1,863

Total segment assets 8,195 8,195 413 197 1,115 9,920

8,667 8,667 397 203 2,077 11,344

Total capital expenditure ** 1,689 1,689 118 65 6 1,878

1,707 1,707 109 42 5 1,863

Total segment liabilities 4,681 4,681 167 107 3,764 8,719

4,415 4,415 207 129 3,350 8,101

6- Assets and liabilities classified as held for sale and discontinuing operations The following table discloses the results of discontinuing operations for the years indicated

2008 2007

Revenues - 646

Expenses - (368)

Profit before tax from discontinued operations - 278

Income tax expense of discontinued operations - (36)

Gain on disposal of discontinued operations - 844

Income tax expense on gain on disposal - (166)

Profit from discontinued operations - 920


chase consideration is split into two non-interest bearing receivables of US$ 600 million each which are due on December 31, 2008 and 2009, respectively. In June 2008, the Company entered into a receivable purchase agreement with the National Bank of Kuwait and various financial institutions for the sale of these receivables. As of December 31, 2008 an amount of US$ 75 mil-lion was outstanding relating to the amount withheld as guarantee. In accordance with IFRS 5, the results of operations relating to 2007 have been shown separately on the con-solidated income statement within the caption discontin-ued operations.

M-LinkThe assets and liabilities related to M-Link Company (“M-Link”), a company part of the Telecom services seg-ment, have been presented as held for sale, following OTH managements’ decision to focus on GSM business and dispose of non-core assets. M-Link has been sold to TLC Servizi S.p.A., a wholly owned subsidiary of Wind Telecomunicazioni S.p.A., in January 2009.Another company included in assets held for sale is Oracap for East Ltd. The assets and liabilities of this company (mainly relating to US$ 1 million licence to operate a bank and US$ 1 million cash) have been presented as held for sale, following OTH managements’ decision to dispose of the assets. Oracap for East Ltd had a capital commitment amounting to approximately US$ 134 million.

The following provides a breakdown of assets and liabilities held for sale as of December 31, 2008:

2008 2007

Property and equipment 11 -

Intangible assets 20 -

Investments accounted for using the equity method - 924

Trade receivables 40 -

Other current assets 1 -

Cash and cash equivalents 8 -

Assets held for sale 80 924

Trade payables 22 -

Other current liabilities 2 -

Current income tax liabilities 1 -

Liabilities held for sale 25 -

Hutchison TelecommunicationsIn October 2007, management initiated proceedings to dispose of the investment in Hutchison Telecom-munications International Limited (“Hutchison Telecom-munications”). During October and November 2007, the Company sold 5.0% of the investment in Hutchison Telecommunications, incurring a loss of US$ 3 million which was recorded in the income statement for the year ended December 31, 2007. In January 2008, the Company sold the remaining investment of 14.2% for consideration of US$ 956 million, generating a gain of US$ 27 million. This gain has been recorded in gain on disposal of associates.As of December 31, 2007 assets held for sale includes the Company’s equity investment in Hutchison Telecom-munications which was disposed of in January 2008. In accordance with IFRS 5, assets held for sale in disposal groups have been separately shown in a specific cap-tion on the consolidated balance sheet. As Hutchison Telecommunications is an associate there is no income statement disclosure relating to Hutchison Telecommuni-cations within discontinuing operations.

Operations in Iraq In December 2007, the Company sold its subsidiary Iraqna for consideration of US$ 1.2 billion. The pur-

7- Revenues

2008 2007

Revenues from services

Telephony services 4,751 4,150

Interconnection traffic 191 147

International and national roaming 99 76

Other services 14 12

Total revenues from services 5,055 4,385

Total revenues from sale of goods 272 342

Total 5,327 4,727

Total revenues from services increased in 2008 mainly due to the increase in revenues from telephony services as a result of an increase in the subscriber numbers, mainly in Algeria, Egypt, Tunisia and Bangladesh. Revenues from interconnection traffic and international and national roaming increased in 2008 compared to 2007 due to the increase in subscriber num-bers.


Global Reports LLC

126 127

Total revenues from sale of goods decreased in 2008 mainly as a result of the disposal of the subsidiary Ring Jordan in May 2007, in addition to a decrease in sales of goods in Ring Egypt.

8- Purchases and services

2008 2007

Interconnection traffic and roaming 711 585

Cost of handsets, scratch cards, sim cards, bundle cost 281 350

Advertising and promotional services 253 265

Internet and fixed line costs 245 205

Customer acquisition costs 252 264

Maintenance costs 190 109

Utilities 132 76

Rental of network 85 113

Other leases and rentals 76 65

Rental of civil and technical sites 71 59

Consulting and professional services 58 50

Consumable materials, equipment and goods 48 42

Cost for security service 37 26

Cost for printing & collection services 12 22

Other service expenses 60 57

Total 2,511 2,288

Purchases and services costs increased during 2008 primarily due to the increase in operating activities. As a percentage of revenues, purchase and service costs were substantially consistent, amounting to 48% in 2007 and to 47% in 2008.In particular, interconnection traffic and roaming costs increased in 2008 compared to 2007 mainly due to the increase in the subscriber numbers in North Africa.Cost of handsets, scratch cards, sim cards and bundle costs decreased substantially in 2008 compared to 2007 as a result of the disposal of the Ring Jordan subsidiary in May 2007.Maintenance costs, security services and utilities increased in 2008 due to significant investments in the Groups telecommu-nication network as well as increased fuel and energy prices,

9- Other expenses

2008 2007

Licence costs 55 41

Travel costs 21 13

Accruals for provisions 14 11

Allowance for doubtful receivables 19 28

Taxes (other than income tax) 17 20

Training expenses 11 10

Other operating expenses 37 35

Total 174 158

The increase in other expenses was primarily attributable to the higher licence costs driven by increased activity. The an-nual contribution for licence costs are calculated as a percentage of revenues.


10- Personnel costs

2008 2007

Wages and salaries 195 154

Bonuses given to management and employees 45 52

Social security 16 13

Share based compensation 11 9

Pension costs 7 9

Board of Directors remuneration 3 3

Other personnel costs 22 17

Total 299 257

Personnel costs increased in 2008 compared to 2007 due to the increase in the average number of employees during the year. In particular, the increase in senior and middle management personnel related to the increase in operations. The table below provides a breakdown of the number of employees as of December 31:

As of December 31,




Staff 14,859 15,164

Total 16,522 16,619

The table below provides a breakdown of the average number of employees for the years ended December 31, 2008 and 2007:

Average for the year ended December 31,




Staff 15,012 13,973

Total 16,572 15,338

11- Depreciation and amortization

2008 2007

Depreciation of property and equipment:

-Cell sites 686 552

-Computers, fixtures and other equipment 63 46

-Buildings 23 17

Amortization of intangible assets

-Licences 112 107

-Other intangible assets 28 30

Total 912 752

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


Global Reports LLC

128 129

US$ 68 million in 2008 mainly relates to the gain on the disposal of the subsidiary OrasInvest. In Novem-ber 2008, the Company disposed of its investment in OrasInvest for consideration of US$ 180 million. Consid-eration of US$ 90 million was paid in cash on closing of the transaction and a promissory note was issued by the purchasers for the remaining US$ 90 million. The prom-issory note is due on December 19, 2009 and interest of 12.5% accrues on the outstanding principal. Additionally the sale and purchase agreement includes a potential price adjustment based on OrasInvest’s revenue for the twelve month period following the closing date.

14- Net financing costs

2008 2007

Interest on deposits and bank accounts 29 35

Interest on non-current financial receivables 15 -

Other financial income 6 2

Dividends from investments 2 1


Impairment of financial assets: (1) -

Interest on bonds (91) (96)

Interest on other borrowings (335) (403)

Interest on other liabilities and other financial expense (41) (21)

Financial expense (468) (520)

Foreign exchange gain /(loss) (354) 42

Fair value changes of FX derivative instruments 153 -

Net foreign exchange gain /(loss) (201) 42

Net financing cost (617) (440)

12- Impairment chargesImpairment charges amounting to US$ 39 million in 2008 mainly relate to the impairment of US$ 31 million of the CAT telecommunication license in Algeria. Following the decision to liquidate this entity, the licence has been fully impaired. Impairment charges also include impairments of US$ 7 million for obsolete property and equipment in Pakistan and an impairment of US$1 million for other intangible assets.

13- Disposal of non-current assetsGain on disposal of non-current assets amounting to

16- Income tax expense

2008 2007

Current income tax expense 427 358

Deferred taxes (24) 96

Income tax expense 403 454

Financial expense decreased mainly due to a decrease in interest paid on other borrowings mainly due the restructuring and amendment of the Company’s syndi-cated loan facility, and particularly to the decrease of its spread from 2.5% to 2.0%. Additionally, interest on other liabilities and financial expense increased mainly due to the increase in telecommunication licence payable and the interest effect of non-current income tax liabilities.The increase in foreign exchange loss is mainly due to unrealized losses on translation of supplier facilities, telecommunication licence payables and borrowings due to the devaluation of the PKR and DZD against the US$. Furthermore, foreign exchange loss in 2008 also included the unrealized loss on the translation of the loans provided to GWMC which are denominated in CAD. See Note 30 “Acquisition of associates” for further information.Fair value changes on FX derivative instruments relates to the changes in the fair value of the cross currency swaps held by Pakistan Mobile Communications Limited (“PMCL”) in connection with the economic hedge of bor-rowings.

15- Share of profit / (loss) of associates and gain/(loss) on disposal of associates

Hutchison TelecommunicationsAs explained in Note 6 “Assets and liabilities held for sale and discontinuing operations”, during October and November 2007, the Group sold 5% of its investment in Hutchison Telecommunications. The remaining invest-ment was sold in January 2008. The Group’s share of profit from the associate, which was recorded in share of profit of associates, amounted to US$ 761 million in 2007. The sale of the first portion of the investment in 2007, recorded in gain/(loss) on disposal of associates, generated a loss of US$ 3 million, whilst the gain on disposal of the remaining investment in 2008 amounted to US$ 27 million.

GlobaliveShare of loss of associates amounting to US$ 3 million in 2008 relates to the Group’s investment in Globalive. Further details of this associate are included in Note 30 “Acquisition of Associates”.


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

2008 2007

Current income tax receivable 75 112

Current and non current income tax liabilities (384) (442)

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

2008

Profit from continuing operations 906

Tax calculated at Company's income tax rate 181

Different income tax rates in subsidiaries 87

Theoretical income tax for the year 268

Permanent differences 16

Unrecognized deferred tax for tax losses 90

Reversal of expired deferred tax assets for tax losses 8

Utilization of previously unrecognized deferred tax assets (16)

Unrecognized deferred tax liabilities on unremitted earnings 19

Other differences 18

Income tax for the year 403

The Group’s income tax expense decreased from US$ 454 million in 2007 to US$ 403 million in 2008 while the effective tax rate increased from 28% to 44%, respectively. Income tax expense in 2007 was benefited by a tax exemption for Orascom Telecom Algeria S.P.A. (“OTA”). This tax exemption expired in August 2007.

17- Property and equipment

Land and Buildings

Cell Sites Computers, fixtures

and other equipment


Total

Cost

As of January 1, 2008 165 5,382 289 796 6,632

Additions 39 322 87 1,184 1,632

Change in the scope of consolidation (3) 59 (11) (4) 41

Assets held for sale (3) (16) (3) (1) (23)

Disposals (6) (41) (6) (8) (61)

Currency translation differences (16) (682) (25) (87) (810)

Reclassifications 4 916 5 (925) -

As of December 31, 2008 180 5,940 336 955 7,411


As of January 1, 2008 44 1,628 148 9 1,829

Charge for the year 23 686 63 - 772

Change in the scope of consolidation 1 26 (7) - 20

Assets held for sale (1) (9) (2) - (12)

Disposals (1) (29) (3) - (33)

Impairment loss - - - 7 7

Currency translation differences (8) (208) (13) - (229)

As of December 31, 2008 58 2,094 186 16 2,354

Net book value as of December 31, 2007 121 3,754 141 787 4,803



Global Reports LLC

130 131

Land and Buildings

Cell Sites Computers, fixtures

and other equipment


Total

Cost

As of January 1, 2007 122 4,181 208 724 5,235

Additions 40 266 89 1,195 1,590

Change in the scope of consolidation (3) (263) (16) 3 (279)

Disposals - (16) (4) (18) (38)

Currency translation differences 4 95 7 18 124


As of December 31, 2007 165 5,382 289 796 6,632


As of January 1, 2007 28 1,071 109 - 1,208

Charge for the year 17 580 48 - 645

Change in the scope of consolidation (3) (66) (10) - (79)

Disposals - (2) (3) - (5)

Impairment loss 1 9 - 9 19

Currency translation differences 1 36 4 - 41

As of December 31, 2007 44 1,628 148 9 1,829



Property and equipment pledged as security for bank borrowings amount to US$ 1.3 billion as of December 31, 2008 and primarily relate to securities for borrow-ings of PMCL, Trans World Asscociated Private Limited (“TWA”) and Orascom Telecom Tunisie S.A.(“OTT”).In the year ended December 31, 2008 and 2007 the Group capitalized borrowing costs of US$ 63 million and US$ 39 million, respectively, relating to the acquisition of property and equipment.The Group leases various assets under non-cancellable finance lease agreements. As of December 31, 2008 the Group had assets under finance lease with cost of US$ 53 million and net book value of US$ 44 million mainly relating to vehicles and equipment.

Additions to property and equipment in 2008 mainly relate to cell site investments and assets under construc-tion relating to new base stations, predominantly in GSM companies in Pakistan, Bangladesh and Algeria. Those investments are mainly due to the expansion of the business, increased capacity and the change in GSM technology. Property and equipment transferred to assets held for sale in 2008 relates to the property and equipment of M Link. See Note 6 “Assets and liabilities classified as held for sale and discontinuing operations” for further information. Additionally, depreciation charged during 2007 includes an amount of US$ 30 million relating to the discontinued operations of Iraqna.


18- Intangible assets


Cost

As of January 1, 2008 1,701 1,173 200 3,074

Additions 252 - 44 296

Change in the scope of consolidation 20 93 4 117

Assets held for sale (2) (17) (3) (22)


Currency translation differences (110) - 2 (108)

As of December 31, 2008 1,861 1,249 240 3,350


As of January 1, 2008 614 120 115 849




Impairment loss 31 - 1 32

Currency translation differences (36) 1 (9) (44)

As of December 31, 2008 724 121 134 979




Cost

As of January 1, 2007 1,406 835 146 2,387

Additions 224 - 49 273

Change in the scope of consolidation 7 312 - 319

Currency translation differences 64 26 5 95

As of December 31, 2007 1,701 1,173 200 3,074


As of January 1, 2007 480 116 82 678



Currency translation differences 24 4 3 31

As of December 31, 2007 614 120 115 849

Net book value as of December 31, 2006 926 719 64 1,709


Additions to intangible assets in 2008 primarily relate to the acquisition of a 3G license in Egypt, by Egyptian Company for Mobile Services S.A.E. (“ECMS”) with a duration of 14 years validity, the group’s proportionate share is US$ 172 million and the acquisition of a WiMax License by PMCL.Intangible assets pledged as security for bank borrow-ings amount to US$ 1.4 billion and primarily relate to securities for borrowings of PMCL and OTT.

Impairment tests for goodwillGoodwill is allocated to the individual CGU which reflects the minimum level at which the units are monitored for management control purposes.

The carrying amount as of December 31, 2008 was subject to an impairment test involving comparing the carrying amount with value in use and the recoverable amount. No evidence of impairment arose. Value in use was determined by discounting the expected cash flows, resulting from business plans approved by the re-spective Board of Directors, using the post-tax weighted average cost of capital (WACC) as the discount rate. The following table provides an analysis of goodwill by segment


Global Reports LLC

132 133

2008 2007

GSM Telecom Services


Total GSM Telecom Services


Total

North Africa 564 - - 564 560 - - 560

South Asia 288 1 - 289 288 1 - 289

Middle East 167 6 22 195 166 1 20 187

Other 80 - - 80 - 17 - 17

1,099 7 22 1,128 1,014 19 20 1,053

19. Other financial assets

2008 2007

Non-current

Current Total Non-current

Current Total

Financial receivables 416 170 586 569 567 1,136

Derivative financial instruments 160 25 185 45 15 60

Deposits 43 82 125 14 44 58

Financial assets available for sale 20 - 20 14 3 17

639 277 916 642 629 1,271

Deposits are partially pledged as security against related bank borrowings.

Financial ReceivablesAs of December 31, 2008 financial receivables mainly include an amount of US$ 401 million relating to a fi-nancial receivable due GWMC. The Company provided financing to GWMC in connection with the funding of the acquisition of spectrum licences (further information is provided in Note 30 “Acquisition of associates”). Financial receivables as of December 31, 2008 also include an amount of US$ 165 million relating to re-ceivables from the sale of subsidiaries. This primarily

relates to the receivable from the sale of OrasInvest amounting to US$ 90 million which is due to be settled in December 2009 and the residual receivable of US$ 75 million from the sale of Iraqna. As of December 31, 2007 financial receivables includes an amount of US$ 1,100 million (of which US$ 566 mil-lion is included in current financial receivables and US$ 534 million is included in non-current financial receiv-ables) relating to the receivable from the sale of Iraqna. As explained in Note 6 “Assets and liabilities classi-fied as held for sale and discontinuing operations”, the Company entered into receivable purchase agreements, during 2008, for the sale of this receivable.

Derivative financial instruments

As of December 31, 2008 2008 2007

Assets Liabilites Assets Liabilites

Interest rate derivatives - 112 - 6


Other derivative instruments 7 1 2 -

Total 185 113 60 6

Less non-current portion

Interest rate derivatives - 71 - -


Other derivative instruments 6 - - -

Current portion 25 42 15 6

Interest rate derivativesThe notional principal amounts of the outstanding interest rate swaps that qualify for hedge accounting amounts to US$ 1.5 billion, relating to the A1 and A2 term loan supplements of the Company. Under the derivative contract the Company pays fixed interest rate and receives 6 month Libor. Gains and losses are rec-ognized in the cash flow hedge reserve in equity. As of

December 31, 2008 the fair value of the derivative liabil-ity was US$ 113 million. The loss recognized in the cash flow hedge reserve, net of deferred tax as of December 31, 2008, amounts to US$ 88 million. Foreign exchange derivativesForeign exchange derivatives primarily relate to the eco-nomic hedge of PMCL. The cross currency swap relates


2008 2007

Deposits Financial receivables

Deposits Financial receivables

Not past due 125 511 58 1,136

Past due 0-30 days - - - -

Past due 31-120 days - 75 - -

Past due 121 - 150 days - - - -

Past due more than 150 days - - - -

125 586 58 1,136

Financial assets available for sale

Company name % ownership December 31, 2008 December 31, 2007

Smart Village (ECDMIV) 10% 8 8

My Screen Mobile Inc 9% 4 -

Lingo Media Corporation 23% 3 -

Top Level Domain Co. 5% 1 1

Other investments 4 8

20 17

Lingo Media CorporationIn August 2008, the Company entered into a subscrip-tion agreement to acquire 2,857,143 common shares of Lingo Media Corporation, a media entity focusing on online advertising. The investment represents approxi-mately 23% of the total share capital and existing voting rights. The Company also purchased share warrants to acquire up to 2,142,857 shares of this entity. The warrants can be exercised from the date of the agree-ment for a period of two years, at an increasing price from US$4 up to US$8. The total purchase price of the shares and warrants was US$ 5 million. Assuming exercise of the warrants, the Company would have an interest of approximately 34% in this entity. Based on an assessment of the contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2008, the fair value of the investment amounted to US$ 3 million and the fair value of the warrants, which is recorded in derivative financial assets, amounted to US$ 0.1 million.

My Screen Mobile IncIn May 2008, the Company concluded a “Restricted Stock Purchase Agreement” with My Screen Mobile Inc, an entity specializing in the delivery of advertising to mobile phones, to acquire 12.5 million shares which represents approximately 9% of the total share capital and existing voting rights. Additionally, the Company purchased share warrants to acquire up to 20 million shares at an exercise price of US$ 2 per share. The warrants can be exercised from the date of the agree-ment until May 23, 2012. The total purchase price of the shares and warrants was US$ 10 million. Upon exercise of the warrants, the Company would hold approximately 20% of the existing and potential voting rights. Based on an assessment of the potential ownership percent-age and other contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2008 the fair value of the investment amounted to US$ 4 million and the fair value of the warrant amounted to US$ 6 million.

to certain borrowings of PMCL, under which borrowings are swapped from US$ to PKR and from Euro to PKR, whilst the associated interest is swapped from LIBOR to KIBOR and from Euribor to KIBOR. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement.

Other derivative instrumentsOther derivative instruments mainly include the warrants to purchase shares of My Screen Mobile Inc and Lingo Media Corporation amounting to US$ 6 million and US$ 0.1 million, respectively as of December 31, 2008. The details of these warrants are provided below in the sec-tion “Financial assets available for sale”.CDC Fennec Ltd, a lender to OTA has the option to con-

vert all amounts payable under the loan agreement into shares of the Company until the debt is extinguished. As of December 31, 2008 the amount due, recorded as liabilities to banks, amounted to US$ 30 million. As of December 31, 2008 and 2007 the fair value of this option was zero.

DepositsDeposits primarily relate to letters of guarantee and oth-er restricted cash held as security for the performance of Group obligations. The increase in deposits in 2008 mainly relates to an increase in cash deposits in Algeria.The following table shows the ageing analysis of finan-cial receivables and long term deposits as of December 31, 2008 and 2007:


Global Reports LLC

134 135

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

2008 2007

Deferred tax liabilities, gross 415 456

Deferred tax assets offset (166) (133)

Deferred tax liabilities 249 323

Deferred tax assets, gross 254 206

Deferred tax liabilities offset (166) (133)

Deferred tax assets 88 73

of which recognized directly in equity (22) (1)

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

2008 2007

As of January 1, 250 157


Change in scope (1) -

Income statement charge (24) 96

Tax charged directly to equity (22) (1)

As of December 31, 161 250

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

Deferred tax liabilities Depreciation and

amortization

Unremitted earnings

Other Total

As of December 31, 2007 370 86 - 456

Charged / (credited) to the income statement 36 (3) 9 42

Exchange differences (79) (3) (1) (83)

As of December 31, 2008 327 80 8 415

Deferred tax assets Tax losses

Accrued revenue

Depreciation and

amortization

Impairment of assets

Provi-sions

Fair value

Other Total

As of December 31, 2007 114 33 20 12 9 1 17 206

Charged / (credited) to the income statement 70 5 3 (3) (1) (1) (7) 66

Charged directly to equity - - - - - 22 - 22

Change in scope - - - - - - 1 1

Exchange differences (32) (2) (1) (1) (1) - (4) (41)

As of December 31, 2008 152 36 22 8 7 22 7 254

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carry forwards of the Group’s subsidiaries in Pakistan with no expiry date.No deferred tax assets were recognized on income tax loss carryforwards for some foreign subsidiaries, mainly Orascom Telecom Bangladesh Limited (“OTB”) and CAT, as it is currently not probable that taxable profit will be available in the near future against which such tax loss

carryforwards might be utilized. Generally the Group does not recognize deferred tax assets for temporary differences related to accruals for provisions, due to un-certainties in connection with the tax treatment of such expenses, as they might be challenged by local tax authorities. No liability has been recognized in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures,


where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. The following table provides a breakdown by estimated recoverability of recognized deferred tax assets and liabilities:

Deferred tax liabilities Deferred tax assets

2008 2007 2008 2007

within 1 year 50 83 1 7

within 1 - 5 years 331 125 252 197

after 5 years 34 248 1 2

415 456 254 206

21. Trade receivables

2008 2007

Receivables due from customers 165 170

Receivables due from telephone operators 91 76

Accrued revenue (unbilled) 76 125

Receivables due from authorized dealers 17 17

Other trade receivables 46 69

Allowance for doubtful receivables (67) (87)

Total 328 370

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

2008 2007

At January 1 87 79

Exchange differences (6) 2


Change in scope - (15)

Use (13) (6)

Reversal (2) (3)

Reclassifications (18) 2


The following table shows the ageing analysis of trade receivables as of December 31, 2008 and 2007, net of the relevant provision for doubtful receivables:

2008 2007

Not past due 154 207



Past due 121 - 150 days 9 14

Past due more than 150 days 30 32

Trade receivables 328 370

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any collateral as security.


Global Reports LLC

136 137

22- Other current assets

2008 2007

Prepaid expenses 76 75

Advances to suppliers 16 17

Receivables due from tax authority 15 45

Deferred cost 14 19

Other receivables 172 87

Allowance for doubtful current assets (46) (27)

Total 247 216

The increase in other receivables is mainly related to down payments as a guarantee to issue indexed notes with a nominal amount of US$ 230 milion (private placement) through a fully owned subsidiary Orascom Telecom Oscar. See note 36 “Sub-sequent Events” for further information.The following table shows the movement in the allowance for other current assets:

2008 2007

At January 1 27 25

Exchange differences (1) 1


Reclassifications 18 -


23- Cash and cash equivalents

2008 2007

Bank accounts 580 1,168

Deposits 70 69

Cash on hand 2 2

Total 652 1,239

Cash and cash equivalents as of December 31, 2007 were unusually high mainly due to the receipt of the proceeds from the sale of 5% of the investment in Hutchison Telecommunication.


24- Changes in equity

Attributable to equity holders of the Company Minority interest

Total equityShare

capitalTreasury shares

Other reserves

Retained earnings

Total

As of January 1, 2007 319 (131) 136 1,740 2,064 125 2,189

Fair value gains/(loss), net of tax:

- available-for-sale financial assets - - 1 - 1 - 1

- cash flow hedges - - (4) - (4) - (4)

Currency translation differences - - 65 - 65 6 71

Share of profit recognized directly in equity of associates

- - 3 - 3 - 3


- - 65 - 65 6 71



- - 65 2,021 2,086 68 2,154

Dividends paid - - - (137) (137) (64) (201)


Cancellation of shares (3) 112 (4) (105) - - -

Purchase of treasury shares - (873) - - (873) - (873)

Acquisition of minority interest - - - - - (36) (36)

Reclassifications - - 6 (6) - - -

As of December 31, 2007 316 (892) 212 3,513 3,149 93 3,242

Attributable to equity holders of the Company Minority interest

Total equityShare

capitalTreasury shares

Other reserves

Retained earnings

Total

As of January 1, 2008 316 (892) 212 3,513 3,149 93 3,242

Fair value gains/(loss), net of tax:

- available-for-sale financial assets - - (2) - (2) - (2)

- cash flow hedges - - (88) - (88) - (88)

Currency translation differences - - (173) - (173) (3) (176)

Share of profit recognized directly in equity of associates

- - 5 - 5 - 5


- - (258) - (258) (3) (261)

Profit for the year - - - 431 431 72 503


- - (258) 431 173 69 242

Dividends paid - - (9) (157) (166) (61) (227)


Cancellation of shares (55) 2,789 (79) (2,655) - - -


Sale of treasury shares - 115 - - 115 - 115

Capital increase minority interest - - - - - 20 20

Reclassifications - - (16) 16 - - -

As of December 31, 2008 261 (190) (139) 1,148 1,080 121 1,201


Global Reports LLC

138 139

Authorized and Issued Share CapitalAs of December 31, 2007 the issued and paid up share capital amounted to LE 1,090 million (equivalent to US$ 316 million) comprising 1,090,000,000 shares of a nomi-nal value of LE 1 per share. The Company is listed on both the Egyptian Stock Exchange and also has GDR’S (where one GDR is equivalent to 5 local shares) listed on the London Stock Exchange.On February 24, 2008, the Extraordinary General Meeting approved a share capital reduction through the cancellation of 61,900,000 treasury shares (11,612,970 GDR and 3,835,150 local shares). The cancellation of the shares took place on June 16, 2008. Furthermore, on August 8, 2008, the Extraordinary General Meeting approved a share capital reduction through the cancellation of 128,697,126 treasury shares (22,891,514 GDR’s and 14,239,556 local shares). The cancellation took place on September 11, 2008.Accordingly, as a result of the above transactions, as of December 31, 2008 the issued and paid up share capital amounted to LE 899 million (equivalent to US$ 261 mil-lion) comprising 899,402,874 shares of a nominal value of LE 1 per share. The legal reserve connected with the cancelled shares including currency translation differences, amounting to LE 95 million (equivalent to US$ 16 million), was reclas-sified from other reserves to retained earnings.

Treasury SharesTreasury SharesOn May 14, 2008, the Company purchased 105,999,773 shares (11,177,963 local shares and 18,964,362 GDR’s), through a tender offer at a pur-

chase price of LE 83 per local share and US$ 77.41 per GDR. On July 2, 2008, the Company purchased 11,999,403 shares (3,035,563 local shares and 1,792,768 GDR’s), through a tender offer launched on May 27, 2008 at a purchase price of LE 83 per share and US$ 77.82 per GDR. As previously explained, the Company cancelled 190,597,126 treasury shares (equivalent to 38.12 mil-lion GDR’s). In addition to the two fixed price tender offers, during the year ended December 31, 2008 the Company purchased from the market 46,560,120 shares to be held as treasury shares and sold 18,206,500 shares to the market.

Share based compensation planDuring the year ended December 31, 2008 the Group acquired 1,383,855 of its own shares. Share grants exercised during 2008 resulted in 1,223,148 shares. As a result of the above transactions, as of December 31, 2008 the Company had 21,343,485 shares held as treasury shares and for the purposes of the share based compensation plan with a fair market value of US$ 116 million.

DividendsThe Shareholders’ Meeting of the Company held on April 21, 2008 approved a dividend distribution of LE 1 per share (LE 5 per GDR) which was paid on June 5, 2008. The dividend distribution in 2007 amounted to LE 0.75 per share (LE 3.75 per GDR).

Liabilities to banksAppendix A includes a detailed analysis of liabilities to banks as of December 31, 2008. In addition to the normal scheduled repayments of bor-rowing facilities, in accordance with the relevant agree-ments, the main changes in liabilities to banks during

2008 relates to financing transactions by the Company and PMCL, primarily for the purpose of refinancing exist-ing borrowings. As of December 31, 2007 the Company had an amount of US$ 2,084 million outstanding relating to a syndi-cated loan facility. Following the disposal of Hutchison

25- Borrowings

within one year

1-2 years 2-3 years 3-4 years 4-5 years after 5 years

Total



Liabilities to banks 432 468 746 945 1,620 210 4,421

1,726 572 716 489 215 239 3,957

Bonds 35 51 14 63 253 737 1,153

95 6 65 17 59 988 1,230

Derivative instruments 42 36 23 11 1 - 113

6 - - - - - 6

Finance lease liability 8 8 7 6 4 - 33

3 5 5 2 1 - 16

Other borrowings 13 - - - 2 - 15

10 - - - - - 10

Total as of December 31, 2008 530 563 790 1,025 1,880 947 5,735

Total as of December 31, 2007 1,840 583 786 508 275 1,227 5,219


Telecommunications in January 2008, the Group was required to make a mandatory prepayment of US$ 958 million of this facility from the proceeds of the disposal. During the year, in accordance with the contractual con-ditions, the Company also made additional repayments of US$ 140 million of this facility. Following these repay-ments the amount outstanding was US$ 988 million. During the second quarter of 2008, the Company en-tered into an amendment agreement which restated the amount outstanding under this facility using the pro-ceeds from a new five year senior secured syndicated debt facility. The proceeds from the new facility, of US$ 2.5 billion, were partially used to repay previous facili-ties and to finance the tender offer for the acquisition of treasury shares (see “Share Capital” for further details on these transactions). The new facility has a duration of five years and is due in 2013 with a grace period of two years.Additionally, during 2008 PMCL entered into a syndi-cated loan for an amount of PKR 22,060 million (equiva-

lent to US$ 352 million). The loan, which was fully drawn down in 2008, is repayable in six semi-annual installments between July 2011 and January 2014. The proceeds from the loan were used to refinance existing borrowings amounting to US$ 250 million and to finance ongoing capital expenditure programs.

BondsAppendix B includes a detailed analysis of Bonds as of December 31, 2008. During 2008 PMCL received proceeds of PKR 1,899 million (equivalent to US$ 30 million) from the issuance of new unsecured term finance certificates. The bond bears interest of 6 months KIBOR plus a spread of 1.65% and is repayable on 28 October 2013.

DerivativesDetails of the derivative liabilities are provided in Note 19 “Other financial assets”.

Finance Lease Liabilities

2008 2007

Gross finance lease liabilities - minimum lease payments



After 5 years - -

43 21

Future finance charges on finance leases (10) (5)

Present value of finance lease liabilities 33 16

The present value of finance lease liabilities is as follows:

Within one year 8 3


After 5 years - -

33 16

Other BorrowingsOther borrowings mainly include notes payable to suppliers and loans from minority shareholders in subsidiaries.


Global Reports LLC

140 141

Currency Information of Borrowings

US$ Euro Egyptian Pound

Pakistan Rupee

Bangladeshi Taka

Algerian Dinar

Tunisian Dinar

Others Total


Total borrowings by currency of issue

4,022 421 539 576 61 52 55 9 5,735

Notional amount of currency derivatives

(315) (305) - 620 - - - - -

Borrowings after derivative effect

3,707 116 539 1,196 61 52 55 9 5,735


floating rate borrowings 1,110 108 458 1,195 61 52 53 - 3,037

fixed rate borrowings 2,597 8 81 1 - - 2 9 2,698


Total borrowings by currency of issue

3,335 478 515 628 57 130 76 - 5,219

Notional amount of currency derivatives

(309) (324) - 633 - - - - -

Borrowings after derivative effect

3,026 154 515 1,261 57 130 76 - 5,219


floating rate borrowings 716 142 331 1,261 57 130 75 - 2,712

fixed rate borrowings 2,310 13 184 - - - 1 - 2,508

Financial liabilities include secured liabilities of US$ 3,897 million as of December 31, 2008 and US$ 3,621 million as of December 31, 2007. In general, the financial liabilities are secured on property and equipment of the relevant subsidiary, pledged shares and receivables.

26- Other liabilities

2008 2007

Current Non-current Total Current Non-current Total

Telecommunication licence payable 202 193 395 72 178 250

Taxes (Other than income taxes) 190 - 190 212 - 212

Prepaid Traffic and deferred income 187 - 187 168 - 168

Due to local authorities 62 - 62 122 - 122

Personnel payables 53 - 53 74 - 74

Other 162 27 189 125 16 141

Total 856 220 1,076 773 194 967

The increase in telecommunication license payable relates to the 3G license acquired by ECMS.

27- Trade payables

2008 2007

Capex payables 654 647

Trade payables due to suppliers 260 218

Trade payables to telephone operators 74 45

Other trade payables 198 173

Total 1,186 1,083

Trade payables are all due within one year.


28- Earnings per share (a) Basic

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

2008 2007


- Profit from continuing operations (in million of US$) 431 1,101

- Profit from discontinuing operations (in million of US$) - 920

431 2,021

Weighted average number of shares (in number of shares) 936,675,662 1,043,162,950

Earnings per share – basic (in US$)


- from discontinuing operations n.a. 0.88

0.46 1.94

(b) DilutedDiluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to as-sume conversion of all dilutive potential ordinary shares. During 2007 and 2008 the dilutive potential ordinary shares relate to the share based compensation plan.

2008 2007

Earnings

Profit from continuing operations attributable to equity holders of the Company

431 1,101

- adjustments for diluted shares - -

Profit used to determine diluted earnings per share 431 1,101

Profit from discontinued operations attributable to equity holders of the Company

- 920

431 2,021

Weighted average number of shares in issue (in number of shares) 936,675,662 1,043,162,950

Adjustments for:

- Shares granted (in number of shares) 2,245,362 1,651,546

Weighted average number of shares for diluted earnings per share (in number of shares)

938,921,024 1,044,814,496

Earnings per share – diluted (in US$)


- from discontinuing operations n.a. 0.88

0.46 1.94

29- Business combinationsDuring 2008 the Group acquired 100% of share capital of two GSM telecommunications operators in Central African Repub-lic and Burundi through its subsidiary Telecel Globe and a telecommunication company operating in the software develop-ment, internet and related services through its subsidiary Intouch.


Global Reports LLC

142 143

the Group. The goodwill is attributable to the internet and fixed line segment. See Note 36 “Subsequent events” for the business com-bination that took place after the balance sheet date but before the approval of these financial statements.

30- Acquisition of AssociatesGlobaliveDuring 2008 Orascom Telecom Holding Canada (Malta) Limited (“OTHCML”) acquired an interest in Globalive Canada Holdings Corp (“Globalive”). This investment comprises a combination of voting and non-voting rights. Including direct and indirect interests, OTHCML holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The investment is equity ac-counted as the Group only has significant influence and not control over the financial and operating policies of this company.In March 2009, Globalive was awarded CAD 442 million of spectrum licences from Industry Canada’s Advances Wireless Services Spectrum Auction. Globalive will offer a wireless service across Canada in a market that is not fully penetrated and which offers relatively high ARPU. Globalive expects to launch its network to con-sumers in the fourth quarter of 2009. During 2008, Globalive Management Corp (“GWMC”, a subsidiary of Globalive) entered into two loan agree-ments with the Company to borrow up to a total of CAD 508 million. As of December 31, 2008 the outstanding loan amount, including accrued interest amounts to CAD 483 million (equivalent to US$ 401 million). Both loans are secured non-revolving term loans, bearing interest of Libor plus 18%. The loans are secured by an assign-

The following table provides details of main acquisitions during 2008:

Provisional fair value (*)

U-COM Telecel WOL

Cash and cash equivalents 3 3 9

Property and equipment 17 19 7

Intangible assets 1 - 2

Deferred tax assets 1 - -

Inventories 1 1 -


Other current assets (3) 3 1

Non-current borrowings - (7) -

Other non-current liabilities - (4) -

Current borrowings - (3) -

Other current liabilities (5) (4) (3)

Trade payables (1) (1) (3)

Current income tax liabilities (2) - -

Net identifiable assets acquired 15 16 14

Provisional goodwill 62 18 3

Cash consideration 77 34 17

Cash and cash equivalents in subsidiary acquired (3) (3) (9)

Cash outflow on acquisition 74 31 8

(*) The provisional fair value is approximated with the acquirees’ carrying amounts.

U-COMThe Group acquired U-COM, a mobile telecommunica-tions operator in Burundi for a cash consideration of US$ 77 million. U-COM is consolidated from the third quarter 2008 and contributed revenues of US$ 14 million and net profits of US$ 3 million to the Group during the period.U-Com Burundi operates GSM 900/1800, CDMA 800, and WIMAX (in Bujumbura) networks and is the market leader with 246,000 subscribers and over 70% market share in Burundi. The goodwill is attributable to the strong market position of U-COM in Burundi.

Telecel CentrafriqueThe Group acquired the Central African GSM telecom-munications operator Telecel Centrafirque (“Telecel”)for a cash consideration of US$ 33 million. Telecel is consolidated from the third quarter 2008 and contributed revenues of US$ 11 million and net loss of US$ 5 million to the Group during the period.The goodwill is attributable to Telecel’s market position. The company utilizes a GSM 900/1800 network and is the largest operator in the Central African Republic with over 113,000 subscribers and 37% market share.

WOL Telecom LimitedThe Group acquired 100% of the share capital of WOL Telecom Limited (“WOL”), a telecommunication com-pany, operating in software development, internet and related services, for a cash consideration of US$ 17 million. WOL is consolidated from January 1, 2008. The goodwill is attributable to WOL’s market positioning and the synergies expected to arise after its acquisition by


ment of the spectrum licenses and are guaranteed, on a limited recourse basis, by some of the investment held by GWMC.

Total assets 375

Total liabilities 405

Revenue -

Net loss (29)

% shareholding 65.4%

proportional share of net loss (19)

Elimination of proportional share of intragroup interest expense 16

Share of loss in associate (3)

31- Interest in joint venturesThe Group has the following interest in its joint ventures:

Joint venture Shareholding Country of domiciliation

Egyptian Company for Mobile Services S.A.E. 34.67% Egypt

Orascom Telecom Tunisie S.A. 50.00% Tunisia

Consortium Algerian Telecommunication S.P.A. 50.00% Algeria

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

2008 2007

Revenues 2,554 2,010

Profit for the year 247 203

Current assets 476 482

Non-current assets 2,867 2,357

Current liabilities 1,324 1,138

Non-current liabilities 1,337 1,038

0.46 1.94

32- CommitmentsThe commitments as of December 31, 2008 and 2007 are provided in the table below:

As of December 31, 2008 As of December 31, 2007

Intangible assets 138 346

Property and equipment 338 365

Others 109 43

Total 585 754

The following table provides selected financial informa-tion of Globalive as of December 31, 2008 and for the year ended December 31, 2008.

Commitments for the purchase of intangible assets mainly relate to commitments of ECMS amounting to US$ 108 million primarily relating to the acquisition of the 3G licence. Commitments for purchase of property and equipment mainly relate to commitments of Menacable amounting to US$ 153 million relating to the purchase of marine

cables and related equipment. Other purchase commitments mainly relate to the com-mitment of Telecel Globe to purchase Powercom Limited for an amount of US$ 59 million. The first installment of this commitment, amounting to US$ 30 million, is due in January 2009 and the remaining installment, of US$ 29 million, is due one year later.


Global Reports LLC

144 145

were granted on January 1 to existing employees. The GDRs granted vest in three installments over the vesting periods that vary from 12 to 42 months. Starting from 2005 GDRs are granted for free and must be exercised within two years after the end of the vesting period. Exercise of an award is subject to employment in the Group at the exercise date. The Group has no legal obligation to repurchase or settle the awards in cash.GDRs were valued using the Black-Scholes option-pricing model. The assumptions for calculations of the fair value per GDR at the grant date include the GDR price at each grant date, nil exercise price, a GDR price volatility between 29% and 69%, a dividend yield of 1% and an annual risk free rate between 3.74% and 6.43%.

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

2008 2007



After 5 years 41 43

185 177

33- Share based compensationThe following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of December 31, 2008:

Grant date Tranche GDRs granted (thou-

sands)

Vesting pe-riod (months)

Weighted exercise price

in US$

GDR price at grant date in

US$

Fair value of GDRs at grant

date in US$

July 1, 2004 3 4 42 9.20 9.29 4.79

July 1, 2005 2 20 30 - 50.70 49.20

July 1, 2005 3 40 42 - 50.70 48.71

July 1, 2006 2 29 30 - 40.80 39.59

July 1, 2006 3 31 42 - 40.80 39.20

January 1, 2007 2 53 24 - 66.00 62.98

January 1, 2007 3 53 36 - 66.00 62.36

July 1, 2007 1 46 18 - 64.90 63.61

July 1, 2007 2 46 30 - 64.90 62.98

July 1, 2007 3 46 42 - 64.90 62.36

January 1, 2008 1 11 12 - 83.00 80.00

January 1, 2008 2 25 24 - 83.00 79.07

January 1, 2008 3 29 36 - 83.00 78.19

July 1, 2008 1 25 18 - 62.90 60.81

July 1, 2008 2 25 30 - 62.90 59.84

July 1, 2008 3 25 42 - 62.90 58.90

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


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

2008 2007

Averageexercise price

in US$ per GDR option granted


GDRs granted for free

(thousands)


in US$ per GDR option granted


GDRs granted for free

(thousands)

At January 1 9.20 80 478 4.76 483 227

Granted - - 140 - - 297

Forfeited - - (6) - - -

Exercised 9.20 (76) (108) 3.88 (403) (46)

Expired - - - - - -

At December 31 9.20 4 504 9.20 80 478

thereof exercisable 4 20 - -

The weighted average GDR price during 2008 amounted to US$ 48.65 (2007; US$ 70.33). The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2008 and 2007:

Range of exercise price in US$

December 31, 2008 December 31, 2007

Weighted average

exercise price in US$

Number of GDRs

(thousands)

Weighted average


Weighted average

exercise price in US$

Number of GDRs

(thousands)

Weighted average

remaining lifein months

9.20 9.20 4 12 9.20 80 24

nil nil 504 36 nil 478 40

The table below sets forth the awards outstanding as of December 31, 2008 and their expiry dates:

Expiry date - December 31 Exercise price in US$ per GDR

GDRs (thousands)

2008 2007

2009 0 - 9.20 24 208

2010 - 179 174

2011 - 180 130

2012 - 100 46

2013 - 25 -

Total 508 558


Global Reports LLC

146 147

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

Sale of services and goods

Purchase of services and goods

Interest income

2008 2007 2008 2007 2008 2007


Weather Investments 12 6 - - - -

Wind Telecomunicazioni SpA 36 24 6 8 - -

Joint ventures

ECMS 3 20 - - - -

OTT 17 13 37 17 - -

Associate

GWMC - - - - 9 -


Orascom Construction Industries - - 3 13 - -

Orascom Technology Solution - - 5 7 - -

Orascom Trading - - 10 12 - -

Orascom Training & Technology - - 3 1 - -

Total 68 63 64 58 9 -

Receivables Payables

2008 2007 2008 2007


Weather Investments 14 6 1 -

Wind Telecomunicazioni SpA 6 3 4 2

Joint ventures

ECMS 5 7 1 1

OTT 2 15 5 7

Associate

GWMC 401 - - -


Orascom Construction Industries - - 1 -

Orascom Technology Solution 1 1 1 -

Orascom Trading - - 2 2

Total 429 32 15 12

Transactions with Weather Investments GroupThe Group is directly controlled by Weather Invest-ments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Company and interconnection traffic between the Group and the subsidiaries of Weather Investments, and particularly Wind Telecomunicazioni SpA.

Transactions with Joint Ventures of the GroupTransactions with joint ventures of the Group mainly refer to transactions with OTT and ECMS relating to interconnection traffic and the sale of handsets.

Transactions with Associates of the GroupOTH provided financing to GWMC, an associate of the Group, in connection with the funding of the acquisition of the spectrum licenses. For further details see Note 30 “Acquisition of associates”.

Transactions with other related partiesThe Group is indirectly controlled by the Sawiris fam-ily. Transactions with entities under the control of the Sawiris family mainly refer to transactions with Oras-com Constructions Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology.


a total purchase consideration of US$ 7 million through its subsidiary Ring For Distributions.

Key management compensationKey management includes executive and non executive directors of the Board of Directors of the Company, the Company’s chief financial officer, other managing direc-tors considered key personnel and the chief executive officers of significant subsidiaries and joint ventures.

Transactions with Orascom Technology Solutions mainly refer to maintenance activities of electronic hard- and software carried out for the Group. Orascom Construc-tions Industries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Oras-com Training & Technology mainly include management training programs.Furthermore, during 2008 the Group acquired 98.9% of MMS from companies controlled by the Sawiris family for

The compensation paid or payable to key management for employee services is shown below:

2008 2007

Salaries and other short-term employee benefits 11 10

Equity settled share based payments 2 3

35- Contingent assets and liabilitiesThe Group is subject to various legal proceedings and claims which arise in the ordinary course of business due to the nature of the operations of the Group and the nature of the markets where the Group operates. The Group recognizes a provision for losses and li-abilities when the existence is certain or probable. As of December 31, 2008 the Company is a party in a number of legal cases which resulted from carrying out its activi-ties. Based on the legal advice obtained, the Company’s management believe that the outcome of these lawsuits, individually or in aggregate, would not be material to the Group’s results.PMCL is involved in proceedings regarding tax claims up to the year 2005 whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. The appeals have been decided by the second level tax appellate forum and the assessments have been set aside for fresh consideration. With the excep-tion of the 2005 tax year, the re-assessment has been completed. However, the company has appealed against the re-assessment. The amount under dispute is equal to approximately US$ 20 million.The Jordanian Tax Authority has initiated proceedings against Pioneer Investment Ltd., a wholly owned subsid-iary of the Group, in connection with the sale of Fastlink (Jordan Mobile Telecommunication Services). The amount under dispute if approximately US$ 62 million. At present the Group is not in a position to assess the status of the case.The Group resorted to the International Chamber of Commerce Arbitration regarding a material breach of the Shareholders’ Agreement entered into between Orascom Telecom and France Telecom in relation to the management of Mobinil for Telecommunications and Egyptian Company for Mobile Services (ECMS). Although no official timeline has been communicated to the management, the management expects a decision on the matter sometime before end of June 2009. The management is not in a position to opine on the outcome of the arbitration processOrascom Telecom Iraq upon the disposal of its invest-ment in (Iraqna for Mobile Services-subsidiary) provided warranty to the purchaser of the investment. This war-ranty, for a maximum amount of US$ 120 million, is in respect of claims and tax covenant claim and includes all legal and other professional fees and expenses payable

by the company in respect of all such claims and tax covenant claims, of which no more than US$ 60 million shall be payable in relation to tax covenant claim.Telecom Egypt filed a complaint with the dispute resolu-tion committee of the National Telecommunication Regu-latory (NTRA), with the purpose of changing its intercon-nection prices with the mobile operators, despite the fact that there are existing contracts with the operators. In response ECMS requested the committee to respect the prices of contracts in effect. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnection prices between the fixed and mobile networks to be effective from that date. On November 1, 2008 a law suit against the NTRA was filed in the Administrative Court at the State Counsel asking for staying and nullifying the NTRA decision .Based on the legal advice obtained, ECMS’s man-agement believes that ECMS has a strong legal and contractual position, therefore ECMS recorded intercon-nection traffic with Telecom Egypt based on the exist-ing agreement. If ECMS had applied Telecom Egypt’s interpretations, it would have negatively impacted the Group’s interconnection revenue by US$ 9 million, and decreased interconnection cost by US$ 3 million for the current financial year.On December 23, 2008 OTA received a provisional corporate tax assessment amounting to US$ 56 mil-lion relating to year 2004. Management illustrated its position to the tax administration at January 31, 2009. As management considers most of the tax assessment challengeable, it did not accrue any provision. InTouch group received a tax claim amounting to US$ 4 million. Management believes that the process is still in its early stages and that at present the Group is not in a position to assess the potential liability in this regard.OTT received a notification on tax investigation dur-ing 2006 regarding electronic recharge sales. The total amount claimed by the tax authority is estimated to be US$ 53 million (the Group’s proportionate share of such claim amounts to approximately US$ 27 million). In 2007 OTT received the first judgment according to which the amount was reduced to US$ 12 million. Management believes to be fully compliant with Tunisian legislation. However, due to uncertainties of the legal environment, managements provided for the amount fully. The Group’s proportionate share of this provision amounts to US$ 6 million.


Global Reports LLC

148 149

be based on arm’s length legal requirements which are in line with best practice. The valuation will be finalized at the end of the due diligence process and will be sub-ject to approval by the OTH Board of Directors.

Secured indexed bondOn February 12, 2009 the Company issued equity indexed notes of a nominal amount of US$ 230 million fully amortised by 2013 and carrying a coupon of US$ Libor plus a margin of 5%. The issuance has been imple-mented in a fully subscribed private placement.

Share transactionsIn February 2009, the Company plans a potential GDR and local shares repurchase from the market of up to 27 million shares (5.4 million GDRs) over the following three months. The potential buy back consist with what was declared in August 2008, to buy 44,5 million shares (8.9 million GDRs) over twelve month from that date.

Other eventsOn January 13, 2009 the Company was awarded the management contract for one of two Lebanese mo-bile telecommunications operators. The management contract has duration of one year which can be further extended for another year.

International Chamber of Commerce decision Con-cerning Mobinil TelecomMobinil for Telecommunications S.A.E. (“Mobinil”) (unlisted Company) is a jointly controlled entity between Orascom Telecom Holding S.A.E. (“OTH”) and France Telecom (“FT”). FT owns 71.25% of the shares of Mo-binil, and OTH owns the remaining 28.75%. The purpose of Mobinil is to acquire the license of the first Mobile net-work (GSM) in Egypt through the Egyptian Company for Mobile Services (“ECMS”) “the operator” which is owned by Mobinil at 51%. The shares of ECMS are traded in Egypt Stock Exchange. In addition, OTH has 20% direct interest in ECMS. On August 8th 2007, OTH initiated an arbitration against FT at the Arbitration Court of the International Chamber of Commerce (ICC) regarding the dispute related to determining the identity of the shareholders who are en-titled to acquire the interest of another partner in Mobinil based on the provisions of the shareholders agreement. On March 10th, 2009, the ICC has issued its award which is summarized as follows:-1-OTH has to sell and transfer the ownership of all its shares in Mobinil amounting to 9 079 shares to FT at the price of L.E. 441 658 per share with a total amount of L.E. 4 009 812 982 which has to be paid on its equivalent in U.S. Dollars at the exchange rate of the payment date.2-OTH has to execute the sale not later than a 30 days period from arbitration award date, and in case OTH fails to execute the sale within the said period, a delay penalty of U.S.$. 50 000 per day shall be levied against OTH.3-Rejecting the other claims and the claims of compen-sation presented by the parties in dispute.On April 7th, 2009, the Capital Market Authority (CMA) issued its decision in regard to the legal effect based on the execution of the arbitration award and its impact on the minority interest of ECMS (a listed company in Egypt Stock Exchange) which stipulated the following:-

The tax exposure of U-Com Burundi, a subsidiary of Telecel Globe, amounts approximately to US$ 12 mil-lion, including penalties, as of December 31, 2008. As at present the Group is not in a position to assess the status of the case, no provision has been accounted for.The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activi-ties. Guarantees include the following:

Corporate guarantee in an amount of US$ 29 mil-• lion relating to a guarantee provided for the second tranche of the payment for the acquisition of Power-com in Namibia;Letter of guarantee in an amount of US$2 million • provided by OTH to BBG Telecommunication;Letter of Guarantee amounting to USD 1 million in fa-• vour of NTRA to guarantee MENA Cable execution of its entire obligations related to constructing, operating and renting sea cables networks and its infrastructure for international communication;Letters of guarantee provided by Ring Egypt, of which • the uncovered portion amounts to US$ 18.5 million, provided to mobile handset suppliers;Letters of guarantee provided by ECMS to National • Telecom Regulatory Authority. The Company’s share in such letters of guarantee is equal to US$16 million.Guarantee provided by Mobilink on behalf of Dancom • online with an amount of PKR 148 million equivalent to US$ 2 million

36- Subsequent eventsAcquisitions and participationsOn January 13, 2009 the Group acquired 100% of the Namibian telecommunications operator, Cell One, through its subsidiary Telecel Globe. This acquisition together with the acquisition of U-COM in Burundi and Telecel Central African Republic are part of Telecel Globe’s strategy to target licenses and mobile operators in small and medium sized developing countries that have high growth potential. The total purchase consider-ation amounted to US$ 59 million. In March 2009 the company announced that Globalive Wireless Management Corp. (“Globalive Wireless”), in which OTH has a 65.4% per cent indirect equity owner-ship, has officially been granted its spectrum license from Industry Canada and has received the correspond-ing spectrum. Globalive Wireless participated in Industry Canada’s Advanced Wireless Services Spectrum Auction in May 2008, purchasing CAD 442 million in provisional spectrum. Following a standard review period, Globalive has been granted its license, having met the eligibility requirements specified by Industry Canada to become a spectrum license.

DisposalsOn January 13, 2009 OTH disposed of 100% of its investment in M-Link SARL to TLC Servizi S.p.A. which is a wholly owned subsidiary of Wind Telecomunicazioni S.p.A. for a total consideration of $77 million..On February 22, 2009 OTH received an indicative non-binding offer from ECMS for the acquisition of 100% of the shares of LINKdotNET and Link Egypt. The offer was approved by the Board of Directors of ECMS on February 20, 2009. The transaction will be subject to standard due diligence procedures and the valuation will


The provision of Article No. (327) of the executive • regulations of the Capital Market Law that is relevant to the purchase offers for the purposes of acquisition stipulates that equality and equal opportunities among the holders of financial securities subject to the pur-chase offer must be in place. The provision of Article No. (353) of the said execu-• tive regulations also included the obligatory cases in which a mandatory purchase offer to buy the entire shares and the convertible bonds of the company targeted by the offer, in addition to the stipulation of paragraph No. (3) of the same article. Whereas, the execution of the arbitration award • results in an indirect acquisition by FT of more than 50% of the capital or voting rights.Whereas there is a close relationship between the • transfer of the ownership of the shares of Mobinil to FT which results in the acquisition of 51% of the shares of ECMS.And whereas the only activity of Mobinil is the owner-• ship of a stake that is more than 50% of the shares of ECMS and exercising its voting rights related thereto, therefore, the execution of the ownership transfer process relevant to the execution of the arbitration award cannot be separated from the liabilities arising from the said award. Especially, the processes of transferring the ownership of the shares of ECMS in the light of the obligation of presenting a mandatory

purchase offer.In addition to the necessity of execution on the shares of ECMS in a direct and indirect way, through the acqui-sition of the partner’s stake in the shares of Mobinil, simultaneously. Hence the transfer of ownership of the same share cannot be accepted whether in a direct or an indirect way at two different prices in the same time.

The Capital Market Authority (CMA) refused the • mandatory purchase offer presented by FT to acquire all the shares of ECMS as it is to the contrary of the principle of equality and equal opportunities among the securities’ owners.

Due to the fact of not reaching a clear agreement in regard to the minority interest of the shareholders of ECMS, the management of OTH, currently, cannot es-timate the financial impact of this event on the financial statements of the company.

37- Reconciliation of previous disclosureThe following table provides a reconciliation between the income statement classified by function as reported in the consolidated financial statements for 2007 and the income statement classified by nature, disclosed for comparative purposes in these annual consolidated financial statements as of and for the year ended De-cember 31, 2008.


Global Reports LLC

150 151

US$ 38 million and to foreign exchange gains for US$ 42 million.Operating costs have been reclassified according to their nature. In particular an amount of US$ 1,826 million was reclassified to purchase and services, an amount of US$ 660 million to depreciation and amortization and an amount of US$ 66 million to other expenses. The reclassification to purchase and services mainly includes interconnection traffic, roaming, expenses for handsets, scratch and sim cards, customer acquisition costs, internet and land line costs. The reclassification to other expenses mainly relates to license fee expenses.

CThe reclassification of US$ 40 million to other expenses mainly relates to accruals for provisions and doubtful receivables.The following table provides reconciliation between the

AAdministrative expenses have been reclassified according to their nature. In particular an amount of US$ 257 million was reclassified to personnel costs, an amount of US$ 459 million and to purchase and services, an amount of US$ 52 million to other expenses and an amount of US$ 92 million to depreciation and amortization. The reclassifications to purchase and services mainly re-late to consulting and professional services and expens-es for maintenance and utilities. The reclassification to other expenses mainly relate to taxes other than income taxes and expenses for traveling and staff training.The reclassification of US$ 248 million from distribution expenses to purchase and services mainly relates to the reclassification of marketing and promotion expenses.

BNet finance costs have been reallocated to financial expenses for US$ 520 million, to financial income for

(in million of US$)2007

as reportedChange in presentation from functional

to nature2007

reclassified

A B C

Revenues 4,747 - - (20) 4,727

Other income 29 - - 20 49

Operating cost (2,552) - 2,552 - -

Distribution expenses (248) 248 - - -

Administrative expenses (611) 611 - - -

Remunerations and allowances for Board members

(1) 1 - - -

Other expenses (68) - - 68 -

Purchases and services - (459) (1,826) (3) (2,288)

Other expenses - (52) (66) (40) (158)

Personnel costs - (257) - - (257)

Depreciation and amortization - (92) (660) - (752)

Impairment charges - - - (19) (19)

Disposal of non-current assets - - - (3) (3)

Operating income 1,296 - - 3 1,299

Net financing costs (440) - 440 - -

Financial expense - - (520) - (520)

Financial income - - 38 - 38

Net foreign exchange gain /(loss) - - 42 - 42

Share of profit of associates 761 - - - 761

Gain/ (loss) on disposal of associates - - - (3) (3)

Profit before income tax 1,617 - - - 1,617

Income tax expense (454) - - - (454)

Profit from continuing operations 1,163 - - - 1,163

Profit from discontinued operations (net of tax)

920 - - - 920

Profit for the period 2,083 - - - 2,083

Attributable to:

- Equity holders of the Company 2,021 - - - 2,021

- Minority interest 62 - - - 62


balance sheet classification as of December 31, 2007 included in the annual consolidated financial statements as of and for the year ended December 31, 2007 and the

(in million of US$)December 31, 2007

as reported

Reclassifications December 31, 2007

ReclassifiedA B C

Assets

Property and equipment 4,803 - - - 4,803

Intangible assets 1,171 1,054 - - 2,225

Goodwill 1,054 (1,054) - - -

Investments 17 (17) - - -

Advance payments for investments 31 (31) - - -

Other non-current financial assets 594 48 - - 642

Deferred tax assets 73 - - - 73

Total non-current assets 7,743 - - - 7,743

Inventories 111 - - - 111

Trade receivables 213 (74) 80 151 370

Other current financial assets 1,046 - - (417) 629

Due from related parties 80 - (80) - -

Prepaid expenses 76 - (76) - -

Current income tax receivables - (14) - 126 112

Other receivables - 76 140 216

Cash and cash equivalents 1,239 - - - 1,239

Assets held for sale 924 - - - 924

Total current assets 3,689 (88) - - 3,601

Total Assets 11,432 (88) - - 11,344


Equity attributable to equity holders of the Company

3,149 - - - 3,149

Minority interest 93 - - - 93

Total equity 3,242 - - - 3,242

Liabilities

Non-current borrowings 3,366 - 13 - 3,379

Other non-current liabilities 207 - (13) - 194

Non-current income tax liabilities - - - - -

Deferred tax liabilities 323 - - - 323

Total non-current liabilities 3,896 - - - 3,896

Current borrowings 1,756 65 6 13 1,840

Trade payables 974 211 1 (103) 1,083

Other payables 986 83 (464) 168 773

Due to related parties 21 - - (21) -

Debt due on purchase of investments 57 - - (57) -

Accrued expenses 500 (433) (67) - -

Current income tax liabilities - (14) 456 - 442

Provisions - - 68 - 68

Total current liabilities 4,294 (88) - - 4,206

Total Liabilities 8,190 (88) - - 8,102

Total Equity and Liabilities 11,432 (88) - - 11,344

information included for comparative purposes in these annual consolidated financial statements as of and for the year ended December 31, 2008.


Global Reports LLC

152 153

ables. Prepaid expenses amounting to US$ 76 million have been reclassified to other receivablesAccrued expenses amounting to US$ 67 million relating to provisions have been reclassified to provisions for other liabilities and charges. Current income tax liabilities amounting to US$ 456 million have been reclassified from other payables to a new line of the balance sheet. The finance lease liability amounting to US$ 13 million, previously classified within other non-current liabilities, has been reclassified to non-current borrowings.

CLiabilities due to related parties amounting to US$ 21 million and debt due on purchase of investments amounting to US$ 57 million have been reclassified to trade payables. The reclassification from trade payables to other payables is mainly due to payables due to local authorities.

AAn amount of US$ 1,054 million has been reclassified from goodwill to intangible assets. Investments amounting to US$ 17 million have been reclassified to other non-current financial assets.Advance payments for investments amounting to US$ 31 million have been reclassified to other non-current financial assets.Accrued expenses have mainly been reclassified to trade payables for an amount of US$ 211 million, to other payables for an amount of US$ 83 million and to current borrowings for an amount of US$ 65 million. The reclassification to other payables mainly relates to ac-crued expenses. The reclassification to trade payables includes payables for property and equipment and the reclassification to current borrowings relates to accrued interest expense.

BTrade receivables due from related parties amounting to US$ 80 million have been reclassified to trade receiv-



NSGB-Car LoanCurrent

Non-current

Total CurrencyNominal

Line of credit Maturity Interest rateSecurities

Millions of US$ Millions of contract currency


Revolving Credit Supplement 3 1,000 1,003 US$ 1,000 1,000 17/04/2013 Libor + 2% Secured

A1 Term Loan Supplement 13 955 968 US$ 987 987 17/04/2013 Libor + 2% Secured

A2 Term Loan Supplement 7 499 506 US$ 513 513 17/04/2013 Libor + 2% Secured

National Societe Generale Bank 10 - 10 US$ 9 10 30/04/2009 Libor +2.5% Unsecured

National Bank Of Abu Dhabi 10 - 10 US$ 9 10 31/12/2009 0.5 plus NBAD base rate for USD

Unsecured

Fortis Banque 5 3 8 Euro 6 20 14/06/2010 6.30% Unsecured

Piraeus Bank 3 - 3 US$ 3 5 31/05/2009 Libor + 2% Unsecured

NSGB-Car Loan 1 1 2 EGP 13 15 02/02/2013 11% Unsecured

Credit Agricole Indo Suez Ban 1 - 1 US$ 1 10 31/05/2009 1 mnth Libor + 2.25% p.a. Unsecured

- 1 1 EGP 6 15 08/03/2014 11% Unsecured

53 2,459 2,512


MCB Bank Limited - Pakistan 21 279 300 PKR 22,060 22,060 04/01/2014 6 mnth Kibor + 1.30% Secured

ABN AMRO - COFACE Loan - ECA 29 53 82 Euro 60 125 30/12/2011 6 mnth Euribor + 0.80% Secured

ABN AMRO - Hermes - ECA Round II 27 49 76 Euro 56 110 16/09/2011 6 mnth Euribor + 0.25% Secured

ABN AMRO - Coface - ECA Round II 16 36 52 Euro 40 85 29/06/2013 6 mnth Euribor + 0.25% Secured

Royal Bank of Scotland - Pakistan - 45 45 PKR 3,548 3,548 18/12/2012 6 mnth Euribor+ 1.30% Secured

ABN AMRO - ECGD - ECA Round II 10 34 44 US$ 50 94 28/02/2014 6 mnth Libor + 0.175% Secured

Habib Bank Limited - Pakistan - 38 38 PKR 3,000 3,000 18/12/2013 6 mnth Kibor + 1.30% Secured

DEG - Germany 1 28 29 Euro 20 20 15/08/2013 6 mnth Euribor + 3% Secured

FMO - Netherlands 1 28 29 Euro 20 20 15/08/2013 6 mnth Euribor + 3% Secured

ABN AMRO - Hermes - ECA 11 15 26 Euro 19 46 29/03/2011 6 mnth Euribor + 0.78% Secured

ABN AMRO - ECGD - ECA 7 16 23 US$ 24 48 28/02/2012 6 mnth Libor + 0.40% Secured

Citibank N.A - Islamabad - Pakistan 5 8 13 PKR 949 1,740 02/07/2011 6 mnth Kibor + 2.25% Secured

ABN AMRO - ECA 5 6 11 Euro 8 10 15/12/2011 6 mnth Euribor + 2.50% Secured

Standard Chartered Bank-Pakistan 11 - 11 PKR 902 1,000 1 year 3 mnth Kibor + 2% Secured

Habib Bank Limited - Pakistan 9 - 9 PKR 732 750 1 year 1 mnth Kibor + 2% Secured

HSBC Bank Middle East Limited- Pakistan 3 - 3 PKR 244 600 1 year 1 mnth Kibor + 1.25% Secured

Habib Bank Limited - Pakistan 2 - 2 PKR 188 1,500 01/04/2009 6 mnth Kibor + 1% p.a or 3.5%

Secured

Faysal Bank Limited - Pakistan 1 - 1 PKR 102 715 01/06/2009 6 mnth Kibor + 1.35% p.a with a floor 3.5%

Secured

159 635 794

Egyptian Company for Mobile Services S.A.E.

Misr/CIB/NSGB/HSBC (Syndicated loans) - 201 201 L.E. 1,121 1,121 14/08/2014 The interest rate shall be calculated based on following elements :- CBE discount rate(CDR) - The company's time deposit return rate -CBE mid cor-ridor rate - 9.75 % includ-ing highest over drawn balance commission

Unsecured

Misr/CIB/NBE (Syndicated loans) 29 100 129 L.E. 718 878 30/04/2013 Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans) - 126 126 L.E. 707 1,072 26/02/2015 Unsecured

Credit Agricole Bank 11 - 11 L.E. 59 73 1 year Unsecured

Banque Misr 7 - 7 L.E. 40 43 1 year *12.5% Unsecured

Scotiabank Cairo 3 - 3 L.E. 14 43 1 year *12.25% Unsecured

National Societe General Bank 3 - 3 L.E. 17 29 1 year *11.25 % Unsecured

HSBC 3 - 3 L.E. 14 41 1 year *13.5 % Unsecured

BNP Paribas 3 - 3 L.E. 18 50 1 year *11.75 % Unsecured

Barclays 3 - 3 L.E. 17 38 1 year *11.75 % Unsecured

62 427 489 * including highest over drawn balance commission

Orascom Telecom Bangladesh Limited

USD Commercial Facility 9 116 125 US$ 130 130 01/08/2013 3 mnth Libor +3.45% Secured

Hermes Facility 12 74 86 US$ 91 120 01/07/2014 3 mnth Libor+0.55% Secured

BDT A Facility 11 19 30 US$ 30 30 15/06/2014 14.75% ( Floating) Secured

DFI Facility - 29 29 BDT 2,205 2,520 30/06/2012 3 mnth Libor +3.60% Secured

BDT B Facility 1 13 14 BDT 1,020 1,020 30/06/2014 91days TB rate+ 7.5% Secured


Pubali Bank Limited 5 - 5 BDT 350 350 22/01/2009 14.50% (Floating) Unsecured

National Bank Ltd. 1 - 1 BDT 100 100 22/01/2009 14.50% (Floating) Unsecured

National Credit and Commercial Bank 1 - 1 BDT 100 100 22/01/2009 14.50% (Floating) Unsecured


Global Reports LLC

154 155


NSGB-Car LoanCurrent

Non-current

Total CurrencyNominal

Line of credit Maturity Interest rateSecurities

Millions of US$ Millions of contract currency

Standard Bank Limited 1 - 1 BDT 12 12 22/01/2009 14.50% (Floating) Unsecured

United Commercial Bank Ltd. 1 - 1 BDT 100 100 22/01/2009 14.50% (Floating) Unsecured


Standard Chartered Bank 1 - 1 BDT 100 100 22/01/2009 13.25% (floating) and 14.5% (floating)

Unsecured

50 251 301

Orascom Telecom Algeria S.P.A.

Hermes loan 2006 21 60 81 US$ 83 86 15/11/2012 Libor + 0.6 % Secured

Coface Loan 2006 DZD 27 25 52 DZD 3,808 9,724 15/11/2010 Rediscount rate + 0.60% Secured

48 85 133

Orascom Telecom Tunisie S.A.

International refinancing 23 46 69 Euro 100 100 March-2011 Euribor+1% Secured

Local refinancing 18 35 53 TND 105 105 March-2011 TMM+2% Secured

41 81 122

Moga Holding Limited

CDC loan 5 25 30 Euro 18 18 15/8/2010 Euribor plus 10 % Secured

5 25 30

Med Cable Limited

Export Credit Calyon 3 6 9 Euro 6 12 13/09/2011 Euribor + 0.95 % Guaranteed by OTH

Commercial Loan Calyon 1 - 1 Euro 1 4 17/12/2009 Euribor + 3.5 % Guaranteed by OTH

4 6 10

Intouch for Telecommunication Services

Barclays 2 2 4 L.E 35 35 01/10/2010 14.25% Secured

NBAD 2 2 4 L.E 35 35 01/04/2011 14.50% Secured

Other - various lenders 1 - 1 L.E 11 12 01/04/2011 14% Unsecured

5 4 9

Telecel Globe Limited

Banque de development 1 3 4 XAF 2,500 2,500 30/06/2014 9.25% Unsecured


Commercial Bank Centrafrique - 1 2 XAF 423 423 31/07/2012 12% Unsecured

Commercial Bank Centrafrique 1 - 1 XAF 379 379 one year 12% Unsecured

popluer Moroco Centrafrique - 1 2 XAF 109 109 one year 15% Unsecured

3 6 9

Trans World Associates (Private) Limited

United Bank Limited - 2 2 PKR 138 345 27/11/2013 Kibor + 3% Secured

Habib Bank Limited - 1 1 PKR 101 252 27/11/2013 Kibor + 3% Secured

Allied Bank Limited - 1 1 PKR 80 200 27/11/2013 Kibor + 3% Secured

Askari Bank Limited - 1 1 PKR 69 173 27/11/2013 Kibor + 3% Secured

Standard Chartered Bank Pakistan Limited - 1 1 PKR 69 173 27/11/2013 Kibor + 3% Secured

Pak Oman Investment Company Limited - 1 1 PKR 60 150 27/11/2013 Kibor + 3% Secured


El Falah Bank - 1 1 PKR 40 100 27/11/2013 Kibor + 3% Secured


- 10 10

Ring for Distributions

Over Draft facility from Arab Bank - Algeria 1 - 1 L.E 3 3 01/12/2011 7.62% Unsecured

Over Draft facility from Abu Dabi Bank - Egypt 2 - 2 US$ 1 2 01/12/2009 7.50% Unsecured

NSGB OverDrafts 1 - 2 L.E 1 1 01/12/2009 7.75% Unsecured

NBAD OverDrafts 1 - 2 US$ 1 1 01/12/2009 7.75% Unsecured

5 - 7

Total - liabilities to banks 432 3,989 4,421


Appendix B - BondsMillions of US$ Millions of contract

currency Maturity Securities

Current Non-current Total Currency Nominal


ABN Amro Bank and Deutcs bank 3 246 249 USD 250 13/11/2013 Unsecured

Pak Oman Investment Company Limited 1 41 42 PKR 3,258 31/05/2013 Secured

United Bank Limited (Trustee) 5 - 5 PKR 400 11/03/2009 Secured

Allied Bank Limited 2 44 46 PKR 3,500 01/10/2010 Unsecured

Allied Bank Limited 1 49 50 PKR 3,907 28/10/2013 Unsecured

12 380 392

Orascom Telecom Finance SCA

Senior Notes OTFSCA 23 738 761 USD 750 08/02/2014 Unsecured

23 738 761

Total Bonds 35 1,118 1,153


Global Reports LLC

156 157

Appendix C - Scope Of Consolidation Selected subsidiaries, joint ventures and associates

Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom HoldingNorth Africa Algeria Orascom Telecom Algeria S.P.A. 96.81% Algeria Orascom Telecom Service Algeria 96.81% Algeria Data Base Management services Algeria 100.00% Algeria Ring Algeria LLC 98.01% Algeria Caring Algeria 97.03% Algeria MobiZone Algeria 100.00% Algeria Algeria Win Call 100.00% Algeria Consortium Algerian Telecommunication S.P.A. 49.83% Morocco Kenza Telecom Morocco 100.00% Tunisia Ring Tunisia 78.21% Tunisia Ring Distribution Tunisia 77.43% Tunisia Ring Retail Tunisia 76.65% Tunisia R&D Tunisia 96.53% Tunisia Orascom Telecom Tunisie S.A. 50.00%Asia Bangladesh Orascom Telecom Bangladesh Limited 100.00% Bangladesh Ring Bangladesh 98.98% Bangladesh MobiZone Bangladesh 100.00% North Korea CHEO Technology JV (DPKR) 75.00% Pakistan Pakistan Mobile Communications Limited 100.00% Pakistan Business & Communications 100.00% Pakistan Link Direct International Limited 100.00% Pakistan Mobitalk Limited 100.00% Pakistan MobiZone Pakistan (Pvt.) Limited 100.00% Pakistan PMDL Limited 16.70% Pakistan Trans World Assoicates (Private) Limited 51.00% Pakistan Ring Pakistan 94.59% Pakistan Ring Pakistan Service 94.59% Pakistan WOL Telecom Limited 100.00% Pakistan Call Pack Pakistan 100.00%Middle East Dubai Gloabl Entity for Telecom Trade 100.00% Dubai Global Entity for Telecom Trade -FZE 100.00% Dubai Ring Dubai 96.53% Dubai LinkDotNet Dubai 100.00% Dubai MobiZone Dubai 100.00% Egypt Cortex Egypt 94.00% Egypt Ring for Distributions 99.00% Egypt Advanced Electronic Industries 96.53% Egypt Caring Egypt 97.02% Egypt Connect 50.49% Egypt MMMS 98.80% Egypt Intouch for Telecommunication Services 100.00% Egypt Link Egypt 99.96% Egypt Into Net 55.78% Egypt LINKdotNET 100.00% Egypt Arab Finance Securities 100.00% Egypt Link Development 99.80% Egypt Link Online Egypt 100.00% Egypt Arpu for Telecommunication Services 100.00% Egypt Global Telecom 95.80% Egypt Egypt Call 99.98% Egypt Mobinil Services Egypt 35.86% Egypt Mobinil for Telecommunication S.A.E. 28.75% Egypt Egyptian Company for Mobile Services S.A.E. 34.67%

Egypt Orascom for International Investment Holding 99.9%Egypt Middle East and North Africa Cable Submarine 100%

Iraq Ring Iraq 96.53% Palestine Pal Call Palestine 99.90% Qatar LDN Qatar 49.00%


Appendix C - Scope Of Consolidation (Contained)Selected subsidiaries, joint ventures and associates

Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding Saudi Arabia LinkDotNet Saudi Arabia 100.00% Saudi Arabia MobiZone Saudi Arabia 100.00%Central Africa Burundi U-Com Burundi S.A. 100.00% Central Africa Telecel Centrafrique S.A. 100.00% Sudan Sudan Call 70.00%North America Canada Globablive Investment Holdings 47.60% Canada Globalive Canada Holdings 65.05% Canada Globalive Wireless Management 65.05% Canada Gloablive Wireless LP (GELP) 65.05% Canada Globalive Telecom Holdings 65.05% Canada Orascom Telecom Holding (Canada) Limited 100.00%Europe France Orascom Telecom Services Europe 100.00% France Orascom Telecom Wireless Europe 100.00% Italy MobiZone Italy 99.00% Luxembourg M Link Sarl 100.00% Luxembourg Orascom Luxrembourg Sarl 100.00% Luxembourg Orascom Luxembourg Finance SCA 100.00% Luxembourg Orascom Telecom Sarl 100.00% Luxembourg Orascom Telecom Finance SCA 100.00% Luxembourg M Link Teleport 100.00% Malta Sawyer Limited 100.00% Malta Orascom Telecom Eurasia Limited 100.00% Malta Oratel International Inc plc 100.00% Malta Moga Holding Limited 100.00% Malta International Wireless Communications Pakistan Limited 100.00% Malta TMGL 100.00% Malta Telecel International Limited 100.00% Malta Orascom Tunisia Holding 100.00% Malta Carthage Consortium Limited 100.00% Malta Orascom Iraq Holding 100.00% Malta Orascom Telecom Iraq Corporation 100.00% Malta Orascom Telecom Ventures Limited 100.00% Malta Telecel Globe Limited 100.00% Malta Orascom Telecom Holding (Malta) Canada Limited 100.00% Malta M Link Limited 100.00% Malta Minimax Ventures 100.00% Malta Financial Powers Plan Limited 100.00% Malta Orascom Telecom ESOP Limited 100.00% Malta Data Base Management services Limited 100.00% Malta Orascom Telecom CS 100.00% Malta Mcube 51.00% Netherland Orascom Telecom Netherland 100.00% Switzerland Telecel International S.A. Switzerland 100.00% United Kingdom Med Cable Limited 100.00% United Kingdom Orascom Telecom WiMax 100.00% United Kingdom International Telecommunication Consortium Limited 50.00%


Global Reports LLC

158 159

SUBSEQUENT EVENTS IN 2009

Orascom Telecom Holding secures commitments to subscribe for US$230 million senior bondIn November 2008, Orascom Telecom Holding announced that it had secured commitments for a US$230 million financing with a maturity of approximately 3 to 4 years, to be implemented in a fully subscribed private placement. The transaction was completed and funds received by OTH in February 2009.

Telecel Globe acquires Cell One in Namibia In January 2009, Orascom Telecom Holding announced that it has acquired the mobile telecommunications operator Cell One in Namibia. Cell One operates a GSM 900/1800 network and has 198,000 active subscribers and over 20% market share. The total consideration of this transaction is approximately US$59 million in cash, of which US$32 million is already paid and the balance due in January 2010. The debt assumed as part of this transaction is non-recourse on Telecel Globe.

Orascom Telecom Holding announces application for share buybackIn February 2009, Orascom Telecom Holding filed an ap-plication with the Egyptian Capital Market Authority and the Egyptian Exchange for the selective repurchase of its shares in light of favourable relative market valuations. Orascom Telecom Holding plans a potential on-market GDR and local shares repurchase plan of up to 65 million shares (13 million GDRs) over the next three months. The potential buy-back will be made pursuant to CMA regulations for on-market transactions.

Orascom Telecom Holding announces offer for sale of LINKdotNetIn February 2009 Orascom Telecom Holding announced that it has received an indicative non-binding offer from The Egyptian Company for Mobile Services (“ECMS”) for the acquisition of 100% of the shares of LINKdotNet and Link Egypt; the final valuation will be finalized at the end of the due-diligence process.

Globalive Wireless, OTH’s Canadian Investment, is Granted License and Receives Spectrum from Industry CanadaOn March 16th, 2009, Orascom Telecom Holding an-nounced that Globalive Wireless Management Corp. (“Glo-balive Wireless”), in which OTH has a 65% indirect equity ownership, has officially been granted its spectrum license from Industry Canada and has received the corresponding spectrum. Globalive Wireless expects to launch its network to consumers in the fourth quarter of 2009, providing af-fordable, customer-centric and innovative wireless services across Canada in a market that is still not fully penetrated, with relatively high ARPU and a reasonably competitive environment.

Subsequent Events in 2009:

Global Reports LLC

160 161


Nile City Towers - South Tower

26th Floor - Corniche El Nile,

Ramlet Beaulac - Cairo - Egypt

Tel. : +202 2 461 5050 / 51

Fax : +202 2 461 5054 / 55

Website: www.orascomtelecom.com

Investor Relations Contact:

[email protected]

Global Reports LLC

www.orascomtelecom.com

Med

ia T

erra

nia

Global Reports LLC

annual report 2008 - morningstar, inc

Documents