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34

Orascom Telecom Holding Board Report

Highlights

Operational Performance

Table 1: Total Subscribers

Table 2: Blended Average Revenue Per User (ARPU)1

ARPU

Strong subscriber growth had a dilutive impact on ARPU in most operations compared to Q4 2009. In Algeria, ARPU remained stable in local currency terms. Djezzy shows resilience despite the impact of the new interconnection catalogue of July 2009, which was further modified in July 2010, resulting in lower incoming ARPU. Moreover, the stagnant “no-promotion” conditions imposed upon the Algerian operator have had a negative impact on pre-paid ARPU. Mobinil experienced heavy ARPU dilution of nearly 25% compared to Q4 2009 due to highly competitive pressures significantly reducing tariffs, all the while still maintaining strong growth of its customer base.

Subscribers

Throughout the year 2010, Orascom Telecom succeeded in sur-passing the 100 million subscriber mark reaching over 101 mil-lion customers, showing an increase of nearly 16% over the same period last year. For comparative purposes, subscriber base for YE 2009 and Q3 2010 have been adjusted to reflect the sale of Tunisiana.

In Bangladesh aggressive acquisition and strong customer reten-tion led to a 39% YoY increase in banglalink’s subscriber base. Our Pakistani operation showed over 3% growth in subscribers com-pared to the year end of 2009 as a result of aggressive acquisition promotions countering a dip in subscriber figures experienced in the previous quarter due to damages incurred during the massive country-wide floods.

In Bangladesh and North Korea, the significant growth in subscribers YoY led to ARPU dilution.In Pakistan, Mobillink’s ARPU displayed stability in US$ terms, while increasing slightly over 1% in local currency terms compared to Q4 2009. This was mainly due to subscriber growth, targeted acquisition of high value customers, increased traffic and increased VAS. The increase in Alfa’s subscriber base had a dilutive impact on ARPU in comparison to the same period last year.

Djezzy subscribers increased by 3% compared to the year end of 2009. The growth in customer base was achieved despite the vari-ous obstacles encountered throughout the year relating to banning Djezzy promotions, advertising on government owned TV chan-nels, as well as the inability to import SIM cards.Telecel Globe’s significant subscriber growth of 78% during 2010 contributed to Orascom Telecom’s 101 million strong customer base. Similarly, koryolink’s subscriber figures have witnessed a sharp increase YoY, reaching over 400,000 subscribers compared to just over 90,000 subscribers at year end 2009. WIND Mobile Canada added nearly 100,000 new customers this quarter in com-parison to Q3 2010 consequently showing a 67% increase.Under the management contract of Alfa, customer base has wit-nessed a 26% increase over the previous year, maintaining steady growth well above the 1 million subscriber mark.

1. US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (IFRS).2. The weighted average for the outstanding GDRs was 1,015,240,054 as of December 31st, 2010.

• On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia (“OTT”). As a result the proportionate consolidation of OTT during Q4 is no longer applicable under IFRS as it renders the entity an investment held for sale, and consequently a discontinued operation under IFRS rules. Figures for 2009 and 9M 2010 have been restated to reflect the accounting treatment of OTT.

• Total subscribers exceeded 101 million, an increase of 16% over the same period last year.• Net Income before minority interest showed a sharp increase of 106% compared to the same period last year, reaching US$ 781

million1 for the period ending December 31st, 2010, mainly due to the gain recognized on the Mobinil transaction by comparing the carrying amount of the investments in Mobinil and ECMS to the relevant fair value, taking into consideration the net proceeds from the transaction for the global settlement fee amounting to US$300 million.

• Revenues reached US$ 3,825 million1, increasing by 2% over the previous year as a result of strong growth in all GSM operations, with the exception of Algeria. The persistence of an adverse operating environment in Algeria, which was further affected by the hindrance of promotions, caused a 6.5% decrease in OTA’s YoY revenues. Revenues of Mobilink and banglalink had a positive impact on GSM revenue growth for the year ending December 31st, 2010. Revenues of Mobilink were impacted YoY due to currency devaluation: revenues for Mobilink were up 9% in local currency vs. a 5% increase in US$. banglalink’s revenues grew by 30% compared to the same period last year. Consolidated Revenue in Q4 2010 remained stable compared to Q3 2010.

• EBITDA reached US$ 1,584 million1, an increase of 4% compared to the same period last year. The solid performance across all the GSM subsidiaries was negatively impacted by the 8% decrease in Djezzy’s EBITDA as a result of the ongoing crisis situation in Algeria. EBITDA in Q4 2010 increased by over 1% compared to Q3 2010.

• Group EBITDA margin stood at 41.4%, an increase of 1% compared to the year 2009. EBITDA margins for the major subsidiaries were: Djezzy 56.2%, Mobilink 39.6% banglalink 27.9%, and koryolink 87%.

• Earnings per GDR reached US$ 0.73/GDR (based on a weighted average for the outstanding GDRs of 1,015 million over 12M 2010)2. • Net Debt as of December 31, 2010 stood at US$ 4,009 million with a Net Debt/EBITDA of 2.5x. Pro-forma for the receipt of proceeds

from the disposal of Tunisiana, Net Debt/EBITDA is approximately 1.9x.

Subsidiary31 Dec.

200930 Sept.

201031 Dec.

2010

Inc/(dec) Dec. 2010 vs.

Dec. 2009Djezzy (Algeria) 14,618,166 14,919,031 15,087,393 3.2%Mobilink (Pakistan) 30,800,354 31,444,099 31,794,292 3.2%banglalink (Bangladesh) 13,886,913 18,107,163 19,327,005 39.2%Telecel Globe 1,823,000 2,952,530 3,242,000 77.8%koryolink (DPRK) 91,704 301,199 431,919 n.m.Alfa (Lebanon) 1,067,552 1,253,163 1,342,385 25.7%Total 62,287,689 68,977,185 71,224,994 14.3%

Operations accounted for under the equity method

31 Dec. 2009

30 Sept. 2010

31 Dec. 2010


Dec. 2009Mobinil (Egypt) 25,354,209 28,401,312 30,224,888 19.2%Wind Canada (Canada) 139,681 232,641 n.a.Total 25,354,209 28,540,993 30,457,529 20.1%Grand Total1 87,641,898 97,518,178 101,682,523 16.0%

Subsidiary

31 Dec. 2009 US$

(3 months)

30 Sept. 2010 US$

(3 months)

31 Dec. 2010 US$

(3 months)


Dec. 2009

Djezzy (Algeria) 9.9 9.6 9.7 (2.3%)Mobilink (Pakistan) 2.9 2.7 2.9 0.0%Mobinil (Egypt)2 6.5 5.4 4.9 (24.6%)banglalink (Bangladesh) 2.3 2.3 2.1 (10.0%)koryolink (DPRK) 24.5 15.2 14.6 (40.5%)Wind Canada (Canada) 30.0 (4.3%)Alfa (Lebanon) 40.0 43.9 38.3 (4.3%)Global ARPU (YTD)3 5.3 5.3 4.5 (14.7%)Global ARPU (3 months) 5.1 4.6 4.5 (12.2%)

Table 3: Blended Average Revenue Per User (ARPU) (Local Currency)

1. After excluding Tunisiana subscribers in December 2009 and September 2010.

1. After excluding Tunisiana subscribers in December 2009 and September 2010.2. ARPU expressed under OTH’s definition may differ from Mobinil’s disclosed ARPU. Please see Appendix for definition.3. Global ARPU is calculated on a year to date basis, taking into account the weighted average subscribers for calculation.

Subsidiary31 Dec.

2009 (3 months)

30 Sept. 2010

(3 months)

31 Dec. 2010

(3 months)


Dec. 2009(Djezzy (Algeria) (DZD 721.4 724.5 724.1 0.4%(Mobilink (Pakistan) (PKR 241.7 231.0 244.6 1.2%

35

Financial Review

Table 6: Consolidated Revenues1

Market Share & Competition At the end of 2010, Orascom Telecom’s operations maintained their market leading positions, except for banglalink which remains at a secured second position in the Bangladeshi market.Djezzy was able to maintain its market leadership, capturing nearly 58% of the market in Algeria and showing stability compared to Q3 2010, despite the ongoing challenges the operation continues to face.In Egypt, Mobinil held its market share and showed slight improve-ment over the previous quarter, closing in on almost 40% of market

Revenues Total Consolidated Revenues increased 2% in comparison to the previous year, with GSM revenues up 3% YoY.

Despite the overall increase during the period, GSM revenue growth was negatively impacted by the 6.5% decline in Djezzy’s revenues for the year ended December 31st, 2010. The adverse conditions in Algeria still persist; the hindrance of promotions in conjunction with the drop in incoming tariffs from the newly implemented catalogues adjusted in July 2010, have had a negative impact on the operation’s revenues. Although the SIM card shortage has now been contained, it impacted the YoY decline in revenues.

The revenues of Mobilink for the full year of 2010 showed a 5% increase compared to the same period last year. It is worth con-sidering the impact of currency devaluation, as the YoY increase in Mobilink’s revenues in local currency terms amounted to 9%. The significant growth in the Pakistani operation can be attributed to an

CAPEX Total consolidated capital expenditures for the twelve months of 2010 declined by 13% compared to the previous year.In Algeria, the blocking of imports of equipment and spare parts re-mained in place throughout Q4 2010, resulting in a 66% decline in CAPEX compared to the same period last year. Mobilink’s CAPEX for the twelve months of 2010 showed a YoY decline of 9% as a re-sult of rollout delays caused by the country-wide floods in Q3 2010.

share in the face of a highly aggressive competitive environment.The strong subscriber growth trend in Bangladesh led banglalink’s share of the market to edge beyond 28%. Mobilink’s market share illustrated a minor decline as a result of subscriber clean-up and increased MNP activity. Mobilink’s market share of active subscribers as measured internally on traffic pat-terns stood at 39% as of December 31, 2010.

increase in subscriber base, as well as highly effective promotional activities throughout 2010.

The strong subscriber uptake of banglalink, as well as the pen-etration of new market segments, resulted in a 30% YoY increase of revenues. Similarly, the increase of koryolink subscribers had a positive impact on the operation’s revenue growth for the year 2010 compared to the same period last year.

Telecel Globe revenues increased by 25% YoY as a result of sub-scriber acquisition and focused market penetration. In Q4 2010 the decline in tariff prices in Burundi, CAR and Zimbabwe, led to an overall decline in revenues.

The 36% YoY increase in “Other” Telecom Services is attributed to growth of subscribers of OT Lebanon (Alfa Management Contract).

The strong and steady growth of banglalink subscribers, and con-sequently traffic, is reflected in increased investments in network capacity. A CAPEX increase of 93% was recorded for banglalink in comparison to the previous year. The 13% decrease in “Other” CAPEX compared to the twelve months of 2009 is related to investments of Telecel Globe, koryo-link and our submarine cables.

Table 4: Market Share & Competition

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

Table 5: Capital Expenditure of OTH Subsidiaries for the twelve months to December 31st1

1. Based on 100% ownership of all subsidiaries. 2. “Other” companies include CHEO, Linkdotnet, MedCable, Mena-Cable, OT Holding, Ring and Telecel Globe in 2009 and CHEO, Linkdotnet, Mena-Cable, OT Holding, Ring

and Telecel Globe in 2010.

1. On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia (“OTT”). As a result the proportionate consolidation of OTT during Q4 is no longer applicable under IFRS as it renders the entity an investment held for sale, and conse-quently a discontinued operation under IFRS rules. Figures for 2009 and 9M 2010 have been restated to reflect the accounting treatment of OTT.

2. On July 13, 2010, the amended and restated shareholders’ and settlement agreements concluded with France Telecom entered into force. Consequently, starting Q3 2010, Mobinil is reflected through the equity method. Mobinil’s financial figures for 2009 and H1 2010 are represented as a discontinued operation under IFRS.

3. Other Telecom Services Companies include C.A.T., OT Lebanon and TWA in 2009 and OT Lebanon, Mena Cable and TWA in 2010.

Country Brand nameMarket Share (%)

Market Position Names of additional network operations30 Sept 2010

31 Dec. 2010

Algeria Djezzy 57.9% 57.6% 1 AMN, Qtel Pakistan1 Mobilink 32.6% 30.9% 1 U-Fone, Paktel, Telenor, Al Warid Egypt Mobinil 39.0% 39.9% 1 Vodafone, Etisalat Bangladesh1 banglalink 27.8% 28.5% 2 Garmeen, Aktel, Citycell, BTTB, Airtel

Country Service nameTotal

US$ million 2009

Total US$ million

2010(Inc/(dec

Algeria Djezzy 261 90 (66%)Pakistan Mobilink 157 143 (9%)Bangladesh banglalink 122 235 93%Other2 221 192 (13%)Total 761 660 (13%)Total Consolidated 761 660 (13%)Consolidated Capex/Sales 20.2% 17.3% (3%)

Subsidiary

Represented 31 Dec.

2009 US$ (000)

31 Dec. 2010

US$ (000)2

Inc/ (dec)

Represented Q3 - 2010

(3 months) US$ (000)

Q4 - 2010


Inc/ (dec)

GSM Djezzy (Algeria) 1,867,837 1,746,566 (6.5%) 444,597 452,915 1.9%Mobilink (Pakistan) 1,058,448 1,107,067 4.6% 266,705 280,869 5.3%banglalink (Bangladesh) 350,884 456,984 30.2% 120,576 122,284 1.4%Telecel Globe (Africa) 81,384 101,830 25.1% 28,040 25,007 (10.8%)koryolink (North Korea) 25,951 66,402 155.9% 18,445 24,757 34.2%Total GSM 3,384,503 3,478,848 2.8% 878,363 905,833 3.1%Telecom Services Ring 206,474 152,278 (26.2%) 38,895 37,506 (3.6%)Other3 79,906 108,350 35.6% 28,695 27,912 (2.7%)Total Telecom Services 286,380 260,628 (9.0%) 67,590 65,419 (3.2%)Internet Services 88,881 86,058 (3.2%) 29,061 8,780 (69.8%)Total Consolidated 3,759,764 3,825,534 1.7% 975,014 980,031 0.5%

36

Table 7: Proforma Consolidated Revenues (Local Currency)1

Total GSM Revenues EBITDA Consolidated EBITDA increased by 4% compared to the same pe-riod last year. While GSM EBITDA grew by 2.5% YoY, it was ad-versely impacted by the crisis conditions facing the Algerian unit.

Djezzy’s EBITDA declined 8% compared to the previous year as a result of the previously mentioned decrease in revenues.

In Pakistan, the EBITDA of Mobilink grew 13% YoY in US$ terms, while EBITDA in local currency terms showed an increase of 18% compared to the same period last year. The increase is a result of higher revenues coupled with lower absorption of activation taxes, which were reduced from Rs 500/SIM to Rs 250/SIM in July 2009.

Consolidated revenues for the fourth quarter of 2010 remained sta-ble in comparison to Q3 2010, while GSM revenues increased by 3% QoQ.The revenues of Djezzy witnessed a 2% increase compared to Q3 2010 due to local currency appreciation against the US$. In local currency terms, revenues were stable resulting from the mitigation of the harsh operating conditions from SIM shortage, which was con-tained towards Q4 2010, to no promotions since the previous quarter.In Pakistan, Q4 2010 revenues grew by 5% in comparison to the previous quarter. The increase in traffic stimulated by promotions spanning discounted tariffs, SMS bundles and VAS contributed to the quarterly revenue’s growth. banglalink’s revenues for Q4 2010 indicated an increase of over

The high growth of banglalink’s subscribers and revenues corre-sponded to an increase in EBITDA for the year of 8% in compari-son to the full year of 2009.

Both Telecel Globe and Koryolink showed tremendous increases in their EBITDA compared to the previous year as a result of sub-scriber and revenue growth complimented by OPEX savings.

The increase in Telecom Services is mainly attributed to OT Leba-non (Alfa Management contract).

1.4% compared to the previous quarter as competitive pressures intensify and lower end market segments are penetrated.

In North Korea, revenue growth reached 34% QoQ attributable to the high additions made to its subscriber base. Telecel Globe saw an 11% decrease in revenues for Q4 2010 in comparison to Q3 2010 due to the impact of price wars in the Burundi market.

The QoQ decrease of 70% in Internet Services’ revenues is attrib-uted to the disposal of LINKdotNET and LINK Egypt in Q3 2010.

1. Un-audited Figures.

Table 8: Consolidated EBITDA1,2

1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.2. On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia

(“OTT”). As a result the proportionate consolidation of OTT during Q4 is no longer applicable under IFRS as it renders the entity an investment held for sale, and conse-quently a discontinued operation under IFRS rules. Figures for 2009 and 9M 2010 have been restated to reflect the accounting treatment of OTT.


4. Other Telecom Services Companies include: C.A.T., MedCable, Mena Cable, OT Lebanon, TWA, and OTWIMAX in 2009 and 2010.5. Other non operating companies include: OTH, OTV, OIIH, OTI Malta, Cortex, Eurasia, FPPL, IWCPL, Moga, Oratel, OT Finance, Swyer, OT Holding Canada, OT Asia,

Oscar, OT ESOP, OT Services Europe, TMGL, Pioneers, OT Wireless Europe for 2009, in addition to TIL and TILSA in 2010.

31 Dec,2009

US$ (million)

31 Dec,2010

US$ (million)

Total GSM

banglalink (Bangladesh)

Koryolink (North Korea)

Mobilink (Pakistan)

Telecel Globe (Africa)

Djezzy (Algeria)

3,384

1,868

1,058

351

26

1,747

1,107

45710266

3,479

81

Subsidiary31 Dec.

2009

31 Dec. 2010

Inc/ (dec)

Q3 - 2010(3 months)

Q4 - 2010(3 months)

Inc/ (dec)

GSM Djezzy (Algeria) (DZD bn) 135.6 129.2 (4.7%) 33.0 32.8 (0.5%)Mobilink (Pakistan) (PKR bn) 86.8 94.3 8.7% 22.5 23.9 6.4%

Subsidiary

Represented 31 Dec.

2009 US$ (000)

31 Dec. 2010

US$ (000)3

Inc/ (dec)



Q4 - 2010 (3 months) US$ (000)

Inc/ (dec)

GSM Djezzy (Algeria) 1,067,241 982,167 (8.0%) 265,548 241,357 (9.1%)Mobilink (Pakistan) 386,653 438,071 13.3% 105,431 111,223 5.5%banglalink (Bangladesh) 118,560 127,686 7.7% 23,340 30,772 31.8%Telecel Globe (Africa) (435) 23,505 .n.m 7,565 6,643 (12.2%)koryolink (North Korea) 17,153 57,764 .n.m 7,475 31,611 .n.mTotal GSM 1,589,172 1,629,193 2.5% 409,360 421,605 3.0%Telecom Services Ring (8,317) (6,885) 17.2% (3,298) (6,885) (108.8%)Other4 (3,184) 21,905 .n.m 4,339 2,465 (43.2%) Total Telecom Services (11,501) 15,020 .n.m 1,040 (4,421) .n.mInternet Services 9,557 11,914 24.7% 3,431 2,293 (33.2%)OT Holding & Other5 (68,693) (71,843) (4.6%) (18,625) (19,518) (4.8%)Total Consolidated 1,518,535 1,584,283 4.3% 395,207 399,959 1.2%

3%

37

Total GSM EBITDA

Table 10: Consolidated EBITDA Margin

Table 9: Proforma Consolidated EBITDA (Local Currency)1

Consolidated EBITDA increased by 1.2% compared to the previous quarter, with GSM EBITDA illustrating a 3 % increase YoY due to the adverse impact of a 9% decrease in Djezzy’s EBITDA despite an increase among all other operations.

In Algeria, EBITDA declined 9% QoQ, mainly a result of the de-crease in revenues as well as the application of a new tax on re-charge cards, further accompanied by a decrease in OPEX arising from marketing, technical maintenance, leased lines and bad debt.

Mobilink’s high revenues translated to a 5.5% growth in EBITDA compared to the previous quarter.The EBITDA of banglalink showed an increase of 32% compared

EBITDA MARGIN

The EBITDA margin for the group stood at 41.4% representing a 1% increase over the same period last year.

Djezzy’s margin declined by only 1% compared to year end of 2009 as a result of efficient cost management in order to mitigate the im-pact of the prevailing challenges the unit is facing with regards to its operating environment and imposed restrictions.

The EBITDA margin of Mobilink grew by 3% YoY thanks to high

to Q3 2010 which is attributable to the high customer base growth and increasing revenues.Telecel Globe witnessed higher interconnect costs as well as inten-sified competition in its operations leading to a decrease of 12% in its EBITDA in comparison to the last quarter.

The EBITDA of Internet Services compared to Q3 2010 showed a decline of 33%, mainly due to the disposal of LINKdotNET and LINK Egypt. The 43% decrease of “Other” Telecom Services is due to insurance costs relating to the cable business, as well as lower quarterly revenues from OT Lebanon as a result of ARPU dilution and increased subscriber costs.

revenue generation coupled with cost control. In Bangladesh, the decrease of 6% in banglalink’s EBITDA margin in comparison to last year came as a consequence of higher cost due to strong net additions to the network, as well as the impact of SIM tax subsidies borne by the operators in the market.

Both Telecel Globe and koryolink showed significant increases in their EBITDA margins, growing 24% and 21% respectively. The in-crease in koryolink is attributable to higher revenues, while Telecel Globe has also implemented cost control measures.

Subsidiary 31 Dec. 2009

31 Dec. 2010

Inc/ (dec)

Q3 - 2010(3 months)

Q4 - 2010(3 months)

Inc/ (dec)

GSMDjezzy (Algeria) (DZD bn) 78.1 72.5 (7.2%) 19.6 17.3 (11.7%)Mobilink (Pakistan) (PKR bn) 31.7 37.3 17.8% 9.5 9.4 (0.7%)

1. Un-audited Figures.

SubsidiaryRepresented

31 Dec. 2009

31 Dec. 2010 Change

Represent-edQ3 - 2010 (3 months)

Q4 - 2010 (3 months) Change

GSM Djezzy (Algeria) 57.1% 56.2% (0.9%) 59.7% 53.3% (6.4%)Mobilink (Pakistan) 36.5% 39.6% 3.0% 39.5% 39.6% 0.1%banglalink (Bangladesh) 33.8% 27.9% (5.8%) 19.4% 25.2% 5.8%Telecel Globe (Africa) (0.5%) 23.1% 23.6% 27.0% 26.6% (0.4%)koryolink (North Korea) 66.1% 87.0% 20.9% 40.5% 127.7% 87.2%Total GSM 47.0% 46.8% (0.1%) 46.6% 46.5% (0.1%)Total Telecom Services (4.0%) 5.8% 9.8% 1.5% (6.8%) (8.3%)Internet Services 10.8% 13.8% 3.1% 11.8% 26.1% 14.3%EBITDA Margin 40.4% 41.4% 1.0% 40.5% 40.8% 0.3%

31 Dec,2009

US$ (million)

31 Dec,2010

US$ (million)

Total GSM

banglalink (Bangladesh)

Koryolink (North Korea)

Mobilink (Pakistan)

Telecel Globe (Africa)

Djezzy (Algeria)

1,589

1,067

387

119

4

982

438

128

5823

1,6292.5%

17

38

Net Income

Net Income before minority interest for the year end of 2010 stood at US$ 781 million. Net income attributable to equity holders for the year 2010 was positive for US$ 743 million. Effective July 13, 2010 and as per the amended and restated share-holders’ and settlement agreements concluded with France Tele-com, OTH measured its investments in Mobinil and ECMS at fair value according to IAS 31 “Interests in Joint Ventures” and subse-quently accounted for them using the equity method. OTH recog-nized a gain of US$ 822 million on the transaction by comparing the carrying amount of the investments in Mobinil and ECMS to the relevant fair value, taking into consideration the net proceeds from the transaction for the global settlement fee amounting to US$300 million.This recorded gain was partially offset by several factors. Firstly, as per statutory requirements, OTH’s primary accounts are held in Egyptian Pounds, consequently the appreciation of the US$ against

the Egyptian Pound from 5.5090 to 5.8057 over the course of the year had a significant effect on the mark to market value of the US$ denominated debt at OTH of approximately US$ 3.5 billion. Secondly, the impairment of both tangible and intangible assets relating to Telecel Globe’s subsidiary in Namibia caused a further decline to the impairment of non-current assets in Q4 2010. This led to the impairment of related deferred taxes, which adversely affected income tax.Furthermore, the impairment of MedCable in Algeria, caused by the disallowing of the cables’ use for domestic and international calls by OTA, also impacted the bottom line. Finally, the net in-come for the period also encompassed start up losses from our Canadian operations. EPS in the 12 months ended December 31, 2010 stood at US$ 0.73/GDR.

1- Represents the average monthly exchange rate from the start of the year until the end of the period.2- Represents the spot exchange rate at the end of the period.3- Appreciation / (Depreciation) of USD vs. Local Currency.

1- Management Presentation developed from IFRS financials.2- Mainly due to the impairment of Telecel Globe’s investment in Namibia and the impairment of MedCable in Algeria.3- Due to the proceeds of the disposal of M-Link.4- Due to the proceeds of the disposal of LINKdotNET and LINK Egypt in Q3 2010.5- Due to a waiver obtained from the lenders regarding the Algerian tax claim amounting to approximately US$ 24 million in H1 2010.6- Mainly due to gains of approx. US$36.5 million resulting from the early extinguishment of PMCL’s bond.7- Mainly due to the unrealised FX loss from mark to market value of the US$ denominated debt at OTH of US$ 3.5 billion as a result of the depreciation of the Egyptian Pound during 2010, 8- Mainly due to the launch of the Canadian operations. Q3 & Q4 2010 figures include the equity consolidation of Mobinil as per the amended and restated shareholders’ and

settlement agreements concluded with France Telecom which entered into force on July 13, 2010. 9- Due to the impairment of Orabank, a financial receivable related to North Korea.10- Due to the impairment of deferred taxes associated with the impairment of Telecel Globe’s investment in Namibia11- On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia

(“OTT”). As a result the proportionate consolidation of OTT during Q4 is no longer applicable under IFRS as it renders the entity an investment held for sale, and conse-quently a discontinued operation under IFRS rules. Figures for 2009 and 9M 2010 have been restated to reflect the accounting treatment of OTT.

12- Equates to Net Income after Minority Interest.13- Based on a weighted average for the outstanding number of GDRs of 1,015,240,054 GDRs as of 31 December 2010. On a pro forma basis for the rights issue, the

weighted average for the outstanding number of GDRs for 2009 is 878,947,566. The weighted average for the outstanding number of GDRs in Q3 2010 and Q4 2010 is: 1,045,651,444 GDRs and 1,046,501,539 GDRs respectively.

Foreign Exchange RatesTable 11: Foreign Exchange Rates used in the Income Statement & Balance Sheet

Table 12: Income Statement in IFRS/US$

Currency

Dec. 09

Sept. 10

Dec. 10

% Chg 3

Dec. 10 vsDec. 09

% Chg 3

Dec. 10 vsSept. 10

Egyptian Pound/USD Income Statement1 5.5801 5.6221 5.6359 1.0 0.2Balance Sheet2 5.5090 5.7050 5.8057 5.1 1.7Algerian Dinar/USD Income Statement1 72.5825 74.5171 73.9910 1.9 (0.7)Balance Sheet2 72.7309 74.7419 74.2862 2.1 (0.6)Pakistan Rupee/USD Income Statement1 81.9791 85.1752 85.6721 4.3 0.6Balance Sheet2 84.2333 86.3333 85.1836 1.1 (1.3)Bangladeshi Taka/USD Income Statement1 69.4675 69.7500 69.6256 0.2 (0.2)Balance Sheet2 69.6500 70.1000 70.5983 1.3 0.7Canadian Dollar/USD Income Statement1 1.1210 0.9736 1.0297 (8.9) 5.4Balance Sheet2 1.0386 0.9801 0.9970 (4.2) 1.7

Represent-ed 31 Dec.

2009US$ (000)

31 Dec. 2010

US$ (000)

Inc/ (dec)



Q4 - 2010(3 months) US$ (000)

Inc/ (dec)

Revenues 3,759,764 3,825,534 2% 975,014 980,031 1%Other Income 34,887 32,265 7,501 6,722 Total Expense (2,263,239) (2,273,678) (585,280) (584,782) Net unusual Items (12,877) 162 (110) 272 EBITDA1 1,518,535 1,584,283 4% 397,125 402,243 1%Depreciation & Amortization (760,739) (792,368) (185,553) (236,226) Impairment of Non Current Assets (38,297) (122,756) (7,784)2 (79,936)2

Gain (Loss) on Disposal of Non Current Assets 42,2373 27,909 26,9934 1,475 Net unusual Items (15,117) Operating Income 746,620 697,067 (7%) 230,781 87,557 (62%)Financial Expense (439,772) (466,847)5 (114,107) (101,186) Financial Income 87,1726 56,084 20,788 (1,845) Foreign Exchange Gain (Loss) 24,753 (78,448) 24,184 8,913 Net Financing Cost (327,847) (489,212) (69,135) (94,118) Share of Profit (Loss) of Associates (47,129)8 (118,829) (15,844)8 (36,071)8 Impairment of Financial Assets - (48,129)9 - (48,129) Profit Before Tax 371,644 40,898 (89%) 145,802 (90,761) n.m.Income Tax (266,073) (239,298)10 (56,336) (84,617)10 Profit from Continuing Operations 105,571 (198,400) n.m. 89,466 (175,378) n.m.Gains or losses from discontinued operations11 273,057 979,851 844,762 5,845 Profit for the Period 378,628 781,452 106% 934,228 (169,533) n.m.Attributable to: Equity Holders of the Parent12 317,290 743,099 134% 939,209 (178,834) n.m.Earnings Per Share (US$/GDR)13 0.36 0.73 103% 0.90 (0.17) n.m.Minority Interest 61,338 38,352 (4,981) 9,301 Net Income 378,628 781,451 106% 934,228 (169,533) n.m.

39

Table 13: Balance Sheet in IFRS/US$ Table 14: Cash Flow Statement in US$

1- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.2- On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia

(“OTT”). As a result the proportionate consolidation of OTT during Q4 is no longer applicable as per IFRS as it renders the entity an investment held for sale, and conse-quently a discontinued operation under IFRS rules. Figures for 2009 and 9M 2010 have been restated to reflect the accounting treatment of OTT.

3- Due to reclassification purposes, some figures previously presented as other non-current assets in 9M 2010 have been adjusted to intangible assets

IFRS/US$31 December

2009US$ (000)

IFRS/US$31 December

2010US$ (000)

Assets Property and Equipment (net) 5,031,757 3,763,359 Intangible Assets3 2,261,477 1,486,662 Investment in Associates - 1,029,294 Other Non-Current Assets3 963,990 1,104,740 Total Non-Current Assets 8,257,224 7,384,055 Cash and Cash Equivalents 759,546 824,085 Trade Receivables 331,759 258,820 Assets Held for Sale 109,953 422,604 Other Current Assets 640,536 1,090,912 Total Current Assets 1,841,794 2,596,421 Total Assets 10,099,018 9,980,476 Equity Attributable to Equity Holders of the Company 1,275,548 2,726,524 Minority Share 140,000 74,639 Total Equity 1,415,548 2,801,163 Liabilities Long Term Debt 4,873,991 3,859,447 Other Non-Current Liabilities 342,351 354,225 Total Non-Current Liabilities 5,216,342 4,213,672 Short Term Debt 998,231 973,454 Trade Payables 1,042,907 811,443 Other Current Liabilities 1,425,990 1,180,744 Total Current Liabilities 3,467,128 2,965,641 Total Liabilities 8,683,470 7,179,313 Total Liabilities & Shareholder’s Equity 10,099,018 9,980,476 Net Debt1 5,112,676 4,008,816

IFRS/US$Represented 31

December 2009

US$ (000)

IFRS/US$Represented 31 December

2010US$ (000)

Cash Flows from Operating Activities Profit for the Period 104,517 (198,634) Depreciation, Amortization & Impairment of Non-Current Assets 799,036 915,124 Income Tax Expense 266,073 239,053 Net Financial Charges 327,847 489,383 Share of Loss (Profit) of Associates Accounted for Using the Equity Method 47,129 118,829 Impairment of Financial Assets - 48,129 Other 57,973 38,740 Changes in Assets Carried as Working Capital (61,075) (579,962) Changes in Other Liabilities Carried as Working Capital 188,907 109,441 Income Tax Paid (521,866) (300,982) Interest Expense Paid (408,513) (356,517) Net Cash Generated by Operating Activities 800,028 522,604 Cash Flows from Investing Activities Cash Outflow for Investments in Property & Equipment, Intangible Assets, and Financial Assets & Consolidated Subsidiaries (1,080,718) (690,153) Proceeds from Disposal of Property & Equipment, Subsidiaries and Financial Assets 209,620 142,592 Advances & Loans made to Associates & other parties (135,237) (300,348) Dividends & Interest Received 27,010 20,152 Net Cash Used in Investing Activities (979,325) (827,757) Cash Flows from Financing Activities Proceeds from loans, banks' facilities and bonds 932,921 332,843 Payments for loans, banks' facilities and bonds (632,472) (866,978) Net Payments from financial liabilities - (10,683) Net Change in Cash Collateral 83,212 (924) Dividend Payments (91,160) - Payments for Treasury Shares (4,189) (460) Capital injection - 765,233 Change in non-controlling interest (20,468) - Net Cash generated by Financing Activities 267,844 219,031 Discontinued operations Net cash generated by operating activities 386,261 23,913 Net cash (used in) generated by investing activities (240,872) 142,251 Net cash (used in) generated by financing activities (103,764) 38,879 Net cash generated from discontinued operations 41,625 205,043 Net Increase in Cash & Cash Equivalents 130,172 118,921 Cash included in Assets Held for Sale (13,561) (43,559) Effect of Exchange Rate Changes on Cash & Cash Equivalents (8,848) (10,823) Cash & Cash Equivalents at the Beginning of the Period 651,783 759,546 Cash & Cash Equivalents at the End of the Period 759,546 824,085

40

Table 15: Income Statement in EAS/Egyptian Pounds1 Table 16: Balance Sheet in EAS/Egyptian Pounds1

1- According to the Egyptian Accounting Standards (EAS), the investments in Mobinil and ECMS are measured at cost and not at fair value as per the IFRS. Consequently, the gain recognized on the ECMS Transaction is not reflected in the following statement.

2- Management Presentation developed from EAS financials.3- Based on a weighted average for the outstanding number of shares for 2010 of 5,076,200,272 local shares. On a pro forma basis for the rights issue, the weighted average

for the outstanding number of shares for 2009, Q3 2010 and Q4 2010 is 4,394,737,830; 5,228,257,218 and 5,232,507,694 local shares respectively.

1- Management presentation developed from EAS financials.2- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.

Represented 31 Dec. 2009

LE (000)

31 Dec. 2010

LE (000)

Inc/ (dec)


(3 months) LE (000)

Q4 - 2010(3 months)

LE (000)

Inc/ (dec)

Revenues 20,979,798 21,560,259 3% 5,561,039 5,562,524 0%Other Income 194,671 181,844 43,028 38,238 Total Expense (12,594,908) (12,784,460) (3,354,003) (3,309,113) Net unusual Items (67,170) - (618) 618 EBITDA2 8,512,391 8,957,643 5% 2,249,446 2,292,267 2%Depreciation & Amortization (4,241,760) (4,463,057) (1,061,357) (1,337,730) Other (62,366) (534,381) 106,346 (442,377) Operating Income 4,208,265 3,960,205 (6%) 1,294,435 512,160 (60%)Financial Expense (2,453,683) (2,616,839) (649,702) (572,345) Financial Income 486,425 315,120 118,635 (10,562) Foreign Exchange Gain (Loss) 138,124 (442,126) 130,672 49,030 Net Financing Cost (1,829,134) (2,743,845) (400,395) (533,877) Share of Profit (Loss) of Associates (262,986) (571,602) (93,113) (105,469) Impairment of Financial Assets (271,251) (271,251) Profit Before Tax 2,116,145 373,507 (82%) 800,927 (398,438) n.m.Income Tax (1,484,707) (1,355,325) (320,770) (486,313) Profit from Continuing Operations 631,438 (981,818) n.m. 480,157 (884,751) n.m.Gains or losses from discontinued operations 1,564,635 2,106,966 1,881,524 15,494 Profit for the Period 2,196,073 1,125,148 (49%) 2,361,680 (869,257) n.m.Attributable to: Equity Holders of the Parent 1,844,897 880,717 (52%) 1,951,081 (922,404) n.m.Earnings Per Share (EGP/Share)3 0.42 0.17 (59%) 0.37 (0.18) n.m.Minority Interest 351,176 244,431 31,202 53,147 Net Income 2,196,073 1,125,148 (49%) 2,361,680 (869,257) n.m.

EAS/LE31 December

2009LE (000)

EAS/LE31 December

2010LE (000)

Assets Property and Equipment (net) 27,557,254 21,710,070 Intangible Assets 12,260,323 8,584,912 Other Non-Current Assets 5,310,618 8,558,597 Total Non-Current Assets 45,128,195 38,853,579 Cash and Cash Equivalents 4,184,340 4,784,360 Trade Receivables 1,827,658 1,502,624 Assets Held for Sale 605,732 2,430,567 Other Current Assets 3,539,221 6,332,816 Total Current Assets 10,156,952 15,050,367 Total Assets 55,285,148 53,903,946 Equity Attributable to Equity Holders of the Company 6,804,851 12,246,749 Minority Share 762,697 458,581 Total Equity 7,567,548 12,705,330 Liabilities Long Term Debt 26,747,219 22,314,854 Other Non-Current Liabilities 1,886,006 1,735,569 Total Non-Current Liabilities 28,633,225 24,050,423 Short Term Debt 5,483,719 5,639,775 Trade Payables 5,747,657 4,710,968 Other Current Liabilities 7,852,999 6,797,450 Total Current Liabilities 19,084,375 17,148,193 Total Liabilities 47,717,600 41,198,616 Total Liabilities & Shareholder’s Equity 55,285,148 53,903,946 Net Debt2 28,046,598 23,170,269

41

Table 17: Ownership Structure & Consolidation Methods Appendix 1


2. Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS.3. Direct and Indirect stake through Moga Holding Ltd. and Oratel. 4. On 4 January 2011, OTH sold its entire shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia

(“OTT”). As a result the proportionate consolidation of OTT during Q4 is not applicable as per IFRS as it renders the entity an investment held for sale, and consequently a discontinued operation under IFRS. Figures for 2009 and 9M 2010 have been restated to reflect the accounting treatment of OTT.

5. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink.6. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL). 7. OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007.8. Holding company for OTH’s Share in Globalive which has been accounted for under the equity method.

Glossary

ARPU (Average Revenue per User): Average monthly recurrent revenue per customer (excluding visitors roaming revenue and connection fee). This includes airtime revenue (national and international), as well as, monthly subscription fee, SMS, GPRS & data revenue. Quarterly ARPU is calculated as an average of the last three months. Capex: Tangible & Intangible fixed assets additions during the reporting pe-riod, 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 disconnec-tions during a month divided by the average customer base for that month. Churn Rule:A subscriber is considered churned (removed from the subscriber base) if he exceeds the 90 days from the end of the validity period without recharging. It is worth noting that the validity period is a function of the scratch denomination. In cases where scratch cards have open validity, the subscriber is considered churned in case he has not made a single billable event in the last 90 days (i.e. outgo-ing or incoming call or sms, wap session…). Open cards validity is applied for OTA, Mobilink, Mobinil and banglalink so far. A koryolink customer is considered churn if he/she does not recharge within four months after the validity of the scratch card.

MOU (Minutes of Usage):Average airtime minutes per customer per month. This includes billable national & international outgoing traffic originated by sub-scribers (on-net, to land line & to other operators). Also, this in-cludes incoming traffic to subscribers from land line or other op-erators. OTH’s Market Share Calculation Method:The market share is calculated through the data warehouse of OTH’s subsidiaries. The number of SIM cards of competitors that appeared in the call detail record of each of OTH’s subsidiaries is collected. This reflects the number of subscribers of the competi-tion. However, OTH deducts the number of SIM cards that did not appear in the call detail records for the last 90 days to account for churn. The same is applied to OTH subsidiaries. This method is used to calculate the market shares of Djezzy and Mobinil only. In Pakistan and Bangladesh, Market share as announced by the Regulators is based on disclosed information by the other opera-tors which may use different subscriber recognition policy.

SubsidiaryOwnership

December 31Consolidation Method

December 312009 2010 2009 2010

GSM OperationsMobinil (Egypt)2 28.75% 28.75% Proportionate Consolidation Equity consolidation1

Egyptian Co. for Mobile Services 20.00% 20.00% Proportionate Consolidation Equity consolidation1

IWCPL (Pakistan) 100.00% 100.00% Full Consolidation Full ConsolidationOrascom Telecom Algeria3 96.81% 96.81% Full Consolidation Full ConsolidationTelecel (Africa) 100.00% 100.00% Full Consolidation Full ConsolidationOrascom Telecom Tunisia4 50.00% 50.00% Proportionate Consolidation Assets Held for saleTelecel Globe 94.00% 100.00% Full Consolidation Full ConsolidationOT Ventures5 100.00% 100.00% Full Consolidation Full ConsolidationCHEO 75.00% 75.00% Full Consolidation Full ConsolidationInternet Service Intouch 100.00% 100.00% Full Consolidation Full ConsolidationNon GSM Operations Ring 99.00% 99.00% Full Consolidation Full ConsolidationOrasinvest - - - -OTCS 100.00% 100.00% Full Consolidation Full ConsolidationOT ESOP 100.00% 100.00% Full Consolidation Full ConsolidationM-Link 100.00% - Full Consolidation -OT Services Europe 100.00% 100.00% Full Consolidation Full ConsolidationMedCable 100.00% 100.00% Full Consolidation Full ConsolidationMena Cable 100.00% 100.00% Full Consolidation Full ConsolidationMoga Holding 100.00% 100.00% Full Consolidation Full ConsolidationOratel 100.00% 100.00% Full Consolidation Full ConsolidationC.A.T.6 50.00% 50.00% Proportionate Consolidation Proportionate ConsolidationOT Wireless Europe 100.00% 100.00% Full Consolidation Full ConsolidationOT WIMAX 100.00% 100.00% Full Consolidation Full ConsolidationTWA 51.00% 51.00% Full Consolidation Full ConsolidationOIIH 100.00% 100.00% Full Consolidation Full ConsolidationOT Holding 100.00% 100.00% Full Consolidation Full ConsolidationFPPL 100.00% 100.00% Full Consolidation Full ConsolidationMinMax Ventures 100.00% 100.00% Full Consolidation Full ConsolidationOIH7 100.00% 100.00% Full Consolidation Full ConsolidationOTFCSA 100.00% 100.00% Full Consolidation Full ConsolidationOT Holding Canada8 100.00% 100.00% Full Consolidation Full ConsolidationITCL 50.00% 50.00% Proportionate Consolidation Proportionate ConsolidationSAWLTD 100.00% 100.00% Full Consolidation Full ConsolidationOT_OSCAR 100.00% 100.00% Full Consolidation Full ConsolidationOTLB 100.00% 100.00% Full Consolidation Full ConsolidationTMGL 100.00% 100.00% Full Consolidation Full ConsolidationOTO 100.00% 100.00% Full Consolidation Full ConsolidationCORTEX 100.00% 100.00% Full Consolidation Full Consolidation

42

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 2010, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow 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 preparation 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 2010, 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 liabilities” for the following:1- 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 cannot make reliable estimate of tax exposures.

2- Egyptian Company for Mobile Services (ECMS) “associated company” filed a lawsuit against the National 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 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 Telecom Egypt and other mobile operators based on the existing agreements.

Cairo, 19 April, 2011 KPMG Hazem Hassan

Consolidated FinancialStatements and Auditor’s Report

(in IFRS/US$)

• Consolidated balance sheet• Consolidated income statement• Consolidated statement of comprehensive income • Consolidated statement of changes in equity• Consolidated statement of cash flows• Notes to the consolidated financial statements• Appendix A - Liabilities to banks• Appendix B – Bonds• Appendix C - Scope of consolidation

43

Group CFO Chief Executive Officer Aldo Mareuse Khaled Bichara Auditor’s report ‘attached’

Consolidated Income StatementConsolidated Balance Sheet

(The notes are an integral part of these consolidated financial statements)

As of December 31, Note 2010 2009(in million of US$)

AssetsProperty and equipment 19 3,763 5,032Intangible assets 20 1,487 2,261Investment in associates 1,029 -Other non-current financial assets 21 1,033 845Deferred tax assets 22 72 119Total non-current assets 7,384 8,257

Inventories 56 55Trade receivables 23 259 332Other current financial assets 21 46 114Current income tax receivables 18 83 100Other current assets 24 905 371Cash and cash equivalents 25 824 760Assets held for sale 6 423 110Total current assets 2,596 1,842Total assets 9,980 10,099

Equity and liabilitiesShare capital 1,031 258Reserves (279) (214)Retained earnings 1,975 1,232Equity attributable to owners of the Company 2,727 1,276

Non-controlling interest 74 140Total equity 26 2,801 1,416

LiabilitiesNon-current borrowings 27 3,859 4,874Other non-current liabilities 28 112 121Provisions 1 4Deferred tax liabilities 22 242 216Total non-current liabilities 4,214 5,215

Current borrowings 27 973 998Trade payables 29 811 1,043Other current liabilities 28 753 1,091Current income tax liabilities 18 148 187Provisions 86 94Liabilities held for sale 6 194 55Total current liabilities 2,965 3,468Total liabilities 7,179 8,683Total equity and liabilities 9,980 10,099


For the year ended December 31 Note 2010 2009

(in million of US$) (Restated)

Continuing operations

Revenues 7 3,825 3,760 Other income 32 35 Purchases and services 8 (1,796) (1,831)Other expenses 9 (206) (162)Personnel costs 10 (272) (271)Net unusual inventory loss 13 - (13)Depreciation and amortization 11 (793) (761)Impairment charges 12 (123) (38)Net unusual capital loss 13 - (15) Disposal of non current assets 14 28 42 Operating income 695 746 Financial income 15 56 87Financial expense 15 (467) (440)Foreign exchange (loss) / gain 15 (78) 25Net financing costs (489) (328)

Share of profit and loss of associates 16 (119) (47)Impairment of financial assets 17 (48) - Profit before income tax 39 371 Income tax expense 18 (238) (266)

(Loss) / profit from continuing operations (199) 105

Discontinued operationsProfit from discontinued operation (net of income tax) 6 980 274Profit for the year 781 379Attributable to:Owners of the Company 743 318 Non-controlling interest 38 61

781 379

Earnings per share - (US$) 30 0.15 0.07

Basic earnings / (loss) per share:From continuing operations (0.04) 0.01From discontinued operations 0.19 0.06Diluted earnings / (loss) per share:From continuing operations (0.04) 0.01From discontinued operations 0.19 0.06

44

Consolidated statement of changes in equityConsolidated statement of comprehensive income



For the year ended December 31, 2010 2009(in million of US$)

Profit for the year 781 379Other comprehensive income:Changes in fair value of available-for-sale financial assets (2) (2)Cash flow hedges 6 25Currency translation differences (67) (46)Other comprehensive income for the year, net of tax (63) (23)Total comprehensive income for the year 718 356

Attributable to:Owners of the Company 689 292Non-controlling interest 29 64

(in million of US$)

Attributable to owners of the Company

Share capital

Treasury shares

Other reserves

Retained earnings Total

Non controlling

InterestTotal equity

As of January 1, 2010 258 (48) (166) 1,232 1,276 140 1,416Comprehensive income Profit for the year - - - 743 743 38 781Other comprehensive income - - (54) - (54) (9) (63)Total comprehensive income - - (54) 743 689 29 718Transactions with ownersCapital Increase 773 (4) (4) - 765 - 765Change in non controlling interest - - - - - (57) (57)Dividends paid - - - - - (38) (38)Share based compensation - 8 (11) - (3) - (3)Total transactions with owners 773 4 (15) - 762 (95) 667As of December 31, 2010 1,031 (44) (235) 1,975 2,727 74 2,801

(in million of US$)

Attributable to owners of the Company

Share capital

Treasury shares

Other reserves


Non controlling

Interest Total equity

As of January 1, 2009 261 (190) (139) 1,148 1,080 121 1,201Comprehensive income Profit for the year - - - 318 318 61 379Other comprehensive income - - (26) - (26) 3 (23)Total comprehensive income - - (26) 318 292 64 356Transactions with owners Change in non controlling interest - - - - - (10) (10)Dividends - 56 10 (160) (94) (35) (129)Share based compensation - 5 (3) 2 - 2Cancellation of shares (3) 92 (15) (74) - - -Purchase of treasury shares - (38) - - (38) - (38)Sale of treasury shares - 27 7 - 34 - 34Total transactions with owners (3) 142 (1) (234) (96) (45) (141)As of December 31, 2009 258 (48) (166) 1,232 1,276 140 1,416

45

Consolidated Statement of Cash Flows

1. General information

Orascom 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 com-pany operating in high growth emerging markets in the Middle East, Africa and Asia, having a total population under license of approximately 517 million. The Com-pany is a subsidiary of WIND TELECOM SpA (“WIND TELECOM” 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, 2010 (the “Consolidated Financial Statements”) were approved for issue by the Board of Directors on April 18, 2011.

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, 2010, have been prepared in accordance with International Finan-cial Reporting Standards (IFRS) and its interpretations as adopted by the International Accounting Standards Board (IASB) and all interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and all interpretations of the Standing Interpretations Committee (SIC).

The consolidated financial statements have been pre-pared under the historical cost basis except for the fol-lowing:• derivative financial instruments are measured at fair value;• financial instruments at fair value through profit or loss are measured at fair value; and• available-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. 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$”), ex-cept earnings per share and unless otherwise stated.

2.2 Change in Accounting Polices

The Group has adopted the following new and amended IFRSs and IFRIC Interpretations, as of January 1, 2010, with no material impact:

· IAS 27 (revised), “Consolidated and separate finan-cial statements”. The revised standard requires the effects of all transactions with non-controlling inter-ests 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 accounting 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.

· IFRS 3 (revised), “Business combinations. 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 pay-ments 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 pro-portionate share of the acquiree’s net assets. All acquisition-related costs should be expensed.

· IFRS 5 (amendment) “Non-current assets held for sale and discontinued operations” and consequen-tial amendments to IFRS 1 “First-time adoption”. 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. Relevant disclosure should be made for this sub-sidiary 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.

· IFRIC 17, “Distribution of non-cash assets to own-ers”. The interpretation is part of the IASB’s an-nual improvement project which was published in April 2009. This interpretation provides guidance on accounting for arrangements whereby the entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended.

· IAS 38 (amendment), “Intangible Assets”. The amendment is part of the IASB’s annual improve-ments project published in April 2009 and the Group will apply IAS 38 (amendment) from that date that IFRS 3 (revised) is adopted (January 1, 2010). The amendment to the standard clarifies guidance in measuring the fair value of an intangible asset that is acquired in a business combination and permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives.

· IAS 1 (amendment), “Presentation of financial statements”. This amendment is part of the IASB’s annual improvements project published in April 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current.

· IFRS 2 (amendments), “Group cash-settled and share-based payment transactions”. In addition to incorporating IFRIC 8, “Scope of IFRS 2”, and IFRIC 11, “IFRS 2 - Group and treasury share transactions”, the amendments expand on the guidance in IFRIC 11 to address the clarification of group arrangements that were not covered by that interpretation.

· IAS 39 (amendment), “Financial instruments: Rec-ognition and Measurement. The amendment on eligible hedged items specifies that an entity may designate an option as a hedge of changes in the cash flows or fair value of a hedged item above or below a specified price or other variable. The pro-visions are to be applied retrospectively.

For the year ended December 31, (in millions of USD) 2010 2009Continuing operations (Restated)Cash flows from operating activities(Loss)/profit for the year (199) 105 Adjustments for: Depreciation, amortization and impairment charges 916 799 Net unusual inventory loss and capital loss - 28 Income tax expense 238 266 Share-based compensation 3 12 Net financial charges 411 353Foreign exchange differences 78 (25)Gain on disposal of non-current assets (28) (42)Share of loss of associates 119 47 Impairment of current financial assets 48 - Change in assets carried as working capital (580) (61)Change in provisions and allowances 64 61 Change in other liabilities carried as working capital 109 188 Income tax paid (301) (522)Interest expense paid (357) (409)Net cash generated by operating activities 521 800 Cash flows from investing activitiesCash outflow for investments in: - Property and equipment (538) (872)- Intangible assets (94) (103)- Financial assets and associates (28) (75)- Consolidated subsidiaries (30) (30)Proceeds from disposals of: - Property and equipment 13 34 - Intangible assets 1 -- Consolidated subsidiaries 117 216 Net investments in financial assets held for trading 12 (41)Advances and loans made to associate and other parties (300) (135)Dividends and interest received 20 27 Net cash (used in) investing activities (827) (979)Cash flows from financing activitiesProceeds from loans, banks› facilities and bonds 333 932 Payments for loans, banks› facilities and bonds (867) (632)Net payments for other current financial liabilities (11) - Net change in cash collateral (1) 83 Dividends paid - (91)Net payments for treasury shares - (5)Proceeds from capital increase 765 - Change in non-controlling interest - (20)Net cash generated by financing activities 219 267 Net cash (used in) / generated by continuing operations (87) 88Discontinued operations Net cash generated by operating activities 24 386 Net cash generated by / (used in) investing activities 142 (241)Net cash generated by /(used in) financing activities 39 (104)Net cash generated by discontinued operations 205 41 Net increase in cash and cash equivalents 118 129 Cash included in assets held for sale (43) (14)Effect of exchange rate changes on cash and cash equivalents (11) (7)Cash and cash equivalents at the beginning of the year 760 652 Cash and cash equivalents at the end of the year 824 760


46

Foreign currency translationFunctional and presentation currency The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial informa-tion to international investors the Group’s presentation currency is US$.

Transactions and balancesTransactions in foreign currencies are translated into the func-tional currency of the relevant entity at the exchange rate prevail-ing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated, at the balance sheet date, into the prevailing exchange rates at that date. For-eign currency exchange differences arising on the settlement of transactions and the translation of the balance sheet are recog-nized in the income statement. 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 average exchange

rate for the year;· All resulting exchange differences are recognized as a sepa-

rate component of equity in the “translation 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 translated at the closing exchange rate; and

· In 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:

Property and equipmentProperty and equipment are stated at purchase cost or produc-tion cost, net of accumulated depreciation and any impairment losses. Cost includes expenditure 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 capitalized 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, moderniza-tion 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 accord-ance 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 val-ues are reviewed and updated, where necessary, at least at each year end. Land is not depreciated. When a depreciable asset is composed of identifiable separate components whose useful lives vary significantly from those of other components of the asset, de-preciation is calculated for each component separately, applying the “component approach”. The useful lives estimated by the Group for the various categories of property and equipment are as follows.

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 “Disposal 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 acquired under finance lease are recog-nized 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 corresponding liability due to the lessor is recognized as part of financial liabilities. An asset acquired under a finance lease is depreciated 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 ownership of the assets are classified as operating leases. Lease payments under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

Intangible assetsIntangible assets are identifiable non-monetary assets without physical substance which can be controlled and which are capa-ble 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 ap-plicable. 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.· Licenses Costs for the purchase of telecommunication licenses are

capitalized. Amortization is charged on a straight-line basis such as to write off the cost incurred 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 license may be exercised.

2-3 Summary of main accounting principles and policies

The main accounting principles and policies adopted in pre-paring these Consolidated Financial Statements are set our below. These policies have been consistently applied to all periods in those consolidated financial statements, and have been applied consistently by the group entities.

Basis of consolidation The 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 owner-ship 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 re-lationships. The existence of potential voting rights that are exercisable or convertible 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, 2010 (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 non-controlling interests, where ap-plicable, 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 con-solidated income statement;

· the purchase method of accounting is used to account for business combinations in which the control of an en-tity is acquired. The cost of an acquisition is measured as the fair value of the assets acquired, liabilities incurred or assumed and equity instruments issued at the acquisi-tion 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 li-abilities 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 im-mediately in the income statement;

· Business combinations in which all of the combining enti-ties or businesses are ultimately controlled by the same party or parties both before and after the business com-bination are considered business combinations involving entities under common control. In the absence of an ac-counting standard guiding the accounting treatment of these operations 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 non-controlling holders in entities where control is already exercised is considered a purchase. Therefore the difference be-tween the cost incurred for the acquisition and the re-spective share of the accounting equity acquired is rec-ognized in goodwill;

· Any options to purchase non-controlling interests out-standing at the end of the year are treated as exercised and are reported as a financial liability or in equity de-

pending on whether the transaction is to be settled in cash or through the exchange of equity instruments;

· Unrealized gains and losses on transactions carried out between companies consolidated on a line-by-line ba-sis and the respective tax effects are eliminated if mate-rial, as are corresponding balances for receivables and payables, income and expense, and finance income and expense;

· gains and losses arising from the sale of holdings in consolidated entities are recognized in the income state-ment as the difference between the selling price and the corresponding portion of consolidated equity sold.

AssociatesInvestments in companies where the Group exercises a sig-nificant 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 investee is

recognized in the income statement from the date when significant influence begins up to the date when that significant influence 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. Eq-uity changes in investees accounted for using the equity method that do not result from profit or loss are recog-nized directly in consolidated equity reserves;

· Unrealized gains and losses generated from transac-tions between the Company or its subsidiaries and its investees accounted for using the equity method are eliminated on consolidation for the portion pertaining to the Group; unrealized losses are eliminated unless they represent an impairment.

· The license of the Group’s associated undertaking in Canada, Globalive Wireless Management Corp, are indefinite lived assets. Although the spectrum licenses have an initial term of 10 years, based on available infor-mation, the management believes that they are subject to perfunctory renewal and that renewal cost will not be significant. Accordingly, they are not subject to amorti-zation but are tested annually for impairment, or when indicators exist that the carrying value is not recoverable.

Joint venturesJoint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and op-erating decisions.Interests in joint ventures are consolidated using the propor-tionate method under which the assets and liabilities and in-come 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 invest-ment is then eliminated against the respective portion of equity. Transactions, balances and any unrealized gains and losses on intercompany transactions are proportionately eliminated.

Unrealised gains arising from transactions with associates (and jointly controlled entities) are eliminated to the extent of the Group’s interest in the enterprise. Unrealised gains result-ing from transactions with associates and joint ventures are eliminated against the investment in the associates or joint venture.

Appendix C includes a list of the entities included in the scope of consolidation.

Average for year ended December 31,

Closing rate as of December 31,

2010 2009 2010 2009

Egyptian Pound (LE) 0.1774 0.1792 0.1722 0.1815Algerian Dinar (DZD) 0.0135 0.0138 0.0135 0.0137Tunisian (TND) 0.6992 0.7395 0.6954 0.7591Pakistan Rupee (PKR) 0.0117 0.0122 0.0117 0.0119Bangladeshi Taka (BDT) 0.0144 0.0144 0.0142 0.0144Canadian Dollar (CAD) 0.9711 0.8920 1.0030 0.9628Euro 1.3257 1.4134 1.3362 1.4551

Number ofyears

Buildings 50Cell Sites 8-15Tools 5-10Computer equipment 3-5Furniture and Fixtures 5-10Vehicles 3-6Leasehold improvements and renovations 3-8

47

· Goodwill Goodwill represents the excess of the cost of an acquisition

over the interest acquired in the net fair value at the acquisi-tion date of the assets and liabilities of the entity or business acquired. Goodwill relating to investments accounted for us-ing 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 bal-ance sheet is adequate (“impairment testing”). Impairment testing is carried out annually or more frequently when events or changes in circumstances occur that could lead to an im-pairment of the cash generating units (“CGUs”) to which the goodwill has been allocated. An impairment loss is recognized whenever the recoverable amount of goodwill is lower than its carrying amount. The recoverable 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 recognized for goodwill it cannot be reversed.

Whenever an impairment loss resulting from the above test-ing 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 8 years), while software maintenance costs are expensed in the income statement in the period in which they are incurred. Costs incurred on development of software products are recog-nized as intangible assets when the Group has intentions to com-plete and use or sell the assets arising from the project, considering the existence of a market for the asset, its commercial and tech-nological 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 a software product include software development employee costs and an ap-propriate portion of relevant overheads. Other development ex-penditures that do not meet these criteria are recognised as an expense as incurred. Development 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 cus-tomers identified when allocating the purchase price in acquisi-tions 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 intan-gible 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 estimated 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 chang-es 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 independ-ent cash flows its recoverable amount is determined in relation to the cash-generating unit (CGU) to which it belongs. An impair-ment loss is recognized in the income statement 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 de-preciation) had no impairment loss been recognized for the asset, with the reversal being recognized in the income statement.

InvestmentsInvestments in companies other than those classified as avail-able 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 “Fi-nancial assets available for sale”). If fair value cannot 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 car-rying 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. Pur-chases and sales of financial instruments are recognized at their settlement date. Financial assets are derecognized when the right to receive cash flows from them ceases and the Group has ef-fectively 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 models 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 four categories and subsequently measured as described:

Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss includes finan-cial assets purchased primarily for sale in the short term, (held for trading) and derivative financial instruments, except for the effec-tive 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 cat-egory are classified as current assets if they are held for trading or expected to be disposed of within twelve months from the balance sheet date. Derivatives are treated as assets or liabilities depend-ing on whether their fair value is positive or negative; positive and negative fair values arising from transactions with the same coun-terparty are offset if this is contractually provided 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 ob-jective 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 future 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 in-struments which are either designated in this category or not clas-sified 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 clas-sified as available for sale are analyzed between translation dif-ferences 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 im-paired, the accumulated fair value adjustments recognized in eq-uity are included in the income statement. The classification of an asset as current or non-current is the con-sequence of strategic decisions regarding the estimated period of ownership of the asset and its effective marketability, with those which are expected to be realized within twelve months from the balance sheet date being classified as current assets.Financial assets held to maturity.These are non-derivative assets with fixed maturities that the Group has the intention and ability to hold to maturity. Those ma-turing within 12 months are carried as current assets. These fi-nancial assets are measured at amortized cost using the effective interest method.

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 be-low its cost is considered as an indicator that the securities are im-paired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference 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 statement on equity instruments are not reversed through the income statement.

Financial liabilitiesFinancial liabilities consisting of borrowings, trade payables and other obligations are measured at amortized cost using the effec-tive interest method. When there is a change in cash flows which can be reliably estimated, the value of the financial liability is re-calculated to reflect such change based on the present value of expected cash flows and the originally determined 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 instru-ment.Derivative financial instrumentsDerivatives are initially recognized at fair value on the date a de-rivative 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 in-strument, and if so, the nature of the item being hedged. The Group documents at the inception of the transaction the rela-tionship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its as-sessment, 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 classified 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.

· Fair value hedge Changes 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 state-ment.

· Cash flow hedge The effective portion of changes in the fair value of derivatives

that are designated and qualify as cash flow hedges is rec-ognized in equity in a specific reserve (the “cash flow hedge reserve”) . The gain or loss relating to the ineffective portion is recognized 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 economic effects deriving from the hedged item are real-ized, 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 effec-tive, the non-effective portion of the change in fair value of the

48

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 ultimately recognized in the income statement. When a fore-cast transaction is no longer expected to occur, the cumula-tive 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 av-erage method. Net realizable value is the estimated selling price in the ordinary 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 comprise 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 comprising assets and li-abilities) that are expected to be recovered primarily through sale rather than through continuing use is classified as held for sale. Immediately 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 li-abilities held for sale (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impair-ment 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, and de-ferred 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 remeas-urement are recognised in the income statement. Subsequent in-crease 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 ex-tent 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 interpre-tation. 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 liabili-ty method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consoli-dated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of goodwill 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 accounting 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 differences arising on investments in subsidiaries, associates and joint ventures, ex-cept where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.Additional income taxes that arise from the distribution of divi-dends are recognised at the same time that the liability to pay the related dividend is recognised.Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities 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 simultaneously.

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 mar-ket rates and takes into account the specific risk of each liability. Provisions are not recognised for future operating 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 benefits The Group recognizes additional benefits to certain managers

and other members of personnel through share based pay-ment 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 recog-nized as an expense with a correspondent 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 pe-riod, which is the period over which all of the specified vesting conditions 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 Company’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 hold-ers 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 ceas-es once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized for covering losses or for increasing the Company’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 Financial Statements in the period in which the dividends are approved by the Company’s sharehold-ers.

Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods and services 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 ownership of the goods. Rev-enue from services is recognized in the income statement by refer-ence 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, interconnection and

roaming is recognized on the basis of the actual usage made by each subscriber and telephone operator. Such revenue in-cludes 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 recharging is rec-ognized on the basis of the prepaid traffic actually used by subscribers during the year. The unused portion of traffic at period end is recognized 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 subscrip-tion) 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 rendered 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.

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 discontinued operations, by the weighted average number of ordinary shares in issue during the year excluding or-dinary 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 number of ordinary shares of the Compa-ny 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 cal-culated when there are losses as any dilutive effect would improve earnings per share.

Discontinued operations A discontinued operation is a component of the Group’s busi-

ness that represents a separate major line of business or geo-graphical 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 oc-curs 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 in-come statement is re-presented as if the operation had been discontinued from the start of the comparative period.

Segment reporting Operating segments are reported in a manner which is con-

sistent with the internal reporting information provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and as-sessing performance of the operating segments, has been identified as the board of directors.

Recent accounting pronouncements The following new standards, amendments to standards and

interpretations have been issued but are not effective for the financial year 2010 and have not been early adopted:

IAS 32 (amendment), “Financial instruments: Presentation”. This amendment will be applicable for the Group from January 1, 2011. The amendment clarifies the classification of rights issues as equity or liabilities when the rights are denominated in a currency other than the issuer’s functional currency.

IAS 24, “Related Party Disclosures” will be effective for the Group from January 1, 2011. The amendment simplifies the definition of a related party by clarifying its intended meaning and elimination of any inconsistencies from the definition and furthermore provides a partial exemption from the disclosure requirements.

IFRS 9, “Financial Instruments” will be applicable for the Group from January 1, 2013. IFRS 9 is the first part of Phase 1 of the IASB’s project to replace IAS 39. IFRS 9 governs the classification and measurement of financial assets.

IFRIC 14, “Prepayments of a minimum funding requirement” will be applicable for the Group from January 1, 2011 . The amendment applies in limited circumstances when an entity

49

Market Risk

Foreign exchange risk

The Group operates internationally and is exposed to foreign ex-change risk arising when its business transactions are in curren-cies other than its functional currency. The main currencies to which the Group is exposed are the US dollar, the Canadian Dollar and the Euro.

In general the Group’s subsidiaries are encouraged to obtain fi-nancing 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 currencies, and in particular in US$, CAD and Euro, the Group may be subject to the risk of exchange rate fluctuations which, in certain instances the Group manages through the use of hedging strategies. As of December 31, 2010 the Group’s borrowings included US$ borrowings amount-ing to US$ 3,894 million and Euro borrowings amounting to Euro 121 million (equivalent to US$ 162 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$ 161 million and Euro 119 million (equivalent to US$ 159 million) as of December 31, 2010. Such borrowings were fully hedged by PMCL using cross currency swaps pursu-ant 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 subsidiar-ies 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 denominat-ed 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 described further in “Credit Risk”, the Group has provided loan facilities to Globalive Wireless Management Corp which are de-nominated in CAD.

As of December 31, 2010, if the functional currencies had weak-ened / strengthened by 10% against the US$, the Euro and CAD, with all other variables held constant, the translation of foreign currency receivables and payables would have resulted in a de-crease/ increase in profit for the year (after tax)of US$ 104 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 risk

The Group is exposed to market risks as a result of changes in interest rates particularly in relation to borrowings. Borrowings is-sued 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 in-terest 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 costs.

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, 2010 the Group had floating-to-fixed interest rate swaps with a notional value of US$ 1.5 billion and other contracts for floating-to-fixed interest rate swap with a notional value of US$ 500 million. After considering such derivative transactions approximately 40% of the Group’s total borrowings had a floating rate of interest.

The Group considers the sensitivity of its finance costs to move-ments in interest rates. In particular an increase / decrease of 1.0% in interest rates as of December 31, 2010 would have re-sulted in an increase / decrease in finance costs of US$ 19 million and a decrease / increase in the cash flow hedge reserve of US$ 74 million.

Price risk

The 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 concentra-tions of credit risk in relation to trade receivables. However, credit risk can arise in the event of non-performance of a counterparty, particularly in relation to credit exposures for trade and other re-ceivables, financial instruments and cash and cash equivalents.

The Group considers that the concentration of credit risk with re-spect to trade receivables is limited given that the Group’s cus-tomer base is largely pre-paid subscribers. Post paid subscrib-ers 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 finan-cial 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 transactions 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 invest-ment grade rating.

The Group is exposed to credit risk relating to financial receivables as follows:

· During 2008 the Company entered into two loans agreements to provide a total amount of CAD 508 million to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment Holdings Corp (“Globalive”). The amount of these loans was increased to CAD 608 million during 2009 and further increased to CAD 970 million during 2010. As of December 31, 2010 the amount outstanding under such loan agreements, including accrued interest, was CAD 1,092 million (equivalent to US$ 1,105 million).The loans were primarily provided to GWMC to fund the acquisition of spec-trum licenses in Canada.

· The licenses were awarded to GWMC during March 2009 by Industry Canada and GWMC launched operations in Decem-ber 2009. During the start-up phase of operations Globalive has incurred losses and as a result the Group’s share of loss-es exceeds the carrying value of the investment. The Group considers the loan provided as part of the investment and has therefore deducted the excess losses from the receivable. Af-ter considering such losses an amount of US$ 870 million is recorded in financial receivables. (see Note 21 “Other financial assets” for further details)

In general the remaining other receivables and financial receiva-

is subject to minimum funding requirements and makes an early payment of contributions to cover these requirements. The amendment permits an entity to treat the benefit of such a payment as an asset.

IFRIC 19, “Extinguishing financial liabilities with equity instru-ments” will be applicable for the Group from January 1, 2011. The interpretation provides guidance on how to interpret IFRS when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept equity in-struments to fully or partially settle the financial liabilities.

3. Use of Estimates

The preparation of these Consolidated Financial Statements required management to apply accounting policies and meth-odologies that are based on complex, subjective judgments, estimates based on past experience and assumptions deter-mined from time to time to be reasonable and realistic based on the related circumstances. 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 estimates and assumptions were made in the Consolidated Financial Statements may differ from those reported in these statements due to the uncertainties that characterize the as-sumptions and conditions on which the estimates are based.

The accounting principles requiring a higher degree of sub-jective judgment in making estimates and for which changes in the underlying conditions could significantly affect the Con-solidated Financial Statements are briefly described below.

Goodwill

Goodwill is tested for impairment on an annual basis to deter-mine 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 gener-ating 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 good-will 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 as-sets may not be recoverable and that they have suffered an impairment loss that needs to be recognized. In order to de-termine whether any such elements exist it is necessary to make subjective measurements, based on information ob-tained 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 tech-niques. The identification of the elements that may determine a potential impairment loss and the estimates used to meas-ure such loss depend on factors which may vary over time, thereby affecting the estimates and measurements.

Depreciation of non-current assets The 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 concern-ing future events which may affect them, amongst which are changes in technology. The actual useful lives may therefore differ from the estimates of these lives. The Group regularly reviews technological and business sector changes, disman-tling costs and recoverable amounts in order to update re-sidual 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 assets The recognition of deferred tax assets is based on forecasts

of future taxable profit. The measurement of future taxable profit for the purposes of determining whether or not to recog-nize deferred tax assets depends on factors which may vary over time and which may lead to significant effects on the measurement of this item.

Income tax The companies of the Group are subject to different tax leg-

islation. A significant amount of estimates are necessary in order to account for the total tax effects on the financial state-ments. 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 instruments The 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 tech-niques 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 contingencies In recognizing provisions the Group analyses the extent to

which it is probable that a liability will arise from disputes with employees, suppliers and third parties and in general the losses it will be required to incur as a result of past obliga-tions. The definition of such provisions entails making esti-mates based on currently known factors which may vary over time and which could actually turn out to be significantly dif-ferent from those referred to in preparing the financial state-ments.

4. Financial Risk Management

Financial Risk Factors

The Group’s activities expose it to a variety of financial risks: mar-ket 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, in-terest rates and market prices. The Group’s overall risk manage-ment 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. Depending on the risk assessment, the Group uses selected de-rivative hedging instruments. The management has overall re-sponsibility for the establishment and oversight of the group’s risk management framework.

50

bles included in financial assets generally relate to a variety of smaller amounts due from a wide range of counterparties, there-fore, the Group does not consider that it has a significant concen-tration of credit risk.

Liquidity Risk

The Group monitors and mitigates liquidity risk arising from the uncertainty of cash inflows and outflows by maintaining sufficient liquidity of cash balances as well as undrawn credit lines and by diversifying its sources of finance. In general, liquidity risk is mon-itored 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 rel-evant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts dis-closed in the table are the contractual undiscounted cashflows.

* Expected cash flows are the gross contractual undiscounted cash flows including interest, charges and other fees.

The table below analyses the group’s derivative financial instru-ments into relevant maturity groupings based on the remaining pe-riod at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

* Derivative cashflows for interest rate derivatives and foreign ex-change derivatives represent the net cashflow from the rel-evant 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 be exercised. The exer-cise of such warrants is at the option of the Company. Details of such warrants are provided in Note 21 “Other financial assets”. Contractual cash flows are derived based on the relevant index as of the balance sheet date.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to pro-vide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or ad-just the capital structure, the Group may, among other things, ad-just 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 risks

Political and economic risk in emerging countriesA significant amount of the Group’s operations are conducted in Algeria and Pakistan. The operations of the Group depend on the market economies of the countries in which the subsidiaries oper-ate. In particular, these markets are characterized by economies that are in various stages of development or are undergoing re-structuring. Therefore the operating results of the Group are af-fected by the current and future economic and political develop-ments in these countries. In particular, the results of operations could be unfavorably affected by changes in the political or gov-ernmental 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 busi-ness 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, receiving excessive tax assessments, granting of re-

lief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable 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 subsidiaries 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 reg-ulations. 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 reporting

The chief operating decision-maker has been identified as the board of directors of the Group. The board of directors reviews the Group’s internal reporting in order to assess its performance and allocate resources, mainly from a geograph-ical perspective, of the mobile telecommunication business. Management has determined the reportable

Operating segments according to the information analyzed periodically by the board of directors as follows:

• Mobile telecommunication business in Algeria;• Mobile telecommunication business in Pakistan;• Mobile telecommunication business in Egypt;• Mobile telecommunication business in Tunisia;• Mobile telecommunication business in Bangladesh;• Other GSM which comprises the mobile telecommunica tion

businesses in Central and South Africa and Namibia and North Korea ; and

• Other Telecom service (Non GSM Service) which includes other territories in which the Group operates as a mobile tel-ecommunication operator and other services.

The Group reports on operating segments which are independent-ly managed. The board of directors assesses the performance of such operating segments based on:

• Total revenues• EBITDA, defined as profit for the period before income

tax expense (or if applicable profit from continuing opera-tions for the period before income tax expense), gains (losses) on disposal of associates, share of profit (loss) of associates, foreign exchange gains (losses), financial ex-pense, financial income, disposal of noncurrent assets, impairment charges, depreciation and amortization and net unusual capital loss, and

• Segment capital expenditure is the total cost incurred

during the period to acquire property, plant and equip-ment, and intangible assets other than goodwill.

The information provided to the board of directors is measured consistently with that of the financial statements.

* Holding and other mainly represent income and expense relating to activities provided from the holding and other companies. These represent mainly management fees and revenue as a result of sup-porting activities provided by Orascom Telecom Holding.

It should be noted that the segments “Egypt” and “Tunisia” relate to ECMS and OTT which are considered as discontinued operations. Therefore, going forward Egypt and Tunisia will not be reportable segments. The following table provides a breakdown of revenue by product and service:

As of Decem-ber 31, 2010

Carrying amount

Expect� ed cash (*) flows

Less than 1

year

Between 1 and 5years

More than 5years

Liabilities Liabilities tobanks

3,377 3,778 1,026 2,745 7

Bonds 1,320 1,618 130 1,488 - Finance leaseliability

20 34 3 13 18

Other borrow-ings

10 11 9 2 -

Telecommuni- cation licensepayable

88 134 15 60 59

Trade pay-ables

811 811 811 - -

5,626 6,386 1,994 4,308 84

As of Decem-ber 31, 2009

Carrying amount

Expect� ed cash (*) flows

Less than 1

year

Between 1 and 5years

More than 5years

Liabilities Liabilities tobanks

4,475 5,012 1,021 3,969 22

Bonds 1,255 1,674 159 1,515 - Finance leaseliability

24 43 7 15 21

Other borrow-ings

19 18 18 - -

Telecommuni- cation licensepayable

363 420 286 60 74

Trade pay-ables

1,043 1,043 1,043 - -

7,179 8,210 2,534 5,559 117

As of December 31, 2010 Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

Cash outflow / (cash inflow)Interest rate derivatives 105 62 43Foreign exchange deriva-tives

(114) (11) (103)

Other derivative instru-ments - cash inflow

(3) - (3)

Total (12) 51 (63)

As of December 31, 2009 Expected cash flows (*)

Less than 1 year


Cash outflow / (cash inflow)Interest rate derivatives 98 65 33Foreign exchange deriva-tives

(214) (41) (173)

Other derivative instru-ments - cash inflow

(16) - (16)

Total (132) 24 (156)

51

2010 2009Product and services Mobile 3,479 3,385Fixed - line and Internet 346 312Other revenue & income - 63Total revenue 3,825 3,760

6 Assets and liabilities classified as held for sale and discontin-ued operations

The following provides a breakdown of discontinued operations for the years indicated:

The following provides a breakdown of assets and liabilities held for sale as of December 31:

2010 2009 )$In millions of US( Property and equipment 170 46Intangible assets 141 30Trade receivables 46 12Other current assets 17 8Cash and cash equivalents 43 14Deferred tax assets 6 -Assets held for sale 423 110

Current and non-current borrowings 39 24Trade payables 49 15Other current liabilities 77 15Current income tax liabilities 10 -Deferred tax liabilities 19 1Liabilities held for sale 194 55

Assets and liabilities held for sale include the following:

2010 Assets Held for Sale and Discontinued Operations

Orascom Telecom Tunisia S.A. )“OTT”(

OTT operates a GSM network in Tunisia and provides a range of

pre-paid and postpaid voice and data telecommunication services under the brand name “Tunisiana”. The Company has a 50% share-holding in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT. The remaining 50% interest is held by National Mobile Telecommunications Company KSC which is owned by Qatar Telecom.

In November 2010, the Company announced that it had entered into a share purchase agreement with Qatar Telecom Q.S.C., pursuant to which the Company would sell its entire shareholding in Oras-com Tunisia Holdings and Carthage Consortium, the two compa-nies through which the Company owns 50% of OTT for a total cash consideration of US$ 1.2 billion. The transaction was completed on January 2, 2011. In accordance with IFRS 5 the assets and li-abilities held for sale in disposal groups have been shown in specific captions in the consolidated balance sheet and the income state-ment effect has been shown as discontinued operation as this group represents a separate major line of business. The comparative in-come statement information for 2009 has also been reclassified to discontinued operations.

Egyptian Company for Mobile Services SAE )“ECMS”(ECMS is a mobile telecommunication operator in Egypt and pro-vides a range of prepaid and postpaid voice and data telecommuni-cation services under the brand name of Mobinil. The Company has an investment of 34.66% in ECMS and the France Telecom Group also has an investment of 36.34%. The remaining shareholding is publicly traded on the Cairo and Alexandria Stock Exchange.

In April 2010 France Telecom and the Company entered into a new and comprehensive agreement regarding Mobinil Telecom and ECMS which brought to an end all disputes in relation to their joint investment in Mobinil and ECMS. A revised shareholders’ agree-ment was implemented and became effective on July 14, 2010, as a result of which France Telecom will change its accounting method and will fully consolidate Mobinil in its consolidated financial state-ments. As a result of the amended shareholders agreement, the Company ceases to have joint control over ECMS, which becomes an associate. In accordance with IFRS, the Company’s shares of ECMS results of operations are no longer proportionally consolidat-ed but, from July 14, 2010 are consolidated using the equity method. On the date that ECMS became an associate, the investment was measured at fair value and the gain was recognized in the income statement within discontinued operations. As ECMS is considered a single cash generating unit clearly distinguished for financial report-ing, the income statement of ECMS until July 14, 2010 has been re-classified and shown as discontinued operations. The comparative income statement information for 2009 has also been reclassified to discontinued operations.

In consideration for the settlement of all disputes between the par-ties France Telecom paid a settlement fee of US$ 300 million on July 13, 2010. The change in control was effective from July 14, 2010, therefore, as of December 31, 2010 there is no balance sheet impact to assets or liabilities held for sale. The Company also en-tered into a put option whereby the Company has the option to put its 34.6% interest in ECMS to France Telecom (i) during the period from September 15 to November 15,2012 (ii) during the period from September 15 through November 15,2013 and anytime until No-vember 15, 2013 in a limited number of deadlock situations. The strike price of the put option increases over time from Euro 29.44 to Euro 33.0 as of December 31, 2013. The put option had zero value as the exercise is not considered probable as the asset is a strategic investment.

2009 Assets Held For SaleIn 2009 the assets and liabilities of LINKdotNET and Link Egypt were classified as held for sale in 2009. The income statement ef-fect of these operations were not shown as discontinued operations as they did not represent a separate major line of business. In July 2010, the Group concluded the sale of LINKdotNET and Link Egypt to ECMS for total cash consideration of US$ 130 million.

7. Revenues

Total revenues from services increased in 2010 compared to 2009 due to the increase in revenue from telephony services as a result of the increase in subscribers, mainly in Bangladesh, Pakistan and North Korea. Total revenues from sale of goods decreased in 2010 compared to 2009 due to a decrease in the revenue from the sale of hand-sets, starter kits and scratch cards, mainly in Ring Algeria and Ring Egypt.

8. Purchases and services

Purchases and services costs decreased during 2010 primarily due to a decrease in mobile finished goods purchases, relating to costs of handsets, scratch cards, sim cards and bundle costs primarily as a result of the decrease in sales of the Ring Group. As a percentage of revenues, purchase and service costs decreased from 48.7% in 2009 to 47.0% in 2010.

The decrease in mobile finish goods purchases was marginally offset by an increase in customer acquisition costs due to the in-crease in the subscriber base and an increase in telephony costs due to an increase in telephony service revenues.

*Refer to Note 9 “Other expenses”

9. Other expenses ($In millions of US) 2010 2009 Promotion and gifts 91 48Provisions for risks and charges 38 23 Annual contributions for licenses 29 30 Write down of current receivables and liquid assets 23 42

Other operating expenses 25 19Total 206 *162

The increase in other expenses was primarily attributable to the increase in accruals for provisions for risks and charges during 2010 and an increase in costs related to promotions and gifts. The accruals for provisions for risks and charges increased by US$15

($In millions of US) 2010 2009ECMS OTT Total ECMS OTT Total

Revenues 439 352 791 945 357 1,302Expenses (327) (220) (547) (709) (223) (932)

Profit before tax fromdiscontinued operations 112 132 244 236 134 370Income tax (25) (69) (94) (47) (49) (96) Profit from discontinuedoperations 87 63 150 189 85 274 Gain from ceasing jointcontrol 951 . 951 - - - Income Tax on gain fromdiscontinued operations (121) . (121) - - -

Profit from discontinuedoperations 917 63 980 189 85 274

)$In millions of US( 2010 2009Revenues from services

Telephony services 3,121 2,993Interconnection traffic 388 394International and national roaming 19 30Other services 135 117Total revenues from services 3,663 3,534

Total revenues from sale of goods 162 226

Total 3,825 3,760

($In millions of US) 2010 2009 Interconnection traffic 338 362 Telephony cost 274 207 Customer acquisition costs 203 181 Mobile finished goods purchases 202 311 Maintenance costs 181 184 Utilities 146 123 Other service expenses 108 127 Advertising and promotional services 95 96 Rental of civil and technical sites 78 75 Other leases and rentals 49 50 Consulting and professional services 42 30 Rental of local network 36 35Raw, ancillary and consumable materials and goods 33 40 National and international roaming 11 10Total 1,796 *1,831

Algeria Pakistan Egypt Tunisia Bangladesh Other GSM

Other Telecom

services (Non GSM)

Holdings & Others

Elimination of discontinued

operation effects

Consolidated

2010 2009 Total segment revenue - current year 1,747 1,107 439 352 457 168 482 - (791) 3,961 Total segment revenue - previous year 1,868 1,061 944 357 351 107 354 63 (1,301) 3,804 (Inter-segment revenue - current year) - - - - - - (136) - - (136)(Inter-segment revenue - previous year) - (2) - - - - (42) - - (44)Total revenue from external customers � current year 1,747 1,107 439 352 457 168 346 - (791) 3,825 Total revenue from external customers - previous year 1,868 1,059 944 357 351 107 312 63 (1,301) 3,760 EBITDA - current year 988 446 171 195 127 81 9 (68) (366) 1,583 EBITDA - previous year 1,014 385 459 195 103 17 (5) 4 (654) 1,518 Net unusual capital loss - current year - - - - - - - - - - Net unusual capital loss - previous year (15) - - - - - - - - (15) Depreciation, amortization & Impairment - current year (340) (282) (46) (63) (126) (129) (34) (5) 109 (916)Depreciation, amortization & Impairment - previous year (337) (264) (167) (56) (120) (36) (38) (4) 223 (799) Disposal of non current assets - current year - - - - (2) - 43 (13) 28 Disposal of non current assets - previous year 1 (1) (1) 62 (20) 1 42 Financial Income - current year - 11 3 2 1 - 4 40 (5) 56 Financial Income - previous year 3 34 5 2 1 3 1 45 (7) 87 Financial expense � current year (12) (101) (26) (3) (42) (8) (9) (295) 29 (467)Financial expense - previous year (10) (122) (63) (5) (28) (15) (9) (256) 68 (440)Share of (losses) of associates - current year - - - - - - - (119) - (119)Share of (losses) of associates - previous year - - - - - - - (47) - (47)Net foreign exchange gain (loss)� current year (2) (33) 7 (1) (5) - (1) (37) (6) (78)Net foreign exchange gain (loss)- previous year (3) (69) 3 (3) - 1 (2) 98 - 25 Impairment of financial assets � current year - - - - - - - (48) - (48)Impairment of financial assets - previous year - - - - - - - - - - Profit (loss) before income tax � current year 634 41 109 130 (47) (56) 12 (545) (239) 39 Profit (loss) before income tax - previous year 652 (35) 236 133 (45) (30) 9 (180) (369) 371 Total assets - current year 2,859 2,176 - 423 1,078 424 667 2,353 - 9,980 Total assets - previous year 2,474 2,381 1,477 485 967 471 568 1,276 - 10,099 Investment in associates-current year - - 1,029 - - - - - - 1,029 Investment in associates-previous year - - - - - - - - - - Total Borrowings - current year 46 817 - 39 400 61 20 3,488 (39) 4,832 Total Borrowings - previous year 86 1,021 453 84 341 57 27 3,803 - 5,872 Capital Expenditure � current year 90 143 71 55 235 72 113 3 - 782 Capital Expenditure - previous year 257 150 225 45 130 91 106 31 - 1,035

52

million, mainly relating to the accruals for the tax dispute in Algeria. The increase in costs for promotion and gifts was mainly related to an increase of costs in Bangladesh relating to promotional activi-ties in Bangladesh.*The 2009 information has been reclassified to present homog-enous information with that of the parent company. The reclas-sifications related to Purchases and services, Other expenses and Other income.

10. Personnel costs

Total personnel costs during 2010 remained substantially consist-ent compared to 2009 as the increase in wages and salaries costs was offset by a decrease in other personnel costs.

Wages and salaries costs increased due to an increase in the num-ber of employees in 2010 compared to 2009 and an increase in the seniority of staff.

Personnel costs include Board of Directors remuneration of US$ 3 million in 2010 and US$ 4 million in 2009 and share based com-pensation costs of US$ 3 million in 2010 and US$ 9 million in 2009.

The table below provides a breakdown of the number of employ-ees as of December 31:

(in number of employees) 2010 2009

Senior management 233 256Middle management 1,114 1,131Staff 13,492 11,176Total 14,839 12,563

The table below provides a breakdown of the average number of employees for the years ended December 31, 2010 and 2009:

Average for the year ended,December 31


Senior management 245 236Middle management 1,123 1,289Staff 12,334 13,018Total 13,702 14,543

11. Depreciation and amortization(In millions of US$) 2010 2009

Depreciation of property and equipment: -Plant and machinery 635 578 -Commercial and other tangible assets 37 42 -Buildings 16 21

Amortization of intangible assets -Licenses 101 111 -Other intangible assets 4 9Total 793 761

Depreciation and amortization increased due to the increase in cell sites depreciation primarily as a result of an increase in invest-ments in the network.

12. Impairment charges

Impairment charges amounting to US$123 million in 2010 mainly relate to the impairment of TelecelGlobe Namibia for an amount of US$ 93 million due to uncertainty regarding future operations and US$25 million for plant and equipment of Medcable.

Impairment charges amounting to US$ 38 million in 2009 main-ly relate to the impairment of US$17 million for plant and equip-ment in PMCL in Pakistan and LinkDotNet Telecom, a subsidiary of PMCL operating in Pakistan as well as impairment of goodwill amounting to US$6 million in LinkDotNet Telecom.

13. Unusual Items

During November 2009 Orascom Telecom Algeria S.p.A. and Ring Algeria LLC, subsidiaries of the Company, experienced damage to shops, warehouses and infrastructure, as well as break-ins to premises and theft of equipment, during football related distur-bances in Algeria.

The cost of damaged inventories, as a result of such disturbances, amounted to US$ 18 million, whilst the damage to property and equipment amounted to US$ 24 million.

Both entities have submitted formal claims to their insurance com-panies relating to this incident. Furthermore, a technical assess-ment performed by an independent insurance expert stated that the minimum expected recovery from the insurance company is 1 billion DZD (equivalent to US$ 14 million).

This incident is considered as an exceptional event which is out-side with the normal course of operations and has been recorded in the income statement as unusual items. After considering the expected minimum insurance proceeds, an amount of US$13 mil-lion has been recorded as an unusual inventory loss relating to the damaged inventories and an amount of US$15 million has been recorded as an unusual capital loss relating to the damaged prop-erty and equipment.

14. Disposal of non-current assets

The gain on the disposal of non-current assets amounting to US$28 million in 2010 relates to the gain on the disposal of LINK-dotNET and Link Egypt for total cash consideration of US$ 130 million in July 2010.

The gain on disposal of non-current assets amounting to US$ 42 million in 2009 mainly relates to the gain of US$ 35 million on dis-posal of M-Link which was sold to Wind Telecomunicazioni SpA for a cash consideration of US$ 77 million during January 2009. (See 35 “Related party transactions”) 15. Net financing costs(in millions of US$) 2010 2009

Interest income - Deposits 17 16Other interest income 39 71Financial income 56 87Interest on bonds (130) (123)Interest on bank borrowings (207) (265)Fair value gains and losses on deriva-tives (91) (1)Other financial expenses (39) (51)Financial expense (467) (440)Foreign exchange gain /(loss) (35) 31Fair value changes of FX derivative instruments (43) (6)Net foreign exchange gain /(loss) (78) 25Net financing cost (489) (328)

Financial income decreased in 2010 mainly as a result of the de-crease in other interest income. Other interest income in 2009 included an amount of US$ 23 million from the extinguishment of debt relating to a tender offer by PMCL, which was completed in May 2009 to repurchase a portion of its notes.

Interest expense on bank borrowings decreased mainly as a result of the repayment of liabilities with banks during 2010. In particular during 2010 the Company made two repayments to the term loan supplement for a total of US$ 150 million as well as a payment of US$ 38 million to settle loans with Audi bank and US$ 110 million to settle major overdraft balances.

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.

16. Share of profit and loss of associates Share of loss of associates in 2009 and 2010 includes the invest-ment in Globalive Canada Investment Holdings Corp. and Globalive Canada Holdings Corp. (collectively “Globalive”). The Group holds a 65.4% investment in Globalive which comprises a combination of voting and non-voting rights. Considering direct and indirect interests, the Group holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The Group has significant influence over this investment and does not have control over the financial and operating policies of Globalive. Therefore the invest-ment is equity accounted.

In 2010, share of loss of associates also includes the Group’s in-vestment in ECMS, as described in further details in Note 6 Assets and liabilities classified as held for sale and discontinued opera-tions, as a result of a new and comprehensive agreement entered into between France Telecom and the Company,the Company has ceased to have joint control over ECMS and it has become an as-sociate. Therefore, the Company consolidates its 34.66% interest in ECMS using the equity method. The following table provides selected financial information of the Group’s associates as of December 31, 2010 and 2009 and for each of the years then ended.(In millions of US$) 2010 2010 2009

ECMS Globalive GlobaliveCurrent assets 349 70 64Non-current assets 2,518 862 762Current liabilities 936 99 196Non-current liabilities 1,215 1,208 722Revenue 982 138 47Net profit / (loss) 110 (275) (92)% shareholding 34.66% 65.4% 65.4%proportional share of net profit /( loss) 38 (180) (60)

Elimination of intercompany transactions 3 71 16Equity accounting and other adjustments (17) (34) (3)Share of profit / (loss) in as-sociate 24 (143) (47)

17. Impairment of financial assets

Impairment of financial assets in 2010 include an amount of US$ 18 million relating to Globalive and US$ 30 million relating to North Korea.

During 2010 the credit agreements with Globalive were re-nego-tiated and the interest rate was reduced from Libor plus 18% to Libor plus 10.8%, to reflect market conditions. As a result of the renegotiation the outstanding receivable due from Globalive was re-measured at fair value. Following this re-measurement an im-pairment of US$ 53 million was recorded to reflect the fair value ad-justment. Impairment of financial assets also includes an amount of US$ 30 million which represent the impairment of a financial receivable relating to the Group investment in North Korea due to uncertainties regarding its recoverability.

18. Income tax expense(In millions of US$) 2010 2009

Current income tax expense 185 312Deferred taxes 53 (46)Income tax expense 238 266

Current income tax receivables and liabilities in the consolidated balance sheet are as follows:

(In millions of US$) 2010 2009

Current income tax receivable 83 100 Current and non current income taxliabilities (148) (187)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate ap-plicable to profits of the consolidated entities as follows:

(In millions of US$) 2010 2009Profit before income tax 39 371

Tax calculated at Company›s incometax rate 8 78Different income tax rates in subsid-iaries 73 77

Theoretical income tax for theyear 81 155

Permanent differences 25 22 Unrecognized deferred tax for taxlosses 70 50 Reversal of unused deferred taxassets 34 -

Minimum tax expense 11 -Adjustments in respect of prior years 16 48Other differences 1 (9)Income tax for the year 238 266

The Group’s income tax expense decreased from US$ 266 million in 2009 to US$ 238million in 2010 mainly relating to tax provisions recorded during 2009.

(In millions of US$) 2010 2009 Wages and salaries 194 178 Social security 11 11 Pension costs 6 7 Other personnel costs 61 75Total 272 271

53

(In millions of US$) Land and Buildings Plant andmachinery

Commercial andother tangible as-

sets

Assets Under Con-struction

Total

CostAs of January 1, 2009 180 5,936 336 955 7,407 Additions 44 267 52 626 989Change in the scope of consolidation 1 28 3 5 37Reclassification to assets held for sale - (56) (16) (3) (75)Disposals (26) (28) (16) (16) (86)Currency translation differences (3) (147) (5) (18) (173)Reclassifications - 717 2 (719) -As of December 31, 2009 196 6,717 356 830 8,099 Depreciation and impairment lossesAs of January 1, 2009 58 2,094 186 16 2,354Depreciation for the year 24 744 59 - 827Change in the scope of consolidation - 5 1 - 6Reclassification to assets held for sale - (22) (7) - (29)Disposals (12) (19) (13) - (44)Impairment losses - 5 2 17 24Currency translation differences (2) (59) (10) - (71)As of December 31, 2009 68 2,748 218 33 3,067 Net book value as of December 31, 2008 122 3,842 150 939 5,053Net book value as of December 31, 2009 128 3,969 138 797 5,032

(In millions of US$) Land and Buildings Plant and machinery Commercial and

other tangible as-sets

Assets Under Con-struction

Total

CostAs of January 1, 2010 196 6,717 356 830 8,099 Additions 18 189 45 496 748Change in the scope of consolidation (63) (1,326) (120) (61) (1,570)Reclassification to assets held for sale (10) (292) (19) (32) (353)Disposals (2) (35) (7) (5) (49)Currency translation differences (4) (148) (16) (16) (184)Reclassifications - 402 3 (405) -As of December 31, 2010 135 5,507 242 807 6,691 Depreciation and impairment lossesAs of January 1, 2010 68 2,748 218 33 3,067Depreciation for the year 18 712 43 - 773Change in the scope of consolidation (13) (604) (68) - (685)Reclassification to assets held for sale (4) (166) (13) - (183)Disposals (1) (30) (7) - (38)Impairment losses 1 56 1 6 64Currency translation differences - (53) (6) (11) (70)As of December 31, 2010 69 2,663 168 28 2,928 Net book value as of December 31, 2009 128 3,969 138 797 5,032Net book value as of December 31, 2010 66 2,844 74 779 3,763

19. Property and equipment

Additions to property and equipment in 2010 mainly relate to cell site investments and assets under construction relating to new base stations in Bangladesh (Orascom Telecom Bangladesh Lim-ited), Pakistan (Pakistan Mobile Communications Limited and Al-geria (Orascom Telecom Algeria). These investments are mainly driven by the expansion of the business, increased capacity and the change in GSM technology.

Property and equipment transferred to assets held for sale in 2010 relates to property and equipment of Orascom Telecom Tunisia. Assets held for sale in 2009 relates to Link-Egypt and Link dot Net. See Note 6 “Assets and liabilities classified as held for sale and discontinued operations” for further information. Change in the scope of consolidation in 2010 relates to the assets of ECMS. See Note 6 “Assets and liabilities classified as held for sale and discontinued operations” for further information.

Impairment losses in 2010 relate to the full impairment of property, plant and equipment of Powercom in Namibia due to uncertainties

regarding future operations.

Property and equipment pledged as security for bank borrowings amount to US$ 1.2 billion as of December 31, 2010 and primarily relate to securities for borrowings of PMCL, Trans World Associ-ated Private Limited (“TWA”) and Powercom in Namibia.

In the year ended December 31, 2010 and 2009 the Group capital-ized borrowing costs of US$ 28 million and US$ 36 million, respec-tively, relating to the acquisition of property and equipment.

The Group leases various assets under non-cancelable finance lease agreements. As of December 31, 2010 the Group had assets under finance lease with net book value of US$ 25 million mainly relating to a sale and lease back of the premises at Nile City Tow-ers (headquarter offices in Cairo), as well as minor finance leases for vehicles and equipment.

Additions to licenses in 2010 mainly relates to licenses in North Korea and AlgeriaImpairments in 2010 relate to the full impairment of the intangible assets of Powercom in Namibia (subsidiary of Telecel Globe) due to uncertainty regarding the future operations of such entity.

Intangible assets pledged as security for bank borrowings amount to US$ 1.2 billion and primarily relate to securities for borrowings of PMCL.

Impairment tests for goodwillGoodwill is allocated to the individual CGU which reflects the mini-mum level at which the units are monitored for management con-trol purposes.

The carrying amount as of December 31, 2010 was subject to an impairment test to compare the carrying amount with value in use and the recoverable amount. The goodwill of Algeria Win Call, allocated within the Algeria segment, was impaired during the year prior to performing this test. Additionally the goodwill of Powercom in Namibia (subsidiary of Telecel Globe), allocated within the Cen-tral and South Africa segment, was fully impaired due to uncertain-ties regarding the future operations of this entity. Value in use was determined by discounting the expected cash flows, resulting from business plans approved by the respective Board of Directors, us-ing the post-tax weighted average cost of capital (WACC) as the discount rate. The following table provides an analysis of goodwill by segment:

Licenses Goodwill Others TotalCost As of January 1, 2009 1,861 1,227 274 3,362 Additions - - 46 46Change in the scope of consolidation 8 48 10 66Reclassifications to assets held for sale - (9) (34) (43)Disposals - - (7) (7)Currency translation differences (23) 5 (3) (21)As of December 31, 2009 1,846 1,271 286 3,403

Amortization and impairment losses As of January 1, 2009 724 121 134 979Amortization for the year 114 - 43 157Change in the scope of consolidation 1 - 1 2Reclassification to assets held for sale - - (13) (13)Impairment losses - 13 2 15Currency translation differences (10) 1 11 2As of December 31, 2009 829 135 178 1,142

Net book value as of December 31, 2008 1,137 1,106 140 2,383Net book value as of December 31, 2009 1,017 1,136 108 2,261

(In millions of US$) Licenses Goodwill Others TotalCost As of January 1, 2010 1,846 1,271 286 3,403 Additions 28 - 7 35Change in the scope of consolidation (401) (175) - (576)Reclassification to assets held for sale (267) (34) (3) (304)Disposals (32) - - (32)Reclassifications 238 (2) (236) -Currency translation differences (54) (46) (3) (103)As of December 31, 2010 1,358 1,014 51 2,423Amortization and impairment lossesAs of January 1, 2010 829 135 178 1,142Amortization for the year 125 - 4 129Disposals (32) - - (32)Change in the scope of consolidation (151) (11) - (162)Reclassifications to assets held for sale (163) - - (163)Impairment losses 13 42 5 60Reclassifications 165 (2) (163) -Currency translation differences (26) (13) 1 (38)As of December 31, 2010 760 151 25 936

Net book value as of December 31, 2009 1,017 1,136 108 2,261Net book value as of December 31, 2010 598 863 26 1,487

20. Intangible assets

54

DepositsDeposits primarily relate to letters of guarantee and other restricted cash held as security for the performance of Group obligations. Deposits in 2010 also include an amount of US$ 28 million relating to cash held in North Korea which is subject to restrictions on use for certain operating and capital expenses in local currency only. The funds cannot be converted into Euro and cannot be repatri-ated overseas.Deposits with amounts of US$ 33 million are pledged or blocked as security against related bank borrowings or others commitments.The following table shows the ageing analysis of financial receiva-bles and long term deposits as of December 31, 2010 and 2009:

2010 2009

(In millions of US$)

Deposits Financial receivables

Deposits Financial receivables

Not past due 66 890 55 697Past due 0-30 days - - - -Past due 31-120 days - - - - Past due more than 150days - - - -

66 890 55 697

Financial assets available for sale

Company name owner- % ship

December 31, 2010

December 31, 2009

(Smart Village (ECDMIV 10% 8 8 My Screen Mobile Inc 9% - 2 Lingo Media Corporation 23% 2 3Other investments 9 11

19 24

My Screen Mobile Inc

In May 2008, the Company concluded a “Restricted Stock Pur-chase Agreement” with My Screen Mobile Inc, an entity special-izing 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 exer-cised 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 approxi-mately 20% of the existing and potential voting rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has sig-nificant influence over the company. As of December 31, 2010 the carrying value of the investment had been written down to zero.

Lingo Media Corporation

In August 2008, the Company entered into a subscription agree-ment to acquire 2,857,143 common shares of Lingo Media Cor-poration, a media entity focusing on online advertising. The in-vestment represents approximately 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 war-rants 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$8. The total purchase price of the shares and warrants was US$ 5 million. Based on an assessment of the 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 Decem-ber 31, 2010, the fair value of the investment amounted to US$ 2 million. The warrants expired, unexercised, during 2010.

Financial assets held for trading

Financial assets held for trading relate to government treasury bills and investment bonds purchased by PMCL.

22. Deferred taxes

Deferred 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.

(In millions of US$) 2010 2009Deferred tax liabilities, gross 431 430Deferred tax assets offset (189) (214)Deferred tax liabilities 242 216Deferred tax assets, gross 261 333Deferred tax liabilities offset (189) (214)Deferred tax assets 72 119of which recognized directly in equity - 5

The movement in the deferred income tax account is as follows:


As of January 1, 97 169Charged / (credited) to the income statement

144 (46)

Charged directly to equity - 5Change in scope (57) (19)Assets held for sale (13) -Exchange differences (1) (12)As of December 31, 170 97

The movement of deferred tax assets and liabilities during the year, without taking into consideration any offsetting is provided in the tables below:

Financial Receivables

As of December 31, 2009 and 2010 financial receivables mainly re-late to loans provided to Globalive Management Corp (“GWMC”), a subsidiary of Globalive (see Note 16 “Share of loss of associates and gain on disposal of associates”). During 2008 the Company entered into two loan agreements with Globalive Management Corp (“GWMC”, a subsidiary of Globalive) to borrow an amount of up to CAD 508 million. Both loans are non-revolving term loans bearing interest of Libor plus 18%. In 2009 the loan agreements were amended to increase the facility to CAD 608 million and were further amended during 2010 to increase the facility to CAD 970 million. Additionally, effective from January 1, 2011 the interest rate has been reduced to 10.8%. Globalive was awarded CAD 442 million of spectrum licenses in March 2009 and the loans are secured on a subordinated basis by an assignment of these licenses and are guaranteed on a non recourse basis. Globalive launched its wireless network to the Canadian market in December 2009 and is therefore in the start-up phase of opera-tions and has incurred losses to date. The Group’s share of these losses is in excess of the carrying value of the investment. The loans provided to Globalive are long term loans and have been considered to be a long-term interest forming part of the net in-vestment in Globalive. As of December 31, 2010 the amount out-standing under such loan agreements, including accrued interest, was CAD 1,092 million (equivalent to US$ 1,105 million) (CAD 723 million, equivalent to US$ 696 million as of December 31, 2009) , the Group’s share of the excess losses of Globalive compared to the carrying value of the investment have therefore been deducted from the long term receivable. After considering the share of such losses the amount recorded in financial receivables is US$ 870 million (US$ 643 million as of December 31, 2009).

Financial receivables as of December 31, 2009 also include an amount of US$ 15 million relating to the receivable from the sale of OrasInvest which was settled in 2010.

Derivative financial instruments

2010 2009(In millions of US$) Assets Liabilities Assets LiabilitiesInterest rate derivatives - 105 1 99Foreign exchange derivatives 80 - 134 -Other derivative instruments 3 - 16 -

Total 83 105 151 99Less non-current portionInterest rate derivatives - 36 - 35Foreign exchange derivatives 69 - 94 -Other derivative instruments 3 - 15 -Current portion 11 69 42 64

Interest rate derivatives

The 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 recognized in the cash flow hedge reserve in equity. As of December 31, 2010 the fair value of the derivative liability was US$ 83 million. The gain recognized in the cash flow hedge reserve, net of deferred tax dur-ing the year ended December 31, 2010, amounts to US$ 6 million.

During 2009 the Company entered into a switchable interest rate swap for a notional amount of US$ 500 million to cover a portion of the syndication loan. Under the derivative contract the Company received a 25 basis point reduction in the floating interest rate and at the end of the first year (September 23, 2010) the bank had the right to either switch to a fixed rate swap or switch to a floating rate with a cap. The Company therefore entered into a fixed interest rate swap covering the period from September 23, 2010 to March 23, 2013. Under the derivative contract the Company pays a fixed interest rate of 2.7625% per annum and received 3 month Libor.

As of December 31, 2010 the fair value of the derivative liability was US$ 21 million. The changes in the fair value of the deriva-tive are recognized in financial income and expense in the income statement.

Foreign exchange derivativesForeign exchange derivatives primarily relate to the economic hedge of PMCL. The cross currency swap relates to certain bor-rowings of PMCL, which 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. As of December 31, 2010 the fair value of this derivative asset was US$ 80 million

Other derivative instrumentsOther derivative instruments mainly relate to an embedded deriva-tive on the Company’s indexed notes. In February 2009 the Com-pany issued equity indexed notes with a nominal amount of US$ 230 million which mature in 2013. The notes have a redemption price on maturity which is indexed to the Company’s GDR price. This feature of the debt is considered as an embedded derivative which is valued at fair value through profit and loss. As of Decem-ber 31, 2010 the fair value of this embedded derivative asset was US$ 3 million.

2010(In millions of US$) Algeria Pakistan Egypt Tunisia Bangladesh Central and

South Africa Total GSM 503 276 - - 11 64 854 Telecom Services - 1 1 - - - 2 Internet & Fixed Line - - 6 - - - 6

503 277 7 - 11 64 8622009

(In millions of US$) Algeria Pakistan Egypt Tunisia Bangladesh Central andSouth Africa Total

GSM 529 277 168 36 11 104 1,125 Telecom Services - 1 2 - - - 3 Internet & Fixed Line - - 8 - - - 8

529 278 178 36 11 104 1,136

21. Other financial assets 2010 2009

(In millions of US$) Non-current Current Total Non-current Current Total

Financial receivables 887 3 890 676 21 697Derivative financial instruments 72 11 83 109 42 151Deposits 63 3 66 41 14 55Financial assets held for trading - 21 21 - 32 32Financial assets available for sale 11 8 19 19 5 24

1,033 46 1,079 845 114 959

Deferred tax liabilities Depreciation and amortization Unremitted earnings Fair value Other Total(In millions of US$) As of December 31, 2009 325 59 35 11 430Charged / (credited) to the income state-ment (10) 122 (14) (11) 87Change in scope (59) (1) - 2 (58)Assets held for sale - (19) - - (19)Currency translation differences (7) (2) - - (9)As of December 31, 2010 249 159 21 2 431Deferred tax assets Tax losses Accrued ex-

pense Depreciation

and amorti-zation

Impairment ofassets

Provisions Fair value Other Total

(In millions of US$) As of December 31, 2009 240 40 16 9 7 18 3 333Charged / (credited) to the income statement (50) 8 (3) (4) (6) (5) 3 (57)Change in scope - - (1) - - - - (1)Assets held for sale - - (4) - - - (2) (6)Currency translation differences (6) (2) (1) - (1) 2 - (8)As of December 31, 2010 184 46 7 5 - 15 4 261

55

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carry forwards of the Group’s subsidiaries in Paki-stan with no expiry date.

No deferred tax assets were recognized on income tax loss car-ryforwards for some foreign subsidiaries, mainly Orascom Telecom Bangladesh Limited (“OTB”) and CAT, as it is currently not prob-able 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 differ-ences 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 dif-ferences and it is probable that such differences will not reverse in the foreseeable future.

The following table provides a breakdown by estimated recover-ability of recognized deferred tax assets and liabilities:

Deferred tax liabilities Deferred tax assets(In millions of US$) 2010 2009 2010 2009within 1 year 50 14 9 6within 1 - 5 years 298 243 194 327after 5 years 83 173 58 -

431 430 261 333

23. Trade receivable

(In millions of US$) 2010 2009Receivables due from customers 171 256Receivables due from telephone op-erators 90

98

Receivables due from authorizeddealers 9

12

Other trade receivables 97 50Allowance for doubtful receivables (108) (84)Total 259 332

The following table shows the movement in the allowance for doubtful receivables

(In millions of US$) 2010 2009At January 1 84 67Exchange differences - (1) Additions (allowances recognized as(an expense 27 39Change in scope (8) (5)Assets held for sale (4) - Use (4) (11)Reversal (3) (5)Reclassifications 16 -,At December 31 108 84

The following table shows the ageing analysis of trade receivables as of December 31, 2010 and 2009, net of the relevant provision for doubtful receivables:


Not past due 102 123Past due 0-30 days 93 86Past due 31-120 days 30 81Past due 121 - 150 days 14 4Past due more than 150 days 20 38Trade receivables 259 332

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any col-lateral as security.

24. Other current assets

(In millions of US$) 2010 2009Prepaid expenses 81 82Advances to suppliers 20 12Receivables due from tax authority 748 185Other receivables 89 141Allowance for doubtful current assets (33) (49)Total 905 371

The increase in receivables due from tax authority is mainly related payments of US$ 514 million made by OTA during 2010 in relation to tax claims covering the years 2004-2007. See Note 35 “Contin-gent Assets and Liabilities” for further information. The following table shows the movement in the allowance for other current assets:(In millions of US$) 2010 2009At January 1 49 46Exchange differences (2) -Additions (allowances recognized as an expense) 2 5Reclassifications (16) (2)At December 31, 33 49

25. Cash and cash equivalents(In millions of US$) 2010 2009Bank accounts 502 413Deposits 319 344Cash on hand 3 3Total 824 760Cash and cash equivalents at December 31, 2010 includes an amount of US$ 327 million held in OTA, in which prior approval is required to transfer the funds abroad.

26. Share Capital

Authorized and issued share capital and legal reserves

As of December 31, 2009 the issued and fully paid share capital amounted to L.E. 889 million (equivalent to US$ 258 million) com-prising 889,100,105 shares of a nominal value of LE 1 per share. The Company is listed on the Egyptian Stock Exchange and also has GDRs (where one GDR is equivalent to 5 local shares) listed on the London Stock Exchange.

On December 27, 2009, the Extraordinary General Meeting, del-egated the Board of Directors to proceed with all necessary legal procedures to increase the authorized share capital from L.E 2.5 billion to L.E. 7.5 billion and authorized a rights issue. In con-nection with the rights issue, in March 2010, the Company issued 4,356,590,515 new shares with a nominal value of L.E. 1. The net proceeds from the rights issue were approximately US$ 800 million.

As a result of the above transactions, as of December 31, 2010, the issued and paid up share capital amounted to LE 5,245 mil-lion (equivalent to US$ 1,031 million), comprising 5,245,690,620 shares of a nominal value of L.E. 1 per share.

Dividends

No dividends were distributed during 2010.

The shareholder’s meeting of the Company held on June 7, 2009 approved a dividend distribution of LE 1 per share in the form of cash and/or shares. Based on the announced distribution ratio of 36:1; on August 27, 2009 the Company distributed 243,376 shares to local shareholders and 1,985,097 shares to the GDR holders (equivalent to 9,925,487 local shares).

Consequently, the Company distributed in cash an amount of LE 180 million for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of US$ 60 million for a total num-ber of 66,337,438 GDRs (equivalent to 331,687,192 local shares) (around US$ 0.9022/GDR).

Share based compensation plan

As of December 31, 2009 the Company had 3,947,300 shares which were held for the purposes of the share based compensa-tion plan. During the year ended December 31, 2010 the Group acquired 295,235 of its own shares for the purposes of the share based compensation. Share grants exercised during 2010 re-sulted in 2,186,135 shares and 14,469,650 shares were added as a result of the rights issue explained above. As a result of the above transactions, as of December 31, 2010 the Company had 16,526,050 shares held as treasury shares for the purposes of the share based compensation plan. The fair market value of such shares was US$ 12 million.

27. Borrowingswithin one year years 1-2 years 2-3 years 3-4 years 4-5 after 5 years Total

As of December 31, 2010As of December 31, 2009(In millions of US$) Liabilities to banks 833 880 1,569 77 11 7 3,377

838 830 972 1,655 160 20 4,475Bonds 60 31 1,108 121 - - 1,320

76 13 197 230 739 - 1,255Derivative instruments 69 32 4 - - - 105

64 32 4 (1) - - 99Finance lease liability 2 3 3 3 2 7 20

4 3 3 2 2 10 24Other borrowings 9 - 1 - - - 10

16 - 3 - - - 19Total as of December 31, 2010 973 946 2,685 201 13 14 4,832Total as of December 31, 2009 998 878 1,179 1,886 901 30 5,872

Liabilities to banks

Appendix A includes a detailed analysis of liabilities to banks as of December 31, 2010.

The decrease in borrowings is mainly attributable to the normal scheduled repayments of borrowing facilities, in accordance with the relevant agreements and due to the change in accounting for ECMS and reclassifying Orascom Telecom Tunisia as a liability held for sale, as the comparative figures as of December 31, 2009 include the Group’s proportional share of ECMS and Orascom Tel-ecom Tunisia borrowings.

Liabilities to Banks

Orascom Telecom HoldingDuring 2010 the Company paid two scheduled payments of the A1 and A2 term loan supplements for a total amount of US$ 150 mil-lion. Additionally, an amount of US$ 36 million was made to settle the borrowings with Audi Bank and US$ 108 million to settle major overdraft balances.

Telecel GlobeAs of December 31, 2010 borrowings of Power-Com Ltd (a sub-sidiary of Telecel Globe) amounting to US$ 40 million, which ma-ture in June 2016 have been entirely classified within current liabili-ties due to Power-Com Ltd inability to meet the imposed promises mentioned in the contract. As a result, Power-Com Ltd is in the process of rescheduling its contract with this bank.

Bonds

Appendix B includes a detailed analysis of Bonds as of December

31, 2010. Changes in bond liabilities during 2010 primarily relate to the issuance of a new bond by Orascom Telecom Bangladesh. In particular in March 2010 Orascom Telecom Bangladesh, issued a senior secured bond with a nominal value of BDT 7,070 million (approximately US$ 100 million) . The notes carry a fixed coupon of 13.5% and mature in June 2014.

Derivatives

Details of the derivative liabilities are provided in Note 21 “Other financial assets”.

Finance lease liabilities

(In millions of US$) 2010 2009Gross finance lease liabilities – minimum lease payments Within one year 4 5Between 1-5 years 13 15After 5 years 17 22

34 42Future finance charges on finance leases (14) (18)Present value of finance lease liabilities 20 24The present value of finance lease liabili-ties is as follows:Within one year 2 4Between 1-5 years 11 10After 5 years 7 10

20 24

Other Borrowings

Other borrowings mainly include promissory notes and loans from non-controlling shareholders in subsidiaries.

56

The purchase price for this acquisition was US$ 60 million of which US$ 30 million was paid during 2009 and the remaining portion was paid in 2010. The purchase price allocation was finalized on December 2009.

The following table provides details of this acquisition

(In millions of US$) Cell One Cash and cash equivalents -Property and equipment 31Intangible assets 15Deferred tax assets 17Inventories 1Trade receivables 3Other current assets 1Non-current borrowings (32)Other non-current liabilities (6)Trade payables (15) Net identifiable assets acquired 15Goodwill 45Purchase price 60Cash and cash equivalents in subsidiary acquired -Cash outflow on acquisition 60There were no acquisitions during 2010.

Interest in joint ventures

As of December 31, 2009 the Group had joint control in the follow-ing joint ventures.

Joint venture ShareholdingCountry of

domiciliationEgyptian Company for Mobile Services S.A.E. 34.67% EgyptOrascom Telecom Tunisia S.A. 50.00% TunisiaConsortium Algerian Telecommuni-cation S.P.A. 50.00% Algeria

Consortium Algerian Telecommunication S.P.A. “CAT(

CAT was formerly a landline operator in Algeria which ceased op-erations during the period. The current intention of the manage-ment of CAT is to liquidate this company. Therefore the Group has fully written down all assets relating to this business.

As described in Note 6 “Assets and liabilities classified as held for sale and discontinued operations”, during 2010 the shareholders

agreement with France Telecom in relation to ECMS was amended and as such ECMS is no longer a joint venture but is accounted for as an associate using the equity method.

In January 2011, the Company sold its shareholding in Orascom Telecom Tunisia S.A. to Quatar Telecom. As described in Note 5 , as of December 31, 2010 and for the year then ended the assets and liabilities of OTT have been classified as assets held for sale and the income statement effects have been classified as discon-tinued operations.

32. Commitments

The commitments as of December 31, 2010 and 2009 are pro-vided in the table below:

)In millions of US$(

As of De- cember 31,

2010

As of De- cember 31,

2009

Intangible assets 23 136Property and equipment 74 205Others - -Total 97 341

Commitments for purchase of property and equipment mainly re-late to commitments of Mena cable amounting to US$ 58 million relating to the purchase of marine cables and related equipment.

The following table provides the future aggregate minimum lease payments under non-cancellable operating leases:

($In millions of US) 2010 2008

Within one year 9 8Between 1-5 years 9 7After 5 years 8 8

26 23

33. Share based compensation

The following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of Decem-ber 31, 2010:

Currency Information of Borrowings

Financial liabilities include secured liabilities of US$ 3,697 million as of December 31, 2010 and US$ 4,091 million as of December 31, 2009. In general, the financial liabilities are secured on prop-

erty and equipment of the relevant subsidiary, pledged shares and receivables.

US$ Euro EgyptianPound

PakistanRupee

Bangla-deshi Taka

AlgerianDinar

TunisianDinar

Others Total

As of December 31, 2010Total borrowings by currency of issue 3,894 162 23 504 188 1 - 60 4,832Notional amount of currency derivatives (161) (159) - 320 - - - - -Borrowings after derivative effect 3,733 3 23 824 188 1 - 60 4,832of which (after derivative effect):floating rate borrowings 917 3 1 824 186 1 - - 1,932fixed rate borrowings 2,816 - 22 - 2 - - 60 2,900As of December 31, 2009Total borrowings by currency of issue 4,232 361 483 575 102 27 37 55 5,872Notional amount of currency derivatives (178) (276) - 454 - - - - -Borrowings after derivative effect 4,054 85 483 1,029 102 27 37 55 5,872of which (after derivative effect):floating rate borrowings 1,663 83 402 1,029 102 27 36 - 3,342fixed rate borrowings 2,391 2 81 - - - 1 55 2,530

2010 2009(In millions of US$) Current Non-current Total Current Non-current Total

Telecommunication license payable 14 74 88 283 80 363Prepaid Traffic and deferred income 189 - 189 237 - 237Due to local authorities 289 - 289 358 - 358Personnel payables 77 3 80 77 - 77

Other 184 35 219 136 41 177Total 753 112 865 1,091 121 1,212The decrease in telecommunication license payable is mainly re-lated to the change in accounting treatment of ECMS. In 2009, telecommunication license payable includes the Group’s propor-tional share.

29. Trade payables


Capex payables 380 470Trade payables due to suppliers 152 269Trade payables to telephone operators 97 97Other trade payables 182 207Total 811 1,043

Trade payables are all due within one year.

30. Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attrib-utable 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.

2010 2009(Loss) /profit attributable to equity hold-ers of the Company continuing opera-tions (in million of US$) (237) 44Profit from discontinued operations at-tributable to equity holders of the Com-pany (in million of US$) 980 274Weighted average number of shares (in millions of shares) 5,074 4,395

Earnings per share – basic (in US$) 0.15 0.07

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conver-sion of all dilutive potential ordinary shares. During 2008 and 2009 the dilutive potential ordinary shares relate to the share based compensation plan.

2010 2009(Loss) /Profit attributable to equity hold-ers of the Company (in million of US$) (237) 44Profit from discontinued operations at-tributable to equity holders of the Com-pany (in million of US$) 980 274

Weighted average number of shares in issue (in millions of shares) 5,074 4,395Adjustments for:- Shares granted (in millions of shares) 10 18Weighted average number of shares for diluted earnings per share (in Million of shares) 5,084 4,413Earnings per share – diluted (in US$) 0.15 0.07

In March 2010, the Company issued 4,356,590,515 new ordinary shares through a rights issue. The rights issue was offered at L.E. 1 per share and represented a fair value to the value of the existing shares. The number of shares used for prior year calculations of earnings per share shown above has been adjusted for the dis-counted rights issue in order to provide a comparable basis for the current year.

31. Business combinationsDuring 2009 the Group acquired 100% of share capital of Power-COM (Cell One) in Namibia, a GSM telecommunications operator in Namibia through its subsidiary Telecel Globe, for a cash con-sideration of US$ 60 million. The acquired business contributed revenues of US$ 14 million and net loss of US$ 19 million to the Group in the period since acquisition.

28. Other liabilities

Grant date Tranche

GDRs granted (thousands)

Vesting period (months)

Contractual term (months)

GDR price at grant date in US$

GDR market price at grant date in US $

Fair value of GDRs at grant

date in US$ January 1, 2009 1 1,377 12 36 - 27.29 26.39January 1, 2009 2 153 24 48 - 27.29 25.44January 1, 2009 3 153 36 60 - 27.29 24.53January 1, 2010 1 1,831 12 36 - 4.58 4.58

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 appointed a Com-mittee 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 denomi-nated 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 re-ports. 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 29.0% and 72.6%, a dividend yield of zero and an annual risk free rate between 1.7% and 6.4%.

The following table provides a breakdown of the movements of outstanding GDR options and GDRs granted and their weighted average exercise price:

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 appointed a Com-mittee 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 denomi-nated 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 re-ports. 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 29.0% and 72.6%, a dividend yield of zero and an annual risk free rate between 1.7% and 6.4%.

The following table provides a breakdown of the movements of outstanding GDR options and GDRs granted and their weighted average exercise price:

57

Transactions with WIND TELECOM Group

The Group is directly controlled by WIND TELECOM SpA. Trans-actions with WIND TELECOM SpA and its subsidiaries mainly re-late to management fees charged by the Company and intercon-nection traffic between the Group and the subsidiaries of WIND TELECOM SpA, and particularly Wind Telecomunicazioni SpA.

In addition to the information presented above, in January 2009 the Company sold its investment in M-Link to TLC SERVIZI S.p.A now (Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A for a cash consideration of US$ 78 million. Following the acquisition the name was changed to WIS sarl. Transactions with M-Link since the sale are disclosed in the line “WIS Sarl”. Finally, in 2010 the Group sold its investment in Orascom Telecom Services Europe to WIND TELECOM SpA for a cash consideration of Euro 1.5 million.

Transactions with Joint Ventures of the Group

Transactions with joint ventures of the Group mainly refer to trans-actions with OTT relating to interconnection traffic and the sale of handsets.

Transactions with Associates of the Group

OTH provided financing to GWMC, an associate of the Group, in connection with the funding of the acquisition of the spectrum li-censes. For further details see Note 21 “Other financial assets”.

During 2009 and until July 14, 2010 ECMS was a joint venture and subsequently became an associate. For comparability purposes all transactions have been shown in the same line. Transactions with ECMS mainly relate to interconnection traffic and the sale of handsets.

Transactions with other related parties

The Group is indirectly controlled by the Sawiris family. Transac-tions with entities under the control of the Sawiris family mainly re-fer to transactions with Orascom Construction Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology.

Transactions with Orascom Technology Solutions mainly refer to maintenance activities of electronic hardware and software carried out for the Group. Orascom Construction Industries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technology mainly include management train-ing programs.

A balance of US$ 6 million is outstanding from one member of the board of directors and this amount will be settled against his ESOP plan entitlements on exercise and vested.

Key management compensation

Key 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 person-nel and the chief executive officers of significant subsidiaries and joint ventures.

The compensation paid or payable to key management for em-ployee services is shown below:

(In millions of US$) 2010 2009Salaries and other short-term employee benefits 11 11Equity settled share based payments 3 9

35. Contingent liabilities

The 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, 2010 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 law-suits, individually or in aggregate, would not be material to the Group’s results.

PMCL tax claims

Income tax proceedingsPMCL is involved in proceedings regarding tax claims up to the tax year 2007, whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. PMCL has tax claims up to year 2007 which the tax authorities either framed or assessed. PMCL has filed appeals to the appellate authorities against the re-assessment orders.The disputed demand against the above assessments framed/amended aggregates to Rs. 1,920.51 million equivalent to US$ 22.4 million. The company has made a provision for such assess-ments for an amount of RS 191 million equivalent to US$ 2.2 mil-lion.

Sales tax proceedingsThe tax authorities levied sales tax/federal excise duty aggregating Rs. 3,254 M equivalent to US$ 38 million for the year 2008. The parent company has filed appeal against the order before CIR(A). A writ petition has been filed with the High Court.The tax authorities issued orders for the years 2007 to 2009 for an aggregate amount of Rs 838 M equivalent to US$ 9.8 million on account of FED by contending that the parent company was Fran-chisee of IWCPL. The parent company has filed appeal against these orders before the CIR(A). A writ petition has also been filed before the High Court and stay against recovery of tax demand has been granted in this respect.

Telecom Egypt Interconnection Prices

Telecom Egypt filed a complaint with the National Telecommunica-tion Regulatory Authority (NTRA), with the purpose of changing it’s interconnect prices with the mobile operators, with which it has existing contracts. ECMS responded to the complaint before the NTRA Dispute Resolution Committee asking to honor the existing effective contract between ECMS and Telecom Egypt. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnect prices between the fixed and mobile networks to be effective from that date.

ECMS informed the NTRA of its objection and rejection of the deci-sion as it has no legal or contractual basis and that we intend to bring the matter to the courts in order to protect our interest. On November 01, 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.

On September 3, 2009 and based on the interconnect agree-ment (article (25) first paragraph) the Company filed an arbitration against TE according to the rules of The Cairo Regional Center for International Commercial Arbitration in order to settle the existing dispute between the two parties. On October 9, 2009 TE sent an initial response and a counter claim in the arbitration filed against it.

2010 2009 Average exer-

cise price in US$ per GDR option

granted

GDR options (thousands)

GDRs granted for free

(thousands)

Average exer-cise price in US$ per GDR option

granted

GDR options (thou-sands)

GDRs granted for free

(thousands)

At January 1 9.20 4 723 9.20 4 504Granted - - 1,831 - - 467Forfeited - - (190) - - (90)Exercised 9.20 (4) (203) 9.20 - (158)Expired - - - Rights Issue - - 1,353At December 31 - - 3,514 - 4 723thereof exercisable 1,377 4 198

December 31, 2010 December 31, 2009Range of exercise

price in US$ Weighted average

exercise price in US$

Number of GDRs (thousands)

Weighted average remaining life in

months

Weighted average exercise price in

US$

Number of GDRs (thousands)

Weighted average remaining life in

months9.20 9.20 - - 9.20 4 -Nil Nil 3,514 26 Nil 723 29

The table below sets forth the awards outstanding as of December 31, 2010 and their expiry dates:

Expiry date � December 31Exercise price in US$ per GDR GDRs (thousands)

2010 20092010 0 - 9.20 - 242011 - - 182012 - 1,377 4532013 - 1,984 1302014 - 153 792015 - - 23Total 3,514 72734. Related party transactions Transactions with subsidiaries, associates, with the Parent Com-pany and its subsidiaries and other related parties are not con-sidered 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.The main related party transactions are summarized as follows:

The weighted average GDR price during 2010 amounted to US$ 4.8(2009; US$ 25.14). The following table details the range of exercise prices and the

weighted average remaining contractual life of outstanding awards as of December 31, 2010 and 2009:

Sale of services and goods Purchase of services and goods Interest income (In millions of US$) 2010 2009 2010 2009 2010 2009WIND TELECOM Group Wind Telecom SpA 9 12 - - - -Wind Telecomunicazioni SpA 1 3 1 1 -WIS sarl 88 78 64 65 - -OTSE - - 10 - - -Joint venturesOTT 3 4 - - - -AssociatesGWMC - - - - 36 32ECMS 11 8 - - - -Other related partiesOrascom Construction Industries - - - 2 - -Summit Technology (Orascom Technology Solution) - - 3 7 - -Orascom Trading - - - 12 - -Contract facilities management - - - 1 - -Total 112 105 78 88 36 32

Receivables Payables (In millions of US$) 2010 2009 2010 2009WIND TELECOM Group Wind Telecom SpA 6 5 - -Wind Telecomunicazioni SpA 1 1 2 4WIS sarl 15 26 8 16Rain Srl - 1 - 2Joint venturesOTT - - - -AssociatesGWMC 802 643 - -ECMS 2 1 - -Other related partiesSummit Technology (Orascom Technology Solution) - 1 - 1Orascom Trading - - - 1Total 826 678 10 24

58

On December 31, 2009 the NTRA issued a decree (which was amended by another decree on January 14, 2010) making new changes to the interconnect prices between the different operators to be applied retroactively from September 1, 2009. The decrees were based on the September 03, 2008 decision. ECMS filed an administrative claim to stay and nullify the 2 decrees. On June 5, 2010 the administrative court accepted the summary request in the lawsuits filed by the Company and therefore ruled:

First:Staying the implementation of the first appealed decision dated 3/9/2008 related to items 2, 8, 9 -and all effects related to its con-sequences- that sets the interconnection tariffs for outgoing calls initiated from Telecom Egypt terminated on Mobinil network at 11.3 P.T. per minute and setting interconnect tariffs for outgoing calls initiated from Mobinil terminated on Telecom Egypt at 6.5 P.T. per minute, and obliged the defendant to pay all the expenses related to this lawsuit.

Second:Staying the implementation of the second appealed decision dated 31/12/2009 -and all effects related to its consequences - that was amended by the decision dated 14/01/2010, which sets intercon-nect tariffs for outgoing calls initiated from mobile operators net-works (Vodafone Egypt & Etisalat Egypt) and also Telecom Egypt network terminated on Mobinil network at 8.5 P.T per minute cal-culated on seconds basis, and setting interconnection tariffs for outgoing calls initiated from Mobinil terminated on Vodafone Egypt network at 10 P.T per minute calculated on the basis of the sec-ond and the terminated on Etisalat Egypt network at 11 P.T per minute calculated on the basis of the second and the terminated on Telecom Egypt network at 6.5 P.T per minute calculated on the basis of the second, and what was included in this decision from setting tariffs by the NTRA on a regular basis and when needed, and obliged the defendant to pay all the expenses related to this lawsuit. The administrative court has referred the lawsuit to the state commissioners’ authority to prepare a legal opinion concern-ing the request to nullify the said decisions.

The NTRA appealed the staying decision before the High Admin-istrative Court. The State Commissioner issued its advisory report on December 6, 2010 in the summary appeal, recommending the reversing of the summary decision rendered on June 05, 2010 in favor of ECMS. The High Administrative Court shall decide on the appeal after hearing the parties reply to the State Commissioner report.

ECMS and its external legal counsel believe that it has a strong le-gal position as the NTRA’s decisions do not have legal or contrac-tual ground, hence interconnect revenue and costs continued to be recorded based on the existing agreement with Telecom Egypt and other mobile operators.

If ECMS had applied these decisions, the Group’s profit before any income tax effects would have decreased by US$ 30 million for the year ended December 31, 2009 and US$ 43 million for the year ended December 31, 2010.

OTA tax claims

OTA has been inspected by the tax authorities up to the end offis-cal year 2009 which has resulted in three tax claims.

Year 2004

On April 27, 2009 OTA has received a final tax assessment relating to 2004 tax year amounted to DZD 3,948 million equivalent to US$ 53.2 million .The Company filed a claim against the tax authority after the payment of 20% of final tax assessment .In January 2010 the company received a refusal on the objection

dated June 2009. OTA subsequently filed an appeal before the Central Committee which was subsequently rejected. On April 4, 2010 an appeal was filed before the Administrative Algerian Court “Tribunal Administrative Algérienne”.

An amount of DZD 4,532 million equivalent to US$ 61 million, in-cluding penalties of DZD 584 million equivalent to US$ 7.9 million has been paid in relation to this tax assessment in order to proceed with the various appeals.

Years 2005-2007

In November, 2009, OTA received a final tax assessment of the years 2005 until 2007, amounting to DZD 43,910 million DZD, equivalent to US$ 591.4 million. Approximately 85% of the as-sessed amount is due to a rejection of OTA’a accounts by the DGE (Tax Department for Large Scale Companies) .OTA has appealed the assessments after the payment of 20% of final tax assessment.

On March 4, 2010 OTA received a rejection on its administrative appeal filed in December 2009. In order to file its second appeal, OTA paid a further 20% of the remaining outstanding balance of the taxes and penalties assessed by DGE, amounting to approxi-mately US$ 110 million. On March 30, 2010 the subsequent ap-peal was declined. On April 4, 2010 OTA filed before the Adminis-trative Algerian Court “Tribunal Administrative Algérienne”.

An amount of DZD 47,548 million equivalent to US$ 640.4 million, including penalties of DZD 3,639 million equivalent to US$ 49.18 million has been paid in relation to this tax assessment in order to proceed with the various appeals.

Payment of the remaining penalties amounting to DZD 1,767 mil-lion equivalents to US$ 23.8 million has been suspended until final ruling of the Administrative Court.

Years 2008-2009

In November 2009, OTA received a final tax assessment relating to the tax years 2008 and 2009 amounting to DZD 17,064 million equivalents to US$ 229.8 million. On February 6, 2011, OTA paid the full amount of the tax claim to avoid penalties. During February 2011 OTA filed an appeal before the Administrative Algerian Court “Tribunal Administrative Algérienne”.

In relation to the above disputes, based on a technical report pre-pared by an external expert, OTA has accrued a provision of DZD 6,802 million as follows:

· DZD 908 million (equivalent to US$ 12.2 million) for 2004 tax claim

· DZD 2,957 million (equivalent to US$ 39.8 million) for 2005/2007 tax claim

· DZD 2,937 million (equivalent to US$ 39.5 million) for 2008/2009 tax claim

The experts report assumes that the reject of accounting is arbi-trary and the related tax assessments have been disregarded by the experts estimate. All amounts will be recoverable if OTA’s case against the tax authority is successful.

Pioneer Investment Ltd

The Jordanian Tax Authority claims for JD 49.2 million, equivalent to USD 69.4 million income tax against Pioneer Investment Ltd. in connection with the sale of Fastlink (Jordan Mobile Telecom-munication Services) in 2002 to MTC by Pioneer Investment Ltd a wholly owned subsidiary of OTH.

Orascom Telecom Iraq Disposal Warranties

Orascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile Services-subsidiary) the company provided war-ranty to the purchaser of the investment. This warranty, which in respect of tax covenant claims, of which no more than US$ 60 mil-lion shall be payable in relation to tax covenant claim.

Ring Group

During 2009 Ring Group received tax claims amounting to US$ 46 million relating to the tax period 2005/2008. A provision for the assessment amounting to US$ 9 million has been accrued. No further appeals were made by Ring Group and as such the amount became payable. No further payments have been made and man-agement have not made any provision as liquidation of this com-pany is in process.

Intouch Group

Intouch group received a tax claim amounting to DZD 205 million in addition to DZD 51 million equivalents to USD 3.4 million. On Janu-ary, 2009 the company paid 20% from total tax claim in order to be able to appeal against that claim. The subsidiary was granted a tax exemption amounting DZD 205 million and the remaining amount of DZD 51 million was recorded as provision.

Wind Canada

In January 2010, Globalive Wireless Management Corp. was named as a respondent in an application by Public Mobile Inc. to the Federal Court of Canada for an order overturning the De-cember 2009 Cabinet order which permitted GWMC to launch its wireless operations. In that December 2009 order, the Cabinet had determined that the Company met the requirements of Can-ada’s ownership and control rules and was, therefore, eligible to commence operations. On February 4, 2011, the Federal Court ruled that the Cabinet order contained two errors and should be quashed. WIND Mobile and the Canadian Government have ap-pealed the decision and the decision has been stayed pending the resolution of the appeal.

Telecel Globe GroupTelecel CAR

On, August 2009, Telecel CAR received from the Post and Tel-ecommunication Ministry a license revaluations document, stip-ulated that TCAR should pay a complement amount of 1B XAF equivalent to US$ 2 million for the licensee. Telecel did not pay this amount and no provision has been booked.

Telecel has sent a request to the government in which it propos-es the payment of the revaluation of the licence. This payment is conditioned by the recovery of receivables due to Telecel CAR by Socatel (public operator) and Government 712 million XAF equiva-lent to US$ 1.4 million . The amount that has been paid on Q4 2010 by Telecel is 400 million XAF equivalent to US$ 812,994 instead of 288 million XAF equivalent to US$ 585,356. Also, Telecel has paid an amount of 663 million XAF equivalent to US$ 1.3 million , as agreement fees, these amounts have been booked on costs, but they have not received any bill or agreement relating to this fees.

U-Com

On January 2010 UCOM a subsidiary of Telecel Globe received from the tax administration preliminary assessment amounting to US$ 11 million .The company has booked a total provision with an amount US$ 7 million.

On August 2010, A compromise has been signed between U-COM and local tax authority, U –Com agreed to pay US$ 3.1 million as advance before the end of year 2010, the company already paid US$ 1.9 as at 30 September 2010 in order to resolve all pending issues relating to the tax due relating to financial years 2008 and 2009.

Letters of credit and guarantee

The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following:

-Letters of guarantee provided by Ring Egypt to suppliers’ .The Company’s share in letters of guarantee is equivalent to US$ 8.9 million.-Letter of Guarantee amounting to US$ 1 million in favor of NTRA to guarantee MENA Cable execution of its entire obligation related to constructing, operating and renting sea cables networks and its infrastructure for international communications.-Letter of guarantee in a favor of Lebanon Ministry of Telecommu-nication (ROL) to guarantee OTH in the payment of any amount due by the selected Participant to ROL amount with US$ 30 million.-Guarantee provided by Orascom Telecom Bangladesh in favor of Ministry of Post & Telecommunication, the Chief Controller of Ex-ports and Imports and Power development board existed of BDT 99 million equivalents to US$ 1.40 million.-Guarantee provided by MENA Cable in favour of Gulf Ridge Inter-national amounting to US$ 29.1 million.

36. Subsequent events

VimpelCom Transaction

VimpelCom Ltd. (“VimpelCom”) and WIND TELECOM S.p.A. (“WIND TELECOM” formerly, Weather Investments S.p.A.) an-nounced in October 2010 that they had signed an agreement to combine the two groups (the “Transaction”). At the closing of the Transaction, VimpelCom Ltd will own, through WIND TELECOM, 51.7% of Orascom Telecom Holding S.A.E. (“Orascom Telecom”) and 100% of Wind Telecomunicazioni S.p.A. (“Wind Italy”). Under the terms of the Transaction, WIND TELECOM’S shareholders will contribute to VimpelCom their shares in WIND TELECOM in exchange for a consideration consisting of 325,639,827 newly is-sued VimpelCom common shares, US$1.8 billion in cash and cer-tain assets that will be demerged from orascom Telecom and from Wind Italy. The WIND TELECOM interests in these assets, which principally comprise Orascom Telecom’s investments in Egypt and North Korea, will be transferred to the current WIND TELECOM shareholders. Wind Hellas Telecommunications S.A. in Greece is entirely excluded from the Transaction.

On March 17, 2011 it was announced that the majority of Vimpel-Com shareholders had voted in favour of the issuance of Vimpel-Com common shares and convertible preferred shares and the increase of VimpelCom’s authorized share capital needed to complete the combination. Following this favourable outcome, the management teams of VimpelCom and WIND TELECOM will proceed in satisfying the conditions precedent for the completion of the Transaction, which is expected to take place in the first half of 2011.

On March 29, 2011 the Company announced that it has obtained the consent of the Egyptian Financial Supervisory Authority’s to convene its Ordinary General Meeting and Extraordinary General Meeting on April 14, 2011 to vote on certain resolutions related to the previously announced expected combination of WIND TEL-ECOM S.p.A. with VimpelCom Ltd. The resolutions to be voted on include:

59

Refinancing Plan: the approval of a refinancing plan to repay the Company’s outstanding secured and high yield debt together with certain derivative transactions for an amount of approximately US$ 2.7 billion.

The refinancing plan will be entered into as a related party transac-tion with VimpelCom (or one of its affiliates) following the closing of VimpelCom’s combination with WIND TELECOM, and under which VimpelCom would provide the funding to refinance the Company’s secured and high-yield debt, together with certain derivative trans-actions. The combination of WIND TELECOM and VimpelCom triggers the refinancing of the senior secured credit facility and eq-uity linked notes. In addition, the refinancing of the high yield notes will facilitate the execution of the demerger.

Increase in Authorized Share Capital: an increase in the Com-pany’s authorized share capital to EGP 14 billion.Pursuant to the proposal to increase the authorized share capi-tal from EGP 7.5 billion to EGP 14 billion, the current issued and paid-in capital will remain the same. Any future issuances will be undertaken in order to repay debt, will offer customary preemptive rights to all shareholders, and will be issued at fair market value rather than par value.

Demerger Plan: the approval of the planned demerger from OTH of Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”) a company to be formed at the time of the demerger. OTMT will hold certain assets of OTH that are not intended to form part of the VimpelCom –WIND TELECOM group going forward, in-cluding OTH’s interests in Egyptian Company for Mobile Services, CHEO Technology Joint Venture in North Korea, Orascom Tele-com Ventures S.A.E. (formerly Intouch Communications Services S.A.E.) as well as other investments in the media and technology sectors, including undersea cable assets.

The split of OTH into two separate companies will be conducted by the way of a demerger of OTMT and will result in existing share-holders of OTH holding the same percentage interest in OTMT as they hold in OTH as of the record date of the demerger. Follow-ing the effectiveness of the demerger and consummation of the VimpelCom-WIND TELECOM transaction, WIND TELECOM’s then owned 51.7% indirect stake in OTMT will be transferred to Weather Investments II S.à r.l. (“Weather II”), the current main shareholder of WIND TELECOM, as part of the consideration for the VimpelCom-WIND TELECOM transaction. Weather II has noti-fied OTH that it intends to cause OTMT, following the completion of the demerger and the listing of OTMT shares on the Egyptian Stock Exchange, to launch a voluntary tender offer to buy back all of OTMT’s issued shares at fair market value (the “Buyback Tender Offer”). An independent financial advisor registered with EFSA will be appointed to give a view on the fairness of the valuation of the cash or other consideration offered to OTMT shareholders. Any Buyback Tender Offer will comply with all applicable legal require-

ments.

On April 14, 2011 Orascom Telecom Holding S.A.E announced that the Company’s shareholders approved all of the items on the Or-dinary and Extraordinary General Assembly Meetings , Sharehold-ers approved the following significant resolutions, among others:

1. The approval of a refinancing plan to refinance the Compa-ny’s outstanding secured and high yield debt together with certain derivative transactions in an amount of approximately US$2.7 billion.

2. An increase in OTH’s authorized share capital to EGP 14 bil-lion to US$ 2.4 billion (with the issued and paid-in capital re-maining unchanged).

3. The approval of the planned demerger from OTH of Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”), a company to be formed at the time of the demerger. OTMT will hold certain assets of OTH that are not intended to form part of the VimpelCom-WIND TELECOM group going forward, including OTH’s interests in Egyptian Company for Mobile Services (“ECMS”), CHEO Technology Joint Venture compa-ny (“koryolink”) in North Korea, Orascom Telecom Ventures S.A.E. (formerly Intouch Communication Services S.A.E.), as well as other investments in the media and technology sec-tors, including undersea cable assets.

Other events

As described in Note 6, Assets and Liabilities Classified As Held For Sales and Discontinued Operations, on January 5, 2011 the Company announced that it had completed the sale of its entire shareholding in Orascom Tunisia Holding Ltd and Carthage Con-sortium Ltd. for a total cash consideration of US$ 1.2 billion.

On January 17 2011,Orascom Telecom Holding announced ob-tained the support of its Senior Secured Lenders for relief from representations, warranties, and covenants in the credit agree-ments as they relate to Orascom Telecom Algeria (“OTA”), in order to provide the Group with greater flexibility while it assesses its alternative options relating to OTA.

On March 1, 2011, Orascom Telecom Holding (OTH) announced that it has been awarded an extension to the management contract of Alfa with the Republic of Lebanon, for a further year commenc-ing on February 1, 2011. The terms of this new contract remain the same whereby, OTH receives a monthly sum of US$ 2.5 million in addition to 8.5% of total revenues. Out of these amounts, OTH is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The Republic of Lebanon is fully responsible for the CAPEX during the contract period.

Liabilities to banks Current Non-current Total Currency Nominal Line of

credit Maturity Securities

Millions of USD Millions of contract currency

Orascom Telecom Holding S.A.E.A1 Term Loan Supplemnt 253 621 874 USD 888 987 17/04/2013 SecuredA2 Term Loan Supplemnt 132 323 455 USD 462 513 17/04/2013 SecuredRevolving Credit Supplemnt 2 1,002 1,004 USD 1,000 1,000 17/04/2013 SecuredNSGB - 1 1 EGP 4 6 03/08/2014 unsecuredNSGB-1 - 1 1 EGP 9 15 28/02/2013 unsecuredNSGB-4 - 1 1 EGP 8 9 31/07/2015 unsecured

387 1,949 2,336

Pakistan Mobile Communications LimitedCitibank N.A - Islamabad - Pakistan 2 - 2 PKR 158 1,740 7/02/2011 SecuredRoyal Bank of Scotland (Formerly ABN AMRO Bank)- Islamabad- Pakistan 21 21 42 PKR 3,548 3,548 18/12/2012 SecuredHabib Bank Limited - Islamabad - Pakistan (2007) 12 23 35 PKR 3,000 3,000 18/12/2013 SecuredRoyal Bank of Scotland, London - Citibank London - ECGD - ECA 7 3 10 USD 10 48 28/02/2012 SecuredRoyal Bank of Scotland, London - Citibank London - COFACE Loan - ECA 25 - 25 EUR 19 125 30/12/2011 SecuredRoyal Bank of Scotland, London -AB Svensk ExportKredit - Sweeden - Hermes - ECA 5 - 5 EUR 4 46 29/03/2011 SecuredRoyal Bank of Scotland, London -The OPEC Fund for internationalDevelopment - ECA

3 - 3 EUR 3 10 15/12/2011 Secured

Royal Bank of Scotland, London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - ECGD - ECA Round II

12 27 39 USD 40 70 28/02/2014 Secured

Royal Bank of Scotland London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Coface - ECA Round II

20 26 46 EUR 36 85 31/12/2013 Secured

Royal Bank of Scotland, London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Hermes - ECA Round II

27 13 40 EUR 30 110 16/03/2012 Secured

DEG - Germany 7 13 20 EUR 15 20 15/08/2013 SecuredFMO - Netherlands 7 13 20 EUR 15 20 15/08/2013 SecuredMCB Bank Limited (PKR 22.060 Billion) -Islamabad - Pakistan 60 214 274 PKR 22,060 22,060 1/04/2014 SecuredSCB Bank Limited STFA (PKR 5.1 Billion) - Islamabad Pakistan 21 29 50 PKR 4,250 5,100 5/09/2013 SecuredDubai Islamic Bank (Pakistan) Ltd Ijara Facility PKR 700 Million - 8 8 PKR 700 700 5/09/2012 Secured

Silkbank Limited PKR 400 Million - 5 5 PKR 400 400 30/07/2015 Secured 229 395 624

60

Current Non-current Total Currency Nominal Line of credit Maturity Securities Millions of USD Millions of contract

currency

Orascom Telecom Bangladesh LimitedHermes Facility 16 44 60 USD 62 120 7/1/2014 SecuredUSD Commercial Faciilty 32 56 88 USD 89 130 8/1/2013 SecuredDFI Facility 7 18 25 USD 26 30 15/06/2014 SecuredBDT A Facility 9 4 13 BDT 945 2,520 30/06/2012 SecuredBDT B Facility 3 7 10 BDT 714 1,020 30/06/2014 SecuredStandard Chartered Bank, London 6 33 39 USD 43 50 30/09/2016 SecuredCommercial Bank of Ceylon 1 - 1 BDT 100 100 28/02/2011 UnSecuredCitibank, N.A. 9 - 9 BDT 650 650 Renewal in

process UnSecured

Standard Chartered Bank 14 - 14 BDT 1,000 1,100 16/03/2011 UnSecuredBRAC Bank Ltd. 6 - 6 BDT 400 400 Renewal in

process UnSecured

Eastern Bank Ltd. 1 - 1 BDT 100 950 31/05/2011 UnSecuredThe City Bank 3 - 3 BDT 200 200 Renewal in

process UnSecured

Short Term WCS - SCB - 650mln 9 - 9 BDT 650 650 30/07/2011 UnSecuredShort Term WCS - SCB - 1.21bln 17 - 17 BDT 1,210 1,210 26/08/2011 UnSecuredMutual Trust Bank Limited 6 - 6 BDT 360 360 Renewal in

process UnSecured

Dutch Bangla Bank Limited 1 - 1 BDT 100 100 Renewal inprocess

UnSecured

140 162 302

Orascom Telecom Algeria S.P.A. Hermes loan 20 25 45 USD 47 86 15/11/12 Secured

20 25 45 Med Cable LimitedExport Credit Loan Calyon 3 - 3 EUR 2 12 13/09/2011 Guaranteed

by OTH 3 - 3 Current Non-current Total Currency Nominal Line of credit Maturity Securities

Millions of USD Millions of contract currency

Telecel Globe Limited Nedcapital 23 - 23 NAD 156 156 30/06/2016 SecuredInvestec bank 23 - 23 NAD 156 156 30/06/2016 SecuredBanque de development des etats de l›afrique Central March 2007

1 3 4 XAF 2,140 2,464 30/06/2015 Secured

Ecobank CentrAfrique S.A 1 4 5 XAF 2,466 3,000 08/10/2014 SecuredBanque Populaire Maroco Centrafricaine 2 - 2 XAF 850 850 28/02/2012 SecuredBanque Populaire Maroco Centrafricaine - overdraft

1 - 1 XAF 375 300 12 months revolving

Unsecured

Commercial Bank Centrafrique - overdraft 1 - 1 XAF 546 500 12 months revolving

Unsecured

52 7 59 Trans World Associates (Private) LimitedUnited Bank Limited 1 1 2 PKR 124 345 27/11/2013 securedHabib Bank Limited 1 1 2 PKR 91 252 27/11/2013 securedAllied Bank Limited - 1 1 PKR 72 200 27/11/2013 securedAskari Bank Limited - 1 1 PKR 62 173 27/11/2013 securedStandard Chartered Bank Pakistan Limited - 1 1 PKR 62 173 27/11/2013 securedPak Oman Investment Company Limited - 1 1 PKR 54 150 27/11/2013 secured

2 6 8

Total - liabilities to banks 833 2,544 3,377

Bonds Current Non-current Total Nominal Maturity Securities Millions of USD Currency Millions of contract

currency

Pakistan Mobile Communications LimitedRoyal Bank of Scotland and DeutscheBank Securities Inc. (Euro Bond) 2 111 113 USD 112 13/11/2013 UnsecuredPak Oman Investment CompanyLimited - Karachi - Pakistan(Trustee - Public Listed TFC) 13 19 32 PKR 3,256 31/05/2013 SecuredAllied Bank Limited - Karachi - Pakistan (2007) 1 45 46 PKR 4,257 28/10/2013 Unsecured

Orascom Telecom Finance SCASenior Notes OTFSCA 23 741 764 USD 750 8/2/2014 Unsecured

Orascom Telecom Bangladesh LimitedSenior Secured Bonds Due 2014 19 78 97 BDT 7,070 30/06/2014 Secured

Orascom Telecom OscarIndexed linked notes 2 266 268 USD 230 18/02/2013 SecuredTotal Bonds 60.00 1,260.00 1,320

61

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 Data Base Management services Algeria 100.00% Algeria Ring Algeria LLC 98.01% Algeria MobiZone Algeria 100.00% Algeria Algeria Win Call 100.00% Algeria Consortium Algerian Telecommunication S.P.A. 50.00%

Algeria Ring Algeria Services 97.02% Morocco Kenza Telecom Morocco 100.00% Tunisia Ring Tunisia 78.21% Tunisia Ring Distribution Tunisia 77.43% Tunisia Ring Retail Tunisia 76.65% Tunisia Orascom Telecom Tunisie S.A. 50.00%

Tunisia Mobizone Tunisia 100.00%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 MobiZone Pakistan (Pvt.) Limited 100.00% Pakistan Trans World Associates (Private) Limited 51.00% Pakistan Ring Pakistan 94.59% Pakistan Ring Pakistan Service 94.59% Pakistan Call Pack Pakistan 100.00%

Pakistan Link Pakistan Ltd. 99.99%Pakistan LinkdotNet Pakistan 100.00%Pakistan Wwaseela Bank 100.00%

Middle East 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 Middle East and North Africa Submarine Cable System –Mena Cable 100.00% Egypt Cortex Egypt 94.00% Egypt Ring for Distributions 99.00% Egypt Advanced Electronic Industries 96.52% Egypt Connect 78.58% Egypt MMMS 98.80% Egypt Intouch for Telecommunication Services 100.00% Egypt Link Egypt 99.96% Egypt Into Net 51.00% Egypt Arab Finance Securities 100.00% Egypt Link Development 100.00% Egypt Link Online Egypt 100.00% Egypt Arpu for Telecommunication Services 100.00% Egypt Global Telecom 94.87% Egypt Egypt Call 98.98% 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 E.C.P. 51.00%Egypt OTH for mobile phone investments 100.00%

Iraq Ring Iraq 96.53%Lebanon Orascom Telecom Lebanon 100.00%

Palestine Pal Call Palestine 98.99% Qatar LDN Qatar 100.00%

Selected subsidiaries, joint ventures and associates Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding Saudi Arabia Link Dot Net Saudi Arabia 100.00% Saudi Arabia Mobi Zone 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%

Namibia Power-com Cell one 100.00%North America Canada Globalive Investment Holdings 47.60% Canada Globalive Canada Holdings 65.40% Canada Globalive Wireless Management 65.40% Canada Gloablive Wireless LP (GELP) 65.40% Canada Globalive Telecom Holdings 65.40% Canada Orascom Telecom Holding (Canada) Limited 100.00%

British Virgin Islands Arab Call Ltd. (BVI) 100.00% Europe France Orascom Telecom Wireless Europe 100.00% Italy MobiZone Italy 98.01% Luxembourg Orascom Luxembourg Sarl 100.00% Luxembourg Orascom Luxembourg Finance SCA 100.00% Luxembourg Orascom Telecom Sarl 100.00% Luxembourg Orascom Telecom Finance SCA 100.00%

Luxembourg Orascom Telecom Acquisition 100.00%Luxembourg Orascom Telecom One Sarl 100.00%Luxembourg Orascom Telecom Oscar 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 Orascom for International Investment Holding 100.00% Malta Data Base Management services Limited 100.00% Malta Orascom Telecom CS 100.00% 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%

62

Consolidated financialstatements and auditor’s report

(in Eas/EGP)

• Consolidated Balance sheet• Consolidated Income statement• Consolidated statement of Comprehensive Income • Consolidated statement of Changes in Equity• 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 balance sheet as at 31 December 2010, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and statement 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 prevailing 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 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 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 2010, 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 (36) “Contingent liabilities” for the following:

1- 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 cannot make reliable estimate of tax exposures.

2- Egyptian Company for Mobile Services (ECMS) “associated entity” filed a lawsuit against the National 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 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 Telecom Egypt based on the existing agreement.

Cairo, 19 April, 2011 KPMG Hazem Hassan

63

Consolidated income statement for the year ended December 31

(in million of EGP) Note 2010 2009

Assets Property and equipment 19 21,710 27,526Intangible assets 20 8,585 12,262Investment in associates 2,114 -Othernon-currentfinancialassets 21 6,028 4,657Deferred tax assets 22 417 654Total non-current assets 38,854 45,099Inventories 330 304Trade receivables 23 1,503 1,828Othercurrentfinancialassets 21 266 629Current income tax receivables 486 553Other current assets 24 5,251 2,084Cash and cash equivalents 25 4,784 4,184assets held for sale 6 2,431 606Total current assets 15,051 10,188Total assets 53,905 55,287Equity and liabilitiesshare capital 5,246 889Treasury shares (150) (166)reserves (572) (802)retained earnings 7,724 6,885Equity attributable to equity holders of the Company 12,248 6,806Minority Interest 459 763Total equity 12,707 7,569LiabilitiesNon-current borrowings 27 22,315 26,747Other non-current liabilities 647 662Provisions 4 35Deferred tax liabilities 22 1,086 1,191Total non-current liabilities 24,052 28,635Current borrowings 27 5,640 5,483Trade payables 29 4,711 5,745Other current liabilities 28 4,317 6,006Income tax liabilities 857 1,032Provisions 498 517Liabilities held for sale 6 1,123 300Total current liabilities 17,146 19,083Total liabilities 41,198 47,718Total equity and liabilities 53,905 55,287

(Thenotesfrom(1)to(37)areanintegralpartoftheseconsolidatedfinancialstatements)

GroupCFO ChiefExecutiveOfficer aldo Mareuse Khaled Bichara auditor’s report ‘attached’

Consolidated balance sheet as at 31, December

(in million of EGP) Note 2010 2009Continuing operations Represented

revenues 7 21,560 20,980 Other income 182 195 Purchases and services 8 (10,142) (10,217)Other expenses 9 (1,161) (905)Personnel costs 10 (1,481) (1,472)Net unusual inventory loss 13 - (68)Depreciation and amortization 11 (4,462) (4,242)Impairment charges 12 (692) (214)Net unusual capital loss 13 - (84)Disposal of non current assets 14 157 236 Operating income 3,961 4,209 financial income 15 316 493 financial expense 15 (2,616) (2,470)foreign exchange (loss)/ gain 15 (442) 148 Net financing costs (2,742) (1,829)

share of loss of associates 16 (572) (263)Impairmentoffinancialassets 17 (271) -Profit before income tax 376 2,117 Income tax expense 18 (1,358) (1,486)(Loss)/ profit from continuing operation (982) 631

Discontinued operations Profitfromdiscontinuedoperation(netofincometax) 2,107 1,565 Profit for the year 1,125 2,196 Attributable to: Owners of the Company 881 1,845 Minority Interest 244 351 Profit for the year 1,125 2,196 Basic and diluted earnings per share 30 0.17 0.42


64

Consolidated statement of changes in equity

2010 2009(in million of EGP) Profit for the year 1,125 2,196Other comprehensive income:Changesinfairvalueofavailable-for-salefinancialassets (9) (9)Cashflowhedges 32 138Currency translation differences 273 (366)Other comprehensive income for the year, net of tax 296 (237)Total comprehensive income for the year 1,421 1,959

Attributable to:Owners of the Company 1,173 1,596Minority Interest 248 363

1,421 1,959


Attributable to Equity holders of the Company

(in million of EGP)Share capital

Treasury shares Reserves


Minority Interest

Total equity

As of January 1, 2010 889 (166) (802) 6,885 6,806 763 7,569Comprehensive income Profitfortheyear - - - 881 881 244 1,125Other comprehensive income - - 292 - 292 4 296

Total comprehensive income - - 292 881

1,173 248

1,421 Transactions with owners Capital increase 4,357 (24) (21) - 4,312 - 4,312Capital increase in subsidiaries - - - - - 65 65Dividends for minority interest - - - - - (126) (126)Change in minority interest - - - - - (491) (491)Employees Dividends - - - (42) (42) - (42)share based compensation - 40 (41) - (1) - (1)Total transactions with owners 4,357 16 (62) (42) 4,269 (552) 3,717As of December 31, 2010 5,246 (150) (572) 7,724 12,248 459 12,707

Attributable to Equity holders of the Company

(in million of EGP)Share capital

Treasury shares Reserves


Minority interest

Total equity

As of January 1, 2009 899 (865) (540) 6,298 5,792 633 6,425Comprehensive income Profitfortheyear - - - 1,845 1,845 351 2196Other comprehensive income - - (249) - (249) 12 (237)

Total comprehensive income - - (249) 1,845

1,596 363

1,959 Transactions with owners Change in minority interest - - - - - (34) (34)Dividends - 310 56 (878) (512) (199) (711)Employees Dividends - - - (62) (62) - (62)share based compensation - 28 (12) - 16 - 16Cancellation of shares (10) 422 (94) (318) - - -Purchase of treasury shares - (186) - - (186) - (186)sale of treasury shares - 125 37 - 162 - 162Total transactions with owners (10) 699 (13) (1,258) (582) (233) (815)As of December 31, 2009 889 (166) (802) 6,885 6,806 763 7,569


Consolidated statement of comprehensive income for the year ended December 31

65

1- GeneralA- Legal status

Orascom Telecom Holding s.a.E “the Company” is an Egyptian Joint stock Company subject to the provisions of the Capital Market Law No. 95 of 1992 and its executive regulations. The Company is a majority owned subsidiary of Weather Investments s.P.a registered in Italy. The Company’sregisteredofficeislocatedinNileCityTowers,ramlet Beaulac, Cairo, Egypt.

B- Purpose of the companyThe 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 themoraffiliatethem,pursuanttotheprovisionsofthelaw 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 510 million citizens.

C- Financial statement authorizationThefinancialstatementswereapprovedbytheboardofdirectors on april 18, 2011.

2- Basis of preparation

2-1 Statement of complianceThese Consolidated financial statements have beenprepared in accordance with the Egyptian accounting standards (Eass) and relevant Egyptian laws and regulations.

2-2 Basis of measurementThefinancialstatementsarepreparedonthehistoricalcost convention, except for the following assets and liabilities which are measured as fair value

• Derivativefinancialinstruments.• Financial instruments at fair value through

profitandloss.• Available-for-salefinancialassets.

2-3 Functional and presentation currencyThese financial statements are presented in Egyptianpounds (EGP), which is the Company’s functional currency.AllfinancialinformationpresentedinEgyptianpounds has been rounded to the nearest million.

2-4 Use of estimates and judgmentsThe preparation of financial statements requiresmanagement to make judgments, estimates and assumptions 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 estimates are recognized in the period in which the estimate is revised and in any future periods affected.In particular, information about significant areas ofestimation uncertainty and critical judgments in applying accountingpoliciesthathavethemostsignificanteffecton the amount recognized in the financial statements

are described in the following notes:• Measurement of the recoverable amount of

intangible assets and goodwill.• Valuationoffinancialinstruments• Recognitionofdeferredtaxassets.• Provisionsandcontingencies.

3 - Significant accounting policies appliedThe main accounting principles and policies adopted in preparing these Consolidated financial statements are set our below. These policies have been consistently applied to all periods in those consolidated financialstatements, and have been applied consistently by the group entities.The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial information to international investors,the information 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 thefollowing 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 thefinancialandoperatingpoliciesofanentitysoastoobtain benefits from its activities. In assessing control,potential voting rights that presently are exercisable are taken into account. The financial statements ofsubsidiaries are included in the consolidated financialstatements 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. Profitsand losses resulting from intragroup transactions that are recognizedinassets,suchasinventoryandfixedassets,are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements.EAS24 IncomeTaxes applies totemporary differences that arise from the elimination of profitsandlossesresultingfromintragrouptransactions.

- Minority interests shall be presented in the consolidated balance sheet within equity, separately from the parent shareholder’s equity. Minority interests in the profit orloss of the group shall also be separately disclosed.

- a parent loses control when it loses the power to govern thefinancialandoperatingpoliciesofaninvesteesoastoobtainbenefitfromitsactivities.

3-1-2 Joint venture companiesJoint control is the contractually agreed sharing of control over an economic activity, and exists only when thestrategicfinancialandoperatingdecisionsrelatingtothe 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 separatelineitemsintheventure’sfinancialstatements.

2010 2009(in million of EGP) RepresentedContinuing operationsCash flows from operating activities (Loss) / profit for the year (982) 631Adjustments for:Depreciation, amortization and impairment charges 5,154 4,456Net unusual inventory loss and capital loss - 152Income tax expense 1,358 1,486share-based compensation 15 69Netfinancialcharges 2,300 1,977foreign exchange differences 442 (148)Impairmentofcurrentfinancialassets 271 -(Gain) on disposal of non-current assets (157) (236)share of loss of associates 572 263Change in provisions and allowances 360 338Change in assets carried as working capital (3,272) (375)Change in other liabilities carried as working capital 577 1,006Income tax paid (1,696) (2,912)Interest expense paid (2,009) (2,280)Net cash generated by operating activities 2,933 4,427Cash flows from investing activitiesCash outflow for investments in:- Property and equipment (3,026) (4,828)- Intangible assets (529) (574)- Consolidated subsidiaries (169) (169)- financial assets (158) (420)Proceeds from disposals of:- Property and equipment 75 286- Intangible assets 4 -- Consolidated subsidiaries 659 1,206- financial assets 66 -Dividends and interest received 114 151Netinvestmentsinfinancialassetsheldfortrading - (227)advances and loans made to associate and other parties (1,693) (755)Net cash (used in) investing activities (4,657) (5,330)Cash flow from financing activitiesProceeds from non-current borrowings 1,876 4,272repayments of non-current borrowings (4,886) (3,519)Net(paymentsof)proceedsfromothercurrentfinancialliabilities (56) 829Net change in cash collateral (5) 464Dividends paid - (509)Net payments for treasury shares (3) (23)Change in minority interest - (114)Proceeds from capital increase 4,313 -Net cash generated by financing activities 1,239 1,400Net cash (used in) generated by continuing operations (485) 497Discontinued operationsNet cash generated by operating activities 126 2,138Net cash generated by (used in) investing activities 809 (1,333)Netcashgeneratedby(usedin)financingactivities 221 (573)Net cash generated by discontinued operations 1,156 232Net increase in cash and cash equivalents 671 729Cash included in assets held for sale (251) (70)Effect of exchange rate changes on cash and cash equivalents 180 (83)Cash and cash equivalents at the beginning of the year 4,184 3,608Cash and cash equivalents at the end of the year 4,784 4,184


Consolidated statement of cash flows for the year ended December 31

66

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 carrying amount is increased or decreased to recognize the investor’s shareoftheprofitorlossoftheassociatesafterthedateof 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 identifiableassets,liabilitiesandcontingentliabilitiesofthe 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.

The license of the Group’s associated undertaking in the Canada, Globalive Wireless Management Corp, are indefinitelivedassets.Althoughthespectrumlicenseshave an initial term of 10 years, based on available information, the management believes that they are subject to perfunctory renewal and the renewal cost willnotbesignificant.Accordingly,theyarenotsubjectto amortization but are tested annually for impairment, or when indicators exist that the carrying value is not recoverable.

3-2 Translation of the foreign currencies transactionsOrascom Telecom Holding and some of its subsidiaries maintain their accounting books in Egyptian Pound. Transactions denominated in foreign currencies are recorded at the prevailing exchange rate at the date of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the prevailing exchange rates at that date. The foreign currencies exchange differences arising on the settlement of transactions and the translation at the balance sheet date are recognized 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 translated at historical rates, where as the income statement 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 instrumentsto hedge its exposure to foreign exchange and interestraterisksarisingfromoperational,financialand investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for tradingpurposes. 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. CashflowhedgesChanges in the fair value of the derivative hedging instrument designated as a cash flow hedge arerecognized 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 profitorloss. 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 forecast transaction occurs. When the hedged item is a non-financial asset, theamount 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 transferredtoprofitorlossinthesameperiodthatthehedgeditemaffectsprofitorloss.fair value hedgesChanges in the fair value of a derivative hedging instrument designated as a fair value hedge are recognizedinprofitor loss.Thehedgeditemalsois stated at faire value in respect of the risk being hedged, with any gain or loss being recognized in profitorloss.

3-5 Property & equipment and depreciationProperty & equipment are stated at historical cost and presented in the balance sheet net of accumulated depreciation 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, Estimate in respect of certain items of “Cell sites” were revised in 2009 ( see note 18) for each class of assets, for depreciation calculation purposes:

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 expenditure is capitalized only when it increases the futureeconomicbenefitsembodied inthepropertyand 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 recognized 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 netidentifiableassetsacquiredatacquisitiondate.

- 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 carrying 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 amortization and impairment losses. amortization is recognized 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:

C- Subsequent expenditure subsequent expenditure on capitalized intangible assets is capitalized only when it increases the futureeconomicbenefitsembodiedinthespecificasset 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 assetsare valuedatfair value, with any resultant gain or loss being recognized 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 forsale, identifiesbasedonquotedpriceof theexchange market at the balance sheet date,

investments that are not quoted, and whose fair value cannot 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 valuethrough income statement if it is held for trading or is designated 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 decisions based on their fair value.

3-9 Impairment a- Financial assets

A financial asset is considered to be impairedif objective evidence indicates that one or more events have had a negative effect on the estimatedfuturecashflowsofthatasset. Animpairmentlossinrespectofafinancialassetmeasured at amortized cost is calculated as the difference between its carrying amount, and the presentvalueoftheestimatedfuturecashflowsdiscounted at the original effective interest rate. an impairment loss in respect of an available-for-salefinancialassetiscalculatedbyreferencetoits current fair value. Individually significant financial assets aretested for impairment on an individual basis. The remaining financial assets are assessedcollectively in groups that share similar credit risk characteristics. All impairment losses are recognized in profitor loss. any cumulative loss in respect of an available-for-sale financial asset recognizedpreviouslyinequityistransferredprofitorloss.an impairment loss is reversed if the reversal can be related objectively to an event occurring after theimpairmentlosswasrecognized.Forfinancialassets measured at amortized cost and available-for-salefinancialassetsthataredebtsecurities,the reversal is recognized in profit or loss. Foravailable-for-salefinancialassetsthatareequitysecurities, the reversal is recognized directly in equity.

b- Non-financial assetsThecarryingamountsoftheGroup’snon-financialassets, 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-generatingunit is thesmallest identifiableassetgroup that generates cash flows that largelyare independent from other assets and groups. Impairmentlossesarerecognizedinprofitorloss.The recoverable amount of an asset or cash-generating 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

Assets Depreciation period

Buildings 50 yearsCell sites 8-15 yearsTools 5-10 yearsComputers equipment 3-5 yearsfurniture and fixtures 5-10 yearsVehicles 3-6 yearsLeasehold improvements and renovations 3-8 years

Assets Amortization period

- Licenses fees Over the remaining period of the licenses

- Concessions and Comput-ers software

3-15 years

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determine the recoverable 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 amortization, 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 aninsignificantriskofchangesinvaluewithoriginalmaturities of three months or less are considered as cash and cash equivalents. The statement of Cash flows is prepared according 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 sale Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use is classified as held for sale. Immediatelybeforeclassificationasheld for sale, theassets (orcomponents 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 adisposalgroupfirstisallocatedtogoodwill,andthento remaining assets and liabilities on pro rata basis, exceptthatnolossisallocatedtoinventories,financialassets,deferredtaxassets,employeebenefitassets,investment property and biological assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initialclassificationasheld forsaleandsubsequentgains or losses on remeasurement are recognised in profitor loss.Gainsarenotrecognisedinexcessofany cumulative impairment loss.

3-14 TaxationIncometaxontheprofitorlossfortheyearcomprisescurrent and deferred tax. Income tax is recognized 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 taxable 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 liabilities

for financial reporting purposes and the amountsused 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 substantively 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 beavailable against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is nolongerprobablethattherelatedtaxbenefitwillberealized.

3-15 ProvisionsProvisions are recognized when the Company has a legal or constructive obligation as a result of a pasteventandit’sprobablethataflowofeconomicbenefits will be required to settle the obligation. Ifthe effect is material, provisions are determined by discountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentofthetime value of money and, where appropriate, the risks specifictotheliability.Provisionsarereviewedatthebalance sheet date and amended (when necessary) 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 calculatedbydividingtheprofitorlossattributabletoordinary shareholders of the Company by the weighted 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. subsequent to initial recognition, Interest-bearing borrowings are stated at amortized cost with any difference between cost and redemption value being recognized 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 repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a change in equity. Repurchasedsharesareclassifiedastreasurystockand 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 theCompany’s statutes 5% of net profit forthe 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 facilities 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 revenue space 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 exception 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 thebenefit of its personnelin accordance with the social insurance law. Under this law, the employees and the employers contributeintothesystemonafixedpercentage-of-salariesbasis.TheCompany’sliabilityisconfinedto 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 acquiredexclusivelywithaviewtoresale.Classificationas a discontinued operation occurs upon disposal or whentheoperationmeetsthecriteriatobeclassifiedasheldforsale,ifearlier.Whenanoperationisclassifiedas 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 Factors

TheGroup’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includingcurrencyrisk,fairvalueinterestriskandcashflowinterest 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 focusesontheunpredictabilityoffinancialmarketsandseekstominimize potential adverse effects on the Group’s performance throughongoingoperationalandfinanceactivities.Dependingonthe 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.

Market Risk

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising when its business transactions are in currencies other than its functional currency. The main currencies to which the Group is exposed are the Us dollar, the Canadian Dollar and the Euro.

In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a naturalhedge of the exchange rate of such financing. However, assome transactions are executed in foreign currencies, and in particular in Us$, CaD and Euro, the Group may be subject to theriskofexchangeratefluctuationswhich, incertain instancesthe Group manages through the use of hedging strategies. as of December 31, 2010 the Group’s borrowings included Us$ borrowings amounting to Us$ 3,894 million and Euro borrowings amounting to Euro 121 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$ 161 million and Euro 119 million as of December 31, 2010. such borrowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani rupee.

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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 described further in “Credit risk”, the Group has provided loan facilities to Globalive Wireless Management Corp which are denominated in CaD.

as of December 31, 2010, if the functional currencies had weakened / strengthened by 10% against the Us$, the Euro and CAD,withallothervariablesheldconstant,thecurrentyear’sprofitwill decrease/ increase by EGP 605 million, mainly relating to Us$ 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 borrowings. Borrowings issuedatfloatingratesexposetheGrouptocashflowinterestraterisk. Borrowings issued at fixed rates expose theGroup to fairvalue interest rate risk.

The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floatinginterest rate borrowings based on the Group’s perception of future interest rate movements. In particular, the risk monitored relates totheimpactofmovementsinfloatingrateindicesontheGroup’sfinancecosts.

Whenconsideredappropriate, theGroupmanages itscashflowinterestrateriskbyusingfloating-tofixed interestrateswaps. Inparticular, as of December 31, 2010 the Group had floating-to-fixed interest rateswapswithanotionalvalueofUS$1.5billionandothercontracts forfloating-to-fixed interest rateswapwithanotional value of Us$ 500 million. after considering such derivative transactions approximately 40% of the Group’s total borrowings hadafloatingrateofinterest.

The Group considers the sensitivity of its finance costs tomovements in interest rates. In particular an increase / decrease of 1.0% in interest rates as of December 31, 2010 would have resultinanincrease/decreaseinfinancecostsofEGP111million&theincreaseeffectinthecashflowhedgereserveamountedtoEGP 429 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 concentrations of credit risk in relation to trade receivables. However, credit risk can arise in the event of non-performance of a counterparty, particularly in relation to credit exposures for trade and other receivables, financialinstrumentsandcashandcashequivalents.

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, includingassessing the credit worthiness of the counterparty and limiting the exposure to any one counterparty.

Creditriskrelatingtocashandcashequivalents,derivativefinancialinstruments and financial deposits arises from the risk that thecounterparty becomes insolvent and accordingly 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 fundswithfinancialinstitutionswithaminimumofinvestmentgraderating.

TheGroupisexposedtocreditriskrelatingtofinancialreceivablesas follows:• During 2008 the Company entered into two loans agreementsto provide a total amount of CaD 508 million equivalent to EGP 2,334 million to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment Holdings Corp (“Globalive”). The amount of these loans was increased to CaD 608 million during 2009 and further increased to CaD 970 million during 2010. as of December 31, 2010 the amount outstanding under such loan agreements, including accrued interest, was EGP 6,403 million (equivalent to CaD 1,090 million).The loans were primarily provided to GWMC to fund the acquisition of spectrum licenses in Canada. The licenses were awarded to GWMC during March 2009 by Industry Canada and GWMC launched operations in December 2009. During the start-up phase of operations Globalive has incurred losses and as a result the Group’s share of losses exceeds the carrying value of the investment. The Group considers the loan provided as part of the investment and has therefore deducted the excess losses from the receivable. after considering such losses anamountofEGP4,655millionisrecordedinfinancialreceivables.(seeNote21“Otherfinancialassets”forfurtherdetails)

Ingeneraltheremainingotherreceivablesandfinancialreceivablesincluded infinancialassetsgenerallyrelatetoavarietyofsmalleramounts due from a wide range of counterparties, therefore, the Groupdoesnotconsider that ithasasignificantconcentrationofcredit risk.

Liquidity RiskThe Group monitors and mitigates liquidity risk arising from the uncertainty of cash inflowsandoutflowsbymaintaining sufficientliquidity of cash balances as well as undrawn credit lines and by diversifying its sources of finance. In general, liquidity risk ismonitored at entity level whereby each subsidiary is responsible for managingandmonitoringitscashflowsandrollingliquidityreserveforecastinordertoensurethatithassufficientcommittedfacilitiesto meet its liquidity needs.

As of December 31, 2010 Carrying amount

Expected cash flows (*)

Less than 1 year


More than 5 years

LiabilitiesLiabilities to banks 19,608 21,934 5,956 15,935 43Bonds 7,668 9,391 754 8,637 -Other borrowings 73 77 54 23 -Telecommunication license payable 431 780 88 350 342Trade payables 4,711 4,711 4,711 - -

32,491 36,893 11,563 24,945 385

As of December 31, 2009 Carrying amount

Expected cash flows (*)

Less than 1 year


More than 5 years

LiabilitiesLiabilities to banks 24,652 27,595 5,625 21,850 120Bonds 6,914 9,224 875 8,349 -Other borrowings 119 128 108 20 -Telecommunication licence payable 2,003 2,313 1,575 332 406

Trade payables 5,745 5,745 5,745 - -39,433 45,005 13,928 30,551 526

*Expectedcashflowsarethegrosscontractualundiscountedcashflowsincludinginterest,chargesandotherfees.Thetablebelowanalysisthegroup’sderivativefinancialinstrumentsintorelevantmaturitygroupingsbasedontheremainingperiodatthebalancesheetdatetothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.

As of December 31, 2010 Expected cash flows (*) Less than 1 year Between 1 and 5 yearsCashoutflow/(cashinflow)Interest rate derivatives (610) (359) (251)foreign exchange derivatives 662 65 597Other Derivative instruments 18 2 16Total 70 (292) 362

As of December 31, 2009 Expected cash flows (*) Less than 1 year Between 1 and 5 yearsCashoutflow/(cashinflow)Interest rate derivatives 540 357 183foreign exchange derivatives (1,131) (178) (953)Other derivative instruments - cashinflow (152) (50) (102)

Total (743) 129 (872)

*Derivativecashflowsforinterestratederivativesandforeignexchangederivativesrepresentthenetcashflowfromtherelevantswaptransactionassuchderivativesarenetsettled.Cashinflowandcashoutflowforotherderivativeinstrumentsareshownseparatelyassuchderivativesaregross settled.

DerivativecashoutflowsdonotincludethepotentialcashoutflowsshouldthesharewarrantsofMyScreen&Lingobeexercised.TheexerciseofsuchwarrantsisattheoptionoftheCompany.DetailsofsuchwarrantsareprovidedinNote21“Otherfinancialassets”.Alsodoesn’tconsiderthecashfloweffectfromexercisingtheoptionofbuyingNamibiaTelecomshares.Contractualcashflowsarederivedbasedontherelevantindexas of the balance sheet date.

Thetablebelowanalysisthegroup’sfinancialliabilitiesintorelevantmaturitygroupingsbasedontheremainingperiodatthebalancesheettothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.

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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 risks

Political and economic risk in emerging countriesAsignificantamountof theGroup’soperationsareconducted inalgeria and Pakistan. The operations 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 restructuring. 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 andbusiness 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, receiving excessive tax assessments, granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable effect on the financialactivitiesoftheGroupandontheabilitytoreceivefundsfrom 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 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. Inaddition, in somecountries it couldbedifficult toconvert 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 reporting

The Company considers primary segment information by business activity. The method used to identify the business 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 segmentisbasedontheidentificationofeachcomponentofcostand 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 and is controlled by different legal entities.

Thefollowingprimarybusinesssegmentshavebeenidentified:• 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 activities; and

• Internet & fixed line covering the internet and fixedtelecommunications 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.Thefollowinggeographicalsegmentshavebeenidentified:

• North Africa – comprising algeria and Tunisia• Middle East – comprising Egypt• South Asia – comprising Pakistan and Bangladesh• Others – comprising, North Korea, Central africa,

Namibia, Burundi, Malta, Belgium, the United Kingdom and other countries

* 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, legalservices, communications and investor relations. Unallocated assets and liabilities mainly include borrowings of the Company and deferred tax assets and liabilities.

** segment capital expenditures is the total cost incurred during the period to acquire property and equipment and intangible assets other than goodwill.

Primary business segments

(in million of LE) GSM Telecom services Internet & fixed line Unallocated*

Disposal of discontinued operations results

Total

2010

2009

Gross revenues 24,565 1,669 539 - (4,457) 22,316

26,513 1,448 549 - (7,282) 21,228

Intersegment revenues (5) (699) (54) - 2 (756)

(16) (178) (54) - - (248)

Net revenues 24,560 970 485 - (4,455) 21,560

26,497 1,270 495 - (7,282) 20,980

Impairment Charges (538) (144) (8) (2) - (692)

(136) - (78) - - (214)

Depreciation and amortization (5,226) (28) (10) (21) 823 (4,462)

(5,321) (39) (94) (23) 1,235 (4,242)

Operating income / (Loss) 5,745 (238) 235 (441) (1,340) 3,961

7,125 147 (223) (409) (2,431) 4,209

Profit/(Loss)beforeincometax 4,508 (278) 235 (2,854) (1,235) 376

5,571 123 (256) (1,229) (2,092) 2,117

Profit/(Loss)fortheperiod 4,038 (287) 187 (2,813) (2,107) (982)

3,882 33 (269) (1,450) (1,565) 631

Total assets 41,440 2,675 988 8,802 - 53,905

46,284 2,314 880 5,809 - 55,287

** Total Capital expenditures 3,826 600 44 42 - 4,512

5,048 515 31 32 - 5,626

Total Liabilities 18,697 945 366 21,190 - 41,198

24,473 2,231 598 20,416 - 47,718

70

Secondary business segments

(in million of LE) North Africa Middle East South Asia Other Unallocated

Disposal of discontinued operations results

Total

20102009Gross revenues 11,828 4,558 8,941 1,446 - (4,457) 22,316

12,418 7,137 7,978 977 - (7,282) 21,228 Intersegment revenues (3) (740) (15) - - 2 (756)

(5) (197) (20) (26) - - (248)Net revenues 11,825 3,818 8,926 1,446 - (4,455) 21,560

12,413 6,940 7,958 951 - (7,282) 20,980 Operating income / (Loss) 4,394 728 942 (322) (441) (1,340) 3,961

4,822 1,311 705 222 (420) (2,431) 4,209 Profit/(Loss)beforeincometax 4,248 613 (17) (379) (2,854) (1,235) 376

4,657 971 (332) 155 (1,242) (2,092) 2,117 Profit/(Loss)fortheperiod 2,812 1,813 (71) (616) (2,813) (2,107) (982)

3,135 604 (278) 196 (1,461) (1,565) 631 Total assets 19,934 3,432 19,040 2,696 8,803 - 53,905

17,249 10,746 18,551 2,847 5,894 - 55,287 Total Capital expenditures 817 1,033 2,220 400 42 - 4,512

1,717 1,750 1,619 508 32 - 5,626

(In million of EGP) 2010 2009ECMS OTT Total ECMS OTT Total

revenues 2,475 1,981 4,456 5,275 1,990 7,265Expenses (1,970) (1,241) (3,211) (4,004) (1,168) (5,172)Profit before tax from discontinued operations 505 740 1,245 1,271 822 2,093Income tax (107) (385) (492) (261) (267) (528)Profit from discontinued operations 398 355 753 1,010 555 1,565Gain from ceasing joint control 1,697 - 1,697 - - -Income Tax on gain from discontinued operations (343) - (343) - - -Profit from discontinued operations 1,752 355 2,107 1,010 555 1,565

assets and liabilities held for sale include the following:

2010 Assets Held for Sale and Discontinued Operations

Orascom Telecom Tunisia S.A. (“OTT”)OTT operates a GsM network in Tunisia and provides a range of pre-paid and postpaid voice and data telecommunication services under the brand name “Tunisiana”. The Company has a 50% shareholding in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT. The remaining 50% interest is held by National Mobile Telecommunications Company KsC which is owned by Qatar Telecom.

In 22, November 2010, the Company announced that it had entered into a share purchase agreement with Qatar Telecom Q.s.C., pursuant to which the Company would sell its entire shareholding in Orascom Tunisia Holdings and Carthage Consortium, the two companies through which the Company owns 50% of OTT for a total cash consideration of Us$ 1.2 billion. The transaction was completed on January 2, 2011. In accordance with Egyptian accounting standard No. 32 the assets and liabilities held for sale anddiscontinuedoperationshavebeenshowninspecificcaptionsin the consolidated balance sheet and the income statement effect has been shown as discontinued operation as this group represents a separate major line of business. The comparative incomestatementinformationfor2009hasalsobeenreclassifiedto discontinued operations.

Egyptian Company for Mobile Services SAE (“ECMS”) ECMs is a mobile telecommunication operator in Egypt and provides a range of prepaid and postpaid voice and data telecommunication services under the brand name of Mobinil. The Company has an investment of 34.67% in ECMs and the france Telecom Group also has an investment of 36.34%. The remaining shareholding is publicly traded on the Cairo and alexandria stock Exchange.

In april 2010 france Telecom and the Company entered into a new and comprehensive agreement regarding Mobinil and ECMs which brought to an end all disputes in relation to their joint investment in Mobinil and ECMs. a revised shareholders’ agreement was implemented and became effective on July 14, 2010, as a result of which france Telecom will change its accounting method and will fully consolidateMobinil in its consolidated financial statements.as a result of the amended shareholders agreement, the Company ceases to have joint control over ECMs, which becomes an associate. In accordance with Eas, the Company’s shares of ECMs results of operations are no longer proportionally consolidated but, from July 14, 2010 are consolidated using the equity method. On the date that ECMs became an associate. as ECMs is considered a single cash generating unit clearly distinguished for financialreporting, the income statement of ECMs until July 14, 2010 has been reclassified and shown as discontinued operations. Thecomparative income statement information for 2009 has also been reclassifiedtodiscontinuedoperations.

In consideration for the settlement of all disputes between the parties france Telecom paid a settlement fee of Us$ 300 million (equivalent to EGP 1,717 million) on July 13, 2010. The change in control was effective from July 14, 2010, therefore, as of December 31, 2010 there is no balance sheet impact to assets or liabilities held for sale. The Company also entered into a put option whereby the Company has the option to put its 34.6% interest in ECMs to france Telecom (i) during the period from september 15 to November 15, 2012 (ii) during the period from september 15 through November 15,2013 and anytime until November 15, 2013 in a limited number of deadlock situations. The strike price of the put option increases over time from EGP 221.7 to EGP 248.5 as of December 31, 2013. The Company assumed the put option

had zero value since the sell is not considered probable being the underlying asset a strategic investment. 2009 Assets Held For SaleIn 2009 the assets and liabilities of LINKdotNET and Link Egypt were classifiedasheldforsalein2009.Theincomestatementeffectofthese operations were not shown as discontinued operations as they did not represent a separate major line of business. In July 2010, the Group concluded the sale of LINKdotNET and Link Egypt to ECMs for total cash consideration of Us$ 130 million.

7- Revenues

(In million of EGP) 2010 2009Revenues from services Telephony services 17,592 16,700Interconnectiontraffic 2,184 2,198International and national roaming 108 170Other services 764 655Total revenues from services 20,648 19,723Total revenues from sale of goods 912 1,257Total 21,560 20,980

Total revenues from services increased in 2010 compared to 2009 due to the increase in revenue from telephony services as a result of the increase in subscribers, mainly in Bangladesh, Pakistan and North Korea.

Total revenues from sale of goods decreased in 2010 compared to 2009 due to a decrease in the revenue from the sale of handsets, starter kits and scratch cards, mainly in ring algeria and ring Egypt.

8- Purchases and services

(In million of EGP) 2010 2009Interconnectiontraffic 1,906 2,020Telephony cost 1,544 1,156Customer acquisition costs 1,142 1,010Mobilefinishedgoodspurchases 1,131 1,736Maintenance costs 1,014 1,027Utilities 821 685Other service expenses 610 713advertising and promotional services 538 537rental of civil and technical sites 440 416Other leases and rentals 293 277Consulting and professional services 248 168rental of local network 203 193raw, ancillary and consumable materials and goods 191 222National and international roaming 61 57Total 10,142 10,217

Purchases and services costs decreased during 2010 primarily due to a decrease inmobile finished goods purchases, relatingto costs of handsets, scratch cards, sim cards and bundle costs primarily as a result of the decrease in sales of the ring Group. as a percentage of revenues, purchase and service costs decreased from 48.7% in 2009 to 47.0% in 2010.

The decrease inmobile finish goods purchases wasmarginallyoffset by an increase in customer acquisition costs due to the increase in the subscriber base and an increase in telephony costs due to an increase in telephony service revenues.

6- Assets and liabilities classified as held for sale and discontinued operations

The following provides a breakdown of discontinued operations for the years indicated:

The following provides a breakdown of assets and liabilities held for sale as of December 31:

2010 2009Property and equipment 988 261Intangible assets 795 166Deferred tax assets 39 -Othernon-currentfinancialassets 40 -Trade receivables 267 67Other current assets 51 42Cash and cash equivalents 251 70Assets held for sale 2,431 606Current and non-current borrowings 245 128Trade payables 285 81Other current liabilities 432 83Current income tax liabilities 54 1Deferred tax liabilities 107 7Liabilities held for sale 1,123 300

71

15- Net financing costs

(In million of EGP) 2010 2009Dividends income – available for sale investments 4 -

Interest income - Deposits 96 91fair value gains and losses on derivatives - 7 Other interest income 216 395Financial income 316 493Interest on bank borrowings (1,167) (1,478)Interest on bonds (732) (689)fair value gains and losses on derivatives (517) (10)Otherfinancialexpenses (200) (293)Financial expense (2,616) (2,470)

foreign exchange (loss)/gain (198) 185fair value changes of fX derivative instruments (244) (37)Net foreign exchange gain /(loss) (442) 148

Net financing cost (2,742) (1,829)

financial income decreased in 2010 mainly as a result of the decrease in other interest income. Other interest income in 2009 included an amount of EGP 128 million from the extinguishment of debt relating to a tender offer by PMCL, which was completed in May 2009 to repurchase a portion of its notes.

Interest expense on bank borrowings decreased mainly as a result of the repayment of liabilities with banks during 2010. In particular during 2010 the Company made two repayments to the term loan supplement for a total of EGP 837 million as well as a payment of EGP 212 million to settle loans with audi bank and EGP 614 million to settle major overdraft balances.

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.

16- Share of profit & loss of associates share of loss of associates in 2009 and 2010 includes the investment in:

1- Globalive Canada Investment Holdings Corp. and Globalive Canada Holdings Corp. (collectively “Globalive”). The Group holds a 65.4% investment in Globalive which comprises a combination of voting and non-voting rights. Considering direct and indirect interests, the Group holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The Group hassignificantinfluenceoverthisinvestmentanddoesnothavecontroloverthefinancialandoperatingpoliciesofGlobalive.Therefore the investment is equity accounted.

2- In 2010, share of loss of associates also includes the Group’s investment in ECMs, as described in further details in Note 6 Assetsandliabilitiesclassifiedasheldforsaleanddiscontinuedoperations, as a result of a new and comprehensive agreement entered into between france Telecom and the Company, the Company has ceased to have joint control over ECMs and it has become an associate. Therefore, the Company consolidates its 34.6% interest in ECMs using the equity method. ThefollowingtableprovidesselectedfinancialinformationoftheGroup’s associates as of December 31, 2010 and 2009 and for each of the years then ended.

(In million of EGP) 2010 2009OTHCMLECMS OTHCML

Current assets 2,026 407 353Non-current assets 14,619 5,004 4,198Current liabilities 5,436 576 1,080Non-current liabilities 7,053 7,016 3,977revenue 5,534 778 262Net Gain / (loss) 628 (1,370) (513)% shareholding 34.66% 65.40% 65.40%

proportional share of net gain/( loss) 217 (896) (336)

amortization expense ofidentifiableassets - (21) (17)Elimination of proportional share of intra group interest expense

14 114 90

share of loss in associate 231 (803) (263)

17- Impairment of financial assets

Impairment of financial assets in 2010 includes an amount of EGP102million relating to Globalive and EGP 169 million relating to North Korea.During 2010 the credit agreements with Globalive were re-negotiated and the interest rate was reduced from Libor plus 18% to Libor plus 10.8%, to reflectmarketconditions.Asaresultoftherenegotiationtheoutstandingreceivable due from Globalive was re-measured at fair value. following this re-measurementanimpairmentofEGP102millionwasrecordedtoreflectthe fair value adjustment. Impairment of financial assets also includesan amount of EGP 169million relating to the impairment of a financialreceivablewithafinancial institution inNorthKoreadue touncertaintiesregarding its recoverability.

18- Income tax expense (In million of EGP) 2010 2009

Current income tax expense 1,047 1,823Deferred taxes 311 (337)Income tax expense 1,358 1,486

Current income tax receivables and liabilities in the consolidated balance sheet are as follows:

(In million of EGP) 2010 2009

Current income tax receivable 486 553Current and non current income tax liabilities (857) (1,032)

ThetaxontheGroup’sprofitbeforetaxdiffersfromthetheoreticalamount that would arise using the weighted average tax rate applicabletoprofitsoftheconsolidatedentitiesasfollows:

9- Other expenses

(In million of EGP) 2010 2009Promotion and gifts 511 265Provisions for risks and charges 218 128annual contributions for licenses 163 170Write-down of current receivables and liquid assets 128 232Other operating expenses 141 110Total 1,161 905

The increase in other expenses was primarily attributable to the increase in accruals for provisions for risks and charges during 2010 and an increase in costs related to promotions and gifts. The accruals for provisions for risks and charges increased by EGP 90 million, mainly relating to the accruals for the tax dispute in algeria. The increase in costs for promotion and gifts was mainly related to an increase of costs in Bangladesh relating to promotional activities in Bangladesh.

10- Personnel costs

(In million of EGP) 2010 2009Wages and salaries 1,094 993social security 61 62Pension costs 35 38Other personnel costs 291 379

Total 1,481 1,472

Total personnel costs during 2010 remained substantially consistent compared to 2009 as the increase in wages and salaries costs was offset by a decrease in other personnel costs.

Wages and salaries costs increased due to an increase in the number of employees in 2010 compared to 2009. The table below provides a breakdown of the number of employees as of December 31:


senior management 233 256Middle management 1,114 1,131staff 13,492 11,176Total 14,839 12,563

The table below provides a breakdown of the average number of employees for the years ended December 31, 2010 and 2009:

Average for the year ended December 31,

(in number of employees) 2010 2009senior management 245 236Middle management 1,123 1,289staff 12,334 13,018Total 13,702 14,543

11- Depreciation and amortization

(In million of EGP) 2010 2009Depreciation of property and equipment: -Cell sites 3,577 3,226 -Commercial and other tangible assets 208 234 -Land and buildings 86 118Amortization of intangible assets -Licenses 571 618 -Other intangible assets 20 46Total 4,462 4,242

Depreciation and amortization increased due to the increase in cell sites depreciation primarily as a result of an increase in investments in the network.

12- Impairment charges

Impairment charges amounting to EGP 692 million in 2010 increased mainly relate to the impairment of TelecelGlobe Namibia for an amount of EGP 526 million due to uncertainty regarding future operations and EGP 141 million for plant and equipment of Medcable.

Impairment charges amounting to EGP 214 million in 2009 mainly relate to the impairment of EGP 96 million for plant and equipment in PMCL in Pakistan and Link Dot Net Telecom, a subsidiary of PMCL operating in Pakistan as well as impairment of goodwill amounting to EGP 33 million in Link Dot Net.

13- Unusual Items

During November 2009 Orascom Telecom algeria s.p.a. and ring algeria LLC, subsidiaries of the Company, experienced damage to shops, warehouses and infrastructure, as well as break-ins to premises and theft of equipment, during football related disturbances in algeria. The cost of damaged inventories, as a result of such disturbances, amounted to EGP 100 million, whilst the damage to property and equipment amounted to EGP 140 million.

Both entities have submitted formal claims to their insurance companies relating to this incident. furthermore, a technical assessment performed by an independent insurance expert stated that the minimum expected recovery from the insurance company is 1 billion DZD (equivalent to EGP 78 million). This incident is considered as an exceptional event which is outside with the normal course of operations and has been recorded in the income statement as unusual items. after considering the expected minimum insurance proceeds, an amount of EGP 68 million has been recorded as an unusual inventory loss relating to the damaged inventories and an amount of EGP 84 million has been recorded as an unusual capital loss relating to the damaged property and equipment.

14- Disposal of non-current assets

The gain on the disposal of non-current assets amounting to EGP 157 million in 2010 relates to the gain on the disposal of LINKdotNET and Link Egypt for total cash consideration of EGP 728 million in July 2010.The gain on disposal of non-current assets amounting to EGP 236 million in 2009 mainly relates to the gain of EGP 195 million on disposal of M-Link which was sold to Wind Telecomunicazioni spa for a cash consideration of EGP 430 million during January 2009. (see 35 “related party transactions”)

(In million of EGP) 2010 2009Profit before income tax 376 2,117Tax calculated at Company's income tax rate 75 423Different income tax rates in subsidiaries 443 430Theoretical income tax for the year 518 853Permanent differences 61 123Unrecognized deferred tax for tax losses 393 279reversal of expired deferred tax assets 192 -Minimum tax expenses 82 - adjustments in respect of prior years 112 268Other differences - (37)Income tax for the year 1,358 1,486

72

Land and Buildings Cell Sites

Computers, fixtures

and other equipment

Assets Under Construction Total

CostAs of January 1, 2010 942 36,934 1,916 4,578 44,370additions 98 1,248 242 2,719 4,307Change in the scope of consolidation (356) (7,408) (656) (343) (8,763)Reclassificationtoassetsheldforsale (58) (1,695) (111) (183) (2,047)Disposals (12) (200) (41) (28) (281)Currency translation differences 20 1,019 32 146 1,217Reclassifications 6 2,096 20 (2,122) -As of December 31, 2010 640 31,994 1,402 4,767 38,803Accumulated depreciation and impairmentAs of January 1, 2010 380 15,101 1,182 181 16,844Depreciation 97 4,173 261 - 4,531Change in the scope of consolidation (74) (3,535) (393) - (4,002)Reclassificationtoassetsheldforsale (21) (966) (72) - (1,059)Disposals (8) (167) (36) (1) (212)Impairment loss 3 310 6 31 350Currency translation differences 10 575 31 25 641As of December 31, 2010 387 15,491 979 236 17,093Net book value as of December 31, 2009 562 21,833 734 4,397 27,526Net book value as of December 31, 2010 253 16,503 423 4,531 21,710

Land and Buildings Cell Sites

Computers, fixtures

and other equipment

Assets Under Construction Total

Cost As of January 1, 2009 994 32,812 1,811 5,289 40,906additions 107 1,477 291 3,494 5,369Change in the scope of consolidation 5 155 19 28 207Reclassificationtoassetsheldforsale - (313) (92) (15) (420)Disposals (145) (158) (87) (87) (477)Currency translation differences (21) (1,037) (39) (118) (1,215)Reclassifications 2 3,998 13 (4,013) -As of December 31, 2009 942 36,934 1,916 4,578 44,370Accumulated depreciation and impairmentAs of January 1, 2009 325 11,567 1,020 86 12,998Depreciation 133 4,142 321 - 4,596Change in the scope of consolidation 1 25 3 - 29Reclassificationtoassetsheldforsale - (120) (39) - (159)Disposals (69) (108) (74) - (251)Impairment loss 1 26 11 95 133Currency translation differences (11) (431) (60) - (502)As of December 31, 2009 380 15,101 1,182 181 16,844Net book value as of December 31, 2008 669 21,245 791 5,203 27,908Net book value as of December 31, 2009 562 21,833 734 4,397 27,526

19- Property and equipment

additions to property and equipment in 2010 mainly relate to cell site investments and assets under construction 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 2010 relates to the property and equipment of Orascom Holding Tunisie and Cartage Consortium (see Note 6 “assets and liabilities classifiedasheldforsaleanddiscontinuedoperations”forfurtherinformation.

Property and equipment pledged as security for bank borrowings amount to EGP 7.2 billion as of December 31, 2010 and primarily relate to securities for borrowings of PMCL, Trans World associated (“TWa”), Orascom Telecom Tunisie s.a.(OTT) and Telecel Namibia “Cell one” .

In the year ended December 31, 2010 and 2009 the Group capitalized borrowing costs of EGP 159 million and EGP 201 million, respectively, relating to the acquisition of property and equipment.

20- Intangible assets

Licences Goodwill Others TotalCost As of January 1, 2010 10,175 6,948 1,575 18,698additions 170 - 35 205Change in the scope of consolidation (2,261) (970) - (3,231)Reclassificationtoassetsheldforsale (1,550) (175) (19) (1,744)Disposals (182) - (3) (185)Currency translation differences 235 71 (7) 299As of December 31, 2010 6,587 5,874 1,581 14,042Accumulated amortization & impairmentAs of January 1, 2010 4,571 883 982 6,436amortization 728 - 21 749Change in the scope of consolidation (876) (174) - (1,050)Reclassificationtoassetsheldforsale (948) (1) - (949)Disposals (181) - - (181)Impairment Loss 76 238 28 342Currency translation differences 142 (36) 4 110As of December 31, 2010 3,512 910 1,035 5,457Net book value as of December 31, 2009 5,604 6,065 593 12,262Net book value as of December 31, 2010 3,075 4,964 546 8,585

The Group’s income tax expense decreased from EGP 1,486 million in 2009 to EGP 1,358 million in 2010 mainly relating to tax provi-sions recorded during 2009.

73

Licences Goodwill Others TotalCost As of January 1, 2009 10,302 6,741 1,518 18,561additions - - 257 257Change in the scope of consolidation 46 265 55 366Reclassificationtoassetsheldforsale - (48) (191) (239)Disposals - - (38) (38)Currency translation differences (173) (10) (26) (209)As of December 31, 2009 10,175 6,948 1,575 18,698Accumulated AmortizationAs of January 1, 2009 4,006 813 746 5,565Charge for the year 639 - 242 881Change in the scope of consolidation 5 - 5 10Reclassificationtoassetsheldforsale - - (73) (73)Disposals - - - -Impairment Loss - 72 9 81Currency translation differences (79) (2) 53 (28)As of December 31, 2009 4,571 883 982 6,436Net book value as of December 31, 2008 6,296 5,928 772 12,996Net book value as of December 31, 2009 5,604 6,065 593 12,262

21- Other financial assets

2010 2009 (In million of EGP) Non-current Current Total Non-current Current Total

financial receivables 5,179 18 5,197 3,729 101 3,830Derivativefinancialinstruments

417 62 479 601 234 835

Deposits 367 19 386 224 78 302financial assets held for trading

- 120 120 - 191 191

financial assets available for sale

65 47 112 103 25 128

6,028 266 6,294 4,657 629 5,286

21.1 Financial Receivables

AsofDecember31,2009and2010financial receivablesmainlyrelate to loans provided to Globalive Management Corp (“GWMC”), a subsidiary of Globalive (see Note 16 “share of loss of associates and gain on disposal of associates”).

During 2008 the Company entered into two loan agreements with Globalive Management Corp (“GWMC”, a subsidiary of Globalive) to borrow an amount of up to CaD 508 million (equivalent to EGP 2,334 million). Both loans are non-revolving term loans bearing interest of Libor plus 18%. In 2009 the loan agreements were amended to increase the facility to CaD 608 million (equivalent to EGP 3,225 million) and were further amended during 2010 to increase the facility to CaD 970 million (equivalent to EGP 5.6 billion). additionally, effective from January 1, 2011 the interest rate has been reduced to 10.8%.

Globalive was awarded CaD 442 million (equivalent to EGP 2.6 billion) of spectrum licenses in March 2009 and the loans are secured on a subordinated basis by an assignment of these licenses and are guaranteed on a non recourse basis.

Globalive launched its wireless network to the Canadian market in December 2009 and is therefore in the start-up phase of operations and has incurred losses to date. The Group’s share of these losses is in excess of the carrying value of the investment. The loans provided to Globalive are long term loans and have been considered to be a long-term interest forming part of the net investment in Globalive. as of December 31, 2010 the amount outstanding under such loan agreements, including accrued interest, was CaD 1,092 million (equivalent to EGP 6.4 billion), CaD 723 million, equivalent to EGP 3.8 billion as of December 31, 2009, the Group’s share of the excess losses of Globalive compared to the carrying value of the investment have therefore been deducted from the long term receivable. after considering the shareofsuchlossestheamountrecordedinfinancialreceivablesas of December 31, 2010 is EGP 4.65 billion and EGP 5,05 billion as of December 31, 2009).

financial receivables as of December 31, 2009 include an amount of EGP 82.6 million relating to the receivable from the sale of OrasInvest which was settled in 2010.

21.2 Derivative financial instruments

2010 2009 Assets Liabilities Assets Liabilities

Interest rate derivatives - 487 6 545foreign exchange derivatives 461 - 741 -Other derivative instruments 18 120 88 -

Total 479 607 835 545Less non-current portionInterest rate derivatives - 154 - 195foreign exchange derivatives 399 - 518 -Other derivative instruments 18 51 83 -Current portion 62 402 237 350

additions to intangible assets in 2010 primarily relate to licenses and others.

Intangible assets pledged as security for bank borrowings amount to EGP 7 billion and primarily relate to securities for borrowings of PMCL, OTT and Powercom in Namibia.

Impairment tests for goodwill

Goodwill is allocated to the individual Cash Generating Unit (CGU) whichreflectstheminimumlevelatwhichtheunitsaremonitoredfor management control purposes.

The carrying amount as of December 31, 2010 was subject to an impairment test to compare the carrying amount with value in use and the recoverable amount. The goodwill of Powercom in Namibia was impaired (see note no. 12 Impairment). after having considered this previous impairment, no further evidence ofimpairmentarose.Valueinusewasdeterminedbydiscountingtheexpectedcashflows,resultingfrombusinessplansapprovedby 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 segment2010

(In million of EGP) Algeria Pakistan Egypt Tunisia BangladeshCentral

and South Africa

Total

GsM 2,925 1,542 - - 66 388 4,921 Telecom services - 5 3 - - - 11Internet&fixedLine - 1 32 - - - 32Total 2,925 1,547 38 - 66 388 4,964

2009

(In million of EGP) Algeria Pakistan Egypt Tunisia BangladeshCentral

and South Africa

Total

GsM 2,925 1,464 814 175 59 573 6,010 Telecom services - 5 9 - - - 14 Internet & fixed Line - - 41 - - - 41Total 2,925 1,469 864 175 59 573 6,065

74

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. UnderthederivativecontracttheCompanypaysfixedinterestrateand receives 6 month Libor. Gains and losses are recognized in the cashflowhedgereserveinequity.AsofDecember31,2010thefair value of the derivative liability was Us$ 83 million (equivalent toEGP487million).Thegainrecognizedinthecashflowhedgereserve, net of deferred tax during the year ended December 31, 2010, amounts to EGP 32 million.

During 2009 the Company entered into a switchable interest rate swap for a notional amount of Us$ 500 million to cover a portion of the syndication loan. Under the derivative contract the Company receiveda25basispointreductioninthefloatinginterestrateandattheendofthefirstyear(September23,2010)thebankhadtherighttoeitherswitchtoafixedrateswaporswitchtoafloatingratewithacap.TheCompanythereforeenteredintoafixedinterestrate swap covering the period from september 23, 2010 to March 23,2013.UnderthederivativecontracttheCompanypaysafixedinterest rate of 2.7625% per annum and received 3 month Libor.

as of December 31, 2010 the fair value of the derivative liability was Us$ 21 million (equivalent to EGP 120 million). The changes inthefairvalueofthederivativearerecognizedinfinancialincomeand expense in the income statement.

Foreign exchange derivativesforeign exchange derivatives primarily relate to the economic hedge of PMCL. The cross currency swap relates to certain borrowings of PMCL, which 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. as of December 31, 2010 the fair value of this derivative asset was Us$ 80 million (equivalent to EGP 464 million)

Other derivative instrumentsOther derivative instruments mainly relate to an embedded derivative on the Company’s indexed notes. In february 2009 the Company issued equity indexed notes with a nominal amount of Us$ 230 million which mature in 2013. The notes have a redemption price on maturity which is indexed to the Company’s GDr price. This feature of the debt is considered as an embedded derivativewhichisvaluedatfairvaluethroughprofitandloss.Asof December 31, 2010 the fair value of this embedded derivative asset was Us$ 3 million (equivalent to EGP 15.7 million). The fair valuelossrecognisedthroughprofitandlosswithanamountEGP61million.

21-3 DepositsDeposits primarily relate to letters of guarantee and other restricted cash held as security for the performance of Group obligations.

Deposits in 2010 also include an amount of EGP 163 million relating to cash held in North Korea which is subject to restrictions on use for certain operating and capital expenses in local currency only. The funds cannot be converted into Euro and cannot be repatriated overseas.

Deposits with amounts of EGP 192 million are pledged or blocked as security against related bank borrowings or others commitments.

The following table shows the ageing analysis of financialreceivables and long term deposits as of December 31, 2010 and 2009:

2010 2009

Deposits Financial receivables Deposits Financial

receivables Not past due 384 5,197 302 3,830

Past due 0-30 days 2 - - - 386 5,197 302 3,830

21-4 Financial assets available for sale

Company name ownership % 2010 2009

SmartVillage(ECDMIV) 10% 46 44 My screen Mobile Inc 9% 2 12 Lingo Media Corporation 23% 11 15 Top Level Domain Co. 5% - 6 Other investments 53 51

112 128

22- Deferred taxes

Deferred 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.

2010 2009Deferred tax liabilities, gross 2,185 2,370Deferred tax assets offset (1,099) (1,179)Net Deferred tax liabilities 1,086 1,191Deferred tax assets, gross 1,516 1,833Deferred tax liabilities offset (1.099) (1,179)Net Deferred tax assets 417 654of which recognized directly in equity - 28

The movement in the deferred income tax account is as follows:2010 2009

As of January 1, 537 938Currency translation differences 31 (68)Change in scope (322) (105)Reclassificationtoassetsheldfor sale (68) -Charged to the income statement 489 (256)

Charged directly to equity 2 28

As of December 31, 669 537

The movement of deferred tax assets and liabilities during the year, without taking into consideration any offsetting is provided in the tables below:

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 rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has significant influenceover the company. as of December 31, 2010 the carrying value of the investment is EGP 2 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 advertising. The investment represents approximately 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 agreement 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.Themanagementdoesnotconsiderthatithassignificantinfluenceoverthecompany.Therefore,theinvestmenthasbeenrecordedasafinancialassetavailableforsaleandmeasuredatfairvalue. as of December 31, 2010, the fair value of the investment amounted to EGP 11 million. The warrants expired, unexercised, during 2010. Financial assets held for trading

financial assets held for trading relate to government treasury bills and investment bonds purchased by PMCL.

Deferred tax liabilities Depreciation and amortization

Unremitted earnings Fair value Other Total

As of January 1, 2010 1,778 331 191 70 2,370Charged to the income statement (72) 368 (72) (53) 171Currency translation differences 53 20 3 5 81Change in scope (338) - - 8 (330)Reclassificationtoassetsheldforsale - (107) - - (107)As of December 31, 2010 1,421 612 122 30 2,185

Deferred tax assets Tax losses

Accrued expense

Depreciation and

amortization

Impairment of assets Provisions Fair

value Other Total

As of January 1, 2010 1,328 216 89 50 42 99 9 1,833

Charged to the income statement (281) 44 (16) (23) (36) (25) 19 (318)

Charged directly to equity - - - - - (2) - (2)

Change in scope - - (3) - - - (5) (8)

Currency translation differences 22 9 (3) 1 (6) 18 9 50Reclassificationtoassetsheldforsale - - (27) - - - (12) (39)

As of December 31, 2010 1,069 269 40 28 - 90 20 1,516

75

DividendsNo dividends were distributed during 2010.

The shareholder’s meeting of the Company held on June 7, 2009 approved a dividend distribution of EGP 1 per share in the form of cash and/or shares. Based on the announced distribution ratio of 36:1; on august 27, 2009 the Company distributed 243,376 shares to local shareholders and 1,985,097 shares to the GDr holders (equivalent to 9,925,487 local shares).

Consequently, the Company distributed in cash an amount of EGP 180 million for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of Us$ 60 million for a total number of 66,337,438 GDrs (equivalent to 331,687,192 local shares) (around Us$ 0.9022/GDr).

Share based compensation planas of December 31, 2009 the Company had 3,947,300 shares which were held for the purposes of the share based compensation plan. During the year ended December 31, 2010 the Group acquired 295,235 of its own shares for the purposes of the share based compensation. share grants exercised during 2010 resulted in 2,186,135 shares and 14,469,560 shares was added to consider the impact of the rights issue explained above, as a result of the above transactions, as of December 31, 2010 the Company had 16,526,050 shares held as treasury shares for the purposes of the share based compensation plan. The fair market value of such shares was Us$ 12 million equivalent to EGP 71 million).

Liabilities to banks

appendix a includes a detailed analysis of liabilities to banks as of December 31, 2010.The decrease in borrowings is mainly attributable to the normal scheduled repayments of borrowing facilities, in accordance with the relevant agreements and due to the change in accounting for ECMs and reclassifying Orascom telecom Tunisia as a liabilities heldforsale,asthecomparativefiguresasofDecember31,2009include the Group’s proportional share of ECMs and Orascom telecom tunisia borrowings.

Orascom Telecom HoldingDuring 2010 the Company paid two scheduled payments of the a1 and a2 term loan supplements for a total amount of Us$ 150 million equivalent to EGP 827 million. additionally, an amount of EGP 207 million was made to settle the borrowings with audi Bank and EGP 628 million to settle major overdraft balances.

Telecel Globeas of December 31, 2010 borrowings of Power-Com Ltd (a subsidiary of Telecel Globe) amounting to EGP 231 million, have been entirely classified within current liabilities due to Power-Com Ltd inability to meet the imposed promises mentioned in the contract. as a result, Power-Com Ltd is in the process of rescheduling its contract with this bank.

Bonds

appendix B includes a detailed analysis of Bonds as of December 31, 2010. Changes in bond liabilities during 2010 primarily relate to the issuance of a new bond by Orascom Telecom Bangladesh. In particular in March 2010 Orascom Telecom Bangladesh, issued a senior secured bond with a nominal value of BDT 7,070 million (approximatelyEGP581million).Thenotescarryafixedcouponof 13.5% and mature in september 2014.

DerivativesDetails of the derivative liabilities are provided in Note 21 “Other financialassets”.

Other BorrowingsOther borrowings mainly include promissory notes and loans from non-controlling shareholders in subsidiaries.

within one year 1-2 years 2-3 years 3-4 years 4-5 years after 5

years Total

As of December 31, 2010as of December 31, 2009Liabilities to banks 4,840 5,109 9,107 447 64 41 19,608

4,616 4,573 5,352 9,117 880 114 24,652Bonds 346 182 6,435 705 - - 7,668

417 70 1,088 1,267 4,072 - 6,914Derivative instruments 402 183 21 - - - 606

350 177 23 (5) - - 545Other borrowings 52 2 19 - - - 73

100 19 - - - - 119Total as of December 31, 2010 5,640 5,476 15,582 1,152 64 41 27,955Total as of December 31, 2009 5,483 4,839 6,463 10,379 4,952 114 32,230

27- Borrowings

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 notprobablethattaxableprofitwillbeavailableinthenearfutureagainst 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 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.

23- Trade receivables

2010 2009receivables due from customers 992 1,514receivables due from telephone operators 523 437receivables due from authorized dealers 55 64

Other trade receivables 561 277allowance for doubtful receivables (628) (464)Total 1,503 1,828

The following table shows the movement in the allowance for doubtful receivables

2010 2009at January 1 464 373Exchange differences 34 (15)additions (allowances recognized as an expense) 155 218Change in scope (47) (27)Reclassificationtoassetsheldforsale (24) -Use (25) (59)reversal (19) (26)Reclassifications 90 -At December 31, 628 464

The following table shows the ageing analysis of trade receivables as of December 31, 2010 and 2009, net of the relevant provision for doubtful receivables:

2010 2009 Not past due 590 677Past due 0-30 days 542 476Past due 31-120 days 173 449Past due 121 - 150 days 83 22Past due more than 150 days 115 204Trade receivables 1,503 1,828

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.

24- Other current assets

2010 2009Prepaid expenses 473 494advances to suppliers 118 67receivables due from tax authority 4,345 1,018Other receivables 507 777allowance for doubtful current assets (192) (272)Total 5,251 2,084

The increase in receivables due from tax authority is mainly related payments of EGP 2.9 billion made by OTa during 2010 in relation to tax claims covering the years 2004-2007. see Note 36 “Contingent assets and Liabilities” for further information.

The following table shows the movement in the allowance for other current assets:

2010 2009at January 1 272 255foreign Exchange differences 7 (3)additions (allowances recognized as an expense) 9 29

Reclassifications (90) -Provisions Used (6) (9)At December 31, 192 272

25. Cash and cash equivalents

2010 2009Bank accounts 2,915 2,277Deposits 1,852 1,893Cash on hand 17 14Total 4,784 4,184

Cash and cash equivalents at December 31, 2010 includes an amount of EGP1.9 billion held in OTa, in which prior approval is required to transfer funds abroad.

26- Share Capital

Authorized and issued share capital and legal reservesas of December 31, 2009 the issued and fully paid share capital amounted to EGP 889 million comprising 889,100,105 shares of a nominal value of EGP 1 per share. The Company is listed on the Egyptian stock Exchange and also has GDrs (where one GDr is equivalent to 5 local shares) listed on the London stock Exchange.

On December 27, 2009, the Extraordinary General Meeting, delegated the Board of Directors to proceed with all necessary legal procedures to increase the authorized share capital from EGP 2.5 billion to EGP 7.5 billion and authorized a rights issue. In connection with the rights issue, in March 2010, the Company issued 4,356,590,515 new shares with a nominal value of EGP 1. The net proceeds from the rights issue were approximately EGP 4,357 million equivalents to Us$ 800 million.

as a result of the above transactions, as of December 31, 2010, the issued and paid up share capital amounted to EGP 5,245 million, comprising 5,245,690,620 shares of a nominal value of EGP 1 per share.as a result of the above transactions, as of December 31, 2010, the issued and paid up share capital amounted to EGP 5,245 million, comprising 5,245,690,620 shares of a nominal value of EGP 1 per share.

76

financial liabilities include secured liabilities of EGP 21.5 Billion as of December 31, 2010 and EGP 22.5 Billion as of December 31, 2009. Ingeneral, thefinancial liabilitiesaresecuredonproperty

and equipment of the relevant subsidiary, pledged shares and receivables.

The decrease in telecommunication license payable is mainly related to the change in accounting treatment of ECMs. In

2009, telecommunication license payable includes the Group’s proportional share.

30. Earnings per share

Basic earnings per share is calculated by dividing the profitattributable 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.

Currency Information of Borrowings

US$ Euro Egyptian Pound

Pakistan Rupee

Bangladeshi Taka

Algerian Dinar

Tunisian Dinar Others Total

as of December 31, 2010Total borrowings by currency of issue 22,609 939 32 2,924 1,093 7 - 351 27,955Notional amount of currency derivatives (935) (924) - 1,859 - - - - -Borrowings after derivative effect 21,674 15 32 4,783 1,093 7 - 351 27,955of which (after derivative effect): -floatingrateborrowings 5,325 15 1 4,783 1,083 7 - - 11,214fixedrateborrowings 16,349 - 31 - 10 - - 351 16,741As of December 31, 2009Total borrowings by currency of issue 23,314 1,989 2,543 3,168 562 148 204 302 32,230Notional amount of currency derivatives (975) (1,520) - 2,495 - - - - -Borrowings after derivative effect 22,339 469 2,543 5,663 562 148 204 302 32,230of which (after derivative effect):floatingrateborrowings 9,165 455 2,215 5,663 562 148 198 - 18,406fixedrateborrowings 13,174 14 328 - - - 6 302 13,824

2010 2009Current Non-current Total Current Non-current Total

Telecommunication license payable 81 431 512 1,561 442 2,003Taxes (other than income taxes) - - - 1,257 - 1,257PrepaidTrafficanddeferredincome 1,095 - 1,095 1,307 - 1,307Due to local authorities 1,677 - 1,677 716 - 716Personnel payables 395 16 411 425 - 425Other 1,069 200 1,269 740 220 960Total 4,317 647 4,964 6,006 662 6,668

29- Trade payables 2010 2009

Capex payables 2,209 2,591Trade payables due to suppliers 880 1,480Trade payables to telephone operators 564 535Other trade payables 1,058 1,139Total 4,711 5,745

Trade payables are all due within one year.

2010 2009

(loss)/Profitattributabletoequityholdersof the Company continuing operations (In million of EGP

(1,226) 280

Profit from discontinued operationsattributable to equity holders of the Company (In million of EGP

2,107 1,565

Weighted average number of shares (in millions of shares) 5,074 4,395

Loss/earnings per share – basic (in EGP) from continuing operations (0,24) 0,063

Earnings per share – basic (in EGP) from discontinued operations 0,41 0,36

Total earnings per share 0,17 0,42

28- Other liabilities

In March 2010, the Company issued 4,356,590,515 new ordinary shares through a rights issue. The rights issue was offered at EGP 1 per share and represented a fair value to the value of the existing shares. as per Eas 22 “Earnings per share” the number of shares used for prior year calculations of earnings per share shown above has been adjusted for the discounted rights issue in order to provide a comparable basis for the current year.

31- Business combinations

During 2009 the Group acquired 100% of share capital of Power-COM (Cell One) in Namibia, a GsM telecommunications operator in Namibia through its subsidiary Telecel Globe, for a cash consideration of EGP 335 million. The acquired business contributed revenues of EGP 78 million and net loss of EGP 106 million to the Group in the period since acquisition.The purchase price for this acquisition was EGP 335 million of which EGP 168 million was paid during 2009 and the remaining portion was paid in 2010. The purchase price allocation was finalizedonDecember2009.Therewerenoacquisitionsduring2010.

32- Interest in joint ventures

as of December 31, 2010 the Group had joint control in the following joint ventures.

Joint venture Shareholding Country of domiciliation

Consortium algerian Telecommunication s.P.a.

50.00% algeria

Consortium Algerian Telecommunication S.P.A. “CAT)

CaT was formerly a landline operator in algeria which ceased operations during the period. The current intention of the management of CaT is to liquidate this company. Therefore the Group has fully written down all assets relating to this business.

32. Commitments

The commitments as of December 31, 2010 and 2009 are provided in the table below:

2010 2009

Intangible assets 750 766Property and equipment 1,129 1,870 Others - 604 Total 1,879 3,240

Commitments for purchase of property and equipment mainly relate to commitments of Mena cable amounting to EGP 463 million relating to the purchase of marine cables and related equipment. The following table provides the future aggregate minimum lease payments under non-cancellable operating leases:

2010 2009Within one year 52 44Between 1-5 years 52 39after 5 years 47 44

151 127

77

2010 2009

Average exercise price in EGP per

GDR option granted


GDRs granted for

free (thousands)

Average exercise price in EGP per

GDR option granted


GDRs granted for

free (thousands)

at January 1 51.85 4 723 51,32 4 504Granted - - 1,831 - - 467forfeited - - (190) - - (90)Exercised 51.85 (4) (203) 51,32 - (158)Expired - - - rights Issue - - 1,353At December 31 - - 3,514 9,20 4 723thereof exercisable 1,377 4 198

The weighted average GDr price during 2010 amounted to Us$ 4.8(2009; Us$ 25.14).

The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2010 and 2009:

December 31, 2010 December 31, 2009

Range of exercise price in EGP

Weighted average exercise

price in EGP

Number of GDRs

(thousands)

Weighted average

remaining life in

months

Weighted average exercise price in

EGP

Number of GDRs

(thousands)

Weighted average

remaining life in months

51,85 51,85 - - 51,85 4 -Nil Nil 3,514 26 Nil 723 29

The table below sets forth the awards outstanding as of Decem-:ber 31, 2010 and their expiry dates

Expiry date - December 31 Exercise price in EGP per GDR

GDRs (thousands)2010 2009

2010 0 – 51.85 - 242011 - - 182012 - 1,377 4532013 - 1,984 1302014 - 153 792015 - - 23Total 3,514 727

35. Related party transactions

Transactions with subsidiaries, associates, 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.The main related party transactions are summarized as follows:

Grant date Tranche GDRs

granted (thousands)

Vesting period

(months)

Contractual term

(months)

GDR price at grant date

in EGP

GDR market price at

grant date in EGP

Fair value of GDRs at

grant date in EGP

January 1, 2009 1 1,377 12 36 - 153.8 148.7January 1, 2009 2 153 24 48 - 153.8 143.4January 1, 2009 3 153 36 60 - 153.8 138.2January 1, 2010 1 1,831 12 36 - 25.81 25.8

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 appointed a Com-mittee 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 denomi-nated 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 vest-ing 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 prices, a GDr price volatility between 29% and 69%, a dividend yield of 1% and an annual risk free rate between 3.74% and 6.45%.The following table provides a breakdown of the movements of outstanding GDr options and GDrs granted and their weighted average exercise price:

34. Share based compensation

The following table provides a summary of the Company’s existing Executive share Option Plans (EsOP), not expired as of December 31, 2010:

Sale of services and goods

Purchase of services and goods Interest income

2010 2009 2010 2009 2010 2009Weather Investments GroupWeather Investments 48 69 1 - - -Wind Telecomunicazioni spa 4 17 3 6 - -WIs sarl 495 437 364 364 - -Orascom Telecom service Europe - - 54 - - -Joint venturesECMs - 42 - - - -OTT 17 20 - 3 - -AssociateGWMC - - - - 204 179ECMs 63 - 2 - - -Other related partiesOrascom Construction Industries - - 2 11 - -summit Technology (Orascom Technology solution) - - 20 41 - -Orascom Trading - - - 64 - -Orascom Training & Technology - - - 1 - -Contrack facilities Management - - - 4 - -Total 627 585 446 494 204 179

Receivables Payables2010 2009 2010 2009

Weather Investments GroupWeather Investments 34 26 3 2Wind Telecomunicazioni spa 5 4 10 20WIs sarl 91 147 55 90rain srl - 8 - 9Joint venturesECMs - 6 - 1OTT - 2 - -AssociateGWMC 4,655 3,542 - -ECMs 13 - 1 -Other related partiesOrascom Construction Industries - - - 2summit Technology (Orascom Technology solution) - 5 2 5Orascom Trading - 1 - 7Gemini 1 1 - -Total 4,799 3,742 71 136

78

Transactions with Weather Investments Group

The Group is directly controlled by Weather Investments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Company and interconnectiontrafficbetweentheGroupandthesubsidiariesofWeather Investments, and particularly Wind Telecomunicazioni spa. Transactions with Joint Ventures of the Group

Transactions with joint ventures of the Group mainly refer to transactionswithOTTandECMSrelatingtointerconnectiontrafficand the sale of handsets (see note no. 6 assets and liabilities held for sale and discontinued operations).

Transactions with Associates of the Group

OTH provided financing to GWMC, an associate of the Group,in connection with the funding of the acquisition of the spectrum licenses.Transactions with associates also include ECMs relating to interconnection traffic and the sale of handsets (see note no. 6assets and liabilities held for sale and discontinued operations).

Transactions with other related parties

The Group is indirectly controlled by the sawiris family. Transactions with entities under the control of the sawiris family mainly refer to transactions with Orascom Constructions Industries, Orascom Technology solutions, Orascom Trading and Orascom Training & Technology.

Transactions with Orascom Technology solutions mainly refer to maintenance activities of electronic hard- and software carried out for the Group. Orascom Constructions Industries mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technology mainly include management training programs.

36- Contingent liabilities

The 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, 2010 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 aggregate, would not be material to the Group’s results.

Pioneer Investment Ltd

The Jordanian Tax authority claims for JD 49.2 million equivalent to 402.8 M EGP, income tax against Pioneer Investment Ltd. in connection with the sale of fastlink (Jordan Mobile Telecommunication services) in 2002 to MTC by Pioneer Investment Ltd a wholly owned subsidiary of OTH.

Ring Group

ring group received a tax claims amounting to Us$ 46 million, equivalent to 267 M EGP relating to the assessment of the period 2005/2008. The company has provided a provision for such assessments with an amount of Us$ 9 million, equivalent to 52.2

and local tax authority, U –Com agreed to pay UsD 3.1 Million equivalent to EGP 17.9 million as advance before the end of year 2010, the company already paid UsD 1.9 million equivalent to EGP 11 million as at 30 september 2010 in order to resolve all pending issues relating to the taxdue relating tofinancialyears2008 and 2009.

M EGP has been accrued. No further appeals were made by ring Group and as such the amount became payable. No further payments have been made and management have not made any provision as liquidation of this company is in process.

Orascom Telecom Iraq Disposal Warranties

Orascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile services-subsidiary) the company provided warranty to the purchaser of the investment. This warranty, which in respect of tax covenant claims, of which no more than Us$ 60 million equivalent to 348.3 M EGP shall be payable in relation to tax covenant claim.

Intouch Group

Intouch group received a tax claim amounting to DZD 205 million equivalent to 16 M EGP in addition to DZD 51 million equivalents to 3.9 M EGP. On January, 2009 the company paid 20% from total tax claim in order to be able to appeal against that claim. The subsidiary was granted a tax exemption amounting DZD 205 million and the remaining amount of DZD 51 million was recorded as provision

Wind Canada

In January 2010, Globalive Wireless Management Corp. was named as a respondent in an application by Public Mobile Inc. to the federal Court of Canada for an order overturning the December 2009 Cabinet order which permitted GWMC to launch its wireless operations. In that December 2009 order, the Cabinet had determined that the Company met the requirements of Canada’s ownership and control rules and was, therefore, eligible to commence operations. On february 4, 2011, the federal Court ruled that the Cabinet order contained two errors and should be quashed. WIND Mobile and the Canadian Government have appealed the decision and the decision has been stayed pending the resolution of the appeal. WIND Mobile expects a favorable outcome.

Telecel Globe GroupTelecel CAR

On, august 2009, Telecel Car received from the Post and Telecommunication Ministry a license revaluations document, stipulated that TCar should pay a complement amount of 1B Xaf equivalent to 11.8M EGP for the licensee. Telecel did not pay this amount and no provision has been booked.Telecel has sent a request to the government in which it proposes the payment of the revaluation of the licence. This payment is conditioned by the recovery of receivables due to Telecel Car by socatel (public operator) and Government 712 million Xaf equivalent to 8.4M EGP . The amount that has been paid on Q4 2010 by Telecel is 400 million Xaf equivalent to 4.7 M EGP instead of 288 million Xaf equivalent to 3.4 M EGP. also, Telecel has paid an amount of 663 million Xaf equivalent to 7.8 M EGP , as agreement fees, these amounts have been booked on costs, but they have not received any bill or agreement relating to this fees.

U-Com

IOn January 2010 UCOM a subsidiary of Telecel Globe received from the tax administration preliminary assessment amounting to Us$ 11 million equivalent to EGP 63.8 million. The company has booked a total provision with an amount Us$ 7 million equivalent to EGP 23.2 million.

On august 2010, a compromise has been signed between U-COM

PMCL tax claimsIncome tax proceedings

PMCL is involved in proceedings regarding tax claims up to the tax year 2007, whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. PMCL has tax claims up to year 2007 which the tax authorities either framed or assessed. PMCL has filed appeals to the appellate authorities against there-assessment orders. The disputed demand against the above assessments framed/amended aggregates to rs. 1,920.51 million equivalent to 130.2 M EGP. The company has made a provision for such assessments for an amount of rs 191 million equivalent to 13 M EGP.

Sales tax proceedings

The tax authorities levied sales tax/federal excise duty aggregating rs. 3,254 M equivalent to 220.6 M EGP for the year 2008. The parentcompanyhasfiledappealagainsttheorderbeforeCIR(A).AwritpetitionhasbeenfiledwiththeHighCourt.Thetaxauthoritiesissued orders for the years 2007 to 2009 for an aggregate amount of rs 838 M equivalent to 56.8 M EGP on account of fED by contending that the parent company was franchisee of IWCPL. TheparentcompanyhasfiledappealagainsttheseordersbeforetheCIR(A).AwritpetitionhasalsobeenfiledbeforetheHighCourtand stay against recovery of tax demand has been granted in this respect.

Telecom Egypt Interconnection Prices

TelecomEgyptfiledacomplaintwiththeNationalTelecommunicationregulatory authority (NTra), with the purpose of changing it’s interconnect prices with the mobile operators, with which it has existing contracts. ECMs responded to the complaint before the NTra Dispute resolution Committee asking to honor the existing effective contract between ECMs and Telecom Egypt. The NTra issued a ruling on the dispute on september 3, 2008 in favor of Telecom Egypt by changing the interconnect prices between the fixedandmobilenetworkstobeeffectivefromthatdate.

ECMs informed the NTra of its objection and rejection of the decision as it has no legal or contractual basis and that we intend to bring the matter to the courts in order to protect our interest. OnNovember01,2008alawsuitagainsttheNTRAwasfiledinthe administrative Court at the state Counsel asking for staying and nullifying the NTra decision.

On september 3, 2009 and based on the interconnect agreement (article (25) first paragraph) the Company filed an arbitrationagainst TE according to the rules of The Cairo regional Center for International Commercial arbitration in order to settle the existing dispute between the two parties. On October 9, 2009 TE sent an initialresponseandacounterclaiminthearbitrationfiledagainstit.

On December 31, 2009 the NTra issued a decree (which was amended by another decree on January 14, 2010) making new changes to the interconnect prices between the different operators to be applied retroactively from september 1, 2009. The decrees werebasedontheSeptember03,2008decision.ECMSfiledanadministrative claim to stay and nullify the 2 decrees. On June 5, 2010 the administrative court accepted the summary requestinthelawsuitsfiledbytheCompanyandthereforeruled:

First:

Staying the implementation of the first appealed decision dated3/9/2008 related to items 2, 8, 9 -and all effects related to its consequences- that sets the interconnection tariffs for outgoing calls initiated from Telecom Egypt terminated on Mobinil network at 11.3 P.T. per minute and setting interconnect tariffs for outgoing calls initiated from Mobinil terminated on Telecom Egypt at 6.5 P.T. per minute, and obliged the defendant to pay all the expenses related to this lawsuit.

Second:

staying the implementation of the second appealed decision dated 31/12/2009 -and all effects related to its consequences - that was amended by the decision dated 14/01/2010, which sets interconnect tariffs for outgoing calls initiated from mobile operators networks (VodafoneEgypt &Etisalat Egypt) and alsoTelecomEgypt network terminated on Mobinil network at 8.5 P.T per minute calculated on seconds basis, and setting interconnection tariffs for outgoing calls initiated fromMobinil terminated onVodafoneEgypt network at 10 P.T per minute calculated on the basis of the second and the terminated on Etisalat Egypt network at 11 P.T per minute calculated on the basis of the second and the terminated on Telecom Egypt network at 6.5 P.T per minute calculated on the basis of the second, and what was included in this decision from setting tariffs by the NTra on a regular basis and when needed, and obliged the defendant to pay all the expenses related to this lawsuit. The administrative court has referred the lawsuit to the state commissioners’ authority to prepare a legal opinion concerning the request to nullify the said decisions.The NTra appealed the staying decision before the High administrative Court. The state Commissioner issued its advisory report on December 6, 2010 in the summary appeal, recommending the reversing of the summary decision rendered on June 05, 2010 in favor of ECMs. The High administrative Court shall decide on the appeal after hearing the parties reply to the state Commissioner report.ECMs and its external legal counsel believe that it has a strong legal position as the NTra’s decisions do not have legal or contractual ground, hence interconnect revenue and costs continued to be recorded based on the existing agreement with Telecom Egypt and other mobile operators.

If ECMs had applied these decisions, the Group’s share of interconnect revenue and interconnect costs would have decreased by approximately Us$ 11 million equivalent to 63.8 M EGP and Us$ 4 million equivalent to 23.2 M EGP, respectively for the year ended December 31, 2008, by approximately Us$ 39 million equivalent to 226.4 M EGP and Us$ 9 million equivalent to 52.3 M EGP, respectively for the year ended December 31, 2009 and by approximately Us$ 57 million equivalent to 330.9 M EGP and Us$ 14 million equivalent to 81.3 M EGP, respectively for the financialyearendedDecember31,2010.

OTA tax claims

OTa has been inspected by the tax authorities up to the end of fiscalyear2009whichhasresultedinthreetaxclamis

Year 2004

OnApril27,2009OTAhasreceivedafinaltaxassessmentrelatingto 2004 tax year amounted to DZD 3,948 million equivalent to 308.7MEGP.TheCompanyfiledaclaimagainstthetaxauthorityafterthepaymentof20%offinaltaxassessment.

In January 2010 the company received a refusal on the objection datedJune2009. OTAsubsequentlyfiledanappealbefore the

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Central Committee which was subsequently rejected. On april 4, 2010anappealwasfiledbeforetheAdministrativeAlgerianCourt“Tribunal administrative algérienne”.

an amount of DZD 4,532 million equivalent to 354.4 M EGP, including penalties of DZD 584 million equivalent to 45.7 M EGP has been paid in relation to this tax assessment in order to proceed with the various appeals.

Years 2005-2007

InNovember,2009,OTAreceivedafinal taxassessmentof theyears 2005 until 2007, amounting to DZD 43,910 million DZD equivalent to 3,434 M EGP. approximately 85% of the assessed amount is due to a rejection of OTa’a accounts by the DGE (Tax Department for Large scale Companies) .OTa has appealed the assessmentsafterthepaymentof20%offinaltaxassessment.

On March 4, 2010 OTa received a rejection on its administrative appealfiledinDecember2009.Inordertofileitssecondappeal,OTa paid a further 20% of the remaining outstanding balance of the taxes and penalties assessed by DGE, amounting to approximately Us$ 110 million equivalent to 638.6 M EGP. On March 30, 2010 the subsequent appeal was declined. On april 4, 2010OTAfiledbeforetheAdministrativeAlgerianCourt“Tribunaladministrative algérienne”.

an amount of DZD 47,548 million equivalent to 3,718 M EGP, including penalties of DZD 3,639 million equivalent to 284.5 M EGP has been paid in relation to this tax assessment in order to proceed with the various appeals.

Payment of the remaining penalties amounting to DZD 1,767 millionequivalentsto138.2MEGPhasbeensuspendeduntilfinalruling of the administrative Court.

Years 2008-2009

InNovember2009,OTAreceivedafinaltaxassessmentrelatingto the tax years 2008 and 2009 amounting to DZD 17,064 million equivalents to 1,334 M EGP. On february 6, 2011, OTa paid the full amount of the tax claim to avoid penalties. During february 2011OTAfiledanappealbeforetheAdministrativeAlgerianCourt“Tribunal administrative algérienne”.

In relation to the above disputes, based on a technical report prepared by an external expert, OTa has accrued a provision of DZD 6,802 million as follows:• DZD 908 million equivalent to 71 M EGP for 2004 tax claim• DZD 2,957 million equivalent to 231.2 M EGP for 2005/2007

tax claim• DZD 2,937 million equivalent to 229.7 M EGP for 2008/2009

tax claimThe experts report assumes that the reject of accounting is arbitrary and the related tax assessments have been disregarded by the experts estimate. all amounts will be recoverable if OTa’s case against the tax authority is successful.

Letters of credit and guarantee

The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following:

• Letters of guarantee provided by ring Egypt to suppliers’ .The Company’s share in letters of guarantee is equivalent to Us$ 52 million.

• Letter of Guarantee amounting to Us$ 1 million equivalent to 5.8 M EGP. In favor of NTra to guarantee MENa Cable

execution of its entire obligation related to constructing, operating and renting sea cables networks and its infrastructure for international communications.

• Letter of guarantee in a favor of Lebanon Ministry of Telecommunication (rOL) to guarantee OTH in the payment of any amount due by the selected Participant to rOL amount with Us$ 30 million equivalent to 174.1 M EGP.

• Guarantee provided by Orascom Telecom Bangladesh in favor of Ministry of Post & Telecommunication, the Chief Controller of Exports and Imports and Power development board existed of BDT 99 million equivalent to equivalent to 8.1 M EGP.

• Guarantee provided by MENa Cable in favor of Gulf ridge International equivalent to Us$ 29.1 million equivalent to 169 M EGP.

37-Subsequent events

AsdescribedinNote6,AssetsandLiabilitiesClassifiedAsHeldfor sales and Discontinued Operations, on January 5, 2011 the Company announced that it had completed the sale of its entire shareholding in Orascom Tunisia Holding Ltd and Carthage Consortium Ltd. for a total cash consideration of Us$ 1.2 billion equivalent to EGP 6,967 million.

On January 17 2011,Orascom Telecom Holding announced obtained the support of its senior secured Lenders for relief from representations, warranties, and covenants in the credit agreements as they relate to Orascom Telecom algeria (“OTa”), in ordertoprovidetheGroupwithgreaterflexibilitywhileitassessesits alternative options relating to OTa. On March 1, 2011, Orascom Telecom Holding (OTH) announced that it has been awarded an extension to the management contract of alfa with the republic of Lebanon, for a further year commencing on february 1, 2011. The terms of this new contract remain the same whereby, OTH receives a monthly sum of Us$ 2.5 million equivalent to EGP 14.5 million in addition to 8.5% of total revenues. Out of these amounts, OTH is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The republic of Lebanon is fully responsible for the CaPEX during the contract period.

VimpelCom Transaction

VimpelCom Ltd. (“VimpelCom”) and WIND TELECOM S.p.A.(“WIND TELECOM” formerly, Weather Investments s.p.a.) announced in October 2010 that they had signed an agreement to combine the two groups (the “Transaction”). at the closing of the Transaction,VimpelComLtdwillown,throughWINDTELECOM,51.7% of Orascom Telecom Holding s.a.E. (“Orascom Telecom”) and 100% of Wind Telecomunicazioni s.p.a. (“Wind Italy”). Under the terms of the Transaction, WIND TELECOM’s shareholders willcontributetoVimpelComtheirshares inWINDTELECOMinexchange for a consideration consisting of 325,639,827 newly issued VimpelCom common shares, US$1.8 billion equivalentto EGP 10,450 million in cash and certain assets that will be demerged from Orascom Telecom and from Wind Italy. The WIND TELECOM interests in these assets, which principally comprise Orascom Telecom’s investments in Egypt and North Korea, will be transferred to the current WIND TELECOM shareholders. Wind Hellas Telecommunications s.a. in Greece is entirely excluded from the Transaction.

On March 17, 2011 it was announced that the majority of VimpelCom shareholders had voted in favor of the issuance ofVimpelCom common shares and convertible preferred sharesandtheincreaseofVimpelCom’sauthorizedsharecapitalneededto complete the combination. following this favorable outcome, themanagementteamsofVimpelComandWINDTELECOMwillproceed in satisfying the conditions precedent for the completion

oftheTransaction,whichisexpectedtotakeplaceinthefirsthalfof 2011.

On March 29, 2011 the Company announced that it has obtained the consent of the Egyptian financial supervisory authority’s to convene its Ordinary General Meeting and Extraordinary General Meeting on april 14, 2011 to vote on certain resolutions related to the previously announced expected combination of WIND TELECOM S.p.A. with VimpelCom Ltd. The resolutions to bevoted on include:

Refinancing Plan: theapprovalofarefinancingplantorepaytheCompany’s outstanding secured and high yield debt together with certain derivative transactions for an amount of approximately Us$ 2.7 billion equivalent to EGP 15,675 million.

The refinancing plan will be entered into as a related partytransactionwithVimpelCom(oroneof itsaffiliates)followingtheclosingofVimpelCom’scombinationwithWINDTELECOM,andunderwhichVimpelComwouldprovide the funding to refinancethe Company’s secured and high-yield debt, together with certain derivative transactions. The combination of WIND TELECOM and VimpelCom triggers the refinancing of the senior secured creditfacilityandequitylinkednotes.Inaddition,therefinancingofthehigh yield notes will facilitate the execution of the demerger.

Increase in Authorized Share Capital : an increase in the Company’s authorized share capital to EGP 14 billion.Pursuant to the proposal to increase the authorized share capital from EGP 7.5 billion to EGP 14 billion, the current issued and paid-in capital will remain the same. any future issuances will be undertaken in order to repay debt, will offer customary preemptive rights to all shareholders, and will be issued at fair market value rather than par value.

Demerger Plan: the approval of the planned demerger from OTH of Orascom Telecom Media and Technology Holding s.a.E. (“OTMT”) a company to be formed at the time of the demerger. OTMT will hold certain assets of OTH that are not intended to form part of theVimpelCom–WINDTELECOMgroupgoingforward,includingOTH’s interests in Egyptian Company for Mobile services, CHEO Technology Joint Venture in North Korea, Orascom TelecomVentures S.A.E. (formerly Intouch Communications Servicess.a.E.) as well as other investments in the media and technology sectors, including undersea cable assets.

The split of OTH into two separate companies will be conducted by the way of a demerger of OTMT and will result in existing shareholders of OTH holding the same percentage interest in OTMT as they hold in OTH as of the record date of the demerger. following the effectiveness of the demerger and consummation of theVimpelCom-WINDTELECOMtransaction,WINDTELECOM’sthen owned 51.7% indirect stake in OTMT will be transferred to Weather Investments II s.à r.l. (“Weather II”), the current main shareholder of WIND TELECOM, as part of the consideration for the VimpelCom-WINDTELECOMtransaction.WeatherIIhasnotifiedOTH that it intends to cause OTMT, following the completion of the demerger and the listing of OTMT shares on the Egyptian stock Exchange, to launch a voluntary tender offer to buy back all of OTMT’s issued shares at fair market value (the “Buyback Tender Offer”). An independent financial advisor registered with EFSAwill be appointed to give a view on the fairness of the valuation of the cash or other consideration offered to OTMT shareholders. any Buyback Tender Offer will comply with all applicable legal requirements.

On april 14, 2011 Orascom Telecom Holding s.a.E announced that the Company’s shareholders approved all of the items on the Ordinary and Extraordinary General assembly Meetings

, Shareholders approved the following significant resolutions,among others:

1. TheapprovalofarefinancingplantorefinancetheCompany’soutstanding secured and high yield debt together with certain derivative transactions in an amount of approximately Us$2.7 billion equivalent to EGP 15,675 million.

2. an increase in OTH’s authorized share capital to EGP 14 billion (with the issued and paid-in capital remaining unchanged).

3. The approval of the planned demerger from OTH of Orascom Telecom Media and Technology Holding s.a.E. (“OTMT”), a company to be formed at the time of the demerger. OTMT will hold certain assets of OTH that are not intended to form part of the VimpelCom-WIND TELECOM group going forward,including OTH’s interests in Egyptian Company for Mobile Services(“ECMS”),CHEOTechnologyJointVenturecompany(“koryolink”) in North Korea, Orascom Telecom Venturess.a.E. (formerly Intouch Communication services s.a.E.), as well as other investments in the media and technology sectors, including undersea cable assets.

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Appendix A Appendix A

Current Non-current Total Currency Nominal Line of

credit Maturity Securities

Millions of EGP Millions of contract currency

Orascom Telecom Holding S.A.E.

a1 Term Loan supplemnt 1,469 3,604 5,073 UsD 888 987 17/04/2013 secured

a2 Term Loan supplemnt 763 1,873 2,636 UsD 462 513 17/04/2013 secured

revolving Credit supplemnt 11 5,815 5,826 UsD 1,000 1,000 17/04/2013 secured

NsGB 1 3 4 EGP 4 6 08/03/2014 unsecured

NsGB-1 2 7 9 EGP 9 15 28/02/2013 unsecured

NsGB-2 - 1 1 EGP 1 6 08/03/2014 unsecured

NsGB-4 2 6 8 EGP 8 9 31/07/2015 unsecured

2,248 11,309 13,557

Pakistan Mobile Communications Limited

Citibank N.a - Islamabad - Pakistan 10 - 10 PKr 158 1,740 7/02/2011 secured

royal Bank of scotland (formerly aBN aMrO Bank)- Islamabad- Pakistan

122 120 242 PKr 3,548 3,548 18/12/2012 secured

Habib Bank Limited - Islamabad - Pakistan (2007) 69 134 203 PKr 3,000 3,000 18/12/2013 secured

royal Bank of scotland, London - Citibank London - ECGD - ECa

40 19 59 UsD 10 48 28/02/2012 secured

royal Bank of scotland, London - Citibank London - COfaCE Loan - ECa

144 - 144 EUR 19 125 30/12/2011 secured

royal Bank of scotland, London -aB svensk ExportKredit - sweeden - Hermes - ECa

29 - 29 EUr 4 46 29/03/2011 secured

royal Bank of scotland, London -The OPEC fund for international Development - ECa

19 - 19 EUr 3 10 15/12/2011 secured

royal Bank of scotland, London; Citibank International plc; sumitomo Mitsui Banking Corporation Europe Limited - ECGD - ECa round II

67 154 221 UsD 40 70 28/02/2014 secured

royal Bank of scotland London; Citibank International plc; sumitomo Mitsui Banking Corporation Europe Limited - Coface - ECa round II

116 152 268 EUr 36 85 31/12/2013 secured

royal Bank of scotland, London; Citibank International plc; sumitomo Mitsui Banking Corporation Europe Limited - Hermes - ECa round II

155 73 228 EUr 30 110 16/03/2012 secured

DEG - Germany 41 77 118 EUr 15 20 15/08/2013 secured

fMO - Netherlands 41 77 118 EUr 15 20 15/08/2013 secured

MCB Bank Limited (PKr 22.060 Billion) - Islamabad - Pakistan 350 1,245 1,595 PKr 22,060 22,060 1/04/2014 secured

sCB Bank Limited sTfa (PKr 5.1 Billion) - Islamabad Pakistan 122 171 293 PKr 4,250 5,100 5/09/2013 secured

Dubai Islamic Bank (Pakistan) Ltd Ijara facility PKr 700 Million 1 47 48 PKr 700 700 5/09/2012 secured

silkbank Limited PKr 400 Million 2 27 29 PKr 400 400 30/07/2015 secured

1,328 2,296 3,624

Current Non-current Total Currency Nominal Line of credit Maturity Securities

Millions of EGP Millions of contract currency

Orascom Telecom Bangladesh Limited

Hermes facility 92 255 347 UsD 62 120 01/07/2014 secured

UsD Commercial faciilty 186 324 510 UsD 89 130 01/08/2013 secured

DfI facility 42 106 148 UsD 26 30 15/06/2014 secured

BDT a facility 50 25 75 BDT 945 2,520 30/06/2012 secured

BDT B facility 15 39 54 BDT 714 1,020 30/06/2014 secured

standard Chartered Bank, London 35 190 225 UsD 43 50 30/09/2016 secured

Commercial Bank of Ceylon 8 - 8 BDT 100 100 28/02/2011 Unsecured

Citibank, N.a. 53 - 53 BDT 650 650 renewal in process Unsecured

standard Chartered Bank 84 - 84 BDT 1,000 1,100 16/03/2011 Unsecured

BraC Bank Ltd. 34 - 34 BDT 400 400 renewal in process Unsecured

Eastern Bank Ltd. 8 - 8 BDT 100 950 31/05/2011 Unsecured

The City Bank 16 - 16 BDT 200 200 renewal in process Unsecured

short Term WCs - sCB - 650mln 53 - 53 BDT 650 650 30/07/2011 Unsecured

short Term WCs - sCB - 1.21bln 100 - 100 BDT 1,210 1,210 26/08/2011 Unsecured

Mutual Trust Bank Limited 30 - 30 BDT 360 360 renewal in process Unsecured

Dutch Bangla Bank Limited 8 - 8 BDT 100 100 renewal in process Unsecured

814 939 1,753

Orascom Telecom Algeria S.P.A.

Hermes loan 116 148 264 UsD 47 86 15/11/2012 secured

116 148 264

Med Cable Limited

Export Credit Loan Calyon 16 - 16 EUr 2 12 13/09/2011 Guaranteed by OTH

16 - 16

Intouch for Telecommunication Services

NsGB 1 - 1 L.E 1 35 01/04/2011 secured

1 - 1

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Appendix A Appendix B

Current Non-current Total Currency Nominal Line of credit Maturity Securities

Millions of EGP Millions of contract currency Telecel Globe LimitedNedcapital 135 - 135 NaD 156 156 30/06/2016 secured Investec bank 135 - 135 NaD 156 156 30/06/2016 secured Banque de development des etats de l'afrique Central March 2007 7 19 26 Xaf 2,139 2,139 30/06/2015 secured Ecobank Centrafrique s.a 5 25 30 Xaf 2,466 2,466 08/10/2014 secured Commercial Bank Centrafrique May 2008 2 - 2 Xaf 125 125 30/06/2011 secured Commercial Bank Centrafrique sept 2007 2 1 3 Xaf 215 215 31/07/2012 secured Banque Populaire Maroco Centrafricaine 8 2 10 Xaf 850 850 28/02/2012 secured Ecobank Centrafrique s.a - overdraft 2 - 2 Xaf 250 250 12 months revolving Unsecured Banque Populaire Maroco Centrafricaine - overdraft 4 - 4 Xaf 198 198 12 months revolving Unsecured Commercial Bank Centrafrique - overdraft 6 - 6 Xaf 726 726 12 months revolving Unsecured

306 47 353 Trans World Associates (Private) Limited United Bank Limited 2 6 8 PKr 124 345 27/11/2013 secured Habib Bank Limited 2 4 6 PKr 91 252 27/11/2013 secured allied Bank Limited 1 4 5 PKr 72 200 27/11/2013 secured askari Bank Limited 1 3 4 PKr 62 173 27/11/2013 secured standard Chartered Bank Pakistan Limited 1 3 4 PKr 62 173 27/11/2013 secured Pak Oman Investment Company Limited 1 3 4 PKr 54 150 27/11/2013 secured The Bank of Punjab 1 2 3 PKr 41 115 27/11/2013 secured Bank alfalah Limited 1 2 3 PKr 36 100 27/11/2013 secured

saudi Pak Industrial & agricultural Co. (Pvt) Limited 1 2 3 PKr 36 100 27/11/2013 secured

11 29 40 Total - liabilities to banks 4,840 14,768 19,608

Current Non-current Total Nominal Maturity Securities

Bonds Millions of EGP Currency Millions

Pakistan Mobile Communications Limitedroyal Bank of scotland and Deutsche Bank securities Inc. (Euro Bond) 8 648 656 UsD 112 13/11/2013 Unsecured

Pak Oman Investment Company Limited - Karachi - Pakistan (Trustee - Public Listed TfC) 76 110 186 PKr 3,256 31/05/2013 secured

allied Bank Limited - Karachi - Pakistan (2007) 7 263 270 PKr 4,257 28/10/2013 Unsecured

Orascom Telecom Finance SCA

senior Notes OTfsCa 135 4,305 4,440 UsD 750 08/02/2014 Unsecured

Orascom Telecom Bangladesh Limited

senior secured Bonds Due 2014 108 450 558 BDT 7070 30/06/2014 secured

Orascom Telecom Oscar

Indexed linked notes 12 1,546 1,558 UsD 230 18/02/2013 secured

Total Bonds 346 7,322 7,668

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Appendix C – Scope of Consolidation Appendix C – Scope of Consolidation

Subsidiaries, joint ventures and associates Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom HoldingNorth Africa Algeria Orascom Telecom Algerie S.P.A. 96.81%

Algeria Database Management Services Algeria 100.00%Algeria Ring Algeria LLC 98.01%Algeria MobiZone Algeria Ltd 100.00%Algeria Algeria Win Call 100.00%Algeria Consortium Algerie de Telecommunication S.P.A. 50.00%Algeria Ring Algeria Maintenance (CaRing) 97.02%Morocco Kenza Telecom (Rosten Investment) 100.00%Tunisia Ring Tunisia SARL 78.21%Tunisia Ring Distribution Tunisia 77.43%Tunisia Ring Distribution Detail s.a.r.l. (Ring Retail) 76.65%Tunisia Orascom Telecom Tunisie S.A. 50.00%Tunisia MobiZone Tunisie 100.00%

Asia Bangladesh Orascom Telecom Bangladesh Limited 100.00%Bangladesh Ring Distribution (Private) Limited 98.98%Bangladesh MobiZone Bangladesh 100.00%North Korea CHEO Technology JV Company (DPKR) 75.00%Pakistan Pakistan Mobile Communications Limited 100.00%Pakistan Business & Communication Systems (Pvt) Limited 100.00%Pakistan Link Direct International (Private) Limited 100.00%Pakistan MobiZone Pakistan (Pvt.) Limited 100.00%Pakistan Trans World Associates (Private) Limited 51.00%Pakistan Ring Distribution (Private) Limited 93.67%Pakistan CaRing (Private) Limited (Ring Pakistan Service) 93.67%Pakistan Pakistan Call Company 100.00%Pakistan Link Pakistan (Pvt) Ltd. 99.99%Pakistan LinkdotNET Pakistan (Pvt) Ltd 100.00%Pakistan Waseela Microfinance Bank Ltd 100.00%

Middle East Dubai Global Entity for Telecom Trade Ltd (JAFZA) 100.00%Dubai Ring Distribution FZCO 96.52%Dubai LinkDotNet LLC 100.00%Dubai MobiZone FZ LLC 100.00%Egypt Middle East and North Africa for Sea Cables 100.00%Egypt Cortex for Services & Consultations S.A.E. 94.00%Egypt Ring Distributions S.A.E. 99.00%Egypt Advanced Electronic Industries 96.52%Egypt Egyptian Company for Marketing and Telecommunication and Service "Connect" 74.74%Egypt Multi Media Mega Stores 98.80%Egypt OT Ventures S.A.E 100.00%Egypt Link Egypt 99.96%Egypt Intonet 51.00%Egypt Arab Finance Securities 100.00%Egypt Link Development S.A.E. 100.00%Egypt Link Online S.A.E. 100.00%Egypt Arpu for Telecommunication Services 100.00%Egypt Global Telecom S.A.E. 94.87%Egypt Egypt Call Telecommunication Co. S.A.E. 98.98%Egypt Mobinil Services S.A.E. 35.96%Egypt Mobinil for Telecommunication S.A.E. 28.75%Egypt Egyptian Company for Mobile Services S.A.E. 34.67%Egypt ORACAP Holding Co.S.A.E (Free zone) 100.00%Egypt E.C.P. 51.00%Egypt Orascom Holding Handset Investment Company S.A.E. 100.00%Iraq Ring Iraq 96.53%Lebanon Orascom Telecom Lebanon S.A.L. 100.00%Palestine Palestine Call 98.99%Qatar LinkdotNet Qatar 100.00%

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 African Republic Telecel Centrafrique S.A. 100.00%Sudan Sudan Call 70.00%Namibia Powercom Proprietary Ltd 100.00%

North America Canada Globalive Investment Holdings 47.60%Canada Globalive Canada Holdings 65.40%Canada Globalive Wireless Management 65.40%Canada Gloablive Wireless LP (GELP) 65.40%Canada Globalive Telecom Holdings 65.40%Canada Orascom Telecom Holding (Canada) Limited 100.00%

British Virgin Islands Arab Call Ltd. Group 100.00%Europe France OT Wireless Europe S.A.S. 100.00%

Italy MobiZone Italy S.r.l. 98.01%Luxembourg Orascom Luxembourg Finance SCA 100.00%Luxembourg Orascom Telecom Sarl 100.00%Luxembourg Orascom Telecom Finance SCA 100.00%Luxembourg Orascom Telecom Acquisition 100.00%Luxembourg Orascom Telecom One Sarl 100.00%Luxembourg Orascom Telecom Oscar S.A. 100.00%Malta Sawyer Limited 100.00%Malta Orascom Telecom Eurasia Limited 100.00%Malta Oratel International Inc Limited 100.00%Malta Moga Holding Limited 100.00%Malta International Wireless Communications Pakistan Limited 100.00%Malta Telecom Management Group Limited 100.00%Malta Telecel International Limited S.A. 100.00%Malta Orascom Tunisia Holding 100.00%Malta Carthage Consortium Limited 100.00%Malta Orascom Iraq Holding Limited 100.00%Malta Orascom Telecom Iraq Limited 100.00%Malta Orascom Telecom Ventures Limited 100.00%Malta Telecel Globe Limited 100.00%Malta OTH Canada (Malta) Limited 100.00%Malta Minimax Ventures Limited 100.00%Malta Financial Powers Plan Limited 100.00%Malta Orascom Telecom ESOP Limited 100.00%Malta Orascom for International Investment Holding 100.00%Malta Data Base Management services Limited 100.00%Malta Orascom Telecom CS Limited 100.00%Netherland Orascom Telecom Netherland S.B.V. 100.00%Switzerland Telecel International S.A. Switzerland 100.00%United Kingdom Med Cable Limited 100.00%United Kingdom Orascom Telecom WiMax Limited 100.00%

United Kingdom International Telecommunication Consortium Limited 50.00%

annual report 2010

Documents

employees of oth

contents oth annual

growth of orascom telecom

wind telecom

holding company

year of significant

financial review

oths shareholders