Orascom Telecom Second Quarter ORASCOM TELECOM HOLDING Second Quarter 2012

Transcription

1 ORASCOM TELECOM HOLDING Second Quarter 2012 P a g e 1

2 Content 1. Highlights 2 2. Performance Review 3 3. OTH Operations 8 4. Financial Statements Appendix 16 P a g e 2

3 Cairo/London (August 14, 2012), Orascom Telecom Holding S.A.E. ( OTH, or the Group ) (EGX: ORTE.CA, ORAT EY. LSE: ORTEq.L, OTLD LI), a leading provider of mobile telecommunications in Africa, Asia and North America, announces its consolidated financial and operating results for the period ending June 30, 2012, demonstrating 15% subscribers growth, 1% revenue growth and 7% increase in EBITDA year on year (YoY). 1. Highlights Total subscribers surpassed 83 million, an increase of 15% 1 YoY. Revenues 2 reached USD 934 million, exhibiting an organic 3 growth of 9% YoY. EBITDA 2 amounted to USD 469 million, showing an organic 3 growth of 14% YoY, driven by operational excellence and cost savings. Solid group EBITDA margin of 50.5%, an increase of 3.1 p.p. YoY. EBITDA margins for the major subsidiaries were as follows: Djezzy 60.3%, Mobilink 44.1%, and banglalink 38.0%. Net income before minority interest 2 stood at USD 32 million for the second quarter of 2012, while profit from continuing operations increased by 271% YoY, mainly due to lower net financing cost. Net income attributable to equity holders 2 amounted to USD 27 million compared to a net loss of USD 58 million for the same period last year. Net debt 4 stood at USD 2,953 million 2, a slight decrease of approximately 2%; Net Debt/EBITDA of 1.7x as at June 30, Table 1: Group key indicators Thousands 2Q12 2Q11 Change Organic Growth 1H12 1H11 Change Total subscribers 83,384 72, % 83,384 72, % Revenues (USD) 934, , % 9% 1,833,708 1,814, % EBITDA (USD) 469, , % 14% 902, , % EBITDA margin 50.5% 47.4% % 47.0% 2.3 Net income (USD) 31,694 (47,589) n.m. 152, ,130 (81.4%) EPS (USD per GDR) 0.03 (0.06) n.m (82.2%) Capex (USD) 79,499 83,139 (4.4%) 143, ,139 (3.8%) 1. Excluding Alfa, Mobinil, koryolink and Powercom Ltd. subscribers from last year for comparative purposes. 2. Income Statement and Balance Sheet figures are in US dollars in accordance with the International Financial Reporting Standards (IFRS). 3. Organic growth for Revenue and EBITDA: non-ifrs financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, which includes business under liquidation, disposals, mergers and acquisitions (Please refer to glossary of terms for the definition of organic growth ). 4. Net debt is calculated as a sum of short term debt, long term debt, less cash and cash equivalents. Note: Figures for the period ending 30 June 2011 were represented to reflect the effect of the spun-off assets. P a g e 2

4 Ahmed Abou Doma, Chief Executive Officer, commented on the results: I am pleased to announce Orascom Telecom s second quarter results. Group EBITDA growth once again surpassed consolidated revenue growth, another testimony to strong operational excellence initiatives across all of our operations, leading to profitable growth for yet another quarter. Total subscribers surpassed the 83 million mark, achieving 15% growth YoY, mainly driven by the increase in banglalink s subscribers, up 26% YoY. Consolidated revenues recorded an organic growth of 9% YoY, resulting from strong subscriber growth and an increase in data and VAS uptake in our main subsidiaries, namely in Algeria, Pakistan and Bangladesh. EBITDA exhibited an organic growth of 14%, as a result of cost savings in our major subsidiaries, mainly driven by Pakistan. Our operations witnessed solid performance in local currency terms. Nevertheless, the fluctuation of local currencies against the US dollar continued to adversely affect our IFRS consolidated results. 2. Performance Review 2-1 Subscribers 1 Table 2: Subscriber base Subsidiary 2Q12 2Q11 Change Djezzy, Algeria 17,747,586 15,963, % Mobilink, Pakistan 35,953,434 33,378, % banglalink, Bangladesh 25,490,566 20,202, % Telecel Globe 2 3,736,000 2,789, % Subtotal 82,927,586 72,333, % Operations consolidated under the equity method 2Q12 2Q11 Change Wind Canada, Canada 456, , % Total 83,384,472 72,650, % The Group s subscriber base stood at more than 83 million customers, achieving approximately 15% growth YoY. banglalink exceeded the 25 million subscriber mark, a 26% growth YoY, where the launch of a new start-up offer alongside digressive and regional tariff plans all contributed to attracting new additions to the banglalink network during the quarter. In Algeria, Djezzy grew its subscriber base by 11% YoY, driven by strong subscriber acquisition coupled with the Imtiyaz loyalty program aimed at customer retention. While in Pakistan, Mobilink increased its subscriber base by approximately 8% YoY, despite intense competition in the market. Telecel Globe subscribers increased by 34% YoY, mostly driven by additions to Zimbabwe s subscriber base and supported by market leadership positions in Burundi and the Central African Republic (CAR). In Canada, subscribers of Wind Mobile increased by 44%, through strategic focus on the operator s Value Plus customer segment. 1. For comparative purposes, the subscriber base for 2Q 2011 was represented to reflect the impact of the demerger of Mobinil, koryolink and Alfa. 2. Including Zimbabwe. P a g e 3

5 2-2 Revenues Table 3: Revenues in US dollars Subsidiary/thousands 2Q12 Represented 1 Represented 1 Change 1H12 2Q11 1H11 Change GSM Djezzy Algeria 470, ,461 (1.4%) 928, , % Mobilink, Pakistan 295, , % 581, , % banglalink, Bangladesh 142, , % 271, , % Telecel Globe, Africa 2 22,914 23,955 (4.3%) 45,279 48,600 (6.8%) Total GSM 931, , % 1,826,281 1,785, % Telecom Services Ring 3,059 5,980 (48.9%) 7,427 29,020 (74.4%) Total Consolidated Revenues 934, , % 1,833,708 1,814, % Table 4: Revenues in local currency Subsidiary/billions 2Q12 2Q11 Change 1H12 1H11 Change GSM Djezzy, Algeria (DZD) % % Mobilink, Pakistan (PKR) % % banglalink, Bangladesh(BDT) % % Consolidated revenues were stable compared to the previous year, increasing by approximately 1% in US dollar terms YoY. GSM revenues showed an increase of 1% YoY, adversely impacted by local currency devaluation against the US dollar in our main operating countries (Algeria, Pakistan and Bangladesh). In Algeria, revenues declined slightly by 1% in US dollar terms, nevertheless exhibiting a growth of 4% in local currency terms, mostly due to higher subscribers growth in 1Q12 coupled with on-going customer retention programs. In Pakistan, the prolonged impact of local currency devaluation against the US dollar led to only 1% revenue growth in US dollar terms as opposed to 9% growth in local currency. Revenue grew in local currency terms, as a result of increased data and Value-Added Services (VAS) uptake, as well as tariff adjustments. In Bangladesh, revenues achieved a significant growth of 24% in local currency terms, driven by a larger subscriber base, in addition to a higher level of VAS and data adoption, and increased penetration of the Small and Medium Enterprise (SME) segment. Telecel Globe s revenues declined by 4% YoY. For comparative purposes, excluding the contribution of Powercom Ltd. in Namibia, revenues grew by 20% YoY comparative figures were represented to reflect the completion of the demerger process. 2. As per IFRS rules, Telecel Globe figures have not been represented in 2Q 2012, to reflect the disposal of Powercom Ltd. in 2Q P a g e 4

6 2-3 ARPU Table 5: Blended average revenue per user (USD) Subsidiary 2Q12 2Q11 Change Djezzy, Algeria (12.1%) Mobilink, Pakistan (4.7%) banglalink, Bangladesh (6.6%) Table 6: Blended average revenue per user in local currency Subsidiary 2Q12 2Q11 Change Djezzy, Algeria (DZD) (7.2%) Mobilink, Pakistan (PKR) (0.5%) banglalink, Bangladesh (BDT) (0.9%) In Algeria, the decrease in ARPU is mainly attributed to a decline in MOU, mostly resulting from the growth in Djezzy s subscriber base, especially in 1Q These new subscribers have a relatively lower usage pattern. In Pakistan, Mobilink s ARPU decreased by 5% in US dollar terms, while it remained stable in local currency terms, mostly due to the growing uptake and impact of VAS and data offerings, as well as tariff adjustments. In Bangladesh, ARPU declined by approximately 7% in US dollar terms and less than 1% in local currency terms, and was preserved through a particular focus on VAS and data offerings, despite strong additions to the subscriber base. P a g e 5

7 2-4 EBITDA 1 Table 7: EBITDA in US dollars Subsidiary/thousands 2Q12 Represented 2 Represented 2 Change 1H12 2Q11 1H11 Change GSM Djezzy (Algeria) 284, , % 557, , % Mobilink (Pakistan) 130, , % 250, , % banglalink (Bangladesh) 54,010 54,511 (0.9%) 98,143 99,559 (1.4%) Telecel Globe (Africa) 3 9,330 1,774 n.m. 15,591 6, % Total GSM 477, , % 922, , % Ring 202 (4,756) n.m. (2,965) (8,693) 65.9% OT Holding & Other 4 (7,935) (12,536) 52.7% (16,666) (16,802) 6.8% Total Consolidated 469, , % 902, , % Table 8: EBITDA in local currency Subsidiary/billions 2Q12 2Q11 Change 1H12 1H11 Change GSM Djezzy, Algeria (DZD) % % Mobilink, Pakistan (PKR) % % banglalink, Bangladesh (BDT) % % Group EBITDA grew by 7% YoY, with an organic growth of 14%, as a result of cost savings in our major subsidiaries. EBITDA growth continued to surpass revenue growth following the implementation of our operational excellence initiatives across the board, maintaining profitable growth. In Algeria, EBITDA remained stable in US dollar terms, however it increased by 6% in local currency terms YoY, due to continued cost savings and despite the restrictions imposed on OTA. In Pakistan, EBITDA increased by approximately 11% in US dollar terms, alongside 19% growth in local currency terms, driven by improved cost control measures for cost of sales and tariff optimization. In Bangladesh, EBITDA improved by 11% in local currency terms, translating into a 1% decline in US dollar terms, as a result of the local currency depreciation against the US dollar. EBITDA growth in local currency was mainly attributed to higher revenues for the quarter. Telecel Globe s EBITDA showed significant improvement YoY. It is worth highlighting that after excluding the contribution of Powercom Ltd. in Namibia (sold during 2011), EBITDA nearly tripled on a comparative basis, also exceeding revenue growth YoY. Group EBITDA margin for 2Q 2012 stood at 50.5%, showing an increase of 3.1 p.p. YoY. GSM margin witnessed an improvement of approximately 2 p.p. YoY, mostly due to operational excellence programs aimed at reducing Opex, thus leading to an enhancement of the margins for Djezzy, Mobilink, and Telecel Globe. In Bangladesh, EBITDA margin decreased by 4.7 p.p., due to higher marketing costs associated with the strong subscriber acquisition. 1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the holding company. 2. 2Q 2011 and 1H 2011 figures were represented to reflect the completion of the demerger process. 3. As per IFRS rules, Telecel Globe figures were not represented in 2Q 2011 and 1H 2011, to reflect the disposal of Powercom Ltd. 4. Other non-operating companies include: CAT, OTI M, ITCL, Cortex, Euroasia, IWCPL, Moga, Oratel, Sawyer, OTV, OIIH, OIH, Globalive, OT Asia, OSCAR, OT ESOP, OT Sarl, TMGL, TIL, and TIL SA. P a g e 6

8 2-5 Net Income Net Income before minority interest amounted to USD 32 million for 2Q 2012, showing a significant improvement compared to the same period last year, mostly driven by an increase of 271% in profit from continuing operations. Net Income was partially offset by an unrealized FX loss of USD 99 million at the holding company level (OTH), due to the revaluation of the shareholder loan from VimpelCom and the financial receivables from Globalive, Canada. EPS for the three months ended June 30, 2012 amounted to USD 0.03/GDR. 2-6 Capex Table 9: Capex in US dollars Subsidiary/thousands 2Q12 2Q11 Change 1H12 1H11 Change Djezzy (Algeria) 10,256 10,219 0% 20,256 14,219 42% Mobilink (Pakistan) 31,063 52,022 (40%) 55,063 97,022 (43%) banglalink (Bangladesh) 34,510 14, % 63,510 27, % Telecel Globe 3,670 6,412 (43%) 4,670 10,412 (55%) Total 79,499 83,139 (4%) 143, ,139 (4%) Consolidated Capex/Revenue 8.5% 9.0% 0.5 p.p. 7.8% 8.2% (0.4) p.p. Total Capex amounted to USD 79 million for 2Q 2012, decreasing by 4% YoY. In Algeria, Capex remained low due to the on-going ban on foreign currency transfers, which remains in effect and prevents the payment of essential suppliers, in addition to the import of critical equipment necessary for network maintenance and expansion. In Pakistan, the slowdown in capacity roll-out for the network before proceeding with network modernization led to a 40% decline in Capex. In Bangladesh, in order to accommodate banglalink s growing subscriber base, Capex increased by 138% in comparison to the previous year. Capex for Telecel Globe decreased by 43% to USD 4 million for 2Q 2012, when compared with the aggressive 3G roll-out and network expansion investments implemented during Cash and Debt Net debt declined by 2% in the first half of 2012 to reach USD 2.95 billion in comparison to USD 3.02 billion as at 31 December 2011, mainly due to increased cash flow from operations resulting from increased profitability, and a decrease in cash outflow on Capex, leading to Net Debt/ EBITDA of 1.7x as of 30 June P a g e 7

9 3. OTH Operations The Group operates in seven countries with favourable dynamics in Africa, Asia and North America. It is worth highlighting that OTH serves a population 1 of approximately 415 million people with an average mobile penetration rate of 51%. Operations owned by Orascom Telecom (OTH has 65% indirect equity ownership in Globalive Canada but a minority voting stake) ALGERIA Population: 35 million GDP Growth: 2.9% GDP/Capita PPP ($): 7,200 Pop. Under 15 years: 24% Mobile Penetration: 88% BURUNDI Population: 11 million GDP Growth: 4.2% GDP/Capita PPP ($): 400 Pop. Under 15 years: 46% Mobile Penetration: 21% BANGLADESH Population: 162 million GDP Growth: 6.3% GDP/Capita PPP ($): 1,700 Pop. Under 15 years: 34% Mobile Penetration: 58% CENTRAL AFRICA REPUBLIC Population: 5 million GDP Growth: 4.1% GDP/Capita PPP ($): 800 Pop. Under 15 years3: 41% Mobile Penetration: 19% PAKISTAN Population: 190 million GDP Growth: 2.4% GDP/Capita PPP ($): 2,800 Pop. Under 15 years: 35% Mobile Penetration: 63% CANADA Population: 34 million GDP Growth: 2.2% GDP/Capita PPP ($): 40,300 Pop. Under 15 years: 16% Mobile Penetration: 75% ZIMBABWE Population: 13 million GDP Growth: 6% GDP/Capita PPP ($): 500 Pop. Under 15 years3: 42% Mobile Penetration: 60% 1. Excluding Canada. Note: Figures from CIA Factbook (est. July 2012). Mobile penetration is based on June 30, 2012 subscriber figures and market share. P a g e 8

10 3-1 Djezzy, Algeria Table 11: Djezzy key indicators Financial data 2Q12 2Q11 Change Operational data 2Q12 2Q11 Change Revenues (USD 000) 470, ,461 (1.4%) Subscribers 17,747,586 15,963, % Revenues (DZD bn) % Market Share 56.7% 58.1% (1.4)p.p. EBITDA (USD 000) 284, , % ARPU (USD) (12.1%) EBITDA (DZD bn) % ARPU (DZD) (7.2%) EBITDA Margin 60.3% 59.2% 0.8p.p. MOU (7.8%) Capex (USD m) Churn 1 5.7% 5.2% 0.5p.p. Orascom Telecom Algeria S.p.A ( OTA or the company ) operates a GSM network in Algeria and provides a range of prepaid and postpaid products encompassing voice, data and multimedia, using the corporate brand Orascom Telecom Algerie and the dual commercial brand of Djezzy and Allo. OTA is focusing on maintaining value through key strategic pillars. These strategic pillars are oriented towards value segmentation, distribution control, operational excellence, new revenue streams and assets monetization, control of regulatory risks, and finally retaining key staff members as well as introducing new talent development programs. During July 2012, Vincenzo Nesci was appointed to the position of Executive Chairman of OTA. Vincenzo joined OTH in September 2010 as Senior Advisor to OTH's Group CEO. A year later, he was appointed to the position of Chief Executive Officer of the Sub-Saharan Africa Cluster, a responsibility he will continue to keep. He graduated with honors from the Bocconi University in Milano, where he also completed some post-graduate programs in international banking and finance. He has more than 30 years of experience in the telecoms industry. During the second quarter of 2012, the company continued to face various challenges due to unfair and arbitrary actions from a number of Government authorities, in particular, the Bank of Algeria s detrimental and unfounded decision, issued during the second quarter of 2010, instructing banks not to process any overseas foreign currency transfer by OTA, resulting in devastating effects on OTA s network and reputation. Nevertheless, the company maintained its leadership position with a market share of 57%, controlling the largest distribution across all 48 provinces (Wilayas) and operating the largest network with 7,553 Base Transceiver Stations (BTS). OTA launched promotions with strategic focus on acquisition, without creating peaks on the normal network utilization. The promotion focused on Djezzy card acquisition by offering a 50% discount on the SIM price. VAS activity distinguished itself in the marketplace through the launch of two new products, Verso and Tranquilo. The Verso product offering provides the customer with a secondary number within the same SIM. The Tranquilo product is an out of credit type of product by which the customer has the possibility to make 1 to 2 emergency calls after running out of credit. Both Verso and Tranquilo are examples of successful internal developments without the need of any external support or new technological platforms. 1 Figures for three month period. P a g e 9

11 Furthermore, the company continued to promote existing products through very successful communication campaigns. Three major campaigns were launched during 2112, focusing on Control products, Leadership: 17 million customers and First operator with ISO certification. Several handset-related campaigns were launched during the period to create buzz in the market, offering handsets at very competitive prices, with no subsidy. Campaigns were coordinated in cooperation with top recognized handset manufacturers (Samsung Galaxy on exclusivity in the country; several Nokia handsets and Blackberry curve). It is worth highlighting that Djezzy managed to become the official sponsor of the national handball team, the second most popular sport in the country, and supported the team during the African games and Olympic qualifiers. In effort to improve customer service, a flagship store was launched, the largest telecom operator s shop in the country with over 400 m 2. OTA is now able to serve its customer base in the Amazigh language and therefore the only operator to offer three languages to customers when contacting the call centre (Arabic, French and Amazigh). Djezzy s revenues increased by 4% YoY, from DZD 34 billion to approximately DZD 36 billion in line with the recovery trend seen in previous quarters. EBITDA increased by 6% in local currency terms. Capex remained low at USD 10 million, mainly due to the ban on overseas foreign currency transfers. Subscribers reached million, showing a growth of 11% YoY. 3-2 Mobilink, Pakistan Table 12: Mobilink key indicators Financial data 2Q12 2Q11 Change Operational data 2Q12 2Q11 Change Revenues (USD 000) 295, , % Subscribers 35,953,434 33,378, % Revenues (PKR bn) % Market Share % 30.7% (0.6)p.p. EBITDA (USD 000) 130, , % ARPU (USD) (4.7%) EBITDA (PKR bn) % ARPU (PKR) (0.5%) EBITDA Margin 44.1% 40.4% 3.7p.p. MOU % Capex (USD m) (40%) Churn 2 7.1% 7.1% 0p.p. Pakistan Mobile Company Limited (PMCL) operates under the brand Mobilink and has established itself as a market leader amongst Pakistan s GSM network operators, providing prepaid and postpaid voice and data services to individuals and corporate clients across Pakistan. Mobilink is steadfast and focused on retaining and strengthening its market share to achieve revenue growth, whilst continuing to reduce operational costs. The telecom industry in Pakistan remained competitive with focus on voice, SMS and data offers. Data products continued to gain momentum in the industry as all operators introduced data products, enhancing their respective product portfolios. Major developments took place on the regulatory front, including the limitation on the number of SIM cards to only five against each CNIC (National identity card), alongside the implementation of a new regime for registering and activating new SIM cards. During the second quarter of 2012, data promotions evolved to become a major part of media campaigns. Mobilink continued to improve its data proposition for all segments of the subscriber base. Customers were given aggressive offers with unlimited daily and late night bundles at attractive rates. A new stock-keeping unit ( SKU ) was launched for the youth brand (Jazba) to emphasize the individuality and passion of Pakistani youth for technology. The launch was supported by a TVC and music video along with an outdoor campaign. 1. Market share, as announced by the Regulator in Pakistan is based on information disclosed by the other operators which use different subscriber recognition policies. As of this release, market share for June had not been disclosed by the regulator. The above figure reflects market share as of 31 May Figures for three month period. P a g e 11

12 To further strengthen the association of Mobilink Jazz with Cricket, the national cricket team players were taken onboard as brand ambassadors and major international cricketing events were sponsored. Furthermore, to increase customer engagement, a bonus on usage offer was introduced. Building on its tradition of introducing attractive offers for international calling, new International Direct Dialing ( IDD ) offers for United Arab Emirates and United Kingdom were launched. Mobilink Indigo introduced a new tariff plan for its postpaid customers. i-300, a simplified new package, offering buckets of minutes, SMS and GPRS against a line rent of PKR 311. Indigo also unveiled HTC One X, the world s first quad-core smartphone for its customers. On the VAS side, an innovative service, Mobitunes Star was launched during the second quarter of This feature allows customers to copy a ring-back tone while listening to a friend's tune. A Social Calendar Service was introduced, which allows customers to get all the latest information about social events of their choice and make a list of these on their handsets. Mobilink s revenues amounted to PKR 27 billion for the second quarter of 2012, an increase of 9% YoY. EBITDA reached approximately PKR 12 billion, a 19% increase YoY, translating into an improved EBITDA margin of 44%. Capex declined by 40% to USD 31 million, in comparison to the aggressive network expansion and maintenance that took place during The subscriber base also exhibited growth of 8%, reaching million customers. 3-3 banglalink, Bangladesh Table 13: bangalink key indicators Financial data 2Q12 2Q11 Change Operational data 2Q12 2Q11 Change Revenues (USD 000) 142, , % Subscribers 25,490,566 20,202, % Revenues (BDT bn) % Market Share % 26.3% 0.9p.p. EBITDA (USD 000) 54,010 54,511 (0.9%) ARPU (USD) (6.6%) EBITDA (BDT bn) % ARPU (BDT) (0.9%) EBITDA Margin 38.0% 42.8% (4.7)p.p. MOU % Capex (USD m) % Churn 2 5.1% 5.1% 0p.p. Orascom Telecom Bangladesh ( OTB ) provides its services under two brand names: banglalink and Icon. OTB s marketing strategy is oriented towards targeting different consumer segments with tailored products and services to cater for the needs of these segments. During the period, Bangladesh Telecommunication Regulatory Commission (BTRC) has published the Draft VAS Guidelines outlining a framework which will favor local VAS service providers, once made official. The Government has announced 72 new gateway licenses to different firms in three categories of which 22 are international gateway ( IGW ) licenses, 21 are interconnection exchange ( ICX ) licenses and 29 are international internet gateway ( IIG ) licenses. To date, the Government has handed over a total amount of 26 IGW, 21 ICX and 35 IIG licenses. The Government has planned on auctioning 3G licenses during 2012, and Draft 3G licensing guidelines were submitted to the ministry by BTRC. Under this process, a total of five licenses shall be awarded, of which one is reserved for state-owned Teletalk, one for a new entrant and the remaining three for existing telecom operators. In addition, BTRC issued the Draft Telecommunication Competition Regulation, which could lead to Significant Market Power Regulations, stipulated in the 2G renewed licenses. 1. Market share, as announced by the Regulator in Bangladesh is based on information disclosed by the other operators which use different subscriber recognition policies. 2. Figures for three month period. P a g e 11

13 banglalink continued to launch attractive services and offers to the market. A new attractive package with digressive tariff was launched, in addition to loyalty programs, bonus on usage, and a reactivation promotion offering bonus on recharge and attractive tariffs. banglalink continued its special focus on the data market, leading to a 98% increase in monthly data revenue compared to December banglalink has introduced a number for notification based services through mobile terminated ( MT ) charging features leading to sizable incremental revenue in VAS. banglalink realized an important milestone by exceeding 25 million subscribers mark; a growth of 26% YoY. banglalink s market share reached 27%, with revenue increasing to USD 142 million, a growth of 11%. In local currency terms, revenues achieved a remarkable growth of 24% reaching approximately BDT 12 billion. EBITDA amounted to USD 54 million, slightly lower than last year, mainly due to local currency devaluation. 3-4 Wind Mobile, Canada Table 14: Wind Mobile key indicators 1 Operational data 2Q12 2Q11 Change Subscribers 456, , % ARPU (USD) (3.9%) ARPU (CAD) (0.4%) Globalive Wireless Management Corporation ( The company or Wind Mobile ), operates its wireless business under the brand name Wind Mobile, a Canadian wireless operation jointly owned by AAL Holdings Corporation and OTH. During the period under review, Wind Mobile continued its "Value Plus" strategy execution, adding primarily postpaid subscribers while carefully managing prepaid economics for both voice and mobile broadband customers. The Telecom Act was amended effective 29 June 2012 to remove foreign investment restrictions for telecom companies that hold less than a 10% share of the total Canadian telecom market. Companies that are successful in growing their market share to greater than 10% organically (i.e., other than by way of merger or acquisitions) will continue to be exempt from the restrictions. Wind Mobile continues to grow its market share on a normalized basis for its coverage by adding 41 thousand subscribers during the second quarter, growing its active subscriber base to 457 thousand, an increase of 44%. The company maintained a special focus on handsets, continuing to target the needs of its Value Plus customer segment. WIND Mobile strengthened the midrange lineup with the launch of the Lumia 700 and Samsung Galaxy Q. Wind Mobile, simultaneous with the Big 3, launched the popular Samsung Galaxy S3 which is becoming Wind Mobile s bestselling handset. Wind Mobile focused on raising awareness with the WINDimonial mixed media advertising campaign, shining a spotlight on over 450,000 customers by featuring real customer testimonials. The company continued to expand its network by launching the city of Barrie and paid special focus on improving its quality in existing markets, increasing its on Air site count to more than 1,200 sites. 1. Wind Canada is consolidated according to equity method. 2. Figures for three month period. P a g e 12

14 4. Financial Statements (IFRS) Income Statement USD thousands 2Q12 Represented 2Q11 Change 1H12 Represented 1H11 Change Revenues 934, ,546 1% 1,833,708 1,814,414 1% Other Income 5,431 6,549 10,475 15,061 Total Expense (469,804) (493,749) (941,258) (977,349) Net unusual Items 2 1 (247) (0) EBITDA 1 469, ,348 7% 902, ,126 6% Depreciation & Amortization (170,008) (194,274) (347,435) (384,696) Impairment of Non-Current Assets (413) (1,996) (1,993) (2,245) Gain (Loss) on Disposal of Non-Current Assets (2,450) 59,231 (3,330) 57,967 Operating Income 296, ,309 (2%) 549, ,152 5% Financial Expense (112,787) (222,789) (214,926) (354,484) Financial Income 16,723 20,567 35,590 40,900 Foreign Exchange Gain (Loss) (99,063) 2 (17,063) (56,330) 2 10,433 Net Financing Cost (195,127) (219,286) (235,667) (303,151) Share of Profit (Loss) of Associates (25,071) (25,612) (49,548) (53,847) Profit Before Tax 76,759 39,269 96% 264, ,155 60% Income Tax (45,065) (30,627) (113,229) (91,737) Profit from Continuing Operations 31,694 8,642 n.m. 151,476 74, % Gains or losses from discontinued operations - (56,231) 3-699,712 4 Profit for the Period 31,694 (47,589) n.m. 151, ,130 (80%) Attributable to: Equity Holders of the Parent 5 27,116 (58,407) n.m. 142, ,303 (81%) Earnings Per Share (US$/GDR) (0.06) n.m (81%) Minority Interest 4,578 10,818 9,319 19,826 Net Income 31,694 (47,589) n.m. 151, ,130 (80%) 1. Management presentation developed from IFRS financials. 2. Mainly due to the appreciation of CAD against EGP, resulting in an unrealized FX gain related to the financial receivable from Globalive, Canada. 3. Reflects the effect of the spun off assets. 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 ). The figure also includes the effect of the spun-off assets. 5. Equates to net income after minority interest. 6. Based on a weighted average for the outstanding number of GDRs of 1,049,138,124 for 2Q 2012 and 1H 2012, and 1,046,261,121 GDRs for 2Q 2011, and 1,049,138,124 GDRs for 1H P a g e 13

15 Balance Sheet USD thousands 30 June December 2011 Assets Property and Equipment (net) 2,626,881 2,901,831 Intangible Assets 1,491,432 1,557,590 Other Non-Current Assets 1,154,212 1,089,077 Total Non-Current Assets 5,272,524 5,548,498 Cash and Cash Equivalents 1,489,391 1,013,543 Trade Receivables 248, ,195 Other Current Assets 1,067,952 1,186,206 Total Current Assets 2,805,487 2,404,944 Total Assets 8,078,011 7,953,442 Equity Attributable to Equity Holders of the Company 1,885,043 1,854,630 Minority Share 62,981 56,729 Total Equity 1,948,024 1,911,359 Liabilities Long Term Debt 3,926,307 3,492,164 Other Non-Current Liabilities 272, ,159 Total Non-Current Liabilities 4,199,120 3,747,323 Short Term Debt 515, ,826 Trade Payables 683, ,289 Other Current Liabilities 731,845 1,012,645 Total Current Liabilities 1,930,867 2,294,759 Total Liabilities 6,129,987 6,042,083 Total Liabilities and Shareholder s Equity 8,078,011 7,953,442 Net Debt 1 2,952,853 3,022, Net debt is calculated as a sum of short term debt, long term debt, less cash and cash equivalents. P a g e 14

16 Cash Flow Statement USD thousands 30 June 2012 Represented 30 June 2011 Cash Flows from Operating Activities Profit for the Period 151,476 74,418 Depreciation, Amortization & Impairment of Non-Current Assets 349, ,940 Income Tax Expense 113,225 91,738 Net Financial Charges 235, ,153 Share of Loss (Profit) of Associates Accounted for Using the Equity Method 49,549 53,848 Other 5,988 (51,787) Changes in Assets Carried as Working Capital (96,192) (360,091) Changes in Other Liabilities Carried as Working Capital 48,844 93,858 Income Tax Paid (378,269) (141,736) Interest Expense Paid (55,328) (191,274) Net Cash Generated by Operating Activities 424, ,067 Cash Flows from Investing Activities Cash Outflow for Investments in Property & Equipment, Intangible Assets, and Financial Assets & Consolidated (207,332) (234,981) Subsidiaries Net (Payments) for Current Financial Assets - - Proceeds from Disposal of Property & Equipment, Subsidiaries and Financial Assets 1,384 11,656 Advances & Loans made to Associates & other parties (76,778) (81,419) Dividends & Interest Received 4,588 8,520 Net Cash Used in Investing Activities (278,138) (296,224) Cash Flows from Financing Activities Proceeds from loans, banks' facilities and bonds 684,699 73,434 Payments for loans, banks' facilities and bonds (412,222) (1,154,854) Net Payments from financial liabilities (1,497) (6,684) Net Change in Cash Collateral 124,606 (13,809) Net Cash generated by Financing Activities 395,586 (1,101,913) Discontinued operations Net cash generated by operating activities - 48,998 Net cash (used in) generated by investing activities - 1,177,822 Net cash (used in) generated by financing activities - (1,650) Net cash generated from discontinued operations - 1,225,171 Net Increase in Cash & Cash Equivalents 541,841 86,101 Effect of Exchange Rate Changes on Cash & Cash Equivalents (66,012) 14,649 Cash & Cash Equivalents at the Beginning of the Period 1,013, ,087 Cash & Cash Equivalents at the End of the Period 1,489, ,837 P a g e 15

17 5. Appendix Foreign Exchange rates applied to the Financial Statements Currency Egyptian Pound/USD June 2011 March 2012 June 2012 Change 3 Change 3 June 2012 June 2012 vs vs June 2011 March 2012 Income Statement Balance Sheet Algerian Dinar/USD Income Statement Balance Sheet Pakistan Rupee/USD Income Statement Balance Sheet Bangladeshi Taka/USD Income Statement (0.6) Balance Sheet Canadian Dollar/USD Income Statement Balance Sheet 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 US dollars in comparison to local currency. P a g e 16

18 Ownership structure and consolidation methods Subsidiary GSM Operations Ownership June 30 Consolidation Method June IWCPL (Pakistan) % % Full Consolidation Full Consolidation Orascom Telecom Algeria % 96.81% Full Consolidation Full Consolidation Telecel (Africa) % % Full Consolidation Full Consolidation Telecel Globe % % Full Consolidation Full Consolidation OT Ventures % % Full Consolidation Full Consolidation Non-GSM Operations Ring 99.00% 99.00% Full Consolidation Full Consolidation OTCS % % Full Consolidation Full Consolidation OT ESOP % % Full Consolidation Full Consolidation Moga Holding % % Full Consolidation Full Consolidation Oratel % % Full Consolidation Full Consolidation C.A.T % 50.00% Proportionate Consolidation Proportionate Consolidation OT WIMAX % % Full Consolidation Divested OT Holding % % Full Consolidation Full Consolidation FPPL % % Full Consolidation Full Consolidation OIH % % Full Consolidation Full Consolidation OTFCSA % % Full Consolidation Full Consolidation OT Holding Canada % % Full Consolidation Full Consolidation Proportionate Proportionate ITCL 50.00% 50.00% Consolidation Consolidation SAWLTD % % Full Consolidation Full Consolidation OT_OSCAR % % Full Consolidation Full Consolidation TMGL % % Full Consolidation Full Consolidation OTO % % Full Consolidation Full Consolidation Waselabank % % Full Consolidation Full Consolidation CORTEX % % Full Consolidation Full Consolidation 1. Direct and Indirect stake through Moga Holding Ltd. and Oratel. 2. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink. 3. Direct and indirect stake through International Telecommunications Consortium Limited (ITCL). 4. OIH owns 100% of Orascom Telecom Iraq, which sold Iraqna in December The holding company for OTH s Share in Globalive, which has been accounted for under the equity method. P a g e 17

19 Glossary of terms Average Revenue per User ( ARPU ): 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. Capital Expenditure ( Capex ): Tangible & Intangible fixed assets additions during the reporting period, includes work in progress, network, IT, and other tangible and intangible fixed assets additions but excludes license fees. Churn: Disconnection rate. This is calculated as the number of disconnections during a month divided by the average customer base for that month. Churn Rule: A subscriber is considered churned (removed from the subscriber base) if he exceeds the 90 days from the end of the validity period without recharging. It is worth noting that the validity period is a function of the scratch denomination. In cases where scratch cards have open validity, the subscriber is considered churned in case he has not made a single billable event in the last 90 days (i.e. outgoing or incoming call or sms, wap session). Open cards validity is applied for OTA, Mobilink and Banglalink so far. Minutes of Usage ( MOU ): Average airtime minutes per customer per month. This includes billable national & international outgoing traffic originated by subscribers (on-net, to land line & to other operators). Also, this includes incoming traffic to subscribers from land line or other operators. OTH s Market Share Calculation Method: The market share is calculated through the data warehouse of OTH s subsidiaries. The number of SIM cards of competitors that appeared in the call detail record of each of OTH s subsidiaries is collected. This reflects the number of subscribers of the competition. However, OTH deducts the number of SIM cards that did not appear in the call detail records for the last 90 days to account for churn. The same is applied to OTH subsidiaries. This method is used to calculate the market shares of Djezzy. In Pakistan and Bangladesh, Market share as announced by the Regulators is based on disclosed information by the other operators which may use different subscriber recognition policy Organic Growth for Revenue and EBITDA: Are non-ifrs financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, such as business under liquidation, disposals, mergers and acquisitions. We believe readers of this earnings release should consider these measures as it is more indicative of the Group s ongoing performance. Management uses these measures to evaluate the Group s operational results and trends. Investor Relations contacts otinvestorrelations@otelecom.com Website: Tel: /21/22 Fax: /54 This presentation contains statements that could be construed as forward looking. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the subscriber base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the company. Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. You are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation, which is not intended to reflect Orascom Telecom s business or acquisition strategy or the occurrence of unanticipated events. P a g e 18