FY 2010
Disclaimer This document has been prepared by Telecom Egypt (the Company ) solely for the use at the analyst/investor presentation, held in connection with the Company. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information set out herein is subject to updating, completion, revision, verification and amendment and such information may change materially. The Company is under no obligation to update or keep current the information contained in this material or in the presentation to which it relates and any opinions expressed in them is subject to change without notice. None of the Company or any of their respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this document or its contents, or otherwise arising in connection with this document. This document does not constitute an offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares of the Company and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. This presentation has been made to you solely for your information and background and is subject to amendment. This presentation (or any part of it) may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (excluding the relevant person s professional advisors) or published in whole or in part for any purpose without the prior written consent of the Company. This presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Company s intentions, beliefs or current expectations concerning, among other things, the Company s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwardlooking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm analysts expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.
FY 2010
Telecom Egypt At A Glance Fact Sheet Key Statistics The nation s only fixed-line network Provides connectivity to all mobile operators Controls 100% of wholesale Internet & Data business Has one of the largest fixed-line subscribers base in the MENA region Industry leading profitability margins More than 30,000 Km of fiber optic cables 44.95% shareholding in Vodafone Egypt Vodafone Egypt reached 43.2 bn voice minutes Full ownership of Egypt s leading Internet & Data company - TE Data TE Data Market Share 63% Source: Bloomberg FY 2010 Turnover EGP 10.32 bn U$D 1.78 bn EBITDA EGP 4.87 bn U$D 0.84 bn Net Income EGP 3.31 bn U$D 0.57 bn Total Assets EGP 33.20 bn U$D 5.72 bn Total Equity EGP 27.99 bn U$D 4.83 bn Subscribers 9.33 mn Tele Density 11.87% Penetration (Household) 55.80% # of Employees (Closing) 49.00 K U$D 1 = EGP 5.80 (31/12/2010) 5 Fact Sheet Fixed Voice & Mobile Internet & Data Wholesale Submarine Cable Vodafone Egypt
Telecom Egypt s Retail Business 1 Defend Voice Revenue Responding To Aggressive Market Competition Retention of ARPU customers: Promotional offers & bundles Customers can subscribe to (Kalam 12 tariff plan) to get 120 local minutes, 80 national minutes & 10 mobile minutes in exchange of the current subscription fees with no additional cost. They will be billed every 3 months as usual. Residential Customers: a total discount of 300 L.E. (250 L.E. the installation fees & 50 L.E. the administrative fees). Business Customers: a total discount of 550 L.E. (500 L.E. the installation fees & 50 L.E. the administrative fees). Introduction of triple play services Lowest rate to mobiles from landline. Customers Choose the bundle that best fits their needs Starting from 100 L.E monthly, and they get: Extra free minutes Extra discount on international calls Interconnection cost reduction to offer more competitive rates Residential Customers From May until July TE is offering its residential customers, three months of free minutes and exemption on installation fees. The offer is applied fro local, long distance and fixed to mobile calls. Residential Customers Lowest Minute Rate. only 15 Pt. for mobile to fixed calls (starts from the first minute). This offer includes current and new customers. 6 Fact Sheet Fixed Voice & Mobile Internet & Data Wholesale Submarine Cable Vodafone Egypt
Internet and Data TE Data Internet & Data Revenue Growth (In EGP Millions) Revenue CAGR (2004-2010): 48.0% 841.7 622.3 501.5 345.2 184.7 123.5 80.0 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Market Share ADSL (In EGP Millions) Overview TE Data Fully owned subsidiary of Telecom Egypt Market leader with 63% market share Product Portfolio includes: Switched Access Services Broadband Access Internet Services Managed Access Services Extensive marketing infrastructure tailored to focus on residential and business customers. Operations in Egypt and Jordan Differentiated Service Offering 80% 70% 60% 50% 40% 30% 20% 10% 26.5% Subscribers Market Share 30.5% 9.2 27.3 44.9% 92.3 52.0% 222.2 59.0% 424.4 60.9% 625.2 883.2 63.0% 1000 900 800 700 600 500 400 300 200 100 0 IP-TV (TE VU), Prepaid International Calling Cards - (Habayebna), WiMAX Demonstration License & Data Center Services. TE Data and ART Ramadan TELive service is the first of its kind where ICT and media really merge. TE Data and Microsoft is the first of its kind partnership in Egypt and the middle east, and the 6th worldwide to provide new innovative services to its customers based on Microsoft Live platform. FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 7 Fact Sheet Fixed Voice & Mobile Internet & Data Wholesale Submarine Cable Vodafone Egypt
Telecom Egypt s International & Wholesale Growth Main Customers Segments & Service Landscape Wholesale Revenue Growth (In EGP Millions) CAGR (2006-2010): 12.8% I&W Main Customers Segments Mobile Operators Data Operators TE Retail Submarine Cables 3,053 3,852 3,936 4,197 4,939 International Services Portfolio Offers wide range of international services, including: International voice conveyance services International connectivity and data/ip services Expanded network reach through partnerships with Tier-1 international players ( AT&T, Verizon and TATA). FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 National Services Portfolio Offers wide range of national services, including: Infrastructure and transport Voice and data services Collocation and Hosting services Enables 60 million fixed and mobile subscribers and over one million broadband users. 32% 39% 39% 42% 48% Percentage of TE s Total Revenue 8 Fact Sheet Fixed Voice & Mobile Internet & Data Wholesale Submarine Cable Vodafone Egypt
Submarine Cable Opportunity International Customers BU Growth Pillars Position TE as a regional Asia And East Africa gateway to Europe for traffic originating from Asian, Middle-Eastern and African countries 1 Diversify TE International Service Portfolio Extend TE s international service portfolio by developing new value added services Leverage partnerships with global operators to enhance international brand image 2 3 Expand TE International Reach Expand TE international footprint by deploying PoPs and expanding customer base Identify opportunities for new business development (e.g. TE- North expansion or deployment of new cable system) Seek partnerships with international carriers to enter new markets Enhance Sales Capabilities Develop sales capabilities and enhance international account management Leverage TE national backbone and international infrastructure to support TE international business Project Contractual Progress (In USD Millions) # Cable IRU Value / TE Transit Corridor 1 IMEWE 36 Asset Transfer / TEN 2 Seacom/TATA 40 43 3 EIG 50 4 TE North - CYTA 50 Total 126 93 Grand Total 219 9 Fact Sheet Fixed Voice & Mobile Internet & Data Wholesale Submarine Cable Vodafone Egypt
Solid Financial & Operational Performance in 9M 2010* Telecom Egypt s Position In The Mobile Sector Customers Enjoy receiving unlimited roaming minutes for only LE I per minute anywhere. prepaid customers can send free 1500 SMS to any Vodafone number for only LE 4. 50% discount on the internet monthly subscription fees. Make 3 min. to any mobile or land line and enjoy 5 minutes to any Vodafone number. Upon recharging, customers enjoy from 3 to 30 free days to any Vodafone Number. In Ramadan, upon recharging, customers have a chance to win free calls for a day or month or free SMS s to all Vodafone numbers. Operational Highlights 9M 2010 Number of Total Closing Subs 31.8 mn Number of Prepaid Subs (96%) Number of Postpaid Subs (4%) 30.6 mn 1.2mn 36% Increase in total closing customers year-on-year Total Voice Minutes 43.2bn 51% Growth in total voice minutes Financial Highlights 9M 2010 1% Revenue EGP 9.2 bn Revenue increase year-on-year EGP 1.35 bn contribution to TE s net profit in FY 2010 Net Profit Capex EGP 2.1 bn EGP 1.7 bn * Vodafone Egypt s Financial Year ending 31 st March. 10 Fact Sheet Fixed Voice & Mobile Internet & Data Wholesale Submarine Cable Vodafone Egypt
FY 2010
Summary Income Statement Summary Income Statement Full Year In EGP Millions FY 2010 FY 2009 YoY % Change Revenue 10,318 9,960 3.59% Revenue (In EGP Millions) CAGR (2006-2010): 2.0% 10,117 9,993 9,960 10,318 9,517 EBITDA 4,865 5,048-3.63% Margin 47% 51% EBIT 3,577 3,515 1.76% Margin 35% 35% FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 NPAT Growth (In EGP Millions) Profit Before Tax & Minority Interest 3,804 3,510 8.36% Margin 37% 35% 100% 90% 80% 70% CAGR (2006-2010): 8.1% 2,427 2,534 2,790 3,051 3,309 3,500 3,000 2,500 Net Profit 3,309 3,051 8.45% Margin 32% 31% 60% 50% 40% 30% 20% 10% 26% 25% 28% 31% 32% 2,000 1,500 1,000 500 0% - EPS 1.72 1.64 4.87% FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 NPAT NPAT Margin Note: All financial figures reported are based on Consolidated financials under Egyptian Accounting Standards 12 Income Statement EBITDA Revenue Balance Sheet
Revenue Breakdown Revenue Full Year In EGP Millions FY 2010 FY 2009 YoY % Change FY 2010 Revenue Analysis 14% 17% Retail Services Access: Access Revenue 1,809 2,049-11.72% Voice: Voice Revenue 2,124 2,618-18.88% Internet & Data 810 649 24.84% Others 637 448 42.24% Total Retail Revenue 5,379 5,764-6.67% 12% 36% Access Voice Int`l WS Domestic WS Internet & Others Revenue Mix ( In EGP Millions) 21% Wholesale Services Domestic: Domestic Revenue 1,242 1,029 20.67% 3,053 3,852 3,936 4,197 4,939 48% International: International Revenue 3,697 3,168 16.70% 6,464 6,141 6,181 5,764 5,379 52% Total wholesale Revenue 4,939 4,197 17.68% Total Revenues 10,318 9,960 3.59% Note: All financial figures reported are based on Consolidated financials under Egyptian Accounting Standards FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Retail Wholesale 13 Income Statement EBITDA Revenue Balance Sheet
EBITDA Analysis In EGP Billions (% of Sales) 10.32 ( 2.30 ) 22.2% ( 1.02 ) 9.9% ( 2.14 ) Margin 47.1% 4.86 FY 2010 20.7% Sales Revenue Personnel Cost Interconnect Cost Other Opex EBITDA EBITDA (In EGP Millions) EBITDA Margin (In Percent %) CAGR (2006-2010): -2.0% 5,277 5,389 5,163 5,048 4,865 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 60% 55% 50% 45% 40% 35% 30% 25% 20% 55% 54% 51% 51% 47% FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 14 Income Statement EBITDA Revenue Balance Sheet
Summary Balance Sheet Summary Balance Sheet Full Year YoY In EGP Millions FY 2010 FY 2009 % Change Current Assets 9,126 7,220 26.40% Net Fixed Assets 14,528 16,086-9.68% Long - Term Investments 7,515 7,731-2.79% Other Long -Term Assets 2,035 1,424 42.88% Total Assets 33,204 32,461 2.29% Curent Liabilities (Exc. STD) 4,194 4,093 2.49% Bank Short-Term Borrowings 0 7-100.00% Capital Expenditure (CAPEX) ( In EGP Millions) 2,500 2,300 2,100 1,900 1,700 1,500 1,300 1,100 900 700 500 300 100-100 1,937 20% 945 919 981 Debt Position ( In EGP Millions) 1,086 9% 9% 10% 11% FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Capex Capex/Sales 30% 20% 10% 0% CPLTD 150 179-16.07% Long -Term Debt 725 858-15.46% Other Non-Current Liabilities 146 57 158.34% Total Liabilities 5,216 5,193 0.45% Total Equity & Minority Interest 27,988 27,268 2.64% Total Liabilities & Equity 33,204 32,461 2.29% Note: All financial figures reported are based on Consolidated financials under Egyptian Accounting Standards 10,000 8,000 6,000 4,000 2,000 0-2,000-4,000-6,000 600 712 600 500 393 1,397 361 4,976 400 6,777 3,589 2,735 2,453 300 411-1,409 200 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010-4,101 137 26 100 0 Cash Net Debt Interest Exp. 15 Income Statement EBITDA Revenue Balance Sheet
Closing Remarks Strong Growth in Full Year Net Profit After Tax Solid Growth in Wholesale Revenue Robust Cash Position and Solid Balance Sheet Ownership of Strong Performing Mobile Asset Strong Platform of Cashflow Generation Upside Potential from Under Penetrated Broadband Market Ability to Capitalize on Unique Geographic Position 17
Investor Relations Contacts Mahmoud Abu Taleb Director of Investment & Investor Relations Tel: +202 3131 5266 Fax: +202 3131 6115 Email: investor.relations@telecomegypt.com.eg Mohamed Kamal General Manager of Investor Relations & Internal Reporting Tel: +202 3131 5219 Fax: +202 3131 6115 Email: investor.relations@telecomegypt.com.eg Website: ir.telecomegypt.com.eg