2008 Registration Document - Maroc Telecom...Registration Document 2008- Maroc Telecom 5 July 2008...

2008 Registration Document

This Registration Document was filed on April 24, 2009, pursuant to Article 212-13, of the Financial Market Authority’s Regulation. It may not be used in support of a financial transaction unless it is accompanied by a transaction note endorsed by the Financial Market Authority.

SUMMARY

HIGHLIGHTS 4

KEY FIGURES 6

1 PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE AUDIT OF THE FINANCIAL STATEMENTS 8 1.1 PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 10 1.2 CERTIFICATION OF THE REGISTRATION DOCUMENT 10 1.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS 10 1.4 INFORMATION POLICY 11

2 INFORMATION RELATING TO THE TRANSACTIONS 12

3 GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 14 3.1 GENERAL INFORMATION 16 3.2 GENERAL INFORMATION RELATING TO THE COMPANY’S SHARE CAPITAL 38 3.3 TRADING OF THE COMPANY’S SHARES 42 3.4 DIVIDENDS AND DIVIDEND POLICY 44 3.5 BREAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS 48 3.6 ASSET PLEDGES 53 4 INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 54 4.1 HISTORY 56 4.2 OVERVIEW OF THE GROUP’S OPERATIONS 57 4.3 MAROC TELECOM’S BUSINESS STRATEGY 60 4.4 BUSINESS ACTIVITIES IN MOROCCO 62 4.5 DESCRIPTION OF SUBSIDIARIES’ OPERATIONS 104 4.6 RESEARCH AND DEVELOPMENT 111 4.7 SEASONALITY 111 4.8 REGULATORY ENVIRONMENT AND POSSIBLE DEPENDENCIES 112 4.9 HUMAN RESOURCES 126 4.10 REAL PROPERTY 131 4.11 INTELLECTUAL PROPERTY 132 4.12 INSURANCE 134 4.13 LEGAL AND ARBITRATION PROCEEDINGS 136 4.14 RISK FACTORS 138

5 FINANCIAL REPORT 144 5.1 CONSOLIDATED FINANCIAL DATA FOR THE LAST THREE YEARS 146 5.2 OVERVIEW 148 5.3 CONSOLIDATED INCOME STATEMENT 160 5.4 CONSOLIDATED FINANCIAL STATEMENTS 184 5.5 INDIVIDUAL FINANCIAL STATEMENTS 230

6 CORPORATE GOVERNANCE 252 6.1 MANAGEMENT AND SUPERVISORY BOARD 254 6.2 CORPORATE GOVERNANCE 262 6.3 INTERESTS OF THE SENIOR EXECUTIVES 266 6.4 RELATED PARTY TRANSACTIONS 268

7 RECENT DEVELOPMENT AND OUTLOOK 272 7.1 RECENT DEVELOPMENT 274 7.2 MARKET OUTLOOK 275 7.3 OBJECTIVES 276 TABLE OF CONCORDANCE 278 2008 ANNUAL INFORMATION DOCUMENT 280 STATUTORY AUDITORS FEES 281 GENERAL SHAREHOLDERS’ MEETING OF APRIL 23, 2009 282

GLOSSARY 284

4 Registration Document 2008 - Maroc Telecom

January 2008 • Maroc Telecom launched video-telephony services in the main cities of the Kingdom for both postpaid and prepaid

customers and also introduced “Optimis”, a new pricing plan for business customers. The monthly fixed-line rental fee was revised for residential customers and telestores. The Universal Service Management Board of the Moroc-can telecoms regulator ANRT approved the MAD1.2 billion budget for the Pacte program, which seeks to ensure universal access to telecommunications services, affording Maroc Telecom coverage of nearly 80% of the 9,263 towns and villages involved.

• The completion of the merger between Mauritel SA and Mauritel Mobiles was accompanied by significant reductions in mobile service charges.

February 2008 • Maroc Telecom launched an unlimited call plan for designated international numbers along with “Phony Interna-

tional”, a new unlimited rate plan for calls to international fixed lines, and introduced further price cuts for calls from fixed lines to international fixed and mobile lines.

• Mauritel launched the “AMI Mobile” service (news by SMS) and reduced ADSL subscription rates. • Onatel overhauled its pricing structure, with cuts of up to 78% for international calls, and strengthened its distribu-

tion network with the establishment of 75 kiosks, notably in rural areas.

March 2008 • Maroc Telecom launched two new unlimited mobile broadband Internet call plans, “Internet Mobile 1.8” and “Internet

Mobile 512", and enhanced the Mobile Zone portal with new content. A “Call return” service was implemented for prepaid mobile customers.

• Mauritel lowered its rates for CDMA Internet access and CDMA subscriptions and increased its Mobile subscription rates.

• Onatel introduced the IN platform (for mobile and fixed lines) and launched new prepaid cards for fixed lines (“Phone Cash”) which are available in small amounts to meet the needs of low-income customers.

April 2008 • As part of the Universal Service program, Maroc Telecom launched the “CDMA 1 Mbit/s Internet” service, a new

unlimited Internet access offering which is marketed in rural areas covered by the CDMA network. A new ministerial order defined the terms for telecommunications services price promotions in Morocco. Maroc Telecom will be re-quired to notify the ANRT of all the price promotions it plans to introduce. ANRT approved the technical and pricing proposal for interconnection by capacity for calls to Maroc Telecom’s fixed-line network. The ANRT also set Wana’s mobile termination charge for the 2008-2009 period at a level different to that applying to Maroc Telecom and Meditel. Maroc Telecom and the ANRT signed an agreement on the Pacte program for 2008, covering the invest-ment by Maroc Telecom of MAD762 million for infrastructure for 1,500 towns and villages.

• Mauritel reviewed its “On-net Mobile” call charges.

May 2008 • Maroc Telecom lowered its postpaid international mobile rates for calls to international zone 1 and for calls made on

leased Internet lines. • An agreement was signed by the Fondation Mohammed VI de Promotion des Œuvres Sociales de l’Education-

Formation (Mohammed VI Foundation for the Promotion of Social Work, Education and Training), comprised of teachers, and a number of sponsors, including Maroc Telecom, under which its members benefit from subsidized rates for Internet access (Nafid@ program).

• Gabon Telecom implemented a layoff plan involving 752 staff members, with approval from the Gabonese govern-ment. At the same time, it obtained a commitment for FCFA47 billion in financing from the Gabonese bank BGFI.

• Onatel launched Internet services via the CDMA network (postpaid and prepaid), fixed-line/ADSL bundles and elec-tronic top-up services for fixed and mobile lines. The distribution network was extended through the agreement with Sonapost covering the distribution of fixed-line and mobile products.

June 2008 • The “Mobile Zone” portal was enriched with the addition of new games and new BlackBerry options (“External BES”

and “Full BES”). • Onatel introduced unlimited mobile call plans, free airtime, special rates for preferred customers and a new call plan

aimed at the youth market (preferential rates and SMS bundles during off-peak hours). Onatel secured a EUR7.5 million loan with the International Finance Corporation to finance its expansion.

• Gabon Telecom revised its pricing structure for subscription fees and call rates.

HIGHLIGHTS

5 Registration Document 2008- Maroc Telecom

July 2008 • Maroc Telecom launched new unlimited options for business customers: Mobile Business Control and Mobile Busi-

ness Class bundles. • Summer promotions were launched for triple-play bundles (fixed-line phone, IPTV and broadband Internet) and for

ADSL subscriptions, and introduced a new rate for the “Canal+ Essentiel” option. • Mauritel launched a 1-hour “El Jawal” service, offering prepaid mobile customers one hour of airtime for MRO1990

(approximately MAD65).

August 2008 • Onatel launched a project to bridge the digital divide, involving the provision of wireless Internet access using

CDMA technology to over 45 rural communities in Burkina Faso by the end of 2008. • Mauritel launched the 1-hour “Liberté plan”, offering one hour of communication to all operators for MRO1990

(approximately MAD65).

September 2008 • Maroc Telecom added two new channels (Canal+ Family and Canal+ Cinema) to its Canal+ option and introduced a

price reduction. • Mauritel launched a “Phony” call plan, which provides unlimited calls to five numbers over one week for MRO1990

(approximately MAD65). • Gabon Telecom and Mauritel introduced layoff plans. The layoff plan implemented in Gabon involved over 750 Ga-

bon Telecom employees.

October 2008 • Maroc Telecom introduced a range of promotions (ADSL, Corporate Mobile, etc.) in its home market along with a

MAD30 Jawal bundle (with MAD10 of free airtime). The pricing structure for Mobisud was overhauled. • Onatel secured a FCFA5 billion loan to finance its expansion, of which FCFA2 billion was allocated to its mobile

subsidiary, Telmob.

November 2008 • Maroc Telecom launched a new prepaid Internet mobile call plan, offering Internet access starting at MAD10/day. • Mr. Rachid Mechahouri was appointed to the Management Board of Maroc Telecom.

December 2008 • In Morocco, a new call plan was launched, offering international calls at the same rate as domestic calls, ADSL

rates were further reduced, with an entry-level rate starting at MAD99 (incl. tax), and Internet connection speed was doubled for existing customers. Maroc Telecom also cut international flat-rate call plan rates by 30%.

• The Burkina Faso Government launched a public offer for the sale its 20% stake in Onatel.

January 2009 • Maroc Telecom again reviewed its pricing terms, raising its monthly fixed-line subscription for prepaid capped phone

plan customers while lowering prices on fixed-line international calls and bundles. Maroc Telecom launched a new offering for international calls over VPN.

February 2009 • Success of Maroc Telecom’s bid to acquire a 51% stake in Sotelma in Mali. • Maroc Telecom further developed its innovative offerings with a new triple-play service, called the ”MT Box” (test

phase) as well as the ”Pack Pro” call plan combining fixed-line, mobile and Internet (ADSL or 3G) services, along with a PC at a subsidized rate, and an exclusive TV service for mobile subscribers.

March 2009 • Maroc Telecom provided extensive support for customers during the switchover of the telephone numbering system in

Morocco, with a major communications campaign and the provision of a free service for updating call-lists. A number of different promotional campaigns were also launched (TV ADSL, 3G Internet modem starter kits, Infinifix, etc.).

• Results of the bid for a 20% stake in Onatel were announced: 1.4 times oversubscribed. An IPO on the Abidjan Stock Exchange is planned before May 1, 2009.

HIGHLIGHTS


KEY FIGURES

2006 2007 2008

In thousands

Mobile customers 11,564 15,342 17,184

Maroc Telecom 10,707 13,327 14,456

Mauritel 601 905 1,141

Onatel 244 564 977

Gabon Telecom - 386 447

Mobisud - 160 163

Number of fixed-lines 1,402 1,518 1,526

Maroc Telecom 1,266 1,336 1,299

Mauritel 37 36 49

Onatel 99 122 145


Internet customers 402 503 522

Maroc Telecom 391 476 482

Mauritel 4 5 9

Onatel 7 12 17


In IFRS (In millions of Moroccan dirhams)

Consolidated revenues 22,615 27,532 29,521

Mobile (gross) 14,894 19,296 21,160

Fixed-lines and Internet (gross) 10,312 11,090 11,354

Consolidated earnings from operations before amortization 13,152 15,659 17,641

Mobile 8,763 11,399 12,854

Fixed-lines and Internet 4,389 4,260 4,787

Consolidated earnings from operations 10,043 12,234 13,889

Mobile 7,228 9,557 10,697


Consolidated net earnings (group share) 6,739 8,033 9,520

Capital expenditure 3,978 5,466 5,957

Mobile 2,445 3,279 3,614


Number of employees 11,764 14,154 13,955


KEY FIGURES

2006 2007 2008

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

In thousands

Mobile customers 9,067 9,442 11,054 11,564 12,736 13,172 14,517 15,342 15,897 16,561 17,204 17,184

Maroc Telecom 8,576 8,924 10,496 10,707 11,372 11,713 12,838 13,327 13,697 14 ,211 14 ,629 14,456

Mauritel 491 518 558 601 687 767 843 905 959 1,015 1,104 1,141

Onatel - - - 244 411 388 460 564 645 756 877 977

Gabon Telecom - - - - 254 263 320 386 392 424 453 447

Mobisud - - - - 21 41 56 160 204 155 141 163

Number of fixed-lines 1,372 1,346 1,304 1,402 1,477 1,490 1,496 1,518 1,526 1,536 1,530 1,526

Maroc Telecom 1,336 1,310 1,267 1,266 1,314 1,325 1,324 1,336 1,335 1,329 1,314 1,299

Mauritel 36 36 37 37 39 36 38 36 40 46 47 49

Onatel - - - 99 101 107 111 122 126 130 138 145

Gabon Telecom - - - - 23 22 23 24 25 31 31 33

Internet customers 306 335 352 402 447 466 473 503 517 520 518 522

Maroc Telecom 306 332 348 391 425 444 449 476 487 487 482 482

Mauritel - 3 4 4 5 5 5 5 6 7 8 9

Onatel - - - 7 8 8 10 12 13 15 16 17

Gabon Telecom - - - - 9 9 9 10 11 11 12 14

In IFRS (In millions of Moroccan dirhams)

Consolidated revenues 5,276 5,612 6,195 5,532 6,113 6,894 7,320 7,205 6,965 7,343 7,729 7,484

Mobile (gross) 3,342 3,736 4,221 3,595 4,162 4,727 5,260 5,148 4,901 5,260 5,612 5,388

Maroc Telecom 3,181 3,565 4,047 3,413 3,795 4,105 4,722 4,474 4,295 4,628 4,939 4,668

Mauritel 161 171 174 182 210 211 215 199 199 218 228 231

Onatel - - - - 151 178 161 229 208 213 222 238

Gabon Telecom - - - - - 223 146 213 151 157 185 199

Mobisud - - - - 6 10 16 32 48 44 38 53

Fixed-lines and Internet (gross) 2,563 2,514 2,634 2,601 2,618 2,913 2,769 2,789 2,745 2,800 2,871 2,938

Maroc Telecom 2,483 2,435 2,561 2,524 2,326 2,401 2,377 2,347 2,347 2,403 2,437 2,497

Mauritel 80 79 73 77 81 84 73 81 74 71 72 73

Onatel - - - - 212 198 192 197 187 188 180 204

Gabon Telecom - - - - - 230 127 164 136 139 183 164

Elimination of intersegment tran-sactions

(629) (638) (660) (664) (667) (746) (710) (731) (681) (716) (754) (843)

Consolidated earnings from operations

2,326 2,165 3,107 2,446 2,844 3,155 3,510 2,724 3,104 3,562 3,755 3,469

Mobile 1,498 1,731 2,233 1,767 2,162 2,426 2,777 2,191 2,344 2,789 2,951 2,615

Number of fixed-lines 828 435 874 679 682 729 733 533 761 773 804 854

PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE AUDIT OF THE FINANCIAL STATEMENTS

1.1 PERSON RESPONSIBLE FOR THE REGISTRATION

DOCUMENT 10 1.2 CERTIFICATION OF THE REGISTRATION DOCUMENT 10

1.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS 11 1.3.1 STATUTORY AUDITORS 11

1.4 INFORMATION POLICY 11 1.4.1 PERSON RESPONSIBLE FOR INFORMATION 11 1.4.2 FINANCIAL COMMUNICATION CALENDAR 11 1.4.3 SHAREHOLDERS’ INFORMATION 11


Chairman of the Management Board

Mr. Abdeslam AHIZOUNE

Having taken all reasonable care to ensure that such is the case, I certify that the information contained in this registration document accurately reflects, to the best of my knowledge, the facts and contains no omis-sion that would be likely to affect its meaning. I attest, to my knowledge, that the accounts are established in accordance with the applicable accounting standards and give a faithful image of the financial statement and result of the company and all of the con-solidated companies, and the management report (appearing in chapters 4 and 5 of this Registration docu-ment) gives a faithful presentation of the evolution of the businesses, results and financial statements of the Company and all of the consolidated companies as well as a description of the principal risks and contin-gences that they face. I have obtained a letter from the statutory auditors Mr. Abdelaziz Almechatt and KPMG Maroc represented by Mr. Fouad Lahgazi, confirming that they have completed their work and indicating that they have verified the financial position and the financial statements included in this Registration Document and that they have reviewed the document as a whole. Historical financial information presented in the Registration Document was the subject of Statutory Audi-tors’ reports:

• The Statutory Auditors’ report on the consolidated financial statements for the year ended December 31, 2008, presented on page 185 of this Registration Document, contains an observation on the estimates used in segment data (detailed in Note 1 (section 2.5) and Note 28).

• The Statutory Auditors’ report on the individual financial statements for the year ended December 31, 2008, pre-sented on page 231 of this Registration Document, contains no observations.

• The Statutory Auditors’ report on the consolidated financial statements for the year ended December 31, 2007, presented on page 187 of Registration Document D.08-0323 filed with Autorité des Marchés Financiers (hereinafter “AMF”, the French securities regulator) on April 28, 2008, contains an observation on the estimates used in segment data (detailed in Notes 1 (Section 2.5) and 28).

• The Statutory Auditors’ report on the individual financial statements for the year ended December 31, 2007, pre-sented on page 234 of Registration Document D.08-0323 filed with the AMF on April 28, 2008, contains no obser-vations.

• The Statutory Auditors’ report on the consolidated financial statements for the year ended December 31, 2006, presented on page 175 of Registration Document R.07-0058 filed with the AMF on May 9, 2007, contains observa-tions on both the estimates used in segment data (detailed in Note 2.5 and Note 28) and on Note 2 (Section 2.3.9.3) and Note 5 on property, plant and equipment: as at December 31, 2006, most of the land and buildings contributed by ONPT at the time of the formation of the company IAM were registered or are under requi-sition with the land registrar. It should be noted that procedures are in place to ensure that the remaining property is properly registered.

• The Statutory Auditors’ report on the individual financial statements for the year ended December 31, 2006, pre-sented on page 198 of Registration R.07-0058 filed with the AMF on May 9, 2007, contains the following observa-tion: as at December 31, 2006, most of the land and buildings contributed by ONPT at the time of the formation of the company IAM were registered or are under requisition with the land registrar. It should be noted that proce-dures are in place to ensure that the remaining property is properly registered

The Statutory auditors drew up a report on the forward-looking financial information presented in Chapter 7, Section 7.3, of this Registration Document, which appears on page 277of this Registration Document. Mr. Abdeslam Ahizoune

Chairman of the Management Board

1.1 PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT

In this Registration Document, "Maroc Telecom" or “the Company” refers to the company Itissalat Al-Maghrib, and “the group” refers to the group constituted by the Company and all direct and indirect subsidi-aries, as described in Chapter 5.

1

1.2 CERTIFICATION OF THE REGISTRATION DOCUMENT


1.3.1 Statutory auditors

Mr. Arnaud Castille Chief Financial Officer Maroc Telecom Avenue Annakhil - Hay Riad Rabat, Maroc Telephone : 00 212 (0) 37 71 67 67

E-mail : [email protected]

1.4.2 Financial communication calendar All the financial information issued by Maroc Telecom (press releases, presentations, annual reports) is available on its website www.iam.ma. The following is an indicative calendar of Maroc Telecom’s financial communication for 2008:

The parent company information, accounting and legal documents destined for shareholders and third par-ties, whose communication is governed by Moroccan and French law and by the Company’s bylaws, may be consulted at the head office of the Company. Registration Documents, updates to Registration Documents filed with the Autorité des marchés financiers (AMF), presentations to investors and financial analysts and the various press releases are available on Maroc Telecom’s website : www.iam.ma. In accordance with the provisions of the Transparency Directive, which became applicable as from January 20, 2007, all regulated information is available on Maroc Telecom’s website: www.iam.ma/information-reglementee.aspx.

1.4 INFORMATION POLICY

Date* Event Format Monday January 19 , 2009 Q4-08 and full year 2008 revenues Press releases Thuesday February 24 , 2009 Q4-08 and full year 2008 results Press releases

Press conference Analyst and investors conference

Thursday April 23, 2009 Annual General Shareholders’ Meeting

Monday May 11, 2009 Q1-2009- revenues and results Press releases Friday July 17, 2009 Q2 and H1 2009- revenues Press releases Wednesday July 29, 2009 Q2 and H1 2009- results Press releases

Press conference Analyst and investors conference

Thursday November 5, 2009 Q3-2009– revenues and results Press releases * Before market

PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE AUDIT OF THE FINANCIAL STATEMENTS

1.3. Information policy

KPMG Maroc Represented by Mr. Fouad Lahgazi 11, avenue Bir Kacem, Souissi - 10 000 Rabat, Morocco First appointed in April 12,2007 for a three fiscal year term by the general Shareholders’ Meeting. This mandate will expire at the end of the general Shareholders’ Meeting to approve the financial statements for the fiscal year ended December 31, 2009. Mr. Abdelaziz Almechatt 83 avenue Hassan II - 20 100 Casablanca, Morocco First appointed in 1998 in the bylaws, his term of office was renewed in 2005. His current three-year term was renewed at the Shareholders’ Meeting held on April 17, 2008 and will expire at the close of the Shareholders’ Meeting held to approve the financial statements for the year ended December 31, 2010.

1.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STA-TEMENTS

1.4.1 Person responsible for information

1.4.3 Shareholders’ information

INFORMATION RELATING TO THE TRANSACTION

NOT APPLICABLE

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL

3.1 GENERAL INFORMATION 16 3.1.1 CORPORATE NAME 16 3.1.2 HEAD OFFICE 16 3.1.3 LEGAL FORM 16 3.1.4 LEGISLATION 16 3.1.5 COMMITMENTS OF THE COMPANY TO THE MARKET AUTHORITIES IN FRANCE 17 3.1.6 REGISTRATION 19 3.1.7 CORPORATE TERM 19 3.1.8 CORPORATE PURPOSE 19 3.1.9 LEGAL DOCUMENTS AVAILABLE FOR VIEWING 19 3.1.10 FISCAL YEAR 19 3.1.11 ALLOCATION OF PROFITS 20 3.1.12 GENERAL SHAREHOLDERS’ MEETINGS 20 3.1.13 MANAGEMENT OF THE COMPANY 24 3.1.14 STATUTORY AUDITORS 30 3.1.15 TRADING OF SHARES 31 3.1.16 STATUTORY THRESHOLDS 31 3.1.17 PUBLIC BIDS 32 3.2 GENERAL INFORMATION RELATING TO THE COMPANY’S SHARE CAPITAL 38 3.2.1 SHARE CAPITAL 38 3.2.2 FORM OF SHARES 38 3.2.3 RIGHTS AND DUTIES ATTACHED TO SHARES 38 3.2.4 ACQUISITION BY THE COMPANY OF ITS OWN SHARES 39 3.2.5 CHANGES IN THE COMPANY’S SHARE CAPITAL SINCE ITS INCORPORATION 41

3.3 TRADING OF THE COMPANY’S SHARES 42 3.3.1 LISTING OF THE SHARES OF THE ISSUER 42 3.3.2 MAROC TELECOM SHARE PRICE 42

3.4 DIVIDENDS AND DIVIDEND POLICY 44 3.4.1 DIVIDENDS PAID OUT OVER THE PAST FISCAL YEARS 44 3.4.2 DIVIDEND POLICY 44 3.4.3 TAX TREATMENT RELATING TO DIVIDENDS 45 3.5 BREAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS 48 3.5.1 OWNERSHIP OF SHARE CAPITAL AND VOTING RIGHTS IN THE COMPANY 48 3.5.2 AUTHORIZED SHARE CAPITAL 48 3.5.3 CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY OVER LAST THREE FISCAL YEARS 48 3.5.4 EMPLOYEE STOCK OWNERSHIP 49 3.5.5 SHAREHOLDERS’ AGREEMENT 49

3.6 ASSETS PLEDGES 53


3.1.1 Corporate name The Company’s corporate name is: “Itissalat Al-Maghrib”. It also operates under the trade names “IAM” and “Maroc Telecom”.

3.1.2 Head Office The Company’s Head office is located on Avenue Annakhil (Hay Riad), Rabat, Morocco.

Telephone: +212 37 71 21 21

3.1.3 Legal form Maroc Telecom is a Moroccan corporation with a Management board and Supervisory board, governed by Chapter II of Act 17- 95 relating to joint stock companies.

3.1.4 Legislation The Company is governed by Moroccan law, in particular, by Act 17-95 relating to joint stock companies as amended and extented by Act 20-05, and by the bylaws. The Company is not bound by the French Com-mercial code.

As the Company is listed on a regulated market in Morocco, the provisions of various Moroccan rules, regu-lations, orders, decrees and circulars will be applicable, including in particular:

• Decree 1-93-211, dated September 21, 1993, relating to the Securities Exchange, as amended and extended by Act 45-06;

• The General Regulation of the Stock Exchange approved by Order 499-98 of the Minister of the Econo-my and Finance, dated July 27, 1998,amended and completed by Order 1960-01 of the Minister of the Economy, Finance, Privatization and Tourism dated October 30, 2001, by Order 1994-04 of the Minis-ter of Finance and Privatization dated November 22, 2004, by order 1137-07 of the Minister of Finance and Privatization dated June 13,2007, and by order 1268-08 of the Minister of the Economy and Fi-nance, dated July 07,2008;

• Decree 1-93-212, dated September 21, 1993, relating to the Moroccan securities regulator (CDVM) and the information required of legal entities issuing securities to the public, as amended and extended by Act 44-06;

• Decree 35-96 relating to the creation of the central depositary and establishment of a general account-ing system for certain securities as amended and extended by Act 43-02;

• The General Regulation of the central depositary approved by Order 932-98 of the Minister of the Eco-nomy and Finance, dated April 16, 1998, and amended by Order 1961- 01of the Minister of the Econo-my, Finance, Privatization and Tourism, dated October 30, 2001;

• Decree 24-96 relating to the Postal Service and Telecommunications, dated August 7, 1997, as amen-ded by Act 79 99, dated June 22, 2001, and by Act 55-01, dated November 4, 2004;

• Decree 1-07-11, dated April 17, 2007, enacting Act 46- 06, amended and completed the Act 26-03 rela-ting to public offers on the Moroccan stock market;

• Circular 02-03 of the Moroccan securities regulator (CDVM), dated may 23,2003, relating to required information for listed companies at the time of acquiring its own shares in view of stabilizing the share price ;

• Circular 01-04 of the Moroccan securities regulator (CDVM), dated June 8, 2004, relating to the thres-holds for ownership of shares or voting rights of listed companies;

• Circular 01-05 of the Moroccan securities regulator (CDVM), dated March 18, 2005, relating to the ethi-cal framework for information within listed companies;

• The Circular 05-05 of the Ethics Council for Securities (CDVM), dated October 3, 2005, relating to pu-blication of important information by legal entities issuing securities to the public;

3.1 GENERAL INFORMATION

3


GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.1. General information

• Circular 06-05 of the Moroccan securities regulator (CDVM), dated October 13, 2005, relating to publi-cation and distribution of financial information by legal entities issuing securities to the public.

• Circular 01-08 of the Moroccan securities regulator (CDVM), dated March 25,2008, on the processing of securities transactions involving listed shares.

3.1.5 Commitments of the Company to the market authorities in France As it is also listed on the primary market of Nyse Euronext Paris, some provisions of French stock market regulations are applicable to the Company. Indeed, under the current legislation, rules concerning foreign issuers provided by the AMF General Regulation are applicable to the Company. In addition, organization and general rules of Nyse Euronext are applicable to the Company.

AMF rules may also apply to public bids for the shares of the Company, except provisions concerning Com-pulsory standing offer procedure, the mandatory submission of a public tender offer and compulsory buyout.

Since the European Transparency Directive has been transposed, it is applicable as from March 30, 2008, and the rules relating to the crossing of thresholds are now applicable as regards the Company.

Other rules of French stock exchange law do not apply to the Company. This is the case of threshold rules.

With regards to French law, a foreign issuer has to take the necessary steps to allow the shareholders to manage their investments, and implement their rights.

Since Company securities are listed in the primary market of Nyse Euronext, and pursuant to the AMF Ge-neral Regulation and the provisions of the European Transparency Directive, as transposed into French law by the Monetary and Financial Code and applicable since January 20, 2007, the Company is required to:

• inform the AMF of any changes in its share capital compared with previously disclosed information, par-ticularly any declaration for the crossing of thresholds which Maroc Telecom would have received;

• publish interim financial reports including condensed financial statements, an interim management re-port, the Statutory Auditors’ reports on the limited review of the above mentioned financial statements and a statement from the persons responsible for the half-yearly financial report within two months of the end of the first half of the Company’s fiscal year;

• publish an annual financial report including the accounts, a management report, the Statutory Auditors’ report and a statement from the persons responsible for the report within four months of the end of the fiscal year;

• publish quarterly statements including net revenues by business segment for the past quarter, a gene-ral description of the Company’s results and financial position and that of companies it controls, and the significant transactions and events which occurred during the quarter and their impact on the Compa-ny’s financial position, within 45 days from the end of the first and the third quarters;

• publish a press release specifying the fees paid to the Statutory Auditors, to be presented on the Maroc Telecom website within four months of the end of the fiscal year ;

• publish monthly statements on the total number of voting rights and shares comprising the Company’s share capital;

• publish, as early as possible, any information on new facts that may significantly affect the share price and inform the AMF thereof;

• inform the French public about changes in the business of the Company or its management; • make the necessary provisions to allow the persons who hold their securities through Euroclear France

to exercise their rights, particularly by informing them about any annual ordinary shareholders’ meeting and by allowing them to exercise their voting rights;

• notify the persons who hold their securities through Euroclear France about dividend payments, new share issues, allocation, subscription, renunciation and conversion;


• update names and details of the person responsible for financial information in France; • provide the AMF with any information it may require in accordance with its mission and the laws and

regulations applicable to the Company; • provide the AMF with any information it may require in accordance with its mission and the laws and

regulations applicable to the Company; • comply with the AMF General Regulation relating to the obligation to inform the public; • comply with the provisions of the AMF General Regulation on disclosures • make all regulated information available on Maroc Telecom’s website and store such information for at

least five years; and • inform the AMF and Nyse Euronext about any draft amendment of its bylaws.

The Company will have to inform the AMF about any general shareholders’ meeting resolution authorizing the Company to trade in its own shares and send the AMF periodic reports of purchases or sales of shares made by the Company by virtue of the authorization.

The Company must provide the same information simultaneously in France and in foreign countries, par-ticularly in Morocco.

Any publication and information to the public referred to in this chapter will be published in a notice or press release in a national financial daily newspaper distributed in France.

The information intended for the public in France is written in French.

The Company establishes, as per other French issuers, a Registration Document, providing legal and finan-cial information relating to the issuer (shareholding structure, activities, management, financial information) however without containing any information relating to an issue of specific shares.

In practice, the annual report of the Company can be used as the Registration Document, on condition that it contains all the required information.

The Registration Document will then have to be filed with the AMF and distributed to the public once regis-tered.

The annual and the interim reports in French will be available for the public in France at the office of the financial intermediary in charge of financial service in France (currently: CACEIS).

In addition, the Company intends to lead an active policy towards all shareholders, including those holding their shares through Euroclear France, to allow them to participate in any public offer which would, if appli-cable, be made on the international markets.

However, due to the constraints related to stock market on international markets and in order to be able to benefit from the optimal conditions on these markets, in the interest of the Company and of all its sharehol-ders, the Company cannot guarantee that individuals holding their shares through Euroclear France will be able to participate in any or all such transactions, as appropriate.

3.1.6 Registration The Company was founded in Rabat by a deed dated February 3, 1998.

The Company was registered with the Rabat Registry of Commerce on February 10, 1998, under number 48.947.

3.1.7 Corporate term The term of the Company is 99 years from the date of its registration with the Registry of Commerce, sub-ject to early dissolution or extension as provided for by law and the bylaws.

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3.1.8 Corporate purpose The Company’s corporate purpose, in accordance with its contract specifications as an operator and pur-suant to the article 2 of its statutory and regulatory rules in force, is:

• to provide all electronic communication services for domestic and international relations; • in particular, to provide universal telecommunications services; • to establish, develop and operate all electronic communications networks available to the public that

are required to provide these services and ensure their interconnection with other networks available to domestic and international users;

• to provide all other services, facilities, terminals, electronic communication networks and establish and operate all networks that distribute audiovisual services, including audio, television and multimedia broadcasting;

For the purposes of the activities so defined, it may:

• create, purchase, own and operate any real or personal property or business necessary or appropriate for its operations, notably any property whose transfer or availability is specifically authorized by legisla-tion;

• market and, to a lesser extent, assemble and manufacture any telecommunications products or de-vices;

• create, purchase, license and apply or sell any patents, processes or trade names; • take part in any financial consortium, business concern or company that currently exists or is being cre-

ated, having a purpose similar or related to its own, by any lawful means; • and more generally, carry out any commercial, financial or even industrial transactions relating to real

or personal property that could be related, directly or indirectly, wholly or partially, to any part of the Company’s corporate purpose and that could advance its growth and development.

The above extension of the Company’s corporate purpose is subjected to the approval of the new bylaws by the combined General Shareholders’ Meeting of April 23, 2009.

3.1.9 Legal documents available for viewing The corporate, accounting and legal documents required to be disclosed by law or the bylaws to the share-holders and third parties may be viewed at the Company’s Head Office in avenue Annakhil (Hay Riad), Ra-bat, Morocco

3.1.10 Fiscal year The Company’s fiscal year begins on January 1 and ends on December 31.

3.1.11 Allocation of profits At the close of each fiscal year, the Management Board draws up a statement of the various business as-sets and liabilities existing at that date and prepares the annual financial statements and the annual report to be submitted to the shareholders’ meeting, in accordance with the applicable law.

The net profit generated by the Company, after deduction of any earlier net loss, shall be subject to a with-holding of 5% to fund the statutory reserve; such withholding shall no longer be required once the amount of the statutory reserve exceeds one-tenth of the share capital.

The distributable profit shall consist of the net profit for the fiscal year, after funding the statutory reserve and the allocation of net profit or loss carried from prior years.

Against such profit, the shareholders’ meeting may charge such amounts as it shall see fit in order to fund



any optional, ordinary or exceptional reserve funds, or to carry forward, to the extent of a maximum aggre-gate amount of one-half the distributable profit, subject to an exception granted by a 75% majority of the members of the Supervisory Board present or represented.

The balance shall be paid out to the shareholders by way of a dividend, the aggregate amount of which shall not be less than one-half the distributable profit, subject to an exception granted by a 75% majority of the members of the Supervisory Board present or represented.

Within the limits set forth by law, the shareholders’ meeting may resolve, on an exceptional basis, to pay out amounts charged against the optional reserves at its disposal (see also section 3.4 “Dividends and divi-dend policy”).

Dividend payments

The terms of payment of dividends are voted by the ordinary shareholders’ meeting, or failing such, by the Management Board. Such payment shall be made within nine months after the end of the fiscal year, subject to extension of that period by an order of the chief justice of the Court, acting in summary proceedings upon a petition by the Supervisory Board. If the Company holds shares of its own stock, the related dividend entitlement shall be cancelled. Dividends not collected within five years after the date of payment thereof shall be forfeited to the Compa-ny. Amounts not collected and not forfeited shall constitute a claim of the owners against the Company, not bearing interest, unless they are converted into loans on mutually agreed terms. If the shares are subject to a life interest, the dividends shall be payable to the life tenant. The proceeds of the distribution of reserves, other than the carry-forward, shall, however, be allocated to the bare owner.

3.1.12 General shareholders’ meetings

Shareholders’ meetings

The shareholders’ collective resolutions shall be made at meetings, which shall be ordinary or extraordinary according to the nature of the decisions that they are called upon to make.

A duly convened general meeting shall be deemed to represent all the shareholders; its decisions shall be binding on all, including those who are absent, not sui juris, dissenting or deprived of voting rights.

Calling of meetings

Meetings shall be called by the Supervisory Board.

An ordinary shareholders’ meeting may also be called:

• the Statutory Auditor or Auditors, who may do so only after failure by the Supervisory Board to call a meeting and the Supervisory Board fails to do so when requested by the auditor (s);

• by an agent appointed by a Court order, upon the application of any interested party in an emergency or of one or more shareholders holding at least one tenth of the share capital; or

• by the liquidator or liquidators in the event of the Company’s dissolution, during the liquidation period and;

• by the majority shareholders in share capital or voting rights, following a public bid or the sale of a block of shares that would result in a change of the controlling ownership of the Company

Shareholders’ meetings shall be called and carried out in the manner provided for by law.

The Company shall, at least 30 days before the shareholders’ meeting is convened, publish in a newspaper

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chosen among those contained in the list determined by the Minister of Finance and in the Official Journal, a notice containing the information required by law and the draft resolutions to be submitted to the meeting by the Management Board. Subject to the approval of the new bylaws by the combined General Shareholders’ Meeting of April 23, 2009, the company shall be required to publish a notice containing, as applicable, the terms and conditions for voting by mail, as stipulated by the regulations in force, at least 15 days prior to the Shareholders’ Meet-ing, in a newspaper included in the list defined by the Minister of Finance.

The Company shall be required to publish, in a newspaper authorized to carry legal advertisements, at the same time as the notice of the annual ordinary shareholders’ meeting, the summary financial statements relating to the previous fiscal year, drawn up in accordance with applicable law (which shall include the ba-lance sheet, statement of income, statement of cash flows and statement of changes in financial position), and the report of the Statutory Auditor(s) on the financial statements.

Any amendment to such documents shall be published by the Company in a newspaper authorized to carry legal advertisements within 20 days after the annual ordinary shareholders’ meeting Meetings shall be held at the head office or at any other location specified in the notice.

Agenda

The agenda of a shareholders’ meeting shall be determined by the author of the notice.

One or several shareholders holding at least 2% of the share capital may, however, call for one or several draft resolutions to be tabled on the agenda.

Regardless of the number of shares held, all shareholders shall be entitled, upon providing evidence of identity, to take part in shareholders’ meetings subject:

• for holders of registered shares, to an entry by name in the Company’s records; • for holders of bearer shares, to the deposit, at the locations mentioned in the notice, of the bearer

shares or of a certificate of deposit issued by the establishment having custody of such shares; • and if applicable, to provide the Company, in accordance with applicable law, with proof of his or her

identification. Such formalities shall be completed no later than five days before the date of the meeting, subject to any shorter period provided for in the notice or mandatory statutory rules reducing such period.

Participation in meetings

The shareholders’ meeting concerns all shareholders, regardless of the number of shares they hold.

Corporate shareholders shall be represented by a specially appointed agent, who need not personally to be a shareholder.

A shareholder may be represented by another shareholder, or by his or her guardian, spouse or an ascen-dant or descendant, who need not to be a shareholder in his or her personal capacities and by any compa-ny involved in securities management..

Multiple holders of undivided interests in shares shall be represented at shareholders’ meetings by one of them or by a single agent.

A shareholder having pledged his or her shares shall retain the right to attend shareholders’ meetings.



Officers - Attendance sheet

Officers

The shareholders’ meeting shall be chaired by the Chairman of the Supervisory Board or the Vice Chair-man of the Supervisory Board. Failing this, the meeting shall appoint its own Chairman. The Chairman of the meeting shall be assisted by the holders of the two largest interests, either personally or as agents, present and accepting such office, who shall serve as scribes. The meeting shall appoint a Secretary which does not necessarily have to be one of its members.

Attendance sheet An attendance sheet shall be kept at each meeting, specifying the names and addresses of the sharehol-ders, and, if applicable, those of their proxies, and the numbers of shares and voting rights they hold. Such attendance sheet shall be signed by all shareholders present and by the proxies of absent sharehol-ders; it shall then be certified by the officers of the meeting.

Voting rights

Each member of the meeting shall have as many voting rights as he or she owns or represents, in particu-lar as a result of voting proxies or other powers of attorney. The voting rights attached to a share shall belong to the life tenant at ordinary shareholders’ meetings and to the bare owner at extraordinary shareholders’ meetings. If the shares are pledged, the voting rights shall be exercised by the owner. The Company may not vote shares that it has acquired or accepted as security. All shareholders can vote by mail in accordance with the terms of regulations in force. Shareholders who vote by mail are deemed present or represented, provided the Company receives their voting form at least two (2) days prior to the Shareholders’ Meeting.

Minutes

Minutes of meetings shall be entered in a special register kept at the Head Office, the pages of which shall be numbered and initialed by the Registrar of the Court at the location of the Company’s registered office. Copies of/or extracts from the minutes shall be certified by the Chairman of the Supervisory Board alone, or by the Vice Chairman of the Supervisory Board signed jointly with the Secretary.

Ordinary shareholders’ meetings

Powers

Ordinary shareholders’ meeting shall act upon all matters of an administrative nature exceeding the powers of the Supervisory Board and Management Board, and which are not reserved for the extraordinary share-holders’ meeting.

An ordinary shareholders’ meeting shall be held each year, within the six months after the end of the com-pany’s fiscal year.

This meeting shall hear in particular the report from the Management Board and the report from the Statuto-ry Auditor or Auditors; it shall consider, amend and approve or refuse the financial statements; and it shall apportion and allocate profit.

It shall appoint members of the Supervisory Board and the Statutory Auditor(s).

It may also dismiss members of the Supervisory Board.

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Quorum and majority

The ordinary shareholders’ meeting shall be duly convened and may validly act only if the shareholders present or represented hold at least 25% of the voting rights, exclusive of shares acquired or accepted as security by the Company; if such quorum is not obtained, a further meeting shall be called, for which no quorum shall be required.

At an ordinary shareholders’ meeting, resolutions shall be passed by a majority of votes of the shareholders present or represented.

Extraordinary shareholders’ meetings

Powers

Extraordinary shareholders’ meetings shall have sole authority to amend any provisions of the bylaws. They may dismiss the members of the Supervisory Board. They may not, however, change the Company’s nationality or increase the shareholders’ liabilities without the approval of the latter.

They may decide upon the conversion of the Company into a company of any other form, subject to com-pliance with the applicable statutory rules.

Quorum and majority

Extraordinary shareholders’ meetings shall be duly convened and may act validly only if the shareholders present or represented hold at least, upon a first call, one-half, and upon a second call, 25%, of the voting rights, exclusive of shares acquired or accepted as security by the Company.

If the 25% quorum is not satisfied, the second meeting may be postponed to a date no later than two mon-ths after the date for which it had been called, and may be validly held with the presence or representation of shareholders holding at least 25% of the share capital.

At an extraordinary shareholders’ meeting, resolutions shall be passed by a two-third majority of votes of the shareholders present or represented.

3.1.13 Management of the Company

Management Board

Membership

The Management Board shall administer and manage the Company, under the supervision of a Superviso-ry Board. The Management Board shall consist of five members.

The members of the Management Board must be individuals. All members of the Management Board shall be employees of the Company and/or resident in Morocco more than 183 days per year, subject to excep-tions granted by the Supervisory Board acting by a 75% majority of the members present or represented.

In the event of termination of the office of a member of the Management Board during its term, the Board shall appoint his or her substitute in the manner provided for by law and the Company’s bylaws.



Appointment and dismissal of members of the Management Board

The members of the Management Board are appointed by the Supervisory Board, acting by a majority of the members present or represented. The Supervisory Board shall appoint one of the members to act as Chairman. Subjetc to approval of the new bylaws by the Combined General Shareholders’ Meeting of April 23, 2009, it shall be possible for Board members to be dismissed by a vote of the Ordinary Shareholders’ Meeting or by the Supervisory Board, acting by a 75% qualified majority. Any dismissal without just cause may give rise to the payment of compensation. Termination of office on the Management Board shall not entail termination of the contract of employment between the person concerned and the Company.

Term of office

The members of the Management Board are appointed for a two (2) year term which may be renewed. Subject to the approval of the new bylaws by the Combined General Shareholders’ Meeting of April 23, 2009, the aforementioned term of office shall be extended to four (4) years. In the event of termination of office of a member of the Management Board during its term, his or her sub-stitute shall be appointed for the remaining duration of the term until the renewal of Management Board. All members of the Management Board shall be eligible for further office.

Operation

The Management Board shall manage the Company collectively.

The members of the Management Board may, subject to the Supervisory Board’s consent, allocate among themselves the management tasks. Such allocation may in no event, however, deprive the Management Board of its collegiate character as the Company’s management Body.

Management Board meetings may be held outside the head office or by videoconference or any equivalent means allowing members to be identified, as stipulated by regulations in force.

Resolutions shall be passed by a majority of members present or represented in office, each of whom shall have one vote.

Minutes of resolutions of the Management Board, if any are drawn up, shall be entered in a special register and signed by the Chairman of the Management Board and another member. Copies of, or extracts from such minutes shall be certified by the Chairman of the Management Board or by an Executive Officer.

Powers

The Management Board shall have full powers to act in all circumstances in the name of the Company, within the limitations of the corporate purpose and subject to those powers expressly conferred by law and the Company’s bylaws on the Supervisory Board under Articles 10.5.3 to 10.5.5 of the bylaws.

In relation to third parties, the Company shall be bound even by an action of the Management Board that is not consistent with the corporate purpose and bylaws, unless it proves that the third party was aware that the action exceeded such purpose and/or the bylaws, or could not be unaware thereof in the circum-stances.

The provisions of the bylaws restricting the Management Board’s powers shall not be binding on third par-ties.

The Chairman of the Management Board shall represent the Company in its dealings with third parties. The Management Board may, however, confer the same representation power on one or more members of the Management Board, who shall have the title of Executive Officer.

The provisions of the bylaws restricting the Chairman’s, or, if applicable, the Executive Officer ’powers to represent the Company shall not be binding on third parties.

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The Chairman of the Management Board and the Executive Officer (s) may grant powers of attorney to third parties. The powers thereby concerned shall, however, be limited and relate to one or more specific purpose or purposes.

In relation to third parties, any action binding the Company shall be validly taken by the Chairman of the Management Board or any other member appointed by the Management Board as an Executive Officer.

Disclosure duties

The Supervisory Board may require the Management Board to submit a report relating to its management and to current transactions at any time. Such report may be supplemented, at the Supervisory Board’s re-quest, by a provisional accounting statement for the Company.

To the extent necessary, the Management Board shall forward to the Supervisory Board a report detailing the application or implementation, if applicable, of the points to be adopted by the Supervisory Board in ac-cordance with Articles 10.5.3 to 10.5.5 of the bylaws.

At least once a quarter, the Management Board shall submit to the Supervisory Board a report on the Com-pany’s operations.

Within three months after the end of each fiscal year, the Management Board shall draw up the Company’s annual financial statements (balance sheet, statement of income and notes) and provide them to the Super-visory Board, in order to enable it to perform its supervisory function.

The Management Board shall also provide the Supervisory Board with the report to be submitted to the or-dinary meeting of shareholders called to act upon the financial statements for the previous fiscal year.

Compensation

The Supervisory Board shall determine, in the appointing resolution, the nature and amount of compensa-tion paid to each member of the Management Board.

Liability

Without prejudice to any specific liability arising out of the Company’s receivership or bankruptcy proceed-ings, the members of the Management Board shall be liable, personally or jointly as the case may be, to the Company and to third parties, for offenses against the statutory or regulatory rules applicable to joint stock companies, for breaches of the bylaws, or for misconduct in their management.

Supervisory Board

Membership

The Supervisory Board shall consist of not less than eight and not more than 12 members, which may be increased to 15 members if the Company’s shares are admitted to listing on the Casablanca stock ex-change. Each member of the Supervisory Board shall hold at least one share of the Company throughout the term of office. The members of the Supervisory Board shall be appointed by the ordinary shareholders’ meeting. If, on the date of his or her appointment, a member of the Supervisory Board does not hold at least one share of the Company or, during his or her term of office, ceases to hold at least one share, he or she shall be deemed to have resigned if the situation is not fixed within three months. The statutory auditor(s) shall, under his/their sole responsibility, secure compliance with the provisions en-visaged above, and shall report any breach thereof in their report to the annual shareholders’ meeting.



Term of office

The members of the Supervisory board shall be appointed for a six-year term.

The office of a member of the Supervisory Board shall terminate upon adjournment of the ordinary share-holders’ meeting convened to approve the financial statements for the past fiscal year and which net during the year in which the said term expires.

They shall always be eligible for further office.

They may be dismissed at any time by the ordinary shareholders’ meeting.

No member of the Supervisory Board may simultaneously be a member of the Management Board. If a member of the Supervisory Board is appointed to the Management Board, his or her term of office as mem-ber of the Supervisory Board shall terminate upon his or her assumption of office on the Management Board.

A legal entity may be appointed to the Supervisory Board. At the time of appointment, it shall be required to appoint a permanent representative who shall be subject to the same conditions and obligations, and shall incur the same civil and criminal liability, as a member of the Supervisory Board in a personal capacity, without prejudice to the joint liability of the legal entity that he or she represents.

When the legal entity dismisses its representative, it shall be required to appoint a substitute concomitantly. It shall immediately notify its decisions to the Company. It shall act likewise in the event of the permanent representative’s death or resignation.

Vacancy and appointment

In the event of vacancy, as a result of death or resignation or any other inability to act, of the holder of one or several seats on the Supervisory Board, the Supervisory Board may, between two shareholders’ meet-ings, make temporary appointments. If the number of members of the Supervisory Board falls below eight, the Supervisory Board shall be bound to make temporary appointments to restore its membership within three months of the date of vacancy. Temporary appointments by the Supervisory Board shall be subject to ratification by the next subsequent ordinary shareholders’ meetings; the member appointed to replace another shall remain in office only for the remaining duration of his or her predecessor’s term. Even if the temporary appointments are not approved, the resolutions made and actions taken previously by the Supervisory Board shall remain valid. If the number of members of the Supervisory Board falls below three, the Management Board shall be re-quired to call, within 30 days after the date of the vacancy, an ordinary shareholders’ meeting to supple-ment the Supervisory Board’s membership.

Chairman and Vice Chairman

The Supervisory Board shall appoint from among its members a Chairman and Vice Chairman who shall call meetings of the Supervisory Board and direct its proceedings, and who shall hold office during the term of office of the Supervisory Board. The Chairman and Vice Chairman must be individuals. The Supervisory Board may appoint a Secretary for each meeting, who could not be a member of the Board.

Notice of meeting and proceedings

The Supervisory Board shall meet, upon a notice given by its Chairman or Vice Chairman, as frequently as required by the Company’s interests, at the Head Office or any other location specified in the notice. Such notice may be given by electronic message or by fax, in both cases followed by confirmation by ordinary mail, or by registered mail with return receipt, or by letter delivered personally against a receipt, eight (8) days before the date of the meeting, unless such period is reduced upon the consent of all the members of

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the Supervisory Board. The aforementioned eight-day period of notice is subject to approval of the new by-laws by the Combined General Shareholders’ Meeting of April 23, 2009. The Supervisory Board shall act validly only if at least one-half the members of the Supervisory Board are present. Supervisory Board members who attend Supervisory Board meetings by videoconference or equivalent means allowing members to be identified, as stipulated by regulations in force, are taken into account in determining the quorum and majority. This provision shall not apply if the following items are included on the agenda: the appointment or dis-missal of the Chairman of the Supervisory Board, the approval of the financial statements or the notice for shareholders’ meetings. Subject to the provisions of Articles 10.5.4 to 10.5.5 of the bylaws described below, decisions of the Super-visory Board are passed in accordance with the Moroccan law relating to joint stock companies (as amended or extended), by a majority. In addition to transactions subject by law to the Supervisory Board’s consent pursuant to article 10.5.3 of the bylaws, the following resolutions require prior consent from the Supervisory Board acting by a majority of members present or represented :

• Review, approval and revision of the business plan, drawn up according to the same strategic criteria and requirements in terms of productivity, profitability and competitiveness as the best international op-erators;

• Review and approval of the budget drawn up, according to the same criteria and strategic, productivity, profitability and competitive requirements as the best international operators;

• Policy with respect to compensation, training and management of human resources and creation of profit sharing schemes for the Company’s managers or employees;

• Appointment of members of the Management Board; and • Approval of the draft resolutions to be submitted to the general meeting of the Company’s shareholders

with respect to the allocation of the earnings of the Company and its subsidiaries (pay-out of dividends, reserves, etc.) in the manner provided for under Articles 16 and 10.5.4(x) of the bylaws.

However, by way of exception from the provisions of Article 10.5.3 of the bylaws described above and in accordance with Article 10.5.4 of the bylaws, the following resolutions shall be matters for the Supervisory Board and require approval by a majority of at least 75% of the members of the Supervisory Board present or represented:

• Any significant change in accounting methods; • Repeal, abandon, transfer of licenses or concession of major operating facilities not provided for under

the annual budget; • Any decision related to the implementation or initiation of judicial, administrative or arbitration actions or

proceedings involving the Company or its subsidiaries, for which the amount of the claim in principal against or at the initiative of the Company or its subsidiaries, whether this concerns an initial claim or a counter-claim, for each of these actions or proceedings, amounts to a unitary amount of more than MAD100 million or requires judicial enforcement by the Company or its subsidiaries, as well as any de-cisions with the aim of obliging the Company and/or its subsidiaries to reach a settlement for such ac-tions or proceedings involving amounts owed or due to the Company for an amount of more than MAD25 million;

• Any decision concerning the conclusion, amendment and/or termination of any service provision agree-ment or any other agreement—other than the agreements concerning day-to-day transactions entered into under normal conditions — between the Company and (i) any shareholder holding more than 30% of the capital and/or voting rights of the Company and/or (ii) the subsidiaries whatsoever of such share-holder, for which the management and/or direction are effectively directly or indirectly controlled by the latter or by its parent company, whether through a holding in the share capital, through contractual agreements or in concert with a third party (hereinafter the “Reference Shareholder”);

• Any decision related to a merger, under any form whatsoever, between the business of the Company and any businesses over which the Reference Shareholder has control which are in competition with the Company over the sectors of Fixed, Mobile, Internet and Data exchange telecommunications (and



more generally all businesses connected to or arising from the Company’s corporate purpose) ; • Any decision related to the exemption of the obligation for a member of the Management Board to be

an employee of the Company and/or to be present for more than 183 days a year in Morocco; • Investments or divestments and borrowings and loans exceeding more than 30% of the corresponding

amounts shown in the budget; • Any creation of a subsidiary with an initial share capital or shareholders’ equity of more than MAD100

million, and any takeover(s) or assignment(s) of a holding or interest in any group or entity exceeding 20% of the Company’s net assets;

• Any resolution relating to a proposed merger, spin-off, contribution of assets or management lease re-lating to all or part of the business of the Company or one of its subsidiaries, and any resolution relating to dissolution, liquidation or discontinuation of any substantial operation of the Company or one of its subsidiaries;

• Any exceptions from the obligation provided for under Article 16 of the bylaws to pay out dividends of at least one-half the distributable profit; and

• Amendment of the internal regulations of the Company’s audit committee. In addition, in accordance with the provisions of Article 10.5.5 of the bylaws described below, the Supervi-sory Board may not submit the following resolutions to the meeting of shareholders unless they have been made by at least 75% of the members of the Supervisory Board present of represented:

• A motion for amendment of the Company’s bylaws (including in particular a reduction or increase in the Company’s share capital or changes in the fiscal year);

• A motion for issuance of new securities of the Company or its subsidiaries; a motion for amendment of the corporate purpose and/or principal business of the Company or its subsidiaries;

• A motion for amendment of the rights and duties relating to shares of the Company or its subsidiaries; • A motion for amendment of the first or last day of the fiscal year of the Company or its subsidiaries; • A motion for the choice of the statutory auditors of the Company and its subsidiaries; • A motion for the nomination of one or more members of the Supervisory Board; • A motion for dismissal of the members of the Management Board; and • A settlement of differences between the Management Board and the Supervisory Board.

Role, responsibilities and powers of the Supervisory Board

The Supervisory Board shall exercise permanent supervision over the Company’s management by the Management Board. At any time, it shall perform such inspections as it shall see fit, and may obtain disclo-sure of such documents as it considers appropriate for the performance of its dutiest. The members of the Supervisory Board may obtain disclosure of any information or data relating to the Company’s operation.

The Supervisory Board may, within the limits that it shall determine and subject to the provisions of Article 10.5 of the bylaws, allow the Management Board to sell real estate assets, sell all or part of investments, and issue warranties, endorsements or security in the name of the Company.

It shall submit to the annual shareholders' meeting its observations on the report from the Management Board and on the financial statements for the fiscal year. The Supervisory Board may create from among its members, and if it so deems necessary, with the assis-tance of third parties who need not be shareholders, technical committees in charge of reviewing matters that it shall submit to them for an opinion. Such committees shall have advisory powers and act subject to the authority of the Supervisory Board, of which they are agencies and to which they shall report. The members of committees shall be appointed by the Supervisory Board. Unless otherwise resolved by the Supervisory Board, the duration of committee members’ terms of office shall be that of their terms as members of the Supervisory Board. Each committee shall draw up its own internal regulations, which shall require approval by the Supervisory Board

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Compensation

The shareholders’ meeting may allocate to the members of the Supervisory Board, as compensation for their duties, a fixed annual amount in attendance fees. The Supervisory Board may also allocate excep-tional compensation with respect to assignments or duties entrusted to its members.

Liability

Members of the Supervisory Board shall be liable, personally or jointly as the case may be, to the Company and to third parties, for offences against the statutory or regulatory rules relating to joint stock companies, for breaches of the bylaws or for misconduct in their management. If several members of the Supervisory Board have cooperated in the same action, the Court shall apportion liability among them in terms of payment of damages. Members of the Supervisory Board shall be liable for any negligent or tortious acts committed by them in a personal capacity in the performance of their duties. They shall incur no liability for acts of management or the result thereof. They shall be held liable in civill law for criminal offences committed by members of the Management Board if, having been aware thereof, they did not report teh said offences to the General Mee-ting.



3.1.14 Statutory auditors The Company shall be audited by at least two statutory auditors, who shall be appointed and shall perform their duties in accordance with the law.

Appointment, removal from office and incompatibility of offices

During the term of the Company, the statutory auditors shall be appointed for three fiscal years by the ordi-nary shareholders’ meeting. The statutory auditors’ offices shall expire upon adjournment of the ordinary shareholders’ meeting acting upon the financial statements for the third fiscal year. The statutory auditors shall be eligible for further of-fice. A statutory auditor appointed by the shareholders’ meeting to replace another shall remain in office only for the remaining duration of his or her predecessor’s term. If, upon expiry of a statutory auditor’s term of of-fice, a motion is submitted to the shareholders’ meeting against extension of his or her term, the statutory auditors may address the meeting, if he or she so requests. One or more shareholders holding at least 5% of the share capital, and/or the Moroccan securities regulator (CDVM) may apply to the chief justice of the commercial court acting in summary proceedings for one or more statutory auditors appointed by the shareholders’ meeting to be barred from office, and apply for ap-pointment of one or more auditors to perform their offices in their stead. Under penalty of inadmissibility, the referral to the chief justice of the commercial court shall be entered by a reasoned application made within 30 days after the challenged appointment. If the application is granted, the statutory auditor or auditors appointed by the chief justice of the commer-cial court shall remain in office until appointment of the new statutory auditor or auditors by the meeting of shareholders. If it becomes necessary to appoint one or more statutory auditors and the meeting of shareholders fails to do so, any shareholder may apply to the chief justice of the commercial court, acting in summary proceed-ings, for appointment of a statutory auditor. The statutory auditor(s) appointed by the chief justice of the court shall remain in office until appointment of the new statutory auditor or auditors by the shareholders’ meeting. The appointments of statutory auditors shall comply with the rules relating to incompatibility of offices laid down by law. In the event of resignation, the Statutory Auditors are required to report the reasons for their decision in writing. This document is submitted to the Supervisory Board at the following Shareholders’ Meeting and must be transmitted immediately to the CDVM.

Duties of the statutory auditors

The Statutory Auditor(s) shall have a permanent assignment, exclusive of any interference in the manage-ment of the Company, of inspecting the Company’s assets, books and accounting documents, and ascer-taining the compliance of its financial statements with applicable rules. They shall also review the fairness and consistency relative to the summary statements of the information provided in the annual report from the Management Board and in the documents sent to the shareholders with respect to the Company’s as-sets and liabilities, its financial position and its earnings. The Statutory Auditor(s) shall ensure that equal treatment among the shareholders has been observed. The statutory auditor(s) shall be invited to attend the meeting of the Management Board to approve the fi-nancial statements for the past fiscal year, and all shareholders’ meetings. At any time of the year, the statutory auditor(s) shall perform such inspections as they shall consider being desirable, and may obtain disclosure on the spot of any document they consider necessary for the perform-ance of their assignment, including without limitation any contracts, records, accounting documents and minute books.

The Management Board’s annual report and summary statements shall be made available to the statutory auditor( s) at least 60 days before notice of the annual shareholders’ meeting is given.

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3.1.15 Trading of shares Sales of shares shall be carried out in the manner provided for by law.

3.1.16 Statutory theresholds

In Morocco

Any individual or legal entity, acting alone or in concert with others, that becomes the owner, directly or indi-rectly, of a number of shares representing more than one twentieth (5%), one tenth (10%), one fifth (20%), one third (33.33%), one-half (50%) or two-thirds (66.66%) of the Company’s share capital or voting rights must notify the Company, the CDVM (Moroccan securities regulator) and the Casablanca Stock Exchange, within five working days of the date it crosses such threshold of the total number of the Company’s shares that he, she or it holds, and of the related number of voting rights.

The date of crossing of the threshold shall be the date of execution of the reporting party’s order on the ex-change.

In addition to the statutory obligation mentioned above to inform the Company of the crossing of thresholds, any individual or legal entity, acting alone or in concert with another, that becomes the owner directly or indirectly of a number of shares representing more than 3%, 5%, 8%, 10%, or any threshold that is a multi-ple of 5% in excess of 10%, of the share capital or voting rights of the Company, must notify the Company, by registered mail with return receipt the total number of shares or voting rights that he, she or it holds, within five trading days after the date of acquisition.

The notice above is also to be given if the interest in the capital falls below the thresholds provided for above.

In each aforementioned report, the reporting party shall certify that the report includes all shares or voting rights held or owned. The reporting party shall also specify the date or dates of acquisition or sale of his, her or its shares.

Any individual or legal entity, acting alone or in concert with another, that becomes the owner, directly or indirectly, of a number of shares representing more than one tenth (10%) or one fifth (20%) of the Com-pany’s share capital or voting rights must notify the Company, the CDVM and the Casablanca Stock Ex-change, within five working days from the time when any such threshold is crossed, of his, her or its in-tended objectives within the 12 months after such threshold is crossed, specifying whether he, she or it is acting alone or in concert with another, whether he, she or it intends to discontinue or proceed with acquisi-tion and his, her or its intention to submit the appointment of members of the corporate governing bodies and to acquire control over the Company or not.

The date of crossing of the threshold referred in the previous paragraph shall be the date of execution of the reporting party’s order on the exchange.

Without prejudice to and within the limits of mandatory statutory rules, in the event of failure to comply with the reporting obligations above, the shares in excess of the portion that ought to have been reported shall be deprived of voting rights at any shareholders’ meeting for a two-year period after the date of the breach.

Holders of shares may also be subject to the reporting obligations provided for under statutory Decree 1-04-21 enacting Act 26-03 relating to public bids on the stock market dated April 21, 2004, and Circular 01/04, dated June 8, 2004, relating to the crossing of thresholds of interest in the share capital or votes of listed companies.

Holders of shares or other securities of the Company are advised to consult their legal counsel in order to ascertain whether the reporting obligations are applicable to them.



In France

The provisions of the AMF General Regulation, relating to the method for calculating threshold crossing, notice obligations and the declaration of intent, applicable to the Company are defined as follows: To calculate the shareholding thresholds, the person required to provide information, takes into account the shares and the voting rights that he/she holds as well as the shares and voting rights assimilated thereto and determines the portion of capital and voting rights that he/she holds based on the total number of shares comprising the company’s share capital and the total number of voting rights attached to these shares.

As regards the notice obligations,

• The persons required to provide information must inform the AMF at the latest within five trading days of the date of threshold crossing. A calendar of trading days of the regulated markets established or operating in France, may be found on the AMF website.

• Threshold crossing declarations must be drawn up according to the standard model drafted by the AMF available on the website (www.amf-france.org). They may be transmitted to the AMF by email. The declarations are then made available to the public by the AMF within a maximum of three trading days of the date the declarations are received. The applicable thresholds are: 5%, 10%, 15%, 20%, 25%, 33%, 50%, 66%, 90% and 95%.

Declaration of intent:

• Any individual or legal entity, acting alone or in concert with another, that becomes the owner, directly or indirectly, of a number of shares representing more than one tenth (10%) or one fifth (20%) of the Company’s share capital or voting rights must notify the Company, and the AMF, within ten trading days from the time when any such threshold is crossed, of his, her or its intended objectives for the 12 months following the threshold crossing, specifying whether he, she or it is acting alone or in concert with another, whether he, she or it intends to discontinue or proceed with acquisition of control of the Company and his, her or its intention to request his/her/its appointment or that of one or several per-sons as members of the corporate governing bodies. The declaration must be addressed to the com-pany whose shares have been acquired, and to the AMF within 10 trading days. This information is made public pursuant to the conditions set out in the AMF General Regulation.

• In the event of failure to comply with the reporting and declaration of intent obligations above, the shares in excess of the portion that ought to have been reported shall be deprived of voting rights at any shareholders’ meeting for a two-year period after the date of the breach.

3.1.17 Public bids Under Moroccan law, public bids are governed by Act 46-06 amended and completed by Act 26-03, dated April 21, 2004. A public bid is defined as the procedure whereby an individual or legal entity, acting alone or in concert (the “bidder”), publicly discloses an intention to acquire, exchange or sell all or part of the securi-ties entailing access to the share capital or votes of a listed company.

As in French law, public bids can be voluntary or obligatory when certain conditions are met.

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Voluntary public bids

Any individual or legal entity, acting alone or in concerted fashion and wishing to report publicly that he, she or it wishes to acquire or sell shares listed on the securities exchange, may file a proposed public bid for acquisition or sale of the shares. Unlike the French law which provides the involvement of presenting banks, under Moroccan law, a public bid is to be filed by the bidder with the Moroccan securities regulator (CDVM), and must include:

• the bidder’s objectives and intentions; • the number and nature of the company’s securities; • the date and terms on which the purchase thereof has been or may be made; • the price or exchange ratio at which the bidder is offering to acquire or sell the securities, the

information on which these are based and the terms of payment, settlement or exchange planned; • the number of shares to which the proposed public bid relates; and • if applicable, the percentage of votes below which the bidder reserves the option not to carry out the

bid. The proposed public bid must be accompanied by an information document. The contents and performance of the offers contained in the proposed bid shall be warranted by the bidder, and if applicable, by any person acting as guarantor. The proposed public bid filed with the CDVM shall be accompanied by the prior permit or permits from the competent authorities. In the absence of this permit, the proposed bid is not admissible. Upon filing of the proposed public bid, the CDVM shall issue a notice of filing of the proposed public bid in a newspaper authorized to carry legal advertisements, which shall report the main provisions of proposal. The publication shall be the starting point for the bid period. The CDVM shall forward the main features of the proposed public bid to the public authorities, which shall be allowed two working days from the date of transmission to rule upon the admissibility of the proposal with regard to national strategic interests. If no decision is taken within two working days, it shall be deemed that the authorities have no further comments. As soon as the proposed public bid has been filed, the CDVM shall request the company managing the stock market to suspend the listing of the shares of the company to which the public bid relates. The sus-pension notice shall be published. The CDVM shall be allowed a period of ten working days from the publication, of the suspension notice to review the admissibility of the proposed bid and may request that the bidder provides any evidence or infor-mation required for its evaluation. Under French legislation, it is a period of five trading days following the publication of the proposed bid. As in French law, the bidder is required to modify the proposal in order to comply with the CDVM’s recom-mendations if the latter considers that the proposal is inconsistent with the principles of equal treatment among shareholders, full disclosure, integrity of the market or fairness of transactions and competition. In all cases, the CDVM also has authority to require from the bidder any additional warranties and to demand the deposit of a guarantee in cash or in securities. Grounds shall be stated for any ruling denying admissibi-lity. If a public bid is ruled to be admissible, the CDVM shall notify its ruling to the bidder and publish a notice of admissibility in a newspaper authorized to carry legal advertisements. Concurrently, the CDVM requests the company managing the securities exchange to resume listing. Any proposed public bid shall be accompanied by the information documents which may be drafted jointly by the bidder and the target company if the latter concurs on the bidder’s objectives and intentions. If not, the target company may draft separately and file with the CDVM its own information document within five trading days after approval of the bidder’s information document. In this case, the bidder is bound to file a copy of his, her or its information document and proposed public bid with the target company on the day of filing of his, her or its bid proposal with the CDVM.



The contents of the information document(s) shall be determined by the CDVM, which shall be allowed a maximum period of 25 working days to approve the information document(s) after the date of filing thereof. Such period may be extended by ten working days, if the CDVM considers that additional evidence or infor-mation is required. Upon expiry of such period, the CDVM shall grant or deny approval, and shall provide a justification for any denial. In French law, the AMF has a period of ten days following the opening date of the bid, to perform a compli-ance review, which entails verifying that the bidder’s proposition complies with applicable regulations. The AMF reviews the bidder’s targets, intentions and information appearing in the information notice. During this period, the AMF may require additional explanations or justifications needed to review the bid and the infor-mation notice. The period is then suspended until reception of the required elements. If the propsed bid meets the required conditions, the AMF publishes a compliance report which is deemed as approval of the information notice. In French law, the information notice made available carrying the AMF’s approval visa must either be pub-lished in a national economic daily newspaper, or be notified free of charge to the public by the bidder or the targeted company and published as a summary or a press release. The approval must be published before the offer opens and at the latest on the second day of trading following the AMF’s approval. The managing company shall centralize the acquisition, sale or exchange orders and notify the results to the CDVM, which shall issue a notice on the outcome of the bid in a newspaper authorized to carry legal advertisements.

Compulsory public bids

Cash takeover bids

Under Article 18 of Moroccan Act 26-03, amended and completed by Act 46-06 relating to public bids, the filing of a cash takeover bid is compulsory when an individual or legal entity, acting alone or in concert, holds, directly or indirectly, a given percentage of voting rights in a company listed on the Securities Ex-change. Pursuant to an order of the Minister of Finance and Privatization n°1874- 04 dated Ramadan 11, 1425 (October 25, 2004) when an individual or legal entity holds 40% of the voting rights a cash takeover bid be-comes compulsory. Any individual or legal entity is required, within three working days after the 40% voting rights threshold is crossed, to file with the CDVM a proposed take-over bid. Failing this, this person or legal entity and those acting in concert shall lose the voting and financial rights attached to their capacity as shareholders. Such rights shall be recovered only after a proposed cash takeover bid is filed. The CDVM may grant an exception from the filing of a compulsory cash takeover bid when:

• The crossing of the 40% threshold does not affect control over the company concerned, in particular as a result of a capital reduction or transfer of shares among companies affiliated to the same group;

• the voting rights arise out of a direct transfer, a distribution of assets by a legal entity in proportion to shareholders’ rights as a result of a merger or partial contribution of assets, or a subscription to a capital increase in a company in financial difficulties.

The application for an exception shall be filed with the CDVM within three working days after the voting rights threshold of 40% is crossed. It shall include covenants by that party to the CDVM not to initiate any action intended to obtain control over such company during a specific period, or to implement a recovery plan for the company concerned if it is in financial difficulties. If the CDVM grants the exception requested, its ruling shall be published in a newspaper authorized to carry legal advertisements.

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Compulsory buy-out bids

Pursuant to the article 20 of Moroccan law 26-03, amended and completed by Art 46-06 relating to public bids, the filing of a compulsory buy-out bid is mandatory when one or more individual or corporate share-holders of a listed company hold, alone or in concert, a specific percentage of voting rights in that company. Pursuant to an Order of the Minister of Finance and Privatization n°1875-04 dated Ramadan 11,1425 (October 25, 2004) when an individual or legal entity holds 95% of the voting rights he/she/it must proceed with a compulsory buy-out bid. These persons are required, within three working days after the percentage of 95% threshold is crossed, to file with the CDVM a proposed compulsory buyout bid. Failing this, they shall automatically forfeit all the voting rights. These voting rights shall be recovered only after the filing of a proposed compulsory buyout bid. Filing of a proposed compulsory buy-out bid may also be required by the CDVM of the individual or indi-viduals, or legal entity or entities, holding, alone or in concert, a majority of the share capital listed on the securities exchange, when certain requirements are met, including the requirement of a 66% holding of the voting rights concurrently. (Order of the Minister of Finance and privatization n°1873-04 dated Ramadan, 11, 1425). Filing of a proposed buy-out bid by individuals or legal entities, holding, alone or in concert , a majority of the share capital may also be compulsory if the listed shares are delisted from the securities exchange for any reason.

Standing offer procedure

Under French law, when an individual or legal entity, acting alone or in concert, acquires or has agreed to acquire a block of shares conferring on him, her or it, the majority, of shares or voting rights falling into ac-count which he, she or it already holds, that party is required to file an offer for a compulsory buy-out and to agree to acquire on the market, during a minimum of ten trading days, all securities tendered for sale at the price at which the securities have been or are to be sold.

Such a procedure does not exist under Moroccan law.



Competing bids and improved public bids

One or more competing public bids, or improved public bids, may be launched.

A competing public bid is a procedure whereby any individual or legal entity, acting alone or in concert, may, from the time of initiation of a public bid, and no later than five trading days before its closing date, files with the CDVM a competing bid of shares of the company to which the initial bid refers. Improved bidding is a procedure in which the bidder of the initial public bid improves the terms of the initial bid, either at his/her own initiative or after a competing public bid, by modifying the price or the nature or quantity of securities or the terms of payment. A bidder wishing to improve the bid files with the CDVM the changes made to the initial public bid no later than five trading days before the date closing of the initial bid. The CDVM shall determine whether the improved bid is admissible within five trading days after the filing of the proposal. The bidder shall draw up and submit to the CDVM a supplementary information document. When more than ten weeks have elapsed since the publication of an initiation of a public bid, the CDVM may, in order to expedite the competition between bids, set a deadline for the filing of successive improved bids or competing public bids.

In the event of a competing bid, the initial or previous bidder must, within ten days before the close of the bid, inform the CDVM of his, her or its intentions. The bid may be maintained, withdrawn or modified by an improved bid.

Under French law, the price of a competing bid or an improved public bid must be at least 2% above the price stipulated in the initial bid. It can also be declared compliant if it contains a significant improvement of the terms proposed to securities holders. It can also be declared compliant if, without modifying the terms stipulated in the previous bid, it withdraws the threshold below which the initiator would not have followed up with the bid.

Rules relating to targeted companies and public bidders

During the term of a public bid, the bidder and the parties with which he, she or it is acting in concert may not, in the case of a mixed public bid, trade in the securities of the target company or the shares of the com-pany, tendered in exchange.

In the event of a voluntary takeover bid, the bidder may withdraw the bid within five trading days after publi-cation of the notice of admissibility of a competing or improved bid. The bidder shall inform the CDVM of the decision to withdraw, which shall be published by the latter in a newspaper authorized to carry legal adver-tisements. This option is also permitted under French law.

During the term of the public bid, the targeted company and parties acting in concert with it, if applicable, may not intervene directly or indirectly in the shares of the targeted company. If payment for the public bid is to be made solely in cash, the targeted company may, however, proceed with a share buyback program if the resolution of the meeting of shareholders having permitted such program has expressly so provided.

During the term of the public bid, the targeted company and the bidder, individuals or legal entities holding directly or indirectly at least 5% of the share capital or voting rights of the targeted company, and any other individuals or legal entities acting in concerted fashion with the foregoing, are required to report to the CDVM after each trading day the purchases and sales that they have carried out with respect to the shares concerned by the bid, and any transaction resulting in an immediate or future transfer of title to the shares or voting rights of the targeted company.

Any delegation of authority to increase the share capital granted by the target company’s extraordinary shareholders’ meeting shall be held in abeyance during the term of the cash or stock takeover bid of the company’s shares, and the targeted company may not increase its holdings of its own stock.

During the term of the bid, the appropriate agencies of the targeted company shall give the CDVM prior notice of any proposed resolution within their powers that would prevent performance of the public bid or of a competing bid. Under French law, the initiator of a public bid and others acting in concert may, subject to exceptions, purchase the securities of the targeted company, in accordance with certain price conditions.

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These rules are also applicable to any agent or advisor acting on its behalf or on behalf of the initiator or of the target company. The AMF General Regulation also imposes disclosure obligations as regards the pur-chase and sale of shares concerned by the bid.

CDVM’s supervision and penalties

Public bidders, targeted companies and parties acting in concert with them are subject to the supervision of the CDVM, which shall ensure that the bids are carried out in orderly fashion in investors’ and the market’s interests. The CDVM may impose civil and criminal penalties.



3.2.1 Share capital The share capital of Itissalat Al-Maghrib is MAD5,274,572,040 divided into 879,095,340 shares with a par value of MAD6 each, in a single class and fully paid in. The shares’ par value may be increased or decreased as provided by the applicable laws and regulations. The share capital may be increased, decreased or redeemed by a resolution of the appropriate sharehold-ers’ meeting in the manner provided for by the applicable laws and regulations.

3.2.2 Form of shares The shares shall be in registered or bearer form at the shareholders’ option. The Company shall keep at the registered office a register known as the “transfer register” in which are re-corded, in chronological order, subscriptions for and transfers of registered shares. The pages of this regis-ter are to be numbered and it shall be initialed by the chief justice of the Court. Any holder of a registered share issued by the Company is entitled to obtain a copy thereof certified as true by the Chairman of the Management Board. If the register is lost, copies shall constitute conclusive evidence. The Company may decide not to issue shares in physical form. In accordance with the prevailing statutory rules relating to the book entries of securities, the Company’s shares must be evidenced by book entries with the central depositary.

Indivisibility of shares

Shares shall be indivisible in the view of the Company, which shall recognize only one owner for each share. Joint holders of undivided interests shall be bound to appoint a joint representative in respect of their rela-tions with the Company in order to exercise their rights as shareholders; failing an agreement, the agent shall be appointed by the chief justice of the Court, acting in summary proceedings upon a petition from any of the holders of undivided interests. The right to obtain disclosure of the documents provided for by law shall nonetheless be held by each of the holders of interests in undivided shares, and by each life tenant and bare owner.

3.2.3 Rights and duties attached to shares Each share shall carry a right, proportional to the portion of the share capital that it represents, in the profits or corporate assets, at the time of distribution thereof during the term of the Company or upon its liquida-tion. Any shareholder shall be entitled to information relating to the Company’s operation and to obtain disclo-sure of certain corporate documents at the times and in the manner provided for by law and the bylaws. Shareholders shall be liable for corporate debts only to the extent of the par value of the shares that they own; no additional assessment shall be permitted. The rights and duties attached to a share shall be transferred to any owner thereof. Title to a share shall entail, as of right, acceptance of the Company’s bylaws and resolutions of sharehold-ers’ meetings and of the Supervisory Board and Management Board acting upon delegations of authority from the shareholders’ meetings.

3.2 GENERAL INFORMATION RELATING TO THE COMPANY’S SHARE CAPITAL

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Heirs, creditors, assigns or other representatives of a shareholder may not, on any grounds whatsoever, call for the affixing of seals on the assets and valuables of the Company, or call for a division or sale by auction thereof, or interfere in any manner whatsoever in the actions of its administration; for the exercise of their rights, they shall be bound by the statements of corporate assets and liabilities and resolutions of the shareholders’ meetings.

Whenever it is necessary to hold a given number of shares in order to exercise any right, shareholders who do not hold the required number of shares must make their own arrangements to form a group or to pur-chase or sell the requisite number of shares.

3.2.4 Acquisition by the Company of its own shares

Moroccan legislation

In accordance with Moroccan legislation and the bylaws, the Company may acquire its own shares which are fully paid in, up to 10% of the total of its own shares and/or of a specific class. Pursuant to the CDVM’s circular 02/03, dated May 23, 2003, implementing Decree 2-02-556, dated Febru-ary 24, 2003, any joint stock company (société anonyme), the shares of which are listed on the Securities Exchange and wishing to acquire its own shares in order to adjust the share price, shall be required to is-sue an information notice, which shall require approval from the CDVM prior to the holding of the share-holders’ meeting called to consider the action. The Company’s purchases of its own shares in order to adjust the price shall not interfere with the proper operation of the market. A Company trading its own shares shall inform the CDVM, no later than the fifth working day after the close of the relevant month, of the number of shares acquired and shares sold, if applicable. If the Company does not trade its own shares during a particular month, it shall so inform the CDVM within the same period. During the buyback program, any change relating to the number of shares to be acquired, the maximum purchase price and minimum selling price, or the period during which the acquisition is to be performed shall be promptly notified to the public by means of a notice published in one of the newspapers authorized to carry legal advertisements. Such changes shall remain within the scope of the authorization granted by the shareholders’ meeting.

French legislation

Since the listing of its shares on a regulated market in France, the Company is now subject to the legisla-tion summarized below. Pursuant to the AMF General Regulation, when a company purchases its own shares it must file an infor-mation notice which does not require AMF approval. Pursuant to AMF Regulation and European Commission regulation no.2273/2003 of December 22, 2003 a company may not carry out transactions relating to its own shares in order to manipulate the market. After buying back its own shares, a company must publish the details of all its transactions at the latest by the end of the seventh trading day after their date of execution, and file with the AMF monthly reports con-taining specific information relating to the transactions performed.

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.2. General information relating to the Company’s share capital


Current program

The current share buyback program implemented to adjust the stock price was approved at the Sharehold-ers’ Meeting held on May 28, 2008, following the CDVM’s approval of the program on May 9, 2008 under number VI/EM/017/2008 in the notice published on the buyback program.

The main features of the program are as follows:

• Period: until November 29, 2009 • Price range: MAD150- 250 • Maximum percentage of the share capital: 1.82%, or 16 million shares. Since October 16, 2007 and for a period of one year, renewable by tacit agreement, Rothschild & Cie Ban-que has been under contract by Maroc Telecom to implement:

• in Casablanca, a share price regulation contract involving MAD55 million. • in Paris, a liquidity contract meeting the requirements of the Compliance Charter drawn up by the Asso-

ciation Française des Entreprises d’Investissement (Association of French Investment Firms) and ap-proved by the AMF in its decision of March 22, 2005, published in the French legal gazette (BALO) on April 1, 2005. EUR5 million was allocated to the liquidity account for the application of the contract.

The share buyback program over the period from May 28, 2008 to December 31, 2008 breaks down as follows:

*Average euro/MAD exchange rate at December 31, 2008 (EUR1=MAD11.246)

Casablanca Paris* Total

Number of shares purchased

536,243 829,818 1,366,061

Number of shares sold (356,243) (554,468) (910,711)

Shares held as at December 31,2008

180,000 275,350 455,350

Average purchase price (MAD) 179.24 175.56 -

Average sale price (MAD) 181.78 181.17 -

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GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.2. General information relating to the Company’s share capital

3.2.5 Changes in the Company’s share since incorporation The table below sets out the main changes in share capital since the Company’s incorporation in 1998:

*: At the time of incorporation, only one quarter of the initial share capital was paid in. As a result of this capital reduction, the share capital was fully paid in. **: by compulsory exchange of 10 new shares with a MAD10 par value against one former share with a MAD100 par value. ***: The extraordinary and ordinary shareholders’ meeting on March 30, 2006 authorized Maroc Telecom’s reduction in capital, which was not the result of losses, by reducing the par value of each share from MAD10 to MAD6.

Date Actions Amount Premium Number of shares issued

Total number

of shares

Par value (in MAD)

Share Capital (in MAD)

February 25, 1998

Incorporation 100,000,000 - 1,000,000 1,000,000 100 100,000,000

March 25, 1999

Capital increase 8,765,953,400 - 87,659,534 88,659,534 100 8,865,953,400

June 4, 1999 Capital reduction* 75,000,000 - (750,000) 87,909,534 100 8,790,953,400

October 28, 2004

Change in par va-lue**

- - 791,185,806 879,095,340 10 8,790,953,400

June 12, 2006 Capital reduction by par value reduc-tion***

3,516,381,360 - - 879,095,340 6 5,274,572,040


3.3.1 Listing of the shares of the issuer Since December 13, 2004, Maroc Telecom has been listed on both the Casablanca Stock Exchange and Euronext.

3.3.2 Maroc Telecom share price

Casablanca Stock Exchange

Main market, Code 8001.

* The average price is calculated by dividing trading value by number of shares. Source : Casablanca Stock Exchange.

Changes in Maroc Telecom’s share price on the Casablanca Stock Exchange

Since December 2004 Since December 2007

In May 2008, 89% of free float was traded on the Casablanca Stock Exchange.

Average price* High Low Transactions

(in MAD) Number of shares (in thousands)

Trading value (in millions MAD)

January 2008 162.62 169.95 146.00 6,527.1 1,061.5

February 2008 182.35 193.50 168.05 7,134.8 1,031.1

March 2008 195.76 208.00 184.20 5,261.7 1,028.1

April 2008 199.03 202.00 194.10 7,821.2 1,556.7

May 2008 201.23 212.50 185.50 5,029.0 1,012.0

June 2008 189.13 197.00 186.50 4,782.0 904.4

July 2008 189.16 191.30 185.70 3,184.1 602.7

August 2008 184.78 190.65 181.30 2,649.5 488.9

September 2008 179.08 186.50 165.00 5,909.6 1 058.3

October 2008 171.08 179.95 163.00 5,496.6 940.3

November 2008 173.42 183.90 165.10 3,716.9 644.5

December 2008 157.24 170.20 151.25 9,939.0 1 562.8

January 2009 146.38 158.00 138.20 2,599.3 380.48

February 2009 153.32 166.50 145.25 3,107.7 476.49

March 2009 158.06 163.80 152.00 2,295.3 362.8

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déc 07 janv 08 févr 08 mars 0 8 avr 08 mai 08 juin 08 juil 08 août 08 sep t 08 o ct 08 nov 08 déc 08 janv 09 févr 09 mars 09

Maroc Telecom

MASI

3.3 TRADING OF THE COMPANY’S SHARES

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Nyse Euronext Paris

Eurolist-Foreign securities, Code MA0000011488, Eligible for Euronext’s SRD deferred settlement service

* The average price is calculated by dividing trading value by number of shares ** Not including off-system transactions Source : Nyse Euronext Paris

Changes in Maroc Telecom’s share price on Nyse Euronext Paris

Since December 2004 Since December 2007

Average price* High Low Transactions**

(in euro) Number of shares (in thousands)

Trading value (in millions euro)

January 2008 14.15 14.75 13.00 4,430.5 62.7

February 2008 15.88 16.90 14.58 3,855.8 61.2

March 2008 16.69 18.03 15.94 2,705.6 45.7

April 2008 17.15 17.60 15.70 1,163.6 20.0

May 2008 17.40 19.10 15.62 2,791.0 48.6

June 2008 16.49 17.00 15.34 1,318.3 21.6

July 2008 16.28 16.50 15.74 1,288.5 21.0

August 2008 16.33 17.19 15.52 1,534.7 24.8

September 2008 15.75 16.30 14.09 2,000.8 31.8

October 2008 15.27 15.82 14.01 1,988.8 30.2

November 2008 15.66 16.45 14.25 1,771.9 27.3

December 2008 14.69 15.17 13.66 755.6 11.2

January 2009 13.17 13.90 12.55 1,172.7 15.3 February 2009 13.61 15.44 12.86 2,420.7 33.6

March 2009 14.30 14.82 13.25 530.8 7.6

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déc 07 janv 08 févr 08 mars 08 avr 08 mai 08 juin 08 juil 08 août 08 sep t 08 o ct 08 nov 08 déc 08 janv 09 févr 09 mars 09

Maroc Telecom

CAC 40

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.3. Trading of the Company’s shares

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déc 04 mars 05 juin 05 sep t 05 déc 05 mars 06 juin 06 sep t 0 6 déc 0 6 mars 07 juin 07 sep t 07 déc 07 mars 08 juin 08 sep t 08 d éc 08 mars 09

Maroc Telecom

CAC 40


3.4.1 Dividend paid out over the past fiscal years The table below sets out the amount of dividends (in millions of Moroccan dirhams) paid by the Company in respect of fiscal years 2004 to 2008.

* Amount proposed at the shareholders’ meeting of April 23, 2009.

As of December 31, 2008, the Company’s reserves amounted to MAD3,425 million (excluding results at the end of December 2008), out of which MAD2.8 million are distributable. (See section 5.2.4 “Significant ac-counting policies and estimates”).

3.4.2 Dividend policy Maroc Telecom is particularly attentive to the twin objectives of ensuring that shareholders are rewarded appropriately while securing the resources necessary for the Company’s development. Accordingly, Maroc Telecom intends to establish a policy of regular and significant dividend distributions, according to the eco-nomic environment and the Company’s profits and funding requirements.

The total amount of dividends paid shall be determined taking into account the Company’s funding require-ments, return on capital and the Company’s current and future profitability. The Company cannot guarantee shareholders an identical payment every year. This objective is not therefore a commitment of the Com-pany.

The bylaws (article 16) contain an obligation to distribute annually, in the form of dividend, at least half of the Company’s distributable profits, unless otherwise decided by the Supervisory Board by a 75% majority of votes.

In addition, the final provisions of Article 331 of Act 17-95 provide that “a fixed dividend may not be cove-nanted in favor of the shareholders; any clause to the contrary shall be deemed to be unwritten, unless the State has granted the guarantee of a minimum dividend to the shares.”

Moroccan company law requires all joint stock companies, including Maroc Telecom, to fund their statutory reserve with 5% of profits until the reserve reaches 10% of the share capital . In 2004, Maroc Telecom had reached the statutory reserve, and may accordingly, since fiscal year 2005, pay out its entire distributable profit.

Fiscal year Distribution date Dividends

2004 May 4, 2005 4,395

2005 May 2, 2006 6,119

Exceptional dividend June 12, 2006 3,516

2006 May 15, 2007 6,927

2007 May 28, 2008 8,088

2008 June 3, 2009 9,521*

3.4 Dividends and dividend policy

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3.4.3 Tax treatment relating to dividends

Moroccan tax treatment

Investors should be aware that the summary of tax rules applicable in Morocco set out below is provided for information only and does not constitute a complete description of all potential tax situations applicable to each investor. Accordingly, investors should obtain advice from their usual tax advisors as to the tax treatment applicable to their specific situation and in particular the consequences of the acquisition, holding or transfer of company shares.

The tax rules applicable in Morocco with respect to dividend distributions are governed by the General In-come Tax Code: Income tax for companies (IS) and Income tax (IR) for private persons.

The proceeds of shares (dividends) collected by individuals or companies resident in Morocco or not, are subject to a 10% withholding tax. Companies involved in the payment of such proceeds shall be responsible for payment of the withholding tax to the Treasury.

Companies having their registered offices in Morocco are exempt from this withholding tax, provided that they deliver to the paying agent attestations of title to the shares, including the reference of the tax applica-ble in Morocco.

It should be noted that dividends paid to residents of countries with which Morocco has entered into tax treaties can benefit from a rate of less than 10% if these treaties provide for such a rate. Further, such persons are usually entitled to credit the tax paid in Morocco with the tax authorities in their own countries according to the procedures for the elimination of double taxation.

Moroccan exchange control legislation permits foreign shareholders to transfer dividends abroad.

French tax treatment

Investors should note that the French tax treatment presented below is provided for information only, and does not constitute a complete description of all the tax situations that may apply to each investor. Accordingly, investors should obtain advice from their usual tax advisers regarding the tax treatment appli-cable to their specific situation and in particular to the acquisition, holding or transfer of shares of the Com-pany.

Individuals holding shares as part of their personal assets and not performing stock exchange transactions on a regular basis

Shareholders are allowed a tax credit chargeable against the amount of French income tax relating to such income, in accordance with Article 25-2 of the Convention signed on May 29, 1970 between the French Republic and the Kingdom of Morocco (the “Convention”). The tax credit amount is set by Article 25-3 of the Convention at 25% of the amount of dividends paid out. According to information from the Director of Tax Legislation, the tax credit amounted to 33.33% of the net amount of dividends collected (after deduction of the withholding tax charged in Morocco).

If the taxpayer so chooses, the net dividends collected, plus the attached tax credit, may be subject to 18% income tax plus the additional social security levy.

Otherwise the net dividends collected, plus the attached tax credit are taken into account to determine the taxpayer’s overall income in the class of proceeds from securities and shall be subject to income tax on a progressive scale.

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.4. Dividends and dividend policy


However, dividends paid out by the Company pursuant to a valid resolution of the Company are taken into account for the purposes of computation of income tax, after a 40% reduction on the gross amount of the payout, (i.e. 60% of the gross dividend is taxable). In addition, they shall be eligible for an annual allowance of €3,050 (for married couples taxed jointly and for partners taxed jointly under a PACS agreement defined under Article 515-1 of the French Civil Code), and of €1,525 for taxpayers who are single, widowed, di-vorced or married and taxed separately. The 40% allowance shall apply before the allowance of €1,525 or €3,050.

In addition, taxpayers resident in France for tax purposes, as defined under Article 4 B of the French Tax Code, may be eligible in respect of such dividends for a tax credit of 50% of the amount of taxable divi-dends before the allowance. Such credit shall be allowed to the extent of €230 annually for married couples taxed jointly and for partners taxed jointly starting under a PACS agreement defined under Article 515-1 of the French Civil Code, and of €115 for taxpayers who are single, widowed, divorced or married and taxed separately.

Investors should note that dividends denominated in Moroccan dirhams shall be converted, for the pur-poses of taxation in France, into euros by applying the exchange rate in Paris on the date of collection of such dividends. If there is no listing on that day, the average trading price applied at a sufficiently close date is to be used.

Companies liable to corporate income tax

The dividend paid out by the Company shall be subject to corporate income tax in France. In accordance with Article 25-2 of the Convention, the shareholder is granted a tax credit chargeable against French corporate income tax. The tax credit amount is set by Article 25-3 of the Convention at 25% of the dividends paid out. According to information from the Director of Tax Legislation, the amount of such tax credit equals 33.33% of the net amount of dividends collected (after deduction of the withholding tax charged in Morocco). Such tax credit may not, however, exceed the amount of French corporate income tax relating to such dividends. No surplus tax credit may be used against the French taxes payable in re-spect of other sources of income, or be refunded or carried forward. The dividends collected, plus the related tax credit, shall be included in the income subject to corporate in-come tax at a rate of 33.33%. An additional contribution of 3% of the gross amount of corporate income tax and a welfare contribution of 3.3% of the gross amount of corporate income tax in excess of €763,000 per 12-month period, shall be added thereto. However, for companies with revenues of less than €7,630,000 and the share capital of which, fully paid in, has been held uninterruptedly for the duration of the fiscal year concerned to the extent of 75% at least by individuals or by a company meeting all such requirements, the rate of corporate income tax is set, to the extent of €38,120 of taxable profit per 12-month period, at 15%. Such companies are in addition exempt from the 3.3% welfare contribution mentioned above.

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Companies qualifying for the French participation exemption regime

Companies meeting the requirements of Articles 145 and 216 of the French Tax Code are, if they so choose, eligible to an exemption for dividends collected pursuant to the participation exemption regime. Article 216 I of the French Tax Code, however, provides for the taxation in the taxable income of the legal entity receiving the dividends, of a portion of costs and expenses set at a fixed rate of 5% of the amount of dividends collected, including the traditional tax credit granted under a tax treaty. For each taxable period, however, such portion may not exceed the total amount of costs and expenses of all kinds incurred by the company collecting the dividends during the same period. Pursuant to the participation exemption regime, the customary tax credit attached to the dividends collected may not be used against the amount of corporate income tax. Investors should note that dividends denominated in Moroccan dirhams shall be converted, for the pur-poses of taxation in France, into euros by applying the exchange rate in Paris on the date of collection of such dividends. If there is no listing on that day, the average trading price applied at a sufficiently close date is to be used.

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.4. Dividends and dividend policy


3.5.1 Ownership of share capital and voting rights in the Company As of December 31, 2008, the share capital and voting rights of the Company were held as follows:

*Through its 100% subsidiary (Société de Participation dans les Télécommunications)

3.5.2 Authorized share capital As of the date of this Registration Document, the Company had not issued any securities other than the ordinary shares carrying direct or indirect rights, at present or in the future, to the Company’s share capital. Likewise, there are no stock option or subscription plans reserved for the employees. However the combined general shareholders’ meeting of April 23, 2009 authorized the Management Board to implement stock option and subscription plans in compliance with applicable laws. This authorization is valid for 36 months from the date of the aforementioned general shareholders’ meeting, and may be used once or several times.

3.5.3 Changes in the shareholding structure of the company over last three fiscal years The Maroc Telecom share has been listed simultaneously on the Casablanca Stock Exchange and Euron-ext Paris since December 13,2004, following the sale by public tender of 14.9% of Maroc Telecom’s share capital by the Government of the Kingdom of Morocco. On November 18, 2004 the Kingdom of Morocco and Vivendi concluded an agreement regarding the acqui-sition by Vivendi of 16% of Maroc Telecom’s share capital. On January 4, 2005, this agreement allowed Vivendi to increase its stake from 35% to 51% via the acquisition of 140,655,260 Maroc Telecom shares. In 2006, the Moroccan State disposed of 0.10% of Maroc Telecom’s share capital, reducing its stake to 34%. On July 2, 2007, the Moroccan State sold 4% of Maroc Telecom’s share capital on the Casablanca Stock Exchange at price of MAD130/share. This sale of shares was reserved for Moroccan and international institutional investors via a book order between June 26 and June 28, 2007. On completion of the transaction, the Moroccan State held 30% of share capital and voting rights of the company. The free float increased from 15% to 19% of the share capital. Under the terms of an agreement concluded in 2007 between Vivendi and the group CDG, Vivendi acqui-red 2% of the capital of Maroc Telecom, thus increasing its stake from 51% to 53%. In addition, CDG group acquired 0.6% of Vivendi’s share capital.

Shareholders Number of shares % of capital / Voting rights

Vivendi Group* 465,920,477 53.00

Kingdom of Morocco 263,728,575 30.00

Members of Supervisory and Management Board 155,980 0.02

Employees 1,311,049 0.15

Public 147,523,909 16.78

Treasury shares 455,350 0.05

Total 879,095,340 100

3.5 BREAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS

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The capital and the voting rights of the Company over the past three years, have been distributed as fol-lows:

* Through its 100% subsidiary (Société de Participation dans les Télécommunications)

3.5.4 Employee stock ownership Maroc Telecom gave employees the opportunity to subscribe to the Initial Public Offering under preferential conditions namely a 15% discount on the subscription price, provided that they conserved the shares thus acquired over a three-year holding period ending on December 16, 2007.

At December 31, 2008, the shares held by employees amounted to 0.15% of the authorized capital and the voting rights

3.5.5 Shareholders’ agreement

Amended shareholders’ agreement between the Kingdom of Morocco and Vivendi

By an amendment dated November 18, 2004 and April 6,2007, Vivendi and the Government of the King-dom of Morocco modified the amended shareholders’ agreement. In accordance with this amendment, the key features of the provisions governing relations between the Kingdom of Morocco and Vivendi are as fol-lows:

Organization of powers within Maroc Telecom’s management and supervisory bodies

• Supervisory Board The amended Shareholders’ Agreement provides that the Supervisory Board, in theory, is to be composed of eight members, and that a change in the apportionment of seats on the Supervisory Board is contingent upon a change in the respective beneficial interests of Vivendi and the Government of the Kingdom of Mo-rocco in the Company’s share capital, as follows.

If the stake of the Government of the Kingdom of Morocco in the total voting rights held jointly with Vivendi becomes:

• greater than or equal to 50% but less than or equal to 65%, then five members will be appointed by the Government of the Kingdom of Morocco and three members by Vivendi;

• greater than or equal to 40% but less than 50%, then three members will be appointed by the Govern-ment of the Kingdom of Morocco versus five members by Vivendi;

Situation at December 31, 2008 December 31, 2007 December 31, 2006

Shareholders % of Capital/ voting rights Number of shares %Capital/

voting rights Number of shares % of Capital/ voting rights Number of shares

Vivendi Group* 53.00 465,920,477 53.00 465,920,477 51.00 448,338,570

Kingdom of Morocco 30.00 263,728,575 30.00 263,728,575 34.00 298,892,389

Members of Supervisory and Management Board 0.02 155,980 0.02 155,980 0.02 157,980

Employees 0.15 1,311,049 0.17 1,466,653 0.18 1,590,776

Public 16.78 147,523,909 16.81 147,768,655 14.80 130,115,625

Treasury shares 0.05 455,350 - 55,000 - 0

Total 100 879,095,340 100 879,095,340 100 879,095,340

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.5. Breakdown of share capital and voting rights


• greater than or equal to 30% but less than 40%, then two members will be appointed by the

Government of the Kingdom of Morocco versus six members by Vivendi; • greater than or equal to 20% but less than 30%, then one member will be appointed by the Government

of the Kingdom of Morocco versus seven members by Vivendi; • greater than or equal to 70% but less than 80%, then seven members will be appointed by the

Government of the Kingdom of Morocco versus one member by Vivendi ; and • greater than 65% but less than 70%, then six members will be appointed by the Government of the

Kingdom of Morocco versus two members by Vivendi. In addition, if the Kingdom of Morocco holds less than 5% of the capital and at least two shares of the Company, it will be entitled to appoint two representatives of the Government of the Kingdom of Morocco who will attend the Supervisory Board without being able to vote.

In order to preserve its right to appoint the Chairman of Supervisory Board, the Kingdom of Morocco has to have two seats.

Pursuant to the Amended Shareholders’ Agreement, the following rules will apply to the extent that the ap-plication of such rules would result in the Kingdom of Morocco appointing a number of members of the Su-pervisory Board greater than the number resulting from the application of the rules described above:

• if the shareholding of the Government of the Kingdom of Morocco is more than or equal to 22% of the share capital and voting rights of the Company, three members of the Supervisory Board will be ap-pointed by the Kingdom of Morocco and five members of the Supervisory Board by Vivendi;

• if the shareholding of the Kingdom of Morocco is less than 22% and more than or equal to 9% of the share capital and voting rights of the Company, two members of the Supervisory Board will be appoin-ted by the Kingdom of Morocco and six members of the Supervisory Board by Vivendi ; and;

• if the shareholding of the Kingdom of Morocco is less than 9% or more than or equal to 5% of the share capital and voting rights of the Company, one of the members of the Supervisory Board will be appoin-ted by the Kingdom of Morocco and seven members of the Supervisory Board will be appointed by Vi-vendi, and the Kingdom of Morocco shall be entitled to appoint one Representative who shall have the right to attend the Supervisory Board without being able to vote.

These rules governing the allocation of the seats on the Supervisory Board shall remain applicable as long as the Kingdom of Morocco holds at least 5% of the share capital and voting rights of the Company.

The rules of majority applicable to the Supervisory Board are set out in the Shareholders’ Agreement and are reproduced identically and virtually in full in the bylaws. The only decisions subject to the approval of the Supervisory Board in the Amendment which are not reproduced in the bylaws are related to:

(i) the agreement of the parties to submit to the Supervisory Board for approval, by a majority, any excep-tions made to the commitment of Vivendi to propose the appointment of at least one Moroccan member to the Management Board and;

(ii) the agreement of the parties to submit to the Supervisory Board for approval, by a majority, any decision concerning a project involving the non-competition clause in the MENA zone provided for by the Amended Shareholders’ Agreement.

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• Management Board The Amended Shareholders’ Agreement provides that a change in the apportionment of seats on the Ma-nagement Board is contingent upon a change in the respective beneficial interests of Vivendi and the Go-vernment of the Kingdom of Morocco in the Company’s share capital, as described below.

If the pro rata share of the Government of the Kingdom of Morocco of the total amount of voting rights held jointly by it with Vivendi becomes:

• greater than or equal to 20% but less than 40%, then one member will be appointed by the Government of the Kingdom of Morocco versus four members by Vivendi;

• greater than or equal to 40% but less than or equal to 65%, then two members will be appointed by the Government of the Kingdom of Morocco versus three members by Vivendi;

• greater than 65% but less than or equal to 70%, then three members will be appointed by the Govern-ment of the Kingdom of Morocco versus two members by Vivendi;

• greater than 70% but less than or equal to 80%, then four members will be appointed by the Govern-ment of the Kingdom of Morocco versus one member by Vivendi.

In addition, as long as the Government of the Kingdom of Morocco holds at least 15% of the share capital and voting rights of the Company, two members of the Management Board will be appointed by the Gov-ernment of the Kingdom of Morocco and three members of the Management Board will be nominated by Vivendi and as long as the Government of the Kingdom of Morocco holds at least 9% of the share capital and voting rights of the Company, one member of the Management Board will be appointed by the Govern-ment of the Kingdom of Morocco and four members of the Management Board will be nominated by Vivendi notwithstanding any less favorable stipulation of the Amended Shareholders’ Agreement.

These provisions shall remain in force as long as the Government of the Kingdom of Morocco holds at least 9% of the share capital and voting rights of the Company.

• Shareholders’ meeting Vivendi holds the majority of votes at ordinary general shareholders’ meetings.

• Audit Committee As long as the Government of the Kingdom of Morocco holds at least 5% of the share capital and voting rights of the Company, at least two members of the Audit Committee of Maroc Telecom will be appointed by the Government of the Kingdom of Morocco and this committee’s internal regulations shall provide for the possibility for any member of the Audit Committee to ask the Audit Committee to carry out an audit of the Company and the obligation for the Audit Committee to rule on any formal request submitted by at least two members of the Audit Committee to carry out such an audit.

Specific rights of the Moroccan Government

The Government of the Kingdom of Morocco also holds a right to veto a proposed merger, divestment or partial contribution of assets that is likely to substantially modify the scope of the Company’s business acti-vities or substantially modify the Company’s corporate purpose, unless Vivendi demonstrates to the Go-vernment of the Kingdom of Morocco, on objective and reasonable grounds, a strategic purpose for the Company for such a plan. This right shall remain in force, until the earliest of the two following dates: (i) the date on which the Government of the Kingdom of Morocco ceases to hold at least 14% of the share capital and voting rights of the Company or (ii) February 20, 2014.

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.5. Breakdown of share capital and voting rights


Conditions for transfers of shares and rights of the parties

Call option of the Government of the Kingdom of Morocco Vivendi would have to transfer to the Government of the Kingdom of Morocco its beneficial interest in the Company, held directly or through its subsidiaries, in the event of a change in the control of Vivendi having such a impact on competition on the Moroccan market, that it will incur an obligation for Vivendi, imposed by the Moroccan competition authorities, to transfer all or a portion of its beneficial interest in the Company and/or a transfer by the Company of one of its business activities representing at least 25% of its revenues. This provision will remain in force as long as the Government of the Kingdom of Morocco holds at least 20% of the total amount of voting rights held jointly with Vivendi.

“Standstill” obligation of Vivendi In application of the amended Shareholders’ Agreement, the period during which Vivendi is prohibited from transferring Company shares without preliminary agreement of the Moroccan Minister of Finance and Priva-tization, is extended to February 20, 2008.

Pro rata tag-along right of the Kingdom of Morocco In the event of a transfer of shares by Vivendi between February 21, 2008 and February 20, 2010 (inclusive) that does not trigger a mandatory public tender offer, the Government of the Kingdom of Moroc-co shall benefit from a pro rata tag-along right. However, this tag-along right shall not apply in the event of a transfer between companies within the Vivendi group (i.e., between Vivendi and/or any company/companies in which Vivendi holds at least two-thirds of the share capital and voting rights).

Vivendi’s right of pre-emption Vivendi shall benefit from a right of pre-emption in the event of an assignment by the Government of the Kingdom of Morocco of all or part of its shares until February 20, 2010 (inclusive).

Mauritel SA shareholders’ agreement On April 12, 2001, Maroc Telecom acquired 54% of the share capital of the incumbent Mauritanian opera-tor, Mauritel SA. At the time of this acquisition, the Islamic Republic of Mauritania and Maroc Telecom ente-red into a shareholders’ agreement, under the terms of which Maroc Telecom obtained the right to appoint members of the Board of Directors of Mauritel SA in proportion to the beneficial interest that it holds (four members out of seven, as long as it holds more than 50% of the share capital). Until June 30, 2004, the Mauritanian State benefited from a right of veto with respect to significant operations (including, in particu-lar, modification of the legal structure of Mauritel SA, approval of the budget and business plan, setting the annual dividend, and the conclusion of any financing). The agreement provides for a payment of dividends at the level of 30% of the consolidated profits of the Mauritel group, as long as such a distribution is legally possible and would not compromise the fulfillment of objectives set out in the business plan or a healthy financial position. In addition, Maroc Telecom was not entitled to transfer shares of Mauritel SA before June 30, 2004, except for a transfer within the group or a transfer of 3% of the share capital to the employees of the Mauritanian operator. In 2006, CMC acquired 0.527% of Mauritel SA’s share capital from Socipam, the-reby increasing its stake to 51.527%.

On June 6, 2002, Maroc Telecom transferred its beneficial interest of 54% in Mauritel SA to the controlling holding company Compagnie Mauritanienne de Communications (CMC), and then transferred 20% of the share capital of CMC to Mauritanian investors. At the time of this transfer, Maroc Telecom and the Maurita-nian investors entered into a shareholders’ agreement under which each shareholder holds management rights with respect to CMC in proportion to the levels of its beneficial interest. In reference to this transfer, CMC was substituted to Maroc Telecom in the Shareholders’ Agreement.

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Finally, under the terms of the shareholders’ agreement, CMC transferred 3% of the share capital of Mauri-tel SA to the employees of the Mauritanian operator, thus bringing its beneficial interest to 51% of the share capital of Mauritel SA.

Each of the parties holds a right of pre-emption with respect to the beneficial interest of the other party. All transfers are subject to approval by the board of directors of Mauritel SA. The agreement also contains a tag-along right (droit de suite) allowing the Government to sell to the acquirer of the beneficial interest in Mauritel SA the same percentage of shares acquired from Maroc Telecom.

Medi-1-Sat shareholders’ agreement Pursuant to the shareholders’ agreement signed with the other shareholders (CDG, 39% via its subsidiary FIPAR Holding, RMI 19.50% and CIRT 2.5%), Maroc Telecom, which owns 39% of the share capital, recei-ved and/or granted certain rights (right of first refusal etc.) enabling it to protect its shareholder rights.

Mobisud France shareholders’ agreement Pursuant to the shareholders’ agreement signed with the other shareholders (SFR, 16% and Saham Group, 18%), Maroc Telecom, which owns 66% of the share capital, received and/or granted certain rights (right of first refusal etc.) enabling it to protect its shareholder rights.

Gabon Telecom shareholders’ agreement According to the shareholders’ agreement concluded with Gabon Telecom, Maroc Telecom which owns 51% of the share capital, received and/or granted certain rights (right of first refusal etc.) enabling it to pro-tect its shareholder rights.

GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL 3.6. Asset pledges

3.6 Asset pledges

No pledge on assets of the Company has been granted.

In addition, the shares in Maroc Telecom’s subsidiaries are not pledged for the benefit of third parties.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITES

4.1 HISTORY 56

4.2 OVERVIEW OF THE GROUP’S OPERATIONS 57 4.2.1 ORGANIZATION 57 4.2.2 ISO CERTIFICATION 59

4.3 MAROC TELECOM’S BUSINESS STRATEGY 60

4.4 BUSINESS ACTIVITIES IN MOROCCO 62 4.4.1 MOBILE SERVICES 62 4.4.2 FIXED-LINE AND INTERNET SEGMENT 78 4.4.3 NETWORK AND SYSTEMS INFRASTRUCTURE 92 4.4.4 DISTRIBUTION AND ADVERTISING 94 4.4.5 COMPETITIVE LANDSCAPE 100

4.5 DESCRIPTION OF SUBSIDIARIES’ OPERATIONS 104 4.5.1 MAURITEL 104 4.5.2 ONATEL 106 4.5.3 GABON TELECOM 108 4.5.4 CASANET 110 4.5.5 MEDI -1-SAT 110 4.5.6 MOBISUD (FRANCE ANDBELGIUM) 110

4.6 RESEARCH AND DEVELOPMENT 111

4.7 SEASONALITY 111

4.8 REGULATORY ENVIRONMENT AND POSSIBLE DEPENDENCIES 112 4.8.1 THE LEGAL FRAMEWORK WITH RESPECT TO TELECOMMUNICATIONS IN MOROCCO 112 4.8.2 REGULATORY ENVIRONMENT OF SUBSIDIARIES 123

4.9 HUMAN RESOURCES 126 4.9.1 DEVELOPING COMPETENCIES WITHIN THE ENTREPRISE 126 4.9.2 COMPOSITION OF THE WORKFORCE 126 4.9.3 STAFF TURNOVER RATE 126 4.9.4 CHANGES IN THE WORKFORCE 126 4.9.5 STAFF ON SECONDMENT FROM VIVENDI 127 4.9.6 TRAINING 127 4.9.7 CHANGE IN STAFF COMPENSATION 127 4.9.8 EMPLOYEE SHARE OWNERSHIP 127 4.9.9 LABOR RELATIONS 128 4.9.10 LABOR AGREEMENTS AND NEGOTIATIONS 128 4.9.11 EMPLOYEE BENEFITS 129

4.10 REAL PROPERTY 131

4.11 INTELLECTUAL PROPERTY 132

4.12 INSURANCE 134

4.13 LEGAL AND ARBITRATION PROCEEDINGS 136

4.14 RISK FACTORS 138 4.14.1 RIISKS RELATING TO THE COMPANY’S OPERATIONS 138 4.14.2 REGULATORY RISKS 142 4.14.3 TAX RISK 143 4.14.4 RISKS RELATING TO THE INTERESTS HELD BY MAJOR SHAREHOLDERS IN MAROC TELECOM 143 4.14.5 MARKET RISKS 143


4.1 HISTORY

Maroc Telecom was created from the break-up of the Office National des Postes et Télécommunications pursuant to the enactment of Act 24-96 and the implementing decrees relating to telecommunications. Ma-roc Telecom, the incumbent telecommunications operator in the Kingdom of Morocco, operates in two busi-ness segments: Mobile services and Fixed-line & Internet services.

A mobile telephone service using analog technology was introduced in Morocco as from 1987. Once the GSM digital standard was adopted, Maroc Telecom, as the incumbent operator, expanded its mobile tele-phone services and was the first operator in Africa, and the second in the MENA (Middle East North Africa) region, to operate a GSM network (as from April 1, 1994). Maroc Telecom soon extended coverage to the country’s main economic and political centers. In January 1995, Maroc Telecom signed its first international roaming agreement. In order to prepare for the entry of a new competitor on the market and to increase market penetration, Maroc Telecom introduced prepaid schemes and GSM packages in 1999, and launched rate plans in 2000. There are now two 2G mobile operators, three 3G mobile operators in Mo-rocco, including Maroc Telecom (see section 4.4.5 “Competitive landscape”).

There has been a fixed-line telephone service in Morocco since the first half of the twentieth century. The Company extended the range of fixed-line telecommunications services it provides with the launch of nar-rowband Internet in 1995 and then broadband ADSL, in 2003, and broadband TV (IPTV), in 2006. In addi-tion, it has introduced dedicated data transmission services for business users utilizing state-of-the-art tech-nologies.

On February 20, 2001, Vivendi acquired a 35% interest in the Company pursuant to an invitation to tender organized by the government of the Kingdom of Morocco for the selection of a strategic partner. Vivendi was granted certain rights relating to the Company’s management and operations (see section 3.5.5 “Shareholders’ Agreement). Maroc Telecom, along with the SFR group, is now affiliated to the Telecommu-nications division of the Vivendi group. Pursuant to an agreement dated November 18, 2004 between the government of the Kingdom of Morocco and Vivendi, the Kingdom of Morocco transferred ordinary shares representing an additional 16% of Maroc Telecom’s share capital. In 2006, the government of the Kingdom of Morocco sold 0.1% of Maroc Telecom’s share capital, reducing its stake to 34%.

On July 2, 2007, the Moroccan State sold 4% of Maroc Telecom’s share in the Casablanca Stock Ex-change at MAD130/share. This transfer of shares was reserved for Moroccan and international institutional investors via a book order between June 26 and June 28, 2007. On completion of the transaction, the Mo-roccan State held 30% of the share capital and voting rights of the Company and the free float increased from 15% to 19% of share capital. In December 2007, following a share exchange with the deposit and management fund of Morocco, Vivendi acquired an additional 2%.

As at December 31, 2008, the breakdown of Maroc Telecom’s capital was as follows:

Vivendi Group 53.0%

Kingdom of Morocco 30.0%

Free float 17.0%

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Since 2001, Maroc Telecom has been part of the Vivendi group, a leading player in entertainment, with ac-tivities in music, television, cinema, mobile telecommunications, Internet and games. All of Vivendi’s busi-nesses, like Maroc Telecom, hold preeminent positions on their markets:

• Universal Music Group, a wholly-owned subsidiary of Vivendi, is the world leader in recorded music with more than one out of every four CDs sold worldwide, and a leading position on the digital music market;

• Canal+ Group, a wholly-owned subsidiary of Vivendi, is the French leader in thematic and premium TV channels, and in pay-TV. It is also a leader in France and Europe in the funding, acquisition and distribution of movies;

• SFR, a 56%-owned subsidiary of Vivendi. With 19.7 million mobile clients, 3.9 million broadband Internet clients and EUR12 billion in annual revenues, the entity formed from the merger of Neuf Ce-getel and SFR is the leading alternative mobile and fixed-line operator in Europe;

• Activision Blizzard, a 54%-owned subsidiary of Vivendi, is the world’s largest pure-play online and console game publisher, with leadership positions in all segments of the fast-growing interactive en-tertainment industry.

In addition, Vivendi owns 20% of NBC Universal which is a major global player in media and communica-tions with activities encompassing film and TV production, TV broadcasting and the operation of theme parks.

4.2 OVERVIEW OF THE GROUP’S OPERATIONS

4.2.1 Organization The group’s simplified legal structure as of December 31, 2008 was as follows:

Vivendi Kingdom of Morocco Market

Maroc Telecom

CMC

Mauritel

Mobisud Belgique

Others**

53%* 30%* 17%*

51,5%*

80%* 100%*

Onatel 51%*

Gabon 51%*

Telmob Libertis

100%* 100%*

Mobisud France-

66%*

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.2. Overview of the group’s operations

* The percentages represent voting right percentages ** for details of the equity holdings see Section 5.5 Individual financial statements – B4


Finally, Vivendi Mobile Entertainment (VME) was established in 2007 and is a wholly-owned subsidiary of Vivendi. VME aims to become a leading provider of entertainment services for mobile telephones. "zaOza”, its latest consumer subscription service was launched in 2008.

Maroc Telecom holds majority equity interests in three full-service operators in Africa (see section 4.5 “Description of subsidiaries’ operations”):

• Mauritel SA, the incumbent telecommunications operator in Mauritania, which was acquired on April 12, 2001;

• Onatel, Burkina Faso’s incumbent telecommunications operator, which was acquired on December 29, 2006;

• and Gabon Telecom, the incumbent telecommunications operator of Gabon, which was acquired on February 9, 2007

In addition, Maroc Telecom has established an MVNO (Mobile Virtual Network Operator), named Mobisud. It was launched in France using SFR’s network as of December 1, 2006 and in Belgium, using the Proxi-mus network, as of May 2, 2007.

Organized into general management departments and regional departments based on its businesses and services, Maroc Telecom combines Mobile, Fixed-line and Internet operations in its Services division, alongside support functions such as Networks & Systems, Regulatory Affairs, Communication, Interna-tional Business Development and Administration & Finance functions. Maroc Telecom is decentralized with eight Regional Divisions each equipped with their own operational structures and support allowing them to react quickly and to be more autonomous in the field.

As at December 31, 2008, the functional organization chart of the Group was as follows:

Abdeslam AHIZOUNE Chairman of the Management Board

Larbi GUEDIRA

Managing Director Services

Rachid MECHAHOURI

Managing Director Networks and systems

Janie LETROT

Managing Director Regulation, Communication and

International Development

Arnaud CASTILLE

Managing Director Administration & Finance

Regional Divisions (8)

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4.2.2 ISO certification As part of its continuous improvement efforts, Maroc Telecom obtained ISO 9001:2000 certification for spe-cific operations in 2003. This was extended in 2004 to encompass all of its products and services within the framework of a total quality system. This certification was renewed following the renewal audit of December 2007.

Certification covers the design and development of offers, sales and marketing, commissioning and decom-missioning, activation / deactivation, billing and collection, after-sales service, information and assistance for all consumer and business customers in all Maroc Telecom sites.

Within the framework of its information systems security policy, Maroc Telecom obtained in January 2008 the ISO 27001 version 2005 certification for all its activities. This certification covers the design, planning, development, operation, maintenance, and after-sales fixed-line, mobile and data services, added-value services and corresponding technological infrastructure.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.2. Overview of the group’s operations


Against the background of a growing telecommunications market, boosted by favorable economic and demographic conditions, Maroc Telecom’s goal is to retain leadership in all its market segments (mobile, fixed-line and Internet), and to maintain profitability levels. At the end of 2008, despite efforts made by competitors, Maroc Telecom succeeded in maintaining its lead-ership in each segment of the market, relying in particular on:

• a segmented and competitive offer, tailored to consumers’ expectations; • an extensive distribution network, the densest in the country, with more than 55,000 direct and indirect

retail outlets licensed by Maroc Telecom; • modern network infrastructure, offering the country’s best mobile coverage; and • strong brands enjoying extensive customer recognition.

Maroc Telecom’s strategy thus consists of the following:

Stimulating growth in the mobile segment through innovation and initiatives to boost usage of mobile services Maroc Telecom stimulates the use of prepaid services, with promotional offers for voice services (offers on top-up cards and other regular promotions) and data services (reducing SMS and MMS tariffs and promo-tions), while striving to expand its customer base and increase customer loyalty. Maroc Telecom has introduced new value-added services, based on SMS, MMS and GPRS, to enhance its range and to increase ARPU (average revenue per user). Maroc Telecom has consistently acted as a fore-runner in deploying new technologies, most recently with its launch of 3G services in 2007. The Company’s priorities are to achieve steady growth in the customer base, driven by reductions in access rates, in order to ensure tight control over customer acquisition costs and to enhance customer loyalty. The mobile penetration rate increased from 53.5% at end-2006 to 65.7% at end-2007, then to 74% at end-2008 (Source: ANRT), thereby illustrating the high growth potential of the market. In the medium term, the pene-tration rate is expected to increase to over 95% (Maroc Telecom estimate).

Reinforcing our competitive edge in fixed-line services to deal with the advent of competition The fixed-line telecommunications market has been fully liberalized since 2005 when two new licenses were awarded to Meditel and Wana (formerly Morocco Connect). Both new entrants started marketing their new Fixed-line and Internet services in 2007. Maroc Telecom’s strategy focuses on making its offers more competitive, and in particular on providing high quality service, on its customer loyalty program and launching new innovative services. This strategy essentially aims to:

• Steadily increase unlimited fixed-to-fixed rate plans (“Phony” range with very competitive tariffs and “Infinifix” for business) granting unlimited calls and call time to all fixed lines.

• Enrich telecommunications products with entertainment content, with the launch in 2006 of broadband TV and double and triple-play Internet offers, VOIP and Video on demand in 2008, made possible by IP technologies and high bandwidth. The aim is to equip the Fixed-line segment with new growth drivers.

• Enhance the quality of after-sales services. • Strengthen customer loyalty programs, enabling customers to earn various gifts and benefits. • Rapidly increase ADSL penetration, which at the end of 2008 had already reached 42% of fixed lines

(excluding public telephony).

Remaining the principal engine of Internet development in Morocco The spectacular success of unlimited ADSL Internet services, launched in early 2004, along with the rate reductions and promotional offers launched in 2008 are indicative of the high growth potential in the market. Maroc Telecom concentrates its focus on broadband, with a marketing strategy which revolves around gradual price cuts, increasing access speeds and introducing alternative offerings such as CDMA Internet

4.3 MAROC TELECOM’S BUSINESS STRATEGY

4


for rural areas and Mobile 3G Internet services. Maroc Telecom also develops initiatives aimed at increas-ing Internet penetration, in particular in schools, while developing specific plans for business users and as-sisting in the development of content and use of the Internet.

Capitalizing on its brands and making Maroc Telecom a reference in terms of cus-tomer service in Morocco Maroc Telecom enjoys strong public recognition and an excellent image with its brands, such as Jawal (prepaid mobile telephony), El Manzil (fixed-line telephony for residential and business users), Phony (unlimited fixed-to-fixed rate plans) and Menara (Internet access). The Company also proposes to make Maroc Telecom the reference in customer service in Morocco by continuing to improve presentation, and customer interface at the point of sale, customer services (technical start-up, after-sales service, commer-cial administration, call centers).

Leveraging a state-of-the art network infrastructure Maroc Telecom has the most extensive and technologically advanced network infrastructure in Morocco. With its modern high-performance network, based on a interconnected and secure optical fiber backbone, Maroc Telecom offers a wide range of high-quality telecommunications services (Fixed-line, mobile, data and broadband Internet). In order to maintain a reliable leading-edge network, providing innovative new services to its customers, Maroc Telecom intends to proceed with its policy of investment in its network, aiming to develop capacity and coverage, introduce new mobile and fixed-line technologies, develop, build and strengthen domestic and international interconnections.

Maintaining rigorous financial management and a sound financial structure In recent years, Maroc Telecom has consistently demonstrated its ability to maintain robust levels of profit-ability by combining aggressive growth efforts with tight cost control. Its significant cash-flow generating ability enables it to maintain a sound financial structure while paying out dividends to its shareholders on a regular basis.

Making international development a key engine of growth In recent years, Maroc Telecom has opted to invest part of its financial resources to ensure its development outside of its home market. This strategy led to the acquisitions of majority equity interests in telecommuni-cations operators based in Mauritania, Burkina Faso and Gabon. In addition, Maroc Telecom intends to seize value-creating acquisition opportunities that meet its strict in-vestment criteria.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.3. Maroc Telecom’s business strategy


Maroc Telecom is the leader in the Moroccan market, offering Mobile, Fixed-line and Internet services.

The Mobile segment is dedicated to providing mobile telecommunications services. It had 14.5 million customers as at end-2008 and operates a GSM network covering almost the entire Moroccan population through more than 5,410 2G base stations and 1,100 3G base stations.

The Fixed-line and Internet segment provides fixed-line telephone services including public telephony, Internet services and data transmission services. It had 1.3 million Fixed-line and 510,000 Internet custom-ers as at December 31, 2008. As at the same date, its network, entirely digitized for switching, consisted of 8,069 kilometers of intercity optical fiber cable and over 9,007 kilometers of urban optical fiber.

Maroc Telecom’s products and services are marketed through a distribution network consisting of its own branches, covering the entire territory of Morocco, and through independent distribution channels (see sec-tion 4.4.4 “Distribution”).

The following table describes the development of Maroc Telecom’s customer base over the past three fiscal years:

* Mobile customer figures include prepaid and postpaid ** Based on equivalent customer bases in 2007 and 2008 and the number of fixed lines for each access point. 2006 customer base was calculated using the number of access points. *** Internet customers concerns IP accounts opened with Maroc Telecom (wireline and mobile customers)

4.4.1 Mobile services

Overview

Maroc Telecom is the leader in the Moroccan market for mobile communications. The Company’s market share reached 63.4% as at December 31, 2008 (Source: ANRT). This market has expanded considerably since 2000, with the number of mobile customers (all operators) rising from 2.9 million in 2000 to 22.8 mil-lion as at December 30, 2008 (Source: ANRT). Over the same period, the market penetration rate rose from 10% to 74% (Source: ANRT). The mobile market (all operators) is mainly a prepaid market. In 2008, the prepaid customer base in Mo-rocco increased 13.9% from 19.2 million customers to 21.9 million customers at the end of 2008. In the postpaid segment, the total number of customers increased 15.3% in 2008, to 922,000 customers. Maroc Telecom offers prepaid services (Jawal and Mobisud cards) and a range of postpaid offers. Maroc Telecom provides extensive coverage both in terms of infrastructure and commercial presence. Its network covers almost the entire population of Morocco (Maroc Telecom estimate). Internationally, with over 466 roaming agreements, Maroc Telecom’s customers have access to services in over 214 countries. This extensive commercial presence has been achieved through a direct and indirect distribution network of approximately 55,000 retail outlets licensed by Maroc Telecom (see section 4.4.4 “Distribution”).

As at December 31, in thousands 2006 2007

Mobile customers * 10,707 13,327

Fixed-line customers ** 1,266 1,336

Internet customers *** 391 476

2008

14,456

1,299

510

4.4 BUSINESS ACTIVITIES IN MOROCCO

4


The following table breaks down Maroc Telecom’s mobile revenues for the past three years:

*Revenues generated by inbound international traffic to Maroc Telecom’s mobile fleet and outbound international traffic from Maroc Telecom mobile customers were directly accounted for in Mobile operations in 2007, whereas in 2006, they were accounted for as transit revenues for fixed operations. Revenue figures for 2006 have been adjusted accordingly. This adjustment had no impact on Maroc Telecom's consolidated net revenues.

Change in customer base The Moroccan mobile market has seen strong growth mainly due to the launch of prepaid plans in 1999. The prepayment system allows customers to keep a check on their expenditure and helps them to stay within their rate plan limits. This formula is particularly well tailored to the Moroccan market, which has a young population, with half of the population aged under 25. The following table sets out the main data relating to prepaid and postpaid services offered for the past three years. Maroc Telecom defines the churn rate as the ratio of cards disconnected or contracts terminated to the av-erage customer base during a given period. For prepaid customers, the validity period of a prepaid card is fixed at an initial period of six months, followed by a second six-month period during which the customer can continue to receive calls irrespective of whether or not the card is topped up. The ANRT defines a mobile subscriber as a person with a postpaid mobile subscription that is still acti-vated, or a person with a prepaid card who has made or received at least one call (charged or free) within the past three months.

In millions of Moroccan dirhams – in IFRS As at December 31 2006 2007

Gross revenues * 14,206 17,096

• Revenues for Mobile communications services* 13,237 16,138

• Terminal equipment revenues 969 958

Earnings from operations before amortization 8,398 10,607

Earnings from operations 6,954 9,138

2008

18,529

17,354

1,175

11,891

10,255

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.4. Business activities in Morocco


(1) Postpaid subscribers and prepaid cards (2) See Glossary (3) Including 'pay-as-you-go rate plans’

Prepaid services have seen sustained growth since their launch, due in particular to price cuts for SIM card only deals, subsidized packages including a GSM handset at fairly low prices, and Maroc Telecom’s many promotions for top-up phone cards and calls, which stimulated growth and developed the loyalty of the ex-panded customer base.

Post-payment covers mainly a high-consumption customer base generating substantially higher ARPU than prepaid customers.

Despite the competitive nature of the market, Maroc Telecom has succeeded in maintaining its churn rate at a satisfactory level owing to its efforts to build customer loyalty while maintaining an acquisition policy in order to extend its base (see “Offers” section below). Thus, the loyalty program offered to prepaid custom-ers since mid-2002 has been improved through the launch of a point-based Fidelio loyalty scheme. The customer can choose from a variety of loyalty bonuses: additional time, SMS, or GSM terminal. Reflect-ing the robust growth in 2007 in the customer base (2.6 million), the churn rate rose to 34.9% in 2008, rep-resenting a 9.5 point increase on 2007. Once again, as a consequence of the significant growth in the cus-tomer base in the prior year, ARPU declined by just 8.4% in 2008, despite an intensely competitive operat-ing environment and the introduction of more restrictive regulations for price promotions.

2006 2007

Number of Mobile customers(1) (in thousands) 10,707 13,327

Prepaid 10,297 12,822 Postpaid(3) 410 505 Churn rate (%)(2) Prepaid 20.5% 25.7%

Postpaid(3) 13.4% 17.9%

Average churn rate 20.3% 25.4%

ARPU (MAD/customer/month) Prepaid 89 85

Postpaid(3) 706 701

Average ARPU 113 108

Incoming usage (minutes/customer/month) Prepaid 25 22 Postpaid(3) 82 73

Average incoming usage 27 24

Outgoing usage (minutes/customer/month) Prepaid 21 29

Postpaid(3) 508 620

Average outgoing usage 40 52

2008

14,456

13,853 603

35.5%

17.2%

34.9%

77

653

99

19 63

21

26

632

50

4


(1) Including initial call account balance (2) Indivisible first minute; increments of one second for standard subscribers and 20 seconds for rate plan and prepaid subscribers, Standard subscrip-

tion for postpaid and Jawal Classique for prepaid at peak times (3) Standard subscription formula (4) Tariffs vary depending on account balances (incl. tax)

Pricing

Since 2002, Maroc Telecom has charged calls by the second after the indivisible first minute for traditional subscribers and by 20-second increments for postpaid rate plans and prepaid calls.

This pricing strategy focuses on: • encouraging the use of rate plans for postpaid subscribers, by offering them a wider range of rate

plans and sliding-scale prices over the duration of rate plans; • offering significant reductions based on the amount of top-ups acquired by prepaid customers; • regularly introducing promotional offers (double top-up, “Jawal hour”, other price reductions, etc.).

Maroc Telecom regularly offers price cuts for international mobile calls and harmonizes tariffs. This new international tariff policy is in line with the general trend of new offers, where prices are attractive and com-petitive. As a result of these efforts, the average rate charged to clients is MAD1.5 (incl. tax) per minute. The table below sets out the change in average prices per minute, prepaid and postpaid, in Moroccan dirhams (incl. tax) as at December 31 of each year.

In Moroccan dirham – at year-end 2006 2007

Access costs

Prepaid(1)(4)

Over MAD30 Over MAD10

Postpaid 120 120

Subscription

Postpaid (3) 150 150

Mobile price per minute (2) To Maroc Telecom mobile and fixed lines and other

Fixed lines

Prepaid 3.60 3.60

Postpaid (3) 1.80 1.80

To other mobile lines (excl. restricted mobility)

Prepaid 4.80 4.80

Postpaid (3) 2.40 2.40

To restricted mobility lines Prepaid - 4.20 Postpaid (3) - 2.10

2008

Over MAD30

120

150

3.60

1.80

4.80

2.40

4.20 2.10

Average rate 1.80 1.50 1.50



Mobile services Maroc Telecom offers prepaid and postpaid services for residential and business customers. These ser-vices comprise a wide range of offers with different levels of user commitment and different terms for mak-ing calls outside the contract rate plan. The following table shows the range of Maroc Telecom’s Mobile offers:

Prepaid

At year-end 2008, the prepaid customer base consisted of 13.853 million customers, or almost 96% of the mobile customer base, representing an increase of 8% year-on-year.

Maroc Telecom strives to maintain ARPU by stimulating usage (selling a wide range of top-ups) and by developing the use of value added data services (SMS and MMS). The group has launched several promo-tional offers on top-ups and calls to increase customer loyalty and to stimulate usage.

Offers

Maroc Telecom provides prepaid services under the “Jawal” and ‘’Mobisud’’ brands. Prepaid services are aimed primarily at residential users, who demand a broad range of access and pricing offers.

Maroc Telecom’s prepaid plans are marketed as packages (handset and SIM card) and SIM card only deals, according to the following formulas:

• Jawal Classique, which offers an undifferentiated day/night tariff; • Jawal Jeunes, with special rates in the evenings, on weekends and on public holidays; • Mobisud which is marketed at a special rate for calls made at evenings and on public holidays towards

all operators as well as Mobisud (France and Belgium). These three formulas are valid initially for six months, corresponding to the duration of the card’s account balance, and then a further six-month period during which the customer may recharge the phone card and receive calls.

In 2008, Maroc Telecom introduced a new access fee and sales promotions on these deals are designed to stimulate sales. Promotional offers for new clients include free minutes and free SMS and MMS.

Service Customers Commitment Calls outside Product

Prepaid Consumer and business No No Jawal Classique Jawal Jeunes Mobisud

Postpaid Consumer,

Business user

And business

No No Liberté rate plan Liberté rate plan SMS/MMS Yes No Controlled rate plans Yes Yes Standard subscription Yes Yes Individual rate plan Business Yes Yes Rate plan Business Class Yes No Rate plan Business Control

Yes No/Yes Intenso/Extenso/Extenso+/Optimis

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In order to develop the use of prepaid services, Maroc Telecom markets a range of top-up phone cards from MAD5 to MAD1,200, with automatic bonuses linked to the purchase of MAD50 top-up increments.

Promotions are implemented on voice and data services and on the range of top-up phone cards and are part of a policy to build customer loyalty, increase usage and develop the customer base.

The available recharging resources are also diversified, with a dual goal of reducing distribution costs and facilitating recharging for the customer. Thus, in addition to PVC scratch card recharging, Maroc Telecom offers electronic recharging and recharging through cash dispensers. Other similar solutions are also being considered.

Price plans for prepaid services

Maroc Telecom applies a differentiated pricing plan for prepaid customers according to the type of Jawal (Classique or Jeune) and Mobisud card, the call destination, as well as according to the time of the day, in the case of the Jawal Jeune and Mobisud cards: Thus standard-rate pricing (outside of promotional peri-ods) is charged as follows:

• From MAD3.60 to MAD4.80 (incl. tax) per minute for Jawal Classique customers; • From MAD1.07 to MAD6.00 (incl. tax) per minute for Jawal Jeune customers; • From MAD1 to MAD4 (incl. tax) per minute for Mobisud customers.

SMSs are charged at MAD0.96 (incl. tax) per message for Jawal customers and MAD0.72 per message for Mobisud customers and their price range is between MAD3.60 and MAD6 (incl. tax) for sending SMS to foreign countries, except for Mobisud customers for whom the tariff towards Europe and North America is MAD3.60 incl. tax.

Pricing of international calls varies according to the call destination, and is the same for all three price structures. Call destinations are classified into four zones and their rates vary from MAD11.52 to MAD28.80 (incl. tax) per minute, with the exception of the Mobisud formula, which offers a tariff of MAD2 (incl. tax) from 10 p.m. to 6 p.m. towards fixed lines and Mobisud lines in France and Belgium and a tariff of MAD4 per minute (incl. tax) from 6 p.m. to 10 p.m..

In 2008, to boost usage, Maroc Telecom continued its promotional offers for prepaid clients giving unlimited calls to a chosen telephone number at certain times at a special price and a rate plan of one hour of calls towards all fixed-line and mobile numbers for limited times.

Migration of customers from prepaid to postpaid

In order to consolidate customer loyalty and raise ARPU, Maroc Telecom is implementing a strategy in-tended to persuade high-usage prepaid customers to migrate to postpaid offers, a two-fold strategy. First, Jawal customers can migrate their prepaid accounts free of charge to a postpaid rate plan or subscription without changing their telephone number. Similarly, Maroc Telecom offers all-inclusive post-paid rate plans, which are a basic product attractive to prepaid customers wishing to migrate to postpaid while retaining control over their communication costs.

In keeping with this strategy, Maroc Telecom launched promotional Liberté 12 month rate plans which allow customers to migrate to postpaid with a 12-month contractual commitment.



Postpaid As at December 31, 2008, the postpaid customer base amounted to 603,000 subscribers, up 19.4% versus 2007. The postpaid customers are mainly high usage customers.

Maroc Telecom is seeking to increase ARPU by stimulating subscribers’ usage of its services and of new and existing voice and data services (SMS, MMS, GPRS, 3G and BlackBerry). In 2008, postpaid ARPU declined by 6.8% as a result of the increase in unlimited call plans and the introduction of new rate plans for business customers offering an increased proportion of free calls.

Postpaid offers are marketed mainly via Maroc Telecom retail branches, 28 of which are dedicated to mo-bile services. In addition, 18 branches are specifically dedicated to businesses and four branches to key accounts. Postpaid services are also distributed through the GSM Al-Maghrib and Lineatec networks (see section 4.4.4 “Distribution”).

Postpaid offers are available to both residential, professional and business clients. The business market comprises SMEs, SMIs, local government, embassies and major private and public business customers.

Consumer market

Maroc Telecom offers three plans to consumers:

• Standard subscription, which is a monthly subscription offering usage billing according to peak and off-peak times (see “Price plans for postpaid services” section below);

• Individual rate plans, which offer ten options based on call time and a flat rate for calls regardless of domestic destination and time of call (peak/ off peak). This rate plan is designed to boost usage by customers (see “Price plans for postpaid services” section below);

• Capped rate plans, which allow consumers to control their communication expenses by blocking out-going calls once they exceed their monthly allotment. If they wish to make additional calls, customers can recharge the account with Jawal top-up phone cards. This rate plan was introduced in order to build customer loyalty and encourage migration towards postpaid plans.

The rate plan offers, with ten options ranging from 1 to 15 hours, provide for the charging of calls by 20-second increments after the first minute, and a single rate for any domestic call. These offers include a dou-bling of the call time for calls to Maroc Telecom numbers, automatic carry-over of unused time and free SMS, MMS and GPRS service. In the business market, Maroc Telecom has introduced a range of six “Business Class” rate plans, offering unlimited domestic calls and calls to a limited number of international destinations as well as free SMS, MMS and GPRS. Alongside this offering, it also markets a capped rate plan for business customers called “Business Control”. In order to boost recruitment of new postpaid subscribers and encourage prepaid clients to migrate to post-paid, Maroc Telecom launched “pay-as-you-go” offers which allow customers to return to their initial offer at no extra cost. Two such offers have been developed

• “Liberté” rate plan: Maroc Telecom has developed a range of three capped rate, pay-as-you-go plans for 45 minutes, 90 minutes. and 150 minutes. for monthly subscriptions starting at MAD118.80 (incl. tax). This comprises a standard rate plan with free off-peak calls for an equivalent time period as well as a top-up account. Since 2007, a reduction was offered for customers taking out a 12-month mini-mum subscription.

• SMS/MMS Liberté” rate plan: Maroc Telecom markets two data rate plans aimed at the youth market with 100 and 300 SMS/MMS, bonus voice airtime and a top-up, pay-as-you-go account starting at MAD89/month (incl. tax).

In order to boost usage, Maroc Telecom also offers unlimited calls to a set list of two, five or seven destina-tion numbers for a minimum monthly charge of MAD118,80 (incl. tax).

4


To stimulate international usage, Maroc Telecom has introduced two international rate plans, offering preferential call tariffs for international destinations. In 2008, it rounded out this offering with the introduction of unlimited rate plans for a range of fixed-line international destinations. Similarly, rate plans now offer cus-tomers the option to make calls to Europe and North America at the same price as a domestic call while tariffs for international rate plans have been reduced, with an entry-level rate starting at MAD70 (incl. tax) per month. Lastly, Maroc Telecom began marketing two special products as from the end of 2004: an SMS rate plan for the speech and hearing impaired and a pack including special software for the visually impaired.

Business market

Given the potential and strategic importance of the enterprise segment, Maroc Telecom has established a specific policy for this segment, centered on a range of offers and services and a dedicated distribution net-work. In addition, for major business customers, Maroc Telecom is implementing customized service solu-tions to meet its customers’ specific requirements, in particular in terms of control over staff calls and man-agement of costs.

In addition to the consumer rate plans detailed above, also open to businesses, Maroc Telecom launched the following “Mobile Voice Solutions for business” in 2002:

• Intenso: a dedicated formula where GSM calls are made mainly inside the enterprise, Intenso offers ten hours of free calls per month and per line for all communications within the enterprise;

• Extenso: a suitable formula when GSM calls are made mainly to outside contacts, Extenso offers com-petitively priced subscription fees and external call rates; and

• Extenso+: launched in May 2004, it combines the two previous offers and provides business custom-ers with additional flexibility.

• Optimis: to round out its offerings for Business users, Maroc Telecom launched the Optimis offering in 2008. This provides all-inclusive and unlimited calls within the enterprise while enabling clients to cap usage at any time or to top up their account while continuing to benefit from the same price-per-minute designated for their rate plan.

Since the end of 2006, “Push-to-Talk” and “BlackBerry®” services have been introduced for business cus-tomers.

“Push-to-Talk” enables colleagues to speak simultaneously to one or more colleagues and to receive replies in real time.

• Blackberry®: In February 2007, Maroc Telecom launched the BlackBerry offer in order to satisfy emerging demands for productive mobility phones.

In addition, Maroc Telecom has created various other services for business mobile voice services. These services are designed to enable companies to manage their mobile fleet and control usage costs. They in-clude:

“Mouzdaouij”, a subscription enabling users to have two numbers on the same SIM card, allowing them to segregate their personal and professional calls;

• Unlimited phone calls within the enterprise for Optimis customers; • Capped billing; • Reduced call charges based on usage volume; • Exemption from subscription fees subject to conditions; • Reductions for certain international calls; • EasyFact (CD-based bill service) and E-Management.



Price plans for postpaid services

Activation expenses for SIM cards are identical regardless of the subscription type and are set at MAD120 (incl. tax). The price structure for postpaid services varies according to whether customers opt for a standard sub-scription, rate plan or specific option for business users. For standard subscriptions, the subscription charge is MAD150 (incl. tax) and the airtime price is MAD1.80 per minute for calls to Maroc Telecom fixed-line and mobile numbers and other fixed-line operators, or MAD2.40 (incl. tax) to other mobile networks at peak time and MAD2.10 (incl.tax) to fixed-line restricted mobility networks . At off-peak times a single tariff of MAD1.20 (incl. tax) applies regardless of the domestic destination. In 2005, prices for ten individual or capped rate plans were reduced. Tariffs now range between MAD180 and MAD870 (incl. tax) for individual rate plans and between MAD202.80 and MAD942 for capped rate plans. These rate plans include a predefined airtime of between 1 hour and 15 hours, free off-peak calls for the same amount of time, and free SMS, MMS and GPRS. For pay-as-you-go rate plans, charges range from MAD118.80 to MAD274.80 (incl. tax) for the Liberté rate plans, and from MAD89 to MAD199 (incl. tax) for the Liberté SMS/MMS rate plans. For business customers, Business Class rate plans range from MAD522 (incl. tax) for a 5-hour rate plan to MAD1,599 (incl. tax) for the 30-hour capped rate plan.

For businesses, subscription fees and pricing structures vary according to the number of phone lines within the enterprise and whether clients opt for Intenso or Extenso rate plans. Maroc Telecom overhauled its pricing structure for enterprises in 2005. In 2008, it introduced a new option for Optimis rate plan customers offering billing per second after the first minute of communication.

For the visually impaired, a handset and special software are offered at a competitive price, while an SMS rate plan for MAD150/month (incl. tax) is available for the speech-and hearing-impaired.

SMS and MMS are charged at MAD0.96 per message (incl. tax) and their price ranges between MAD3.60 and MAD6 (incl. tax) for SMS to foreign countries. GPRS is charged between MAD48 and MAD636 per month (incl. tax) depending on the chosen volume of data. Pay-as-you-use is also available since September 2005 and is charged at MAD0.29 incl. tax/Kb.

Since November 1, 2007, and in order to stimulate traffic, the international tariffs were lowered and the number of zones was reduced. Pricing of international calls varies according to the destination country, whatever the subscription formula. The destination countries are classified in two zones and their rates vary from MAD5 to MAD10 (incl. tax) per minute.

In 2008, Maroc Telecom reinforced its marketing effort in the postpaid segment by reducing the price of its international rate plans (entry-level rate plan reduced to MAD70 incl. tax) and bundled calls to designated international destinations with its domestic rate plans.

Loyalty rewards for customers

Building loyalty among customers has been a key area of focus for Maroc Telecom since 2000 and helped to prepare Maroc Telecom for the advent of competition. Loyalty rewards were introduced as early as Janu-ary 2000, by providing customers with preferential prices for handsets A “ Gold club” for high-volume users was launched in 2001. Gold customers are awarded a free- of-charge loyalty card, a top-of-the-range mobile phone, a dedicated call center (a toll-free 999 number) and preferential treatment at retail agencies. As from July 2003, the Gold club was subsumed into the Fidelio program and customers are selected for membership according to the number of points they have accumu-lated. Additional customer benefits have also been introduced: VIP after-sales service and bonus points.

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Fidelio is the first points-based loyalty scheme introduced in Morocco. It is reserved for postpaid customers and was launched on June 1, 2002. This scheme allows points to be accumulated on the basis of bill totals and provides advantages in the form of free or cut-price handsets, and free calls and SMS messages. Since April 2003, Maroc Telecom has set up the Fidelio 24-month offer. In 2008, almost 106,000 customers (17% of the customer base) renewed their subscriptions thanks to the Fidelio program. Maroc Telecom is currently examining opportunities to extend and revitalize the Fidelio program while improving customer satisfaction.

Bundled services for prepaid and postpaid customers

Bundled services for prepaid customers Many supplementary services are included in the Jawal plan, including caller ID, call waiting, dual call ser-vice and the “Family & Friends” service, all free of charge. Voicemail and SMS and MMS related services are also included in all plans. Finally, since 2003, via the introduction of the “Camel” technology (see “Glossary”), prepaid customers may use international roaming for their voice services. Other bundled services offered at no additional cost include the “My Favorite Number” offer launched in 2005, which gives the client a reduction for calls made to a designated Maroc Telecom number. This offer-ing was extended in 2007 to include calls to Mobisud France and Mobisud Belgium customers. This offering entitles customers calling their designated Maroc Telecom number to a 50% tariff reduction after the first minute of communication or allows them to call Mobisud customers in France and Belgium at the domestic rate after the first minute. Bundled services for postpaid customers Postpaid customers can benefit from all of the bundled services offered to prepaid customers. Additional services offered to postpaid customers include itemized billing, conference calling, and calling line identifi-cation restriction (CLIR) and call transfer all offered free of charge. Postpaid clients may obtain reductions through the “Family & Friends” service as well as volume-based re-ductions in call tariffs. In addition, the Mouzdaouij service enables customers to carry two numbers in a sin-gle SIM card. Services available at additional cost are also marketed to satisfy the needs of customers who make calls outside their rate plan (e.g. "Offre Complice" and SMS/MMS rate plans). Maroc Telecom has also introduced unlimited calls by offering optional extras for individual rate plans, which are charged at an additional cost. The “Top-up for me or my friend” service enables customers to top up their own account if they have a capped rate plan, Liberté rate plan or Liberté rate plan SMS/MMS or to top up another person’s account “Top-up for my friend” if the friend is a customer with a capped rate plan, Liberté rate plan, Liberté rate plan SMS/MMS or Jawal account. In 2007, Maroc Telecom marketed "Favorite Mobisud Number" a free option which allows postpaid custom-ers to call Mobisud France and Belgium customers at the domestic rate as from the second minute. Fur-thermore, international rate plans were introduced for the consumer market and Businesses Class custom-ers with a competitive international voice tariff. Finally, Maroc Telecom’s postpaid subscribers can benefit from international roaming for voice and SMS services, as well as for data services (MMS, GPRS and 3G+).

Value-added services In 2008, value-added services contributed 6.2% (excluding Voice Mail System (VMS)) to total revenue. The contribution of the VMS to total revenue was 5.2% in 2008. Maroc Telecom places particular emphasis on developing value-added services and on launching the latest breakthrough technologies on the Moroccan market on an exclusive basis. Examples include WAP which was introduced as early as 2000, GPRS in 2002, MMS in 2003 and 3G in 2007. In addition these services are offered to roaming customers using the Maroc Telecom network in Morocco.



• VMS VMS was introduced in 1998 for postpaid customers and extended to prepaid customers in 2003. VMS is used by over 90% of the mobile customer base.

This service is regularly enriched with new functions: automatic call-back, straight to voicemail, notifications of missed calls, a user-friendly voice menu for callers leaving a message on a Maroc Telecom voice mail-box.

• SMS The Short Message Service (SMS) has been available since April 2000. The service has been regularly enhanced with the launch of SMS Info in 2001 (SMS messages containing information of local interest such as TV programs, pharmacies on duty, train schedules, etc.) and SMS Chat in 2002 (a community service aimed mainly at young customers), and the first pilot trials of kiosk-type services in 2003 (SMS messages offering content or remote voting services suited to radio or TV programs), SMS International chat in 2005 (service enabling Maroc Telecom mobile customers to chat via SMS with French mobile customers).

In 2008, almost 2.14 billion SMS messages were sent successfully, representing a 49% increase compared to 2007.

• MMS The Multimedia Messaging System (MMS) is available for postpaid and prepaid customers. It allows users to exchange of text, image and audio messages. At the end of 2008, the number of MMS subscribers rose to almost 2.5 million. They exchanged around 8 million MMS. The MMS service is regularly expanded and enriched: The MMS service was introduced as of 2004. In March 2006, the maximum size of an MMS via the Maroc Telecom network was increased from 50 to 100 Kb. Finally, as from 2007, customers can send MMS to email addresses and overseas correspondents. Since October 2006, MMS text messages are charged at a rate of MAD0.96 (incl. tax) and MMS photos are charged at MAD1.92 (incl. tax).

• IAM Messenger In November 2007, Maroc Telecom launched IAM messenger, an instant messaging service on mobiles IAM Messenger enables Maroc Telecom mobile customers to chat using the instant messaging service mode and to see if their correspondent is switched on and available. Users can chat in text and use images with all Maroc Telecom mobile customers and even with their Google Talk contacts. The service is charged at a rate of MAD0.72 (incl. tax) per message.

• My address book Since November 2007, Maroc Telecom launched the “My Address Book” service. This service allows cus-tomers to save the list of contacts on their SIM/USIM card onto a central server via the menu on the mobile. Customers can download this list of contacts on their SIM card at any time. Furthermore, the list of contacts saved on the central server will constantly be made more reliable as it is updated automatically or manually each time the address book is changed. In addition, customers may also manage their address book via a user-friendly Web interface on the www.mobileiam.ma portal. Customers can subscribe to the service for a monthly subscription of MAD12 (incl. tax).

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• GPRS The General Packet Radio Service (GPRS) has been extended to all postpaid customers. GPRS is offered in the form of three rate plans (from 1 to 20 Mb) and charged by volume. Beyond the basic rate plan, users only pay for the volume of data actually exchanged, and not the duration of consultation. GPRS enables wireless users to access IP-based services: optimized Internet/intranet connections, sending and receiving e-mails, WAP-mode browsing and file transfer.

Maroc Telecom’s GPRS offer has been enhanced by:

• ‘’GPRS Only’’, which enables mobile customers to have a SIM card specifically for GPRS use. The GPRS customer can obtain a second SIM card for free to be used with the GPRS rate plan. Users can continue to use the first SIM card for making or receiving calls or SMS/MMS;

• A pay-as-you-go “GPRS Free Access” formula, which grants access to all GPRS services; • “Unlimited GPRS” gives customers unlimited access to all GPRS services for a flat-rate monthly fee.

GPRS is charged between MAD48 per month (incl. tax) and an additional fee of MAD0.06 per Kb (incl. tax).. The “Free Access” option is billed at a rate of MAD0.288 per Kb (incl. tax). The “Unlimited” option is billed at a monthly rate of MAD180 (incl. tax).

In 2008, almost 4% of customers activated this service.

• BlackBerry Maroc Telecom launched a BlackBerry service for the Moroccan market in February 2007. Backed by a robust and versatile technology, this solution enables clients to consult their personal and professional emails, together with enterprise applications, and to access the Internet. The service is marketed at a monthly subscription fee of MAD240 (incl. tax).

• Mobile Internet In June 2007, Maroc Telecom launched a mobile Internet service giving mobile customers using HSDPA 3G+ technology and offering unlimited wireless broadband internet access. The service was initially re-served for postpaid customers and, as from November 2008, was extended to prepaid customers. This ser-vice enables customers to access the Internet via a 3G compatible mobile, a PDA or smartphone or a lap-top fitted with a PCMCIA card or USB modem. In areas not covered by the +3G network, Maroc Telecom’s GPRS network provides seamless access to the Internet.

The postpaid service is available in two options (voice and data or data-only) and at three bandwidths (512 Kb/s, 1.8 Mb/s and 3.6 Mb/s). The entry-level plan is priced at a monthly fee of MAD198 (incl. tax).

The prepaid plan is available on a pay-as-you-go basis with no monthly bill. Customers can use Jawal top-up cards to add money to their account and the service is priced at a rate of MAD10 (incl. tax) per day/connection.

• “Mobitalkie” push-to-talk service In September 2006, Maroc Telecom launched the “Mobitalkie” push-to-talk service for business clients. The service allows users to communicate with other cell phones equipped with the push-to-talk function in a similar way as a walkie-talkie. By contrast, unlike a walkie-talkie, the push-to-talk service is available to do-mestic and roaming users. Mobitalkie uses the GPRS network giving the same coverage as the GSM net-work both within Morocco and abroad. Maroc Telecom provides an unlimited Mobitalkie rate plan for MAD360 (incl. tax) per month to allow customers to use the service without incurring overage.



• Content services In addition to the SMS information service launched in 2001, the 500 service launched in 2002 (service for downloading ringtones and logos), and the SMS kiosk services launched in 2003, Maroc Telecom has of-fered a service for downloading content under the proprietary “Mobile Zone” brand since May 2005. This service enables subscribers to download ringtones, screen savers, animated pictures, games and videos to compatible handsets. Customers are provided with local, regional and international value-added content. Exclusive content is available through partnerships with internationally renowned brands (Star Wars for cin-ema, the Spanish La Liga for football) and exclusive agreements with other international content suppliers In December 2005, Maroc Telecom enhanced its content offer with the new “Al Jazeera - Maghreb Arabe Presse (MAP) news bouquet” for postpaid customers. With this service, customers can receive news of their choice via SMS on their mobile phone: politics, economics, sport, etc. from Maghreb Arabe Presse or Al Jazeera (the Arabic language news channel). Customers can subscribe to one or more topics from MAP and/or Al Jazeera for between MAD18 and MAD30 (incl. tax) per topic. Since May 2006, all of Maroc Telecom’s postpaid and prepaid customers have been able to customize their voicemail message. This entertaining and practical service extends the range of available content services. The service enables customers to choose their own welcome message for their voicemail box. A wide vari-ety of messages are available to suit all tastes: comedy, imitations, parody, classical music etc. Messages can be previewed via Maroc Telecom’s portal www.mobilezone.ma.

The service is available by dialing 309 (MAD8.40 incl. tax per minute plus the cost of call to a Maroc Tele-com mobile) or by sending an SMS with the code corresponding to the chosen message to 309 (MAD18 incl. tax per message).

• Mobile Zone multimedia WAP portal In March 2007, to improve its Mobile Zone offer, Maroc Telecom launched a multimedia WAP portal allow-ing all customers with a compatible mobile to access WAP portals with a wide variety of content: logos, ring tones, Java games, news and current affairs, sports, cinema, etc.

• A-Ghany service At the end of September 2007, to reinforce its first-mover status on the market, Maroc Telecom launched the exclusive “A-Ghany” service which is based on RBT technology (Ring Back Tones). The service en-ables mobile customers to customize their ring tones with songs, messages recorded by actors, humorous messages, etc. A variety of ring tones to suit all tastes are available on www.mobilezone.ma.

A-Ghany can be accessed by dialing or sending an SMS to 409.

• Video telephony Maroc Telecom customers who are located in 3G network coverage zones and who own a 3G compatible mobile handset can now communicate via video telephony. Video phone calls are charged at the same rate as voice calls.

• Geolocation Maroc Telecom provides geolocation services which offer informative content relating to the area in which customers are located (e.g. emergency services, news, tracking etc.).

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Handset sales

Prepaid customers A wide variety of handset models are available under Jawal prepaid starter kits at highly competitive prices. Maroc Telecom strives to offer customers ample opportunities to upgrade their handsets and access the latest associ-ated functionalities. In 2008, in line with its competitive pricing policy, Maroc Telecom offered Jawal mobiles at prices starting at MAD199 (incl. tax) and up. Phones are bundled with a MAD10 phone credit (incl. tax).

Postpaid customers Action taken to develop postpaid services focus upon the areas of customer acquisition, loyalty rewards and enhancing the service offering. For postpaid customers, the acquisition policy is based on providing an attractive call plans, with a variety of associated products and services, and a comprehensive range of handsets. Cobranded marketing cam-paigns are regularly organized to highlight handset launches or upgrades — often at the same time as handsets are premiered on other international markets. The focus for these efforts is to enable customers to benefit from state-of-the-art design and technology. Maroc Telecom offers a wide range of packages with a minimum contract period (12 or 24 months).

Since 2003, Maroc Telecom has also focused on improving customer loyalty, as described above.

Customer services In order to facilitate the roll-out of its commercial offerings, Maroc Telecom has developed a multi-pronged customer relationship management strategy which revolves around: information for customers, customer recruitment and follow-up with prospects, with the objective of building and retaining customers. This CRM approach is designed to cater to the needs of both residential and business customers.

In line with its global quality strategy, Maroc Telecom obtained ISO 9001: 2000 certification in 2003 for its mobile services billing systems and its mobile call center.

Mobile call centers To optimize its customer relationship management, Maroc Telecom has established dedicated call centers: A consumer call center for mobile customers and an enterprise call center for business customers.

To maintain close customer relations and ensure customer satisfaction:

The mobile call center is structured to respond, through six different call numbers, to the needs of each customer segment: prepaid, postpaid, Gold customers, inbound roamers, customer prospects and Fidelio members.

The enterprise call center for business customers provides sales and technical support via a single call number.

The call center established in March 2000 was specifically created to: provide customers with information on Maroc Telecom products and services; handle their requests for activation and set-up of added-value services; inform customers about the commercial offering and pricing plan changes; enable customers to check their account balances and Fidelio program benefits; and handle customer complaints. Information of local interest is also available in Arabic, French and English.



In addition, Maroc Telecom conducts monthly customer satisfaction surveys in order to measure the quality of services provided by the retail branches. Service quality is monitored using dedicated statistical indica-tors. Finally, Maroc Telecom informs the public about new offers through a dedicated call number for existing and prospective customers.

Customer relationship management: Complaint resolution centers Complaint resolution centers have been established to deal with complaints that have not been settled ei-ther online or at retail branches. Centers are segmented by product to ensure optimal handling for com-plaints.

Staff working in agencies, call centers and complaint resolution centers use CRM tools to escalate issues and enable their handling and follow-up. The same tools are also used to establish performance and cus-tomer satisfaction indicators.

After-sales services Maroc Telecom provides after-sales services through its direct distribution network in order to cater to the needs of users of the entire range of mobile handsets. The service is offered free-of-charge during the war-ranty period. In addition, the Gold after-sales service provides Gold club members with immediate replace-ment of their handsets via home delivery.

Self-service customer care Business customers can manage their enterprise mobile fleets via Internet using the www.mobleiam.ma web-site. The service allows customers to switch between plans and activate value-added services.

Business customers can also track their spending on mobile telecommunications via the EasyFact service. This service enables customers to receive billing data for GSM subscriptions on CD-Rom disc for a more detailed view of expenditure with easier access.

Portals

Maroc Telecom has set up three self-service portals:

• www.mobileiam.ma describes Maroc Telecom’s services and commercial offerings and enables busi-nesses to access the “Self Care” service;

• the Maroc Telecom WAP portal, in addition to thematic information enables users to access the yellow pages, and;

• the Mobile Zone portal, which allows customers to download content.

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International roaming Roaming is a service offered by telecommunications operators enabling mobile telephone users to call and be called in a foreign country. For this purpose, the operators in various countries enter into roaming agree-ments, allowing their customers’ telephones to be easily connectable to a foreign network if necessary. Maroc Telecom entered into its first roaming agreement with SFR in February 1995. The agreement was concluded on an arms-length basis. At December 31, 2008, Maroc Telecom had 466 roaming agreements with associated operators in 214 countries, including in six countries through agreements with the GMPCS systems operators, Thuraya and Globalstar. Morocco’s tourism industry generates a massive influx of visitors, providing a significant potential source of roaming revenues. In order to capture the largest possible share of this traffic, Maroc Telecom has de-veloped a customer acquisition policy through associations with foreign operators, and has entered into preferential agreements with the largest of them. In 2008, in order to ensure constant growth in roaming revenues and reinforce its competitive edge, Maroc Telecom maintained its discount agreements with its main partners and entered with new agreements with other operators. In addition, Maroc Telecom has ex-tended its international roaming services to include 3G roaming. GPRS and MMS services have been including in the roaming service offering since end-2003. As at 31 December, 2008, Maroc Telecom had agreements with 116 operators in 75 countries for GPRS/MMS roaming (73 of these agreements relate to outbound roaming). In addition, it has concluded agreements with 89 operators to provide prepaid roaming across 54 countries. Of this total, 69 agreements relate to out-bound roaming services. Maroc Telecom also provides international SMS services (268 operators in 144 countries), the use of speed-dial numbers (333 for voicemail and 777 for customer services) via agreements in 58 countries with 98 operators, and international MMS service since November 1, 2007. As at December 31, 2008, Maroc Telecom had signed agreements with 137 operators in 84 countries covering international MMS services via MMVD (login access). Bilateral agreements have been signed with 37 operators in 28 countries. As from 2008, Maroc Telecom offers inbound and outbound 3G roaming services through agreements with its principal partners. As at December 31, 2008, Maroc Telecom had signed agreements with 12 operators in 11 countries for 3G roaming. This included agreements for outbound 3G roaming with nine operators.



4.4.2 Fixed-line and Internet segment

Overview Maroc Telecom is the leading provider of fixed-line telephony, Internet and data transmission services in Morocco and the only provider of broadband IPTV. All of these markets were fully liberalized in 2005 and fixed-line telecommunications licenses were awarded to two new operators.

The main fixed-line telecommunications services provided by Maroc Telecom are:

• telephone services; • interconnection services with domestic and international operators; • data transmission services for business users, Internet service providers, and other telecoms operators; • Internet services, which include Internet service provision and Internet-related services, such as

hosting; and • broadband television (IPTV).

The following table shows the breakdown of revenues from Fixed-line and Internet operations for the rele-vant fiscal years.

*Revenues relating to inbound international traffic to Maroc Telecom’s mobile and to outgoing international traffic from Maroc Telecom mobile customers were directly accounted for in Mobile operations in 2007, whereas in 2006, they were accounted for as transit revenues for fixed operations. Revenue figures for 2006 have been adjusted accordingly. This adjustment had no impact on Maroc Telecom's consolidated net revenues.

In millions of Moroccan dirhams – in IFRS As at December 31 2006 2007

Gross revenues * 10,003 9,451

Voice 6,618 6,225

Interconnection* 993 655

Data transmission 1,585 1,552

Internet 807 1,019

Earnings from operations before amortization 4,315 4,106


2008

9,683 6,091

562 1,958 1,072 4,511

3,302

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Fixed-line telephone services The penetration rate for fixed-line telephony in Morocco was 9.7% as at December 31, 2008, versus 7.9% at December 31, 2007 and 4.2% at end-2006 (source ANRT). This increase is essentially due to the introduction of prepaid fixed-line telephone services with restricted mobility by competitors. Excluding these offers, the penetration rate was 4.25%. This relatively weak penetration rate must be considered in light of the high average number of persons per household which stands at 5.3 (Source: 2004 Census- Haut Commissariat au Plan). The number of fixed lines (excluding public telephony, business users) divided by the number of households gives a penetration rate of almost 15% of households. Furthermore, some 160,000 public telephony lines do not give an accurate indication of the actual number of users of Maroc Telecom public call booths and telestores (see "Public telephony" subsection below). Owing to the competition in the residential segment from prepaid mobile telephone services, the penetra-tion rate for fixed-line services declined substantially between 1999 and 2002. In response, Maroc Telecom has launched an aggressive action plan to boost its fixed-line services and to address increasing competi-tion from prepaid mobile offers, in particular, as from early 2007, due to the restricted mobility fixed-line ser-vice introduced by the third-largest operator. Action taken by Maroc Telecom has included:

• developing a responsive sales and marketing policy catering to customer expectations and require-ments, in particular with the creation of the “El Manzil” brand for fixed-line tariff packages for residential customers;

• introducing commercial offerings designed to boost fixed-line telephone usage, in particular “Phony” and ‘’Infinifix’’, which offers residential, professional and small enterprise customers unlimited fixed-to-fixed calls;

• pursuing aggressive steps to extend Internet access to the Moroccan public. regular promotional of-fers, price reductions and increased uptake of ADSL have greatly increased Internet usage among the wider public;

• offering new services which drive fixed-line consumers to switch to triple-play offers; Maroc Telecom has launched IPTV with the aim of making this a mass-market TV product in Morocco;

• proceeding to develop the network of public call booths, initiated in 2001, and stepping up investment in this area;

• placing particular emphasis on the business market via dedicated bundles and tariff offerings for busi-ness users

As at December 31, 2008, the overall fixed-line customer base totaled 1.299 million lines (excluding Maroc Telecom’s in-house base), a level 2.8% lower than in 2007. The following table shows the change in the overall number of fixed telephone lines in each segment:

* Aggregate of phone lines used by Maroc Telecom telestores and public booths ** The customer base includes all fixed-line subscriber contracts irrespective of the technology used (PSTN or ISDN). It does not include Maroc Telecom's in-house base *** Since January 1, 2008, the fixed-line customer base has been reported on an equivalence basis taking into account the number of lines for each access

Numbers of lines*** 2006 2007

Residential 813 825

Public telephony* 157 160

Professional and business users 296 351

Customer base** 1,266 1,336

2008

775

160

364

1,299



Consumer market The consumer market includes residential subscribers, small businesses consisting of craftsmen, trades-people and self-employed professions, and public telephony.

Consumer offerings

• Fixed-line telephony Maroc Telecom’s consumer offers of fixed-line telecommunications have been marketed since March 2002 under the “El Manzil” brand name. With the “El Manzil” range of products and services, the Company pro-vides capped and unlimited call plans. A new fixed-line call plan was added to the range of consumer offerings in 2006, under the “Phony” brand name. “Phony”, is an unlimited flat-rate offering for calls to Maroc Telecom fixed lines with various price plans available starting at MAD156 (incl. tax) per month (including line rental). Phony offers customers the option of capped and uncapped services which enable them to call all their fixed-line correspondents in Mo-rocco with an all-inclusive monthly bill. The Phony range of call plans has been extremely successful and has helped to drive a spike in usage in the consumer Fixed-line segment as from the fourth quarter of 2006. The “Phony” range comprises three price plans: “Classic Phony”; “Capped Phony” and “Liberté Phony”. De-pending on the price plan the customer can choose to make unlimited calls outside peak time with “Phony Evening and Weekend” (EW) or “Phony Anytime” (AT). The “EW” or “AT” price plans are available with standard subscription or capped subscription options. The capped option offers unlimited calls and a capped monthly bill, and gives consumers a limited talk time allowance for calls not included in the unlim-ited call destination (with the possibility of topping up the account). “Liberté Phony” gives the customer a limited talk time allowance at a reduced rate for calls to all mobile numbers in Morocco as well as unlim-ited calls to all Maroc Telecom fixed lines. “Phony International” was launched in February 2008, and gives residential customers unlimited calls on evenings, weekends and bank holidays to fixed lines in Southern and Northern Europe and North America. Maroc Telecom also offers “El Manzil” bundles which include free installation of a fixed-line (for new cus-tomers) and a partially subsidized terminal. The range of El Manzil bundles offer a wide choice of terminals, analogue and digital cordless handsets, and fax machines for business customers which is constantly being extended, are available from MAD99 (incl. tax). Maroc Telecom also regularly organizes promotional cam-paigns to boost sales and usage, in particular with the “zero dirham package” and bonus talk time. As from July 2008, Maroc Telecom introduced a “Refer a Friend” scheme which rewards customers who recommend the Phony service to their friends and family through free phone rentals and reduced rates for phone terminals for referrers and their friends.

• IPTV In June 2006, Maroc Telecom innovated in the fixed-line segment with its new broadband TV service (IPTV), thereby marking a “first” for the service in Africa and the Middle East. Dubbed “Maroc Telecom TV”, the service enables fixed-line customers to access 80 digital quality national and international TV channels and 20 radio stations using ADSL technology. The offering includes four channel bouquets (“Access”, “Discovery”, “Prestige” and “Evasion”) from a price of MAD48 (incl. tax) per month. The extensive range of channel bouquets covers all of the national free-to-air channels, general interest French channels, news channels in three languages (Arabic, French, English), youth and children’s channels, cinema and enter-tainment channels, music, documentaries and cultural programs. In addition, three Canal+ bouquets (“Basic”, “Movies” and “Family”) are also available.

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Value-added services for consumers

Maroc Telecom offers valued-added services to consumers such as voicemail, itemized billing in Arabic or French, caller ID display, call-waiting notification and line transfer, three-way calling and more. These services also include an option for subscribers using capped rate plans, and Phony capped rate plans to top up their accounts remotely, by simply dialing the 114 voice operated server.

Loyalty rewards

Maroc Telecom has devised loyalty rewards for customers, based on El Manzil loyalty points system. All standard fixed-line and Phony subscribers (excluding capped rate plan customers) are automatically en-rolled in the fixed-line loyalty program. The loyalty program features a points-based reward system which is tied to the amount of customers’ monthly bills. Points can be exchanged for a range of gifts, either at Maroc Telecom retail outlets or by calling the fixed-line call center. The gift catalogue is updated each quarter and is sent to all customers in the program. Gifts include handsets, fax machines, free calls via telephone cards, ADSL modems, mobile phones and TV packages (router and set-top box).

Public telephony

Maroc Telecom also provides a public telephony service with its own booths and call boxes operated by third parties, known as “telestores”. As in other countries at a comparable stage of development, public te-lephony remains the preferred means of communication for lower income consumers in Morocco. Public telephone lines managed by Maroc Telecom, directly or by telestore operators with whom the Company has entered into agreements, amounted to over 160,000 lines as at end-2008, up 0.2% com-pared to 2007.

Public booths

Maroc Telecom places particular emphasis on developing its network of public call boxes, and for this pur-pose, has entirely renewed and extended its installed base in recent years in order to have secure boxes operated by smart card.

Telestores

The network of “telestores” has seen substantial growth in the last five years. As at December 31, 2008, there were more than 44,600 telestores nationwide. Virtually all telestore operators are bound to Maroc Telecom by exclusive agreements. Their profit margins are based on the difference between the retail price and the preferential rate charged to them by Maroc Telecom. In October 2004, against a background of heightened competition (see section 4.4.5 “Competitive landscape - Public telephony market”), the so-called “chaining rule”, imposing a minimum distance of 200 meters between each outlet, was repealed al-lowing a denser network of telestores. This led to a significant increase in new telestores which opened during the final quarter of 2004 and the first quarter of 2005. In addition, in the two first quarters of 2007, Maroc Telecom introduced rate cuts to enable operators to maintain their competitive positioning in relation to new entrants.

Prepaid phone cards

Maroc Telecom first launched prepaid phone cards on January 27, 2006. The phone card, which combines the concepts of a chip card and a prepaid account card, can be used in Maroc Telecom call boxes and pri-vate residential fixed lines. Phone cards are marketed on a pay-as-you-go basis. The offering was designed to replace the existing two prepaid cards: This new concept makes it easier to use prepaid cards, by regrouping a variety of card formats in a single card, and has increased the use of this type of card in the public telephony segment.



Business market This market, which covers SMEs, SMIs, local government bodies and public and private major business customers, is a key segment for Maroc Telecom, as it includes high-volume telecommunications users. The enterprise market is a key priority for Maroc Telecom and it has established a dedicated organization and market strategy for business customers. Offerings for business customers

Marnis: In addition to classic telephony services, Maroc Telecom offers businesses all the functionalities of digital telecommunications via ISDN marketed under the Marnis brand. This solution enables businesses to use an end-to-end digital network carrying data for multimedia applications (voice, data and video) by means of either a standard access, with two communication channels, or a primary access with 30 com-munication channels Flat-rate multi-line phone services: Maroc Telecom introduced a multi-line rate plan for enterprise and key account customers as of 2005. These rate plans, which include call time of 15 to 600 hours, cover calls to domestic fixed-line numbers with a single per- minute tariff within the rate plan ranging from MAD0.36 to MAD0.46 (incl. tax). Overage is charged at standard rates. Subscribers have the option to bundle multiple STN or ISDN lines in the same rate plan. Preferential tariffs: Maroc Telecom has also implemented a range of rate plans which enable business customers to obtain preferential tariffs for calls to a variety of destinations. PABX bundle: Maroc Telecom markets a “PABX bundle”, a turnkey solution comprising a switchboard, commissioning, hardware maintenance and upgrading of the switchboard according to the customer’s re-quirements. In April 2008, it launched a new PABX range in partnership with hardware resellers. The initia-tive is designed to incite customers to connect additional fixed lines and provides incentives for them. Infinifix: Maroc Telecom launched the “Infinifix” offering in May 2007 as an unlimited call plan for calls to Maroc Telecom fixed lines.

Added-value services for businesses

Electronic billing: To facilitate cost management, Maroc Telecom offers business customers an electronic invoicing system called “Smart Fact”. Maroc Telecom provides on a monthly basis a CD-ROM with an item-ized list of calls and a breakdown of usage by product. Welcome numbers: Maroc Telecom has set up a range of “welcome numbers”, toll-free number (0800xxxxx), reduced-rate numbers (0810xxxxx) and direct numbers (0820xxxxx), accessible throughout Morocco at a flat rate, facili-tating customers’ access to business customers and including personalized call reception. Kiosk numbers: Maroc Telecom also offers customers the possibility to use surcharged numbers, such as “audiotext”, with a margin for service providers. Meeting calls: In January 2007, Maroc Telecom introduced “Meeting Call”, an audio conferencing service for business customers. Smart call center solution: Maroc Telecom provides a virtual call center solution, the so-called “smart call center”, which enables standard call center functionalities (such as voice servers, and call routing based on call center operators’ availabilities) to be delivered via Maroc Telecom’s network. This solution enables businesses to establish customer service solutions with a minimal upfront cost.

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Fixed-line pricing structure Over consecutive years, the ONPT and, subsequently, Maroc Telecom, implemented a price rebalancing policy characterized by reductions in call rates and gradual increases in line rental charges. The resulting tariff changes are designed to increase fixed-line usage while complying with regulatory obligations and preparing for the advent of competition. As from 2002, Maroc Telecom introduced time-based billing, with an indivisible first minute, and progres-sively simplified the pricing structure, with the introduction of three tariff levels: fixed-line, mobile and inter-national.

Access charges and line rental

Since January 1, 2008, standard line rental charges are MAD120 (incl. tax) for residential customers (versus MAD108 incl. tax in 2007) and MAD144 (incl. tax) for business and professional customers. In order to boost the growth of the customer base, in 2002 Maroc Telecom introduced “El Manzil” bundles with a 24-month subscription commitment, including free installation, and a highly competitive pricing policy as well as regular promotional offers: several promotions of this type were proposed in 2008, both for resi-dential and business users. In addition, activation costs for a new fixed lines (excluding the El Manzil bundle) are available at a promo-tional fee of MAD100 (incl. tax) for residential and business users since the beginning of 2007 in place of a listed tariff of MAD600 (incl. tax) for residential users and of MAD1,200 (incl. tax) for business and profes-sional users.

Call charges

• Domestic calls Fixed-to-fixed call charges were reduced in March, 2007 to MAD1 per two minutes for local and domestic calls at all times of the day. In 2008, call charges from fixed-line to mobile remained unchanged. Fixed-line call charges were last changed on September 1, 2005, following the ANRT decision to reduce fixed-to-mobile interconnection charges by 5%. This enabled Maroc Telecom to pass on to customers the reduction in traffic termination costs for mobile networks. The following table illustrates the change in the average price in Moroccan dirhams (incl. tax) per minute of a three minute domestic call at peak times from a private fixed-line terminal:

Calls from telestores and Maroc Telecom public call boxes are still priced by call charging units. Retail prices for public telephones are generally higher than for calls made from a private terminal.

• International calls On November 1, 2007, Maroc Telecom reorganized its international call prices offering customers special prices for calls to fixed lines and mobiles outside Morocco. The number of tariff zones was reduced and international tariffs were reduced by up to 60% depending on the destination.

In Moroccan dirhams- incl. tax 2008

Fixed-line to Maroc Telecom fixed-line and other operators (excluding restricted mobility) 0.50

Fixed-line to other operators’ fixed lines with restricted mobility 1.92

Fixed-line to Mobile 2.28



As from February 2008 and, subsequently, as from January 2009, further reductions were introduced for international calls. This resulted in a peak rate tariff of MAD2.5 per minute (incl. tax) and an off-peak rate tariff of MAD1.5 per minute (incl. tax).

• Rate plans and other tariff options

Maroc Telecom has implemented targeted pricing strategies based upon specific rate plans and tariff op-tions. Maroc Telecom offers a range of “Preferential Business Tariffs”, which allow business customers to benefit from lower rates on domestic calls based on three price options: “Preferential Group Tariff”, “Preferential Volume Tariff” and “Preferential Mobile Tariff”. The range also includes a “Preferential International Tariff” which offers reduced rates for international calls. Since 2007, two new options were introduced for compa-nies: "Privileged Preferential Mobile Tariff" and "Privileged Preferential International Tariff" which allow com-panies to benefit from lower mobile and international tariffs. Targeted price offers have also been developed for the consumer segment. These include a capped rate plan enabling consumers to control their spending as well as the “Phony” unlimited rate plans which allow unlimited calls to Maroc Telecom fixed-line numbers subject to a rate plan fee starting at MAD144 (incl. tax and line rental). Maroc Telecom regularly launches promotional offers for El Manzil top-up cards to stimulate use by capped rate plan clients. Since November 1, 2007, international rate plans have been introduced to round out the range of targeted tariff offerings for consumers and to boost international call traffic. These rate plans offer a number of hours for calls to fixed lines in the main international zones: Southern Europe, Northern Europe and North America.

The fixed-line tariff structure is available in the “Grille tarifaire” section of the www.elmanzil.ma website.

Zones Destinations

Peak rate

Off-peak rate

Zone 2 North America 2.50 1.50

Zone 3 Rest of the world

7.00 4.20

Off-peak rate

1.50

4.20

Peak rate

2.50

7.00

Tariff (MAD/minute incl. tax) To fixed lines To mobiles

Zone 1 Southern Europe Northern Europe North Africa

2.50 1.50 4.20 3.26

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Interconnection services Interconnection services include interconnection with domestic and international operators.

Domestic interconnection Domestic regulation is regulated by the ANRT. As such, Maroc Telecom is bound to comply with intercon-nection requests, taking account of the reasonable requirements and capacities of other operators. The interconnection charge serves as compensation for the actual use of the network and the related costs (see section 4.8 “Regulatory environment and possible dependencies”). Interconnection with domestic mo-bile operators is a key cost item for fixed-line telecommunications, as the costs of traffic termination on mo-bile networks are far higher than the interconnection income generated by traffic entering the fixed-line net-work. In 2006, with the arrival of two new operators on the fixed-line market, new interconnection charges were determined. In April 2008, a flat-rate interconnection charge was mandated by ANRT for Maroc Telecom’s fixed-line net-work.

Domestic interconnection tariffs

Further reductions to domestic interconnection tariffs for calls to Maroc Telecom’s fixed-line network have been introduced. The following table indicates the domestic interconnection pricing applicable in 2007, 2008 and 2009 (peak times):

* A reduction of 50% is applied on off-peak times Termination charges to mobile phones are as follows:

* A reduction of 50% is applied on off-peak times The ANRT has approved Maroc Telecom’s partial unbundling offer. The following table shows the principal tariffs applicable as of April 14, 2009:

A catalogue of fixed-line interconnection charges and the partial and total unbundling offers are published online at the www.iam.ma website.

Calls to fixed lines Tariffs (MAD excluding tax /min, peak times)* Local (intra CAA) Simple

Transit Double Transit

2007 0.1268 0.3617 0.4742 2008 0.1252 0.3346 0.4410 2009 0.1236 0.3201 0.4220

Calls to mobiles Tariffs (MAD excluding tax/min, peak times)* Mobile termination charge 2007 1.3309

2008 1.2217

2009 1.1551

Access tariffs In MAD excluding tax

Cost of access requests (per request) 70

Costs for accessing the service (per access) 255

Cancellation costs (per access) 70

Monthly fees (use and maintenance / access)

Partial unbundling 35

Total unbundling 80



International interconnection tariffs

Maroc Telecom has developed extensive international connectivity, with 230 interconnections to foreign operators. The chief highlight of 2008, was the intensification in competitive pressures.

Incoming international traffic Incoming international traffic terminating on Maroc Telecom networks increased by 3.6% in 2008 to 2 billion minutes. Thanks to an aggressive tariff policy which is specifically adapted to the changing conditions in international markets, Maroc Telecom has succeeded in retaining a market share of over 85% in the incoming interna-tional traffic segment, despite increasing encroachment by competitors. Maroc Telecom also carries a significant proportion of incoming international traffic to competitor networks.

Outgoing international traffic

For outgoing traffic, Maroc Telecom negotiates with international operators in order to terminate outgoing international traffic at the lowest possible cost and to offer the most attractive price to end-customers.

Combating fraud The international traffic carried by Maroc Telecom has seen slower growth than expected in recent years, due to the diversion of traffic by fraudulent means. A specific action plan to fight fraud on incoming interna-tional traffic has been put in place. It includes the creation of a dedicated department, provided with detec-tion equipment, and awareness building among engineering and sales teams. Maroc Telecom constantly reinforces and modifies its antifraud measures and considers that fraud concerning international incoming calls is currently under control.

Data services

Data services for business clients Maroc Telecom offers its customers (mainly business customers) a comprehensive range of state-of-the-art data transmission services. Historically, the first data services launched on the market were leased analog lines, then digital lines, then packet technology (X25 network in 1991), and more recently, Frame Relay (in 2001). IP virtual private network solutions were introduced in late 2003 and the LAN to LAN solution was introduced in 2005. The following table illustrates the change in the breakdown of the data transmission base (excluding Maroc Telecom’s in-house base):

* Customer leased lines, excluding lines to customer operators

Number of lines 2006 2007

Domestic leased lines* 5,497 5,534

International leased lines* 246 285

Maghripac 1,271 1,081

Frame Relay 1,357 1,350

IP VPN 2,095 4,001

2008

5,605

255

591

1,198

5,555

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The range of products and services dedicated to Maroc Telecom’s network solutions is structured as fol-lows:

• Leased lines: Maroc Telecom offers domestic and international leased-line services, including

the physical chain, modems and monitoring of leased lines. In order to meet increasing demand for call centers in Morocco, Maroc Telecom offers special prices for call centers together with one-stop shop-ping for end-to-end leased lines with France, which simplifies operational management.

• Frame Relay: This service allows businesses to carry multimedia flows (voice, data and image) within their networks at flow rates of up to 34 Mb/s. Frame Relay provides a high level of performance with a guaranteed minimum flow rate associated with each permanent virtual circuit defined between the call’s end points.

• IP / MPLS VPNs: Maroc Telecom offers a virtual private network solution (interconnection of sites us-ing a common infrastructure), built upon the IP/MPLS protocols and marketed under the “IP Connexion” brand name. This service is accessible via leased lines, Marnis and broadband. Maroc Telecom also offers secure wireless Internet access. In 2005, the range was rounded out with IP VPN broadband access with guaranteed bandwidth.

• LAN to LAN: Using Maroc Telecom’s optical fiber network, Ethernet LAN to LAN solutions enable cli-ents to connect call center sites in the same city via high bandwidth optical fiber cable systems offering speeds of up to 1 Gb/s and non-disruptive optical fiber backup.

Maroc Telecom has adapted its product and service ranges to the business market in particular in terms of a guaranteed quality of service. Maroc Telecom is contractually bound to maintain a high quality of service. In particular, Maroc Telecom measures its network availability rate and complies with international standards in this regard (see “Infrastructure” section). Maroc Telecom has enhanced its international data offer with the introduction of wholesale minute rates which give call centers very competitive international tariffs.

Data transmission services for ISPs Data transmission services are regulated by the ANRT. In this respect, Maroc Telecom, as the incumbent operator, is bound to provide interested Internet service providers (ISPs) with non-discriminatory engineer-ing and pricing solutions enabling them to deliver competitively priced offers for consumers and allowing them to compete with the same Internet services provided by Maroc Telecom to its end customers under the “Menara” brand (see “Internet” section hereafter). The following offers, whose content and prices are approved by the ANRT, allow ISPs to market Internet access as follows:

• IP transit, for Maroc Telecom international Internet bandwidth; • free PSTN collection for callers, enabling ISPs to offer rate plans; • PSTN collection with repayment to ISPs, charged to the caller, enabling ISPs to market pay-as-you-

go Internet access offers; • bulk ADSL, allowing ISPs to market bundled ADSL offers, including access and Internet use; and • provision of Internet service over leased lines for ISPs.



International data transmission services The tariff structure for data transmission access points comprises upfront access costs and monthly subscrip-tion fees for each bandwidth range. Reductions are offered for bulk volumes and subscription commitments and are applied to monthly rental fees. Maroc Telecom has regularly reduced its tariffs for leased lines and related data services. These cuts re-flect technological changes and the related cost reductions. Current prices are in line with the prices applied by international operators. For example, the basic monthly rental fee for leased lines has fallen from MAD33,000 in 2001 to MAD9,000 today. In 2004, Maroc Telecom revised its leased lines offering for telecom operators. This offering is reserved for operators of public communication networks. Pricing is based on distance categories, for bandwidths of up to 155 Mb/s. Maroc Telecom strives to remain competitive as the cost of international calls is a decisive element inciting companies to set up offshore call centers. Thus, the basic monthly rental fee for 2 Mb/s international leased lines to France has fallen from MAD110,000 in 2003 to MAD57,000 as from March 2007.

Internet services The first Internet connection was established in Morocco by Maroc Telecom in 1995. Between 1997 and 2000, Morocco has seen the creation of many ISPs which have subsequently consolidated around two ma-jor players:. Maroc Telecom and Maroc Connect. The Internet market experienced slow growth until the end of 2003. However, the pace of development has accelerated significantly since the first half of 2004. The slow development of the Internet market prior to 2004 was due to a combination of three factors: a low rate of computer ownership, with only 11% of urban households (Source: ANRT, 2005), the relatively high cost of Internet for users (access and call costs), illiteracy, lack of training and a relatively limited offering of homegrown content. Maroc Telecom has a determined policy to increase Internet access in Morocco and provides solutions both for access and usage. As evidenced by the successive price cuts introduced in March 2005, May 2006, November 2007 and December 2008 and frequent promotional offers (free modem, one month’s free sub-scription, free bandwidth upgrade, promotion of higher-speed broadband services at the price of lower-speed services, etc). As at December 31, 2008, Maroc Telecom had 482,000 wireline internet access subscribers, which repre-sents around 42% of installed fixed lines (excluding public telephony). The following table shows the number of Menara Internet customers (the Menara customer base repre-sents customers of the Internet access plans marketed by Maroc Telecom, excluding access for Maroc Telecom’s in-house use).

Active customers as at December 31 (in thousands) 2006 2007

Narrowband: 6 5

Libr@cces 2 2

Subscription 4 3

Broadband 385 471

ADSL 384 470

Leased lines 1 1

Total wireline 391 476

2008 4

2

2

478

477

1

482

3G mobile broadband - - 28

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The customer base growth since 2005 was chiefly attributable to ADSL, launched in November 2003 and marketed in an unlimited formula since March 2004. As at December 31, 2008, ADSL represented more than 99% of all types of Internet access used by Menara customers. Maroc Telecom’s market share on this segment is 99% (Source: ANRT, December 2008). The chief highlight of 2008, was the growth in the 3G mobile broadband customer base which was notably fuelled by the introduction of prepaid offerings.

Internet offerings Maroc Telecom’s Internet access offers are marketed under the “Menara” brand.

Consumer market

In the narrowband segment, Maroc Telecom markets: • Menara libr@cces : dial-up offers with time-based charging billed to the telephone line used; • Menara “Toucompri” Internet rate plan: all-inclusive options including a subscription and a fixed con-

nection limit. These offerings include value-added services, such as free hosting of personal web-pages, e-mail services and options such as time carryover, an evening and weekends package, or capped usage allowances.

• CDMA Internet: a narrowband Internet offering launched in 2007 for customers in localities covered by Maroc Telecom’s CDMA network.

• In the broadband segment, Maroc Telecom offers ADSL contracts with bandwidth ranging from 128 Kb/s to 20 Mb/s (ADSL+ at 8 and 20 Mb/s launched in November 2006), enabling users to use their fixed-line phone at the same time. These contracts have met with a great success since the launch of Unlimited ADSL in March 2004, and the price cuts in March 2005, May 2006, November 2007 and De-cember 2008.

Furthermore, a series of promotions were introduced in 2008 for ADSL bundles and subscription fees, along with sales drives and referral schemes.

Business customers

For businesses, broadband is provided via ADSL or via leased Internet lines (with bandwidths of up to 155 Mb/s). At present, ADSL is by far the preferred access method for business customers. The success of ADSL is not only due to the fact that it is affordable but also because it meets a number of needs that were already satisfied by leased Internet lines (speed, unlimited and always-on access). The ADSL Pro offer provides bandwidths ranging from 128 Kb/s to 20 Mb/s and includes a wide range of services, in particular secure emails, a domain name, a web page for contacts etc. Internet leased lines are particularly attractive for large companies due to excellent performance (symmetrical and guaranteed ultra-high bandwidth) and the end-to-end security offered. Maroc Telecom also hosts corporate websites via two different solutions: shared hosting (on a Maroc Tele-com platform) or dedicated hosting (purchase or collocation of servers), providing businesses with visibil-ity on the Internet at minimal cost. As well as Internet access and web hosting services for businesses, Maroc Telecom also provides a com-plete range of added-value extras: fixed IP addresses, domestic and international domain names and e-mail addresses...



Internet tariffs Over the past four years, Maroc Telecom has steadily cut prices across its entire product range. The follow-ing table shows the principal Internet access tariffs currently applicable (MAD per month):

Finally, Maroc Telecom markets an all-inclusive narrowband option (“Toutcompri”) at a monthly fee of MAD79 (incl. tax) and a narrowband Libr@ccès option at MAD0.20 per minute (incl. tax). Prices across all ADSL bandwidths are regularly reduced, with reductions for broadband speeds of 2, 4 and 8 Mb/s and free bandwidth upgrading for existing customers in the 128 kb/s to 1 Mb/s bandwidth range.

Other products and services In accordance with its contract specifications, Maroc Telecom is bound to provide the following services (non-exhaustive list):

• a free-of-charge maritime radio-communication service to broadcast maritime safety notices; • a two-way telecommunications service for the exchange of messages between ships at sea and any

termination point of the public networks; • a telegraph and telex service (this service was discontinued as from December 2008 with the agree-

ment of the ANRT); • a directory enquiries service (call number 160), provided through dedicated information centers; • the routing of calls to emergency numbers; and • an Arabic-language telephone directory. Maroc Telecom also publishes a professional “yellow pages”

directory. This business is not significant in terms of revenues.

Customer services The customer relationship is at the core of Maroc Telecom’s business. To meet customer expectations and requirements, Maroc Telecom has developed a proactive customer relationship management policy.

Telephone directories and enquiries

Directory Enquiry Centers (Rabat, Casablanca, Marrakech and Meknes) in compliance with the universal service, reply 24h/24 and 7j/7 to customers who call the national access number "160" and request a Ma-roc Telecom fixed-line telephone number. Similarly, these centers ensure the first contact with Maroc Tele-com’s new fixed-line customers and update the directories’ database.

Narrowband Domestic leased lines* 55 kbps 3,700 128 kbps 5,100 256 kbps 8,800 512 Mbps 9,500 1 Mbps 11,500 2 Mbps 14,000 4 Mbps 21,000 6 Mbps 24,500 8 Mbps 37,600 20 Mbps 69,900

155 Mbps 220,000 34 Mbps 96,000

Unlimited ADSL -

99 129 149 199 299 599

- 799 999

- -

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In 2007, the Yellow Pages business was transferred to Casanet, whose objective is to make the Yellow Pages the benchmark directory within three years. A yellow pages website is available at the www.menara.ma website.

Relations with business customers Maroc Telecom has systematically focused on strengthening its relationships with business customers in recent years. This is evidenced by the creation at the end of 2001 of a Business Sales department and a Key Accounts sub-division. The latter acts as a one-stop shop for key clients from the public and private sectors: Key account sales engineers handle the entire sales relationship with customers for all of Maroc Telecom’s products and services on a nationwide basis.

Dedicated business customer branches within each regional directorate provide on-the-ground support for the Business Sales department in relations with SME-SMI customers (see section 4.4.4 “Distribution”). To strengthen its sales presence in the business segment, Maroc Telecom has also appointed regional dis-tributors.

Call centers Maroc Telecom’s call centers division comprises the following operations:

Consumer segment :

The fixed-line call center provides incoming and outgoing customer care services.

• Handling of incoming calls (several access numbers including the main number 108): dealing with gen-eral enquiries and assistance for Fixed-line customers, orders and activating added-value services.

• Outgoing calls: outstanding debt collection, telesales, telemarketing, checking customer data (billing addresses, direct debit, etc.);

The Internet call center (single call number: 115): Information and support for Internet and IPTV custom-ers.

Enterprise segment :

The Enterprise call center (single call number: 3030): is responsible for informing and supporting SME/SMI and key account customers across the entire Maroc Telecom product portfolio for business customers.

Customer relations portals Maroc Telecom uses a variety of web portals to maintain a direct line of communication with its Fixed and Internet customers: − www.elmanzil.ma for fixed-line residential customers; − www.iamentreprises.ma for enterprise clients; − www.maroctelecomtv.ma for IPTV customers; − and www.menara.ma for internet subscribers. In addition to providing information on the product and service range, functionalities such as on-line sub-scription for services or bill consultation are also available. Menara (www.menara.ma) benefits from out-standing exposure as it has the largest number of visitors of any content and services site in Morocco and North Africa (excluding international search engines and portals) with a strong brand image (over 5 million visits and 3 million visitors per day).



4.4.3 Network and systems infrastructure

Mobile network infrastructure Maroc Telecom’s mobile network is based on GSM technology which has deployed throughout almost the entire territory of Morocco. It is characterized by a well-developed infrastructure, high international connec-tivity and a quality of service comparable to that of international operators. In order to maintain its market leadership and reinforce its competitive edge, Maroc Telecom is pressing ahead with the rollout of its 3G/HSDPA network which offers 3G services (videoconferencing, streaming, downloads, online gaming, etc.) at a theoretical bandwidth of 3.6 Mb/s and also provides USB-based high bandwidth Internet access.

Network switching subsystem – Core CS and service platforms Maroc Telecom’s network switching subsystem is equipped with next-generation network technology which provides support for IP and 2G/3G networking and enables optimal resource allocation. Packet switching and services platforms use highly redundant infrastructure in order to guarantee the highest network avail-ability possible. Furthermore, the network is also equipped with technical platforms enabling the provision of high-quality services to clients in both voice and data services (voicemail, SMS, MMS, GPRS, prepaid management systems, etc.). By leveraging the possibilities offered by advanced intelligent networks, Maroc Telecom was able to extend its 3G mobile services to prepaid customers in 2008.

Coverage

Maroc Telecom’s GSM network covers almost all of the Moroccan population (98% at end-2008). As part of the Pacte universal service program, Maroc Telecom will extend its coverage to an additional 7,338 rural areas by 2011.

The GSM base station network is optimized via:

• a continuous program of infrastructure redeployment; • ongoing software upgrades to the most recent releases; • Voice compression technology is used to cope with spikes in traffic which typically occur during public

holidays or promotional periods. In 2008, Maroc Telecom extended its 3G/HSDPA network to the main urban centers in Morocco in order to offer new-generation services to its clients.

By the end of 2008, Maroc Telecom’s GSM network covered virtually all of the Moroccan population via 5,410 second generation base stations and over 1,100 third generation base stations.

Mobile service quality Maintaining and enhancing mobile service quality is a key priority.

Accordingly, the call success rate amounted to 97.22 % in 2008 while the ratio of dropped calls remained below 1.2% and the SMS success rate (excluding promotions for free SMS) stood at 96%.

Maroc Telecom is attentive to public health concerns and abides by the guidelines for human exposure to radiofrequency electromagnetic fields issued by the International Commission for Non-Ionizing Radiation Protection (ICNIRP), a scientific body recognized by the World Health Organization (WHO).

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Fixed-line network infrastructure Maroc Telecom has developed a state-of-the art network enabling it to deliver a wide range of services. This network is made up of a transmission backbone, switching centers, service platforms and an access network.

Domestic transmission network Maroc Telecom’s transmission network incorporates NG SDH and WDM modules and is essentially based on optical fiber over a distance of 17,120 km for local and long-distance calls. An IP MPLS backbone has been implemented to carry voice, VOIP and ultra-high broadband traffic. It will also support the switch to all IP networks.

Voice platforms The next-generation network (NGN) has been deployed and enables the provision of the following services:

• Voice over IP (VOIP); • Migration of time division multiplex (TDM) traffic to all-IP, thus simplifying the network optimization proc-

ess.

Wireline access network and business customers To consolidate its wireline access network which enables the provision of high bandwidth Internet access (up to 20 Mb for customers in the principal urban centers of Morocco) and IPTV, Maroc Telecom has de-ployed optical local loop technology with the aim of distributing high bandwidth Internet services to business customers. Pursuant to its universal service obligations, Maroc Telecom has installed code division multiple access (CDMA) base stations to deliver voice and Internet services to rural areas that are not served by wireline access.

Independent network Through approximately 230 agreements with foreign operators, Maroc Telecom secures Morocco’s connec-tivity to all countries worldwide through two international transit centers (Casablanca and Rabat) and four optical fiber submarine cables (SMW3, Tetouan-Estepona and Eurafrica as well as Atlas Offshore which entered service in 2007 and is owned by Maroc Telecom), in addition to satellite connections via Intelsat and Arabsat.

Maroc Telecom also has redundant international bandwidth which increased from 12.1 Gb/s at end 2006 to 25.13 Gb/s in 2008.

Information systems The Information Systems department is responsible for the provision of IT infrastructure, office automation solutions and software applications for use in day-to-day operations. A number of major IT projects were completed in 2008:

• a complete overhaul of the product and access services management system; • upgrades to interconnection and mobile mediation applications with the objective of achieving perform-

ance enhancements and new functionalities; • establishment of inventory and engineering databases for all Maroc Telecom networks; • establishment of the first cross-platform administration system for fixed-line and mobile products and for

the indirect sales channel; • The extension of the “business continuity” backup and restore site to other systems responsible for

managing inter-operator settlements, together with the Purchasing and Finance administration systems.



4.4.4 Distribution and advertising

Distribution

Organization

Maroc Telecom has an extensive distribution network, with a direct sales channel and an indirect sales channel comprising more than 55,000 outlets.

In 2008, the various distribution channels were as follows: • a direct sales channel comprising 304 branches; • a indirect sales channel, made up of small, locally based and independent resellers bound by exclu-

sive agreements and each managed by the nearest Maroc Telecom retail branch. A significant portion of these resellers also manage a telestore business licensed by Maroc Telecom;

• distributors which are structured on a nationwide basis and for which telecommunications is not a core business. These include supermarket retailers, the tobacco company Altadis Maroc or the post offices of Barid Al Maghrib;

• regional distributors operating in the telecoms sector and specifically serving business customers in the cities and hinterlands of Rabat, Tangier, Marrakech, Settat, Casablanca and Fes;

• two nationwide distributors which cover all customer segments and all ranges of Maroc Telecom’s products and services;

• and four partners specialized in the sale and commissioning of PABXs.

Distribution strategy

The scale and organization of Maroc Telecom’s distribution network are a key competitive advantage for the Company. The Company’s distribution strategy focuses on the following objectives:

• maintaining the central role of the direct sales channel, in particular for added-value services; • developing the local reach of indirect sales channels in order to increase proximity to customers; • strengthening the role of telestores in the areas of prepaid product distribution and fixed-line sales; • harnessing synergies between the direct and indirect distribution channels; and • diversifying distribution formats (electronic top-up, cash dispensers, rapid top-ups, etc.).

Direct distribution network

Maroc Telecom’s direct sales channel comprises 304 branches organized and structured to meet the local needs of each customer segment.

Seamless coverage

With knowledge of regional and local specific features, Maroc Telecom’s direct sales channel provides ap-propriate coverage throughout Morocco. In addition, almost all the branches market the entire range of products and services (mobile, fixed-line and Internet).

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Catering to a broad range of customer needs

Four types of branch have been established, each specialized in serving a specific customer segment. The direct sales channel comprises four dedicated branches for key accounts (with nationwide coverage); 18 business branches; 30 reseller branches and 252 retail branches. These sites are located in most urban centers in order to provide optimal convenience for customers.

During 2008, the physical layout of 32 branches was redesigned according to a new concept designed to enhance marketing effectiveness and customer care. In an environment characterized by ever-increasing product and service convergence and the distribution of multifunctional communications devices, the objec-tive for this concept is to foster a pleasing environment for customers that allows them to experience the Company’s products and services at first hand.

To extend the customer reach of existing direct sales branches, ten specialized branches have been set up to serve small and medium sized enterprise and industry customers, with six branches created in 2008. Similarly seven specialized customer care centers have been created for the consumer segment

Indirect distribution network

Indirect regional network

The telestores network, whose main business activity is the operation of a public telephony service li-censed by Maroc Telecom, also distributes prepaid fixed-line and mobile cards, and subscriptions for fixed-line telecommunications. The reseller sales channel consists mainly of tobacconists, convenience stores, newsagents and other dis-tributors of telecom and electronics products that have entered into agreements for the distribution of Maroc Telecom products and services. The indirect sales channel comprises more than 30,000 resellers who are licensed to retail prepaid phone cards. The rapid top-up service is used by almost one-half of this total. Agreements are made with each telestore in order to develop a wide-reaching distribution network and allow locally-based distribution of Ma-roc Telecom products and services. Telestore owners are compensated through sales commissions. In the business segment, regional distribution contracts have been signed with the following retailers: Lineatec (2006 and 2008), Canal Market (2006), Setronic (2008) and AGT Maroc (2008).

Indirect network

The sales channel diversification has been extended through partnership agreements with nationwide opera-tors such as the tobacco firm, Altadis Maroc, Barid Al-Maghrib (Morocco’s post office, which provides sub-scription sales and bill payment services) and the supermarket retailers Marjane and Acima. Maroc Telecom thus has a complementary licensed indirect distribution network with more than 24,000 retail outlets nation-wide.

Independent network

In 2006, Maroc Telecom signed agreements with three new distributors, in addition to GSM Al-Maghrib.

In March 2006, Maroc Telecom sold its 35% stake in the distributor GSM Al-Maghrib, but is still linked to the company via distribution agreements.



Distribution agreements

As at December 31, 2008, Maroc Telecom had concluded distribution agreements with the following companies:

Company Activity Agreement date

Maroc Telecom products distributed

GSM Al-Maghrib telecom products retailer

Distribution of telecom products 11/2003 Prepaid mobile and fixed-line cards Sales of mobile, fixed-line and Internet subscrip-tions; electronic phone card top-ups.

Barid Al-Maghrib Moroccan post office 06/2003 Prepaid mobile and fixed-line cards Fixed-line subscription sales

Cofarma Marjane hypermarkets and Acima supermarkets

10/2002 Prepaid mobile and fixed-line cards Fixed-line subscription sales

Mahatta (Total Maroc group)

Service stations 07/2002 Prepaid mobile and fixed-line cards

Altadis Maroc Manufacture and distribution of tobacco products in Morocco

11/2003 Prepaid mobile and fixed-line cards

Canal Market Electronic payment service provider and distributor of electronic re-charge platforms

11/2002 11/2006

Fixed-line and mobile electronic top-up Sales of mobile, fixed-line and internet subscrip-tions for business customers in Marrakech and its hinterland.

Sicotel Distribution of telecom products 11/2006 Prepaid mobile and fixed-line cards Sale of mobile, fixed-line and Internet subscrip-tions

Lineatec Distribution of telecom products 11/2006

11/2008

Prepaid mobile and fixed-line cards Sales of mobile, fixed-line and internet subscrip-tions for business customers in Rabat and Tangier and their hinterland. Sales of mobile, fixed-line and internet subscrip-tions for business customers in Casablanca and Fes and their hinterlands.

Setronic Distribution of telecom products 11/2008 Sales of mobile, fixed-line and internet subscrip-tions for business customers in Settat and Mar-rakech and their hinterlands.

AGT Maroc Distribution of telecom products 11/2008 Sales of mobile, fixed-line and internet subscrip-tions for business customers in Casablanca and its hinterland.

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Advertising As the largest advertiser in Morocco, Maroc Telecom devotes a significant advertising, communica-tions and marketing budget, both to promote its Mobile, Fixed-line, Business and Internet services, and to develop communication initiatives in the corporate, employee relations and investor relations sectors.

Communications initiatives are spearheaded by the following teams: • the Consumer and Enterprise Products team, which manages communications strategies for products

and services across all market segments, from residential to business customers; • the Corporate Communication team which is responsible for communications linked to Maroc Tele-

com’s corporate image (e.g. corporate sponsorship and patronage) while maintaining the consistency of Group’s communications strategy, logo and visual brand identity;

• the Employee Relations team: It operates across the entire organization through an extended network of practitioners. The purpose of the Employee Relations team is to work in close collaboration with front-line managers, to escalate information within the organization and disseminate information about economic, financial and cultural events within the enterprise. Since the reorganization completed in 2006, the team reports directly to the HR department.

• Financial Communications, which is responsible for ensuring compliance with the group’s financial com-munications policy as defined by General Management, regulatory obligations in terms of financial dis-closure in Morocco and France and for organizing events for investors and financial analysts.

These entities work in close cooperation to ensure the overall coherence of communications initiatives with the objectives set by Maroc Telecom.

Product advertising

Product advertising focuses on promoting new product offerings by means of above- and below-the-line media advertising campaigns. In 2008, advertising efforts for the mobile segment focused essentially on price promotions, the launch of 3G mobile services, reductions in international call rates and the introduction of all-inclusive call plans for international destinations. To stimulate cross-selling of postpaid and prepaid mobile bundles and consolidate its innovative brand im-age, Maroc Telecom developed a series of co-branding initiatives in 2008. Initiatives were deployed in col-laboration with handset manufacturers and focused on promotional offers (3G and Jawal bundles) as well as seasonal promotions (Women’s day, Clean beaches campaign, Agricultural Fair and more). In the Internet segment, Maroc Telecom initiated high-profile advertising campaigns to publicize its broadband services and introduced promotional campaigns to raise customer acquisition rates. A major advertising cam-paign was rolled out for the new prepaid mobile Internet offering in the final quarter of 2008 and highlighted the value-for-money aspect of the offering which is retailed at a price of MAD10 per day. In the Fixed-line segment, advertising initiatives were directed towards efforts to reposition phone cards as a low-cost communications means. A dedicated advertising campaign was introduced in the first quarter of 2008 in order to highlight the specific advantages offered by phone cards: cost savings, low price and con-venience (cards can be used at home or via public phone booths). Maroc Telecom continued to devote considerable resources to below-the-line marketing initiatives. A vari-ety of direct marketing techniques are used, whether through the publication of monthly newsletters (Mobinews, Moustajadat, Hissati, etc.), promotional SMS messages and email campaigns. The (www.mobileiam.ma, www.elmanzil.ma, www.marotelecomtv.ma and www.menara.ma) Internet portals are regularly updated in order to increase traffic and attract visitors. In 2008, advertising initiatives directed at business customers focused on print media and billboard adver-tising to publicize new product launches. These were supplemented with direct marketing efforts (monthly newsletters, informative mail shots and SMS messages) and below-the-line marketing efforts (sales bro-chures, point-of-purchase promotions, roadshows and customer seminars).


Corporate communication Corporate communication initiatives deployed in 2008 focused on consolidating Maroc Telecom’s brand image as the undisputed leader in full-service telecommunications in Morocco. A variety of initiatives were organized to respond to the increasingly competitive market environment across all telecoms segments, the development of third-generation mobile services and efforts to boost international call traffic. Increased emphasis was placed on highlighting the Company’s image as an innovator which simplifies access to tele-communications services and provides ubiquitous service for customers. In addition, steps were taken to optimize advertising spending and measure communications value.

Sponsorship and corporate patronage Maroc Telecom’s sponsorship and patronage efforts focus on the following areas:

- Sport : Maroc Telecom’s aim is to discover and train young Moroccan talent both locally and nationally. It is the Official partner of the Fédération Royale Marocaine de Football and the Groupement National de Football and official partner of national athletics via the Fédération Royale Marocaine d’Athlétisme. Maroc Telecom is also active in other sports disciplines (golf, horse riding, jet skiing, etc.).

- Environment Maroc Telecom is actively involved in environmental protection efforts, through its sponsorship for projects such as the “Clean beaches” campaign which is organized under the auspices of the Mohamed VI Founda-tion for Environmental Protection. Crowning the success of its past involvement in clean-up events organ-ized at several beaches in the Tangier area, Maroc Telecom was awarded a prize for its contribution to beach clean-up events in 2008. Thanks to its involvement, Achakar beach maintained its “blue flag” status while Riffyine beach was awarded a blue flag for the first time. The efforts deployed in 2006 and 2007 at Arsat Moulay Abdeslam park continued throughout 2008 with the opening of a museum and investment in signage. - Culture Maroc Telecom is actively involved in cultural events through its sponsorship for cultural festivals (Mawazine, Casablanca, Marrakech, Rai, etc.). In addition, it helps to fund the Mohammed VI National Theatre and sup-ports national artists, particularly emerging talents, by organizing concerts during summer months. The 2008 beach festival was an innovative and highly original concept as Maroc Telecom built villages where a variety of shows were organized day and night for two months (July, August) with more than 10 million visitors. The sites installed in cities throughout Morocco, showed our commitment to community out-reach and helped to build brand empathy with consumers. The 2008 musical roadshow “Jawla” traveled to several cities throughout the Kingdom, organizing large concerts requiring significant logistical and human resources and associating a diverse panel of national and international stars. The roadshow attracted more than one million spectators. - Community outreach As regards community and humanitarian actions, Maroc Telecom is active via the Maroc Telecom Associa-tion for Entrepreneurship which awards grants to young entrepreneurs and to students from modest back-grounds. Maroc Telecom also supports foundations and charities such as the Mohamed V Foundation for Solidarity and the Lalla Salma association for the fight against cancer.

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Employee relations The Employee Relations department organizes conventions for senior managers of Maroc Telecom and disseminates internal communication tools (Newsflash, Itissal and Wissal). It also provides support for projects launched by other departments such as EAP, MassaRH, quality assur-ance, information systems security. In 2008, as part of its continuous improvement drive, Maroc Telecom conducted a employee survey to iden-tify employees' preferences and expectations in terms of internal communications. The results of this sur-vey were broadly positive and led to the identification of several components to be included in the commu-nications action plan for coming years.

Financial communication In 2008, Maroc Telecom complied with all its financial disclosure obligations in Morocco and France, held several meetings with analysts and investors and organized roadshows in Europe, the United States and the Middle East to present its annual and interim results. Furthermore, Maroc telecom was nominated for the 2009 edition of the “Africa Investor Financial Reporting Awards” and was awarded a trophy in the telecommunications category. The prize was awarded in recogni-tion of Maroc Telecom’s entire financial communications and its contribution to financial reporting quality on the African continent.



4.4.5 Competitive landscape As at December 31, 2008, a total of 18 telecommunications licenses had been awarded to operators in Morocco: three licenses for operators of public fixed-line telecommunications network (Maroc Telecom, Meditel and Wana), two 2G mobile licenses (Maroc Telecom and Meditel), three 3G mobile licenses (Maroc Telecom, Meditel and Wana), five licenses for operators of GMPCS-type satellite telecommunications net-works, three licenses for operators of VSAT-type satellite telecommunications networks, and two licenses for operators of shared resources radio-electronic networks (3RP).

In 2005, the liberalization process for the fixed-line market continued, and two fixed-line telecommunica-tions licenses were awarded:

• a fixed-line license including local loop (without restricted mobility) and national and international trans-mission was awarded to Meditel in July 2005;

• a fixed-line license including local loop (with restricted mobility) and national and international trans-mission was awarded to Wana in September 2005.

In July 2006, three mobile licenses for 3G (UMTS) networks were awarded to Maroc Telecom, Wana and Meditel.

In February 2009, ANRT awarded a 2G mobile license to Wana.

Mobile services In the mobile sector, Maroc Telecom has a direct competitor in Medi Telecom (“Meditel”), the holder of a mobile license since August 1999. The majority of Meditel’s stock is held by Telefonica and Portugal Tele-com (32.18% each). The minority interests are held by the Moroccan bank group BMCE and Holdco (an entity which is more than 75% owned by the Caisse des Dépôts et de Gestion of Morocco), with 18.06% and 17.59% stakes in the share capital, respectively (Source: Meditel and CDG).

The Moroccan market for mobile telecommunications had more than 22.8 million GSM customers as at De-cember 31, 2008. This market is predominantly prepaid, with more than 96% prepaid customers. The prin-cipal highlight of 2008 was the launch of 3G mobile services using CDMA technology by Wana. In terms of market share, Maroc Telecom had at end-2008, 63.4% of the overall market as compared to 34.7% for Meditel and 1.9% for Wana. (Source: ANRT)

(Source : ANRT)

The mobile services market typically experiences a seasonal peak during the summer months. This phe-nomenon is essentially attributable to the arrival of large numbers of Moroccans living abroad who return on vacation during the summer months. In the prepaid mobile services segment, mobile operators organize frequent price promotions, thereby leading to a decline in rates. They have also introduced significant subsidies for mobile handsets, which contribute to sustained market growth. In the postpaid segment, pricing and the characteristics of service bundles are the key competitive differ-entiators for operators. Maroc Telecom has a broad range of rate plans to suit both consumer and business customers. Maroc Telecom continues to respond to competition with aggressive price promo-tions.

As at December 2008 Market status Market share (as % of total customer base)

Mobile prepaid Liberalized market Maroc Telecom : 63.3% Other : 36.7%

Mobile postpaid Liberalized market Maroc Telecom : 65.4% Other : 34.6%

Total Mobile Maroc Telecom : 63.4% Meditel : 34.7%

Wana : 1.9%

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Maroc Telecom’s brand enjoys a high recognition, for postpaid as well as for prepaid services (Jawal). Ma-roc Telecom is also distinguished by its expertise and the performance and quality of its network (Source: survey conducted by Sofres). Maroc Telecom’s chief competitive strengths are as follows:

• Its network covers almost the entire population of Morocco (Maroc Telecom estimate). • Maroc Telecom relies on a dense and efficient distribution network of almost 55,000 licensed retail

outlets; • Customer loyalty: As from April 2002, Maroc Telecom innovated within the market with a points-based

loyalty system, “Fidelio”; • Commissions for resellers: Maroc Telecom and Meditel compensate resellers according to distinct

models: Maroc Telecom compensates resellers for sales while Meditel also compensates for calls (Airtime).

In order to enable its customers to enjoy the most recent innovations, Maroc Telecom has pioneered the latest technologies, such as WAP in 2000 or GPRS in 2002 and 3G data services in 2007.

The following table lists the years in which mobile technologies were launched on the market by Maroc Telecom and Meditel:

Fixed-line telephony Two new fixed-line licenses were awarded in July and September 2005. Operations commenced as from early 2007. Maroc Telecom faces competition in all segments, from residential and public telephony through to busi-ness. The fixed-line penetration rate in Morocco was 9.70% as at December 31, 2008 compared with 7.85% a year earlier (source ANRT). As at the same date, Maroc Telecom held a market share of 99.2%, excluding restricted mobility.

Source : ANRT

Fixed-line consumer telephony market In February 2007, Wana, the third telecom operator launched Bayn, its fixed-line service with restricted mo-bility. This prepaid service is marketed on a pay-as-you-go basis, without an bill or subscription, and can be considered as a prepaid mobile service. In light of its price structure and advertising strategy, Bayn appears to be attempting to compete head to head with Maroc Telecom in the telestores segment. As at December 31, 2008, Wana had not launched any postpaid fixed-line offers or any consumer offers without mobility. To our knowledge, Meditel has not yet launched any fixed-line voice or Internet offers for consumers.

Maroc Telecom Meditel WAP 2000 2004 SMS Info 2001 2003 GPRS 2002 2004 MMS 2003 2004 Roaming MMS et GPRS 2004 2006 Push mail 2006 2006 Push to talk 2006 - 3G Voice 2008 2008

As at December 2008 Market status Market share - Maroc Telecom (as % of total number of lines)

Fixed lines Liberalized market 99.2%

Fixed lines, including restricted mobility Liberalized market 43.4%



Since 2006, Maroc Telecom has launched two fixed-line offers which differentiate it from competitors, namely:

• in the voice segment: the Phony offer allows unlimited calls to all Maroc Telecom fixed-line numbers at accessible rate plan prices;

• in the content segment: TV via ADSL offers Maroc Telecom’s fixed-line customers exclusive access to 80 national and international digital TV channels via their telephone line.

In addition, the ADSL offer includes a variety of bandwidths up to 20 Mb/s and the quality of its technology, gives Maroc Telecom a strong positioning relative to competitors.

Public telephony market Maroc Telecom held a monopoly in this market up until 2003. The advent of deregulation as from 2004 saw the arrival of Meditel, which, since spring of 2004, has set up telestores using GSM technology. In addition, in September 2004, two operators (Globalstar and Thuraya) announced their intention to enter the market using satellite-based telephony. To date, these two operators have not yet made a commercial launch. At end-December 2008, the global fleet of public telephone (all operators and all types of technology) was estimated at 175,000 lines. Maroc Telecom’s share of the public telephony market was estimated at 91.5% lines versus 8.5% for Meditel. (Source ANRT).

Fixed-line business telephony market Meditel, by installing “Lo-box” GSM gateways, has entered the market for business fixed-line telecommuni-cations. By installing this device on a PABX outlet, users can convert fixed-line-to-mobile traffic into mobile-to-mobile traffic without transiting via Maroc Telecom’s fixed-line network (also see the discussion of the ruling ANRT/DG/N.01/04 above).

In 2006, Meditel launched several offers and services for business customers: • NeoFixe offering attractive prices for calls to domestic fixed-line numbers and a flat price for calls to

Meditel and Maroc Telecom mobile numbers; • a range of pricing options offering preferential prices per minute depending on the destination and the

company’s usage profile (Shared rate plans, intra company Option Advantages and Intra com-pany+);

• international minutes for offshore call centers (various rate plans depending on the call centers’ monthly usage per minute).

In 2007, new market entrants introduced specific offers tailored for businesses such as the double-play Voice + Internet offer, proposed by Wana. At the end of 2007, Maroc Telecom considered that these offers only had a limited impact on its market share. At the end of December 2008, the total number of business lines in Morocco stood at more than 375,000. Maroc Telecom’s share of the business fixed-line market was 97% compared to 1.9% for Meditel and 1.1% for Wana (source ANRT).

Interconnection of incoming international traffic Since April 2006, when the decrees on the fixed-line licenses granted to Meditel and Wana were published, the three operators who held a fixed-line license have been authorized to offer termination services for in-ternational operators for their traffic to Morocco, irrespective of the end destination of the calls. In 2008, incoming international traffic on Maroc Telecom networks (including international traffic des-tined for other domestic operators) increased by 4.2% compared with 2007. Despite increased competition from new entrants, Maroc Telecom maintained the direct routing of more than 85% of international calls to its customers (Maroc Telecom estimate) due to price cuts introduced in response to the new conditions on the international telephony market.

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Data transmission At December 31, 2008, competition for data transmission services remained fairly limited, despite the fact that the two new fixed-line operators had launched products and services for businesses. Competi-tion in the data transmission market takes four forms:

• competition from ISPs offering VPN IP services, such as those offered by Maroc Connect, which be-came Wana in 2006. The service offered is VPN IP based on the ISP’s IP network for interconnection of sites on a domestic and international basis. At the end of 2006, Wana unveiled its data transmission services for businesses;

• operators of VSAT satellite telecommunications networks, such as Space Com S.A., Gulfsat Maghreb and Cimecom S.A. On the domestic market, the service is suited to remote locations where Maroc Telecom is not present. Maroc Telecom may, however, meet its customers’ requirements by means of customized offers such as wireless service. The VSAT operators provide the call centers with interna-tional leased lines;

• the international operator Equant, which provides international connectivity services to major cus-tomers. Maroc Telecom estimates that Equant offers services to approximately 20 airlines formerly customers of the SITA network, and to approximately 25 businesses. This competition remains limited since the entire traffic of Equant’s customers is carried through a leased line with a total capacity of 2 Mb/s;

• Meditel’s data transmission services, in particular the international connectivity service, include a spe-cially designed service aimed at call center customers and a VPN IP service of up to 2 MB;

• the independent networks deployed by a number of key account customers, which have opted to build their own data networks and use radio solutions. This competition is insignificant.

The following table summarizes the market situation as at December 31, 2008:

Internet services Highlights in the Internet services market included the continued success of the ADSL program and the spectacular growth in 3G mobile internet services. Like its competitors, Maroc Telecom has launched pre-paid and postpaid 3G mobile services. At end-December 2008, nearly 35% of the market used wireless Internet access technologies (source ANRT). Maroc Telecom has a very strong position on the ADSL market, which accounts for almost 64% of overall Internet access in Morocco, with a market share of close to 99% (Source: ANRT). The following table provides a breakdown of the market share as at December 31, 2008 (Source: ANRT):

Market status Market share of Ma-roc Telecom

Domestic data transmission ser-vices

Competition from: Private network (radio solutions), Meditel, Wana Unavailable

International data transmission services Competition from: VSAT operators, Meditel, Wana Unavailable

Market status Market s h a r e (as % of total access points)

Total number of access points

Liberalized market Maroc Telecom : 67.3% Wana : 25.1% / Meditel : 7.3%

Mobile broadband Liberalized market Maroc Telecom : 10.3% Wana : 69.1% / Meditel : 20.6%

Wireline broadband access points (ADSL and leased lines)

Liberalized market Maroc Telecom : 98.8% Other : 1.2%



4.5.1 Mauritel Mauritel SA is the incumbent Mauritanian operator and arose out of the break-up of the Mauritanian Na-tional Postal and Telecommunications Office in 1999. In 2000, Mauritel SA created Mauritel Mobiles, a wholly owned subsidiary, which obtained the second license to operate a GSM Mobile telecommunications network. On April 12, 2001, in response to an international invitation to tender launched by the Mauritanian govern-ment, Maroc Telecom acquired a 54% stake in Mauritel SA. In January 2002, Maroc Telecom created the Compagnie Mauritanienne de Communication (CMC), to which it transferred the shares it held in Mauritel SA. On June 6, 2002 Maroc Telecom sold a 20% stake in CMC to a group of Mauritanian investors. In 2003, CMC sold a 3% stake in Mauritel SA to company em-ployees for MAD17 million, in compliance with the commitments undertaken at the time of the privatization in 2001. As of July 1, 2004, the Mauritanian government’s veto rights expired, giving Maroc Telecom exclu-sive control of this subsidiary which is fully consolidated in Maroc Telecom’s financial statements. In 2006, the CMC Group acquired 0.527% of Mauritel SA’s share capital from Socipam, a non-trading company cre-ated by employees of the Mauritanian subsidiaries. On completion of this transaction, CMC held a 51.527% stake in Mauritel SA.

Following the repeal of article 73 of Act 99-019 on telecommunications in September 2007 (Act 2007-049 dated September 3, 2007), which obliged Mauritel SA to spin-off all of its business units which operate in deregulated markets, including its mobile operations, the Extraordinary General Shareholders’ Meeting of Mauritel SA and Mauritel Mobiles approved the merger of two companies on November 27, 2007. Since that date, Mauritel SA has operated as a full-service operator, leveraging synergies across its mobile, fixed-line and Internet operations.

Fixed-line telecommunications, Data and Internet Mauritel provides fixed-line telephony services (voice and data) together with Internet access.

Mauritel lost its monopoly in the core services segment (domestic fixed-line telecommunications, telex and telegraph) as from June 2004. However, at the end of 2006, it was still the only fixed-line telecommunica-tions operator in Mauritania. In November 2004, the Mauritanian telecoms regulatory authority (ARE) launched a call for interest to telecoms consultants for the purpose of obtaining assistance it in the license award process. On completion of the license award process, ARE awarded fixed-line licenses to the new operator, Chinguitel, in 2006.

As at December 31, 2008, the number of fixed lines amounted to 49,000, representing a penetration rate of 1.5%. The fixed-line network covers the main Mauritanian urban centers. Aside from residential clients and companies, phone shop lines account for more than 5% of the customer base, enabling broad sections of the public to access telephone services.

Mauritel also offers Internet access via the standard dial-up telephone network, ISDN lines, leased lines and ADSL launched in 2006. The Internet customer base increased by around 80% in 2008, rising to over 9,000 access points compared to 5,100 access points in 2007

The Fixed-line and Internet market is split between two operators: Mauritel and Chinguitel (since August 2007) At December 31, 2008, Mauritel had an estimated market share of 95% in the Fixed-line segment (versus 5% for Chinguitel) and an 88% market share in the Internet segment (versus 12% for Chinguitel). (Maroc Telecom estimate)

4.5 DESCRIPTION OF SUBSIDIARIES’ OPERATIONS

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Mobile services Mauritel provides prepaid and postpaid services and offers roaming and SMS, together with specially adapted services for businesses, such as closed user groups. To stimulate usage, Mauritel Mobiles offers volume reductions for calls and special offers for top-ups. It has developed a wide range of added-value services to suit the needs of a diverse customer base. Added-value services introduced to date include “Friends & Family”, “Favorite Mobile Number”, “Preferred Country”, “Phony”, 1-hour “Eljawal” and 1-hour “Liberté”. Mauritel operates in a liberalized market alongside Compagnie Mauritano-Tunisienne de Telecommunica-tions (Mattel) and Chinguitel (since August 2007). In 2006, the ARE awarded new licenses, including a 3G license for Mauritel and 2G and 3G licenses for Chinguitel. At December 31, 2008, Mauritel had more than 1.14 million mobile customers, virtually all of whom are pre-paid customers. The mobile penetration rate in Mauritania is close to 62% (Maroc Telecom estimate). The market is shared between three operators: Mauritel SA, Mattel and Chinguitel. According to Mauritel estimates, the market shares as at December 31, 2008 are 56% for Mauritel Mobiles, 30% for Mattel and 13% for Chinguitel.

The following table summarizes Mauritel Group’s key operating and financial data:

* Revenues net of inter-segment revenue between subsidiaries' fixed-line and mobile operations, but including revenues generated by subsidiaries (including service commitment contracts) which are eliminated from consolidated revenues.

Maroc Telecom’s representatives sit on the Board of Directors of CMC and Mauritel SA and none of Maroc Telecom’s executive officers hold executive functions in either company.

The consolidation method of the Mauritel sub-group, and its contribution to Maroc Telecom’s results are summarized in Notes 1, 2 and 28 to the Consolidated Financial Statements. In addition, chapter “6.4 Related Party Transactions” summarizes the financial flows and the nature of such flows between Maroc Telecom and the Mauritel sub-group.

in thousands – as at December 31 2006 2007 2008

Mobile customer base 601 905 1,141

Number of fixed lines 37 36 49

Internet customer base 4 5 9

in millions of Moroccan dirhams– in IFRS

Net revenues* 910 1 063 1 086

Fixed-line (gross) 309 319 290

Mobile (gross) 688 834 875

Earnings from operations before amortization 474 554 572

Fixed-line 74 53 74

Mobile 399 501 498

Earnings from operations 295 388 372

Fixed-line (14) (9) 5

Mobile 309 397 367

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.5. Description of subsidiaries’ operations


4.5.2 Onatel Onatel is the incumbent operator in Burkina Faso and arose out of the break-up of the Office des Postes et Télécommunications in 1987. It was formed as a state-owned company in 1994. In October 2002, Burkina Faso’s government established Telmob as a wholly-owned subsidiary of Onatel. In April 2004, Telmob was awarded the third GSM network mobile license in Burkina Faso. On December 29, 2006, Maroc Telecom acquired a 51% stake in Onatel, Office National des Télécommu-nications, Burkina Faso’s incumbent operator, by means of an international invitation to tender.

Fixed-line telecommunications, Data and Internet Onatel provides fixed-line telephony services (voice and data) together with Internet access.

Onatel lost its monopoly of fixed-line services (national fixed-line telephone, telex and telegraph) as from December 31, 2005. However, at the end of 2008, it remained the only fixed-line operator in Burkina Faso. In the Internet market other ISPs operate alongside Onatel. As at December 31, 2008, the number of fixed lines amounted to 145,000, representing a penetration rate of 1.1%. The fixed-line network covers the main urban centers in Burkina Faso. Aside from residential cli-ents and companies, phone shop lines account for more than 10% of the customer base comprises tele-centers, phone shop lines, enabling broad sections of the public to access telephone services. Onatel also offers Internet access via the PSTN telephone network, ISDN connections, leased line and ADSL, launched in September 2005.

The Internet customer base stood at 17,000 as of December 31, 2008.

Mobile services Telmob, a wholly-owned subsidiary of Onatel, provides prepaid and postpaid services and offers roaming and SMS, together with specially adapted services for businesses, such as closed user groups. To stimulate usage and increase customer acquisition, Telmob offers volume reductions on call charges and promo-tional rates for top-ups and starter kits. It operates in a liberalized market alongside the companies Zain (Celtel )and Moov (Telecel Faso). With a customer base of almost 977,000 as at December 31, 2008, virtually all of which is prepaid, Telmob has an estimated market share of around 37%. The mobile penetration rate in Burkina Faso was close to 19% at the end of 2008 (Source: Onatel), which means that there is significant room for further growth. The market is shared between three operators: Tel-mob, Zain and Moov (Telecel). At end 2008, market share was distributed as follows: 51% for Zain, 37% for Telmob and 12% for Moov (Telecel) – Maroc Telecom estimate.

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The following table summarizes Onatel group’s key operating and financial data:


Maroc Telecom has representatives on the Board of Directors of Onatel and Telmob, and none of Maroc Telecom’s executive officers hold executive functions in either of these companies.

The consolidation method of the Onatel sub-group, and its contribution to Maroc Telecom’s results are summarized in Notes 1, 2, and 28 to the Consolidated Financial Statements. In addition, section 6.4 “Related Party Transactions” gives details of the financial flows and the nature of such flows between Ma-roc Telecom and the Onatel sub-group.

in thousands – as at December 31 2006 2007

Mobile customer base 244 564

Number of fixed lines 99 122

Internet customer base 7 12

in millions of Moroccan dirhams– in IFRS

Net revenues* 1,239 1,371

Fixed-line (gross) 783 799

Mobile (gross) 578 719

Earnings from operations before amortization 466 588

Fixed-line 162 180

Mobile 303 408

Earnings from operations 67 211

Fixed-line (75) (35)

Mobile 142 246

2008

977

145

17

1,467

758

881

606

133

473

210

(60)

270



4.5.3 Gabon Telecom Gabon Telecom SA is the incumbent operator in Gabon, and arose out of the break-up of the Office des Postes et Telecommunications in 2001, in accordance with the terms of Act 004/2001 of June 27, 2001, governing the reorganization of the postal and telecommunications sectors.

In March 1999, Gabon Telecom launched Libertis, its wholly owned mobile subsidiary, which was awarded the second GSM network mobile license in 2007. Until 2006, the Gabonese government held complete ownership of Gabon Telecom’s share capital. In Feb-ruary 2007, following an international invitation to tender, the Gabonese government sold a 51% stake to Maroc Telecom.

Fixed-line telecommunications, Data and Internet Gabon Telecom provides fixed-line telephony services (voice and data) together with Internet access. Although Gabon Telecom lost its fixed-line and Internet monopoly as from June 2001, it will remain the sole fixed-line operator in Gabon until 2011. As at December 31, 2008, the number of fixed lines amounted to 33,000, representing a penetration rate of 2.2%. The fixed-line network covers the main Gabonese urban centers. Gabon Telecom SA also offers Internet access via PSTN telephone network, ISDN connections, leased line, ADSL and a fixed-line phone service based on CDMA technology (launched in December 2007). The Internet customer base stood at around 14,000 as at December 31, 2008.

Mobile services Libertis, a wholly-owned subsidiary of Gabon Telecom SA, provides prepaid and postpaid services and of-fers roaming and SMS, together with specially adapted services for businesses, such as closed user groups. Libertis offers volume reductions on call charges and special offers on top-ups.

Libertis operates in a competitive mobile market and had approximately 447,000 customers at the end of December 2008. The penetration rate was about 93% at the end of 2008. Three operators are active on the market: Libertis (32% market share), Zain Gabon (59% market share) and Moov / Telecel (9% market share) – Maroc Tele-com estimate.

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The following table summarizes Gabon Telecom Group’s key operating and financial data:


Maroc Telecom has representatives on the Board of Directors of Gabon Telecom and Libertis, and none of Maroc Telecom’s executive officers hold executive functions in either of these companies. The consolidation method of the Gabon Telecom sub-group, and its contribution to Maroc Telecom’s re-sults are summarized in Notes 1, 2 and 28 to the Consolidated Financial Statements. In addition, section “6.4 Related Party Transactions” gives details of the financial flows and the nature of such flows between Maroc Telecom and the Gabon Telecom sub-group.

in thousands – as at December 31 2006 2007 2008

Mobile customer base 241 386 447

Number of fixed lines 22 24 33

Internet customer base - 10 14

In millions of Moroccan dirhams – in local standards

Revenues* 1,062 1,001

Fixed-line (gross) 690 521

Mobile (gross) 436 583

Earnings from operations before amortization 64 68

Fixed-line 38 (79)

Mobile 26 147

Earnings from operations (175) (169)

Fixed-line (114) (214)

Mobile (60) 45

1,187

622

692

260

69

191

(11)

(55)

44



4.5.4 Casanet A wholly-owned subsidiary of Maroc Telecom, Casanet is one of the leading Internet service providers in Morocco. It provides Internet access for business customers as well as portal administration services. It notably hosts the Menara portal. In 2008, revenues for Casanet amounted to MAD67 million, up 6% compared to 2007 and earnings from operations reached MAD10 million.

4.5.5 Médi1Sat In 2005, Maroc Telecom acquired a 24.7% stake in Medi-1-Sat which it increased to 26.8% in 2006. Medi1Sat is preparing to launch a 24-hour television news channel based in Tangier and broadcasting in Arabic and French.

Through its participation in this project, Maroc Telecom intends to establish closer ties with the media in-dustry and to accompany the development of the content of its triple play ADSL offer. In December 2006, Medi1Sat began broadcasting its programs from the Hotbird satellite and on TV via ADSL.

In 2008, Maroc Telecom subscribed MAD6.6 million of the MAD18.6 million share capital increase organ-ized by Medi-1-Sat, representing one-quarter of the issue, and increased its stake in the company to 37% (the target equity stake after release would be 39%). At December 31, 2008, the other shareholders of Medi-1-Sat are Caisse de Dépôt et de Gestion, via its FIPAR Holding (39%) subsidiary, Radio Méditerranée International (19.5%) and Compagnie Internationale de Radio Télévision (CIRT) (2.5%)

4.5.6 Mobisud (France and Belgium) On December 1, 2006, Maroc Telecom launched Mobisud in France, then in Belgium on May 2, 2007; two new MVNO in the European mobile market. It uses the radio network of the French mobile operator SFR in France and Proximus in Belgium. Mobisud France has three shareholders: Maroc Telecom (66% stake), SFR, the number-two mobile telephone operator in France (16%) and the Moroccan group Saham (18%). Mobisud Belgium is wholly-owned by Maroc Telecom. Mobisud is specifically targeted towards individuals who live in France and have ties with Morocco, Algeria and Tunisia. The offering is designed to enable customers to communicate cheaply with their friends and family in France, Belgium and North Africa. Mobisud France and Belgium create their own offers and services, develop their own IT systems and man-age their own brands, marketing and sales activities and their customers. They offer prepaid formulas and pay-as-you-go subscriptions. As at December 31, 2008, the active customer base of Mobisud France and Belgium reached 163,000 cus-tomers. Mobisud (France and Belgium) recorded total revenues of MAD183 million and reported an operat-ing loss of MAD239 million.

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Maroc Telecom has a research and development department which works on the Company’s products. This research usually leads to the launch of new products and/or services or transformations or improve-ments of existing products, even though such work may not be considered as patentable inventions or processes.

Maroc Telecom research and development costs are not significant.

Morocco The summer months, with the return of Moroccans living abroad, and the fortnight preceding the Aid al-Adha holiday (December 9, 2008) traditionally see a spike in usage (primarily mobile and fixed-line public telephony), while the month of Ramadan (September 2008) is a seasonal trough for the fixed-line and mo-bile segments.

Mauritania Usage of telecommunications services in Mauritania generally peaks during the period from June to Sep-tember. Other periods of temporary increases in usage include the Aid El Al Adha, Aid El Fitr and Aid El Mawlid religious holidays. Conversely, usage of fixed-line and mobile services is particularly subdued dur-ing the month-long Ramadan fast.

Burkina Faso The annual rainy season (August-September) tends to depress sales in Burkina Faso and has a negative impact on network service quality. This has repercussions both for fixed-line and mobile revenues.

4.6 RESEARCH AND DEVELOPMENT

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.6. Research and development

4.7 SEASONALITY


4.8.1 The legal framework with respect to telecommunications in Morocco This section provides a non-exhaustive summary of the legal environment with respect to the company's telecommunications operations in Morocco.

Overview The focus for reforms to telecommunications regulations consists in:

• equipping the telecommunications sector with an effective and transparent regulatory framework sup-porting fair competition for the benefit of the consumers;

• pursuing the development of telecommunications networks and services by supporting development of new information technologies;

• providing telecommunications services for the entire Moroccan population; • providing the Moroccan economy with state-of-the-art communications technologies in order to pro-

mote integration into the global economy. The reform of the Moroccan telecommunications sector was initiated by Act 24-96, dated August 7, 1997 (Act 24-96), which dissolved the Office National des Postes et Télécommunications (ONPT) and laid down the conditions for the liberalization of the telecommunications sector. The dissolution of the ONPT led to the creation of three separate legal entities: Itissalat Al-Maghrib (Maroc Telecom), a private joint stock company (société anonyme); Barid Al Maghrib (the post office, or BAM), a public agency organized as a financially independent legal entity; and the Moroccan telecommunications regulator (ANRT) whose primary role is to regulate the telecommunications sector. The liberalization process continued with the adoption of a series of implementing decrees concerning mainly the operation of the ANRT, the general terms of operation of the public telephony networks and the terms applicable to open telecommunications network provision.

In November 2004, Act 24-96 amended and supplemented by Act 55-01 completed the liberalization process initiated in 1997 and clarified the existing statutory framework. This gave rise to a reduction of the public telecommunications network operators’ annual contribution to universal service to 2% of annual revenues (excl. tax), net of interconnection costs. Operators may opt for a conventional regime allowing them to provide universal service directly. Provision has been made for access to alternative infrastructure (i.e. facilities owned by public sector enti-ties, private sector holders of public service concessions and other private entities) and authorization has been granted for the sharing of existing telecommunications infrastructure (see the sections on “Universal service” and “Rights of way” hereafter). Finally, the ANRT’s powers were reinforced (see “Role and respon-sibilities of ANRT”). In 2004, the ANRT published general guidelines on the liberalization of the telecommunications sector for the 2004-2008 period. These guidelines specified the liberalization strategy to be implemented to introduce competition, which is now effective, between three operators (including existing operators) in all segments of the fixed-line and mobile markets. In 2005, the decrees concerning interconnection and the general terms of operation of the public telephony networks were amended and supplemented, respectively by Decree no. 2-05-770 and Decree no. 2-05-771 dated July 13, 2005. A new Decree, no. 2-05-772 dated July 13, 2005, relating to ANRT’s new powers of monitoring compliance with the law on the freedom of pricing and competition, was adopted. These three decrees were published in the Moroccan legal gazette (Bulletin Officiel) no. 5336 dated July 21, 2005. Further initiatives aimed at the liberalization of the telecommunications sector have included:

• The award of three 3G mobile services licenses to Maroc Telecom, Meditel and Wana (in May 2006); • Carrier pre-selection (as from July 8, 2006);

4.8 REGULATORY ENVIRONMENT AND POSSIBLE DEPENDENCIES

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• Partial local loop unbundling (January 8, 2007); • Full local loop unbundling (July 8, 2008).

In 2006, the ANRT set the following timetable for number portability: • Portability of mobile numbers (by January 1, 2007); • Portability of fixed-line numbers (by March 31, 2007); • Finally, the regulatory framework has also been supplemented by a number of decisions made by

ANRT, on both a general and an individual basis, both for the purposes of regulating the industry and settling disputes between operators. This decisions are published on the ANRT website (www.anrt.net.ma).

In 2008, ANRT launched a tender process for the award of a third second-generation mobile license. The license was awarded in February 2009 to Wana.

Rules governing the establishment and operation of telecommunications networks and ser-vices in Morocco

Act 24-96, as amended and supplemented, implements different rules according to the type of tele-communications networks and services provided.

Networks and services subject to a license

General description

Operators seeking to establish public telephony networks using the public domain or the radio frequency spectrum are required to obtain a license.

A license may only be issued in response to an invitation to tender. Invitations to tender are issued by the ANRT.

Contract specifications define, among other items: • conditions for deployment of the network; • the conditions for the provision of the service; • the area of coverage of that service and the timetable for completion; • the radio frequencies and numbering blocks allocated; • the duration of the license’s validity and the conditions of its renewal; • financial considerations and related terms of payment.

The applicant whose bid is deemed to be the most favorable, as indicated by an opinion issued by the ANRT, is awarded the contract. The adjudication process is documented in a public report. Licenses are issued by decree of the Prime Minister. The awarded licenses are personal and may be assigned to a third party only pursuant to a decree. In addition to complying with the contract specifications, the holder of the license is also required to comply with all applicable statutory and regulatory rules in force, including in particular the general conditions of operation of public telecommunications networks, the conditions of provision of technical offers, intercon-nection tariffs, leased lines and rules governing frequencies. The general conditions of operation of public telephony networks are defined by Decree 2-97-1026, as amended and supplemented by Decree no. 2-05-771 dated July 13, 2005, which establishes certain obliga-tions, in particular compliance with the principle of fair competition, advertising retail tariffs (with prior notifi-

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.8. Regulatory environment and possible dependencies


cation to the ANRT), equal treatment among users, confidentiality and neutrality of service. The abovemen-tioned decree also enacts the rules related to the division of the infrastructure and the allocation of number-ing resources. Finally, telecommunications operators are required to contribute to certain general needs of the State. In particular, they are required to contribute to universal service programs as well as research and training in telecommunications. See “Universal service” subsection hereafter. The conditions of interconnection and the supply of leased lines are defined by Decree 2-97-1025 as amended and supplemented by Decree no. 2-05-770 dated July 13, 2005 and Decree 2-97-1027, dated February 25, 1998 (see "Pricing regulations” hereafter). As regards radio frequencies, Decree 2-98-157, dated February 25, 1998, provides that the fees are to be set by an order of the minister in charge of telecommunications after obtaining an opinion from the Minister of Finance. Thus, under the terms of Order 310-98, dated February 25, 1998, as amended by Order 606-03, dated February 4, 2004, three fees are payable: Verification expenses for radio communication stations, fees for the assignment of radio frequencies and the levy for the inspection of operators’ radio communica-tion stations.

Legal status of Maroc Telecom

Pursuant to Act 24-96, the telecommunications networks and services previously operated by the ONPT, namely fixed-line telecommunications network and services, mobile telecommunications network and ser-vices and the right to use the radio frequencies allocated or assigned to the ONPT, were transferred to Maroc Telecom. In respect of its position as the incumbent operator, Maroc Telecom is subject to specific contract specifica-tions approved by Decree no. 2-00-1333, dated October 9, 2000, amended by order no. 2-05-1455, dated April 21, 2006 which define the conditions for the operation of all the networks and services initially oper-ated by the ONPT. These contract specifications specify the conditions in accordance with which Maroc Telecom is to establish and operate, for an unlimited duration:

• fixed landline telecommunications services (including data transmission services, leased lines and the integrated services digital network) on a local and nationwide basis;

• telegraph services; • telex services; • maritime radio communications services; • mobile telecommunications services using the GSM standard; • international telecommunications services.

Following the amendment of Act 24-96 by Act 55-01and its rules according to the nature of the telecommu-nications networks and services provided, Maroc Telecom’s contract terms have now been adapted. Thus, for instance, provisions concerning exclusivity p e r i o d s have been rescinded, while those relating to universal service and local development have been modified, and those regarding the sharing of infrastruc-tures have been added.

It should be noted that mobile telecommunications services using the NMT standard, telex and telegraph services have been discontinued. Maroc Telecom has requested permission from the ANRT to cease provi-sion of maritime radio communication services and X25 data transmission services for which maintenance can no longer be ensured.

Maroc Telecom’s services are to be provided on a permanent and continuous basis, in an objective, trans-parent and nondiscriminatory manner. The Company is thus required to avoid any price discrimination based on geographical location. Maroc Telecom agrees to use its best efforts to achieve levels of quality of service in line with international standards. In this respect, the ANRT may perform inspections of Maroc Telecom, and the Company is required to provide an annual report on the quality of its services.

Since the promulgation of Act no. 55-01, the parameters of the universal service requirement encompass local development obligations while the amount of the overall contribution is set at a maximum of 2% of

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pre-tax revenues (net of interconnection costs). Second, the operator is subject to a fine which may not exceed 2% of its pretax revenues net of interconnection charges, as reported for the previous year. Maroc Telecom’s contract specifications have been revised accordingly. (see “Universal service” subsection here-after). A special fund was created by the 2005 budget into which the universal service contributions are paid (see section 5.2.4 “ Significant accounting policies and estimates — Contribution to universal service”). Maroc Telecom pays a fee to the ANRT for use of the spectrum of radio frequencies, in an amount set by regulation. Finally, Maroc Telecom also pays an inclusive fee of MAD100 million to the Moroccan treasury for access to public land.

Other licenses awarded

As regards mobile telecommunications, pursuant to an invitation to tender issued by the ANRT, a GSM-type license was awarded on August 2, 1999 to Meditel for a term of 15 years. This term was extended to 25 years in 2005.

In 1999 and late 2002, ten licenses for the establishment and operation of telecommunications networks were awarded in Morocco. Apart from the license awarded to Meditel, five licenses were issued to opera-tors to operate GMPCS satellite telecommunications networks, three licenses were issued to operators to operate VSAT satellite telecommunications networks, and two licenses were issued to operators to operate trunked radio communications networks (3RP) in Morocco.

In 2005, two licenses were awarded for next-generation fixed-line telecommunications: • a fixed-line license including local loop (without restricted mobility) and national and international trans-

mission was awarded to Meditel in July 2005; • a fixed-line license including local loop (with and without restricted mobility) and domestic and interna-

tional transmission was awarded to Maroc Connect (now known as Wana) in September 2005. In 2006, three 3G mobile licenses were awarded to the three existing operators (Maroc Telecom, Meditel and Wana). Lastly, a regional license for the establishment and operation of a 3RP network was allocated in February 2008 to the Cires Telecom company in the Tangier-Tetouan area. In 2008, ANRT launched a tender process for the award of a third second-generation mobile license. The license was awarded in February 2009 to Wana.

Networks and services subject to licensing

The establishment and operation of any independent network, other than corporate networks, requires a license from the ANRT. Independent networks are non-profit telecommunications networks which are re-served for private use (i.e., where use is reserved for the party establishing it) or shared use (i.e., where use is reserved for the exchange of internal communications among a single group of companies).



Services subject to prior declaration

The provision of value-added services is unrestricted, subject to the provision of prior declaration to the ANRT and compliance with applicable regulations. The list of value added services is determined by regu-lations adopted by the ANRT. Decree 2-97-1024, dated February 25, 1998, defines the following as value-added services: electronic messaging, voicemail, audiotext, electronic data interchange, enhanced fax, online information, access to data (including data processing and searches), file transfer, conversion of pro-tocols and encryption and the provision of Internet service, together with the administration of the .ma do-main name.

Providers of value-added services are required to obtain a license to use the connection capacities of one or more public telephony networks, unless the value-added service provider is itself the holder of a license. Act 55-01 provides that such capacity is to be used solely to link customers to a point of presence and be-tween the point of presence and the network of the public telephony operator, when the ANRT grants spe-cial permission to a value-added service provider to use any other technical means.

Unrestricted networks and facilities

The ANRT permits the establishment of corporate networks and radio systems consisting solely of energy-efficient and short range devices without restriction. However, such networks and radio systems are subject to the same requirements as for the approval of devices (regarding the protection of the safety of users and operating staff, compatibility, etc.). The ANRT also determines the technical conditions of use of such net-works and facilities. The use of the network is to be reserved for the company’s own requirements, and the network’s infrastructure must be entirely leased from one or more licensed operators of a public telephony network.

Pricing regulations Telecom operators are free to set their own retail rates, subject to compliance with the principles of full competition and uniformity of national rates. Operators must notify the ANRT of their rates before they be-come applicable. Maroc Telecom as a powerful operator, is subject to reinforced preliminary notification obligations and justification of its rates relative to costs. If operators fail to comply with the competition rules and the abovementioned principle of uniformity, the ANRT may require them to amend their tariffs. As an exception to the principle that operators are free to set their rates, Maroc Telecom’s rates for mari-time radio communication services must be linked to costs and safety messages must be free of charge, (i.e. emergency and distress calls). Interconnection charges and leased line tariffs provided to third party operators are controlled via the publi-cation of an interconnection catalogue approved each year by the ANRT (see “Interconnection” hereafter).

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Interconnection

Background Interconnection is governed by Act 24-96, as amended and supplemented by Act 55-01 and by Decree 2-97-1025, as amended and supplemented by Decree no. 2-05-770 dated July 13, 2005, which defines the technical and pricing conditions that operators of public telephony networks are required to offer for inter-connection to their own networks. Any operator of a public telephony network is required to satisfy reasonable interconnection requests made by the holder of a license to operate a public telephony network, taking into account the applicant’s require-ments and the operator’s ability to satisfy them. The interconnection is subject to a contract between the operators, intended to determine the technical, administrative and financial terms of interconnection, in compliance with the principles of objectivity, full disclosure and non-discrimination. In the event of any dis-agreement between the parties during negotiation of the agreement, the matter is referred to the ANRT.

Dominant operators

Specific interconnection obligations are imposed upon operators designated by ANRT as exercising a sig-nificant influence on a given market. An operator is considered to exercise a significant influence, if, either individually or in conjunction with another, it enjoys a dominant position enabling it to behave independently with respect to its competitors, clients and consumers.

Under Decree no. 2-97-1025, as amended and supplemented by decree no. 2-05-770 dated July 13, 2005, operators exercising a significant influence on a given market are required to publish technical and pricing terms for interconnection, once they have been approved by the ANRT. The pricing terms must cover only the actual costs of use of the network and related costs.

For such purpose, the presentation of pricing terms must be sufficiently detailed to enable the relevant costs to be determined accurately, and the ANRT is in charge of determining the appropriate accounting methods.

Maroc Telecom is thus required to offer pricing terms that comply with the principles of objectivity, full disclosure and non-discrimination, and costs orientation.

As of 2006, interconnection charges are to be calculated using the "Long Run Average Incremental Costs" method in compliance with an ANRT decision dated September 1, 2005, relating to the adoption of the "Long Run Average Incremental Costs" method to set interconnection charges to the fixed-line network.

The list of market segments designated by ANRT for the period 2009-2011 covers the following segments:

fixed-line termination;

• mobile voice termination;

• mobile SMS termination;

• leased lines

For 2009, Maroc Telecom has been designated as an operator exercising a significant influence on the fixed-line termination, mobile voice and SMS termination and lease lines markets. Meditel has been desig-nated as an operator exercising a significant influence on the mobile voice and SMS termination market.

Pursuant to the ANRT decision no. 05/07 of April 24, 2007, ANRT exercises multiyear supervision over in-terconnection charges for the mobile networks of Maroc Telecom and Meditel. The ANRT has set termina-tion charges for Wana’s mobile network which enable it to benefit from termination rate asymmetry.



The following table sets out the operators’ mobile termination rates for 2008 and 2009 (peak time, with a 50% reduction for off-peak hours):

On April 14, 2009, the ANRT approved Maroc Telecom’s technical and interconnection rates for fixed-line and mobile networks for 2009. These offers take account of the fact that Maroc Telecom was designated as exercising a significant influence on the aforementioned markets.

The following table sets out the operators’ domestic interconnection charges to fixed-line networks as appli-cable on January 1, 2009 (peak time, with a 50% reduction for off-peak hours):

In addition, the ANRT exercises multiyear supervision over interconnection charges for Maroc Telecom’s fixed-line network and has set a requirement to achieve a 15% reduction in termination charges between 2007 and 2010. In April 2008, the ANRT approved Maroc Telecom’s technical and pricing proposal for interconnection by capacity to Maroc Telecom’s fixed-line network (including restricted mobility). The following tariffs were in-troduced as from January 1, 2009:

Intra CAA: MAD24,571 (excl. tax) per MIC per month Single transit: MAD68,710 (excl. tax) per MIC per month Double transit: MAD100,656 (excl. tax) per MIC per month

Leased lines Decree 2-97-1027, dated February 25, 1998, relating to the conditions for the provision of an open telecom-munications network sets the pricing and technical conditions for the provision of leased lines as well as quality (i.e., the time frame for provision of service and time for repairing malfunctions once a failure has been reported). The ANRT determines the leased lines that operators of public telecommunications net-works are required to provide. This list may be supplemented, after consultation with the operator con-cerned, by a mandate that further services be provided. Each operator offering leased lines is required to publish the technical terms of provision in its price catalogue, including in particular the “principles and terms for compensation”. The price catalogue is to be determined on the basis of an operator’s costs.

Universal service Universal service obligations cover telecommunications services including: a telephone service of a desig-nated quality at an affordable price; value-added services, the contents and performance standards of which are set in the contract specifications of operators of public telephony networks (including services allowing access to the Internet); the routing of emergency calls, and the provision of an enquiries service and a telephone directory, in printed or electronic form.

In Moroccan dirhams (excl. tax/minute) Maroc Telecom Meditel Wana

Mobile termination (2008) 1.2217 1.2217 1.5027

Mobile termination (2009) 1.1551 1.1551 1.4207

In Moroccan dirhams (excl. tax/minute) Maroc Telecom Meditel Wana

Fixed-line termination Intra CAA : 0,1236 Single tariff :

0.3548 Single transit : 0.3201

Double transit : 0.4220

Limited mobility termination - - 0.9981

Single tariff : 0.4256

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Act no. 55-01 instituted the “pay or play” principle and set the contribution required from public telephony network operators with respect to their universal service obligations at 2% of pretax revenues and net of interconnection charges, handset sales and income from value added services. Operators may therefore perform either the universal service duties themselves, or pay a contribution into a special allocation fund. Only the routing of emergency calls and the provision of an enquiries service and a telephone directory, in printed or electronic form, are services to be performed by the operators on a mandatory basis, the routing of the emergency calls and the telephone directory having to be provided free of charge. The terms of per-formance of the universal service duties for each operator are set forth in special specifications approved by decree.

Commissioning, operation and maintenance of public phone booths must also be provided. Any removal of a phone booth must obtain the prior consent of the ANRT.

For 2008-2011, the ANRT launched a consultation paper for all national operators for a broad-reaching uni-versal service program entitled "Pacte". The program aims to ensure the provision of telephone services and Internet access to all white zones in Morocco. This concerns 9,263 rural areas which are not yet cov-ered by the GSM network. The program proposed by Maroc Telecom covered all of the concerned rural areas. The Universal Service management committee commissioned Maroc Telecom to extend coverage to 7,338 areas, for an overall budget of MAD1.159 billion which will be deducted from its universal service contribution for 2008-2011.

In April 2008, Maroc Telecom formalized an agreement with the ANRT covering the provision of universal services to 1,500 rural areas in the 2008 calendar year. This represents an overall investment of MAD396 million which will be deducted from its universal service contribution for 2008.

Contribution to research, training and standardization in telecommunications Act 55-01 sets the required contribution from operators of public telephony networks in respect of training and standardization at 0.75% of revenues (excl. tax) and net of interconnection charges generated by the telecommunications operations covered by their licenses. This fee is paid to the ANRT. The fee in respect of research is set at 0.25% of the same revenue base. This fee is paid into a special fund allocated to re-search. Operators providing equivalent funding for research programs under agreements with research agencies designated by the regulator are exempt from the fee.

Rights of way Act 55-01 introduces a provision whereby legal entities organized under public law, public contractors and the other operators of public telephony networks must make their property (e.g., easements, major roads, conduits, high points, etc.) available to operators so requesting for the purpose of commissioning and oper-ating transmission systems. Compliance is mandatory unless the transmission systems are likely to inter-fere with public use. It is to be provided on acceptable, objective and nondiscriminatory regulatory, techni-cal and financial terms, securing an environment of fair competition. The purpose of this provision is to al-low operators to make use of the infrastructure currently at the disposal of entities such as the Office Na-tional de l’Electricité, the Office National des Chemins de Fer (railroads), Autoroutes du Maroc (highways) or other operators of public infrastructure networks. The contracts must be forwarded to the ANRT for its information and the latter may resolve any related disputes.

In addition, the operators of alternative infrastructure networks (public or private entities) may lease or as-sign to an operator the excess capacity at their disposal and/or rights of way over the public domain. The leasing agreement must be forwarded to the ANRT for its information, and may not interfere with the rights of way that other operators are entitled to obtain.



Numbering and number portability The ANRT allocates numbers, blocks of numbers and prefixes to the operators of public telephone net-works on terms which must be objective, transparent and non-discriminatory. These numbers, blocks of numbers and prefixes may not be transferred without the express prior consent of the ANRT. The conditions for number portability are set by the ANRT, in accordance with the terms of its decision no. 10/06 of October 4, 2006, relating to the framework and conditions for number portability, and decision 10/07 of July 18, 2007, setting the pricing conditions for portability of Maroc Telecom fixed-line and mobile numbers and the portability of Meditel mobile numbers. Fixed-line and mobile number portability has been in place since May 31, 2007.

Pre-selection Carrier pre-selection (i.e., pre-selection of the operator carrying a call on the domestic and international network, as opposed to the local loop network), must be effective within twelve months of the award of licenses (namely July 8, 2006), according to the terms of the memorandum defining the guidelines for the liberalization of the telecommunications sector for the 2004-2008 period). However, to date, no third party operator has opted to make use of Maroc Telecom’s offer.

Unbundling of the local loop Act 55-01 does not specify the conditions for unbundling of the local loop. Under the timetable for the 2004-2008 period, partial unbundling is expected to be implemented within a period of 18 months, followed by complete unbundling three years from the award of fixed-line licenses (namely January 8, 2007 and July 8, 2008).

On January 4, 2008, the ANRT approved the technical aspects and pricing of the total and shared access to Maroc Telecom’s local loop, with the following monthly rental fees: -partial unbundling: MAD35 excluding tax -total unbundling: MAD100 excluding tax

Maroc Telecom’s partial unbundling became effective on January 1, 2007, but to date no third party opera-tor has opted to make use of it.

Accounting separation In accordance with Decree no. 2-97-1026 as amended and supplemented by Decree no. 2-05-771 dated July 13, 2005, and with Decree no. 2-97-1025 as amended and supplemented by Decree no. 2-05-770 dated July 13, 2005, operators are required to keep cost accounting records that enable clear iden-tification of the costs, income and earnings connected with each network they operate or service they offer. The annual costs accounts are to be submitted for audit to a body designated by the ANRT.

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The Moroccan telecommunications regulatory authority (ANRT) The ANRT was established by Act 24-96 as a public agency under the authority and supervision of the Prime Minister. It is a separate legal entity that is financially independent and subject to the State’s financial supervision and direction.

Management bodies of the ANRT Decrees 2-97-813 and 2-98-158, dated February 25, 1998, set out the composition of the ANRT’s Board of Directors and its powers. The management bodies of the ANRT comprise the board of directors, the man-agement committee and the director general. The Board of Directors comprises a chairman and seven state representatives of ministerial rank and five individuals appointed by decree for a term of five years. It is chaired by the Prime Minister and sets the ANRT’s general policies and its annual agenda. An man-agement committee assists the Board of Directors and has responsibility, inter alia, for resolving intercon-nection disputes. The director general of the ANRT has executive responsibility for the regulatory author-ity. Challenges on the basis of misuse of power of the ANRT’s rulings are referred to the Rabat Administra-tive Court.

Role and responsibilities of ANRT The purpose of the ANRT is to define the regulatory environment for the telecommunications sector, to monitor and ensure compliance with the competition law applying to telecommunications operators, and to resolve disputes.

The ANRT drafts proposals for the development of legal, economic and safety rules governing telecommu-nications activities. It prepares legislative bills, draft decrees and draft ministerial orders.

The ANRT prepares and updates the contract specifications for operators of public telephony networks.

The ANRT processes applications for licenses and establishes maximum charges for services relating to universal service needs.

The ANRT sets the technical and administrative specifications for the approval of terminal equipment and radio facilities, and the technical rules applicable to telecommunications networks and services generally.

The ANRT manages and monitors the spectrum of radio frequencies, and allocates these frequencies.

Pursuant to its responsibility to monitor compliance with applicable legislation, the ANRT has extensive in-vestigative rights as well as disciplinary powers. If operators fail to furnish required information or do not provide such information within the required timeframe, Act 55-01 authorizes the ANRT’s Director to impose fines (the scale of penalties ranges from MAD20,000 to MAD100,000, as appropriate).

Any operator failing to comply with the applicable regulation may be subject to sanction. As a first step, the ANRT’s Director issues a written warning. Thereafter, the operator is subject to a fine which may not ex-ceed 1% of its revenues (excl. tax) net of interconnection charges, as reported for the previous year. In such cases, the ANRT’s Director refers the matter to the Crown Prosecutor of the Rabat Court of First In-stance to initiate criminal proceedings, and may bring an independent action for damages. The above fine is doubled if the operator is a repeat offender. Finally, the ANRT may suspend all or part of the operator’s license for a term not exceeding 30 days. Alternatively, it may temporarily suspend the license or reduce its duration by up to one year, or revoke the license. The license is suspended by the appropriate govern-ment body at the recommendation of the ANRT’s Director, and the license is rescinded by decree at the recommendation of the ANRT’s Director.



The ANRT’s remit includes the resolution of disputes among operators and problems connected with the general operating conditions of telecommunications licenses. The management committee is authorized to resolve interconnection disputes and other matters for which it has been authorized by the Board of Direc-tors. It should be noted that Act 55-01 has extended the scope of the ANRT’s powers to cover compliance with the provisions relating to competition contained in Act 6-99 on freedom of pricing and competition.

The ANRT prepares the invitation to tender for the award of licenses, processes license applications and receives prior notifications for activities subject to the reporting system. It issues permits and prepares the related licenses and regulatory obligations. It also monitors the operators’ compliance with the terms of their licenses.

Dispute resolution Decree no. 2-05-772 dated July 13, 2005 sets out the procedures before the ANRT as regards litiga-tion, anti-competitive practices and economic concentration operations, including the ANRT’s additional powers as regards enforcing the compliance of applicable regulations on freedom of pricing and competi-tion.

In 2008, Maroc Telecom filed two petitions to the ANRT the dispute with Wana relating to technical offering and pricing conditions for access to Wana’s network infrastructure in the Casanearshore business park in Casablanca and relating to the transport of international traffic to Maroc Telecom subscribers via the na-tional interconnection between Maroc Telecom and Wana. Both disputes were settled by the parties by bi-partite agreements Furthermore, Wana has requested mediation to resolve its dispute with Maroc Telecom and Meditel which concerns interconnection charges to Wana’s 3G mobile network. This application gave rise to decision no. 10/08 of the ANRT dated April 23, 2008, wherein the regulator set the call termination charges for Wana’s 3G network at MAD1.5027 per minute (peak hours) for 2008 and at MAD1.4207 per minute for 2009. As from 2010, these rates are subject to review by the ANRT in light, notably, of the degree of competition in the mobile market.

Dependency As a service provider, Maroc Telecom has no direct involvement in industrial processes. The components of its network infrastructure, and the handsets and SIM cards that it sells to its clients, are purchased from various suppliers so as not to create any form of dependency.

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4.8.2 Regulatory environment of subsidiaries

Mauritel

Overview Act 99.019 dated July 11, 1999 relating to telecommunications in the Islamic Republic of Mauritania defines the regulatory environment for telecommunications services in Mauritania. The Act stipulates that the regulatory authority is responsible for regulating, controlling and supervising the activities of telecommunications operators. This independent authority has full financial and management autonomy, and is governed by the bylaws set out in the telecommunications Act and placed under the su-pervision of the Minister in responsible for telecommunications Decree 2000-163, which defines the conditions governing network interconnection and the provision of telecommunications services, constitutes the main legislative text governing the telecommunications sector.

Main regulatory obligations applying to Mauritel In 2005, Mauritel satisfied its contractual obligations as regards fixed-line and 2G mobile coverage. For 3G services, Mauritel is committed to covering 19 localities in four phases over a four-year period from the date the service is launched on the market. Each telecom operator is required to pay a universal service contribution equivalent to 3% of revenues net of interconnection charges, and a regulatory levy equivalent to 2% of revenues net of interconnection charges. The above rates are identical for all operators. Finally, Mauritel is required to pay an annual fee for the numbering plan and the use of the radio frequen-cies.

Competitors Since the reform of the sector was launched in 2000 and until July 2006, only the mobile sector was liberal-ized with two operators present on the market; Mauritel Mobiles and Mattel. The incumbent operator Mauritel SA, retained the monopoly on the fixed-line services (telephony, Internet and international traffic).

In July 2006, with the completion of the liberalization process and the award of new fixed-line and 2G and 3G mobile licenses, a new operator is now active in the fixed-line and mobile segments.



Onatel

Overview The regulatory environment for telecommunications services in Burkina Faso is governed by the telecom-munications Reform Act no. 051/98/AN dated December 4, 1998.

The regulatory authority is a public sector administration placed under the supervision of the Ministry of Post and Telecommunications. It is responsible for enforcing telecommunication regulations, ensuring that operators comply with regulatory obligations, managing and controlling radio frequencies, establishing and managing the national numbering plan, and managing conciliation and arbitration proceedings between operators and between the latter and consumers.

The principal laws regulating the telecommunications sector are as follows: • Decree 2000-083/PRES/PM/MC/MCIA dated March 3, 2000 concerning the establishment and supervi-

sion of pricing for telecommunications services; • Decree 2000-087/PRES/PM/MC/MCIA dated March 13, 2000 governing the conditions for network

interconnection and the provision of telecommunications services

Main regulatory obligations applying to Onatel and Telmob Pursuant to its contracts specifications, Onatel is under an obligation to cover 143 localities before 2010, 60 of which must be covered by June 2009.

Telmob’s contract specifications also set out its obligations in terms of coverage of localities and certain major roads throughout the country. Telmob’s contract specifications, like those of other GSM mobile op-erators, allow coverage to be completed in five (5) phases. Decree 2000-408/PRES/PM/MC dated September 13, 2000 fixes operators’ universal service contributions at 2% of collected revenues.

Decree 2000-409/PRES/PM/MC fixes the regulatory fee to be paid by operators to the Regulation Authority at 1% of collected revenues.

Finally, Onatel and Telmob are required to pay an annual fee for the numbering plan and the use of the radio frequencies.

Competitors Onatel SA remains the sole fixed-line operator in Burkina Faso in spite of the fact that it lost its monopoly in the core services segment (domestic fixed-line services, telex and telegraph) as of December 31, 2005.

In 2000, two GSM mobile licenses were awarded to Zain (formerly Celtel) and Telecel for a period of ten years.

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Gabon Telecom

Overview The regulatory environment for telecommunications services in Gabon is governed by Act no. 005/2001 dated June 27, 2001.

The Gabonese regulatory authority is responsible for regulating, controlling and monitoring the telecommu-nications sector. The authority is placed under the supervision of the Ministry of Post and Telecommunica-tions and the Ministry of Economy, Finance, Budget and Privatization.

The principal laws regulating the telecommunications sector: • Decree 0540/PR/MPT on interconnection and infrastructure sharing; • Decree 0008/PR/MPT on the implementation and management of the numbering plan; • Decree 1081/PR/MPT on the approval of the public service concession agreement; • Decree 084/PR/MCPTNTI relating to fees, duties and contributions due by telecommunications opera-

tors holding a public service concession contract or a license; • Decree 0544/PR/MPT relating to the creation, financing and management of the universal service fund.

Main regulatory obligations applying to Gabon Telecom and Libertis: Pursuant to its contract specifications, Gabon Telecom is under an obligation to provide coverage for 54 rural areas before the end of 2011 at a minimal rate of 10 areas per year. In consideration for this, Gabon Telecom benefits from a five-year exclusivity period in the Fixed-line segment. Libertis’ contract specifications also set out its obligations in terms of coverage of rural areas and certain major roads throughout the country. Libertis’ contract specifications do not set out a specific timetable for coverage. This is also the case for all other GSM mobile operators. Decree 00544/PR/MPT dated July 15, 2005 relating to the financing and management of the universal ser-vice fund, fixes the contribution due by operators at 2% of net revenues. Gabon Telecom is exempt from payment during the five-year exclusivity period. Decree 0084/PR/MCPTNTI dated October 26, 2006 relating to fees, license payments and contributions due by telecommunications operators holding a concession contract or license, sets their contribution for research, training and telecommunications standardization at 2% of net revenues. Gabon Telecom and Libertis are required to pay an annual fee for the numbering plan and the use of the radio frequencies. In 2008, the Gabonese telecommunications regulatory authority introduced a new levy on mobile phone operators which is designed to help fund the obligatory health insurance scheme. This levy is equal to 10% of net revenues.

Competitors Gabon Telecom is the sole fixed-line operator in Gabon. As from February 9, 2007, it was awarded a five-year exclusivity period in the Fixed-line segment.

In the mobile services sector, the company’s competitors are Zain Gabon and Moov. In addition, in May 2007, the government renewed three mobile licenses for the three operators for 10 years.



4.9.1 Developing competencies within the enterprise Maroc Telecom repeated its competency assessment process in 2008 as part of its efforts to further the personal and professional development of its employees. The focus for the 2008 competency assessment program was on customer-facing staff. Assessment inter-views were held for 3,860 employees working in a variety of 44 job functions and resulted in the implemen-tation of 2,795 individual action plans for employees. The human resources department undertook significant efforts on a nationwide basis to follow-up the imple-mentation of individual action plans. The program gave rise to a 98% score for non-training related develop-ment actions and 68% for training related development actions. Finally, audits were carried out to assess the effectiveness of training initiatives at close-out. This enabled the HR department to measure results in the field and to identify best practices and proliferate them.

4.9.2 Composition of the workforce 36% of Maroc Telecom’s workforce is aged below 40 and 37% of the workforce has seniority of between 15 and 20 years.

To sustain its development, Maroc Telecom pursues an active recruitment policy which aims to hire the best graduates from leading universities. By attracting the most talented recruits, Maroc Telecom aims to make recruitment a key lever for value creation within the enterprise.

4.9.3 Staff turnover rate The rate of staff turnover (i.e., the ratio of staff having left at year-end to the staff at the beginning of the fiscal year) was 2.3% in 2008 compared with 5.2% in 2007 and 1.4% in 2006. The increase of this rate in 2007 was due to the implementation of a voluntary redundancy plan.

4.9.4 Changes in the workforce The following table shows the changes in Maroc Telecom Group’s workforce over the fiscal years ended December 31, 2006, 2007 and 2008:

* See Note 19 of consolidated financial statements relating to average workforce of the Maroc Telecom Group. At end-2006, Maroc Telecom launched a fourth incentive-based voluntary redundancy plan with improved conditions compared with previous plans.

2006 2007 2008

Maroc Telecom 11,212 10,949 11,093

Mauritel 499 502 440

Gabon Telecom 1,265 1,220 452

Onatel - 1,301 1,335

4.9 HUMAN RESOURCES

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4.9.5 Staff on secondment from Vivendi The staff numbers mentioned in the table above also include Vivendi employees on secondment with Ma-roc Telecom either under a service contract or fixed-term contract. The number of expatriate staff was 17 in 2006 , 19 in 2007 and 16 in 2008. Over half of these employees are on secondment from Vivendi.

4.9.6 Training Training is considered an essential investment in Maroc Telecom’s future performance and growth. Training forms part of an overarching strategy to develop and adapt the Company’s human resources to its require-ments. In 2008, this was reflected by the 37,000 days of training provided to 15,000 participants, represent-ing an average of nearly 3.3 days per employee.

4.9.7 Change in staff compensation Gross compensation granted to Maroc Telecom employees comprises both fixed and variable components. The amount of the variable component (performance bonus) is determined on a case-by-case basis ac-cording to each employee’s achievement of targets.

The change in payroll costs over the past three fiscal years is as follows:

4.9.8 Employee share ownership At the time of its IPO, Maroc Telecom gave employees the opportunity to acquire shares in the Company under preferential conditions (e.g. a 15% discount on the subscription price on condition that they conserve the shares thus acquired over a three-year holding period ending on December 16, 2007). At December 31, 2008, employees held 0.15% of the equity capital and voting rights. In 2008, employees of Maroc Telecom and Casanet were invited to take part in the Opus 08 employee share ownership plan implemented for the staff of Vivendi and its subsidiaries. A total of 1,890 employees subscribed to the plan including 28 employees of Casanet SA.

in millions of Moroccan dirhams 2006 2007

Payroll costs for Maroc Telecom 1,958 2,134

Payroll costs - Maroc Telecom group 2,060 2,695

2008

2,145

2,705

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.9. Human resources


4.9.9 Labor relations

Employer-employee relations The telecommunications sector is characterized by ongoing two-way exchanges between employers and labor unions. This dialogue is facilitated by the existence of representative labor unions and employee rep-resentatives. In order to comply with the new provisions of the Moroccan Employment Code, since 2006 Maroc Telecom has held elections for employees’ representatives within the works council and regional health and safety committees. Elections were also held to set up the employee welfare association.

Labor unions The most representative labor unions are:

• Syndicat National des Postes et Télécommunications (SNPT), affiliated with the Confédération Dé-mocratique de Travail (CDT); and

• Union Syndicale des Telecom (UST), affiliated to the Union Marocaine de Travail (UMT).

Union representation The last elections, organized in September 2003, in accordance with applicable labor laws, elected em-ployee representatives. The elected candidates were divided as follows:

• SNPT (CDT): 48.8% • UST (UMT): 38.1% Other labor union organizations:

In the 2003 elections for the appointment of employee representatives, the workforce participation rate was 47%. The results obtained indicate the predominance of the SNPT (affiliate to CDT), followed by the UST (affiliated to UMT).

The labor constituencies within Maroc Telecom consist of eight representative entities and three electoral colleges.

4.9.10 Labor agreements and negotiations Maroc Telecom’s labor relations policy seeks to balance interests while achieving industrial harmony. This approach is also characterized by a emphasis on continuous improvement of the utility and benefits of labor relations.

As such, employer-employee dialogue is a continuous process. In 2008, the longstanding partnership es-tablished with the most representative labor unions representing Maroc Telecom employees gave rise to the signature of an agreement on employee compensation.

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4.9.11 Employee benefits Maroc Telecom has placed human resources at the heart of its strategy. In keeping with this commitment, it has traditionally offered a wide range of employee benefits. Efforts pursued in this area consist in acting to promote the welfare of employees and their families and working closely on their individual needs.

The Company’s policy extends across the following areas:

Supplementary pension scheme: In accordance with applicable legislation, employees can join one of three mandatory pension funds oper-ated by the Caisse Marocaine des Retraites (CMR), Régime Collectif d’Allocation de Retraite (RCAR) and the Caisse Nationale de Sécurité Sociale (CNSS). In addition, Maroc Telecom provides a supplementary pension scheme in association with Caisse Interprofessionnelle Marocaine des Retraites (CIMR). The pur-pose is to enable participants to benefit from additional pension arrangements on top of the mandatory pen-sion scheme. Approximately 71%, or 7,872 employees, of Maroc Telecom’s workforce have joined the complementary pension scheme.

Supplementary health insurance: Under the mandatory health insurance scheme, all Maroc Telecom employees, irrespective of their employ-ment grade, are affiliated to the Moroccan social security body, Caisse Nationale des Organismes de Prévoyance Sociale, and are therefore eligible to benefit from the supplementary health insurance scheme introduced in 2003. If employees wish, they may take out a policy which reimburses medical costs not cov-ered by the social security body.

Currently, around 76%, or 9,050 employees, of Maroc Telecom’s workforce have complementary health insurance coverage

Life insurance: Maroc Telecom employees are covered by life insurance and permanent total disability insurance up to the age of seventy. This scheme comprises two components: i) a basic insurance premium which is subsidized by Maroc Telecom for all employees. This policy provides a fixed indemnity benefit of MAD100,000; ii) an optional premium which is paid by employees and offers variable indemnity cover of between MAD10,000 and MAD900,000 which is payable to dependents or other persons designated by employees. The annual contribution paid by employees amounts to 0.18% of the insured capital.

Home loans: Maroc Telecom helps to negotiate subsidized lending terms with credit institutions for employees seeking to acquire, build or substantially improve their homes. This enables employees to benefit from a 5% interest rate which is subsidized up a level of 2.5%. In 2006, Maroc Telecom increased the maximum amount of loans available under this scheme to MAD700,000 and set the amount of the concessional rate of interest at 2.5%. Transport allowance: Maroc Telecom provides a subsidy for employees who acquire their own means of transport. This subsidy amounts to MAD5,000 for the purchase of a car and MAD2,000 for the purchase of a motorcycle.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.9. Human resources


Summer vacation centers: Maroc Telecom helps to provide holiday accommodation for employees during the school holidays and an-nual leave periods. Maroc Telecom owns a number of residential vacation centers and has entered into agreements with private hotel operators.

In 2008, the Company’s subsidized summer holiday scheme was extended to approximately 1,000 employ-ees and their families. The cost of this scheme is estimated at more than MAD4 million.

In addition, non-subsidized residential holiday centers operated by Maroc Telecom accommodated 1,688 employees and their families during the year.

Medical and social services: Maroc Telecom operates a number of medical and social services centers which are staffed by 18 con-tracted physicians, including three specialists.

Occupational health: In complement to its medical and social services centers, Maroc Telecom has devised a preventive health care strategy which aims to achieve improvements in working conditions and to ensure compliance with the Moroccan Employment Code. The occupational health structure is staffed by five occupational health physi-cians and is supervised by a consultant physician.

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For the purposes of operating its networks and for its retail, support and administrative functions, Maroc Telecom has more than 5,300 sites (buildings, land, etc.) throughout Morocco. Of this total, around 80% are leased sites and 20% are owned by Maroc Telecom. The sites owned by Maroc Telecom were historically owned by the Kingdom of Morocco and were legally transferred to Maroc Telecom at the time of its incorporation in 1998, in compliance with Act 24-96 via a contribution in kind. Maroc Telecom is currently in the process of obtaining formal legal title to these sites. Administrative pro-ceedings are expected to be completed in 2009. This timetable is given as an indication, since the length of administrative procedures may vary. As at December 31, 2008, the sites owned by Maroc Telecom broke down as follows:

• 54% of the sites are legally owned by Maroc Telecom, which has legal title to them (versus 48% in 2007);

• 34% of sites are under requisition (versus 36% in 2007). Requisition is a claim to a property right. It is delivered by the land registrar once the application for land registration has been made. It becomes a title deed once regulatory administrative formalities have been completed: e.g. publication of applica-tion for land registration, boundary marking, notification of requisition and, finally, registration. This pro-cedure is subject to regulatory time limits;

• 12% of sites are in the process of being formally registered (versus 16% in 2007), around three of which are owned by the ONPT and 87 are subject to legal disputes. These sites include buildings that belong to several presumed owners and where ownership is disputed, certain land parcels for which there is lack of evidence of ownership, land owned by local authorities and subject to several opposi-tions, and land subject to compulsory purchase by Maroc Telecom.

The estimated costs linked to these procedures (payment of land registration fees) and/or the potential fi-nancial risks likely to arise from any dispute over the legal title of ownership are deemed to be insignifi-cant.

In connection with any transfer of ownership to the Company of real or personal property assigned for charitable works falling within the private domain of the State which is required to be made in the form of a remunerated contribution through an increase in the share capital in favor of the government of the King-dom of Morocco, the latter has undertaken to transfer to Vivendi, simultaneously with the increase in capi-tal and at no cost, a percentage of the shares issued at the time of this increase in capital equal to the per-centage of the capital of the Company held by Vivendi prior to the realization of these assets.

4.10 REAL PROPERTY

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.10. Real property


As at December 31,2008, Maroc Telecom owned some 782 trademarks and trade names, four patents, one industrial model and one industrial design registered with the Moroccan Office for Industrial and Com-mercial Property (OMPIC). “Itissalat Al-Maghrib”, “Maroc Telecom”, “Jawal”, “El Manzil”, “Kalimat”, “Menara”, “Fidelio”, “Les pages jau-nes de Maroc Telecom”, “Maghribcom” and “Mouzdaouij” “Solution entreprises” and “Phony” are among the main trademarks and brand names owned by the group in Morocco. The first patent, registered in 1997, is related to the complete execution, with a prototype, of an NT1 device. This device is used to connect customers to Maroc Telecom’s Marnis integrated services digital net-work, and is the method used to carry a digital connection to each customer. The second patent, registered in 1999, regards complete execution, with a prototype, of a remote display device through a radio paging network named Rakkas. This wireless device allows the display of banking, stock exchange or other information at any location covered by the Rakkas radio messaging network. The third patent, registered in 2006, covers an automatic cooling system which provides a backup system in the event of a failure in the air conditioning system in the areas which house the energy and telecommu-nications equipment. The fourth patent, registered in 2006, covers an automatic line identification system which automatically detects all the pair cables connected to telecommunications access network equipment. The design model registered in 2002 mentions the implementation of a new design for phone booths to be installed in public locations. This design model was developed for the Moroccan market and takes account of, among other factors, mechanical, electrical, electromagnetic (electric sparking, radiation, storms) and sound constraints in order to provide the user with comfortable and entirely safe use of the public phone booth. This type of phone booth has now been extensively deployed by Maroc Telecom. The industrial design registered in 2006 covers the drawing of the person on the cover of the “Guidelines for the Security of Information” manual. The trademarks and brand names currently owned by Maroc Telecom, of which there are 782, are pro-tected over the entire national territory. For the 284 trademarks registered prior to January 5, 2005, the pro-tection period is 20 years renewable indefinitely from the date of their registration, in accordance with Act no. 17-97 which came into force on that date, concerning the protection of industrial and intellectual property rights. For the 498 registered subsequently, the protection period is 10 years. In 2006 and 2007, Maroc Telecom was awarded the national trophy by the OMPIC, for having registered the greatest number of national trademarks in 2005.

• 241 brands in 2005 • 113 brands in 2006

Since 2006, in order to preserve its industrial and intellectual property rights, Maroc Telecom has extended the protection of 40 of its trademarks (France, Benelux, Germany, Spain, Portugal, Italy, Algeria, European Community), including the Mobisud brand. In addition, Maroc Telecom is attentive to ensure that appropriate action, whether necessary or desirable, is taken to protect the trademarks, the patents and the design model that it has developed.

Maroc Telecom has a research and development department which works on the Company’s products. This research usually leads to the launch of new products and/or services or transformations or improve-ments of existing products, even though such work may not be considered as patentable inventions or processes. These improvements made to protected inventions may be registered for protection by means of an instrument known as an additional patent, the formalities for the registration of which are identical to those for the principal patent.

4.11 INTELLECTUAL PROPERTY

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Maroc Telecom has launched among its employees an innovation contest intended to reward the best ideas or projects, with possible benefits for the Company in terms of registration of patents, trademarks or designs.

The rights to use the trademarks and trade names granted to Maroc Telecom are described in the service agreements made with its contractors. Some contracts for the sale of services or products marketed by Ma-roc Telecom’s services division give resellers a right to use Maroc Telecom’s trademarks during the term of performance of the agreement, in accordance with the procedure agreed between the parties.

As regards its intellectual property rights: • On November 25, 2004, Maroc Telecom purchased the “Maroc Telecom” brand and domain names

which had been filed in France by a third party; • On May 28, 2007, Maroc Telecom entered into an agreement with Mobisud, to enable the coexistence

of the Mobisud France brand and Maroc Telecom’s Mobisud brand and a contract transferring the do-main names relating to the Mobisud brand to Maroc Telecom;

On November 8, 2007, Maroc Telecom transferred its "Yellow Pages" operations to the Casanet subsidiary.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.11. Intellectual property


Over the past six years, Maroc Telecom has aimed to improve its risk management by:

• estimating and assessing potential risks; • identifying those risks likely to adversely affect the Company’s employees, property or its performance; • determining a more suitable property risk coverage plan which has been assessed and updated by

insurance experts; • optimizing the cost of insurance coverage for such risks; • covering the residual risks through insurance policies; • putting in place claims notification and claims management procedures; • Implementing prevention and protection measures against risks of fire and explosion for the largest

sites; • establishing an information security policy; • establishing a backup center to ensure the continuity of the operations.

In 2008, Maroc Telecom examined ways to optimize its general liability coverage in particular by increasing the level of cover, and extending the coverage scope. This resulted in the subscription of a new insurance policy as from January 2009. In June 2003, it also took out an insurance policy covering compensation for occupational accidents and diseases. On July 1, 2004, Maroc Telecom took out an insurance policy to cover property damage and business inter-ruption. In addition to extending cover to business interruption, the policy’s contractual insurance limits have been successively increased in order to extend the scope of coverage and to avoid any material loss that could jeopardize continued operation. As from January 2006, Maroc Telecom’s insurance policies currently cover up to MAD850 million per loss for combined and cumulative property damage and business interruption. For 2008, in line with its policy to increase insurance cover, Maroc Telecom intends to increase its insur-ance limit to MAD1,100 million for combined losses and business interruption and MAD550 million for natu-ral disasters. Deductibles have also been increased to optimize costs.

4.12 INSURANCE

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Maroc Telecom’s insurance costs amounted to MAD17,492,249.85 in 2008. Maroc Telecom’s main insur-ance policies to date are as follows:

• Property damage and business interruption; • Operating general liability and product liability; • Directors and Officers liability; • Occupational accident and occupational illness insurance; • Complementary health insurance; • Life and invalidity insurance for Maroc Telecom employees; • Contractor’s all-risks insurance for the construction of a new headquarters building

In addition to these insurance policies, since 2005 Maroc Telecom has initiated a program to enhance the safety of its sites against fire, explosions and theft. This is carried out in close collaboration with the Group’s insurance partners. As regards the data security and business continuity, Maroc Telecom currently has a backup center in-stalled in Ain Aouda. Maroc Telecom’s subsidiaries also benefit from its insurance experience and risk management expertise.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.12. Insurance


To the best of the Company’s knowledge, there are no pending or potential government, legal or arbitration proceedings, including proceedings of which the Company has aware that may have or have had in the past 12 months, a significant effect on the Company and on the group’s financial position, profits, business and property, with the exception of the following litigation:

Telestore litigation In a ruling dated December 28, 2004, the Commercial Court of Rabat declared that the application of the Na-tional Federation of Phone Shop Associations was not within its jurisdiction. The Federation then brought a writ before the Commercial Court of Rabat, demanding the withdrawal of all authorizations delivered by Maroc Telecom to new phone shop operators that do not respect the chaining rule imposing a minimum distance of 200 meters between each phone shop. The Court of First Instance, in a ruling dated April 6, 2005, (non-enforceable) ordered Maroc Telecom to re-verse its decision to abandon the 200 meter chaining principle and to withdraw the authorizations that had been granted that did not respect the chaining rule. This judgment was accompanied by a penalty of MAD500/day for non-execution. On June 27, 2005, Maroc Telecom appealed against this judgment before the Commercial Court of Appeal of Casablanca. In its ruling on May 9, 2006, the Court of Appeal partly accepted Maroc Telecom’s applications, rescinding the first instance judgment as regards the order to withdraw the authorizations but upheld the judgment as regards the requirement for Maroc Telecom to reverse its decision to abandon the 200 meter chaining principle and ordered the company not to grant any new authorizations that did not comply with the chaining rule subject to a penalty of MAD500 /day for non-execution. The Company considers that the claims made by the Federation are not legally founded, and appealed to the Supreme Court on July 21, 2006, seeking the annulment of the Court of Appeal’s judgment. As the Federation had also appealed to the Supreme Court, Maroc Telecom applied for the two proceedings to be joined. This application was considered by the Court at a hearing on 14 February, 2007 which referred the case to the chief court clerk for further inquiry. On March 26, 2008, the Supreme Court overturned the decision of the Court of Appeal on grounds that the Federation was not entitled to seek legal action and referred the case to the Court of Appeal for a ruling on this matter. This procedure is currently ongoing. Since 2005, Maroc Telecom has received 105 individual applications before the various commercial courts (Rabat, Fes, Oujda, etc.) from phone shops who each claim between MAD5,000 to MAD50,000 (one applicant is claiming MAD100,000) in interim damages and a legal appraisal to determine the final amount of damages. These applications are based on the judgment and decision of the Court of Appeal’s decision. Following the decision handed down by the Supreme Court, the applications are henceforth based upon an al-leged breach by Maroc Telecom of its agreement with the Federation: 51 claims are currently ongoing, 48 of these claims were dismissed and in one case the applicant withdrew the claim, and four claims were dismissed as it they were considered to be groundless. Of the latter four claims, two claims are under appeal and one is before the Court of Appeal. The Company challenges the notion that the chaining rule is contrary to competition rules insofar as other op-erators are not subject to this rule. The Company does not intend to revoke its decision to put an end to chaining, as it considers that the claims made by the Federation are not legally founded.

Total Call / Free litigation This relates to a compensation claim arising from an interruption to an OSS international leased line. Total Call claims that its leased line was disrupted over a period of eight days thereby resulting in material losses to itself and to its client Free for which it seeks compensation. The aggregate claim made by both companies amounts to approximately MAD58 million. At June 30, 2008, Maroc Telecom had set aside a provision of MAD4 million to cover this claim. This latter amount corresponds to the amount of the claim made by Total Call. No provision has been made in respect of the amount claimed by Free (MAD54 million) insofar as Ma-roc Telecom had no contractual relationship with the latter company. The case is pending before the Com-mercial Court of Casablanca.

4.13 LEGAL AND ARBITRATION PROCEEDINGS

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Wana referral relating to call termination charges for its mobile network On December 21, 2007, Wana made a referral to the ANRT relating to the interconnection charges to its mo-bile network. Negotiations regarding the interconnection contract are currently underway between the Wana mobile network and the Maroc Telecom fixed-line and mobile networks but the parties have not come to an agreement on the interconnection charges to the Wana mobile network. Wana claims a tariff of MAD1.65 (excl. tax) over a three-year period, whereas Maroc Telecom requests that the same tariff be applied to Wana’s mo-bile network as to its own network, which means Wana would be subject to the mobile price cap determined by the ANRT in its decision 05/07 dated April 24, 2007 (see "Interconnection"). Wana has made another referral to the ANRT on this point as regards Meditel and the claims of the latter are identical to those of Maroc Telecom. This application gave rise to decision no. 10/08 of the ANRT dated April 23, 2008, wherein the regulator set the call termination charges for Wana’s 3G network at MAD1.5027 per minute (peak hours) for 2008 and at MAD1.4207 per minute for 2009. As from 2010, these rates are subject to review by the ANRT in light, notably, of the degree of competition in the mobile market.

Petition by Maroc Telecom concerning the technical offering and pricing conditions for access to Wana’s network infrastructure in the Casanearshore business park Maroc Telecom filed an initial petition against Wana before the ANRT, which was subsequently dismissed. The petition cited the absence of a wholesale market enabling Maroc Telecom to market its services, on an equal footing with Wana, to companies located in the Casanearshore business park in Casablanca. Maroc Telecom’s second petition relating to Wana was upheld by the ANRT. The petition cited the absence of a wholesale market enabling Maroc Telecom to replicate the commercial offering marketed by Wana in economi-cally viable conditions. The petition led to a settlement which enabled Maroc Telecom to obtain a more attractive wholesale offer with identical granularity to that offered in the 4km LAN to LAN retail proposal made by Wana for the Casanearshore business park. Under the settlement signed on November 11, 2008, Wana is required to offer wholesale voice service to Maroc Telecom. Insofar as Wana did not uphold the settlement undertaking, Maroc Telecom has requested the ANRT to enforce the terms of the aforementioned settlement dated November 11, 2008. ANRT has ordered the two parties to do all necessary to ensure that Maroc Telecom customers can benefit from service as soon as is possible. A ruling by the ANRT setting tariffs for voice access is awaited.

Petition by Maroc Telecom concerning the transport of international traffic to Maroc Telecom subscribers via domestic interconnection arrangements between Maroc Tele-com and Wana On March 12, 2008, Maroc Telecom filed a petition with the ANRT concerning the transport of international traffic to Maroc Telecom subscribers via domestic interconnection arrangements between Maroc Telecom and Wana. In its report dated August 25, 2008, the expert witness appointed by ANRT recognized the existence of the fraudulent acts as alleged by Maroc Telecom and further indicated that the nature of the fraud was such that the perpetrators had to be in collusion with members of Wana’s staff and that the fraudulent acts were ongoing. Ma-roc Telecom requested a supplementary investigation and audit of Wana’s network in order to uncover the cause of the problem and assess the volume of traffic that has been diverted. On September 19, 2008, Maroc Telecom and Wana signed a settlement which set out to put an immediate halt to the diversion of international telephone traffic. The parties agreed to accept the appointment of an expert witness by the ANRT, which acceded to their request. The expert was mandated to conduct a comprehensive technical audit in the final quarter of 2008. The purpose of this audit was to determine whether the fraudulent acts concerned by the petition had effectively ceased and to detect if there was any further fraudulent activity occurring across Wana’s network. The purpose of the audit is to provide a guarantee as to the adequacy of Wana’s network security in relation to interconnection rules and international standards in the telecoms industry. The results of the audit are pending and its findings will be transmitted to Maroc Telecom in the course of 2009.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.13. Legal and arbitration proceedings


4.14 RISK FACTORS In addition to the other information set forth herein, investors should give careful consideration to the risks described below before deciding to invest in the Company’s shares. If any or all of these risks were to materialize, the activities, financial position, earnings and development of the Company could be adversely impacted.

4.14.1 Risks relating to the company’s operations

Maroc Telecom’s revenues and earnings are dependent to a significant extent on the Moroccan economy.

Maroc Telecom’s core business is the provision of telecommunications services in Morocco, including the provision of international telecommunications services to and from Morocco. Accordingly, Maroc Telecom’s revenues and profitability depend to a significant extent on telecommunications spending by Moroccan cus-tomers and international telephone traffic to and from Morocco. The evolution of usage of telecommunica-tions services in Morocco reflects, in part, the evolution of the country’s economic position, and more spe-cifically, the population’s disposable income and its businesses’ economic activity. A contraction or slower-than-anticipated growth of the Moroccan economy could have a negative impact on the development of the customer base and the usage rate of fixed-line and mobile telecommunications services in Morocco, which could have a material effect on the growth and profitability of Maroc Telecom’s activities, and possibly entail a decline in its revenues and earnings. In this context, the perception of possible acts of terrorism, whether committed in Morocco or abroad, could have a significant adverse effect on the Moroccan economy in general (in particular through a decrease in tourism business). As regards this risk, which is not specific to Morocco, Maroc Telecom cannot forecast the consequences of the perception, informed or otherwise, of such possible acts of terrorism.

Maroc Telecom faces an intensification of competition on the Moroccan telecommunications mar-ket, which could lead to a loss of market share and a reduction in its revenues.

Three licensed operators are currently present on the Moroccan market for mobile and fixed-line telecom-munications: Maroc Telecom, Meditel and Wana (formerly Maroc Connect). In 2008, Maroc Telecom’s market share in the mobile services segment declined to 63.4% at year end (Source: ANRT). Over the same period, the Company reduced its tariffs and introduced promotional offers (including customer subsidies) to anticipate and respond to competition. In 2006, the ANRT awarded third generation mobile licenses to the three existing operators (Maroc Telecom, Meditel and Wana). This was followed in 2009 by the award of a second generation mobile license to Wana. In the future, Maroc Tele-com may be required to implement further price cuts and promotions to maintain its market position and anticipate competition in the Mobile segment. In addition, the granting of two new licenses on the fixed-line telecommunications market in 2005 could fur-ther increase competition on the market (see “Regulatory risks” below). The intensification of competition among the existing operators or due to the arrival of new entrants could lead to a continued reduction in Maroc Telecom’s market share, and in increased customer acquisition and retention costs which could, in turn, lead to a reduction in Maroc Telecom’s revenues and earnings (see 5.2.2 “Market trends and other factors affecting earnings”).

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Maroc Telecom is dependent on the reliability of its information systems; damage to or loss of all or part of its systems could result in a loss of customers and reduced revenues.

Maroc Telecom can be paid for its services only insofar as it uses reliable information systems (including collection and invoicing systems), and succeeds in protecting and securing the continuity of such systems’ operation. Maroc Telecom has established a security policy for its information systems allowing it to deal with ordinary disturbances in computer operations (unauthorized access, power cuts, theft, hardware crash, etc.) and to secure uninterrupted service. Maroc Telecom now has a business continuity plan for its critical information systems, which have a direct impact on its revenues, such as pricing data acquisition systems, and sales and billing information for its three product lines (Fixed-line, Mobile and Internet). The continuity plan was extended in 2008 to cover other administration systems calculating inter-operator settlements, both in Morocco and internationally, together with the Purchasing and Finance administration systems. An event entailing a destruction of all or part of its systems (such as natural disasters, fire or an act of vandal-ism) would automatically activate a backup system. Insofar as critical information systems data produced by production platforms is regularly backed up, the risk of losing data and being unable to bill customers and recover outstanding invoices is now marginal.

Maroc Telecom is dependent on the reliability of its telecommunications networks. Any disruption to such networks could result in a loss of customers and reduced revenues.

Maroc Telecom is able to provide services only insofar as it is able to protect its telecommunications net-works from damage caused by disturbances, power cuts, computer viruses, natural disaster and unauthor-ized access. Any disturbance to the system, accident or breach of security measures causing interruption in the Company’s operations could affect its ability to provide services to its customers and have a material effect on its revenues and operating income. Such disturbances would also have a material effect in terms of image and reputation for the Company, which could lead to a loss of customers. In addition, the Com-pany could be required to bear additional costs in order to repair the damage caused by such disturbances.

Maroc Telecom’s indirect distribution network could be jeopardized if Maroc Telecom fails to main-tain it.

The Company has an extensive distribution network, with a direct sales channel comprising Maroc Telecom branches, an indirect network consisting of telestores, resellers and partners, and an independent network (see section 4.4.4 “Distribution”). If Maroc Telecom were unable to maintain close relations or to renew its distribution agreements with its indirect network participants or, if its indirect distribution network were to be jeopardized for other reasons, in particular the actions of competitors, or if the managers of telestores failed to comply with the exclusive agreements made with Maroc Telecom by distributing products competing with those of Maroc Telecom, the distribution network could be weakened and the Company’s business and earnings could be signifi-cantly affected.

INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.14. Risk factors


Continued and rapid changes in technology could intensify competition or require Maroc Telecom to make significant additional investments.

Many services offered by Maroc Telecom involve intensive use of technology. The development of new technologies could cause some services of the Company to cease to be competitive. Maroc Telecom could fail to identify new opportunities in due time, and be required to make significant additional investments, in particular for the development of new products and services, or for the commissioning of infrastructure nec-essary to enable it to remain competitive. The new technologies in which the Company may choose to in-vest may affect its ability to achieve its strategic targets. Maroc Telecom could then lose customers, fail to succeed in attracting new customers, or be required to bear significant costs in order to maintain its cus-tomer base, which would have a negative effect on its business, revenues and earnings.

Alternative means of communication could result in a reduction of the utility or even obsolescence of the fixed-line network, which could lead to the loss of a competitive advantage and reduce the Company’s revenues significantly.

The Company has already had to deal with the substitution of fixed-line customers by mobile customers, which has been intensified by the use of alternative technologies. As an illustration, GSM gateway services have begun to compete with Maroc Telecom’s business fixed-line voice services. Similarly, restricted mobil-ity services tend to compete with telestores (see 4.4.5 “Competitive landscape”).

The Company’s fixed-line telecommunications activities could be affected by the development of such gate-ways or other alternative means of communication. Such alternative technologies could jeopardize the use-fulness of Maroc Telecom’s infrastructure and fixed-line network, by enabling competitors to use mobile telecommunications services to compete with Maroc Telecom without having a fixed-line network. Maroc Telecom’s infrastructure and extensive network would then become less useful or even obsolete, which would lead to the loss of a competitive advantage and could have a significant adverse effect on the Company’s revenues and earnings.

Health risks, whether real or perceived, or other problems connected with mobile devices or their base stations, could result in less intensive use of mobile communications.

Certain studies of mobile technology claim that the electromagnetic signals emitted by mobile devices and base stations involve health risks. Such risks, whether real or perceived, and the publicity they receive, to-gether with any resulting legislation or litigation, could reduce the Company’s base of mobile customers, make the establishment of new base stations and the maintenance of existing base stations more difficult, or incite customers to reduce their use of mobile telephones.

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Fraudulent diversion of traffic could limit the Company’s revenues and adversely impact its earnings.

The Company first experienced a fraudulent diversion of its traffic in 2001. In response, Maroc Telecom has established a plan to combat such fraud Maroc Telecom cannot anticipate, however, whether new means of fraud will develop, the sectors that potential offenders will attack, nor the effects that any such fraud could have. If Maroc Telecom fails to prevent such fraudulent acts, it could see a reduction in its traffic in the sector af-fected by the fraud, and its revenues and earnings could thereby be adversely impacted.

Maroc Telecom may carry out acquisitions of telecommunications companies or licenses.

In order to extend its geographical presence, Maroc Telecom could acquire telecommunications companies or licenses in other countries. Such transactions necessarily involve risks. If Maroc Telecom does not achieve the results expected from such transactions, its business and earnings could be affected. In par-ticular, Maroc Telecom could:

• carry out acquisitions on financial or operational terms that could subsequently be found unfavorable; • experience difficulties in integrating the companies acquired, or their networks, products or services; • fail to retain the key employees of the companies acquired or to recruit skilled personnel as may be

required; • fail to achieve the expected synergies or economies of scale; • make investments in countries where the political, economic or legal situation involves particular risks,

such as civil or military unrest, the absence of effective or comprehensive protection of shareholders’ rights, or disagreements with other major shareholders, including public authorities, relating to the man-agement of the companies acquired; and

• fail to adapt to the specific features of the countries in which any such companies would be acquired.

Maroc Telecom could fail to retain its key employees or to hire highly skilled personnel, which could adversely impact the Company’s operations and its ability to adapt to its environment.

Maroc Telecom’s performance is dependent to a significant extent on the abilities and services provided by its management team. The management team has significant experience and knowledge of the telecommu-nications industry. The loss of key members of management could have a significant adverse impact on Maroc Telecom’s ability to implement its strategy. Maroc Telecom and its performance are also dependent on skilled personnel having the experience and engineering or sales capabilities required for the development of its business. Maroc Telecom’s ability to adapt its services, products and sales offerings, whether in the area of fixed-line or mobile telecommunica-tions, is highly dependent on the presence of competent and skilled teams in each market segment. Failure by Maroc Telecom to retain its key personnel, whether its management team or its marketing and engineering executives, could adversely affect the Company’s business and its operating income could di-minish substantially.



4.14.2 Regulatory risks

The interpretation of existing legislation and the adoption of new statutory rules could significantly affect Maroc Telecom’s operations.

The regulatory framework governing the telecommunications industry in Morocco is subject to constant change. Act 55-01, which entered into force in November 2004, could be interpreted in a manner that could have a significant adverse affect on Maroc Telecom’s business and result in a reduction in its revenue and earnings. In addition, the introduction of (i) carrier pre-selection, (ii) unbundling, and (iii) number portability will necessarily favor competitors to the detriment of Maroc Telecom. Thus, the injunction issued by the ANRT relating to the identification of mobile customers could lead to unforeseeable decisions by ANRT which cannot be anticipated by Maroc Telecom. Future regulatory changes could have a significant material impact on Maroc Telecom’s operations. Regulatory pricing controls relating to retail sector offerings and promotions could be reinforced via the pub-lication of ANRT guidelines on pricing controls in a manner that would be unfavorable for operators with a dominant influence on specific market segments. In addition, the ANRT is preparing a set of guidelines on the telecommunications sector for the period 2009-2013 which is expected to influence the following areas: digital coverage for the entire Moroccan territory, specific regime for tourism areas and industrial parks, etc., nationwide roaming and infrastructure sharing, price reductions, etc.

The increase in the number of market players could weaken Maroc Telecom’s position in the mobile telecommunications services segment.

In 2005 and 2006, the ANRT awarded a f ixed-line license with restricted mobility to Wana and three 3G mobile licenses to Maroc Telecom, Meditel and Wana. In 2009, it awarded a 2G mobile license to Wana. The Company cannot forecast whether the liberalization process for the mobile sector will evolve in a favor-able manner. Notwithstanding this, the award of a third 2G mobile license, with nationwide roaming rights, to Wana will have the effect of increasing competition in the domestic mobile telecommunications market. Thus, Maroc Telecom could experience a reduction in its market share with a concomitant increase in the acquisition and retention costs for clients which could result in a reduction in revenues and profitability.

Liberalization of the fixed-line market could limit Maroc Telecom’s market share and adversely af-fect its profitability

Maroc Telecom operates in a fixed-line telecommunication market that has recently been liberalized. Two new fixed-line licenses were awarded in 2005 for national, international and local loop services. Liberalization of the fixed-line market could reduce the base of existing or potential customers for Maroc Telecom as customers could be lost to competitors. In addition, the entry of new operators through the award of international licenses will entail heightened competition, which could result in a decrease in inter-national call rates. Accordingly, the liberalization of these markets could adversely affect Maroc Telecom’s revenues and profitability. Maroc Telecom could be affected by regulatory decisions enabling other operators (i) to enter the telecom-munications market on terms less onerous than those imposed on Maroc Telecom, and (ii) to gain access to Maroc Telecom’s network on favorable terms. An operator could provide telecommunications services without having to bear the same obligations as Maroc Telecom, while enjoying the benefit of the latter’s infrastructure, thereby enabling it to target highly profitable markets, to the detriment of Maroc Telecom. As a dominant operator in the fixed-line, voice and data segments, the Company is bound under Act 55-01 to permit access to its network, in order to enable competitors to provide their own services through the use of Maroc Telecom’s network.

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Such operators may thereby target markets offering comparable profitability, such as the business market, urban areas or the international market, which could (i) restrict the opportunities for Maroc Telecom to ex-tend the number of its high-volume users, or (ii) divert its existing customers towards such markets.

Maroc Telecom could be affected by the ANRT’s application of competition regulations

Pursuant to the terms of Act 55-01, the ANRT’s duties henceforth also include monitoring and ensuring the observance of fair competition among operators with regard to Act 6-99 relating to freedom of pricing and competition. The ANRT could thus rule on matters relating to the competitive environment of the telecom-munications market. Maroc Telecom cannot forecast the extent to which the ANRT’s rulings in this area might impact on its operations.

Interconnection costs that are favorable for other operators could significantly affect the Company’s future earnings.

In order to provide services to its customers, Maroc Telecom is required to connect its network to that of any other operator holding a domestic license, and vice versa. The interconnection charges are approved by the ANRT. The Company cannot forecast whether the ANRT’s policy with respect to the fixed-line and mobile interconnection charges will be unfavorable to it.

4.14.3 Tax risk

Maroc Telecom might be unable to deduct certain allowances for doubtful accounts.

The amount of doubtful accounts for which Maroc Telecom has made a provision is deductible from its tax-able base, subject to the presentation of evidence of legal action taken against the debtors. Maroc Telecom has not initiated such legal action against all of the debtors for which it has made a provision. If the deducti-bility of such provisions for doubtful receivables in an amount below a certain threshold were to be chal-lenged, the Company’s earnings and profit could be adversely affected.

4.14.4 Risks relating to the interests held by major shareholders in Maroc Telecom

The Company could be influenced by Vivendi, whose interests may not always be consistent with those of the Company’s other shareholders.

Vivendi holds a majority stake in the Company’s share capital and voting rights. As a result, Vivendi controls all decisions requiring the approval of shareholders acting by a simple majority of votes. The interests of Vivendi with respect to these matters and the factors that it will take into account when exercising its voting rights may not be consistent with those of the Company’s other shareholders.

4.14.5 Market risks In accordance with its cash management policy, Maroc Telecom does not invest in equities, in equity mu-tual funds or derivatives. Maroc Telecom invests its cash with financial institutions either in sight deposits or term deposits. The counterparty exposure limits for each financial institution are approved by the Manage-ment Board. For market risks (foreign exchange risks, interest rate risks, stock valuation risks and liquidity risks), see 5.3.6 “Disclosure of qualitative and quantitative information about market risks”.


FINANCIAL REPORT

5.1 CONSOLIDATED FINANCIAL DATA FOR THE LAST

THREE YEARS 146 5.1.1 FINANCIAL DATA IN MOROCCAN DIRHAMS 146 5.1.2 FINANCIAL DATA IN EURO 147

5.2 OVERVIEW 148 5.2.1 BACKGROUND 148 5.2.2 MARKET TRENDS AND OTHER FACTORS INFLUENCING EARNINGS 148 5.2.3 CONSOLIDATION SCOPE 152 5.2.4 SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES 153

5.3 CONSOLIDATED INCOME STATEMENT 160 5.3.1 COMPARISON OF 2008, 2007 AND 2006 DATA 161 5.3.2 COMPARISON OF OPERATING SEGMENT RESULTS 168 5.3.3 CASH AND CASH EQUIVALENTS 173 5.3.4 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS 178 5.3.5 DISCLOSURE OF QUALITATIVE AND QUANTITATIVE NFORMATION ABOUT MARKET RISKS 179 5.3.6 TRANSITION FROM INDIVIDUAL FINANCIAL STATEMENTS TO CONSOLIDATED FINANCIAL STATEMENTS 183

5.4 CONSOLIDATED FINANCIAL STATEMENTS 184 STATUTORY AUDITORS’ REPORTS 185 CONSOLIDATED FINANCIAL STATEMENTS 186 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 190

5.5 INDIVIDUAL FINANCIAL STATEMENTS 230 REPORT OF THE STATUTORY AUDITORS ON THE FINANCIAL STATEMENTS 231 INDIVIDUAL FINANCIAL STATEMENTS 232 ADDITIONAL DISCLOSURES 237 SPECIAL REPORT OF THE STATUTORY AUDITORS 250


5 5.1 CONSOLIDATED FINANCIAL DATA FOR THE LAST THREE YEARS

Maroc Telecom’s consolidated financial data is summarized in the following table. The financial data for the years ended December 31, 2008, 2007 and 2006 has been taken from the Group’s consolidated financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS), and were audited by the statutory auditors Abdelaziz Almechatt and Fouad Lahgazi of KPMG Morocco.

IFRS-compliant 2004 financial statements and the transition document were published by Maroc Telecom when it reported its consolidated financial statements for the six months ended June 30, 2005.

The transition to IFRS had a limited impact on the group’s financial statements at December 31, 2004 (please refer to the 2005 Registration Document for more information).

5.1.1 Financial data in Moroccan dirhams

Income statement data:

Balance sheet data:

(In millions of Moroccan dirhams) 2008 2007 2006

Revenues 29,521 27,532 22,615

Operating expenses 15,632 15,298 12,572

Earnings from operations 13,889 12,234 10,043

Earnings from continuing operations 13,812 12,201 10,029

Net earnings 10,010 8,137 6,833

Attributable to equity holders of the parent 9,520 8,033 6,739

Earnings per share (in Moroccan dirham) 10.8 9.1 7.7

Diluted earnings per share (in Moroccan dirham) 10.8 9.1 7.7

ASSETS (in millions of Moroccan dirhams) December

31, 2008 December

31, 2007 December

31, 2006

Non-current assets 25,033 23,242 18,095

Current assets 13,450 14,507 10,129

Total assets 38,483 37,749 28,224

SHAREHOLDERS’ EQUITY AND LIABILITIES

(in millions of Moroccan dirhams)

Share capital 5,275 5,275 5,275

Equity attributable to equity holders of the parents 18,709 17,380 16,261

Minority interests 1,647 1,254 592

Total shareholders’ equity 20,356 18,634 16,853

Non-current liabilities 1,319 1,436 224

Current liabilities 16,808 17,679 11,147

Total shareholders’ equity and liabilities 38,483 37,749 28,224


5.1.2 Financial data in euro The company maintains its accounting records and prepares its financial statements in Moroccan dirhams. The aim of this section is to help investors make comparisons in euros.

The following table sets out the MAD/Euro exchange rates used for Vivendi’s consolidated financial state-ments for the years 2006, 2007 and 2008.

(Source : Vivendi)

The above exchange rates are provided for convenience only. The group does not claim that the amounts denominated in Moroccan dirhams were, could have been or could be converted into euros at such ex-change rates or any other rate. For information relating to the impact of foreign exchange variations on the group’s earnings, see section 5.3.5 “Disclosure of qualitative and quantitative information about market risks”.

The following table sets out selected consolidated financial data for Maroc Telecom in euros, translated at the exchange rates used for Vivendi’s consolidated financial position and earnings for the years 2006, 2007 and 2008.

Income statement data:

Balance sheet data:

For 1 euro December 31, 2008

December 31, 2007

Period-end rate used for Balance sheet 11.2599 11.3292

Average used for Income statement 11.3520 11.2099

December 31, 2006

11.1447

11.0156

(euro millions) 2008 2007 2006

Revenues 2,600 2,456 2,053

Operating expenses 1,377 1,365 1,141

Earnings from operations 1,223 1,091 912

Earnings from continuing operations 1,217 1,088 910

Net earnings 882 726 620 Attributable to equity holders of the parents 839 717 612

Earnings per share (in euro) 1.0 0.8 0.7

Diluted earnings per share (in euro) 1.0 0.8 0.7

ASSETS (euro millions) December

31, 2008 December

31, 2007 December

31, 2006


Current assets 1,194 1,280 909

Total assets 3,418 3,332 2,532

SHAREHOLDERS’ EQUITY AND LIABILITIES (euro millions)

Share capital 468 466 473

Equity attributable to equity holders of the parents 1,662 1,534 1,459

Minority interests 146 111 53

Total shareholders’ equity 1,808 1,645 1,512

Non-current liabilities 117 127 20


Total shareholders’ equity and liabilities 3,418 3,332 2,532

FINANCIAL REPORT 5.1. Consolidated data for the last three years


The discussion and analysis which follows are to be read in conjunction with this Registration Document as a whole including, in particular, the audited consolidated financial statements of Maroc Telecom and incor-porating by reference the balance sheet, income statement, statement of cash flows, statement of changes in equity and notes to consolidated financial statements for the years ended December 31, 2006, 2007 and 2008.

The operational data included in Chapter 5.2 refers solely to business operations in Morocco and does not take into account the operational data of the Mauritel, Mobisud, Gabon Telecom and Onatel subsidiaries (see 4.5 “Description of subsidiaries’ operations”).

5.2.1 Background Maroc Telecom was created in 1998 from the break-up of the Office National des Postes et Télécommuni-cations and is Morocco’s incumbent telecommunications operator. Maroc Telecom is the leading Moroccan operator and is active in the Fixed-line and Mobile telecommunications segments and Internet, a fast grow-ing market. Maroc Telecom remains the domestic leader in each of these segments.

The Mobile business provides mobile telecommunication services (subscriptions, rate plans, prepaid phone cards and handsets) for individuals and businesses in Morocco (see 4.4.1 “Overview of the Group’s Opera-tions –Mobile services”). Mobile business has expanded rapidly and accounts for a growing share of Maroc Telecom’s revenues, amounting to 72% of consolidated revenues in 2008.

The Fixed-line and Internet business provides fixed-line telecommunications services, Internet services, TV via ADSL and data transmission services for residential and business customers in Morocco. It also pro-vides public telephone services through its own network of public payphones, and through an independent network of phone shops. Its services also include interconnections with other domestic and international telecommunication operators (see 4.4.2 “Overview of the Group’s operations– Fixed-line and Internet busi-ness”).

In addition, Maroc Telecom, together with a group of local investors, owns a 51.5% stake in the Mauritanian incumbent telecommunications operator, Mauritel. Through this shareholding, Maroc Telecom provides telecommunications services in Mauritania.

On December 29, 2006 Maroc Telecom also acquired a 51% stake in the Burkinabe operator Onatel by means of an international invitation to tender, and a 51% stake in Gabon Telecom on February 9, 2007. Maroc Telecom launched Mobisud, an MVNO (Mobile Virtual Network Operator), on December 1, 2006 in France, in partnership with SFR and Saham. In May 2007, another MVNO “Mobisud” was launched in Bel-gium.

5.2.2 Market trends and other factors influencing earnings

As Maroc Telecom provides telecommunications services in Morocco, including international telecommuni-cations services to and from Morocco, the revenues and earnings of Maroc Telecom are dependent to a significant extent on Moroccan consumers’ average telecommunications expenditure and, to a lesser ex-tent, on the volume of international telephone traffic to Morocco. Trends in the consumption of telecommu-nications services in Morocco need to be considered against a backdrop of fluctuations in the country’s economy and, more specifically, in the Moroccan population’s disposable income. In this regard, it should be noted that the Morocco’s gross domestic product has experienced positive growth in recent years, i.e. 4.8% in 2004, 3.0% in 2005, 7.8% in 2006, 2.7% in 2007 and 5.4% in 2008 (Source: Haut Commissariat au Plan).

5.2 OVERVIEW

5 5


Main factors influencing revenues

Maroc Telecom generates revenue primarily from sales of telecommunications services in the Mobile seg-ment and in the Fixed-line and Internet segment and, to a lesser extent, from sales of products associated with those services, consisting mainly of handsets used by customers and subscribers (mobile and fixed telephones and multimedia devices).

Mobile business

The Mobile business combines mobile telecommunications services (voice, data and roaming) and sales of mobile handsets.

Prepaid and postpaid : The revenues generated by the mobile telecommunications sector vary according to changes in the number of customers and Average Revenue Per User (ARPU). Those two factors were affected to a significant ex-tent by the introduction of prepaid plans in 1999 and the advent of market liberalization in 2000, with led to the award of a second mobile telecommunications license in August 1999, and the subsequent award of three third-generation mobile telecommunications licenses in July 2006 and a second –generation mobile license in 2009. (see section 4.8 “Regulatory Environment and Possible Dependencies”).

In terms of Mobile customers, Maroc Telecom has benefited from the expansion of the market, as shown by a significant increase in the penetration rate. The penetration rate measures the ratio of users of mobile telecommunications services to Morocco’s total population. It has grown rapidly over the last decade, from 1.3% at December 31, 1999 to 74% at December 31, 2008 (Source: ANRT). Furthemore, the total number of mobile telecommunications users has increased from 364,000 at end-1999 to 22.8 million at end-2008 (Source: ANRT).

At December 31, 2008, Maroc Telecom held a 63.4% market share of the domestic mobile telecommunica-tions market compared with 65.7% at December 31, 2007 (Source: ANRT). Prepaid customers accounts for 95.8% of the Company’s total mobile services customer base (Source: Maroc Telecom).

Interconnection services Revenues generated by the interconnection is mainly made up by the incoming international, namely the interconnection with the international operators (Other than revenues generated by the outgoing calls which are included in the revenues from mobile telephony), and the interconnection with Meditel and Wana.

Service bundles and call plans Mobile service bundles and call plans are described in detail in Chapter IV of this Registration Document.

Tariffs Tariffs include access charges (subscription, prepaid phone cards, installation charges and the price of handsets) and usage charges. The entry of a second mobile operator into the Moroccan mobile telecommunications market has put down-ward pressure on prices, and prompted operators to adapt their product range. They initiate frequent pro-motional offers on both handset subsidies and usage charges. Maroc Telecom offsets the negative impact of these price cuts on ARPU by expanding its customer base and boosting usage.

Traffic Outgoing mobile traffic increased by 13% in relation to 2007, chiefly due to growth in the customer base. Morocco’s tourism industry also makes a considerable contribution to this growth, generating a large influx of visitors (including Moroccans resident abroad), and providing a strong potential source of roaming reve-nues. In 2008, roaming accounted for more than 3.2% of mobile revenues (See 4.4.1 ‘’Business activities in Morocco– Mobile services –International roaming’’).

FINANCIAL REPORT 5.2. Overview


ARPU Mobile ARPU corresponds to the revenue generated by incoming and outgoing calls and value-added ser-vices in a given period (excluding roaming revenues), divided by the average number of customers over the same period and by the number of months in the period. The monthly average customer base is the aver-age number of customers per month during the period. ARPU is influenced by several factors, including the price and volume of mobile telecommunications related traffic (incoming calls, outgoing calls and added-value services).

Mixed ARPU for the 2008 fiscal year fell by 8% to MAD99 versus MAD108 a year earlier. This decline was attributable to the twofold impact of a decline in incoming traffic revenues (including international incoming traffic) and a reduction in prepaid usage (due to the increased number of customers who own multiple mo-bile handsets).

Prepaid ARPU amounted to MAD77 at December 31, 2008 compared to MAD84 at December 31, 2007, despite strong growth in the prepaid mobile customer base (up 8% compared to 2007).

Postpaid ARPU fell from MAD701 to MAD653 year-on-year as a result of the acquisition of lower-use sub-scribers.

Fixed-line and Internet segment

Up to the end of 2006 Maroc Telecom was the sole provider of fixed-line telecommunication services and the main provider of Internet services and data transmission services in Morocco. These markets were fully liberalized in 2005 when fixed-line licenses were granted to Meditel. In February 2007, Wana entered the telecommunications market with a restricted mobility service.

The main Fixed-line services provided by Maroc Telecom are:

• telephony; • interconnection with domestic and international operators; • data transmission services for businesses and Internet service providers and other telecom operators; • internet including Internet access services and related services such as hosting; • TV via ADSL.

As in the Mobile business, revenues in the Fixed-line business vary according to the subscriber base, the pricing policy and the usage level of each of the services. Revenues generated by international intercon-nection services are determined by the volumes of incoming traffic on the fixed-line network and by changes in interconnection charges, which are subject to renegotiation from time to time. Revenues gener-ated by domestic interconnection services are determined by the requirement that Maroc Telecom offer interconnection services at prices compensating the actual cost of the use of the network and related costs. In 2008, revenues generated by the Fixed-line and Internet segment rose by 2.8% in 2008, thanks to the robust growth in data services (up 26%) and Internet (5%) revenues, thereby offsetting the impact of a 1.2% reduction in the average monthly bill. Voice services accounted for 63% of revenues generated in the Fixed-line and Internet segment in 2008. Similarly, Internet services accounted for 10.9% of overall Fixed-line and Internet revenues versus 10.7% in 2007.

Fixed-line telecommunications services Historically, the penetration rate of fixed-line telecommunications services, which include public telephone lines, has been relatively low, owing in particular to the high average number of persons per household and the high usage rate of public telephones, which have hindered the development of residential fixed-line telecommunications. The fall in the penetration rate was primarily due to fixed-line customers switching to

5


mobile services. Through a policy of developing new products and services, such as package deals and capped plans (El Manzil), prepaid cards, unlimited offers and the extension of public telephone coverage, the penetration rate in Morocco is still very low at 9.7% at December 31, 2008 (source: ANRT) and at 4.3% only, excluding limited mobility (Maroc estimates). In 2008, the fixed-line customer base fell to 1.299 million lines, representing a 2.8% decrease versus December 2007.

Fixed-line offers are described in detail in Chapter IV of this Registration Document.

Data transmission services Maroc Telecom also provides data transmission services to businesses through a wide range of products and services (ISDN, Frame Relay, digital and analog leased lines, IP VPN ), and a reliable, high quality net-work. This business is dependent on the development of the Moroccan economy and economic growth.

Internet Services In 2008, Maroc Telecom stepped up initiatives aimed at increasing take-up of Internet services in Morocco, both through continued price cuts and frequent promotional offers. The number of wireline Internet access subscribers rose to 482,000 at the end of 2008 and included 477,000 broadband customers. Thus, the number of ADSL lines accounted for almost 42% of the fixed-line installed base (excluding public teleph-ony). Finally, in addition to its wireline Internet subscriber base, Maroc Telecom has around 30,000 high-bandwidth Mobile 3G Internet subscribers and more than 10,000 triple-play (ADSL, TV and fixed-line tele-phone) subscribers.

Interconnection services Interconnection revenues arise mainly from incoming international traffic, in particular interconnection with international operators (excluding revenues generated by outgoing calls, which are included in fixed-line revenues), and interconnection with Meditel and Wana.

Interconnection revenues generated by incoming international calls depends on call volume and the alloca-tion of charges negotiated with international operators.

Seasonality

The summer months, with the return of Moroccans living abroad, and the forthnight preceding the Eid al-Adha holiday (December 9 in 2008) traditionally see a spike in usage (primarily mobile and fixed-line public telephony), while the month of Ramadan (from September 02 to October 01 in 2008) is a seasonal trough for the fixed-line and mobile segments.

Operating expenses

Operating expenses include:

• purchases, mainly including the cost of handsets and interconnection costs; • payroll and payroll-related costs; • taxes and levies; • other operating expenses, such as fees and network maintenance costs; • depreciation, impairment and provisions.

In 2008, operating expenses increased by just 1%, reflecting the impact of lower interconnection expenses (volume and price effects) and an improvement in and reversal of provisions for doubtful receivables.



5.2.3 Consolidation scope

• Mauritel group Maroc Telecom holds 51.5% of the voting rights of Mauritel S.A., the incumbent operator in Mauritania and operator of a fixed-line and mobile telecommunications network, following the merger of Mauritel SA (fixed-line) and Mauritel Mobile. Mauritel SA is owned by the holding Compagnie Mauritanienne de Communica-tions (CMC), in which Maroc Telecom holds 80%, so that Maroc Telecom holds a 41.2% interest in the Mauritanian incumbent operator. Through, the Mauritel group has been consolidated by Maroc Telecom since July 1, 2004.

• Onatel On December 29, 2006, Maroc Telecom acquired 51% of the capital of the Burkinabe operator Onatel and 100% of its mobile subsidiary Telmob. Onatel has been fully consolidated by Maroc Telecom since January 1, 2007.

• Gabon Telecom On February 9, 2007, Maroc Telecom acquired 51% of the capital of the operator Gabon Telecom and 100% of its mobile subsidiary Libertis. Gabon Telecom has been fully consolidated by Maroc Telecom since March 1, 2007.

• Mobisud France

On November 3, 2006 Maroc Telecom acquired a 66% stake in SFR6, renamed Mobisud, alongside the other shareholders Saham (18%) and SFR (16%). Mobisud has been operating as an MVNO (Mobile Vir-tual Network Operator) since December 1, in France. Mobisud has been consolidated since its acquisition (See .Notes to consolidated financial statements).

• Maroc Telecom Belgium In Belgium, Maroc Telecom launched an MVNO business via its wholly-owned subsidiary Maroc Telecom Belgium (trade name: Mobisud Belgium). This company has been operating since May 2007.

• Medi1Sat Medi-1-Sat has been accounted for by the equity method since 2006. At end 2008, Maroc Telecom held a 36.8% equity interest in the company. Since the share capital increase completed in December 2008, Maroc Telecom’s equity interest in the com-pany rose from 28% to 36.8% while CIRT did not participate in the share capital increase. Medi1Sat was established as a satellite news channel for North Africa and produces and broadcasts pro-gramming in French and Arabic. It commenced broadcasting on December 1, 2006

• GSM Al-Maghrib GSM Al-Maghrib (GAM) was accounted for by the equity method in 2005, but this is no longer the case since Maroc Telecom sold its 35% share to Air Time on March 27, 2006.

• Other non-consolidated investments Maroc Telecom’s other non-consolidated investments include Casanet (in charge of maintaining Maroc Telecom’s “Menara” Internet portal), an investment in Matelca (currently in liquidation), and other minority stakes. These companies are not consolidated as their results do not have a material impact on Maroc Telecom’s financial statements.

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5.2.4 Significant accounting policies and estimates

Background of the preparation of 2008 consolidated financial statements

In application of the European regulation 1606/2002 dated July 19, 2002 concerning the adoption of inter-national accounting standards, the consolidated financial statements of Maroc Telecom for the year ended December 31, 2008, were prepared in accordance with International Financial Reporting Standards (IFRS) as determined by the International Accounting Standards board (IASB) and adopted by the European Union at December 31, 2008. For the purpose of comparison 2008 financial statements include items from 2007 and 2006.

All new standards, interpretations or amendments published by the IASB and compulsory in the European Union since January 1, 2006, have been applied. This has not resulted in a restatement of data for the fis-cal years 2005 and 2004 as their impact was not significant.

Statement of compliance

The consolidated financial statements of Maroc Telecom group at December 31, 2008, have been prepared in accordance with all the mandatory International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations adopted by the EU. The accounting standards applied in the consolidated financial statements do not differ from the accounting standards is-sued by the International Accounting Standards Board (IASB). Maroc Telecom has applied the following new standards and interpretations:

• IFRS 8 “Operating Segments” which introduced mandatory reporting requirements for segment infor-mation as from January 1, 2009. Maroc Telecom opted to apply this standard in advance. The standard was published by IASB on November 30, 2006 and adopted by the European Union on November 21, 2007. It was published in the legal gazette of the European Union on November 22, 2007 and it re-places the IAS 14 “Segment data” standard previously in force.

In 2007, according to IAS 14, the first level of segment data consisted of six geographical segments and the second level of segment data comprised the fixed-line and mobile business. After an analysis of IFRS 8 and the structure of Maroc Telecom’s internal financial reporting system, the company believes that the operating segments for which financial information is presented in the notes to the financial statements are in conformity with the second level of segment data presented until 2007 in accordance with IAS 14.

Pursuant to IFRS 8, the operating segments of Maroc Telecom thus reflect its two business activities fixed-line & Internet and mobile. The adoption of IFRS 8 has no significant impact on segment data.

There are other IFRS and IFRIC interpretations issued by the IASB/IFRIC, but not yet effective, as of the date at which the consolidated financial statements were approved. These standards which are likely to apply to Maroc Telecom in the future but for which it has not opted to adopt early are as follows:

• The amendment to IAS 23 - Borrowing Costs, which concerns the capitalisation of interest costs on fixed assets acquired and which shall be mandatory for accounting periods starting as from January 1, 2009.

• the amendments to IAS 1 “Presentation of Financial Statements: A Revised Presentation”, which nota-bly include changes in the presentation of shareholders’ equity, and which shall be mandatory for ac-counting periods starting as from January 1, 2009.

• the revisions to IFRS 3 “Business Combinations” and IAS 27 “Consolidated and Separate Financial Statements”, which respectively relate to business combinations and the use of the acquisition method, on the one hand, and to the accounting treatment for transactions with minority shareholders, on the other hand, and which shall be mandatory for accounting periods starting as from January 1, 2010.



• The amendment to IFRS 2 “Share-based Payment” which concerns the accounting treatment applica-

ble to vesting conditions and cancellations of shares options, and which shall be mandatory for accout-ing periods starting as from January 1, 2009.

Maroc Telecom is currently determining the potential impact of the application of the above standards and interpretations to its income statement, balance sheet, cash flow statement and to the disclosures included in the notes to its consolidated financial statements.

Use of estimates and assumptions

In connection with the preparation of its financial statements, Maroc Telecom must make estimates and certain assumptions. Maroc Telecom’s management bases its estimates on past experience and on various other assumptions that it deems reasonable under the circumstances. These estimates enable an evalua-tion of the appropriateness of carrying value. The figures derived from such estimates and assumptions may differ if other estimates or assumptions are used. The main items calculated on the basis of estimates are provisions for litigation, restructuring provisions, writedowns of accounts receivable, impairment of in-ventories and deferred income. Management reviews its estimates and valuations regularly based on past experience and various other assumptions that it deems reasonable, which constitute the basis of its evaluations of the carrying value of its assets and liabilities. The impact of the change in estimates is booked in the current period and all subsequent periods.

Contribution to universal service

Maroc Telecom is required to set aside 2% of its annual pretax revenues net of interconnection charges for its universal service obligation although it is authorized to offset this contribution with its own costs of imple-menting the universal service, thereby establishing the “pay or play" principle.

In March 2008, the Universal Services management committee of the ANRT granted a MAD396 million subsidy to Maroc Telecom for the implementation of the 2008 universal service program devised by the operator in connection with the so-called Pacte program. In consequence, Maroc Telecom paid MAD55 million to the universal service fund as part of its 2008 contribution.

Deferred income

Deferred income mainly corresponds to prepaid subscriptions, prepaid top-up cards sold to distributors and not yet activated, unused prepaid minutes sold and to provisions related to customer loyalty programs. Since 2007, Maroc Telecom decided to derecognize deferred income linked to sales of Mobile service bun-dles and SIM card-only sales which are still non-activated after 9 months (versus 6 months previously).

Provisions

Provisions are accrued when, at the end of the period, the Group has a legal, regulatory or contractual commitment to a third party resulting from past events, and it is probable that there will be an outflow of resources to the third party, without any consideration expected from the latter, and that the amount can be evaluated accurately. If the time value effect is significant, provisions are determined by discounting expec-ted future cash flows at a pre-tax discount rate which reflects the market’s current evaluation of the time value of money. If no reliable estimate can be made of the amount of the obligation, no provision is recor-ded and a disclosure is made in the notes to the consolidated financial statements.

5


Restructuring provisions are recorded when the Group has approved a formal and detailed restructuring program and has either started to implement the program or has published the program publicly. No provi-sion is recorded to cover future operating expenses.

No provision for pensions and post-retirement benefits relating to the Group’s affiliates incorporated in Mo-rocco has been recorded in the consolidated financial statements insofar as pension expenses are covered by statutory pension plans established for employees in Morocco.

Inventories

Inventories comprise:

• Goods held for sale to customers upon line activation, comprising fixed and mobile handsets and accessories. Inventories are accounted for using the first-in, first-out method. Handsets delivered to distributors and not activated at year-end are recorded as inventories. Handsets not activated within nine months from the delivery date are recorded as revenue.

• Equipment and supplies corresponding to non-network equipment. These inventories are measured at their average acquisition cost.

Inventories are measured at the lower of cost and net realizable value. An impairment loss is recorded by comparing their fair value and their net realizable value.

Trade accounts receivable and other receivables

This item comprises accounts receivable and other receivables, which are initially recognized at fair value, then at amortized cost less impairment.

Accounts receivable include trade receivables and government receivables:

• Trade receivables: held against individuals, distributors, businesses and international operators;

• Government receivables: held against local authorities and the Moroccan government.

Impairment is recorded if the carrying amount of the asset under consideration exceeds the discounted value of its estimated future cash flows.

Contractual obligations and contingent assets and liabilities

Maroc Telecom and its subsidiaries prepare detailed records on all contractual obligations, commercial and financial commitments and contingent obligations, to which they are party or exposed, on a yearly basis. These detailed records are updated by the departments concerned on a regular basis and are reviewed by senior management. The assessment of off-balance sheet commitments relating to suppliers of fixed assets is carried out in the following way: • Difference between minimum commitments and settlements relating to framework agreements and

their endorsements (valued at more than MAD25 million); • Difference between firm orders and delivery for all other contracts. Commitments arising from real estate rental contracts are estimated on the basis of one month’s lease ex-pense given that virtually all termination clauses require one month’s notice



Segment data

The group’s business is divided into Fixed-line, Internet and Mobile segments.

Revenues from each operating segment include revenues from the provision of telephone services to cus-tomers and subscribers as well as intersegment transactions. Intersegment transactions are effected at market price.

Earnings from operations reflect the difference between operating income and expenses. Costs are allo-cated directly to the relevant segments or alternatively by using cost allocation ratios based on economic criteria.

Capital expenditure is directly allocated to the relevant segments. Fixed assets used by multiple segments are allocated in proportion to dedicated assets. The components that are not allocated mainly comprise taxes, cash, financial assets, borrowings and equity.

The classification of the balance sheet by operating segment was in part based on estimates. The break-down into the components used is based on reasonable assumptions. The following balance sheet items have been allocated proportionately between the two activities :

• For items comprising components that can be allocated directly to a segment and components shared by both segments: the shared part of these items is divided proportionately in respect of the amounts allocated directly to these items.

• For items comprising solely shared elements: these amounts are allocated in a way that takes into ac-count the type of items involved (e.g. employee-related liabilities are divided proportionally based on the number of employees in each operating segment).

Geographical data

Information by geographical area is the second level of segment data and comprises the two geographical areas in which Maroc Telecom is present: Morocco and other.

5


Definition of financial statements line items

Revenues Revenues are reported when it is probable that future economic benefits will flow to the Group, and that these revenues can be reliably measured. Maroc Telecom group generates revenues from fixed and mobile telecommunications services, internet services, and the sale of products, which essentially comprise mobile and fixed-line handsets and multime-dia equipment.

Revenues from telephone subscriptions are recognized on a straight-line basis over the subscription con-tract period. Revenues from incoming and outgoing call traffic are recognized when the service is rendered. For prepaid services, revenues are recognized when calls are made.

Revenues from fixed-line and internet and mobile services comprise : • income from domestic and international outgoing and incoming calls under postpaid plans, which is

recorded when generated; • income from subscriptions; • income from prepaid services, which is recognized as calls are made; • income from data transmission services provided to professionals and internet service providers as well

as to other telecommunications operators; • income from advertising in printed and electronic directories, which is recognized when the directories

are published.

Revenues from the sale of handsets, net of point of-sale discounts and connection charges, are recognized on activation of the line. Customer acquisition and loyalty rewards expenses for mobile and fixed-line ser-vices, principally consisting of rebates on the sale of equipment to customers through distributors, are rec-ognized as a deduction from revenues. Sales of services provided to subscribers managed by Maroc Telecom on behalf of content providers (mainly special-rate numbers), are accounted for net of related expenses. When the sale is made via a third party distributor supplied by Maroc Telecom and involves a discount compared with the public sale price, revenues are recorded as gross revenues and commissions granted are recognized as operating expenses.

Operating expenses

Operating expenses include purchases, payroll costs, taxes and duties, other operating expenses and net depreciation, impairment and provisions.

Purchases Purchases consumed include the cost of purchasing handsets, interconnection charges with domestic and international operators, and other purchases (fuel and electricity, top-up cards, supplies and consumables).

Payroll and payroll-related costs Payroll and payroll-related costs include wages, salaries, payroll taxes and training costs.

Taxes and levies This item includes taxes and levies (property taxes, local authority service taxes, local business tax, taxes for occupying public land etc.).

They also include fees paid to ANRT:

• fees relating to radiofrequency licenses pursuant to Act 24-96 and Order 310-98 of February 25, 1998;



• costs related to universal service pursuant to Act 24-96 and Order 2.00.1333 of October 9, 2000 (contractual obligations applicable to Maroc Telecom ); and

• contributions to research, training and telecommunications standardization pursuant to Act 24-96 and Order 2.00.1333 of October 9, 2000 (contractual obligations applicable to Maroc Telecom ).

Other operating income and expenses Other operating income and expenses comprise commissions, communication expenses and other expen-ses (network maintenance costs, audit and advisory fees, postage, vehicle leasing costs, and rental payments for land and buildings). They also include foreign currency translation adjustments arising from operations and expenses incurred in connection with voluntary redundancy plans.

Advertising expenses include marketing and other promotional and multimedia public relation costs incur-red to enhance Maroc Telecom’s market reach and profile.

Net charge to amortization, impairment and provisions Net charge to amortization, impairment and provisions includes:

Amortization calculated on a straight-line basis over the useful life of the relevant assets. Amortization is calculated as from the date of entry into service of the concerned asset;;

• Net provisions and impairment relating to trade accounts receivable and related accounts, inventories and litigation.

Income or loss from equity affiliates

At December 31, 2008 and 2007, Medi-1-Sat was the only company accounted for using the equity method.

Cost of net financial debt

Cost of financial debt includes income from cash and cash equivalents (investment income). Maroc Telecom’s cash assets are deposited with banks or with the national treasury, either through inter-est-bearing sight deposits or short-term deposits not exceeding three months. Maroc Telecom does not make any high-risk investments (mutual investment funds, shares, bonds or derivatives); Cost of debt is mainly includes interest expense and expenses incurred for early repayment of borrowings. Cost of net financial debt is impacted by foreign exchange gains and losses as the group receives income, pays expenses and has borrowings denominated in foreign currencies (See section 5.3.5 “Disclosure of qualitative and quantitative information about market risks”).

Income tax expense

Maroc Telecom pays income tax like any other Moroccan corporation. In 2008, the income tax rate was 30%, in Morocco (compared to 35% in 2007) , 25% in Mauritania, 30% in Burkina Faso and 35% in Gabon.

The “income tax payable” item consists of tax due and deferred taxes. Deferred taxes reflect temporary differences between the book value and taxable value of assets or liabilities.

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Cash flows

Net cash from operating activities corresponds to cash earning plus or minus the change in the Group’s working capital requirement.

Net cash used in investing activities corresponds to the difference between acquisitions and sales of pro-perty, plant and equipment, intangible assets and financial assets, along with cash flows of long-term borro-wings.

Net cash used in financing activities mainly comprises repayment of long-term debt and the payment of dividends.

Comparability of Maroc Telecom‘s financial statements

The consolidated financial statements are used by the Company as a means of communication with finan-cial markets since its shares were listed on the Casablanca stock exchange and Euronext, Paris. In this context, Maroc Telecom’s consolidated financial statements for the years ended December 31, 2008, 2007 and 2006 are prepared in compliance with applicable International Financial Reporting Standards (IFRS).



The following table sets out data regarding Maroc Telecom’s consolidated income statement for the years ended December 31,2006, 2007 and 2008.

The various items of Maroc Telecom’s consolidated income statement and their changes during the periods under consideration are summarized in the following table.

(In millions of Moroccan dirhams) 2007 2006

Revenues 27,532 22,615

Cost of purchases (4,215) (3,692)

Payroll costs (2,695) (2,060)

Taxes and duties (788) (771)

Other operating income (expenses) (3,562) (2,686)

Net depreciation, amortization and provisions (4,038) (3,363)


Other income and charges from ordinary activities 1 7

Income from equity affiliates (34) (21)

Earnings from continuing operations 12,201 10,029

Income from cash and cash equivalents 131 149

Borrowing costs (131) (7)

Net borrowing costs 0 142

Other financial income (expense) 31 1

Net financial income (expense) 31 143

Income tax expense (4,095) (3,339)

Net earnings 8,137 6,833

Attributable to equity holders of the parent 8,033 6,739

Minority interests 104 94

EARNINGS PER SHARE (In Moroccan dirhams)

Net earnings- group share 8,033 6,739

Number of shares as at December 31 879,095,340 879,095,340

Earnings per share 9.1 7.7

Diluted earnings per share 9.1 7.7

2008

29,521

(4,471)

(2,705)

(754)

(3,643)

(4,059)

13,889

(14)

(62)

13,812

112

(106)

6

388

394

(4,196)

10,010

9,520

490

9,520

879,095,340

10.8

10.8

5.3 CONSOLIDATED INCOME STATEMENT

5


5.3.1 Comparison of 2008, 2007 and 2006

Revenues

The following table shows the breakdown of revenues for the years ended December 31, 2006, 2007 and 2008.

Growth in consolidated revenues for the period ended December 31, 2008 was driven by the sustained in-creases in Mobile revenues, both in Morocco and at international subsidiaries, and in Fixed-line and Inter-net revenues in Morocco.

Thus, consolidated revenues amounted to MAD29,521 million in 2008 and were up 7.2%, compared with 2007 (6.2% on a comparable basis and at a constant exchange rates).

In 2007, consolidated revenues amounted to MAD27,532 million, up 21.7%, compared with 2006 . In 2007 revenue growth was fuelled by growth in mobile and ADSL business and in incoming international traffic.

Operating expenses

The following table shows operating expenses for the years ended December 31, 2006, 2007 and 2008.

Operating expenses rose by 2.2% to MAD15.632 billion. This increase was partially offset by cost control initiatives introduced for operations in Morocco and in the subsidiaries.

In millions of Moroccan dirhams 2007 2006

Mobile gross revenues 19,296 14,895

Fixed-line and internet gross revenues 11,090 10,312

Total consolidated gross revenues 30,386 25,207

Elimination of intersegment transactions (2,854) (2,592)

Total consolidated net revenues 27,532 22,615

2008

21,160

11,354

32,514

(2,993)

29,521


Consolidated revenues 27,532 22,615

Cost of purchases 4,215 3,693 % 15% 16%

Payroll costs 2,695 2,060 % 10% 9%

Sundry taxes and duties 788 771 % 3% 3%

Other operating income and expenses 3,562 2,686 % 13% 12%

Net depreciation, amortization and provisions 4,038 3,363 % 15% 15%

Total operating expenses 15,298 12,572

2008

29,521

4,471 15%

2,705 9%

754 3%

3,643 12%

4,059 14%

15,632

FINANCIAL REPORT 5.3. Consolidated income statement


Purchases consumed

The “Other purchases consumed” item includes purchases of energy (fuel and electricity), phone cards and other consumables. Purchases consumed increased by 6% to MAD4,471 million in 2008 versus MAD4,215 million a year ear-lier. In Morocco, handset costs rose primarily due to a volume effect (growth in the customer base) and price effects (upselling of mobile handsets). In 2007, purchases consumed increased by 14% to MAD4,215 million, up from MAD3,693 million in 2006, mainly due to changes in the consolidation scope. In Morocco, handsets costs fell due mainly to a contin-ued reduction in unit purchase prices. The rise in other purchases consumed was mainly linked to the in-crease in the customer base, usage and the extension of the network.

Payroll costs

This item includes the payroll costs for the period, excluding redundancy costs, which were recognized as other operating expenses. In 2008, payroll costs stabilized compared to 2007, as a result of the layoff plan introduced by Gabon Tele-com in the third quarter of 2008 which reduced the workforce by up to 66%. Workforce reductions and vo-luntary redundancy plans were also introduced by Mauritel and Mobisud France. In Morocco, the total payroll remained almost unchanged relative to 2007 without any change in the number of employees on the payroll. In 2007, the increase in payroll costs of more than 30% was due mainly to the consolidation of Onatel and Gabon Telecom, which increased average headcount by 2,536. In addition, payroll costs increased by 8% in Morocco due to salary increases.


Cost of handsets 1,509 1,466

Domestic and international interconnection charges 2,023 1,892

Other purchases 683 335

Total 4,215 3,693

2008

1,678

1,894

899

4,471

(In millions of Moroccan dirhams) 2007 2006 Wages 2,314 1,709

Payroll taxes 358 274

Wages and taxes 2,672 1,982

Share-based compensation 23 77

Payroll costs 2,695 2,060

Average headcount 14,154 11,764

2008 2,297

374

2,671 34

2,705 13,955

5


Taxes and levies

Taxes and levies include local taxes (local business tax, property tax, local authority service taxes), fees paid for occupying public land and other levies (transfer taxes, vehicle tax). Fees include amounts paid to the telecommunications regulatory authority with respect to universal service and training, research and development and license fees for the radiofrequency management (2G and 3G licenses.

In 2008, the overall amount of license fees paid was 6% lower than in 2007, chiefly as a result of the ex-emption received in connection with the Universal Service license fee in Morocco. This exemption was granted in consideration for the capital expenditure commitment provided by Maroc Telecom for the so-called Pacte program which will involve the extension of telecommunications coverage to 1,500 remote ru-ral areas in 2008.

Other operating income and expenses

Other operating income and expenses increased by 2.3% to MAD3,643 million, in 2008. This increase was chiefly attributable to the following items: -Commissions: which rose by 14.1% to MAD1,188 million, chiefly as a result of a volume effects (the num-ber of activated handsets rose by 14% in Morocco) and price effects (upselling of mobile handsets, with a 9% average increase in the price of handsets sold).

-Leasing expenses: which increased by 9.4%, essentially as a result of the increase in circuit leasing ex-penses (in particular for international calls) due to the impact of increases in traffic (e.g. an increase of 7.2% in mobile network traffic).

- Maintenance and repairs: which increased by 15.9% (maintenance of network infrastructure and informa-tion systems) due to the expiry of warranty periods for a sizeable proportion of the network infrastructure. As regards the voluntary redanduncy plan, expenses incurred in 2008 amounted to MAD17 million for Ma-roc Telecom (balance due in respect of the 2006 voluntary redanduncy plan) and MAD 21 million for Mauritel. In 2007, the entire amount of job separation costs was incurred by Maroc Telecom.


Taxes and duties 319 307

Fees 469 464

Total 787 771

2008

311

443

754


Communication 604 464

Commissions 1,041 718

Other including : 1,917 1,504

Rental expenses 467 188

Maintenance, repair and rental expenses 634 504

Audit and advisory fees 425 177

Postage and banking services 108 85

Voluntary redundancy plan 193 30

Other 90 520

Total 3,562 2,686

2008

612

1,188

1,843

511

735

401

112

38

45

3,643



For reference, in 2007:

− the increase in fees and compensation for intermediaries due to the consolidation of the new sub-sidiaries (impact of MAD147 million), the reclassification of MAD148 million as expenses linked to site security, cash transport and commissions that were previously classified under “Other”, and despite a MAD47 million reduction in advisory fees paid by Maroc Telecom; and

− a decrease in the “Other” line item mainly due to the aforementioned reclassification, as well as the foreign exchange impact.

Net charge to amortization , impairment and provisions

The following table sets out Maroc Telecom’s net charge to amortization, impairment and provisions for the years ended December 31, 2006, 2007 and 2008.

Net depreciation remained almost unchanged relative to 2007. Other provisions essentially comprised pro-visions for the voluntary redanduncy plan at Gabon Telecom.

Amortization and impairment of fixed assets

The following table sets out the charges related to amortization and impairment of fixed assets recorded by Maroc Telecom group for the years ended December 31, 2006, 2007 and 2008.

Net charge to provisions and impairment

The following table sets out the net provisions and impairment recorded by Maroc Telecom group for the years ended December 31, 2006, 2007 and 2008.


Depreciation and impairment of fixed assets 3,623 2,752

Impairment of accounts receivable 557 301

Impairment of inventories 121 15

Impairment of other receivables 13 5

Provisions (274) 290

Total 4,038 3,363

2008 3,770

93

(35)

(42)

273

4,059


Other intangible assets 746 564

Building and civil engineering 310 273

Technical plant and pylon 2,337 1,662

Other property, plant and equipment 228 253

Total 3,623 2,752

2008

948

177

2,359

287

3,770






Total 416 611

2008

93 (35)

(42)

273

289

5


The net charge to provisions and amortization fell to MAD289 million in 2008 versus MAD416 million a year earlier. This decline was due primarily to the following factors:

• a MAD320 million reduction in impairment allowances for trade receivables in Morocco due to the im-provement in collection efficiency and the settlement of a number of legal disputes with international operators;

• the reversal of provisions for impairment in inventory, which resulted from the destocking efforts pur-sued throughout 2008 and included auction sales;

• a total of MAD273 million in new provisions were accrued in 2008, mainly to cover the MAD180 million in expenses of the voluntary redundancy plan completed in Gabon.

The net charge to provisions and impairment totaled MAD416 million at December 31, 2007, compared with MAD611 million in 2006. This reflected the impact of the following factors:

• an increase in impairment allowances for trade receivables, linked to the growth of the customer base and a stricter policy for recording impairment of trade receivables;

• and the release of a MAD293 million restructuring provision related to the voluntary redundancy plan initiated by Maroc Telecom in 2006, and which had been provisioned for the sum of MAD300 million in 2006.

Earnings from operations

The table blow shows Maroc Telecom’s earnings from operations for the years ended December 31,2006, 2007 and 2008.

Earnings from operations rose by 14% to MAD13,889 million in 2008. For reference, earnings from opera-tions increased 22% in 2007 to MAD12,234 million.

Income or loss from equity affiliates

Losses from equity affiliates amounted to MAD62 million at December 31, 2008. For reference, in Decem-ber 2008, Maroc Telecom increased its equity interest in Medi-1-Sat from 28% to 36.8%, while CIRT did not participate in the share capital increase.

In 2006, Maroc Telecom divested its 35% equity interest in GSM Al-Maghrib for a sale price of MAD13 mil-lion. The transaction resulted in a MAD12 million capital loss which was partially offset by offset by MAD3 million in earnings in the first quarter of 2008.



2008

13,889


Medi-1-Sat (34) (12)

GAM - (9)

Total (34) (21)

2008 (62)

- (62)



Cost of net financial debt and other financial income and expenses

Other financial income amounted to MAD837 million in 2008 and arose as a result of the agreement with the Gabonese government concerning the forgiveness of tax debts and the assumption of payables due to banks by Gabon Telecom which resulted in a non-recurring financial gain of MAD725 million in the financial statements of Gabon Telecom (pursuant to the transfer of receivables agreement signed in 2008 between Gabon Telecom and the government of Gabon). The other financial expenses (MAD418 million in 2008) included the MAD361 million impact of the price supplement to be paid by Maroc Telecom to the govern-ment of Gabon in accordance with the aforementioned agreement.

In 2007, net financial income declined to MAD32 million, down from MAD143 million a year earlier. This decline is mainly due to: i) a rise in interest expenses on borrowings with the consolidation in 2007 of sub-sidiaries with a negative net cash position at December 31, 2007 (deficit of MAD547 million for Onatel and a MAD626 million deficit for Gabon Telecom) and ii) a reduction in investment income resulting from the negative impact of foreign exchange on interest bearing and sight deposits.

Tax expense

The following table shows the breakdown of tax between income tax payable by Maroc Telecom and de-ferred taxes for the years ended December 31, 2006, 2007 and 2008:

(*) Tax expense / earnings before taxes

Income tax payable declined year-on-year in 2008, reflecting the reduction from 35% to 30% in income tax rates in Morocco and Burkina Faso. The item “Current tax” consists of tax due and deferred taxes. Deferred taxes reflect temporary differences between the book value and taxable value of assets or liabilities. The increase in deferred tax liabilities re-corded in 2008 was chiefly attributable to impairment of deferred tax assets recorded by Mobisud France and the reversal of provisions for impairment of investment securities in Mobisud and Medi-1-Sat.



Interest expenses on loans (131) (7)

Net finance costs 0 142 (In millions of Moroccan dirhams) 2007 2006

Foreign exchange gains and losses 11 (3)

Other financial income (+) 22 4

Other financial expense (1) -

Other financial income and expense 32 1

2008 112

(106)

6

2008

(31)

837

(418)

388


Income tax expense 4,062 3,249

Deferred tax 33 90

Current tax 4,095 3,339

Consolidated effective tax rate (*) 33% 33%

2008 3,915

281

4,196

30%

5


Net earnings

Net earnings rose from MAD6,833 million in 2006 to MAD8,137 million in 2007, and to MAD10,010 million in 2008, representing a 19% increase in 2007 and a 23% increase in 2008.

Minority interests

Minority interests amounted to MAD490 million in 2008, MAD104 million in 2007 and MAD94 million in 2006, reflecting the interests of shareholders other than Maroc Telecom in the earnings of the group’s con-solidated entities.

The increase in minority interests in 2008 was driven by the share attributable to minority shareholders of Gabon Telecom in the non-recurring financial gain arising from the agreement signed between Maroc Tele-com and the Gabonese government.

The following table shows the breakdown of minority interests by consolidated entity:

Earnings after minority interests

Consolidated earnings after minority interests amounted to MAD9,520 million in 2008, compared with MAD8,033 million in 2007 and MAD6,739 in 2006.

Net earnings per share

Based on the 879,095,340 shares outstanding, net earnings per share amounted to MAD10.8 for the fiscal year 2008, compared with MAD9.1 in 2007 and MAD7.7 in 2006.


Mauritel 176 102

Mobisud France (51) (8)

Onatel 79 -

Gabon Telecom (99) -

Total minority interests 104 94

2008

165

(106)

75

355

490



5.3.2 Comparison of operating segment results Overview:

Revenues generated by incoming international traffic to Maroc Telecom’s mobile fleet and outgoing international traffic from Maroc Telecom mobile customers were directly accounted for in Mobile operations in 2008 and 2007, whereas in 2006, they were accounted for as transit revenues for Fixed-line operations. Revenue figures for 2006 have been adjusted accordingly. This adjustment had no impact on Maroc Telecom's consoli-dated net revenues.

In addition, comparable basis reflect the consolidation of Onatel and Gabon Telecom as if it had actually taken place on January 1, 2006 for Onatel and March 1, 2006 for Gabon Telecom, and as if the MAD/Mauritanian ouguiya/CFA Franc/Euro exchange rates had remained constant. Finally, 2006 comparable basis figures for Onatel and Gabon Telecom were adjusted to exclude exceptional items and were prepared using ac-counting policies comparable to those used in 2007.

Revenues and earnings from operations for the Mobile segment

Mobile segment data broke down as follows over the past three years:

Comparison of 2007 and 2008 data

Gross revenues generated by Mobile operations increased significantly in 2008, rising by 9.7% (up 8.9% on a comparable basis).

Consolidated earnings from operations of the Mobile segment climbed to MAD10,697 million, up 11.9% (up 11.8% on a comparable basis). This performance was achieved on the back of increased revenues, tight cost control measures and continued strong growth in the customer base.

Maroc Telecom : In 2008, gross revenues generated by Mobile operations in Morocco experienced a slightly slower pace of growth, particularly in the second half of the year. The other key highlight of the year was the commercial


Gross revenues– Mobile 19,296 14,894

Maroc Telecom 17,096 14,206

Revenues from sale of handsets 958 969

Revenues from sale of services 16,138 13,237

Mauritel 834 688

Onatel 719 -

Gabon Telecom 583 -

Mobisud* 64 -


Earnings from operations- Mobile 9,557 7,228


Mauritel 397 309

Onatel 246 -

Gabon Telecom 45 -

Mobisud* (269) (35)

Contribution to consolidated earnings from operations 78% 72%

Depreciation and impairment of fixed assets- Mobile (1,902) (1,428)

* Includies Mobisud France and Maroc Telecom Belgium

2008

21,160

18,529 1,175

17,354 875 881 692 183

(1,442)

10,697

10,255 367 270

44 (239) 77%

(2 148)

5


launch of 3G mobile voice services by the number three mobile operator. Maroc Telecom maintained its leadership, while recording a net addition of 1.12 million clients to its active customer base. At year-end, the active customer base stood at 14.5 million customers, giving Maroc Telecom a 63.4% market share versus 66.5% in 2007. Gross revenues generated by Mobile operations in Morocco rose to MAD18.5 billion, representing growth of 8.4% relative to 2007. Consolidated earnings from operations for the Mobile segment in Morocco came to MAD10,255 million, representing a 12.2% increase compared to 2007. This performance was driven by revenue growth and tight control over customer acquisition costs amid an intensely competitive market environment. Although Mobile revenue growth showed signs of slowing, Maroc Telecom maintained its dominant position in the market and more particularly in the postpaid segment. Furthermore, the operating margin improved by 1.9 basis points to 55.3%. Average revenues per user (ARPU) stood at MAD99.2, representing an 8.4% decline on 2007, despite an intensely competitive market context and the introduction of more restrictive regulations for price promo-tions. As a consequence of the sharp growth in the customer base (increase of 2.6 million customers), the churn rate rose by 9.5 basis points to 34.9% in 2008. Maroc Telecom focused on maintaining a dominant market share by continuing to roll out innovative service offerings, as evidenced by its launch of 3G video telephony services in the prepaid and postpaid segments, reductions in international call rates and the introduction of new call plans (Optimis, etc.) for business cus-tomers. Finally, at the end of 2008, Maroc Telecom launched a prepaid mobile Internet service. In terms of its infrastructure, Maroc Telecom continued to extend its mobile network coverage. At year-end, it had more than 5,400 2G base stations (versus 5,026 base stations in 2007) and had more than 1,100 3G base stations (versus 400 in 2007).

Mauritel : Gross revenues generated by mobile services rose to MAD875 million, up 4.9% on a constant basis and up 3.4% on a comparable basis. Despite more intense competition, the mobile customer base expanded by 26.1% to 1.14 million customers at end-2008. During the year, the entry of a third fixed-line and mobile operator placed considerable pressure on call tar-iffs.

Onatel : Gross revenues generated by mobile services increased to MAD881 million, up 22.5% on a constant basis and up 21.1% on a comparable basis. The mobile customer base grew by 73.2% year-on-year to 977,000 customers at year-end, driven by an extension to network coverage. Despite this, the pace of revenue growth was dampened by higher cost of living expenses and a reduction in consumer spending.

Gabon Telecom : Gross revenues generated by mobile services amounted to MAD692 million in 2008, an increase of 18.7% on a constant basis and of 0.1% on a comparable basis. The mobile customer base grew by 15.8% during the year to 447,000 customers, largely thanks to price promotions.


Gross revenues generated by Mobile operations rose sharply in 2007, up by 29.6% (up 21.4% on a compa-rable basis).

Consolidated earnings from operations of the Mobile business totaled MAD9,556 million in 2007, up 32.2% on a constant basis and up 31.1% on a comparable basis. This strong performance is due to the higher revenues and tight cost control for acquisition costs despite continued strong growth of customer base .



Maroc Telecom : In 2007, gross revenues for the Mobile operations segment rose by 20.3% in Morocco to MAD17,096 mil-lion, driven by a substantial increase in customer base and a contained decline in ARPU.

Despite strong competition, the customer base continued to grow to 13.327 million customers at December 31, 2007, up 24.5% compared with 2006, representing a net increase of more than 2.6 million customers over the period. With the increase in the customer base and the reduction in access costs, the churn rate is now 25.4% (up 5.1 points compared with 2006).

Aggregate ARPU came out at MAD108.3, a slight 4.1% decline compared with 2006, due mainly to a strong increase in the customer base. Outgoing usage continued to grow (up 29%), boosted by promotional efforts and unlimited call plan offerings. Mauritel : In 2007, Mauritel Mobile revenues grew by 21.2%, due to a 50.4% increase in the customer base to 904,500 customers, and despite increased competition due to the offers launched by the third mobile phone operator in Mauritania. Earnings from operations totaled MAD397 million, up 28.5% compared with 2006. Onatel : In 2007, Onatel Mobile revenues were up by 22.1% on a comparable basis to MAD719 million. Thanks to various promotional offers and extended coverage, the Mobile customer base reached close to 564,400 customers at December 31, 2007, up 131% compared with December 31, 2006. Onatel's Mobile business reported a MAD246 million earnings from operations, up 70.2% compared with 2006 on a comparable basis Gabon Telecom : In 2007, Gabon Telecom Mobile revenues were up 31.4% on a comparable basis to MAD583 million, due mainly to a 60.3% increase in the customer base to 386,300 customers, driven both by promotional offers and extended coverage. Earnings from operations reached MAD45 million.

5


Revenues and earnings from operations for the Fixed-line and Internet segment

Fixed-line and Internet segment data broke down as follows over the past three years:


Gross revenues generated by Fixed-line and Internet services amounted to MAD11,354 million in 2008, up 2.4% on a constant basis and up 1.1% on a comparable basis. Consolidated earnings from operations rose to MAD3,192 million, up 19.2% on a constant basis and up 19.8% on a comparable basis. Maroc Telecom : At the end of 2008, Maroc Telecom had a total of 1.299 million fixed lines in service, a level 2.8% lower than in 2007. This decline was due to a reduction in the number of residential customers whereas the num-ber of business customers increased by 3.7%. As a result, Maroc Telecom maintained its 97% market share in the Business segment.

At year-end, Maroc Telecom had 482,000 Internet subscribers, including 477,000 broadband subscribers. The number of ADSL lines in service accounted for almost 42% of the total number of fixed lines in service (excluding public telephony). Outside the wireline Internet access segment, Maroc Telecom had almost 30,000 3G mobile Internet customers and more than 10,000 IPTV customers. Gross revenues generated by Fixed-line and Internet services amounted to MAD9.7 billion in 2008, repre-senting a 2.4% increase compared to 2007. This growth was chiefly attributable to the data services seg-ment and Internet segment which showed respective revenue growth of 26% and 5%, and which helped to offset the 1.2% decrease in the average monthly bill. Earnings from operations in the Fixed-line and Internet segment rose to MAD3,302 million, up 12.5% com-pared to 2007. This growth was primarily attributable to the reduction in international interconnection charges for outgoing voice traffic.


Gross revenues Fixed-line and Internet 11,090 10,312


Voice 6,225 6,618

Interconnection 655 993

Data 1,552 1,585

Internet 1,019 807

Mauritel 319 309

Onatel 799 -

Gabon Telecom 521 -


Earnings from operations– Fixed-line and Internet 2,676 2,815


Mauritel (9) (14)

Onatel (35) -

Gabon Telecom (214) -

Contribution to consolidated earnings from operations 22% 28%

Depreciation, amortization and impairment of fixed assets – Fixed-line and Internet

(1,716) (1,324)

2008

11,354 9,683 6,091

562 1,958 1,072

290 758 622

(1,551) 3,192 3,302

5 (60) (55)

23%

(1,622)



Mauritel : Mauritel’s Fixed-line and Internet operations generated gross revenues of MAD290 million in 2008, down 9.1% on a constant basis and down 10.4% on a comparable basis. Thanks to the success of CDMA-based services, the number of fixed lines in service stood at 49,000 lines at the end of 2008, a level 36.1% higher than the prior year. The number of Internet access points almost doubled in 2008, reaching 9,000 access points at year-end. Onatel : Onatel’s Fixed-line and Internet operations generated gross revenues of MAD758 million in 2008, down 5.1% on a constant basis and down 6.2% on a comparable basis. At year-end, Onatel had more than 145,000 lines in service, a level 18.9% higher than in 2007. In addition, it had more than 17,000 Internet subscribers, representing a 41.7% increase on the prior year. Gabon Telecom : Gabon Telecom’s Fixed-line and Internet operations generated gross revenues of MAD622 million in 2008, up 19.4% on a constant basis and down 4.0% on a comparable basis. At year-end, the number of fixed lines in service stood at 33,000, a level 37.5% higher than in 2007. In addition, the number of Internet ac-cess points rose by 40% to 14,000.

Comparison of 2006 and 2007 data Gross revenues generated by Fixed-line and Internet operations amounted to MAD11,090 million in 2007, up 7.5% compared with 2006. This rise was chiefly attributable to the first-time consolidation of Onatel and Gabon Telecom in 2007. On a comparable basis, gross revenues in the Fixed-line and Internet segment were down 6%. In 2007, the Fixed-line segment consolidated earnings from operations totaled MAD2,676 million, down 4.9% compared with 2006. Except for Maroc Telecom, the Fixed-line and Internet business recorded an operating loss across all subsidiaries. Maroc Telecom : The Fixed-line and Internet business in Morocco recorded gross revenues of MAD9,451 million in 2007, down 5.5% on the prior year. The number of fixed-line access points totaled 1.289 million (equivalent to 1.336 million lines), up 1.8% compared with 2006. The number of lines in service increased by 23,000 lines during the year, thanks to the success of unlimited call plans. In the voice segment the average monthly bill decreased by 3.5%, due primarily to competition from phone shop operators. This was chief reason for the decline in revenues in the Fixed-line segment. The ADSL customer base reached 470,000 lines as at December 31, 2007, up by 22.4% compared with the end of 2006 and accounting for almost 42% of fixed lines in service (excluding public telephony). Thanks to sound market fundamentals, Internet segment revenues grew by more than 25% to more than MAD1 billion. Mauritel : In 2007, Mauritel SA revenues from Fixed-line business were up 3.2% to MAD319 million compared with 2006. Mauritel SA’s Fixed-line customer base, mainly concentrated in Nouakchott and Nouadhibou, de-creased by 2.6% to 36,467 lines. The company recorded an operating loss of MAD9 million at December 31, 2007.

Onatel : In 2007, Onatel revenues from Fixed-line business totaled MAD799 million, up 0.2% compared with 2006 on a comparable basis. The company recorded an operating loss of MAD35 million at December 31, 2007, versus a loss of MAD75 million at December 31, 2006 on a comparable basis.

Gabon Telecom : In 2007,Gabon Telecom revenues from Fixed-line business totaled MAD521 million, down 25.7% compared with 2006. The company recorded an operating loss of MAD214 million at December 31, 2007, versus a loss of MAD114 million at December 31, 2006 on a comparable basis.

5


5.3.3 Cash and cash equivalents The group’s main source of liquidity is net cash from operating activities. Maroc Telecom group funds all its capital expenditure with its operating cash flow.

Statement of cash flows

The following table contains information relating to Maroc Telecom’s consolidated cash flows for the speci-fied periods:

NB: Net cash from operating activities comprise changes in working capital requirements (including suppliers of fixed assets). Net cash used in investing activities therefore do not include changes in working capital requirements relating to suppliers of fixed assets.

Net cash from operating activities Net cash from operating activities amounted to MAD12,567 million in 2008, representing a reduction of MAD502 million on the prior year. This decline was essentially attributable to an increase in tax payable in 2008, which rose by MAD1,358 million. Conversely, the Company’s cash flow from operations (cash flow before the cost of financial debt) increased by MAD2,214 million. At December 31, 2007, net cash from operating activities totaled MAD13,069 million, a MAD1,836 million increase compared with December 31, 2006. This increase is primarily the result of an improvement in net cash from operating activities after net financial items and taxes (for MAD1,439 million).

Net cash used in investing activities At December 31, 2008, net cash used in investing activities amounted to MAD5,769 million versus MAD5,656 million a year earlier, representing an increase of MAD491 million. At December 31, 2007, net cash used in investing activities totaled MAD5,656 million versus MAD6,435 million in 2006. This decrease mainly reflects the fact that the MAD2,476 million paid for the ac-quisition in 2006 of a 51% stake in Onatel overshadowed the significant increase in capital expenditure of almost MAD1,500 million.

Net cash used in financing activities At December 31, 2008, net cash used in financing activities stood at MAD7,857 million versus MAD6,432 million a year earlier. This increase was primarily attributable to the MAD1,293 million in divi-dend payments made in 2008. At December 31, 2007, net cash used in financing activities totaled MAD6,432 million versus MAD9,615 million in 2006. This decrease resulted mainly from the extraordinary dividends paid in connec-tion with the MAD3,516 million capital reduction carried out by Maroc Telecom in 2006. In addition, ordinary dividends were significantly higher in 2007 at MAD6,953 million compared with MAD6,142 million in 2006.


Net cash from operating activities 13,069 11,233

Net cash used in investing activities (5,656) (6,435)

Net cash used in financing activities (6,432) (9,615)

Effect of foreign currency translation adjustments 3 (27)

Change in cash and cash equivalents 984 (4,844)

Cash and cash equivalents at the beginning of the period 2,741 7,585

Cash and cash equivalents at the end of the period 3,725 2,741

2008

12,567

(5,769)

(7,857)

13

(1,047)

3,725

2,678



Capital expenditure

The following table sets out Maroc Telecom’s capital expenditure by segment for the periods specified:

Overview

The difference between tangible and intangible capital expenditure and net cash used in investing activities is due to the latter taking into account financial investments, sales of fixed assets and the repayment of long-term loans. In 2008, the difference between net cash used in investment activities and acquisitions of property, plant and equipment and intangible assets was essentially attributable to sales of equipment and land in Morocco which generated MAD228 million in proceeds. Capital expenditure amounted to MAD5,957 million while 18% of this total was incurred by subsidiaries. In 2007, the difference between net cash used in investing activities and acquisitions of property, plant and equipment and intangible assetts was mainly due to the acquisition of equity investments in Gabon Tele-com for MAD343 million. In 2007, investments amounted to MAD5,467 million, of which close to 24% at subsidiary level.

In 2006, the difference between net cash used in investing activities and acquisitions of property, plant and equipment and intangible assets was mainly due to the acquisition of Onatel shares for MAD2,476 million. In 2006, investments amounted to MAD3,978 million.

Investments in Morocco

Mobile: In 2008, Maroc Telecom stepped up investments aimed at extending the coverage and capacity of its network, notably through the deployment of around 700 3G base stations and the extension of the service platforms for the intelligent network (IN, SMS, MMS, voicemail servers, etc.). During the year, a large-scale project was launched to replace the legacy core network with next-generation network (NGN) infrastructure. In 2007, Maroc Telecom continued to invest in enhancing the mobile network’s coverage and capacity. The Group deployed 420 new base transceiver stations (BTS), increasing the number of BTS in service to over 5,000. Base station controller (BSC) and network switching subsystem (NSS) capacity was reinforced fol-lowing an increase in traffic and in the number of customers in 2007 (2.3 million new customers). In addition to investments in 2G equipment, 400 3G base stations (NodeB) were deployed to provide for main urban centers of Morocco. The group also invested in service platforms (including IN and SMS MMS, VMS sys-tems etc.), and brought new platforms into service. In 2006, Maroc Telecom continued to invest in enhancing the mobile network’s local reach and capacity. A total of 424 new base transceiver stations (BTS) and 70 replacement BTS were deployed in 2006. Base station controller (BSC) and network switching subsystem (NSS) capacity was reinforced following an increase in traffic and in the number of clients in 2006 (2.5 million new customers). A redeployment and extension program of the TRX started in 2002 has optimized the use of the radio access equipment (TRX). The group also invested in service platforms (including IN and SMS MMS, VMS systems etc.), and brought new platforms into service .


Fixed-line and Internet 2,188 1,533

Mobile 3,279 2,445

Total 5,467 3,978

2008 2,343

3,613

5,957

5


In 2009, in addition to costs arising from the growth in the customer base and usage, capital expenditure will be primarily allocated to the extension of 3G network coverage and increasing broadband speeds for customers in order to meet the demands of Mobile Internet applications. The rollout of the next-generation network core will be finalized and will enhance network operation. Finally, the Universal Service management committee of the ANRT approved Maroc Telecom’s proposal for the extension of network coverage to 7,338 localities (out of a total of 9,263) for an aggregate investment of around MAD1.2 billion, to be deducted from its contribution to the universal service for the 2008 to 2011 period.

Fixed-line and Internet : In 2008, Maroc Telecom continued to invest to increase its network capacity while deploying a dedicated next-generation network core for the fixed-line network along with an IP/MPLS backbone network. In 2007, faced with ever increasing capacity requirements, the Group carried out significant investments, namely in urban and intercity fiber optic cable capacity, increasing the domestic transmission capacity from 201,000 to 308,000 E1 connections. International transmission also involved significant investments, namely via the deployment of the "Atlas Offshore" submarine cable between Assilah and Marseille aimed at increasing international bandwidth, with total capacity reaching 25 Gbits/s at December 31, 2007. Nearly 276,000 customers will be connected for 96,000 ADSL users. In 2006, continued ADSL growth and the introduction of TV via ADSL required significant investments in access, core network and transmission equipment. These investments enabled the Group to deal with the growth in the ADSL customer base. The capacity of the transmission network has been increased by al-most 90% and a cable submarine between Assilah and Marseilles has been deployed. As from 2009, Maroc Telecom will be able to offer new services (VoIP, etc.) for fixed-line customers using IP technology. Network infrastructure, whether for domestic and international transport or for transport plat-forms, will be enhanced in order to cater to growth in usage. In addition, the main urban centers of southern Morocco will be linked to the national backbone by optical fiber links.

Capital expenditure on information systems Maroc Telecom’s expenditure on information systems is intended to:

• Industrialize planning, administration and management for Maroc Telecom’s telecommunications net-work;

• optimize, integrate and increase the reliability of the Company’s engineering, sales and marketing, hu-man resource, administrative and financial processes.

During the 2006 - 2008 period, the principal investments on information systems were: • 2006: changes to the Fixed-line system (Fixed-line and Internet invoicing, set up and activation),

continued installation of back-up sites and further upgrades to financial management systems. • 2007: Continued industrialization via upgraded activation/sales systems. 2008: upgrades the interconnection applications and the fixed-line information system, implementation of

a common administration system for indirect sales; extension of the business continuity plan to new functions.

Investments made by the subsidiaries

Investments made by the subsidiaries accounted for nearly one-quarter of the Group's overall capital expenditure and mainly involved increasing mobile network coverage and capacity, improving existing fixed-line network performance and deploying CDMA and ADSL networks. Thus, in 2008, the number of Mobile base stations was increased by 51% in Mauritania and by 53% in Burkina Faso.



Other non-current financial assets

The Group’s various financial investments and divestments over the past three years can be summarized as follows:

• In 2008, Maroc Telecom sold three land parcels for an aggregate value of MAD106 million and generated an accounting gain of MAD78 million. Furthermore, Maroc Telecom participated in the share capital increases of Mobisud France (for MAD37 million), Mobisud Belgium (MAD54 million) and Medi-1-Sat (of which MAD18 million was fully paid up, representing one-quarter of the share capital increase decided by the General Shareholders’ Meeting). As a result, the group had a 36.8% equity interest in Medi-1-Sat at December 31, 2008 insofar as CIRT did not participate in the capital increase. Furthermore, the MAD18.6 million in interest-bearing loans granted to Medi-1-Sat gener-ated MAD2.6 million in interest income.

• In 2007, Maroc Telecom acquired a 51% stake in Gabon Telecom, Gabon's incumbent operator. The reference price was set at EUR61 million. The contractual arrangements for the acquisition included, a purchase price adjustment mechanism based on the audited balance sheet in the 2006 financial statements. To date, Maroc Telecom has paid EUR26.3 million in total, which forms the basis of valuation for this equity investment. As provided in the shareholders’ agreement, Maroc Telecom participated in Medi-1-Sat's capital in-crease for MAD25 million, thus increasing its stake in the subsidiary to 28%.

Maroc Telecom Belgium, a wholly-owned Maroc Telecom subsidiary, completed a MAD36 million recapitalization in 2007, thereby increasing its share capital to MAD53 million at year end .

• In 2006, Maroc Telecom divested its equity interest in GSM Al-Maghrib for MAD13 million, pursuant to the decision of the General Shareholders’ Meeting. It contributed MAD10 million to the capital increase carried out by Medi-1-Sat, thus increasing its equity interest in the company to 27% . Finally, it established the Maroc Telecom Belgium subsidiary with a contribution of MAD17 million and acquired a 51% shareholding in Onatel the Burkinabe operator for MAD2,476 million.

Capital resources

To date, Maroc Telecom has used its cash surplus as the primary source of funds for day-to-day operations. In May 2008, Maroc Telecom made use of two overdraft facilities, for amounts of MAD2 billion and MAD1.8 billion, which bear interest at respective rates of 3.96% and 4.46%. The overdraft facilities were used to distribute dividends. The outstanding balance of borrowings at December 31, 2008 stood at MAD2,452 million. The following table shows the breakdown of outstanding debt (excluding accrued interest) by currency for the periods specified:


Euro 56 1

US Dollar - -

Other currencies (mainly CFA Franc) 1,512 52

Moroccan Dirham 779

Outstanding debt 2,347 53

Accrued interest 45 1

Total borrowing 2,392 55

2008

714

-

646

1,077

2,436

15

2,452

5


Thanks to its net cash from operating activities and inspite of the impact of dividend distributions and equity investments, the Group has a positive cash position as follows:

* marketable securities are considered as quasi cash when they are held for no more than three months.

In its reports to the stock market regulatory authorities, Vivendi declares that certain of its bank loans and/or bond issues contain customary provisions under which Vivendi undertakes to ensure that its subsidiaries, including the Company, comply with certain commitments such as not providing security for assets in excess of threshold amounts. The thresholds below which these transactions are permitted are generally determined on an aggregate basis for all subsidiaries of the Vivendi group, and the Company may not be able to take full advantage of these exclusions if they have already been utilized by other Vivendi group subsidiaries. In addition, Vivendi’s borrowings also include financial covenants that require it to satisfy a maximum ratio of proportionate net financial debt to proportionate EBITDA and dividends received from unconsolidated companies. These ratios are determined on a consolidated basis and take into account the indebtedness, the financial position and the financial results of Vivendi subsidiaries, including the Company, proportionally to Vivendi's share in their capital. Consequently, Vivendi may exercise its power of control over the Company to prevent it from undertaking certain transactions in the event that such transactions would result in a breach of the commitments made by Vivendi with regard to its loans or would result in Vivendi breaching its financial ratio covenants. Insofar as is not a party to these loans and/or commitments, the Company is unable to estimate the nature or the precise extent of their restrictions or terms contained therein, other than those documents that are publicly available. Maroc Telecom cannot guarantee that the Vivendi group has made other commitments that may have an impact on the Company’s operations and financial resources (see 4.14 “Risk factors").

Commitments

Maroc Telecom’s commitments include the balance of contracts made with suppliers and pledges and se-curity deposits relating to equipment supply contracts.

The following table sets out these commitments:

Commitments given

* balances of contracts with suppliers and others

In 2008, commitments given increased by a MAD1.4 billion, chiefly as a result of the increase in Maroc Telecom’s investment commitments in connection with the Pacte program.


Outstanding debt and accrued interests (a) 2,392 55

Cash* (b) 3,725 2,741

Cash held for repayment of bank loans (c) 118 -

Net cash position (b) + (c) - (a) 1,451 2,686

2008

2,452

2,678

150

376


Contract guarantees - -

Securities receivables (Dailly receivables…) - -

Pledges, mortgages and reals ecurity interests - -

Guarantees, security and warranties 82 205

Other commitments* 1,753 1,336

Total 1,835 1,541

2008

-

-

-

78

3,141

3,219



Commitments received

The increase in commitments received in 2007 mainly relates to an equipment swap contract with Nokia Siemens Network whereby the latter committed to purchase obsolete mobile network equipment (HLR, MSC, TMSC and GPRS) from Maroc Telecom for a total amount of MAD615.5 million. A rider to this contract was signed in 2008 which released Nokia Siemens Network from its obligation to repurchase the obsolete equipment without changing the net purchase price for new equipment. 5.3.4 Contractual obligations and commercial commitments The following table sets out the contractual obligations borne by Maroc Telecom at December 31, 2008, by maturity (in millions of Moroccan dirhams):

* long-term vehicle leases (excluding tax).

Long term liabilities relate to the newly acquired subsidiaries.

Maroc Telecom entered into an investment agreement with the public authorities of the Kingdom of Mo-rocco in 2006, applicable since April 30, 2006, whereby Maroc Telecom agreed to (i) implement a capital expenditure program over three years in an amount of MAD7,410 million and (ii) create 150 new jobs dur-ing the period 2006-2009. In return, the public authorities agreed to exonerate Maroc Telecom from cus-toms duties on all imported capital goods. By December 31, 2007 Maroc Telecom’s capital expenditure un-der this program totaled MAD7,019 million. At December 31, 2008, the commitments entered into in con-nection with this agreement were fully implemented.


Government guarantees on loans - 1

Guarantees, security and warranties 2,109 1,152

Total 2,109 1,153

2008

1,674

1,674

(In millions of Moroccan dirhams) Total <1 year 1-5 years >5 years

Long-term debts 1,316 277 956 83

Finance lease obligations - - - -

Operating leases* 4 4 - -

Irrevocable purchase obligations - - - -

Other long-term commitments - - - -

Total 1,320 281 956 83

5


5.3.5 Disclosure of qualitative and quantitative information about market risks The groups is exposed to various market risks connected with its business.

Foreign exchange risk

Maroc Telecom is exposed to fluctuations in exchange rates as the composition of its foreign currency receipts varies considerably from that of its foreign currency disbursements. Foreign currency receipts and disbursements represent a significant portion of the company’s revenues. Maroc Telecom’s foreign currency receipts relate to revenues from international operations while foreign currency disbursements relate to payments to suppliers (in particular capital expenditure and acquisition of handsets) and payments for interconnection with foreign operators. These disbursements are mainly de-nominated in euros. At December 31, 2008, the portion of euro-denominated disbursements (excluding subsidiaries) accounted for 59% of the MAD4,850 million in total foreign currency disbursements. Foreign currency disbursements exceeded the volume of foreign currency receipts, which amounted to MAD3,059 million in 2008. Furthermore, Maroc Telecom had a overall debt of approximately MAD2,452 million at year-end. The bulk of this debt is denominated in CFA francs and Moroccan dirhams (see “Financial resources” above for more information). Maroc Telecom cannot net its foreign currency disbursements and receipts insofar as Moroccan law allows it to hold only 50% of its telecom receipts in foreign currency accounts and the remaining 50% has to be converted into Moroccan dirhams. Consequently, Maroc Telecom’s earnings may be affected by fluctua-tions in exchange rates, and in particular by fluctuations in the Moroccan dirham against the US dollar or the euro. In 2008, the euro depreciated by 1.0% relative to the Moroccan dirham (exchange rate of EUR1 to MAD11.359 at December 31, 2007 versus EUR1 to MAD11.246 at December 31, 2008). Over the same period, the US dollar appreciated by 5%, rising from an exchange rate of one dollar to MAD7.7132 in 2007 to MAD8.0983 in 2008. For the group, a 1% depreciation in the dirham relative to the euro would have the following impact on the consolidated financial statements:

• revenues : increase of MAD60 million • earnings from operations : increase of MAD14 million • earnings after minority interests : increase of MAD11 million

The following table sets out the Company’s net foreign currency positions at December 31, 2008:

The group does not use foreign-currency hedging instruments. At the level of the Company (excluding subsidiaries), assets denominated in foreign currencies are mainly receivables from foreign operators. Liabilities denominated in foreign currencies are mainly debts to foreign operators and suppliers.

(In millions of Moroccan dirhams) MAD USD Euro/FCFA Other cur-rencies

Total

Total assets 27,255 719 8 335 2,174 38,483

Total liabilities 27,417 661 8 200 2,205 38,483



The following table sets out the Company’s net foreign currency positions (excluding subsidiaries) at De-cember 31, 2008.

* : Assuming euro 1 = MAD11,2460 NB : (1) the other main currencies are the Japanese Yen (JPY), the Swiss franc (CHF) and the Swedish crown (SEK); (2) Exchange rate in euro and US dollar are calculated by applying the currency-specific proportion of receipts and disbursements made during 2008 to the receivables and payables of foreign operators in Special Drawing Rights (SDR) at December 31, 2008; (3) As regards the balance of commitments relating to current agreements, the breakdown by currency is based on the balance observed for such contracts.

For Maroc Telecom, a 1% increase in the euro and US dollar versus the Moroccan dirham would have had the following impact as of December 31, 2008 :

• a MAD22 million increase in assets denominated in foreign currencies; • a MAD20 million decrease in liabilities denominated in foreign currencies; • a MAD2 million increase in the net position; • a MAD17 million decrease in commitments and ; • a MAD16 million decrease in total net assets and liabilities.

Conversely, a 1% decrease in the euro and US dollar versus the Moroccan dirham would have had the fol-lowing impact as of December 31, 2008 :

• a MAD22 million decrease in assets denominated in foreign currencies; • a MAD20 million increase in liabilities denominated in foreign currencies; • a MAD2 million decrease in the net position; • a MAD17 million increase in commitments and ; • a MAD16 million increase in total net assets and liabilities.

(In millions ) EURO USD Other currencies

(euro equivalent)*

Assets 130 89 0

Liabilities (117) (81) (3)

Net assets (liabilities) 13 8 (3)

Commitments (101) (68) (2)

Total net assets (liabilities) denominated in foreign currencies (88) (60) (5)

5


Interest rate risk The following table sets out outstanding debt by creditor at December 31, 2008:

Company (In millions of Moroccan dirhams) Interest rate % Maturity December 31,

2008 December 31,

2007 December 31,

2006

Maroc Telecom Banks, IAM overdrafts 3.9% - 1,071 779 -

Mauritel Loan for a Mobile License (October 2000) 8.0% january-08 0 11 53

Mauritel ABCI 7,2 MEUR 09/96 03/07 7.4% march-07 0 0 1

Mauritel Saudi fund for development 2.5% - 1 1 -

Onatel SBIF 2005-2011 6.7% june-11 216 288 -

Onatel CONS.BIB-ECOBANK-BICIA 7.7% july-12 132 140 -

Onatel Domestic loan retroceded by the Moroccan government 7.5% december-08 0 9 -

Onatel BOAD 96.00 6.0% july-11 21 29 -

Onatel BEI 2.0% december-10 13 20 -

Onatel AFD 1109 7.7% october-09 2 5 -

Onatel AFD110-1111 2.0% october-18 21 23 -

Onatel SGBB 2007 6.4% november-13 86 87 -

Onatel BOA 2007 6.4% december-14 86 87 -

Onatel BOAD 09 00 8.0% july10 51 69 -

Onatel BIB 2008 6.0% dec-13 35 0

Onatel SFI 2008 7.6% Jul-13 87 0

Onatel BICIAI 2008 6.3% sept-15 87 0

Onatel Banks, Onatel overdrafts 8.5% - 54 23

Gabon Telecom BEI 3.0% march-12 0 177 -

Gabon Telecom BID 8.0% december-12 0 156 -

Gabon Telecom AFD 5.0% october-09 2 2 -

Gabon Telecom Commerz bank Euribor+0.75% december-13 72 80 -

Gabon Telecom BGFI leasing liabilities - - 4 12 -

Gabon Telecom Bank, GT bank accounts in credit 0,0% - 12 25 Libertis Alcatel Phase I Euribor+3.5% november-09 23 46 -

Libertis Alcatel Phase II Euribor+0.75% march-11 161 266 -

Mobisud France Borrowing Mobisud fr - - 215 56 -

- Other 8.0% - - - 1

Total Bank loans and other financial liabilities 2,452 2,392 55



Net cash position by maturity

2008

2007

2006

Surplus cash balances are invested at market rates. Fluctuations in deposit interest rates have a significant material impact on investment income:

• Based on the average cash balance at December 31, 2008, a 1% increase in interest rates would result in additional income of MAD9 million over a one year investment timeframe;

• Conversely, based on the average cash balance at December 31, 2008, a 1% decrease in the interest rates would result in a shortfall of MAD-9 million over a one year investment timeframe.

Equity risk

Maroc Telecom does not have a significant portfolio of listed equities. As a result, there is no risk relating to changes in the value of such securities.

In millions of Moroccan dirhams < 1 year 1-5 years > 5 years Total

Bank loans 331 1,125 108 1,565

Bank overdrafts 828 - - 828

Financial liabilities 1,159 1,125 108 2,392

Cash at bank and in hand 3,725 - - 3,725

Cash held for repayment of bank loans 118 - - 118

Total 2,684 (1,125) (108) 1,451

5


Bank loans 277 956 83 1,316

Bank overdrafts 1,136 - - 1,136

Financial liabilities 1,412 956 83 2,452

Cash at bank and in hand 2,678 - - 2,678

Cash held for repayment of bank loans 150 - - 150

Total 1,415 (956) (83) 376


Bank loans 44 11 - 55

Bank overdrafts - - - -

Financial liabilities 44 11 - 55

Cash at bank and in hand 2,741 - - 2,741 Total 2,697 (11) - 2,686


5.3.6 Transition from individual financial statements to consolidated financial sta-tements The consolidated financial statements are derived from the individual financial statements of Maroc Tele-com and its subsidiaries, as prepared under the national accepted accounting principles in each country. A number of adjustments are made to comply with consolidation rules and to bring the individual financial statements into compliance with the format required by IFRS. For the details of the transition to IFRS, please refer to part II of the financial statements below. The main adjustments to the income statement items are:

• The elimination of revenues related to cancelled subscriptions between the date of cancellation and the end of subscription period;

• The recognition as consolidated operating expenses of resellers’ commissions. These costs were initially netted against revenues in the individual financial statements;

• The reclassification of non-current items to earnings from operations, with the exception of variations in the value of fixed assets;

• The reclassification of the Fidelio provision, which is instead netted against revenues; • The reclassification under financial income of non-current financial items.

The main adjustments to the balance sheet relate to current assets:

• SIM cards: reclassification of inventories under fixed assets; • Non-activated handsets: handsets sold but not activated are restated to take into account the

recognition of revenues upon activation. • Regarding trade payables, the main restatement entails recording certain operating payables as

provisions for liabilities and charges. The above changes in presentation do not affect group earnings.

Other consolidation adjustments include the elimination of statutory provisions, the calculation of deferred taxes, and consolidation-related operations (such as the elimination of investment securities etc.).



Pursuant to European Regulation n° 1606/2002 of July 19, 2002, the consolidated financial statements of Maroc Telecom group have been prepared in accordance with the International Financial Reporting Stan-dards (IFRS) approved by the European Union as at December 31, 2008.

Table of contents

5.4 CONSOLIDATED FINANCIAL STATEMENTS

• Statutory auditors’ report on the consolidated financial state-ments

• Consolidated balance sheets as at December 2008, 2007 and 2006

• Consolidated income statements for the years 2008, 2007 and 2006

• Consolidated statements of cash flows for the years 2008, 2007 and 2006

• Consolidated statements of changes in equity for the years 2008, 2007 and 2006

• Notes to consolidated financial statements

• Note 1. Accounting principles and valuation methods-Note 2. Scope of consolidation for 2008, 2007 and 2006

• Note 3. Goodwill as at December 31, 2008, 2007 and 2006 • Note 4. Other Intangible assets at December 31,

2008, 2007 and 2006 • Note 5. Property, plant and equipment as at December

31, 2008, 2007 and 2006 • Note 6. Investment in equity affiliates as at December

31, 2008, 2007 and 2006 • Note 7. Non-current financial assets as at December

31, 2008, 2007 and 2006 • Note 8. Change in deferred taxes as at December,

31, 2008, 2007 and 2006 • Note 9. Inventorires as at December 31, 2008, 2007 and 2006 • Note 10. Receivables and other as at December 31, 2008, 2007 and 2006 • Note 11. Short term financial assets as at December 31, 2008, 2007 and 2006 • Note 12. Cash and cash equivalents as at December

31, 2008, 2007 and 2006 • Note 13. Dividends paid and proposed • Note 14. Provisions as at December 31,

2008, 2007 and 2006

• Note 15. Borrowings and other financial liabilities as at December 31, 2008, 2007 and 2006

• Note 16. Accounts payable as at December 31, 2008, 2007 and 2006

• Note 17. Revenues for 2008, 2007 and 2006

• Note 18. Purchases for 2008, 2007 and 2006

• Note 19. Payroll costs for 2008, 2007 and 2006

• Note 20. Taxes, duties and fees for 2008, 2007 and 2006

• Note 21. Other operating income and expenses for 2008, 2007 and 2006

• Note 22. Net depreciation, impairment and provisions for 2008, 2007 and 2006

• Note 23. Income from equity affiliates for 2008, 2007 and 2006 • Note 24. Net finance income (expense) for 2008, 2007 and 2006 • Note 25. Tax expense for

2008, 2007 and 2006 • Note 26. Minority interests for

2008, 2007 and 2006 • Note 27. Earnings per share for

2008, 2007 and 2006 • Note 28. Segment data as at December 31,

2008, 2007 and 2006 • Note 29. Restructuring provisions as at December 31,

2008, 2007 and 2006 • Note 30. Transactions with related parties • Note 31. Contractual obligations,

and contingents assets and liabilities • Note 32. Risk management • Note 33. Post-Balance sheet events

5


Statutory auditors’ reports on the Consolidated financial statements for the year ended December 31, 2008 Chairman Sirs shareholders we have audited the accompanying financial statements of Itissalat Al-Maghrib SA (IAM), including the balance sheet as of December 31, 2008, consolidated income statement, statement of changes in equity and statement of cahs flows for the fiscal year closed on this date and notes holding a summary of accounting principles methods and other expla-natory notes.

Management responsability

The direction is responsible for the setting up and true presentation of these financial statements, in accordance with the Financial International Information standards. This responsibility includes the design, the setting up and the follow-up of the internal control relating to the establishing and presentation of the financial statements not comprising signifi-cant anomaly, whether those resulting from frauds or errors, as well as the determination of reasonable countable esti-mates taking into consideration circumstances. Auditor responsability Our responsibility is to express an opinion on these financial statements on the basis of our audit. We conducted our audit in accordance with the auditing standards in Morocco. These standards require to conform to the rules of ethics, to plan and carry out the audit to obtain a reasonable assurance that the financial statements are free from material misstatement. An audit implies the implementation of procedures in order to collect convincing elements concerning the amounts and the provide informations in the financial statements. The choice of the procedures concerns the auditor judgement and the evaluation of risk that the financial statements could contain a material misstatement resulting from frauds or er-rors. While carrying out these evaluations of the risk, the auditor takes into account the internal control in force on entity rela-ted to the setting up and presentation of the financial statements in order to define proceedings of audit adapted to the circumstance, and not in aim to express an opinion on effectiveness of this one. It also includes assessment of the accounting principles used and significant estimates made by Management in the preparation of the financial statements and an evaluation of the overall adequacy of the presentation of these state-ments. We believe that our audit provides a reasonable basis for the opinion expressed below. Opinion on the financial statements In our opinion, the consolidated financial statements referred to in the first paragraph above give, in all their significant aspects, a true image of the financial position of the overall unit constitute from the person and the consolidated entities included in the consolidation financial statements of Itissalat Al-Maghrib SA (IAM) as of December 31, 2008, as well as the financial performance and statement of cash flows for the fiscal year closed on this date, in accordance with IFRSs as adopted by the European union.

Without prejudice to the opinion above, we draw your attention to the estimated character of segment data (expressed in the notes 1 (§ 2.5) et 28).

Specific control

In addition, we also performed the verifications of information contained in the Management Board’s report. We ensure that it was consistent with the Company’s financial statements.

February 25, 2009

Statutory auditors

KPMG Fouad LAHGAZI

Partner

Abdelaziz ALMECHATT Abdelaziz ALMECHATT

Partner

FINANCIAL REPORT 5.4. Consolidated financial statements


Consolidated Balance Sheets as at December 31, 2008, 2007 and 2006

ASSETS (In millions of Moroccan dirhams) Note December 31, 2008

December 31, 2007 December

31, 2006 Goodwill 3 2,117 2,197 146

Other intangible assets 4 3,889 3,644 2,415

Property, plant and equipment, net 5 18,684 16,870 12,460

Investments in equity affiliates 6 0 1 9

Non-current financial assets 7 326 326 2 620

Deferred tax assets 8 17 204 445


Inventories 9 744 749 438

Trade accounts receivable and other 10 9,827 9,897 6,928

Current financial assets 11 105 104 22

Cash and cash equivalents 12 2,678 3,725 2,741

Available -for -sale assets 96 32

Current assets 13,450 14,507 10,129

TOTAL ASSETS 38,483 37,749 28,224

SHAREHOLDERS’ EQUITY AND LIABILITIES (In millions of Mo-roccan dirhams) Note December

31, 2008 December

31, 2007 December 31, 2006

Share capital 5,275 5,275 5,275

Retained earnings 3,914 4,071 4,247

Net earnings 9,520 8,033 6,739

Capital attributable to equity holders of the parent 13 18,709 17,380 16,261

Minority interest 1,647 1,254 592

Total shareholders’ equity 20,356 18, 634 16,853

Non-current provisions 14 180 203 36

Borrowings and other non-current financial liabilities 15 1,039 1,233 11

Deferred tax liabilities 8 100 0 177

Non-current liabilities 1,319 1,436 224

Trade accounts payable 16 14,763 15,385 10,278

Current income tax liabilities 114 992 437

Current provisions 14 519 142 388

Borrowings and other current financial liabilities 15 1,412 1,159 44


TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 38,483 37,749 28,224

5


Consolidated Income Statements for the years ended 2008, 2007 and 2006

(In millions of Moroccan dirhams) Note 2008 2007 2006

Revenues 17 29,521 27,532 22,615

Cost of purchases 18 (4,471) (4,215) (3,692)

Payroll costs 19 (2,705) (2,695) (2,060)

Taxes and duties 20 (754) (788) (771)

Other operating income (expenses) 21 (3,643) (3,562) (2,686)

Net depreciation, amortization and provisions 22 (4,059) (4,038) (3,363)


Other income and charges from ordinary activities (15) 1 7

Income from equity affiliates 23 (62) (34) (21)

Earnings from continuing operations 13,812 12,201 10,029

Income from cash and cash equivalents 112 131 149

Borrowing costs (106) (131) (7)

Net borrowing costs 6 0 142

Other financial income and expenses 388 31 1

Net financial income (expense) 24 394 31 143

Income tax expense 25 (4,196) (4,095) (3,339)

Net earnings 10,010 8,137 6,833

Attributable to equity holders of the parent 9,520 8,033 6,739

Minority interests 26 490 104 94

EARNINGS PER SHARE (In Moroccan dirhams) 2008 2007 2006

Net earnings- group share 9,520 8,033 6,739

Number of shares as at December 31 879,095,340 879,095,340 879,095,340

Earnings per share 27 10.8 9.1 7.7

Diluted earnings per share 27 10.8 9.1 7.7



Consolidated Statements of Cash Flows for the years ended 2008, 2007 and 2006

Dividends paid:

• MAD8,088 million dividends paid by Maroc Telecom • MAD158 million paid by subsidiaries to minority shareholders

(*) Onatel has been fully consolidated since January 1, 2007. (*) Mobisud Belgium has been fully consolidated since May 1, 2007. (*) Gabon Telecom has been fully consolidated since March 1, 2007 (C) The change in working capital also includes changes relating to fixed assets

(In millions of Moroccan dirhams ) Note December

31, 2007 December

31, 2006

Consolidated net earnings (including minority interests) 8,137 6,833

Net depreciation, amortization , impairment and provisions 3,317 3,043

Non-cash expenses (income) 34 74

Capital gains and losses (106) -6

Cash flow after net borrowing costs and income tax expense 11,383 9,944

Net finance costs 24 0 (142)

Income tax expense (including deferred tax) 4,095 3,339

Cash flow before net borrowing costs and income tax expense (A) 15,477 13,141

Tax paid (B) (3,572) (3,152)

Change in working capital (C) 1 164 1 244

Net cash from operating activities (D) = (A+B+C) 13,069 11,233

Purchase of PP&E and intangible assets (5,466) (3,978)

Proceeds from disposals of PP&E and intangible assets 79 7

Purchase of non-consolidated investments (413) (2,481)

Proceeds from disposals of non-consolidated investments - -

Decrease in long-term debt (5) (3)

Effects of changes in scope of consolidation (*) 149 20

Net cash used in investing activities (E) (5,656) (6,435)

Dividends paid 13 (6,953) (6,142)

Principal payments on borrowings 714 (79)

Net interests 0 122

Changes in blocked Cash (185) -

Changes in share capital (share capital decrease) (3,516)

Other (8) -

Net cash used in financing activities (F) (6,432) (9,615)

Effect of foreign currency translation adjustments (G) 3 (27)

Change in cash and cash equivalents (D+E+F+G) 12 984 (4,844)

Cash and cash equivalents at beginning of period 2,741 7,585

Cash and cash equivalents at end of period 3,725 2,741

December 31, 2008

10,010

3,863

(302)

(80)

13,491

5

4,196

17,692

(4,930)

(195)

12,567

(5,957)

228

(22)

-

(18)

-

(5,769)

(8,246)

406

(5)

(30)

18

(7,857)

13

(1,047)

3,725

2,678

5


Consolidated Statement of Changes in Shareholders’ Equity for 2008, 2007 and 2006

As at December 31, 2008, Maroc Telecom’s share capital comprised 879,095,340 ordinary shares. Ownership of the shares was as follows: • Kingdom of Morocco: 30%; • Vivendi : 53% via its wholly-owned subsidiary Société de Participation dans les Télécommunications (SPT); • Other: 17% (*) Change in consolidation scope: Onatel has been fully consolidated since January 1, 2007. Gabon Telecom has been fully consolidated since March 1, 2007. Retained earnings mainly comprise undistributed earnings from previous periods, including MAD3,424 million from December 31,2008 and net earnings from the current period attributable to equity holders of the parent. It should be noted that the nominal value of shares decreased from MAD10 to MAD6 in 2006. The shares were fully paid at December 31, 2006. There are no privileges, restrictions or rights attached to the shares. In addition, the shares are not held by Maroc Telecom or by one or several of its subsidiaries.

(In millions of Moroccan dirhams) Note Capital Other

adjust-ments

Cumulative translation differences

Earnings and retained ear-

nings

Attributa-ble to equity

holders of the pa-

rents

Minority interests Total

Balance at December 31, 2005 8,791 (12) (2) 10,404 19,195 530 19,724

Dividends 13 (6,121) (6,121) (31) (6,152)

Net earnings for the year 6,739 6,739 94 6,833

Current charges and income (36) (36) (36) (34) (70)

Income and charges recorded directly in equity

(36) 6,703 6,703 60 6,763

Change in scope of consolidation (*) 33 33

Balance at December 31, 2006 5,276 (12) (37) 10,986 16,261 592 16,853

Dividends (6,927) (6,927) (26) (6,953)


Income and charges recorded directly in equity

Current charges and income 0 0 0 8,033 8,033 104 8,137

Treasury stock (8) (8) (8) (8)

Cumulative translation differences 12 12 12 9 21

Other adjustments 9 9 9 (9) 0

Change in scope of consolidation (*) 584 584

Balance at December 31, 2007 5,276 (11) (25) 12,105 17,380 1,254 18,634

Dividends (8,088) (8,088) (158) (8,246)


Treasury stock

Current charges and income 0 0 0 9,520 9,520 490 10,010

Treasury stock (31) (31) (31) (31)

Cumulative translation differences 6 6 6 10 16

Balance at December 31, 2008 5,276 (120) (19) 13,434 18,709 1,647 20,356

Current charges and income (3,516) 0 (3,516) (3,516)

Change in scope of consolidation (*) 0

Other adjustments (78) (78) (78) 51 (26)



Note 1. Accounting principles and valuation methods

1. Significants events • Participation in Medi-1-Sat’ s share capital increase ;

• At the end of 2008, the Gabonese State, in order to reestablish the financial position of Gabon Telecom, the Gabonese State assumed responsibility , with the agreement of the concerned third parties, for Gabon Telecom’s tax and financial liabilities. Con-sequently, Maroc Telecom accepted to compensate the Gabonese State, in proportion to its share in the capital of Gabon Tele-com ( Cf. note 3 and 24) through contingent payments.

2 Accounting principles and valuation methods

The group companies are consolidated on the basis of the financial statements for the year ended at December 31, 2008, with the exception of CMC whose financial statements were prepared at June 30, 2008. The financial statements and notes were approved by the Management Board on February 20, 2009 . 2.1 Basis of preparation In accordance with European Regulation 1606/2002 of July 19, 2002 concerning the adoption of international accounting standards, the consolidated financial statements of Maroc Telecom for the year ended December 31, 2008 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and effec-tive from December 31, 2008, as approved by the European Union (EU). For comparison purposes, the 2008 financial statements also include financial information for financial years 2007 and 2006. The group has applied all of the new standards, interpretations and amendments issued by the IASB and mandatory in the European Union from January 1, 2008. 2.2 Statement of compliance The consolidated financial statements of Maroc Telecom group at December 31, 2008, have been prepared in accordance with all the mandatory International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations adopted by the EU. The accounting standards applied in the consolidated financial statements do not differ from the accounting standards issued by the International Accounting Standards Board (IASB). Maroc Telecom has applied the following new standards and interpretations:

• IFRS 8 on Segment Reporting, which will be mandatory from January 1, 2009, and which Maroc Telecom chose to apply early. This standard was issued by the IASB on November 30, 2006, adopted in the EU on November 21, 2007, was published in the Official journal of the EU on November 22, 2007. It replaces IAS 14 In 2007, according to IAS 14, the first level of segment data comprised the fixed-line and mobile business and the second level of segment data consisted of two geographical segments: Morocco and other. After an analysis of IFRS 8 and the structure of Maroc Telecom’s internal financial reporting system, the company believes that the operational segments for which financial information is presented in the notes are in conformity with the second level of segment data presented until 2007 in accor-dance with IAS 14. Pursuant to IFRS 8, the operating segments of Maroc Telecom thus reflect its two business activities: fixed and mobile teleph-ony. The adoption of IFRS 8 has no significant impact on the segment data presented by Maroc Telecom.

Of the other IFRS and IFRIC interpretations issued by the IASB/IFRIC at the approval date of these consolidated financial statements, which were not mandatory and which Maroc Telecom did not opt to implement early, the following may concern Maroc Telecom:

• The amendment to IAS 23 Borrowing Costs, requiring the capitalisation of borrowing costs relating to assets that take a sub-stantial period of time to get ready for use or sale, will be mandatory from January 1, 2009;

• The amendments to IAS 1 Presentation of Financial Statements: A Revised Presentation, requiring capital disclosures, will be mandatory from January 1, 2009;

• The revised versions of IFRS 3 on Business Combinations and IAS 27 on Consolidated and Separate Financial Statements relating to applying purchase accounting for business combinations and accounting for investments in subsidiaries will be mandatory from January 1, 2010.

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• The amendment to IFRS 2 on Share-based Payment relating to vesting conditions and cancellations will be mandatory from January 1, 2009.

The potential impact of the implementation of these standards and interpretations on the income statement, balance sheet, statement of cash flows and notes to consolidated financial statements is currently being determined. 2.3 Basis of presentation The consolidated financial statements have been prepared in accordance with the historical cost principle, with the exception of certain asset and liability categories detailed below, in accordance with IFRS. The consolidated financial statements are presented in Moroc-can dirhams and all figures are rounded up or down to the closest million, unless otherwise stated. The consolidated financial state-ments include Maroc Telecom’s financial statements as well as its subsidiaries’ financial statements after the elimination of intra-group items and transactions. 2.3.1 Income statement Maroc Telecom prepares its consolidated income statement according to a format that provides details of revenue and expenses based on their nature. 2.3.1.1 Earnings from operations and earnings from continuing operations Earnings from operations comprises revenues, cost of purchases, payroll costs, taxes and duties, other operating income and ex-penses as well as amortization, depreciation, impairment and net provisions. Earnings from continuing operations includes operating income from continuing operations, other income and expenses from continu-ing operations (including impairment of goodwill and other intangible assets) as well as income (loss) from equity affiliates. 2.3.1.2 Financial costs and other financial expenses and income Net finance cost includes:

• Financial costs, which include interest expense relating to borrowings calculated at the effective interest rate;

• Income from cash and cash equivalents. Other financial expenses and income primarily include foreign exchange gains and losses (other than relating to operating activities classified in earnings from operations), dividends received from non-consolidated interests, and the results of consolidated operations or companies that do not qualify as discontinued operations. 2.3.2 Balance sheet Assets and liabilities expected to be realized in, or intended for sale or consumption in the entity’s normal operating cycle, usually less than 12 months, are recorded as current assets or liabilities. If their maturity exceeds this period, they are recorded as non-current assets and liabilities. 2.3.3 Consolidated statement of cash flows Maroc Telecom prepares its consolidated statement of cash flows using the indirect method. Working capital corresponds to balance sheet items including trade accounts receivable, inventories, provisions and accounts pay-able. 2.3.4 Use of estimates In connection with the preparation of its financial statements, Maroc Telecom must make estimates and certain assumptions. Maroc Telecom’s management bases its estimates on past experience and on various other assumptions that it deems reasonable under the circumstances. These estimates enable an evaluation of the appropriateness of carrying value. The figures derived from such esti-mates and assumptions may differ if other estimates or assumptions are used. The main items calculated on the basis of estimates are provisions for litigation, restructuring provisions, write-downs of accounts receivable, impairment of inventories and deferred in-come. Management reviews its estimates and valuations regularly based on past experience and various other assumptions that it deems reasonable, which constitute the basis of its evaluations of the carrying value of its assets and liabilities. The impact of the change in estimates is booked in the current period and all subsequent periods.



2.3.5 Principles of consolidation The name Maroc Telecom refers to the group of companies of which Maroc Telecom is the parent. A list of Maroc Telecom’s major subsidiaries and affiliates is presented in Note 2 “Scope of consolidation at December 31, 2008, 2007 and 2006”. The accounting methods described below were applied consistently to all the periods presented in the consolidated financial state-ments, as well as the opening balance sheet at January 1, 2004, which was prepared for the purposes of the IFRS transition. The accounting methods were applied in a uniform manner by all group entities.

Full consolidation All companies in which Maroc Telecom has a controlling interest, specifically when it has the power to direct the financial and operat-ing policies of these companies to obtain benefits from their operations, have been fully consolidated. A controlling position is presumed to exist where Maroc Telecom holds, directly or indirectly, more than 50% of voting interests, and where no other shareholder or group of shareholders exercises a significant right that would enable it to veto or block ordinary deci-sions taken by Maroc Telecom. The subsidiaries’ financial statements are included in the consolidated financial statements from the date control is obtained to the date control ceases. A controlling position also exists where Maroc Telecom holds an interest of 50% or less in an entity, but controls more than 50% of the voting rights by virtue of an agreement with other investors, has the power to direct the financial and operating policies of the entity by virtue of a statute or contract, has the power to appoint or remove from office the majority of the members of the Board of Directors or equivalent management body, or has the power to assemble the majority of voting rights at meetings of the Board of Directors or equivalent management body. Equity accounting

Maroc Telecom accounts for affiliates over which it exercises significant influence by the equity method. Significant influence is assumed to exist where Maroc Telecom holds, directly or indirectly, at least 20% of voting rights in an entity, unless it can be clearly demonstrated that this is not the case. The existence of significant influence can be proven on the basis of other criteria, such as representation on the Board of Directors or equivalent management body of the entity, participation in the proc-ess of policy definition, the existence of material transactions with the entity or exchange of management personnel.

Transactions eliminated when preparing the consolidated financial statements Revenues, expenses and balance sheet items resulting from intra-group transactions are eliminated when preparing the consolidated financial statements. 2.3.6 Goodwill and business combinations In accordance with the provisions of IFRS 1 on the First-time adoption of IFRS, Maroc Telecom decided not to restate the business combinations entered into prior to January 1, 2004. Business combinations are recorded using the purchase method. Under this method, the assets acquired and the liabilities and contin-gent liabilities assumed are recognized at their fair value. At the acquisition date, goodwill is initially measured at cost, being the excess of the cost of the business combination over Maroc Telecom’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is measured at cost less accumulated impairment. Goodwill is allocated to each cash-generating unit, and is then subject to impairment tests each year, or more frequently when events indicate a risk of impairment. In the event of a loss in value, impairment is recorded under “Other charges from ordinary activities”. In the event of the acquisition of an additional interest in a subsidiary, the excess of the acquisition cost over the carrying amount of the minority interest acquired is recognized as goodwill. In accordance with IFRS 3, goodwill is no longer amortized. 2.3.7 Foreign currency translation Foreign currency transactions are initially recorded in the functional currency at the transaction date exchange rate. At period end, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency at the period-end ex-change rate. All foreign currency adjustments are expensed in the period. 2.3.8 Translation of financial statements of foreign activities Assets and liabilities relating to foreign activities, including goodwill and fair value adjustments arising from consolidation, are trans-lated into Moroccan dirhams at the period-end rate. Income and expense items are translated into Moroccan dirhams using rates that approximate the exchange rates at the dates of the transactions. Foreign currency translation adjustments resulting from the application of these different rates are recorded as a separate line item of shareholders’ equity.

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2.3.9 Assets 2.3.9.1 Other intangible assets Intangible assets acquired separately are recorded at cost, and intangible assets acquired in connection with a business combination are recorded at their fair value at the acquisition date. The historical cost model is applied to intangible assets subsequent to their initial recognition. Assets with a finite useful life are amortized. Useful life is reviewed at the end of each reporting period. Useful life is estimated at between 2 and 5 years. Trade names, subscriber bases and market shares generated internally are not recognized as intangible assets. Licenses to operate telecom networks are recorded at historical cost and amortized on a straight-line basis from the effective starting date of the service until maturity. Maroc Telecom has chosen not to apply the option provided in IFRS 1 to remeasure certain intangible assets at their fair value at January 1, 2004. The 3G licence of Maroc Telecom is recorded under intangible assets for a total cost of MAD372 million, which includes the licence fee (MAD300 million) and the cost of the contribution to frequency spectrum planning (MAD72 million). It is amortized over 25 years from June 30, 2007. The 3G licence of Mauritel is recorded under intangible assets for a total cost of MAD10 million and is amortized over 15 years. Subsequent expenditure on intangible assets is only added to these assets if the probable future economic benefits specific to the asset to which they relate increase. All other expenditure is expensed in the period in which it is incurred.

2.3.9.2 Research and development costs Research costs are expensed when incurred. Development expenses are capitalized when the feasibility and profitability of the project can reasonably be considered certain. In compliance with IAS 38 on Intangible Assets, development costs are capitalized only after the technical and financial feasibility of the asset for sale or use have been established, where it is probable that the future economic benefits attributable to the asset will flow to the company and where the cost of the asset can be measured reliably. Research and development costs incurred by Maroc Telecom are not significant.

2.3.9.3 Property, plant and equipment Property, plant and equipment are carried at historical cost less any accumulated depreciation and impairment. Historical cost includes the acquisition cost or production cost as well as the costs directly attributable to bringing the asset to the location and condition nec-essary for its use in operations. Borrowing costs are recorded as expenses for the period in which they are incurred. When property, plant and equipment include significant components with different useful lives, they are recorded and depreciated separately; Property comprising “land” and “buildings” is derived in part from the contribution in kind granted in 1998 by the Moroccan government in connection with the transfer from ONPT to Maroc Telecom, when the latter was established. When these assets were transferred, the property titles could not be registered with the property registry. This situation was still unresolved at the end of December 2008. Although the uncertainty over the property titles remains, the risk is limited as the Moroccan government has guaranteed that Maroc Telecom can use the transferred property and there have been no significant incidents to date. The assets transferred by the Moroccan government on February 26, 1998 to set up Maroc Telecom as a public operator were re-corded as a net amount in the opening balance sheet, as approved by:

• the Postal Services and Information Technology Act no. 24-96, and

• the joint Order no. 341-98 of the Telecommunications Minister and Minister of Finance, Commerce and Industry, approving the inventory of assets transferred to the Maroc Telecom group

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives are reviewed at the end of each reporting period and are determined as follows: • Buildings 20 years • Civil engineering 15 years • Network equipment :

• Transmission (Mobile) 8 years • Switching 8 years • Transmission (Fixed-line) 10 years



• Fourniture and fittings 10 years • Computer equipment 5 years • Office equipment 10 years • Transportation equipment 5 years Assets that have not yet been placed into service are recorded as work-in-progress. Assets financed by finance leases are capitalized at the lower of the value of future minimum lease payments and fair value, and the related debt is recorded in “borrowings and other financial liabilities”. These assets are depreciated on a straight-line basis over their estimated useful lives, with depreciation included as a general depreciation expense. Maroc Telecom has chosen not to apply the option provided by IFRS 1 to remeasure property, plant and equipment at fair value at January 1, 2004. The carrying value of an item of property, plant, and equipment includes the replacement cost of a component of such an item if this cost is incurred, if it is probable that the future economic benefits associated with the asset will flow to Maroc Telecom and if the cost can be measured reliably. All maintenance costs are expensed when incurred.

2.3.9.4 Impairment of fixed assets Goodwill and other intangible assets with an indefinite useful life are subject to an annual impairment test and are also tested when-ever there is an indication that they may be impaired. The carrying value of other fixed assets is also subject to an impairment test whenever there is an indication that the carrying value may not be recoverable. The impairment test compares the carrying amount with its recoverable amount, which is the greater of its fair value less selling costs and its value in use. The recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely inde-pendent from those of other assets or groups of assets. If this is the case, as for goodwill, the recoverable amount is determined for the cash-generating unit. Maroc Telecom has determined its fixed- line and mobile businesses as cash-generating units.

2.3.9.5 Financial assets

Financial assets with a maturity of more than 3 months are classified in one of the following four categories: • Assets recognized at fair value through profit and loss; • Held-to-maturity financial assets; • Loans and receivables; • Available-for-sale assets. Financial assets recognized at fair value through profit and loss This category comprises financial assets bought in order to be resold in the very near term, which are held for trading purposes. Profit and loss arising from changes in the fair value of assets in this category is recorded in the period during which they arise. The principal financial assets recognized at fair value through profit and loss are term deposits.

Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets, other than loans and receivables, with fixed or determinable pay-ments that the group intends and is able to hold to maturity. These assets are initially recognized at their fair value including attribut-able transaction costs. After initial recognition they are measured at amortized cost using the effective interest rate method. They are subject to impairment tests in the event of objective evidence of impairment. Impairment is booked if the asset's carrying amount is greater than the present value of estimated future cash flows. As at December 31, 2008, Maroc Telecom had no held-to-maturity financial assets. Loans and receivables This category comprises non-derivative assets where payment is fixed or determinable and which are not listed on any active market. These assets are recognized at amortized cost using the effective interest rate method. These assets are subject to an impairment test if there is an indication of a loss in value. Impairment is booked if the carrying amount is greater than the estimated recoverable amount. This item does not include loans to employees.

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Available-for-sale financial assets

These assets include non-derivative assets that are classified as being either available for sale or that are not allocated to any other category of financial assets. Available-for-sale assets are recognized at fair value. Profit and loss resulting from available-for-sale assets is taken to equity until the financial asset is sold, redeemed or removed from the balance sheet in another way, or until it can be demonstrated that the invest-ment is impaired indefinitely, at which time the accumulated gain or loss previously recorded in equity is expensed. For financial assets actively traded in organized public markets, fair value is determined by reference to the published market price at period end. If the fair value cannot be determined accurately, available-for-sale assets are stated at cost. In the event of objective evidence that the investment is impaired indefinitely, irreversible impairment is expensed. When an available-for-sale financial asset generates interest, the interest is calculated in accordance with the effective interest method and is reported as income. The main available-for-sale assets are non-consolidated investments in unlisted companies

2.3.9.6 Inventories Inventories comprise :

• Goods held for sale to customers upon line activation, comprising fixed and mobile handsets and accessories. Inventories are accounted for using the first-in, first-out method.

• Handsets delivered to distributors and not activated at year-end are recorded as inventories.

• Handsets not activated within nine months from the delivery date are recorded as revenue.

• Equipment and supplies corresponding to general network equipment. These inventories are measured at their average acqui-sition cost.

Inventories are measured at the lower of cost and net realizable value. An impairment loss is recognized according to the prospects for flow (GSM or technical assets). 2.3.9.7 Trade accounts receivable and other This item comprises accounts receivable and other receivables, which are initially recognized at fair value, then at amortized cost less impairment. Accounts receivable include trade receivables and government receivables:

• Trade receivables: held against individuals, distributors, businesses and international operators.

• Government receivables: held against local authorities and the Moroccan government. Impairment is recorded if the carrying amount of the asset under consideration exceeds the present value of its estimated future cash flows. 2.3.9.8 Cash and cash equivalents Cash and cash equivalents include cash on hand, sight deposits, current accounts and short-term, highly liquid investments with a maturity of three months or less.



2.3.10. Assets held for sale and discontinued operations A non-current asset or a group of assets and liabilities qualify as held for sale when their carrying amount is recovered principally through their divestiture and not through continuing utilization. To meet this definition, the asset must be available for immediate sale, and divestiture must be highly probable. These assets and liabilities are recognized as assets held for sale and liabilities associated with assets held for sale, and are not netted. The related assets recorded as assets held for sale are stated at the lower of fair value, net of divestiture fees, and cost less accumulated depreciation and impairment, and are no longer depreciated. An operation is considered to be discontinued when the criteria for classification as an asset held for sale have been met, or when Maroc Telecom has sold the operation. Discontinued operations are presented as a separate line on the income statement, compris-ing the earnings after tax of the discontinued operations until the divestiture date and the gain or loss after tax on the sale, or the fair value measurement less the costs to sell the assets and liabilities comprising the discontinued operations. In addition, the cash flows generated by the discontinued operations are presented on a separate line of the consolidated statement of cash flows. 2.3.11. Financial liabilities Financial liabilities comprise borrowings, accounts payable and bank overdrafts. Borrowings All borrowings are initially accounted for at cost, which corresponds to the fair value of the amount received, net of costs directly relat-ing to the borrowing. The allocation of borrowings to current liabilities or non-current liabilities is based on contractual maturity.

Derivative financial instruments Maroc Telecom does not use any derivative financial instruments or currency hedging instruments. 2.3.12. Provisions Provisions are recognized when, at the end of the reporting period, the Group has a legal, regulatory or contractual obligation as a result of past events, when it is probable that an outflow of resources (without any expected related inflow) will be required to settle the obligation, and when the obligation can be reliably estimated. Where the effect of the time value of money is material, provisions are determined by discounting expected future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money. If no reliable estimate can be made of the amount of the obligation, no provision is recorded and a disclosure is made in the Notes to the consolidated financial statements. Restructuring provisions are recorded when the Group has approved a formal and detailed restructuring program and has either started to implement the program or has announced the program publicly. Future operating expenses are not provisioned. No provisions for pensions and post-retirement benefits have been recorded for the Group’s Moroccan companies in the consolidated financial statements, as pension expenses are covered by statutory employee pension plans in Morocco. For Mauritel, Onatel and Gabon Telecom a provision for retirement benefits has been estimated using the actuarial method. 2.3.13. Deferred taxes Deferred taxes result from temporary differences arising at period end between the tax basis of assets and liabilities and their carrying amount. They are accounted for using the liability method. Deferred tax liabilities are recognized for all temporary taxable differences:

• except for temporary differences generated by the initial recognition of goodwill; and • for taxable temporary differences arising from investments in subsidiaries, affiliates and joint ventures, deferred tax assets are

recorded to the extent that it is probable that the temporary difference will reverse in the foreseeable future, and that taxable profit will be available against which the temporary difference can be utilized.

Deferred tax assets are recognized for all deductible temporary differences and for carry-forwards of tax losses and unused tax cred-its, if it is probable that a taxable profit will be available, or when a current tax liability exists, to make use of those deductible tempo-rary differences, tax loss carry forwards and unused tax credits:

• except where the deferred tax asset associated with the deductible temporary difference is generated by initial recognition of an asset or liability in a transaction which is not a business combination, and which, at the transaction date, does not impact either accounting earnings, taxable earnings or taxable losses;

• for deductible temporary differences arising from investments in subsidiaries, affiliates and joint ventures, deferred tax assets are recorded to the extent that it is probable that the temporary difference will reverse in the foreseeable future, and that tax-able profit will be available against which the temporary difference can be utilized.

The carrying amount of deferred tax assets is reviewed at each period end, and reduced to the extent that it is no longer probable that a taxable profit will be available to allow the deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the expected tax rates for the year during which the asset will be realized or the liability settled, based on tax rates (and tax regulations) in force or substantially in force at the period end.

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Current tax and deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged directly to equity. 2.3.14. Trade accounts payable Trade accounts payable include other accounts payable. They are initially measured at fair value and subsequently at amortized cost. 2.3.15. Share-based compensation In accordance with IFRS 2, share-based compensation is recorded as a payroll cost at the value of the equity instruments granted, which is measured using a binomial model. However, the calculation of the share-based payment expensed depends upon whether the obligation is settled in Maroc Telecom’s shares or in cash :

• If the instrument is settled in shares, the fair value of the instrument granted is measured and fixed at the grant date, then spread over the vesting period, according to the characteristics of equity-settled instruments. The obligation is recorded as a corresponding increase in equity.

• If the share-based payment transaction is settled in cash, the fair value is measured and fixed at the initial grant date, then remeasured at each year-end and adjusted for subsequent changes in the value of the vested rights. The expense is spread over the vesting period in accordance with the characteristics of the instruments. The corresponding obligation is booked as a non-current provision.

Maroc Telecom chose the retrospective application of IFRS 2 from January 1, 2004. 2.3.16. Revenues Revenues are reported when it is probable that future economic benefits will flow to the Group, and the revenues can be measured reliably. Maroc Telecom group generates revenues from fixed and mobile telecommunications services, internet services, and the sale of prod-ucts, which essentially comprise mobile and fixed-line handsets and multimedia equipment. Revenues from telephone subscriptions are recognized on a straight-line basis over the subscription contract period. Revenues from incoming and outgoing call traffic are recognized when the service is rendered. For prepaid services, revenues are recognized when calls are made. Revenues from fixed-line and internet and mobile services comprise :

• income from domestic and international outgoing and incoming calls under postpaid plans, which is recorded when generated;

• income from subscriptions;

• income from prepaid services, which is recognized as calls are made;

• income from data transmission services provided to professionals and internet service providers as well as to other telecom-munications operators;

• income from advertising in printed and electronic directories, which is recognized when the directories are published.

Revenues from the sale of handsets, net of point of-sale discounts and connection charges, are recognized on activation of the line. Customer acquisition and loyalty costs for mobile and fixed-line services, principally consisting of rebates on the sale of equipment to customers through distributors, are recognized as a deduction from revenues. Sales of services provided to subscribers managed by Maroc Telecom on behalf of content providers (mainly special-rate numbers), are accounted for net of related expenses. When the sale is made via a third party distributor supplied by Maroc Telecom and involves a discount compared with the public sale price, revenues are recorded as gross revenues and commissions granted are recognized as operating expenses. The advantages granted by Maroc Telecom and its subsidiary companies to their customers within the framework of development of consumer loyalty programs in the form of exemptions from payment or reductions, are recorded in accordance with IFRIC 13-IAS 18 interpretation. Interpretation IFRIC-13 based on the principle of evaluation of the premiums of consumer loyalty at their fair value, reconized as the addition of value compared to the premium which would be granted to all new customer, and consists in, if necessary, differing the booking of revenues related to the subscription . 2.3.17. Cost of purchases Cost of purchases comprises the purchase of Mobile and Fixed-line handsets and interconnection costs. 2.3.18. Other income (expenses) This item comprises commissions to distributors, network maintenance expenses, advertising, marketing and promotion costs and expenses related to the voluntary redundancy plan.



2.3.19. Net finance cost Net finance cost includes interest payable on loans calculated using the effective interest rate method and interest on investments. Investments are recognized in the consolidated income statement when they are acquired. 2.3.20. Income tax expense Income tax expense includes income tax payable and deferred tax expense (or income). Tax is expensed unless it applies to items recognized as equity. 2.4. Contractual obligations and contingent assets and liabilities Maroc Telecom and its subsidiaries prepare detailed records on all contractual obligations, commercial and financial commitments and contingent obligations, to which they are party or exposed, on a yearly basis. These detailed records are updated by the departments concerned on a regular basis and are reviewed by senior management. The assessment of off-balance sheet commitments relating to suppliers of fixed assets is carried out in the following way:

• Variation in minimum commitments and settlements relating to framework agreements and their endorsements (valued at more than MAD25 million);

• Variation between firm orders and delivery for all other contracts. Commitments arising from real estate rental contracts are estimated on the basis of one month’s lease expense given that virtually all termination clauses require one month’s notice. 2.5. Segment data A segment is a distinguishable component of the group that is engaged in providing a product or service or a group of related products or services (business segment), or in providing a product or service in a specific economic environment (geographical segment) that generates significant revenue from external customers, and that is subject to risks and rewards that are different from those of other business segments. 2.5.1 Business segment data The group’s business is divided into fixed-line, internet and mobile segments. Revenues from each business segment include revenues from the provision of telephone services to customers and subscribers as well as intersegment transactions. Intersegment transactions are conducted at market price. Earnings from operations reflects the difference between operating income and expenses. Costs are allocated directly to the relevant segments or alternatively by using cost allocation ratios based on economic criteria. Capital expenditure is directly allocated to the relevant segments. Fixed assets used by several segments are allocated in proportion to dedicated assets. The components that are not allocated mainly comprise taxes, cash, financial assets, borrowings and equity. The classification of the balance sheet by business segment was in part based on estimates. The breakdown into the components used is based on reasonable assumptions.

The following balance sheet items have been allocated proportionately between the two activities :

• For items comprising components that can be allocated directly to a segment and components shared by both segments: the shared part of these items is divided proportionately in respect of the amounts allocated directly to these items.

• For items comprising solely shared elements: these amounts are allocated in a way that takes into account the type of items involved (e.g. employee-related liabilities are divided proportionally based on the number of employees in each business seg-ment).

2.5.2 Geographical data Information by geographical area is the second level of segment data and comprises the two geographical areas in which Maroc Tele-com is present: Morocco and other.

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2.6 Net cash This item includes cash and cash equivalents less borrowings, and excludes short-term financial assets (term deposits) with a maturity exceeding three months. 2.7 Earnings per share Earnings per share, as presented in the consolidated income statement, are calculated by dividing earnings for the period by the aver-age number of shares outstanding over the period.

Diluted earnings per share are calculated by dividing:

• the earnings attributable to the equity holders of the parent ;and

• the average number of shares outstanding over the period, plus the average number of shares that would have been issued upon conversion of all instruments that can potentially be converted into ordinary shares.

As at December 31, 2008, there were no instruments that could potentially be converted into ordinary shares.



Note 2. Scope of consolidation as at December 31, 2008, 2007 and 2006

(*) Mauritel Mobiles was taken over by Mauritel SA in 2007 Maroc Telecom is a Moroccan corporation. Its main activity is the sale and provision of telecommunications goods and services. Its registered office is located at Avenue Annakhil Hay Riad Rabat, Morocco. Maroc Telecom is fully consolidated by Vivendi Universal. Onatel has been fully consolidated by Maroc Telecom since January 1, 2007 Gabon Telecom has been fully consolidated by Maroc Telecom since March 1, 2007 Mobisud Belgium has been fully consolidated Maroc Telecom since May 1, 2007 At the end of December 2008, Maroc Telecom held 37% of Medi-1-Sat, up from 28% at the end of December 2007.

Company name Legal form % Group inte-rest % Capital held Consolidation

method Maroc Telecom SA 100% 100% FC Avenue Annakhil Hay Riad Rabat - Morocco Compagnie Mauritanienne de Communication (CMC) SA 2008 80% 80% FC December 31, 2007 80% 80% FC December 31, 2006 80% 80% FC Avenue Roi Fayçal Nouakchott - Mauritania Mauritel SA SA Excercice 2008 41% 52% FC December 31, 2007 41% 52% FC December 31, 2006 41% 51% FC Avenue Roi Fayçal 7000 Nouakchott - Mauritania Mauritel Mobiles (*) SA 2008 December 31, 2007 41% 52% FC December 31, 2006 41% 51% FC Av Charles De gaulle ilot 37-38 Nouakchott -Mauritania Onatel SA

December 31, 2007 51% 51% FC 705, AV. de la nation 01 BP 10000 Ouagadougou Telmob SA

December 31, 2007 51% 51% FC 705, AV. de la nation 01 BP 10000 Ouagadougou Gabon Telecom SA

December 31, 2007 51% 51% FC B.P.40 000 Libreville E – Gabon Libertis SA

December 31, 2007 51% 51% FC BP8900 immeuble 9 étages Libreville- Gabon Medi-1- Sat SA

December 31, 2007 28% 28% EM December 31, 2006 27% 27% EM Zone franche, lot n°31 BP 2397 - Tangier - Morocco Mobisud France SA

December 31, 2007 66% 66% FC December 31, 2006 66% 66% FC 86, avenue de saint ouen 75018 Paris - France Mobisud Belgium SA

December 31, 2007 100% 100% FC Avenue Louise 283 Bte 4 1050 Bruxelles - - -

2008 51% 51% FC

2008 51% 51% FC

2008 51% 51% FC

2008 51% 51% FC

2008 37% 37% EM

2008 66% 66% FC

2008 100% 100% FC

5


Note 3. Goodwill as at December 31, 2008, 2007 and 2006

Goodwill is subject to impairment tests at least once a year when events indicate a risk of impairment. Each identifiable cash generating unit (CGU) of goodwill is tested for impairment. The impairment of goodwill test compares the carrying amount of each CGU with discounted expected future cash flows. CGUs corre-spond to businesses within each business segment (fixed-line and mobile). Valuations are based on the following main assumptions: • The impairment of goodwill test is based on a 5 year business plan • The growth rate of cash flows from the CGUs corresponding to the goodwill of Mauritel, Onatel, Gabon Telecom is estimated

at: : • 2.5% for Mauritel ; • 4.5% for Onatel ; • 2.5% for Gabon Telecom .

This assumption takes into account the inflation rate in the country, and the growth potential of the telecommunications market and Moroccan economy due to the oil industry.

• The discount rate, which is calculated using the weighted average cost of capital, is estimated at:

• 14% for Mauritel ; • 14.5% for Onatel ; • 15.5% for Gabon Telecom.

In 2007, the goodwill of Gabon Telecom amounted to MAD213 million. In 2008, the finalization of the convergence to IFRS standards project in Gabon Telecom generated an impact of MAD71 million.

(In millions of Moroccan dirrhams) December 31, 2007

December 31, 2006

Mauritel 137 137

Mobisud France 9 9 Onatel 1,838 Gabon Telecom 213 Net total 2,197 146

December 31, 2008

137

0 1,838

142 2,117

(In millions of Moroccan dirr-hams)

Beginning of period

Impairment Translation adjustments

Change in scope of consolidation End of period

2006 129 0 0 17 146 Mauritel 129 8 137 Mobisud France 0 9 9 2007 146 0 0 2,051 2,197 Mauritel 137 137 Mobisud France 9 9 Onatel 1,838 1, 838 Gabon Telecom 213 213

2008 2,197 -9 0 (71) 2,117

Onatel 1,838 1,838 Gabon Telecom 213 (71) 142

Mobisud France 9 -9 0 Mauritel 137 137



Note 4. Other intangible assets as at December 31, 2008, 2007 and 2006

The item “Mobile license“ includes the 2G license of Mauritel, Onatel and Gabon Telecom, and two 3G licenses acquired respectively by Morocco Telecom and Mauritel. "Other intangible assets" includes primarily telecommunications network equipment software and work in progress Intangible assets increased considerably in 2008 due to a large volume of investments in intangibles relating to: • mobile network (IN platform; new value added services; network software upgrades); • fixed-line network (ADSL; optical fibres; corporate networks); and • information systems (GISR Lot2 and WIAM).

The reclassification column concerns transfers of intangible assets between line items and the restatement of retired assets that were not adjusted in the individual financial statements.


December 31, 2006

Patents, trademarks and similar rights 1,268 416

Mobile license 727 503

Other intangible assets 1,649 1,496

Net total 3,644 2,415

December 31, 2008

1,271

668

1,950

3,889

2008

(In millions of Moroccan dirhams) 2007 Acquisitions

and additions

Disposals and with-

drawls

Transla-tion adjust-

ment

Change in scope of

consolida-tion

Reclassifi-cation

2008

Gross 6,776 834 0 6 7 346 7,969

Patents, trademarks and similar rights 2,424 8 0 0 0 (35) 2,397

Mobile license 893 0 0 3 0 0 896

Other intangible assets 3,459 827 0 2 7 381 4,676

Amortization and impairment (3,131) (954) 0 (2) 0 7 (4,080)

Patents, trademarks and similar rights (1,156) 0 0 0 0 30 (1,126)

Mobile license (166) (59) 0 (2) 0 (2) (228)

Other intangible assets (1,810) (894) 0 (1) 0 (22) (2,726)

Net total 3,644 (119) 0 3 7 353 3,889

2007

(In millions of Moroccan dirhams) 2006 Acquisitions and additions

Disposals and with-

drawls


ment

Change in scope of

consolida-tion

Reclassifi-cation

2007

Gross 4,625 1,302 0 8 372 468 6,776

Patents, trademarks and similar rights 812 116 0 3 193 1,300 2,424

Mobile license 591 188 0 4 109 0 893

Other intangible assets 3,222 998 0 2 70 (832) 3,459 Amortization and impairment (2,210) (746) 0 (3) (182) 10 (3,131) Patents, trademarks and similar rights (396) (645) 0 (2) (123) 10 (1,156)

Mobile license (88) (44) 0 (1) (33) 0 (166)

Other intangible assets (1,726) (57) 0 (1) (26) 0 (1,810)

Net total 2,415 556 0 5 190 478 3,644

2006

(In millions of Moroccan dirhams) 2005 Acquisitions and additions

Disposals and with-

drawls


ment

Change in scope of

consolida-tion

Reclassifi-cation

2006

Gross 3,128 1,149 (7) (26) 0 380 4,625 Patents, trademarks and similar rights 572 2 0 (1) 0 238 812

Mobile license 226 382 0 (17) 0 0 591

Other intangible assets 2,330 766 (7) (8) 0 142 3,222 Amortization and impairment (1,737) (564) 0 12 0 79 (2,210) Patents, trademarks and similar rights (262) (135) 0 1 0 0 (396)

Mobile license (79) (15) 0 6 0 0 (88)

Other intangible assets (1,396) (414) 5 79 (1,726)

Net total 1,392 585 (7) (14) 0 460 2,415

5


The majority of “other property, plant and equipment” includes technical installations in progress relating to the telecommunications network.

Note 5. Property, plant and equipment as at December 31, 2008, 2007 and 2006

(In millions of Moroccan dirrhams) 2007 2006 Land 1,305 989

Buildings 2,010 1,544

Technical plant,machinery and equipment 10,358 6,810

Transportation equipment 62 41

Office equipment furniture and fittings 726 651

Other property plant and equipment 2,410 2,425

Net total 16,870 12,460

2008 1, 354 2,000

10,888 63

789 3,590

18,684


2008

(In millions of Moroccan dirrhams) 2007 Acquisitions additions

Disposals and with-

drawls

Translation adjustments

Change in scope of consolidation

Reclassifica-tion Assets held for sale 2008

Gross 43,595 5,122 (121) (33) 121 (541) (81) 48,062

Land 1,311 17 (28) (3) 121 0 (57) 1,362

Buildings 5,557 147 0 (7) 0 (1) 11 5,706

Technical plant,machinery and equipment 31, 398 2,964 (82) (25) 0 (63) (35) 34,157

Transportation equipment 265 16 (9) (1) 0 (6) 0 266

Office equipment, furniture and fittings 2,517 287 0 (1) 0 7 0 2,810

Other property, plant and equipment 2,547 1,691 (2) 3 0 (478) 0 3,761 Depreciation and impairment (26,724) (2,822) 91 26 0 43 10 (29, 378)

Land (6) 0 0 0 0 0 (1) (8)

Buildings (3,546) (177) 0 5 0 1 11 (3,706)

Technical plant,machinery and equipment (21,040) (2,359) 82 19 0 29 0 (23,269)

Transportation equipment (204) (21) 9 0 0 13 0 (203)

Office equipment, furniture and fittings (1,790) (232) 0 1 0 0 0 (2,021)

Other property, plant and equipment (137) (34) 0 0 0 0 0 (171) Net total 16, 870 2,299 (30) (7) 121 (499) (70) 18,684 2007


Disposals and with-

drawls




Gross 31,858 4,164 (40) 133 8,353 (833) (40) 43,595

Land 989 8 (17) 5 290 68 (32) 1,311

Buildings 4 ,048 19 (2) 19 1,253 228 (8) 5,557

Technical plant,machinery and equipment 22,015 812 (19) 104 6,502 1,984 0 31,398

Transportation equipment 101 13 (2) 2 151 0 0 265

Office equipment, furniture and fittings 2,127 20 0 2 116 252 0 2,517

Other property, plant and equipment 2 ,578 3,292 0 1 42 (3,366) 0 2 ,547 Depreciation and impairment (19, 398) (2,875) 6 (76) (4,705) 315 7 (26,724)

Land 0 (1) 0 0 (6) 0 0 (6)

Buildings (2,503) (310) 1 (11) (731) 1 7 (3, 546)

Technical plant,machinery and equipment (15,205) (2 ,337) 4 (61) (3,753) 313 0 (21,040)

Transportation equipment (60) (19) 2 (2) (126) 1 0 (204)

Office equipment, furniture and fittings (1,476) (227) 0 (2) (85) 0 0 (1,790)

Other property, plant and equipment (153) 19 0 0 (3) 0 0 (137) Net total 12,460 1,289 -33 58 3,648 (518) -32 16,870 2006


Disposals and with-

drawls




Gross 30,140 2,829 (276) (91) 1 (745) 0 31,858

Land 975 0 (1) (1) 17 989

Buildings 3,733 11 (2) (5) 311 4,048

Technical plant,machinery and equipment 20,014 110 (71) 1,962 22,015

Transportation equipment 122 2 (22) (2) 1 101

Office equipment, furniture and fittings 1,900 7 (3) 1 222 2,127

Other property, plant and equipment 3,396 2,700 (252) (9) (3 ,258) 2,578 Depreciation and impairment (17,557) (2,188) 22 40 0 285 0 (19,398)

Land 0 0

Buildings (2,232) (273) 1 2 (2 ,503)

Technical plant,machinery and equipment (13,678) (1 827) 0 34 265 (15,205)

Transportation equipment (74) (10) 21 2 (60)

Office equipment, furniture and fittings (1,254) (243) 2 19 (1,476)

Other property, plant and equipment (318) 165 0 (153) Net total 12,584 641 (254) (52) 1 (461) 0 12,460

The reclassification column concerns transfers of property, plant and equipment between line items.


Note 6: Investments in equity affiliates as at December 31, 2008, 2007 and 2006

6.1 Principal investments in equity affiliates as at December 31, 2008, 2007 and 2006

6.2 Financial information relating to equity affiliates as at December 31,2008, 2007 and 2006

The information relating to equity affiliates is derived from the individual financial statements prepared in accordance with Moroccan generally accepted accounting principles (GAAP).

Note 7. Non-current financial assets as at December 31, 2008, 2007 and 2006

(a) “Other financial assets” mainly include the cash at bank in escrow against borrowings to Onatel for MAD126 million, asset loans which amounted to MAD49 million and other financial assets for MAD21 million, divided between Gabon Telecom, Onatel and Mauritel.

As at December 31, 2008 “other financial assets” had the following maturities:

(In millions of Moroccan dirrhams) % of interest Value of equity affiliates

December 31, 2008

December 31, 2007

December 31, 2006 December 31,

2008 December 31,

2007 December

31, 2006

Medi1Sat 36.80% 28.00% 26.80% 0 1 9

Total net 36.80% 28.00% 26.80% 0

1 9

(In millions of Moroccan dirrhams) Medi -1 - Sat

December 31, 2008 December 31, 2007 December 31, 2006

Revenues 6 1 Earnings from operations (142) (113) (44) Net earnings (153) (116) (46)

Total assets and liabilities 124 153 157

(In millions of Moroccan dirrhams) Note December 31, 2008

December 31, 2007

December 31, 2006

Non-consolidated investments 7.1 104 93 2,534

Other financial assets (a) 222 233 86

Net total 326 326 2,620


December 31, 2007

December 31, 2006

Due within one year 12 14 12

Due between 1and 5 years 156 184 39

Due after 5 years 54 35 35

Net total 222 233 86

5


7.1 Non-consolidated investments

(1) Casanet’s main business activity is the maintenance of Maroc Telecom’s internet portal (Menara). Casanet invoices the related costs incurred to Maroc Telecom (2) Matelca was not included in the scope of consolidation, as it is in liquidation (3) Onatel has been fully consolidated since January 1, 2007 (See Note1) In 2008 the share of listed non-consolidated companies was not material (low exposure of share price to market risk)

2008

(In millions of Moroccan dirrhams) % Interest Gross Impairment Net carrying amount Earnings Total equity

Casanet (1) 100% 18 18 8 30

Matelca (2) 50% NS NS NS ND ND Arabsat NS 13 0 13 ND ND Autoroute du Maroc NS 20 4 16 ND ND Thuraya NS 10 0 10 ND ND Sindbad investment fund 10% 3 3 0 ND ND Rascom NS 34 10 25 ND ND Sonatel NS 5 5 ND ND CMTL NS 6 4 2 ND ND INMASAT NS 4 4 ND ND Other NS 1 1 0 ND ND Total 114 22 93 8 30

2006


Casanet (1) 100% 18 18 5.6 22

Matelca (2) 50% NS NS NS ND ND

Arabsat NS 13 0 13 ND ND

Autoroute du Maroc NS 20 20 0 35.4 4 Thuraya NS 10 0 10 ND ND Sindbad investment fund 10% 3 3 0 (1.3) 18.2 Onatel (3) 51% 2,476 2,476 ND ND MVNO Belgium 100% 17 17 ND ND Other NS 0 0 ND ND Total 2,557 23 2,534

Other NS 1 0 1 ND ND


INMASAT NS 12 0 12 ND ND CMTL NS 6 4 2 ND ND Sonatel NS 5 0 5 ND ND Rascom NS 34 8 26 ND ND Sindbad investment fund 10% 5 8 0 ND ND

Thuraya NS 10 5 10 ND ND Autoroute du Maroc NS 20 4 16 ND ND

Matelca (2) 50% NS NS NS ND ND

Casanet (1) 100% 18 0 18 ND ND

Arabsat NS 13 0 13 ND ND

Total 125 21 104 ND ND

2007



Note 8. Change in deferred taxes as at December 31, 2008, 2007 and 2006

8.1 Change in deferred taxes

8.2 Components of deferred tax assets and liabilities

(In millions of Moroccan dirrhams) December 31, 2008 December 31, 2007 December 31, 2006

Assets 18 204 445

Liabilities 100 177

Net asset position (82) 204 268

2008

(In millions of Moroc-can dirrhams)

December 31, 2005

December 31, 2006

Statement of income

impact

Equity impact

Change in scope of

consolida-

Reclassi-fication


ments

December 31, 2007

Assets 525 445 (32) (32) (177) 1 204

Liabilities 172 177 (177) 0

Net asset position 353 268 (32) 0 (32) 0 1 204

2006


January 1, 2005

December 31, 2005

Statement of income

impact

Equity impact

Change in scope of

consolida-

Reclassi-fication


ments

December 31, 2006

Assets 495 525 (85) 6 (1) 445

Liabilities 129 172 5 0 177

Net asset position 366 353 (90) 0 6 0 (1) 268

Net asset position 268 204 (281) 0 -6 0 1 (82)


December 31, 2006

December 31, 2007

Statement of income

impact

Equity impact

Change in scope of

consolida-

Reclassi-fication


ments

December 31, 2008

Liabilities 177 0 252 6 (158) 100 Assets 445 204 (30) (158) 1 18

2007


December 31, 2007

December 31, 2006

Deferred taxes assets 18 204 445 - Impairment deductible in later period 262 341 423

- Restatements of revenues (76) (68) - Other (169) (69) 22 Deferred taxes liabilities 100 177 - Restatements of revenues 61

- Other 100 116

Net asset position (82) 204 268

5


Note 9. Inventories as at December 31, 2008, 2007 and 2006

Inventories at December 31, 2008 essentially comprised: - MAD309 million of mobile handsets; - MAD53 million of multimedia handsets; - MAD70 million of fixed-line handsets; - MAD179 million of consumable goods; Changes in current asset inventories are recorded as cost of purchases; The impairment of inventories is recorded in “Amortization, depreciation and provisions”.

Note 10. Trade accounts receivables and other at December 31, 2008, 2007 and 2006

10.1. Accounts receivable

Trade receivables include receivables collected from SFR and Casanet. The details of these transactions are set out in Note 30 on related parties.

10.2 Other receivables and accruals

Advances, downpayments, trade payables, receivables from employees, government receivables and other receivables are due in less than one year. Employee accounts comprise advances granted to employees, net of write-downs. As these loans are granted to many employees under particular conditions, and do not represent material amounts, Maroc Telecom deemed that it was not relevant to provide specific details (repayment date, early repayment options, conditions of the instruments, interest rates). Tax receivables mainly comprise VAT items. Accruals essentially relate to prepaid expenses for transport operating leases and insurance policies.

(In millions of Moroccan dirrhams) December

31, 2008 December

31, 2007 December

31, 2006

Inventories 919 970 525

Impairment (-) (175) (221) (87)

Net total 744 749 438

(In millions of Moroccan dirrhams) December 31,

2008 December 31,

2007 December 31,

2006 Accounts receivable 7,858 8,062 5,901

Other receivables and accruals 1,969 1,835 1,027

Net total 9,827 9,897 6,928


2008 December 31,

2007 December 31,

2006 Trade receivables 10,650 14,200 8,415

Government receivables 2,314 1,998 1,473

Impairment of receivables (-) (5,106) (8,136) (3,987)

Net total 7,858 8,062 5,901


2008 December 31,

2007 December 31,

2006 Trade payables, advances and downpayments 323 171 260

Employee accounts 41 40 31

Tax receivables 1,102 1,234 559

Other receivables 382 219 3

Accruals 121 171 174

Net total 1,969 1,835 1,027



Note 11. Short term financial assets as at December 31, 2008, 2007 and 2006

In 2006, short term financial assets comprised term deposits with a maturity exceeding three months and which did not meet the Group’s definition of highly liquid investments. (1) In 2007 and 2008, Maroc Telecom mandated Rotschild & Cie to enter into a liquidity agreement with the Paris stock exchange and a share price stabilization arrangement with the Casablanca stock exchange.

Note 12. Cash and cash equivalents as at December 31, 2008, 2007 and 2006

Change in cash and cash equivalents

Net cash from operating activities

The decrease in net cash from operating activities in 2008 compared to 2007 was mainly related to the decrease in working capital. The increase in net cash from operating activities in 2007 compared to 2006 was mainly related to an improvement in net income and working capital.

Net cash used in investing activities The increase of net cash used in investing activities in 2008 compared to 2007 was mainly due to the investment plan for 2008 which was 9% higher than in 2007. The decrease in net cash used in investing activities in 2007 compared to 2006 was mainly due to subsidiaries’ acquisitions, despite the 37% increase in capital expenditure on tangible and intangible assets.


December 31, 2007

December 31, 2006

Term deposit > 90 days 22 Escrow accounts (1) 105 104 Short term investments Total 105 104 22


2008 December 31,

2007 December 31,

2006 Cash 675 633 1,123

Cash equivalents 2,003 3,092 1,618

Cash and cash equivalents 2,678 3,725 2,741


2008 December 31,

2007 December 31,

2006 Net cash from operating activities 12,567 13,069 11,233 Net cash used in investing activities (5,769) (5,656) (6,435) Net cash used in financing activities (7,857) (6,432) (9,615) Foreign currency translation adjustments 13 3 (27)

Change in cash and cash equivalents (1,047) 984 (4,844) Cash and cash equivalent at beginning of period 3,725 2,741 7,585

Cash and cash equivalent at end of period 2,678 3,725 2,741

Change in cash and cash equivalents (1,048) 984 (4,844)

5


Net cash used in financing activities The increase in net cash used in financing activities in 2008 compared to 2007 was mainly due the ordinary dividend payment, which was 19% higher in 2008 at an aggregate MAD8,246 million than the aggregate dividend payment of MAD6,953 million in 2007. The decrease in net cash used in financing activities in 2007 compared to 2006 was mainly due the payment of dividends related to Maroc Telecom’s share capital reduction for MAD3,516 million. In addition, the ordinary dividend payout increased considerably in 2007 to MAD6,953 million compared with MAD6,142 million in 2006.

Note 13. Dividends

13.1 Dividends

The dividend payment period for Mauritel is long due to the Mauritanian tax system.

13.2 Dividend proposed for the year 2009

At its meeting on February 23, 2009 convened to approve the financial statements for 2008 and appropriate net earnings, the Supervi-sory Board decided to propose to shareholders a dividend payment of MAD10.8 per share, or an aggregate payment of MAD9,520 million.

Year ended at

(In millions of Moroccan dirrhams) December 31, 2008 December

31, 2007 December 31, 2006

Dividends received from equity affiliates - Medi-1-Sat

- - -

Dividends paid by subsidiaries to minority shareholders (a)

- Mauritel 158 26 23

- Onatel - - - - Gabon Telecom - - - - Other - - - 158 26 23

- Moroccan government 2,426 2,078 2,080

- Vivendi 4,287 3,533 3,121

- Other 1,375 1,316 918 8,088 6,927 6,119

Total dividends paid (a) + (b) 8,246 6,953 6,142

Dividends paid by Maroc Telecom to shareholders (b)



Note 14. Provisions as at December 31, 2008, 2007 and 2006 Provisions for liabilities mainly relate to disputes with employees and third parties. They are evaluated on a case-by-case basis. Provisions for contingent liabilities are analyzed as follows:

The provision for employee-related expenses corresponds to Maroc Telecom’s commitment to pay life annuities to its current and former employees for work-related accidents, and other related expenses. The allowance of MAD180 million relating to restructuring provisions corresponds to the voluntary redundancy plan initiated by Gabon Telecom in 2008. The other current provisions correspond mainly to litigation with third parties, the tax authorities and the telecommunications regula-tory authority.

(In millions of Moroccan dirhams) December 31,

2008 December 31,

2007 December 31, 2006

Non-current provisions 179 203 36

Provisions for life annuities 26 27 28

Provisions for termination benefits 90 172 8

Other provisions 59 - -

Current provisions 519 143 388

Provisions for voluntary redundancy plan 179 11 304

Provisions for employee - related expenses 22 23 26

Provisions for disputes with third parties 182 108 35

Other provisions 137 - 23 Total 698 345 424

Provisions for disputes with third parties 4 3 -

2008

(In millions of Moroccan dirhams) 2007 Charges Utilized

Change in scope of

consolida-tion

Transla-tion ad-

justment Releases Reclassifi-

cation 2008

Non-current provisions 203 19 (75) (17) 0 (1) 51 179

Provisions for life annuities 27 - - - - (1) - 26

Provisions for termination benefits 172 10 (75) (17) 0 - - 90

Provisions for disputes with third parties 3 1 - - - - - 4

Other provisions - 8 - - 0 - 51 59

Current provisions 143 362 (25) 0 -1 (2) 43 519

Provisions for voluntary redundancy plan 11 180 (11) - -1 - - 179

Provisions for employee - related expenses 23 12 (12) - 0 (2) - 22

Provisions for disputes with third parties 108 76 (2) - 0 - - 182

Other provisions - 94 - - - - 43 137

Total 345 381 (100) (17) (1) (3) 94 698

5


2007

The provision for employee-related expenses corresponds to Maroc Telecom’s commitment to pay life annuities to its current and former employees for work-related accidents, and other related expenses. The provision for retirement benefits mainly concerned Onatel and Gabon Telecom. The reversal of MAD293 million relating to restructuring provisions corresponds to the voluntary redundancy plan initiated by Maroc Telecom in 2006. The other current provisions correspond mainly to litigation with third parties, the tax authorities and the telecommunications regula-tory authority.

The provision for employee-related expenses corresponds to Maroc Telecom’s commitment to pay life annuities to its current and former employees for work-related accidents, and other related expenses. The allowance of MAD300 million of restructuring provisions corresponds to the voluntary redundancy plan initiated by Maroc Tele-com in 2006. The other current provisions correspond mainly to the Mauritel group, and relate to litigation with the tax authorities and the telecom-munications regulatory authority.

2006

(In millions of Moroccan dirhams) 2005 Charges Utilized Change in

scope of consolida-

Translation adjustment Releases 2006

Non-current provisions 35 4 (2) 0 (1) 0 36 Provisions for life annuities 25 3 - - - - 28

Other provisions 10 1 (2) - (1) - 8 Current provisions 102 320 (24) 0 (2) (9) 388 Provisions for voluntary redundancy plan 6 300 (2) - - - 304

Provisions for employee - related expenses 53 2 (15) - - (14) 26

Provisions for disputes with third parties 13 10 (3) - - 15 35 Other provisions 29 9 (3) - (2) (10) 23 Total 137 325 (26) 0 (2) (9) 424


(In millions of Moroccan dirhams) 2006 Charges Utilized

Change in scope of

consolida-tion

Transla-tion ad-

justment Releases Reclasse-

ments 2007

Non-current provisions 36 13 (10) 163 2 (3) 0 203 Provisions for life annuities 28 - (1) - - - - 27 Provisions for termination benefits 8 13 - 152 2 (3) - 172 Other provisions - - (9) 11 - - - 3 Current provisions 388 51 (223) 28 1 (101) 0 143 Provisions for voluntary redundancy plan 304 - (193) - - (100) - 11 Provisions for employee - related expenses 26 14 (17) 1 - (1) - 23 Provisions for disputes with third parties 35 37 (13) 27 1 - 23 108 Other provisions 23 - - - - - (23) 0

Total 424 64 (233) 191 3 (104) 0 345


Note 15. Borrowings and other financial liabilities as at December 31, 2008, 2007 and 2006

15.1. Net cash position

15.2. Net cash by maturity

The breakdown by maturity is based on the repayment terms and conditions of the borrowings.

(In millions of Moroccan dirhams) December 31,

2008 December 31,

2007 December 31,

2006

Borrowings due in less than one year 277 331 44

Borrowings due in more than one year 1,039 1,233 11

Facilities and overdrafts 1,136 828 Borrowings and financial liabilities 2,452 2,392 55 Cash and cash equivalents 2,678 3,725 2,741

Escrow accounts 150 118 Net cash position 376 1,451 2,686

2008 (In millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings 277 956 83 1,316 Facilities and overdrafts 1,136 1,136 Borrowings and financial liabilities 1,412 956 83 2,452 Cash and cash equivalents 2,678 2,678 Escrow accounts 126 24 150 Net cash position 1,265 (830) (59) 376

2007 (In millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings 331 1,125 108 1,565 Facilities and overdrafts 828 828 Borrowings and financial liabilities 1,159 1,125 108 2,392 Cash and cash equivalents 3,725 3,725 Escrow accounts 118 118

Net cash position 2,684 (1,125) (108) 1,451

2006 (In millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings 44 11 55 Facilities and overdrafts - Borrowings and financial liabilities 44 11 - 55 Cash and cash equivalents 2,741 2,741 Net cash position 2,697 (11) - 2,686

5


Note 16. Accounts payable as at December 31, 2008, 2007 and 2006

Trade accounts payable and related accounts include debt due from GAM, SFR, Vivendi, Vivendi Telecom International, Canal+ Group and Casanet. Details of these transactions are presented in Note 30 on related parties.

”Tax liabilities and other payables’’ includes tax and VAT payables. It also includes payables relating to obligations arising from Maroc Telecom’s operating terms and conditions.

Accruals mainly includes prepaid income, corresponding to subscriptions invoiced in advance, SIM cards sold but not used (whether activated or not), handsets sold but not activated and provisions relating to loyalty programs of MAD1,555 million.

Companies Interest rate% Interest rate% Maturity December 31, 2008

December 31, 2007

December 31, 2006

Maroc Telecom Banks, overdrafts Maroc Telecom 3,9% 1,071 779 - Mauritel Mobile license borrowing (October 2000) 8.0% January-08 0 11 53 Mauritel ABC EURI 7.2 m 09/96 03/07 7.4% March-07 0 0 1 Mauritel Borrowing Saudi development fund 2.5% - 1 1 - Onatel Borrowing SBIF 2005-2011 6.7% June-11 216 288 - Onatel CONS.BIB-ECOBANK-BICIA 7.7% July-12 132 140 - Onatel Interior borrowing reassigned by government 7.5% December-08 0 9 - Onatel Borrowing BOAD 96.00 6.0% July-11 21 29 - Onatel Borrowing BEI 2.0% December-10 13 20 - Onatel Borrowing AFD 1109 7.7% October-09 2 5 - Onatel Borrowing AFD110-1111 2.0% October-18 21 23 -

Onatel Borrowing SGBB 2008 6.4% Novembre-13 86 87 -

Onatel Borrowing BOA 2008 6.4% December-14 86 87 - Onatel Borrowing BOAD 09 00 8.0% July-10 51 69 - Onatel Onatel Borrowing BIB 2008 6.0% December-13 35 0

Onatel Borrowing SFI 2008 7.6% July-13 87 0 Onatel Borrowing BICIAI 2008 6.3% September-15 87 0 Onatel Banks. overdrafts Onatel 8.5% - 54 23 - Gabon Telecom Borrowing BEI 3.0% March-12 0 177 - Gabon Telecom Borrowing BID 8.0% December-12 0 156 - Gabon Telecom Borrowing AFD 5.0% October-09 2 2 - Gabon Telecom Borrowing Commerzbank Euribor+0.75% December-13 72 80 - Gabon Telecom Leasing debts BGFI - - 4 12 - Gabon Telecom Banks-GT credit balance 0.0% - 12 25 - Libertis Alcatel PhaseI Euribor+3.5% November-09 23 46 - Libertis Alcatel Phase II Euribor+0.75% March-11 161 266 - Mobisud France Borrowing Mobisud fr - - 215 56 -

- Other 8.0% - - 1

Borrowings and other financial liabilities 2,452 2,392 55

(In millions of Moroccan dirhams) December

31, 2007 December

31, 2006 Trade accounts payable 7,209 5,318

Employee- related liabilities 758 555

Tax liabilities and other payables 5,685 3,002

Accruals 1,734 1,403

Total 15,386 10,278

December 31, 2008

7,264 880

5,064 1,555

14,763



Note 17. Revenues for the years ended December 31, 2008, 2007 and 2006

Maroc Telecom reported 2008 revenues of MAD29,521 million, up 7.2% due to continuing strong growth in Mobile business activities.

Consolidated revenues at December 31, 2008 increased significantly, on the one hand due to the rise in mobile activity and on the other hand due to growth in broadband internet activities, data services for corporate users and operators and greater volumes of incoming international traffic.


Mobile gross revenues 19,296 14,895

Sales of goods 989 969

Sales of services 18,307 13,926

Fixed-line and internet gross revenues 11,090 10,312

Sales of goods 76 101

Sales of services 11,014 10,211

Total consolidated gross revenues 30,386 25,207


Total consolidated net revenues 27,532 22,615

2008

21,160

1,196

19,965

11,354

59

11,295

32,514

(2,993)

29,521


Gross revenues 32,514 30,386 25,207

Maroc Telecom 28,212 26,547 24,210

Mauritel 1,165 1,153 997

Onatel 1,639 1,517

Mobisud 183 65

Gabon Telecom 1,315 1,104

Total consolidated gross revenues 32,514 30,386 25,207

Elimination of intersegment transactions (2,993) (2,854) (2,592 )

Total consolidated net revenues 29,521 27,532 22,615

5


Note 18. Purchases for the years ended December 31, 2008, 2007 and 2006

The item “Other purchases’’ mainly includes fuel and electricity, phone cards and other consumables

Note 19. Payroll and payroll-related costs for the years 2008, 2007 and 2006

This item includes payroll costs for the period, excluding redundancy costs, which are recognized as other operating income and ex-penses.

Note 20. Taxes, duties and fees for the years ended December 31, 2008, 2007 and 2006

Taxes, duties and fees include local taxes (patents, urban taxes), the tax for occupation of public land and other taxes (registration fees, motor tax).

Fees include amounts paid to the telecommunications regulatory authority with respect to universal service and training.


Cost of handsets 1,678 1,509 1,466

Domestic and international interconnection charges 1,894 2,023 1,892

Other purchases 899 683 335

Total 4,471 4,215 3,693


Wages 2,297 2,314 1,709

Payroll taxes 374 358 274

Wages and taxes 2,671 2,672 1,982

Share-based compensation 34 23 77

Payroll costs 2,705 2,695 2,060

Average headcount 13,955 14,154 11,764


Taxes and duties 319 307

Fees 469 464

Total 787 771

2008

311

443

754



Note 21. Other operating income and expenses for the years ended December 31, 2008, 2007 and 2006

Communication expenses increased 1.4%, mainly due to Onatel and Mauritel subsidiaries and despite the decrease reported by Ma-roc Telecom and Gabon Telecom.

Commissions were up 14%, primarily due to the 18% increase in Maroc Telecom’s commissions, from MAD804 million in 2007 to MAD952 million in 2008.

Note 22. Net depreciation, impairment and provisions for the years ended Decem-ber 31, 2008, 2007 and 2006

“Provisions” mainly comprise the amounts relating to Gabon Telecom’s voluntary redundancy plan, which is presented in detail in Note 29.


Communication 604 464

Commissions 1,041 718

Other including : 1,917 1,504

Rental expenses 467 188

Maintenance, repair and rental expenses 634 504

Audit and advisory fees 425 177

Postage and banking services 108 85

Voluntary redundancy plan 193 30

Other 90 520

Total 3,562 2,686

2008

612

1,188

1,843

511

735

401

112

38 45

3,643


Depreciation and impairment of fixed assets 3,623 2,752





Total 4,038 3,363

2008

3,770

93

(35)

(42)

273

4,059

5


Note 23. Income from equity affiliates for the years ended December 31, 2008, 2007 and 2006

• Medi-1-Sat has been accounted by using the equity method since January 1, 2006 • GSM Al-Maghrib was sold in the first quarter of 2006 for MAD13 million, generating a loss of MAD12 million, which was partly

offset by net income of MAD3 million.

Note 24. Net financial income (expense) for 2008, 2007 and 2006

24.1 Borrowing costs

The decrease in income from investments between 2008 and 2007 was due to the reduced interest rate on term deposits and sight deposits.

Interest expense decreased 18% due to Gabon Telecom’s debt reduction following the agreement signed with the Gabonese State, as well as the reduction in interest paid by Maroc Telecom on the bank overdraft.

24.2 Other financial income and expenses

Other financial income and expenses take into account the effects on Gabon Telecom’s financial statements of the assumption by the Gabonese State of part of Gabon Telecom’ debt and the effect on Maroc Telecom of the compensation cost (contingent payment) made by Maroc Telecom (see Significant Events).


Medi-1- Sat (34) (12)

GAM (9)

Total (34) (21)

2008

(62)

(62)



Interest expense on loans (131) (7)

Net borrowing costs 0 142

2008

112

(106)

6


Gains (losses) from foreign exchange translation 11 (3)

Other financial income (+) 21 4

Other financial expenses (-) (1)

Other financial income and expenses 31 1

2008

(31)

837

(418)

388



Note 25. Tax expense for 2008, 2007 and 2006

(*) The line item ‘’Other differences’’ primarily includes the 17.5% tax exemption on revenues from international activities The deferred tax rate of Maroc Telecom and Onatel was 30%. The deferred tax rate of Gabon Telecom was 35%. The deferred tax rate of Mobisud France was 33.33%.

Note 26. Minority interests for 2008, 2007 and 2006

Minority interests reflect the interests of shareholders other than Maroc Telecom in the net earnings of Mauritel, Mobisud France, Onatel and Gabon Telecom. Minority interests increased considerably primarily due to the improvement in Gabon Telecom’s net earnings. Minority interests take into account the net effect of the agreements on debt assumption entered into with the Gabonese State (MAD338 million).

Note 27. Earnings per share for 2008, 2007 and 2006 27.1 Earnings per share

27.2 Change in the number of shares.

(In millions of Moroccan dirhams) 2007 2006 Income tax expense 4,062 3,249

Deferred tax 33 90

Current tax 4,095 3,339

Consolidated effective tax rate * 33% 33%

* Tax expense/earnings before taxes (In millions of Moroccan dirhams) 2007 2006 Earnings 8,137 6,833

Income tax expense 4,095 3,339

Earnings before tax 12,232 10,172 Moroccan statutory tax rate 35% 35%

Theoretical income tax expense 4,281 3,560 Impact of changes in tax rates (28) 63

Other differences (*) (158) (284)

Effective income tax expense 4,095 3,339

2008 3,915

281 4,196

30%

2008 10,010

4,196 14,206

30% 4 262

0 (66)

4,196

(In millions of Moroccan dirhams) 2007 2006 Mauritel 176 102 Mobisud France (51) (8) Onatel 79 Gabon Telecom (99)

Total minority interests 104 94

2008 165

(106) 75

355 490

Dec.31, 08 Dec.31, 07 Dec.31, 06 (In millions of Moroccan dirhams) Basic Diluted Basic Diluted

Earnings attributable to equity holders of the parent 8,033 8,033 6,739 6,739

Adjusted earnings attributable to equity holders of the parent

8,033 8,033 6,739 6,739

Number of shares (in millions) 879 879 879 879

Earnings per share (in Moroccan dirhams) 9.1 9.1 7.7 7.7

Diluted 9,520

9,520

879

10.8

Basic 9,520

9,520

879

10.8

2007 2006

Weighted average number of shares outstanding over the period 879,095,340 879,095,340

Adjusted weighted average number of shares outstanding over the period 879,095,340 879,095,340

Potential dilutive effect of financial instruments outstanding Weighted average number of shares after potential dilutive effect 879,095,340 879,095,340

2008

879,095,340 879,095,340

879,095,340

5


Note 28. Segment data for 2008, 2007 and 2006 28.1. Breakdown of balance sheet items by business segment

(c) includes taxes, cash, financial assets, borrowings and net equity.

28.2. Breakdown of balance sheet items by geographical area

December 31, 2008

(In millions of Moroccan dirhams) Fixed-line (A)

Mobile (B) Unalloca-

ted (C) Total Maroc

Telecom group

Non-current assets 11,182 11,391 2,461 25,034

Current assets 5,530 4,841 3,078 13,449

Total assets 16,713 16,232 5,538 38,483

Total shareholders’ equity 20,356 20,356

Non-current liabilities 113 16 1,190 1,319

Current liabilities 7,017 7,591 2,200 16,809

Total shareholders’ equity and liabilities 7,130 7,607 23,746 38,483

Acquisitions of tangible and intangible assets 2,343 3,613 5,957



ted (C) Total Maroc

Telecom group


Current assets 7,285 3,530 3,692 14,507

Total assets 17,954 13,376 6,419 37,749

Total shareholders’ equity 18,634 18,634

Non-current liabilities 185 17 1,233 1,436

Current liabilities 7,573 7,984 2,121 17,679


Acquisitions of tangible and intangible assets 2,188 3,279 5,467 December 31, 2006



ted (C) Total Maroc

Telecom group


Current assets 4,525 2,823 2,780 10,129

Total assets 11,993 10,231 6,000 28,224 Total shareholders’ equity 16,853 16,853

Non-current liabilities 27 10 187 224

Current liabilities 4,667 5,989 491 11,147


Acquisitions of tangible and intangible assets 1,533 2,445 3,978

December 31, 2007

(In millions of Moroccan dirhams) December 31, 2007

December 31, 2006

Morocco 23,280 21,008

Other 8,050 1,216

Total segment assets 31,330 22,224

December 31, 2008

25,280 7,665

32,945



28.3. Segment earnings by business

28.4. Segment earnings by geographical area 2008

2007

2008

(In millions of Moroccan dirhams) Fixed-line Mobile Elimina- Total

Revenues 11,090 19,296 (2,854) 27,532


Net depreciation and impairment 1,716 1,907 3,623

Voluntary redundancy plan 125 68 193

2006 (In millions of Moroccan dirhams) Fixed-line Mobile Elimina- Total

Revenues 10,312 14,895 (2,592) 22,615


Net depreciation and impairment 1,324 1,428 2,752

Voluntary redundancy plan 30 1 31

2007

(In millions of Moroccan dirhams) Fixed-line Mobile Elimina- Total

Voluntary redundancy plan (28) (10) (38) Net depreciation and impairment 1,622 2,148 3,770 Earnings from operations 3,192 10,697 13,889

Revenues 11,354 21,160 (2,993) 29,521

(In millions of Moroccan dirhams) Morocco Mauritania Burkina Faso Gabon France Belgium Elimina-

tions Total

Revenues 25,738 1,086 1,467 1,187 98 85 (140) 29,521

Net depreciation and impairment 2,859 181 410 282 39 0 3,770

Voluntary redundancy plan (17) (21) (38)

Earnings from operations 13,557 372 210 (11) (201) (38) 13,889

(In millions of Moroccan dirhams) Morocco Other Elimina-tions Total

Revenues 24,136 3,499 (103) 27,532 Earnings from operations 12,072 162 12,234 Net depreciation and impairment 2,786 837 3,623 Voluntary redundancy plan 193 0 193

2006

(In millions of Moroccan dirhams) Morocco Other Elimina-tions Total

Revenues 21,736 929 (50) 22,615 Earnings from operations 9,783 260 10,043 Net depreciation and impairment 2,601 151 2,752 Voluntary redundancy plan 2 28 30

5


Note 29. Restructuring provisions for the years ended December 31, 2008, 2007 and 2006

Maroc Telecom initiated a voluntary redundancy plan in 2006 for which it recorded provisions of MAD300 million. In 2007, MAD193 million of the provisioned amount were used and MAD100 million were reversed. In 2008, MAD11 million were reversed by Maroc Telecom. In addition, Gabon Telecom initiated a voluntary redundancy plan at an estimated cost of MAD181 million.

Note 30. Transactions with related parties

30.1. Compensation of executive officers, group management and directors in 2008, 2007 and-2006

For the year ended December 31, 2008, members of the Management Board received MAD29 million. For the year ended December 31, 2007, members of the Management Board received MAD23 million. For the year ended December 31, 2006, members of the Management Board received MAD22 million.

(1) Salaries, compensation, performance–based compensation and incentive plans, social security contributions, holiday pay, Direc-tors’ attendance fees and non-monetary benefits. (2) Pension and post-retirement benefits, life insurance and medical care (3) Long-service leave, sabbatical leave, long service benefits, jubilees, deferred compensation, performance-based compensation and incentive plans and bonuses (if payable 12 months or more after year end) (4) Redundancy pay (5) Stock options and other share-based compensation

(In millions of Moroccan dirhams) Maroc

Telecom Other Total Maroc Te-lecom group

Balance as at January 1, 2006 6 0 6 Changes in scope of consolidation and adjustments of allocation of acquisition price

0

Addition 300 300

Utilization (2) (2)

Releases 0 Balance as at December 31, 2006 304 0 304 Changes in scope of consolidation and adjustments of allocation of acquisition price

0

Addition 0

Utilization (193) (193)

Releases (100) (100) Balance as at December 31, 2007 11 0 11 Changes in scope of consolidation and adjustments of allocation of acquisition price

0

Addition 181 181

Utilization (11) (11)

Releases 0 Balance as at December 31, 2008 0 181 181


Short term benefits (1) 23 22

Post-employement benefits (2) - - Other long-term benefits (3) - - Redundancy benefits (4) 28 25

Share-based compensation (5) - - Total 51 47

2008

29

- -

38 -

67



30.2. Equity affiliates Medi1Sat :

Medi-1-Sat was created in 2004. Its business activity includes: • satellite transmission and broadcasting of news, educational programs, sports and entertainment programs;

• broadcasting of advertising;

• all cable and satellite TV activity;

• all operations relating to satellite image broadcasting, notably setting up and broadcasting TV programs. During fiscal year 2006, Maroc Telecom entered into an agreement with Medi-1-Sat under the terms of which Maroc Telecom agreed to grant Medi-1-Sat an advance of €2,800,000. The amount was recorded under current account advances. In 2006, Maroc Telecom paid the first tranche of this advance corresponding to €1,200,000 (MAD13 million). In 2007, Maroc Telecom paid the second tranche of the advance for €1,600,000 (MAD18 million). During 2008, two amendments were made to the agreement signed in 2006, whereby Maroc Telecom paid the first tranche of €1,100,000 (MAD13 million). A second tranche of €500,000 (MAD6 million) was paid. The balance of the advances as at December 31, 2008, including accrued interest, amounted to MAD54 million. The main transactions with Medi-1-Sat and amounts owed by Medi-1-Sat or Maroc Telecom are detailed as follows:

30.3. Other related parties Casanet

During 2003, Maroc Telecom concluded several agreements with Casanet relating to:

• the maintenance of Maroc Telecom’s “Menara” internet portal;

• the provision of development services and hosting of Maroc Telecom’s mobile portal;

• the hosting of Maroc Telecom’s El Manzil website;

• the maintenance of new WAP applications on the Menara portal and the production of content relating to these applications;

• the marketing of internet access over leased lines. The amounts invoiced in 2008 by Casanet to Maroc Telecom according to agreements noted below, totaled MAD32 million compared to MAD48 million in 2007. The balance of payables amounted to MAD11 million as at December 31, 2008.

(In millions of Moroccan dirhams) December 31, 2007 December 31, 2006 Revenues 1

Expenses -

Receivables 33 14

Payables -

December 31, 2008 3 0

54 0

(In millions of Moroccan dirhams) December 31, 2007 December 31, 2006 Revenues 0 5

Expenses 48 27

Receivables 0 11

Payables 12 17

December 31, 2008 2

32 14 11

5


Vivendi – SFR – Vivendi Telecom International – Canal+ group In 2001, Maroc Telecom entered into a management services agreement with Vivendi Telecom International (VTI) for the provision of technical assistance in the following fields:

• strategy and organization;

• development;

• sales and marketing;

• finance;

• purchasing;

• human resources;

• information systems;

• regulation and interconnection;

• infrastructure and networks. In addition, with a view to further strategic cooperation, Maroc Telecom entered into transactions with SFR (the leading French private mobile operator), Canal + group and the Vivendi Universal group. These transactions are summarized as follows:

2008

(In millions of Moroccan dirhams) Vivendi SFR Canal+ group VTI

Revenues 84 Expenses 6 131 5 12

Receivables 128 Payables 102 173 3

2006 (In millions of Moroccan dirhams) Vivendi SFR Canal+ group VTI

Revenues 114 Expenses 70 28 5 25

Receivables 31 Payables 60 92 0 2

2007

(In millions of Moroccan dirhams) Vivendi SFR Canal+ group VTI

Payables 251 64 3 3 Receivables 222 Expenses 3 197 8 5 Revenues 401



Note 31. Contractual obligations and contingent assets and liabilities

31.1. Contractual obligations and commercial commitments recorded in the balance sheet

* Long-term vehicle leases (excluding tax)

31.2. Other commitments given and received relating to ordinary operations

Commitments given Commitments given comprise:

In 2008

− Commitment of investments of MAD3,141 million comprising: − Maroc Telecom’s commitments of MAD2,689 million to suppliers of fixed assets; − Other subsidiaries’ commitments of MAD452 million to suppliers of fixed assets.

− Mauritel’s commitment to the Government to invest MAD145 million in the third generation license; − Guarantees given to banks for MAD78 million; − Stake acquired in Medi-sat for MAD56 million; − Commitment related to quasi-equity of Casanet for MAD4 million; − Operating leases for MAD12 million; − Long-term satellite lease for MAD185 million; − Various other commitments of MAD0.2 million.

In 2007

− Guarantees on equipment contracts. As at December 31, 2007, these commitments amounted to MAD67.1 million, compared with MAD205 million at year-end 2006, and they were mostly current.

− Supplier orders, which amounted to MAD1,753 million at year-end 2007, compared with MAD910 million at December 31, 2006, and were mostly current. These orders mainly relate to investments in property, plant and equipment.

− Commitments relating to operating leases with terms of between 3 and 10 years totalled MAD10.8 million at December 31, 2007. The amount recorded corresponds to one month’s expense reflecting the termination clause, which provides for a one-month no-tice period.

− Long-term space segment leases for MAD254.2 million. − Sindibad investment fund amounting to MAD2 million in 2007 compared with MAD2 million in 2006. − CMC group agreed to retrocede to Socipam, a civil company comprising the employees of the Mauritanian subsidiaries, its

0.527% interest in Mauritel SA, which it bought in February 2006. The terms and conditions governing this commitment are the following :

− possible buyback for 5 years by Socipam of 5,592 shares sold to CMC for MAD7.8 million; − by tranche of 100 shares; − at a unit price which will increase every year from 2007.

− Mauritel’s commitment to the Government to invest MAD160 million in the third generation license, of which MAD32 million within one year and the remaining amount subsequently.

(In millions of Moroccan dirhams) Total Due less than one year Due 1-5 years Due more than 5

years Long- term debts 1,316 277 956 83 Capital lease obligations* - - - - Operating leases 4 4 - - Irrevocable purchase obligations - - - - Other long-term commitments - - - - Total 1,320 281 956 83

5


− Gabon Telecom – contribution to health insurance: 10% of annual revenue from mobile business (excluding tax and less commis-sions to retailers) from January 1, 2008.

− Commitment by Maroc Telecom to increase the quasi-equity of Casanet by MAD6.1 million. − Maroc Telecom is exempt from customs duty for all capital goods imported pursuant to an investment agreement entered into with

the public authorities of the Kingdom of Morocco. Under the terms of the agreement Maroc Telecom is required to carry out a three year capital expenditure program over three years from 2006 to 2009 for MAD7.4 billion and to create 150 new jobs. As at December 31, 2007, outstanding expenditure required under the program amounted to approximately MAD391 million. If Maroc Telecom does not make these investments, it will have to pay the customs duty outstanding on all the goods imported, plus penalties for late payment.

In 2006

− Guarantees on equipment contracts. At year-end 2006, these commitments amounted to MAD205 million, compared with MAD236 million as at December 31, 2005, and were mostly current.

− A guarantee given relating to the participation of MarocTelecom in the bid for Gabon Telecom’s privatization for MAD11 million. − Supplier orders, which amounted to MAD910 million at December 31, 2006, compared with MAD613 million at year-end 2005, and

were mostly current. These orders mainly relate to investments in property, plant and equipment. − Operating leases with terms of between 3 and 10 years for MAD10 million at December 31, 2006. The amount recorded corre-

sponds to one month’s expense reflecting the termination clause, which includes a one-month notice period. − Long-term space segment leases for MAD117 million. − Sindbad investment fund for MAD2 million in 2006 compared with MAD2 million in 2005. − Stake acquired in Medi-1-Sat for MAD42 million. − CMC group agreed to retrocede to Socipam, a civil company comprising the employees of the Mauritanian subsidiaries, its

0.527% interest in Mauritel SA bought in February 2006. The terms and conditions governing this commitment are the following:

− possible buyback for 5 years, required by Socipam, of 5,592 shares sold to CMC for MAD7.8 million; − by tranche of 100 shares; − at a unit price which will increase every year from 2007

− the agreement concluded between Mobisud and SFR whereby Mobisud is committed to paying an advance of MAD84 million in January 2007 for its interest in the Enhanced Service Provider (ESP). (SFR provides transmission and other services to Mobisud over its GSM and UMTS networks throughout mainland France.) SFR will repay MAD72 million of the advance when Mobisud signs up 75,000 customers.

− Mauritel’s commitment to the government to invest MAD160 million in the third generation license, MAD32 million of which within one year and the remaining amount subsequently.

− Maroc Telecom is exempt from customs duty on all capital goods imported, pursuant to an investment agreement with the public authorities of the Kingdom of Morocco. Under the terms of the agreement Maroc Telecom is required to carry out a three year capital expenditure program from 2006 to 2009 for MAD7.4 billion and to create 150 new jobs. As at December 31, 2006, out-standing expenditure required under the program amounted to approximately MAD4.6 billion. If Maroc Telecom does not make these investments, it will have to pay the customs duty outstanding on all the goods imported, plus penalties for late payment.

Commitments received Commitments received include: In 2008 − Guarantees for MAD1,600 million at December 31, 2008, compared to MAD1,455 million at December 31, 2007. − Other commitments for MAD74 million. − On May 4, 2008, Maroc Telecom entered into a universal service agreement “Pacte” with the telecommunications regulatory

authority. for 2008 under which Maroc Telecom is committed to equip 1,500 localities for an estimated amount of MAD923 million (MAD81 million) in return for an exemption from the payment of MAD396 million (€35 million) to the universal service fund.

In 2007 − Guarantees for MAD1,455 million at December 31, 2007 compared with MAD1,152 million at year-end 2006. − In 2007, Maroc Telecom concluded a mobile network equipment swap agreement with Nokia Siemens Network whereby the

latter agreed to purchase Maroc Telcom’s used equipment (HLR, MSC, TMSC and GPRS) for MAD615.5 million.

− In 2007, Maroc Telecom signed two agreements to sell land for an aggregate MAD39 million.



In 2006 − Guarantees of MAD1,152 million as at December 31, 2006, compared with MAD705 million at year-end 2005.

− Moroccan government guarantee on MarocTelecom loans for MAD1 million as at December 31,2006 compared with MAD11 million at year-end 2005. This guarantee matures at the same time as the loans.

− The agreement concluded between Mobisud and SFR by which Mobisud is committed to pay an advance of MAD84 million in January 2007 for its interest in the Enhanced Service Provider (ESP). SFR provides transmission and other services to Mobi-sud over its GSM and UMTS networks throughout mainland France. SFR will repay MAD72 million when Mobisud signs up 75,000 customers.

− In July 2006, Maroc Telecom was awarded a third generation mobile telecommunications license by the regulator (ANRT) for 25 years (from July 2006 to July 2031) for a fixed fee of MAD300 million (approximately €27 million) paid in the fourth quarter of 2006.

− In July 2006, Mauritel SA was awarded a third generation license by the regulator (ARE) for 15 years (from July 2006 to July 2021) for MAD10 million.

− Maroc Telecom is exempt from customs duty on all capital goods imported, pursuant to an investment agreement with the public authorities of the Kingdom of Morocco. Under the terms of the agreement Maroc Telecom is required to carry out a three year capital expenditure program from 2006 to 2009 for MAD7.4 billion and to create 150 new jobs. As at December 31, 2006, outstanding expenditure under the agreement amounted to approximately MAD4.6 billion. If Maroc Telecom does not carry out these investments, it will have to pay the customs duty outstanding on all the goods imported, plus penalties for late payment.

31.3 Collateral and pledges In 2008 − Pledges totalling MAD46 million as at December 2008 compared with MAD55 million as at December 31, 2007. In 2007 − Pledges totalling MAD55 million as at December 31, 2007 compared with MAD66 million as at December 31, 2006; − In the event of the disposal, within a two-year period of over 65% of GSM Al-Maghrib’s share capital for a price above

MAD293 per share, Air Time shall repay the capital gain exceeding 65% to Maroc Telecom. In 2006 − Pledge totalling MAD66 million as at December 31, 2006 compared with MAD80 million at December 31, 2005; − In the event of the disposal, within a two-year period of over 65% of GSM Al-Maghrib’s share capital for a price above

MAD293 per share, Air Time shall repay the capital gain exceeding 65% to Maroc Telecom. − Commitment by Air Time to settle late payment penalities on GSM Al-Maghrib’s receivables for a total MAD22 million within

one year.

5


Note 32. Risk management

Credit risk

Maroc Telecom minimizes its credit risk by only engaging in credit operations with commercial banks and financial institutions which have high credit ratings and by spreading the transactions among the selected institutions. Maroc Telecom’s receivables do not have high credit risk, due to their high dilution rate.

Currency risk

Maroc Telecom is exposed to variations in exchange rate as the breakdown of its receipts in foreign currencies differs from the break-down of its disbursements in foreign currencies. Receipts and disbursements in foreign currencies represent a significant portion of company’s activity. Maroc Telecom’s foreign currency receipts relate to revenues from international operations and its foreign currency disbursements relate to the servicing of debt, payments to suppliers (in particular concerning investments and purchases of handsets) and payment for interconnection with foreign operators. These disbursements are mainly denominated in euros. The portion of foreign currency disbursements denominated in euros, excluding subsidiaries, was 59% at December 31, 2008, of an aggregate MAD4,850 million. These foreign currency disbursements exceed the amount of foreign currency receipts (MAD3,058 million in 2008). In addition, Maroc Telecom group had debt totalling MAD2,452 million as at December 31,2008, denominated mainly in Moroccan dirham, FCFA and euro:

Maroc Telecom cannot net its foreign currency disbursements and receipts as Moroccan law only allows it to retain 50% of its tele-coms receipts in a foreign currency account; the 50% remaining are converted into Moroccan dirhams. Maroc Telecom’s earnings may be affected by fluctuations in exchange rates, and in particular by fluctuations in the Moroccan dirham against the US Dollar or the euro. In 2008, the euro gained 1,0% in relation to the Moroccan dirham (from MAD11.3590 at December 31, 2007 to MAD11.2460 for €1 at December 31, 2008). Over the same period, the US dollar gained 5% from MAD7.7132 in 2007 to MAD8.0983 for USD1 in 2008. The consolidation of the new Africain subsidiaries in 2007 (Onatel and Gabon Telecom), whose functional currency is the CFA Franc, increased the group’s exposure to currency risk, in particular with respect to the variations of euro against the Moroccan dirham. How-ever, a 1% depreciation in the Moroccan dirham against the euro, would have the following limited impacts on the basis of the group’s financial statements for fiscal year 2008:

− revenues = +MAD60 millions de dirhams

− Earnings from operations = +MAD14 millions de dirhams

− Net earnings, group share = +MAD11 millions de dirhams

The following table sets out the group’s foreign currency positions as at December 31, 2008.

The group does not use foreign currency hedging instruments. Maroc Telecom’s assets denominated in foreign currencies are mainly receivables from foreign operators. Liabilities denominated in foreign currencies are mainly payables to foreign operators and suppliers.

(In millions of Moroccan dirhams) 2007 2006 Euro 56 1 Dollar US Moroccan dirhams 779 Other (mainly FCFA) 1,512 52

Current debt 2,348 53 Accrued interest 44 1

Total financial debts 2,392 54

2008 714

1,077

646 2,436

15 2,452

(In millions of Moroccan dirhams)

Euro /FCFA USD Other * Total foreign cur-rency

MAD Total Maroc Telecom group

Total assets 8,335 719 2,174 11,228 27,255 38,483 Total liabilities and equity (8,200) (661) (2,205) (11,066) (27,417) (38,483)

* mainly Ouguiyas Net position 135 58 (31) 162 (162) 0



Maroc Telecom would be affected by a 1% increase of the euro and US dollar against the Moroccan dirham at December 31, 2008 as follows:

+MAD22 million on assets denominated in foreign currencies; -MAD20 million on liabilities denominated in foreign currencies; +MAD2 million on net liabilities; -MAD17 million on commitments and; -MAD16 million on total net liabilities.

Conversely, a 1% decrease in the euro and US dollar against the Moroccan dirham would have an impact at December 31, 2008 of:

-MAD22 million on assets denominated in foreign currencies; +MAD20 million on liabilities denominated in foreign currencies; -MAD2 million on net liabilities ; +MAD17 million on commitments and ; +MAD16 million on total net liabilities .

Liquidity risk

Maroc Telecom believes that its cash flow from operations, net cash and funds available through credit lines will be sufficient to cover the expenses and investments necessary for its operations, to service its debt, to pay dividends and to complete the underway exter-nal growth operations as at December 31, 2008.

Interest rate risk The majority of loans taken out by Maroc Telecom are fixed-rate loans. As the portion of floating rate interest loans is relatively low, Maroc Telecom group is not highly exposed to favorable or unfavorable changes in interest rates.

5


Note 33. Post-balance sheet events NONE



Table of contents

5.5 INDIVIDUAL FINANCIAL STATEMENTS

• Report of the statutory auditors on the financial state-ments

• Balance sheet assets

• Balance sheet shareholders’ equity and liabilities

• Income statement

• Statement of operating data

• Statement of cash flows

• Additional disclosures

A1 : Main valuation methods used by the company A2 : Exceptions A3 : Changes in methods B1 : Capitalized costs B2 : Non-financial assets B2 Cont : Depreciation schedule B3 : Gains or losses on disposals or withdrawls of fixed assets B4 : Equity investments B5 : Provisions

B6 : Receivables B7 : Liabilities B8 : Guarantees given or received B9 : Financial commitments received or given excluding leasing transactions B10 : Assets leased B11 : Income statement items B12: Reconciliation of net income and tax income B13 : Determination of ordinary income after tax B14 : Value added tax C1 : Shareholding structure C2 : Appropriation of year-end income C3 : Income and other significant characteristics of com-pany over the last three years C4 : Transactions in foreign currencies during the period C5 : Date of financial statements and subsequent events

• Special report of the statutory auditors

5


Report of the Statutory Auditors on the financial statements for the year ended December 2008 Chairman Sirs shareholders In accordance with the terms of our appointment by your AGM, we have audited the accompanying financial statements of Itissalat Al-Maghrib (IAM) for the fiscal year ended December 31, 2008, which include the balance sheet, the income statement, the statement of operating data, the cash flow statement and the additional disclosures. These financial statements, which show capital and reserves of MAD 18,233,492 thousand, including a net profit of MAD9,527,628 thousand.

Management responsability

The direction is responsible for the setting up and true presentation of these financial statements, in accordance with the Financial International Information. This responsibility includes the design, the setting up and the follow-up of the internal control relating to the establishing and presentation of the financial statements not comprising significant ano-maly, whether those resulting from frauds or errors, as well as the determination of reasonable countable estimates taking into consideration circumstance. Auditor responsability Our responsibility is to express an opinion on these financial statements on the basis of our audit. We conducted our audit in accordance with the auditing standards in Morocco. These standards require to conform to the rules of ethics, to plan and carry out the audit to obtain a reasonable assurance that the financial statements are free from material misstatement An audit implies the implementation of procedures in order to collect convincing elements concerning the amounts and the provide informations in the financial statements. The choice of the procedures concerns the auditor judgement and the evaluation of risk that the financial statements could contain a material misstatement resulting from frauds or er-rors. While carrying out these evaluations of the risk, the auditor takes into account the internal control in force on entity rela-ted to the setting up and presentation of the financial statements in order to define proceedings of audit adapted to the circumstance, and not in aim to express an opinion on effectiveness of this one. It also includes assessment of the accounting principles used and significant estimates made by Management in the preparation of the financial statements and an evaluation of the overall adequacy of the presentation of these state-ments. We believe that our audit provides a reasonable basis for the opinion expressed below. Opinion on the financial statements In our opinion, the financial statements referred to in the first paragraph above give a true and fair view of Itissalat Al-Maghrib’s assets, liabilities and financial position as of December 31, 2008, as well as of its results and cash flows for the year then ended, in accordance with the accounting principles generally accepted in Morocco. Specific controls and information We also performed the specific verifications required by law. In particular, we ensured that the information contained in the Management Board’s Report to the Supervisory Board was consistent with the Company’s financial statements. We draw your attention to the fact that during 2008, Itissalat Al-Maghrib (IAM) carried out: The contingent price contribution for the acquisition of 51% of Gabon Telecom, the incumbent telecommunications op-erator for a total amount of MAD361 million, IAM’s stake in Gabon Telecom thus rose from MAD323.9 million to MAD6-84.9 million as at December 31, 2008. The capital increase of Maroc Telecom Belgium SA, a Belgium-based company wholly-owned by Maroc Telecom, for an amount of MAD54.3 million increasing its share capital from MAD52.6 million to MAD106.9 million. The participation in Mobisud France's share capital, a France-based company, held at 66% by Itissalat Al-Maghrib, for an amount of MAD37.3 million, increasing its stake from MAD73,7 million to MAD111 million. The participation to the recapitalization of Medi1-Sat through the increase of Itissalat Al-Maghrib stake in this company from MAD46,7 million to MAD79 million at the end of 2008 (i.e. Euro7 million), increasing its interest from 28% to 37% following the release of the quarter of the capital increase and to 39% following the total release of the contribution. The participation in Sindibad Funds’s share capital increase, held at 10.42% by Itissalat Al-Maghrib, increasing its share capital from MAD27.2 million to MAD48 million, i.e. from MAD2.8 million to MAD5 million. On February 25, 2009

Statutory auditors

KPMG Fouad LAHGAZI

Partner


Partner

FINANCIAL REPORT 5.5 Individual financial statements


Balance sheet

ASSETS Gross Amortization, depreciation

NET

and provisions 2007 2006 (n thousands of Moroccan dirhamsه)

CAPITALIZED COSTS (A) 0 0 0 0

. Start up costs 0 0 0 0

. Deferred costs 0 0 0 0

. Bond redemption premiums 0 0 0 0

INTANGIBLE ASSETS (B) 6,704,015 3,416,876 3,008,766 2,169,999 . Research and development costs 0 0 0 0 . Patents, tardemarks, rights ad similar rights 6,033,640 3,394,798 2,454,246 1,700,482

. Goodwill 31,686 22,078 4,260 2,198

. Other intangible assets 638,688 0 550,260 467,319

PROPERTY, PLANT AND EQUIPMENT (C) 38,155,566 24,238,046 12,274,467 11,755,431

. Land 956,636 0 969,530 971,953

. Buildings 4 205,200 2,830,770 1,368,100 1,502,464

. Technical plant, machinery and equipment 26,472,087 19,044,718 7,013,607 6,302,103

. Vehicles 69,574 65,933 4,279 4,393

. Office equipments, furniture and fittings 2,889,598 2,102,418 726,410 681,288

. Other property, plant and equipment 11,048 0 11,048 11,048

. Work in progress 3,551,424 194,207 2,181,492 2,282,181

FINANCIAL ASSETS (D) 4,055,257 410,182 3,510,610 3,071,749

. Long term loans 167,025 118,171 149,052 83,399

. Other financial receivables 1,988 0 1,966 1,989

. Equity investments 3,886,245 292,011 3,359,592 2,986,361

. Other investments and securities

UNREALISED FOREING EXCHANGE LOSSES (E) 0 0 0 46

. Decrease in long term receivables 0 0 0 0

. Increase in long term debt 0 0 0 46

TOTAL I (A+B+C+D+E) 48,914,837 28,065,103 18,793,843 16,997,225

INVENTORIES (F) 611,997 143,395 381,903 334,446

. Merchandise 432,791 114,177 294,948 265,969

. Raw materials and supplies 179,206 29,218 86,955 68,476

. Work in progress 0 0 0 0

. Intermediary and residual goods 0 0 0 0

. Finished goods

CURRENT RECEIVABLES (G) 12,991,057 5,407,226 7,242,014 6,630,232

. Trade payables, advances and downpayments 289,489 0 130,818 254,288

. Accounts receivable and related accounts 11,828,625 5,363,708 6,459,978 5,695,162

. Employees 17,664 4,120 10,304 21,087

. Tax receivable 640,545 0 529,964 532,169

. Shareholders’ current accounts 0 0 0 0

. Other receivables 169,422 39,397 29,149 25,580

. Accruals 45,313 0 81,802 101,s947

MARKETABLE SECURITIES (H) 1,843,576 0 2,810,321 1,400,000

UNREALIZED FOREIGN EXCHANGE LOSSES (I) 0 0 0 0

(Current items) 58,570 0 88,978 63,166

TOTAL II (F+G+H+I) 15,505,201 5,550,621 10,523,216 8,427,844

CASH AND CASH EQUIVALENTS 161,153 0 120,530 854,254

. Checks 155,900 0 47,600 9,375

. Bank deposits 0 0 67,464 839,851

. Petty cash 5,253 0 5,466 5,028

TOTAL III 161,153 0 120,530 854,254

GRAND TOTAL I+II+III 64,581,191 33,615,724 29,437,589 26,279,322

2008 0 0 0 0

3,287,139 0

2,638,842

9,608

638,688

13,917,520

956,636 1,374,430 7,427,370

3,640 787,180 11,048

3,357,217

3,645,075 48,854 1,988

3,594,234

0 0 0

20,849,734

468,601 318,614 149,988

0 0

7,583,832 289,489

6,464,917 13,544

640,545 0

130,025 45,313

1,843,576 0

58,570

9,954,580 161,153 155,900

0 5,253

161,153

30,965,467

5


SHAREHOLDERS’ EQUITY AND LIABILITIES NET

(In thousands of Moroccan dirhams) 2008 2007 2006

SHAREHOLDERS’ EQUITY (A) 18,233,492 16,793,541 15,628,890

. Share capital (1) 5,274,572 5,274,572 5,274,572

. Less : capital subscribed and not paid-in 0 0 0

. Paid-in capital 0 0 0

. Premium of merger , contribution 0 0 0

. Revaluation difference 0 0 0

. Statutory reserve 879,095 879,095 879,095

. Other reserves 2,552,197 2,546,122 2,546,122

. Retained earnings (2) 0 1 829 0

. Unllocated income (2) 0 0 0

. Net income of the year (2) 9,527,628 8,091,922 6,929,101

QUASI EQUITY (B) 0 0 0

. Investment subsidies 0 0 0

. Regulated provisions 0 0 0

LONG TERM DEBT (C) 3,138 1,451 2,029

. Debenture bonds 0 0 0

. Other long term debt 3,138 1,451 2,029

PROVISIONS (D) 26,424 27,407 28,400

. Provisions for contingencies 0 0 46

. Provisions for losses 26,424 27,407 28,355

UNREALIZED FOREIGN EXCHANGE GAINS (E) 0 0 0

. Increase in long term receivables 0 0 0

. Decrease in long term debt 0 0 0

TOTAL I (A+B+C+D+E) 18,263,054 16,822,399 15,659,319

CURRENT LIABILITIES (F) 10,893,340 11,328,952 9,890,079

. Accounts payable and related accounts 5,426,197 5,382,077 5,025,705

. Trade receivables, advances and downpayments 555,913 380,061 248,829

. Payroll costs 642,178 572,635 467,591

. Social security contribution 110,237 76,771 78,525

. Tax payable 2,289,450 3,129,379 2,506,014

. Shareholders’ current accounts 1 1 1

. Other payables 625,127 424,683 468,348

. Accruals 1,244,237 1,363,345 1,095,066

OTHER PROVISIONS FOR CONTINGENCIES AND LOSSES (G) 656,174 433,977 689,555

UNREALIZED FOREIGN EXCHANGE GAINS (CURRENT ITEMS) (H) 85,735 82,788 40,369

Total II (F+G+H) 11,635,250 11,845,717 10,620,003

BANK-OVERDRAFTS 1,067,163 769,474 0

. Discounted bills 0 0 0

. Treasury loans 0 0 0

. Bank loans and overdrafts 1,067,163 769,474 0

Total III 1,067,163 769,474 0

GRAND TOTAL I+II+III 30,965,467 29,437,589 26,279,322



Income statement (excluding VAT)

(In thousands of Moroccan dirhams) 2007 2006 I– OPERATING INCOME 24,198,296 21,733,218 Sales of goods 977,764 829,042 Sales of manufactured goods and services rendred 22,684,747 20,407,427 Operating revenues 23,662,511 21,236,468 Change in inventories 0 0 Self-constructed assets 0 0 Operating subsidies 0 0 Other operating income 55,474 19,751 Operating write-backs, expense transfers 480,310 476,999 TOTAL I 24,198,296 21,733,218 II– OPERATING EXPENSES 12,293,097 11,564,577 Cost of goods sold 1,616,308 1,343,139 Raw material and supplies 2,223,534 2,299,185 Other external expenses 2 550 059 2,559,357 Taxes (except corporate income tax) 265,600 303,657 Payroll costs 2,133,965 1,958,220 Other operating expenses 2,000 4,000 Operating allowances for amortization 2,591,979 2,483,137 Operating allowances for provisions 909,651 613,882 TOTAL II 12,293,097 11,564,577 III– OPERATING INCOME I-II 11,905,199 10,168,641 IV– FINANCIAL INCOME 299,404 326,001 Income from equity investments 14,008 23,667 Foreign exchange rate 81,188 63,567 Interets and other financial income 105,997 138,030 Finnacial write-backs; expense transfers 98,212 100,738 TOTAL IV 299,404 326,001 V- FINANCIAL EXPENSES 217,959 130,483 Interest on loans 44,861 366 Foreign exchange losses 37,365 66,905 Other financial expenses 0 0 Financial allowances 135,733 63,212 TOTAL V 217,959 130,483 VI- FINANCIAL INCOME IV - V 81,446 195,519 VII- ORDINARY INCOME III + VI 11,986,645 10,364,160 VIII- EXTRAORDINARY INCOME 640,477 466,312

Proceeds from disposal of fixed assets 64,829 20,244 Subsidies received 0 0 Write-backs of investment subsidies 0 0 Other extraordinary income 68,558 74,258 Extraordinary write-backs, expense transfers 507,090 371,810

TOTAL VIII 640,477 466,312

IX- EXTRAORDINARY EXPENSES 610,005 794,245

Net book value of disposed assets 20,488 12,606

Subsidies 0 0

Other extraordinary expenses 240,497 45,752

Regulated provisions 0 0

Extraordinary allowances for depreciation and provisions 349,019 735,887

TOTAL IX 610,005 794,245

X– EXTRAORDINARY INCOME VIII - IX 30,473 (327,933)

XI- INCOME BEFORE TAX VII + X 12,017,117 10,036,227 XII- CORPORATE INCOME TAX 3,925,195 3,107,127 XIII- NET INCOME XI - XII 8,091,922 6,929,101

XIV- TOTAL INCOME ( I+IV+VIII) 25,138,177 22,525,531

XV- TOTAL EXPENSES ( II+V+IX+XII) 17,046,255 15,596,431

XVI- NET INCOME (TOTAL INCOME-TOTAL EXPENSES) 8,091,922 6,929,101

2008 25,637,467

904,290 23,969,851 24,874,141

0 0 0

79,403 683,924

25,637,467 12,065,958 1,612,064 1,985,431 2,622,754

220,049 2,145,276

2,000 2,762,409

715,976 12,065,958 13,571,509

394,771 86,317

121,330 98,093 89,031

394,771 645,792 20,868

135,312 0

489,612 645,792

(251,021) 13,320,488

577,803 107,967

0 0

118,019 351,817

577,803

630,177

28,142

0

115,980

0

486,055

630,177

(52,374)

13,268,115 3,740,486 9,527,628

26,610,042

17,082,414

9,527,628

5


Statement of operating data

Operating statements (in thousands of Moroccan dirhams) 2007 2006

1 Sales of goods 977,764 829,042

2 - Cost of goods sold 1,616,308 1,343,139

I = GROSS MARGIN ON SALES (638,544) (514,097)

II + PRODUCTION FOR THE YEAR : (3+4+5) 22,684,747 20,407,427

3 Sales of manufactured goods and services rendered 22,684,747 20,407,427

4 Change in inventories 0 0

5 Self-constructed assets 0 0

III - COST OF CURRENT YEAR PRODUCTION 4,773,593 4,858,542

6 Raw materials and supplies 2,223,534 2,299,185

7 Other external expenses 2,550,059 2,559,357

IV = ADDED VALUE (I+II-III) 17,272,610 15,034,787

8 + Operating subsidies 0 0

9 - Taxes 265,600 303,657

10 - Payroll costs 2,133,965 1,958,220

V = GROSS OPERATING SURPLUS 14,873,045 12,772,910

= NET LOSS FROM OPERATIONS 0 0

11 + Other operating income 55,474 19,751

12 - Other operating expenses 2,000 4,000

13 + Operating write-backs, expense transfers 480,310 476,999

14 - Operating allowances 3,501,630 3,097,019

VI = OPERATING INCOME (+ ou -) 11,905,199 10,168,641

VII + / - FINANCIAL INCOME 81,446 195,519

VIII = ORDINARY INCOME (+ ou -) 11,986,645 10,364,160

IX + / - EXTRAORDINARY INCOME 30,473 (327,933)

15 - CORPORATE INCOME TAX 3,925,195 3,107,127

X = NET INCOME (+ ou -) 8,091,922 6,929,101

CASH EARNINGS (in thousands of Moroccan dirhams) 2007 2006

1 Net income

+ Profit 8,091,922 6,929,101

- Loss 0 0

2 + Operating allowances (1) 2,591,979 2,486,809

3 + Financial allowances (1) 46,702 46

4 + Extraordinary allowances (1) 349,019 435,887

5 - Operating write-backs (2) 947 0

6 - Financial write-backs (2) 35 046 2 802

7 - Extraordinary write-backs (2) , (3) 214,567 369,940

8 - Proceeds on disposal of fixed assets 64,829 20,244

9 + Net book value of disposed assets 20,488 12,606

I CASH EARNINGS 10,784,721 9,471,463

10 - Dividends 6,927,271 6,118,504

II NET CASH EARNINGS 3,857,450 3,352,959

(1) Excluding allowances related to current assets and liabilities and cash

(2) Excluding write-backs relating to current assets and liabilities and cash

(3) Including write-backs of investments subsidies

2008

904 290

1,612,064

(707,774)

23,969,851

23,969,851

0

0

4,608,185

1,985,431

2,622,754

18,653,892

0

220,049

2,145,276

16,288,567

0

79,403

2,000

683,924

3,478,385

13,571,509

(251,021)

13,320,488

(52,374)

3,740,486

9,527,628

2008

9,527,628

0

2,762,409

356,593

377,215

983

0

340,010

107,967

28,142

12,603,027

8,087,677

4,515,350



Statement of cash flows

Selected balance sheet data

Year Year Change (a-b)

LINE ITEMS 2008 2007 Uses Sources

(In thousands of Moroccan dirhams) (a) (b) (c) (d)

1 Equity and long term liabilities 18,263,054 16,822,399 1,440,655

2 Less long term assets 20,849,734 18,793,843 2,055,891

3 Working capital (1-2) (A) (2,586,680) (1,971,444) 615,236

4 Current assets 8,254,580 7,823,269 431,311

5 Less current liabilities 11,635,250 11,845,717 210,467

6 Working capital requirement (4-5) (B) (3,380,670) (4,022,448) 641,778

7 Net cash (A-B) 793,990 2,051,003 1,257,014

Uses and sources

I - LONG TERM FINANCING SOURCES

(In thousands of Moroccan dirhams)

2008 2007

Uses Sources Uses Sources Uses Sources

NET CASH EARNINGS (A) 4,515,350 3,857,450 3 352,959

Cash earnings 12,603,027 10,784,721 9,471,463

Dividends 8,087,677 6,927,271 6,118,504

DISPOSALS AND REDUCTIONS OF FIXED ASSETS (B) 233,508 157,438 292,172

Reduction of intangible assets 0 0 7,424

Reduction of property, plants and equipment 116,737 78,211 254,138

Disposal of property, plant and equipment 107,967 64,829 7,149

Disposal of financial assets 0 0 13,095

Write-backs of long term receivables 8,805 14,398 10,367

INCREASE IN SHAREHOLDERS’ EQUITY AND QUASI EQUITY (C)

0 0 0

Increase in equity, capital contribution 0 0 0

Investments subsidies 0 0 0

INCREASE IN LONG TERM DEBT (D) 1,688 0 1,111

(Net of redemption premiums)

TOTAL (I) LONG TERM RESOURCES (A+B+C+D) 4,750,546 4,014,888 3,646,242

II - LONG TERM USES FOR THE YEAR

ADDITIONS & INCREASE IN FIXED ASSETS (E) 5,365,782 4,647,895 6,319,402

Acquisitions of intangible assets 677,862 918,218 1,071,497

Acquisitions of property, plant and equipment 4,198,056 3,264,716 2,674,391

Acquisitions of financial assets 473,064 384,933 2,559,827

Increase in long term receivables 26,799 80,028 13,687

Increase in property, plant and equipment (*) 0 0 0

REIMBURSEMENT OF EQUITY (F) 0 0 3,516,381

REIMBURSEMENT OF LONG TERM DEBT (G) 0 532 10,158

CAPITALIZED COSTS (H) 0 0 0

TOTAL (II) STABLES USES(E+F+G+H) 5,365,782 4,648,427 9,845,941

III - CHANGE IN WORKING CAPITAL REQUIREMENT 641,778 0 0 430,341 0 1,179,747

IV - CHANGE IN CASH AND CASH EQUIVALENTS 0 1,257,014 0 203,198 0 5,019,952

GRAND TOTAL 6,007,560 6,007,560 4,648,427 4,648,427 9,845,941 9,845,941

2006

5


A1 : Main valuation methods used by the company Accounting policies The company’s financial statements have been prepared in accordance with generally accepted accounting principles, and in particular with principles related to historical cost, independence, conservatism, consistency of methods and no offsetting.

Property, plant and equipment and intangible assets

− The assets transferred by the Moroccan government on February 26, 1998, to set up Maroc Telecom as a public operator, were recorded as a net amount in the opening balance sheet, which was approved by:

− the Postal Services and Information Technology Act N°24-96 and; − the joint order no. 341-98 of the Telecommunications Minister and Minister of Finance, Commerce and Industry, ap-

proving the inventory of assets transferred to Itissalat Al-Maghrib. − Assets acquired subsequently are recorded at their acquisition or production cost, which for networks essentially comprises

design and planning costs, construction costs, site development cost, network rollout costs, customs duties and internal costs related to network development. Financial expenses corresponding to interest payments on loans to finance the production of property, plant and equipment are not included in production costs during the construction period.

− Network maintenance charges are expensed.

− Assets are depreciated in a consistent way according to their nature (intangible vs. tangible) and their use (e.g. transmission, network equipment).

− Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which are as follows:

− Intangible assets: 4 to 5 years except 3G license (25 years)

− Property, plant and equipment: − Buildings 20 years

− Civil engineering 15 years

− Network equipment:

− Trasmission (mobile) 10 years

− Switching 8 years

− Transmission (fixed-line) 10 years

− Other property, plant and equipment

− Furniture and fittings 10 years

− Computer equipment 5 years

− Office equipment 10 years

− Transportation equipment 5 years − Whenever necessary, an additional provision is recorded for technical obsolescence, reduction in the estimated useful life or

impairment of the asset. − Assets which have not yet been brought into service are recorded as work-in-progress.

Financial assets

− Non-consolidated investments are reported at their acquisition value. A provision for impairment is recorded whenever the carrying value is higher than the value in use. The provision is determined based on the Group’s proportionate share in the equity of the non-consolidated investment, which is adjusted, where appropriate, to account for the company’s growth and earnings outlook.

− Other financial assets, which include receivables, loans and deposits, are recorded on the basis of their nominal value, with provisions recorded, where appropriate, for collection risk.



Inventories

Inventories consist of:

• mobile and accessories held for sale to customers upon line activation; • technical equipment required for network rollout and maintenance other than cable and spare parts.

Inventories of mobile and accessories are accounted for using the first-in, first-out method and a provision for impairment is recorded for both the risk of obsolescence and excess inventory. Technical equipment inventories are measured at their average acquisition cost (including customs duties and other costs) and are written down based on their value in use or obsolescence.

Accounts receivable

Accounts receivable are reported at nominal value. Trade receivables: Impairment provisions are recorded to cover collection risk, which is estimated based on the age of the receivable.

Government receivables: Provisions are recorded to cover the risk of the Moroccan government not recognizing these receivables. These provisions are evaluated statistically.

Other receivables: Where appropriate, other receivables are provisioned in line with the estimated collection risk.

Accruals (assets)

This caption mainly includes prepaid expenses.

Cash and investment securities

Cash and investment securities are made up of immediately available liquid assets and short-term investments, and are recognized at cost.

Regulated provisions

Regulated provisions comprise:

• provisions for employee housing; • provision for investments in capital goods and machinery, in accordance with the fiscal regulations at the end of the year.

Provisions for contingent liabilities These include long term provisions for contingent liabilities and other provisions for contingent liabilities. Long term provisions for liabilities and charges correspond to provisions related to translation adjustments and life annuities. Other provisions for contingent liabilities include provisions for reorganization and loyalty programs, and provisions to cover liabilities or litigation outstanding at period end. These provisions are evaluated on the basis of the state of procedures underway and estimated risks at period end. No provision for pension and post-retirement benefits has been recorded in the consolidated financial statements as pension expen-ses are covered by statutory pension plans set up for employees in Morocco.

Accruals (liabilities) This item mainly contains deferred income concerning prepaid subscriptions and unused prepaid minutes sold.

Receivables and payables in foreign currencies Receivables in foreign currencies are translated into the reporting currency using the exchange rate at the transaction date. At period end, receivables and payables in foreign currencies are translated using the exchange rate at the closing date, and the unrealized gain or loss is recorded on the balance sheet under ‘Accruals’ (assets or liabilities). Unrealized losses are accrued in full.

5


Revenues Revenues are recorded on the basis of consumption by subscribers and customers at the end of the period, net of customer acquisi-tion and loyalty costs.

• Sales of goods and services are related to outgoing and ingoing communications at the time they take place (communication and access charges). Subscription fees are recognized every month in advance under deferred income on the balance sheet, then reported in revenues for the period. For prepaid services, revenues are recognized as and when consumption takes place. They also include revenues from advertisements in paper and electronic telephone directories, which are recognized when the advertisements are published.

• Sales of merchandise relate to revenues from handset sales, which are recognized at the time of delivery or line activation. • Customer acquisition and loyalty costs include discounts to new customers and promotions (free airtime granted to new custo-

mers). Discounts on mobile phones are deducted from revenues at the time the mobiles are delivered to the customer or the distributor. Discounts granted to distributors as remuneration for services rendered are mainly recognized in revenues at the time of delivery.

Other income Other income from operations include:

• Expenses transferred (mainly telecommunication costs specific to IAM, recognized under Other operating expenses);

• Reversal of operating provisions (provisions for impairment of inventories and provisions for liabilities and charges).

Other expenses Aside from rental expenses, maintenance charges, advertising expenses and general expenses, other expenses include:

• ANRT fees related to frequency assignment in compliance with Act 24-96 Order 310-98 of February 25, 1998; • costs related to the universal service obligation in accordance with Act 24-96 and Order 2.00.1333 of October 9, 2000;and • costs related to research, training and telecommunication standardization in accordance with Act 24-96 and Order 2.00.1333 of

October 9, 2000 (contract specifications of Itissalat Al-Maghrib).

Financial instruments

Maroc Telecom does not use financial instruments or currency hedges.

A2 : Exceptions NONE

A3 : Changes in methods NONE

B1 : Capitalized costs NONE



B2: Non-financial assets

B2 Cont: Depreciation schedule

(In thousands of Moroccan dirhams) Gross ba-

lance INCREASE DECREASE Gross ba-

lance DESCRIPTION Carried

forward Acquisition Self-

construc-ted assets

Transfer Dispo-sal

Withdrawl Transfer Year end

CAPITALIZED COSTS 0 0 0 0 0 0 0 0

Start up costs 0 0 0 0 0 0 0 0

Deferred costs 0 0 0 0 0 0 0 0

Bond redemption premiums 0 0 0 0 0 0 0 0

INTANGIBLE ASSETS 5,674,606 667,862 0 940,981 0 0 579,434 6,704,015

Research and development costs 0 0 0 0 0 0 0 0

Patents, trademarks, rights and similar rights 5,100,082 0 0 933,558 0 0 0 6,033,640

Goodwill 24,264 0 0 7,422 0 0 0 31,686

Other intangible assets 550,260 667,862 0 0 0 0 579,434 638,688

PROPERTY, PLANT AND EQUIPMENT 34,471,308 4,198,056 0 2,511,695 35,515 116,737 2,873,241 38,155,566

Land 969,530 0 0 15,247 28,142 0 0 956,636

Buildings 4,085,423 0 0 119,777 0 0 0 4,205,200

Technical plant machinery and equipment 24,360,427 0 0 2,111,711 50 0 0 26,472,087

Vehicles 75,318 0 0 1,227 6,971 0 0 69,574

Office equipment 2,626,216 0 0 263,734 352 0 0 2,889,598

Other property plant and equipment 11,048 0 0 0 0 0 0 11,048

Work in progress 2,343,346 4,198,056 0 0 0 116,737 2,873,241 3,551,424

Year ended December 31, 2008

(In thousands of Moroccan dirhams)

Accumulated depreciation Allowances of Amortization of Amount

DESCRIPTION opening period year (*) Disposed assets year end

CAPITALIZED COSTS 0 0 0 0 * Start up costs 0 0 0 0 * Deferred costs 0 0 0 0 * Bond redemption premiums 0 0 0 0

INTANGIBLE ASSETS 2,665,840 751,036 0 3,416,876 * Research and development costs 0 0 0 0 * Patents, bonds, rights and related rights 2,645,836 748,961 0 3,394,798 * Goodwill 20,003 2,075 0 22,078 * Other intangible assets 0 0 0 0

PROPERTY, PLANT AND EQUIPMENT 21,825,670 2,062,615 7,373 23,880,912 * Land 0 0 0 0 * Buildings 2,650,323 180,447 0 2,830,770 ,* Technical plant, machinery and equipment 17,204,503 1,677,338 ,50 18,881,790 * Vehicles 71,040 1,865 6,971 65,933 * Office equipment 1,899,805 202,964 352 2,102,418 * Other property, plant and equipment 0 0 0 0 * Work in progress 0 0 0 0

Of which extraordinary allowances: - Asset retirement MAD4 m - Delayed placing in service MAD47 m Total of extraordinary allowances MAD51 m


5


B3: Gains or losses on disposals or withdrawls of fixed assets

B4: Equity investments

B5: Provisions

(In thousands of Moroccan dirhams) Year ended December 31, 2008, Disposal or Main amount Gross amount Accumulated Net book Proceeds Gains Losses

Withdrawl date depreciation value from disposal of assets

2008 231& 232 28,142 0 28,142 105,724 77,583 2008 233 50 50 0 18 18 2008 234 6,971 6,971 0 2,225 2,225 2008 235 352 352 0 0 Total 35,515 7,373 28,142 107,967 79,825 0

(In thousands of Moroccan dirhams) Year ended December 31, 2008

Business segment Share capital % of

interest Overall

acquisition price

Net book value

Derived from latest selected financial data of issuer company

Income recor-ded in income

statement

Closing

date Net

equity Net

income 1 2 3 4 5 6 7 8 9 Matelca Study and realization of submarines cables 300 50 50 0 Dec.31, 08

-

- -

Arabsat Operation and commercialization of telecommu-nications systems

5,094,637 0,61 6,454 6,454 Dec.31, 08 -

-

-

ADM Building and operation of Moroccan road net-work

6,507,629 0,31 20,000 16,000 Dec.31, 08 , -

-

-

Thuraya Regional satellite operator 5,312,845 0,16 9,872 9,872 Dec.31, 08 -

-

-

Casanet Internet service provider 14 414 100 18,174 18,174 Dec.31, 08 -

-

-

CMC Financial holding 396,546 80 399,469 399,469 Dec.31, 08 -

-

86,317

Fonds Amor-çage Sindbad Capital –amorçage fund 48,000 10 5,000 0 Dec.31, 08

-

- -

Medi1 Sat Media (Satellite television) 62,390 37 65,097 0 Dec.31, 08 -

-

-

Mobisud SA Telecommunication 168,075 66 110,976 0 Dec.31, 08 -

-

-

Maroc Telecom Belgique SA

Telecommunication 106,888 100 106,888 0 Dec.31, 08 -

-

-

Onatel Telecommunication 583,631 51 2,459,380 2,459,380 Dec.31, 08

-

- -

Gabon Telecom Telecommunication 1,280,985 51 684,885 684,885 Dec.31, 08

-

- -

Total 3,886,245 3,594,234 0 0 86,317


DESCRIPTION Opening balance

ALLOWANCES WRITE-BACKS Closing ba-lance Operating Financial Extraordinary (*) Operating Financial Extraordinary (*)

1- Provisions for depreciation of fixed assets 424,759 0 356,593 325,974 0 0 340,010 767,316 2-Regulated provisions 0 0 0 0 0 0 0 0 3-Provisions for contingences and losses 27 407 0 0 0 983 0 0 26,424 Sub total (A) 452,167 0 356,593 325,974 983 0 340,010 793,740 4-Provisions for depreciation of current assets (excluding cash and cash equivalent) 5,289,743 576,539 0 0 315,608 52 0 5,550,621 5-Other provisions for contingencies 433,977 139,437 133,018 108,840 58,313 88,978 11,807 656,174 6-Provisions for depreciation of cash and cash equiva-lents 0 0 0 0 0 0 0 0 Sub total (B) 5,723,720 715,976 133,018 108,840 373,921 89,031 11,807 6,206,795 Total (A+B) 6,175,886 715,976 489,612 434,814 374,904 89,031 351,817 7,000,535

.(*,,Of,which: (* ) Of which:

Provision of asset retirements MAD113 m Amortization MAD7 m

Depreciation of inventories class 2 MAD133 m Spare parts MAD101 m

Depreciation of cable MAD18 m Write-backs of provision for depre-ciation of cable

MAD104 m

Delayed placing in service of work in progress MAD 62 m MAD61 m

Write-backs of provision of land MAD67 m

Total MAD326 m MAD340 m

Delayed placing inservice of work in progress



B6: Receivables

B7: Liabilities

B8: Guarantees given or received

(In thousands of Moroccan dirhams) Year ended December 31, 2008 RECEIVABLES TOTAL BREAKDOWN BY MATURITY OTHER BREAKDOWN

Due in more than one

year

Due in less than one

year

Matured but not

recovered

Amount in foreign

currency

Amounts due: Government and security

Amounts due: related parties

Amounts in notes

FIXED ASSETS 169,012 159,185 9,828 118,171 120,471 Long term loans 167,025 157,197 9,828 118,171 120 471 Other financial receivables 1,988 1,988 0

CURRENT ASSETS 12,991,057 0 6,511,090 6,479,967 2,309,780 2,306,781 495,648 4,077 . Trade payables, advances and down-payments 289,489 0 289,489 62,193

. Accounts receivable and related accounts 11,828,625 0 5,392,175 6,436,450 2,144,933 1,666,236 409,331

. Employees 17,664 0 13,544 4,120

. Tax receivable 640,545 0 640,545 640,545

. Shareholders’ current accounts 0 0 0

. Other receivables 169,422 0 130,025 39,397 102,654 86,317

. Accruals 45,313 0 45,313 4,077

(In thousands of Moroccan dirhams) Year ended December 31, 2008 LIABILITIES TOTAL BREAKDOWN BY MATURITY OTHER BREAKDOWN

Due in more than one

year

Due in less than one

year

Matured but not recove-

red

Amount in foreign curren-

cy

Amounts due: Government and security

Amounts due: related parties

Amounts in notes

LONG TERM DEBT 3,138 0 3,138 558 0 0

Debenture bonds 0 0 0 0 0 0 0 0 Other long term debt 3,138 0 3,138 0 558 0

CURRENT LIABILITIES 10,893,340 109,635 9,437,730 1,345,976 2,985,363 2,595,299 581,366 4,470

. Accounts payable and related accounts 5,426,197 109,635 4,035,493 1,281,069 2,037,730 0 189,645 4,470

. Trade receivables, advances and downpayment 555,913 0 555,913 0 555,913 0 0 Employee 642,178 0 642,178 0 0 0 . Social security 110,237 0 110,237 0 0 110,237 0 0

. Shareholders’ current accounts 1 0 1 0 0 0 0 0

. Other payables 625,127 0 560,220 64,907 391,721 195,611 391,721 0

. Accruals 1,244,237 0 1,244,237 0 0 0 0 0

Tax payable 2,289,450 0 2,289,450 0 0 2,289,450 0 0


Third parties

Amount cove-red by garan-

tee

Descrip-tion

(1)

Date and place of

registration Purpose (2) (3)

Net book value of the garantee given at

closing date . Guarantees given . Garantees received Guarantees received are Long term loans 46,554 (1) from employees

( 1) Collateral : 1-Mortgage :2-Pledge: 3-Warrant : 4– Others : 5- (to specify)

( 2 ) State if the guarantee is given to a company or to a person (guarantees given) (related parties, associates, employees)

( 3 ) State if the guarantee is received from a person other than the debtor (guarantees received)

5


B9: Financial commitments received or given excluding leasing transactions

B10: Assets leased NONE

(In thousands of Moroccan dirhams) Year ended December 31, 2008 Amounts Amounts

COMMITMENTS GIVEN Year end Previous

year - Investments not yet realized * Property, plant and equipment 2,812,316 1,533,298 * Investment commitment 0 390,742

2,812,316 1,533,298 - Guarantees from banks * Documentary credit 0 14,943 * Endorsements 61,981 63,709

61,981 78,652 - Equity investments * Gabon Telecom 175,408 * Fonds Amorçage Sindibad 0 2,164 * Medi-1-Sat (capital increase) 55,836 0 * Medi-1-Sat (quasi-equity) 0 0 * Mobisud France (capital increase) 37,224 74,773

* Casanet (quasi–equity) 3,800 6,100

272,268 83,036 - Partenership commitment with ASSOCIATION FORUM DE CASABLANCA 0 10,500 0 10 500 - Operating lease obligations (*) 11,281 10,340 11,281 10,340 -Purchase commitment of land in Casa technopôle and its construction in the maximum deadline of 3 years 230 230 230 230

Total 3,158,076 1,716,056

(*) 2 to 15 year rent contract with tacit renewal. The amount indicated is related to one month’s notice Amounts Amounts

COMMITMENTS RECEIVED Year end Previous year . Endorsements and guarantees 1,528,452 1,383,607 . Other commitments received . Commitment by the Moroccan government to social welfare

. Commitment on acquisition of land 0 39,000 . Commitment on acquisition of material from NOKIA (SWAP) 0 615,514

. Investment commitment Exemption of the customs duties and the VAT on the imports relating to the investments.

0 0

Total 1,528,452 2,038,121

* Mobisud France (quasi-equity) 0



B11: Income statement items


ITEM Previous year

OPERATING INCOME 24,198,296

711 .Sales of goods 0

. Sales of goods in Morocco 977,764

. Sales of goods abroad 0

. Other sales of goods

Total 977,764

712 . Sales of manufactured goods and services rendered

. Sales of manufactured goods in Morocco

. Sales of manufactured goods in abroad

. Sales of rendered services in Morocco 19,145,837

. Sales of rendered services abroad 3,538,910

. Royalties for patents, brands, rights...

. Other sales of manufactured goods and services rendered 0

Total 22,684,747

713 CHANGE IN INVENTORIES 0

. Change in manufactured goods inventory 0

. Change in rendered services inventory 0

. Change in product inventory WIP 0

Total 0

714/718 OTHER OPERATING INCOME 0

. Directories’ fees received 0

. Rest of line item (other revenues) 55,474

Total 55,474

719 OPERATING WRITE-BACKS,

EXPENSE TRANSFERS

. Write-backs 150,223

. Expense transfers 330,087

Total 480,310

FINANCIAL INCOME

738 . Interest and other financial income

. Interest and similar income 17,194

. Revenues from receivables from controlled entities 0

. Net revenues from disposal of marketable securities 86,847

. Other interest and financial income 1,955

Total 105,997

Current year 2008

25,637,467

0

904,290

0

904,290

20,717,694

3,252,156

0

23,969,851

0

0

0

0

0

0

0

79,403

79,403

374,904

309,020

683,924

29,753

0

60,187

8,153

98,093

5


(In thousands of Moroccan dirhams) Year ended December 31, 2008 ITEM Current year 2008 Previous year

OPERATING EXPENSES 611 Cost of goods sold

. Cost of goods 1,577,545 1,761,223 . Change in inventory (+,-) 34,519 (144,915)

Total 1,612,064 1,616,308 612 Raw material and supplies

. Raw materials 0 0 . Change in raw material inventory . Supplies and packaging 366,233 346,111 . Change in supplies and packaging inventory (66,184) (11,747)

. Cost of materials and supplies not stocked 221,966 204,181 . Cost of works, studies and services 1,463,416 1,684,989 Total 1,985,431 2,223,534 613/614 OTHER EXTERNAL EXPENSES . Rent and rental expenses 328,836 314,284 . Leasing installments 0 0 . Maintenance and repair 637,504 529,135 . Insurance premiums 12,515 22,774

. Payments of external staff 86,432 60,234 . Payments for intermediaires and fees 218,451 247,103

. Fees for patents, brand, rights... 331,817 345,542 . Transportation 14,851 11,629 . Travel and entertainment expenses 97,089 94,999

. Other external expenses 895,258 924,357 Total 2,622,754 2,550,059

617 PAYROLL COSTS . Payroll 1,866,567 1,844,778

. Social security 278,709 289,186 . Other payroll costs 0 0

Total 2,145,276 2,133,965 618 OTHER OPERATING EXPENSES

. Directors’ fees 2,000 2,000 . Losses on uncollectible receivables 0 0

. Other operating expenses 0 0 Total 2,000 2,000

638 FINANCIAL EXPENSES . Other financial expenses 0 0

. Net losses on disposal of marketable securities 0 0 . Other financial expenses 0 0

Total 0 0 658 EXTRAORDINARY EXPENSES

. Other extraordinary expenses 85,434 199,094 . Contract cancallation payments and forfeiture of deposit 0 0 . Paid back tax (other than income tax) 0 0 . Penalities and tax fines 11,892 1,659 . Uncollectible receivables 0 0 . Other extraordinary expenses 18,654 39,745

Total 115,980 240,497



B12: Reconciliation on net income and tax income

(In thousands of Moroccan dirhams) I DETERMINATION OF INCOME AMOUNT AMOUNT

I– NET INCOME . Net profit 9,527,628

- Net loss II- TAX ADJUSTMENTS TO ADD 4,171,418 1. Ordinary 3,830,331 - Income tax 2006 3,740,486

- Amortization exceeding MAD300,000 529

- POP Paris expenses (IAM branch) 1,376 , - Unrealized foreign exchange gains 2008 85,735

- Gifts exceeding MAD100 per unit 2,205

- Grants in cash or kind 0

- Expenses for the previous years 0

2. Extraordianry 341,088

- Provisions & amortization 310,541

- Penalties and fiscal fines 11,892

- Expenses for the previous years 18,654

III– TAX DEDUCTIONS 512,391

1. Ordinary 169,206 - Unrealized foreign exchange gains 2007 82,788

- POP Paris income (IAM branch) 101

- Revenues from equity investments 86,317

2. Extraordinary 343,185

- Allowance on net capital gains from dipsosal 1,121

- Provisions & amortization 342,064

- Reversal of provision for restructuring 0

TOTAL 4,171,418 512,391

IV- GROSS TAXABLE INCOME - Gross profit 13,186,656

- Gross taxable loss V- LOSS CARRIED OVER 0

VI– TAXABLE INCOME - Net taxable profit 13,186,656

- Net taxable loss Reduction of corporate income tax rate to 17.5% of export revenues 215,510 * CORPORATE INCOME TAX 3,740,486


5


B13: Determination of ordinary income after tax

B14: Value added tax

(In thousands of Moroccan dirhams) Year ended December 31, 2008 I DETERMINATION OF INCOME AMOUNT

Ordinary income from income statement (+) 13,320,488

Add-backs on ordinary operations 89,845

Deduction of ordinary operations 169,206

Ordinary income theoretically taxable (=) 13,241,127

Theoretical tax on ordinary income ( - ) 3,972,338

Exemption of export revenues (216,401)

Ordinary income after tax (=)

9,564,551

II - INDICATION OF THE TAX STATUS AND ADVANTAGES GRANTED

Maroc Telecom has an income tax exemption of 17,5% instead of 30% of its international revenues

BY THE INVESTMENT CODES

OR BY SPECIFIC LEGAL REGULATIONS

(In thousands of Moroccan dirhams) Year ended December 31, 2008 Opening Operations VAT Closing

DECSRIPTION balance returns balance 1 2 3 (1+2-3) A / Invoiced VAT 2,217,132 4,260,160 4,497,940 1,979,352 B / Recoverable VAT 496,383 1,298,139 1,379,402 415,120 * On expenses 290,977 907,117 942,463 255,631 * On assets 205,406 391,022 436,939 159,490 C / VAT payable (VAT credit) 1,720,749 2,962,021 3,118,539 1,564,232 VAT = (A-B)



C1: Shareholding structure

C2: Appropriation of year-end income


Surname, first name, business name of main shareholders (1)

Adress

STOCKS HELD

Nominal value of each stock

or share

CAPITAL AMOUNT

Previous year Current year

Subscribed Called Fully paid

1 2 3 4 5 6 7 8

1°/ Kingdom of Morocco represented by M. Salaheddine Mezouar, Minister of the Economy, Finance and Privatization

263,729 263,729 0.006 1,582,371 1,582,371 1,582,371

2°/ Société de Participation dans les Télécommunications represented by M. Jean-Bernard Levy

465,920 465,920 0.006 2,795,523 2,795,523 2,795,523

3°/ M. Fathallah Oualalou 10 0 0.006 0 0 0 4°/ M. Jean Bernard levy 10 10 0.006 0.060 0.060 0.060

5°/ M. Philip Capron 1,010 1,010 0.006 6.060 6.060 6.060

6°/ M. Jacques Paul Espinasse 10 10 0.006 0.060 0.060 0.060

7°/ M. Robert de Metz 10 0 0.006 0 0 0

8°/ M. Regis Turrini 0 10 0.006 0.060 0,060 0,060 9°/ M. Franck Esser 10 10 0.006 0.060 0,060 0,060

10°/ M. Jean-Rene Fourtou 10 10 0.006 0.060 0,060 0.060

11°/ M. Abdelaziz Talbi 10 10 0.006 0.060 0,060 0.060

12°/ M. Chakib Benmoussa 10 10 0.006 0.060 0,060 0.060

13°/ M. Salaheddine Mezouar 0 10 0.006 0 0 0

14°/ Other shareholders 149,445 149,445 0.006 896,671 896 671 896,671

(1) If the number of shareholders is less than or equal to 10, the company should list all the shareholders. Otherwise, the company may list only the 10 major shareholders.

(In thousands of Moroccan dirhams) year ended December

31, 2008 AMOUNT AMOUNT

A. SOURCE OF INCOME (Decision of April 17, 2008 )

. Retained earnings at December 31, 2007 1,829 . Other reserves 7,046 . Net income to be allocated 0 . Directors’ profit sharing 0 . Net income of the year 8,091,922 . Dividends 8,087,677 . Retained reserves 971 . Other allocations 0 . Other reserves 0 . Retained earnings 0

Total A 8,094,723 Total B 8,094,723

B. INCOME APPROPRIATION

5


C3: Income and other significant characteristics of company over the last three years

C4: Transactions in foreign currencies during the period

C5: Date of financial statements and subsequent events

(In thousands of Moroccan dirhams) DESCRIPTION Year 2006 Year 2007

NET EQUITY OF THE COMPANY Shareholders’ equity and quasi equity less capitalized costs 15,628,890 16,793,541

OPERATIONS AND INCOME FROM PERIOD Revenues excluding tax 21,236,468 23,662,511 Income before tax 10,036,227 12,017,117 Corporate income tax 3,107,127 3,925,195

Dividends 6,118,504 6,927,271

Unappropriated income (reserves or to be allocated) 266,303 1,829

EARNINGS PER SHARE

Earnings per share for period (in Moroccan dirhams) 7.88 9.20 Dividends per share (*) in Moroccan dirhams 6.96 7.88

(*) The nominal value decreased from MAD100 in 2003 to MAD10 in 2004 and MAD6 in 2006.

Year 2008

18,233,492

24,874,141 13,268,115 3,740,486

8,087,677

7,046

10.84 9.20

(In thousands of Moroccan dirhams) Year ended December 31, 2008 DESCRIPTION Entry Outgoing Exchange value Exchange value . Permanent financing . Gross assets 3,158,648 . In-flow assets 11,423 . Repayment of long term debt 0 . Dividends paid . Income 3,047,513 . Expenses 1,691,570

TOTAL IN-FLOWS 3,058,936 TOTAL OUT-FLOWS 4,850,217 FOREIGN CURRENCY BALANCE 1,791,281 TOTAL 4,850,217 4,850,217

I. DATES . Closing date (1) : December 31, 2008 . Date of the financial statements (2) January 16, 2009 . Date of rectifying declaration (1) Proof in case of change of closing date (2) Proof in case regulated delay of three months is extended forecast for preperation of financial statements

II. EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS RELATED TO THIS PERIOD AND KNOWN BEFORE THE FIRST

RELEASE OF THE FINANCIAL STATEMENTS Dates Indication of events

NONE



Special report of the statutory auditors Year ended December 31, 2008

Ladies and gentlemen Shareholders,

As statutory auditors of the company, we present our report on related-party transactions.

In compliance with Article 58 of Moroccan Act 17-95 as amended and completed by Act 20-05, we have been informed of all the related party transactions that are subject to the prior approval of the Supervisory Board and the ordinary general shareholders’ meeting. 1. Related-party transactions concluded during 2008 1.1. Current account advance – Medi1Sat On May 29, 2008, the Supervisory Board approved a convention between Maroc Telecom and Medi-1-Sat under the terms of which it agrees (on the basis of an amount of € 4.000 0000 distributed between the shareholders of Medi1-Sat) to grant a sum of €1,120,000 as current account advance, representing a proportional amount to Maroc Telecom’s share in Medi-1-Sat.. During 2008, the amount of this advance was the subject of releasing for a value of MAD12,896 thousands. In addition, a complementary amount of € 504,000 (MAD5,673 thousands) was also granted as an advance by IAM to Medi1-Sat during 2008, thus carrying the total balance of the advances authorized within this framework (including the interests for MAD496 thousands) to MAD19,065 thousands at December 31, 2008. The granting of a complementary advance of € 504,000 was not approved beforehand by your Supervisory Board. 1.2. Current account advance – Mobisud France On July 29, 2008, the Supervisory Board of IAM approved a current account advance to Mobisud France for an amount of €6.6 millions. At December 31, 2008, no payment was carried out under this convention. 2. Related-party transactions concluded in previous years that were still effective during 2007 2.1 Agreement of current account advance with Mobisud (France) On March 1, 2007, the Supervisory Board approved an agreement of current account advance between IAM and Mobisud France for a maximum amount of €5,280,000. During 2007, this advance was releasing entirely, i.e. the main amount of MAD59,628 thousands to which were added MAD1,235 thou-sands (total balance of MAD60,863 thousands to date) recorded as financial income by IAM at December 31, 2007. On December 31, 2008, the balance of the advance, including the accrued interests , to receive amounted to MAD64,157 thousands. 2.2 Agreement of current account advance with Medi1Sat During 2006, for financial needs, Itissalat Al-Maghrib concluded an agreement with Medi-1-Sat under which it committed to grant Medi-1-Sat an advance of €2,800,000, recorded in a current account advances. In 2006, Maroc Telecom paid the first tranche of this ad-vance for amount of €1,200,000 (MAD13,283 thousands).

In 2007, IAM paid the second tranche of this advance for amount of €1,600,000 (MAD18,198 thousands).

As of December 31, 2007, interest receivable recorded by IAM related to this agreement amounted to MAD967 thousands.

The balance of these advances at December 31, 2008, including the interests to receive on this date, totaled MAD34,949 thousands. 2.3 Contract with Onatel During 2007, Onatel concluded an agreement with IAM under which the latter provides services in the following fields: - Strategy and development; - Organization ; - Networks ; - Marketing ; - Finance ; - Purchasing ; - Human resources ; - Information systems ; - Regulation. The implementation of these services can be made through expatriated employees. The amount charged by IAM to Mauritel for 2008 was MAD11,333 thousands (excluding tax). As of December 31,2008, the balance of Mauritel’s receivable in Itissalat Al-Maghrib’s books amounted to MAD7,565 thousands. 2.4 Contract with Gabon Telecom In 2007, Gabon Telecom concluded an agreement with IAM under which this latter provides services in the following fields: - Strategy and development ; - Organization ; - Networks ; - Marketing ; - Finance ; - Purchasing ; - Human resources ; - Information system; - Regulation. The implementation of these services can be made through expatriated employees.

5


Under this agreement, The amount charged by Itissalat Al-Maghrib to Gabon Telecom during 2008, was MAD12,795 thousands excluding tax. Moreover, during 2008, IAM sold to Gabon Telecom an equipment for a value of MAD176 thousands. As of December 2008, the Gabon Telecom’s account in Itissalat Al-Maghrib’s books amounted to a liability of MAD14,512 thousands. 2.5 Agreement of current account advance with Casanet Maroc Telecom decided to entrust its activity of professional directories to its subsidiary Casanet. Within this framework, the Supervisory Board authorized on December 4, 2007, the load by the company of the capital expenditure ne-cessary whose financing will be carried out by advances in not remunerated current account , the amount of the advance should rise to MAD6,100 thousands. On December 31, 2008, Maroc Telecom had been made a current account advance of MAD2,300 thousands to Casanet, representing the Casanet’s liability account in Itissalat Al-Maghrib at December 31, 2008. 2.6 Management services’ agreement with Vivendi Telecom international (VTI) During 2001, Itissalat Al-Maghrib entered into a management services’ agreement with Vivendi Telecom International (VTI), under which the latter and its subsidiaries provide Itissalat Al-Maghrib with technical assistance in the following fields: - Strategy and organization ; - Developement ; - Sales and marketing ; - Finance ; - Purchasing; - Human resources ; - Information system ; - Regulation ; - Interconnection ; - Infrastructure and networks In accordance with the terms of this agreement, the fees agreed to be paid by IAM amounted to MAD6,964 thousands (excluding tax) in 2008. As of December 31, 2008, the balance payable amounted to MAD5,331 thousands. 2.7 Invoicing of costs related to stock options and free shares granting Vivendi invoiced its subsidiaries for costs concerning the agreed advantages linked to the stock options and the allocation of free shares to employees. Pursuant to the stock options and free shares granting, the invoicing amount rise to MAD14,367 thousands. As of December 31, 2008, the balance of debts amounted to MAD68,921 thousands. 2.8 Agreement with Mauritel SA During 2001, Mauritel SA concluded an agreement with Itissalat Al-Maghrib under which the latter provides services, technical assistance and transfer of equipment to Mauritel SA. The amount charged by IAM to Mauritel SA was MAD9,473 thousands (excluding tax) for 2008. As of December 31,2008, Mauritel’s ac-count in Itissalat Al-Maghrib books amounted to a liability of 10,976 thousands. 2.9 Agreement with Casanet During 2003, IAM concluded a several agreements with Casanet related to: - The maintenance of Itissalat Al-Maghrib’s internet portal ‘’Menara’’; - The supplying of development services and hosting of Itissalat Al-Maghrib mobile portal ; - The hosting of Itissalat Al-Maghrib’s website ‘’El-Manzil ‘’; - The maintenance of new WAP applications on the Menara portal; - The production of the IPTV web site; -The commercialisation of leased line internet access; - The acquisition of several equipments; - The production and marketing of Itissalat Al-Maghrib’s yellow pages; - The regularization and the setting on line of the advertising banners on the Menara portal; - The sending of the SMS for the account of IAM; - Etc. As of December 31, 2008, the amount of expenses recorded by IAM under this agreement amounted to MAD31,686 thousands excluding tax. As of December 31, 2008, the amount of incomes recorded by IAM under this agreement amounted to MAD2,202 thousands ex-cluding tax. At December 31, 2008, the Casanet’s account in Itissalat Al-Maghrib’s books amounted to a credit of MAD11,047 thou-sands and a debit of MAD13,494 thousands. 2.10 Agreement with Media Overseas On February 24 , 2006, IAM’s Supervisory Board approved the agreement entered into over the period with Media Overseas, a subsi-diary of Canal+ Group, concerning the launch of IPTV.

Pursuant to this agreement, operations are performed with Multitv Afrique, a subsidiary of Media Overseas.

During 2008, Itissalat Al-Maghrib recorded an expense of MAD7,768 thousands excluding tax.

At December 31, 2008, the balance of Multitv Afrique in Itissalat Al-Maghrib’s books amounted to a liability of MAD3,016 thousands. On February 25, 2009 Statutory auditors


KPMG Fouad LAHGAZI

Partner


Partner

CORPORATE GOVERNANCE

6.1 MANAGEMENT AND SUPERVISORY BOARD 254 6.1.1 COMPOSITION AND FUNCTIONS OF THE MANAGEMENT BOARD 254 6.1.2 COMPOSITION AND FUNCTIONS OF THE SUPERVISORY BOARD 257

6.2 COPORATE GOVERNANCE 262 6.2.1 AUDIT COMMITTEE 262 6.2.2 CODE OF ETHICS 265

6.3 INTERESTS OF THE SENIOR EXECUTIVES 266

6.3.1 COMPENSATION PAID TO MEMBERS OF THE MANAGEMENT AND SUPERVISORY BOARD 266 6.3.2 OWNERSHIP OF COMPANY SHARES BY MEMBERS OF THE DECISION-MAKING AND SUPERVISORY BODIES 266 6.3.3 CONFLICTS OF INTERESTS 267 6.3.4 INTERESTS OF SENIOR EXECUTIVES IN SIGNIFICANT CUSTOMERS AND SUPPLIERS OF THE COMPANY 267 6.3.5 SERVICE CONTRACTS 267 6.3.6 STOCK OPTIONS 267 6.3.7 LOANS AND GUARANTEES GRANTED TO SENIOR EXECUTIVES 267

6.4 RELATED PARTY TRANSACTIONS 268 6.4.1 MANAGEMENT SERVICES’ AGREEMENT CONCLUDED BY MAROC TELECOM IN 2008 268 6.4.2 RELATED PARTY TRANSACTIONS FROM PRIOR YEARS WHICH REMAINED OUTSTANDING IN 2008 268


6.1.1 Composition and functions of the Management Board

* The terms of office of the members of the Management Board were renewed by a decision of the Supervisory Board meeting of February 23, 2009, for a period of two years. These termes of office will be increased to four years, subject to the approval of the new bylaws by the General Meeting of Share-holders.

Biographies and other offices and duties exercised by members of the Management Board

Abdeslam AHIZOUNE Abdeslam Ahizoune was appointed Chairman of the Management Board of Maroc Telecom in February 2001. He is also a member of the Management Board of Vivendi (since April 2005). Mr. Ahizoune is a member of the Boards of Directors of Axa assurances, Holcim Maroc, Mohammed V Foundation for Solida-rity, Mohammed VI Foundation for the Environment, the Lalla Salma Association Against Cancer and Al Akhawayne University. Abdeslam Ahizoune has been Chairman of the Royal Moroccan Athletics Federa-tion (FRMA), since 2006. In 2008, he was appointed Chairman of the Moroccan Association of Telecoms Professionals (MATI) and Chairman and Chief Executive Officer of the Moroccan satellite TV channel Medi-1-Sat . Mr. Ahizoune served as Chairman and Chief Executive Officer of Maroc Telecom (from February 1998 to 2001), He had previously served as Minister of Telecommunications (from August 1997 to 1998), Managing Director of Office National des Postes et Télécommunications (ONPT) (from February 1995 to August 1997), Director of Telecommunications at the Minister of Postal and Telecommunications Services and Di-rector General of the ONPT (between August 1992 and February 1995) and Director of Telecommunica-tions in the Ministry of Postal and Telecommunications Services (between 1983 and 1992). From 1982, Ahizoune held successive positions of responsability in the Postal and Telecommunications Services de-partment and then in the ONPT. Ahizoune holds an engineering degree from Ecole Nationale Supérieure des Télécommunications of Paris (1977).

Name (age)

Office and duties Date appointed

Term of office expi-

res Abdeslam AHIZOUNE

(53) Chairman First appointed : February 20, 2001 Renewed on February 23, 2009

2011*

Larbi GUEDIRA (54) Managing Director

Services First appointed : February 20, 2001

Renewed on February 23, 2009 2011*

Arnaud CASTILLE (36) Managing Director

Finance and Administration

First appointed : February 24, 2006 with effect on April 1, 2006

Renewed on February 23, 2009

2011*

Janie LETROT (54)

Managing Director Regulatory affairs, Communica-tion and International Develop-

ment

First appointed : June 29, 2006 Renewed on February 23, 2009

2011*

Rachid MECHAHOURI (42) Managing Director

Networks and Systems First appointed: November 17,2008

Renewed on February 23, 2009 2011*

6 6.1 MANAGEMENT AND SUPERVISORY BOARDS


Larbi GUEDIRA

Larbi Guedira is Managing Director of Maroc Telecom’s Services division, and served previously as Execu-tive Director of the Sales and Marketing division, Executive Director of Telecommunications and Chief Fi-nancial Officer and Regional Director for Casablanca. In addition, Mr. Guedira serves as Director of CMC, Mauritel SA, Matelca, Onatel Telmob, Gabon Telecom, Libertis and Mobisud Belgium. He also served as Chairman of the National Association of Telecommunications Engineers (Association Nationale des Ingé-nieurs des Télécommunications) between 2000 and 2002. Larbi Guedira is a fellow of the Ecole Nationale Supérieure des Télécommunications in Paris and holds a masters degree in Mathematics from Paris XI (Orsay). He also holds a postgraduate diploma (DESS) in Management from the University of Lille.

Rachid MECHAHOURI

Rachid Mechahouri is Managing Director of the Networks and Systems division of Maroc Telecom. He joi-ned Maroc Telecom as an engineer in 1992 and successively held positions as Project Leader for Maroc Telecom’s GSM project, Head of planning then Head of Mobile Networks Infrastructure , Director of Purcha-ses of infrastructures and Purchases Director. In addition, he is a member fo the Board of Directors of Ca-sanet Mr. Mechahouri is a graduate of the Ecole Nationale Supérieure des Télécommunications of Paris , he also holds a postgraduate diploma (DEA) in Electronics and Automatic.

Janie LETROT

Janie Letrot is Managing Director, Regulatory Affairs, Communication and International Development of Maroc Telecom. She is also a member of the Board of Directors Onatel. From January 1999 to July 2001 Letrot served as Vivendi Group’s General Delegate in Morocco, and joined Maroc Telecom as Director, of Regulatory and Public Affairs before being promoted Executive Director, Regulatory Affairs and Communi-cation. In her previous career, Ms. Letrot had served as a senior civil servant been in the French Ministry of Finance, Trade Advisor and Financial Advisor to the Economic Mission of the French Embassy in Rabat and then Economic and Financial Advisor to the Frensh Permanent Mission of France to the United Nations in New York. Janie Letrot holds a degree in History and Geography from the Paris-Sorbonne University, and is a gra-duate of Ecole Nationale d’Administration in Paris. Janie Letrot has been named a Knight of the Frensh National Order of Merit.

Arnaud CASTILLE

Arnaud Castille is Managing Director, Finance and Administration of Maroc Telecom. He joined Maroc Tele-com in September 2001 as Director of Management Control. He also serves as Chairman of the Board Di-rectors of CMC and a member of the Boards of Directors of Onatel and Mobisud Belgium. Previously he held positions as Director of Finance and Administration for a construction services business unit of Bouygues, then Accounts Manager in the consultancy firm CSC Peat Marwick. He began his career as an auditor with Ernst & Young. Arnaud Castille is 36 years old. Castille holds a Masters degree in Management, a postgraduate diploma (DESS) in Corporate Finance from the University of Paris Dauphine and is a graduate of INSEAD’s International Executive Program.

CORPORATE GOVERNANCE 6.1. Management and Supervisory Board


Responsibilities and functions of the Management Board

The Management Board manages and directs the affairs of the Company under the oversight of the Super-visory Board. The Board comprises five members who collectively manage the affairs of the Company. The Board mem-bers may allocate management tasks among them, subject to the approval of the Supervisory Board. Deci-sions of the Management Board are taken by a majority of the votes of its members present or represented. Messrs. Larbi Guedira and Rachid Mechahouri represent the interests of the Government of the Kingdom of Morocco, while Messrs. Abdeslam Ahizoune, Arnaud Castille and Ms. Janie Letrot represent the interests of Vivendi. Within three months following the close of the fiscal year, the Management Board must prepare the financial statements and submit them to the Supervisory Board, so that the latter may exercise its po-wers of control. Likewise, the Management Board must submit a management report to the Supervisory Board before pre-senting the same to the ordinary general meeting shareholders, so that the Supervisory Board may make its observations, if any, on the report. Information relating to the composition of the Supervisory Board, the term of the office of its members and the process of deliberations is set in chapter 3 (see section 3.1.13 "Administration of the Company").

Rights and obligations of the members of the Management Board

In accordance with Moroccan law, the Management Board has the broadest powers to act in all circumstan-ces on behalf of the Company. The Board exercises its powers within the limits of the Company’s corporate purpose and subject to those powers that are expressly attributed to the Supervisory Board and to the ge-neral meetings of shareholders. In relations with third parties, the Company remains bound even by the actions of the Management Board that do not come within the Company’s corporate purpose, unless it proves that the third party knew that the act was extraneous to this purpose or that said party could not be ignorant thereof given the circums-tances, publication of the bylaws shall not in and of itself constitute proof. The provisions of the Company’s bylaws limiting the powers of its Management Board are not valid with regard to third parties. Except by an express waiver issued by the Supervisory Board upon the vote of a 75% qualified majority of its members, the members of the Management Board are required to be em-ployees of the Company and resident in Morocco for more than 183 days each year.

6


6.1.2 Composition and functions of the Supervisory Board

Composition of the Supervisory Board

Name (age) Current

office

Date

appointed Expiry of of-

fice expires Principal post or

occupation

Salaheddine MEZOUAR (56)

Chairman Supervisory Board Meeting of December

4, 2007

OGA called to approve the

financial state-ments for 2013

Minister of Economy and Finance

Jean-Bernard LEVY (53)

Vice-Chairman Supervisory Board Meeting of December

17, 2002 OGA called to

approve the financial state-ments for 2013

Chairman of the Man-agement Board of

Vivendi

Chakib BENMOUSSA (50)

Member Supervisory Board Meeting of February

24, 2006



Interior Minister

Abdelaziz TALBI (59)

Member Supervisory Board Meeting of March 4,

2005



Director of Public Entre-prises and Privatization

at the Ministry of Economy and Finance

Chairman of the standing committee of the Na-

tional Accounting Council

Jean-Rene FOURTOU (69)

Member Supervisory Board Meeting of January 4,

2005 OGA called to


Chairman of the Supervi-sory Board of Vivendi

Philippe CAPRON (50)

Member Supervisory Board Meeting of March 01 ,

2007 OGA called to


Chief Financial officer of Vivendi

Member of the Manage-ment Board of Vivendi

Jacques ESPINASSE (65)

Member Supervisory Board Meeting of December

17, 2002



Director of companies

Frank ESSER (50)

Member Supervisory Board Meeting of March 4,

2005 OGA called to


Chairman and CEO of SFR group

Member of the Manage-ment Board of Vivendi

Regis TURRINI (49) Member

Supervisory Board Meeting of February

21, 2008



Senior executive Vice-President for Strategy and Development oft

Vivendi



Biographies and other offices and duties exercised by members of the Supervisory Board

Salaheddine MEZOUAR - Chairman

Salaheddine Mezouar holds an Executive Management diploma from INSEAD, Fontainebleau (France), a higher diploma in business administration from Casablanca’s Institut supérieur de commerce et d’adminis-tration des entreprises (ISCAE), a postgraduate diploma (DEA) from Grenoble University of Social Scien-ces (France) and a Master degree in Economic Science (development economics) from the same universi-ty Mr. Mezouar has been Minister of Economy and Finance, since October 15,2007. From 1986 and 1991, he was division head and policy officer for the Moroccan Ports and Harbors Authority (ODEP). Prior to this, he served as a Managing Director of a private sector textiles company. In addition, Mr. Mezouar was chairman of the Moroccan Association of Textile and Apparel Manufacturers (AMITH) and as Chairman of the Textile and Leather Goods Federation within the General confederation for Moroccan Entrepreneurs (CGEM). In 2004, Mr. Mezouar was appointed Minister of industry, Trade and Economic Development. He is a mem-ber of the central committee of the Moroccan political party « Rassemblement national des Indépen-dants » (RNI) and a former Deputy Chairman of Raja club athletic. As a sportsman, Mr. Mezouar was team captain of the national basketball team.

Jean-Bernard LEVY – Deputy Chairman

Jean-Bernard Lévy is Chairman of the Management Board of the Vivendi group. He previously served as Chief Operating Officer of the Vivendi Universal group, Managing Director and subsequently Managing Partner responsible for corporate finance at Oddo and Cie from 1998 to 2002. From1995 to 1998 he was Chairman and CEO of Matra Communication. He was chief of staff to Gerard Longuet, the French Minister for Industry, Postal Services, Telecommunica-tions and Foreign Trade in 1993 and 1994. From 1988 to 1993, he was Director of Telecommunications Satellites at Matra Marconi Space. He was a technical adviser to M.Gérard Longuet, the Frensh Minister Delegate of Posts and Telecommunications from 1986 to 1988, and engineer at France Telecom from 1978 to 1986.

Jean-Bernard Levy is a Chairman of the Supervisory Board of the Canal+ Group and Deputy Chairman of the Supervisory Board of Canal+Group. He sits on the Boards of Directors of SFR, NBC Universal, Inc (USA), Vinci, institut Pasteur and Activision Blizzard , Inc (USA). He is also the chairman of Supervisory Board of Viroxis. Mr. Levy is a graduate of Ecole Polytechnique and Ecole Nationale Supérieure des Télé-communications.

Chakib BENMOUSSA Chakib Benmoussa has served as Moroccan Interior Minister since February 15, 2006. Prior to this, he wor-ked as Director of Planning, Director of Roads in the Infrastructure Ministry, Secretary General in the office of the Prime Minister and Chairman Delegate of SONASID and Tangier Free Zone. Mr. Benmoussa has also served as a Board member and Managing Director of Brasseries du Maroc, as member of the General Confederation of Moroccan Entrepreneurs (CGEM) and The CGEM Entreprise Foundation and of COSEF (Special Commission for Education and Training), and as Secretary General to the Interior Minister. Chakib Benmoussa graduated from Ecole Polytechnique in 1979 and from Ecole Nationale des Ponts and Chaussées in 1981. He graduated with a Master of Science degree in Civil Engineering from Massachu-setts Institute of Technology in 1983 and holds a postgraduate diploma (DESS) in Project Management from Institut d’Administaration des Entreprises (Lille).

6


Abdelaziz TALBI

Abdelaziz Talbi has been Director of the Public Entreprises and Privatization department of the Ministry of Economy and Finances since 2005. He had previously held various position of responsibility within the De-partment, overseeing the accounting and audit function, and following this, audit and accounting standardi-zation, before being appointed Deputy Director of the department. In his previous career within the private sector, Mr. Talbi was Finance and Administrative Director of a company in Rabat and regional manager for an accountancy firm in Paris. In addition to his duties as Director of the Public Entreprises and Privatization department, Abdelaziz Talbi is also Chairman of Morocco’s National Accounting Council.

Mr. Talbi is a chartered accountant certified by the French State and holds a diploma in business and public administration from the University of Nancy. Mr. Talbi, represents the Moroccan government on the Supervisory Boards of the Regie des Tabacs, Atlas Blue and Credit Agricole du Maroc. He also serves on the Boards of Directors of Morocco’s flag carrier, Royal Air Maroc, Companie Marocaine de Navigation (COMANAV), Société Nationale de Radio et de Télé-vision (SNRT) and Société Nationale d’Aménagement Communal (SONADAC).

Jean-Rene FOURTOU

Jean-Rene Fourtou is an alumnus of Ecole Polytechnique. Mr. Fourtou joined Bossard & Michel as consul-tant in 1963. In 1972, he became Chief Operating Officer of Bossard Consultants and Chairman and CEO in 1977. In 1986, he was appointed Chairman and Chief Operating Officer of Rhône-Poulenc. From Decem-ber 1999 to May 2002, he served as Deputy Chairman and Chief Operating Officer of Aventis. Jean-Rene Fourtou is Honorary President of the International Chamber of Commerce. He is the Co-chairman of the Franco-Moroccan economic impetus group set up in September 2005. A working group which strives to improve economic relations between the two countries. Mr. Fourtou is chairman of Supervisory Board of Canal+ group, member of the Supervisory Board of AXA , member of the Boards of Directors of AXA Millesimes SAS, Cap Gemini, Sanofi Aventis, NBC Universal (USA) and Nestlé (Switzerland).

Jacques ESPINASSE

Jacques Espinasse holds an MBA from the University of Michigan. Since May 2007, he has entered semi-retirement and serves as a director of companies.

He sits on the Boards of Directors and serves as Chairman of the Audit Committee of Axa Belguim and Axa Holdings Belguim (Brussels), he is member of Supervisory Board, Audit Committee and Compensation Committee of La Banque Postale Asset Management LBPAM (Paris). He is also a member of the Board of Directors and Member of Audit Committee of Hammerson Plc (London), member of the Board of Directors and member of the Audit Committee, Appointments and Compensation Committee of SES (Luxembourg).

Jacques Espinasse has served a variety of senior management positions in leading French companies, including CEP Communication and Group Larousse Nathan, where he was appointed Executive Vice-President in 1984. In 1985, he became Chief Financial Officer of the Havas group. He was appointed Se-nior Executive Vice-President of the Havas group when it was privatized in May 1987 and held this position until January 1994. In 1999, he was appointed Chief Executive Officer of satellite bouquet TPS, then Direc-tor as from 2001. Finally, he was appointed Chief Financial Officer of Vivendi Group in July 2002, then member of Management Board in April 2005.



Frank ESSER

Frank Esser holds a doctorate in economics from the University of Cologne. Mr.Esser has been a member of the Management Board of Vivendi since April 2005 and Chairman of SFR since December 2002 and has been with the SFR group since September 2000, when he was appointed Chief Executive Officer. He has been a member of the Board of Directors of the Frensh GSM Association since February 2003 and became Chairman of its Regulatory Affairs Committee in 2004. Prior to joining SFR, Mr. Esser was employed at Mannesmann as Executive Vice-President with responsability for interna-tional operations and business development. Mr. Esser is also Chairman and Chief Executive Officer of SFR and Neuf Cegetel. He is member of Supervisory Board of Jet Multimédia, Vodafone D2 and Arcor. He is also a member of the Board of Directors of Faurecia, SHD and Vivendi Telecom International.

Philippe CAPRON

Philippe Capron is an alumnus of Institut d’études politiques-Paris (IEP), Ecole des hautes études commer-ciales (HEC). Between 1979 and 1981, Mr. Capron was assistant to the Chairman and Secretary to the Bo-rad of Directors of Sacilor. He joined the Inspectorate General of the French Finance Ministry in 1985 after graduating from the Ecole Nationale d’Administration (ENA) .

Advisor to the Chairman and CEO of Duménil Leblé (1989-1990), then Managing Director and member of the Management Board of Duménil Leblé Bank, Cérus group (1990-1992), he was subsequently appointed Vice-President and Partner of the consultancy firm Bain and Company (1992-1994). After serving as Direc-tor of International Development and member of Euler Group’s Executive Committee (1994-1997), he ser-ved as Chairman-Chief Executive Officer of Euler- SFAC from 1998 to 2000. Mr. Capron joined the Usinor group in November 2000 as Chief Financial Officer, and member of the Executive Committee. In 2002, he was named Executive Vice-president of Arcelor, in charge of the steel packaging division and then of Inter-national Trading and Distribution. At the beginning of 2006, he became Executive Vice-President, Finance, and member of the Management Board of the Arcelor Group. Philippe Capron joined Vivendi in January 2007 as Executive Vice-President. He become Chief Financial Officer and member the Managemet Board in April 2007 He is a member of Supervisory Board of Canal+ group, member of Supervisory Board and chairman of the audit committees of Canal+ France and Vibrac group. He is also a member of the Bords of Directors and Chairman of the audit committee of SFR, member of the Boards of Directors of NBC Universal (USA), Acti-vision Blizzard (USA) and Tinubu Square and is a member of the Société d’Economie Politique.

Regis TURRINI Regis Turrini has served as Senior Executive Vice-President for Strategy and Development of Vivendi since January 2008. He joined Vivendi in January 2003, as Executive Vice-President in charge of mergers and acquisitions. Mr.Turrini is an attorney admitted to the Paris Bar. He is graduate of the faculties of letters and law and of Institut des Etudes Politiques of Paris, and an alumnus of Ecole Nationale d’Administration. Aged 49, Mr. Turrini began its career as a judge in the French Administrative Court and Administrative Court of Appeal. He then went on to join the law firms Cleary Gottlieb Steen & Hamilton (1989-1992), follo-wed by Jeantet & Associés (1992-1995), as a corporate lawyer. In 1995, Mr.Turrini joined the investment bank Arjil & Associés Lagardere group) as executive director. He was then appointed managing director and from 2000, managing partner. Mr. Turrini is Chairman and CEO of the Vivendi Telecom International, Vivendi Net USA Group, and MP3 com companies. In addition, he is a member of the Supervisory Board of Canal+ France and a member of the Boards of Directors of Scoot Europe NV of Belgium and of Vivendinet U.K. Limited.

6


Responsibilities and functions of the Supervisory Board

In accordance with the bylaws,and since the initial public offering of the Company, the Supervisory Board comprises a minimum of eight members and a maximum of 15 members. The Board elects a Chairman and Deputy Chairman from among its members, who are in charge of convening Board meetings and conduc-ting its discussions. The Supervisory Board has the power to appoint and remove from office members of the Management Board by a simple majority and appoint the Chairman among them In accordance with the bylaws, decisions of the Supervisory Board are taken either by simple majority or, by a qualified 75% majority of the members. The Supervisory Board exercises permanent control over the conduct of the Company’s affairs by the Ma-nagement Board. Further information on the composition of the Supervisory Board, the terms of office, the duties of members, and the deliberation process, is provided in section 3.1 “General information regarding the Company—Administration of the Company— Supervisory Board”.

In 2008, the Supervisory Board met five times to review the Company’s performance and its medium to long-term prospects, with an average attendance rate of 70%. As regards the composition of the Supervisory Board, three members— Messrs. Salaheddine Mezouar, Chakib Benmoussa, and Abdelaziz Talbi—were appointed upon proposal of the Government of the King-dom of Morocco and five members— Messrs. Jean Bernard Levy, Jean-Rene Fourtou, Frank Esser, Phi-lippe Capron and Regis Turrini —were appointed upon proposal of Vivendi. Jacques Espinasse who was appointed upon proposal of Vivendi, stood down from the Board following his retirement in 2007 while retaining his position as a member of Supervisory Board. Each member of the Supervisory Board must hold at least one share.

Rights and obligations of the members of the Supervisory Board

In accordance with Moroccan law, the Supervisory Board exercises permanent control over the manage-ment decisions of the Company’s Management Board. The Company’s bylaws may require the prior authorization of the Supervisory Board for certain transac-tions. Where a transaction requires the authorization of the Supervisory Board and such authorization is denied, the Management Board may submit the disupte to the general meeting of shareholders for the latter to decide. The disposal of real estate assets, the full or partial disposal of shareholdings and pledges of collateral, guarantees, security and warranties are subject to authorization by the Supervisory Board. The Board de-termines the amount for each transaction. Notwithstanding the foregoing, the Management Board may be authorized to grant, endorsements and guarantees to customs and excise and tax authorities, without any limit on the amount thereof. Whenever a transaction exceeds the amount determined as mentioned above, the authorization of the Su-pervisory Board is required. The Management Board may delegate the powers vested in it by the above paragraphs. The absence of authorization is not valid vis-à vis third parties, unless the Company proves that such parties knew about such absence or could not have been ignorant thereof. Throughout the year, the Supervisory Board performs the checks and controls it considers appropriate, and may request any documents it deems useful in the accomplishment of its role. Members of the Supervisory Board can access all information relating to the Company’s business affairs. At least once each quarter, the Management Borad makes a report to the Supervisory Board. Within three months of the fiscal year end, the Management Board submits to the Supervisory Board, for the purpose of verification and control, the documents referred to in the Moroccan Act 17-95 on joint stock companies. The Supervisory Board may provide to the shareholders’ meeting its observations on the report of the Ma-nagement Board and on the financial statements for the fiscal year. The members of the Supervisory Board are not employees of the Company.



6.2.1 Audit committee Maroc Telecom’s Audit Committee is responsible for making recommendations and/or providing advice on accounting procedures for the financial administration of the group.

Composition

The Audit Committee is comprised as follows:

*Ms. Sandrine Dufour was appointed to replace her predecessor, Mr. Robert de Metz, as a member of the audit Committee by the Supervisoru Board meeting of May 29, 2008.

Biographies and other offices and duties exercised by members of the Audit Committee

Noureddine BOUTAYEB Noureddine Boutayeb was appointed as Wali, Director of Rural Affairs in the Interior Ministry in 2006. Mr. Boutayeb is also a member of the Supervisory Board of Crédit Agricole. He previously, served as Direc-tor of Rural Affairs in the Interior Ministry, Chief Operating Officer of Société Maghrébine d’Ingénierie (INGEMA SA)) and had held various positions as an engineer within the Infrastructure Ministry and in a technical and engineering studies firm in Paris. Mr. Boutayeb is an alumnus of Ecole Centrale (Paris). He also holds an MBA and an engineering degree from Ecole Nationale des Ponts et Chaussées as well as a postgraduate diploma (DEA) in Soil Mechanics.

Pierre TROTOT Pierre Trotot is Senior Executive Vice-President, Finance and Administration of SFR. He previously, served as Acting Director, then Director of Financial Management at Compagnie Générale des Eaux, after having served as an acting director reporting to the Chairman of Compagnie de Navigation Mixte (1982-1988). Prior to this, Mr.Trotot was an acting director at Arthur Andersen Audit (1978-1982). Mr.Trotot is a graduate of Hautes Etudes Commerciales (HEC).

Name (age) Current office Date of

appointment Principal post or occupation

Philippe CAPRON (50)

Chairman 2007 Chief Financial Officer of Vivendi

Member of the Management Board of Vivendi

Jacques ESPINASSE (65)

Member 2003 Director of companies

Noureddine BOUTAYEB (51)

Member 2003 Wali, Director of Rural Affairs in the Inte-rior Ministry

Abdelaziz TALBI (59)

Member 2004 Director of Public Entreprises of the Mi-nistry of Economy and Finances

Chairman of the National Accounting Council

Monkid MESTASSI (56)

Member 2007 Secretary general of the Ministry of Ge-neral and Economic Affairs

Pierre TROTOT (54)

Member 2003 Senior Executive Vice -President, Fi-nance and Administration of SFR

Sandrine Dufour* (41)

Member 2008 Deputy Chief Financial Officer of Vivendi Chairman of Vivendi Mobile Entertaine-

ment (VME)

6.2 CORPORATE GOVERNANCE

6


Monkid MESTASSI Monkid Mestassi has been General Secretary to the Minister Delegate attached to the Prime Minister in charge of Economic and General Affairs since September 2003. Prior to this, he held positions as a deputy administrator of the bilateral economic cooperation department of the Ministry of Foreign Affairs, assistant to the Governor of the Moroccan Central Bank, Bank Al-Maghreb, head of department in the Moroccan trade and export board, and as an advisor attached to the Prime Minister.

In 1987, Mr. Mestassi was appointed advisor to the Prime Minister with responsibility for economic coopera-tion with USAID and for coordinating relations with the World Bank Group. As from 2000, he was also ap-pointed to coordinate efforts to promote accountability in public life and to curb corruption and was named a special advisor attached to the Prime Minister, with responsability for public administration reform.

Monkid Mestassi is a state certified statistician economist and holds a masters degree in economic scien-ces.

Sandrine DUFOUR Sandrine Dufour is Deputy Chief Financial Officer of Vivendi, with responsibility for financial consolidation, financial reporting, planning, budget and management control. Ms. Dufour is also chairman of Vivendi Mo-bile Entertainment (VME). In her previous career, she served successively as advisor to the Chief Financial Officer of Vivendi, the Chief Financial Officer of VU Net, and then head of the Internal Audit and Special Projects department of Vivendi, based in New York. Prior to joining Vivendi in 1999, Sandrine Dufour was a financial analyst with BNP (1990-1993), and then with the brokerage firm CAI Cheuvreux (1993-1999), where she was in charge of the telecommunications sector. Sandrine Dufour is a graduate of ESSEC and CFA.

Functions of the Audit Committee

The Audit Committee was established by the Supervisory Board in 2003, in line with efforts to enhance ac-countability to shareholders by adopting international standards for the corporate governance and internal control of Maroc Telecom.

The Audit Committee comprises a Chairman and six permanent members, with three representatives of the Government of the Kingdom of Morocco and four representatives (including the Chairman) of Vivendi. The Audit Committee was convened for the first time in May 2004, and held four meetings in 2008. Its role is to make recommendations and proposals to the Supervisory Board on matters such as:

• the individual financial statements and consolidated financial statements, before their submission to the Supervisory Board;

• the consistency, efficiency and effectiveness of the Company’s internal audit process; • supervision of the audit programs of internal and external auditors and the examination of their audit

findings; • accounting principles and methods, and the consolidation scope; • the Company’s off-balance sheet risks and commitments; • supervision of the Company’s insurance policy; • The procedures for the selection of the statutory auditors, formulating an opinion on the fees requested

for the performance of their audit duties, and monitoring compliance with the rules guaranteeing auditor independence; and

• Issues that the committee determines to pose a risk for the Company or that could result in a decrease in audit quality.

CORPORATE GOVERNANCE 6.2. Corporate Governance


Internal Control

The internal control procedures established within the Maroc Telecom group have the following two objecti-ves:

• ensure that the management actions and the conduct of affairs, as well as employees’ behavior, com-ply with guidelines set by the decision-making and supervisory bodies governing the Company’s busi-ness operations and with applicable law and regulations; and

• ascertain that the accounting, financial and management information provided to the Company’s deci-sion-making and supervisory bodies provides a true and fair reflection of the Company’s operations and financial position.

The objectives of the internal control process are to mitigate and control risks arising both from the compa-ny’s business affairs and from error and fraud, particularly in the areas of finance and accounting. As is the case for all audit systems, however, they cannot provide an absolute guarantee that these risks will be completely eliminated.

In order to carry out its task of assessing and validating the Company’s internal control systems, the Audit Committee is supported by the Internal Audit and Inspection departments. The Audit Committee defines the Internal Audit and Inspection departments’ mandates and analyzes their findings.

In 2008, the average attendance rate for Audit Committee meetings was 77%.

Internal Audit and Inspection

Internal Audit

The Internal Audit department of Maroc Telecom is an independent function that has direct access to the Audit Committee. Its functions are governed by a charter approved by the Audit Committee.

The Internal Audit department’s role is to provide the Company with an assurance concerning the degree of risk control within its operations and to monitor the quality of internal control at each level of the Company’s organization. The Internal Audit department assists Management in achieving its objectives by assessing its risk management, control and corporate governance procedures.

The efficacy of the internal audit process is assessed by the Internal Audit department, according to an an-nual audit plan approved by the Audit Committee. Summaries of the comments and recommendations for-mulated by the Internal Audit department are provided to the Audit Committee so that the latter can monitor its progress and guarantee its implementation.

The audit plan is defined according to an analysis of company risks, which covers both financial risks, infor-mation systems risks, and risks particular to the operational units of the Company.

For the purpose of meeting this twofold objective, the Internal Audit department comprises two segments which have the following complementary missions:

• financial audit (09 auditors at December 31, 2008) attached to the General Control Department (office of Chairman) for matters having a dual accounting and financial impact; and

• operational audit (18 auditors at December 31, 2008) attached to the General Control department (office of the Chairman) which works in operating units (retail branches, technical centers, stores and Regional headquarters, etc.). Audit work consists of inspecting procedures for the management of re-sources, networks and customer services.

The annual audit plan comprises a program of engagements, the implementation of which is entrusted to the Internal Audit department. The missions have the following main objectives:

• verify the existence and adequacy of controls in the areas of finance, data processing and operations, to ensure that the main risks are identified and suitably covered;

6


• review the integrity of the financial information, including the controls relating to security of communica-ting, recording and back-up of information;

• review the operational units and systems for ensuring adequacy in respect of policies, procedures and legal and regulatory requirements;

• review the means of safeguarding assets and advising management as to the efficiency and effective-ness of the utilization of resources; and

• ensure that recommendations have been carried out as recommended in improvement action plans. Finally, the Internal Audit department communicates and coordinates with the Company’s external auditors, to maximize the effectiveness of the audit’s coverage scope. Internal audits performed in 2008 involved the main items of balance sheet and the consolidated income statement, i.e. revenues, fixed assets, inventories and cash flow.

Inspection

Alongside the Internal Audit department, the Inspection department (15 inspectors at December 31, 2008) is responsable for assessing and approving the Company’s internal control system. The department reports to the General Control Department (office of the chairman) and to the Audit Committee.

At the request of the aforementioned bodies or on its own initiative, the Inspection department conducts periodic audits, spot checks and specific reviews, for the following purposes:

• protecting the assets, property, resources and means used; • verifying that management procedures, instructions, policies and rules are observed; • ensuring the quality, adequacy and reliability of data and optimization of the allocation of resources;

and • demonstrating and determining any possible liabilities in the event that the Company becomes aware of

deficiencies, irregularities or fraud. The Inspection department may assist the Internal Audit department in the implementation of specific as-signments, to determine a program of review and analysis, and to provide proposals on the functioning of the Company.

Sarbanes-Oxley

In 2006, Vivendi termined the deposit agreement with Bank of New York relating to its American Depositary Receipts (ADR) as well as its obligations under the Securities Exchange Act of 1934. As required by Vivendi, which was, at the time, listed on the New York Stock exchange, Maroc Telecom, as a subsidiary of the group, initiated work in 2003 to prepare for compliance with Sarbanes-Oxley Act, by assessing the quality of processes that might effect the reliability of its financial information. Although Vivendi is now no longer bound by regulatory obligations to the US market authorities, Maroc Te-lecom remains committed to maintaining the highest standards of corporate governance and financial diclo-sure.

6.2.2 Code of Ethics Maroc Telecom has established a Code of Ethics which sets out to maintain high levels of fairness, trans-parency and market integrity, and to ensure the primacy of customer interests. This Code is not intended to replace existing rules, but outlines the ethical principles and rules that are ge-nerally applicable and emphasizes the need to comply with them scrupulously. It aims to make each member of the Company accountable, setting out the principal rules governing the confidentiality of privileged information, in order to increase awareness of best practices among company employees, and to assist them in adjusting their professional behavior to those best practices. This Code of Ethics includes rules for dealing with real or apparent conflicts of interest in order to avoid si-tuations such as insider trading or the suspicion of such. Employees may also consult the chief compliance officer, who is in charge of ensuring compliance with law and the rules of the Code of Ethics.

CORPORATE GOVERNANCE 6.2. Corporate Governance


6.3.1 Compensation paid to members of the Management and Supervisory Boards The Supervisory Board determines, in conjunction with its appointment decisions, the form and amount of compensation paid to members of the Management Board. This information is then included in the em-ployment contract of the respective member. A compensation committee comprised of the Chairman and Deputy Chairman of the Supervisory Board meets each year to examine the overall compensation of the members of the Management Board, including any variable portion, and submits its proposal to the Super-visory Board.

The total gross compensation paid by the Company, its subsidiaries and all controlling companies to mem-bers of the Management Board for fiscal year 2008 amounted to approximately MAD29 million, of which 39% represented variable compensation. Variable compensation for the members of the Management Board for 2008, was determined on the basis of: (a) Vivendi group and/or Maroc Telecom’s financial targets and (b) priority developments in their business areas.

The following table summarizes the compensation paid in the past three fiscal years:

Some companies in the Vivendi group contribute part of these payments to certain members of the Mana-gement Board. In addition, certain members of the Management Board are eligible to participate in Viven-di’s stock option plans. Based on compensation for 2008, the minimum amount to be paid by the Company in the event of termination of the employment of members of the Management Board, except in cases of dismissal for serious misconduct or gross negligence, would amount to an aggregate amount of approxima-tely MAD38 million. Furthermore, the company bears the cost of representation and travel expenses incur-red by the members of the Management Board in the course of their duties.

The Shareholders’ meeting on October 28, 2004 decided to allocate the total annual sum of two million dir-hams (MAD2,000,000) for the payment of attendance fees to the members of the Supervisory Board. This decision remains valid until a new decision is made by the Shareholders’ meeting. The form and proportio-nal allocations of payment are determined each year by the Supervisory Board. It will be proposed at the General meeting of April 23, 2009 to allocate an overall amount of MAD2.4 million for attendance fees to the Supervisory Board members.

At the Supervisory Board meeting of August 1, 2007, the Supervisory Board decided, as in the previous year, to waive payment of attendance fees due in respect of 2006 and opted for those fees to be awarded by Maroc Telecom to the Maroc Telecom Association for Entrepreneurship which distributes these sums in the form of bursaries for worthy and disadvantaged students attending universities in Morocco.

6.3.2 Ownership of Company shares by members of the decision-making and Su-pervisory bodies As of December 31, 2008, the members of the Supervisory Board and the Management Board held respec-tively, directly or indirectly, 155,980 Maroc Telecom shares.

In millions of Moroccan dirhams 2006 2007 2008

Gross compensation 22 23 29

o/w variable compensation 30% 28% 39%

Minimum compensation in the event of termination of contract 25 28 38

6.3 INTERESTS OF THE SENIOR EXECUTIVES

6


6.3.3 Conflicts of interests Over the past five years, no conviction for fraudulent acts has been delivered against any member of Ma-roc Telecom’s Management Board or Supervisory Board, none of the members of the Management Board or the Supervisory Board have been associated with a bankruptcy, receivership or liquidation and no official public incrimination and/or sanction has been issued against any member of the Management Board or the Supervisory Board by statutory or regulatory authorities or by professional associations.

Furthermore, there are no family relations between the members of the Management Board and those of the Supervisory Board.

Finally, members of the Management Board and of the Supervisory Board are appointed by the Sharehol-ders’ Agreement according to the conditions set out in paragraph 3.5.5 “Shareholders’ Agreement”.

6.3.4 Interests of senior executives in significant customers and suppliers of the company None

6.3.5 Service contracts To date, with the exception of employment contracts between members of the Management Board and Ma-roc Telecom, there are no contracts between members of the Management Board or the Supervisory Board and the Company and/or any of its subsidiaries, that bestow any particular benefits.

6.3.6 Stock options As of the date of this annual report, no director and/or employee holds any stock options. Nonetheless, the Extraordinary and Ordinary Shareholders’ meeting of April 23, 2009, in the seventh resolution, authorized the Management Board to grant stock options, under the conditions provided for by law, on one or more occasions, over a period of three years from the date of authorization, to corporate officers, senior executi-ves and executives, or in exceptional cases, to non-executive Group employees.

6.3.7 Loans and guarantees granted to senior executives None

CORPORATE GOVERNANCE 6.3. Interests of the senior executives


Insofar as Maroc Telecom is incorporated under Moroccan law, it is not governed by the provisions of the French commercial code. Nervertheless, under Article 95 of Moroccan Act 17-95 as amended and comple-ted by Act n° 20-05, any agreement entered into, between the Company and any of the Management or Supervisory Board members,or any shareholder holding directly or indirectly more than 5% of the share capital and voting rights is subject to the prior authorization of the Supervisory Board. The same applies to agreements entered into between the Company and another entity, if any member of the Management or Supervisory Board, is an owner, partner, with unlimited liability, manager, director, managing director or a member of the Management or Supervisory Board of such entity.

6.4.1 Management Services Agreement concluded by Maroc Telecom in 2008

Medi1Sat-Current account advance

On May 29, 2008, Maroc Telecom concluded an agreement with Medi1Sat under the terms of which it agreed an additional current account advance in amount of €1.120 million. On September 30, 2008, Maroc Telecom made a supplementary payment of €504,000.

Mobisud (France)– Current account advance

On July 29, 2008, the Supervisory Board approved the current account advance agreement between Maroc Telecom and Mobisud (France) for an amount of €6.6 million. On December 31, 2008, no payment had been made under this agreement.

6.4.2 Related party transactions from prior years which remained outstanding in 2008

Agreement with Onatel

On September 2007, Onatel concluded an agreement with Maroc Telecom under which the latter provides services in the following fields: strategy and business development; organization; networks; marketing; fi-nance; procurement; human resources; information systems and regulatory affairs.

These services are rendered essentially by expatriate employees.

The amount (excluding tax) related to services provided and invoiced to Onatel stood at MAD11.3 million in 2008 and to 11.5 million in 2007.

Agreement with Gabon Telecom

On September 2007, Gabon Telecom concluded an agreement with Maroc Telecom under which the latter provides services in the following fields: strategy and development; organization; networks; marketing; fi-nance; procurement; human resources; information systems and regulatory affairs.

These services are rendered essentially by expatriate employees.

6.4 RELATED PARTY TRANSACTIONS

6


The amount (excluding tax) related to services provided and invoiced to Gabon Telecom stood at MAD12.8 million in 2008, a level unchanged from 2007.

In addition, Maroc Telecom sold equipment to Gabon Telecom for a value of approximately MAD0.176 mil-lion in 2008 and MAD1.35 million in 2007.

Management Services Agreement with Vivendi

In June, 2001, Maroc Telecom entered into a management services agreement with Vivendi under which Vivendi provides Maroc Telecom directly or via its subsidiaries, with technical assistance in the following fields: strategy and organization; development; commercial and marketing; finances; purchasing; human resources; information systems; regulatory affairs; interconnection; infrastructures and networks.

These services may be rendered by expatriated employees.

In accordance with the terms of this agreement, the fees paid by Maroc Telecom to Vivendi amounted to MAD7 million in 2008, MAD18.9 million in 2007 and MAD95 million in 2006.

Cross-charging of costs related to stock options and free share allocation plans

In accordance with IFRS standards, Vivendi invoices its subsidiaries for costs related to benefits granted to employees in the form of stock options and allocations of free shares. The following amounts were charged to Maroc Telecom: In respect of stock options and allocations of free shares, the amount stood at MAD14.4 million for 2008, MAD21.9 million for 2007and MAD21.5 million for 2006.

Agreement with Mauritel

In 2001, Mauritel SA concluded an agreement with Maroc Telecom for the provision of services and techni-cal ssistance and for sale of equipment to Mauritel SA.

The amount charged by Maroc Telecom to Mauritel SA was MAD9.5 million (excluding tax) in 2008 and MAD10.6 and MAD12.5 million (excluding tax) in 2007 and 2006 respectively.

CORPORATE GOVERNANCE 6.4. Related party transactions


Agreement with Casanet

In 2003, Maroc Telecom concluded a series of agreements with Casanet related to the maintenance of the Maroc Telecom internet portal “Menara”, the supply of IT development services and the hosting of Maroc Telecom‘s Mobile portal, hosting of Maroc Telecom’s website “El Manzil”, the maintenance of new WAP modules on the Menara portal and the production of the content for these modules, as well as the marke-ting of internet access over leased lines.

The amounts charged by Casanet to Maroc Telecom pursuant to these agreements for the fiscal years 2008, 2007 and 2006 were MAD31.7 million, MAD49.4 million and MAD27.5 million respectively.

Casanet -Current account advance

Maroc Telecom has outsourced its Yellow Pages business to its subsidiary Casanet.

To this end, on December 4, 2007, the Management Board authorized the underwriting of associated capi-tal expenditure which would be funded through non-interest bearing current account advances. The amount authorized totaled MAD6.1 million.

In 2008, Maroc Telecom made a current account advance to Casanet for an amount of MAD2.3 million, and no payment was made in 2007.

Contract with Media Overseas

On February 24, 2006, Maroc Telecom’s Supervisory Board approved the agreement entered into during the period with Media Overseas, a subsidiary of the Canal + Group, concerning the launch of an IPTV offe-ring. Pursuant to this agreement, operations are performed with Multitv Afrique, a subsidiary of Media Over-seas.

Maroc Telecom recorded expenses of MAD7.8 million in 2008 and MAD4.5 million in 2007, in relation to this agreement.

Medi-1-Sat current account advance

In 2006, Maroc Telecom entered into an agreement with Medi-1-Sat, under which it grants its subsidiary €2.8 million in financing in the form of current account advances. In 2006, Maroc Telecom paid €1.2 million for the first tranche of this advance (MAD13.3 million), €1.6 million (MAD18 million) as a second tranche in 2007 and €1.6 million (MAD18.6 million) in 2008.

6


Mobisud (France)-Current account advance

On March 1, 2007, the Supervisory Board approved a current account advance agreement between Maroc Telecom and Mobisud (France) for an amount of €5,280,000. The full amount of this advance was paid in 2007, representing a sum of around MAD59.6 million. On December 31, 2008, the oustanding balance payable, including accrued interests, amounted to MAD64.2 million.

CORPORATE GOVERNANCE 6.4. Related party transactions

RECENT DEVELOPMENT AND OUTLOOK

7.1 RECENT DEVELOPMENT 274

7.2 MARKET OUTLOOK 275

7.3 OBJECTIVES 276

REPORT OF THE STATUTORY AUDITORS ON PROFIT

FORECASTS 277


Privatization of Sotelma in Mali On March 1, 2009, the Government of Mali, via its Minister for the Communication and New technologies, announce Maroc Telecom as provisional purchaser of the 51% stake of the Sotelma’s incumbent operator .

Mobisud France In joint agreement with the other shareholders of Mobisud France, Maroc Telecom plans to sell its 66% stake in Mobisud France to SFR.

Combined General Shareholders’ Meeting held April 23, 2009 The shareholders of Itissalat Al-Maghrib, limit company with Management and Supervisory Board and a capital of 5,274,572,040 dirhams whose head office is in Rabat, which occurred Annakhil, Hay Riyadh registered in trade register under number 48 947, are convened on April 23, 2009 at 3pm at the head office, to combined general meeting for the purpose of deliberating on the following day order:

On ordinary basis:

• approval of the reports and annual Financial Statements for the year ended and the social annual December 31, 2008;

• Approval of consolidated financial statements for the year ended December 31, 2008; • Approval of regulated conventions reviewed by the auditors’ special report; • Allocation of net income 2008-dividends; • Attendance’ fees

On extraordinary basis:

• Overhaul of statutes; • Authorization granted to the Management Board for the purpose of agreeing a buy or subscription

options; • Powers for formalities.

7.1 RECENT DEVELOPMENT

7


The discussion herein relating to market outlook contains forward-looking statements, and information rela-ting to the Company’s expectations. Such forward-looking statements involve risks and uncertainties inhe-rent to forecasts, and are based solely on evaluations made as of the date on which such statements are made. The Company warns investors that a significant number of factors could result in the actual results differing materially from those expected, including the factors listed in section 4.14.

The telecommunications market in Morocco offers large potential for growth, owing to the following eco-nomic and social factors, which favor the further penetration of new information and telecommunications technologies:

• the population’s overall youth (51% aged under twentyfive) (2004 census); • population growth of 1.4% per year; • the fact that the population is increasingly living in urban areas (with the rate of urbanization rising from

43% in 1982 to 55% in 2004)(2004 census); • sustained growth in GDP (6% annual average growth since 5 years) and completion in the medium

term of programs for the development of road and tourism infrastructures, and electrification of rural areas;

• the National Initiative for Human Development (INDH) was launched in 2005 and aims to set up pro-grams which aim to fight against poverty and exclusion, along with;

• the establishment of free-trade agreements with the European Union, the United States and Arab coun-tries.

On the mobile segment, revenue growth is expected to derive mainly from the increase in the penetration rate of mobile telecommunications in Morocco as well as in the countries where the subsidiaries of Maroc Telecom are established. On the basis of Maroc Telecom estimates, the rate of mobile penetration in Mo-rocco could exceed 95% in the medium term. Moreover, the Company hopes to benefit from the growth in usage, owing mainly to a migration of prepaid customers to pospaid subscriptions and of the increased use of the data services in the medium term. Regarding its competitive position in this market, Maroc Telecom considers that is possible that a new operator, holding a new license as a Mobile Virtual Network Operator (MVNO) or through other means, may enter to the market in the near future.

On the fixed-line and internet segments, Maroc Telecom intends to pursue its efforts, initiated, in order to expand its fixed-line business by developing the abundance offers (unlimited) and the multi-play offers, while continuing to improve quality of service. In the future, the company anticipates a moderate growth of the number of fixed lines in Morocco, offset by the development of the usage and the offers of contents. Regarding the Internet, the strong growth posted since 2004 is expected to continue in the next years , in particular due to the development of the wireline broadband (ADSL) and the mobile (+3G). The Company also considers that the liberalization of the market in the near future could decrease its market share in the short term. However, the fixed-line market might benefit from this liberalization and from the competition incurred by new entrants, as it has been the case in other countries that liberalized their telecommunica-tions sector.

In sub-Saharan Africa where the principal subsidiaries of Maroc Telecom operate, the market of telecom-munications offers a very important potential of growth because of:

• an economic growth estimated at more than 4%/year during the next two years (source: International Monetary Funds),

• and a penetration rate of only 19% (source: International Telecommunications Union - 2007) which will grow significantly during the next years.

7.2 MARKET OUTLOOK

RECENT DEVELOPMENT AND OUTLOOK 7.2. Market outlook


This section contains information regarding the Company’s objectives for the fiscal year 2009. The Compa-ny warns potential investors that these forward-looking statements are dependent on circumstances and events which are expected to occur in the future. These statements do not reflect historical data and are not to be interpreted as warranties that the facts and data mentioned will occur or that the targets will be achie-ved. By their nature, these are targets and it is therefore possible that they may not be achieved, and the assumptions on which they are based may be found to be erroneous. Investors are invited to take into consideration the fact that some of the risks described in section 4.14 “Risk factors” herein may affect the Company’s operations and its ability to achieve its targets (see also section 7.2 “Market Outlook”).

Given continuing growth in Morocco as well as in subsidiaries, the Company’s growth targets for 2009 are as follows:

• Consolidated revenues should grow by more than 3%; • Operating margin should be maintained at 47%.

7.3 OBJECTIVES

7


Report of the statutory auditors on profit forecasts

Chairman,

In our capacity as Statutory Auditors and in accordance with the European Regulation (EC) no. 809/2004, we have prepared this report on Maroc Telecom’s profit forecasts in part 7, section 7.3 of this 2008 Regis-tration Document.

These forecasts and underlying significant assumptions were prepared under the responsibility of the Ma-nagement Board of Itissalat Al-Maghrib, in accordance with the provisions of the European Regulation (EC) no.809/2004 and the CESR recommendations on profit forecasts.

It is our responsibility to express, in accordance with the terms required by annex I, item 13.3 of the Euro-pean Regulation (EC) no.809/2004, our conclusions on the appropriateness of the preparation of such fore-casts.

We conducted our work in accordance with International Auditing Standards. Our work included an assess-ment of the procedures implemented by management to prepare the forecasts, as well as the performance of procedures to obtain assurance about whether the accounting methods used are consistent with those used for the preparation of historical data of Maroc Telecom. They also involved collecting data and expla-nations we deemed necessary in order to obtain reasonable assurance about whether the forecasts are appropriately prepared on the basis of the specified assumptions.

We remind you that, as this concerns forecasts, which are uncertain by nature, actual results may differ significantly from the forecasts presented and so, we do not express any conclusion as to the potential rea-lization of such forecasts.

In our opinion:

• The forecasts have been appropriately prepared in accordance with the basis indicated; • The accounting basis used for the purposes of these forecasts is consistent with the accounting me-

thods used by Itissalat Al-Maghrib. This report is issued for the sole purpose of publication of these forecasts in the Registration Document and may not be used in any other context.

Casablanca, April 23, 2009

Statutory Auditors

RECENT DEVELOPMENT AND OUTLOOK 7.3. Objectives

KPMG Fouad LAHGAZI

Partner


Partner


Schedules from appendix 1 of the European regulation 809/2004 Page number of the Registration Document

1. PERSONS RESPONSiBLE 8

2. STATUTORY AUDITORS 10

3. SELECTED FINANCIAL INFORMATION -

3.1. Selected historical financial information 6 / 146

3.2. Selected financial information for interim periods 7

4. RISK FACTORS 138-143

5. INFORMATION ABOUT THE ISSUER -

5.1. History and development of the Issuer 16 / 56

5.2. Investments 174-175

6. BUSINESS OVERVIEW -

6.1. Principal activities 54-111 / 168-172

6.2. Principal markets 54-111

6.3. Information given pursuant to items 6.1. and 6.2. that has been influenced by exceptional events NA

6.4. Extent to which the issuer is dependent on patents or licenses, industrial commercial or financial contracts or new manufacturing processes

132

6.5. The basis for any statements made by the issuer regarding its competitive position 100-109

7. ORGANIZATIONAL STRUCTURE -

7.1. Description of the group 57-58

7.2. Significant subsidiaries 104-110

8. PROPERTY, PLANT AND EQUIPMENT -

8.1. Existing or planned material tangible fixed assets 131

8.2. Environmental issues that may affect the issuer’s utilization of tangible fixed assets NA

9 OPERATING AND FINANCIAL REVIEW 146-183

9.1. Financial condition 146-183

9.2. Operating income 160-167

10. CASH AND CAPITAL RESOURCES 173-182

10.1. Information concerning the issuer’s capital resources (both short and long term) 179-182

10.2. Cash flows 173

10.3. Information on the borrowing requirements and funding structure of the issuer 179-182

10.4. Information regarding any restrictions on the use of capital resources NA

10.5. Information regarding the anticipated sources of funds needed to fulfill commitments referred to in items 5.2.3 and 8.1

NA

11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES 111/132

12. TREND INFORMATION 275

13. PROFIT FORECASTS OR ESTIMATES 276

14. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIES AND SENIOR MANAGEMENT -

14.1. Administrative, management or supervisory bodies 254-265

14.2. Administrative, management, and supervisory bodies and senior management conflicts of interests 266-267

15. REMUNERATION AND BENEFITS 266

15.1 Remuneration paid and benefits in kind 266

15.2 Pension, retirement and similar benefits 266

TABLE OF CONCORDANCE


In compliance with article 28 of European Commission regulation (EC) no. 809/2004 dated April 29 2004, the following information is included for reference in the present Registration Document:

• The consolidated financial statements for the year ended December 31, 2008, the relevant Statutory Auditors’ report and the Group financial report on pages 186, 187 and 146 of the Registration Document filed with the AMF on April 28, 2008 (R 08-0323)

• The consolidated financial statements for the year ended December 31, 2006, the relevant Statutory Auditors’ report and the Group financial report on pages 135, 175 and 106 of the Registration Document filed with the AMF on May 9, 2007 (R 07-0058) ;

• The consolidated financial statements for the year ended December 31, 2005, the relevant Statutory Auditors’ report and the Group financial report on pages 124, 167 and 98 of the Registration Document filed with the AMF on April 11, 2006 (R 06-031) ;

• The consolidated financial statements for the year ended December 31, 2004, the relevant Statutory Auditors’ report and the Group financial report on pages 157, 131 and 100 of the Registration Document filed with the AMF on April 8, 2005 (R 05-038) ;

• The consolidated financial statements for the year ended December 31, 2003, the relevant Statutory Auditors’ report and the Group financial report on pages 160, 122 and 208 of the Registration Document recorded with the AMF on November 8, 2004 (I 04-198).

• The chapters of the Registration Document no. R 05-038 and of the draft prospectus no. I 04-198 that are not referred to above are either not relevant for the investor, or are covered elsewhere in this Registration Document.

Schedules from appendix 1 of the European regulation 809/2004 Page number of the Registration Document

16. BOARD PRACTICES -

16.1. Date of expiration of the current term of office 254/262

16.2. Information about members of the administrative, management or supervisory bodies’ ser-vice contracts

267

16.3. Audit committee and others 262-265

16.4. Statement as to whether or not the issuer complies with the incorporation corporate gover-nance regime of its country

NA

16.5. Report of the Chairman of the Supervisory Board on internal control NA

16.6. Statutory Auditors’ report on the Chairman’s report NA

17. EMPLOYEES -

17.1. Human resources 126-130

17.2. Shareholdings and stock options 267

17.3. Description of any arrangements for involving the employees in the capital of the issuer

127

18. MAJOR SHAREHOLDERS 48-49

18.1. Breakdown of capital and voting rights 48-49

18.2. Different voting rights NA

18.3. Control of the issuer 49-53

18.4. Description of any arrangements, known to the issuer, the operation of which may at a sub-sequent date result in a change of control of the issuer

49-53

19. RELATED PARTY TRANSACTIONS 268-271

20. FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES

146-183

20.1. Historical financial information 146-183

20.2. Pro forma financial information 146-183

20.3. Financial statements 184-251

20.4. Auditing of financial information 185/231/250-251

20.5. Age of latest financial information 146

20.6. Interim and other financial information NA

20.7. Dividend policy 44

20.8. Legal and arbitration proceedings 136-137

20.9. Significant change in the issuer’s financial or trading position 274

21. ADDITIONAL INFORMATION -

21.1. Share capital 38-53

21.2. Memorandum and articles of association 16-37

22. ADDITIONAL INFORMATION NA

23. THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATION OF ANY INTEREST

NA

24. DOCUMENTS ON DISPLAY 11

25. INFORMATION ON HOLDINGS 104-110

TABLE OF CONCORDANCE


The following table shows a list of the information published or made public by Maroc Telecom over the past twelve months (from 26 January 2006 to 22 January 2007), in accordance with article L. 451-1-1 of the Monetary and Financial Code and article 221-1-1 of the AMF General Regulation:

All press releases are available on:

• The AMF website: http://www.amf.fr

• Maroc Telecom’s website under “Information réglementée”: http://www.iam.ma/Information-Reglementee.aspx

Date Title

January 7, 2008 Half year assessment of liquidity (Paris) - Contract of share regularization (Casablanca)

January 20, 2008 Press release: 2007 revenues

February 22 , 2008 Press release: 2007 results

March 18, 2008 Shareholders’ Meeting Notice for General Meeting on April 17, 2008

April 23, 2008 Press release: post General Shareholders’ Meeting dated April 17, 2008

April 25, 2008 Shareholders’ Meeting Notice for General Meeting on May 28, 2008

April 30, 2008 Press release: Official disposal of the 2007 registration document

May 09, 2008 Press release: first quarter 2008 revenues and results

July 4, 2008 Half year assessment of liquidity (Paris) - Contract of share regularization (Casablanca)

July 11, 2008 Press release: nomination of a new managing director to the head of the Gabon Telecom group

July 22 , 2008 Press release: first half 2008 revenues

February 23, 2009 Press release: 2008 results

March 20, 2009 Shareholders’ Meeting Notice for General Meeting on April 23, 2009

March 1, 2009 Press release: provisional purchaser of Sotelma

January 19, 2009 Press release: 2008 revenues

January 7, 2009 Press release: endorsement to AMAFI contract

November 19, 2008 Press release: new nomination in the Supervisory Board of Maroc Telecom

November 5, 2008 Press release: third quarter 2008 revenues and results

July 29, 2008 Press release: first half 2008 results

January 7, 2009 Half year assessment of liquidity (Paris) - Contract of share regularization (Casablanca)

ANNUAL INFORMATION DOCUMENT 2008


2008 In accordance with the provisions of article 221.1.2 of the AMF General Regulation, the table below shows the amount of fees paid by the Maroc Telecom Group, to each of its statutory auditors for the fiscal year 2008:

In millions of Moroccan dirhams Maroc Telecom Group

Total 2007 KPMG Abdelaziz

Almechatt Other

Statutory auditors’ fees 11.34 3.82 2.70 16.98

Other missions of audit 4.17 - - 9.02

Total 15.51 3.82 2.70 26.00

Total 2008

17.86

4.17

22.03

STATUTORY AUDITORS FEES

ANNUAL INFORMATION DOCUMENT 2008 Statutory auditors fees

STATUTORY AUDITORS FEES


Proposed resolutions

On ordinary basis :

First resolution: Approval of the reports and annual financial statements for the year ended December 31, 2008

The General Shareholders’ Meeting, having satisfied the quorum and majority requirements for Ordinary Shareholders’ Meetings, after reviewing:

− the Management Board’s report and the comments of the Supervisory Board on the said report;

− and the Auditors’ Report on the financial statements for the year ended December 31, 2008. − approve the financial statements for the said fiscal year and the operations translated in these state-

ments or summarized in these reports. Consequently, the Shareholders’ Meeting decides to give final discharge to the members of the Supervisory and Management Board for the performance of their term of office for the fiscal year 2008. Second resolution : Approval of the consolidated financial year ended December 31, 2008 The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Ordinary Sharehol-ders’ Meetings, approves where necessary the consolidated financial statements for the year ended De-cember 31, 2008, such as they have been presented. Third resolution : Approval of the regulated related-party agreements The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Ordinary Sharehol-ders’ Meetings, after having heard a reading of the Statutory Auditors’ Report on the agreements referred to in Article 95 of Act no. 17- 95, approves all the transactions and regulated related-party agreements descri-bed in this report. Fourth resolution : Allocation of net income and payment of dividend The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Ordinary Sharehol-ders’ Meetings, decides to allocate the net income of MAD9,527,628,199.54 for the year ended December 31, 2008 as follows:

(1) This amount shoul be adjusted in order to take into account the number of self held shares at the payment date of dividend.

Consequently the Shareholders’Meeting fixes the dividend at MAD10.83 per share composing the authori-zed capital and having there right because of their date of pleasure. This dividend will be put in payment from June 3, 2009.

The ordinary dividends paid over each of the past three fiscal years were as follows:

Allocation of 2008 results (in thousands of Moroccan dirhams)

Distribuable income 9,527,628,199.54 Total dividend (1) 9,520,602,532.20 Optional reserve(1) 7,025,667.34

2006 2005 Number of shares 879,095,340 879,095,340 Dividend/share (dirhams) 7.88 6.96 Total dividend 6,927,271,279.20 6,118,503,566.40

2007 879,095,340

9.20 8,087,677,128

COMBINED GENERAL SHAREHOLDERS’ MEETING, APRIL 23, 2009


Fifth resolution : Directors’ fees The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Ordinary Sharehol-ders’ Meetings, decides to allocate as directors’ fees to the members of the Supervisory Board, the annual sum of two million four hundred and thousand (MAD2,400,000). The conditions and procedures of distribu-tion will be laid down each year by the Management Board. This decision will remain valid until that a new decision is made by the General Meeting.

On extraordinary basis:

Sixth resolution : overhaul of formalities The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Extraordinary Share-holders’ Meetings, knowledge taken of the Management report, decides the overhaul of the statutes and the adoption of their new writing (2). The General meeting gives full powers to the Management Board, with ability to delegate, for purposes to carry out all modifications and formalities which would prove to be necessary under the terms of the present decision.

(2) The project of amended statutes will be available on the Company website.

Seventh resolution : Authorization granted to the Management Board for the purpose of agreeing a buy or subscription options

The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Extraordinary Share-holders’ Meetings, allow the Management Board, within the framework of the legal disposals in force, to grant, in one or more time, during a deadline of three years as from this day, for the benefit of social agents, of top executives, senior officers or, exceptionally, no executive employees of the group, options of new subscription shares of the company to be emitted as capital growth, or the buy option of the company sha-res coming from a repurchase carried out by the company, within the limit of 1% of the authorized capital at the day of the granting of the options by the Managemet Board.

The price fixed for the shares subscription by the recipients will be determined by the Management Board and could not be lower than the share price at the last closing seance preceding the date of the attribution of the subscription options of shares. The price fixed for the purchase of shares by the recipients will be determined by the Management Board and could not be lower than the weight average cost of the repurchase of shares by the company. The present authorization automatically carries with the profit of the recipients in the case of options of subscription attribution, renunciation of the shareholders of their preferential duty of the shares subscription which will progressively be emitted liftings of option. The granted options will have to be exerted within ten years maximum from the date on which they will have been granted. The subscribed shares, within the framework of this authorization, will be registered. The Shareholders’ Meeting gives full powers to the Management Board for, in one or more time, under the terms envisaged by the statutes, to define the recipients and to adopt the number of options granted to each one of them, to set the date of the opening of the options, to adopt the practical conditions and proce-dures of attribution, of practise and of temporary suspension of the granted options, to carry out all the ope-rations which will be necessary, to implement all other new legal tendencies which would step in throughout this authorization and of which the application; would not require an expresse decision of general meeting and to delegate to its chairman all powers with effect to achieve all acts or formalities. Eighth resolution : Powers for formalities The Shareholders’ Meeting, having satisfied the quorum and majority requirements for Ordinary Sharehol-ders’ Meetings, gives full powers to the bearer of an original, copy or extract of the minutes of this meeting for the purposes of carrying out any formalities required by law.

MIXED GENERAL SHAREHOLDERS’ MEETING Proposed resolutions


3RP (Réseau Radioélectrique à Ressources Partagées). Trunked private mobile radio networks Mobile radio networks where frequenciesare shared by the users of several companies or organizations for internal communications. The sharing of fre-quencies is limited to the duration of each call.

ADSL (Asymetrical Data Subscriber Line). Technology enabling users to receive high bandwidth services through their existing phone lines while being able to make a phone call at the same time. The transmission capacity going from the network to the customer is greater than that from the customer to the network, hence Asymmetric.

ANRT. The Moroccan Telecommunications Regulator

ARPU (average revenue per user). ARPU corresponds to the revenues generated (prepaid and postpaid) for a given period, excluding roaming in revenues (incoming and outgoing calls, revenues from value added servi-ces) divided by the average number of customers (prepaid and postpaid) over the same period, on a monthly basis. The average number of custo-mers is the average of average monthly customer base (prepaid and post-paid) figures. The monthly average customer base corresponds to the mean number of customers per month (prepaid and postpaid) taken at the beginning and at the end of each month

ATM (Asynchronous Transfer Mode). Network technology that accommo-dates the simultaneous transmission of data, voice, and video. It is based on asynchronous transmission of short packets of fixed length. Optical local loop. Optical Fiber Cable-based access network used forcon-necting broadband customers.

BTS (Base Transeiver Station). Component of the mobile radio network comprising antennas and radio transmitters/receivers (TRX). It provides GSM network coverage within a given range.

Self-Routing Switch. A switch is a piece of equipment used to establish a temporary link or connection between an incoming path and an outgoing path on a line or circuit.

CAIR. Virtual call center solution offered by Maroc Telecom, aimed at com-panies for which customer relationship management is strategically crucial. This solution enables businesses to set up customer-response solutions with minimum investment. All call center functions can be managed within Maroc Telecom’s network.

SIM (Subscriber Identity Module). Without a SIM card, calls cannot be-made from a mobile phone. In particular, the SIM card stores the user’s personal profile and a PIN code protecting access to the card).

Mobile Switching Center (MSC) Mobile Switching Center (MSC)

International Transit Center.A switch that carries international calls to foreign operators’ networks.

Unbundling. An incumbent operator, owner of the local loop, has an obli-gation to provide pairs of copper wires to third-party operator, in exchange for compensation. Such third-party operator install their own transmission equipment in order to connect their network to their customers’ premises. Partial unbundling allows the third party operator to take over the Internet connection while the incumbent operator still provides telephony subscrip-tion and services. Full unbundling allows the third party operator to connect the entire customer line to its own network, and thus to offer both telephony and ADSL services. DSLAM (Digital Subscriber Line Access). ADSL device located at a telephone exchange. It is an electronic assembly holding several cards that are equivalent to the client filter and modem. The filter separates incoming phone and data signals and the modem translates back the ATM cells (small packets transported over ATM connections).

ISP (Internet Service Provider). A company or an organization offering internet access to household, professional and business users.

Radio-relay link. Technology used for radio signal transmission (voice, data or video). Relays are installed on pylons or highpoints, which are deployed to carry signals from one point to the next, creating the link.

Fidelio. Fidelio is the first point-based loyalty program introduced in Moroc-co. It is reserved for postpaid customers and was launched on June 1, 2002. The program allows points to be collected based on expenditure, and provides advantages in the form of free or cut-price handsets, and free calls and SMS messages. ou à prix réduit, de communications et de SMS gra-tuits.

Inter-segment revenues. Inter-segment revenues are mainly generated from interconnection services relating to traffic between the fixed-line and mobile networks and the provision to the Mobile segment of leased lines by the Fixed-line and Internet segment. Since July 1, 2004, they also include revenues from the provision of services to Mauritel. Frame Relay. Technology used to send high bandwidth data over long distances enabling the transmission of large amounts of information, the handling of fluctuations in data flows and voice transmission.

GMPCS (Global Mobile Personal Communications by Satellite). Personal communications system providing cross-border, regional or worldwide coverage via a network of satellites accessible using small easily transpor-table handsets. GPRS (General Packet Radio Service). Packet switching system enabling enhanced data rates over GSM networks. Maroc Telecom Group . Indicates all the companies fully consolidated within the scope of consolidation.

GSM (Global Systems for Mobile communications). European digital radio transmission standard for mobile telephony, known as 2G (2nd generation), adopted in 1987 and devised by the ETSI (European Telecommunications Standard Institute). It is the most widely used standard in the world. In operation since 1992, this technology uses two band frequencies: 900 and 1,800 MHz, and can transmit voice as well as data.

Interconnection. Reciprocal service offered by the operators of two different telecommunications networks enabling all subscribers within the two groups to communicate freely with each other.

IP (Internet Protocol). Telecommunications protocol used on networks used to carry internet traffic and based on the technique of transmission of data packets.

Kbits/s (Kilo bits per second). Unit of measurement used to express the speed at which data can be transmitted along a line. Leased line . Every part of the network, including an access line to the network, that is supplied as a dedicated channel with all of its capacity available exclusively to the user and on which there are no controls or signaling. LO BOX (GSM Gateways). Terminal equipment, compatible with the GSM standard, that has been designed to act as an interface between the GSM network and terminal equipment that is normally meant to be connected to the fixed public telecommunications network (such as private switching systems (PABX) or ordinary telephones). MENA (The Middle East and North Africa). Region including the following countries: Algeria, Bahrain, Egypt, Gaza and the West Bank, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, Turkey, UEA, Yemen. PCM (Pulse Code Modulation). Process used to transmit the spoken word involving the sampling and digital coding of the signal. The PCM circuit is the circuit at the heart of the 2 Mbps telephone network. MMS (Multimedia Messaging Service). Multimedia version of SMS ena-bling real multimedia files to be attached to text messages: videos, audio, high-resolution images. Multiplexeur. A piece of telecom network equipment enabling the insertion or extraction of data packages. Standard NMT (Nordic Mobile Telephone). Mobile network launched by Maroc Telecom, based on analogue technology operating in the 450 Mhz frequency band. PABX (Private Automatic Branch exchange). Equipment able to stablish temporary connections between inbound and outbound lines in order to route communications. IN platform (Intelligent Network).Platform allowing value-added services to be made available (prepaid card, prepaid line, kiosk, capped rate plan, etc.). Segments. Refers to the Mobile segment or the Fixed-line and Internet segment of Maroc Telecom. Postpaid (services). Method of paying for services after they have been used (free services can also be included in thismethod).

GLOSSARY


Power CP. New more powerful processor for MSC mobile switches based on Siemens technology. PPT. Intelligent Network service allowing the marketing of capped-rate plans, not with a line number (CLI) but any virtual phone number.

Prepaid (services). Formula whereby services are paid for prior to being used (free services can also be included in this formula).

Radio paging.Transmission of numeric or alphanumeric messages to a mobile handset or a group of mobile handsets. NSS (Network Sub-System). All elements/equipment, notably switchgear required to make up a GSM network. SS7 (Signaling System 7). American name for the CCITT 7 network signaling protocol.

ISDN (Integrated Services Digital Network). Entirely digital telecom net-work enabling the simultaneous transmission of voice and data (fax, inter-net etc.).

Roaming. When a user is abroad, this function enables a user to make and receive calls via an operator other than the one to which he/she is a subs-criber

PSTN (Public Switched Telephone Network).This is the traditional two wire network. This network is switched in so far as the connection with the person being called is temporary as opposed to cable where the connection is permanent.

SDH (Synchronous Digital Hierarchy). Digital method of transmission used to optimize transmissions over optic fiber and radio systems.

SMSC (Short Message Service Center) servers.Service allowing the sending and reception of written messages containing a maximum of 160 characters. Messages can be sent via an operator, via the internet or direc-tly using the keyboard on a mobile phone. If the recipient’s phone is turned off the messages are still saved at the operator’s message center. The length of time these messages are stored for varies depending on the operator. Nonetheless, in order for messages to be received, the maximum storage capacity of the handset must not have been attained.

SMS (Short Message Service). Written message, limited to 160 charac-ters, exchanged between mobile telephones.

SMW3 (SEA-ME-WE3 / South East Asia – Middle East – Western Europe). Fiber optic sub-sea cable linking 4 continents. SSNC (Signalling System Network Control). A new component develo-ped by Siemens for controlling signaling traffic for MSCs (mobile switching centers), enabling handling capacity to be increased. Signaling Transfer Point (STP).Signaling transfer point for S7 signaling systems. The STP allows for the routing and transfer of signaling messages using the SS7 protocol. Churn rate. An indicator that is calculated by dividing the number of contracts terminated over a given period by the average customer base over the same period, expressed on an annualized basis. The average customer base corresponds to the mean number of clients taken at the beginning and at the end of each month. Average churn rate. An indicator that is calculated by dividing the number of contracts terminated (by clients subscribing to prepaid and postpaid offers) over a given period by the average total customer base (prepaid and postpaid) over the same period, expressed on an annualized basis. The average customer base is based on the average monthly figures (prepaid and postpaid) for the period. The average monthly customer base corres-ponds to the mean number of clients (prepaid and postpaid) at the begin-ning and at the end of the month. Dropped call rate. A quality indicator that measures, across the whole of the existing mobile subscriber base, the number of disconnected calls in proportion to all the calls made on the network. Successful connections rate. A quality indicator that measures, during peak periods on the network, the number of calls successfully established emanating from the existing mobile subscriber base (on the BSS radio part), in relation to all calls made on the network. Fault report rate. Generic term, applicable to different services, illustrating the number of faults reported on lines or for services over a certain period in proportion to the total number of lines or services on offer over the same period .

Success rate. A quality indicator that measures the number of SMS suc-cessfully sent by the existing mobile subscriber base in relation to the total number of SMS sent over the network.

Technologie CAMEL (Customised Applications for Mobile networks Enhanced Logic). A technology that enables a user to call his home coun-try without needing an area code. The technology works for short messa-ges (SMS) as well as voice calls.

SDH Technology (Synchronous Digital Hierarchy). High throughput technology based on a “ring”. This type of structure allows for a different geographical trace to be made available, providing a back-up path when the primary route becomes unavailable.

Phone shops. Commercial outlet managed by a third party not employed by Maroc Telecom, open to the public and containing a certain number of payphones, providing telecom services to consumers. Digital network termination. Device used to connect ISDN clients.

TRX (Transceiver Receiver). The part of the BTS that emits and receives the GSM signal.

UMTS (Universal Mobile Telecommunications System). 3G (3rd genera-tion) standard used for the transfer of voice and data. This technology, based on the WCDMA-CDMA standards, allows for throughput in excess of 2Mbps.

Billing unit (BU). Unit used for billing calls, the duration of which varies according to the type of call made (local, national, international, fixedto- mobile).

VMS (Voice Mail System). Name given to the voice messaging system.

VPN (Virtual Private Network). A VPN is a private communications net-work used for the internal needs of a closed group of users to communicate over one or a number of public networks. This product fulfils both the inter-nal and external communication requirements of businesses.

VSAT (Very Small Aperture Terminal). System of satellite transmission using small antennas. A VSAT base equates to a micro-station made up of antennae with a diameter of 0.9 to 3.5 m. A VSAT network is a satellite network enabling communications, via a hub, with a group of sites equipped with micro-stations (VSAT) linked to a central system by a star topology.

WAP (Wireless Application Protocol). Standard adapting the internet to the constraints of mobile telephony, notably through the use of an appro-priate content format.

WiFi (Wireless Fidelity). Commercial brand name for a data transmission system based on the IEEE 802.11 standard that allows wireless access to an Ethernet network from up to a few hundred meters away at a speed of 11 Mbits/s.

X 25. Protocol used to manage packet switched networks. Used by Maroc Telecom through Maghripac.

GLOSSARY

2008 Registration Document - Maroc Telecom...Registration Document 2008- Maroc Telecom 5 July 2008...

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