Annual Report 2007 - Global Telecomgtelecom.com/documents/10157/24707/Annual_report_2007.pdf · 4...

Annual Report 2007

Giving the world a voice

www.orascomtelecom.com

Med

ia T

erra

nia

Letter from the Chairman & CEO 2

Financial Highlights 4

OTH’s Organization 8

Financial Milestones 10

History & Evolution of OTH 12

Disclosure & Shareholder Information 14

Board of Directors 16

Corporate Governance Report 20

OTA 24

Mobilink 26

Mobinil 28

Tunisiana 30

banglalink 32

Internet Services – LINKdotNET 36

International Gateway & Submarine Cables -

M-Link - Medcable - TWA - MENA 37

Value Added Services – Arpu+ 38

Handsets & Distribution – Ring 39

Infrastructure & Services – OrasInvest 40

Board Report 45

Financial Statements (EAS) 61

Financial Statements (IFRS) 89

Subsequent Events in 2008 119

Contents:

About OTH:

GSM Operations:

GSM Support Operations:

2007 Financial Review:

Dear Shareholders,

Letter from the Chairman & CEO

OTH ANNUAL REPORT 2007 l ABOUT OTH l GSM OPERATIONS l GSM SUPPORT OPERATIONS l 2007 FINANCIAL REVIEW2

Orascom Telecom has achieved yet another year of strong growth and achievements that has driven the management

to focus on two key areas: to support and maximise growth for Orascom Telecom and its main subsidiaries by providing

financial, technical and management resources, and to pursue the company’s strategy of expansion by acquiring licenses

and companies, as demonstrated by the CHEO joint venture, our subsidiary in the Democratic Republic of North Korea,

which has acquired the first and only mobile license in North Korea.

This year marked the highest ever net profit in the history of Orascom Telecom. This important result was driven by the

continuous growth of revenues and EBITDA across our operations. The sale of Iraqna and the stake held in HTIL further

confirms our commitment to generate shareholder value and control the risks. We maintained our leadership position

in terms of market share in our main markets while growing our revenues and EBITDA by 22% and 20% respectively.

During 2007, our operations have continued to show robust organic growth, with almost 20 million net subscribers

added, providing mobile communications to over 70 million subscribers. We are confident we can continue with this

growth pattern for the future.

In 2007 we continued to pursue our strategy of consolidation of ownership in our operations by increasing our stake in

our Pakistani GSM subsidiary to 100% from 88.7%. Moreover, we continued with our buyback program for Orascom

Telecom shares at favorable relative market valuations.

Naguib Sawiris, Chairman and CEO

We are continuing to head in the right strategic direction. Our Greenfield

license in North Korea announced in early 2008 is in line with our strategy

to penetrate countries with high population and low penetration by

providing the first mobile telephony services. Orascom Telecom has

consistently proved its ability to successfully roll out mobile services in

countries where no other operator has.

The Orascom Telecom of today is the fruit of countless individual efforts

by our 20,000 dedicated, highly professional employees with different

backgrounds and nationalities. I would like to take this opportunity to

thank them.

In 2008, the markets OTH operates in will continue to grow rapidly due

to their sustained economic growth, low mobile penetration rate, limited

fixed-line coverage, and the relatively high cost of fixed-line infrastructure

deployment.

OTH expects to continue delivering 20% growth rate in revenues. Overall

ARPU is expected to decrease slightly, mainly as a result of the ARPU

decrease in Egypt, due to continued strong subscribers' growth. We

expect ARPU to be stable in Algeria and Tunisia, and to decrease slightly

in Pakistan and Bangladesh. Overall EBITDA margins are expected to be

more or less stable with Bangladesh expected to turn EBITDA positive in

2008. In Egypt, the strong expected growth will put pressure on margins

while, in the other markets, EBITDA margin will be stable or will improve

slightly. While OTH will continue to focus on negotiating better prices

with suppliers and on increasing network efficiency, tangible Capex are

expected to remain stable due to the expected strong subscribers and

traffic growth in addition to new investment projects; such as: undersea

cables and WiMax.

We also view a huge potential for growth in smaller emerging markets

and, in order to exploit these opportunities, Orascom Telecom has

established a vehicle to specifically explore and target a cluster of licences

in Africa, Central Asia and Asia-Pacific with this growth potential. This

subsidiary will be independently staffed and will have access to our

procurement and commercial experience without exhausting OTH’s

managment time and focus.

OTH expects to continue its current strategy of capturing the lion’s share

of the high subscriber growth by capitalizing on its leadership position

in each of its existing markets by investing in its network coverage and

quality, as well as innovating product and marketing strategies tailored

to the local market conditions. OTH will also continue to deliver shareholder

value by evaluating investment opportunities in a disciplined manner,

investing in new VAS, including financial services as a new revenue stream,

specifically from mobile banking, continuing to return capital to its

shareholders, either via buybacks or dividends, centralizing network

infrastructure procurement through frame agreements and financial

discipline and reporting at our subsidiaries.

3Letter from the Chairman & CEO

Financial Highlights

In 2008, the markets OTH operates

in will continue to grow rapidly due

to their sustained economic growth,

low mobile penetration rate, limited

fixed-line coverage, and the relatively

high cost of fixed-line infrastructure

deployment.”

“

28.5

48.8

70.1

2005 2006 2007

+57%

* Management View

Subscribers

in millions

2,893

3,881

4,720

2005* 2006 2007

+28%

Revenues

in US$ millions

1,176

1,704

2,043

2005* 2006 2007

+32%

EBITDA

in US$ millions

4 OTH ANNUAL REPORT 2007 l ABOUT OTH l GSM OPERATIONS l GSM SUPPORT OPERATIONS l 2007 FINANCIAL REVIEW


Letter from the Chairman & CEO


5

+192%

(US$)

Earnings per GDR

2006: 3.32

2007: 9.69+180%

(US$)

Net Income

2006: 721 mn

2007: 2,021 mn

(1) Based on a weighted average for the outstanding number of shares 208,632,590 GDRs.

(2) Taking into consideration US$ 739 million of AAA-rated money market funds having no

investment in shares or equities which can be liquidated in the same day, that is classified as

Other Current Assets item and the sale of the 14.2% stake in HTIL for US$ 960 million in cash.

Main Financial Data(according to IFRS)

2006 2007

in US$ million in US$ million

Revenues 3,881 4,720

EBITDA 1,704 2,043

EBITDA Margin 43.9% 43.3%

Net Income 721 2,021

Earnings per GDR (US$)(1) 3.32 9.69

CAPEX 1,476 1,584

Net Debt (2) 3,433 2,924

About OTH


GSM Subsidiaries

OTH’s Organization

Investment & Business

Development Officer

Mike O’Connor

Naguib Sawiris, Chairman & CEO

Corporate Treasury

Officer

Amr Abaza

Corporate Accounting

Officer

Mohamed Naguib

Corporate Finance

Officer

Karim Nasr

Budgeting, Planning

& Control Officer

Ahmed Halawa

Group Chief Financial

Officer

Aldo Mareuse

OTA Hassan Kabbani

Mobilink Zouhair A. Khaliq

Mobinil Iskander Shalaby

Tunisiana Yves Gauthier

banglalink Rashid Khan

TelZim JD Swaim

Subsidiary CEO Investor Relations

Director

Stefano Songini

By December 31st, Orascom Telecom had 210 employees working at the Holding company, over 70% of which are below the age of 35.


Financial Milestones

History & Evolution of OTH

Disclosure & Shareholder Information

Board of Directors

Corporate Governance Report

9

General Counsel

Ragy Soliman

GSM Services Officer

Khaled Ismail

PR & Communication

Senior Director

Sabrine El Hossamy

Internal Audit

Senior Director

Walid Bedair

VP HR & Administration

Wafaa Lotaief

GSM Support SubsidiariesLINKdotNET Karim Bichara

M-Link Maan El Amine

Arpu+ Yassine El Oraby

Ring Adel Khouzam

OrasInvest Emad Barsoum

Subsidiary CEO

Group Chief Operations

Officer

Emad Farid

Chief Technology

Officer

Tamer El Mahdy

Chief Commercial

Officer

Ossama Bessada



February

2007

Orascom Telecom Holding

Completed a US$750 million

Bond Offering.

April

2007


announced the five-for-one split

of OTH’s common stock (traded

on the Cairo & Alexandria Stock

Exchange (“CASE”)).

May

2007


announced the dividend of LE 0.75

per share (LE 3.75 per GDR).

June

2007


acquired the remaining minority

stake in its Pakistani GSM

operation.

July

2007


received US$ 793 million in cash

as dividends from Hutchison

Telecommunications

International Limited (“HTIL”).





Board of Directors


11

August

2007


cancelled 10 million shares

(equivalent to 2 million GDRs).

After the cancellation, OTH’s

issued share capital consists of

1,090,000,000 shares (equivalent

to 218 million GDRs). On January

22nd, 2007, OTH announced a

potential repurchase plan of up

to 5% of the outstanding shares

over a 12 month period. OTH

completed this announced

buyback by purchasing

11,000,000 in equivalent GDRs.

October

2007


completed the sale of a 3% stake

in HTIL, at a price of HK$10.70

per share. This transaction

brought OTH’s ownership in HTIL

down to 16.19% from 19.3%.

November

2007

Orascom Telecom Holding completes

the sale of a further 2% stake in HTIL,

at a price of HK$10.70 per share. This

transaction brought OTH’s ownership

in HTIL down to 14.2%.

December

2007


completed the sale of the

remaining 14.2% stake in HTIL at

a price of HK$11 per share.


announced the sale of its Iraqi

mobile operation "Iraqna" to

MTC-Atheer ("Zain"), for a

consideration of US$ 1.2 billion.


History and Evolution of the Company

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

is part of the Orascom group of companies, which was established in 1976.

Orascom entered the field of Information Technology and Telecommunications by trading and distributing IT and

telecom equipment in Egypt. It became the market leader representing the most important companies in these

sectors such as Microsoft, Hewlett Packard, Compaq, IBM, Lucent Technologies (AT&T), Oracle and Novell.

Orascom spent nearly ten years establishing a foundation in IT and telecom hardware. In 1994, it acquired

an interest in Egypt’s first ISP, InTouch. This acquisition was its first step in offering services in the communications

marketplace. As the communications sector in Egypt began to be privatized, Orascom continued to add more service

companies to its portfolio, and was a participant in a joint venture that was awarded Egypt’s first license for VSAT

technologies, and a lead member of a consortium formed to create Egypt’s first private payphone network. By 1997,

Orascom was in a position to participate in the bidding process for a GSM license in Egypt, having proven itself in

the marketplace as an IT and telecom hardware leader, in addition to building up the know-how and skills in managing

large scale projects and understanding local market conditions.

On July 27th, 1997, OTH was incorporated to consolidate the telecommunications and technology interests of the

Orascom family of companies and the controlling shareholders, the Sawiris family. By 1998, OTH was the only company

in Egypt with licenses in all three privatized sectors: wireless, fixed line payphones and VSAT technologies.





Board of Directors


13

• In early 1998GSM operations were commenced by acquiring 51% of ECMS

("Mobinil") with France Telecom and Motorola.

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

• In March 2000Greenfield license in Yemen was acquired.

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

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

• In February 2001BOT contract was awarded in Syria.

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

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

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

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

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

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

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

• In September 2004OTH purchased 100% of a GSM operation in Bangladesh and re-

branded it as "banglalink".

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

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

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

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

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

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

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

under Telecel.

• In September 2002SabaFon in Yemen was divested.

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

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

• In February 2004OTH announced the sale of 51.7% equity stake of Telecel Loteny

in the Ivory Coast.

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

of Congo.

• In December 2005

OTH signed a definitive agreement to sell its GSM operation

in Congo Brazzaville, Libertis Telecom ("Liberits").

• In December 2007

OTH completes the sale of the remaining stake in HTIL.

OTH sold its Iraqi operations Iraqna for US$ 1.2 billion.

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

non-core assets and focus on its core operations to build value:

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



0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

1400

1500

Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07

1244%

341%

OTH

MSCIOTH’s GDR Performance 2001-2007

0

20

40

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180

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

22%

55%

OTH

MSCIOTH’s GDR Performance 2007

Ownership Structure

Weather Investments owns approximately 50.5% of the shares of

OTH, of which 5.68% are held as treasury shares and 43.82% is public

free float.

Buyback Shares

In January 2007, OTH announced its intention to evaluate

opportunistic repurchases of its GDRs in light of favorable relative

market valuations. OTH announced a potential on-market GDR

repurchase plan of up to the GDR equivalent of 5% of the out-

standing shares (approximately 11 million GDRs) over a period of

12 months. OTH completed this program by purchasing 10,227,764

GDRs on the London Stock Exchange (“LSE”) and 3,861,180 local

shares on the Cairo & Alexandria Stock Exchange (“CASE”). In Sep-

tember 2007, OTH announced another buyback program up to 5

million GDRs. In total as of December 31st, 2007 OTH holds 11,612,970

GDRs on the LSE and 3,861,180 local shares on the CASE; the

equivalent of approximately 12,385,206 million shares.

Share Split and Cancellation of Shares

On April 10th, 2007 OTH announced a five-for-one split of OTH’s

common stock traded on the Cairo & Alexandria Stock Exchange.

After the split, the nominal value of the local shares listed on CASE

became LE 1 instead of LE 5. Prior to the split, the ratio between

OTH’s common stock and the GDRs was one to-one, following the

split it became five-to-one. In August 2007, OTH cancelled 10 million

treasury shares (equivalent to 2 million GDRs). Post the cancellation,

OTH’s issued share capital consisted of 1,090,000,000 shares

(equivalent to 218 million GDRs).

Share Ownership Program for Employees

As part of its commitment to motivate and retain its key employees,

OTH offers an ESOP plan, having an ownership of approximately

1% of OTH shares.

Paid up Capital

As at December 31st, 2007, OTH’s paid up capital was LE 1,090 million,

divided into 1,090 million shares, each with a nominal value of LE 1.

Dividends

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

shareholders during 2007. In May, 2007 a dividend payment of LE

0.75 per share (LE 3.75 per GDR share) was distributed.

Dividend Policy

OTH’s primary goal is to maintain sufficient reserves and liquidity

to ensure operational and financial needs and maintain high business

growth and potential acquisitions. OTH intends to operate a

progressive distribution policy based on what are believed to be

sustainable levels of dividend payments supplemented by variable

distribution to shareholders of any excess cash resources.

Consequently, dividends will vary from year to year.

Share Price Performance

At the beginning of 2007, the OTH stock was quoted at LE 78.38

on CASE. The highest quotation during the year was LE 91.65, and

the lowest was LE 64.55. At year end, the quotation price was

LE 91.36; this amounted to a 16.6% increase in value. The market

value as of December 31st, 2007 was LE 99.6 billion.

OTH stock on the London Stock Exchange at the beginning of 2007

was quoted at US$ 67.9. The highest quotation during the year was

US$ 83, and the lowest was US$ 55.5. At year end, the quotation

price was US$ 83; this amounted to a 22.2% increase in value. The

market value as of December 31st, 2007 was US$ 18.1 billion.

Trade

OTH is traded on both the Cairo & Alexandria Stock Exchange and

on the London Stock Exchange under the symbols (ORTE.CA,

ORAT EY) and (ORTEq.L, OTLD LI), respectively.

Disclosure

To ensure full disclosure and transparency, OTH reports its Holding

and Consolidated financials on a quarterly basis using both the

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

financial statements in accordance with the International Financial

Reporting Standards (”IFRS”).





Board of Directors


15

Orascom Telecom Holding S.A.E. ("OTH") maintains a high level of disclosure and keeps its

shareholders informed of any significant event through press releases, quarterly earning releases, conference calls and an updated website

with all relevant operational and financial information in addition to reporting its financials in Egyptian Accounting Standards (LE) and

International Financial Reporting Standards (US$).


Board of Directors

Iskander Shalaby

Executive Board Member

Khaled Bichara

Non-Executive Board Member

Khaled Ismail


Onsi Sawiris

Non- Executive Board Member

Naguib Sawiris


Ahmed Maher El Sayed


François Dopffer


Hassan Abdou






Board of Directors


17

Mr. Naguib Sawiris


Chairman & CEO - Orascom Telecom Holding S.A.E.

Since joining Orascom, the family business, in 1979, Mr. Sawiris has

continuously contributed to the growth and diversification of the

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

diversified conglomerates. The Orascom Group is the country’s

largest private sector employer and has the largest market

capitalization on the Cairo & Alexandria Stock Exchange. Mr. Sawiris

established and built the railway, information technology, and

telecommunications sectors of Orascom. The success of these

ventures as well as the other sectors of the company led to the

management’s decision to split Orascom into separate operating

companies: Orascom Telecom Holding (”OTH”), Orascom Construc-

tion Industries (”OCI”), Orascom Hotels & Development and Orascom

Technology Systems (”OTS”). Orascom Telecom Holding S.A.E was

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

managed by Mr. Sawiris.

As Chairman and CEO of Orascom Telecom Holding, Mr. Sawiris has

dynamically led the growth of the company, to be the leading

regional telecom player and among the best regarded emerging

markets players in the world. OTH operates GSM networks in seven

different countries in the Middle East, Africa, and South Asia (Egypt,

Bangladesh, Pakistan, Algeria, Tunisia, Zimbabwe, and North Korea)

with 70 million subscribers as at December 2007 . In addition, it

operates the leading Internet Service Providers (ISPs), as well as

satellite service providers.

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

telecommunications industry, Orascom Telecom represented by

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

The appointment came as an acknowledgement of the group’s

position as one of the largest ten operators based on subscriber

numbers.

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

the landmark leveraged buyout of a majority stake of Wind

Telecommunications in Italy and took over management as its

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

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

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

Wind Telecommunications floated the largest ever PIK debt in

Europe with proceeds used to complete the buyout of Wind from

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

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

successful career journey in leading the international growth of

both Orascom Telecom and Weather Investments.

Mr. Sawiris is also Chairman of the Board of Weather Investments

and Chairman of the Egyptian Company for Mobile Services (”ECMS”),

commonly known as Mobinil.

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

following Boards, Committees and Councils, as:

• Member of the International Advisory Committee to the NYSE

Board of Directors (”IAC”) since November 2005

• Board member of the International Advisory Board to the National

Bank of Kuwait

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

for 2008-2009

• Board member of the Supreme Council of Sciences and Technology

formed by a presidential decree issued by Egyptian President

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

including Nobel laureate Dr. Ahmed Zewail, Dr. Farouk El-Baz and

Dr. Magdy Yacoub

• Co-chairman, the Egyptian Italian Business Council

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

Directors of the Arab Thought Foundation,

• Board of Trustees member of the French University in Cairo

• Board member of the Egyptian Council for Foreign Affairs

• Board member of the Consumer Rights Protection Association of

Egypt

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

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

(the highest award given by the French Republic for outstanding

services rendered to France) and the recipient of prestigious “Sitara-

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

General Pervez Musharref for services rendered to the people of

Pakistan in the field of telecommunication, investments and social

sector work).

Mr. Sawiris holds a diploma of Mechanical Engineering with a

Masters in Technical Administration from the Swiss Institute of

Technology, ETH Switzerland and a Diploma from the German

Evangelical School, Cairo, Egypt.


Ahmed Maher El Sayed


Born September 14, 1935, graduated from the Faculty of Law, Cairo

University in 1956. He joined the Foreign Ministry in 1957 and served

in Zurich, Kinshasa and Paris. Moreover, he served in the departments

of Arab Affairs, Consular Affairs and European Department. He

served in the Office of the President’s National Security Advisor

from 1972-1974, as Chief of Cabinet of Minister of Foreign Affairs

from 1974-1980, as a member of the Egyptian delegation at the

Camp David negotiations in 1978 and as a member of the Taba

arbitration team.

Mr. El Sayed held the following positions:

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

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

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

participated in negotiations about Taba and arbitration procedures,

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

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

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

publishes weekly articles in the leading newspaper “Al Sharq Al

Awsat”.

Ala M. El Khawaja

Mr. El Khawaja submitted his resignation from the Board of the

company on September 19th, 2007.

François Dopffer


Mr. Dopffer is a former French Ambassador to Turkey (1991-96) and

to Egypt (2000-2002). He has extensive knowledge of North Africa,

Middle East and Asian countries where he served in different

positions. He holds degrees in Political Science (IEP Paris), Public

Management (ENA) and Law (Paris University).

Hassan Abdou


Mr. Abdou is currently Chief Executive Officer of Weather Invest-

ments II, which was formed in 2005 as the majority owner of Weather

Investments, a global telecom company owning and controlling

Orascom Telecom, Wind Telecommunications in Italy and most

recently TIM Hellas in Greece. Mr. Abdou is an active board member

in Weather, Wind and OT and in addition, sits on the board and

executive committees of several IT, telecom and media companies

in Europe, Egypt and the Middle East.

Prior to his involvement with the Orascom Group which started in

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

and the Horus Private Equity Fund where he was Fund Manager

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

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

worked with Fortune 500 companies in such areas as

Telecommunications, Media & Entertainment, Energy and

Pharmaceuticals. Mr. Abdou had begun his career with Exxon

Company where he worked for several years as a Project Controls

Engineer.

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

the Advisory Board of the New York Private Placement Exchange

(”NYPPE”).

Mr. Abdou received his Bachelor of Science in Mechanical

Engineering from the University of Pennsylvania and a Bachelor of

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

he received his MBA from the Harvard Business School.

Iskander Shalaby


President & CEO of Mobinil

In November 2005, Mr. Shalaby stepped up from Chief Regulatory

Affairs Officer to become President and CEO of Egypt’s leading

mobile service provider, the Egyptian Company for Mobile Services,

commercially known as Mobinil.

Mr. Shalaby lived and worked in Washington DC from 1995 to 1998

and was Director of Government Affairs at AT&T, one of the world's

largest telecommunications companies. He was part of the Law and

Government Affairs team responsible for lobbying the different

branches of the US government for telecom reforms in the developing

markets of the Middle East, Africa, Central Asia, and Eastern Europe.

Mr. Shalaby was AT&T's Regional Director for International Public

Affairs in Egypt from 1993 to 1995, where he was the principal

interface with key agencies within governments in the region on

matters impacting AT&T operations. He established first presence

for AT&T in a number of countries of the Middle East as well as in

South Africa. It was during these years that he served on the boards

of the American Chamber of Commerce, as its president, (AmCham

1991 - 1992), Seeds of Peace, and the bi-national Fulbright

Commission, as his AT&T responsibilities shifted from local to regional,

with particular focus on North Africa and the Levant.

Mr. Shalaby was Managing Director of AT&T, Egypt and General

Manager for the Middle East and North Africa region until 1993. He

held a variety of technical and managerial positions and was

involvedwith AT&T start-ups in the Gulf (1977–1980). In 1977, he

moved to Saudi Arabia to help launch the first AT&T microwave

project before moving on to Kuwait and the UAE. Once again,





Board of Directors


19

during this period he established and secured a solid position for

AT&T in the Gulf region.

Mr. Shalaby graduated with a Bachelor of Science degree in Electrical

Engineering from Alexandria University’s Faculty of Engineering

(1966) and holds a Master of Science degree in Electrical Engineering

and Computer Science from San Jose State University, California

(1974). He started his professional career with Egypt Air as a Radio

and Radar Engineer for two years before immigrating to the United

States in 1969, where he had a brief stint with United Airlines in San

Francisco before moving on for a 28-year career with AT&T, starting

with Pacific Telephone, in San Jose.

Khaled Bichara


Mr. Bichara is the Chief Operating Officer of Wind Telecomunicazioni

S.p.A. He is also the cofounder and Chairman of LINKdotNET (”LDN”)

the largest private Internet Service Provider (”ISP”) in the Middle

East.

Mr. Bichara sits on the board of Orascom Telecom Holding (”OTH”),

on the Board of Wind Telecomunicazioni S.p.A., on the board of

Tellas S.A., the largest alternative fixed line operator in Greece, on

the board of .MOBI mtld ltd, the mobile domain company and

multiple other boards.

Since September 2005, Mr. Bichara is undertaking the restructure

of Wind Fixed and Portal Business unit aiming at increasing his unit

market share and profitability; his valuable position among the

Wind management executive committee allows him to contribute

in building the overall Wind strategy as well as participate in all

relevant major initiatives such as being part of the November 2005

road show team for Wind high yield bond which was one of the

largest offerings in Europe.

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

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

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

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

Community in the Middle East; a founding member of Egyptian

Software Association, Internet Society of Egypt and The Egyptian

Electronic Commerce Committee.

Khaled Ismail


GSM Services Officer

Dr. Khaled Ismail is currently the GSM Services Officer at Orascom

Telecom Holding, in charge of mobile services and strategic

directions for convergence including Wimax.

Prior to that, Dr. Ismail was the senior advisor of the Egyptian Minister

of CIT, responsible for technology development.

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

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

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

Invention Achievement Award and the IBM Outstanding Technical

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

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

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

for the Young Arab Engineer in 1995.

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

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

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

Onsi Sawiris


Mr. Sawiris is an Egyptian citizen born in Egypt in 1930 and holds

a Bachelor of Science degree in Engineering from the Cairo University.

Mr. Sawiris serves as the Chairman of Orascom Construction

Industries (”OCI”) and Orascom Trading Co., Mr. Sawiris is a board

member in Orascom Hotels & Development (”OHD”), Orascom

Technology Systems, and Orascom Telecom Holding (”OTH”).

He founded Orascom in 1976 as a general contracting and trading

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

as a leading private sector contractor by working in partnership

with international companies pursuing projects in Egypt. He oversaw

the diversification of the business into new areas like tourism and

information technology and its enormous growth and success to

become Egypt’s largest conglomerate operating under three major

operating companies OTH, OCI and OHD.

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

Misr Exterior Bank, Pharaonic AIG Insurance Co, the Egyptian

Scandinavian Business Association and YMCA in Cairo.

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

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

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

Majesty the King of Belgium ALBERT II.


The Company is committed to achieving and maintaining the

highest standards of corporate governance. The Company considers

effective corporate governance essential to enhancing shareholders’

value and protecting stakeholders’ interests. Accordingly, the Board

attributes a high priority to identifying and implementing appropriate

corporate governance practices to ensure transparency,

accountability and effective internal controls. The key corporate

governance principles and practices are as follows:

The General Assembly

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

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

• includes all the shareholders of the Company;

• takes its decision by voting among shares represented in the

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

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

extra-ordinary meeting as needed;

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

Statues;

• it appoints the board, approves the financial results, appoints the

external auditors, and approves dividends distribution.

Board of Directors

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

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

In summary, the Board:

• is engaged in active and continuous strategic planning and

approves corporate strategies, including the approval of

transactions relating to acquisitions and divestments, and capital

expenditure above delegated authority limits;

• reviews and approves the corporate plan for the forthcoming year

and following two years, including the capital expenditure and

operating budget, and reviews performance against strategic

objectives;

• assesses business opportunities and risks on an ongoing basis

and oversees the Company's control and accountability systems;

• monitors and approves the Company's financial reporting and

dividend policies;

• appoints and has the authority to remove the Chief Executive

Officer and approves the recommendations of the Human Resources;

• ratifies the appointment and has the authority to remove the

Chief Financial Officer and Group General Counsel and appoints

the Company Corporate Secretary; and

• oversees succession planning for the Chief Executive Officer and

senior management.

The Chairman and the Chief Executive Officer establish meeting

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

In addition workshops and strategy meetings take place. Executives

and other senior people regularly attend Board meetings and are

also available to be contacted by Directors between meetings.

Composition of the Board of Directors

Chairman & Managing Director

Naguib Sawiris

Board Members

Naguib Sawiris (Executive-Board Member)

Ahmed Maher (Non-Executive Board Member)

François Dopffer (Non-Executive Board Member)

Hassan Abdou (Non-Executive Board Member)

Iskander Shalaby (Executive-Board Member)

Khaled Bichara (Non-Executive Board Member)

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

Onsi Sawiris (Non-Executive Board Member)

Secretary to the Board

Ragy Soliman

The above Board Members classification is based on the Egyptian

Corporate Governance code. The latter did not specify the criteria

for independent directors that would allow the Company to

benchmark against, yet in our opinion and based on internationally

recognized best practices, a number of our directors would qualify

as independent directors bringing to the company the highest

possible standing from both a personal and professional standpoint.

Committees

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

important tools for the management and the operational

integration of the Company.

It has recently been revised to:

• Monitor the implementation of strategies and the development

of plans and results.

• Ensure the overall coordination of business actions and the

management of the relative cross-over business issues.

• Build up the necessary operating synergies between the various

functions involved in the technological, business and support

processes.

• Support the integrated development of the innovation processes

of the Company.

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






Board of Directors


21

Executive Committee

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

appropriate, authorize corporate action with respect to most matters

concerning the Company’s interests, strategy and management of

its business and subsidiaries during intervals between meetings of

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

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

Investment Committee

The objective of the Investment Committee is to assist the Board

in reviewing the Company's investment policies, strategies,

transactions and performance, and in overseeing the Company's

capital and financial resources. The Committee has resources and

authority appropriate to discharge its responsibilities, including the

authority to retain experts or consultants.

Audit Committee

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

fulfilling its oversight responsibilities by reviewing (i) proposed

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

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

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

process, including both internal and external audits. The Audit

Committee interacts directly with the independent auditor to ensure

the independent auditor’s ultimate accountability to the Board and

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

responsible for the appointment, compensation and oversight of

the independent auditor.

Remuneration Committee

The objective of the Remuneration Committee is to ensure that

the company has a formal process of considering management

and directors’ remuneration that is, executive directors should play

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

an alignment of the remuneration schemes and the performance

objectives of the Company, and the remuneration schemes should

attract and retain talented individuals.

Algeria(OTA)

Tunisia(Tunisiana)

Egypt(Mobinil)

Pakistan(Mobilink)

Zimbabwe(Telecel Zimbabwe)

GSM Operations

Bangladesh(banglalink)

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obile P

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OTA

Mobilink

Mobinil

Tunisiana

banglalink

25CEO: Hassan Kabbani

CFO: Amr El Adawy

Algerian Telecommunications MarketTelecommunications services in Algeria are provided principally by

Algérie Télécom, the incumbent state-owned telecommunications

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

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

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

services until 2005, when OTH announced the acquisition, jointly

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

LicenseIn July 2001 OTA was granted a license to operate a nationwide

GSM telecommunications network, to provide a range of telecom-

munications services in Algeria, to operate its own backbone and

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

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

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

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

NetworkAs of December 31st, 2007, OTA’s network covered approximately

95% of Algeria’s population, spreading its coverage over the 48

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

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

equipment introduced at the end of 2006 allowed OTA to further

reduce the capital expenditure and operating expense per subscriber.

Services and MarketingOTA provides both basic voice and value-added services to its

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

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

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

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

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

BlackBerry connect, Wap Portal, Streaming, Directory Service,

Automatic device management, Phonebook backup over GPRS,

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

GPRS roaming...)

OTA offers prepaid, postpaid and hybrid postpaid-prepaid services

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

leader and trendsetter with the highest brand recognition and

preference. As of December 31st, 2007, prepaid subscribers

represented over 97% of OTA’s total subscribers’ base. OTA offers a

loyalty program “Imtiyaz” to its prepaid and postpaid subscribers

who can accumulate points when using their mobile phone and

convert them into free airtime, handsets or other rewards.

Ownership and GovernanceUpon completion of an agreement to purchase an additional 1.21%

stake in Oratel in November 2006, OTH directly and indirectly owns

96.81% of OTA.

Subsidiary Highlights

December 2006 December 2007 %

Financial Data

Revenues (US$ 000) 1,531,242 1,755,856 14.7%

EBITDA (US$ 000) 991,478 1,108,255 11.8%

EBITDA Margin 64.7% 63.1% (1.6%)

Capex (US$ m ) 392 325 (17.1%)


Operational Data

Subscribers 10,530,826 13,382,254 27.1%

Prepaid 10,191,909 13,037,600 27.9%

Postpaid 338,917 344,654 1.7%

Market Share 63.8% 62.4% (1.4%)

ARPU (US$) (3 months) 13.0 12.1 (6.9%)

MOU (YTD) 147 141 (4.1%)

Churn (3 months) 15.0% 9.7% (5.3%)


OTA - ALGERIA

Orascom Telecom Algeria SPA (“OTA”) operates a GSM network in Algeria and provides a range of prepaid and postpaid

products encompassing voice, data and multimedia, using the corporate brand “Orascom Telecom Algérie” and the dual

commercial brands of “Djezzy” and “Allo.” OTA was awarded the second GSM license in Algeria in 2001 and launched its

operations in February 2002. OTA commenced its operations under the brand “Djezzy” and introduced a second prepaid

brand “Allo” in August 2004.

As of December 31st, 2007, OTA served over 13 million subscribers with a market share exceeding 62% of total mobile

subscribers and its network covered 95% of the total population of Algeria. OTA accounted for 37% of OTH’s consolidated

net revenues and 54% of OTH’s consolidated EBITDA for the year ended December 31st, 2007.

Despite launching its GSM operation approximately three years after the launch of operations by the incumbent Algerian

Mobile Network (“AMN” conducting business under the “Mobilis” name), OTA was able to become Algeria’s leading and

preferred telecommunications operator.

While OTA has already invested considerably in its network, it plans to make further investments to increase its capacity,

maintain and improve the quality of its network to meet market demand. Finally, as demand is growing and local content

is beginning to develop, OTA has started to rollout a range of value-added multimedia services based on GPRS and EDGE

technologies, which are designed to increase customer usage and boost loyalty.


Mobilink-PAKISTAN

Pakistan Mobile Communications Limited (“Mobilink” or “PMCL”) operates the leading GSM network in Pakistan and

provides a range of prepaid and postpaid voice and data telecommunication services to both individual and corporate

subscribers, under the brand name “Mobilink.” Mobilink launched its operations in August 1994 after it was founded in

1990 as a joint venture between Motorola and the Saif Group. The Mobilink network is the most extensive in Pakistan,

reaching over 66% of the total population and 99% of the urban population as of December 31st, 2007. As of December

31st, 2007, Mobilink had invested more than US$2.5 billion in its mobile communications network and had 6,428 cell sites

and 66 switches.

Mobilink served over 30 million subscribers as of December 31st, 2007, representing a market share of approximately

39.8% of the total mobile subscribers in Pakistan. Mobilink accounted for 27% of OTH’s consolidated net revenues and

27% of OTH’s consolidated EBITDA for the year ended December 31st, 2007.

In 2005, the entry of two new operators in the Pakistani mobile telecommunication market led to an increase in market

size and competition. Nevertheless, Mobilink’s recognition within the market, its history of cash generation and profitability,

the support of its majority shareholder, and the existing coverage and quality of its network provided Mobilink with a

strong foundation to consolidate its market leadership and increase its competitive pressure on the existing and prospective

operators.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

27President & CEO: Zouhair A. Khaliq

CFO: Ehab Rochdy

Pakistani Telecommunications Market

Telecommunication services in Pakistan are provided by Pakistan

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

of which 74% is state-owned and the remaining 26% is held by

Etisalat. PTCL enjoyed a monopoly position with respect to basic

fixed line services until 2003. The PTA issued 12 new licenses to

provide long distance and international services. There are currently

five mobile operators in Pakistan: Pakistan Mobile Communication

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

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

Telenor Pakistan and Warid Telecom providing GSM services.

The telecommunication market of Pakistan in general, and Mobilink

in particular, are currently experiencing extremely rapid growth.

Mobilink was awarded a license for mobile telecommunication

system and services in July 1992 and commenced GSM operations

in 1994, becoming the first company in Pakistan to set up and

operate a digital mobile network based on GSM 900 technology.

Telenor commenced operations in March 2005 and Warid Telecom

launched operations in May 2005. During 2007, Millicom sold Paktel

to China Mobile for US$ 477 mn, and Instaphone to a local investor.

License

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

and operate a digital cellular telecommunication system using the

GSM 900 standard and to offer telecommunication services in

Pakistan. Mobilink’s license was renewed on July 6th, 2007 for a

further period of 15 years.

Network

As of December 31st, 2007, Mobilink’s GSM network covered more

than 7,011 cities, towns and villages and provides on-road coverage

along all of the nation’s major highways. In addition to 2G, 2.5G and

EDGE compatibility, Mobilink’s network offers BlackBerry services

and a host of value added services.

Services and Marketing

Mobilink markets its prepaid services using the “Jazz” brand name

and its postpaid services using the brand name “Indigo”.

In addition to basic voice services, Mobilink provides its subscribers

with various special tariffs for Friends & Family, closed user group,

happy hour and late night hours. Moreover, it also offers value

added services such as SMS, MMS, voice portal, caller ring back

tones, mobile banking, voicemail, call waiting, call forwarding, caller

line identification and many more. Mobilink was the first operator

to start rolling out the Enhanced Data Rates for Global Evolution

(”EDGE”) in Pakistan. Mobilink also launched its BlackBerry service

in December 2005 through its GPRS platform, and currently remains

the first and only BlackBerry service provider in Pakistan.

Ownership and Governance

In June 2007, OTH has acquired all the remaining minority stake

and thus as of December 31st, 2007, Orascom Telecom indirectly

owns 100% of the share capital of Mobilink through direct stakes

held by wholly owned subsidiaries of OTH.



Financial Data

Revenues (US$ 000) 1,017,239 1,259,255 23.8%

EBITDA (US$ 000) 406,537 552,415 35.9%

EBITDA Margin 40.0% 43.9% 3.9%

Capex (US$ m ) 693 520 (25.0%)


Operational Data

Subscribers 22,491,900 30,612,630 36.1%

Prepaid 22,058,805 30,111,756 36.5%

Postpaid 433,095 500,874 15.6%

Market Share* 46.3% 39.8% (6.5%)

ARPU (US$) (3 months) 4.1 3.8 (7.3%)

MOU (YTD) 130 149 14.6%

Churn (3 months) 2.6% 5.2% 2.6%

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


Mobinil-EGYPT

The Egyptian Company for Mobile Services (“Mobinil” or “ECMS”) operates the leading mobile telecommunications network

in Egypt and provides a range of prepaid and postpaid voice and data telecommunications services, using the brand

name ‘‘Mobinil.’’ Mobinil launched its operations in May 1998. As of December 31st, 2007, Mobinil’s network covered

approximately 99% of the total population of Egypt.

Mobinil served over 15 million subscribers as of December 31st, 2007, representing a market share of approximately 49.5%

of total mobile subscribers.

Mobinil was the first telecommunications company to acquire ISO 14001 certificate (an international specification for an

environmental management system) in Egypt and the Middle East. It has also obtained official renewal of the ISO 14001

for the fifth consecutive year.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

29President & CEO: Alex Shalaby

Vice President & CFO: Khalid Ellaicy

Egyptian Telecommunications Market

Telecommunications services in Egypt are provided principally by

Telecom Egypt, the incumbent government-owned fixed-line operator,

with respect to fixed-line services, and by three GSM mobile operators,

Mobinil, Vodafone Egypt and Etisalat. In July 2006, Etisalat, of the

United Arab Emirates, won the auction to operate Egypt’s third GSM

mobile license which incorporates an entitlement to use frequencies

enabling 2G and 3G services for US$2.9 billion. Telecom Egypt’s

monopoly on fixed-line services expired at the end of 2005 and the

sector is currently in the process of progressive liberalization, with

second fixed line license terms and conditions expected to be released

in the 2nd quarter of 2008, and to start operations by end of 2009.

License

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

telecommunications network and to provide a range of

telecommunications services in Egypt. The license, which was

amended in January 2005 by the National Telecommunication

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

automatic renewal for successive five-year periods if Mobinil complies

with the requirements of the license. It is due to expire in May 2013,

but as Mobinil signed the 3G license agreement in October 2007,

the 2G license has been extended till 2022.

On October 17th, 2007, Mobinil has signed an agreement with NTRAfor the 3G license and its related components against LE 3,668 millionand a charge of 2.4% of service revenue. An amount of LE 318 millionwas paid at the date of signature and the remaining amount will bepaid in installments until the end of December 2010.

Network

As of December 31st, 2007, Mobinil’s network covered approximately

19% of Egypt’s territory, enabling coverage of approximately 99%

of the population.

Services and Marketing

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

corporate and retail subscribers, although Mobinil’s revenues

are overwhelmingly driven by voice services. In addition to basic

voice services, Mobinil provides its mobile subscribers with value-

added services such as voicemail, caller identification, call

waiting/holding, call forwarding and data services such as SMS,

Information Services, MMS and WAP based on GPRS technologies.

Mobinil offers both prepaid and postpaid telephony services.

As of December 31st, 2007, prepaid subscribers represented

approximately 96% of Mobinil’s total subscribers. Mobinil markets

its prepaid services using the ‘‘Mobinil ALO’’ trade name. With the

increased competition from Etisalat, and in order to address

continued rapid growth for mobile services in Egypt, Mobinil

developed a strategy to address lower income customers in Egypt.

Such lower spending customers will represent an important

component of increased mobile market penetration in the future.

Ownership and Governance

Mobinil is owned by OTH, FT Group and public market equity investors.

Orascom Telecom has a 34.66% economic interest, and FT Group has

a 36.34% economic interest, in ECMS. The remaining shares of ECMS

are publicly traded on the Cairo and Alexandria Stock Exchange.



Financial Data

Revenues (US$ 000) 1,105,741 1,446,647 30.8%

EBITDA (US$ 000) 558,877 652,662 16.8%

EBITDA Margin 50.5% 45.1% (5.4%)

Capex (US$ m ) 358 578 61.4%


Operational Data

Subscribers 9,266,815 15,117,626 63.1%

Prepaid 8,359,760 14,562,595 74.2%

Postpaid1 907,055 555,031 (38.8%)

Market Share 52.1% 49.5% (2.6%)

ARPU (US$) 2 (3 months) 10.1 8.1 (19.8%)

MOU (YTD) 148 161 8.8%

Churn (3-month) 7.3% 5.8% (1.5%)

1. Call & control subscribers were moved from the postpaid to prepaid.2. Arpu MOU & Churn expressed under OTH’s definition may differ from Mobinil’s disclosed figures.


Tunisiana-TUNISIA

Orascom Telecom Tunisie (“Tunisiana” or “OTT”) operates a GSM network in Tunisia and provides a range of prepaid and

postpaid voice and data telecommunications services, using the brand name “Tunisiana.” Tunisiana launched its operations

in December 2002. As of December 31st, 2007, Tunisiana’s network covered approximately 99% of the total population

of Tunisia.

Tunisiana served over 3.6 million subscribers as of December 31st, 2007, representing a market share of approximately

47.7% of total mobile subscribers in Tunisia.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

31CEO: Yves Gauthier

CFO: Marital Caratti

Tunisian Telecommunications MarketTelecommunications services in Tunisia are provided principally by

Tunisie Télécom, the incumbent state-owned fixed-line operator,

with respect to fixed-line services, and by two GSM mobile operators,

Tunisiana and Tunisie Télécom. The duopoly in the GSM mobile

market shared by Tunisiana and Tunisie Télécom expired on

November 30th, 2004. The Tunisian government has since part-

privatized Tunisie Télécom by selling a 35% stake of the company

to Dubai Group TeCom-DIG in March 2006.

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

telecommunications network and to provide a range of

telecommunications services in Tunisia. The license was granted

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

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

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

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

in the prior period.

NetworkAs of December 31st, 2007, Tunisiana’s network provided coverage

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

network consists of 1,706 cell sites and 11 switches. International

traffic is serviced through four international gateways.

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

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

Tunisiana provides its subscribers with value-added services such

as voicemail, detailed monthly billing, call line identification

presentation or restriction, call waiting/holding, call forwarding,

international roaming and data services such as SMS. Tunisiana’s

network deploys GPRS technology, which it launched in February

2006, as well as EDGE technology. Tunisiana is providing a range of

value-added services based on these technologies including MMS,

internet and Data.

Tunisiana offers both prepaid and postpaid telephony services. As

of December 31st, 2007, prepaid subscribers represented

approximately 99% of Tunisiana’s total subscribers.

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

wholly-owned subsidiaries which own 35% and 15% of the shares

in OTT, respectively. During 2005, OTH increased its economic

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

held by National Mobile Telecommunications Company KSC

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

which was sold to Qatar Telecom during 2007.



Financial Data

Revenues (US$ 000) 456,071 558,616 22.5%

EBITDA (US$ 000) 224,515 278,303 24.0%

EBITDA Margin 49.2% 49.8% 0.6%

Capex (US$ m ) 93 76 (18.3%)


Operational Data

Subscribers 3,069,314 3,651,813 19.0%

Prepaid 3,027,761 3,601,102 18.9%

Postpaid 41,553 50,711 22.0%

Market Share 46.5% 47.7% 1.2%

ARPU (US$) (3 months) 13.3 14.3 7.5%

MOU (YTD) 132 135 2.3%

Churn (YTD) 8.9% 7.6% (1.3%)


Banglalink-BANGLADESH

Orascom Telecom Bangladesh Limited (“banglalink” or “OTB”) operates a GSM telecommunications business in Bangladesh

and provides a range of prepaid and postpaid voice and data telecommunications services, using the brand name

“banglalink.” As of December 31st, 2007, banglalink’s network covers over 90% of the total population of Bangladesh.

As of December 31st, 2007 banglalink had over 7 million subscribers with a market share of 20.6%.

OTA

Mobilink

Mobinil

Tunisiana

banglalink

33CEO: Rashid Khan

CFO: Ezz Heikel

Bangladeshi Telecommunications MarketTelecommunications services in Bangladesh are provided principally

by the Bangladeshi Telegraph and Telephone Board (the “BTTB”),

the incumbent state-owned fixed-line operator, with respect to

fixed-line services, and by five GSM and one CDMA mobile operators:

OTB (“banglalink”), GrameenPhone, TM International (Bangladesh)

Ltd. (“TMIB”), Pacific Bangladesh Telecom Ltd. (“PBTL”), Teletalk

Bangladesh Ltd. (“Teletalk”), a subsidiary of BTTB, and Al Warid

Telecom (“Warid”) (launched operations in 2007).

Following our acquisition of then Sheba Telecom in September 2004,

SingTel acquired a minority interest in PBTL, the only CDMA based

operator. GrameenPhone, the market leader is owned by Telenor.

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

1996 that will expire on November 11th, 2011. The license may be

renewed on a yearly basis with the mutual consent of the parties.

Networkbanglalink relaunched its GSM operations in February 2005 in 9 cities

and by year end 2007 covered 61 districts with 3,079 cell sites on air,

as compared to 86 sites on air when it was acquired. As of December

31st, 2007, banglalink’s network covered approximately 60% of the

territory and over 90% of the total population of Bangladesh.

Services and MarketingSheba rebranded its operation under the trade name “banglalinkTM”

shortly after it was acquired by Orascom Telecom. banglalink provides

its subscribers with basic voice services, messaging services including

SMS, SMS e-mail and SMS chat, and value-added services such as

voicemail, detailed monthly billing, call line identification, call

waiting/holding, call forwarding, caller ring back tone, song

dedication, voice chat, voice portal and international roaming.

banglalink offers a prepaid and postpaid telephony service. It is also

providing GPRS services to both postpaid and prepaid customers.

banglalink’s marketing strategy is to provide customized voice and

value added services for each segment. banglalink introduced its

prepaid services using the “banglalink desh” brand name, which is

known as the best prepaid package to call any network. On the

other hand, it introduced its postpaid services using the brand

name “banglalink enterprise”. Enterprise caters to the Corporate &

SME segments as well as the personal postpaid market. As of

December 31st, 2007, prepaid subscribers represented approximately

93% of banglalink’s total subscribers.

Ownership and GovernanceOrascom Telecom owns 100% of the shares of banglalink.



Financial Data

Revenues (US$ 000) 93,520 192,689 106.0%

EBITDA (US$ 000) (29,386) (42,151) (43.4%)

EBITDA Margin (31.4%) (21.9%) 9.5%

Capex (US$ m ) 126 353 180.9%


Operational Data

Subscribers 3,276,313 7,082,348 116.2%

Prepaid 3,134,297 6,577,336 109.9%

Postpaid 142,016 505,012 255.6%

Market Share 15.6% 20.6% 5.0%

ARPU (US$) (3 months) 3.1 2.9 (6.5%)

MOU (YTD) 143 222 55.2%

Churn (3 months) 5.8% 4.2% (1.6%)

GSM Support Operations


Internet Services - LINKdotNET

LINKdotNET S.A.E. (“LINKdotNET”), a well established name in the internet

solutions industry, was the result of a merger between two companies

– Link Egypt and In Touch Communications – owned by Orascom

Telecom Holding. LINKdotNET is the largest of four ISPs in the Middle

East and North Africa. It offers Internet access, web content and e-

commerce development services, in addition to wireless applications

content and service. LINKdotNET has regional offices in the United Arab

Emirates, Kingdom of Saudi Arabia, Qatar, Algeria, and Pakistan.

LINKdotNET provides end-to-end services for its corporate clients

with a full range of services and connectivity access options for its

customers. The DSL and online advertising are booming businesses.

LINK Development, a subsidiary of LINKdotNET, is the fastest

growing regional software export powerhouse. The company works

on challenging projects that employ the latest technologies, serving

governments, multinationals and local companies.

LINKonLINE , a subsidiary of LINKdotNET, and owns, manages

and develops a wide range of online content and services; catering

to different customer needs in different sectors through MSN MENA,

Windows Live hotmail, Windows Live Messenger, Windows Live

search, Windows Live Spaces, Masrawy, Yallabina, Yallakora, Mazika,

Careermideast, Otlob, El3ab, and Barcaarabia.

Connect Ads, a subsidiary of LINKdotNET, is the region's leader

in digital advertising, offering media planning and buying services,

as well as creative consultancy and execution.

Arab Finance, a subsidiary of LINKdotNET, is a comprehensive

content gateway, providing its users with the latest financial and

economic news on Egypt and the Arab world, market commentaries

and information on companies.

In early 2007 LINKdotNET received the Gold Award in web development

for Banking & Financial Institutions at the UAE Web Awards ceremony

and has won five prizes at the Pan Arab Web Awards in a variety of

business sectors: Golden Award in the Culture category, Silver Award

in the ICT category, Bronze Award in the Media & Press category, Also

Golden and Bronze Awards in the Services category.

During the year 2007/2008, LINKdotNET was selected by Microsoft

Egypt for the second year in a row as Telecommunications Partner

of the Year and received Early Adopters Award.

LINKdotNET

M-Link - Medcable - TWA - MENA

Arpu+

Ring

Orasinvest

37

M-Link - Medcable - TWA - MENA

M-Link

M-Link , is a Luxemburg based subsidiary and provides gateway

services mainly for Orascom Telecom’s operations in Algeria, Tunisia,

Pakistan, Zimbabwe and several other sub-Saharan operations. M-

Link interconnects the traffic with international carriers, in and out

of these countries based on price and delivery capabilities, for final

delivery around the world.

M-Link also provides in-country transit services on a limited basis.

M-Link’s headquarters in Europe act as the control centre for all

satellite operations and interaction with all of the various international

carrier networks.

Orascom Telecom Holding owns 100% of the shares of M-Link.

Med Cable and TWA

Orascom owns 100% and 51% of MedCable and TWA, respectively.

The two fully funded subsidiaries build and operate undersea fiber

optic cables to carry international voice and data traffic between

two of its most significant markets and international telecom-

munications hubs in Europe and the Middle East. The undersea

cables will connect respectively Algeria and Pakistan with France

and the United Arab Emirates. Alcatel Submarine Networks and

Tyco Telecommunications have supplied the infrastructure for the

two subsidiaries.

MENA

MENA is a project to build a fiber optics network connecting Europe,

Egypt, the Middle East and South East Asia. MENA will connect

Sicily, Alexandria, Suez, Jeddah and the gulf (Oman and/or Fujairah)

via undersea segments in the Mediterranean and Red Sea, and a

terrestrial fiber optic network across Egypt, connecting Alexandria

and Suez.

The project commenced in 2007 and is expected to cost an

estimated US$320 million with a projected payback period of 4

years. MENA is expected to start generating revenues in 2010

through selling network capacity to International traffic.


ARPU+ Telecommunication Services S.A.E. (“ARPU+”)

ARPU+ Telecommunication Services S.A.E. (“ARPU+”) is a specialized

value added mobile services company. It is a multinational company

wholly owned by Orascom Telecom indirectly through InTouch . It

has subsidiaries in Egypt, Algeria, Tunisia, Morocco, Sudan, the

United Arab Emirates, Saudi Arabia, Yemen, Pakistan, Bangladesh

and Italy.

ARPU+ offers a wide variety of turnkey solutions in the VAS and

content market.

ARPU+ was the first to provide ring back tone service in the Middle

East and Africa. It is currently providing its service to 39 operators

in 17 countries. Their scope varies from a full solution (platform,

content and billing integration) to the sole role of content

aggregation. It specializes in developing customized services for

its customers in the Middle East, North Africa, Asia and Europe and

has pioneered Arabic and Urdu based value added services in the

region.

ARPU+ provides multimedia services to the end user through the

local GSM/GPRS/EDGE operator-such as greeting cards and

animation, Java games, jokes, screensavers and horoscopes, along

with many localized Interactive Voice Recognition (“IVR”) products.

The fast developing SMS pull-and-push packages, as well as SMS

chat and games are provided alongside the interactive SMS2TV

and radio service where audience and listeners can vote and rate

on live and recorded programs. SMS advertising has also proven

to be a very economical and effective medium for many local

businesses.

Currently, ARPU+ is the largest content aggregator in the Middle

East (access to 20,000 songs, 1,600 films and 1,000 video clips) with

74 content partners. ARPU+ also provides its full library of products

through its portal “www.mobizone.com”.

LINKdotNET

M-Link

Arpu+

Ring

Orasinvest

39

Ring Distributions S.A.E. (“Ring”)

Ring Distributions S.A.E. (“Ring”) provides GSM operators with a range

of services, including retail franchise, product customization, logistics,

supply chain management and customer care and service centres.

Ring is a distributor of handsets and is responsible for the procurement

of SIM and scratch cards for Orascom Telecom’s subsidiaries. During

2005, it has placed one of the biggest orders (2.4 million out of a

total of six million) for Motorola C115, the low priced handsets

awarded by the GSM association for emerging markets. Through its

production and logistics facilities in Algeria, Tunisia, Dubai and

Bangladesh; Ring manages starter kit production, prepaid solutions,

data management, product customization and in-country distribution.

Ring also assists in the supply chain management for Orascom

Telecom’s customers. Ring manages product forecasts ordering and

delivery logistics from factories until products/services are carried

in retail and wholesale channels.

Orascom Telecom owns 99% of the shares of Ring.

LINKdotNET

M-Link

Arpu+

Ring

Orasinvest


OrasInvest Holding Inc.

OrasInvest is 100% owned by Orascom Telecom and was established

in 1998 to offer specialized telecom and business services to the

Egyptian and international market. It currently holds under its umbrella,

First Service, the leading provider of fully integrated business solutions

in Egypt, and MobiServe with expertise in telecommunication and

construction industries, and manufacturing of telecommunication

towers and shelters.

OrasInvest operates also under the names of MobiServe and Servitec

in 6 countries: Egypt, Pakistan, Algeria, Tunisia, Bangladesh, UAE, and

soon in the Kingdom of Saudi Arabia.

First Service - First Service is specialized in offering various business

solutions locally and regionally. It was established in 1998 to serve

the leading mobile operator in Egypt, Mobinil, and then succeeded

over the last years to expand its portfolio of clients to cover 80% of

the banking and ISPs sectors and others in Egypt. First Service operates

in Algeria under the name of Servitec since 2001 with the introduction

of mobile telephony into the Algerian market. Servitec provides the

same portfolio of services with unlimited ability to customization

according to the client’s needs. The portfolio of service includes digital

printing & enveloping, delivery, cash collection, CD burning,

investigation, packaging and call center outsourcing. First Service

has a one year contract which is renewable yearly to supply both

scheduled maintenance and emergency services to ECMS.

MobiServe - MobiServe is ranked as the first global service provider

focusing on the telecommunication industry. Its portfolio of services

includes telecommunication infrastructure, telecom components’

manufacturing, telecom engineering, satellite services, civil

constructions and facility management. Currently, MobiServe operates

in 7 countries in which it serves OTH operators and others through

more than 40 offices and a workforce of more than 2,200 employees.

Since February 1999, MobiServe has installed all the new site

installations using entirely its own resources. MobiServe has a one

year contract which is renewable yearly to supply both scheduled

maintenance and emergency services to ECMS.

GIVING THE WORLD A VOICE

2007 Financial Review

Inc/(dec)Subsidiary 31 December 30 September 31 December Dec. 2007 vs.

2006 2007 2007 Dec. 2006

Djezzy (Algeria) 10,530,826 12,714,275 13,382,254 27%Mobilink (Pakistan) 22,491,900 28,571,847 30,612,630 36%Mobinil (Egypt) 9,266,815 13,722,278 15,117,626 63%Iraqna (Iraq) 2,904,166 - - naTunisiana (Tunisia) 3,069,314 3,452,936 3,651,813 19%banglalink(Bangladesh) 3,276,313 6,021,212 7,082,348 116%Telecel (Africa)1 148,785 232,781 241,874 63%

Grand Total 51,688,119 64,715,329 70,088,545 36%

Proforma Total2 48,783,953 64,715,329 70,088,545 44%

Highlights

• Total subscribers exceeded 70 million, an increase of 44% over December 2006 on a proforma1 basis.

• Revenues of US$ 4,720 million2 (LE 26,754 million), an increase of 22% over December 2006.

• EBITDA reached US$ 2,043 million2 (LE 11,698 million), an increase of 20% over December 2006.

• Group EBITDA margin stood at 43.3%.GSM EBITDA3 margin stood at 49.6%. EBITDA margins of the major subsidiaries are: Djezzy 63.1%, Mobilink43.9%, Mobinil 45.0%, Tunisiana 51.3%, and banglalink (21.9%).

• Net income for the period reached US$ 2,021 million2 (LE 11,563 million) an increase of 180% over December 2006.

• Earnings per GDR reached US$ 9.69 (based on a weighted average for the outstanding GDRs of 208.6 millionduring 2007)4 vs. US$ 3.32 in December 2006.

• Proforma Net Debt5 stood at US$ 3,663 million2 (LE 20,384 million) resulting in a Net Debt/EBITDA of 1.8xfor the period.

Table 1: Total Subscribers

Operational Performance

During 2007, Orascom Telecom continued to aggressively expand its subscriber base adding over 20 million customers year-on-yearand reaching the 70 million mark. Mobilink’s subscriber base crossed 30 million, adding over 8 million customers year-on-year. In Egypt,Mobinil exceeded 15 million customers having added approximately 6 million subscribers in 2007. Banglalink’s subscriber base morethan doubled reaching over 7 million, while Djezzy grew to over 13 million subscribers.

Orascom Telecom Holding (”OTH”) Full Year 2007 Consolidated Results

1. After excluding Iraqna subscribers in December 2006.2. US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (”IFRS”).3. GSM EBITDA margin excludes Telecel.4. As a consequence of the buy back program the average outstanding GDRs as at December 31st, 2007 was reduced to 204.9 million.5. Taking into consideration the sale of the 14.2% stake in HTIL for US$ 960 million in cash.

1. Telecel reflects Telecel Zimbabwe subscribers only.2. After excluding Iraqna subscribers in December 2006.

45

• Board Report

• Financial Statements

- Egyptian Accounting Standards (in LE)

- International Financial Reporting Standards (in US$)

2007 Financial Review

With the continuous increase in penetration, ARPU decline has slowed year-on-year with a growth in highly penetrated markets suchas Tunisia. ARPU in Egypt continued to decline due to the very fast growth which resulted in the increased penetration of lower incomesegments.

31 December 30 September 31 December Inc/(dec)Subsidiary 2006 2007 2007 Dec. 2007 vs.

US$ US$ US$ Dec. 2006(3 Months) (3 Months) (3 Months)

Djezzy (Algeria) 13.0 12.5 12.1 (6.9 %)Mobilink (Pakistan) 4.1 3.9 3.8 (7.3 %)Mobinil (Egypt)1 10.1 9.1 8.1 (19.8 %)Tunisiana (Tunisia) 13.3 13.6 14.3 7.5 %banglalink (Bangladesh) 3.1 3.1 2.9 (6.5 %)

Proforma Global ARPU (YTD)2 8.4 7.2 7.0 (16.7 %)

Proforma Global ARPU (3 months) 7.7 7.1 6.8 (11.7 %)

Market Share (%) Number ofadditional Names of additional

network network operations operations

Algeria Djezzy 64.4% 62.4% 2 AMN, Wataniya

Pakistan Mobilink1 40.8 % 39.8% 5 U-Fone, Paktel, Telenor, Al Warid

Egypt Mobinil 49.3 % 49.5% 2 Vodafone, Etisalat

Tunisia Tunisiana 47.1% 47.7% 1 Tunisie Telecom

Bangladesh banglalink 18.9% 20.6% 5 Grameen, Aktel, Citycell, BTTB, Al Warid

Zimbabwe Tel Zim 19.0% 19.0% 2 Econet, Net One

1. ARPU expressed under OTH’s definition may differ from Mobinil’s disclosed ARPU. Please see Appendix for definition.2. Proforma Global ARPU is calculated after excluding Iraqna in December 2006. It is calculated on a Year to date basis, taking into account the

weighted average subscribers for calculation.

Table 2: Blended Average Revenue Per User (ARPU)

Table 3: Market Share & Competition

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

46

Country Brand name 30 September 31 December2007 2007

47

Total Capex for the year reached US$ 1.9 Bn. Capex continued to decrease in Algeria, Pakistan and Tunisia, but increased in Egypt andBangladesh, as OTH experienced very strong growth in these two markets.

Table 4: Capital Expenditure of OTH Subsidiaries for December 31, 20071

Total TotalCountry Service name US$ million US$ million Inc/(dec)

2006 2007

Algeria Djezzy 392 325 (17%)Pakistan Mobilink 693 520 (25%)Egypt Mobinil 358 578 61%Tunisia Tunisiana 93 76 (18%)Bangladesh banglalink 126 353 180%Other2 57 86 51%

Proforma Total3 1,719 1,938 12.7%

Total Capex/Sales 44.3% 41.1% (3.2%)

Proforma Consolidated4 1,476 1,584 7.3%

Consolidated Capex/Sales 38.0% 33.6% (4.4%)

1. Based on 100% ownership of all subsidiaries.2. Other Companies include C.A.T., Linkdotnet, M-link, MedCable, OrasInvest, OT Holding, Ring, and Telecel.3. After excluding Iraqna in December 2006 and December 2007.4. Consolidated Capex based on: 48.75% in ECMS in 2007 & 47.12% in 2006; 50% in Tunisiana, and 50% in CAT.

48

Stock Split Announcement on CASE

In April 2007 OTH announced the effective date of the OTH stocksplit. The five-for-one split of OTH’s common stock (traded on theCairo & Alexandria Stock Exchange (“CASE”)) decided by theExtraordinary General Assembly of OTH held on January 25th, 2007was effected on April 12th, 2007. This split did not apply on theGlobal Depositary Receipts (“GDRs”) traded on the London StockExchange(“LSE”). After the split, the nominal value of the localshares listed on CASE became LE 1 instead of LE 5. Prior to thesplit, the ratio between OTH’s common stock and the GDRs wasone-to-one, following the split; it has become five-to-one.

Dividend Payment

OTH announced the payment date and record date for the dividendof EGP 0.75 per share (EGP 3.75 per GDR to be converted at theprevailing US$ to EGP exchange rate at the time of payment). Thedividend was paid on May 24th, 2007 to the holders of shares onMay 21st, 2007.

Orascom Telecom Acquires Remaining Minority Stake inPakistani GSM Operation

In June 2007, OTH announced that it has purchased an 11.3%indirect stake in its Pakistani GSM operation, (“Mobilink”), for cashconsideration of US$ 290 million. As a result, OTH indirectly owns100% of the share capital of Mobilink through direct stakes held bywholly owned subsidiaries of OTH.

Orascom Telecom Receives US$ 793 Million Dividends fromHutchison Telecom

In July 2007, OTH announced the receipt of US$ 793 million incash as dividends from Hutchison Telecommunications InternationalLimited (“HTIL”). The special cash dividend was distributed fromthe proceeds of HTIL’s divestment of CGP Investment (Holdings)Limited, a company that held all its interests in its Indian subsidiary,Hutch Essar, which was completed on May 8th, 2007.

OTH Share Buyback Program & Cancelling of Treasury Shares

In April 2006, OTH completed the purchase of 1,815,000 GDRs onthe LSE, and 185,000 local shares on CASE. In August 2007, OTHannounced that it has cancelled 10 million shares (equivalent to 2million GDRs). After the cancellation, OTH’s issued share capitalconsisted of 1,090,000,000 shares (equivalent to 218 million GDRs).

On January 22nd, 2007, OTH announced a potential repurchaseplan of up to 5% of the outstanding shares over a 12 month period.And OTH indicated that it will continue to evaluate selectiverepurchases of its shares in light of favorable relative marketvaluations. In September 2007, OTH has announced anotherpotential buy back of equivalent to 5 million GDRs.

On February 24th 2008, the EGM decided, in consensus of thevotes of shareholders present and represented in the meeting, toapprove the reduction of OTH’s issued capital by writing off OTH’streasury shares, by the amount equal to 61,900,000 shares. Afterthis reduction the total number of fully paid up shares will be 1,028million.

Orascom Telecom Sells its Stake 19.3% in HTIL

Through a series of transactions in October, November andDecember 2007, OTH has sold its shareholding in HutchisonTelecommunications International Ltd (“HTIL”), representing 19.3%of HTIL’s outstanding share capital. Total proceeds from the saleare HK$ 10.03 billion (approximately US$ 1.28 billion).

Orascom Telecom Announces the Sale of its Iraqi MobileOperation "Iraqna"

In December 2007, OTH announced that it has concluded a definitiveagreement for the sale of 100% of the share capital of IraqnaCompany for Mobile Phone Services Ltd. ("Iraqna") to MTC-Atheer,the Iraqi subsidiary of Mobile Telecommunications Company K.S.C.("Zain"), for a consideration of US$ 1.2 billion, net gain from thesale is US$ 920 million.

Orascom Telecom Receives the First Mobile License in theDemocratic People’s Republic of Korea

In January 2008, OTH announced that it had been granted the firstcommercial license to provide mobile telephony services in theDemocratic People’s Republic of Korea (“DPRK”) using WCDMA(3G) technology. The license was granted to OTH’s subsidiaryCHEO Technology JV Company (“CHEO”) which is controlled byOrascom Telecom with an ownership of 75% while the remaining25% is owned by the state owned Korea Post and Telecommuni-cations Corporation.

Orascom Telecom Secures US$ 2.5 bn Committed Bank Facility

In March 2008, OTH announced that it has secured commitmentsand underwritings for a five year senior secured debt facility totalingUS$ 2.5 billion. General syndication of the facility was launched onFebruary 29th, 2008. The Facility will be used to refinance theoutstanding amounts under OTH’s existing US$ 2.5 billion jumbofacilities and for general corporate purposes. The new facility willprovide long term financing that will allow the Company to evaluateinvestment opportunities on a disciplined basis, or continue to returncapital to its shareholder’s in light of favorable relative marketvaluations. The committed facility provides greater financial flexibilityfor the continued development of our fast growing businesses andcreates a simpler and more transparent capital structure.

Main Financial Events During 2007

49

Revenues

Revenues for the full year reached US$ 4,720 million (LE 26,754 million), a 22% increase over the prior year and a 1% increase overthe third quarter of 2007.

Financial Review

31 December 31 December Inc/ Q3 - 2007 Q4 - 2007 Inc/Subsidiary 2006 2007 (dec) (3 months) (3 months) (dec)

US$ (000) US$ (000) US$ (000) US$ (000)

GSMDjezzy (Algeria) 1,531,242 1,755,856 15% 471,667 454,703 (4%)Mobilink (Pakistan) 1,017,239 1,259,255 24% 321,272 340,599 6%Mobinil (Egypt) 511,961 705,229 38% 191,091 186,305 (3%)Tunisiana (Tunisia) 217,582 264,499 22% 70,098 72,445 3%banglalink (Bangladesh) 93,520 192,689 106% 55,595 59,501 7%

Total GSM 3,371,544 4,177,528 24% 1,109,723 1,113,553 0%

Telecom Services Ring 332,993 283,090 (15%) 69,506 36,030 (48%) M-Link & MedCable 99,977 148,854 49% 26,957 67,2682 150% OrasInvest 30,576 50,517 65% 14,923 15,953 7% Other1 13,099 7,519 (43%) 798 434 (46%)

Total Telecom Services 476,645 489,980 3% 112,184 119,685 7%

Internet Services 32,364 52,118 61% 14,748 16,302 11%

Total Consolidated 3,880,553 4,719,626 22% 1,236,655 1,249,540 1%

Table 5: Consolidated Revenues

1. Other Telecom Services Companies include ARPU+, C.A.T., and Onward Technologies & Pharoah in 2006.2. Due to inter-company transactions with OTI and OTT, Q4 includes a US$ 25 million revenue gross-up from Q3.

50

EBITDA

Consolidated EBITDA reached US$ 2,043 million (LE 11,698 million) growing 20% year-on-year, with banglalink achieving positive EBITDAfor the first time in Q4. EBITDA margin reached 43.3%, GSM EBITDA margin reached 49.6%.

Table 6: Consolidated EBITDA1

1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.2. Banglalink paid US$ 18 million to the Bangladesh Telecommunication Regulatory Commission in Q3 2007.3. Other Telecom Services Companies include ARPU+, C.A.T., OT WIMAX, TWA and Pharoah & Onward Technologies in 2006.4. Other non operating companies include: Cortex, Eurasia, FPPL, ITCL, Moga Holding, Oratel, OT Asia, OT ESOP, OTFSCA, OTI Malta, OT Services

Europe, OT Wireless Europe and Pioneers.

31 December 31 December Inc/ Q3 - 2007 Q4 - 2007 Inc/Subsidiary 2006 2007 (dec) (3 months) (3 months) (dec)

US$ (000) US$ (000) US$ (000) US$ (000)

GSMDjezzy (Algeria) 991,478 1,108,255 12% 306,203 285,478 (7%)Mobilink (Pakistan) 406,537 552,415 36% 140,959 154,419 10%Mobinil (Egypt) 254,647 317,198 25% 80,342 77,415 (4%)Tunisiana (Tunisia) 102,237 135,580 33% 33,052 41,333 25%banglalink (Bangladesh)2 (29,386) (42,151) (43%) (21,257) 2,639 112%Telecel (Africa) (9,454) (4,945) na (93) (411) na

Total GSM 1,716,059 2,066,352 20% 539,206 560,873 4%

Telecom Services Ring 17,931 4,424 (75%) 929 (4,321) (565%) M-Link & MedCable 29,999 23,180 (23%) 960 11,328 1080% OrasInvest 1,003 18,503 1745% 3,622 8,006 121% Other3 (12,283) (25,081) na (540) (18,413) na

Total Telecom Services 36,650 21,026 (43%) 4,971 (3,400) na

Internet Services 6,604 2,981 (55%) 2,462 (1,901) (177%)

OT Holding & Other4 (55,585) (47,282) na (1,521) (2,433) na

Total Consolidated 1,703,728 2,043,077 20% 545,118 553,139 1%

51

31 December 31 December Q3-2007 Q4-2007Subsidiary 2006 2007

Change (3 months) (3 months) Change

GSMDjezzy (Algeria) 64.7% 63.1% (1.6%) 64.9% 62.8% (2.1%)Mobilink (Pakistan) 40.0% 43.9% 3.9% 43.9% 45.3% 1.4%Mobinil (Egypt) 49.7% 45.0% (4.7%) 42.0% 41.6% (0.4%)Tunisiana (Tunisia) 47.0% 51.3% 4.3% 47.2% 57.1% 9.9%banglalink (Bangladesh) (31.4%) (21.9%) 9.5% (38.2%) 4.4% 42.6%

Total GSM1 51.2% 49.6% (1.6%) 48.6% 50.4% 1.8%

Total Telecom Services 7.7% 4.3% (3.4%) 4.4% (2.8%) (7.2%)

Internet Services 20.4% 5.7% (14.7%) 16.7% (11.7%) (28.4%)

EBITDA Margin 43.9% 43.3% (0.6%) 44.1% 44.3% 0.2%

Table 7: Consolidated EBITDA Margin

1. GSM EBITDA margin excludes Telecel.

Table 8: Foreign Exchange Rates used in the Income Statement & Balance Sheet

Income Statement Balance Sheet

Currency Dec. Sept. Dec. Dec. Sept. Dec.2006 2007 2007 2006 2007 2007

Egyptian Pound / US Dollar 0.1738 0.1753 0.1764 0.1744 0.1773 0.1797Algerian Dinar / US Dollar 0.0138 0.0143 0.0144 0.0140 0.0147 0.0149Tunisian Dinar / US Dollar 0.7536 0.7735 0.7828 0.7710 0.7958 0.8062Pakistan Rupee / US Dollar 0.0166 0.0165 0.0165 0.0164 0.0165 0.0163Bangladeshi Taka / US Dollar 0.0143 0.0144 0.0144 0.0144 0.0144 0.0145

Source: Banks

52

Net Income

OTH reports the results of operations of Iraqna (Iraq) as a discontinued operation due to the sale of the operation. To facilitate the analysisof our results, all main indicators for Q4 2007 are being compared on a proforma basis to previous results, excluding Iraqna. A proformaanalysis with Iraqna and excluding Iraqna for 31 December 2006, is provided in appendix II.

Net Income for the period reached US$ 2,021 million (LE 11,563 million) a 180% increase year-on-year. Net income includes a nonrecurring gain of US$ 761 million resulting from HTIL and of US$ 920 million resulting from the sale of Iraqna.

Table 9: Income Statement in IFRS/US$

31 December 31 December Inc/ Q3-2007 Q4-2007 Inc/ 2006 2007 (dec) (dec) (3 months) (3 months)

US$ (000) US$ (000) US$ (000) US$ (000)

Revenues 3,880,553 4,719,626 22% 1,236,655 1,249,540 1%

Total Cost (1,336,421) (1,589,668) (421,948) (395,816)

Gross Profit 2,544,132 3,129,958 814,707 853,724

Total Expense (830,690) (1,065,911) (264,492) (298,782)Other (9,714) (20,970) (5,097) (1,803)

EBITDA1 1,703,728 2,043,077 20% 545,118 553,139 1%

Depreciation & Amortization (553,284) (752,136) (200,407) (209,734)Net Interest Expense (340,338) (482,088) (118,235) (104,521)Foreign Exchange Gain (Loss) (43,923) 41,932 25,432 3,737Capital Gain (Loss) (151) (228) 159 (798)Share of Gain of Associates2 (16,912) 761,295 53,541 - Net Profit from DiscontinuedOperations net of Tax3 177,282 919,628 65,542 754,223Gain (Loss) from Sale of Investments 4,859 (4,969) (4) (2,611)Other Income 6,400 10,606 592 6,328

Profit Before Tax 937,661 2,537,117 171% 371,738 999,763 169%

Income Tax4 (149,648) (453,621) (98,121) (217,273)

Profit for the Period 788,013 2,083,496 164% 273,617 782,490 186%

Attributable to:

Equity Holders of the Parent5 720,758 2,021,353 180% 256,647 769,490 200% Earnings Per Share (US$/GDR) 3.32 9.696 192% 1.22 3.69 202%

Minority Interest 67,255 62,143 16,970 13,000

Net Income 788,013 2,083,496 164% 273,617 782,490 186%

1. Management Presentation developed from IFRS financials.2. Non recurring gain on sale of HTIL stake and dividends received.3. Represents Iraqna net profit net of Tax and inter-company transactions.4. In compliance with the requirements of IAS12- Income Tax, and based on the provisions of Egyptian Tax Law, the company has calculated a deferred

tax liability on its share of undistributed profit.5. Equates to Net Income after Minority Interest.6. Based on a weighted average for the outstanding number of shares of 208,632,590 GDRs.

53

Balance Sheet

OTH continued its strategy to optimize its capital structure by returning cash to its shareholders and maintaining an appropriate leverage.

Table 10: Balance Sheet in IFRS/US$

IFRS/US$ IFRS/US$ 31 December 31 December

2006 2007US$ (000) US$ (000)

AssetsProperty and Equipment (net) 4,041,120 4,803,014Goodwill (net) 718,889 1,053,505Other Non-Current Assets 2,322,230 1,886,069

Total Non-Current Assets 7,082,239 7,742,588

Cash 756,198 499,943Trade and Other Receivables (net) 214,337 212,904Assets Held for Trading1 - 924,351Other Current Assets 622,620 2,051,248

Total Current Assets 1,593,155 3,688,446

Total Assets 8,675,394 11,431,034

Total Shareholder's Equity 2,063,299 3,149,068Minority Share 125,223 93,063

Total Equity 2,188,522 3,242,131

LiabilitiesLong Term Debt 3,580,236 3,366,364Other Long term Liabilities 236,923 529,420

Total Long Term Liabilities 3,817,159 3,895,784

Bank Facilities & Short Term Debt 608,819 1,756,101Trade and Other Payables 973,567 977,709Other Current Liabilities 1,087,327 1,559,309

Total Current Liabilities 2,669,713 4,293,119

Total Liabilities 6,486,872 8,188,902

Total Liabilities & Shareholder's Equity 8,675,394 11,431,034

Net Debt2 3,432,857 4,622,522

Net Debt (Proforma HTIL)3 na 3,662,522

Net Debt (Proforma HTIL & Iraqna)4 na 2,462,522

1. Includes HTIL.2. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash.3. Taking into consideration the sale of the 14.2% stake in HTIL for US$ 960 million in cash.4. Taking into consideration the sale of the 14.2% stake in HTIL for US$ 960 million and the sale of Iraqna for US$ 1.2 billion in cash.

54

Cash Flow Statement

Table 11: Cash Flow Statement in US$

IFRS/US$ IFRS/US$ 31 December 31 December

2006 2007US$ (000) US$ (000)

Cash Flows from Operating ActivitiesNet Profit for the Period before Tax 971,733 2,573,027Adjustment to Reconcile Net Profit to Cash Flows from Operating ActivitiesDepreciation, Amortization & Impairment of Assets 593,444 800,511Unrealized Exchange Difference 40,409 (47,794)Financial Charges 332,043 479,467Share of Results of Associated Companies 16,912 (761,295)Gain on Sale of Discontinued Operations, Net of Income Tax & Sale of Investment (4,859) (678,232)Other 39,184 1,852

Net Profit before Changes in Current Assets and Current Liabilities 1,988,866 2,367,536

Changes in Current Assets 12,816 (238,692)Changes in Current Liabilities 171,469 118,758

Cash Generated from Operations 2,173,151 2,247,602

Income Tax Paid (134,545) (200,295)Interest Paid (320,209) (495,078)

Net Cash Provided by Operating Activities 1,718,397 1,552,229

Cash Flows from Investing ActivitiesPayments for Property & Equipment and Property under Construction (1,291,117) (1,563,160)Proceeds from Sale of Property & Equipment 2,285 5,662Payments for Licenses & Software (58,637) (96,443)Interest Received 19,511 22,546Dividend Received 459 794,091Payments for Purchase of Trading Investments 8,817 (725,117)Cash at Bank from Increase in Ownership in Joint Ventures 1,225 810Payments for Investments (1,698,579) (374,998)Proceeds from Sale of Investments 5,418 261,542

Net Cash Used in Investing Activities (3,010,618) (1,675,067)

Cash Flows from Financing ActivitiesProceeds from Borrowings 3,474,300 2,324,107Repayment of Borrowings (1,417,413) (1,466,589)Change in Other Assets 34,171 33,122Payments for Treasury Stocks (110,510) (855,771)Change in Minority Interests (82,286) (63,677)Dividend Paid (141,372) (131,303)Proceeds from Sale Lease Back - 10,199Payments for Capital Lease Obligations (1,990) (2,147)

Net Cash Provided by Financing Activities 1,754,900 (152,059)

Net Change in Cash & Cash Equivalents 462,679 (274,897)Cash & Cash Equivalents as at January 1st 286,891 756,198Change in Cumulative Translation Adjustments 6,628 18,642

Cash & Cash Equivalents as at December 31st 756,198 499,943

55

Table 12: Income Statement in EAS/Egyptian Pounds

31 December 31 December Inc/ Q3-2007 Q4-2007 Inc/ 2006 2007 (dec) (dec) (3 months) (3 months)

LE (000) LE (000) LE (000) LE (000)

Revenues 22,331,650 26,754,002 20% 7,021,620 6,957,160 (1%)

Total Cost (7,690,781) (9,011,306) (2,362,376) (2,200,381)Gross Profit 14,640,869 17,742,696 4,659,244 4,756,779Total Expenses (4,708,084) (5,936,785) (1,524,618) (1,615,114)Provisions (290,535) (91,020) 158,435 (30,821)Other 234,634 (16,385) (177,857) 25,744

EBITDA1 9,876,884 11,698,506 18% 3,115,204 3,136,588 0%

Depreciation & Amortization (3,179,397) (4,257,471) (1,136,730) (1,167,295)

Earnings Before Interest & Tax 6,697,487 7,441,035 11% 1,978,474 1,969,293 0%

Net Financing Cost (2,209,127) (2,493,762) (532,974) (558,814)Other Revenues 36,832 60,106 9,369 35,699Gain (Loss) from Sale of Investments 29,904 (28,166) 14 (14,712)Net Profit from Discontinued Operations 1,019,984 5,213,066 372,417 4,269,429Share of Gain of Associates (97,324) 4,315,530 294,835 (27,658)Capital Gain (Loss) (871) (1,295) 902 (4,550)

Earnings Before Taxes 5,476,885 14,506,514 165% 2,123,037 5,668,687 167%

Income Tax (861,188) (2,571,427) (557,706) (1,223,058)

Net Income before Minority Interest 4,615,697 11,935,087 159% 1,565,331 4,445,629 184%

Minority Share (407,975) (371,780) (104,616) (81,402)

Net Income 4,207,722 11,563,307 175% 1,460,715 4,364,227 199%

Earnings Per Share (in LE) 3.87 11.08 186% 1.39 4.18 201%

1. Management Presentation developed from EAS financials.

56

Table 13: Balance Sheet in EAS/Egyptian Pounds1

EAS/LE EAS/LE 31 December 31 December

2006 2007LE (000) LE (000)

AssetsCash 4,335,282 2,782,182Trade Receivable (net) 1,228,791 1,184,810Other Current Assets 3,569,710 16,562,850

Total Current Assets 9,133,783 20,529,842

Net Fixed Assets 23,062,435 26,688,621Goodwill (Net) 3,924,460 5,666,342Other Long Term Assets 13,385,525 10,495,977

Total Long Term Assets 40,372,420 42,850,940

Total Assets 49,506,203 63,380,782

Liabilities

Bank over Draft & Short Term Debt 3,490,358 9,772,700Trade Payable 5,558,609 5,423,282Other Current Liabilities 6,247,490 8,691,947

Total Current Liabilities 15,296,457 23,887,929

Long Term Debt 20,525,687 18,733,812Other Long Term Liabilities 1,358,278 2,936,772

Total Long Term Liabilities 21,883,965 21,670,584

Total Liabilities 37,180,422 45,558,513

Total Shareholder's Equity 11,613,040 17,300,808Minority Share 712,741 521,461

Total Liabilities & Shareholder's Equity 49,506,203 63,380,782

Net Debt 2 19,680,763 25,724,330

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

Table 14: Ownership Structure & Consolidation Methods

Ownership Consolidation MethodSubsidiaries 31 December 31 December

2006 2007 2006 2007GSM Operations

Mobinil (Egypt)1 28.75% 28.75% Proportionate Consolidation Proportionate ConsolidationEgyptian Co. for Mobile Services 18.37% 20.00% Proportionate Consolidation Proportionate ConsolidationIWCPL (Pakistan) 100.00% 100.00% Full Consolidation Full ConsolidationOrascom Telecom Algeria2 96.81% 96.81% Full Consolidation Full ConsolidationTelecel (Africa) 100.00% 100.00% Full Consolidation Full ConsolidationOrascom Telecom Tunisia3 50.00% 50.00% Proportionate Consolidation Proportionate ConsolidationOIH (Iraq)4 100.00% 100.00% Full Consolidation Full ConsolidationOT Ventures5 100.00% 100.00% Full Consolidation Full Consolidation

Internet Service

Intouch 93.50% 99.94% Full Consolidation Full Consolidation

Non GSM OperationsRing 99.00% 99.00% Full Consolidation Full ConsolidationOrasinvest6 100.00% 100.00% Full Consolidation Full ConsolidationCortex 100.00% 100.00% Full Consolidation Full ConsolidationOT ESOP 100.00% 100.00% Full Consolidation Full ConsolidationArpu +7 96.81% - Full Consolidation -M-Link 100.00% 100.00% Full Consolidation Full ConsolidationOT Services Europe 100.00% 100.00% Full Consolidation Full ConsolidationMedCable 100.00% 100.00% Full Consolidation Full ConsolidationOratel 100.00% 100.00% Full Consolidation Full ConsolidationC.A.T.8 50.00% 50.00% Proportionate Consolidation Proportionate ConsolidationOT Wireless Europe 100.00% 100.00% - Full ConsolidationOT WIMAX9 70.00% 70.00% Full Consolidation Full ConsolidationTWA 51.00% 51.00% Full Consolidation Full ConsolidationFPPL - 100.00% - Full ConsolidationOT Asia 100.00% 100.00% Full Consolidation Full ConsolidationOTFCSA - 100.00% - Full ConsolidationEurasia 100.00% 100.00% - Full ConsolidationIntelligent Village 10.19% 10.19% Fair Value Fair Value

1. Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS.2. Direct and Indirect stake through Moga Holding Ltd. and Oratel.3. Orascom Telecom Tunisia is proportionately consolidated through Orascom Tunisia Holding and Carthage Consortium.4. OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007.5. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink.6. Includes Egyptian Satellite Company, Contra Egypt, & Contra BVI.7. In September 2007, ARPU+ became fully consolidated in Intouch.8. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL).9. With an option to increase stake to 100%.

57

58

Glossary

ARPU (Average Revenue per User): Average monthly recurrentrevenue per customer (excluding visitors roaming revenue &connection fee). This includes airtime revenue (national &international), as well as, monthly subscription fee, SMS, GPRS &data revenue. Quarterly ARPU is calculated as an average of thelast three months.

Capex: Tangible & Intangible fixed assets additions during thereporting period, includes work in progress, network, IT, and othertangible and intangible fixed assets additions but excludes licensefees.

Churn: Disconnection rate. This is calculated as the number ofdisconnections during a month divided by the average customerbase for that month.

Churn Rule: A subscriber is considered churned (removed fromthe subscriber base) if he exceeds the 90 days from the end of thegrace period without recharging. It is worth noting that the graceperiod is a function of the scratch card being recharged by thesubscriber in case this card has a certain validity and grace period.In cases where scratch cards have open validity, the subscriber isconsidered churned in case he has not made a single billable eventin the last 90 days ( i.e outgoing or incoming call or sms, wapsession…). Open cards validity is applied for OTA, and banglaLinkso far.

MOU (Minutes of Usage): Average airtime minutes per customerper month. This includes billable national & international outgoingtraffic originated by subscribers (on-net, to land line & to otheroperators). Also, this includes incoming traffic to subscribers fromland line or other operators.

OTH’s Market Share Calculation Method: The market share iscalculated through the data warehouse of OTH’s subsidiaries. Thenumber of SIM cards of competitors that appeared in the call detailrecord of each of OTH’s subsidiaries is collected. This reflects thenumber of subscribers of the competition. However, OTH deductsthe number of SIM cards that did not appear in the call detail recordsfor the last 90 days to account for churn. The same is applied toOTH subsidiaries. This method is used to calculate the marketshares of Djezzy, Mobinil, and Tunisiana only. In Pakistan &Bangladesh, Market share as announced by the Regulators isbased on disclosed information by the other operators which mayuse different subscriber recognition policies.

Outlook for 2008

The markets OTH operates in, will continue to grow rapidly, due totheir sustained economic growth, low mobile penetration rate, limitedfixed-line coverage, and the relatively high cost of fixed-lineinfrastructure deployment.OTH expects to continue delivering over 20% growth rate inrevenues. Overall ARPU is expected to decrease slightly, mainlyas a result of the ARPU decrease in Egypt due to continued strongsubscribers' growth. We expect ARPU to be stable in Algeria andTunisia, and to decrease slightly in Pakistan and Bangladesh.Overall EBITDA margins are expected to be more or less stablewith Bangladesh expected to turn EBITDA positive in 2008. In Egyptthe strong expected growth will put pressure on margins while, inthe other markets, EBITDA margin will be stable or will improveslightly. While OTH will continue to focus on negotiating betterprices with suppliers and on increasing network efficiency, tangibleCapex are expected to remain stable due to the expected strongsubscribers and traffic growth in addition to new investment projects;such as: undersea cables and WiMax.

OTH expects to continue its current strategy to:

1. Capture the lion share of the high subscriber’s growth in itsexisting markets by capitalizing on its leadership position in eachof its markets by investing in its network coverage and quality,as well as innovating product and marketing strategies tailoredto the local market conditions.

2. Deliver shareholder value by:• Evaluating investment opportunities in a disciplined manner.• Investing in new VAS including financial services as a new

revenue stream.• Continuing to return capital to its shareholders; either via

buybacks or dividends.• Centralizing network infrastructure procurement through frame

agreements,• Financial discipline and reporting at our subsidiaries.

Appendix I

Disclaimer

This presentation contains statements that could be construed as forward looking. These statements appear in a number of places in this presentation and include statementsregarding the intent, belief or current expectations of the subscriber base, estimates regarding future growth in the different business lines and the global business, marketshare, financial results and other aspects of the activity and situation relating to the company.

Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forwardlooking statements as a result of various factors.

You are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation, which is not intended to reflect OrascomTelecom’s business or acquisition strategy or the occurrence of unanticipated events.

31 December 31 December Inc/ 2006 2006 (dec) With Iraq Without Iraq

US$ (000) US$ (000)

Revenues 4,400,984 3,880,553 (12%)

Total Cost (1,501,861) (1,336,421)

Gross Profit 2,899,123 2,544,132 (12%)

Total Expense (935,720) (830,690)Others (9,249) (9,714)

EBITDA 1,954,154 1,703,728 (13%)

Depreciation & Amortization (588,359) (553,284)Net Interest Expense (339,251) (340,338)Foreign Exchange Gain (Loss) (45,356) (43,923)Capital Gain (Loss) (3,803) (151)Share of Gain of Associates (18,700) (16,912)Net Profit from Discontinued Operations Net of Tax - 177,282Gain (Loss) from Sale of Investments 4,859 4,859Other Income 6,400 6,400

Profit Before Tax 969,944 937,661 (3%)

Income Tax (183,719) (149,648)

Profit for the Period 786,225 788,013 0%

Attributable to:

Equity Holders of the Parent 718,970 720,758 0% Earnings Per Share (US$/GDR) 3.31 3.32 0%

Minority Interest 67,255 67,255

Net Income 786,225 788,013 0%

59

Appendix II

Table 15: Proforma Income Statement (12 months)

• Auditor’s Report

• Consolidated Balance Sheet

• Consolidated Income Statement

• Consolidated Statement of Changes in

Shareholders’ Equity

• Consolidated Cash Flows

• Notes to the Consolidated Financial

Statements

Financial StatementsEgyptian Accounting Standards (in LE)

61

Auditor’s reportTo the Shareholders of Orascom Telecom Holding (S.A.E)

We have audited the accompanying Consolidated Balance Sheet of Orascom Telecom Holding "Egyptian Joint Stock Company" as

of December 31, 2007 and the related Consolidated Statements of Income, Changes in Shareholders’ Equity and Cash Flows for the

year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to

express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of provisions of applicable Egyptian laws

and regulations. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures

in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management

as well as evaluating the overall financial statement presentation. We have obtained the information and explanations, which we deemed

necessary for our audit. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above together with the notes attached thereto present fairly, in all

material respect, the financial position of the Company as of December 31, 2007 and the results of its operations and its cash flows for

the financial year then ended, in accordance with Egyptian Accounting Standards and relevant Egyptian laws and regulations.

KPMG Hazem Hassan

Cairo, March 31, 2008

Consolidated Balance SheetAs at December 31, 2007

The accompanying notes from (1) to (40) are an integral part of these consolidated financial statements.

Group C.F.O Chairman and Managing DirectorAldo Mareuse Naguib Onsi Sawiris Auditor's report "attached"

Note 31/12/2007 31/12/2006No.

In thousands of L.E. In thousands of L.E.

Non-current assetsProperty and equipment (net) (3/5-3/6-4) 26 688 621 23 053 120Investments in associates (3/1/3-6) - 7 327 709Investments available for sale (3/8/A-5) 93 734 67 236Advance payments for investments (7) 173 743 28 318Intangible assets (net) (3/7/B-8) 6 521 064 5 673 568Deferred tax assets (21/C) 404 151 187 346Goodwill (net) (3/7/A-10) 5 666 342 3 924 460Other assets (9) 3 303 285 110 663Total non-current assets 42 850 940 40 372 420

Current assetsInventories (net) (3/12) 617 126 779 030Trade receivable (net) (3/11) 1 184 810 1 228 791Due from related parties 443 034 325 866Prepaid expenses 418 831 381 257Other debit balances (3/11-11) 2 350 146 1 554 638Other assets (9) 3 479 250 528 919Cash and cash equivalents (3/10-12) 6 892 630 4 335 282Assets classified as held for sale (3/13-26) 5 144 015 -Total current assets 20 529 842 9 133 783

Current liabilitiesBorrowings (3/17-13) 9 772 700 3 490 358Trade and other payable 5 423 282 5 558 609Debt due on purchase of investments (14) 315 473 336 262Due to related parties 110 418 112 055Accrued expenses 2 774 701 2 526 087Other credit balances (15) 5 491 355 3 273 086Total current liabilities 23 887 929 15 296 457Excess of current liabilities over current assets (3 358 087) (6 162 674)Net investments 39 492 853 34 209 746Financed as follows:

EquityIssued and paid capital (3/18) 1 090 000 1 100 000Legal reserve (3/19) 545 000 510 647Other reserves (18) 254 022 261 188Retained earnings 8 507 621 5 833 018Net profit for the year 11 563 308 4 207 951Translation reserve (3/3) 305 908 453 956Treasury shares (3/18/A-19) (4 965 051) (753 720)Total equity attributable to equity holders of the Company 17 300 808 11 613 040Minority interest 521 461 712 741Total equity 17 822 269� 12 325 781

Non-current liabilitiesBorrowings (3/17-13) 18 733 812 20 525 687Creditors (16) 1 139 803 272 229Deferred tax liabilities (21/C) 1 796 969 1 086 049Total non-current liabilities 21 670 584 21 883 965Total equity and liabilities 39 492 853 34 209 746

62

Consolidated Income Statementfor the financial year ended December 31, 2007

* See note (25) discontinued operation


Note 2007 2006No. *Re-presented


Continued operationCellular operations revenue (3/20/ i) 23 597 373 19 356 201Telecommunications service revenue (3/20/ ii) 3 022 118 2 903 238Internet service and fixed lines revenue (3/20/ iii) 289 931 206 323Total revenues 26 909 422 22 465 762

Cellular operations cost ( 11 774 840) ( 9 036 904)Telecommunications service cost ( 2 564 675) ( 2 632 116)Internet service and fixed lines cost ( 120 290) ( 95 760)Total operating cost ( 14 459 805) ( 11 764 780)Gross profit 12 449 617 10 700 982

Other income 165 927 196 994Distribution expenses (1 406 471) (1 086 658)Administrative expenses ( 3 348 756) ( 2 698 624)Remunerations and allowances for board members (4 008) (14 889)Other expenses ( 384 725) (338 004)Results from operating activities 7 471 584 6 759 801

Net financing cost (23) ( 2 493 666) ( 2 205 577)Share of profits (loss) of associates (6) 4 315 530 ( 97 324)Profit before income tax 9 293 448 4 456 900Income tax expense (3/14-21/d) ( 2 571 426) (861 187)Profit from continuing operations 6 722 022 3 595 713

Discontinued operationProfit from discontinuing operations (net of tax) (3/23-25) 5 213 066 1 020 213Profit for the year 11 935 088 4 615 926

Attributable to:Equity holders of the Company 11 563 308 4 207 951Minority interest 371 780 407 975Profit for the year 11 935 088 4 615 926Basic and diluted earnings per share (3/16-27) 11.09 3.87Basic and diluted earning per share from (3/16-27) 6.09 2.93continuing operation

63

Consolidated Statement of Changes in Shareholders' Equityfor the financial year ended December 31, 2007


Attributable to equity holders of the Company

Note No. Issued and paid Legal Other Retained Net profit for Translation Treasury Minority Total in share reserve reserve earnings the year reserve shares Total interest equitycapital

In thousands of L.E.

Balance as at 1/1/2006 1 100 000 463 578 174 414 2 825 011 3 944 793 312 074 (161 766) 8 658 104 705 290 9 363 394Transfer to retained earnings - - - 3 944 793 ( 3 944 793) - - - - -Transfer to legal reserve - 47 069 - ( 47 069) - - - - - -Cash flow hedge gain transferred to income statement - - (401) - - - - (401) - (401)Cash flow hedge loss (net) (3/4) - - (4 271) - - - - (4 271) - (4 271)Company's share of items recognized directly - - (41 170) - - - - (41 170) - (41 170)in associate's equityEmployees share option plan - - 100 253 - - - - 100 253 - 100 253Foreign exchange recognized in equity - - 22 220 - - - - 22 220 - 22 220Investments available for sale valuation - - 10 143 - - - - 10 143 - 10 143Dividends to equity holders - - - (813 563) - - - (813 563) - (813 563)Employees' dividends - - - (76 154) - - - (76 154) - (76 154)Dividends to minority - - - - - - - - (327 422) (327 422)Acquisition of minority interest - - - - - - - - (76 413) (76 413)Net purchase/sale of treasury shares - - - - - - (591 954) (591 954) - (591 954)Profit for the year ended 31/12/2006 - - - - 4 207 951 - - 4 207 951 407 975 4 615 926Exchange differences arising on translation of foreign (3/3) - - - - - 141 882 - 141 882 3 311 145 193 operationsBalance as at 31/12/2006 1 100 000 510 647 261 188 5 833 018 4 207 951 453 956 (753 720) 11 613 040 712 741 12 325 781

Balance as at 1/1/2007 1 100 000 510 647 261 188 5 833 018 4 207 951 453 956 (753 720) 11 613 040 712 741 12 325 781Transfer to retained earnings - - - 4 207 951 (4 207 951) - - - - -Transfer to legal reserve - 34 353 - (34 353) - - - - - -Cancellation of treasury shares (10 000) - (16 689) (609 270) - - 635 959 - - -Cash flow hedges loss (net) (3/4) - - (20 619) - - - - (20 619) - (20 619)Foreign exchange recognized directly in equity - - ( 35 882) - - - - (35 882) - (35 882)Company's share of items recognized directly in - - 14 335 - - - - 14 335 - 14 335associate's equityInvestments available for sale valuation - - 2 985 - - - - 2 985 - 2 985Dividends to equity holders - - - (786 683) - - - (786 683) - (786 683)Employees share option plane - - 48 704 - - - - 48 704 - 48 704Employees dividends - - - (103 042) - - - (103 042) - (103 042)Dividends to minority - - - - - - - - (363 434) (363 434)Acquisition of minority interest - - - - - - - - (201 245) (201 245)Net purchase/sale of treasury shares - - - - - - ( 4 847 290) (4 847 290) - (4 847 290)Profit for the year ended 31/12/2007 - - - - 11 563 308 - - 11 563 308 371 780 11 935 088Exchange differences arising on translation of foreign (3/3) - - - - - (148 048) - (148 048) 1 619 (146 429)operationsBalance as at 31/12/2007 1 090 000 545 000 254 022 8 507 621 11 563 308 305 908 (4 965 051) 17 300 808 521 461 17 822 269

64

Consolidated Statement of Cash Flowsfor the financial year ended December 31, 2007


Note 2007 2006No.


Cash flows from operating activitiesProfit before income tax and minority (39) 14 710 078 5 673 185Adjustments to reconcile net profit to cash flows fromoperating activitiesDepreciation and amortization 4 420 994 3 381 245Amortization of arrangement fees 235 326 181 862Payments for employees dividends (98 357) (65 866)Share of profits of associates (6) (4 315 530) 97 324Dividends from investments available for sale (7 315) (2 642)Provisions 69 267 110 785Impairment of assets 293 553 222 765Unrealized foreign exchange difference (270 926) 232 543Financing expenses 2 716 410 1 908 609Financing income (208 519) (140 385)Loss/(gain) from sale of subsidiaries 28 166 (29 904)Gain from discountinued operations (3 872 840) -Change in value of hedging (263 426) (123 082)Capital loss 2 313 21 889

13 439 194 11 468 328Changes in working capitalChanges in current assets (1 356 423) 74 125Changes in current liabilities 686 161 956 077

12 768 932 12 498 530Income tax paid (1 135 407) (774 272)Financing expenses paid (2 806 430) (1 842 726)Net cash from operating activities 8 827 095 9 881 532

Cash flows from investing activitiesPayments for property and equipment and under construction (8 845 849) (7 422 472)Proceeds from sale of property and equipment 32 094 13 152Financing income received 127 804 112 282Dividends received 4 501 438 2 642Payments for Intangible assets (546 702) (337 442)Proceeds from sale of investments 1 482 599 81 916Payments for purchasing subsidiaries, joint venture & associates (2 121 148) (9 767 861)Net cash used in investing activities (5 369 764) (17 317 783)

Cash flows from financing activitiesProceeds from borrowings 13 231 994 19 993 760Repayment of borrowings (8 326 202) (8 056 367)Dividends paid to equity holders (786 683) (813 563)Dividends paid to minority interest (360 963) (473 742)Net proceeds from other assets 187 756 84 731Payments for treasury shares (4 851 085) (635 959)Net cash (used in) from financing activities (905 183) 10 098 860Net cash movement 2 552 148 2 662 609Cash and cash equivalents as at January 1st 4 335 282 1 651 055Effect of exchange rate fluctuations on cash held in 5 200 21 618foreign currenciesCash and cash equivalents as at December 31st (12) 6 892 630 4 335 282

65

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1- GeneralA- Legal status

Orascom Telecom Holding S.A.E “the Company” is an EgyptianJoint Stock Company subject to the provisions of the CapitalMarket Law No. 95 of 1992 and its executive regulations. TheCompany is a majority owned subsidiary of Weather InvestmentsS.P.A registered in Italy. The Company’s registered office islocated in Nile City Towers, Ramlet Beaulac, Cairo, Egypt.

B- Purpose of the companyThe Company’s purpose is to participate in companies issuingsecurities or to increase its share capital of these companies.The Company may have interest or participate in, by any mean,in companies and other enterprises that have activities similarto those of the Company or those that may assist the Companyto achieve its objective in Egypt or abroad. It may also mergeinto those companies and enterprises purchase them or affiliatethem, pursuant to the provisions of the law and its executiveregulations.

C- Financial statement authorizationThe financial statements were approved by the board of directorson March 31, 2008.

2- Basis of preparation

2-1 Statement of complianceThese Consolidated financial statements have been preparedin accordance with the Egyptian Accounting Standards (EASs)and relevant Egyptian laws and regulations.

2-2 Basis of measurementThe financial statements are prepared on the historical costconvention, except for the following assets and liabilities whichare measured as fair value• Derivative financial instruments.• Financial instruments at fair value through profit and loss.• Available-for-sale financial assets.

2-3 Functional and presentation currencyThese financial statements are presented in Egyptian pounds(L.E), which is the Company’s functional currency. All financialinformation presented in Egyptian pounds has been roundedto the nearest thousand.

2-4 Use of estimates and judgmentsThe preparation of financial statements requires managementto make judgments, estimates and assumptions that affectthe application of accounting policies and the reportedamounts of assets, liabilities, income and expenses. Actualresults may differ from these estimates.Estimates and underlying assumptions are reviewed on anongoing basis. Revisions to accounting estimates arerecognized in the period in which the estimate is revised andin any future periods affected.In particular, information about significant areas of estimationuncertainty and critical judgments in applying accountingpolicies that have the most significant effect on the amountrecognized in the financial statements are described in thefollowing notes:• Note (8, 10) – measurement of the recoverable amount

of intangible assets and goodwill.• Note (20, 22) – valuation of financial instruments.• Note (21) – Recognition of deferred tax assets.• Note (24/30) – provisions and contingencies.

3- Significant accounting policies appliedThe accounting policies set out below have been appliedconsistently with those applied in the previous year presentedin these consolidated financial statements and applied consistentlyby Group entities.

3-1Basis of consolidationThe consolidated financial statements include the followingcompanies:

3-1-1 Subsidiary companies • The consolidated financial statements include all

subsidiaries that are controlled by the parent companyand which the management intends to continue tocontrol. Control exists when the Group has the powerto govern the financial and operating policies of anentity so as to obtain benefits from its activities. Inassessing control, potential voting rights that presentlyare exercisable are taken into account. The financialstatements of subsidiaries are included in theconsolidated financial statements from the date thatcontrol commences until the date that control ceases.

• Intragroup balances and transactions, includingincome, expenses and dividends, are eliminated infull. Profits and losses resulting from intragrouptransactions that are recognized in assets, such asinventory and fixed assets, are eliminated in full.Intragroup losses may indicate an impairment thatrequires recognition in the consolidated financialstatements. EAS 24 Income Taxes applies totemporary differences that arise from the eliminationof profits and losses resulting from intragrouptransactions.

• Minority interests shall be presented in theconsolidated balance sheet within equity, separatelyfrom the parent shareholder’s equity. Minority interestsin the profit or loss of the group shall also beseparately disclosed.

• A parent loses control when it loses the power togovern the financial and operating policies of aninvestee so as to obtain benefit from its activities.

3-1-2 Joint venture companiesJoint control is the contractually agreed sharing ofcontrol over an economic activity, and exists only whenthe strategic financial and operating decisions relatingto the activity require the unanimous consent of theparties sharing control (the ventures).

Proportion consolidation is a method of accountingwhereby a venture’s share of each of the assets,liabilities, income and expenses of a jointly controlledentity is combined line by line with similar items in theventure’s financial statements or reported as separateline items in the venture’s financial statements.

3-1-3 Investments in associatesInvestments in associates are stated at equity method.Under the equity method the investment in associatesis initially recognize at cost and the carrying amountis increased or decreased to recognize the investor’sshare of the profit or loss of the associates after thedate of acquisition. Distributions received from ssociatesreduce the carrying amount of the investment.

Losses of an associate in excess of the Company’sinterest in that associate (which includes any long-terminterests that, in substance, form part of the Company’snet investment in the associate) are not recognized,unless the Company has incurred legal or constructiveobligations or made payments on behalf of the associate.

Any excess of the cost of the acquisition over theCompany’s share of the net faire value of the identifiableassets, liabilities and contingent liabilities of the associate

Notes to the Consolidated Financial Statementsfor the financial year ended December 31, 2007

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recognized at the date of acquisition is recognized asgoodwill. The goodwill is included within the carryingamount of the investment and is assessed for impairmentas part of the investment.

3-2Translation of the foreign currencies transactionsOrascom Telecom Holding and some of its subsidiariesmaintain their accounting books in Egyptian Pound.Transactions denominated in foreign currencies are recordedat the prevailing exchange rate at the date of transactions.Monetary assets and liabilities denominated in foreigncurrencies at the balance sheet date are translated at theprevailing exchange rates at that date. The foreign currenciesexchange differences arising on the settlement of transactionsand the translation at the balance sheet date are recognizedin the income statement.

3-3 Translation of the foreign subsidiaries’ financialsAs at the balance sheet date the assets and liabilities ofthese consolidated subsidiaries are translated to EgyptianPound at the prevailing rate as at the period end, and theshareholders’ equity accounts are translated at historicalrates, where as the income statement items are translatedat the average exchange rate prevailing during the periodof the consolidated financial statements. Currency translationdifferences are recorded in the shareholders’ equity sectionof the balance sheet as translation reserves adjustments.

3-4Derivative financial instrumentsThe Group uses derivative financial instruments to hedgeits exposure to foreign exchange and interest rate risksarising from operational, financial and investment activities.In accordance with its treasury policy, the Group does nothold or issue derivative financial instruments for tradingpurposes. However, derivatives that do not qualify for hedgeaccounting are accounted for as trading instruments.Derivatives are recognized initially at fair value; attributabletransaction costs are recognized in profit or loss whenincurred. Subsequent to initial recognition, derivatives aremeasured at fair value, and changes therein are accountedfor as described below.

Cash flow hedgesChanges in the fair value of the derivative hedging instrumentdesignated as a cash flow hedge are recognized directly inequity to the extent that the hedge is effective. To the extentthat the hedge is ineffective, changes in fair value arerecognized in profit or loss.If the hedging instrument no longer meets the criteria forhedge accounting, expires or is sold, terminated or exercised,then hedge accounting is discontinued prospectively. Thecumulative gain or loss previously recognized in equityremains in place until the forecast transaction occurs. Whenthe hedged item is a non-financial asset, the amountrecognized in equity is transferred to the carrying amount ofthe asset when it is recognized. In other cases the amountrecognized in equity is transferred to profit or loss in thesame period that the hedged item affects profit or loss.

Fair value hedgesChanges in the fair value of a derivative hedging instrumentdesignated as a fair value hedge are recognized in profit orloss. The hedged item also is stated at fair value in respectof the risk being hedged, with any gain or loss beingrecognized in profit or loss.

3-5Property & equipment and depreciationProperty & equipment are stated at historical cost andpresented in the balance sheet net of accumulateddepreciation and impairment (Note 3-9-b). Depreciation is

charged to the income statement over the estimated useful-life of each asset using the straight-line method. The followingare the estimated useful lives, for each class of assets, fordepreciation calculation purposes:

Expenditure incurred to replace a component of an itemof property and equipment that is accounted for separately,including major inspection and overhaul expenditure, iscapitalized. Other subsequent expenditure is capitalizedonly when it increases the future economic benefits embodiedin the property and equipment. All other expenditure isrecognized in the income statement as an expense asincurred.

3-6 Property and equipment under constructionProperty and equipment under construction are recognizedinitially at cost. Cost includes all expenditures directlyattributable to bringing the asset to a working condition forits intended use. Property and equipment under constructionare transferred to property and equipment caption whenthey are completed and are ready for their intended use.

3-7 Intangible assetsA- Goodwill

Goodwill (positive and negative) represents amountsarising on acquisition of subsidiaries, associates andjoint ventures. Goodwill (positive and negative) representsthe difference between the cost of the acquisition andthe fair value of the net identifiable assets acquired atacquisition date.

• Positive goodwill is stated at cost less impairment losses(note 3-9).

• While negative goodwill arose from business combinationsafter applying International Financial Reporting Standards(IFRS3) will be recognized directly in the incomestatement.

• Goodwill resulting from further acquisitions after controlis obtained is determined on the basis of the cost of theadditional investment and the carrying amount of netassets at the date of acquisition, accordingly, no fair valueadjustments would be recognized.

B- Other intangible assetsOther intangible assets that are acquired by the Groupare stated at cost less accumulated amortization andimpairment losses (note 3-9). Amortization is recognizedin the income statement on a straight – line basis overthe estimated useful lives of intangible assets. Licensefees are amortized over the period of the licenses,concessions and computers software are amortized fromthe date they are available for use. The estimated usefullives are as follows:

Assets Depreciation period

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

Assets Amortization period

Licenses Fees Over the remainingperiod of the licenses

Concessions and Computers 3-15 yearssoftware


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C- Subsequent expenditureSubsequent expenditure on capitalized intangible assetsis capitalized only when it increases the future economicbenefits embodied in the specific asset to which it relates.All other expenditure is expensed as incurred.

3-8 Investments at fair valueA- Available-for-sale financial assets

Available-for-sale financial assets are valued at fair value,with any resultant gain or loss being recognized in equity,except for impairment losses which is recognized in theincome statement. When these investments arederecognized, the cumulative gain or loss previouslyrecognized directly in equity is recognized in the incomestatement. The fair value of investments available forsale, identifies based on quoted price of the exchangemarket at the balance sheet date, investments that arenot quoted, and whose fair value can not be measuredreliably, are stated at cost less impairment loss.

B- Investments at fair value through profit and lossAn instrument is classified as at fair value through incomestatement if it is held for trading or is designated as suchupon initial recognition. Financial instruments aredesignated at fair value through income statement if theCompany manages such investments and makespurchase and sale decisions based on their fair value.Upon initial recognition, attributable transaction costs arerecognized in income statement when incurred. Financialinstruments at fair value through income statement aremeasured at fair value, and changes therein arerecognized in income statement.

3-9 ImpairmentA- Financial assets

A financial asset is considered to be impaired if objectiveevidence indicates that one or more events have had anegative effect on the estimated future cash flows of thatasset.An impairment loss in respect of a financial assetmeasured at amortized cost is calculated as the differencebetween its carrying amount, and the present value ofthe estimated future cash flows discounted at the originaleffective interest rate. An impairment loss in respect ofan available-for-sale financial asset is calculated byreference to its current fair value.Individually significant financial assets are tested forimpairment on an individual basis. The remaining financialassets are assessed collectively in groups that sharesimilar credit risk characteristics.All impairment losses are recognized in profit or loss.Any cumulative loss in respect of an available-for-salefinancial asset recognized previously in equity istransferred profit or loss.An impairment loss is reversed if the reversal can berelated objectively to an event occurring after theimpairment loss was recognized. For financial assetsmeasured at amortized cost and available-for-sale financialassets that are debt securities, the reversal is recognizedin profit or loss. For available-for-sale financial assetsthat are equity securities, the reversal is recognizeddirectly in equity.

B- Non-financial assetsThe carrying amounts of the Group’s non-financial assets,other than biological assets, investment property,inventories and deferred tax assets, are reviewed at eachreporting date to determine whether there is any indication

of impairment.An impairment loss is recognized if the carrying amountof an asset or its cash-generating unit exceeds itsrecoverable amount. A cash-generating unit is the smallestidentifiable asset group that generates cash flows thatlargely are independent from other assets and groups.Impairment losses are recognized in profit or loss.The recoverable amount of an asset or cash-generatingunit is the greater of its value in use and its fair valueless costs to sell.Impairment losses recognized in prior periods areassessed at each reporting date for any indications thatthe loss has decreased or no longer exists. An impairmentloss is reversed if there has been a change in the estimatesused to determine the recoverable amount. An impairmentloss is reversed only to the extent that the asset’s carryingamount does not exceed the carrying amount that wouldhave been determined, net of depreciation or amortization,if no impairment loss had been recognized.

3-10 Cash and cash equivalentsFor the purpose of preparing the Statement of Cash Flows,the Company considers all cash on hands and bank ondemand deposits with banks and short-term highly liquidinvestments that are readily convertible to known amountsof cash and that are subject to an insignificant risk ofchanges in value with original maturities of three monthsor less are considered as cash and cash equivalents. TheStatement of Cash Flows is prepared according to theindirect method.

3-11 Trade and other receivablesTrade and other receivables are stated at their cost lessimpairment losses (note 3-9).

3-12 InventoriesInventories are stated at the lower of cost and net realizablevalue. Cost is determined using the weighted averagemethod and net realizable value is the estimated sellingprice in the ordinary course of business, less the estimatedcosts of completion and other addition expenses.

3-13 Non-current assets held for saleNon-current assets (or disposal groups comprising assetsand liabilities) that are expected to be recovered primarilythrough sale rather than through continuing use is classifiedas held for sale. Immediately before classification as heldfor sale, the assets (or components of a disposal group)are remeasured in accordance with the Group’s accountingpolicies. Thereafter generally the assets (or disposal group)are measured at the lower of their carrying amount andfair value less cost to sell. Any impairment loss on a disposalgroup first is allocated to goodwill, and then to remainingassets and liabilities on pro rata basis, except that no lossis allocated to inventories, financial assets, deferred taxassets, employee benefit assets, investment property andbiological assets, which continue to be measured inaccordance with the Group’s accounting policies.Impairment losses on initial classification as held for saleand subsequent gains or losses on remeasurement arerecognised in profit or loss. Gains are not recognised inexcess of any cumulative impairment loss.

3-14 TaxationIncome tax on the profit or loss for the year comprisescurrent and deferred tax. Income tax is recognized in theincome statement except to the extent that it relates toitems recognized directly in equity, in which case it isrecognized in equity.


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Current tax is the expected tax payable on the taxableincome for the year, using tax rates enacted or substantiallyenacted at the balance sheet date, and any adjustment totax payable in respect of previous years.Deferred tax is provided using the balance sheet liabilitymethod, providing for temporary differences between thecarrying amounts of assets and liabilities for financialreporting purposes and the amounts used for taxationpurposes. The amount of deferred tax provided is basedon the expected manner of realization or settlement of thecarrying amount of assets and liabilities, using tax ratesenacted or substantively enacted at the balance sheetdate.A deferred tax asset is recognized only to the extent thatit is probable that future taxable profits will be availableagainst which the asset can be utilized. Deferred tax assetsare reduced to the extent that it is no longer probable thatthe related tax benefit will be realized.

3-15 ProvisionsProvisions are recognized when the Company has a legalor constructive obligation as a result of a past event andit’s probable that a flow of economic benefits will be requiredto settle the obligation. If the effect is material, provisionsare determined by discounting the expected future cashflows at a pre-tax rate that reflects current marketassessment of the time value of money and, whereappropriate, the risks specific to the liability. Provisions arereviewed at the balance sheet date and amended (whennecessary) to represent the best current estimate.

3-16 Earning per shareThe Company presents basic earnings per share (EPS)data for its ordinary shares. Basic EPS is calculated bydividing the profit or loss attributable to ordinary shareholdersof the Company by the weighted average number ofordinary shares outstanding during the period.

3-17 Interest-bearing borrowingsInterest-bearing borrowings are recognized initially at fairvalue less attributable transaction costs. Subsequent toinitial recognition, Interest-bearing borrowings are statedat amortized cost with any difference between cost andredemption value being recognized in the income statementover the period of the borrowings on an effective interestbasis.

3-18 Issued capitalA- Repurchase of share capital

When share capital recognized as equity is repurchased,the amount of the consideration paid, including directlyattributable costs, is recognized as a change in equity.Repurchased shares are classified as treasury stockand presented as a deduction from total equity.

B- DividendsDividends are recognized as a liability in the year inwhich they are declared.

3-19 Legal reserveAs per the Company’s statutes 5% of net profit for the yearis set aside to form a legal reserve, the transfer to suchreserve ceases once it reaches 50% of the Company’spaid in share capital. The reserve can be utilized in coveringlosses or increasing the Company’s share capital. If thereserve falls below the said 50%, the Company shouldresume setting aside 5% of its annual net profit until thereserve reaches 50% of the Company’s paid in sharecapital.

3-20 Revenue recognition(i)Cellular operations revenue

GSM revenue is recognized when services rendered tothe customers based on the actual usage airtime fromthe following activities:• Prepaid cards is recognized based on the actual used

calls minutes while the unused call minutes at the endof the period are deferred.

• Monthly and connection fees are recognized in theincome statement on a straight-line basis over theperiod or the terms of the contract.

• Other GSM telecommunications services and facilitieswhen provided.

(ii) Telecommunications services revenueRevenue from the provision of telecommunicationsservices includes the following:• Goods sold

Revenue is recognized when the significant risksand rewards of ownership have been transferred tothe buyer.

• Construction contractsRevenue is recognized in proportion to the stage ofcompletion of the contract.

• Satellite servicesRevenue is recognized once the services deliveredto the client.

• VAS revenueValue Added Services (VAS) revenue is recognizedonce the services are delivered, or used by thecustomers.

• Space segment revenueSpace segment rental fees are recognized in theincome statement on a straight-line basis over theterms of the lease.

(iii)Internet and fixed lines revenueRevenue is recognized once the service deliveredto the client.

3-21 ExpensesA- Borrowing costs

Borrowing costs are recognized as expenses in theincome statement when incurred, with the exception ofborrowing cost directly attributable to the constructionand acquisition of new assets which is capitalized aspart of the relevant assets cost and depreciated overassets’ estimated useful lives. This capitalization ceasesonce the assets become in operational condition andready for use.

B- Employees’ pensionThe Company contributes to the government socialinsurance system for the benefit of its personnel inaccordance with the social insurance law. Under thislaw, the employees and the employers contribute intothe system on a fixed percentage-of-salaries basis. TheCompany’s liability is confined to the amount of itscontribution. Contributions are charged to incomestatement using the accrual basis of accounting.

3-22 Segment reportingA segment is a distinguishable component of the groupthat is engaged either in providing products or services(business segment) or in providing products or serviceswithin a particular economic environment (geographicalsegment), which is subjected to risks and rewards that aredifferent from those of other segments. The group’s primary


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format for segment reporting is based on business segment.

3-23 Discontinued operationsA discontinued operation is a component of the Group’sbusiness that represents a separate major line of businessor geographical area of operations that has been disposedof or is held for sale, or is a subsidiary acquired exclusively

with a view to resale. Classification as a discontinuedoperation occurs upon disposal or when the operationmeets the criteria to be classified as held for sale, if earlier.When an operation is classified as a discontinued operation,the comparative income statement is re-presented as ifthe operation had been discontinued from the start of the

Pledged assets• Some of the property and equipment costs which belongs to M-Link amounted to USD 830 K equivalent to L.E 4.6 million are secured by first

hypothecation charge.• Some of the property and equipment costs which belong to Trans world Association amounted to PKR 2 231 million equivalent to L.E 200 million.

Capitalized borrowings• The Egyptian Company for Mobile Services (Joint Ventures Company) capitalizes borrowing costs related to the acquisition of property and equipment.

Accordingly, Orascom Telecom Holding proportionated share from the capitalization during the financial year ended December 31, 2007 is L.E 83.88million in property and equipment and L.E 41.18 million in under construction.

• International Wireless Communication Pakistan (Subsidiary Company) capitalized borrowing costs related to the acquisition of property and equipmentduring the financial year ended December 31, 2007 amounted to PKR 1 814 million equivalents to L.E 164.14 million in property & equipment andPKR 134 million equivalent to L.E 12.18 million in under construction.

• Orascom Telecom Ventures (Subsidiary Company) capitalized borrowing costs related to the acquisition of property and equipment during thefinancial year ended December 31, 2007 amounted to TAKA 158 million equivalents to L.E 12.8 million.

* The Egyption Company for Mobile Services changed the estimated useful life of certain cell sites equipment starting 2007, resulting in a decreaseof the proportionate depreciation charge with the amount of L.E 35.7 million.

5- Investments available-for-sale

31/12/2007 31/12/2006 In thousands of L.E. In thousands of L.E.

% of Ownership % of Ownership

Smart Village (ECDMIV) Co. 10.46% 44 064 10.19% 24 026Top Level Domain Co. 5% 5 949 5% 5 949Orascom Telecom Internet Algeria Co. 20 462 19 912Link Direct International Ltd. Pakistan Co. 2 981 -Other investments (owned by subsidiaries) 20 278 17 349

93 734 67 236

Land Cell Sites Computers, Fixtures and Under Totaland equipments fittings construction

buildings and tools


CostAs at 1/1/2007 374 414 23 942 982 796 877 699 704 4 151 502 29 965 479Transfer to additions during the year - - - - (6 384 227) (6 384 227)Additions during the year 66 018 7 911 696 327 595 305 473 6 775 355 15 386 137Addition coming from new incoming companies - - 1 450 1 125 - 2 575Addition coming from changes in proportionate companies 6 395 109 155 8 213 3 570 18 326 145 659Disposals during the year (4) (87 552) (5 004) (18 201) (103 952) (214 713)Deconsolidation of subsidiaries - (1 637 919) (53 031) (39 908) - (1 730 858)Currency translation differences (1 075) (287 875) (6 264) (3 001) (24 457) (322 672As at 31/12/2007 445 748 29 950 487 1 069 836 948 762 4 432 547 36 847 380

Accumulated Depreciation & Impairment lossesAs at 1/1/2007 22 331 6 166 659 431 454 291 915 - 6 912 359*Depreciation for the year 12 815 3 289 180 185 517 160 695 - 3 648 207Addition coming from new incoming companies - - 501 526 - 1 027Addition coming from changes in proportionate companies 148 53 655 5 302 2 391 - 61 496Accumulated depreciation of disposals (1) (13 056) (2 792) (14 627) - (30 476)Impairment loss - 57 452 - 3 649 49 172 110 273Deconsolidation of subsidiaries - (449 552) (32 214) (26 395) - (508 161)Currency translation differences (1 087) (45 099) 4 046 6 174 - (35 966)As at 31/12/2007 34 206 9 059 239 591 814 424 328 49 172 10 158 759Net book value as at 31/12/2007 411 542 20 891 248 478 022 524 434 4 383 375 26 688 621Net book value as at 31/12/2006 352 083 17 776 323 365 423 407 789 4 151 502 23 053 120

4- Property and equipment


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6- Investments in associatesInvestments in associates were represented in Hutchison Telecommunications International Ltd. (associate company) investment asfollows:

31/12/2007 31/12/2006In thousands of L.E. In thousands of L.E.

Beginning balance 7 327 709 7 494 485Company share of items recognized directly in equity 3 645 (41 170)* Share of profit (loss) of associates 4 315 530 (97 324)Dividends received (4 494 124) -Currency translation differences (82 223) (28 282)Transfer to assets held for sale (note 26) (7 070 537) -

- 7 327 709

* This amount detailed as following:


Share of profits from continued operations 7 950 28 674**Share of profits from discontinued operations 9 767 171 -Impairment of investment (5 388 567) -Loss from change in ownership percentage (2 905) (3 319)Amortization of intangible assets (net of tax) (68 119) (122 679)

4 315 530 (97 324)

** This amount represents Hutchison TelecommunicationInternational Ltd. sale of its interest in Hutchison Essar –India.• On December 2005, Orascom Telecom Holding

established Orascom Telecom Eurasia Malta (100%owned subsidiary) to acquire 19.26 % of HutchisonTelecommunications International Ltd. HTIL shares whichare pledged as security for the US$ 2.5 billion syndicationloan (note 13).

• Although the Company holds less than 20% of the equityshares of Hutchison Telecommunications InternationalLtd. HTIL, and it has less than 20% of the voting powerin shareholder meetings, the Company exercises

significant influence by virtue of its contractual right toappoint two directors to the board of directors of thatCompany.

• During the first half of 2007 HTIL has issued 9.4 millionshare as a result of exercising a “Share Option Scheme”granted to its employee. Accordingly, Orascom TelecomHolding ownership percentage was decreased from19.26% to 19.22%.

• In October 2007, the board of directors decided to sellthe stake held in Hutchison Telecommunication.Accordingly, management classified the investment asheld for sale as of October 2007.

7- Advance payments for investmentsThe balance represents amounts paid in advance by some of the subsidiaries to invest in new subsidiaries which are in process offulfilling their legal procedures.

8- Intangible assets

Licenses Concession & software TotalIn thousands of L.E.

CostAs at 1/1/2007 8 063 006 834 268 8 897 274Additions during the year 1 269 194 279 604 1 548 798Additions from changes in proportionate companies 39 113 - 39 113Currency translation differences 93 645 69 93 714As at 31/12/2007 9 464 958 1 113 941 10 578 899

Accumulated AmortizationAs at 1/1/2007 2 750 179 473 527 3 223 706Amortization for the year 604 205 168 582 772 787Additions from changes in proportionate companies 18 867 - 18 867Impairment loss - 290 290Currency translation differences 41 290 895 42 185As at 31/12/2007 3 414 541 643 294 4 057 835Net Book value as at 31/12/2007 6 050 417 470 647 6 521 064Net Book value as at 31/12/2006 5 312 827 360 741 5 673 568


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* Restricted as collateral for loans and letter of guarantees.

Note 31/12/2007 31/12/2006 No. In thousands of L.E. In thousands of L.E.

Other assets (non-current)* Restricted cash at banks 41 484 - Receivable from sale of investments (25) 3 007 718 21 513Derivative Assets 250 782 89 150Prepaid expenses 3 301 -

3 303 285 110 663Other assets (current)* Restricted cash at banks 245 990 496 707 Derivative Assets 81 916 32 212Receivable from sale of investments (25) 3 151 344 -

3 479 250 528 919

9- Other assets

10- Goodwill


CostAt the beginning of the year 4 684 944 3 416 975Acquisitions through business combinations 50 275 5 011Acquisitions of minority interest 1 719 120 1 262 839Cumulative translation adjustments (27 551) 119At the end of the year 6 426 788 4 684 944

Accumulated Impairment lossesAt the beginning of the year 760 484 760 873Cumulative translation adjustments (38) (389)At the end of the year 760 446 760 484Net Book value at the end of the year 5 666 342 3 924 460Net Book value at the end of the years 2006/2005 3 924 460 2 656 122

Goodwill as at December 31, 2007 is as follows:

Net as at Net as at31/12/2007 31/12/2006


Goodwill at the parent company’s levelMobinil for Telecommunications 230 574 230 574Egyptian Company for Mobile Services 588 180 337 230Pakistan Mobile Ltd. 42 784 42 784Telecel International Ltd. 87 726 87 726InTouch for Telecommunication Services 54 386 46 423Orascom Telecom Algeria Co. 2 032 061 2 032 061Orascom Tunisia Holding 80 906 80 906Carthage Consortium Ltd. 94 370 94 370Orasinvest Holding Inc. 1 438 1 438TranseWorld Associates 5 011 5 011Oratel International Limited 892 483 892 483

Goodwill at the subsidiaries’ levelMobinil for Telecommunication in the Egyptian Company 644 644for Mobile ServicesInTouch for Telecommunication in subsidiaries 56 038 9 645Orascom Telecom Ventures in Orascom Telecom Bangladesh 59 411 61 205(Sheba Telecom previously)Orasinvest Holding in subsidiaries 2 393 345International Wireless Communication Pakistan Ltd. (IWCPL) 1 437 937 1 615

5 666 342 3 924 460


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Advance payments to suppliers 232 489 275 615Accrued revenues 893 458 620 662Deposits with others 24 667 29 143Taxes 953 746 447 890Other debit balances 245 786 181 328

2 350 146 1 554 638

11- Other debit balances


Cash on hand 9 745 24 974Banks - current accounts 2 386 128 2 968 554* Money Market funds 4 110 447 -Treasury Bills - 47 986Banks - short term deposits 386 310 1 293 768

6 892 630 4 335 282

12- Cash and cash equivalents

* Money market funds comprise basically from short term debt instruments with original maturity of three months or less. Thecarrying amount of the funds reflects their fair value.


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13- Borrowings

Borrower Lending Interest Short Term Long Term Total Currency Debt Collateral Given Institution Rate borrowings borrowings

31/12/2007 31/12/2007 31/12/2007 In thousands of L.E. Thousands

Orascom Telecom Holding A.Group of Egyptian and foreign banks 6 925 971 4 760 773 11 686 744 (Tranche A-1) Libor +2.5% US$ 1 687 453 *Pledging 16.6% in ECMS, 28.75% in Mobinil, 57.51% in OTA

& 11.06% in OTA through Oratel, (Tranche A-2) Libor +2.5% US$ 452 381 14.22% in HTIL, 100% in OTI, Orascom Tunsia Holding, (Tranche B ) 2.5% + discount rate of LE 700 000 Carthage Consortium & Oratel Internationa

Central bank of Egypt Revolving facilities Libor +2.5% € 20 310 B. Fortis bank 6.3% US$ 238 095

Moga Holding Company Mezzanine Euribor + 10 % - 143 442 143 442 € 17 500

Orascom Telecom Tunisia Group of banks Margin+ Euribor 239 367 718 100 957 467 € 132 599 *Secured by Orascom Telecom Tunisia equipments(Orascom Tunisia Holding Margin+ TMM TND 188 532 *Secured by Orascom Telecom Tunisia Fond de CommerceCarthage Consortium Ltd.)

The Egyptian Company for Mobile Services Group of banks CBE Discount rate (CDR) 339 626 1 673 490 2 013 116 LE 877 500(Mobinil for Telecommunication Co.) ECMS Time deposit return rate

CBE Mid Corridor rate LE 1 121 250 Credit Agricole 9.75% including highest over LE 53 625

drawn balance commission HSBC 9.75% including highest over LE 41 437

drawn balance commission BNB Paribas 9.75% including highest over LE 24 375

drawn balance commission NSGB 9.75% including highest over LE 29 250

drawn balance commission Banque Misr 9.75% including highest over LE 12 188

drawn balance commission

Orascom Telecom Algeria CDC Euribor +4.25% 236 496 835 243 1 071 739 € 797 * Pledge on Orascom Telecom Algeria business undertaking . DLMT 2.35%+BOA Discounted rate DZD 3 987 500 * Pledge on Orascom Telecom Algeria bank accounts.HERMES Libor +0.6% $ 85 871 * Financial commitments to meet certain financial targets related

to debt to equity ratio, annual revenues, EBITDA and debt serviceCOFACE 4.60% DZD 9 723 636 coverage.

* Other commitments covering new investments, capital structurechanges, new borrowing and fixed assets disposals.

*158 Promissory note to secure the principle amount of the loans and the corresponding interests due up to maturity date to the lenders.

Orascom Telecom Ventures Hermes Facility Libor +0.55% 152 219 1 606 792 1 759 011 US$ 120 000(Orascom Telecom Bangladesh (previously Sheba)) Group of banks Libor +3.45% US$ 130 000

Standard Chartered &Other local Bank 14.25% TAKA 2 520 000 * Pledge all the company shares in Orascom Telecom Venture andOrascom Telecom Bangladesh.

DFI Libor +3.60% Group of banks Tresury bill rate + 7.50% US$ 30 000 Group of banks 11.5% - 12.50% TAKA 1 030 000 * Lien by the company over its bank accounts.

*Guaranteed by Orascom Telecom Holding

*A first ranking floating charge by the company over certainmaterial agreements, intellectual property rights and all of its present and future receivables and tangible moveable property (Deed ofHypothecation)

Orasinvest Holding Group of Banks 11.5%-12.5% 6 106 13 201 19 307 LE 26 000 * Dividends distribution should not exceed 70% of Mobiserve (subsidiary) year's income

12.50% LE 10 000 * Total shareholders' funds retained in Mobiserve (subsidiary)11.50% LE 22 000 must not be less than L.E. 10 million

* All accounts at BNP PARIBAS Egypt bank considered guarantee

Orascom Telecom Finance SCA Bonds 7.875% - 4 173 750 4 173 750 US$ 750 000 *Guaranteed by Orascom Telecom HoldingInternational Wireless CommunicationPakistan Ltd Group of banks Libor + 0.175% - 0.7% 1 775 372 4 964 729 6 740 101 PKR 43 090 987

T-Bill rate + 2.5% - 5.5% € 415 614 * Secured by the company's present and future assets.KIBOR +0.20% to 2.625% US$ 400 762 *A pledge on the present & future receivable & fixed assets of PMCL.Euribor +0.25% to 7.8% * Negative pledge under taking in respect of the company's assets

Senior Notes 8.625% * Restrictions on financial indebtedness* Limitations on the granting of loans and guarantees*Restrictions on the payment of dividends* Limitations on disposals of assets*Restrictions on mergers or reconstructions* Limitation on permitted acquisition of assets* Restrictions on investments* Restrictions to create or incur certain lines

Intouch company Cairo Barclays Bank 11% 43 263 41 886 85 149 LE 30 000 * Guarantee from Orascom Telecom Holding not to reduce it's Cairo Barclays Bank 11.75% LE 35 000 share in Intouch capital than 51% NBAD 11.75% LE 35 000 *Owner's equity shouldn't be less than L.E 124 M.

*Transfer revenue within amount L.E 10 750 K to NBAB. * Seured by part of the company revenue.

Med Cable Calyon Bank Euribor +0.95% 23 872 56 970 80 842 € 8 397 * Guaranteed by Orascom Telecom Holding and a pledge on the fixed assets of Med Cable.

Euribor +3.5% € 2 787

Trance World Associates Group of financial institutions Kibor + 3 % 29 089 101 813 130 902 PKR 1 400 000 * Secured by the company's present and future assets.Kibor + 3 % PKR 207 500

Other 1 319 3 300 4 619Total borrowings 9 772 700 19 093 489 28 866 189Net issuance cost - (359 677) (359 677)Net borrowings 9 772 700 18 733 812 28 506 512

Hereunder some important loan agreements• On February 27, 2006 and May 25, 2006 the company signed

loan and facility agreement with a total amount of US$ 2.5 billionwith syndication of foreign & Egyptian banks.The Company utilizedUS$ 1 187 million to pay the unpaid portion of investment HutchisonTelecommunication International (note 6) while the remaining ofthe loan was utilized to repay the Company’s existing indebtednessfrom loans, bonds and to finance it’s operations. See subsequentevents (note 37).

• On February 4, 2007 Orascom Telecom Holding successfullyissued US$ 750 million of Senior Notes due 2014 through OrascomTelecom Finance S.C.A (wholly owned subsidiary). The Notesbear an interest rate 7.875% per annum and include typical highyield bond guarantees. The proceeds were used in generalcorporate purposes, which may include investments in new andexisting operation and purchase its shares.


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17- Share capitalThe Parent Company’s original authorized share capital wasfixed at LE 2.5 billion represented in 250 million shares of anominal value of LE 10 each. The original issued and paid upcapital was LE 1.1 billion represented in 110 million shares ofa nominal value LE 10 each (1 Share = 2 GDRs).

On January 25, 2007, the extraordinary general assemblyapproved the split of shares with par value of 1 L.E. Accordinglythe number of issued and paid shares become 1.1 billion shares(where five local shares equal�one GDRs).

On April 18, 2007, the extraordinary general assembly approvedreducing the share capital by cancelling treasury shares amountedto 10 million shares at a cost of L.E. 635 959 K (1,815,000GDR and 925,000 local share) accordingly, the issued and paidup capital became L.E. 1.09 billion distributed over 1.09 billionshare of a par value L.E. 1 each. (See subsequent eventsnote 37)

14- Debt due on purchase of investments


* Orascom Telecom Bangladesh (previously Sheba Telecom) 55 650 57 330** Minority interest in OTA & OTT 259 823 278 932

315 473 336 262

* The amount represents the unpaid portion of OrascomTelecom Ventures investment in Orascom TelecomBangladesh (previously Sheba Telecom) – Banglalinkthat it will be paid after the seller fulfillment of certainconditions.

** This represents the amounts due to Oratel Internationalshareholders (shareholder in OTA) , Carthage ConsortiumLtd. and Orascom Tunisia Holding shareholders(shareholders in OTT) to purchase additional stake inOrascom Telecom Algeria OTA and Orascom TelecomTunisia OTT during 2005.


Accrued taxes 3 716 847 1 479 066Deferred revenues 932 209 1 082 320Deposits from others 48 896 44 080Provisions (24) 376 124 365 662Derivative liabilities (20) 31 112 9 477Put option liabilities (22) 3 774 3 715Other credit balances 382 393 288 766

5 491 355 3 273 086

15- Other credit balances

16- Creditors


Due to shareholders (Mr. Naguib Sawiris) - 7 453Sundry creditors 151 827 137 963License payable 987 976 126 813

1 139 803 272 229

18- Other reserves


Surplus from selling treasury shares in 2003 - 16 689Employees stock option plan 306 282 257 578 Cash flow hedge loss (net) (24 890 ) (4 271)Company share of items recognized in associate’s equity (26 835 ) (41 170)Foreign exchange recognized directly in equity (13 662 ) 22 220Change in fair value of investment available for sale 13 127 10 142

254 022 261 188


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19- Treasury shares

Amount No. of sharesIn thousands L.E In thousand

Treasury shares 4 833 277 61 926Employees stock option plan – Treasury Shares 131 774 3 501

4 965 051 65 427

Fair market value for those shares amounted to L.E 5 977 million as at December 31, 2007. See Subsequent events (note 37).

20- Hedge agreements and forward rate agreementsThe group concluded Hedge agreements in order to hedgeinterest rate and foreign currency exposure. Outstandingagreements as at December 31, 2007 were as follows:

1- Orascom Telecom HoldingZero premium agreements – (cash flow hedge)A- The Company has signed interest rate SWAP

agreements to hedge the Libor interest rate fluctuationsin syndication loan (term A-1) (note 13) with CreditSuisse bank as follows:

The loss from the valuations of this agreement as atDecember 31, 2007 is L.E 16 702 thousand and representedin the Shareholders’ Equity (Other Reserves), after deductingdeferred income tax amounted to L.E 3 340 thousand andin Other Credit Balances (Derivative Liabilities).B- To hedge the LIBOR interest rate fluctuations from the

Syndication loan (Term A2) (note 13) the Companyentered into a Hedge Agreement with ABN AMROBank on the following terms:

The loss from the valuation of this agreement as atDecember 31, 2007 is L.E 7 315 thousand and representedin the Shareholders’ Equity (Other Reserves), afterdeducting deferred income tax amounted to L.E 1 463thousand and in Other Credit Balances (DerivativeLiabilities).

The loss from the valuation of this agreement as atDecember 31, 2007 is L.E 7 095 thousand and representedin the Shareholders’ Equity (Other Reserves), afterdeducting deferred income tax amounted to L.E 1 419thousand, and in Other Credit Balances (DerivativeLiabilities).

Notional amount Interest SWAP rates End ofagreements

US$ Floor Cap

1 024 621 764 4.07% 6% February, 2009

Inputs OutputsLOAN Principle Receive Principle Interest

In thousand In thousand In thousand

ECA – I US$ 30,854 Floating Libor & Euribor PKR 12,588,585 Kibor + 1.25%US$ 11,670 PKR 1,030,065

ECA – II US$ 39,072 Floating Libor & Euribor PKR 12,949,644Euro 116,080 PKR 1,206,483 Kibor + 0.72%

Euro bond US$ 250,000 8.55%PKR 137,078 PKR 15,376,675 Kibor + 4.49% and 0.075%

21- Deferred tax(A) Unrecognized deferred tax

Unrecognized deferred tax assets

31/12/2007 31/12/2006in thousands L.E in thousands L.E

Tax loss Carry forward (*) 735 212 251 369Provisions (**) 35 851 35 851

771 063 287 220

I. Notional amount Interest rates SWAP End ofagreements

US$ Fixed rate

92 000 000 5.586% February, 2009

II. Notional amount Interest rates SWAP End ofagreements

US$ Fixed rate

184 000 000 4.8875% February, 2009

2- Pakistan Mobile Communications Ltd. (Fair Value Hedge)The nominal amounts of the cross currency Swaps equal that of the debt, the dates at which the exchange of the principle isrequired equals to the debt and the interest payment dates under the cross currency swaps are the same as the interestpayment dates under the debt, it is concluded that there is no ineffectiveness in the hedge design.


77

(*) The Group did not recognize deferred income tax assetsamounting to L.E. 483 843 K during the year ending December31, 2007 arising from Orascom Telecom Bangladesh (previouslySheba Telecom). Due to the past and current losses (note 35)along with low possibility of significant profits in the foreseeablefuture, cast doubt on the company's ability to use such losses.

(**) Deferred tax assets resulted from the impact of temporarydifferences related to provisions were unrecognized due to thelikelihood that the temporary difference will not reverse in theforeseeable future.


Investment in Foreign Subsidiaries 236 982 124 848236 982 124 848

Unrecognized deferred tax liabilities

Taxable temporary differences in relation to investment in subsidiaries which deferred tax liabilities have not been recognized�dueto the company’s intention - and power - for not distributing that accumulated profit in the foreseeable future.


Beginning balance of year 898 703 815 541Exchange difference (45 685) (24 025)Acquisition of Subsidiaries 1 898 1 253Charge (credit) to the income statement 543 056 107 102Tax charged to equity (5 154) (1 168)Ending balance of the year 1 392 818 898 703

(B) Deferred tax movement

Deferred tax assets are recognized for tax loss carry forwards to the extent the realization of the related tax benefit through the future taxableprofits is probable. The group has recognized tax loss" amounted to L.E 633 040 K in December 31, 2007 compared to L.E 516 796 K in December 31, 2006.These tax losses have been accumulated during year 2004 till December 31, 2007 and it has unlimted time expiry period.

Deferred Tax Assets Tax losses Impairment of Provisions Others Offsetting Total carry forwards Intangible assets


As at 1 January 2007 (516 796) (163 590) (22 754) (35 985) 551 779 (187 346)Tax charged to equity - - - (5 154) (5 154)Charge ( Credit ) to the income statement ( 140 818) 94 158 ( 2 497) (340 615) (389 772)Acquisition of subsidiaries - - - (86) (86)Currency translation differences 24 574 3 215 708 (1 538) 26 959As at 31 December 2007 (633 040) (66 217) (24 543) (383 378) 551 779 (555 399)Offsetting 151 248Net deferred tax assets as at 31 December 2007 (404 151)

(C) Deferred tax balances

Deferred Tax Liabilities Fixed assets Tax on overseas Fair value of Others Offsetting TotalSubsidiaries Financial

Asset/Liab. In thousands of L.E.

As at 1 January 2007 1 633 669 - 4 159 - (551 779) 1 086 049Charge ( Credit ) to the income statement 491 315 479 587 (39 878) 1 804 - 932 828Acquisition of subsidiaries 1 984 - - - - 1 984Currency translation differences (73 698) - 1000 54 - (72 644)

As at 31 December 2007 2 053 270 479 587 ( 34 719) 1 858 (551 779) 1 948 217Offsetting (151 248)Net deferred tax liabilities as at 31 December 2007 1 796 969


Income tax for the year 2 028 370 754 085Deferred tax 543 056 107 102Total income tax 2 571 426 861 187

(D) Income tax expense


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22- Put option LiabilitiesOrascom Telecom Holding signed Put and Call option Agreements. As at December 31, 2007 the fair value of these options are asfollows:


Intel Capital Corporation Put option 22-1 3 774 3 715CDC Fennec Put option 22-2 - -

3 774 3 715

22-1 On May 19, 2006, as part of the agreement between OTHand Intel Capital Corporation to establish Orascom TelecomWimax Ltd-OTWL, OTH granted Intel Capital Corporationthe following options:A- Put option

Intel has the right to require OTH to buy it all its sharesin Orascom Telecom Wimax Ltd.-(OTWL) on theoccurrence of non compliance conditions or during orafter the fourth anniversary from the date of theagreement.As of December 31, 2007 the company’s managementhas estimated the fair value of this option at US$ 678K equivalent to L.E 3 774 K.

B- Commitment to sell a non financial assetIntel has the right but not the obligation to purchase

the wireless spectrum license in certain rollout countries,in case the rollout is not completed, at the same priceas paid by OTWL.Management’s estimate of the option’s fair value, asat 31 December 2007 is zero.

22-2 Orascom Telecom Algeria (subsidiary) granted an optionto one of its lending institution (CDC Fennec Ltd) wherebythe lender has the right to convert all amounts owed bythe subsidiary into shares in Orascom Telecom Holding,the option is exercisable after two years from the date ofsigning the lending agreement, 18 December 2003, anduntil all amounts due to the lender are fully settled.Management’s assessment of the option’s fair value, as at31 December 2007, is zero.

23- Net financing costs


Financing expenses (2 711 773) (1 901 356)Amortization of loan arrangement fees (3/21/A) (235 326) (181 862)Financing income 208 519 126 876Dividends from investments available for sale 7 315 2 642Gain/(Loss) from foreign currency revaluation (3/2) 237 599 (251 877)

(2 493 666) (2 205 577)


Balance at January 1, 2007 365 662Changes coming from changes in proportionate companies 8 026Made during the year 91 020Used during the year (59 650)Deconsolidation of subsidiaries (8 303)Provision no longer required (19 316)Currency translation differences (1 315)Balance at December 31, 2007 376 124

24- Provisions movement


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25- Discontinued operationOn December 2007, the company sold its investment in IraqnaCompany for Mobile Service Ltd. (Fully owned subsidiary throughOrascom Iraq Holding) for US$ 1 200 million. This amount isrepayable by the purchaser in two equal installments onDecember 2008 and December 2009. The amount was recordedat amortized cost, using a discount rate of 6% (note 9).

The comparative income statement has been re-presented toshow Iraqna results for the year ended December 31, 2007 inthe discontinued operation separately from continuing operations.Profits attributable to the discontinued operation were as follows:

2007 2006In thousands L.E In thousands L.E

Cash flows from discontinued operationNet cash from operating activities 1 645 128 1 279 757Net cash (used in) investing activities (322 872) (462 509)Net cash from financing activities - -Net cash from discontinued operation 1 322 256 817 248

26- Non-current assets held for sale1- The shareholders meeting of Consortium Algerian de

Telecommunication CAT decided on the divestiture of itsoperations and consequently initiated a sale process whichwas intended to be completed by the end of 2007.Subsequently, the Algerian Telecommunication RegulatoryARPT accepted the Company’s request for certain changesto the license subject to the survival of CAT’s operations.Following the management’s decision to continueoperations, an impairment loss of L.E 104 181 K recognizedin September 2007 was reversed in December 2007.

2- According to the board meeting held on October 2007 themanagement decided to sell the investment in HutchisonTelecommunications- During October and November 2007 the Company

concluded sale of 5% of investment in HTIL, by this salethe Company occurred losses amounted to L.E 14 697million recognized in other expense in the IncomeStatements.

As for the remaining 14.22% from the investment theCompany concluded their sale during January 2008(Subsequent events note 37).The following represent the investments in HTIL asassets classified as held for sale:

27- Earnings per shareEarnings per share are calculated using the weighted average number of ordinary shares outstanding through the year.

Note 2007No. In thousands

of L.E.

Assets classified as held for saleTransfer to assets held for sale (6) 7 070 537Sale of 5% from the investment (1 830 694)Currency translation differences (95 828)

5 144 015


Results of discontinued operationRevenue 3 629 684 3 059 180Expenses (2 085 894) (1 842 895)Results from operating activities 1 543 790 1 216 285Income tax expense (203 564) (196 072)Results from operating activities, net of income tax 1 340 226 1 020 213Gain on sale of discontinued operation 4 815 804 -Income tax on gain on sale of discontinued operation (942 964) -Profit for the year 5 213 066 1 020 213Earnings per share from discontinued operation LE (27) 5.00 0.94

Year ended Year ended31/12/2007 31/12/2006

Net profit for the year in thousands (L.E) 11 563 308 4 207 951Net profit for the year from continued operation in thousands (L.E) 6 350 242 3 187 738Net profit for the year from discontinued operation in thousands (L.E) 5 213 066 1 020 213Weighted average number of ordinary shares during the year in thousands (share) 1,043,163 1,086,814Basic and diluted earnings per share (L.E) 11.09 3.87Basic and diluted earnings per share from continued operation (L.E) 6.09 2.93Basic and diluted earnings per share from discontinued operation (L.E) 5.00 0.94


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Subsidiary name To guarantee Maximum Liability Expiry

Pioneer Co. Pella Company tax position US$ 50 million 31/12/2007

Orascom Telecom Iraq Unpaid amount from the 5.5 % + unpaid amount As long as thesupplier facility agreement USD 329 k for Alcatel & agreement is validwith Alcatel & Motorola USD 4.34 million Motorola

as of 31/12/2007.

Orascom Telecom Bangladesh Facilities from group of USD 280 million. As long as the(previously Sheba Telecom)- financial institutions. agreement is valid

Banglalink

Medcable Facilities from West LB € 16 million plus any As long as theand Calyon Bank. interest or cost. agreement is valid

28- Granted guarantees from OTH to the SubsidiariesA) Orascom Telecom Holding signed agreements as a guarantor for the following subsidiaries:-

B) Letter of Guarantee amounting to USD 50 million equivalents to L.E 278 million for Iraq’s mobile license bid that will expire asat March 31, 2008.

C) Uncovered portion to a Letter of Guarantee amounting to USD 1 million equivalents to L.E 5.6 million in favor of NTRA to guaranteeMENA Cable execution of all its obligation related to constructing, operating and renting sea cables networks and its infrastructurefor international communication.

29- Legal StatuesThe Legal Statues as at December 31, 2007 are representedin the followings:• The International Chamber of Commerce Arbitration initiated

by OTH against France Telecom S.A regarding the materialbreach of the share holders agreement in OTH’s Egyptianmobile operation interests, the Egyptian Company forMobile Services.

• Jordan Tax court claims for JD 49.2 million, income taxpayments initiated by the Jordanian Tax Authority againstPioneer Investment Ltd. (A wholly owned subsidiary ofOTH) in connection with the sale of Fastlink (Jordan MobileTelecommunication Services) in 2002 to MTC by Pioneerwhich has claimed that the tax payments are unfounded.At present OTH is not in a position to asses the casestatus.

• Arbitration initiated by Telecel , regarding the failure ofAtlantique Telecom to adhere to the terms of sale of sharesin five of Telecel’s mobile operations in Western Africa.

• PMCL the subsidiary of International Wireless CommunicationsPakistan Ltd (IWCPL) has certain cases are pending in differentcourts of law. The management of the company is confidentthat these cases will be decided in favor of the company.

• A company registered on 4 April 2005 in the name of BanglaLink Ltd, filed a suit against Orascom Telecom Bangladesh(previously Sheba Telecom Ltd.) for payment for damages ofTK 58.92 million equivalent to L.E 4.75 million and permanentmandatory injunction against the use of the name of“Banglalink”. The application for temporary injunction againstthe use of the trade mark has been rejected in the districtcourt of Dhaka, Bangladesh and the said suit in now pendingfor final hearing and disposal.

• ECMS is a party in a number of legal cases which resultedfrom carrying out its activities. Based on the legal adviceobtained, the company’s management believes that theoutcome of these law suits–individually or in aggregate –would not be material to ECMS results.

• TWA has filed applications for issuance of exemption certificateof the income tax on payments made to Tyco Telecom-munications and David Ross, USA, on the ground that theincome of the non-resident persons is not taxable in Pakistan.

Article III of the treaty for avoidance of double taxation betweenPakistan and U.S.A fortifies the company’s stance. However,no final order has been passed.

30- Contingent liabilitiesIn addition to the contingent liabilities that may arise from theabove legal statues, Orascom Telecom Holding has the followingcontingent liabilities:• The Company’s proportionate share in the Egyptian Company

for Mobile Services (ECMS) contingent liabilities is L.E 86.77million which represents the uncovered amount of the lettersof guarantee issued for the benefit of third parties.

• PMCL tax claims up to the tax year 2005 (year ended December31, 2004), is between framed and amended aggregates toRs. 2 084 million equivalent to L.E 188 million, however thefuture cash flow exposure in this respect is Rs. 556 millionequivalent to L.E 50.35 million, which has been adequatelyprovided in PMCL financial statements.

• Guarantees issued by PMCL on behalf of Dancom Online(Private) Limited Rs. 148 million equivalents to L.E 13.39million.

• Orascom Telecom Tunisie has received tax control notificationduring 2006 regarding electronic recharge sales. The totalamount claimed by the Tax Authority is estimated at TND 70.2million. In May 2007, Orascom Telecom Tunisie received thefirst judgment related to the inspection that reduced this amountto be 14 million TND. Management believes that the companyis fully compliant with Tunisian legislation and decided to bringthe case to the court appeal. Orascom Telecom Tunisie hasmade a total provision regarding this claim of TND 8.5 millionequivalent to L.E. 38.13 million. Based on the above aguarantee was given from the Arab Tunisian bank by anamount of 9.9 million TNP.

• Ring Egypt for distribution and subsidiaries contingent liabilitiesrepresented in legal cases against the company equivalentto L.E 4.68 million to the company’s clients.

• Ring Egypt for distribution and subsidiaries contingent liabilitiesrepresented in Letters of guarantee USD 4.5 million equivalentto L.E 25 million.

• Orascome Telecom Iraq upon the disposal of its investmentin (Iraqna for Mobile Services-subsidiary) the company providedwarranty to the purchaser of the investment. This warranty,


81

Exercise Year No. of Shares

2007 447 3342008 191 5002009 158 7502010 114 0002011 45 750

957 334

which dose not exceed USD 120 million, is in respect of claimsand tax covenant claim and includes all legal and otherprofessional fees and expenses payable by the company inrespect of all such claims and tax covenant claims, of whichno more than USD 60 million shall be payable in relation totax covenant claims.

31- Capital commitments• During 2007 Orascom Telecom Holding & Middle East and

North Africa Submarine Cable Company – MENA Cable(subsidiary in progress – advance payments for investments)signed agreements as collectively purchasers from a groupof suppliers with a total amount US$ 252 million to supply andinstall submarine equipments and cables in the Mediterraneanand Red Seas. The Company was billed by 11 % from thetotal amount shown in property and equipment underconstruction.

• The Company committed for approximately US$ 48 millionwhich represents the unpaid portion from Cheo Technologyinvestment in progress which will operate in DemocraticPeople’s Republic of Korea.

• The Company’s proportionate share in the Egyptian Companyfor Mobile Services capital expenditure commitments is L.E2 102 million which represents fixed assets and intangiblecontracts entered into and not yet executed as of theconsolidated balance sheet date.

• InTouch for Telecommunication Company capital expenditurescommitments amounted to L.E 153 000 which represents theunpaid capital for investment.

• Orasom Telecom Bangladesh (previously Sheba Telecom)capital commitments amounted to Euro 7.13 million and US$24.73 million equivalent to L.E 197 million to purchase tangibleand intangible assets.

• Pakistan Mobile Communication Limited (PMCL) has thefollowings commitments :1- In respect of capital and other expenditure amounted to

PKR 6 638 million equivalent to L.E 601 million.2- PMCL has entered into a forward exchange contracts in

which the company is committed to buy USD 9.9 millionwith a contractually agreed price of Rs. 608 million equivalentto L.E 55 million, Further the company has also committed

to buy EURO 23.24 million at a contractually agreed priceof Rs. 1 980 million equivalent to L.E 179 million.

• Transworld Associates Capital commitments amounted toPKR 5.5 million equivalent to L.E 498 K.

32- Employees stock option planThe Company has approved a plan to grant some of itsemployees’ stock options in the Company’s shares throughOrascom Telecom ESOP Ltd, Malta (a wholly owned subsidiary).According to this plan the employees will have the right to receivethe appreciation between the stock option price and the exerciseprice of the shares when the option vests. Orascom TelecomHolding shares held by Orascom Telecom ESOP Ltd., arepresented as treasury stock in the consolidated financialstatements.On June 10, 2003 the Board of Directors approved the allotmentof 1 650 000 shares to certain officers and key employees basedon the period of service and level of performance. Under thisstock option plan, the eligible employees will be entitled toexercise their option as follows:-

33- Segment reportingSegment information is presented in respect of the Group’sbusiness and geographical segments. The primary format,business segment, is based on the Group’s management andinternal reporting structure. Inter-segment pricing is determinedon an arm’s length basis.Segment results, assets and liabilities include items directlyattributable to a segment as well as those that can be allocatedon a reasonable basis. Unallocated items comprise mainlyinvestments, loans and borrowings and related expenses,corporate assets (primarily the company’s headquarters) andincome tax assets and liabilities.

33-1 Primary Reporting Format – Business SegmentsThe revenue analyses in the tables below are based on the type of business activities and services that are distinguishablecomponent.

Financial year ended December 31, 2007Business segments

Cellular Telecomm- Internet & Elimination Totaloperations (*) unication fixed lines

Service (**) service (***)In thousands of L.E.

Total revenue from external customers 23 597 373 3 022 118 289 931 - 26 909 422Intersegment revenue 392 036 1 905 738 - (2 297 774) -Total revenue 23 989 409 4 927 856 289 931 (2 297 774) 26 909 422Gross profit 12 449 617Other Income 165 927Distribution expenses (1 406 471)Administrative expenses (3 348 756)Remunerations and allowances for board members (4 008)Other expenses (384 725)Net financing costs (2 493 666)Share of gain of associates 4 315 530Income tax (2 571 426)Profit from continuing operation 6 722 022Profit from discontinued operation (net of tax) 5 213 066Profit for the year 11 935 088


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(*) The GSM revenue comes mainly from the following companies:• Carthage Consortium Co. including Orascom Telecom Tunisia.• Orascom Tunisia Holding Co. including Orascom Telecom Tunisia.• Egyptian Company for Mobile Services• International Wireless Communication Pakistan Ltd. including Pakistan Mobile Communication Ltd.• Orascom Telecom Algeria Co.• Orascom Telecom Ventures Co. including Orascom Telecom Bangladesh (previouslySheba Telecom -Banglalink).

(**) The Telecommunication Services revenue comes mainly from the following companies:• Ring Distribution Co.• Orasinvest Holding Co.• M-Link Co.• Arpu for Telecommunication services.

(***) The Internet and Fixed line services revenue comes mainly from the following companies:• Consortium Algerian Telecommunication.• In Touch for Telecommunication.

33-2 Secondary Reporting Format—Geographical segmentsGSM telecommunication services revenues and internetservices revenues are managed on world wide basis, butoperate in three principal geographical areas, North Africa,Middle East and South Asia. In presenting information onthe basis of geographical segments, segment revenue isbased on the geographical location of operation. Segmentassets are based on the geographical location of the assets.The group's operations are reported under geographicalsegments, reflecting their respective size of operation, they

are as follows:• North Africa: Comprising Algeria and Tunisia,• Middle East: Comprising Egypt.• South Asia: Comprising Pakistan and Bangladesh.• Others: Malta, United Kingdom and other countries.The revenue analysis in the tables below are based onthe location of the operating company, which is the sameas the location of the major customers and the location ofthe operating companies:

Financial year ended December 31, 2007Geographical segments

North Africa Middle East South Asia Others Unallocated TotalIn thousands of L.E

Total revenues 11 506 521 5 963 025 8 281 922 1 157 954 - 26 909 422

Segment assets 18 152 741 7 293 081 18 431 889 1 064 136 18 438 935 63 380 782

34- Tax status of the parent34-1 Corporate tax

Years from 1997 till 1999:The Company submitted its tax returns for these years,and received form No. 18 taxes, in the name of OrascomTechnology (formally the name of Orascom TelecomHolding) including the tax assessment with a total amountof L.E 7 million for these years. However, in January 16,2003 the Company’s management filed an appeal, againstthe assessment included in this form. On November 3,2004 the appeal committee accepted the company’sconclusion and decided to return the file back to thecorporate income tax inspectorate for inspection. OnDecember 20, 2005, the company rejected what thecorporate income tax inspectorate has ended up with, andrequested for returning the file to the internal committeein the corporate income tax inspectorate.

Year 2000-2001:The Company has received tax claim Form no. (19) taxesfor years 2000 and 2001 based on estimate calculationfrom Tax Authority .The Company rejected the assessmentand requested the return of the file to the internal committee.

Years from 2002 till 2004:The Company submitted its Income Tax returns for theseyears on the legal required dates, and the tax authorityhas not yet inspected the Company’s records for theseyears.• As per the tax return for these years, there is no corporate

tax due on the net income. Management has applied,when preparing the tax return, article No. (111) of theIncome Tax Law No. 157 for 1981. According to theaforementioned article net profit derived from activitiesthat are being undertaken abroad by independent entityis not subject to tax in Egypt.

Cellular Telecommunication Internet & Unallocated Totaloperations Services fixed lines assets/

service liabilitiesIn thousands of L.E.

Segment assets 41 980 382 1 933 531 1 027 934 - 44 941 847Unallocated assets - - - 18 438 935 18 438 935Total assets 41 980 382 1 933 531 1 027 934 18 438 935 63 380 782

Segment liabilities 9 340 528 743 705 550 560 - 10 634 793Unallocated liabilities - - - 34 923 720 34 923 720Total liabilities 340 528 743 705 550 560 34 923 720 45 558 513


83

• On 22/11/2007 The Company has received tax claimForm no. (18) taxes for years 2002 to 2004 based onestimate calculation from Tax Authority .The Companyrejected the assessment and requested the return ofthe file to the internal committee.

Year 2005-2006:Starting from 1/1/2005, the Company's profits are subjectto Egyptian Income Tax Law No. 91 for 2005 whichsupersede the law No. 157 for 1981. The company hadsubmitted its tax return for years 2005 and 2006 inaccordance to the new tax law and paid the tax due onyears 2005 and 2006.

34-2 Stamp dutyStamp duty was settled and paid up to October 31, 2003.The company’s books are currently under examination till31/12/2005 and the company hadn’t received any claimstill the balance sheet date.

34-3 Salary taxYears till 2004:The company’s books where examined and the differencesare settled.

Year 2005 and 2006:The company’s books were not examined and no claimswere received.

35- Subsidiaries going concern• During the financial year ending December 31, 2007

Orascom Telecom Bangladesh (previously Sheba Telecom)(subsidiary of Orascom Telecom Ventures) incurred a netaccumulated loss as at financial year ended 31/12/2007of TK 16 172 million equivalent to L.E 1 322 million.However the management is confident that the companywill continue in operational existence for the foreseeablefuture on the basis of improved profitability and continuedsupport of Orascom Telecom Holding. The total consolidatedassets and revenues of Orasom Telecom Bangladeshrepresent 5.33 % and 4.07 % respectively of the Grouptotal consolidated assets and revenues.

• During the financial year ending December 31, 2007Consortium Algerian Telecommunications incurred netaccumulated loss of DZD 6 129 million equivalent to L.E502 million, Orascom Telecom Holding proportionate sharein the retained losses is L.E 251 million and since theretained deficit exceeded half the company’s issued &paid-up capital, an extra-ordinary general assembly meetingwill be settled to study the going concern of the company.The total consolidated assets and revenues of ConsortiumAlgerian Telecommunications represent 0.34%, 0.06% ofthe Group total consolidated assets and revenues.

Ownership % Ownership % Country31/12/2007 31/12/2006

* Orascom Telecom Algeria Company 96.81% 96.81% AlgeriaInternational Wireless Communication Pakistan Ltd. (IWCPL) 100% 100% MaltaOrascom Iraq Holding Company 100% 100% MaltaOrascom Telecom Ventures Company 100% 100% MaltaOratel International Ltd. Company 100% 100% MaltaMoga Holding Limited Company 100% 100% MaltaRing Distribution Company 99% 99% Egypt * Orasinvest Holding Inc. Company 100% 100% MaltaM-Link Company 100% 100% MaltaMed Cable Company 100% 100% United Kingdom **Wimax Company 100% 100% United KingdomInTouch for Telecommunication Company 99.94% 93.5% Egypt*** Arpu for Communication services Company 99.1% 96.82% Egypt Trance World Associates 51% 51% Pakistan Orascom Telecom Asia Limited 100% 100% Malta*Orascom Telecom Eurasia 100% 100% MaltaSawyer Limited 100% - MaltaOrascom Telecom Services Europe Company 100% 100% FranceOrascom Telecom Wireless Europe 100% 100% FranceTelecel International Ltd. Company 100% 100% MaltaFinancial power plan Company 100% 100% MaltaOrascom Telecom Esop 100% 100% MaltaOrascom Telecom C.S Company 100% 100% MaltaOrascom Telecom SARL 100% - LuxembourgOrascom Telecom Finance SCA 100% - Luxembourg

36- Consolidated Subsidiaries and Joint Ventures Companies36-1 Fully consolidated subsidiaries:

* Includes direct and indirect ownership stake.** Wimax Company consolidated by 100 % which a result of considering the outstanding Put option and commitment to sell non financial item

agreements (note no.22-1)*** Starting from 1st of July 2007, Arpu for Communication Services Company was be consolidated through InTouch Telecommunication Company.


84

36-2 Joint Ventures Companies – proportionally consolidatedThe consolidated financial statements also include theParent’s prorate interest in the assets, liabilities, revenuesand expenses of joint ventures through proportionateconsolidation of these items in the Parent’s financialstatements.

Indicated hereunder are the joint ventures, the Parent’sprorate interest and the period for which the financialstatements have been prepared as a basis for proportionateconsolidation in the Parent’s consolidated financialstatements.

Name of the Joint Venture Prorate Interest as at CountryDecember 31, 2007

* Egyptian Company for Mobile Services 34.66% Egypt** Orascom Telecom Tunisia 50% Tunis*** Consortium Algerian Telecommunications 50% Algeria

* Proportionally consolidated for Egyptian Company for Mobile Services through direct share in:

Name of the Company Ownership % as at Country December 31, 2007

Mobinil for Telecommunications 28.75% EgyptEgyptian Company for Mobile Services 20% Egypt

** Proportionally consolidated for Orascom Telecom Tunisie through direct share in:


Orascom Tunisia Holding Co. 100% MaltaCarthage Consortium Ltd. Co. 100% Malta

*** Proportionally consolidated for Consortium Algerian Telecommunications through direct share in:


Consortium Algerian Telecommunications 33% AlgeriaInternational Telecommunication Consortium Ltd. 50% United Kingdom

37- Subsequent events• On January 3, 2008 Orascom Telecom Holding completed

and satisfied all the closing obligations pertaining to the saleof its 14.22% (remaining entire stake) in HuschisonTelecommunication International Ltd. HTIL. Accordingly theCompany has to settle part of the Syndication Credit facilityin the same date.

• On January 30, 2008 Orascom Telecom Holding announcedthat it has been granted the first commercial license to providemobile telephony services in the Democratic People’s Republicof Korea (“DPRK”) using (3G) technology.

• On January 30, 2008 a marine cable was damaged in theMediterranean Sea, which led to partial disconnection to theinternet and some of the international telecommunication inArab Republic Of Egypt–ARE. Accordingly, Ministry ofTelecommunication decided to compensate ARE users throughInternet Services providers.

• On the other hand the Internet Services providers incorporatewith Ministry of Telecommunication will claim the Internationalowners of the marine cables to adequate compensation againstoccurred losses. Currently management is unable to assesthe effects that may be arise upon that.

• On February 24, 2008, the extraordinary general assemblyapproved reducing the share capital by cancelling treasuryshares amounted to 61,9 million shares at a cost of L.E. 4831 240 K (11 612 970 GDR and 3 835 150 local share) .

• On March 2, 2008 Orascom Telecom Holding has securedcommitments and underwritings for a five year senior secured

debt facility totaling US$ 2.5 billion. The Facility will be usedto refinance the outstanding amounts under the company’sexisting US$ 2.5 billion facilities and for general corporatepurposes.

38- Financial instruments & related risk managementThe Company has exposure to the following risks because ofits business operations.• Credit risk• Liquidity risk• Market riskThis note presents information about the Company’s exposureto each of the above risks. Further quantitative disclosures areincluded throughout the financial statements.The Management has overall responsibility for the establishmentand oversight of the Company’s risk management framework.

Credit riskThis risk is represented in the trade receivables, other receivablesand due from related parties and affiliates inability to pay theirdebts. This risk is considered low as the company periodicallyassesses the recoverability of these balances and work oncollecting it.It is worth mentioning that due to the nature of the emergingmarkets, in which the group mainly operates, have a majorprepaid subscriber base, the remaining small part which comesfrom post-paid subscribers creates portion of the tradereceivables. The group controls its credit risk by the followingmethods:• Ascertainment of credit worthiness of customers.• Appointment of outside agencies to collect receivables.


85

• Monitoring of debt on a continuous basis.• Legal notices and follow-ups.In December 2007 Orascom Telecom has concluded anagreement to sell 100% of the share capital of Iraqna Companyfor Mobile Phone Services Ltd. (“Iraqna”) to MTC-Atheer, theIraqi subsidiary of Mobile Telecommunication Company K.S.C.(“Zain”) for a consideration of $1.2 billion equivalent to L.E 6.7billion. This consideration is payable over two equal annualinstallments on the first and second anniversaries of thecompletion of this sale. The credit risk has increased after theabove mentioned transaction which has resulted in large debtorsbalance. However, it is worth noting that Zain has 6 licenses inthe Middle East and 14 licenses in Sub-Saharan African Countries.As at December 31, 2007, Zain had 42.5 million of activesubscribers, and recorded consolidated revenues and net profitof US$ 5.9 billion and US$ 1.1 billion respectively. Zain had amarket capitalization of US$ 26.49 billion as at December 31,2007.The risk is also represented in having banks or financial institutionsat which cash balances are deposited or with which derivativetransactions are concluded becoming insolvent and accordinglynot being able to return the deposited funds or not being ableto execute their obligations under the derivative transactions asa result of such insolvency. This risk is being mitigated byOrascom Telecom Holding S.A.E having its main foreigncurrencies, cash accounts and derivative instruments maintainedand concluded with, to the extent it is partially possible, financialinstitutions having investment grade.

Liquidity riskThe liquidity risk is managed through prudent management ofsufficient cash and marketable securities, the availability offunding from an adequate amount of committed credit facilitiesat each operating entity that is responsible for its ownmanagement of the cash flows with consistent managementand holding company monitoring of the rolling forecast of theentity’s liquidity reserve on the basis of the expected cash flowsand committed credit facilities.

Market riskThe Group’s activities expose it primarily to the financial risksof changes in foreign currency exchange rates (see (a) below)and interest rates (see (b) below). The Group enters into avariety of derivative financial instruments to manage its exposureto interest rate and foreign currency risk, including for example:• Currency swaps to manage the foreign currency risk associated

with foreign currency denominated borrowings;• Forward FX contracts to manage FX fluctuation risk; and• Interest rate swaps to mitigate the risk of rising interest rates.Market risk exposures are supplemented by sensitivity analysis.The analysis is focused on Orascom Telecom Holding and GSMcompanies only, whose revenues and debts account for approx.88% and 96% respectively of the total revenues and consolidateddebt of the group as of December 31, 2007. Figures outlined inthe analysis are pro forma figures based on a $956 millionequivalent to L.E 5,320 million prepayment executed by OrascomTelecom Holding on January 3, 2008 (see note 37-subsequentevents), that all the closing obligations pertaining to the sale ofits 14.22% (remaining entire stake) in HutchisonTelecommunication International Ltd. HTIL were completed andsatisfied. Accordingly, the company had to settle part of theSyndication Credit facility at the same date.

A- Currency riskIn general, the operating subsidiaries are encouraged to obtainthe financing in their functional currencies in order to have anatural hedge of the foreign currency risk of such financings.However, as some transactions are executed in foreign currencies,

the Company may be subject to risk of exchange rate fluctuations.Therefore the company concluded some agreements to hedgeforeign currency exposure.The risk monitored is related to1-Financial debt, for which the single company concluded a

financing agreements in currencies other than functionalcurrencies (typically US$ and EUR);

2-Suppliers facilities, nominated in currencies other than functionalcurrencies.

3-The Holding company is exposed to currency risk on dividendincome that is denominated in a currency other than itsfunctional currency.

The total amount of liabilities exposed against EUR-risk isequivalent to L.E 2,649 million and against US$-risk is equivalentto L.E 14,681 million.Nevertheless to mention that these exposed amounts that aresubject to the below sensitivity analysis, do not include facilities– nominated in foreign currencies - for which the company /GSM subsidiary already hedged related FX risk by means ofderivatives instruments.For example, Pakistan Mobile Communication Limited (PMCL)had debts denominated in foreign currencies for USD 363 (millionequivalent to L.E 2,021 million) and EUR 245 million (equivalentto L.E 1,998 million) as of end of December 2007. Such foreigncurrency denominated debts were fully hedged by PMCLconclusion of Cross Currency Swaps, and accordingly interestpayments and principal repayments of these debts are paid inPakistani Rupees, and such debts are deemed to be effectivelydenominated in Pakistani local currency in the below analysis.

Foreign currency sensitivityAs the major outstanding foreign currency denominated monetaryitems are the debts and the suppliers facilities, the managementhas assessed OTH group exposure against foreign currencyfluctuations with an analysis of potential depreciation impact offoreign currencies.Management runs a sensitivity analysis (what if) in case EURand USD currencies appreciated vs. functional currencies of 5%and 3% respectively (equivalent to the impact on the P&L dueto the revaluation of the financial debts, Trade Payables andlong term USD license payment obligation of PMCL).As of December 2007 the “FX losses on the income statementdue to FX position of debts, Trade payables and PMCL longterm license payment obligations” would have been L.E 537million.

B- Interest Rate RiskThis risk represents interest rate changes, which may have animpact on the results of operations. The Company has loansand facilities bearing variable interest rate. The Company utilizesavailable funds – where applicable - to reduce any interestexposure in addition to the hedge agreements to hedge theinterest rate risk related to loans and facilities. The basic strategyon management of interest rate risks is to balance the debt loadwith an appropriate mix of fixed and floating interest rateborrowings based on the Group’s view on future interest ratemovements. Derivative structures may be employed for hedging interest rate risk only after obtaining the necessary approvalsfrom Orascom Telecom Holding.The risk monitored is related to the impact of movements offloating interest benchmarks on the group’s incurred financingcharges.Total debt bearing fixed interest rates as of December 31, 2007amounted to L.E 17,535 million. This above mentioned amountrepresents the combined debt which does not consider theconsolidation percentage; also it includes the floating debt portionthat has been hedged by means of interest rate swaps.


86

Total debt bearing floating interest rates as of December 31,2007 amounted to L.E 9,093 million. This floating rate debtincludes an un-triggered hedged amount of L.E 5,704 millionand shall be fixed in case 3 months LIBOR becomes lower than4.07% or higher than 6.00%Had three months LIBOR been greater than 6% or lower than4.07%, then above equivalent total amount bearing fixed interestrate debts would have been L.E 23,239 million, while debtsbearing floating interest rates would have been L.E 3,389 million.The above values were calculated based on the managementperception of various interest benchmarks, where debts peggedto stable interest benchmarks are perceived as fixed interest rates.

All above figures were calculated after considering impact oftriggered interest hedging instruments of the group as ofDecember 31, 2007.Management runs a sensitivity analysis (what if) benchmarksrelated to floating un-triggered debts outstanding as of 31.12.2007(pro forma for $956 million prepayment executed on January 3,2008) were 100 bps higher and such debt level was outstandingthroughout 2007. The impact of this sensitivity analysis is anadditional L.E 81 million financing charges to be incurred by thegroup hitting the income statement.

2007 2006In thousands of L.E. In thousands of L.E.

Profit before income tax from continuing operations 9 293 448 4 456 900Add: profit from discontinuing operations 5 213 066 1 020 213Add: income tax expenses from discontinued operation 203 564 196 072

14 710 078 5 673 185

39- Notes on Cash Flows StatementProfit before income tax and minority represents in the following

40- Comparative figuresCertain comparative figures have been reclassified to comply with the current presentation of the financial statements. Thesereclassifications are stated as below:

Before classification Afterclassification classification

31/12/2006 31/12/2006In thousands of L.E.

Property and equipment (net) 23 134 693 (81 573) 23 053 120Intangible assets (net) 5 591 995 81 573 5 673 568


Notes

• Auditor’s Report

• Consolidated Balance Sheet

• Consolidated Income Statement

• Consolidated Statement of Changes in

Shareholders’ Equity

• Consolidated Cash Flows

• Significant Accounting Policies and Notes to

the Consolidated Financial Statements

Financial StatementsInternational Financial Reporting Standards (in US$)

89

Independent Auditor’s ReportTo The Board of Directors of Orascom Telecom Holding (S.A.E)

We have audited the accompanying consolidated financial statements of Orascom Telecom Holding (S.A.E), which comprise theconsolidated balance sheet as at December 31, 2007, and the consolidated income statement, consolidated statement of changes inshareholders’ equity and consolidated cash flow statement for the year then ended, and a summary of significant accounting policiesand other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withInternational Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal controlrelevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraudor error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inaccordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatementof the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internalcontrol relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimatesmade by management, as well as evaluating the overall presentation of the consolidated financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Orascom TelecomHolding (S.A.E) as at December 31, 2007, and of its financial performance and its cash flows for the year then ended in accordancewith International Financial Reporting Standards.

KPMG Hazem Hassan

Cairo, March 31, 2008

90

Consolidated Balance SheetAs at December 31, 2007

Group C.F.O Chairman and Managing DirectorAldo Mareuse Naguib Onsi Sawiris Auditor's report "attached"

Note 31/12/2007 31/12/2006No.

Thousand US$ Thousand US$

AssetsNon-current assetsProperty and equipment (net) (3.4/3.5/5) 4 803 014 4 026 903Licenses and software (net) (3.6.ii/6) 1 171 799 989 634Goodwill (net) (3.6.i/7) 1 053 505 718 889Investments available for sale (3.7.i/8) 16 843 11 728Investments in associates (3.1.3/9) - 1 278 163Advance payments for investments (10) 31 221 4 940Deferred tax assets (3.24/25.D) 72 624 32 679Other non-current assets (11) 593 582 19 303Total non-current assets 7 742 588 7 082 239

Current assetsInventories (net) (3.9) 110 894 135 885Trade and other receivables (net) (3.8) 212 904 214 337Due from related parties 79 611 56 840Prepaid expenses 74 617 66 463Other current assets (12) 1 047 501 363 432Cash and cash equivalents (3.10/13) 1 238 568 756 198Assets classified as held for sale (3.12/27) 924 351 -Total current assets 3 688 446 1 593 155Total assets 11 431 034 8 675 394

Equity and liabilitiesEquityIssued and paid up capital (14) 316 025 318 924Legal reserve (3.14) 137 592 132 016Other reserves (15.A) 44 307 45 661Retained earnings 1 493 574 1 019 380Net profit for the year 2 021 353 720 758Translation reserves (3.2) 28 411 (41 971)Treasury shares (3.13.i/3.16.ii/15.B) (892 193) (131 470 )Total equity attributable to equity holders of the Company 3 149 069 2 063 298Minority interest 93 063 125 223Total equity 3 242 132 2 188 521

LiabilitiesNon-current liabilitiesBorrowings (3.15/17) 3 366 363 3 580 236Creditors (18) 206 514 47 485Deferred tax liabilities (3.24/25.D) 322 906 189 438Total non-current liabilities 3 895 783 3 817 159

Current liabilitiesBorrowings (3.15/17) 1 756 101 608 819Trade and other payables (3.18) 975 205 973 567Due to related parties 19 841 17 115Debt due on purchase of investments (19) 56 689 58 654Accrued expenses 498 598 440 639Other current payables (20) 986 685 570 920Total current liabilities 4 293 119 2 669 714Total liabilities 8 188 902 6 486 873Total equity and liabilities 11 431 034 8 675 394

The notes from (1) to (40) are an integral part of these consolidated financial statements

91

Consolidated Income Statementfor the financial year ended December 31, 2007

* See note (26) discontinued operation


Note 31/12/2007 31/12/2006No. Represented*


Continuing operationsCellular operations revenue (3.19.i) 4 162 772 3 363 512Telecommunications service revenue (3.19.ii) 533 126 504 493Internet service and fixed lines revenue (3.19.iii) 51 146 35 852Total revenues 4 747 044 3 903 857

Cellular operations cost (2 077 636) ( 1 570 741)Telecommunications service cost (452 430) (457 381)Internet service and fixed lines cost (21 220) (16 640)Total operating cost (3.20) (2 551 286) (2 044 762)Gross profit 2 195 758 1 859 095

Other income 28 501 33 895Distribution expenses (3.21) (248 113) (188 828)Administrative expenses (3.22) (611 237) (484 745)Remunerations and allowances for board members (707) (2 587)Other expenses ( 67 869) (55 895)Results from operating activities 1 296 333 1 160 935

Net financing costs (24) (440 139) (383 644)Share of profit (loss) of associates (9) 761 295 (16 912)Profit before income tax 1 617 489 760 379Income tax expense (3.24/25.C) (453 621) (149 648)Profit from continuing operations 1 163 868 610 731

Discontinued operationProfit from discontinued operation (net of tax) * (3.28/26) 919 628 177 282Profit for the year 2 083 496 788 013

Attributable to:Equity holders of the Company 2 021 353 720 758Minority interest 62 143 67 255Profit for the year 2 083 496 788 013Basic and diluted earnings per share (US$) (3.27/28) 1.94 0.66Basic and diluted earnings per share from continuing operations (US$) (3.27/28) 1.06 0.50

92

Consolidated Statement of Changes in Shareholders' Equityfor the financial year ended December 31, 2007


Attributable to equity holders of the company

Note Issued & Legal Other Retained Net profit for Translation Treasury Total Minority Total No. paid up capital reserve reserves earnings the year reserves shares interest equity

Thousand US$

Balance as at 1/1/2006 318 924 123 910 34 519 502 833 666 731 (70 237) (28 109) 1 548 571 123 299 1 671 870Transfer to retained earnings - - - 666 731 (666 731) - - - - -Transfer to legal reserve - 8 106 - (8 106) - - - - - -Cash flow hedge transferred to income statement - - (70) - - - - (70) - (70)Cash flow hedges loss taken to equity (net) (3.3) - - (745) - - - - (745) - (745)Company share of items recognized directly in associate's equity - - (7 181) - - - - (7 181) - (7 181)Employees share option plan - - 17 487 - - - - 17 487 - 17 487Foreign exchange recognized in equity - - 3 876 - - - - 3 876 - 3 876Change in fair value of investments available for sale - - (2 225) - - - - (2 225) - (2 225)Dividends to shareholders - - - (135 549) - - - (135 549) - (135 549)Dividends to minority - - - - - - - - (56 896) (56 896)Acquisition of minority interest - - - - - - - - (13 278) (13 278)Net sale/purchase of treasury shares (3.13.i) - - - - - - (102 863) (102 863) - (102 863)Net profit for the year ended 31/12/2006 - - - - 720 758 - - 720 758 67 255 788 013Foreign currency translation differences of foreign operations - - - (6 529) - 28 266 (498) 21 239 4 843 26 082Balance as at 31/12/2006 318 924 132 016 45 661 1 019 380 720 758 (41 971) (131 470) 2 063 298 125 223 2 188 521

Balance as at 1/1/2007 318 924 132 016 45 661 1 019 380 720 758 (41 971) (131 470) 2 063 298 125 223 2 188 521Transfer to retained earnings - - - 720 758 (720 758) - - - - -Transfer to legal reserve - 5 576 - (5 576) - - - - - -Cancellation of treasury shares (2 899) - (3 119) (105 164) - - 111 182 - - -Cash flow hedges loss taken to equity (net) (3.3) - - (3 728) - - - - (3 728) - (3 728)Foreign exchange recognized directly in equity - - (6 425) - - - - (6 425) - (6 425)Company share of items recognized in associate's equity - - 2 576 - - - - 2 576 - 2 576Change in fair value of investments available for sale - - 590 - - - - 590 - 590Dividends to shareholders - - - ( 132 813) - - - (132 813) - ( 132 813)Employee share option plan - - 8 752 - - - - 8 752 - 8 752Dividend to minority - - - - - - - - ( 64 113) ( 64 113)Acquisition of minority interest - - - - - - - - ( 35 501) ( 35 501)Net sale/purchase of treasury shares (3.13.i) - - - - - - ( 855 102) (855 102) - ( 855 102)Net profit for the year ended 31/12/2007 - - - - 2 021 353 - - 2 021 353 62 143 2 083 496Foreign currency translation differences of foreign operations - - - ( 3 011) - 70 382 ( 16 803) 50 568 5 311 55 879Balance as at 31/12/2007 316 025 137 592 44 307 1 493 574 2 021 353 28 411 ( 892 193) 3 149 069 93 063 3 242 132

93

Consolidated Statement of Cash Flowsfor the financial year ended December 31, 2007


Note 31/12/2007 31/12/2006No.


Cash flows from operating activitiesNet profit for the year before tax and minority (39) 2 573 027 971 732Adjustments to reconcile net profit to cashflows from operating activitiesDepreciation, amortization and impairment of assets 800 652 593 444Amortization of arrangement fees (24) 41 514 31 602Share of results of associated companies (9) (761 295) 16 912Dividends from available-for-sale (24) (1 290) (459)Provisions and allowances 44 335 50 021Unrealized foreign exchange differences ( 47 794) 40 409Interest income (36 784) (24 395)Interest and finance expenses 479 467 332 043Change in fair value of hedging (46 471) (21 388)Gain from sale of subsidiaries (678 232) (4 859)Capital loss 408 3 804

2 367 537 1 988 866Changes in working capitalChanges in current assets (238 692) 12 816Changes in current liabilities 118 758 171 469

2 247 603 2 173 151Income tax paid (200 295) (134 545)Interest and finance expense paid ( 495 077) (320 209)Net cash from operating activities 1 552 231 1 718 397

Cash flows from investing activitiesPayments for property and equipment (1 563 160) (1 291 117)Proceeds from sale of property and equipment 5 662 2 285Interest received 22 546 19 511Dividends received 794 090 459Payments for licenses and software (96 443) (58 637)Proceeds from sale of investments 261 543 14 235Payments for purchasing subsidiaries, joint venture & associates (374 188) (1 697 354)Net cash (used in) investing activities (949 950) (3 010 618)

Cash flows from financing activitiesProceeds from borrowings 2 324 107 3 474 300Repayment of borrowings ( 1 466 589) ( 1 417 413)Dividend paid to equity holders ( 131 303) ( 141 372)Dividend paid to minority interest ( 63 677) ( 82 286)Net proceeds from other assets 33 122 34 171Payments for treasury shares (855 771) (110 510)Proceeds from sales, lease back agreements 10 199 -Payments for capital lease obligation (2 147) (1 990)Net cash (used in) from financing activities (152 059) 1 754 900Net change in cash and cash equivalents 450 222 462 679Cash and cash equivalents as at January 1st 756 198 286 891Effect of exchange rate fluctuation on cash held 32 148 6 628Cash and cash equivalents as at December 31st (3.10/13) 1 238 568 756 198

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1- General1-1Legal status

Orascom Telecom Holding S.A.E. "the Parent Company" isan Egyptian Joint Stock Company established in accordancewith the provisions of the Companies Law No.�159 of 1981and its executive regulations. The Parent Company and itsSubsidiaries are referred to hereinafter as "the Group". TheCompany is a majority owned subsidiary of WeatherInvestments S.P.A. registered in Italy. The Company’sregistered office is located at Nile City Towers, RamletBeaulac, Cairo, Egypt.

1-2 Purpose of the companyThe Parent Company's purpose is to participate in companiesissuing securities or to increase its participation in the capitalof these companies. The Company may have interest orparticipate, by any mean, in companies and other enterprisesthat have activities similar to those of the Company or thosethat may assist the Company to achieve its objective in Egyptor abroad. It may also merge into those companies andenterprises, purchase them or affiliate them, pursuant to theprovisions of the law and its executive regulations.

1-3Financial statements authorizationThe financial statements were approved by the board ofdirectors on March 31, 2008.

2- Basis of Preparation

The significant accounting policies adopted in preparing theseconsolidated financial statements are set out below.

2-1 Statement of ComplianceThese consolidated financial statements have been preparedin accordance with International Financial Reporting Standards(IFRSs) and its interpretations adopted by the InternationalAccounting Standards Board (IASB) with dueacknowledgement of the interpretation of the InternationalFinancial Reporting Interpretation Committee (IFRIC).In compliance with the Egyptian Companies law andregulations, the Parent Company prepares its statutoryconsolidated financial statements in accordance with EgyptianAccounting Standards (EASs), these financial statementsare presented in Egyptian Pound.The primary differences between the statutory consolidatedfinancial statements and the consolidated financial statementsprepared in accordance with IFRSs and presented in US$(IFRS/US$) include, but are not limited to the following:• Recognition of certain capital lease agreements (IAS-17).• Recognition of employees' share in dividends (IAS-19).

2-2 Functional and presentation currencyThe consolidated financial statements are translated to/andpresented in US$. The Company’s reporting currency is theEgyptian pound. These translated financial statements intoUS$ are based on the Egyptian pound financial statementsand are translated as stated in note (3.2) financial statementstranslation. All financial information presented in US$ hasbeen rounded to the nearest thousand.

2-3Basis of measurementThe consolidated financial statements are prepared usingthe historical cost convention, except for the following assetsand liabilities which are measured at fair value in accordancewith IAS 39:• Derivatives financial instruments.• Financial instruments at fair value through profit and loss.• Available-for-sale financial assets.

2-4 Use of estimates and judgmentsThe preparation of financial statements in conformity with

IFRSs requires management to make judgments, estimatesand assumptions that affect the application of policies andreported amounts of assets, liabilities, income and expenses.The estimates and associated assumptions are based onhistorical experience and various other factors that arebelieved to be reasonable under the circumstances andresults of which form the basis of making the judgmentsabout carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differfrom these estimates.

The estimates and underlying assumptions are reviewed onan ongoing basis. Revisions to accounting estimates arerecognized in the period in which the estimate is revised ifthe revision affects only that period or in the period of therevision and future periods if the revision affects both currentand future periods.In particular, information about significant areas of estimatinguncertainty and critical judgments in applying accountingpolicies that have the most significant effect on the amountrecognized in the financial statements are described in thefollowing notes:• Notes (6 and 7) Measurement of recovering value of

intangible assets and goodwill.• Notes (21 and 22) Financial Instrument Valuation• Notes (25) Deferred tax assets recognition.• Notes (29 and 32) Provisions and Contingencies.

3- Significant accounting policies

The accounting policies set out below have been appliedconsistently with those applied in the previous year presentedin these consolidated financial statements and applied consistentlyto all Group entities.

3-1 Basis of ConsolidationThe consolidated financial statements comprise the ParentCompany and its principal subsidiaries (the group) and theGroup's interest in jointly controlled entities. The principalsubsidiaries and related consolidation method are set forthbelow:

3-1-1 Fully consolidated subsidiariesSubsidiaries are entities controlled by the Parent Company.Control exists when the Parent Company has the power,directly or indirectly, to govern the financial and operatingpolicies of an entity so as to obtain benefits from itsactivities. In assessing control, potential voting rights thatpresently are exercisable or convertible are taken intoaccount. The financial statements of subsidiaries areincluded in the consolidated financial statements from thedate that control commences until the date that controlceases. A listing of the principal subsidiaries is given innote (37.1).All intragroup balances and transactions, and any unrealizedgains arising from intragroup transactions are eliminatedwhen preparing the consolidated financial statements.Unrealized losses are eliminated in the same way asunrealized gains, but only to the extent that there is noevidence of impairment.• Minority interests shall be presented in the consolidated

balance sheet within equity, separately from the parentshareholders’ equity. Minority interests in the profit orloss of the group shall also be separately disclosed.

• A parent loses control when it loses the power togovern the financial and operating policies of aninvestee so as to obtain benefit from its activities.

Significant Accounting Policies and Notesto the Consolidated Financial StatementsAs at December 31, 2007

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3-1-2 Joint VenturesJoint control is the contractually agreed sharing of controlover an economic activity, and exists only when the strategicfinancial and operating decisions relating to the activity require the unanimous consent of the parties sharingcontrol (the ventures).Proportion consolidation is a method of accounting wherebya venture’s share of each of the assets, liabilities, incomeand expenses of a jointly controlled entity is combined lineby line with similar items in the venture’s financial statementsor reported as separate line item in the venture’s financialstatements. A listing of the joint ventures is given in note(37.2).

3-1-3 Investments in associatesInvestments in associates are stated at equity method.Under the equity method the investment in associates isinitially recognized at cost and the carrying amount isincreased or decreased to recognize the investor’s shareof the profit and loss of the associates after the date ofacquisition. Dividends received from associates reducethe carrying amount of the investment.Losses of an associate in excess of the Company’s interestin that associate (which includes any long-term intereststhat, in substance, form part of the Company’s netinvestment in the associate) are not recognized, unlessthe Company has incurred legal or constructive obligationsor made payments on behalf of the associate.Any excess of the cost of the acquisition over theCompany’s share of the net fair value of the identifiableassets, liabilities and contingent liabilities of the associaterecognized at the date of acquisition is recognized asgoodwill. The goodwill is included within the carryingamount of the investment and is assessed for impairmentas part of the investment.

3-2Foreign CurrencyIn line with IAS 21 (The effects of Changes in ForeignExchange Rates) foreign currency transactions and financialstatements of foreign operations are translated as follows:

Foreign currency transactionsThe Parent Company and its subsidiaries maintain theiraccounting books in local currencies of the economies inwhich they operate. Transactions in foreign currencies aretranslated to local currency at the foreign exchange rateapplicable at the date of the transaction. Monetary assetsand liabilities denominated in foreign currencies at the balancesheet date are translated to local currency at the foreignexchange rate applicable at that date. Foreign exchangedifferences arising on translation are recognized in the incomestatement.

Financial statements translationThe assets and liabilities of the Parent Company and itssubsidiaries, and its proportionate share in the assets andliabilities of joint ventures including goodwill are translatedto US$ at foreign exchange rates applicable at the balancesheet date. The revenues and expenses are translated toUS$ at the average foreign exchange rate for the period.Shareholders’ equity accounts are translated at historicalexchange rates. Foreign exchange differences arising ontranslation are recognized directly in a separate componentof equity. On disposition of a subsidiary, the related currencytranslation differences are recognized in the income statementas a component of the gain and loss on disposal.

3-3 Derivative financial instrumentsThe Group uses derivative financial instruments to hedge

its exposure to foreign exchange and interest rate risksarising from operational, financial and investment activitiesand to manage cash in various currencies. In accordancewith its treasury policy, the Group does not hold or issuederivative financial instruments for trading purposes. However,derivatives that do not qualify for hedge accounting areaccounted for as trading instruments.

In line with IFRS 7 (Financial Instruments: Disclosures) andIAS 32 (Financial Instruments: Presentation), derivatives arereported within the current assets and the current liabilitiesitems in the consolidated balance sheet and based on IAS39 (Financial Instruments: Recognition and Measurement),derivatives are recognized initially at fair value; attributabletransaction costs are recognized in profit or loss whenincurred. Subsequent to initial recognition, derivatives aremeasured at fair value, and changes therein are accountedfor as described below.

Changes in the fair value of the derivative hedging instrumentdesignated as a cash flow hedge are recognized directly inequity to the extent that the hedge is effective. To the extentthat the hedge is ineffective, changes in fair value arerecognized in profit or loss. If the hedging instrument no longer meets the criteria forhedge accounting, expires or is sold, terminated or exercised,then hedge accounting is discontinued prospectively. Thecumulative gain or loss previously recognized in equityremains in place until the forecast transaction occurs. Whenthe hedged item is a non-financial asset, the amountrecognized in equity is transferred to the carrying amount ofthe asset when it is recognized. In other cases the amountrecognized in equity is transferred to profit or loss in thesame period that the hedged item affects profit or loss.

Changes in the fair value of a derivative hedging instrumentdesignated as a fair value hedge are recognized in profit orloss. The hedged item also is stated at fair value in respectof the risk being hedged, with any gain or loss beingrecognized in profit or loss.

3-4Property and equipmentOwned assetsIn line with IAS 16 (Property, Plant and Equipment), itemsof property and equipment are stated at historical cost lessaccumulated depreciation and impairment losses (seeaccounting policy 3.11). The cost of self-constructed assetsincludes the cost of materials, direct labour and an appropriateproportion of production overheads.Where parts of an item of property and equipment havedifferent useful lives, they are accounted for as separateitems of property and equipment.

Leased assetsLeases for which the Group assumes substantially all therisks and rewards of ownership are classified as financeleases. Assets acquired by way of finance leases are statedat an amount equal to the lower of its fair value and thepresent value of the minimum lease payments at the inceptionof the lease, less accumulated depreciation and impairmentlosses (see accounting policy 3.11).The interest expense component of finance lease paymentsis recognized in the income statement using the effectiveinterest rate method. All other leases are classified asoperating leases. Rentals payable under operating leasesare charged to the income statement on straight-line basisover the terms of the relevant lease contract.


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Subsequent costsThe Group recognizes in the carrying amount of an item ofproperty and equipment the cost of replacing part of suchan item when that cost is incurred if it is probable that thefuture economic benefits embodied with the item will flow tothe Group and the cost of the item can be measured reliably.All other costs are recognized in the income statement asan expense as incurred.

DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful life of each part of anitem of property and equipment. The estimated useful livesare as follows:

The residual value, if significant, is reassessed annually.

3-5 Property and equipment under constructionProjects under construction are recognized at cost less anyimpairment losses (see accounting policy 3.11). Cost includesall expenditures directly attributable to bringing the asset toa working condition for its intended use. Projects underconstruction are transferred to property and equipmentcaption when they are completed and are ready for theirintended use.

3-6 Intangible assets(i) Goodwill

In line with IFRS 3 (Business Combinations), all businesscombinations are accounted for by applying the purchasemethod. Goodwill represents amounts arising on acquisitionof subsidiaries, associates and joint ventures and representsthe difference between the cost of acquisition and thegroup's share in the fair value of the underlying assetsand liabilities of the acquired business.• Positive goodwill is stated at cost less impairment losses

(note 3.11).• Negative goodwill arising from business combinations

after applying International Financial Reporting Standards(IFRS3) will be recognized directly in the incomestatement.

• Goodwill resulting from further acquisitions after controlis obtained is determined on the basis of the cost ofadditional investment and the carrying amount of netassets at the date of acquisition, accordingly, no fairvalue adjustments would be recognized.

(ii) Other intangible assetsIn line with IAS 38 (Intangible Assets), other intangibleassets, such as licenses, concession and computersoftware acquired by the Group, are stated at theiracquisition cost less accumulated amortization andimpairment losses (see accounting policy 3.11).Expenditure on internally generated goodwill and brandsis recognized in the income statement as an expense asincurred.Amortization is charged to the income statement on astraight-line method over the estimated useful lives ofintangible assets unless such lives are indefinite. Goodwilland intangible assets with an indefinite useful life aresystematically tested for impairment at each balance sheet

date. Other intangibles are amortized from the date theyare available for use. The estimated useful lives are asfollows:

• Licenses Fees Over the remainingperiod of the licenses term

• Concessions and Computers software 3-15 years

(iii) Subsequent expenditureSubsequent expenditure on capitalized intangible assetsis capitalized only when it increases the future economicbenefits embodied in the specific asset to which it relates.All other expenditure is expensed as incurred.

3-7 Investments(i) Investments available for sale

Investments available-for-sale are valued at fair value,with any resulting gain or loss being recognized in equity,except for impairment losses which are recognized in theincome statement. When these investments arederecognized, the cumulative gain or loss previouslyrecognized directly in equity is recognized in the incomestatement.The fair value of investments available for sale, is thequoted bid price at the balance sheet date while investmentsthat are not quoted are valued using valuation techniques.Investments available-for-sale are recognized /derecognized by the Group on the date it commits topurchase/sell the investments.

(ii) Investments at fair value through profit or lossAn instrument is classified at fair value through profit orloss if it is held for trading or is designated as such uponinitial recognition. Financial instruments are designated atfair value through profit or loss if the Group manages suchinvestments and makes purchase and sale decisionsbased on their fair value. Upon initial recognition, attributabletransaction costs are recognized in profit or loss whenincurred. Financial instruments at fair value through profitor loss are measured at fair value, and changes thereinare recognized in profit or loss.

3-8 Trade and other receivablesTrade and other receivables are stated at their cost lessimpairment losses (see accounting policy 3.11). An impairmentloss for trade receivables is recognized when there is objectiveevidence that the Group will not be able to collect all theamounts due according to the original terms of the receivable.The amount of the impairment losses is the differencebetween the carrying amount and the recoverable amountdetermined on a discounted cash flow basis.

3-9 InventoriesIn line with IAS 2 (Inventories), inventories are stated at thelower of cost and net realizable value. Cost is based on"weighted average" method. Net realizable value is theestimated selling price in the ordinary course of business,less the estimated costs of completion and selling expenses.

3-10 Cash and cash equivalentsIn line with IAS 7 (Cash Flow Statements), cash and cashequivalents comprise cash balances, call deposits and short-term highly liquid investments that are readily convertible toknown amounts of cash, and that are subject to an insignificantrisk of changes in value, with original maturities of threemonths or less. Bank overdrafts that are repayable on demandand form an integral part of the Group’s cash managementare included as a component of cash and cash equivalents.The statement of cash flows is prepared according to theindirect method.

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


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3-11 Impairment 3-11-1 Financial assets

A financial asset is considered to be impaired if objectiveevidence indicates that one or more events have had anegative effect on the estimated future cash flows of thatasset. An impairment loss in respect of a financial assetmeasured at amortized cost is calculated as the differencebetween its carrying amount, and the present value of theestimated future cash flows discounted at the originaleffective interest rate. An impairment loss in respect of anavailable-for-sale financial asset is calculated by referenceto its current fair value.Individually significant financial assets are tested forimpairment on an individual basis. The remaining financialassets are assessed collectively in groups that sharesimilar credit risk characteristics.All impairment losses are recognized in profit or loss. Anycumulative loss in respect of an available-for-sale financialasset recognized previously in equity is transferred profitor loss.An impairment loss is reversed if the reversal can berelated objectively to an event occurring after the impairmentloss was recognized. For financial assets measured atamortized cost and available-for-sale financial assets thatare debt securities, the reversal is recognized in profit orloss. For available-for-sale financial assets that are equitysecurities, the reversal is recognized directly in equity.

3-11-2 Non-financial assetsThe carrying amounts of the Group’s non-financial assets,other than inventories and deferred tax assets are reviewedat each reporting date to determine whether there is anyindication of impairment. If any such indication exists thenthe asset’s recoverable amount is estimated. For goodwilland intangible assets that have indefinite lives or that arenot yet available for use, recoverable amount is estimatedat each reporting date.An impairment loss is recognized if the carrying amountof an asset or its cash-generating unit exceeds itsrecoverable amount. A cash-generating unit is the smallestidentifiable asset group that generates cash flows thatlargely are independent from other assets and groups.Impairment losses are recognized in profit or loss.Impairment losses recognized in respect of cash-generatingunits are allocated first to reduce the carrying amount ofany goodwill allocated to the units and then to reduce thecarrying amount of the other assets in the unit (group ofunits) on a pro rata basis.The recoverable amount of an asset or cash-generatingunit is the greater of its value in use and its fair value lesscosts to sell. In assessing value in use, the estimatedfuture cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current marketassessments of the time value of money and the risksspecific to the asset.An impairment loss in respect of goodwill is not reversed.In respect of other assets, impairment losses recognizedin prior periods are assessed at each reporting date forany indications that the loss has decreased or no longerexists. An impairment loss is reversed if there has beena change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extentthat the asset’s carrying amount does not exceed thecarrying amount that would have been determined, net ofdepreciation or amortization, if no impairment loss hadbeen recognized.

3-12 Non-current assets held for saleNon-current assets (or disposal groups comprising assetsand liabilities) that are expected to be recovered primarilythrough sale rather than through continuing use are classifiedas held for sale. Immediately before classification as heldfor sale, the assets (or components of a disposal group) areremeasured in accordance with the Group’s accounting policies. Thereafter the assets (or disposal group) aremeasured at the lower of their carrying amount and fair valueless cost to sell. Any impairment loss on a disposal groupis firstly allocated to goodwill, and then to remaining assetsand liabilities on pro rata basis, with the exception ofinventories, financial assets, deferred tax assets, employeebenefit assets, investment property and biological assets,which continue to be measured in accordance with theGroup’s accounting policies. Impairment losses on initialclassification as held for sale and subsequent gains or losseson remeasurement are recognized in profit or loss. Gainsare not recognized in excess of any cumulative impairmentloss.

3-13 Issued capital(i) Repurchase of share capital

When share capital recognized as equity is repurchased,the amount of the consideration paid, including directlyattributable costs, is recognized as a change in equity.Repurchased shares are classified as treasury shares andpresented as a deduction from total equity.

(ii) DividendsDividends are recognized as a liability in the year in whichthey are declared.

3-14 Legal reserveAs per the Egyptian Companies Law and the ParentCompany's statutes, 5% of net profit for the year is set asideto form�a legal reserve, which can be used to increase theParent Company share capital or to offset losses. It is possibleto cease the transfer to the reserve if the reserve amountreaches 50% of the paid-up capital. If the reserve falls belowthe said 50%, the Parent Company is required to resumesetting aside 5% of annual net profit into the legal reserveuntil the reserve reaches 50% of paid up capital.

3-15 Interest-bearing borrowingsInterest-bearing borrowings are recognized initially at fairvalue less attributable transaction costs. Subsequent to initialrecognition, interest-bearing borrowings are stated atamortized cost with any difference between cost andredemption value being recognized in the income statementover the period of the borrowings on an effective interestbasis.

3-16 Employee benefits (i) Defined contribution plans

In line with IAS 19 (Employee Benefits), contributions todefined contribution pension plans are recognized as anexpense in the consolidated income statement whenincurred.

(ii) Employees Share Option Plan (ESOP)The Group has established an ESOP that provides for thegranting of share options to key employees. The shareoptions are exercisable over a period of three years. Asoptions are granted, the Group generally purchases in themarket the number of shares that would fall due to beissued on exercise of the option. Based on IFRS 2 (Share-based Payment) and IAS 19 (Employee Benefits), expensesresulting from the share options granted are reported inthe consolidated income statements and initially measured


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at the grant date based on the difference between theoption price and the market value of the share, withperiodical adjustments subsequently made for market pricefluctuations.

3-17 ProvisionsIn line with IAS 37 (Provisions, Contingent Liabilities andContingent Assets), a provision is recognized in the balancesheet when the Group has a current legal or constructiveobligation as a result of a past event, and it is probable thatan economic outflow will be required to settle the obligation.Provisions are reviewed on each balance sheet date andamended (when necessary) to represent the most accuratecurrent estimate.

3-18 Trade and other payablesTrade and other payables are stated at cost.

3-19 RevenueThe Group’s main business is to operate GSM mobilenetworks, provide internet services and retail sales of handsetsto its customers.The group revenue recognition polices are as follows:

(i) Cellular operating revenue (GSM)Airtime usage, interconnection, and roaming revenues arerecognized when the service is rendered to the customerbased on the actual airtime usage, while unused callminutes at the end of the year/period are deferred. Monthlyfees are recurring monthly subscription fees, and connectionfees are one-time fees paid for the line or connection.Monthly and connection fees are recognized in the incomestatement upon activation of the line.

(ii) Telecommunications services revenueSales revenues, primarily from handset sales, arerecognized in the income statement when the significantrisks and rewards of ownership have been transferred tothe buyer. No revenues are recognized if there aresignificant uncertainties regarding recovery of theconsideration due, the associated costs or the possiblereturn of goods sold.• Goods sold: Revenue recognized when the significant

risks and rewards of ownership transferred to thebuyer.

• Construction contracts: Revenues from constructioncontracts are recognized when the outcome of aconstruction contract can be estimated reliably.Construction contract revenue is recognized in theincome statement in proportion to the stage ofcompletion of the contract. The stage of completion isassessed by reference to surveys of work performed.Any expected loss on a contract is recognizedimmediately in the income statement.

• International carrier services: international carrierservices revenue, including international traffic revenue,leased lines revenue, international roaming revenue,and other revenue is recognized in the incomestatement once the service is delivered to the client.

• Value Added Services (VAS) revenue: VAS revenueis recognized in the income statement once the serviceis rendered to or used by the customer.

(iii) Internet service and fixed lines revenueInternet services and fixed lines revenues are recognizedin the income statement once the service is rendered tothe customer.

(iv) Other revenuesInterest income is recognized in the income statement asit accrues, using the effective interest method. Dividend

income is recognized in the income statement on the datethe entity’s right to receive payments is established.

3-20 Operating CostsOperating costs, often referred to as cost of sales, areincurred by the Group in connection with the provision oftelecommunications services, and include the dealercommissions, interconnection costs, roaming costs, SIMcard cost, scratch card cost, cost of handsets, recurringlicense and regulatory fees, leased lines, IT maintenanceand repair, network rental expenses and other direct costs.

Operating costs are recognized under the accrual basis ofaccounting when they occur and there is a direct associationbetween the costs incurred and the earning of specific itemsof income.

3-21 Distribution expensesThese items include, but are not limited to, advertising,marketing and sales promotion expenses. These expensesare recognized on an accrual basis.

3-22 Administrative expensesThese items include, but are not limited to, wages andsalaries, travel expenses and office expenses. Theseexpenses are recognized on an accrual basis.

3-23 Interest expenseIn line with IAS 23 (Borrowing Costs), borrowing costs arerecognized as expenses in the income statement whenincurred, with the exception of borrowing costs that aredirectly attributable to the construction, and acquisition ofnew assets which are capitalized as part of the relevantassets cost and depreciated over the assets' estimated usefullives. This capitalization ceases once the assets are inoperating condition and ready for use.

`

3-24 Income TaxIncome tax on the profit or loss for the year includes currentand deferred taxes. Income tax is recognized in the incomestatement except to the extent that it relates to itemsrecognized directly in equity, in which case it is recognizedin equity.

Current tax is the expected tax payable on the taxable incomefor the year, using tax rates enacted or substantially enactedat the balance sheet date, and any adjustment to tax payablein respect of previous years.

Deferred tax is provided using the balance sheet liabilitymethod, providing for temporary differences between thecarrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for taxation purposes. Theamount of deferred tax provided is based on the expectedmanner of realization or settlement of the carrying amountof assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.A deferred tax asset is recognized only to the extent that itis probable that future taxable profits will be available againstwhich the asset can be utilized. Deferred tax assets arereduced to the extent that it is no longer probable that therelated tax benefit will be realized.

3-25 Gain (loss) from sale of subsidiariesIn line with IAS 27 (Consolidated and Separate FinancialStatements), gain (loss) from sale of subsidiaries is thedifference between the proceeds from the disposal of thesubsidiary and the aggregate carrying amount of thesubsidiary assets less liabilities and the currency translationdifferences as of the date of disposal.


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3-26 Segment reportingIn line with IAS 14 (Segment Reporting), a segment is adistinguishable component of the Group that is engagedeither in providing products or services (business segment)or in providing products or services within a particulareconomic area (geographical segment), which is subject torisks and rewards that are different from those of othersegments. The primary format, business segments, is basedon the Group’s management and internal reporting structure.

3-27 Basic and diluted earnings per shareThe Group presents basic and diluted earnings per share(EPS) data for its ordinary shares. Basic EPS is calculatedby dividing the profit or loss attributable to ordinaryshareholders of the Company by the weighted averagenumber of ordinary shares outstanding during the period.

3-28 Discontinued operationsA discontinued operation is a component of the Group’sbusiness that represents a separate major line of businessor geographical area of operations that has been disposedof or is held for sale, or is a subsidiary acquired exclusivelywith a view to resale. Classification as a discontinued operationoccurs upon disposal or when the operation meets the criteria

to be classified as held for sale, if earlier. When an operationis classified as a discontinued operation, the comparativeincome statement is represented as if the operation hadbeen discontinued from the beginning of the comparativeperiod.

4- Segment reportingSegment information is presented in respect of the Group’sbusiness and geographical segments. The primary format,business segment, is based on the Group’s management andinternal reporting structure. Inter-segment pricing is determinedon an arm’s length basis.Segment results, assets and liabilities include items directlyattributable to a segment as well as those that can be allocatedon a reasonable basis. Unallocated items comprise mainlyinvestments, loans and borrowing and related expenses,corporate assets (primarily the company’s headquarters), andincome tax assets and liabilities.

4-1 Primary Reporting Format – Business SegmentsThe revenue analysis in the tables below are based on thetype of business activities and services that havedistinguishable components.

Year ended December 31, 2007Business segments

(*) The GSM revenue comes mainly from the following companies:• Carthage Consortium Co. & Orascom Tunisia Holding Co. including Orascom Telecom Tunisia.• Egyptian Company for Mobile Services.• International Wireless Communication Pakistan Ltd. including Pakistan Mobile Communication Ltd.• Orascom Telecom Algeria Co.• Orascom Telecom Ventures Co. including Orascom Telecom Bangladesh (previously Sheba Telecom).

(**)The Telecommunication Services revenue comes mainly from the following companies:• Ring Distribution Co.• Orasinvest Holding Co.• M-Link Co.• Arpu for telecommunications services.

(***) The Internet and Fixed line services revenue comes mainly from the following companies:• Consortium Algerian Telecommunication.• In Touch for Telecommunication.

Cellular Telecommunication Internet & Unallocated Totaloperations Services fixed lines assets/

service liabilitiesThousand US$

Segment assets 7 583 617 348 842 185 028 - 8 117 487Unallocated assets - - - 3 313 547 3 313 547Total assets 7 583 617 348 842 185 028 3 313 547 11 431 034

Segment liabilities 1 678 563 133 640 98 933 - 1 911 136Unallocated liabilities - - - 6 277 766 6 277 766Total liabilities 1 678 563 133 640 98 933 6 277 766 8 188 902


Cellular Telecomm- Internet & Elimination Totaloperations unication fixed linesRevenue Service service (GSM) (*) Revenue (**) Revenue (***)

Thousand US$

Total revenue from external customers 4 162 772 533 126 51 146 - 4 747 044Inter-segment revenue 69 158 336 188 - (405 346) -Total revenue 4 231 930 869 314 51 146 (405 346) 4 747 044Gross profit 2 085 136 80 696 29 926 - 2 195 758Other income 28 501Distribution expenses (248 113)Administrative expenses (611 237)Remunerations and allowances for board members (707)Other expenses (67 869)Net financing costs (440 139)Share of profit of associated companies 761 295Income tax expense (453 621)Net profit from continuing operations 1 163 868Profit from discounted operation (net of tax) 919 628Profit for the year 2 083 496

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4-2 Secondary Reporting Format—Geographical segmentsCellular operations, Telecommunication services revenuesand internet services revenues are managed on world widebasis, but operate in three principal geographical areas,North Africa, Middle East and South Asia. In presentinginformation on the basis of geographical segments, segmentrevenue is based on the geographical location of operation.Segment assets are based on the geographical location ofthe assets. The group's operations are reported undergeographical segments, reflecting their respective size of

operation, they are as follows:• North Africa: Comprising Algeria and Tunisia,• Middle East: Comprising Egypt,• South Asia: Comprising Pakistan and Bangladesh,• Others: Comprising Malta and other countries.The revenue analysis in the tables below are based on thelocation of the operating company, which is the same as thelocation of the major customers and the location of theoperating companies:

Financial year ended December 31, 2007Geographical segments

North Africa Middle East South Asia Others Unallocated TotalThousand US$

Total revenues 2 029 845 1 051 927 1 460 999 204 273 - 4 747 044

Segment assets 3 265 859 1 337 343 3 323 065 191 219 3 313 548 11 431 034

Land Cell Sites Computers, Fixtures and Under Totaland Equipments fittings Construction

Buildings and toolsThousand US$

CostAs at 1/1/2007 68 323 4 181 329 138 998 122 408 724 141 5 235 199Transfer to additions during the year - - - - (1 126 230) (1 126 230)Additions during the year 9 702 1 397 287 57 791 56 447 1 195 228 2 716 455Additions coming from new incoming companies - - 256 199 - 455Additions coming from changes in proportionate companies 1 128 19 431 1 449 630 3 233 25 871Disposals during the year (1) (15 445) (883) (3 211) (18 338) (37 878)Deconsolidation of subsidiaries - (288 942) (9 355) (7 040) - (305 337)Currency translation differences 2 071 95 221 3 988 4 050 18 470 123 800As at 31/12/2007 81 223 5 388 881 192 244 173 483 796 504 6 632 335

Accumulated Depreciation & Impairment LossesAs at 1/1/2007 3 987 1 077 816 75 258 51 235 - 1 208 296* Depreciation for the year 2 286 580 990 32 727 28 654 - 644 657Additions coming from new incoming companies - - 88 93 - 181Additions coming from changes in proportionate companies 26 9 542 935 422 - 10 925Accumulated depreciation of disposals - (2 303) (493) (2 580) - (5 376)Impairment loss - 10 135 - 644 8 674 19 453Deconsolidation of subsidiaries - (79 305) (5 683) (4 656) - (89 644)Currency translation differences (33) 34 103 3 514 3 083 162 40 829As at 31/12/2007 6 266 1 630 978 106 346 76 895 8 836 1 829 321Net book value as at 31/12/2007 74 957 3 757 903 85 898 96 588 787 668 4 803 014Net book value as at 31/12/2006 64 336 3 103 513 63 740 71 173 724 141 4 026 903

5- Property and equipment

* The Egyptian Company for Mobile Services changed the useful life of certain cell sites equipments that resultes in a decrease of the proportionatedepreciation charge with the amount of L.E 35.71 million, equivalent to US$ 6.3 million.

5-1 Pledges on Property and Equipment5-1-1 The cost of certain property and equipment owned by

M-Link amounting to US$ 830 thousand, are pledgedfor first hypothecation charge.

5-1-2 The cost of certain property and equipment owned byTrans World Associates amounting to PKR 2 213 million,equivalent to US$ 35.98 million, are pledged for its loan(see note 17).

5-2 Capitalized Borrowing CostsBased on IAS 23 (Borrowing Costs) the following subsidiariescapitalize part of their borrowing costs as follows:

5-2-1 The Egyptian Company for Mobile Services (JointVenture Company) capitalize borrowing costs related tothe acquisition of property and equipment; the group’sproportionate share from the capitalization during thefinancial year ended December 31, 2007 is L.E 83.88 million equivalent to US$ 14.79 million included in propertyand equipment, and L.E 41.18 million equivalent to US$

7.26 million in under construction.

5-2-2 International Wireless Communication Pakistan(subsidiary company) capitalized borrowing costs during2007, amounting PKR 1 814 million equivalent to US$28.95 million in property and equipment, and PKR 134million equivalents to US $ 2.14 million in under construction.

5-2-3 Orascom Telecom Ventures (subsidiary company)capitalized borrowing costs related to the acquisition ofproperty and equipment during the financial year endedDecember 31, 2007, amounted to TAKA 158 millionequivalents to US$ 2.26 million.

5-3 Leased plant and equipmentsThe Group leases buildings, telecommunication equipmentand vehicles under a number of finance lease agreements.Certain leases provide the group with the option to purchasethe equipment at a beneficial price. At December 31, 2007the net carrying amount of leased plant and machinery wasUS$ 21 222 thousand.


101

6- Licenses and softwareLicenses and software comprise:

7- Goodwill

December 31, 2007 December 31, 2006Thousand US$ Thousand US$

CostAt the beginning of the year 835 139 612 291Acquisitions through business combination 8 869 871Acquisition of minority interest 303 267 219 442Disposal of subsidiaries - (334)Currency translation differences 26 076 2 869At the end of the year 1 173 351 835 139

ImpairmentAt the beginning of the year 116 250 116 202Currency translation differences 3 596 48At the end of the year 119 846 116 250Net book value at the end of the year 1 053 505 718 889Net book value at the beginning of the year 718 889 496 089

Net as at Net as atDecember 31, 2007 December 31, 2006


Goodwill at the Parent Company’s levelMobinil for Telecommunications 55 244 53 624Egyptian Company for Mobile Services 111 038 64 985Pakistan Mobile Communication Ltd. 18 644 18 098Telecel International Limited 16 768 15 302InTouch for Telecommunication 9 773 8 402Orascom Tunisia Holding Ltd. 18 449 17 909Carthage Consortium 16 958 16 461Orascom Telecom Algeria 525 524 510 124Trans World Associate 901 874Orasinvest Holding 258 251

Goodwill at the subsidiaries’ levelMobinil for Telecommunications in ECMS 69 158InTouch in subsidiaries 10 384 1 683OTV in Orascom Telecom Bangladesh (Previously Sheba Telecom) –Banglalink 10 676 10 676Orasinvest Holding in subsidiaries 430 60International Wireless Communication Pakistan 258 389 282

1 053 505 718 889


Licenses fees Concession & Software TotalThousand US$

CostAs at 1/1/2007 1 406 420 145 520 1 551 940Additions during the year 223 897 49 324 273 221Additions coming from changes in proportionate companies 6 900 - 6 900Currency translation differences 63 585 5 324 68 909As at 31/12/2007 1 700 802 200 168 1 900 970

Accumulated AmortizationAs at 1/1/2007 479 709 82 597 562 306Amortization for the year 106 587 29 739 136 326Additions coming from changes inproportionate companies 3 328 - 3 328Impairment loss - 51 51Currency translation differences 23 951 3 209 27 160As at 31/12/2007 613 575 115 596 729 171Net book value as at 31/12/2007 1 087 227 84 572 1 171 799Net book value as at 31/12/2006 926 711 62 923 989 634

102

8- Investments available for sale

December 31, 2007 December 31,2006 Thousand US$ Thousand US$

% of Ownership % of Ownership

Smart Village (ECDMIV) 10.46% 7 918 10.19% 4 191Top Level Domain Co. 5% 1 069 5% 1 038Orascom Telecom Internet Algeria Co. 3 677 3 473Link Direct International Ltd Co. 536 -Other investments (owned by subsidiaries) 3 643 3 026

16 843 11 728

9- Investments in associatesInvestments in associates represented in Hutchison Telecommunications International Ltd. (associate company) as follows:

Hutchison Telecommunications International December 31, 2007 December 31, 2006Thousand US$ Thousand US$

Beginning balance 1 278 163 1 302 256Company share of items recognized directly in equity 643 (7 181)Share of profit (loss) of associates (*) 761 295 (16 912)Dividends received (792 800) -Transfer to assets held for sale (See note 27) (1 247 301) -Investments in associates - 1 278 163

(*) This amount detailed as following:


Share of profit from continued operation 1 402 4 983Share of profit from discontinued operation (**) 1 723 010 -Impairment of investment (950 588) -Loss from change in ownership percentage (512) (577)Amortization of intangible assets (net of tax) (12 017) (21 318)

761 295 (16 912)

(**) This amount resulted from HTIL sales of its interest in Hutchison Essar – India.• In December 2005, Orascom Telecom Holding (OTH) established Orascom Telecom Eurasia – Malta - a 100 % owned subsidiary - to acquire

19.26% of Hutchison Telecommunications International Ltd. (HTIL). These shares are pledged as security for US$ 2.5 billion syndication loan(note 17).

• Although the Company holds less than 20% of the equity shares of HTIL, and it has less than 20% of the voting power in shareholder meetings,the Company exercises significant influence by virtue of its contractual right to appoint two directors to the board of directors of that Company.

• During the first half of 2007, HTIL has issued 9.4 million shares as a result of exercising a “Share Option Scheme” granted to its employees.Accordingly, Orascom Telecom Holding ownership decreased from 19.26% to 19.22%.

• In October 2007, the board of directors decided to sell the stake held in Hutchison Telecommunication. Accordingly, management classified theinvestment as held for sale as of October 2007.

10- Advance payments for investmentsThe balance represents amounts paid by the group in advance to invest in subsidiaries which are in process of fulfilling their legalprocedures.

11- Other non-current assetsOther non-current assets comprise:

Note December 31, 2007 December 31, 2006No.


Restricted cash at banks -long term* 7 454 -Deposits to others-long term 6 472 3 753Derivative financial instruments assets (3-3) 45 064 15 550Prepaid expenses 594 -Receivables from sale of investment 533 998 -

593 582 19 303

* Restricted as collateral for loans and letters of guarantee.


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12- Other current assetsOther current assets comprise:



Advance payments to suppliers 41 777 48 164Accrued revenues 160 550 108 261Deposits with others 4 433 5 083Withholding taxes 171 383 78 125Restricted cash at banks* 44 203 86 640Derivative financial instruments assets (3-3) 14 720 5 619Receivables from sale of investment 566 279 -Other debit balances (net) 44 156 31 540

1 047 501 363 432

* Restricted as collateral for loans and letters of guarantee.

13- Cash and cash equivalentsBased on IAS 7 (Cash flow statements), cash and cash equivalents comprise:


Cash on hand 1 751 4 356Current accounts at banks and checks under collection 428 774 517 802Money market funds * 738 625 -Treasury bills - 8 370Short-term deposits 69 418 225 670

1 238 568 756 198

* Money market funds comprise basically short term debt instruments with original maturity of three months or less. The carrying amount of thesefunds reflects their fair value.

14- Authorized and issued capitalThe Parent Company’s authorized share capital is LE 2.5 billionrepresented by 250 million shares of a nominal value of LE 10each. The issued and paid up capital is LE 1.1 billion (equivalentto US$ 318 924 thousand) represented in 110 million shares ofa nominal value LE 10 each (1 Share = 2 GDRs).

On January 25, 2007, the extraordinary general assemblymeeting approved the split of shares with par value of 1 L.E.,accordingly the issued and paid up capital is distributed over1.1 billion shares (where one GDR equals five local shares).

On April 18, 2007, the extraordinary general assembly meetingapproved to reduce the share capital by disposing of treasuryshares amounting to 10 million shares at a cost of L.E. 636million (represented in 1 815 000 GDR and 925 000 local share),where 1 GDR equal 5 local shares.Accordingly the issued and paid up capital became L.E. 1.09billion (equivalent to US$ 316 025 thousand) distributed over1.09 billion share of a par value L.E. 1 each. (See subsequentevents note 38).

15- Treasury shares and other reservesA- Other reserves

Other reserves comprise:


Surplus from selling treasury shares - 3 119Change in fair value of investments available for sale 2 359 1 769Cash flow hedge loss (net) (4 473) (745)Company share in items recognized in associates equity (4 605) (7 181)Employee share option plan 53 576 44 824Foreign exchange recognized directly in equity (2 550) 3 875

44 307 45 661


104

Fair market value for these treasury shares amounted to US$ 1 074 million as at December 31, 2007.

16- Financial lease liabilities

Principal Interest Minimumlease payments

December 31, 2007Thousand US$

Less than one year 3 473 1 755 5 228 *Between one and five years 12 219 2 708 14 927 **

15 692 4 463 20 155

(*) This amount is included in trade and other payable.(**) This amount is included in sundry creditors (Note 18)

B. Treasury shares

Note Amount in Number of sharesNo. Thousand US$ Thousand

Treasury shares 868 513 61 926Employees Share Option Plan—Treasury shares (30) 23 680 3 501

892 193 65 427


105

17- Borrowings

Borrower Lending Interest Short Term Long Term Total Currency Debt Collateral Given Institution Rate borrowings borrowings

31/12/2007 31/12/2007 31/12/2007 Amounts in Thousand US$ Thousands

Orascom Telecom Holding A.Group of Egyptian and foreign banks 1 244 559 855 484 2 100 043 (Tranche A-1) Libor +2.5% US$ 1 687 453 *Pledging 16.6% in ECMS, 28.75% in Mobinil, 57.51% in OTA

& 11.06% in OTA through Oratel, 14.22% in HTIL, 100% in (Tranche A-2) Libor +2.5% US$ 452 381 OTI, Orascom Tunsia Holding, Carthage Consortium & Oratel (Tranche B ) 2.5% + discount rate of LE 700 000 International

Central bank of Egypt Revolving facilities 6.3% € 20 310 B. Fortis bank Libor +2.5% US$ 238 095

Moga Holding Company Mezzanine Euribor + 10 % - 25 776 25 776 € 17 500

Orascom Telecom Tunisia Group of banks Margin+ Euribor 43 013 129 039 172 052 € 132 599 *Secured by Orascom Telecom Tunisia equipments(Orascom Tunisia Holding Margin+ TMM TND 188 532 *Secured by Orascom Telecom Tunisia Fond de CommerceCarthage Consortium Ltd.)

The Egyptian Company for Mobile Services Group of banks CBE Discount rate (CDR) 61 029 300 717 361 746 LE 877 500(Mobinil for Telecommunication Co.) ECMS Time deposit return rate

CBE Mid Corridor rate LE 1 121 250 Credit Agricole 9.75% including highest over LE 53 625

drawn balance commission HSBC 9.75% including highest over LE 41 437

drawn balance commission BNB Paribas 9.75% including highest over LE 24 375

drawn balance commission NSGB 9.75% including highest over LE 29 250

drawn balance commission Banque Misr 9.75% including highest over LE 12 188

drawn balance commission

Orascom Telecom Algeria CDC Euribor +4.25% 42 497 150 089 192 586 € 797 * Pledge on Orascom Telecom Algeria business undertaking . DLMT 2.35%+BOA Discounted rate DZD 3 987 500 * Pledge on Orascom Telecom Algeria bank accounts.HERMES Libor +0.6% $ 85 871 * Financial commitments to meet certain financial targets related

to debt to equity ratio, annual revenues, EBITDA and debt serviceCOFACE 4.60% DZD 9 723 636 coverage.

* Other commitments covering new investments, capital structurechanges, new borrowing and fixed assets disposals.

*158 Promissory note to secure the principle amount of the loans and the corresponding interests due up to maturity date to the lenders.

Orascom Telecom Ventures Hermes Facility Libor +0.55% 27 353 288 732 316 085 US$ 120 000 * Pledge all the company shares in Orascom Telecom Venture andOrascom Telecom Bangladesh.

(Orascom Telecom Bangladesh (previously Sheba)) Group of banks Libor +3.45% US$ 130 000 * Lien by the company over its bank accounts. Standard Chartered &Other local Bank 14.25% TAKA 2 520 000 *Guaranteed by Orascom Telecom Holding DFI Libor +3.60% US$ 30 000 *A first ranking floating charge by the company over certain Group of banks Treasury bill rate + 7.50% TAKA 1 030 000 material agreements, intellectual property rights and all of its present Group of banks 11.5% - 12.50% and future receivables and tangible moveable property (Deed of

Hypothecation)

Orasinvest Holding Group of Banks 11.5%-12.5% 1 097 2 372 3 469 LE 29 000 * Dividends distribution should not exceed 70% of Mobiserve (subsidiary) year's income

12.50% LE 10 000 * Total shareholders' funds retained in Mobiserve (subsidiary)11.50% LE 22 000 must not be less than L.E. 10 million

* Accounts in banks considered as a guarantee

Orascom Telecom Finance SCA Bonds 7.875% - 750 000 750 000 US$ 750 000 *Guaranteed by Orascom Telecom Holding

International Wireless Communication Group of banks Libor + 0.175% - 0.7% 319 025 892 134 1 211 159 PKR 43 090 987 * Secured by the company's present and future assets.Pakistan Ltd T-Bill rate + 2.5% - 5.5% € 415 614 * A pledge on the present & future receivable & fixed assets of PMCL.

KIBOR +0.20% to 2.625% US$ 400 762 * Restrictions on financial indebtednessEuribor +0.25% to 7.8% * Limitations on the granting of loans and guarantees

Senior Notes 8.625% * Restrictions on the payment of dividends* Limitations on disposals of assets* Restrictions on mergers or reconstructions* Limitation on permitted acquisition of assets* Restrictions on investments* Restrictions to create or incur certain lines

Intouch company Cairo Barclays Bank 11% 7 774 7 527 15 301 LE 30 000 * Guaranteed by part of InTouch revenues Cairo Barclays Bank 11.75% LE 35 000 * Guarantee from Orascom Telecom Holding not to reduce it's NBAD 11.75% LE 35 000 share in Intouch capital than 51%

*Owner's equity shouldn't be less than L.E 124 M.*Transfer revenue within amount L.E 10 750 K to NBAB.

Med Cable Calyon Bank Euribor +0.95% 4 290 10 237 14 527 € 8 397 * Guaranteed by Orascom Telecom Holding and a pledge on the fixed assets of Med Cable.

Euribor +3.5% € 2 787

Trance World Associates Group of financial institutions Kibor + 3 % 5 227 18 295 23 522 PKR 1 400 000 * Secured by the company's present and future assets.Kibor + 3 % PKR 207 500

Other 237 593 830Total borrowings 1 756 101 3 430 995 5 187 096Net issuance cost - (64 632) (64 632)Net borrowings 1 756 101 3 366 363 5 122 464

Hereunder some important loan agreements:17-1 On February 27, 2006, and May 25, 2006, the company

signed a loan and facility agreement with a total amount of US$ 2.5 billion.. The Company utilized US$ 1,187 millionto cover a part of the investment in HutchisonTelecommunication International (note 9) while theremaining amount was utilized to refinance the Company'sexisting indebtedness from loans, bonds and to financeits operations, (subsequent events note 38).

17-2 On February 4, 2007 Orascom Telecom Holdingsuccessfully issued US$ 750 million of Senior Notes due2014 through Orascom Telecom Finance S.C.A (whollyowned subsidiary). The Notes bear an interest rate of7.875% per annum and include typical high yield bondguarantees. The proceeds are intended for used in generalcorporate purposes, which may include investment in newand existing operations and purchase of its shares.


106

18- CreditorsCreditors comprise:


Due to shareholders ( Mr. Naguib Sawiris) - 1 300License payable 177 534 22 120Sundry creditors 28 980 24 065

206 514 47 485

19- Debt due on purchase of investmentsDebt due on purchase of investments comprises:


Orascom Telecom Bangladesh (previously Sheba Telecom) (*) 10 000 10 000Minority interest in OTA & OTT (**) 46 689 48 654

56 689 58 654

(*) The amount represents the unpaid portion of Orascom Telecom Ventures investment in Orascom Telecom Bangladesh (previously Sheba Telecom)that it will be paid after the seller fulfillment of certain conditions.

(**) This represents the amounts due to Oratel International shareholders (shareholder in OTA), Carthage Consortium Ltd. and Orascom Tunisia Holdingshareholders (shareholders in OTT) to purchase additional stake in Orascom Telecom Algeria OTA and Orascom Telecom Tunisia OTT during2005.

20- Other current payablesOther current payables comprise:

Note December 31, December 31,No. 2007 2006


Deferred revenues 167 513 188 788Deposit from others 8 786 7 689Provisions (3-17/29) 67 587 63 782Taxes 667 897 257 992Derivative financial instrument liabilities (3-3) 5 591 1 653Put option liabilities (21) 678 648Other credit balances 68 633 50 368

986 685 570 920

21- Put option liabilitiesOrascom Telecom holding signed Put and Call option agreement as of December 31, 2007.The fair value of these options are as follows:

Note December 31, December 31,No. 2007 2006


Intel Capital Corporation Put option (21-1) 678 648CDC Fennec Put option (21-2) - -

(20) 678 648

21-1 On May 19, 2006, as part of the agreement between OTHand Intel Capital Corporation to establish Orascom TelecomWimax Ltd-OTWL, OTH granted Intel Capital Corporationthe following options:

A- Put option,Intel has the right to require OTH to buy all its shares inOTWL on the occurrence of non compliance conditions orduring or after the fourth anniversary from the date of theagreement.As of December 31, 2007 the company’s managementhas estimated the fair value of this option at US$ 678 thousand.

B- Commitment to sell non financial item.Intel has the right but not the obligation to purchase thewireless spectrum license in certain rollout countries, incase rollout was not completed, at the same price as paidby OTWL. As at December 31, 2007 the company’smanagement estimate the option has a zero value.

21-2 CDC Fennec Ltd, a lender to Orascom Telecom Algeria,has the option to convert into shares in Orascom TelecomHolding with all the amounts payable and liabilities due atany time within the two years subsequent to December18, 2003 or until all amounts due are fully paid. As ofDecember 31, 2007 the company’s management is of theopinion that this option has zero value.


107

22- Derivative financial instrumentThe group concluded hedge agreements in order to hedgeinterest rate and foreign currency exposure. Outstandingagreements as at December 31, 2007 were as follows:

22-1 Orascom Telecom HoldingI- Zero premium agreements – (cash flow hedge)

A- The Company has signed interest rate SWAPagreements to hedge the Libor interest rate fluctuationsfrom Syndication loan- (see note 17) with Credit Suissebank as follows:

The loss from the valuations of these contracts as atDecember 31, 2007 is US$ 3 001 thousand andrepresented in the Shareholders’ Equity (other reserves– see note 15.A), after deducting deferred income taxby US$ 600 thousand and in current liabilities (derivativefinancial liability).

B- To hedge the LIBOR interest rate fluctuations from theSyndication loan (Term A2) (see note 17) the Companyentered into a Hedge Agreement with ABN AMROBank on the following terms:

(*) The loss from the valuation of this agreement as at December31, 2007 is US$ 1 315 thousand and represented in theShareholders’ Equity (Other reserves - see note 15.A), afterdeducting deferred income tax amounted to US$ 263thousand and in Current liabilities (Derivative financialinstrument liabilities).

(**)The loss from the valuation of this agreement as of December31, 2007 is US$ 1 275 thousand and represented in theShareholders’ Equity (Other reserves - see note 15.A), afterdeducting deferred income tax amounted to US$ 255thousand and in Current liabilities (Derivative financialinstrument liabilities).

22-2 Pakistan Mobile Communication Ltd. – (Fair value hedge)Pakistan Mobile Communication Ltd. have forward rateagreements to hedge the changes in the foreign currencyexchange rates arising from the US$ and Euro loans in order to fix the cash flows in PKR at each debt principlerepayment and debt interest payment dates.

Notional amount Interest rates SWAP End of(as trade date) agreements

US$ Floor Cap

1 024 621 764 4.07% 6% February, 2009

Notional amount Interest rates SWAP End of(as trade date) agreements

US$ Fixed rate

92 000 000 (*) 5.586% February, 2009184 000 000 (**) 4.8875% February, 2009

Inputs OutputsLOAN Principle Received Principle Interest

In thousand In thousand In thousand

ECA – I US$ 30,854 Floating Libor & Euribor PKR 12,588,585 Kibor + 1.25%US$ 11,670 PKR 1,030,065

ECA – II US$ 39,072 Floating Libor & Euribor PKR 12,949,644Euro 116,080 PKR 1,206,483 Kibor + 0.72%

Euro bond US$ 250,000 8.55% PKR 15,376,675 Kibor + 4.49%PKR 137,078 and 0.075%

As at December 31, 2007, these agreements have seemed to be ineffective. The details of each loan are set forth below:


108

23- Related parties transactionsBased on IAS�24 (Related Party Disclosures), the following are the significant related parties' transactions in the major subsidiariesof the Group and nature of the relevant transactions:

December 31, 2007Thousand US$

Sales of services:�Sofrecom 1 018Promoters 362Sofrecom france 246Orascom Luxemborg sarl 21Media terrenia 184Chad 72Rain 586Oracap 166Orascom holding for international investment 49Sales of goods:HAWA C/A 86Cylo 22Purchases of service:Orascom�Training�&�Technology 894Orascom�Hotels�&�Development 42Orascom�Trading 11 673International�Integrated�Solutions�(IIS) 1 358Top�Quality�for�Management�&�Services�Co. 467El�Masry�El�Youm�Newspaper 25Geniprocess�International 2 172BULL�S.A.S 1 038Equant�Egypt 1 253Mena cable project 31 516CHEO 797Telecom Management Group 5 552Weather�Investment�Capital 5 549Others 91Purchases of goods:Multi Media�Mega�Stores�(MMMS) 565Orascom�Technology�Solutions 6 385Solutions�Plus 762Orascom�Construction Industries 4 044Orascom�Construction Industries Asia 9 016



Interest income (3-19-iv) 36 784 22 047Interest and financing expenses (3-23) (478 649) (330 783)Amortization of arrangement fees (41 514) (31 602)Dividend from investment available for sale 1 290 459Foreign currency revaluation gain (loss) (3-2) 41 950 (43 765)

(440 139) (383 644)

24- Net financing costsNet financing costs comprise:


109

25- Deferred tax(A) Unrecognized deferred tax

Unrecognized deferred tax assets


Tax loss Carry forward (*) 129 697 43 680Provisions (**) 6 324 6 230

136 021 49 910

(*) The Group did not recognize deferred income tax assets amounting to US$ 86 017 thousand during the year ending December 31, 2007 arisingfrom Orascom Telecom Bangladesh (previously Sheba Telecom). Due to the past and current losses (note 35) along with low possibility of significantprofits in the foreseeable future, cast doubt on the company's ability to use such losses.

(**) Deferred tax assets resulted from the impact of temporary differences related to provisions were unrecognized due to the likelihood that thetemporary difference will not reverse in the foreseeable future.

Unrecognized deferred tax liabilities


Investment in Foreign Subsidiaries 41 806 21 69541 806 21 695

Taxable temporary differences in relation to investment in subsidiaries which deferred tax liabilities have not been recognized�dueto the company’s intention - and power - for not distributing that accumulated profit in the foreseeable future.

(B) Deferred tax assets and liabilities movement

2007 2006Thousand US$ Thousand US$

Beginning balance of year 156 759 141 710Tax charged to equity (727) (203)Acquisition of subsidiaries 335 218Charge to income statement 95 800 18 611Currency translation differences (1 885) (3 577)Ending balance of the year 250 282 156 759

(C) Income tax expense


Income tax for the year 357 821 131 037Deferred tax 95 800 18 611Total income tax 453 621 149 648

Deferred Tax ASSETS Tax losses Impairment of Provisions Others Offsetting Total carry forwards Intangible assets

Thousand US$

As at 1 January 2007 90 144 28 535 3 969 6 277 ( 96 246) 32 679Tax charged to equity - - - 727 - 727Charge ( Credit ) to the income statement 24 841 ( 16 610) 507 60 020 - 68 758Acquisition of subsidiaries - - - 15 - 15Currency translation differences ( 1 231) ( 26) 187 1 599 - 529As at December 31, 2007 113 754 11 899 4 663 68 638 ( 96 246) 102 708Offsetting (30 084)Net deferred tax assets as at December 31, 2007 72 624

(D) Deferred tax balances


110

Deferred Tax Liabilities Fixed assets Tax on overseas Fair value of Others Offsetting TotalSubsidiaries Financial

Asset/Liab.Thousand US$

As at 1 January 2007 284 958 - 726 - (96 246) 189 438Charge ( Credit ) to the income statement 86 672 84 603 (7 035) 318 - 164 558Acquisition of subsidiaries 350 - - - - 350Currency translation differences (3 022) 1 576 71 19 - (1 356)As at December 31, 2007 368 958 86 179 (6 238) 337 (96 246) 352 990Offsetting (30 084)Net deferred tax liabilities as at December 31, 2007 322 906

26- Discontinued operationOn December 31, 2007, the company sold its investments inIraqna Company for Mobile Service Ltd. (Fully owned subsidiarythrough Orascom Iraq Holding) for US$ 1 200 million. Thisamount is payable by the purchaser in two equal installments

on December 2008 and December 2009. The amount wasrecorded at amortized cost, using a discount rate of 6%.The comparative income statement has been re-presented toshow Iraqna results for year ended December 31, 2007 inthe discontinued operation separately from continuing operations.


Cash flows from discontinued operationNet cash from operating activities 290 214 222 382Net cash (used in) investing activities (56 957) (80 370)Net cash from financing activities - -Net cash from discontinued operation 233 257 142 012

27- Non-current assets held for sale1- The shareholders meeting of Consortium Algerian de

Telecommunication CAT decided on the divestiture of itsoperations and consequently initiated a sale process whichwas intended to be completed by the end of 2007.Subsequently, the Algerian Telecommunication RegulatoryARPT accepted the Company’s request for certain changesto the license subject to the survival of CAT’s operations.Following the management’s decision to continue operations,an impairment loss of US$ 18.3 million recognized inSeptember 2007, was reversed in December 2007.

2- The board meeting held on October, 2007, the managementdecided to sell the investment in Hutchison Telecommunication-During October and November 2007, the Company sold5% of its investments in HTIL, incurring a loss of US$ 2.641

million recognized in other expense in the Income Statement.As for the remaining 14.22% from the investment theCompany concluded their sale during January 2008(subsequent events note 38)The following represent the investments in HTIL as assetsheld for sale:

December 31,2007

Thousand US$

Assets classified as held for saleTransferred from investment in associates 1 247 301Sale of 5% of the investments (322 950)

924 351

Deferred tax assets are recognized for tax loss carry forwards to the extent the realization of the related tax benefit through the future taxable profitsis probable. The group has recognized tax loss amounted to US$ 113 754 K in December 31, 2007, compared to US$ 90 144 K in December 31,2006. These tax losses have been accumulated during year 2004 till December 31, 2007 and it has unlimited time expiry period.




Results of discontinued operationRevenue 646 052 531 591Expenses (367 969) (320 238)Results from operating activities 278 083 211 353Income tax expense (35 910) (34 071)Results from operating activities, net of income tax 242 173 177 282Gain on sale of discontinued operation 843 802 -Tax expense on gain on sale of discontinued operation (166 347) -Profit for the year 919 628 177 282Basic and diluted earnings per share from discontinued operations (US$) (28) 0.88 0.16

111

28- Basic and diluted earnings per shareBased on IAS�33 (Earnings per Share), earnings per share are calculated using the weighted average number of shares outstandingthrough the year as follows:

December 31, 2007 December 31, 2006

Net profit for the year (Thousand US$) 2 021 353 720 758Net profit for the year from continuing operations (Thousand US$) 1 101 725 543 813Net profit for the year from discontinued operations (Thousand US$) 919 628 176 945Weighted average of shares through the year (Thousand shares) 1 043 163 1 086 814Basic and diluted earnings per share (US$) 1.94 0.66Basic and diluted earnings per share from continued operations (US$) 1.06 0.50Basic and diluted earnings per share from discontinued operations (US$) 0.88 0.16

29- Provisions movement

Thousand US$

Balance as at January 1, 2007 63 782Changes coming from changes in proportionate companies 1 416Provided during the year 16 057Used during the year (10 523)Deconsolidation of subsidiaries (1 465)Provision no longer required (3 407)Currency translation differences 1 727Balance as at December 31, 2007 67 587

30-Employee share option planThe Company has approved a plan to grant some of itsemployees' share options in the Company's shares throughOrascom Telecom ESOP�Ltd., Malta (a wholly owned subsidiary).According to this plan the employees will have the right to takethe benefit of the difference between the share option price andthe exercise price of the shares when the option vests. TheCompany shares held by Orascom Telecom ESOP�Ltd. arepresented as treasury share in the consolidated financialstatements.On June�10, 2003 the Board of Directors approved the allotmentof 1,650,000 shares to certain officers and key employees based

on their period of service and level of performance. Under thisshare option plan, the eligible employees will be entitled toexercise their options as follows:

Exercise Year No. of Shares

2007 447 3342008 191 5002009 158 7502010 114 0002011 45 750

957 334

31- Granted guarantees from OTH to subsidiaries(A) Orascom Telecom Holding signed agreements as a guarantor for the following subsidiaries:-

Subsidiary name To guarantee Maximum Liability Expiry

Pioneer Co. Pella Company tax position US$ 50 million 31/12/2007

Orascom Telecom Iraq Unpaid amount from the 5.5 % + unpaid amount As long as thesupplier facility agreement USD 329 k for Alcatel & agreement is validwith Alcatel & Motorola USD 4.34 million Motorola

as of 31/12/2007.

Orascom Telecom Bangladesh Facilities from group of USD 280 million. As long as the(previously Sheba Telecom) financial institutions. agreement is valid

Med Cable Facilities from West LB € 16 million plus any As long as theand Calyon Bank. interest or cost. agreement is valid

32- ContingenciesThe contingent liabilities as at December 31, 2007 are representedin the following:• Jordan Tax claims for JD 49.2 million, equivalent to US$

69.9 miilion, income tax initiated by the Jordanian Tax Authority

against Pioneer Investment (a wholly owned subsidiary) inconnection with the sale of Fastlink (Jordan MobileTelecommunication Services) in 2002 to MTC. Pioneer Co.has claimed that the tax payments are unfounded; atpresent OTH is not a position to asses the case status.

(B) Uncovered portion of letter of guarantee for Iraq mobile license bid amounting to US$ 50 million will expire at March 31, 2007.(C) Uncovered portion of a letter of guarantee amounting to US$ 1 million in favor of NTRA to guarantee MENA Cable execution of

its entire obligations related to constructing, operating and renting its sea cable networks and related infrastructure for internationalcommunication.


112

• International Chamber of Commerce Arbitration initiatedby OTH against France Telecom S.A regarding the materialbreach of the share holders agreement in OTH’s Egyptianmobile operation interests, the Egyptian Company forMobile Services.

• PMCL the subsidiary of International WirelessCommunications Pakistan Ltd (IWCPL) has certain casesare pending in different courts of law. The managementof the company is confident that these cases will be decidedin favor of the company.

• A company registered on 4 April 2005 in the name ofBangla Link Ltd, filed a suit against Orascom TelecomBangladesh (previously Sheba Telecom) for payment fordamages of TK 58.92 million equivalent to US$ 853thousand and permanent mandatory injunction againstthe use of the name of “Banglalink”. The application for temporary injunction against the use of the trade mark hasbeen rejected in the district court of Dhaka, Bangladeshand the said suit in now pending for final hearing anddisposal.

• ECMS is a party in a number of legal cases, which resultedfrom carrying out its activities. Based on the legal adviceobtained, the company’s management believes that theoutcome of this law suit–individually or in aggregate –would not be material to ECMS results.

• TWA has filed applications for issuance of exemptioncertificate of the income tax on payments made to TycoTelecommunications and David Ross, USA, on the groundthat the income of the non-resident persons is not taxablein Pakistan. Article III of the treaty for avoidance of doubletaxation between Pakistan and U.S.A fortifies the company’sstance. However, no final order has been passed.

• The Company’s proportionate share in the EgyptianCompany for Mobile Services (ECMS) contingent liabilitiesis L.E 86.77 million equivalents to US$ 15.59 million whichrepresents the uncovered amount of the letters of guaranteeissued for the favor of third parties.

• PMCL Tax claims up to the tax year 2005 (year endedDecember 31, 2004) is between framed and amendedaggregates to Rs. 2 084 million equivalent to US$ 33.78million, however the future cash flow exposure in thisrespect is Rs. 556 million equivalent to US$ 9.04 million,which has been adequately provided in PMCL financialstatements

• Guarantees issued by PMCL on behalf of Dancom Online(Private) Limited Rs. 148 million, equivalent to US$ 2.41million.

• Orascom Telecom Tunisie has received tax controlnotification during 2006 regarding electronic rechargesales. The total amount claimed by the Tax Authority isestimated at TND 70.2 million, equivalent to US$ 56.6million. In May 2007, Orascom Telecom Tunisie receivedthe first judgment related to the inspection that reducedthis amount to be 14 million TND, equivalent to US$ 11.3million. Management believes that the company is fullycompliant with Tunisian legislation and decided to bringthe case to the court appeal. Orascom Telecom Tunisiehas made a total provision regarding this claim of TND8.5 million equivalent to US$ 6.85 million. Based on theabove, a guarantee was given from the Arab TunisianBank for an amount of 9.9 million TND, equivalent to US$8 million.

• Ring Egypt for distribution and subsidiaries contingentliabilities represented in legal cases against the companyamounting US$ 841 thousand to its clients, and Letters ofGuarantee with US$ 4.5 million.

• Orascom Telecom Iraq Upon the disposal of the investmentin its subsidiary (Iraqna Company for Mobile Services),provided a warranty to the purchaser of the investment.This warranty, which does not exceed US$ 120 million, isin respect of claims and tax covenant claims and includeall legal and other professional fees and expenses payableby (OTI) in respect of all such claims and tax covenantclaims, of which no more than US$ 60 million shall bepayable in relation to tax covenant claims.

• Arbitration initiated by Telecel , regarding the failure ofAtlantique Telecom to adhere to the terms of sale of sharesin five of Telecel’s mobile operations in Western Africa.

33- Capital commitments• During 2007 Orascom Telecom Holding & Middle East and

North Africa Submarine Cable Company –MENA Cable(subsidiary in progress – Advance payment for investment)signed agreements as collectively purchasers from a groupof suppliers with a total amount US$ 252 million to supplyand install submarine equipments and cables in theMediterranean and Red Sea. The Company was billed by11 % from the total amount as at December 31, 2007 shownin property and equipment under construction.

• The Company committed for approximately US$ 48 millionthat represents the unpaid portion from Cheo Technologyinvestment which will operate in Democratic People’s Republicof Korea.

• The Company’s proportionate share in the Egyptian Companyfor Mobile Services capital expenditure commitments is L.E2 102 million equivalents to US$ 377.71 million whichrepresents fixed assets contracts entered into and not yetexecuted as of the consolidated balance sheet date.

• InTouch for Telecommunication Company capital expenditurescommitments amounted to L.E 153 thousand equivalent toUS$ 27.49 thousand which represents the unpaid capital forlong-term investment.

• Orascom Telecom Bangladesh previously (Sheba Telecom)capital commitments amounted to Euro 7.12 million equivalentto US$ 10.4 million, and US$ 24.73 million to purchasetangible and intangible assets.

• Pakistan Mobile Communication Limited (PMCL) has thefollowings commitments :1-In respect of capital and other expenditure amounted to

PKR 6 638 million equivalent to US$ 107.99 million.2-PMCL has entered into a forward exchange contracts in

which the company is committed to buy US$ 9.9 millionwith a contractually agreed price of Rs. 608 millionequivalent to US$ 9.88 million. Further the company hasalso committed to buy EURO 23.24 million at a contractuallyagreed price of Rs. 1 980 million equivalent to US$ 32.16million.

• Trans World Associate capital expenditure commitments asat December 31, 2007 amounted to PKR 5.5 million,equivalent to US$ 89.4 thousand.

34- Tax status of the parent34-1 Corporate tax

Years from 1997 till 1999:The Company submitted its tax returns for these years, andreceived form No. 18 taxes, in the name of OrascomTechnology (formally the name of Orascom Telecom Holding)including the tax assessment with a total amount of L.E 7million, equivalent to US$ 1.25 million, for these years.However, in January 16, 2003 the Company’s managementfiled an appeal, against the assessment included in this form.

On November 3, 2004 the appeal committee accepted the


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company’s conclusion and decided to return the file backto the corporate income tax inspectorate for inspection.On December 20, 2005, the company rejected the viewexpressed by the corporate income tax inspectorate, andrequested the file to be returned to the internal committeein the corporate income tax inspectorate.

Year 2000-2001The Company has received tax claim based on estimatecalculation from Tax Authority the company has receivedform no. (19) taxes for years 2000 and 2001.The company rejected the assessment and requested thefile to be returned to the internal committee or appealcommittee.

Years from 2002 till 2004:The Company submitted its income tax returns for theseyears within the time period prescribed by tax law, the taxauthority has not yet inspected the Company’s records forthese years.As per the tax return for these years, there is no corporatetax due on the net profits. Management has applied, whenpreparing the tax return, article No. (111) of the IncomeTax Law No. 157 of 1981. According to the aforementionedarticle net profits derived from activities that are beingundertaken abroad, by independent entity, are not subjectto tax in Egypt.• On 22/11/2007 The Company has received tax claim

Form no. (18) taxes for years 2002 to 2004 based onestimate calculation from Tax Authority .The Companyrejected the assessment and requested the return ofthe file to the internal committee.

Years 2005 and 2006Starting from 1/1/2005, the Company's profits are subjectto Egyptian Income Tax Law No. 91 for 2005 whichsupersede the law No. 157 for 1981. The company hassubmitted the tax return for years 2005 and 2006 and paidthe tax due.

34-2 Stamp dutyStamp duty was settled for financial periods up to 31 October2003. Financial periods from 1 November 2003 to 31December 2005 are currently under inspection by the taxauthority.

34-3 Salary tax

Years till 2004:The company’s books where examined and the differencesare settled.

Years 2005 and 2006:The company’s books were not examined and no claimswere received.

35- Subsidiaries going concern• During the financial year ending December 31, 2007 Orascom

Telecom Bangladesh previously Sheba Telecom (subsidiaryof Orascom Telecom Ventures) incurred a net accumulatedloss of TK 16 172 million equivalent to US$ 234.14 million.However the management is confident that the company willcontinue in operational existence for the foreseeable futureon the basis of improved profitability and continued supportof Orascom Telecom Holding. The total consolidated assetsand revenues of Orascom Telecom Bangladesh represent5.33% and 4.07% respectively of the Group total consolidatedassets and revenues.

• During the financial year ending December 31, 2007Consortium Algerian Telecommunications incurred net accumulated loss of DZD 6 129 million equivalent to US$

90.2 million, Orascom Telecom Holding proportionate sharein the retained losses is US$ 45.1 million and since theretained deficit exceeded half the company’s issued & paid-up capital, an extra-ordinary general assembly meeting willbe convened to study the going concern of the company.The total consolidated assets and revenues of ConsortiumAlgerian Telecommunications represent 0.34% and 0.06%respectively of the Group total consolidated assets andrevenues.

36- Financial instruments and related risk managementThe Company has exposure to the following risks because ofits business operations:• Credit risk• Liquidity risk• Market riskThis note presents information about the Company’s exposureto each of the above risks. Further quantitative disclosures areincluded throughout the financial statements.The Management has overall responsibility for the establishmentand oversight of the Company’s risk management framework.

Credit riskThis risk is represented in the trade receivables, other receivables,due from related parties, and affiliates inability to pay their debts.This risk is considered low as the company periodically assessesthe recoverability of these balances and work on collecting it.It is worth mentioning that due to the nature of the emergingmarkets, in which the group mainly operates, have a majorprepaid subscriber base, the remaining small part which comesfrom post-paid subscribers creates portion of the tradereceivables. The group controls its credit risk by the followingmethods:• Ascertainment of credit worthiness of customers.• Appointment of outside agencies to collect receivables.• Monitoring of debt on a continuous basis.• Legal notices and follow-ups.In December 2007, Orascom Telecom has concluded anagreement to sell 100% of the share capital of Iraqna Companyfor Mobile Phone Services Ltd. (“Iraqna”) to MTC-Atheer, theIraqi subsidiary of Mobile Telecommunication Company K.S.C.(“Zain”) for a consideration of $1.2 billion. This consideration ispayable over two equal annual installments on the first andsecond anniversaries of the completion of this sale. The creditrisk has increased after the above mentioned transaction whichhas resulted in large debtors balance. However, it is worth notingthat Zain has 6 licenses in the Middle East and 14 licenses inSub-Saharan African Countries. As at December 31, 2007, Zainhad 42.5 million of active subscribers, and recorded consolidatedrevenues and net profit of US$ 5.9 billion and US$ 1.1 billionrespectively. Zain had a market capitalization of US$ 26.49billion as at December 31, 2007.The risk is also represented in having banks or financial institutionsat which cash balances are deposited or with which derivativetransactions are concluded becoming insolvent and accordinglynot being able to return the deposited funds or not being ableto execute their obligations under the derivative transactions asa result of such insolvency. This risk is being mitigated byOrascom Telecom Holding S.A.E having its main foreign currency,cash accounts and derivative instruments maintained andconcluded with, to the extent it is partially possible, financialinstitutions having investment grade.

Liquidity riskThe liquidity risk is managed through prudent management ofsufficient cash and marketable securities, the availability offunding from an adequate amount of committed credit facilitiesat each operating entity that is responsible for its own


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management of the cash flows with consistent managementand holding company monitoring of the rolling forecast of theentity’s liquidity reserve on the basis of the expected cash flowsand committed credit facilities.

Market riskThe Group’s activities expose it primarily to the financial risksof changes in foreign currency exchange rates (see (a) below)and interest rates (see (b) below). The Group enters into avariety of derivative financial instruments to manage its exposureto interest rate and foreign currency risk, including for example:

- Currency swaps to manage the foreign currency riskassociated with foreign currency denominated borrowings,

- Forward FX contracts to manage FX fluctuation risk; and- Interest rate swaps to mitigate the risk of rising interest rates.Market risk exposures are supplemented by sensitivity analysis.The analysis is focused on Orascom Telecom Holding and GSMcompanies only, whose revenues and debts account for approx.88% and 96% respectively of the total revenues and consolidateddebt of the group as of December 31, 2007. Figures outlined inthe analysis are pro forma figures based on a US$ 956 millionprepayment executed by Orascom Telecom Holding on January3, 2008 (see note 38 – subsequent events), that all the closingobligations pertaining to the sale of its 14.22% (remaining entirestake) in Hutchison Telecommunication International Ltd. HTILwere completed and satisfied. Accordingly, the company had tosettle part of the Syndication Credit facility at the same date.

A- Currency riskIn general, the operating subsidiaries are encouraged toobtain the financing in their functional currencies in order tohave a natural hedge of the foreign currency risk of suchfinancings. However, as some transactions are executed inforeign currencies, the Company may be subject to risk ofexchange rate fluctuations. Therefore the company concludedsome agreements to hedge foreign currency exposure.

The risk monitored is related to:1-Financial debt, for which the single company concluded

a financing agreements in currencies other than functionalcurrencies (typically US$ and Euro);

2-Suppliers facilities, nominated in currencies other thanfunctional currencies.

3-The Holding company is exposed to currency risk ondividend income that is denominated in a currency otherthan its functional currency.

The total amount of liabilities exposed against Euro-riskamounting US$ 476 million, and against US$-risk amountingUS$ 2,638 million.

Neverthless to mention that these exposed amounts thatare subject to the below sensitivity analysis, do not includefacilities – nominated in foreign currencies - for which thecompany / GSM subsidiary already hedged related FX riskby means of derivatives instruments.

For example, Pakistan Mobile Communication Limited (PMCL)had debts denominated in foreign currencies for USD 363million, and Euro 246 million (equivalent to US$ 360 million)at end of December 2007. Such foreign currency denominateddebts were fully hedged by PMCL conclusion of CrossCurrency Swaps, and accordingly interest payments andprincipal repayments of these debts are paid in PakistaniRupees, and such debts are deemed to be effectivelydenominated in Pakistani local currency in the below analysis.

Foreign currency sensitivityAs the major outstanding foreign currency denominatedmonetary items are the debts and the suppliers facilities, themanagement has assessed OTH group exposure against

foreign currency fluctuations with an analysis of potentialdepreciation impact of foreign currencies.

Management runs a sensitivity analysis (what if ) in caseEUR and USD currencies appreciated vs. functionalcurrencies of 5% and 3% respectively (equivalent to theimpact on the P&L due to the revaluation of the financialdebts, Trade Payables and long term USD license paymentobligation of PMCL).

As of December 2007 the “FX losses on the income statementdue to FX position of debts, trade payables and PMCL longterm license payment obligations” would have been US$96.5 million.

B- Interest Rate RiskThis risk represents interest rate changes, which may havean impact on the results of operations. The Company hasloans and facilities bearing variable interest rate. The Companyutilizes available funds – where applicable - to reduce anyinterest exposure in addition to the hedge agreements tohedge the interest rate risk related to loans and facilities.The basic strategy on management of interest rate risks isto balance the debt load with an appropriate mix of fixed andfloating interest rate borrowings based on the Group’s viewon future interest rate movements. Derivative structures maybe employed for hedging interest rate risk only after obtainingthe necessary approvals from Orascom Telecom Holding.The risk monitored is related to the impact of movements offloating interest benchmarks on the group’s incurred financingcharges.

Total debt bearing fixed interest rates as of December 31,2007 amounted to US$ 3.151 million. This above mentionedamount represents the combined debt which does notconsider the consolidation percentages, also it includes thefloating debt portion that has been hedged by means ofinterest rate swaps.

Total debt bearing floating interest rates as of December 31,2007 amounted to US$ 1.634 million. This floating rate debtincludes an un-triggered hedged amount of US$ 1,025 million,and shall be fixed in case 3 months LIBOR becomes lowerthan 4.07% or higher than 6.00%.

Had three months LIBOR been greater than 6% or lowerthan 4.07%, then above equivalent total amount bearingfixed interest rate debts would have been US$ 4,176 million,while debts bearing floating interest rates would have beenUS$ 609 million.

The above values were calculated based on the managementperception of various interest benchmarks, where debtspegged to stable interest benchmarks are perceived as fixedinterest rates.

All above figures were calculated after considering impactof triggered interest hedging instruments of the group as ofDecember 31, 2007.

Management runs a sensitivity analysis (what if) benchmarksrelated to floating un-triggered debts outstanding as atDecember 31, 2007 (pro forma for US$ 956 millionprepayment executed on January 3, 2008 – note 38subsequent events) were 100 bps higher and such debt levelwas outstanding throughout 2007. The impact of this sensitivityanalysis is an additional US$ 14.5 million, financing chargesto be incurred by the group hitting the income statement.


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37- Principal subsidiary undertakings and joint venture undertakings37-1 Fully consolidated subsidiaries:

As at December 31, 2007 the group owns the following subsidiaries, which have been fully consolidated in the consolidated balancesheets:

Ownership % Ownership % Country of31/12/2007 31/12/2006 incorporation

Orascom Telecom Algeria Company (*) 96.81% 96.81% AlgeriaInternational Wireless Communication Pakistan Ltd. (IWCPL) 100% 100% MaltaOrascom Iraq Holding Company 100% 100% MaltaOrascom Telecom Ventures Company 100% 100% MaltaOratel International Ltd. Company 100% 100% MaltaMoga Holding Limited Company 100% 100% MaltaRing Distribution Company 99% 99% EgyptOrasinvest Holding Inc. Company (*) 99% 100% MaltaM-Link Company 100% 100% MaltaMed Cable Company 100% 100% United KingdomWimax Company (**) 100% 100% United KingdomInTouch for Telecommunication Company 99.94% 93.5% EgyptArpu for Communication services Company (***) 99.1% 96.82% EgyptTrance World Associates 51% 51% PakistanOrascom Telecom Asia Limited 100% 100% MaltaOrascom Telecom Eurasia (*) 100% 100% MaltaSawyer Limited 100% - MaltaOrascom Telecom Services Europe Company 100% 100% FranceOrascom Telecom Wireless Europe 100% 100% FranceTelecel International Ltd. Company 100% 100% MaltaFinancial power plan Company 100% 100% MaltaOrascom Telecom Esop 100% 100% MaltaOrascom Telecom C.S Company 100% 100% MaltaOrascom Telecom SARL 100% 100% LuxembourgOrascom Telecom Finance SCA 100% 100% Luxembourg

(*) Includes direct and indirect ownership stake.(**) Wimax Company consolidated by 100 % which a result of considering Put option and commitment to sell non financial item agreements (note

no.21.1).(***) Starting from 1st of July 2007, Arpu for Communication Services Company is consolidated through InTouch Telecommunication Company.

37-2 Joint venturesAs at December 31, 2007 the Company has joint control over the following subsidiaries, which have been proportionally consolidatedin the consolidated balance sheets:

Prorate Interest as atName of the Joint Venture December 31, 2007 December 31, 2006 Country

Egyptian Company for Mobile Services (*) 34.66% 33.03% EgyptOrascom Telecom Tunisie (**) 50% 50% TunisConsortium Algerian Telecommunications (***) 50% 50% Algeria

(*) Proportionally consolidated for Egyptian Company for Mobile Services through direct share in:

Name of the Company Ownership % as at Ownership % as at CountryDecember 31, 2007 December 31, 2006

Mobinil for Telecommunications 28.75% 28.75% EgyptEgyptian Company for Mobile Services 20% 18.37% Egypt

(**) Proportionally consolidated for Orascom Telecom Tunisie through direct share in:


Orascom Tunisia Holding Ltd. 100% 100% MaltaCarthage Consortium Co. 100% 100% Malta


(***) Proportionally consolidated for Consortium Algerian Telecommunications through direct share in:

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Consortium Algerian Telecommunications 33% 33% AlgeriaInternational Telecommunication Consortium Ltd. 50% 50% England

38- Subsequent events• On January 3, 2008, all the closing obligations pertaining to

the sale of its 14.22% (remaining entire stake) in HutchisonTelecommunication International Ltd. HTIL were completedand satisfied. Accordingly, the company had to settle part ofthe Syndication Credit facility in the same date.

• On January 30, 2008 Orascom Telecom Holding announcedthat it has been granted the first commercial license to providemobile telephony services in the Democratic People’s Republicof Korea (“DPRK”) using (3G) technology.

• On January 30, 2008 a marine cable was damaged in theMediterranean Sea, which led to partial disconnection to theinternet and some of the international telecommunication inArab Republic Of Egypt–ARE. Accordingly, Ministry ofTelecommunication decided to compensate ARE usersthrough Internet Services providers.On the other hand the Internet Services providers and the

Ministry of Telecommunication will file a claim for adequatecompensation from the International owners of the Marinecables to adequate compensation against occurred losses.Currently management is unable to asses the effects thatmay be arise upon that.

• On February 24, 2008, the extraordinary general assemblyapproved the reduction of the share capital by cancellingtreasury shares amounting to 61,9 million shares at a costof US$ 868 147 thousand (11 612 970 GDR and 3 835 150local share) .

• On March 2, 2008 Orascom Telecom Holding has securedcommitments and underwritings for a five years seniorsecured debt facility totaling US$ 2.5 billion. The Facility willbe used to refinance the outstanding amounts under thecompany’s existing US$ 2.5 billion facilities and for generalcorporate purposes.

39- Profit for the year before tax and minorityProfit before income tax and minority represents in the following

31/12/2007 31/12/2006Thousand US$ Thousand US$

Profit before income tax from continuing operations 1 617 489 760 379Add: profit from discontinuing operations (net of tax) 919 628 177 282Add: income tax expenses from discontinued operation 35 910 34 071

2 573 027 971 732

Before Classification Afterclassification classification

31/12/2006 31/12/2006Thousand US$

Property and equipment (net) 4 041 132 (14 229) 4 026 903License and software (net) 975 405 14 229 989 634

40- Comparative figuresCertain comparative figures have been reclassified to comply with the current presentation of the financial statements.

These reclassifications are stated below


Notes

Subsequent Events in 2008

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Orascom Telecom receives the first mobile license in theDemocratic People’s Republic of Korea

In January 2008, OTH was granted the first commercial mobilelicense in the Democratic People’s Republic of Korea using WCDMA(3G) technology. The license was granted to OTH’s subsidiaryCHEO Technology JV Company (“CHEO”) which is controlled byOrascom Telecom with an ownership of 75% while the remaining25% is owned by the state owned Korea Post andTelecommunications Corporation.

Resolution of the Extraordinary General Assembly Meeting

In February 2008, The Extraordinary General Assembly meetingapproved the reduction of the Company's issued capital by writingoff the Company's treasury shares for an amount equal to 61,900,000shares. After this reduction the total number of fully paid up sharesis 1,028 million (i.e. equivalent to 205.6 million GDRs).

Orascom Telecom secures US$ 2.5 bn Committed Bank Facility

In April 2008, OTH announced the successful closing of theamendment and restatement of its US$ 2.5 billion five year seniorsecured debt facility. General syndication was launched on February29th, 2008 and closed on April 14th, 2008. The Facility will be usedto refinance the outstanding amounts under the company’s existingUS$ 2.5bn jumbo facilities and for general corporate purposes andextends the tenor back to five years.

Orascom Telecom announces US$1.6 billion tender offer forits own shares

In April 2008, OTH announced the commencement of a cash tenderoffer pursuant to which it offers to purchase up to 106 million of itsordinary shares (including ordinary shares represented by globaldepositary shares (“GDSs”)) at a purchase price of EGP83 perordinary share for a total of EGP8,798 million (approximately US$1.6billion).

OTH Increases Its Dividend Payment by 33%

In April 2008, OTH’s Ordinary General Assembly Meeting approvedthe payment of a dividend of EGP 1.0 per share (EGP 5.0 per GDRto be converted at the prevailing US$ to EGP exchange rate at thetime of payment) representing a 33% increase over the dividendpaid in the previous year.

Subsequent Events in 2008

Annual Report 2007

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