ORASCOM TELECOM HOLDING GIVING THE … THE WORLD A VOICE Orascom Telecom Holding YE – 2009 P a g e...
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GIVING THE WORLD A VOICE
Orascom Telecom Holding YE – 2009 P a g e | 1
ORASCOM TELECOM HOLDING
Third Quarter 2010
GIVING THE WORLD A VOICE
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CONTENT
Highlights 3
CEO‟s Comment 4
Operational Performance 5
Main Financial Events 9
Financial Review 13
Financial Statements 19
Operational Overview 24
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Orascom Telecom Holding Third Quarter 2010 Results
Cairo, November 7th, 2010: Orascom Telecom Holding (OTH) (Ticker: ORTE.CA, ORTEq.L,
ORAT EY, OTLD LI), announces its third quarter 2010 consolidated results.
Highlights
On July 13, 2010, the amended and restated shareholders‟ and settlement agreements
concluded with France Telecom entered into force (“ECMS Transaction”). Consequently,
starting Q3 2010, Mobinil is reflected through the equity method. Mobinil‟s financial figures for
9M 2009 and H1 2010 are represented as a discontinued operation under IFRS.
Total subscribers surpassed the 100 million mark, and have now exceeded 103 million, an
increase of 16% over the same period last year.
Net Income before minority interest showed a record high increase of 153% compared to the
same period last year, reaching US$ 922 million1 for the period ended September 30th, 2010. This
increase is attributable to the significant gain of US$ 822 million1 recognized on the ECMS
Transaction in Q3 2010 by comparing the carrying amount of the investments in Mobinil and
ECMS to the relevant fair value, taking into consideration the net proceeds from the transaction
for the global settlement fee amounting to US$ 300 million. Excluding this exceptional item, Q3
2010 profits from continuing operations showed a strong performance with $112 million1.
Net Debt was decreased by 12% compared to H1 2010. As of September 30th, 2010, net debt
stood at US$ 4,068 million1, with a Net Debt/EBITDA of 2.4x, while Net Debt stood at US$ 4,613
million1 in H1 2010 with a Net Debt/EBITDA of 2.7x.
Revenues reached US$ 3,122 million1, increasing by 1.6% over the first nine months of 2009 as a
result of strong growth in most of the GSM operations, with the exception of Algeria. The 8.9%
decrease in OTA‟s YoY revenues was driven by the impact of the crisis that took place in Q4
2009, as well as the inability to launch new promotions until the end of Q3 2010 and banning
advertising on the government owned TV channels. Revenues of Mobilink and Tunisiana were
impacted YoY due to currency devaluation: revenues for Mobilink were up 9.6% in local
currency vs. a 4.8% increase in US$ and revenues for Tunisiana increased by 10% in local
currency vs. an increase of 4.7% in US$. Q3 10 revenues increased by 1.3% compared to Q2 10.
EBITDA reached US$ 1,328million1, a decrease of 0.8% compared to the same period last year.
The solid performance across all the GSM subsidiaries was negatively impacted by the 13.2%
decrease in Djezzy‟s EBITDA as a result of the crisis situation in Algeria. EBITDA increased by
almost 2% compared to Q2 2010.
Group EBITDA margin stood at 42.5%, a decline of 1% compared to 9M 2009. EBITDA margins of
the major subsidiaries were: Djezzy 57.3%, Tunisiana 52.9%, Mobilink 39.6% and banglalink 29.0%.
Earnings per GDR reached US$ 0.92/GDR (based on a weighted average for the outstanding
GDRs of 1,004 million over 9M 2010)2.
1. US$ financial figures in the Income Statement & Balance Sheet are according to the International Financial Reporting Standards (IFRS).
2. The weighted average for the outstanding GDRs was 1,004,449,912 as of September 30th, 2010.
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“Subscribers have now surpassed the
100 million mark and net income
before minority interest has reached
US$ 922 million for the period.”
Khaled Bichara, Group CEO, commented on the results:
“The third quarter of 2010 marks a
period with several milestones
attained by OTH despite the various
pressures that our operations were
subjected to. Subscribers have now
surpassed the 100 million mark, net
income before minority interest has
achieved a 153% increase over the
previous year reaching US$ 922 million for the
period, and net debt was successfully reduced to
2.4x Net Debt/EBITDA compared to 2.7x Net
Debt/EBITDA in H1 2010.
Djezzy has displayed
resilience and maintained
relative stability, despite local
governmental restrictions and
actions, which have resulted
in a toughening operational
environment and which threaten network quality.
On July 13th, 2010, the amended and restated
shareholders‟ and settlement agreements
concluded with France Telecom entered into force
and hence Mobinil will be reflected through the
equity method beginning this quarter. From an
operational standpoint, Mobinil has succeeded in
mitigating competitive and regulatory pressures,
receiving new dials from the regulator thus allowing
over 2 million additions to its network QoQ. In
addition, Mobinil‟s acquisition of LINKdotNET was
concluded in Q3 2010, bringing about a
convergence between ISPs and operators, which
will clearly enhance value for both businesses.
In Pakistan, the economy was strongly hit by the
major flood, causing a loss of infrastructure and
agricultural crops. It has been estimated that GDP
growth may drop to 2%, missing the 4.5% GDP initial
growth target, which will inevitably have a
significant effect on the operation‟s growth in the
country. Mobilink‟s infrastructure was also hit with
damages to over 400 sites out of a total of 8,070
sites. Responsive measures were quickly undertaken
to ensure the operation of our network. As part of
Orascom Telecom‟s corporate social responsibility
program, OTH joined in relief efforts by launching a
donation campaign in partnership with the World
Food Program, and with the cooperation of the
Mobilink Foundation, WIND Canada and Wind Italy
for the benefit of the flood victims in Pakistan.
Furthermore, the employees of Mobilink offered their
services in relief efforts,
which resulted in over 1,000
volunteer hours dedicated
to more than 112,000
victims of the flood.
Our Tunisian operation
increased its subscriber base by 21% compared to
the first nine months of 2009. Tunisiana also
managed to increase its market share to 53%
through several promotional campaigns aimed at
ensuring its position against the new third entrant
into the market.
Subscribers in Bangladesh increased by over 49%
YoY in preparation for the entry of a new player into
the Bangladeshi telecommunications market.
In Canada, WIND Mobile has achieved strong
subscriber growth through promotions aimed at
facilitating the switch to their new network and
increased sales presence.
In spite of the many challenges OTH‟s operations
face, we are confident in our promise to uphold
shareholder value and proceed with our efforts to
impact the global telecom segment. “
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Operational Performance
Subscribers
In the 9 months ended September 30th, 2010,
Orascom Telecom continued to grow its customer
base, surpassing the 100 million subscriber mark and
reaching over 103 million customers, a 16% increase
over the same period last year. Bangladesh carried
on its strong growth trend; displaying an increase of
nearly 50% YoY and over two million net additions in
Q3 alone. Operations in Tunisia and Egypt also
showed healthy growth in their subscriber bases,
increasing by 21% and 15% respectively. In Algeria,
Djezzy‟s subscribers remained relatively stable with a
YoY increase of over 1%, and a QoQ decrease
attributable to SIM card shortage as well as the
inability to launch neither new promotions nor tariff
revamps for the post-paid segment throughout the
year with regulatory approval for promotions
coming through towards the end of the third
quarter. Furthermore, the prohibition to advertise on
the government owned TV channels negatively
impacted Djezzy‟s subscriber growth. Pakistan‟s
subscriber base grew by nearly 5%, compared to
the same period last year, despite the country-wide
damage affecting infrastructure caused by the
floods in Q3 2010. Furthermore, the decrease in
Mobilink‟s subscribers QoQ is attributable to a base
clean up, as well as a sales slowdown due to the
flood and seasonality effect. Both koryolink and
Telecel Globe are delivering high subscriber growth;
the customer base in Telecel Globe is approaching
3 million, while in North Korea subscribers‟ growth
has accelerated by almost doubling its base from
Q2 2010. The Canadian operation, WIND Mobile,
saw also a dramatic acceleration of its subscribers,
increasing by 49% QoQ, reaching 140 thousand by
the end of Q3 2010. In Lebanon, Alfa‟s subscribers
increased by almost 27% compared to the same
period last year.
Table 1: Total Subscribers
1. On July 13, 2010, the amended and restated shareholders‟ and settlement agreements concluded with France Telecom entered into force.
Consequently, Mobinil is reflected through the equity method starting Q3 2010.
Subsidiary30 Sept.
2009
30 June
2010
30 Sept.
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Djezzy (Algeria) 14,726,081 15,142,460 14,919,031 1.3%
Mobilink (Pakistan) 30,046,050 32,202,547 31,444,099 4.7%
Tunisiana (Tunisia) 4,807,677 5,562,269 5,797,291 20.6%
banglalink (Bangladesh) 12,135,528 16,096,598 18,107,163 49.2%
Telecel Globe 1,496,000 2,501,000 2,952,530 97.4%
koryolink (DPRK) 69,261 184,531 301,199 n.m.
Alfa (Lebanon) 988,831 1,148,473 1,253,163 26.7%
Total 64,269,428 72,837,878 74,774,476 16.3%
Operations accounted for under
the equity method
Mobinil (Egypt) 24,624,733 26,147,615 28,401,312 15.3%
Wind Canada (Canada) 93,882 139,681 n.a.
Total 24,624,733 26,241,497 28,540,993 15.9%
Grand Total 88,894,161 99,079,375 103,315,469 16.2%
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ARPU
The high subscriber growth trend and the strong
market activities had a dilutive impact on ARPU for
Q3 2010 versus Q3 2009. In Egypt, ARPU declined by
19% as a result of competitive pressures in the
market leading to tariff cuts. In Bangladesh and
North Korea, the significant growth in subscribers
YoY led to ARPU dilution. The decline in ARPU in
Algeria is due to, among other things, the Ramadan
seasonality shift to August, the peak season of Q3,
as well as the suspension of a portion of the post-
paid base for cash collection issues beginning Q1
2010.
ARPU in Q3 2010 was negatively impacted by the
depreciation of the local currencies against the US$
in Tunisia and Pakistan. In Tunisia, the ARPU
decrease is attributable to the dilutive impact of
subscriber additions compared to the same period
last year. Mobilink‟s ARPU declined slightly
compared to Q3 2009 due to the increased level of
promotions in response to competition in the
market, as well as a sales slowdown in the third
quarter of 2010.
However, in most operations ARPU remained stable
in comparison to the previous quarter.
Table 2: Blended Average Revenue Per User (ARPU)
Table 3: Blended Average Revenue Per User (ARPU) (Local Currency)
1. ARPU expressed under OTH‟s definition may differ from Mobinil‟s disclosed ARPU. Please see Appendix for definition.
2. Global ARPU is calculated on a year to date basis, taking into account the weighted average subscribers for calculation.
Subsidiary
30 Sept.
2009
US$
(3 months)
30 June
2010
US$
(3 months)
30 Sept.
2010
US$
(3 months)
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Djezzy (Algeria) 10.5 9.5 9.6 (8.9%)
Mobilink (Pakistan) 2.8 2.9 2.7 (4.7%)
Mobinil (Egypt) 6.7 5.4 5.4 (19.4%)
Tunisiana (Tunisia) 13.1 10.1 10.2 (22.3%)
banglalink (Bangladesh) 2.5 2.5 2.3 (9.2%)
koryolink (DPRK) 21.6 21.5 15.2 (29.7%)
Global ARPU (YTD) 5.8 5.0 5.8 (1.5%)
Global ARPU (3 months) 5.8 5.0 4.9 (15.1%)
Subsidiary
30 Sept.
2009
(3 months)
30 June
2010
(3 months)
30 Sept.
2010
(3 months)
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Djezzy (Algeria) (DZD) 765.9 711.3 724.5 (5.4%)
Mobilink (Pakistan) (PKR) 234.2 246.9 231.0 (1.4%)
Tunisiana (Tunisia) (TND) 17.4 15.0 14.9 (14.4%)
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Market Share & Competition
The third quarter of the year saw OTH‟s operations
leading in market share, with the exception of
banglalink which retained its position in the
Bangladeshi market with second highest market
share. In Algeria, market share decreased in
comparison to the previous quarter, due to, among
other things, promotional inactivity until approval
was allowed by the regulator towards the end of
Q3, banning advertising on the government owned
TV channels, as well as SIM card shortage. In both
Bangladesh and Tunisia market share grew to 28%
and 53% respectively, in line with high additions to
their subscriber bases, while containing competitive
pressure. With regards to Pakistan, Mobilink held its
market share stable, despite an increasingly tough
competitive environment laden with promotions by
the other operators in the market. It should be noted
that a number of competitors in Pakistan do not
apply a strict churn policy. Mobilink‟s market share
of active subscribers as measured internally on
traffic patterns remained at 40% as of September 30,
2010.
Table 4: Market Share & Competition
1. Market share, as announced by the national Regulator is based on information disclosed by the other operators which use different subscriber
recognition policies.
2. Market share for September 2010 was not released by the Pakistani Regulator prior to this release. Accordingly, the above stated figure conveys
the trend as measured internally on Mobilink‟s traffic patterns.
Market Share (%)
30 June
2010
30 Sept
2010
Algeria Djezzy 59.1% 57.9% 1 AMN, Qtel/Nedjma
Pakistan Mobilink 32.6% 32.6% 1 U-Fone, Paktel, Telenor,
Al Warid
Tunisia Tunisiana 52.9% 53.3% 1 Tunisie Telecom, Orange
Tunisie
Bangladesh banglalink 26.9% 27.8% 2 Grameen, Aktel, Citycell,
BTTB, Bharti
Country Brand nameMarket
Position
Names of additional
network operations
1
1
2
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CAPEX
Total consolidated capital expenditures for the
period ended September 30th, 2010 decreased by
10% compared to the previous year. Investments in
banglalink have been increased in order to boost
network capacity in response to subscriber growth,
and increased traffic. In Djezzy, the decrease in
CAPEX of 74% compared to the same period last
year is attributable to the blocking of imports of
equipment and spare parts and the prohibition on
FX transactions. Mobilink‟s CAPEX decreased by
23% compared to the first nine months of 2009 due
to CAPEX delays caused by the flood.
The “Other” CAPEX mainly relates to investments
made in Telecel Globe, koryolink and our
submarine cables.
Table 5: Capital Expenditure of OTH Subsidiaries for the nine months to September 30th1
1. Based on 100% ownership of all subsidiaries.
2. “Other” companies include CHEO, Linkdotnet, MedCable, Mena-Cable, OT Holding, Ring and Telecel Globe in 2009 and CHEO, Linkdotnet,
Mena-Cable, OT Holding, Ring and Telecel Globe in 2010.
3. Consolidated CAPEX based on 50% in Tunisiana.
4. CAPEX components classification (e.g. tangible vs. Intangible) may differ from an operational perspective vs. an accounting one.
Accordingly, OTH has adopted the accounting perspective in order to ensure that CAPEX classification is consistent with those reported in the
financial statements. As a result, stated CAPEX figures as of 30 September 2009 have been adjusted and may differ from previously released
CAPEX figures.
Country Service name
Total
US$ million
30 Sept. 2009
Total
US$ million
30 Sept. 2010
Inc/(dec)
Algeria Djezzy 209 55 (74%)
Pakistan Mobilink 123 95 (23%)
Tunisia Tunisiana 56 56 0%
Bangladesh banglalink 74 153 107%
Other 75 126 68%
Total 537 485 (9.7%)
Total Consolidated 509 457 (10.2%)
Consolidated Capex/Revenue 16.6% 14.7% (1.9%)
2
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Main Financial Events
France Telecom and Orascom Telecom submit the main terms of their agreements on
MobiNil and ECMS to the Egyptian Financial Supervisory Authority
In April 2010, France Telecom and Orascom Telecom submitted to the Egyptian Financial Supervisory Authority the main
terms of the agreements on MobiNil and ECMS signed between them. The content of this submission can be found below.
1. Maintaining the partnership between the Parties, and subject to paragraph 4 below, neither Party shall transfer to the
other Party any shares in MobiNil for Telecommunications (unlisted) or the Egyptian Company for Mobile Services
(listed). The Parties further agreed that Orascom Telecom Holding shall not own or hold, directly or indirectly and/or
whether acting in concert, an equity stake in the Egyptian Company for Mobile Services (listed) of more than 20% of
the share capital of the latter (this refers to a standstill provision which further provides that Orascom Telecom Holding
shall not seek to directly or indirectly and/or whether acting in concert increase its current equity stake in ECMS. This
has been clarified in a subsequent press release);
2. Amending and restating the existing shareholders‟ agreement between the Parties relating to MobiNil for
Telecommunications (unlisted). As a result of this amendment, OT will adopt the equity method instead of the
proportionate consolidation method for the basis of accounting on the shareholders‟ equity. OT will consolidate its
investment using the equity method in accordance with the Egyptian Accounting Standard No. 18, where OT's share in
the net assets of ECMS at the date of entry into force of the settlement agreement shall be presented in a separate
line item in the consolidated balance sheet, rather than on a line-by-line basis. As a result of this reclassification, there
will be no impact on OT‟s consolidated income statement and OT‟s consolidated shareholders‟ equity, at that date. As
for the OT‟s share in the profits or losses, the changes in the shareholders‟ equity of ECMS recognized after that date
will be presented in a separate line item in the consolidated income statement and the consolidated statement of
shareholders‟ equity respectively. By virtue of the International Financial Reporting Standards, France Telecom will fully
consolidate its investment in MobiNil Telecommunications and ECMS as from the date of entry into force of the
settlement agreement and the Amended and Restated Shareholders Agreement. The modification of the basis of the
accounting treatment for France Telecom and Orascom Telecom will have no effect on ECMS and the minority
shareholders of ECMS;
3. Granting Orascom Telecom Holding certain rights in the amended and restated shareholders‟ agreement with respect
to the approval of material decisions and operational matters, the governance model under the Amended and
Restated Shareholders Agreement is designed to ensure (i) the consolidation by FT of the financial results of MobiNil
and its subsidiaries, and (ii) that material matters relating to the finances and operations of MobiNil, ECMS and/or their
material Subsidiaries may not be taken unless such actions are authorized pursuant to the approval of all of the OT
Directors and a majority of the FT Directors. The composition of the boards of MobiNil and ECMS reflects participation
by OT and FT which is not materially different from the original shareholders agreement, whereby FT appoints, directly
or indirectly, the majority of the members of the MobiNil and ECMS board of directors. The ECMS board of directors
shall continue to include three non-executive, independent directors with relevant industry background. ECMS'
management will include a CEO appointed by FT and a CFO designated from among FT candidates, whereas the
Chief Technical Officer and the Chief Commercial Officer will be designated by the CEO from among OT candidates.
Under the original shareholders agreement, in case the OT and the FT representatives on the board of MobiNil fail to
reach consensus on a decision, a deadlock mechanism was triggered where either party buys the other‟s stake in
MobiNil through a bidding process. Being the main reason behind the dispute subject matter of the arbitration
between OT and FT, the parties agreed to simplify and amend such deadlock resolution mechanism and replace it
with a right granted to OT in certain deadlock situations to put its shares in MobiNil and ECMS to FT for the Put Option
Consideration, which consideration is calculated on a per share price;
4. Granting Orascom Telecom Holding in the amended and restated shareholders‟ agreement the option to put its
shares in MobiNil for Telecommunications (unlisted) together with its shares in the Egyptian Company for Mobile
Services (listed) to the France Telecom Group (i) during the period from September 15 through November 15, 2012,
and (ii) during the period from September 15 through November 15, 2013, as well as (iii) at anytime until November 15,
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2013 in a limited number of deadlock situations on some material decisions, and subject to certain conditions. In the
event of the exercise of the put option, the price per the Egyptian Company for Mobile Services (listed) share ("ECMS
P") which has been agreed between the Parties will increase over time from EGP 221.7 as of closing up to EGP 248.5 as
of end 2013, to be converted in EUR at a fixed EUR/EGP exchange rate of 7.53. As for the opening put option price
(221.7 as of 30/06/2010), it was calculated in reference to the weighted average market share price of ECMS for the
week preceding April 14, 2010 accreted by 3% to 30/06/2010 = 220.3*(1+3%*79/360), payable in Euros at a fixed rate
corresponding on the EGP:EUR rate as at the date of signing of the agreement. Each subsequent price represents a 3%
annual accretion over the opening put option price. Therefore, the price of the put option does not express the
parties‟ view of the long term valuation of ECMS. The price per MobiNil for Telecommunications (unlisted) share will be
computed as ECMS P multiplied by the total number of ECMS shares held by MobiNil for Telecommunications (unlisted)
in the Egyptian Company for Mobile Services (listed) and divided by the total number of MobiNil for
Telecommunications (unlisted) shares;
5. The continuation of the Parties in rendering technical support and management services to the Egyptian Company for
Mobile Services (listed) according to the two existing management agreements with the Parties, which were ratified to
the General Assembly of the Company, and whereby each Party receives a fee equal to 0.75% of the total revenues
of the Company (excluding equipment sales and sales taxes). In case of exit by OT, it will assign to FT its rights to the
above management fees and enter into a transition services agreement to the benefit of ECMS enabling ECMS, at its
option, to continue or terminate the various services and/or technical assistance agreements entered into with OT
group, all subject to applicable laws and the approval of the competent corporate bodies of ECMS. In consideration
for the assignment referred to above and the entering into by ECMS of the transition agreement, FT shall pay to OT a
fee of EUR 110 million;
6. Prior to the settlement agreement, a dispute between the relevant parties on the ownership of the "MobiNil" trademark
existed. OT and FT agreed that MobiNil and ECMS shall regularize the ownership of the MobiNil Trademark in the best
interests of ECMS and all its shareholders and with a view to enhance the visibility of the trademark;
7. The agreement in principle of the Parties on the acquisition by the Egyptian Company for Mobile Services of Link Dot
Net S.A.E and Link Egypt S.A.E, a leading Egyptian ISP, for total consideration calculated on the basis of an aggregate
enterprise value of USD 130,000,000, subject to obtaining the approval of the competent corporate bodies (general
assemblies and/or boards of directors) and completing the necessary procedures in accordance with applicable laws
and regulations; and
8. In consideration for the settlement of all disputes between the Parties, whether in Egypt or abroad, under the Master
Agreement, FT also agrees to pay OT a global settlement fee of USD 300,000,000 in consideration for OT's undertakings
and obligations under the Master Agreement, the termination of the original shareholders agreement as well as
execution of the Amended and Restated Shareholders Agreement (which results in the loss for OT of consolidation of
MobiNil financial results) and the Settlement Agreement. There is no specific contractual breakdown of the global
settlement fee among the items set forth above. However, the quantum was agreed taking into account the value of
the additional portion of EBITDA that will be consolidated by France Telecom in its financial statements. Such fee shall
be paid by one of the FT Entities in cash on the Closing Date and is in line with the benchmark of companies suffering a
discount on their holdings in non consolidated assets. The quantum and the payment of such global settlement fee do
not impact ECMS and the minority shareholders of ECMS. All the more, ECMS will benefit from the global settlement
between its main shareholders as it will enable ECMS to perform and pursue its development with the full support and
commitment of France Telecom and Orascom Telecom. Moreover, the global settlement enables France Telecom to
reinforce its long term investment in Egypt and to ensure a positive media environment for its investment.
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Orascom Telecom Algeria’s (“OTA”) Tax Appeal Process
In November 2009 Orascom Telecom Algeria (OTA) received a notice of reassessment from the Algerian Direction des
Grandes Entreprises (“DGE”) in respect of the tax years 2005, 2006 and 2007 (the “Reassessment”). In December 2009, OTA
filed an administrative appeal. To appeal, OTA was required to pay 20% of alleged taxes and penalties to be owed,
amounting to USD 120 million. The appeal was rejected.
In March 2010, OTA paid a further 20% of the remaining balance amounting to USD 110 million (including delay penalties),
to appeal to the Central Commission, which was rejected. OTA‟s administrative appeal in relation to the 2004 tax
reassessment had also been rejected.
In April, after exhausting all appeal available within internal forums at the Algerian tax authority, OTA then appealed to the
Administrative Court of Algiers to request:
- An injunction to immediately suspend the payment order received pursuant to the rejection of OTA‟s appeal to the tax
administration on April 1st, 2010, and
- The dismissal of the entire tax adjustment for the years 2004 through to 2007, on the merit of the case.
OTA paid the remaining balance of the principal amount of the authorities‟ tax reassessment claim for the years 2005-2007
equivalent to USD 597* million, excluding penalties which amount to USD 74 million from which USD 49 million were paid
and USD 25 million has been suspended until final ruling of the administrative court on merits in the case filed by OTA
pertaining to taxes and penalties related thereto. All amounts paid will be recoverable if OTA‟s case against the tax
authority is successful.
These payments were made without prejudice to any rights OTH or OTA may have under: (1) the tax exemptions and
protections granted under an Investment Agreement dated 5 August 2001 signed by Algeria with OTH and Oratel
International Inc. (now a fully owned subsidiary of OTH) acting for and on behalf of OTA; (2) the 1997 Treaty for the Mutual
Promotion and Protection of Investments between Algeria and Egypt; and (3) Algerian law.
* Based on an exchange rate of: USD 1 = DZD 73.6.
Orascom Telecom Holding Announces the Sale of LINKdotNET and Link Egypt to Mobinil
In July 2010, Orascom Telecom Holding S.A.E. (“OTH” or “the Company”) announced that it had concluded the sale of its
internet services arm LINKdotNET and Link Egypt (“LINK”) to the Egyptian Company for Mobile Services (“Mobinil”). InTouch
Communications S.A.E, a wholly-owned subsidiary of OTH signed a share sale and purchase agreement with Mobinil for the
sale of LINK. The sale excludes the non-ISP part of Link Egypt‟s business and affects LINKdotNET‟s Egyptian operations only.
The other non-connectivity business, LINK Development, LINKonLINE, Connect Ads, Arab Finance Brokerage Company and
Arpu+ remain owned by OTH. The deal was a cash transaction based on an enterprise value of USD 130 Million. The
business represented 56% and 90% of the revenue and EBITDA of OTH Internet Services respectively.
Orascom Telecom Algeria (“OTA”) Received a Preliminary Tax Reassessment for the Years
2008 and 2009 Amounting to USD 230 Million Despite Having Paid the Taxes Due For the
Same Years
In September 2010, Orascom Telecom Holding (“OTH”) announced that its Algerian subsidiary Orascom Telecom Algeria
(“OTA”) received a preliminary tax notification from the Algerian Direction des Grandes Enterprises (Tax Department for
Large-Scale Companies) (the “DGE”) in respect of the years 2008 and 2009, in which the DGE preliminarily re-assessed
taxes alleged to be owed by OTA in the amount of approximately DZD 17 billion (approximately USD230 million) (the
“Reassessment”). The Reassessment is of a preliminary nature. The process as envisaged by the Algerian law, dictates that
OTA may challenge the basis of the reassessment within 40 days following the receipt of the preliminary reassessment. The
DGE would then study the arguments made by OTA and accordingly issues its final reassessment. OTA would then within a
period of 30 days either pay the full amount alleged to be owed or challenge the reassessment through the local appeal
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process, whereby it will be required to pay 20% of the claim‟s principal amount. The amount paid will be recoverable if
OTA's appeal is successful.
This preliminary Reassessment comes despite the fact that OTA had already paid the taxes due for the same years. The tax
audit for these years was immediately initiated in early 2010 following the tax filing for 2009. The Reassessment is based
primarily on the unfounded allegation that OTA did not keep proper accounts for the years 2008 and 2009 notwithstanding
that OTA‟s accounts were fully audited and approved by both OTA‟s international auditors (“KPMG”), and its local
statutory auditors.
OTA fully objects to the reconstitution of its audited accounts. In addition, OTA views the technical methodology
implemented by the DGE to reconstitute its accounts to be completely arbitrary and groundless especially given that
OTA‟s accounts were fully audited and approved by both OTA‟s international auditors (“KPMG”), and its local statutory
auditors.
Without prejudice to their rights under the Investment Agreement, applicable bilateral investment treaty and applicable
laws, OTH and OTA intend to take all necessary legal steps to challenge the Reassessment.
VimpelCom combines with Weather to create new global telecom group
In October 2010, Weather Investments S.p.A (“Weather”), the parent company of Orascom Telecom Holding S.A.E. (“OTH”)
announced that it signed an agreement with VimpelCom Ltd. (“VimpelCom”) to combine the two groups creating the
world‟s fifth largest mobile telecommunications carrier by subscribers. The joint Press Release of VimpelCom and Weather
can be found on Orascom Telecom Holding‟s website http://www.otelecom.com/media/PressRelease.aspx .
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 13
Financial Review
Revenues
Consolidated Revenues increased by 1.6%
compared to the previous year. All GSM operations
showed healthy revenue growth, but this was
negatively impacted by an 8.9% decrease in YoY
revenues in Algeria. Negative performance in
Algeria was due to the impact of the crisis in Q4
2009, as well as stagnation in the allowance of
promotions until the end of Q3 2010 and banning
advertising on the government owned TV
channels. Furthermore, lower VAS revenues had an
adverse impact on revenue growth.
Revenues of Mobilink and Tunisiana for the period
ended September 30th, 2010 were impacted by
currency devaluation compared to the same
period last year: revenues for Mobilink were up 9.6%
in local currency vs. a 4.8% increase in US$ and
revenues for Tunisiana increased by 10% in local
currency vs. an increase of 4.7% in US$.
Mobilink‟s revenue growth is attributable to an
increase in traffic from a higher subscriber base
and promotions, as well as higher VAS revenues.
The increase in Tunisiana‟s revenues is due to the
high additions to its subscriber base compared to
the same period last year.
banglalink's revenues grew by 29% as a result of a
higher average subscriber base.
Telecel Globe and koryolink displayed 33% and
126% increase in revenues respectively, becoming
more evident in the overall top-line trend.
Table 6: Consolidated Revenues
1. On July 13, 2010, the amended and restated shareholders‟ and settlement agreements concluded with France Telecom entered into force.
Consequently, starting Q3 2010, Mobinil is reflected through the equity method. Mobinil‟s financial figures for 9M 2009 and H1 2010 are represented
as a discontinued operation under IFRS.
2. Other Telecom Services Companies include C.A.T., OT Lebanon and TWA in 9M 2009 and OT Lebanon and TWA in 9M 2010.
Subsidiary
Represented
30 Sept
2009
US$ (000)
30 Sept
2010
US$ (000)
Inc/
(dec)
Q2 - 2010
(3 months)
US$ (000)
Q3 - 2010
(3 months)
US$ (000)
Inc/
(dec)
GSM
Djezzy (Algeria) 1,420,285 1,293,651 (8.9%) 436,529 444,597 1.8%
Mobilink (Pakistan) 787,992 826,198 4.8% 287,232 266,705 (7.1%)
Tunisiana (Tunisia) 263,548 275,826 4.7% 89,860 97,019 8.0%
banglalink (Bangladesh) 259,435 334,700 29.0% 114,470 120,576 5.3%
Telecel Globe (Africa) 57,792 76,822 32.9% 24,611 28,040 13.9%
koryolink (North Korea) 18,456 41,645 125.6% 14,170 18,445 30.2%
Total GSM 2,807,507 2,848,842 1.5% 966,872 975,382 0.9%
Telecom Services
Ring 145,518 115,158 (20.9%) 40,823 39,281 (3.8%)
Other 54,451 80,437 47.7% 26,629 28,695 7.8%
Total Telecom Services 199,968 195,595 (2.2%) 67,452 67,976 0.8%
Internet Services 65,768 77,431 17.7% 24,451 29,213 19.5%
Total Consolidated 3,073,243 3,121,867 1.6% 1,058,776 1,072,571 1.3%
1
2
1
1 1
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Orascom Telecom Holding Q3 – 2010 P a g e | 14
Total GSM Revenues
Revenues for the third quarter of 2010 displayed
growth across most subsidiaries in comparison to
Q2 2010, increasing by 1.3% on a consolidated
level. In Algeria, Djezzy‟s revenues saw a 2%
increase QoQ due to higher pre-paid revenues
from promotions allowed during late summer and
Ramadan, which increased MOUs. While Q3 is
traditionally considered to be the stronger quarter,
in 2010 the holy month of Ramadan shifted into the
peak month of August, which had a halting effect
on QoQ revenue growth. Tunisiana increased its
revenues by 8% in comparison to the previous
quarter as a result of maintaining ARPU while
growing its subscriber base and the traditional
seasonal positive impact of the summer. In
Pakistan, revenues declined by 7% compared to
the previous quarter due to the widespread impact
of the flood causing lower usage and site outages,
as well as the seasonality shift of Ramadan into the
month of August during 2010. Furthermore,
aggressive pricing cuts to counter competition
adversely impacted Mobilink‟s QoQ revenues.
The operation in Bangladesh witnessed a 5%
revenue increase QoQ which is attributable to the
strong growth in banglalink‟s average subscriber
base. koryolink's revenue increase of 30% is
attributed to high additions to its subscriber base.
Table 7: Proforma Consolidated Revenues (Local Currency)1
1. Un-audited Figures.
30 Sept2009
US$ (million)
30 Sept2010
US$ (million)
1,420 1,294
788 826
264 276
259 335 58 7718 42
Total GSM
koryolink (North Korea)
Telecel Globe (Africa)
banglalink (Bangladesh)
Tunisiana (Tunisia)
Mobilink (Pakistan)
Djezzy (Algeria)
2,808 2,849
30 Sept
2009
30 Sept
2010
Inc/
(dec)Q2 - 2010 Q3 - 2010
Inc/
(dec)
(3 months) (3 months)
GSM
Djezzy (Algeria) (DZD bn) 103.2 96.4 (6.5%) 32.6 33.4 2.6%
Mobilink (Pakistan) (PKR bn) 64.3 70.4 9.6% 24.4 23.0 (5.8%)
Tunisiana (Tunisia) (TND mn) 361.8 398.1 10.0% 133.4 141.4 6.0%
Subsidiary
1.5%
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Orascom Telecom Holding Q3 – 2010 P a g e | 15
EBITDA
Consolidated EBITDA witnessed a decrease of 0.8%
compared to the same period last year. The solid
performance across all the GSM subsidiaries was
negatively impacted by the crisis situation in Algeria.
Djezzy‟s EBITDA decreased by 13.2% compared to
the same period last year as a result of, among other
things, lower revenues due to the inability of
animating the base through promotions, the
restrictive sales environment, the launch of
aggressive retention and loyalty offers leading to
ARPU dilution in addition to the introduction of a new
5% sales tax on mobile recharges effective from July
2009.
EBITDA for Mobilink increased by 22.3% in local
currency vs. an increase of 16.9% in US$ and EBITDA
for Tunisiana increased by 6.3 % in local currency,
while it increased by only 1% in US$.
Mobilink‟s EBITDA increased as a result of higher
revenues as well as a lower absorption of activation
taxes, which were reduced to Rs 250/SIM in July 2009
from Rs 500/SIM. Tunisiana‟s EBITDA grew due to
higher revenues.
The growth of the subscriber base in Bangladesh led
to an increase in marketing expenses in Q2 and Q3
of 2010 compared to the same period last year. As a
result banglalink‟s EBITDA grew slightly by 1.6%
compared to the same period last year. Telecel
Globe‟s EBITDA showed a tremendous increase
compared to the first nine months of 2009 due to
growing revenues coupled with decreased incoming
rates and constant OPEX. koryolink‟s EBITDA grew
significantly compared to the same period last year
as a result of an increasing subscriber base
generating higher revenues.
The increase in Telecom Services is mainly
attributable to OT Lebanon (Alfa Management
contract).
Table 8: Consolidated EBITDA1
1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.
2. On July 13, 2010, the amended and restated shareholders‟ and settlement agreements concluded with France Telecom entered into force. Consequently, starting Q3 2010,
Mobinil is reflected through the equity method. Mobinil‟s financial figures for 9M 2009 and H1 2010 are represented as a discontinued operation under IFRS.
3. Other Telecom Services Companies include: C.A.T., MedCable, Mena Cable, OT Lebanon, TWA, and OTWIMAX in 9M 2009 and 9M 2010.
4. Other non operating companies include: OTH, Cortex, Eurasia, FPPL, Moga Holding, MINMax, OIH, OIIH, Oratel, OT Holding Canada, OT ESOP, OTFSCA, OTI Malta, OT
Services Europe, OT Oscar, OT Wireless Europe, OT Asia, Pioneers, SAWLTD, ITCL, M-link, Swyer, IWPL and Telecel.
Subsidiary
Represented
30 Sept
2009
US$ (000)
30 Sept
2010
US$ (000)
Inc/
(dec)
Q2 - 2010
(3 months)
US$ (000)
Q3 - 2010
(3 months)
US$ (000)
Inc/
(dec)
GSM
Djezzy (Algeria) 853,362 740,810 (13.2%) 245,847 265,548 8.0%
Mobilink (Pakistan) 279,565 326,848 16.9% 115,646 105,431 (8.8%)
Tunisiana (Tunisia) 144,492 145,943 1.0% 47,239 51,833 9.7%
banglalink (Bangladesh) 95,408 96,914 1.6% 30,982 23,340 (24.7%)
Telecel Globe (Africa) 2,723 16,862 n.m. 5,685 7,565 33.1%
koryolink (North Korea) 9,990 26,154 n.m. 12,830 7,475 (41.7%)
Total GSM 1,385,539 1,353,531 (2.3%) 458,227 461,193 0.6%
Telecom Services
Ring (8,485) (515) 93.9% (3,502) (3,311) 5.5%
Other (5,982) 17,659 n.m. 5,919 6,257 5.7%
Total Telecom Services (14,467) 17,144 n.m. 2,417 2,946 21.9%
Internet Services 3,911 9,653 146.8% 2,848 3,464 21.6%
OT Holding & Other (36,375) (52,523) (44.4%) (22,162) (18,203) 17.9%
Total Consolidated 1,338,609 1,327,805 (0.8%) 441,331 449,399 1.8%
3
4
2
2
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Orascom Telecom Holding Q3 – 2010 P a g e | 16
Total GSM EBITDA
Consolidated EBITDA increased by almost 2%
compared to the previous quarter.
In Pakistan, Mobilink‟s EBITDA showed a QoQ
decrease of nearly 9% due to lower revenues for the
quarter. Tunisiana witnessed an almost 10% increase
in its EBITDA in comparison to the last quarter.
banglalink's EBITDA decreased by almost 25%
compared to Q2 2010 due to higher marketing costs
resulting from higher gross adds.
Table 9: Proforma Consolidated EBITDA (Local Currency)1
1. Un-audited Figures.
30 Sept2009
US$ (million)
30 Sept2010
US$ (million)
853 741
280 327
144 146
95 97
3 17 10 26
Total GSM
koryolink (North Korea)
Telecel Globe (Africa)
banglalink (Bangladesh)
Tunisiana (Tunisia)
Mobinil (Egypt)
Mobilink (Pakistan)
Djezzy (Algeria)
1,386 1,354
30 Sept
2009
30 Sept
2010
Inc/
(dec)Q2 - 2010 Q3 - 2010
Inc/
(dec)
(3 months) (3 months)
GSM
Djezzy (Algeria) (DZD bn) 61.9 55.2 (10.8%) 18.4 19.8 7.5%
Mobilink (Pakistan) (PKR bn) 22.8 27.9 22.3% 9.8 9.0 (7.8%)
Tunisiana (Tunisia) (TND mn) 198.0 210.5 6.3% 70.1 75.5 7.7%
Subsidiary
2
-2.3%
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Orascom Telecom Holding Q3 – 2010 P a g e | 17
EBITDA MARGIN
Consolidated EBITDA margin stood at 42.5%, a
decline of 1% compared to the period ended
September 30th, 2009, due to lower margins in
Algeria, Tunisia and Bangladesh. The margin decline
in OTA was driven by the aforementioned sales tax
introduction, borne by the operators. Tunisiana‟s
EBITDA margin decline of 2% is due to increased
sales costs, higher handset costs, as well as the
launching of several bonus promotions to counter
competitive pressures arising from the third entrant
into the Tunisian market. banglalink's margin
decreased 8% YoY as a result of strong net additions
generating higher marketing expenses in Q2 and
Q3 of 2010. The declining margin pressure was
eased by the EBITDA margin increase of Mobilink of
4%, resulting from increasing revenues. Telecel
Globe‟s margin grew by 17% compared to the
same period last year as a consequence of higher
subscriber growth and revenues coupled with lower
OPEX.
Table 10: Consolidated EBITDA Margin
Subsidiary
Represented
30 Sept
2009
30 Sept
2010Change
Q2 - 2010
(3 months)
Q3 - 2010
(3 months)Change
GSM
Djezzy (Algeria) 60.1% 57.3% (2.8%) 56.3% 59.7% 3.4%
Mobilink (Pakistan) 35.5% 39.6% 4.1% 40.3% 39.5% (0.7%)
Tunisiana (Tunisia) 54.8% 52.9% (1.9%) 52.6% 53.4% 0.9%
banglalink (Bangladesh) 36.8% 29.0% (7.8%) 27.1% 19.4% (7.7%)
Telecel Globe (Africa) 4.7% 21.9% 17.2% 23.1% 27.0% 3.9%
koryolink (North Korea) 54.1% 62.8% 8.7% 90.5% 40.5% (50.0%)
Total GSM 49.4% 47.5% (1.8%) 47.4% 47.3% (0.1%)
Total Telecom Services (7.2%) 8.8% 16.0% 3.6% 4.3% 0.8%
Internet Services 5.9% 12.5% 6.5% 11.6% 11.9% 0.2%
EBITDA Margin 43.6% 42.5% (1.0%) 41.7% 41.9% 0.2%
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Orascom Telecom Holding Q3 – 2010 P a g e | 18
Foreign Exchange Rates
Table 11: Foreign Exchange Rates used in the Income Statement & Balance Sheet
1- Represents the average monthly exchange rate from the start of the year until the end of the period.
2- Represents the spot exchange rate at the end of the period.
3- Appreciation / (Depreciation) of USD vs. Local Currency.
Net Income
Effective July 13, 2010 and as per the amended and
restated shareholders‟ and settlement agreements
concluded with France Telecom, OTH measured its
investments in Mobinil and ECMS at fair value
according to IAS 31 “Interests in Joint Ventures” and
subsequently accounted for them using the equity
method. OTH recognized a gain of US$ 822 million on
the transaction by comparing the carrying amount of
the investments in Mobinil and ECMS to the relevant
fair value, taking into consideration the net proceeds
from the transaction for the global settlement fee
amounting to US$300 million. Consequently, Net
Income before minority interest for the period ended
September 30th, 2010 reached US$ 922 million
representing an increase of 153% over the previous
year. Excluding this exceptional item, Q3 2010 profits
from continuing operations showed a strong
performance with $112 million.
EPS in the 9 months ended September 30, 2010 stood
at US$ 0.92/GDR.
% Chg % Chg
Currency Sept 09 Jun 10 Sept 10 Sept 10 vs Sept 10 vs
Sept 09 Jun 10
Egyptian Pound/USD
Income Statement 5.6080 5.5748 5.6221 0.3 0.8
Balance Sheet 5.5250 5.7149 5.7050 3.3 (0.2)
Algerian Dinar/USD
Income Statement 72.6200 74.1869 74.5171 2.6 0.4
Balance Sheet 72.4470 75.3636 74.7419 3.2 (0.8)
Tunisian Dinar/USD
Income Statement 1.3710 1.4343 1.4420 5.2 0.5
Balance Sheet 1.2970 1.5173 1.4213 9.6 (6.3)
Pakistan Rupee/USD
Income Statement 81.3650 84.8122 85.1752 4.7 0.4
Balance Sheet 83.1200 85.5000 86.3333 3.9 1.0
Bangladeshi Taka/USD
Income Statement 69.4290 69.6633 69.7500 0.5 0.1
Balance Sheet 69.4200 69.8000 70.1000 1.0 0.4
Canadian Dollar/USD
Income Statement 1.1480 1.0258 0.9736 (15.2) (5.1)
Balance Sheet 1.0630 1.0392 0.9801 (7.8) (5.7)
1
2
1
2
2
2
2
2
1
1
1
1
3 3
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Orascom Telecom Holding Q3 – 2010 P a g e | 19
Table 12: Income Statement in IFRS/US$
1- Management Presentation developed from IFRS financials.
2- Mainly due to the impairment of MedCable in Algeria.
3- Due to the proceeds of the disposal of M-Link.
4- Due to the proceeds of the disposal of LINKdotNET and LINK Egypt in Q3 2010.
5- Due to a waiver obtained from the lenders regarding the Algerian tax claim amounting to approximately US$ 24 million in H1 2010.
6- Mainly due to gains of approx. US$36.5 million resulting from the early extinguishment of PMCL‟s bond.
7- Mainly due to the unrealised FX loss from mark to market value of the US$ denominated debt at OTH of US$ 3.5 billion as a result of the
depreciation of the Egyptian Pound during H1 2010.
8- Mainly due to the launch of the Canadian operations. Q3 2010 figures include the equity consolidation of Mobinil as per the amended and
restated shareholders‟ and settlement agreements concluded with France Telecom which entered into force on July 13, 2010.
9- On July 13, 2010, the amended and restated shareholders‟ and settlement agreements concluded with France Telecom entered into force.
Consequently, starting Q3 2010, Mobinil is reflected through the equity method. Mobinil‟s financial figures for 9M 2009 and H1 2010 are
represented as a discontinued operation under IFRS.
10- As a result of the amended and restated shareholders‟ and settlement agreements concluded with France Telecom, whereby Mobinil and
ECMS are accounted for using the equity method. The figure also includes the net amount of the Global Settlement Fee.
11- Equates to Net Income after Minority Interest.
12- Based on a weighted average for the outstanding number of GDRs of 1,004,449,912 GDRs as of 30 September 2010. On a pro forma basis for the
rights issue, the weighted average for the outstanding number of GDRs for 9M 2009 is 875,380,629. The weighted average for the outstanding
number of GDRs in Q2 2010 and Q3 2010 is: 1,045,643,124 GDRs and 1,045,651,444 GDRs respectively.
13- Due to the deconsolidation of Mobinil and the implementation of the equity method.
Represented
30 Sept
2009
30 Sept
2010
Inc/
(dec)Q2 - 2010 Q3 - 2010
Inc/
(dec)
US$ (000) US$ (000)(3 months)
US$ (000)
(3 months)
US$ (000)
Revenues 3,073,243 3,121,867 1.6% 1,058,636 1,072,569 1.3%
Other Income 27,102 25,545 8,822 7,503
Total Expense (1,761,736) (1,819,607) (626,127) (630,673)
EBITDA 1,338,609 1,327,805 (0.8%) 441,332 449,399 1.8%
Depreciation & Amortization (605,580) (601,780) (200,082) (202,339)
Impairment of Non Current Assets (22,859) (42,821) (31,289) (7,785)
Gain (Loss) on Disposal of Non Current
Assets35,940 26,275 (452) 26,917
Operating Income 746,110 709,480 (5%) 209,508 266,193 27%
Financial Expense (331,167) (368,384) (118,964) (114,798)
Financial Income 92,201 59,253 21,523 20,662
Foreign Exchange Gain (Loss) 10,805 (89,142) (121,607) 24,859
Net Financing Cost (228,160) (398,273) (219,048) (69,277)
Share of Profit (Loss) of Associates (20,974) (82,758) (33,222) (15,844)
Profit Before Tax 496,976 228,449 (54%) (42,763) 181,072 n.m.
Income Tax (216,158) (191,062) (65,457) (68,858)
Profit from Continuing Operations 280,819 37,386 (87%) (108,220) 112,214 n.m.
Gains or losses from discontinued
operations132,515 913,606 66,818 822,023
Profit for the Period 413,334 950,992 130% (41,402) 934,236 n.m.
Attributable to:
Equity Holders of the Parent 364,520 921,940 153% (66,082) 939,217 n.m.
Earnings Per Share (US$/GDR) 0.42 0.92 120% (0.06) 0.90 n.m.
Minority Interest 48,814 29,052 24,680 (4,980)
Net Income 413,334 950,992 130% (41,402) 934,236 n.m.
3
2
1
12
6
8
12
11
12
7 7
4
9
2
4
8 8
13
13
13
13
5
10 10
12
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Orascom Telecom Holding Q3 – 2010 P a g e | 20
Table 13: Balance Sheet in IFRS/US$
1- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
IFRS/US$ IFRS/US$
31 December
2009
30 September
2010
US$ (000) US$ (000)
Assets
Property and Equipment (net) 5,031,757 3,910,217
Intangible Assets 2,261,477 948,496
Other Non-Current Assets 963,990 2,961,976
Total Non-Current Assets 8,257,224 7,820,689
Cash and Cash Equivalents 759,546 838,661
Trade Receivables 331,759 313,373
Assets Held for Sale 109,953 -
Other Current Assets 640,537 1,082,976
Total Current Assets 1,841,795 2,235,009
Total Assets 10,099,019 10,055,698
Equity Attributable to Equity Holders of the Company 1,275,765 2,931,834
Minority Share 140,029 67,519
Total Equity 1,415,794 2,999,354
Liabilities
Long Term Debt 4,873,991 4,132,628
Other Non-Current Liabilities 340,145 352,269
Total Non-Current Liabilities 5,214,136 4,484,898
Short Term Debt 998,231 773,770
Trade Payables 1,042,907 779,347
Liabilities Held for Sale 54,946 -
Other Current Liabilities 1,373,005 1,018,329
Total Current Liabilities 3,469,089 2,571,447
Total Liabilities 8,683,225 7,056,344
Total Liabilities & Shareholder’s Equity 10,099,019 10,055,698
Net Debt 5,112,676 4,067,737 1
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Orascom Telecom Holding Q3 – 2010 P a g e | 21
Table 14: Cash Flow Statement in IFRS/US$1
IFRS/US$ IFRS/US$
Represented
30 September
2009
30 September
2010
US$ (000) US$ (000)
Cash Flows from Operating Activities
Profit/Loss for the Period from continuing operations 280,819 37,386
Depreciation, Amortization & Impairment of Non-Current Assets 628,439 644,601
Income Tax Expense 216,158 191,062
Net Financial Charges 238,966 309,131
Share of Loss (Profit) of Associates Accounted for Using the
Equity Method20,974 82,758
Other (7,645) 115,235
Changes in Assets Carried as Working Capital (72,765) (355,355)
Changes in Other Liabilities Carried as Working Capital 143,596 (318,716)
Income Tax Paid (497,254) (212,320)
Interest Expense Paid (317,804) (250,759)
Net Cash Generated by/(used in) Operating Activities 633,484 243,023
Cash Flows from Investing Activities
Cash Outflow for Investments in Property & Equipment, Intangible
Assets, and Financial Assets & Consolidated Subsidiaries(949,044) (520,467)
Proceeds from Disposal of Property & Equipment, Associates,
Subsidiaries and Financial Assets157,798 132,173
Advances & Loans made to Associates & other parties (62,000) (261,318)
Dividends & Interest Received 17,743 15,678
Net Cash Used in Investing Activities (835,503) (633,934)
Cash Flows from Financing Activities
Proceeds from Non-Current Borrow ings 571,880 330,269
Repayment of Non-Current Borrow ings (443,886) (844,224)
Net Proceeds/(Payments) from Current Financial Liabilities 199,077 (9,892)
Net Change in Cash Collateral 76,351 15,917
Dividend Payments (91,237) -
Proceeds / (Payments) for Treasury Shares (7,143) (1,014)
Capital injections - 768,662
Change in Minority Interest (19,609) -
Net Cash generated by Financing Activities 285,433 259,718
Discontinued operations
Net cash generated by operating activities 234,901 103,459
Net cash used in investing activities (137,248) 143,071
Net cash used in f inancing activities (67,358) (25,500)
Net cash generated by discontinued operations 30,295 221,030
Net Increase /(Decrease) in Cash & Cash Equivalents 113,709 89,837
Cash included in Assets Held for Sale (12,664) -
Effect of Exchange Rate Changes on Cash & Cash Equivalents (3,678) (10,722)
Cash & Cash Equivalents at the Beginning of the Period 651,783 759,546
Cash & Cash Equivalents at the End of the Period 749,150 838,661
1. On July 13, 2010, the amended and restated shareholders‟ and settlement agreements concluded with France Telecom entered into force. Consequently, starting Q3 2010,
Mobinil is reflected through the equity method. Mobinil‟s financial figures for 9M 2009 and H1 2010 are represented as a discontinued operation under IFRS.
Table 14: Cash Flow Statement in IFRS/US$1
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Orascom Telecom Holding Q3 – 2010 P a g e | 22
According to the Egyptian Accounting Standards (EAS), the investments in Mobinil and ECMS are measured at cost and
not at fair value as per the IFRS. Consequently, the gain recognized on the ECMS Transaction is not reflected in the
following statement.
Table 15: Income Statement in EAS/Egyptian Pounds
1- Management Presentation developed from EAS financials.
2- Adjusted based on a pro forma basis for the rights issue.
3- Based on a weighted average for the outstanding number of shares for 9M 2010 of 5,022,249,558 local shares. On a pro forma basis for the rights
issue, the weighted average for the outstanding number of shares for 9M 09 is 4,376,903,146 local shares.
Represented
30 Sept
2009
30 Sept
2010
Inc/
(dec)
LE (000) LE (000)
Revenues 17,236,112 17,551,484 2%
Other Income 152,998 143,616
Total Expense (9,833,265) (10,210,227)
EBITDA 7,555,845 7,484,873 (1%)
Depreciation & Amortization (3,395,575) (3,381,908)
Impairment charges (128,203) (240,743)
Disposal of non current assets 197,567 147,850
Operating Income 4,229,634 4,010,072 (5%)
Financial Expense (1,857,130) (2,059,619)
Financial Income 520,105 333,127
Foreign Exchange Gain (Loss) 60,601 (501,167)
Net Financing Cost (1,276,424) (2,227,659)
Share of Profit (Loss) of Associates (117,629) (466,133)
Profit Before Tax 2,835,581 1,316,280 (54%)
Income Tax (1,212,309) (1,073,553)
Profit from Continuing Operations 1,623,272 242,727 (85%)
Gains or losses from discontinued
operations764,124 1,751,892
Profit for the Period 2,387,396 1,994,619 (16%)
Attributable to:
Equity Holders of the Parent 2,107,572 1,803,337 (14%)
Earnings Per Share (EGP/Share) 0.48 0.36 (25%)
Minority Interest 279,824 191,282
Net Income 2,387,396 1,994,619 (16%)
1
2
3
3
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Orascom Telecom Holding Q3 – 2010 P a g e | 23
Table 16: Balance Sheet in EAS/Egyptian Pounds1
1- Management presentation developed from EAS financials.
2- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.
EAS/LE EAS/LE
31 December
2009
30 September
2010
LE (000) LE (000)
Assets
Property and Equipment (net) 27,526,242 22,304,974
Intangible Assets 12,262,066 9,705,821
Other Non-Current Assets 5,310,618 8,602,910
Total Non-Current Assets 45,098,927 40,613,705
Cash and Cash Equivalents 4,184,340 4,784,561
Trade Receivables 1,827,658 1,787,791
Assets Held for Sale 605,732 -
Other Current Assets 3,570,237 6,178,435
Total Current Assets 10,187,968 12,750,787
Total Assets 55,286,895 53,364,492
Equity Attributable to Equity Holders of the Company 6,806,645 13,078,647
Minority Share 762,697 400,008
Total Equity 7,569,342 13,478,655
Liabilities
Long Term Debt 26,747,498 23,576,685
Other Non-Current Liabilities 1,886,011 1,671,513
Total Non-Current Liabilities 28,633,509 25,248,198
Short Term Debt 5,483,389 4,412,713
Trade Payables 5,745,373 4,446,176
Other Current Liabilities 7,855,282 5,778,750
Total Current Liabilities 19,084,044 14,637,639
Total Liabilities 47,717,553 39,885,837
Total Liabilities & Shareholder’s Equity 55,286,895 53,364,492
Net Debt 28,046,547 23,204,837 2
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 24
Presence in Countries with Favourable Dynamics:
OTH serves a population of 517 million* with an average penetration of 53%
Note: Sovereign Ratings shown are Moody‟s/S&P.
Population Figures from CIA Factbook (est. July 2010).
Mobile Penetration is based on September 30, 2010 subscriber figures & market share
*excluding Canada and Lebanon
Operations owned by Orascom Telecom (OTH has 65% indirect equity ownership in Globalive Canada but a minority voting stake)
TUNISIA
Population: 10.6 million
GDP Growth: 3%
GDP/Capita PPP ($): 8,200
Pop. Under 15 years: 23%
Sovereign Rating: BBB
Mobile Penetration: 103%
PAKISTAN
Population: 184 million
GDP Growth: 4.2%
GDP/Capita PPP ($): 2,500
Pop. Under 15 years: 37%
Sovereign Rating: CCC
Mobile Penetration: 52%
EGYPT
Population: 80.1 million
GDP Growth: 4.7%
GDP/Capita PPP ($): 6,000
Pop. Under 15 years: 33%
Sovereign Rating: BB+
Mobile Penetration: 89%
BANGLADESH
Population: 156 million
GDP Growth: 5.6%
GDP/Capita PPP ($): 1,500
Pop. Under 15 years: 35%
Sovereign Rating: NR
Mobile Penetration: 43%
NORTH KOREA
Population: 22.8 million
GDP Growth: 3.7%
GDP/Capita (PPP) ($): 1,900
Pop. Under 15 years: 21%
Sovereign Rating: NR
Mobile Penetration: 1%
BURUNDI
Population: 9.9 million
GDP Growth: 3.5%
Pop. Under 15 years: 46%
Sovereign Rating: NR
Mobile Penetration: 13%
CENTRAL AFRICA REPUBLIC
Population: 4.8 million
GDP Growth: 1.7%
Pop. Under 15 years3: 41%
Sovereign Rating: NR
Mobile Penetration: 17%
NAMIBIA
Population: 2.1 million
GDP Growth: -0.8%
Pop. Under 15 years: 36%
Sovereign Rating: BBB
Mobile Penetration: 84%
ALGERIA
Population: 35 million
GDP Growth: 2.6%
GDP/Capita PPP ($): 7,000
Pop. Under 15 years: 25%
Sovereign Rating: NR
Mobile Penetration: 72%
CANADA
Population: 34 million
GDP Growth:-2.5%
GDP/Capita PPP ($): 38,200
Pop. Under 15 years: 16%
Sovereign Rating: AAA
Mobile Penetration: 66%
ZIMBABWE
Population: 11.7 million
GDP Growth: -1.3%
Pop. Under 15 years3: 44%
Sovereign Rating: NR
Mobile Penetration: 41%
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 25
Operational Overview
Djezzy – Algeria
Financial Data Operational Data
During the third quarter of 2010, OTA continued to face
the challenge of the inability to process any transfer
abroad in foreign currency for suppliers. This factor,
among other factors, introduced significant pressure in
technical areas as well as in terms of SIM availability. As
a result, OTA lost its leading position in gross additions in
the Algerian market.
It is worth noting that the OTA Mega promo was abruptly
cut in Q1 2010 by the ARPT just 2 weeks after launch.
During the end of Q3 2010, retention and loyalty actions
were reinforced, capitalizing on the best quality service
offered through the owned shops and distribution
channels. A number of actions were launched in the
context of the “Imtyaz” loyalty program and new
partners were added into the program allowing OTA
customers to exchange points against a wider portfolio
of products.
The VAS activity distinguished itself on the marketplace
through the re-launch of the “Annuaire djezzy” at the
end of the quarter.
From a communication standpoint, OTA faced ongoing
restrictions which have had a serious impact on the
media strategy; OTA has launched four campaigns
(Djezzy card, Allo OTA, one promo classic and one
control). OTA was prohibited to use ENTV, the national
public TV and tried to fill the gap by sponsoring TV shows
and advertising on Nessma TV and MBC. The directory
service campaign (718) has filled the national outdoor
media since its launch and still remains visible in early Q4
2010. Moreover, classical messages for Ramadan and
Independence Day were launched supported by the
CDS initiatives. OTA continues to open new CDS, one
being in Algiers‟ major commercial location (more than
40,000 visitors per day). Over 250,000 calendars for
Ramadan and 100,000 football marketing tools were
also given in addition of BTL campaigns (Liberty
Gratissimo, 3=3, Ramadan Layali). Efforts have been
deployed to support street marketing, such as the
revamp of more than 300 outside banners for our own
network while supporting POS.
The local governmental restrictions and actions, which
have resulted in a toughening operational environment,
led OTA to lose 5% market share compared to the same
period last year. Moreover, revenues and EBITDA for the
period ending 30 September 2010 decreased by 9% and
13% respectively over the same period last year. This
resulted in an EBITDA margin of 57.3%; a decrease of 3%
compared to 9M 2009.
September
2009
September
2010
Inc/
(dec)
September
2009
June
2010
September
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Financial Data Operational Data
Subscribers 14,726,081 15,142,460 14,919,031 1.3%
Revenues (US$ 000) 1,420,285 1,293,651 (8.9%)
Revenues (DZD bn) 103.2 96.4 (6.5%) Market Share 62.9% 59.1% 57.9% (5.0%)
EBITDA (US$ 000) 853,362 740,810 (13.2%)ARPU (US$)
(3 months)10.5 9.5 9.6 (8.9%)
EBITDA (DZD bn) 61.9 55.2 (10.8%)ARPU (DZD)
(3 months)765.9 711.3 724.5 (5.4%)
EBITDA Margin 60.1% 57.3% (2.8%) MOU (YTD) 242 273 278 14.7%
Capex (US$ m) 209 55 (74%) Churn (3 months) 7.4% 6.2% 7.3% (0.1%)
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Orascom Telecom Holding Q3 – 2010 P a g e | 26
Mobilink – Pakistan
Financial Data Operational Data
* Market share, as announced by the Pakistani Regulator is based on information disclosed by the other operators which use different subscriber recognition policies. Market share for
September 2010 was not released by the Pakistani Regulator prior to this release. Accordingly, the above stated figure conveys the trend as measured internally on Mobilink‟s traffic
patterns.
The third quarter of the year 2010 witnessed the most
devastating flood in the history of Pakistan which not only
affected lives in terms of displacing people but the economy
has also suffered due to the loss of infrastructure and
agricultural crops. It is estimated that more than 20 million
people became victims of this flood (more than 10% of the
total population). Mobilink infrastructure also suffered in flood
hit areas; out of the network‟s 8,070 sites, more than 400 sites
were affected. Emergency measures were taken to restore the
affected sites as well as to keep the network up and running in
such areas.
The Pakistani mobile market remained competitive where all
operators kept launching aggressive offers to increase market
share and to enhance customers‟ usage during the month of
Ramadan, which is traditionally a slow month. Mobilink kept a
strong and aggressive presence in the market in order to
maintain its leadership and to engage its customer base.
Mobilink posted revenues of US$ 826 million for the period
ending 30 September 2010. The revenue for the same period
last year was US$ 788 million, translating into YoY increase of
nearly 5%. 9M 2010 EBITDA reached US$ 327 million with an
increase of 17% over the same period last year on a
comparable basis reflecting an EBITDA margin of 39.6%.
Moreover, the closing subscriber base of Q3 2010 showed 4.7%
growth as compared to the closing base of Q3 2009.
In July, Mobilink ran Bonus on Recharge and Bonus on Usage
promotions in order to enhance usage during the typically slow
summer months. During Ramadan, Mobilink rolled out its
discounted tariff promotion for calls to all other Mobilink
numbers. Another aggressive offer was launched towards the
end of August with the objective of improving customer
engagement and satisfaction as well as to counter the
aggressive competition. The campaign resulted in heavy
subscriptions and very good customer recall from the market.
Keeping the momentum, two aggressive promotions were
launched after Eid namely “Non Stop Call Masti” and “Na
Qabil-e-Yaqeen Offer” which gave the customers the
opportunity to make unlimited calls to 3 Friends and Family
numbers. Innovative reactivation promotions were also
launched during the quarter in order to reduce churn and
improve customer engagement. During Q3 there was a
cleanup for some subscribers that were mistakenly considered
active by the systems which contributed to the high
disconnections of the quarter. A revalidation to the reporting
systems has taken place to avoid such incidents in the future
For Post-paid customers, a discount offer was launched during
Ramadan for all Mobilink calls. In addition, an IDD promotion
was launched in September for post-paid customers offering
discounted calls to USA, Canada, UK and many European
destinations.
On the VAS front, a portfolio of services was launched during
Ramadan including Quran recitation, Tafseer & Duas as well as
various Ramadan alerts. Moreover, a special SMS bundle offer
and a special roaming offer to Saudi Arabia were launched
during Ramadan. Mobilink also launched the third phase of
SMS Khazana during August which generated healthy
revenues.
On the brand building front, Jazz acknowledged nation‟s
heroes and rising stars with the “Kal Kay Liyay Aaj Badlo”
campaign on Independence Day. The campaign highlighted
their achievements inspiring others to do the same with their
patriotic spirit guiding their way. Mobilink also launched a Flood
Relief campaign with contributions put in by the Holding
company and Mobilink employees. The campaign led Mobilink
to commit more than 1,000 volunteer hours and reach out to
more than 112,000 flood victims.
September
2009
September
2010
Inc/
(dec)
September
2009
June
2010
September
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Financial Data Operational Data
Subscribers 30,046,050 32,202,547 31,444,099 4.7%
Revenues (US$ 000) 787,992 826,198 4.8%
Revenues (PKR bn) 64.3 70.4 9.6% Market Share 30.9% 32.6% 32.6% 1.7%
EBITDA (US$ 000) 279,565 326,848 16.9%ARPU (US$)
(3 months)2.8 2.9 2.7 (4.7%)
EBITDA (PKR bn) 22.8 27.9 22.3%ARPU (PKR)
(3 months)234.2 246.9 231.0 (1.4%)
EBITDA Margin 35.5% 39.6% 4.1% MOU (YTD) 198 207 202 1.9%
Capex (US$ m) 123 95 (23%) Churn (3 months) 5.3% 5.9% 9.3% 4.0%
*
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Orascom Telecom Holding Q3 – 2010 P a g e | 27
Mobinil – Egypt
Operational Data
* ARPU, MOU & Churn expressed under OTH‟s definition may differ from Mobinil‟s disclosed figures.
Mobinil reached over 28 million subscribers with 2 million
net additions, representing a YoY growth in subscribers
of 15%.
In this quarter Mobinil closed the acquisition of
LINKdotNET on September 2nd and one month of its
results has been consolidated.
The third quarter saw improvement in Mobinil as a result
of its efforts to mitigate the continuing competitive and
regulatory pressures. Mobinil was able to make the best
use of the limited number of dials received and increase
the dial efficiency rate leading to 2 million net adds in
the quarter. The regulator also made an additional one
million dials available which went into service during
October.
Mobinil launched MobiChat for new customers who
bought Huawei Smartphone bundles, where customers
got a monthly bonus of 1500 SMS and 900 minutes
divided over 30 days. Also, a new El Masry acquisition
promotion was launched where new customers enjoyed
10 free on-net minutes every time they made a charged
on-net minute from 12:00 am to 06:00 pm. El Me3alem
recharge promotion was relaunched in August shortly
before Ramadan where customers who subscribed to
that offer got double their recharge as credit. Mobinil
launched a new Friends and Family “Ahsan Nas” tariff
plan where all new and current pre-paid customers can
call up to four Mobinil numbers of their choice for free
from 12:00 am to 06:00 pm and for only EGP 0.05 per
minute for the rest of the day. Furthermore, a Free
daytime talk promotion was launched during Ramadan
for all pre-paid customers limited to any Mobinil number
during fasting hours in addition to an off-net rate of EGP
0.19 per minute to any mobile or landline in Egypt.
“MyShop” was launched as one of the value added
services offered through Mobinil‟s web portal MyMobinil,
where visitors have the opportunity to browse and buy
any of Mobinil‟s products.
September
2009
June
2010
September
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Operational Data
Subscribers 24,624,733 26,147,615 28,401,312 15.3%
ARPU (US$)
(3 months)6.7 5.4 5.4 (19.4%)
ARPU (EGP)
(3 months)37.1 30.1 30.5 (17.8%)
MOU (YTD) 176 171 171 (3.1%)
Churn (3 months) 8.4% 8.4% 7.2% (1.2%)
*
*
*
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Orascom Telecom Holding Q3 – 2010 P a g e | 28
Tunisiana – Tunisia
Financial Data Operational Data
* Proportionate consolidated figures
Tunisiana closed the third quarter of 2010 with an overall
market share of 53.3% and 5.8 Million subscribers compared
to 52.9% overall market share and 5.6 Million subscribers at
the end of Q2 2010. The reported 9M 2010 revenues
reached US$ 276 million representing a growth of almost 5%
over the same period last year. 9M 2010 EBITDA reached
US$ 146 million with an increase of 1% over the same period
last year on a comparable basis reflecting an EBITDA
margin of 52.9%.
During the last quarter, Tunisiana adapted its offers to best
mitigate Orange‟s new products, summer seasonality
effects, and Ramadan.
Starting with the summer season (July & August), Tunisiana
targeted its youth segment by introducing a promotion
composed of a fourth Friends & Family option allowing users
to call 1, 2 or 3 on net numbers from 1 am till 8 am for only 1
TND.
As for the Amigos youth community, Tunisiana reduced the
price of unlimited calls and SMS within the community from
3 TND to 2 TND per day. This promotion became a
permanent offer in September. Furthermore, each
subscription to Amigos unlimited call formulas allows
customers to have one free hour of communication within
the community on the Sunday after.
Furthermore, Tunisiana extended the Familia community
option for pre-paid; an offer that targets family and friends
groups. In fact, this offer gives subscribers the opportunity to
share 2 hours with 4 other Tunisiana subscribers for a given
subscription fee. Moreover, as a promotion, a 100% Bonus
was granted on the first recharge purchased by the group‟s
master.
During the summer, Tunisiana launched the Random Bonus
concept where each recharge can provide up to 1,000
TND of bonus to use on net for the coming 30 days.
Tunisiana also maintained a regular but not predictable
flash promotion of 100% Bonus on recharge in order to
enhance low end usage particularly during the second half
of the month.
As for the holy month of Ramadan, which is a special
season that generally marks a slight decrease in usage,
Tunisiana extended its summer promotions to satisfy its
subscribers‟ needs.
In addition to those extensions, Tunisiana considered the
religious proportion of the sacred month and defined a
special promotion for Omra visitors; during their trip, they
can be called from Tunisiana with a 20% discount granted
to their relatives and 40% discount given to them when
receiving those calls.
Tunisiana has customized its WAP portal and added a few
services to better serve the holy month; the portal included
fasting time, Tunisian cooking recipes, and a special 3D
game.
In order to satisfy its post-paid segment and high-tech users,
Tunisiana launched a promotional 100% Bonus on locked
bundles per month. Also, an additional mid-value bundle
was defined (29 TND). As for high-tech subscribers, Tunisiana
launched the well known Galaxy S smartphone as an
alternative to the Iphone 4G which was recently launched
by Orange Tunisie.
To satisfy its international callers, Tunisiana launched a new
promotion allowing its pre-paid subscribers to call up to 3
international destinations with 30% discount priced at 1 TND
per week per number instead of 2.5 TND (pre-paid Happy
Zone offer becoming permanent since H1-2010).
Last but not least, Tunisiana introduced the unlimited on net
calls concept starting with the business segment where a
subscribing company can have up to 5 favourite numbers
to call with 20 TND per month.
September
2009
September
2010
Inc/
(dec)
September
2009
June
2010
September
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Financial Data Operational Data
Subscribers 4,807,677 5,562,269 5,797,291 20.6%
Revenues (US$ 000) 263,548 275,826 4.7%
Revenues (TND m) 361.8 398.1 10.0% Market Share 53.0% 52.9% 53.3% 0.3%
EBITDA (US$ 000) 144,492 145,943 1.0%ARPU (US$)
(3 months)13.1 10.1 10.2 (22.3%)
EBITDA (TND m) 198.0 210.5 6.3%ARPU (TND)
(3 months)17.4 15.0 14.9 (14.4%)
EBITDA Margin 54.8% 52.9% (1.9%) MOU (YTD) 172 182 185 7.5%
Capex (US$ m) 56 56 0% Churn (3 months) 5.5% 7.7% 7.0% 1.5%
*
*
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Orascom Telecom Holding Q3 – 2010 P a g e | 29
banglalink – Bangladesh
Financial Data Operational Data
* Market share, as announced by the Regulator in Bangladesh is based on information disclosed by the other operators which use different subscriber recognition policies.
banglalink continued its solid growth in the Bangladeshi
market in the first nine months of 2010 ending with 18.1
million subscribers, consolidating further its number 2
position in the market with 27.8% market share. banglalink
achieved 49% subscriber growth in the last 12 months
compared to September 30th , 2009.
Revenue performance has been impressive throughout first
nine months of 2010, reaching US$ 335 million, a 29%
increase over the same period last year. This revenue
growth was mainly driven by subscriber growth and partially
off-set by lower ARPU. In these first nine months, banglalink
achieved an EBITDA of US$ 97 million, only 1.6% higher than
the EBITDA of the same period last year as a result of giving
large subsidy for SIM tax of new connections.
These positive results were achieved by a number of highly
effective marketing actions undertaken in this period in
continuation to Q1 and Q2 of 2010. Targeting Ramadan
and Eid-ul-Fitr, banglalink launched „bonus on recharge‟
and „bonus on usage‟ campaigns along with a reactivation
offer. To further address the need of the growing customer
base and to match the competition, banglalink launched
another new package, desh FnF, for the FnF-lovers with a 7
FnF numbers facility. In the last part of Q3 2010, banglalink
launched another aggressive recharge based tariff
promotion to remain competitive as well as to reduce the
risk of churn and dormant subscribers. Also, banglalink
revised start up offer time to keep the acquisition
momentum.
As a continuation to cater to the needs of the post-paid
segment, banglalink also launched the post-paid bundle
packages of Tk 500 and Tk 1000 in July 2010, monthly
bundle packages which included minutes, SMS and data to
provide the best value to the specific needs of the post-
paid customers. To further enhance revenue and minimize
the dormant and churn base, a reactivation offer was
launched for the PCO and post-paid customers in August
2010 as a limited time promo. To increase penetration in the
SME segment and gain a competitive edge in the SME
market, banglalink launched the new SME tariff option in
August 2010 with an attractive flat tariff and more FnF at a
lower rate. Potential and existing banglalink SME customers
can now choose the package that best suits their specific
needs.
Being the leader in innovative VAS, banglalink has
launched 4 new services in Q3 that are introduced for the
first time in the Bangladeshi market. With banglalink
Emergency service, subscribers can seek help in case of an
emergency in a much faster and efficient way just by
dialing *321*5#, an SMS will be sent to pre-defined numbers
containing sender‟s current approximate location with a
pre-defined text. To cater to the entertainment needs of
mass segment, banglalink introduced CRBT Tune & Service
Gifting. During the holy month of Ramadan, banglalink
introduced first IVR based Salat Timing Service in
Bangladesh. banglalink also strengthened its position as a
leader in innovations by launching a service called
FacebookText where customer can update their Facebook
account by SMS notifications.
In the third quarter of 2010, banglalink has launched m-
ticketing service for purchasing railway tickets through
mobile phones and has already surpassed the market
leader in the number of tickets sold during the Eid vacation.
banglalink has also rolled-out its landmark domestic
remittance service to 1,000 service points in collaboration
with Bangladesh Post Office, establishing banglalink as the
most comprehensive Mobile Financial Services (MFS)
provider.
September
2009
September
2010
Inc/
(dec)
September
2009
June
2010
September
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Financial Data Operational Data
Subscribers 12,135,528 16,096,598 18,107,163 49.2%
Revenues (US$ 000) 259,435 334,700 29.0%
EBITDA (US$ 000) 95,408 96,914 1.6% Market Share 24.2% 26.9% 27.8% 3.6%
EBITDA Margin 36.8% 29.0% (7.8%)
Capex (US$ m) 74 153 107%ARPU (US$)
(3 months)2.5 2.5 2.3 (9.2%)
ARPU (BDT)
(3 months)174.5 171.9 160.2 (8.2%)
MOU (YTD) 259 235 232 (10.4%)
Churn (3 months) (5.5%) 2.1% 5.2% 10.7%
*
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 30
koryolink – Democratic People's Republic of Korea
Financial Data Operational Data
* Based on the official exchange rate between the US$ and the North Korean Won (KPW) of KPW 135 as sourced by Bloomberg.
koryolink closed the third quarter of 2010 with revenues
reaching US$ 42 million representing a growth of 126%
over the same period last year. 9M EBITDA reached US$
26 million with an increase of 162% over the same period
last year on a comparable basis reflecting an EBITDA
margin of 62.8%.
Throughout 2010, koryolink has managed to increase the
demand on its services quarter over quarter through
offering a wide array of products and a high level of
customer experience both of which were unique to the
DPRK. This resulted in increasing customer attachment
and customer satisfaction across the different subscriber
segments that koryolink has successfully penetrated, not
only in Pyongyang, but across various regions of the
country. And this is reflected in the steady increase in
voice and SMS usage that took place over the last three
quarters.
koryolink increased its subscriber base by 63% quarter
over quarter to reach 301,199 subscribers by the end of
September 2010. Combined with the high level of voice
and VAS usage, koryolink has been able to continue its
solid performance throughout the quarter.
By the end of Q3 2010, the number of Gross Adds
coming from outside Pyongyang has reached
approximately 50% of the total Gross Adds for the
period. This was achieved through introducing new
tariffs and products that were specifically designed to
cater for the needs of lower end subscriber segments.
Additionally, koryolink continued the utilization of its 3G
network and successfully launched the Video Calling
service to the market which resulted in a high level of
demand, especially from the youth segment.
In its continuous efforts to maximize its reach to both
existing as well as potential subscribers, koryolink
enriched its distribution network during Q3 2010 by
adding two new shops inside Pyongyang and one more
shop outside Pyongyang to reach a total of 13 shops
and 13 indirect sales outlets covering 8 main cities in
addition to the capital itself.
By end of September 2010, koryolink covered 75% of
DPRK population through more than 276 Node B sites.
During the last quarter, network coverage was
extended to cover one additional main city and 42
smaller cities to reach a total of 12 main cities – in
addition to Pyongyang, 42 small cities, as well as 22
highways & railways. koryolink plans to pursue its
aggressive network expansion plan through covering 59
smaller cities by the end of this year which would raise
the percentage of the population covered to
approximately 91%.
September
2009
September
2010
Inc/
(dec)
September
2009
June
2010
September
2010
Inc/(dec)
Sept. 2010 vs.
Sept. 2009
Financial Data Operational Data
Subscribers 69,261 184,531 301,199 n.m.
Revenues (US$ 000) 18,456 41,645 125.6% Market Share 100.0% 100.0% 100.0% 0%
EBITDA (US$ 000) 9,990 26,154 n.m.ARPU (US$)
(3 months)21.6 21.5 15.2 (29.7%)
EBITDA Margin 54.1% 62.8% 8.7%
Capex (US$ m) 25 30 20% MOU (YTD) 215 328 320 48.9%
Churn (3 months) 0.0% 0.0% 0.0% 0.0%
*
* *
*
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 31
WIND Mobile– Canada
Globalive Wireless Management Corp. (“GWMC”),
operating its wireless business under the brand name
WIND Mobile, closed the third quarter of the year with
approximately 140,000 subscribers. WIND Mobile
operates its network in five of the top six population
centers in Canada, with coverage supplemented by a
national roaming arrangement, and is the first real,
country-wide alternative in a Canadian market that was
marked by an oligopoly of three players.
WIND Mobile offers simple, feature-rich service plans that
start as low as the $15 Chat plan, unlimited province-
wide calling with its $35 Always Talk plan and unlimited
nation-wide calling on the $45 Always Shout plan. WIND
Mobile brings global standards and plans that offer true
value for Canadians, with features such as no charges
for incoming text or incoming long distance, no system
access fees and no contracts, along with the capability
of choosing to pay via post-paid or pre-paid for the
same plan features.
WIND Mobile distribution consisted of over 70 branded
locations in the quarter. WIND Mobile‟s distribution is
supplemented through agreements with third party
retailer locations. In total, WIND‟s distribution network
includes more than 300 points of presence.
WIND continued to offer innovative promotions to help
Canadians make the switch to a new alternative. Such
limited time promotions have included porting credits for
customers that bring their phone numbers to WIND and
fixed term discounts on plan fees for students during the
Back-to-School shopping period in Canada. WIND
continued to expand the breadth of handsets offered to
customers in Q3 2010, including the launch of its first two
Android devices.
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 32
Table 17: Ownership Structure & Consolidation Methods
1. On July 13, 2010, the amended and restated shareholders‟ and settlement agreements concluded with France Telecom entered into force. Consequently, starting Q3
2010, Mobinil is reflected through the equity method. Mobinil‟s financial figures for 9M 2009 and H1 2010 are represented as a discontinued operation under IFRS.
2. Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS.
3. Direct and Indirect stake through Moga Holding Ltd. and Oratel.
4. Orascom Telecom Tunisia is proportionately consolidated through Orascom Tunisia Holding and Carthage Consortium.
5. OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink.
6. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL).
7. OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007.
8. Holding company for OTH‟s Share in Globalive which has been accounted for under the equity method.
2009 2010 2009 2010
GSM Operations
Mobinil (Egypt) 28.75% 28.75% Proportionate Consolidation Equity Consolidation
Egyptian Co. for Mobile Services 20.00% 20.00% Proportionate Consolidation Equity Consolidation
IWCPL (Pakistan) 100.00% 100.00% Full Consolidation Full Consolidation
Orascom Telecom Algeria 96.81% 96.81% Full Consolidation Full Consolidation
Telecel (Africa) 100.00% 100.00% Full Consolidation Full Consolidation
Orascom Telecom Tunisia 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation
Telecel Globe 100.00% 100.00% Full Consolidation Full Consolidation
OT Ventures 100.00% 100.00% Full Consolidation Full Consolidation
CHEO 75.00% 75.00% Full Consolidation Full Consolidation
Internet Service
Intouch 100.00% 100.00% Full Consolidation Full Consolidation
Non GSM Operations
Ring 99.00% 99.00% Full Consolidation Full Consolidation
OTCS 100.00% 100.00% Full Consolidation Full Consolidation
OT ESOP 100.00% 100.00% Full Consolidation Full Consolidation
M-Link 100.00% 100.00% Full Consolidation Full Consolidation
OT Services Europe 100.00% 100.00% Full Consolidation -
MedCable 100.00% 100.00% Full Consolidation Full Consolidation
Mena Cable 99.97% 100.00% Full Consolidation Full Consolidation
Moga Holding 100.00% 100.00% Full Consolidation Full Consolidation
Oratel 100.00% 100.00% Full Consolidation Full Consolidation
C.A.T. 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation
OT Wireless Europe 100.00% 100.00% Full Consolidation Full Consolidation
OT WIMAX 100.00% 100.00% Full Consolidation Full Consolidation
TWA 51.00% 51.00% Full Consolidation Full Consolidation
OIIH 100.00% 100.00% Full Consolidation Full Consolidation
OT Holding 100.00% 100.00% Full Consolidation Full Consolidation
FPPL 100.00% 100.00% Full Consolidation Full Consolidation
MinMax Ventures 100.00% 100.00% Full Consolidation Full Consolidation
OIH 100.00% 100.00% Full Consolidation Full Consolidation
OTFCSA 100.00% 100.00% Full Consolidation Full Consolidation
OT Holding Canada 100.00% 100.00% Full Consolidation Full Consolidation
ITCL 50.00% 50.00% Proportionate Consolidation Proportionate Consolidation
SAWLTD 100.00% 100.00% Full Consolidation Full Consolidation
Subsidiary
Ownership
September 30
Consolidation Method
September 30
2
4
5
7
6
8
3
1
1
GIVING THE WORLD A VOICE
Orascom Telecom Holding Q3 – 2010 P a g e | 33
Appendix I
Glossary
ARPU (Average Revenue per User): Average monthly recurrent revenue per customer (excluding visitors roaming revenue and connection
fee). This includes airtime revenue (national and international), as well as, monthly subscription fee, SMS, GPRS & data revenue. Quarterly
ARPU is calculated as an average of the last three months.
Capex: Tangible & Intangible fixed assets additions during the reporting period, includes work in progress, network, IT, and other tangible
and intangible fixed assets additions but excludes license fees.
Churn: Disconnection rate. This is calculated as the number of disconnections during a month divided by the average customer base for
that month.
Churn Rule: A subscriber is considered churned (removed from the subscriber base) if he exceeds the 90 days from the end of the validity
period without recharging. It is worth noting that the validity period is a function of the scratch denomination. In cases where scratch cards
have open validity, the subscriber is considered churned in case he has not made a single billable event in the last 90 days (i.e. outgoing or
incoming call or sms, wap session…). Open cards validity is applied for OTA, Mobilink, Mobinil and banglalink so far. OTT customers are
considered churn if they do not recharge within 90 days after the validity of the scratch card; while a koryolink customer is considered
churn if he/she does not recharge within four months after the validity of the scratch card.
MOU (Minutes of Usage): Average airtime minutes per customer per month. This includes billable national & international outgoing traffic
originated by subscribers (on-net, to land line & to other operators). Also, this includes incoming traffic to subscribers from land line or other
operators.
OTH’s Market Share Calculation Method: The market share is calculated through the data warehouse of OTH‟s subsidiaries. The number of
SIM cards of competitors that appeared in the call detail record of each of OTH‟s subsidiaries is collected. This reflects the number of
subscribers of the competition. However, OTH deducts the number of SIM cards that did not appear in the call detail records for the last 90
days to account for churn. The same is applied to OTH subsidiaries. This method is used to calculate the market shares of Djezzy, Mobinil, and
Tunisiana only. In Pakistan and Bangladesh, Market share as announced by the Regulators is based on disclosed information by the other
operators which may use different subscriber recognition policy.
For more information: Investor Relations
Orascom Telecom Holding S.A.E.
Nile City Towers – South Tower - 26th Floor – Ramlet Beaulac
Tel: +202 2461 5050 / 51 Fax: +202 2461 5055 / 54
Email: [email protected] Website: www.orascomtelecom.com
This presentation contains statements that could be construed as forward looking. These statements appear in a number of places in this presentation and include statements regarding
the intent, belief or current expectations of the subscriber base, estimates regarding future growth in the different business lines and the global business, market share, financial results
and other aspects of the activity and situation relating to the company.
Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking
statements as a result of various factors.
You are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation, which is not intended to reflect Orascom
Telecom‟s business or acquisition strategy or the occurrence of unanticipated events.