Etisalat Group2Q 2016 Results Presentation

28 July 2016

Emirates Telecommunications Group Company PJSC and its subsidiaries (“Etisalat Group” or the “Company”) have prepared this presentation (“Presentation”) in good faith, however, no warranty or representation, express or implied is made as to the adequacy, correctness, completeness or accuracy of any numbers, statements, opinions or estimates, or other information contained in this Presentation.

The information contained in this Presentation is an overview, and should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary.

Where this Presentation contains summaries of documents, those summaries should not be relied upon and the actual documentation must be referred to for its full effect.

This Presentation includes certain “forward-looking statements”. Such forward looking statements are not guarantees of future performance and involve risks of uncertainties. Actual results may differ materially from these forward looking statements.

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Disclaimer

1. Business Overview

Saleh Abdulla AlabdooliChief Executive OfficerEtisalat Group

Etisalat Group Financial Highlights

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Revenue growth despite currency depreciation in international markets; growth mainly attributed to UAE and MT Group operations

Healthy EBITDA margin above 50% level

Strong growth in net profit attributed to lower finance charges, better share of results from associates that was partially diluted by higher depreciation expenses

Capital expenditure is flat with higher spending in the international operations

(1) Financial figures are restated to exclude the impact of discontinued operations

2Q2016 Highlights

AED Million

Revenue

EBITDA

EBITDA Margin

Net profit

Net profit Margin

Capex

Capex/Revenue

Q2 2016 GrowthYoY%

GrowthQoQ%

13,326 +2% +4%

6,799 0% +6%

51% -1pp +1PP

2,305 +51% +16%

17% +6pp +2PP

1,795 -17% +10%

13% -3PP +1pp

H1 2016 GrowthYoY%

26,178 +1%

13,222 -1%

51% -1pp

4,316 +16%

16% +2pp

3,434 0%

13% 0pp

5

Q2 2016 Highlights

Financial Highlights

Positive organic revenue growth

Stable EBITDA with margin at 50% level

Strong increase in net profit

Interim dividends of 40 fils per share

Domestic Operations

Positive trends in subscribers acquisition

Solid revenue growth mainly driven by data

Improvement in profitability

InternationalOperations

Improved performance of the Int’l operations partially weakened by currency devaluation

Stable performance in Maroc Telecom Group

Strong performance in Egypt

Enhanced results in the mobile segment in Pakistan

Strategic Priorities

Confident in delivering 2016 financial guidance

Progress on portfolio optimisation

Defend leadership position in Key markets

Focus on cash flow generation

2. Financial Overview

Serkan OkandanChief Financial OfficerEtisalat Group

58%

24% 8%

8%

2%

UAE MT Egypt Pakistan Others

64%

24% 6%

5%1%

UAE MT Egypt Pakistan Others

Etisalat Group Financial Highlights

7(1) Financial figures are restated to exclude the impact of discontinued operations (Zantel & Canar)

Revenue Breakdown 2Q 2016 (AED m) EBITDA Breakdown 2Q 2016 (AED m)

UAE +3%

MT Group +3%

Egypt -3%

Pakistan -6%

UAE +3%

MT Group -1%

Egypt 0%

Pakistan 0%

YoY Growth YoY Growth

+2% 0%

13.3bn

6.8bn

(LC +12%)

(LC -4%)

(LC +20%)

(LC +3%)

Represents others

(LC +2%) (LC -2%)

Int’l Operations Financial Highlights 2Q 2016

8(1) Financial figures are restated to exclude the impact of discontinued operations

Revenue (AED m)/EBITDA (AED m) /EBITDA Margin (%)

YoY Growthin AEDMaroc Telecom Group

Revenue +3%3,201

EBITDA -1%1,631

EBITDA Margin -2pp51%

Etisalat Misr

Pakistan

Revenue -6%1,039

EBITDA 0%372

EBITDA Margin +2pp36%

2Q 2016

YoYGrowth in AED2Q 2016

Revenue & EBITDA (AED m) /EBITDA Margin (%) / YoY Growth %

Growth in MAD

-4%

+3%

+2pp

YoYgrowth in

PKR

Revenue -3%1,052

EBITDA 0%420

EBITDA Margin +2pp40%

YoYGrowth in AED2Q 2016

+12%

+20%

+2pp

YoYgrowth in

EGP

+2%

-2%

-2pp5,535 5,480 5,458

2,4872,364 2,459

Q2'15 Q1'16 Q2'16

Revenue EBITDA

45%

43%

45%

59%

19%

19%

UAE58%

Int'l41%

Others1%

Domestic vs. Int’l

13,124 13,326

239 81

37 71 10

Q2'15 UAE MT Group Egypt Pakistan Others Q2'16

Group Revenue

9Note: “Others revenues” consist of domestic non-telecom operations, other international operations, management fees, etc.

In Q2’16 consolidated revenue increased Y/Y by 2% attributed to UAE and MT Group operations

Growth in the UAE is attributed to higher fixed and mobile broadband

Revenues from international consolidated operations decreased by 1%, resulting in 41% contribution to Group revenues, 1 point lower than Q2’15 attributed to currency devaluation

― Growth in MT Group mainly driven by int’l operations

― Revenue growth in Egypt impacted by currency devaluation

― Revenue growth in Pakistan negatively impacted by increased competition in international traffic segment

Highlights

Revenue (AED m) and YoY growth (%) Sources of Revenue growth – Q2’16 vs Q2’15 (AED m)

Revenue by Cluster (Q2’16)

International

13,124 12,853 13,326

6% 1% 2%

Q2'15 Q1'16 Q2'16

Revenue YoY growth %

MT59%

Egypt19%

Pakistan19%

Others3%

UAE64%

Int'l36%

Group EBITDA

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In Q2’16 consolidated EBITDA remained flat Y/Y at AED 6.8 billion

EBITDA in the UAE positively impacted by higher revenue and lower cost of handsets and marketing expenses.

EBITDA of consolidated international operations decreased Y/Y by 1%, resulting in 36% contribution to Group EBITDA, mainly due to currency devaluation.

― Positive contribution from Maroc Telecom, Egypt and Pakistan that grew in local currencies and diluted by currency devaluation

6,810 6,424 6,799

52% 50% 51%

Q2'15 Q1'16 Q2'16EBITDA EBITDA Margin

Highlights

EBITDA (AED m) & EBITDA Margin Sources of EBITDA growth – Q2’16 vs Q2’15 (AED m)

EBITDA by Cluster (Q2’16)

Domestic vs. Int’l International

6,810 6,799

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2

137

Q2'15 UAE MT Group Egypt Pakistan Others Q2'16

Note: “Others EBITDA” consist of domestic non-telecom operations, other international operations, management fees, etc.

141

MT66%

Egypt17%

Pakistan15%

Others2%

Group CAPEX

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2,166

1,6391,795

17%13% 13%

Q2'15 Q1'16 Q2'16

CAPEX CAPEX/Revenue

CAPEX (AED m) & CAPEX/Revenue Ratio (%)

In Q2’16 consolidated capex decreased Y/Y by 17% resulting

in Capex/ Revenue ratio of 13%.

Lower capital spend in the UAE

Capital expenditure in international operations decreased by

5% and contributed 67% of consolidated Group Capex

― Lower capex spend in MT Group due to 4G License

acquisition in Morocco in the prior year

― Higher capex spending in Egypt focused on network

expansion

HighlightsCAPEX by Cluster (Q2’16)

Domestic vs. Int’l International

Sources of Capex growth – Q2’16 vs Q2’15 (AED m)

10%

2,166 1,795

292 74

84

27 61

Q2'15 UAE MT Group Egypt Pakistan Others Q2'16

Note: “Others Capex” consist of domestic non-telecom operations and other international operations

MT Group52%

Egypt

23%

Pakistan24%

Others1%

UAE33%

Int'l67%

14%

Net cash position (AED m) Jun’15 Jun’16

Operating 5,576 4,862

Investing (3,419) (3,484)

Financing (2,170) (3,552)

Net change in cash (13) (2,173)

Effect of FX rate changes (251) 99

Reclassified as held for sales (1) (17)

Ending cash balance 18,277 19,332

Group Balance Sheet & Cash Flows

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Balance Sheet (AED m) Dec-15 Jun-16

Cash & bank Balances 21,422 19,332

Total Assets 128,265 126,077

Total Debt 22,080 23,897

Net Cash / (Debt) (658) (4,566)

Total Equity 59,375 58,529

(1) Moody’s changed its view on the outlook of the UAE sovereign and consequently GRI.

Investment Grade Credit Ratings

Strong liquidity position

Maintained low net debt to EBITDA level

Operating cash flow impacted by change in working capital

Maintained high credit ratings; Outlook change is triggered

by Moody’s revised outlook of the UAE sovereign.

AA-/Stable

Aa3/Negative (1)

Highlights

Debt Profile: Diversified debt portfolio

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Borrowings by Currency Q2 2016

Debt by Source Q2 2016 (AED m)

Borrowings by Operation Q2 2016 (AED m)

Repayment Schedule

15,322

5,023

2,2801,272

Group MT Group Egypt Pakistan

14,766

8,334

332 466

Bonds BankBorrowings

VendorFinancing

Others

1,298

5,004

1,178

16,418

2016 2017 2018 Beyond 2018

Euro40%

USD23%

MAD15%

EGP9%

Others13%

Group Dividends: Proposed dividend for H1 2016 of AED 40 fils per share

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Interim Dividend Payout RatioInterim Interim Dividends and Dividends Per Share

HighlightsInterim Dividend & Earnings Per Share (AED)

Etisalat’s Board approved interim dividends of 40 fils per

share to be distributed from 14 August 2016 to the

shareholders registered in the shareholders’ register on 7

August 2016

(1) Represents diluted earnings per share

H1'12 H1'13 H1'14 H1'15 H1'16

DPS 0.25 0.35 0.35 0.40 0.40

EPS (1) 0.42 0.44 0.52 0.43 0.50

53.8%

72.8%

61.1%

93.7%

80.6%

2012 2013 2014 2015 2016

Payout Raio

1.98

2.77 2.77

3.48 3.48

0.25 0.35 0.35 0.40 0.40

2012 2013 2014 2015 2016

Interim Dividends (AED bn) DPS

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Country by Country Financial Review

UAE: Growth in both top and bottom-line

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Q2’15 Q1’16 Q2’16QoQ

GrowthYoY

Growth

Subs(1) (m) 11.3 12.0 12.1 +1% +7%

Revenue (AED m) 7,479 7,290 7,718 +6% +3%

EBITDA (AED m) 4,195 3,896 4,336 +11% +3%

EBITDA Margin 56% 53% 56% +3pp 0pp

Net Profit 1,864 1,885 2,057 +9% +10%

Net Profit Margin 25% 26% 27% +1pp +2pp

CAPEX 898 428 605 +41% -33%

CAPEX/Revenue 12% 6% 8% +2pp -4pp

Strong subscriber growth Y/Y driven by mobile and eLife segments

Revenue growth Y/Y attributed to growth in mobile and fixed broadband and growing subscriber base

EBITDA in absolute terms improved Y/Y due to higher revenue and lower cost of devices; Q/Q growth is due to higher revenue, lower staff costs and strict cost controls

Maintained stable EBITDA margin Y/Y

Net profit improvement Y/Y due to higher EBITDA and finance income partially diluted by higher depreciation expenses

Lower capital spending focused on modernisation of mobile network

(1) Subscriber numbers calculated as aggregate number of GSM, fixed, fixed broadband and eLife lines generating revenue during the last 90 days.

Highlights

1.42 1.84 1.90

7.46 8.23 8.32

115 110 112

Q2'15 Q1'16 Q2'16

Postpaid Prepaid Blended ARPU

UAE: Steady growth in subscribers base

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0.93 0.84 0.82

133136 144

Q2'15 Q1'16 Q2'16

Fixed ARPL

(1) Mobile ARPU (“Average Revenue Per User”) calculated as total mobile voice, data and roaming revenues divided by the average mobile subscribers.(2) ARPL (“Average Revenue Per Line”) calculated as fixed line revenues divided by the average fixed subscribers.(3) Fixed broadband subscriber numbers calculated as total of residential DSL (Al-Shamil), corporate DSL (Business One) and E-Life subscribers.

Mobile Subs (m) & ARPU(1) (AED)

Fixed Broadband(3) Subs (m)

Fixed Subs (m) & ARPL(2) (AED)

eLife Subs – Double & Triple-Play (m)

0.82 0.89 0.91

404 389 404

Q2'15 Q1'16 Q2'16

E-Life (2P & 3P) ARPL

1.03 1.07 1.08

499 489 500

Q2'15 Q1'16 Q2'16

Fixed BB ARPL

Morocco62%

Int'l38%Morocco

62%

Int'l43%

Others-5%

Maroc Telecom: Recovery in Morocco while maintaining steady growth in Int’l subsidiariesMorocco, Benin, Burkina Faso, CAR, CDI, Gabon, Mali, Mauritania and Togo

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Subscribers (m) Revenue (AED m) (1) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)

50.8 53.1 53.0

Q2'15 Q1'16 Q2'16

3,122 3,119 3,201

53% 50% 51%

Q2'15 Q1'16 Q2'16

Revenue EBITDA %

Domestic vs. Int’l

Revenue Breakdown Q2’16

Int’l

712

779

638

24% 25%20%

Q2'15 Q1'16 Q2'16

CAPEX CAPEX/Revenue

Domestic vs. Int’l

Capex Breakdown Q2’16

Int’l

Historical subsidiaries

63%

New subsidiaries

37%

Historical subsidiaries

31%

New subsidiaries

69%

13% 14%

196

153

280

18% 13%27%

Q2'15 Q1'16 Q2'16

CAPEX CAPEX/Revenue

Egypt: Strong performance in local currency muted by currency devaluation

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Total Subscribers (1) (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)

1,090 1,165

1,052

38%35%

40%

Q2'15 Q1'16 Q2'16

Revenue EBITDA %

Revenue growth Y/Y impacted by currency devaluation

― Maintained strong revenue growth momentum in local currency at 12% level

Revenue growth is mainly attributed to continued upward trend in data revenues and higher voice contribution

EBITDA margin improvement on lower network costs

Increase in capex spending is attributed to acceleration in network rollout

Highlights

95 94 95

24% 24% 24%

Q2'15 Q1'16 Q2'16

Subscribers Market Share

(1) Subscribers and market share data as per statistic published by the Ministry of Information and Technology

22.0

24.9 23.6

Q2'15 Q1'16 Q2'16

1,111

1,028 1,039

33% 34% 36%

Q2'15 Q1'16 Q2'16

Revenue EBITDA %

313

212

286

28%21%

27%

Q2'15 Q1'16 Q2'16

CAPEX CAPEX/Revenue

Pakistan: Recovery in the mobile segment

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Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)

Subscriber growth Y/Y driven by mobile segment

Revenue growth Y/Y impacted by price competition in international voice segment and lower terminal sales that offset

the strong contribution from mobile data

EBITDA in absolute terms and EBITDA margin improvements as a results of cost optimization initiatives

Lower capex spending with relatively stable intensity ratio

Highlights

22.8 21.8

22.3

Q2'15 Q1'16 Q2'16

1,042 1,083 998

13% 14% 13%

Q2'15 Q1'16 Q2'16

Revenue EBITDA %

38

47

87

4% 4%

9%

Q2'15 Q1'16 Q2'16

CAPEX CAPEX/Revenue

Nigeria: Growth impacted by challenging regulatory and uncertain macro economic environments

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Subscribers (m) Revenue (AED m) / EBITDA Margin CAPEX (AED m) & CAPEX/Revenue Ratio (%)

Subscriber growth Y/Y in Q2 is impacted by subscriber disconnections in compliance with the regulatory mandatedregistration process.

— Resumed Q/Q subscriber growth in Q2

Revenue growth Y/Y in local currency of 1% impacted by lower subscriber base, lower data prices and decline in handset sales

EBITDA in absolute term is flat in local currency due to higher interconnection and termination costs, and higher rental charges; resulting in similar EBITDA margin

Capex spend resulted in intensity ratio of 9%

Highlights

2016 Actual Against Guidance: Confident in delivering the full year management guidance

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Revenue Growth %

EBITDA Margin%

CAPEX / Revenue %

Stable

~ 48% - 50%

Financial KPI

Guidance 2016In AED

Low single digits

~ 18%

Guidance 2016Constant

Currencies (1)

+1%

13%

ActualH1 2016In AED

+3%

Actual H1 2016Constant

Currencies

51%

(1) Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for thecomparable prior-year period. In order to compute our constant currency results, we multiple or divide, as appropriate, our current AED results by the current year monthly average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year monthly average foreign exchange rates.

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Etisalat Group Investor RelationsEmail: ir@etisalat.ae

Website: www.etisalat.com/en/ir/index.jspr