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31

Orascom Telecom Holding Board Report

Highlights

Operational Performance

Table 1: Total Subscribers

Investment 31 Dec. 2008

30 Sept. 2009

31 Dec. 2009

Inc/(dec) Dec. 2009 vs.

Dec. 2008Djezzy (Algeria) 14,108,859 14,726,081 14,618,166 3.6%Mobilink (Pakistan) 28,479,600 30,046,050 30,800,354 8.1%Mobinil (Egypt) 20,115,377 24,624,733 25,354,209 26.0%Tunisiana (Tunisia) 4,256,573 4,807,677 5,210,926 22.4%banglalink (Bangladesh) 10,337,128 12,135,528 13,886,913 34.3%Telecel Globe1 701,647 1,496,000 1,823,000 159.8%koryolink (DPRK) 1,694 69,261 91,704 n.m.Alfa (Lebanon) - 988,831 1,067,552 n.a.Grand Total 78,000,878 88,894,161 92,852,824 19.0%

1. Includes Burundi, Central African Republic subscribers in December 2008, Burundi, Central African Republic, Namibia and Zimbabwe subscribers in September and De-cember 2009.

Table 2: Blended Average Revenue Per User (ARPU)

Subsidiary

31 Dec. 2008 US$

(3 months)

30 Sept. 2009 US$

(3 months)

31 Dec. 2009 US$

(3 months)


Dec. 2008

Djezzy (Algeria) 11.8 10.5 9.9 (15.8%)Mobilink (Pakistan) 3.0 2.8 2.9 (3.3%)Mobinil (Egypt)1 7.6 6.7 6.5 (14.5%)Tunisiana (Tunisia) 12.7 13.1 11.6 (8.7%)banglalink (Bangladesh) 2.5 2.5 2.3 (6.7%)koryolink (DPRK) - 21.6 24.5 n.a.Alfa (Lebanon) - 49.3 40.0 n.a.Global ARPU (YTD)2 6.6 5.8 5.7 (13.4%)Global ARPU (3 months) 6.3 5.8 5.5 (12.8%)

Table 3: Blended Average Revenue Per User (ARPU) (Local Currency)

Subsidiary31 Dec.

2008 (3 months)

30 Sept. 2009

(3 months)

31 Dec. 2009

(3 months)


Dec. 2008Djezzy (Algeria) (DZD) 799.0 765.9 721.4 (9.7%)Mobilink (Pakistan) (PKR) 242.8 234.2 241.7 (0.4%)Tunisiana (Tunisia) (TND) 17.0 17.4 15.0 (11.6%)

1. ARPUexpressedunderOTH’sdefinitionmaydifferfromMobinil’sdisclosedARPU.PleaseseeAppendixfordefinition.2. Global ARPU is calculated on a Year to date basis, taking into account the weighted average subscribers for calculation, excluding Alfa.

ARPU

During the year 2009, ARPU was negatively impacted by the ef-fect of the depreciation of the local currencies against the US$ in Algeria, Pakistan and Tunisia. The negative impact has however become less relevant in H2 09 as the local currencies have stabi-lised against the US$. In local currency terms ARPU was stable in Mobilink, while it decreased over the previous year in OTA and in OTT.Tooffsettheimpactoftheunfavourableclimateandfiercecompetitive environment in Algeria, OTA focused more on retain-ing its subscriber base by introducing strong retention campaigns rather than animating the market. This had a negative impact on the outgoing ARPU. In addition, the new yearly interconnection rate implemented as of July (1.5 DZD vs. 2.6 DZD previously) impacted the incoming ARPU in Q4 09 compared to Q4 08.

Subscribers

During the year 2009 Orascom Telecom continued to grow its customer base reaching almost 93 million subscribers, a 19% growth over the previous year. Growth was particularly strong in Bangladesh, up almost 35%, in Egypt, up 26%, and in Tunisia, up almost 23%. After the substantial inactive customer base clean-up performed up to Q1 2009, subscribers’ growth in Pakistan has resumed throughout the rest of the year reaching 30.8 million subscribers and demonstrating an increase of 8% over the previ-

In Tunisia, the seasonality trends contributed to the decline in ARPU in Q4 09 compared to the previous quarter. ARPU in Q4 09 declined compared to Q4 08, due to the fact that during Q4 09 OTT introduced many offers to stimulate acquisitions in lower income market segments. The ongoing high subscriber growth trend in Mobinil throughout the year, coupled with the change in subscriber mix with an increasing penetration in the lower market segment, caused ARPU in Egypt to decline. The decline was further enhanced by the highly aggressive pricing launched by Etisalat in Q2 and Q3 to which the other players, including Mobinil, responded with aggressive tariff plans, which have been withdrawn in Q4. Despite the high subscriber growth, ARPU in Bangladesh decreased only by a mid-single digit over the previ-ous year due to revenue enhancement initiatives aimed at the existing customer base.

ous year. As a result of the unfavourable events that took place in Q4 2009, the customer base in Algeria remained almost stagnant compared to Q3 2009 resulting in only a 4% growth compared to 2008.Asignificantcontributiontocustomerbasegrowthwasalsodelivered by Telecel Globe, with subscribers surpassing the 1.8 million mark, and by koryolink which counts almost 92 thousand subscribers as of December 31, 2009. It is worth noting that the customer base of Alfa in Lebanon exceeded the 1 million mark required in the management contract signed by OTH with the Republic of Lebanon in January 2009.

1. US$financialfiguresintheIncomeStatement&BalanceSheetareaccordingtotheInternationalFinancialReportingStandards(IFRS).2. AfterexcludingM-LinkandOrasInvestfiguresfrom2008.3. The outstanding GDRs as of December 31st, 2009 were 176 million.

• TOTALSUBSCRIBERS were just under 93 million, an increase of 19% over 2008.• EBITDA reached US$ 2,172 million1 (LE 12,183 million), a decrease of 8.9% over the previous year. On a pro-forma basis2 YoY

EBITDA decreased only by 7.2%. EBITDA for OTA decreased by 6.6% in local currency vs. a decrease of 17.3% in US$, EBITDA for Mobilink decreased by 9.2% in local currency vs. a decrease of 22% in US$, EBITDA for Tunisiana increased by 12% in local cur-rency vs. an increase of only 2% in US$, and grew by 7.2% in Egypt where the local currency was stable against the US$.

• NETINCOME for the period reached US$ 318 million1 (LE 1,845 million). Q4 Net Income was mainly impacted by: the unfavourable events that took place in Algeria, as well as the increase in the Tax Rate in Pakistan. Tax provision for OTA’s tax assessment in 2009 was US$ 50 Million of which US$ 40 Million were formed in Q4 09.

• REVENUES of US$ 5,065 million1 (LE 28,262 million), decreased by 4.9% compared to 2008. On a pro-forma basis2 YoY revenues remained stable (-0.6%). In local currency revenues for OTA and Mobilink were stable vs. a decrease of 8.5% and 12.3% in US$ respectively. Revenues for Tunisiana increased by 12% in local currency vs. only an increase of 9.4% in US$. In Egypt and Bangla-desh where the local currency was stable against the US$, revenues grew by 6% and 22% respectively.

• GroupEBITDA margin was at 42.9%. GSM EBITDA margin was at 47.8%. EBITDA margins of the major subsidiaries were: Djezzy 57.1%, Mobilink 36.4%, Mobinil 48.8%,

Tunisiana 53.9%, and banglalink 33.4%.• NETDEBT stood at US$ 5,113 million1 (LE 28,047 million) resulting in a Net Debt/EBITDA of 2.4x for the period, which on a pro-

forma basis including the US$ 800 Million proceeds from the Rights Issue will reach 2.0x. • EARNINGSPERGDR reached US$ 1.81 (based on a weighted average for the outstanding GDRs of 175.7 million over 12M 2009)3.• THESITUATIONINALGERIA – The recent riot events in Algeria following the football match had a negative impact on the opera-

tions. We estimate the impact on OTA Q4 2009 EBITDA to be around US$55 million between loss of revenue opportunity, damages of stock (SIM and scratch cards, handsets) and provision for taxes and around US$41 million below the EBITDA line (damage to physical assets net of insurance and provision for Income tax).

32

Financial Review

Table 6: Consolidated Revenues

MarketShare&Competition

In 2009 OTH maintained its market leadership position in all its countries of operation. In Bangladesh OTH has further strength-ened its number two position. Market share in Egypt declined marginally as a result of the increased competition and aggressive market share promotions during the last three quarters. In Algeria the attacks resulting from the football games caused interruptions to the operational activities, which heavily impacted the market shareinQ4.Furthermore,marketsharedeclinedasaresultof

Revenues Consolidated revenues in 2009 declined mid-single digit over the previous year with GSM revenues only marginally down 1.9% and a sharp decrease in Telecom Services revenues mainly as a result of the exclusion of OrasInvest and M-Link from the 12M 2009 scope of consolidation following their disposal.The performance in GSM revenues in 2009 vs. 2008 was the result of the substantial weakening of the local currency against the US$ in Algeria, Pakistan and Tunisia. This effect was evident in the per-

CAPEX Capital expenditures in 2009 were substantially lower than the previous year mainly as a result of the implementation of OTH’s

the slower approval process of Djezzy’s promotions by the local regulator. Performance was outstanding in Bangladesh where OTH increased its market share by 260bps over Q3. In Tunisia market share increased slightly over the previous quarter. With the growth trend resuming in Pakistan market share for Mobilink, as reported by the regulator, grew to 31.5% over the previous quarter. It should be noted that a number of competitors in Paki-stan do not apply a strict churn policy. Mobilink’s market share ofactivesubscribersasmeasuredinternallyontrafficpatternsremains above 40% as of December 31, 2009.

formance of Mobilink, with US$ revenues declining 12.3% against aflatgrowthinlocalcurrencyterms,ofOTA,whichrecordedadecline of 8.5% in US$ against a stagnant growth in local curren-cy terms, and of Tunisiana, with US$ revenues up 9.4% against an increase in local currency revenues of 11.6%. Inthecountriesofoperationnotimpactedbycurrencyfluctua-tions, performance remained strong with Mobinil growing 6.0% over the previous year and banglalink recording an impressive 21.8% growth over 2008, as a result of strong subscriber increas-es in both operations.

simplefreecashflowboostprogramwhichentailsareductionof investments: mainly in Pakistan and Bangladesh. The “Other” CAPEX mainly relates to investments made in 2009 in Telecel Globe, koryolink and our submarine cables.

Table4:MarketShare&Competition

Country Brand nameMarketShare(%)

MarketPosition Namesofadditionalnetworkoperations30 Sept

200931 Dec.

2009

Algeria Djezzy 62.9% 59.4% 1 AMN, Qtel Pakistan1 Mobilink 30.9% 31.5% 1 U-Fone,Paktel,Telenor,AlWaridEgypt Mobinil 43.6% 42.0% 1 Vodafone, Etisalat Tunisia Tunisiana 53.0% 53.4% 1 Tunisie Telecom Bangladesh1 banglalink 24.2% 26.8% 2 Garmeen, Aktel, Citycell, BTTB, Al Warid

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

Table5:CapitalExpenditureofOTHSubsidiariesfortheninemonthstoDecember311

Country Service nameTotal

US$ million 20085

Total US$ million

20095Inc/(dec)

Algeria Djezzy 167 261 56%Pakistan2 Mobilink 537 157 (71%)Egypt2 Mobinil 524 472 (10%)Tunisia Tunisiana 99 91 (8%)Bangladesh banglalink 407 122 (70%)Other3 160 221 38%Total 1,894 1,324 (30%)Total Consolidated4 1,576 1,037 (34%)ConsolidatedCapex/Sales 29.6% 20.5% (9%)

1. Based on 100% ownership of all subsidiaries.2. Excludes intangible CAPEX of US$ 12 million in Pakistan for WiMax License, US$ 408 million in Egypt related to the 3G license fee in 2008.3. “Other” companies include Linkdotnet, M-link, MedCable, Mena-Cable, OrasInvest, OT Holding, Ring and Telecel in 2008, and CHEO, Linkdotnet, MedCable, Mena-Cable,

OT Holding, Ring and Telecel Globe in 2009. 4. Consolidated CAPEX based on: 48.75% in ECMS and 50% in Tunisiana. 5. CAPEXcomponentsclassification(e.g.tangiblevs.Intangible)maydifferfromanoperationalperspectivevs.anaccountingone.Theabovefigureshavebeenpreparedto

reflectCAPEXfromanoperationalperspective,andmaydifferfromCAPEXfiguresreleasedinthefinancialstatements.

Subsidiary31 Dec.

2008 US$ (000)

31 Dec. 2009

US$ (000)

Inc/ (dec)

Q3 - 2009

(3 months) US$ (000)

Q4 - 2009

(3 months) US$ (000)

Inc/ (dec)

GSMDjezzy (Algeria) 2,040,544 1,867,837 (8.5%) 478,841 447,553 (6.5%)Mobilink (Pakistan) 1,207,520 1,058,463 (12.3%) 258,982 270,473 4.4%Mobinil (Egypt) 890,949 944,133 6.0% 244,583 248,027 1.4%Tunisiana (Tunisia) 326,1101 356,675 9.4% 99,639 93,127 (6.5%)banglalink (Bangladesh) 288,144 350,994 21.8% 89,070 91,559 2.8%Telecel Globe (Africa) 25,345 81,384 n.m. 20,836 23,591 13.2%koryolink (North Korea) - 25,951 n.a. 5,984 7,495 25.2%Total GSM 4,778,612 4,685,436 (1.9%) 1,197,934 1,181,825 (1.3%)Telecom ServicesRing 228,252 210,896 (7.6%) 49,365 65,378 32.4%M-Link 194,868 - n.a. - - n.a.OrasInvest 37,292 - n.a. - - n.a.Other2 11,449 79,906 n.m. 23,299 25,530 9.6%Total Telecom Services 471,861 290,802 (38.4%) 72,664 90,909 25.1%Total Internet Services 76,076 88,551 16.4% 20,499 22,783 11.1%Total Consolidated 5,326,549 5,064,790 (4.9%) 1,291,097 1,295,517 0.3%

1. Excluding intercompany revenues generated by M-Link. 2. Other Telecom Services Companies include C.A.T., OT Lebanon and TWA in 2009, C.A.T., Telecel Globe and TWA in 2008.

33

Table 7: Proforma Consolidated Revenues (Local Currency)1

Consolidated Revenues EBITDA Consolidated EBITDA in 2009 declined 8.9% over the previous year mainly as a result of the decline in revenues resulting from the currency weakness against the US$ in Algeria, Tunisia and Paki-stan. In Tunisia the performance in local currency terms was very positive with a sharp increase over the previous year of 12% vs. a slight increase of almost 2% in US$. EBITDA performance in OTA was negatively impacted by the introduction of a new 5% sales tax on mobile recharges to be borne by the mobile operators and not passed on to the end user and to a lower extent by the introduc-tion of the new termination rates. Currency depreciation against the US$ in Pakistan declined sharply by 21.7% in US$ EBITDA translating into a decline of only 9.2% in local currency terms.

Fourthquarterrevenuesperformanceimprovedoverthepreviousquarter in all major subsidiaries, with the exception of Algeria and Tunisia.InQ42009,OTAwitnessedadeclineintrafficandnetworkusage resulting from the unfavourable events that took place in November and were partially offset by discounts and free minutes promotions. In Tunisia, revenues were down 6.5% in Q4 09 over Q3

Margins in Pakistan have also continued to suffer from the sharp YoY increase in utility expenses as a result of the frequent power outages on the national electricity grid. During the 12 months of 2009 Mobinil continued to perform well posting a 7.2% increase in EBITDA as a result of its on-net strategy and cost control mea-sures. Compared to the previous year, banglalink delivered an impressive performance in 2009 with EBITDA growing exponen-tially mainly as a result of the removal of subsidies on the SIM tax. It is worth noting that the EBITDA decline at the consolidated level is heavily impacted by the decrease in Telecom Services EBITDA as a result of the exclusion of M-Link and OrasInvest from the scope of consolidation in 2009; as well as the decline of the EBITDA of Ring.

09 due to the summer seasonality effect which helped generate higher revenues in Q3. Revenue was positive in Pakistan, Egypt and Bangladesh with single digit increases over the previous quarter. It is worth noting that the recent agreement signed be-tween Ring and Nokia allowed the entity to increase its revenue by 32.4% in Q4 09 compared to Q3 09.

1. Un-auditedFigures.2. Excluding the effect of M-Link in 2008.

Subsidiary 31 Dec. 20082

31 Dec. 2009

Inc/ (dec)

Q3 - 2009(3 months)

Q4 - 2009(3 months)

Inc/ (dec)

GSMDjezzy (Algeria) (DZD bn) 135.0 135.6 0.4% 34.8 32.4 (6.9%)Mobilink (Pakistan) (PKR bn) 87.4 86.8 (0.7%) 21.5 22.7 5.3%Tunisiana (Tunisia) (TND mn) 432.2 482.3 11.6% 132.5 121.0 (8.7%)

Subsidiary31 Dec.

2008 US$ (000)

31 Dec. 2009

US$ (000)

Inc/ (dec)

Q3 - 2009 (3 months) US$ (000)

Q4 - 2009 (3 months) US$ (000)

Inc/ (dec)

GSMDjezzy (Algeria) 1,290,062 1,067,241 (17.3%) 283,121 213,318 (24.7%)Mobilink (Pakistan) 491,664 384,781 (21.7%) 91,932 105,259 14.5%Mobinil (Egypt) 429,683 460,457 7.2% 116,157 120,026 3.3%Tunisiana (Tunisia) 188,912 192,227 1.8% 55,223 48,137 (12.8%)banglalink (Bangladesh) 13,683 117,238 n.m. 35,390 22,224 (37.2%)Telecel Globe (Africa) 492 (202) n.m. 3,519 (2,926)4 n.m.koryolink (North Korea) - 17,153 n.a. 7,1885 7,164 (0.3%)Total GSM 2,414,496 2,238,894 (7.3%) 592,530 513,203 (13.4%)Telecom ServicesRing (1,593) (6,791) n.m. (2,718) (1,162) 57.3%M-Link 24,985 - n.a. - - n.a.OrasInvest 19,260 - n.a. - - n.a.Other2 (10,116) (3,456) 65.8% 1,217 2,344 92.6%Total Telecom Services 32,536 (10,247) n.m. (1,501) 1,182 n.m.Internet Services (62) 10,370 n.m. 3,280 5,570 69.8%OTHolding&Other3 (63,411) (67,079) (5.8%) (16,680) (24,091) (44.4%)Total Consolidated 2,383,559 2,171,938 (8.9%) 577,629 495,864 (14.2%)

Table8:ConsolidatedEBITDA1

1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.2. Other Telecom Services Companies include in C.A.T., MedCable, Mena Cable, OT Lebanon, TWA, and OTWIMAX in 2009, and C.A.T., CHEO, OT WIMAX, MedCable,

Mena Cable, Telecel Globe and TWA in 20083. Othernonoperatingcompaniesinclude:Cortex,Eurasia,FPPL,MogaHolding,MinMax,OIIH,Oratel,OTCS,OTESOP,OTFSCA,OTIMalta,OTServicesEurope,OT

Oscar, OTH, OT Wireless Europe, OT Asia, Pioneers, SAWLTD, ITCL, M-link and Telecel. 4. Mainly due to an increase in staff costs related to 2008 and 2009 that took place in the fourth quarter of 2009.5. Increased EBITDA mainly due to reallocation of the staff cost compared to H1 09 and freezing the handset sales based on NK Government requirements.

31 Dec,2008 US$ (000)

31 Dec,2009 US$ (000)

Total Consolidated

Total Internet ServicesTotal Telecom ServicesTotalGSM

5,327

4,779 4,685

5,065

34

ConsolidatedEBITDA

Table10:ConsolidatedEBITDAMargin

Table9:ProformaConsolidatedEBITDA(LocalCurrency)1

In local currency terms, Q4 2009 performance versus Q3 was strong in Pakistan, but was weaker in Tunisia due to the decrease in revenue. In Algeria the Q4 EBITDA was impacted by the attacks resulting from the football games which caused interruptions to the operational activities. Moreover, in order to rebuild its brand after the negative impact of the football game OTA incurred an increase in cost of sales and marketing expenses versus the previous quar-ter. We estimate the impact on OTA Q4 2009 EBITDA to be around US$55 million between loss of revenue opportunity, damages of stock (SIM and scratch cards, handsets) and provision for taxes and around US$41 million below the EBITDA line (damage to physical assets net of insurance and provision for Income tax).

EBITDAMARGIN

Although the cost cutting initiatives undertaken by the subsidiaries deliveredtheirresultsinthefirstninemonthsof2009,thenega-tive impact of Q4 EBITDA caused a decrease in the consolidated EBITDA margin by 190bps to reach 42.9% over the previous year. GSM margin declined by 2.7% to 47.8% as a result of lower margins in OTA, Mobilink and OTT resulting from the currency devaluation witnessed throughout 2009. This was partially offset by the strong increase in banglalink’s and koryolink’s margins. The margin decline in OTA was driven by the aforementioned sales tax introduction, borne by the operators, and by the termination rate

In Egypt the EBITDA increased by a mid-single digit over the previous quarter mainly due to the success of the on-net strategy and the applied cost optimization initiatives. In Bangladesh the decrease over Q3 was driven by a more aggressive marketing approach to capture market share by introducing promotions and offers that subsidized occasionally the SIM tax; a reaction to the strategy adopted by certain competitors who started to re-subsi-dize the SIM tax. The sharp decrease in Telecel Globe EBITDA wasmainlydueareclassificationofstaffcostsrelatedto2008and 2009 that took place in the fourth quarter of 2009. Consequently, at the consolidated EBITDA level the fourth quarter of 2009 was down by 14.2% over the previous quarter.

revision in July; in addition to the adverse events that occurred in November 2009 as a result of the football games. The mar-gin decline for Mobilink was mainly attributable to the increase in network maintenance and utility expenses which are mostly denominated in US$. The margin for Mobilink in Q4 was however higher compared to what was recorded in the previous quarter, as was the margin recorded by Mobinil. OTT’s margins declined from Q3 to Q4 by 3.7% due to the decrease in seasonal visitor roamingtraffic.Consequently,overallconsolidatedmargininQ409 was 38.3%; 6.5% lower than the result delivered in the previ-ous quarter. Total GSM margin in Q4 was 43.4%.


31 Dec. 2009

Inc/ (dec)

Q3 - 2009(3 months)

Q4 - 2009(3 months)

Inc/ (dec)

GSMDjezzy (Algeria) (DZD bn) 83.7 78.1 (6.6%) 20.83 15.7 (24.9%)Mobilink (Pakistan) (PKR bn) 34.9 31.7 (9.2%) 7.7 8.9 16.2%Tunisiana (Tunisia) (TND mn) 232.7 260.6 12.0% 73.6 62.5 (15.1%)

1. Un-auditedFigures.2. Excluding the effect of M-Link in 2008.3. InQ409areclassificationofexpenseswascarriedoutresultinginanincreaseinDjezzy’sQ3localcurrencyEBITDA

1. Mainly due to reallocation of the staff cost compared to H1 09 and freezing the handset sales based on NK Government requirements.


31 Dec. 2009 Change Q3 - 2009

(3 months)Q4 - 2009

(3 months) Change

GSMDjezzy (Algeria) 63.2% 57.1% (6.1%) 59.1% 47.7% (11.5%)Mobilink (Pakistan) 40.7% 36.4% (4.4%) 35.5% 38.9% 3.4%Mobinil (Egypt) 48.2% 48.8% 0.5% 47.5% 48.4% 0.9%Tunisiana (Tunisia) 57.9% 53.9% (4.0%) 55.4% 51.7% (3.7%)banglalink (Bangladesh) 4.7% 33.4% 28.7% 39.7% 24.3% (15.5%)Telecel Globe (Africa) 1.9% (0.2%) (2.2%) 16.9% (12.4%) (29.3%)koryolink (North Korea) n.a. 66.1% n.a. 120.1%1 95.6% (24.5%)Total GSM 50.5% 47.8% (2.7%) 49.5% 43.4% (6.0%)Total Telecom Services 6.9% (3.5%) (10.4%) (2.1%) 1.3% 3.4%Total Internet Services (0.1%) 11.7% 11.8% 16.0% 24.4% 8.4%EBITDAMargin 44.7% 42.9% (1.9%) 44.7% 38.3% (6.5%)

TotalConsolidated

2008

Total GSM

TotalTelecom Services

Internet Services

OTHolding&Other

Total Consoli-dated 2009

(8.9%)

2,384

500

0

1,000

1,500

2,000

2,500

(176,0) (43) 10 (4)2,172

35

NetIncome

Net Income in 2009 decreased by 26% to US$ 318 Million mainly driven by the loss recorded in the fourth quarter. The recent riot events in Algeria following the football match had a negative im-pact on the operations. We estimate the impact on OTA Q4 2009 EBITDA to be around US$55 million between loss of revenue op-portunity, damages of stock (SIM and scratch cards, handsets) and provision for taxes and around US$41 million below the EBITDA

line (damage to physical assets net of insurance and provision for Incometax).TheincreaseinNetFinancingCostinQ4wasmain-ly triggered by the decrease of foreign exchange gain compared to Q3 09. In addition to the tax provision in Algeria of $30 million out of which $20 million was made in Q4, a change in the tax law in Pakistan, where a minimum tax of 0.5% of revenues was implemented and accounted for in Q4 09. EPS in the 12 months ended December 31, 2009 reached US$1.81/GDR.

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 Local Currency vs. USD.

1- ManagementPresentationdevelopedfromIFRSfinancials.2- Mainly due to the impairment of goodwill in PMCL’s ISP subsidiary amounting to approx. US$ 7 million.3- Mainly due to gains of approx. US$ 36.5 million resulting from the early extinguishment of PMCL’s bond.4- Due to appreciation of Canadian Dollar and depreciation of US$ in 2009 vs.2008.5- Equates to Net Income after Minority Interest.6- Based on a weighted average for the outstanding number of shares of 175,686,958 GDRs.

ForeignExchangeRates

% Chg 3 % Chg 3

Currency Dec. 08 Sept. 09 Dec. 09 Dec. 09 vs Dec. 09 vsDec. 08 Sept. 09

EgyptianPound/USDIncome Statement1 5.4735 5.6084 5.5804 (1.9) 0.5Balance Sheet2 5.5340 5.5250 5.5096 0.4 0.3Algerian Dinar/USDIncome Statement1 64.5161 72.6195 72.4638 (11.0) 0.2Balance Sheet2 70.9220 72.4466 72.4638 (2.1) (0.0)Tunisian Dinar/USDIncome Statement1 1.2302 1.3708 1.3521 (9.0) 1.4Balance Sheet2 1.3137 1.2974 1.3173 (0.3) (1.5)PakistanRupee/USDIncome Statement1 70.9220 81.3647 81.9672 (13.5) (0.7)Balance Sheet2 78.7402 83.1200 84.0336 (6.3) (1.1)BangladeshiTaka/USDIncome Statement1 69.4444 69.4289 69.4444 0.0 (0.0)Balance Sheet2 69.4444 69.4200 69.4444 0.0 (0.0)Canadian Dollar/USDIncome Statement1 1.1266 1.1478 1.1211 0.5 2.4Balance Sheet2 1.2042 1.0628 1.0386 15.9 2.3

Table11:ForeignExchangeRatesusedintheIncomeStatement&BalanceSheet

Table 12: Income Statement in IFRS/US$

31 Dec. 2008

US$ (000)

31 Dec. 2009

US$ (000)

Inc/ (dec)

Q3 - 2009(3 months) US$ (000)

Q4 - 2009(3 months) US$ (000)

Inc/ (dec)

Revenues 5,326,549 5,064,790 (5%) 1,291,098 1,295,516 0%Other Income 41,257 30,978 6,840 7,977 Total Expense (2,984,247) (2,910,771) (720,310) (794,571) Net unusual Items - (13,059) - (13,059) Restructuring costs - - - - EBITDA1 2,383,559 2,171,938 (9%) 577,628 495,864 (14%)Depreciation&Amortization (912,173) (984,067) (248,935) (253,694) Impairment of Non Current Assets (39,464) (38,296) (7,243) (15,223)2

Gain (Loss) on Disposal of Non Current Assets 66,315 41,638 (424) 6,302 Net unusual Items - (15,117) - (15,117) Operating Income 1,498,237 1,176,096 (22%) 321,026 218,132 (32%)FinancialExpense (468,453) (511,332) (118,948) (130,511) FinancialIncome 53,110 95,528 3 13,687 64 ForeignExchangeGain(Loss) (201,083)4 27,1414 77,8784 14,9934

NetFinancingCost (616,426) (388,663) (27,383) (115,454) Netunusualfinancialitems - - - - ShareofProfit(Loss)ofAssociates (2,955) (47,129) (9,804) (26,156) Gain on Disposal of Associates 27,262 - - - ProfitBeforeTax 906,118 740,304 (18%) 283,839 76,522 (73%)Income Tax (403,494) (360,832) (84,490) (110,383) ProfitfromContinuingOperations 502,624 379,472 (25%) 199,349 (33,861) n.m.ProfitforthePeriod 502,624 379,472 (25%) 199,349 (33,861) n.m.Attributable to:EquityHoldersoftheParent5 430,822 318,134 (26%) 180,942 (46,390) n.m.EarningsPerShare(US$/GDR) 2.30 1.816 (21%) 1.03 (0.26) n.m.Minority Interest 71,802 61,338 18,406 12,529 NetIncome 502,624 379,472 (25%) 199,348 (33,861) n.m.

36

IFRS/US$ IFRS/US$31 December

200831 December

2009US$ (000) US$ (000)

AssetsProperty and Equipment (net) 5,052,5741 5,031,757 Intangible Assets 2,383,5721 2,261,477 Other Non-Current Assets 727,436 963,990 TotalNon-CurrentAssets 8,163,582 8,257,224 Cash and Cash Equivalents 651,783 759,546 Trade Receivables 327,638 331,759 Assets Held for Sale 80,4712 109,953 Other Current Assets 705,409 640,537 Total Current Assets 1,765,301 1,841,795 Total Assets 9,928,883 10,099,019 Equity Attributable to Equity Holders of the Company 1,080,2303 1,275,765 Minority Share 120,994 140,029 TotalEquity 1,201,224 1,415,794 LiabilitiesLong Term Debt 5,205,030 4,873,991 Other Non-Current Liabilities 523,8031 340,145 TotalNon-CurrentLiabilities 5,728,833 5,214,136 Short Term Debt 530,315 998,231 Trade Payables 1,186,051 1,042,907 Other Current Liabilities 1,282,460 1,427,951 Total Current Liabilities 2,998,826 3,469,089 Total Liabilities 8,727,659 8,683,225 TotalLiabilities&Shareholder’sEquity 9,928,883 10,099,019 NetDebt4 5,083,562 5,112,676

Table 13: Balance Sheet in IFRS/US$ Table 14: Cash Flow Statement in US$

1- InaccordancetotheIFRS-3areclassificationwasdoneonDecember2008balancesasaresultofthefinalizationofthepurchasepriceallocationofTelecelGlobewhichcovers the acquisition of Burundi and CAR.

2- Includes M-Link.3- Reflectsthepurchaseofapproximately29.3millionGDRsoftreasurysharesin2008.4- 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

200831 December

2009US$ (000) US$ (000)

Cash Flows from Operating ActivitiesProfitforthePeriod 502,624 379,472 Depreciation,Amortization&ImpairmentofNon-CurrentAssets 951,637 1,022,363 Income Tax Expense 403,494 360,832 NetFinancialCharges 415,343 415,805 ShareofLoss(Profit)ofAssociatesAccountedforUsingtheEquityMethod 2,955 47,129 Other 96,250 (27,011) Changes in Assets Carried as Working Capital (152,127) (170,678) Changes in Other Liabilities Carried as Working Capital 111,808 252,577 Income Tax Paid (480,807) (621,940) Interest Expense Paid (428,447) (472,260) NetCashGeneratedbyOperatingActivities 1,422,731 1,186,290

CashFlowsfromInvestingActivitiesCashOutflowforInvestmentsinProperty&Equipment,IntangibleAssets,andFinancialAssets&ConsolidatedSubsidiaries (1,745,442) (1,327,136)

Net(Payments)forCurrentFinancialAssets - (40,762) ProceedsfromDisposalofProperty&Equipment,Associates,SubsidiariesandFinancialAssets 2,087,121 250,767 Advances&LoansmadetoAssociates&otherparties (441,910) (135,237) Dividends&InterestReceived 34,392 32,171 NetCashUsedinInvestingActivities (65,839) (1,220,197)

Cash Flows from Financing ActivitiesProceeds from Non-Current Borrowings 2,522,216 848,314 Repayment of Non-Current Borrowings (1,975,760) (802,073) NetProceeds(Payments)fromCurrentFinancialLiabilities (56,633) 164,611 Net Change in Cash Collateral (76,872) 83,125 Dividend Payments (165,977) (91,160) Proceeds / Payments for Treasury Shares (2,086,224) (4,189) Change in Minority Interest (62,563) (34,548) NetCashgeneratedby(Usedin)FinancingActivities (1,901,812) 164,080 NetIncrease(Decrease)inCash&CashEquivalents (544,920) 130,173 Cash included in Assets Held for Sale (7,804) (12,561) EffectofExchangeRateChangesonCash&CashEquivalents (34,060) (9,849) Cash&CashEquivalentsattheBeginningofthePeriod 1,238,568 651,783 Cash&CashEquivalentsattheEndofthePeriod 651,783 759,546

37

Table15:IncomeStatementinEAS/EgyptianPounds Table16:BalanceSheetinEAS/EgyptianPounds1

1- ManagementPresentationdevelopedfromEASfinancials

1- ManagementpresentationdevelopedfromEASfinancials.2- Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash and Cash Equivalents.

31 Dec. 2008

LE(000)

31 Dec. 2009

LE(000)

Inc/ (dec) Q3 - 2009

(3 months) LE(000)

Q4 - 2009(3 months) LE(000)

Inc/ (dec)

Revenues 29,153,310 28,261,946 (3%) 7,185,568 7,122,189 (1%)Other Income 225,805 172,837 37,991 43,854 Total Expense (16,255,932) (16,178,907) (4,013,452) (4,369,574) Net unusual Items - (72,869) - (72,869) Restructuring costs - - - - EBITDA1 13,123,183 12,183,007 (7%) 3,210,107 2,723,600 (15%)Depreciation&Amortization (4,980,805) (5,477,033) (1,381,819) (1,389,623) Other 146,959 (65,702) (43,446) (134,484) Operating Income 8,289,337 6,640,272 (20%) 1,784,842 1,199,493 (33%)FinancialExpense (2,562,366) (2,851,808) (660,763) (717,118) FinancialIncome 291,000 533,056 74,931 (2,346) ForeignExchangeGain(Loss) (1,101,000) 151,449 438,245 83,316 NetFinancingCost (3,372,366) (2,167,303) (147,587) (636,148) Netunusualfinancialitems - - - - ShareofProfit(Loss)ofAssociates (16,171) (262,986) (54,735) (145,357) Gain on Disposal of Associates 149,211 - - - ProfitBeforeTax 5,050,011 4,209,983 (17%) 1,582,520 417,988 (74%)Income Tax (2,208,409) (2,013,471) (470,144) (608,846) ProfitfromContinuingOperations 2,841,602 2,196,512 (23%) 1,112,376 (190,858) n.m.Gains or losses from discontinued operations - - - -

ProfitforthePeriod 2,841,602 2,196,512 (23%) 1,112,376 (190,858) n.m.Attributable to:EquityHoldersoftheParent 2,463,594 1,845,289 (25%) 1,010,089 (262,284) n.m.EarningsPerShare(EGP) 2.63 2.10 2% 1.1485997 (0.30) n.m.Minority Interest 378,389 351,223 102,286 71,426 NetIncome 2,841,602 2,196,512 (23%) 1,112,376 (190,858) n.m.

EAS/LE EAS/LE31 December

200831 December

2009LE(000) LE(000)

AssetsProperty and Equipment (net) 27,907,419 27,526,242 Intangible Assets 12,996,658 12,262,066 Other Non-Current Assets 4,026,358 5,310,618 TotalNon-CurrentAssets 44,930,435 45,098,927 Cash and Cash Equivalents 3,607,620 4,184,340 Trade Receivables 1,813,478 1,827,658 Assets Held for Sale 445,408 605,732 Other Current Assets 3,912,554 3,570,237 Total Current Assets 9,779,060 10,187,968 Total Assets 54,709,495 55,286,895 Equity Attributable to Equity Holders of the Company 5,791,788 6,806,645 Minority Share 632,979 762,697 TotalEquity 6,424,767 7,569,342 LiabilitiesLong Term Debt 28,794,164 26,747,498 Other Non-Current Liabilities 2,899,244 1,886,011 Total Non-Current Liabilities 31,693,408 28,633,509 Short Term Debt 2,929,972 5,483,389 Trade Payables 6,567,076 5,745,373 Other Current Liabilities 7,094,272 7,855,282 Total Current Liabilities 16,591,320 19,084,044 Total Liabilities 48,284,728 47,717,553 TotalLiabilities&Shareholder’sEquity 54,709,495 55,286,895 NetDebt2 28,116,516 28,046,547

38

Subsidiary Ownership December 31 ConsolidationMethod

December 312008 2009 2008 2009

GSMOperations

Mobinil (Egypt)1 28.75% 28.75% Proportionate Consolidation

Proportionate Consolidation

Egyptian Co. for Mobile Services 20.00% 20.00% Proportionate Consolidation


IWCPL (Pakistan) 100.00% 100.00% FullConsolidation FullConsolidationOrascom Telecom Algeria2 96.81% 96.81% FullConsolidation FullConsolidationTelecel (Africa) 100.00% 100.00% FullConsolidation FullConsolidation

Orascom Telecom Tunisia3 50.00% 50.00% Proportionate Consolidation


Telecel Globe 100.00% 94.00% FullConsolidation FullConsolidationOT Ventures4 100.00% 100.00% FullConsolidation FullConsolidationCHEO 75.00% 75.00% FullConsolidation FullConsolidationInternet ServiceIntouch 100.00% 100.00% FullConsolidation FullConsolidationNonGSMOperationsRing 99.00% 99.00% FullConsolidation FullConsolidationOrasinvest 100.00% - FullConsolidation -OTCS 100.00% 100.00% FullConsolidation FullConsolidationOT ESOP 100.00% 100.00% FullConsolidation FullConsolidationM-Link 100.00% 100.00% FullConsolidation FullConsolidationOT Services Europe 100.00% 100.00% FullConsolidation FullConsolidationMedCable 100.00% 100.00% FullConsolidation FullConsolidationMena Cable 99.97% 100.00% FullConsolidation FullConsolidationMoga Holding 100.00% 100.00% FullConsolidation FullConsolidationOratel 100.00% 100.00% FullConsolidation FullConsolidation

C.A.T.5 50.00% 50.00% Proportionate Consolidation


OT Wireless Europe 100.00% 100.00% FullConsolidation FullConsolidationOT WIMAX 100.00% 100.00% FullConsolidation FullConsolidationTWA 51.00% 51.00% FullConsolidation FullConsolidationOIIH6 100.00% 100.00% FullConsolidation FullConsolidationOT Holding 100.00% 100.00% FullConsolidation FullConsolidationFPPL 100.00% 100.00% FullConsolidation FullConsolidationMinMax Ventures 100.00% 100.00% FullConsolidation FullConsolidationOIH 100.00% 100.00% FullConsolidation FullConsolidationOTFCSA 100.00% 100.00% FullConsolidation FullConsolidationOT Holding Canada7 100.00% 100.00% FullConsolidation FullConsolidation

ITCL 50.00% 50.00% Proportionate Consolidation


SAWLTD 100.00% 100.00% FullConsolidation FullConsolidation

Table17:OwnershipStructure&ConsolidationMethods Appendix1

1- Mobinil is a holding company which controls 51% of ECMS, the mobile operator. Mobinil is also the brand name used by ECMS.2- Direct and Indirect stake through Moga Holding Ltd. and Oratel. 3- Orascom Telecom Tunisia is proportionately consolidated through Orascom Tunisia Holding and Carthage Consortium.4- OT Ventures owns 100% of Sheba Telecom which operates under the trade name banglalink.5- Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL). 6- OIH owns 100% of Orascom Telecom Iraq which sold Iraqna in December 2007.7- Holding company for OTH’s Share in Globalive which has been accounted for under the equity method.

Glossary

ARPU (Average Revenue per User):Average monthly recurrent revenue per customer (excluding visi-tors roaming revenue and connection fee). This includes airtime revenue (national and international), as well as, monthly subscrip-tionfee,SMS,GPRS&datarevenue.QuarterlyARPUiscalcu-lated as an average of the last three months.

Capex:Tangible&Intangiblefixedassetsadditionsduringthereportingperiod, includes work in progress, network, IT, and other tangible andintangiblefixedassetsadditionsbutexcludeslicensefees.

Churn:Disconnection rate. This is calculated as the number of disconnec-tions 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. outgo-ing 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(MinutesofUsage):Average airtime minutes per customer per month. This includes billablenational&internationaloutgoingtrafficoriginatedbysubscribers(on-net,tolandline&tootheroperators).Also,thisincludesincomingtraffictosubscribersfromlandlineorotheroperators.

OTH’sMarketShareCalculationMethod: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.Thisreflectsthenumberofsubscribersofthecompeti-tion. 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 an-nounced by the Regulators is based on disclosed information by the other operators which may use different subscriber recogni-tion policy

39

Independent auditor’s reportTo the board of directors of Orascom Telecom Holding (S.A.E)

We have audited the accompanying consolidated financial statements of Orascom Telecom Holding (S.A.E), which comprise the consolidated balance sheet as at 31 December 2009, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Orascom Telecom Holding (S.A.E) as at 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Emphasis of a matter

Without qualifying our opinion, we draw attention to note (35) “Contingent assets and liabilities” for the following:

1- Some subsidiaries received tax assessment from the tax authorities in the territories in which they operate. Management believes that these assessments are excessive, and intends to challenge the assessments through the proper legal channels. Currently, the management of these subsidiariescannot make reliable estimate of tax exposures.

2- Egyptian Company for Mobile Services (ECMS) “Jointly controlled entity” filed a lawsuit against the National Telecommunication Regulatory Authority (NTRA) to cancel NTRA’s decision relating to the amendments of the interconnect prices between the fixed and mobile networks. The Company and its external legal counselor believe that the possibility of winning the lawsuit is probable as NTRA’s decision does not have legal or contractual ground, therefore the Company continued to recognize interconnect revenue and cost from and to Telecom Egypt based on the existing agreement.

Cairo, 15 March, 2010 KPMG Hazem Hassan

Consolidated FinancialStatements and Auditor’s Report

(in IFRS/US$)

• Consolidated Balance Sheet• Consolidated Income Statement• Consolidated Statement of Comprehensive Income • Consolidated Statement of Changes in Equity• Consolidated Statement of Cash Flows• Notes to the Consolidated Financial Statements• Appendix A - Liabilities to Banks• Appendix B - Bonds• Appendix C - Scope of Consolidation

40

Group CFO Chief Executive Officer Executive Chairman Aldo Mareuse Khaled Bichara Naguib Onsi Sawiris Auditor’s report ‘attached’

Consolidated Income StatementConsolidated Balance Sheet

As of December 31,(in million of US$) Note 2009 2008

Assets Property and equipment 18 5,032 5,053Intangible assets 19 2,261 2,383Other non-current financial assets 20 845 639Deferred tax assets 21 119 88Total non-current assets 8,257 8,163

Inventories 55 106Trade receivables 22 332 328Other current financial assets 20 114 277Current income tax receivables 17 100 75Other current assets 23 371 247Cash and cash equivalents 24 760 652Assets held for sale 6 110 80Total current assets 1,842 1,765Total assets 10,099 9,928

Equity and liabilities Share capital 258 261Reserves (214) (329)Retained earnings 1,232 1,148Equity attributable to owners of the Company 1,276 1,080

Non-controlling interest 140 121Total equity 25 1,416 1,201

Liabilities Non-current borrowings 26 4,874 5,205Other non-current liabilities 27 121 220Provisions 4 3Non-current income tax liabilities 17 - 43Deferred tax liabilities 21 216 257Total non-current liabilities 5,215 5,728

Current borrowings 26 998 530Trade payables 28 1,043 1,186Other current liabilities 27 1,091 856Current income tax liabilities 17 187 341Provisions 94 61Liabilities held for sale 6 55 25Total current liabilities 3,468 2,999Total liabilities 8,683 8,727Total equity and liabilities 10,099 9,928

For the year ended December 31(in million of US$) Note 2009 2008

Revenues 7 5,065 5,327

Other income 31 41

Purchases and services 8 (2,364) (2,511)

Other expenses 9 (215) (174)

Personnel costs 10 (332) (299)

Net unusual inventory loss 13 (13) -

Depreciation and amortization 11 (984) (912)

Impairment charges 12 (39) (39)

Net unusual capital loss 13 (15) -

Disposal of non current assets 14 42 66

Operating income 1,176 1,499

Financial income 15 95 52

Financial expense 15 (511) (468)

Foreign exchange gain /(loss) 15 27 (201)

Net financing costs (389) (617)

Share of loss of associates 16 (47) (3)

Gain on disposal of associates 16 - 27

Profit before income tax 740 906

Income tax expense 17 (361) (403)

Profit for the year 379 503

Attributable to:

Owners of the Company 318 431

Non-controlling interest 61 72

379 503

Basic and diluted earnings per share - (US$) 29 0.36 0.46

(The notes from (1) to (37) are an integral part of these consolidated financial statements)


41

For the year ended December 31, 2009 2008(in million of US$)

Profit for the year 379 503Other comprehensive income: Changes in fair value of available-for-sale financial assets (2) (2)Cash flow hedges, net of tax 25 (88)Currency translation differences (46) (176)Share of profit recognized directly in equity of associates - 5Other comprehensive income for the year, net of tax (23) (261)Total comprehensive income for the year 356 242

Attributable to: Owners of the Company 292 173Non-controlling interest 64 69

Consolidated Statement of Changes in Equity Consolidated Statement of Comprehensive Income

Attributable to owners of the Company

(in million of US$) Share capital

Treasury shares

Other reserves

Retained earnings Total

Non controlling

interest

Total equity

As of January 1, 2008 316 (892) 212 3,513 3,149 93 3,242Comprehensive incomeProfit for the year - - - 431 431 72 503

Other comprehensive income - - (258) - (258) (3) (261)

Total comprehensive income - - (258) 431 173 69 242Transactions with ownersDividends - - (9) (157) (166) (61) (227)Share based compensation - - 11 - 11 - 11Cancellation of shares (55) 2,789 (79) (2,655) - - -Purchase of treasury shares - (2,202) - - (2,202) - (2,202)Sale of treasury shares - 115 - - 115 - 115Capital increase non-controlling interest - - - - - 20 20Reclassifications - - (16) 16 - - -Total transactions with owners (55) 702 (93) (2,796) (2,242) (41) (2,283)As of December 31, 2008 261 (190) (139) 1,148 1,080 121 1,201

(in million of US$)

Attributable to owners of the Company

Share capital

Treasury shares

Other reserves


Non controlling

Interest

Total equity

As of January 1, 2009 261 (190) (139) 1,148 1,080 121 1,201

Comprehensive income

Profit for the year - - - 318 318 61 379

Other comprehensive income - - (26) - (26) 3 (23)

Total comprehensive income - - (26) 318 292 64 356

Transactions with owners Change in non controlling interest

- - - - - (10) (10)

Dividends - 56 10 (160) (94) (35) (129)

Share based compensation - 5 (3) 2 - 2

Cancellation of shares (3) 92 (15) (74) - - -

Purchase of treasury shares - (38) - - (38) - (38)

Sale of treasury shares - 27 7 - 34 - 34Total transactions with owners (3) 142 (1) (234) (96) (45) (141)As of December 31, 2009 258 (48) (166) 1,232 1,276 140 1,416



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Consolidated Statement of Cash Flows

For the year ended December 31, Note 2009 2008(in millions of US$)Profit for the year 379 503 Adjustments for: Depreciation, amortization and impairment charges 1,023 951 Net unusual inventory loss and capital loss 28 - Income tax expense 361 403 Share-based compensation 12 11 Net financial charges 416 416 Unrealized foreign exchange difference (43) 143 loss on disposal of non-current assets 2 2 Gain from sale of subsidiaries and financial assets (44) (68)Share of loss of associates 47 3 Gain on disposal of associates - (27)Change in assets carried as working capital (197) (152)Change in provisions and allowances 73 35 Change in other liabilities carried as working capital 223 112 Income tax paid (622) (481)Interest expense paid (472) (428)

Net cash generated by operating activities 1,186 1,423

Net cash outflow for investments in:- Property and equipment (1,103) (1,474)- Intangible assets (118) (146)- Financial assets and associates (76) (20)- Consolidated subsidiaries (30) (103)Net proceeds from disposals of:- Property and equipment 35 11 -Subsidiaries 216 69 -Associates - 956 -Financial assets - 1,049 Net investments in financial assets held for trading (41) - Advances and loans made to associate and other parties (37) (135) (442)Dividends and interest received 32 34

Net cash (used in) investing activities (1,220) (66)

Proceeds from non-current borrowings 848 2,522 Repayment of non-current borrowings (802) (1,976)Net proceeds/(payments) from Current financial liabilities 165 (57)Net change in cash collateral 83 (77)Dividend payments (91) (166)Net (payments) for treasury shares (5) (2,086)Change in non-controlling interest (35) (61)

Net cash generated by / (used in) financing activities 163 (1,901)

Net increase/(decrease) in cash and cash equivalents 129 (544)

Cash included in assets held for sale (14) (8)Effect of exchange rate changes on cash and cash equivalents (7) (35)

Cash and cash equivalents at the beginning of the year 652 1,239 Cash and cash equivalents at the end of the year 760 652

1- General information

Orascom Telecom Holding S.A.E. (the “Company”) is a joint stock company with its head office in Cairo, Egypt. The Company, through its subsidiaries (together the “Group”) is a leading mobile telecommunications company operating in high growth emerging markets in the Middle East, Africa and Asia, having a total population under license of approximately 510 million. The Company is a subsidiary of Weather Investments S.p.A. (“Weather Investments” or the “Parent Company”). The Company is listed on the Egyptian Stock Exchange and has Global Depository Receipts (“GDR”) listed on the London Stock Exchange.

These consolidated financial statements as of and for the year ended December 31, 2009 (the “Consolidated Financial Statements”) were approved for issue by the Board of Directors on March 15, 2010.

2- Significant accounting policies2.1 Basis of presentation

The Consolidated Financial Statements of the Group, as of and for the year ended December 31, 2009, have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations as adopted by the International Accounting Standards Board (IASB) and all interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and all interpretations of the Standing Interpretations Committee (SIC).The consolidated financial statements have been prepared under the historical cost basis except for the following:

• derivative financial instruments are measured at fair value;

• financial instruments at fair value through profit or loss are measured at fair value; and

• available-for-sale financial assets are measured at fair value.

For presentational purposes, the current/non-current distinction has been used for the balance sheet, while expenses are analyzed in the income statement using a classification based on their nature. The indirect method has been selected to present the cash flow statement.

The information presented in this document has been presented in millions of United States Dollar (US$”), except earnings per share and unless otherwise stated.

2.2 Change in Accounting Polices

The Group has adopted the following new and amended IFRSs as of January 1, 2009:

• IAS1 (revised), “Presentation of financial statements”. The revised standard prohibits the presentation of items of income and expense (“non-owner changes in equity”) in the statement of changes in equity. “Non-owner” changes in equity are presented in the statement of comprehensive income. Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The Group has elected to present two statements: an income statement and a statement of comprehensive income. Comparative information has also been represented so that it is in conformity with the new standard.

• IFRS 8,“Operating segments”, IFRS 8 replaces IAS 14, “Segment reporting” and requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the number of operating segments reported, as a result of the adoption of IFRS 8 we now present our segment reporting using a geographical analysis. Goodwill is allocated by management to groups of cash generating units on a segment level. The change in reportable segments has not resulted in any additional goodwill impairment. The comparative information for 2008 has been restated.

The Group has also adopted the following new and amended IFRSs and IFRIC Interpretations with no material impact:

• IFRS 7(amendment), “Financial instruments – Disclosures” – which requires additional disclosures about fair value measurement and liquidity risk.

• Amendment to IFRS 2 “Share-based Payment” relating to vesting conditions and cancellations.

• Revised IAS 23 “Borrowing Costs” relating to capitalization of borrowing costs and IAS 23 (amendment) relating to the calculation of borrowing costs.

• IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” relating to guidance on the accounting for hedges of a net investment in foreign operations.

• IFRIC 18 “Transfers of Assets From Customers” relating to treatment of items of property, plant and equipment or cash to acquire or construct such assets received from customers.

• IAS 1 (amendment) “Presentation of financial statements”, relating to the classification of financial assets and liabilities held for trading.

• IAS 28 (amendment), “Investments in associates,” and consequential amendments to IAS 32, “Financial Instruments: Presentation” and IFRS 7, “Financial instruments: Disclosures” relating to impairment testing of investments.

• IAS 36 (amendment), “Impairment of assets” relating to impairment testing disclosures.

• IFRIC 13, “Customer loyalty programmes” relating to calculating the fair value of customer loyalty programmes.

3.3 Summary of main accounting principles and policies

The main accounting principles and policies adopted in preparing these Consolidated Financial Statements are set our below. These policies have been consistently applied to all periods in those consolidated financial statements, and have been applied consistently by the group entities.Basis of consolidationThe Consolidated Financial Statements include the financial statements of the Company and those entities over which the Company exercises control, both directly or indirectly, from the date of acquisition to the date when such control ceases. Control may be exercised through direct or indirect ownership of shares with majority voting rights, or by exercising a dominant influence expressed as the direct or indirect power, based on contractual agreements or statutory provisions, to determine the financial and operational policies of the entity and obtain the related benefits, regardless of any equity relationships. The existence of potential voting rights that are exercisable or convertible at the balance sheet date is also considered when determining whether there is control or not.


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The financial statements used in the consolidation process are those prepared by the individual Group entities as of and for the year ended December 31, 2009 (the reporting date for these Consolidated Financial Statements) in accordance with IFRS used by the Company in preparing these statements and approved by the respective Boards of Directors.

The consolidation procedures used are as follows: · the assets and liabilities and income and expenses of

consolidated subsidiaries are included on a line-by-line basis, allocating to non-controlling interests, where applicable, the share of equity and profit or loss for the year that is attributable to them. The resulting balances are presented separately in consolidated equity and the consolidated income statement;

· the purchase method of accounting is used to account for business combinations in which the control of an entity is acquired. The cost of an acquisition is measured as the fair value of the assets acquired, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus all other costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the assets, liabilities and contingent liabilities acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized immediately in the income statement;

· business combinations in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination are considered business combinations involving entities under common control. In the absence of an accounting standard guiding the accounting treatment of these operations the Group applies IAS 8, consolidating the book values of the entity transferred and reporting any gains arising from the transfer in goodwill;

· the purchase of equity holdings from non-controlling holders in entities where control is already exercised is considered a purchase. Therefore the difference between the cost incurred for the acquisition and the respective share of the accounting equity acquired is recognized in goodwill;

· any options to purchase non-controlling interests outstanding at the end of the year are treated as exercised and are reported as a financial liability or in equity depending on whether the transaction is to be settled in cash or through the exchange of equity instruments;

· unrealized gains and losses on transactions carried out between companies consolidated on a line-by-line basis and the respective tax effects are eliminated if material, as are corresponding balances for receivables and payables, income and expense, and finance income and expense;

· gains and losses arising from the sale of holdings in consolidated entities are recognized in the income statement as the difference between the selling price and the corresponding portion of consolidated equity sold.

Associates

Investments in companies where the Group exercises a significant influence (hereafter “associates”), which is presumed to exist when the Group holds between 20% and 50%, are accounted for using the equity method. The equity method is as follows:

• the Group’s share of the profit or loss of an investee is recognized in the income statement from the date when

significant influence or control begins up to the date when that significant influence or control ceases. Investments in associates with negative shareholders’ equity are impaired and a provision for its losses is accrued only if the Group has a legal or constructive obligation to cover such losses. Equity changes in investees accounted for using the equity method that do not result from profit or loss are recognized directly in consolidated equity reserves;

• unrealized gains and losses generated from transactions between the Company or its subsidiaries and its investees accounted for using the equity method are eliminated on consolidation for the portion pertaining to the Group; unrealized losses are eliminated unless they represent an impairment.

• The license of the Group’s associated undertaking in Canada, Globalive Wireless Management Corp, are indefinite lived assets. Although the spectrum licenses have an initial term of 10 years, based on available information, the management believes that they are subject to perfunctory renewal and that renewal cost will not be significant. Accordingly, they are not subject to amortization but are tested annually for impairment, or when indicators exist that the carrying value is not recoverable.

Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.Interests in joint ventures are consolidated using the proportionate method under which the assets and liabilities and income and expenses of the joint venture are consolidated on a line-by-line basis in proportion to the share held by the Group in the venture. The carrying amount of the consolidated investment is then eliminated against the respective portion of equity. Transactions, balances and any unrealized gains and losses on intercompany transactions are proportionately eliminated.

Unrealised gains arising from transactions with associates (and jointly controlled entities) are eliminated to the extent of the Group’s interest in the enterprise. Unrealised gains resulting from transactions with associates and joint ventures are eliminated against the investment in the associates or joint venture.

Appendix C includes a list of the entities included in the scope of consolidation.

Foreign currency translation

Functional and presentation currency

The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial information to international investors the Group’s presentation currency is US$.

Transactions and balances

Transactions in foreign currencies are translated into the functional currency of the relevant entity at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated, at the balance sheet date, into the prevailing exchange rates at that date. Foreign currency exchange differences arising on the settlement of transactions and the translation of the balance sheet are recognized in the income statement.

Group companies

The financial statements of the Group entities are translated into the presentation currency as follows:

• assets and liabilities are translated at the closing exchange rate;

• income and expenses are translated at the average exchange rate for the year;

• all resulting exchange differences are recognized as a separate component of equity in the “translation reserve”;

• goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate; and

• in the preparation of the consolidated cash flow statement, the cash flows of foreign subsidiaries are translated at the average exchange rate for the year.

The exchange rates applied in relation to the US$ are as follows:Average for year ended

December 31,Closing rate as of December 31,

2009 2008 2009 2008

Egyptian Pound (LE) 0.1792 0.1827 0.1815 0.1807

Algerian Dinar (DZD) 0.0138 0.0155 0.0137 0.0141

Tunisian (TND) 0.7395 0.8129 0.7591 0.7612

Pakistan Rupee (PKR) 0.0122 0.0141 0.0119 0.0127

Bangladeshi Taka (BDT)

0.0144 0.0144 0.0144 0.0144

Canadian Dollar (CAD) 0.8920 0.8876 0.9628 0.8304

Euro 1.4134 1.4935 1.4551 1.4113

Property and equipment

Property and equipment are stated at purchase cost or production cost, net of accumulated depreciation and any impairment losses. Cost includes expenditure directly attributable to bringing the asset to the location and condition necessary for use and any dismantling and removal costs which may be incurred as a result of contractual obligations which require the asset to be returned to its original state and condition. Borrowing costs directly associated with the purchase or construction of property and equipment are capitalized as incurred together with the asset to which they relate.Costs incurred for ordinary and cyclical repairs and maintenance are charged directly to the income statement in the year in which they are incurred. Costs incurred for the expansion, modernization or improvement of the structural elements of owned or leased assets are capitalized to the extent that they have the requisites to be separately identified as an asset or part of an asset, in accordance with the “component approach”. Under this approach each asset is treated separately if it has an autonomously determinable useful life and value. Depreciation is charged at rates calculated to write off the costs over their estimated useful lives on a straight-line basis from the date the asset is available and ready for use.

The useful lives of property and equipment and their residual values are reviewed and updated, where necessary, at least at each year end. Estimate in respect of certain items of “Cell Sites” were revised in 2009 (see note 18).Land is not depreciated. When a depreciable asset is composed of identifiable separate components whose useful lives vary significantly from those of other components of the asset, depreciation is calculated for each component separately, applying the “component approach”.

The useful lives estimated by the Group for the various categories of property and equipment are as follows.

Number of yearsBuildings 50Cell Sites 8-15Tools 5-10Computer equipment 3-5Furniture and Fixtures 5-10Vehicles 3-6Leasehold improvements and renovations 3-8

Gains or losses arising from the sale or retirement of assets are determined as the difference between the net disposal proceeds and the net carrying amount of the asset sold or retired and are recognized in the income statement in the period incurred under “Disposal of non-current assets”.

Finance leases are leases that substantially transfer all the risks and rewards incidental to the ownership of assets to the Group. Property and equipment acquired under finance lease are recognized as assets at their fair value or, if lower, at the present value of the minimum lease payments, including any amounts to be paid for exercising a purchase option. The corresponding liability due to the lessor is recognized as part of financial liabilities. An asset acquired under a finance lease is depreciated over the shorter of the lease term and its useful life.

Lease arrangements in which the lessor substantially retains the risks and rewards incidental to ownership of the assets are classified as operating leases. Lease payments under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

Intangible assets

Intangible assets are identifiable non-monetary assets without physical substance which can be controlled and which are capable of generating future economic benefits. Intangible assets are stated at purchase and/or production cost including any expenses that are directly attributable to preparing the asset for its intended use, net of accumulated amortization and impairment losses, if applicable. Borrowing costs accruing during and for the development of the asset are capitalized as incurred. Amortization begins when an asset becomes available for use and is charged systematically on the basis of the residual possibility of utilization of the asset, meaning on the basis of its estimated useful life.

• Licenses

Costs for the purchase of telecommunication licenses are capitalized. Amortization is charged on a straight-line basis such as to write off the cost incurred for the acquisition of a right over the shorter of the period of its expected use and the term of the underlying agreement, starting from the date on which the acquired license may be exercised.

• Goodwill

Goodwill represents the excess of the cost of an acquisition over the interest acquired in the net fair value at the acquisition date of the assets and liabilities of the entity or business acquired. Goodwill relating to investments accounted for using the equity method is included in the carrying amount of the investment. Goodwill is not systematically amortized but is rather subject to periodic tests to ensure that the carrying amount in the balance sheet is adequate

44

(“impairment testing”). Impairment testing is carried out annually or more frequently when events or changes in circumstances occur that could lead to an impairment of the cash generating units (“CGUs”) to which the goodwill has been allocated. An impairment loss is recognized whenever the recoverable amount of goodwill is lower than its carrying amount. The recoverable amount is the higher of the fair value of the CGU less costs to sell and its value in use, which is represented by the present value of the cash flows expected to be derived from the CGU during operations and from its retirement at the end of its useful life. The method for calculating value in use is described in the paragraph below “Impairment of assets”. Once an impairment loss has been recognized for goodwill it cannot be reversed.

Whenever an impairment loss resulting from the above testing exceeds the carrying amount of the goodwill allocated to a specific CGU the residual loss is allocated to the assets of that particular CGU in proportion to their carrying amounts. The carrying amount of an asset under this allocation is not reduced below the higher of its fair value less costs to sell and its value in use as described above.

• Software

Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Software licenses are amortized on a straight-line basis over their useful life (between 3 to 8 years), while software maintenance costs are expensed in the income statement in the period in which they are incurred. Costs incurred on development of software products are recognized as intangible assets when the Group has intentions to complete and use or sell the assets arising from the project, considering the existence of a market for the asset, its commercial and technological feasibility, its costs can be measured reliably and there are adequate financial resources to complete the development of the asset. Other development expenditures are recognized in the income statement in the period in which they are incurred. Directly attributable costs that are capitalised as part of a software product include software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

• Customer List

The customer list as an intangible asset consists of the list of customers identified when allocating the purchase price in acquisitions carried out by the Group. Amortization is charged on the basis of the respective estimated useful lives which range from 5 to 10 years.

Impairment of non-financial assets

At each balance sheet date, property and equipment and intangible assets with finite lives are assessed to determine whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset concerned is estimated and any impairment loss is recognized in the income statement. Intangible assets with an indefinite useful life are tested for impairment annually or more frequently when events or changes in circumstances occur that could lead to an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use, which is represented by the present value of its estimated future cash flows. In determining an asset’s value in use the estimated future cash flows are discounted using a pre-tax rate that reflects the market’s current assessment of the cost of money for the investment period and the specific risk

profile of the asset. If an asset does not generate independent cash flows its recoverable amount is determined in relation to the cash-generating unit (CGU) to which it belongs. An impairment loss is recognized in the income statement when the carrying amount of an asset or the CGU to which it is allocated exceeds its recoverable amount. If the reasons for previously recognizing an impairment loss cease to exist, the carrying amount of an asset other than goodwill is increased to the net carrying amount of the asset that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset, with the reversal being recognized in the income statement.

Investments

Investments in companies other than those classified as available for sale are measured at fair value with any changes in fair value being recognized in the income statement. (The accounting treatment of financial assets available for sale is discussed in “Financial assets available for sale”). If fair value cannot be reliably determined, an investment is measured at cost. Cost is adjusted for impairment losses if necessary, as described in the paragraph “Impairment of Assets”. If the reasons for an impairment loss no longer exist, the carrying amount of the investment is increased up to the extent of the loss with the related effect recognized in the income statement. Any risk arising from losses exceeding the carrying amount of the investment is accrued in a specific provision to the extent of the Group’s legal or constructive obligations on behalf of the associate. Investments held for sale or to be wound up in the short term are classified as current assets and stated at the lower of their carrying amount and fair value less costs to sell.

Financial instruments

Financial instruments consist of financial assets and liabilities whose classification is determined on their initial recognition and on the basis of the purpose for which they were purchased. Purchases and sales of financial instruments are recognized at their settlement date. Financial assets are derecognized when the right to receive cash flows from them ceases and the Group has effectively transferred all risks and rewards related to the instrument and its control. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by reference to prices supplied by third-party operators and by using valuation models based primarily on objective financial variables and, where possible, prices in recent transactions and market prices for similar financial instruments.

• Financial Assets

Financial assets are initially recognized at fair value and classified in one of the following four categories and subsequently measured as described:

• Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets purchased primarily for sale in the short term, (held for trading) and derivative financial instruments, except for the effective portion of those designated as cash flow hedges. These assets are measured at fair value; any change in the year is recognized in the income statement. Financial instruments included in this category are classified as current assets if they are held for trading or expected to be disposed of within twelve months from the balance sheet date. Derivatives are treated as assets or liabilities depending on whether their fair value is positive or negative; positive and negative fair values arising from transactions with the same counterparty are offset if this is contractually provided for. Fair value gains and losses from foreign currency

swaps are recognized in foreign currency gains and losses in the income statement.

• Financial receivables

Financial receivables are non-derivative financial instruments which are not traded on an active market and which are expected to generate fixed or determinable repayments. They are included as current assets unless they are contractually due more than twelve months after the balance sheet date in which case they are classified as non-current assets. These assets are measured at amortized cost using the effective interest method. If there is objective evidence of factors which indicate impairment, the asset is reduced to the present value of future cash flows. The impairment loss is recognized in the income statement. If in future years the factors which caused the impairment cease to exist, the carrying amount of the asset is reinstated up to the amount that would have been obtained had amortized cost been applied.

• Financial assets available-for-sale

Financial assets available for sale are non-derivative financial instruments which are either designated in this category or not classified in any of the other categories. Available for sale financial assets are measured at fair value. Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analyzed between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss; translation differences on non-monetary securities are recognized in equity. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in equity.

When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement.

The classification of an asset as current or non-current is the consequence of strategic decisions regarding the estimated period of ownership of the asset and its effective marketability, with those which are expected to be realized within twelve months from the balance sheet date being classified as current assets.

• Financial assets held to maturity

These are non-derivative assets with fixed maturities that the Group has the intention and ability to hold to maturity. Those maturing within 12 months are carried as current assets. These financial assets are measured at amortized cost using the effective interest method.

Impairment of financial assets

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

Financial liabilities

Financial liabilities consisting of borrowings, trade payables and other obligations are measured at amortized cost using the effective interest method. When there is a change in cash flows which can be reliably estimated, the value of the financial liability is recalculated to reflect such change based on the present value of expected cash flows and the originally determined internal rate of return. Financial liabilities are classified as current liabilities except where the Group has an unconditional right to defer payment until at least twelve months after the balance sheet date.

Financial liabilities are derecognized when settled and the Group has transferred all the related costs and risks relating to an instrument.

Derivative financial instruments

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The full fair value of a hedging derivative is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Derivatives which do not qualify for hedge accounting are classified as a financial asset at fair value through profit or loss.

· Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. If the hedge is not fully effective, meaning that these changes are different, the non-effective portion is treated as part of the net financing cost for the year in the income statement.

· Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity in a specific reserve (the “cash flow hedge reserve”) . The gain or loss relating to the ineffective portion is recognized immediately in the income statement.

A hedge is normally considered highly effective if from the beginning and throughout its life the changes in the expected cash flows for the hedged item are substantially offset by the changes in the fair value of the hedging instrument. When the economic effects deriving from the hedged item are realized, the related gains or losses in the reserve are reclassified to the income statement together with the economic effects of the hedged item. Whenever the hedge is not highly effective, the non-effective portion of the change in fair value of the hedging instrument is immediately recognized as part of the net financing cost for the year in the income statement.

When a hedging instrument expires or is sold, or when a hedge

45

no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

Inventories

Inventories are stated at the lower of purchase cost or production cost and net realizable value. Cost is based on the weighted average method. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. When necessary, obsolescence allowances are made for slow-moving and obsolete inventories. Inventories mainly comprise handsets and SIM cards.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Non-current assets and liabilities held for sale

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use is classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter the assets and liabilities held for sale (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, and deferred tax assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent losses on remeasurement are recognised in the income statement. Subsequent increase in fair value less costs to sell may be recognised in the income statement only to the extent of the cumulative impairment loss that has been recognised previously.

Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries, associates and joint venture operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or

the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Additional income taxes that arise from the distribution of dividends are recognised at the same time that the liability to pay the related dividend is recognised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Provisions

Provisions are only recognized when the Group has a present legal or constructive obligation arising from past events that will result in a future outflow of resources, and when it is probable that this outflow of resources will be required to settle the obligation. The amount provided represents the best estimate of the present value of the outlay required to meet the obligation. The interest rate used in determining the present value of the liability reflects current market rates and takes into account the specific risk of each liability. Provisions are not recognised for future operating losses.Employee benefits

• Short-term benefits

Short-term benefits are recognized in the income statement in the year when an employee renders service.

• Share-based employee benefits

The Group recognizes additional benefits to certain managers and other members of personnel through share based payment plans. IFRS 2 - Share-based Payment considers these plans to represent a component of employee remuneration. The fair value of the employee services received at the grant date in exchange for the grant of options or shares is recognized as an expense with a correspondent increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from proceeds.

Treasury shares

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to equity holders of the Company until the shares are cancelled or re-issued. Where such shares

are subsequently re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to equity holders of the Company.Legal reserveAs per the Company’s statutes 5% of net profit for the year is set aside to form a legal reserve, the transfer to such reserve ceases once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized for covering losses or for increasing the Company’s share capital. If the reserve falls below the said 50%, the Company should resume setting aside 5% of its annual net profit until the reserve reaches 50% of the Company’s paid in share capital.Dividend distributionDividend distribution to the Company’s shareholders is recognized as a liability in the Consolidated Financial Statements in the period in which the dividends are approved by the Company’s shareholders.Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value added tax, rebates and discounts and after eliminating sales within the Group.Revenue from the sale of goods is recognized when the Group transfers the risks and rewards of ownership of the goods. Revenue from services is recognized in the income statement by reference to the stage of completion and only when the outcome can be reliably estimated.More specifically, the criteria followed by the Group in recognizing ordinary revenue are as follows:

• revenue arising from post-paid traffic, interconnection and roaming is recognized on the basis of the actual usage made by each subscriber and telephone operator. Such revenue includes amounts paid for access to and usage of the Group network by customers and other domestic and international telephone operators;

• revenue from the sale of prepaid cards and recharging is recognized on the basis of the prepaid traffic actually used by subscribers during the year. The unused portion of traffic at period end is recognized as “Liabilities – Deferred Income”;

• revenue from the sale of mobile phones and fixed-line phones and related accessories is recognized at the time of sale;

• one-off revenue from landline and mobile (prepaid or subscription) activation and/or substitution, prepaid recharge fees and the activation of new services and tariff plans is recognized for the full amount at the moment of activation independent of the period in which the actual services are rendered by the Group. In the case of promotions with a cumulative plan still open at the end of the year, the activation fee is recognized on an accruals basis so as to match the revenue with the year in which the service may be used.

Dividend income from investments recorded at fair value through profit and loss or as available for sale is recognized when the right to receive payment is established.

Interest income

Interest income is recognized on a time-proportion basis using the effective interest rate method.

Earnings per share

Basic

Basic earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company, both from continuing and discontinued operations, by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.

Diluted

Diluted earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average of the number of ordinary shares of the Company outstanding during the year where, compared to basic earnings per share, the weighted average number of shares outstanding is modified to include the conversion of all dilutive potential shares, while the profit for the year is modified to include the effects of such conversion net of taxation. Diluted earnings per share are not calculated when there are losses as any dilutive effect would improve earnings per share.

Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.

Segment reporting

Operating segments are reported in a manner which is consistent with the internal reporting information provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors.

Recent accounting pronouncements

The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year 2009 and have not been early adopted:

IAS 27 (revised), “Consolidated and separate financial statements” will be effective for the Group from January 1, 2010. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the equity is re-measured to fair value, and a gain or loss is recognized in profit or loss. The Group will apply IAS 27 (revised) prospectively to transactions with non-controlling interests from January 1, 2010.

IFRS 3 (revised), “Business combinations,” will be effective for the Group from January 1, 2010. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on

46

affecting the estimates and measurements.

Depreciation of non-current assets

The cost of property and equipment is depreciated on a straight-line basis over the useful lives of the assets. The useful life of property and equipment is determined when the assets are purchased and is based on the past experience of similar assets, market conditions and forecasts concerning future events which may affect them, amongst which are changes in technology. The actual useful lives may therefore differ from the estimates of these. The Group regularly reviews technological and business sector changes, dismantling costs and recoverable amounts in order to update residual useful lives. Such regular updating may entail a change of the depreciation period and consequently a change in the depreciation charged in future years.

Deferred tax assets

The recognition of deferred tax assets is based on forecasts of future taxable profit. The measurement of future taxable profit for the purposes of determining whether or not to recognize deferred tax assets depends on factors which may vary over time and which may lead to significant effects on the measurement of this item.

Income tax

The companies of the Group are subject to different tax legislation. A significant amount of estimates are necessary in order to account for the total tax effects on the financial statements. The Group has a number of operations for which the relevant taxes are difficult to estimate and thus has to accrue some tax liabilities based on estimates. Whenever the actual tax expense is different from the estimated, the difference is recorded in the income statement.

Fair value of derivatives and other financial instruments

The fair value of financial instruments is determined based on quoted market prices, where available, or on estimates using present values or other valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Where market prices are not readily available, fair value is based on either estimates obtained from independent experts or quoted market prices of comparable instruments.

Provisions and contingencies

In recognizing provisions the Group analyses the extent to which it is probable that a liability will arise from disputes with employees, suppliers and third parties and in general the losses it will be required to incur as a result of past obligations. The definition of such provisions entails making estimates based on currently known factors which may vary over time and which could actually turn out to be significantly different from those referred to in preparing the financial statements.

4- Financial Risk Management

Financial Risk Factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and cash flow interest risk), credit risk and liquidity risk. In particular the Group is exposed to risks from movements in exchange rates, interest rates and market prices. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s performance through ongoing operational and finance activities. Depending on the risk assessment, the Group uses selected derivative hedging

instruments. The management has overall responsibility for the establishment and oversight of the group’s risk management framework.

Market Risk

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising when its business transactions are in currencies other than its functional currency. The main currencies to which the Group is exposed are the US dollar, the Canadian Dollar and the Euro.

In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a natural hedge of the exchange rate of such financing. However, as some transactions are executed in foreign currencies, and in particular in US$, CAD and Euro, the Group may be subject to the risk of exchange rate fluctuations which, in certain instances the Group manages through the use of hedging strategies. As of December 31, 2009 the Group’s borrowings included US$ borrowings amounting to US$ 4,232 million and Euro borrowings amounting to Euro 248 million (equivalent to US$ 361 million). In certain instances the Group has entered into economic hedging agreements to manage the risk of fluctuations relating to these financing operations. In particular, Pakistan Mobile Communication Limited (PMCL) had borrowings for US$ 177 million and Euro 190 million (equivalent to US$ 276 million) as of December 31, 2009. Such borrowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani Rupee.

The Group subsidiaries generally execute their operating activities in their respective functional currencies. Some Group subsidiaries are, however, exposed to foreign currency risks in connection with scheduled payments in currencies that are not their functional currencies. In general this relates to foreign currency denominated supplier payables and receivables. The Group monitors the exposure to foreign currency risk arising from operating activities and, where relevant, enters into hedging transactions in order to manage the exposure.

As of December 31, 2009, if the functional currencies had weakened / strengthened by 3% against the US$, the Euro and CAD, with all other variables held constant, the translation of foreign currency receivables and payables would have resulted in a decrease/ increase in profit for the year (after tax)of US$ 65 million, mainly relating to US$ denominated borrowings.

Additionally, the Group has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure to such risk is not hedged.

Cash flow and fair value interest rate risk

The Group is exposed to market risks as a result of changes in interest rates particularly in relation to borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floating interest rate borrowings based on the Group’s perception of future interest rate movements. In particular, the risk monitored relates to the impact of movements in floating rate indices on the Group’s finance costs.

When considered appropriate, the Group manages its cash flow

an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (revised) prospectively from January 1, 2010.

IFRS 5 (amendment) “Non-current assets held for sale and discontinued operations” and consequential amendments to IFRS 1 “First-time adoption” will be effective for the Group from January 1, 2010. The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS 1 states that these amendments are applied prospectively from the date of transition to IFRS. The Group will apply IFRS 5 (amendment) prospectively to all partial disposals of subsidiaries from January 1, 2010.

IFRIC 17, “Distribution of non-cash assets to owners” will be effective for the Group from January 1, 2010. The interpretation is part of the IASB’s annual improvement project which was published in April 2009. This interpretation provides guidance on accounting for arrangements whereby the entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended. The Group will apply IFRIC 17 from January 1, 2010.

IAS 38 (amendment), “Intangible Assets”. The amendment is part of the IASB’s annual improvements project published in April 2009 and the Group will apply IAS 38 (amendment) from that date that IFRS 3 (revised) is adopted (January 1, 2010). The amendment to the standard clarifies guidance in measuring the fair value of an intangible asset that is acquired in a business combination and permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives.

IAS 1 (amendment), “Presentation of financial statements”. This amendment is part of the IASB’s annual improvements project published in April 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. The Group will apply IAS 1 (amendment) from January 1, 2010.

IFRS 2 (amendments), “Group cash-settled and share-based payment transactions”. In addition to incorporating IFRIC 8, “Scope of IFRS 2”, and IFRIC 11, “IFRS 2 - Group and treasury share transactions”, the amendments expand on the guidance in IFRIC 11 to address the clarification of group arrangements that were not covered by that interpretation. The new guidance is not expected to have a material impact for the Group.

IAS 39 (amendment), “Financial instruments: Recognition and Measurement. This amendment will be applicable for the Group from 1 January 2010. The amendment on eligible hedged items specifies that an entity may designate an option as a hedge of changes in the cash flows or fair value of a hedged item above or below a specified price or other variable. The provisions are to be applied retrospectively.

IAS 32 (amendment), “Financial instruments: Presentation”. This amendment will be applicable for the Group from January 1, 2011. The amendment clarifies the classification of rights issues as equity or liabilities when the rights are denominated in a currency other than the issuer’s functional currency.

IAS 24, “Related Party Disclosures” will be effective for the Group from January 1, 2011. The amendment simplifies the definition of a related party by clarifying its intended meaning and elimination of

any inconsistencies from the definition and furthermore provides a partial exemption from the disclosure requirements.

IFRS 9, “Financial Instruments” will be applicable for the Group from January 1, 2013. IFRS 9 is the first part of Phase 1 of the IASB’s project to replace IAS 39. IFRS 9 governs the classification and measurement of financial assets.

IFRIC 14, “Prepayments of a minimum funding requirement” will be applicable for the Group from January 1, 2011 . The amendment applies in limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover these requirements. The amendment permits an entity to treat the benefit of such a payment as an asset.

IFRIC 19, “Extinguishing financial liabilities with equity instruments” will be applicable for the Group from January 1, 2011. The interpretation provides guidance on how to interpret IFRS when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept equity instruments to fully or partially settle the financial liabilities.

3- Use of Estimates

The preparation of these Consolidated Financial Statements required management to apply accounting policies and methodologies that are based on complex, subjective judgments, estimates based on past experience and assumptions determined from time to time to be reasonable and realistic based on the related circumstances. The use of these estimates and assumptions affects the amounts reported in the balance sheet, the income statement and the cash flow statement as well as the notes. The final amounts for items for which estimates and assumptions were made in the Consolidated Financial Statements may differ from those reported in these statements due to the uncertainties that characterize the assumptions and conditions on which the estimates are based.

The accounting principles requiring a higher degree of subjective judgment in making estimates and for which changes in the underlying conditions could significantly affect the Consolidated Financial Statements are briefly described below.

Goodwill

Goodwill is tested for impairment on an annual basis to determine whether any impairment losses have arisen that should be recognized in the income statement. More specifically, the test is performed by allocating the goodwill to a cash generating unit and subsequently estimating the unit’s fair value. Should the fair value of the net capital employed be lower than the carrying amount of the CGU an impairment loss is recognized for the allocated goodwill. The allocation of goodwill to cash generating units and the determination of the fair value of a CGU requires estimates to be made that are based on factors that may vary over time and that could as a result have an impact on the measurements made by management which might be significant. Impairment of non-current assets

Non-current assets are reviewed to determine whether there are any indications that the net carrying amount of these assets may not be recoverable and that they have suffered an impairment loss that needs to be recognized. In order to determine whether any such elements exist it is necessary to make subjective measurements, based on information obtained within the Group and in the market and also on past experience. When a potential impairment loss emerges it is estimated by the Group using appropriate valuation techniques. The identification of the elements that may determine a potential impairment loss and the estimates used to measure such loss depend on factors which may vary over time, thereby

47

interest rate risk by using floating-to fixed interest rate swaps. In particular, as of December 31, 2009 the Group had two interest rate derivative contracts. The first contract is a floating-to-fixed interest rate swap with a notional value of US$ 1.5 billion and the other contract is a switchable interest rate swap with a notional value of US$ 500 million. After considering such derivative transactions approximately 57% of the Group’s total borrowings had a floating rate of interest.

The Group considers the sensitivity of its finance costs to movements in interest rates. In particular an increase / decrease of 1.0% in interest rates as of December 31, 2009 would have resulted in an increase / decrease in finance costs of US$ 33 million and a decrease / increase in the cash flow hedge reserve of US$ 34 million.

Price risk

The Group has limited exposure to equity securities price risk on investments held by the Group.

Credit Risk

The Group considers that it is not exposed to major concentrations of credit risk in relation to trade receivables. However, credit risk can arise in the event of non-performance of a counterparty, particularly in relation to credit exposures for trade and other receivables, financial instruments and cash and cash equivalents.

The Group considers that the concentration of credit risk with respect to trade receivables is limited given that the Group’s customer base is largely pre-paid subscribers. Post paid subscribers generally represent a small portion of the subscriber base and therefore the credit exposure is limited. In addition, the Group tries to mitigate credit risk by adopting specific control procedures, including assessing the credit worthiness of the counterparty and limiting the exposure to any one counterparty.

Credit risk relating to cash and cash equivalents, derivative financial instruments and financial deposits arises from the risk that the counterparty becomes insolvent and accordingly is unable to return the deposited funds or execute the obligations under the derivative transactions as a result of the insolvency. To mitigate this risk, wherever possible the Group conducts transactions and deposits funds with financial institutions with a minimum of investment grade rating.

The Group is exposed to credit risk relating to financial receivables as follows:

• During 2008 the Company entered into two loans agreements to provide a total amount of CAD 508 million to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment

Holdings Corp (“Globalive”). The amount of these loans was further increased to CAD 608 million during 2009. As of December 31, 2009 the amount outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to US$ 696 million).The loans were primarily provided to GWMC to fund the acquisition of spectrum licenses in Canada. The licenses were awarded to GWMC during March 2009 by Industry Canada and GWMC launched operations in December 2009. During the start-up phase of operations Globalive has incurred losses and as a result the Group’s share of losses exceeds the carrying value of the investment. The Group considers the loan provided as part of the investment and has therefore deducted the excess losses from the receivable. After considering such losses an amount of US$ 643 million is recorded in financial receivables. (see Note 20 “Other financial assets” for further details)

• In November 2008 the Company sold its investment in Orasinvest Holding Inc. (“OrasInvest”). The total receivable from the sale amounted to US$ 180 million, prior to price adjustments. Of this US$ 180 million, US$ 90 million was received in 2008 and a further US$ 75 million was received and settled in 2009. As of December 31, 2009 the amount outstanding was US$ 15 million. The remaining receivable is expected to be settled during 2010.

In general the remaining other receivables and financial receivables included in financial assets generally relate to a variety of smaller amounts due from a wide range of counterparties, therefore, the Group does not consider that it has a significant concentration of credit risk.

Liquidity Risk

The Group monitors and mitigates liquidity risk arising from the uncertainty of cash inflows and outflows by maintaining sufficient liquidity of cash balances as well as undrawn credit lines and by diversifying its sources of finance. In general, liquidity risk is monitored at entity level whereby each subsidiary is responsible for managing and monitoring its cashflows and rolling liquidity reserve forecast in order to ensure that it has sufficient committed facilities to meet its liquidity needs.

The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows.

As of December 31, 2008 Carrying amount

Expected cash flows (*)

Less than 1 year

Between 1 and 5 years

More than 5 years

LiabilitiesLiabilities to banks 4,421 5,515 734 4,563 218Bonds 1,153 1,627 114 733 780Finance lease liability 33 45 12 33 -Other borrowings 15 15 12 3 -Telecommunication license payable 395 477 204 184 89Trade payables 1,186 1,186 1,186 - -

7,203 8,865 2,262 5,516 1,087



Less than 1 year


More than 5 years

LiabilitiesLiabilities to banks 4,475 5,012 1,021 3,969 22Bonds 1,255 1,674 159 1,515 -Finance lease liability 24 43 7 15 21Other borrowings 19 18 18 - -

Telecommunication license payable 363 420 286 60 74

Trade payables 1,043 1,043 1,043 - -7,179 8,210 2,534 5,559 117

Derivative cash outflows do not include the potential cash outflows should the share warrants of My Screen and Lingo be exercised. The exercise of such warrants is at the option of the Company. Details of such warrants are provided in Note 20 “Other financial assets”. Contractual cash flows are derived based on the relevant index as of the balance sheet date.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may, among other things, adjust the amount of dividends paid to shareholders, return capital to shareholders through share buyback transactions, issue new shares or sell assets to reduce debt.

Other risks

Political and economic risk in emerging countries

A significant amount of the Group’s operations are conducted in Algeria, Pakistan, Egypt and Tunisia. The operations of the Group depend on the market economies of the countries in which the subsidiaries operate. In particular, these markets are characterized by economies that are in various stages of development or are undergoing restructuring. Therefore the operating results of the

Group are affected by the current and future economic and political developments in these countries. In particular, the results of operations could be unfavorably affected by changes in the political or governmental structures or weaknesses in the local economies in the countries where it operates. These changes could also have an unfavorable impact on financial condition, performance and business prospects.

Regulatory risk in emerging countries

Due to the nature of the legal and tax jurisdictions in the emerging countries where the Group operates, it is possible that laws and regulations could be amended. This could include factors such as the current tendency to withhold tax on the dividends of these subsidiaries, receiving excessive tax assessments, granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable effect on the financial activities of the Group and on the ability to receive funds from the subsidiaries.

Revenue generated by the majority of the Group subsidiaries is expressed in local currency. The Group expects to receive most of this revenue from its subsidiaries and therefore it relies on their ability to be able to transfer funds. The regulations in the various countries where the subsidiaries operate could reduce the ability to pay interest and dividends and to repay loans, credit instruments and securities expressed in foreign currency through the transfer of currency. In addition, in some countries it could be difficult to

* Expected cash flows are the gross contractual undiscounted cash flows including interest, charges and other fees.The table below analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The

* Derivative cashflows for interest rate derivatives and foreign exchange derivatives represent the net cashflow from the relevant swap transaction as such derivatives are net settled. Cash inflow

amounts disclosed in the table are the contractual undiscounted cash flows.

and cash outflow for other derivative instruments are shown separately as such derivatives are gross settled.

As of December 31, 2009 Expected cash flows (*) Less than 1 year Between 1 and 5 years More than 5

yearsCash outflow / (cash inflow)Interest rate derivatives 98 65 33 -Foreign exchange derivatives (214) (41) (173) -Other derivative instruments - cash intflow (16) - (16) -Total (132) 24 (156) -

As of December 31, 2008 Expected cash flows (*) Less than 1 year

Between 1 and 5 years More than 5 years

Cash outflow / (cash inflow)Interest rate derivatives 116 43 73 -Foreign exchange derivatives (2) 10 (11) (1)Other derivative instruments - cash outflow 31 31 - -Other derivative instruments - cash inflow (31) (31) - -Total 114 53 62 (1)

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convert large amounts of foreign currency due to central bank regulations. The central banks may amend regulations in the future and therefore the ability of the Company to receive funds from its subsidiaries may be restricted.

5- Segment reporting

The chief operating decision-maker has been identified as the board of directors of the Group. The board of directors reviews the Group’s internal reporting in order to assess its performance and allocate resources, mainly from a geographical perspective, of the mobile telecommunication business. Management has determined the reportable operating segments according to the information analyzed periodically by the board of directors as follows:

• Mobile telecommunication business in Algeria;• Mobile telecommunication business in Pakistan;• Mobile telecommunication business in Egypt;• Mobile telecommunication business in Tunisia;• Mobile telecommunication business in Bangladesh;• Other GSM which comprises the mobile telecommunication

businesses in Central and South Africa and Namibia and North Korea ; and

• Other Telecom service (Non GSM Service) which includes other territories in which the Group operates as a mobile telecommunication operator and other services.

The Group reports on operating segments which are independently managed. The board of directors assesses the performance of such operating segments based on:

• Total revenues• EBITDA, defined as profit for the period before income tax

expense (or if applicable profit from continuing operations for the period before income tax expense), gains (losses) on disposal of associates, share of profit (loss) of associates, foreign exchange gains (losses), financial expense, financial income, disposal of non current assets, impairment charges, depreciation and amortization and net unusual capital loss, and

• Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

The information provided to the board of directors is measured consistently with that of the financial statements.

* Holding and other mainly represent income and expense relating to activities provided from the holding and other companies. These represent mainly management fees and revenue as a result of supporting activities provided by Orascom Telecom Holding.

The following table provides a breakdown of revenue by product and service:

Algeria Pakistan Egypt Tunisia Bangladesh Other GSM

Other Telecom services

(Non GSM)

Holdings & Others Consolidated

2009

2008

Total segment revenue - current year 1,868 1,061 944 357 351 107 358 63 5,109

Total segment revenue - previous year 2,088 1,231 891 362 288 26 793 - 5,679

(Inter-segment revenue - current year) - (2) - - - - (42) - (44)

(Inter-segment revenue - previous year) (47) (23) - (36) - - (246) - (352)

Total revenue from external customers - current year 1,868 1,059 944 357 351 107 316 63 5,065

Total revenue from external customers - previous year 2,041 1,208 891 326 288 26 547 - 5,327

EBITDA - current year 1,014 385 445 192 103 17 (1) 17 2,172

EBITDA - previous year 1,225 409 415 190 2 (2) 27 118 2,384

Depreciation, amortization & Impairment - current year (337) (264) (167) (56) (120) (36) (38) (5) (1,023)

Depreciation, amortization & Impairment - previous year (334) (253) (148) (57) (92) (4) (60) (3) (951)

Net unusual capital loss - current year (15) - - - - - - - (15)

Net unusual capital loss - previous year - - - - - - - - -

Disposal of non current assets - current year 1 (1) (1) 63 (20) 42

Disposal of non current assets - previous year (26) (42) (22) (2) (7) - 5 160 66

Financial Income - current year 3 34 5 2 1 3 1 46 95

Financial Income - previous year 3 5 4 1 1 - 3 35 52

Financial expense - current year (10) (122) (63) (5) (28) (15) (9) (259) (511)

Financial expense - previous year (15) (118) (52) (11) (27) (3) (12) (230) (468)

Share of (losses) of associates - current year - - - - - - - (47) (47)

Share of (losses) of associates - previous year - - - - - - - (3) (3)

Gain on disposal of associates- current year - - - - - - - - -

Gain on disposal of associates- previous year - - - - - - - 27 27

Profit (loss) before income tax - current year 652 (35) 222 130 (45) (30) 14 (168) 740

Profit (loss) before income tax - previous year 849 (107) 192 123 (122) (9) (48) 28 906

Total assets - current year 2,474 2,381 1,477 485 967 471 568 1,276 10,099

Total assets - previous year 2,420 2,764 1,367 466 961 308 643 999 9,928

Total Borrowings - current year 86 1,021 453 84 341 57 27 3,803 5,872

Total Borrowings - previous year 133 1,187 491 123 302 9 74 3,416 5,735

Capital Expenditure - current year 257 150 225 45 130 91 106 31 1,035

Capital Expenditure - previous year 174 554 483 50 441 56 165 5 1,928

49

an increase in maintenance costs due to an increase in the number of cell sites and general utilities costs and an increase in costs of handsets, scratch cards, sim cards, bundle cost mainly due to the increased sales of Ring.

9- Other expenses

2009 2008Licenses costs 57 55Travel costs 16 21Accruals for provisions 32 14Allowance for doubtful receivables 39 19Taxes (other than income tax) 4 17Training expenses 9 11Other operating expenses 58 37Total 215 174

The increase in other expenses was primarily attributable to the increase in accruals for provisions, allowance for doubtful receivables and other operating expenses during 2009. The increase in the allowance for doubtful receivables was mainly related to a revision of allowance for doubtful debts policy in OTA. While the accruals for provisions increased by US$18 million mainly relating to the accruals for the tax dispute in Algeria. Taxes (other than income tax) decreased mainly due to the sale of M-Link.

10- Personnel costs

2009 2008Wages and salaries 208 195Bonuses given to management and employees 61 45

Social security 17 16Share based compensation 12 11Pension costs 9 7Board of Directors remuneration 4 3Other personnel costs 21 22

Total 332 299

The increase in personnel cost was primarily due to the increase in the number of employees in 2009 compared to 2008 as well as restructuring and an increase in salaries mainly in the Company and Egyptian Company for Mobile Services S.A.E. (“ECMS”). Bonuses increased in 2009 compared to 2008 mainly relating to bonuses paid in PMCL in 2009 as a result of reaching operational targets.

The table below provides a breakdown of the number of employees as of December 31:

(in number of employees) 2009 2008Senior management 294 216Middle management 1,701 1,447Staff 15,218 14,859Total 17,213 16,522

The table below provides a breakdown of the average number of employees for the years ended December 31, 2009 and 2008:

Average for the year ended December 31,

(in number of employees) 2009 2008Senior management 255 205Middle management 1,574 1,355Staff 15,039 15,012Total 16,868 16,572

11- Depreciation and amortization

2009 2008Depreciation of property and equipment:

-Cell sites 744 686 -Computers, fixtures and other equipment 59 63 -Buildings 24 23

Amortization of intangible assets -Licenses 114 112 -Other intangible assets 43 28Total 984 912

Depreciation and amortization increased due to the increase in cell sites depreciation primarily as a result of an increase in investments in the network.

12- Impairment charges

Impairment charges amounting to US$ 39 million in 2009 mainly relate to the impairment of US$17 million for plant and equipment in PMCL in Pakistan and LinkDotNet Telecom, a subsidiary of PMCL operating in Pakistan as well as impairment of goodwill amounting to US$6 million in LinkDotNet Telecom. The impairments in LinkDotNet Telecom are mainly as a result of the uncertainties for the future expectations of this business.

13- Unusual Items

During November 2009 Orascom Telecom Algeria S.p.A. and Ring Algeria LLC, subsidiaries of the Company, experienced damage to shops, warehouses and infrastructure, as well as break-ins to premises and theft of equipment, during football related disturbances in Algeria.

The cost of damaged inventories, as a result of such disturbances, amounted to US$ 18 million, whilst the damage to property and equipment amounted to US$ 24 million.

Both entities have submitted formal claims to their insurance companies relating to this incident. Furthermore, a technical assessment performed by an independent insurance expert stated that the minimum expected recovery from the insurance company is 1 billion DZD (equivalent to US$ 14 million).

This incident is considered as an exceptional event which is outside with the normal course of operations and has been recorded in the income statement as unusual items. After considering the expected minimum insurance proceeds, an amount of US$13 million has been recorded as an unusual inventory loss relating to the damaged inventories and an amount of US$15 million has been recorded as an unusual capital loss relating to the damaged property and equipment.

7- Revenues

2009 2008Revenues from services Telephony services 3,975 3,994Interconnection traffic 599 864International and national roaming 131 150Other services 118 75Total revenues from services 4,823 5,083

Total revenues from sale of goods 242 244

Total 5,065 5,327

Revenues from telephony services decreased in 2009 compared to 2008 mainly as a result of a decrease in calling rates as part of a marketing campaign due to competition with the other operators. Revenues from interconnection traffic decreased in 2009 compared to 2008 mainly due to the sale of the Group’s gateway carrier M-Link in January 2009. (See Note 34 “Related party transactions” for further information) Revenue from international and national roaming decreased in 2009 due to the agreement of discounts with many operators and low prices offered to compete in the challenging markets across the territories during 2009. In general revenues during 2009 were negatively impacted by the movements in local currencies compared to the US$ and in particular movements in the Algerian Dinar and Pakistan Rupee.

8- Purchases and services

2009 2008Interconnection traffic and roaming 589 711Cost of handsets, scratch cards, sim cards, bundle cost 313 311Advertising and promotional services 189 253Internet and fixed line costs 241 245Customer acquisition costs 232 222Maintenance costs 233 190Utilities 137 132Rental of network 70 85Other leases and rentals 72 76Rental of civil and technical sites 77 71Consulting and professional services 65 58Consumable materials, equipment and goods 20 48Cost for security service 35 37Cost for printing & collection services 20 12Other service expenses 71 60Total 2,364 2,511

Purchases and services costs decreased during 2009 primarily due to the weakening of the local currencies compared to the US$. As a percentage of revenues, purchase and service costs were substantially consistent, amounting to 46.7% in 2009 and to 47.1% in 2008.

In particular, interconnection traffic and roaming costs decreased in 2009 compared to 2008 mainly due to the sale of M-Link in January 2009. Advertising and promotional expenses decreased in 2009 compared to 2008 mainly due to a change in policy in Bangladesh. Consumable materials, equipment and goods decreased in 2009 due to the sale Orasinvest. These items were partially offset by

2009 2008Product and services Mobile 4,686 4,780Fixed - line and Internet 316 547Other revenue & income 63 -Total revenue 5,065 5,327

6- Assets and liabilities classified as held for sale

The following provides a breakdown of assets and liabilities held for sale as of December 31:

2009 2008

Property and equipment 46 11Intangible assets 30 20Trade receivables 12 40Other current assets 8 1Cash and cash equivalents 14 8

Assets held for sale 110 80

Current and non-current borrowings 24 -

Trade payables 15 22Other current liabilities 15 2

Current income tax liabilities - 1

Deferred tax liabilities 1 -Liabilities held for sale 55 25

Assets and liabilities held for sale include the following:

Link Egypt and Link Dot Net

In February 2009 the Company stated that they had received an indicative non-binding offer for the acquisition of 100% of the shares of LINKdotNET and Link Egypt. In accordance with IFRS 5 the assets and liabilities held for sale in disposal groups have been separately shown in specific captions on the consolidated balance sheet. The income statement effects of these entities have not been shown as discontinued operations as they do not represent a separate major line of business.

Oracap Far East Ltd reclassified as held for use.

Orascom Telecom Holding management decided to stop the process of sale of Oracap Far East Ltd. and reclassified as held for use.

Sale of M-link S.a.r.l (Luxemburg) (M-Link)The assets and liabilities of M-Link were presented as held for sale in 2008, following the decision of management of the Company to focus on GSM business and dispose of non-core assets. On January 13 th, 2009 the Company announced the sale of 100% of M-Link to TLC SERVIZI S.p.A (now renamed Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A., for a total consideration of approximately US$ 78 million in cash. (See Note 34 “Related party transactions”).

50

2009 2008Profit before income tax 740 906Tax calculated at Company›s income tax rate 148 181

Different income tax rates in subsidiaries 96 87

Theoretical income tax for the year 244 268Permanent differences 22 16Unrecognized deferred tax for tax losses 50 90

Reversal of expired deferred tax assets for tax losses - 8

Utilization of previously unrecognized deferred tax assets - (16)Unrecognized deferred tax liabilities on unremitted earnings - 19

Adjustments in respect of prior years 48 -Other differences (3) 18Income tax for the year 361 403

Land and Buildings Cell Sites

Computers, fixtures

and other equipment

Assets Under Construction Total

CostAs of January 1, 2009 180 5,936 336 955 7,407Additions 44 267 52 626 989Change in the scope of consolidation 1 28 3 5 37Assets held for sale - (56) (16) (3) (75)Disposals (26) (28) (16) (16) (86)Currency translation differences (3) (147) (5) (18) (173)Reclassifications - 717 2 (719) -As of December 31, 2009 196 6,717 356 830 8,099 Accumulated Depreciation and Impairment

As of January 1, 2009 58 2,094 186 16 2,354Charge for the year 24 744 59 - 827Change in the scope of consolidation - 5 1 - 6Assets held for sale - (22) (7) - (29)Disposals (12) (19) (13) - (44)Impairment loss - 5 2 17 24Currency translation differences (2) (59) (10) - (71)As of December 31, 2009 68 2,748 218 33 3,067 Net book value as of December 31, 2008 122 3,842 150 939 5,053Net book value as of December 31, 2009 128 3,969 138 797 5,032

The Group’s income tax expense decreased from US$ 403 million in 2008 to US$ 361 million in 2009 while the effective tax rate increased from 44% to 49%, respectively. The increase in the effective tax rate was primarily attributable to the provision charged to Income tax expense during 2009 with an amount of US$ 30 million against the tax claims 2004-2007 which has been received by Orascom Telecom Algeria S.P.A. (“OTA”).

18- Property and equipment

14- Disposal of non-current assets

The gain on disposal of non-current assets amounting to US$ 44 million in 2009 mainly relates to the gain of US$ 35 million on disposal of M-Link which was sold to Wind Telecomunicazioni SpA for a cash consideration of US$ 77 million during January 2009. (See Note 34 “Related party transactions”) Gain on disposal of non-current assets amounting to US$ 68 million in 2008 mainly relates to the gain on the disposal of the subsidiary OrasInvest. During 2009 a further gain of US$ 7.7 million was recorded relating to a post acquisition sale price adjustment.

15- Net financing costs

(in million of US$) 2009 2008Interest on deposits and bank accounts 24 29

Interest on non-current financial receivables 11 15

Other financial income 37 6Gain on extinguishment of debt 23 -Dividends from investments - 2Financial income 95 52

Interest on bonds (106) (91)Interest on other borrowings (343) (318)Interest on other liabilities and other financial expense (62) (59)

Financial expense (511) (468)

Foreign exchange gain /(loss) 33 (354)Fair value changes of FX derivative instruments (6) 153

Net foreign exchange gain /(loss) 27 (201)Net financing cost (389) (617)

Gain from extinguishment of debt in 2009 relates to the tender offer by PMCL which was completed in May 2009 to repurchase a portion of its senior notes. As a result of this tender offer, PMCL repurchased the notes at a repurchase price of US$ 730 per US$ 1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million for cash consideration of US$ 101 million. The difference between the repurchase price and carrying value of the debt was recorded as gain from extinguishment of debt, net of the effects of closing out derivatives associated with this debt.

Financial income increased in 2009 mainly relating to the interest accrued on the loans to Globalive. (See Note 20 “Other financial assets” for further information).

Financial expense increased mainly due to an increase in interest on bonds which related to the issuance of a US$ 230 million bond (“Oscar Bond”) in February 2009 (see Note 26 “Borrowings”).

The gain in foreign exchange is mainly due to unrealized gain on translation of supplier facilities, telecommunication license payables and borrowings due to the strengthening of the EGP,PKR and DZD against the US$.

Fair value changes on FX derivative instruments relates to the changes in the fair value of the cross currency swaps held by PMCL in connection with the economic hedge of borrowings

16- Share of loss of associates and gain on disposal of associatesShare of loss of associates in 2009 and 2008 relates to the investment in Globalive Canada Investment Holdings Corp. and Globalive Canada Holdings Corp. (collectively “Globalive”). The Group holds a 65.4% investment in Globalive which comprises a combination of voting and non-voting rights. Considering direct and indirect interests, the Group holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The Group has significant influence over this investment and does not have control over the financial and operating policies of Globalive. Therefore the investment is equity accounted. The following table provides selected financial information of Globalive as of December 31, 2009 and 2008 and for each of the years then ended.

2009 2008Current assets 64 373 Non-current assets 762 2 Current liabilities 196 405 Non-current liabilities 722 -Revenue 47 - Net loss (92) (29)% shareholding 65.4% 65.4%proportional share of net loss (60) (19)

Amortization expense of identifiable assets (3)

- Elimination of proportional share of intra group interest expense 16 16Share of loss in associate (47) (3)

Gain on disposal of associates in 2008 amounting to US$ 27 million relates to the disposal of the remaining investment in Hutchison Telecommunications International Limited (“Hutchison Telecommunications”). In October and November 2007 the Group sold 5% of its investment in this associate and the remaining investment was sold in January 2008.

17- Income tax expense

2009 2008Current income tax expense 407 427Deferred taxes (46) (24)Income tax expense 361 403

Current income tax receivables and liabilities in the consolidated balance sheet are as follows:

2009 2008Current income tax receivable 100 75Current and non current income tax liabilities (187) (384)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

51


Computers, fixtures

and other equipment


CostAs of January 1, 2008 165 5,382 289 796 6,632Additions 39 322 87 1,184 1,632Change in the scope of consolidation (3) 55 (11) (4) 37Assets held for sale (3) (16) (3) (1) (23)Disposals (6) (41) (6) (8) (61)Currency translation differences (16) (682) (25) (87) (810)Reclassifications 4 916 5 (925) -As of December 31, 2008 180 5,936 336 955 7,407 Accumulated Depreciation and Impairment As of January 1, 2008 44 1,628 148 9 1,829Charge for the year 23 686 63 - 772Change in the scope of consolidation 1 26 (7) - 20Assets held for sale (1) (9) (2) - (12)Disposals (1) (29) (3) - (33)Impairment loss - - - 7 7Currency translation differences (8) (208) (13) - (229)As of December 31, 2008 58 2,094 186 16 2,354 Net book value as of December 31, 2007 121 3,754 141 787 4,803Net book value as of December 31, 2008 122 3,842 150 939 5,053

Additions to property and equipment in 2009 mainly relate to cell site investments and assets under construction relating to new base stations, predominantly in GSM companies in Pakistan, Bangladesh and Algeria. Those investments are mainly due to the expansion of the business, increased capacity and the change in GSM technology.

Property and equipment transferred to assets held for sale in 2009 relates to the property and equipment of Link-Egypt and Link dot net See Note 6 “Assets and liabilities classified as held for sale” for further information.

Property and equipment pledged as security for bank borrowings amount to US$ 1.3 billion as of December 31, 2009 and primarily relate to securities for borrowings of PMCL, Trans World Associated Private Limited (“TWA”) , Orascom Telecom Tunisie S.A.(“OTT”) and Telecel Namibia .In the year ended December 31, 2009 and 2008 the Group capitalized borrowing costs of US$ 36 million and US$ 63 million, respectively, relating to the acquisition of property and equipment.

The Group leases various assets under non-cancelable finance lease agreements. As of December 31, 2009 the Group had assets under finance lease with cost of US$ 36 million and net book value of US$ 31 million mainly relating to a sale and lease back of the premises at Nile City Towers (headquarter offices in Cairo), as well as minor finance leases for vehicles and equipment.

Change in estimatesDuring the year ended 31 December 2009 the Group conducted an operational efficiency review at one of its subsidiaries Orascom Telecom Bangladesh Limited – which resulted in changes to the expected useful life of certain items of cell site equipment. This equipment which management previously intended to depreciate over eight years of use, is now expected to remain in use for fifteen years from the date of acquisition. The effect of these changes on depreciation expense, recognized in income statement, in current and future periods as follows:

(in million of US$) 2009 From 2010 to 2017 Later(Decrease) increase in depreciation expense (8) (87) 95

19- Intangible assets

Licenses Goodwill Others TotalCost As of January 1, 2009 1,861 1,227 274 3,362Additions - - 46 46Change in the scope of consolidation 8 48 10 66Assets held for sale - (9) (34) (43)Disposals - - (7) (7)Currency translation differences (23) 5 (3) (21)As of December 31, 2009 1,846 1,271 286 3,403

Accumulated Amortization As of January 1, 2009 724 121 134 979Charge for the year 114 - 43 157Change in the scope of consolidation 1 - 1 2Assets held for sale - - (13) (13)Impairment loss - 13 2 15Currency translation differences (10) 1 11 2As of December 31, 2009 829 135 178 1,142

Net book value as of December 31, 2008 1,137 1,106 140 2,383Net book value as of December 31, 2009 1,017 1,136 108 2,261

Licenses Goodwill Others TotalCost As of January 1, 2008 1,701 1,173 200 3,074Additions 252 - 44 296Change in the scope of consolidation 20 71 38 129Assets held for sale (2) (17) (1) (20)Disposals - - (7) (7)Currency translation differences (110) - - (110)As of December 31, 2008 1,861 1,227 274 3,362

Accumulated Amortization As of January 1, 2008 614 120 115 849Charge for the year 112 - 28 140Change in the scope of consolidation 3 - - 3Disposals - - (1) (1)Impairment loss 31 - 1 32Currency translation differences (36) 1 (9) (44)As of December 31, 2008 724 121 134 979

Net book value as of December 31, 2007 1,087 1,053 85 2,225Net book value as of December 31, 2008 1,137 1,106 140 2,383

52

outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to US$ 696 million) , the Group’s share of the excess losses of Globalive compared to the carrying value of the investment have therefore been deducted from the long term receivable. After considering the share of such losses the amount recorded in financial receivables is US$ 643 million.

Financial receivables as of December 31, 2008 also include an amount of US$ 165 million relating to receivables from the sale of subsidiaries. This primarily relates to the receivable from the sale of OrasInvest amounting to US$ 90 million, of which US$ 75 million was settled in December 2009 and the residual receivable of US$ 75 million from the sale of Iraqna which was settled during 2009. As of December 31, 2009, the residual receivable from the sale of OrasInvest of US$ 15 million is due to be settled in 2010.

Derivative financial instruments

2009 2008 Assets Liabilities Assets Liabilities

Interest rate derivatives 1 99 - 112Foreign exchange derivatives 134 - 178 -Other derivative instruments 16 - 7 1

Total 151 99 185 113

Less non-current portionInterest rate derivatives - 35 - 71Foreign exchange derivatives 94 - 154 -Other derivative instruments 15 - 6 -Current portion 42 64 25 42

Additions to others in 2009 mainly relate to software licenses.

Additions to intangible assets in 2008 primarily relate to the acquisition of a 3G license in Egypt, by Egyptian Company for Mobile Services S.A.E. (“ECMS”) with a duration of 14 years validity, the group’s proportionate share is US$ 172 million and the acquisition of a WiMax License by PMCL.

Intangible assets pledged as security for bank borrowings amount to US$ 1.3 billion and primarily relate to securities for borrowings of PMCL and OTT.

Impairment tests for goodwillGoodwill is allocated to the individual CGU which reflects the

minimum level at which the units are monitored for management control purposes.

The carrying amount as of December 31, 2009 was subject to an impairment test to compare the carrying amount with value in use and the recoverable amount. The goodwill of LinkDotNet Telecom was impaired during the year prior to performing this test. After having considered this previous impairment, no further evidence of impairment arose. Value in use was determined by discounting the expected cash flows, resulting from business plans approved by the respective Board of Directors, using the post-tax weighted average cost of capital (WACC) as the discount rate.

The following table provides an analysis of goodwill by segment

2009

Algeria Pakistan Egypt Tunisia Bangladesh

Central and

South Africa

North Korea Total

GSM 529 277 168 36 11 104 - 1,125 Telecom Services - 1 2 - - - - 3 Internet & Fixed Line - - 8 - - - - 8

529 278 178 36 11 104 - 1,136

2008

Algeria Pakistan Egypt Tunisia Bangladesh

Central and

South Africa

North Korea Total

GSM 527 277 167 36 11 64 - 1,082 Telecom Services - 1 1 - - - - 2 Internet & Fixed Line - - 22 - - - - 22

527 278 190 36 11 64 - 1,106

20- Other financial assets

2009 2008 Non-current Current Total Non-current Current Total

Financial receivables 676 21 697 416 170 586Derivative financial instruments 109 42 151 160 25 185Deposits 41 14 55 43 82 125Financial assets held for trading - 32 32 - - -Financial assets available for sale 19 5 24 20 - 20

845 114 959 639 277 916

Financial Receivables

As of December 31, 2008 and 2009 financial receivables mainly relate to loans provided to Globalive Management Corp (“GWMC”), a subsidiary of Globalive (see Note 16 “Share of loss of associates and gain on disposal of associates”). During 2008 the Company entered into two loan agreements with Globalive Management Corp (“GWMC”, a subsidiary of Globalive) to borrow an amount of up to CAD 508 million. Both loans are non-revolving term loans bearing interest of Libor plus 18%. In 2009 the loan agreements were amended to increase the facility to CAD 608 million. As of December 31, 2008 the amount outstanding under such loan agreements, including accrued interest, amounted to CAD 483 million (equivalent to US$ 401 million). During 2009 a

further amount of CAD 137 million was advanced under the original loan agreements. Globalive was awarded CAD 442 million of spectrum licenses in March 2009 and the loans are secured on a subordinated basis by an assignment of these licenses and are guaranteed on a non recourse basis. Globalive launched its wireless network to the Canadian market in December 2009 and is therefore in the start-up phase of operations and has incurred losses to date. The Group’s share of these losses is in excess of the carrying value of the investment. The loans provided to Globalive are long term loans and have been considered to be a long-term interest forming part of the net investment in Globalive. As of December 31, 2009 the amount

Interest rate derivatives

The notional principal amounts of the outstanding interest rate swaps that qualify for hedge accounting amounts to US$ 1.5 billion, relating to the A1 and A2 term loan supplements of the Company. Under the derivative contract the Company pays fixed interest rate and receives 6 month Libor. Gains and losses are recognized in the cash flow hedge reserve in equity. As of December 31, 2009 the fair value of the derivative liability was US$ 96 million. The gain recognized in the cash flow hedge reserve, net of deferred tax during the year ended December 31, 2009, amounts to US$ 25 million.

Additionally, during 2009 the Company entered into a switchable interest rate swap for a notional amount of US$ 500 million to cover a portion of the syndication loan. Under the derivative contract the Company receives a 25 basis point reduction in the floating interest rate and at the end of the first year (September 23, 2010) the bank has the right to either switch to a fixed rate swap (whereby the Company will pay fixed rate interest and receive floating) or switch to a floating rate with a cap (whereby the Company will pay floating rates up to a cap strike of 4.15%). As of December 31, 2009 the fair value of the derivative liability was US$ 3 million. The changes in the fair value of the derivative are recognized in financial income and expense in the income statement was US$ 1 million.

Foreign exchange derivatives

Foreign exchange derivatives primarily relate to the economic hedge of PMCL. The cross currency swap relates to certain borrowings of PMCL, which are swapped from US$ to PKR and from Euro to PKR, whilst the associated interest is swapped from LIBOR to KIBOR and from Euribor to KIBOR. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement. As of December 31, 2009 the fair value of this derivative asset was US$ 125 million

Telecel Globe entered into a currency forward to hedge exposures to movements in Namibian Dollars in relation to the purchase price to be paid for the investment in PowerCom Namibia. The final installment of the purchase price was due to be paid in January 2010. As of December 31, 2009 the fair value of this derivative asset was US$ 9 million. The changes in the fair value of the

derivative are recognized in foreign exchange loss / gain in the income statement.

Other derivative instruments

Other derivative instruments mainly include the warrants to purchase shares of My Screen Mobile Inc and Lingo Media Corporation amounting to US$ 2 million and US$ 0.4 million, respectively as of December 31, 2009. The details of these warrants are provided below in the section “Financial assets available for sale”.

In February 2009 the Company issued equity indexed notes with a nominal amount of US$ 230 million which mature in 2013. The notes have a redemption price on maturity which is indexed to the Company’s GDR price. This feature of the debt is considered as an embedded derivative which is valued at fair value through profit and loss. As of December 31, 2009 the fair value of this embedded derivative asset was US$ 14 million.

CDC Fennec Ltd, a lender to Moga has the option to convert all amounts payable under the loan agreement into shares of the Company until the debt is extinguished. As of December 31, 2009 the amount due, recorded as liabilities to banks, amounted to US$ 29 million. As of December 31, 2009 and 2008 the fair value of this option was zero.

Deposits

Deposits primarily relate to letters of guarantee and other restricted cash held as security for the performance of Group obligations. The decrease in deposits in 2009 mainly relates to the liquidation of deposits in Algeria for the payments of the dividend and the tax appeal.

Deposits with amounts of US$ 29.5 million are pledged or blocked as security against related bank borrowings or others commitments.

The following table shows the ageing analysis of financial receivables and long term deposits as of December 31, 2009 and 2008:

53

2009 2008

Deposits Financial receivables Deposits Financial

receivables Not past due 55 697 125 511Past due 0-30 days - - - -Past due 31-120 days - - - 75

55 697 125 586

Financial assets available for sale

Company name % ownership December 31, 2009 December 31, 2008

Smart Village (ECDMIV) 10% 8 8 My Screen Mobile Inc 9% 2 4 Lingo Media Corporation 23% 3 3 Top Level Domain Co. 5% 1 1 Other investments 10 4

24 20My Screen Mobile Inc

In May 2008, the Company concluded a “Restricted Stock Purchase Agreement” with My Screen Mobile Inc, an entity specializing in the delivery of advertising to mobile phones, to acquire 12.5 million shares which represents approximately 9% of the total share capital and existing voting rights. Additionally, the Company purchased share warrants to acquire up to 20 million shares at an exercise price of US$ 2 per share. The warrants can be exercised from the date of the agreement until May 23, 2012. The total purchase price of the shares and warrants was US$ 10 million. Upon exercise of the warrants, the Company would hold approximately 20% of the existing and potential voting rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009 the fair value of the investment amounted to US$ 2 million and the fair value of the warrant amounted to US$ 2 million.

Lingo Media Corporation

In August 2008, the Company entered into a subscription agreement to acquire 2,857,143 common shares of Lingo Media Corporation, a media entity focusing on online advertising. The investment represents approximately 23% of the total share capital and existing voting rights. The Company also purchased share warrants to acquire up to 2,142,857 shares of this entity. The warrants can be exercised from the date of the agreement for a period of two years, at an increasing price from US$4 up to US$8. The total purchase price of the shares and warrants was US$ 5 million. Assuming exercise of the warrants, the Company would have an interest of approximately 34% in this entity. Based on an assessment of the contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009, the fair value of the investment amounted to US$ 3 million and the fair value of the warrants, which is recorded in derivative financial assets, amounted to US$ 0.4 million.

Financial assets held for trading

Financial assets held for trading relate to government treasury bills and investment bonds purchased by PMCL.

21- Deferred taxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes due to the same tax authority. The following table provides a reconciliation of deferred tax assets and liabilities of the Group to the amounts included in the face of the balance sheet.

2009 2008Deferred tax liabilities, gross

430

423

Deferred tax assets offset

(214)

(166)

Deferred tax liabilities 216 257

Deferred tax assets, gross

333

254

Deferred tax liabilities offset

(214)

(166)

Deferred tax assets 119 88 of which recognized directly in equity

5

(22)

The movement of deferred tax assets and liabilities during the year, without taking into consideration any offsetting is provided in the tables below:

Deferred tax assets Tax losses

Accrued expense

Depreciation and

amortization

Impairment of assets Provisions Fair

value Other Total

As of December 31, 2008 152 36 22 8 7 22 7 254Charged / (credited) to the income statement 74 5 (6) 2 - 1 3 79

Charged directly to equity - - - - - (5) - (5)Change in scope 18 - - - - - - 18Exchange differences (4) (1) - (1) - - (7) (13)As of December 31, 2009 240 40 16 9 7 18 3 333

The movement in the deferred income tax account is as follows:

2009 2008As of January 1, 169 250Exchange differences (12) (42)Change in scope (19) 7Income statement charge

(46) (24)Tax charged directly to equity 5 (22)

As of December 31, 97 169

Deferred tax liabilities Depreciation and amortization Unremitted earnings Other Total

As of December 31, 2008 335 80 8 423Charged / (credited) to the income statement 17 (17) 33 33

Exchange differences (26) (4) 5 (25)Change in scope (1) - - (1)As of December 31, 2009 325 59 46 430

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carry forwards of the Group’s subsidiaries in Pakistan with no expiry date.

No deferred tax assets were recognized on income tax loss carryforwards for some foreign subsidiaries, mainly Orascom Telecom Bangladesh Limited (“OTB”) and CAT, as it is currently not probable that taxable profit will be available in the near future against which such tax loss carryforwards might be utilized.

Generally the Group does not recognize deferred tax assets for

temporary differences related to accruals for provisions, due to uncertainties in connection with the tax treatment of such expenses, as they might be challenged by local tax authorities.

No liability has been recognized in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

The following table provides a breakdown by estimated recoverability of recognized deferred tax assets and liabilities:

Deferred tax liabilities Deferred tax assets2009 2008 2009 2008

within 1 year 14 50 6 1within 1 - 5 years 243 339 327 252after 5 years 173 34 - 1

430 423 333 254

22- Trade receivable

2009 2008Receivables due from customers 177 165

Receivables due from telephone operators 98 91

Accrued revenue (unbilled) 79 76Receivables due from authorized dealers 12 17

Other trade receivables 50 46Allowance for doubtful receivables (84) (67)Total 332 328

54

as payment of the dividend ; and • during the year ended December 31, 2009 the Company

also purchased the equivalent of 7,240,310 local shares from the market to be held as treasury shares and sold the equivalent of 4,450,380 local shares to the market.

As a result of the above transactions there were no treasury shares as of December 31, 2009.

Liabilities to banks

Appendix A includes a detailed analysis of liabilities to banks as of December 31, 2009.

In addition to the normal scheduled repayments of borrowing facilities, in accordance with the relevant agreements, various Group companies (mainly OTH, PMCL, ECMS and Bangladesh) entered into new borrowings during the year in order to finance license payments, ongoing operations and capital expenditure programs.

Pakistan Mobile Communication Limited

PMCL entered into a syndicate loan agreement with Pakistani banks for a facility amounting to PKR 5.1 billion equivalent to US$ 61 million dealing with standard chartered bank Pakistan as the agent, repayments of principal amount starts from November 9, 2010 and the financing period will last for 4 years.

In addition, during the 2009, OTH and some of its subsidiaries obtained new short term facilities. As in OTH obtained a nominal of US$ 140 million.

Bonds

Appendix B includes a detailed analysis of Bonds as of December 31, 2009. Changes in bond liabilities during 2009 primarily relate to the repurchase by PMCL of a portion of its Senior Notes and the issuance of an equity indexed bond Orascom Telecom Oscar Luxembourg (the “Oscar Bond”).

Pakistan Mobile Communication Limited

In May 2009 PMCL completed a tender offer to repurchase a portion of its 8 5/8% Senior Notes amounting US $ 250 million due 2013. PMCL repurchased the notes at a repurchase price of US$730 per US$1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million for cash consideration of US$ 101 million.

Orascom Telecom Oscar

In February 2009 the Oscar Bond was issued with a nominal amount of US$ 230 million maturing in 2013, through a fully subscribed private placement. The notes carry a coupon of US$ Libor plus a margin of 500bps and rank pari-passu to the existing US$2.5bn senior secured credit facility with accession to the security pool under the Security Share Agreement. The notes have a redemption price at maturity indexed to Orascom Telecom’s GDR which may potentially allow the Group to further reduce financing

Share based compensation plan

As of December 31, 2008 the Company had 3,661,785 shares which were held for the purposes of the share based compensation plan. During the year ended December 31, 2009 the Group acquired 1,235,735 of its own shares for the purposes of the share based compensation. Share grants exercised during 2009 resulted in 950,220 shares. As a result of the above transactions, as of December 31, 2009 the Company had 3,947,300 shares held as treasury shares for the purposes of the share based compensation plan. The fair market value of such shares was US$ 91 million.

26- Borrowings

within one year 1-2 years 2-3 years 3-4 years 4-5 years after 5

years Total

As of December 31, 2009As of December 31, 2008

Liabilities to banks 838 830 972 1,655 160 20 4,475432 468 746 945 1,620 210 4,421

Bonds 76 13 197 230 739 - 1,25535 51 14 63 253 737 1,153

Derivative instruments 64 32 4 (1) - - 9942 36 23 11 1 - 113

Finance lease liability 4 3 3 2 2 10 248 8 7 6 4 - 33

Other borrowings 16 - 3 - - - 1913 - - - 2 - 15

Total as of December 31, 2009 998 878 1,179 1,886 901 30 5,872Total as of December 31, 2008 530 563 790 1,025 1,880 947 5,735

The following table shows the movement in the allowance for doubtful receivables

2009 2008At January 1 67 87Exchange differences (1) (6)Additions (allowances recognized as an expense)

39 19

Change in scope (5) -Use (11) (13)Reversal (5) (2)Reclassifications - (18)At December 31, 84 67

The following table shows the ageing analysis of trade receivables as of December 31, 2009 and 2008, net of the relevant provision for doubtful receivables:

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any collateral as security.

The increase in receivables due from tax authority is mainly related to down payments against the tax claim received by OTA covering the years 2004-2007.

2009 2008 Not past due 123 154Past due 0-30 days 86 71Past due 31-120 days 81 64Past due 121 - 150 days 4 9Past due more than 150 days 38 30

Trade receivables 332 328

23- Other current assets

2009 2008Prepaid expenses 82 76Advances to suppliers 12 16Receivables due from tax authority 185 15Deferred cost - 14Other receivables 141 172Allowance for doubtful current assets (49) (46)

Total 371 247

The following table shows the movement in the allowance for other current assets:

2009 2008At January 1 46 27Exchange differences - (1)Additions (allowances recognized as an expense) 5 2Reclassifications (2) 18At December 31, 49 46

24- Cash and cash equivalents

2009 2008Bank accounts 413 580Deposits 344 70Cash on hand 3 2Total 760 652

Cash and cash equivalents as of December 31, 2009 were unusually high mainly due to undistributed dividends at Orascom telecom Algeria “OTA” and Mobinil amounted to US$ 243 million .Deposits includes an amount of DZD 10,201M equivalent to US$ 140 million representing the remaining agreed amount not to be repatriated until the Algerian tax authority “DGE” issue a clearance certificate in relation to the tax position of OTA (see note 35).

25- Share Capital

Authorized and issued share capital and legal reserves

As of December 31, 2008 the issued and fully paid share capital amounted to L.E. 899 million (equivalent US$ 261 million) comprising 899,402,874 shares of a nominal value of L.E. 1 per share. The Company is listed on the Egyptian Stock Exchange and also has GDRs (where one GDR is equivalent to 5 local shares) listed on the London Stock Exchange.

On October 22, 2009, the Extraordinary General Meeting approved a share capital reduction through the cancellation of 10,302,769 treasury shares (856,624 local shares and 1,889,229 GDRs) amounting to US$ 76 million. The legal reserve connected with the cancelled shares including currency translation differences was reclassified from other reserves to retained earnings.

Accordingly, as a result of the above transactions, as of December 31, 2009 the issued and paid up share capital amounted to LE 889 million (equivalent to US$ 258 million) comprising 889,100,105 shares of a nominal value of LE 1 per share.

Dividends

The shareholder’s meeting of the Company held on June 7, 2009 approved a dividend distribution of LE 1 per share in the form of cash and/or shares. Based on the announced distribution ratio of 36:1; on August 27, 2009 the Company distributed 243,376 shares to local shareholders and 1,985,097 shares to the GDR holders (equivalent to 9,925,487 local shares).

Consequently, the Company distributed in cash an amount of LE 180 million for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of US$ 60 million for a total number of 66,337,438 GDRs (equivalent to 331,687,192 local shares) (around US$ 0.9022/GDR).

The dividend distribution in 2008 amounted to LE 1 per share (LE 5 per GDR) and was paid in cash on June 5, 2008.

Treasury shares

As of December 31, 2008 the Company had 17,681,700 shares which were held as treasury shares, during 2009 the following movements took place:

• as previously explained, the Company cancelled 10,302,769 treasury shares on October 22, 2009 (comprising 856,624 local shares and 1,889,229 GDRs) and distributed the equivalent of 10,168,861 local shares from treasury stock

55

During 2009 the Company entered into a sale and leaseback agreement in relation to the headquarter premises at Nile City Towers in Cairo. The Company sold the building with a net book value of US$ 10 million for an amount of US$ 25 million. The Company will lease back the premises under a finance lease for a period of 8 years and has the option to repurchase the building at the end of the lease for an amount of US$ 13 million. The gain of US$ 15 million is recorded in deferred income and will be released over the life of the finance lease.

Other Borrowings

Other borrowings mainly include promissory notes and loans from non-controlling shareholders in subsidiaries.

* On July 16, 2009 Middle East and North Africa Submarine Cable Systems – MENA Cable (fully owned subsidiary) signed an agreement with Gulf Bridge International –GBI to sell fiber pair and Indefeasible Right of Use (IRU) in an amount of US$ 97 million.

Under this agreement GBI should pay a milestone payments against a commitment from MENA Cable to fulfill certain conditions. As of the date of the financials the amounts received from GBI amounted to US$ 29 million recorded as a deferred income.

costs of the notes.

Derivatives

Details of the derivative liabilities are provided in Note 20 “Other financial assets”.

Finance lease liabilities

2009 2008Gross finance lease liabilities – minimum lease payments

Within one year 5 12Between 1-5 years 15 31After 5 years 22 -

42 43

Future finance charges on finance leases (18) (10)

Present value of finance lease liabilities 24 33

The present value of finance lease liabilities is as follows:Within one year 4 8Between 1-5 years 10 25After 5 years 10 -

24 33

Currency Information of Borrowings US$ Euro Egyptian

PoundPakistan Rupee

Bangladeshi Taka

Algerian Dinar

Tunisian Dinar Others Total

As of December 31, 2009Total borrowings by currency of issue 4,232 361 483 575 102 27 37 55 5,872

Notional amount of currency derivatives (178) (276) - 454 - - - - -

Borrowings after derivative effect 4,054 85 483 1,029 102 27 37 55 5,872of which (after derivative effect):floating rate borrowings 1,663 83 402 1,029 102 27 36 - 3,342fixed rate borrowings 2,391 2 81 - - - 1 55 2,530As of December 31, 2008

Total borrowings by currency of issue 4,022 421 539 576 61 52 55 9 5,735

Notional amount of currency derivatives (315) (305) - 620 - - - - -Borrowings after derivative effect 3,707 116 539 1,196 61 52 55 9 5,735of which (after derivative effect):floating rate borrowings 1,110 108 458 1,195 61 52 53 - 3,037fixed rate borrowings 2,597 8 81 1 - - 2 9 2,698

Financial liabilities include secured liabilities of US$ 4,091 million as of December 31, 2009 and US$ 3,897 million as of December 31, 2008. In general, the financial liabilities are secured on property

and equipment of the relevant subsidiary, pledged shares and receivables.

27- Other liabilities

28- Trade payables

2009 2008Current Non-current Total Current Non-current Total

Telecommunication license payable 283 80 363 202 193 395Taxes (Other than income taxes) 228 - 228 190 - 190*Prepaid Traffic and deferred income 237 - 237 187 - 187Due to local authorities 130 - 130 62 - 62Personnel payables 77 - 77 53 - 53Other 136 41 177 162 27 189Total 1,091 121 1,212 856 220 1,076

2009 2008

Capex payables 470 654Trade payables due to suppliers 269 260Trade payables to telephone operators 97 74

Other trade payables 207 198Total 1,043 1,186

Trade payables are all due within one year.

29- Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Company and held as treasury shares or for the purposes of the share based compensation.

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. During 2008 and 2009 the dilutive potential ordinary shares relate to the share based compensation plan.

30- Business combinationsDuring 2009 the Group acquired 100% of share capital of Power-COM (Cell One) in Namibia, a GSM telecommunications operator in Namibia through its subsidiary Telecel Globe, for a cash consideration of US$ 60 million. The acquired business contributed revenues of US$ 14 million and net loss of US$ 19 million to the Group in the period since acquisition.The purchase price for this acquisition was US$ 60 million of which US$ 30 million was paid during 2009 and the remaining portion will be paid in 2010. The purchase price allocation was finalized on December 2009.

2009 2008

Profit attributable to equity holders of the Company (in million of US$) 318 431

Weighted average number of shares (in millions of shares) 878 937

Earnings per share – basic (in US$) 0.36 0.46

2009 2008

Profit attributable to equity holders of the Company (in millions of US$) 318 431

Weighted average number of shares in issue (in millions of shares) 878 937Adjustments for: - Shares granted (in millions of shares) 4 2Weighted average number of shares for diluted earnings per share (in Million of shares)

882 939

Earnings per share – diluted (in US$) 0.36 0.46

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2009 2008

Within one year 39 27Between 1-5 years 151 117After 5 years 15 41

205 185

33- Share based compensation

The following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of December 31, 2009:

The ESOP was introduced in 2003 and the Company since then uses treasury shares bought from the market to cover the plan. The Board of Directors of the Company has appointed a Committee that can grant GDR options or GDRs to employees of the Company and its subsidiaries through Orascom Telecom ESOP Limited., Malta, a wholly owned subsidiary. Such GDRs of the Company are listed on the London Stock Exchange and denominated in US$. Awards under the ESOP are generally reserved for employees at a senior management level and above that have spent at least one full year of services in the Company and that have a satisfactory performance according to their appraisal reports. The Company has made annual grants on July 1 each year since 2003; from 2007 onwards additional GDRs were granted on January 1 to existing employees. The GDRs granted vest in three installments over the

vesting periods that vary from 12 to 42 months. Starting from 2005 GDRs are granted for free and must be exercised within two years after the end of the vesting period. Exercise of an award is subject to employment in the Group at the exercise date. The Group has no legal obligation to repurchase or settle the awards in cash.

GDRs were valued using the Black-Scholes option-pricing model. The assumptions for calculations of the fair value per GDR at the grant date include the GDR price at each grant date, nil exercise price, a GDR price volatility between 29.0% and 72.6%, a dividend yield of between 1% and 3.5% and an annual risk free rate between 1.7% and 6.4%.

Grant date Tranche GDRs

granted (thousands)

Vesting period

(months)

Contractual term

(months)

GDR price at grant date in

US$

GDR market price at grant date in US $

Fair value of GDRs at

grant date in US$

July 1, 2004 3 4 42 66 9.20 9.29 4.79July 1, 2005 2 20 30 54 - 50.70 49.20July 1, 2005 3 2 42 66 - 50.70 48.71July 1, 2006 3 31 42 66 - 40.80 39.20January 1, 2007 2 7 24 48 - 66.00 62.98January 1, 2007 3 35 36 60 - 66.00 62.36July 1, 2007 1 9 18 42 - 64.90 63.61July 1, 2007 2 44 30 54 - 64.90 62.98July 1, 2007 3 36 42 66 - 64.90 62.36January 1, 2008 2 21 24 48 - 83.00 79.07January 1, 2008 3 22 36 60 - 83.00 78.19July 1, 2008 1 8 18 42 - 62.90 60.81July 1, 2008 2 18 30 54 - 62.90 59.84July 1, 2008 3 14 42 66 - 62.90 58.90January 1, 2009 1 314 12 36 - 27.29 26.39January 1, 2009 2 50 24 48 - 27.29 25.44January 1, 2009 3 50 36 60 - 27.29 24.53July 1, 2009 1 4 18 42 - 28.40 26.25July 1, 2009 2 15 30 54 - 28.40 25.18July 1, 2009 3 23 42 66 - 28.40 24.41

The following table provides details of this acquisition

Cell One Cash and cash equivalents -Property and equipment 31Intangible assets 15Deferred tax assets 17Inventories 1Trade receivables 3Other current assets 1Non-current borrowings (32)Other non-current liabilities (6)Trade payables (15) Net identifiable assets acquired 15Goodwill 45Purchase price 60Cash and cash equivalents in subsidiary acquired -

Cash outflow on acquisition 60

In the third quarter of 2009 the purchase price allocation was finalized for the acquisition of U-com Burundi SA and Telecel Afrique SA which were purchased in July 2008. The comparative amounts for 2008 were restated compared to those reported in the 2008 annual consolidated financial statements as follows:

Egyptian Company for Mobile Services S.A.E. (“ECMS”)

ECMS is a mobile telecommunication operator in Egypt and provides a range of prepaid and postpaid voice and data telecommunication services under the brand name of Mobinil. The Company has an investment of 34.67% in ECMS and the France Telecom Group also has an investment of 36.34%. The remaining shareholding is publicly traded on the Cairo and Alexandria Stock Exchange. Legal proceedings are currently in progress relating to a disagreement regarding the Shareholders Agreement entered into by the Company and France Telecom, Further details are included in Note 32 “Commitments”.

Orascom Telecom Tunisia S.A. (“OTT”)

OTT operates a GSM network in Tunisia and provides a range of pre-paid and postpaid voice and data telecommunication services under the brand name “Tunisiana”. The Company has a 50% shareholding in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT. The remaining 50% interest is held by National Mobile Telecommunications Company KSC which is owned by Qatar Telecom.

Consortium Algerian Telecommunication S.P.A. “CAT)

CAT was formerly a landline operator in Algeria which ceased operations during the period. The current intention of the management of CAT is to liquidate this company. Therefore the Group has fully written down all assets relating to this business.

The following amounts represent the assets, liabilities, revenues and profit for the year of the joint ventures. They are included in the balance sheet and income statement of the Group’s consolidated financial statements according to its shareholding in each joint venture.

December 31, 2008 (as

reported)PPA

adjustmentDecember 31, 2008

(adjusted)

Property and equipment 5,057 (4) 5,053

Intangible assets 2,371 12 2,383Deferred tax liabilities 249 8 257

31- Interest in joint ventures

The Group has the following interest in its joint ventures:

Joint venture Shareholding Country of domiciliation

Egyptian Company for Mobile Services S.A.E. 34.67% Egypt

Orascom Telecom Tunisia S.A. 50.00% TunisiaConsortium Algerian Telecommunication S.P.A. 50.00% Algeria

2009 2008

Revenues 2,651 2,554Profit for the year 501 247Current assets 563 476Non-current assets 2,980 2,867Current liabilities 1,641 1,324Non-current liabilities 991 1,337

32- Commitments

The commitments as of December 31, 2009 and 2008 are provided in the table below:

Commitments for the purchase of intangible assets mainly relate to commitments of Egyptian Company for Mobile and Service amounting to US$ 108.4 million primarily relating to costs connected with the 3G license..

Commitments for purchase of property and equipment mainly relate to commitments of Mena cable amounting to US$ 84 million relating to the purchase of marine cables and related equipment and US$ 60 million for Egyptian Company for Mobile and Service relating to the purchase of equipment.

The following table provides the future aggregate minimum lease payments under non-cancellable operating leases:

As of December 31, 2009

As of December 31, 2008

Intangible assets 136 138Property and equipment 205 338Others - 109Total 341 585

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The following table provides a breakdown of the movements of outstanding GDR options and GDRs granted and their weighted average exercise price:

The main related party transactions are summarized as follows:

The weighted average GDR price during 2009 amounted to US$ 25.14 (2008; US$ 48.65).

The table below sets forth the awards outstanding as of December

Telecel Globe Limited established a share option programme that entitles two key management personnel to purchase shares in the Company. In accordance with this programme, the employees are being granted an option to purchase all of the “Option Shares” in consideration of the payment of USD1. The Option shares represent the number of shares, at a nominal value of USD1 each, in the capital of the Company which shall be equivalent to 3% of the capital of the Company calculated immediately upon its capitalization by an amount of USD50,000,000. Based on these terms, the value of both options amounts to USD1,500,000 for each employee respectively. The fair value of the two options at grant date is, therefore, equivalent to USD3,000,000, to be settled in shares.During 2009, both employees have exercised their respective share options. In order to satisfy these options, Telecel Globe Limited would buy 3,000,000 shares at a nominal value of USD1 each, currently held by Orascom Telecom Holding and deliver them to these employees in accordance with the share option plan. Accordingly, the percentage of ownership of the Company in Telecel Globe Limited was diluted by 6% .

34- Related party transactions

Transactions with subsidiaries, associates, with the Parent Company and its subsidiaries and other related parties are not considered atypical or unusual, as they fall within the Group’s normal course of business and are conducted under market conditions that would be performed by independent third parties.

The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2009 and 2008:

31, 2009 and their expiry dates:

Transactions with Weather Investments Group

The Group is directly controlled by Weather Investments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Company and interconnection traffic between the Group and the subsidiaries of Weather Investments, and particularly Wind Telecomunicazioni SpA.

In addition to the information presented above, in January 2009 the Company sold its investment in M-Link to TLC SERVIZI S.p.A now (Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A for a cash consideration of US$ 78

million. Following the acquisition the name was changed to WIS sarl. Transactions with M-Link since the sale are disclosed in the line “WIS Sarl”.

Transactions with Joint Ventures of the Group

Transactions with joint ventures of the Group mainly refer to transactions with OTT and ECMS relating to interconnection traffic and the sale of handsets.

Transactions with Associates of the Group

OTH provided financing to GWMC, an associate of the Group,

2009 2008

Average exercise price

in US$ per GDR option

granted

GDR options (thousands)

GDRs granted for free

(thousands)

Average exercise price

in US$ per GDR option

granted


GDRs granted for free

(thousands)

At January 1 9.20 4 504 9.20 80 478Granted 467 - - 140Forfeited (90) - - (6)Exercised 9.20 (158) 9.20 (76) (108)Expired - - - At December 31 - 4 723 9.20 4 504thereof exercisable - 4 198 4 20

December 31, 2009 December 31, 2008

Range of exercise price in US$

Weighted average

exercise price in US$

Number of GDRs

(thousands)

Weighted average

remaining life in months

Weighted average

exercise price in US$

Number of GDRs

(thousands)

Weighted average


9.20 9.20 4 - 9.20 4 12Nil Nil 723 29 Nil 504 36

Expiry date - December 31 Exercise price in US$ per GDR

GDRs (thousands)2009 2008

2010 0 - 9.20 24 1792011 - 18 1802012 - 453 1002013 - 130 252014 - 79 -2015 - 23 -Total 727 484

Sale of services and goods

Purchase of services and goods Interest income

2009 2008 2009 2008 2009 2008Weather Investments Group Weather Investments 12 12 - - - -Wind Telecomunicazioni SpA 3 36 1 6 - -WIS sarl 78 - 65 - - - Joint ventures ECMS 8 3 - - - -OTT 4 17 - 37 - -Associate GWMC - - - - 32 9Other related parties Orascom Construction Industries - - 2 3 - -

Summit Technology (Orascom Technology Solution) - - 7 5 - -

Orascom Trading - - 12 10 - -Contrack facilities management - - 1 - - -Orascom Training & Technology - - - 3 - -Total 105 68 88 64 32 9

Receivables Payables 2009 2008 2009 2008Weather Investments Group Weather Investments 5 14 - 1Wind Telecomunicazioni SpA 1 6 4 4WIS sarl 26 - 16 - Rain Srl 1 - 2 - Joint ventures ECMS 1 5 - 1OTT - 2 - 5Associate GWMC 643 401 - -Other related parties Orascom Construction Industries - - - 1Summit Technology (Orascom Technology Solution) 1 1 1 1Orascom Trading - - 1 2Total 678 429 24 15

58

to the courts in order to protect our interest. On November 01, 2008 a law suit against the NTRA was filed in the Administrative Court at the State Counsel asking that the NTRA’s decision be stayed or nullified. On September 3, 2009 and based on the interconnect agreement, ECMS filed an arbitration proceeding against Telecom Egypt according to the rules of The Cairo Regional Center for International Commercial Arbitration in order to settle the existing dispute between the two parties. On October 9, 2009 Telecom Egypt sent an initial response and a counterparty claim related to the arbitration notification filed against it.

On January 5, 2010 a letter from NTRA was received with the purpose of making new changes in the interconnect prices between the different operators to be applied retroactively from September 1, 2009. The letter was based on the September 03, 2008 decision. On January 14, 2010 ECMS sent a letter to NTRA refusing this decision. ECMS considers that it has a strong legal position and continues to record interconnect revenue and costs based on the existing agreement with Telecom Egypt and other mobile operators.

If ECMS applied the NTRA decisions it would have reported less interconnect revenue the group proportionate share amounts to EGP 49 equivalent to US$ 9M, less interconnect cost the group proportionate share amounts to EGP 17M equivalent to US$3 M, for the financial year ended December 31, 2008 and less interconnect revenue the group proportionate share amounts to EGP 168M equivalent to US$ 30.5 M and less interconnect cost the group proportionate share amounts to EGP 40M equivalents to US$ 7.3M for the financial year ended December 31, 2009.

Intouch tax claims

Mobizone Algeria received a tax claim amounting to DZD 204 million in addition to penalties and default interest amounting to DZD 51 million (equivalent to US$ 3.5 million). On January, 2009 Mobizone Algeria paid 20% of the total tax claim in order to appeal . The tax disclosure in Mobizone Algeria’s audited financials for the period ended Dec. 31, 2009 mentioned that the company was granted a tax exemption amounting DZD205 Million and the remaining amount of DZD 51 million was recorded as a provision.

Letters of credit and guarantees

The Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following:

- Letters of guarantee provided by ECMS to National Telecom Regulatory Authority. The Company’s share in such letters of guarantee is equal to L.E 54.1 million equivalents to US$ 9.8 million.

- Letters of guarantee provided by Ring Egypt to suppliers’ .The Company’s share in letters of guarantee is L.E 65.45 million equivalents to US$ 11.8 million.

- Letter of Guarantee amounting to US$ 1 million in favor of NTRA to guarantee MENA Cable execution of its entire obligation related to constructing, operating and renting sea cables networks and its infrastructure for international communications.

- Letter of guarantee in a favor of Lebanon Ministry of Telecommunication (ROL) to guarantee OTH in the payment of any amount due by the selected Participant to ROL amount with US$ 30 million.

- Guarantee provided by Orascom Telecom Bangladesh in favor of Ministry of Post & Telecommunication, the Chief Controller of Exports and Imports and Power development board existed of BDT 99 million equivalents to L.E 7.83million equivalent US$ 1.42 million.

36- Subsequent events

Share transactions

The Extra-ordinary General Assembly of the Company on December 27, 2009, delegated the Board of Directors members to proceed with all necessary legal procedures to increase the authorized capital from LE. 2.5 billion to LE. 7.5 billion and authorized a rights issue to further strengthen the balance sheet and ensure the Company’s liquidity. On January 13, 2010 in accordance with the Egyptian Financial Supervisory Authority’s (“EFSA”) requirements, OTH published a Public Subscription Notice in connection with the rights issue and in March 2010 the Company issued 4,356,590,515 new shares at the nominal price of LE. 1 per share, to raise a total of LE. 4,356,590,515 or approximately US$800 million (without issuing fees).

Financing

Egyptian mobile telephone operator Egyptian Company for Mobile Services (ECMS) issued 1.5 billion Egyptian pounds ($273.3 million) in 5-year bonds with Fixed annual yield hits 12.25 % payable once every six months starting mid-January. ECMS will use the proceeds of the Bonds to finance the expansion of its network. The bonds are divided into two tranches: the first tranche is valued at L.E 1.4 billion and allocated for private offering and institutions while the second tranche of L.E 100 Million is allocated for public offering.

On February 17, 2010 Orascom Telecom Holding S.A.E. received a non interest bearing loan of US$ 225 million from its shareholder, Weather Capital Special Purpose 1 S.A This loan was converted into GDRs by way of participation in the rights issue described above.

On March 8, 2010 the Company and Orascom Telecom Bangladesh has signed an agreement with Standard Chartered Bank, London –as intercreditor agent- to issue amortizing senior secured bond with an amount 7.5 billion BDT equivalent to USD 108 million due in 2014.

Other events

On January 21 2010,Orascom Telecom Holding announce that it has obtained Majority Senior Secured Lenders consent on the proposed permanent waiver related to the existence of a material tax claim under its US$2.5 billion credit agreement. The waiver obtained is specific to the Algerian tax claim against Orascom Telecom Algeria in respect of years 2004 to 2007.

On February 4, 2010, Orascom Telecom Holding (OTH) has been awarded an extension to the management contract of Alfa with the Republic of Lebanon, for a period of 6 months ending on July, 31, 2010. Under this contract, OTH receives a monthly sum of US$ 2.5 million in addition to 8.5% of total revenues. Out of these amounts, OTH is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The Republic of Lebanon is fully responsible for the CAPEX during the contract period.

37- Cash flow statements

Starting from the third quarter ended September 30, 2009 the company has reclassified the advances and loans made to associates and third parties from the “financing activities” to the “investing activities” caption. The reclassification was adopted in order to adhere to IAS7 par. 16 (e). Hence, the previous classification for the periods, March 2009 and June 2009 shall be reclassified accordingly.

in connection with the funding of the acquisition of the spectrum licenses. For further details see Note 20 “Other financial assets”.

Transactions with other related parties

The Group is indirectly controlled by the Sawiris family. Transactions with entities under the control of the Sawiris family mainly refer to transactions with Orascom Construction Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology.

Transactions with Orascom Technology Solutions mainly refer to maintenance activities of electronic hardware and software carried out for the Group. Orascom Construction Industries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technology mainly include management training programs.

A balance of US$ 6 million is outstanding from one member of the board of directors and this amount will be settled against his ESOP plan entitlements on exercise and vested.

Key management compensation

Key management includes executive and non executive directors of the Board of Directors of the Company, the Company’s chief financial officer, other managing directors considered key personnel and the chief executive officers of significant subsidiaries and joint ventures.

The compensation paid or payable to key management for employee services is shown below:

2009 2008 Salaries and other short-term employee benefits 11 11

Equity settled share based payments 9 2

35- Contingent assets and liabilities

The Group is subject to various legal proceedings and claims which arise in the ordinary course of business due to the nature of the operations of the Group and the nature of the markets where the Group operates.

The Group recognizes a provision for losses and liabilities when the existence is certain or probable. As of December 31, 2009 the Company is a party in a number of legal cases which resulted from carrying out its activities. Based on the legal advice obtained, the Company’s management believe that the outcome of these lawsuits, individually or in aggregate, would not be material to the Group’s results.

PMCL tax claims

PMCL is involved in proceedings regarding tax claims up to the year 2007 whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. PMCL has a tax claims up to the year 2007 that the tax authorities either framed or assessed. However, the company has field appeals to the appellate authorities against the re-assessment orders. The disputed demand against the assessments framed/aggregates to Rs 1,921 million equivalent to US$ 22.8 million .The company has made a provision a provision for such assessments with an amount of Rs 163 million equivalent to US$ 1.82 million.

OTA tax claims

OTA has received a final tax assessment relating to 2004 tax year amounted to DZD 3,948 million equivalent to US$ 54.3 million. OTA filed an appeal after the payment of 20% of final tax assessment. In January 2010 OTA received a refusal of its appeal and OTA has 4 months from date of receipt to make a further appeal. A provision with an amount of DZD 709 million equivalent to US$ 9.8 million was accounted for.

In November 2009, OTA received a final tax assessment for 2005 to 2007, amounting to 43,910 M DZD equivalent to US$ 603.7 million. Approximately 85% of the assessed amount is due to a rejection of OTA’s accounts by the DGE (Tax Department for Large Scale Companies). OTA has appealed the assessment after the payment of 20% of the assessed amount.

OTA accrued a provision of 2,957 M DZD equivalent to Euro 28.3 million, equivalent to US $ 41 million, relying on an external expert report. The external expert’s report considers that the DGE’s rejection of the accounts

On March 7, 2010 OTA received a notice of the rejection of its administrative appeal filed on December 2009. In order to file a second appeal, OTA is required to pay a further 20% of the remaining outstanding balance of the taxes and penalties assessed by the DGE, this amounts to approximately $110 million and willbe paid by OTA from its own resources.

Fastlink Jordanian tax dispute:

The Jordanian Tax Authority claims JD 49.2 million (approximately US$ 69.39 million)for income tax allegedly due from Pioneer Investment Ltd. (a wholly owned subsidiary of the Company) in connection with the sale of Fastlink (Jordan Mobile Telecommunication Services) to MTC in 2002 . Pioneer has claimed that the tax assessment is without foundation.

Orascom Telecom Iraq Disposal Warranties

Orascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile Services-subsidiary) the company provided warranty to the purchaser of the investment. This warranty, which in respect of tax covenant claims, of which no more than USD 60 million equivalent 41.8 million Euro shall be payable in relation to tax covenant claim.

Dispute with France Telecom (and subsidiaries) regarding Mobinil:

France Telecom (and subsidiaries) has been in a dispute with the Company regarding the shareholders agreement for Mobinil and this dispute was subject to ICC arbitration. An award was issued by the ICC on March 10, 2009 (the “Award”) and it is the Company’s position, relying on legal advice, that the deadline for concluding the sale ordered by the Award has time-expired as a matter of Egyptian law in light of the failure of France Telecom’s (or subsidiaries thereof) to conclude the sale during the 30 day period stipulated in the Award. OTH Management cannot currently estimate any financial impact that this dispute might have on the financial statements of the Company

Telecom Egypt Interconnection Prices

Telecom Egypt filed a complaint with the dispute resolution committee of the National Telecommunication Regulatory Authority (NTRA), with the purpose of changing its interconnect prices with the mobile operators, with which it has existing contracts. ECMS filed a complaint requesting that the existing effective contract between ECMS and Telecom Egypt be honored. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnect prices between the fixed and mobile networks to be effective from that date.ECMS informed the NTRA that it objects to the decision as it has no legal or contractual basis and that we intend to bring the matter

59

Current Non-current Total Currency Nominal Line of credit Maturity Securities

Millions of USD Millions of contract currency

Orascom Telecom Holding S.A.E.

NATIONAL SOCIETE GENERALE BANK 9 - 9 USD 9 10 19-8-2010 Unsecured

Credit Agricole Indo Suez Ban 11 - 11 USD 11 22 30-6-2010 Unsecured

National Bank Of Abu Dhabi 10 - 10 USD 10 10 21-2-2010 Unsecured


Fortis Banque 3 - 3 EURO 2 20 14-6-2010 Unsecured

HSBC 15 - 15 USD 15 15 7/1/10 Unsecured

NSGB-Car Loan - 2 2 EGP 11 15 2-2-2013 Unsecured

NSGB-Car Loan - 1 1 EGP 5 6 8-3-2014 Unsecured

A1 Term Loan Supplemnt 104 863 967 USD 987 987 17-4-2013 Secured

A2 Term Loan Supplemnt 54 448 502 USD 513 513 17-4-2013 Secured

Revolving Credit Supplemnt 1 1,000 1,001 USD 1,000 1,000 17-4-2013 Secured

Audi Bank 38 - 38 USD 38 50 3/28/10 Unsecured

Citi bank 10 - 10 USD 10 10 Within one Year Unsecured

Egyptian Gulf Bank 5 - 5 USD 5 5 31-5-2010 Unsecured

Pireaus 5 - 5 USD 5 5 Within one Year Unsecured

315 2,314 2,629

Pakistan Mobile Communications Limited

Citibank N.A - Islamabad - Pakistan 4 4 8 PKR 633 1,740 02/07/2011 Secured

Royal Bank of Scotland (Formerly ABN AMRO Bank)- Islamabad- Pakistan - 42 42 PKR 3,548 3,548 18/12/2012 Secured

Habib Bank Limited - Islamabad - Pakistan (2007) - 36 36 PKR 3,000 3,000 18/12/2013 Secured

Royal Bank of Scotland, London - Citibank London - ECGD - ECA 7 10 17 USD 17 48 28/02/2012 Secured

Royal Bank of Scotland, London - Citibank London - COFACE Loan - ECA 30 26 56 EUR 39 125 30/12/2011 Secured

Royal Bank of Scotland, London -AB Svensk ExportKredit - Sweeden - Hermes - ECA 11 5 16 EUR 12 46 29/03/2011 Secured

Royal Bank of Scotland, London -The OPEC Fund for international Development - ECA 4 3 7 EUR 5 10 15/12/2011 Secured

Royal Bank of Scotland, London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - ECGD - ECA Round II

12 37 49 USD 51 70 28/02/2014 Secured

Royal Bank of Scotland London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Coface - ECA Round II

21 48 69 EUR 51 85 31/12/2013 Secured

Royal Bank of Scotland, London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Hermes - ECA Round II

25 45 70 EUR 50 110 3/16/12 Secured

DEG - Germany 8 21 29 EUR 20 20 15/08/2013 Secured

FMO - Netherlands 8 21 29 EUR 20 20 15/08/2013 Secured

MCB Bank Limited (PKR 22.060 Billion) - Islamabad - Pakistan 18 261 279 PKR 22,060 22,060 04/01/2014 Secured

SCB Bank Limited STFA (PKR 5.1 Billion) - Islamabad Pakistan 11 50 61 PKR 5,100 5,100 09/05/2013 Secured

Dubai Islamic Bank (Pakistan) Ltd Ijara Facility PKR 700 Million - 8 8 PKR 700 700 09/05/2012 Secured

PAK Kuwait Investment Company Limited - Karachi - Pakistan 4 - 4 PKR 300 300 08/07/2010 Secured

HSBC Bank Middle East Limited- Islamabad - Pakistan 1 - 1 PKR 101 600 Within one year Secured

164 617 781



Egyptian Company for Mobile Services

Misr/CIB/NBE (Syndicated loans) 31 72 103 EGP 558 878 30/04/2013 Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans) 4 97 101 EGP 541 1,121 14/08/2014 Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans) 13 186 199 EGP 1,073 1,073 26/02/2015 Unsecured

BNP 5 - 5 EGP 42 59 30/04/2010 Unsecured

BB 4 - 4 EGP 24 27 under renewal Unsecured

H.S.B.C 2 - 2 EGP - 41 9/01/10 Unsecured

CAE 14 - 14 EGP 83 88 31/03/2010 Unsecured

NSGB 12 - 12 EGP 73 74 30/04/2010 Unsecured

Scotia 6 - 6 EGP 34 44 9/12/10 Unsecured

CIB 3 - 3 EGP 15 24 16/09/2010 Unsecured

AUB 3 - 3 EGP 17 17 12 months revolving Unsecured

97 355 452

Orascom Telecom Bangladesh Limited

Hermes Facility 16 60 76 USD 79 79 7/1/14 Secured

USD Commercial Faciilty 32 86 118 USD 122 122 8/1/13 Secured

DFI Facility 3 25 28 USD 30 30 6/15/14 Secured

BDT A Facility 9 13 22 BDT 1,575 1,575 6/30/12 Secured

BDT B Facility 3 10 13 BDT 918 918 6/30/14 Secured

Standard Chartered Bank, London 5 15 20 USD 25 50 9/30/16 Secured

Commercial Bank of Ceylon 1 - 1 BDT 100 100 3/20/10 Unsecured

Citibank, N.A. 9 - 9 BDT 620 620 2/1/10 Unsecured

Standard Chartered Bank 4 - 4 BDT 290 290 1/9/10 Unsecured



BRAC Bank Ltd. 6 - 6 BDT 400 570 3/28/10 Unsecured

Eastern Bank Ltd. 4 - 4 BDT 280 292 6/25/10 Unsecured



The City Bank 4 - 4 BDT 240 240 5/3/10 Unsecured


National BankLtd 1 - 1 BDT 102 200 10/30/10 Unsecured

Standard Chartered Bank (Working Capital Syndication) 5 - 5 BDT 360 360 3/17/10 Unsecured

National Bank Ltd (Working Capital Syndication) 1 - 1 BDT 100 100 3/17/10 Unsecured

Pubali Bank Limted (Working Capital Syndication) 5 - 5 BDT 350 350 3/17/10 Unsecured

Standard Bank Limited (Working Capital Syndication) 1 - 1 BDT 100 100 3/17/10 Unsecured

Uttara Bank Ltd. (Working Capital Syndication) 2 - 2 BDT 150 150 3/17/10 Unsecured

Dutch Bangla Bank Limited 4 - 4 BDT 250 250 3/23/10 Unsecured


131 209 340

60



Orascom Telecom Algeria S.P.A.

Hermes loan 2006 21 39 60 USD 62 86 15/11/12 Secured

Coface Loan 2006 26 - 26 DZD 1,904 9,724 15/11/10 Secured

47 39 86

Orascom Telecom Tunisie S.A.

International refinancing 24 23 47 Euro 100 100 March-2011 Secured

Local refinancing 18 18 36 TND 105 105 March-2011 Secured

42 41 83

Moga Holding Limited

CDC Mezzanine shareholder loan 29 - 29 EUR 18 18 15/8/2010 Secured

29 - 29

Med Cable Limited

Export Credit Calyon 3 3 6 EUR 6 12 13/9/11 Guaranteed

3 3 6

Intouch for Telecommunication Services

NBAD 2 1 3 L.E 35 35 1/4/11 Secured

Barclays 2 - 2 L.E 35 35 1/10/10 Secured

4 1 5

Telecel Globe Limited Banque de development des etats de l›afrique Central 2007 1 4 5 XAF 2,305 2,500 30/06/2014 Guaranteed

Commercial Bank Centrafrique 2008 1 - 1 XAF 398 750 30/06/2011 Secured

Ecobank Centrafrique - Local Loans 1 5 6 XAF 2,929 3,000 8/10/14 Secured

IBB - Bank Overdrafts 2 - 2 USD 2 2 12 months revolving Unsecured

Nedbank Limited and Investec Bank Limited - 42 42 NAD 311 311 12 months revolving Secured

5 51 56

Trans World Associates (Private) Limited

Other - various banks 1 7 8 PKR 643 1,608 November 27, 2013 Secured

1 7 8

Total - liabilities to banks 838 3,637 4,475

Current Non-current Total Nominal Maturity Securities

Millions of USD Currency Millions


Royal Bank of Scotland and Deutsche Bank Securities Inc. (Euro Bond) 1 111 112 USD 112 13/11/2013 Unsecured

Pak Oman Investment Company Limited - Karachi - Pakistan (Trustee - Public Listed TFC) 7 32 39 PKR 3,257 31/05/2013 Secured

Allied Bank Limited - Islamabad - Pakistan (2007) 41 - 41 PKR 3,325 01/10/2010 Unsecured

Allied Bank Limited - Karachi - Pakistan (2007) 1 46 47 PKR 3,905 28/10/2013 Unsecured

Orascom Telecom Finance SCA

Senior Notes OTFSCA 24 739 763 USD 750 8/2/14 Unsecured


Indexed linked notes 2 251 253 USD 230 18/2/13 Secured

Total Bonds 76 1,179 1,255

61

Selected subsidiaries, joint ventures and associates Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom HoldingNorth Africa Algeria Orascom Telecom Algeria S.P.A. 96.81% Algeria Orascom Telecom Service Algeria 96.81% Algeria Data Base Management services Algeria 100.00% Algeria Ring Algeria LLC 98.01% Algeria Caring Algeria 97.03% Algeria MobiZone Algeria 100.00% Algeria Algeria Win Call 100.00% Algeria Consortium Algerian Telecommunication S.P.A. 49.83% Morocco Kenza Telecom Morocco 100.00% Tunisia Ring Tunisia 78.21% Tunisia Ring Distribution Tunisia 77.43% Tunisia Ring Retail Tunisia 76.65% Tunisia R&D Tunisia 96.53% Tunisia Orascom Telecom Tunisie S.A. 50.00%Asia Bangladesh Orascom Telecom Bangladesh Limited 100.00% Bangladesh Ring Bangladesh 98.98% Bangladesh MobiZone Bangladesh 100.00% North Korea CHEO Technology JV (DPKR) 75.00% Pakistan Pakistan Mobile Communications Limited 100.00% Pakistan Business & Communications 100.00% Pakistan Link Direct International Limited 100.00% Pakistan Mobitalk Limited 100.00% Pakistan MobiZone Pakistan (Pvt.) Limited 100.00% Pakistan PMDL Limited 16.70% Pakistan Trans World Associates (Private) Limited 51.00% Pakistan Ring Pakistan 94.59% Pakistan Ring Pakistan Service 94.59% Pakistan WOL Telecom Limited 100.00% Pakistan Call Pack Pakistan 100.00%Middle East Dubai Global Entity for Telecom Trade 100.00% Dubai Global Entity for Telecom Trade -FZE 100.00% Dubai Ring Dubai 96.53% Dubai LinkDotNet Dubai 100.00% Dubai MobiZone Dubai 100.00% Egypt Middle East and North Africa Submarine Cable System –Mena Cable 100.00% Egypt Cortex Egypt 94.00% Egypt Ring for Distributions 99.00% Egypt Advanced Electronic Industries 96.53% Egypt Caring Egypt 97.02% Egypt Connect 50.49% Egypt MMMS 98.80% Egypt Intouch for Telecommunication Services 100.00% Egypt Link Egypt 99.96% Egypt Into Net 55.78% Egypt LINKdotNET 100.00% Egypt Arab Finance Securities 100.00% Egypt Link Development 99.80% Egypt Link Online Egypt 100.00% Egypt Arpu for Telecommunication Services 100.00% Egypt Global Telecom 95.80% Egypt Egypt Call 99.98% Egypt Mobinil Services Egypt 35.86% Egypt Mobinil for Telecommunication S.A.E. 28.75% Egypt Egyptian Company for Mobile Services S.A.E. 34.67% Iraq Ring Iraq 96.53% Palestine Pal Call Palestine 99.90% Qatar LDN Qatar 49.00%

Selected subsidiaries, joint ventures and associates Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding

Saudi Arabia Link Dot Net Saudi Arabia 100.00% Saudi Arabia Mobi Zone Saudi Arabia 100.00%Central Africa Burundi U-Com Burundi S.A. 100.00% Central Africa Telecel Centrafrique S.A. 100.00% Sudan Sudan Call 70.00%

Namibia Power-com Cell one 100.00%North America Canada Globalive Investment Holdings 47.60% Canada Globalive Canada Holdings 65.40% Canada Globalive Wireless Management 65.40% Canada Gloablive Wireless LP (GELP) 65.40% Canada Globalive Telecom Holdings 65.40% Canada Orascom Telecom Holding (Canada) Limited 100.00%Europe France Orascom Telecom Services Europe 100.00% France Orascom Telecom Wireless Europe 100.00% Italy MobiZone Italy 99.00% Luxembourg M Link Sarl 100.00% Luxembourg Orascom Luxembourg Sarl 100.00% Luxembourg Orascom Luxembourg Finance SCA 100.00% Luxembourg Orascom Telecom Sarl 100.00% Luxembourg Orascom Telecom Finance SCA 100.00% Luxembourg M Link Teleport 100.00% Malta Sawyer Limited 100.00% Malta Orascom Telecom Eurasia Limited 100.00% Malta Oratel International Inc plc 100.00% Malta Moga Holding Limited 100.00% Malta International Wireless Communications Pakistan Limited 100.00% Malta TMGL 100.00% Malta Telecel International Limited 100.00% Malta Orascom Tunisia Holding 100.00% Malta Carthage Consortium Limited 100.00% Malta Orascom Iraq Holding 100.00% Malta Orascom Telecom Iraq Corporation 100.00% Malta Orascom Telecom Ventures Limited 100.00% Malta Telecel Globe Limited *94% Malta Orascom Telecom Holding (Malta) Canada Limited 100.00% Malta M Link Limited 100.00% Malta Minimax Ventures 100.00% Malta Financial Powers Plan Limited 100.00% Malta Orascom Telecom ESOP Limited 100.00% Malta Orascom for International Investment Holding 99.90% Malta Data Base Management services Limited 100.00% Malta Orascom Telecom CS 100.00% Malta Mcube 51.00% Netherland Orascom Telecom Netherland 100.00% Switzerland Telecel International S.A. Switzerland 100.00% United Kingdom Med Cable Limited 100.00% United Kingdom Orascom Telecom WiMax 100.00% United Kingdom International Telecommunication Consortium Limited 50.00%

*see note (33)

62

Auditor’s reportTo the shareholders of Orascom Telecom Holding S.A.E

We have audited the accompanying consolidated financial statements of Orascom Telecom Holding S.A.E. which comprise the consolidated balance sheet as at 31 December 2009, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and statement of consolidated cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements

These consolidated financial statements are the responsibility of Company’s management. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Egyptian Accounting Standards and in the light of the prevailing Egyptian laws, management responsibility includes, designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; management responsibility also includes selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and we conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Orascom Telecom Holding S.A.E as of 31 December 2009, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the Egyptian Accounting Standards and the Egyptian laws and regulations relating to the preparation of these consolidated financial statements.

Emphasis of a matter

Without qualifying our opinion, we draw attention to note (35) “Contingent Assets and Liabilities” for the following:

1- Some subsidiaries received tax assessment from the tax authorities in the territories in which they operate. Management believes that these assessments are excessive, and intends to challenge the assessments through the proper legal channels. Currently, the management of these subsidiaries cannot make reliable estimate of tax exposures.

2- Egyptian Company for Mobile Services (ECMS) “Jointly controlled entity” filed a lawsuit against the National Telecommunication Regulatory Authority (NTRA) to cancel NTRA’s decision relating to the amendments of the interconnect prices between the fixed and mobile networks. The Company and its external legal counselor believe that the possibility of winning the lawsuit is probable as NTRA’s decision does not have legal or contractual ground, therefore the Company continued to recognize interconnect revenue and cost from and to Telecom Egypt based on the existing agreement.

Cairo, 15 March, 2010 KPMG Hazem Hassan

Consolidated financialStatements and Auditor’s report

(in EAS/EGP)

• Consolidated Balance Sheet• Consolidated Income Statement• Consolidated Statement of Comprehensive Income • Consolidated Statement of Changes in Equity• Consolidated Statement of Cash flows• Notes to the Consolidated Financial Statements• Appendix A - Liabilities to Banks• Appendix B - Bonds• Appendix C - Scope of Consolidation

63

Consolidated Income Statement

As at December (in million of EGP) Note 2009 2008

Assets Property and equipment 18 27,526 27,908Intangible assets 19 12,262 12,996Other non-current financial assets 20 4,657 3,541Deferred tax assets 21 654 486Total non-current assets 45,099 44,931

Inventories 304 584Trade receivables 22 1,828 1,813Other current financial assets 20 629 1,535Current income tax receivables 17 553 416Other current assets 23 2,084 1,377Cash and cash equivalents 24 4,184 3,608Assets held for sale 6 606 445Total current assets 10,188 9,778Total assets 55,287 54,709

Equity and liabilities

Share capital 889 899 reserves (968) (1,405)retained earnings 6,885 6,298Equity attributable to equity holders of the Company 6,806 5,792Minority interest 763 633Total equity 25 7,569 6,425

Liabilities Non-current borrowings 26 26,747 28,794Other non-current liabilities 27 662 1,217Provisions 35 21Non-current income tax liabilities 17 - 237Deferred tax liabilities 21 1,191 1,424Total non-current liabilities 28,635 31,693

Current borrowings 26 5,483 2,930Trade payables 28 5,745 6,567Other current liabilities 27 6,006 4,737Current income tax liabilities 17 1,032 1,887Provisions 517 334Liabilities held for sale 6 300 136Total current liabilities 19,083 16,591Total liabilities 47,718 48,284Total equity and liabilities 55,287 54,709


Group CFO Chief Executive Officer Chairman & Managing Director Aldo Mareuse Khaled Bichara Naguib Onsi Sawiris Auditor’s report ‘attached’

Consolidated Balance Sheet

For the year ended 31 December (in million of EGP) Note 2009 2008

revenues 7 28,262 29,153 Other income 173 226 Purchases and services 8 (13,196) (13,747)Other expenses 9 (1,203) (955)Personnel costs 10 (1,780) (1,554)Net unusual inventory loss 13 (73) -Depreciation and amortization 11 (5,477) (4,981)Impairment charges 12 (214) (216)Net unusual capital loss (84) -Disposal of non-current assets 13 232 363

Operating income 6,640 8,289

financial income 533 291 financial expense (2,852) (2,562)Net foreign exchange gain /(loss) 151 (1,101)Net financing costs 15 (2,168) (3,372)

Share of (loss) of associates 16 (263) (16)Gain on disposal of associates 16 - 149

Profit before income tax 4,209 5,050

Income tax expense 17 (2,013) (2,208)

Profit for the year 2,196 2,842

Attributable to: - Equity holders of the Company 1,845 2,464 - Minority interest 351 378

Basic and diluted earnings per share in EGP 29 2.10 2.63


64

Consolidated Statement of Changes in Equity

For the year ended 31 December 2009 2008(in million of EGP) Profit for the year 2,196 2,842Other comprehensive income: Changes in fair value of available-for-sale financial assets (9) (19)Cash flow hedges, net of tax 138 (484)Currency translation differences (366) (1,161)Share of profit recognized directly in equity of associates - 27Other comprehensive income for the year, net of tax (237) (1,637)Total comprehensive income for the year 1,959 1,205

Attributable to: - Equity holders of the Company 1,596 848- Minority interest 363 357


Attributable to Equity holders of the Company

(in million of EGP)Share capital

Treasury shares

Other reserves


Minority Interest

Total equity

As of January 1, 2009 899 (865) (540) 6,298 5,792 633 6,425Comprehensive income Profit for the year - - - 1,845 1,845 351 2196Other comprehensive income - - (249) - (249) 12 (237)

Total comprehensive income - - (249) 1,845

1,596 363

1,959 Transactions with owners Change in minority interest - - - - - (34) (34)Dividends - 310 56 (878) (512) (199) (711)Employees Dividends - - - (62) (62) - (62)Share based compensation - 28 (12) - 16 - 16Cancellation of shares (10) 422 (94) (318) - - -Purchase of treasury shares - (186) - - (186) - (186)Sale of treasury shares - 125 37 - 162 - 162Total transactions with owners (10) 699 (13) (1,258) (582) (233) (815)As of December 31, 2009 889 (166) (802) 6,885 6,806 763 7,569

Attributable to Equity holders of the Company

(in million of EGP)Share capital

Treasury shares

Other reserves


Minority interest

Total equity

As of January 1, 2008 1,090 (4,965) 1,104 20,071 17,300 522 17,822Comprehensive incomeProfit for the year - - 2,464 2,464 378 2,842Other comprehensive income - - (1,616) - (1,616) (21) (1,637)Total recognized income - - (1,616) 2,464 848 357 1,205Transactions with ownersDividends - - - (909) (909) (331) (1,240)Employees dividends - - - (88) (88) - (88)Share based compensation - - 71 - 71 - 71Cancellation of shares (191) 15,526 (95) (15,240) - - -Purchase of treasury shares - (12,058) - - (12,058) - (12,058)Sale of treasury shares - 632 (4) - 628 - 628Capital increase in subsidiaries - - - - - 85 85Total transactions with owners (191) 4,100 (28) (16,237) (12,356) (246) (12,602)As of December 31, 2008 899 (865) (540) 6,298 5,792 633 6,425

Consolidated Statement of Comprehensive Income

65

1- GeneralA- Legal status

Orascom Telecom Holding S.A.E “the Company” is an Egyptian Joint Stock Company subject to the provisions of the Capital Market Law No. 95 of 1992 and its executive regulations. The Company is a majority owned subsidiary of Weather Investments S.P.A registered in Italy. The Company’s registered office is located in Nile City Towers, ramlet Beaulac, Cairo, Egypt.

B- Purpose of the companyThe Company’s purpose is to participate in companies issuing securities or to increase its share capital of these companies. The Company may have interest or participate in, by any mean, in companies and other enterprises that have activities similar to those of the Company or those that may assist the Company to achieve its objective in Egypt or abroad. It may also merge into those companies and enterprises purchase them or affiliate them, pursuant to the provisions of the law and its executive regulations.The company and its subsidiaries from the biggest companies in providing the mobile services in Middle East companies, Africa and South Asia, it covers a geographic area containing for 510 million citizens.

C- Financial statement authorizationThe financial statements were approved by the board of directors on March 15, 2010.

2- Basis of preparation

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

2-2 Basis of measurementThe financial statements are prepared on the historical cost convention, except for the following assets and liabilities which are measured as fair value

• Derivative financial instruments.• financial instruments at fair value through

profit and loss.• Available-for-sale financial assets.

2-3 Functional and presentation currencyThese financial statements are presented in Egyptian pounds (EGP), which is the Company’s functional currency. All financial information presented in Egyptian pounds has been rounded to the nearest million.

2-4 Use of estimates and judgmentsThe preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes:

• Measurement of the recoverable amount of intangible assets and goodwill.

• Valuation of financial instruments• recognition of deferred tax assets.• Provisions and contingencies.

3 - Significant accounting policies appliedThe main accounting principles and policies adopted in preparing these Consolidated financial Statements are set our below. These policies have been consistently applied to all periods in those consolidated financial statements, and have been applied consistently by the group entities.The functional currency of each subsidiary is the local currency where that entity operates. In order to present financial information to international investors, the information presented in this document has been presented in million of Egyptian Pounds (“EGP.”), except earnings per share information and unless otherwise stated.

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

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

subsidiaries that are controlled by the parent company and which the management intends to continue to control. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

- Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognized in assets, such as inventory and fixed assets, are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. EAS 24 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.

- Minority interests shall be presented in the consolidated balance sheet within equity, separately from the parent shareholder’s equity. Minority interests in the profit or loss of the group shall also be separately disclosed.

- A parent loses control when it loses the power to govern the financial and operating policies of an investee so as to obtain benefit from its activities.

3-1-2 Joint venture companiesJoint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the ventures).Proportion consolidation is a method of accounting

For the year ended December 31 Note 2009 2008(in million of EGP) Profit for the year 2,196 2,842 Adjustments for : Depreciation, amortization and impairment of non current assets 5,691 5,197 Net unusual inventory loss and capital loss items 157 - Income tax expense 2,013 2,208 Share based compensation 69 71 Net financial charges 2,319 2,271Unrealized foreign exchange difference (237) 786 Loss on disposal of non-current assets 10 8 (Gain) from sale of subsidiaries and financial assets (242) (371)Share of loss of associates 263 16 Gain on disposal of associates - (149)Change in provisions and allowances 407 192 Change in assets carried as working capital (1,131) (847) Change in other liabilities carried as working capital 1,157 521 Income tax paid (3,470) (2,632)Interest expense paid (2,635) (2,345)Net cash generated by operating activities 6,567 7,768

Cash outflow for investments in: - Property and equipment (6,104) (8,063)- Intangible assets (661) (802)- Consolidated subsidiaries (169) (564)- financial assets and associates (422) (112)Proceeds from disposals of: - Property and equipment 288 62 - Subsidiaries 1,206 386 - Associates - 5,234 -financial assets - 5,739 Dividends and interest received 180 188 Net investments in financial assets held for trading (227) -Advances and loans made to associate and other parties (37) (755) (2,419)Net cash (used in) investing activities (6,664) (351)

Proceeds from non-current borrowings 4,638 13,805 repayment of non-current borrowings (4,470) (10,801)Net proceeds (payments) from current financial liabilities 919 (310)Net change in cash collateral 464 (421)Dividend payments (509) ( 909)Net payments for treasury shares (23) (11,418)Change in minority interest (193) (357)Net cash generated by (used in) financing activities 826 (10,411)Net increase (decrease) in cash and cash equivalents 729 (2,994)Cash included in assets held for sale (70) (44)Effect of exchange rate changes on cash and cash equivalents (83) (247)Cash and cash equivalents at the beginning of the year 3,608 6,893 Cash and cash equivalents at the end of the year 4,184 3,608


Consolidated Statement of Cash Flows

66

whereby a venture’s share of each of the assets, liabilities, income and expenses of a jointly controlled entity is combined line by line with similar items in the venture’s financial statements or reported as separate line items in the venture’s financial statements.

3-1-3 Investments in associatesInvestments in associates are stated at equity method. Under the equity method the investment in associates is initially recognize at cost and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the associates after the date of acquisition. Distributions received from associates reduce the carrying amount of the investment.Losses of an associate in excess of the Company’s interest in that associate (which includes any long-term interests that, in substance, form part of the Company’s net investment in the associate) are not recognized, unless the Company has incurred legal or constructive obligations or made payments on behalf of the associate.Any excess of the cost of the acquisition over the Company’s share of the net faire value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.The license of the Group’s associated undertaking in the Canada, Globalive Wireless Management Corp, are indefinite lived assets. Although the spectrum licenses have an initial term of 10 years, based on available information, the management believes that they are subject to perfunctory renewal and the renewal cost will not be significant. Accordingly, they are not subject to amortization but are tested annually for impairment, or when indicators exist that the carrying value is not recoverable.

3-2 Translation of the foreign currencies transactions

Orascom Telecom Holding and some of its subsidiaries maintain their accounting books in Egyptian Pound. Transactions denominated in foreign currencies are recorded at the prevailing exchange rate at the date of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the prevailing exchange rates at that date. The foreign currencies exchange differences arising on the settlement of transactions and the translation at the balance sheet date are recognized in the income statement.

3-3 Translation of the foreign subsidiaries’ financials

As at the balance sheet date the assets and liabilities of these consolidated subsidiaries are translated to Egyptian Pound at the prevailing rate as at the period end, and the shareholders’ equity accounts are translated at historical rates, where as the income statement items are translated at the average exchange rate prevailing during the period of the consolidated financial statements. Currency translation differences are recorded in the shareholders’ equity section of the balance sheet as translation reserves adjustments.

3-4 Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financial and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Cash flow hedgesChanges in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in equity remains in place until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognized in equity is transferred to the carrying amount of the asset when it is recognized. In other cases the amount recognized in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss.fair value hedgesChanges in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in profit or loss. The hedged item also is stated at faire value in respect of the risk being hedged, with any gain or loss being recognized in profit or loss.

3-5 Property & equipment and depreciationProperty & equipment are stated at historical cost and presented in the balance sheet net of accumulated depreciation and impairment (Note 3-9-b). Depreciation is charged to the income statement over the estimated useful-life of each asset using the straight-line method. The following are the estimated useful lives, Estimate in respect of certain items of “Cell Sites” were revised in 2009 ( see note 18) for each class of assets, for depreciation calculation purposes:

Expenditure incurred to replace a component of an item of property and equipment that is accounted for separately, including major inspection and overhaul expenditure, is capitalized. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the property and equipment. All other expenditure is recognized in the income statement as an expense as incurred.

3-6 Property and equipment under construction Property and equipment under construction are recognized initially at cost. Cost includes all expenditures directly attributable to bringing the asset to a working condition for its intended use. Property and equipment under construction are transferred to property and equipment caption when they are completed and are ready for their intended use.

3-7 Intangible assetsA- Goodwill Goodwill (positive and negative) represents

amounts arising on acquisition of subsidiaries, associates and joint ventures. Goodwill (positive and negative) represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired at acquisition date. - Positive goodwill is stated at cost less

impairment losses.- While negative goodwill arose will be

recognized directly in the income statement.- Goodwill resulting from further acquisitions

after control is obtained is determined on the basis of the cost of the additional investment and the carrying amount of net assets at the date of acquisition, accordingly.

B- Other intangible assetsOther intangible assets that are acquired by the Group are stated at cost less accumulated amortization and impairment losses. Amortization is recognized in the income statement on a straight – line basis over the estimated useful lives of intangible assets. License fees are amortized over the period of the licenses, concessions and computers software are amortized from the date they are available for use. The estimated useful lives are as follows:

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

3-8 Investments at fair value a- Available-for-sale financial assets

Available-for-sale financial assets are valued at

fair value, with any resultant gain or loss being recognized in equity, except for impairment losses which is recognized in the income statement. When these investments are derecognized, the cumulative gain or loss previously recognized directly in equity is recognized in the income statement. The fair value of investments available for sale, identifies based on quoted price of the exchange market at the balance sheet date, investments that are not quoted, and whose fair value can not be measured reliably, are stated at cost less impairment loss.

b- Investments at fair value through profit and lossAn instrument is classified as at fair value through income statement if it is held for trading or is designated as such upon initial recognition. financial instruments are designated at fair value through income statement if the Company manages such investments and makes purchase and sale decisions based on their fair value.

3-9 Impairment a- Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.All impairment losses are recognized in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognized previously in equity is transferred profit or loss.An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. for financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in profit or loss. for available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity.

b- Non-financial assetsThe carrying amounts of the Group’s non-financial assets, other than biological assets, investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment.An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-

Assets Depreciation period

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

Assets Amortization period

- Licenses fees Over the remaining period of the licenses

- Concessions and Comput-ers software

3-15 years

67

generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in profit or loss.The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

3-10 Cash and cash equivalents

for the purpose of preparing the Statement of Cash flows, the Company considers all cash on hands and bank on demand deposits with banks and short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value with original maturities of three months or less are considered as cash and cash equivalents. The Statement of Cash flows is prepared according to the indirect method.

3-11 Trade and other receivables

Trade and other receivables are stated at their cost less impairment losses.

3-12 Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average method and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and other addition expenses.

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

3-14 TaxationIncome tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3-15 ProvisionsProvisions are recognized when the Company has a legal or constructive obligation as a result of a past event and it’s probable that a flow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Provisions are reviewed at the balance sheet date and amended (when necessary) to represent the best current estimate.

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

3-17 Interest-bearing borrowingsInterest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, Interest-bearing borrowings are stated at amortized cost with any difference between cost and redemption value being recognized in the income statement over the period of the borrowings on an effective interest basis.

3-18 Issued capitala- Repurchase of share capital

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

b- DividendsDividends are recognized as a liability in the year in which they are declared.

3-19 Legal reserveAs per the Company’s statutes 5% of net profit for the year is set aside to form a legal reserve, the transfer to such reserve ceases once it reaches 50% of the Company’s paid in share capital. The reserve can be utilized in covering losses or increasing the Company’s share capital.

3-20 Revenue recognition(i) Cellular operations revenue

GSM revenue is recognized when services rendered to the customers based on the actual usage airtime from the following activities:- Prepaid cards is recognized based on the

actual used calls minutes while the unused call minutes at the end of the period are deferred.

- Monthly and connection fees are recognized in the income statement on a straight-line basis over the period or the terms of the contract.

- Other GSM telecommunications services and facilities when provided.

(ii) Telecommunications services revenuerevenue from the provision of telecommunications services includes the following:- Goods sold Revenue is recognized when the significant

risks and rewards of ownership have been transferred to the buyer.

- Construction contracts Revenue is recognized in proportion to the

stage of completion of the contract. - Satellite services Revenue is recognized once the services

delivered to the client.- VAS revenue Value added services (VAS) revenue is

recognized once the services are delivered, or used by the customers.

- Space segment revenueSpace segment rental fees are recognized in the income statement on a straight-line basis over the terms of the lease.

(iii) Internet and fixed lines revenuerevenue is recognized once the service delivered to the client.

3-21 Expensesa- Borrowing costs

Borrowing costs are recognized as expenses in the income statement when incurred, with the exception of borrowing cost directly attributable to the construction and acquisition of new assets which is capitalized as part of the relevant assets cost and depreciated over assets’ estimated useful lives. This capitalization ceases once the assets become in operational condition and ready

for use.b- Employees’ pension

The Company contributes to the government social insurance system for the benefit of its personnel in accordance with the social insurance law. Under this law, the employees and the employers contribute into the system on a fixed percentage-of-salaries basis. The Company’s liability is confined to the amount of its contribution. Contributions are charged to income statement using the accrual basis of accounting.

3-22 Segment reportingA segment is a distinguishable component of the group that is engaged either in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subjected to risks and rewards that are different from those of other segments. The group’s primary format for segment reporting is based on business segment.

3-23 Discontinued operationsA discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.

4. Financial Risk Management

Financial Risk Factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and cash flow interest risk), credit risk and liquidity risk. In particular the Group is exposed to risks from movements in exchange rates, interest rates and market prices. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s performance through ongoing operational and finance activities. Depending on the risk assessment, the Group uses selected derivative hedging instruments. The management has overall responsibility for the establishment and oversight of the group’s risk management framework.

Market Risk

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising when its business transactions are in currencies other than its functional currency. The main currencies to which the Group is exposed are the US dollar, the Canadian Dollar and the Euro.

In general the Group’s subsidiaries are encouraged to obtain financing in their functional currency in order to have a natural hedge of the exchange rate of such financing. However, as some transactions are executed in foreign currencies, and in particular in US$, CAD and Euro, the Group may be subject to the risk of

68

exchange rate fluctuations which, in certain instances the Group manages through the use of hedging strategies. As of December 31, 2009 the Group’s borrowings included US$ borrowings amounting to EGP 23,313 million (equivalent to US$ 4,232 million) and Euro borrowings amounting to EGP 1,988 (equivalent to Euro 248 million). In certain instances the Group has entered into economic hedging agreements to manage the risk of fluctuations relating to these financing operations. In particular, Pakistan Mobile Communication Limited (PMCL) had borrowings for EGP 975 million (equivalent to US$ 177 million) and EGP 1,523 (equivalent to Euro 190 million) as of December 31, 2009. Such borrowings were fully hedged by PMCL using cross currency swaps pursuant to which interest payments and principal payments are paid in Pakistani rupee.

The Group subsidiaries generally execute their operating activities in their respective functional currencies. Some Group subsidiaries are, however, exposed to foreign currency risks in connection with scheduled payments in currencies that are not their functional currencies. In general this relates to foreign currency denominated supplier payables and receivables. The Group monitors the exposure to foreign currency risk arising from operating activities and, where relevant, enters into hedging transactions in order to manage the exposure.

As of December 31, 2009, if the functional currencies had weakened / strengthened by 3% against the US$, the Euro and CAD, with all other variables held constant, the translation of foreign currency receivables and payables would have resulted in a decrease/ increase in profit for the year (after tax) of EGP 363 million, mainly relating to US$ denominated borrowings.

Additionally, the Group has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure to such risk is not hedged.

Cash flow and fair value interest rate riskThe Group is exposed to market risks as a result of changes in interest rates particularly in relation to borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

The basic strategy of interest rate risk management is to balance the debt structure with an appropriate mix of fixed and floating interest rate borrowings based on the Group’s perception of future interest rate movements. In particular, the risk monitored relates to the impact of movements in floating rate indices on the Group’s finance costs.

When considered appropriate, the Group manages its cash flow interest rate risk by using floating-to fixed interest rate swaps. In particular, as of December 31, 2009 the Group had two interest rate derivative contracts. The first contract is a floating-to-fixed interest rate swap with a notional value of US$ 1.5 billion and the other contract is a switchable interest rate swap with a notional value of US$ 500 million. After considering such derivative transactions approximately 57% of the Group’s total borrowings had a floating rate of interest.

The Group considers the sensitivity of its finance costs to movements in interest rates. In particular an increase / decrease of 1.0% in interest rates as of December 31, 2009 would have resulted in an increase / decrease in finance costs of EGP 182 million and a decrease / increase in the cash flow hedge reserve of EGP 187 million.

Price riskThe Group has limited exposure to equity securities price risk on investments held by the Group.

Credit RiskThe Group considers that it is not exposed to major concentrations of credit risk in relation to trade receivables. However, credit risk can arise in the event of non-performance of a counterparty, particularly in relation to credit exposures for trade and other receivables, financial instruments and cash and cash equivalents.

The Group considers that the concentration of credit risk with respect to trade receivables is limited given that the Group’s customer base is largely pre-paid subscribers. Post paid subscribers generally represent a small portion of the subscriber base and therefore the credit exposure is limited. In addition, the Group tries to mitigate credit risk by adopting specific control procedures, including assessing the credit worthiness of the counterparty and limiting the exposure to any one counterparty.

Credit risk relating to cash and cash equivalents, derivative financial instruments and financial deposits arises from the risk that the counterparty becomes insolvent and accordingly is unable to return the deposited funds or execute the obligations under the derivative transactions as a result of the insolvency. To mitigate this risk, wherever possible the Group conducts transactions and deposits funds with financial institutions with a minimum of investment grade rating.

The Group is exposed to credit risk relating to financial receivables as follows:

• During 2008 the Company entered into two loans agreements to provide a total amount of EGP 2,695 million (equivalent to CAD 508 million) to Globalive Wireless Management Corp (“GWMC”), a subsidiary of the associate Globalive Investment Holdings Corp (“Globalive”). The amount of these loans was further increased to EGP 3,225 million (equivalent to CAD 608 million) during 2009. As of December 31, 2009 the amount outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to EGP 3,833 million). The loans were primarily provided to GWMC to fund the acquisition of spectrum licenses in Canada. The licenses were awarded to GWMC during March 2009 by Industry Canada and GWMC became fully operational in early 2010. During the start-up phase of operations Globalive has incurred losses and as a result the Group’s share of losses exceeds the carrying value of the investment. The Group considers the loan provided as part of the investment and has therefore deducted the excess losses from the receivable. After considering such losses an amount of EGP 3,542 million is recorded in financial receivables. (see Note 20 “Other financial assets” for further details).

• In November 2008 the Company sold its investment in Orasinvest Holding Inc. (“OrasInvest”). The total receivable from the sale amounted to EGP 985 million (equivalent to US$ 180 million), prior to price adjustments. Of this EGP 985 million, EGP 487 million (equivalent to US$ 90 million) was received in 2008 and a further EGP 413 million (equivalent to US$ 75 million) was received and settled in 2009. As of December 31, 2009 the amount outstanding was EGP 83 million (equivalent to US$ 15 million). The remaining receivable is expected to be settled during 2010.

In general the remaining other receivables and financial receivables included in financial assets generally relate to a variety of smaller



Less than 1 year


More than 5 years

LiabilitiesLiabilities to banks 24,652 27,595 5,625 21,850 120Bonds 6,914 9,224 875 8,349 -Other borrowings 119 128 108 20 -Telecommunication license payable 2,003 2,313 1,575 332 406Trade payables 5,745 5,745 5,745 - -

39,433 45,005 13,928 30,551 526



Less than 1 year


More than 5 years

LiabilitiesLiabilities to banks 24,467 30,526 4,060 25,257 1,209Bonds 6,377 9,003 630 4,058 4,315Other borrowings 250 300 105 195 -Telecommunication licence payable 2,190 2,640 1,127 1,021 492

Trade payables 6,567 6,567 6,567 - -39,851 49,036 12,489 30,531 6,016

amounts due from a wide range of counterparties, therefore, the Group does not consider that it has a significant concentration of credit risk.

Liquidity RiskThe Group monitors and mitigates liquidity risk arising from the uncertainty of cash inflows and outflows by maintaining sufficient liquidity of cash balances as well as undrawn credit lines and by diversifying its sources of finance. In general, liquidity risk is

monitored at entity level whereby each subsidiary is responsible for managing and monitoring its cash flows and rolling liquidity reserve forecast in order to ensure that it has sufficient committed facilities to meet its liquidity needs.

The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

* Expected cash flows are the gross contractual undiscounted cash flows including interest, changes and other fees.The table below analyses the group’s derivative financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

As of December 31, 2009 Expected cash flows (*) Less than 1 year Between 1 and 5 years More than 5 yearsCash outflow / (cash inflow)Interest rate derivatives 540 357 183 -foreign exchange derivatives (1,131) (178) (953) -Other Derivative instruments- Cash inflow (152) (50) (102) -

Total (743) 129 (872) -

As of December 31, 2008 Expected cash flows (*) Less than 1 year Between 1 and 5 years More than 5 yearsCash outflow / (cash inflow)Interest rate derivatives 641 236 405 - foreign exchange derivatives (5) 57 (59) (3)Other derivative instruments - cash outflow

31

31

-

-

Other derivative instruments - cash inflow

(31)

(31)

-

-

Total 636 293 346 (3)

* Derivative cash flows for interest rate derivatives and foreign exchange derivatives represent the net cash flow from the relevant swap transaction as such derivatives are net settled. Cash inflow and cash outflow for other derivative instruments are shown separately as such derivatives are gross settled.

69

Derivative cash outflows do not include the potential cash outflows should the share warrants of My Screen and Lingo be exercised. The exercise of such warrants is at the option of the Group. Details of such warrants are provided in note 19 “Other financial assets”. Additionally the put and call option for the purchase of the investment in Namibia has not been included in the contractual cash flows. Contractual cash flows are divided based on the relevant index as of the balance sheet date.

Capital risk managementThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders through share buyback transactions, issue new shares or sell assets to reduce debt.

Other risks

Political and economic risk in emerging countriesA significant amount of the Group’s operations are conducted in Algeria, Pakistan, Egypt and Tunisia. The operations of the Group depend on the market economies of the countries in which the subsidiaries operate. In particular, these markets are characterized by economies that are in various stages of development or are undergoing restructuring. Therefore the operating results of the Group are affected by the current and future economic and political developments in these countries. In particular, the results of operations could be unfavorably affected by changes in the political or governmental structures or weaknesses in the local economies in the countries where it operates. These changes could also have an unfavorable impact on financial condition, performance and business prospects.

regulatory risk in emerging countriesDue to the nature of the legal and tax jurisdictions in the emerging countries where the Group operates, it is possible that laws and regulations could be amended. This could include factors such as the current tendency to withhold tax on the dividends of these subsidiaries, receiving excessive tax assessments,the granting of relief to certain operations and practices relating to foreign currency exchange. These factors could have an unfavorable effect on the financial activities of the Group and on the ability to receive funds from the subsidiaries.revenue generated by the majority of the Group subsidiaries is expressed in local currency. The Group expects to receive most of this revenue from its subsidiaries and therefore it relies on their

ability to be able to transfer funds. The regulations in the various countries where the subsidiaries operate could reduce the ability to pay interest and dividends and to repay loans, credit instruments and securities expressed in foreign currency through the transfer of currency. In addition, in some countries it could be difficult to convert large amounts of foreign currency due to central bank regulations. The central banks may amend regulations in the future and therefore the ability of the company to receive funds from its subsidiaries may be restricted.

5- Segment reportingThe Company considers primary segment information by business activity. The method used to identify the business segments include the factors used by management to direct the Group and assign managerial responsibilities. The methodology adopted to identify the components of revenues and cost attributable to each business segment is based on the identification of each component of cost and revenues directly attributable to each segment. The operating activities of the Group are organized and managed separately based on the nature of the products and services provided. Each segment offers different products and services to different markets and is controlled by different legal entities.

The following primary business segments have been identified:• GSM covering the mobile telecommunications services

activities of the Group, including the sale of pre-paid telephone cards, post-paid and monthly subscriptions packages, telephone packages and roaming included in this segment are ;

• Telecom services relating to the sale of handsets, including ring tones and other cell phone products and activities relating to the rental of portals to allow satellite roaming calls and value added service activities; and

• Internet & fixed line covering the internet and fixed telecommunications services of the Group.

The Group also reports geographical segments based on the geographical location of the legal entity controlling the operation, which is the same as the location of the major customers.

The following geographical segments have been identified:• North Africa – comprising Algeria and Tunisia• Middle East – comprising Egypt• South Asia – comprising Pakistan and Bangladesh• Others – comprising, North Korea, Central Africa,

Namibia, Burundi, Malta, Belgium, the United Kingdom and other countries

**Unallocated represents revenues and costs relating to activities provided centrally from headquarters to subsidiaries across the group. These activities include staff functions with group wide responsibilities such as internal audit, financial advisory, legal services, communications and investor relations. Unallocated

assets and liabilities mainly include borrowings of the Company and deferred tax assets and liabilities.** Segment capital expenditure is the total cost incurred during the period to acquire property and equipment and intangible assets other than goodwill.

Primary segment information

(in million of LE) GSM Telecom services Internet & fixed line Unallocated Total

2009

2008

Gross revenues 26,513 1,448 549 - 28,510

26,738 3,822 521 - 31,081

Intersegment revenues (16) (178) (54) - (248)

(581) (1,248) (99) - (1,928)

Net revenues 26,497 1,270 495 - 28,262

26,157 2,574 422 - 29,153

Impairment Charges (136) - (78) - (214)

(41) - (175) - (216)

Depreciation and amortization (5,321) (39) (94) (23) (5,477)

(4,809) (63) (88) (21) (4,981)

Operating income 7,125 147 (223) (409) 6,640

8,127 (36) (393) 591 8,289

Profit before income tax 5,571 123 (256) (1,229) 4,209

6,153 (103) (435) (565) 5,050

Profit for the Year 3,882 33 (269) (1,450) 2,196

4,525 (348) (446) (889) 2,842

Total Segment assets 46,284 2,314 880 5,809 55,287

46,251 2,275 1,091 5,092 54,709

Total Capital expenditure 5,115 515 31 32 5,693

9,318 597 349 28 10,292

Total segment liabilities 24,473 2,231 598 20,416 47,718

26,317 985 590 20,392 48,284

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6- Assets and liabilities classified as held for sale

The following provides a breakdown of assets and liabilities held for sale as of December 31, 2009:

2009 2008Property, plant and equipment 261 61 Intangible assets 166 111Trade receivables 67 221Other current assets 42 8Cash and cash equivalents 70 44Assets held for sale 606 445

Current and non current borrowings 128 -Trade payables 81 119 Other current liabilities 83 11 Current income tax liabilities 1 6 Deferred tax liabilities 7 -Liabilities held for sale 300 136

Assets and liabilities held for sale include the following:

Link Egypt and Link Dot NetIn february 2009 the Company stated that they had received an indicative non-binding offer for the acquisition of 100% of the shares of LINKdotNET and Link Egypt. In accordance with EAS 32 the assets and liabilities held for sale in disposal groups have been separately shown in specific captions on the consolidated balance sheet. The income statement effects of these entities have not been shown as discontinued operations as they do not represent a separate major line of business.

Oracap Far East Ltd reclassified as held for use. Orascom Telecom Holding management decided to stop the process of sale of Oracap Far East Ltd. and reclassified as held for use.

Sale of M-link S.a.r.l (Luxemburg) (M-Link)The assets and liabilities of M-Link were presented as held for sale in 2008, following the decision of management of the Company to focus on GSM business and dispose of non-core assets. On January 13 th, 2009 the Company announced the sale of 100% of M-Link to TLC SErVIZI S.p.A (now renamed Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A., for a total consideration of approximately EGP 435 million in cash. (See Note 34 “Related party transactions”).

7- Revenues

2009 2008Revenues from services Telephony services 22,178 21,861Interconnection traffic 3,342 4,731International and national roaming 730 820Other services 666 411

Total revenues from services 26,916 27,823Total revenues from sale of goods 1,346 1,330Total 28,262 29,153

revenues from telephony services decreased in 2009 compared to 2008 mainly as a result of a decrease in calling rates as part of a marketing campaign due to competition with the other operators. Revenues from interconnection traffic decreased in 2009 compared to 2008 mainly due to the sale of the Group’s gateway

Secondary segment information

(in million of LE) North Africa Middle East South Asia Other Unallocated Total

2009

2008

Gross revenues 12,418 7,137 7,978 977 - 28,510

13,413 7,670 8,375 1,623 - 31,081

Intersegment revenues (5) (197) (20) (26) - (248)

(454) (923) (133) (418) - (1,928)

Net revenues 12,413 6,940 7,958 951 - 28,262

12,959 6,747 8,242 1,205 - 29,153

Operating income 4,822 1,311 705 222 (420) 6,640

5,703 1,059 760 176 591 8,289

Profit before income tax 4,657 971 (332) 155 (1,242) 4,209

5,466 732 (618) 136 (666) 5,050

Profit for the year 3,135 604 (278) 196 (1,461) 2,196

3,911 310 (453) 65 (991) 2,842

Total Segment assets 17,249 10,746 18,551 2,847 5,894 55,287

17,024 20,999 10,004 1,556 5,126 54,709

Total Capital expenditure 1,717 1,817 1,619 508 32 5,693

1,203 5,504 3,406 151 28 10,292

carrier M-Link in January 2009. (See Note 34 “Related party transactions” for further information) revenue from international and national roaming decreased in 2009 due to the agreement of discounts with many operators and low prices offered to compete in the challenging markets across the territories during 2009. In general revenues during 2009 were negatively impacted by the movements in local currencies compared to the EGP and in particular movements in the Algerian Dinar and Pakistan rupee.

8- Purchases and services2009 2008

Interconnection traffic and roaming 3,287 3,899 Cost of handsets, scratch cards, sim cards, bundle cost 1,747 1,704 Advertising and promotional services 1,055 1,382 Internet and fixed line costs 1,347 1,336Customer acquisition costs 1,293 1,215 Maintenance costs 1,301 1,038Utilities 762 721rental of network 392 466 Other leases and rentals 409 417 rental of civil and technical sites 431 388Consulting and professional services 363 318Consumable materials, equipment and goods 110 264 Cost for security service 195 205Cost for printing & collection services 110 64Other service expenses 394 330Total 13,196 13,747

Purchases and services costs decreased during 2009 primarily due to the weakening of the local currencies compared to the US$. As a percentage of revenues, purchase and service costs were substantially consistent, amounting to 46.7% in 2009 and to 47.1% in 2008.

In particular, interconnection traffic and roaming costs decreased in 2009 compared to 2008 mainly due to the sale of M-Link in January 2009. Advertising and promotional expenses decreased in 2009 compared to 2008 mainly due to a change in policy in Bangladesh. Consumable materials, equipment and goods decreased in 2009 due to the sale Orasinvest. These items were partially offset by an increase in maintenance costs due to an increase in the number of cell sites and general utilities costs and an increase in costs of handsets, scratch cards, sim cards, bundle cost mainly due to the increased sales of ring.

9- Other expenses2009 2008

License costs 320 304Travel costs 87 113 Accruals for provisions 181 78 Allowance for doubtful receivables 218 102 Taxes (other than income tax) 21 93 Training expenses 48 58 Other operating expenses 328 207 Total 1,203 955

The increase in other expenses was primarily attributable to the increase in accruals for provisions, allowance for doubtful receivables and other operating expenses during 2009. The increase in the allowance for doubtful receivables was mainly related to a revision of allowance for doubtful debts policy in OTA. While accruals for provisions included EGP 106 million relating to the accruals for the tax dispute in Algeria. Taxes (other than income tax) decreased mainly due to the sale of M-Link.

10- Personnel costs

2009 2008Wages and salaries 1,173 1,078 Bonuses given to management and employees 257 146

Social security 95 86 Share based compensation 69 61 Pension costs 48 41 Board of Directors remuneration 20 15 Other personnel costs 118 127 Total 1,780 1,554

The increase in personnel cost was primarily due to the increase in the number of employees in 2009 compared to 2008 as well as restructuring and an increase in salaries mainly in the Company and Egyptian Company for Mobile Services S.A.E. (“ECMS”). Bonuses increased in 2009 compared to 2008 mainly relating to bonuses paid in PMCL in 2009 as a result of reaching operational targets.

The table below provides a breakdown of the number of employees as of December 31:

As of December 31,(in number of employees) 2009 2008

Senior management 294 216Middle management 1,701 1,447Staff 15,218 14,859Total 17,213 16,522

The table below provides a breakdown of the average number of employees for the years ended December 31, 2009 and 2008:

Average for the year ended December 31,

2009 2008(in number of employees) Senior management 255 205Middle management 1,574 1,355Staff 15,039 15,012Total 16,868 16,572

11- Depreciation and amortization

2009 2008Depreciation of property and equipment: -Cell sites 4,142 3,747 -Computers, fixtures and other

equipment

321

338 -Buildings 133 127 Amortization of intangible assets -Licences 639 613 -Other intangible assets 242 156Total 5,477 4,981

Depreciation and amortization increased due to the increase in cell sites depreciation primarily as a result of an increase in investments in the network.

71

sold 5% of its investment in this associate and the remaining investment was sold in January 2008.

17- Income tax expense

2009 2008

Current income tax expense (2,270)

(2,339 )

Deferred taxes 257 131

Income tax expense (2,013) (2,208)

Current income tax receivables and liabilities in the consolidated balance sheet are as follows:

2009 2008

Current income tax receivable 553 416

Current and non current income tax liabilities (1.032) (2,124)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

2009 2008Profit from continuing operations 4,209 5,050Tax calculated at Company›s income tax rate 824 1,010

Different income tax rates in subsidiaries

536 456

Theoretical income tax for the year 1,378 1,466Permanent differences 123 87Unrecognized deferred tax for tax losses 279 493

reversal of expired deferred tax assets for tax losses - 47Utilization of previously unrecognized deferred tax assets - (89)Unrecognized deferred tax liabilities on unremitted earnings - 101Prior period tax 250 -Other differences (17) 103Income tax for the year 2,013 2,208

The Group’s income tax expense decreased from EGP 2,208 million in 2008 to EGP 2,013 million in 2009 while the effective tax rate increased from 44% to 48%, respectively. The increase in the effective tax rate was primarily attributable to the provision charged to Income tax expense during 2009 with an amount of US$ 30 million against the tax claims 2004-2007 which has been received by Orascom Telecom Algeria S.P.A. (“OTA”).

12- Impairment chargesImpairment charges amounting to EGP 214 million in 2009 mainly relate to the impairment of EGP 96 million for plant and equipment in PMCL in Pakistan and Link Dot Net Telecom, a subsidiary of PMCL operating in Pakistan as well as impairment of goodwill amounting to EGP 33 million in Link Dot Net Telecom. The impairments in Link Dot Net Telecom are mainly as a result of the uncertainties for the future expectations of this business.

13- Unusual ItemsDuring November 2009 Orascom Telecom Algeria S.p.A. and ring Algeria LLC, subsidiaries of the Company, experienced damages to shops, warehouses and infrastructure, as well as break-in to premises and theft of equipment, during football related disturbances in Algeria.

The cost of damaged inventories, as a result of such disturbances, amounted to EGP 100 million, whilst the damage to property and equipment amounted to EGP 134 million.

Both entities have submitted formal claims to their insurance companies relating to this incident. furthermore, a technical assessment performed by an independent insurance expert stated that the minimum expected recovery from the insurance company is 1 billion DZD (equivalent to EGP 78 million).

This incident is considered as an exceptional event which is out with the normal course of operations and has been recorded in the income statement as unusual items. After considering the expected minimum insurance proceeds, an amount of EGP 73 million has been recorded as unusual inventory loss relating to the damaged inventories and an amount of EGP 84 million has been recorded as unusual capital loss relating to the damaged property and equipment.

14- Disposal of non-current assetsThe gain on disposal of non-current assets amounting to EGP 232 million in 2009 mainly relates to the gain of EGP 196 million on disposal of M-Link which was sold to Wind Telecomunicazioni SpA for a cash consideration of EGP 435 million during January 2009. (See Note 34 “Related party transactions”) Gain on disposal of non-current assets amounting to EGP 363 million in 2008 mainly relates to the gain on the disposal of the subsidiary OrasInvest. During 2009 a further gain of EGP 43 million was recorded relating to a post acquisition sale price adjustment.

15- Net financing costs2009 2008

Interest on deposits and bank accounts 133 162 Interest on non-current financial receivables 63 84 Other financial income 209 36 Gain on extinguishment of debt 128 -Dividends from investments - 9 Financial income 530 291

Interest on bonds (592) (500)Interest on other borrowings (1,913) (1,743)Interest on other liabilities and other financial expense (347) (319)Financial expense (2,850) (2,562)

foreign exchange gain /(loss) 188 (1,936)fair value changes of fX derivative instruments (37) 835 Net foreign exchange gain /(loss) 151 (1,101)Total (2,168) (3,372)

Gain from extinguishment of debt in 2009 relates to the tender offer by PMCL which was completed in May 2009 to repurchase a portion of its senior notes. As a result of this tender offer, PMCL repurchased the notes at a repurchase price of US$ 730 per US$ 1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million (equivalent to EGP 770 million) for cash consideration of US$ 101 million (equivalent to EGP 564 million). The difference between the repurchase price and carrying value of the debt was recorded as gain from extinguishment of debt, net of the effects of closing out derivatives associated with this debt.

financial income increased in 2009 mainly relating to the interest accrued on the loans to Globalive. (See Note 20 “Other financial assets” for further information).

financial expense increased mainly due to an increase in interest on bonds which related to the issuance of a US$ 230 million bond (equivalent to EGP 1,267 million) (“Oscar Bond”) in february 2009 (see Note 26 “Borrowings”).

The gain in foreign exchange is mainly due to unrealized gain on translation of supplier facilities, telecommunication license payables and borrowings due to the strengthening of the EGP,PKr and DZD against the US$.

fair value changes on fX derivative instruments relates to the changes in the fair value of the cross currency swaps held by PMCL in connection with the economic hedge of borrowings

16- Share of loss of associates and gain on disposal of associatesShare of loss of associates in 2009 and 2008 relates to the investment in Globalive Canada Investment Holdings Corp. and Globalive Canada Holdings Corp. (collectively “Globalive”). The Group holds a 65.4% investment in Globalive which comprises a combination of voting and non-voting rights. Considering direct and indirect interests, the Group holds 65.4% of the outstanding shares and directly holds 33.2% of the voting rights. The Group has significant influence over this investment and does not have control over the financial and operating policies of Globalive. Therefore the investment is equity accounted. The following table provides selected financial information of Globalive as of December 31, 2009 and 2008 and for each of the years then ended.

2009 2008Current assets 353 2,065 Non-current assets 4,198 11 Current liabilities 1,080 2,242 Non-current liabilities 3,977 0 revenue 262 0 Net loss (513) (159)% shareholding 65.4% 65.4%proportional share of net loss (335) (104)

0 Amortization expense of identifiable assets (17) 0 Elimination of proportional share of intra group interest expense 89 88

Share of loss in associate (263) (16)

Gain on disposal of associates in 2008 amounting to US$ 27 million relates to the disposal of the remaining investment in Hutchison Telecommunications International Limited (“Hutchison Telecommunications”). In October and November 2007 the Group

72


Computers, fixtures

and other equipment


CostAs of January 1, 2009 994 32,812 1,811 5,289 40,906Additions 107 1,477 291 3,494 5,369Change in the scope of consolidation 5 155 19 28 207Assets held for sale - (313) (92) (15) (420)Disposals (145) (158) (87) (87) (477)Currency translation differences (21) (1,037) (39) (118) (1,215)Reclassifications 2 3,998 13 (4,013) -As of December 31, 2009 942 36,934 1,916 4,578 44,370Accumulated Depreciation and ImpairmentAs of January 1, 2009 325 11,567 1,020 86 12,998Charge for the year 133 4,142 321 - 4,596Change in the scope of consolidation 1 25 3 - 29Assets held for sale - (120) (39) - (159)Disposals (69) (108) (74) - (251)Impairment loss 1 26 11 95 133Currency translation differences (11) (431) (60) - (502)As of December 31, 2009 380 15,101 1,182 181 16,844Net book value as of December 31, 2008 669 21,245 791 5,203 27,908Net book value as of December 31, 2009 562 21,833 734 4,397 27,526


Computers, fixtures

and other equipment


Cost As of January 1, 2008 910 29,915 1,591 4,432 36,848 Additions 214 1,752 454 6,479 8,899 Change in the scope of consolidation (17) 302 (61) (22) 202 Assets held for sale (15) (86) (17) (8) (126)Disposals (30) (224) (32) (45) (331)Currency translation differences (90) (3,860) (149) (487) (4,586)Reclassifications 22 5,013 25 (5,060) -As of December 31, 2008 994 32,812 1,811 5,289 40,906 Accumulated Depreciation and Impairment As of January 1, 2008 247 9,044 819 49 10,159 Charge for the year 127 3,747 338 - 4,212 Change in the scope of consolidation 3 140 (40) - 103 Assets held for sale (4) (51) (10) - (65)Disposals (3) (158) (16) - (177)Impairment loss 2 1 1 37 41 Currency translation differences (47) (1,156) (72) - (1,275)As of December 31, 2008 325 11,567 1,020 86 12,998 Net book value as of December 31, 2007 663 20,871 772 4,383 26,689 Net book value as of December 31, 2008 669 21,245 791 5,203 27,908

18- Property and equipment Additions to property and equipment in 2009 mainly relate to cell site investments and assets under construction relating to new base stations, predominantly in GSM companies in Pakistan, Bangladesh and Algeria. Those investments are mainly due to the expansion of the business, increased capacity and the change in GSM technology.

Property and equipment transferred to assets held for sale in 2009 relates to the property and equipment of Link-Egypt and Link dot net See Note 6 “Assets and liabilities classified as held for sale” for further information.

Property and equipment pledged as security for bank borrowings amount to EGP 7.2 billion as of December 31, 2009 and primarily relate to securities for borrowings of PMCL, Trans World Associated Private Limited (“TWA”), Orascom Telecom Tunisie S.A.(“OTT”) and Telecel Namibia “Cell one” .

In the year ended December 31, 2009 and 2008 the Group capitalized borrowing costs of EGP 201 million and EGP 344

million, respectively, relating to the acquisition of property and equipment.

Change in estimatesDuring the year ended 31 December 2009 the Group conducted an operational efficiency review at one of its subsidiaries – Orascom Telecom Bangladesh Limited – which resulted in changes in the expected useful lives of certain items in cell sites equipments. These equipments, which management previously intended to depreciate over eight years of use, is now expected to remain in use for fifteen years from the date of acquisition.The effect of these changes on depreciation expense, recognized in income statement, in current and future periods as follows:

(in million of EGP) 2009 From 2010 to 2017 Later

(Decrease) increase in depreciation expense (45) (485) 530

19- Intangible assets

Licences Goodwill Others TotalCost As of January 1, 2009 10,302 6,741 1,518 18,561Additions - - 257 257Change in the scope of consolidation 46 265 55 366Assets held for sale - (48) (191) (239)Disposals - - (38) (38)Currency translation differences (173) (10) (26) (209)As of December 31, 2009 10,175 6,948 1,575 18,698Accumulated AmortizationAs of January 1, 2009 4,006 813 746 5,565Charge for the year 639 - 242 881Change in the scope of consolidation 5 - 5 10Assets held for sale - - (73) (73)Disposals - - - -Impairment Loss - 72 9 81Currency translation differences (79) (2) 53 (28)As of December 31, 2009 4,571 883 982 6,436Net book value as of December 31, 2008 6,296 5,928 772 12,996Net book value as of December 31, 2009 5,604 6,065 593 12,262

73

2008

Algeria Pakistan Egypt Tunisia BangladeshCentral

and South Africa

North Korea Total

GSM 2,925 1,471 814 175 59 350 - 5,794 Telecom Services - 5 6 - - - - 11 Internet & Fixed Line - - 123 - - - - 123

2,925 1,476 943 175 59 350 - 5,928

20- Other financial assets

2009 2008 Non-current Current Total Non-current Current Total

financial receivables 3,729 101 3,830 2,302 940 3,242Derivative financial instruments

601 234 835 885 136 1,021

Deposits 224 78 302 240 459 699financial assets held for trading

- 191 191 - - -

financial assets available for sale

103 25 128 114 - 114

4,657 629 5,286 3,541 1,535 5,076

20.1 Financial ReceivablesAs of December 31, 2008 and 2009 financial receivables mainly relate to loans provided to Globalive Management Corp (“GWMC”), a subsidiary of Globalive (see Note 16 “Share of loss of associates and gain on disposal of associates”). During 2008 the Company entered into two loan agreements with Globalive Management Corp (“GWMC”, a subsidiary of Globalive) to borrow an amount of up to CAD 508 million (equivalent to EGP 2,335 million ). Both loans are non-revolving term loans bearing interest of Libor plus 18%. In 2009 the loan agreements were amended to increase the facility to CAD 608 million (equivalent to EGP 3,225 million ). As of December 31, 2008 the amount outstanding under such loan agreements, including accrued interest, amounted to CAD 483 million (equivalent to EGP 2,220 million). During 2009 a further amount of CAD 138 million (equivalent to EGP 732 million) was advanced under the original loan agreements. Globalive was awarded CAD 442 million of spectrum licenses in March 2009 and the loans are secured on a subordinated basis by an assignment of these licenses and are guaranteed on a non recourse basis. Globalive launched its wireless network to the Canadian market in December 2009 and is therefore in the start-up phase of operations

and has incurred losses to date. The Group’s share of these losses is in excess of the carrying value of the investment. The loans provided to Globalive are long term loans and have been considered to be a long-term interest forming part of the net investment in Globalive. As of December 31, 2009 the amount outstanding under such loan agreements, including accrued interest, was CAD 723 million (equivalent to EGP 3,833 million), the Group’s share of the excess losses of Globalive compared to the carrying value of the investment have therefore been deducted from the long term receivable. After considering the share of such losses the amount recorded in financial receivables is US$ 643 million (equivalent to EGP 3,410 million).

financial receivables as of December 31, 2008 also include an amount of US$ 165 million (equivalent to EGP 913 million). relating to receivables from the sale of subsidiaries. This primarily relates to the receivable from the sale of OrasInvest amounting to US$ 90 million, of which US$ 75 million (equivalent to EGP 413 million) was settled in December 2009 and the residual receivable of US$ 75 million (equivalent to EGP 413 million) from the sale of Iraqna which was settled during 2009. As of December 31, 2009, the residual receivable from the sale of OrasInvest of US$ 15 million (equivalent to EGP 83 million) is due to be settled in 2010

20.2 Derivative financial instruments

2009 2008 Assets Liabilities Assets Liabilities

Interest rate derivatives 6 545 - 624foreign exchange derivatives 738 - 981 -Other derivative instruments 88 - 40 6

Total 832 545 1,241 630

Less non-current portionInterest rate derivatives - 195 - 399foreign exchange derivatives 515 - 851 -Other derivative instruments 83 - 34 -Current portion 234 350 136 231

Additions to others in 2009 mainly relate to software licenses.

Additions to intangible assets in 2008 primarily relate to the acquisition of a 3G license in Egypt, by Egyptian Company for Mobile Services S.A.E. (“ECMS”) with a duration of 14 years validity, the group’s proportionate share is EGP 941 million and the acquisition of a WiMax License by PMCL.

Intangible assets pledged as security for bank borrowings amount to EGP 6.9 billion and primarily relate to securities for borrowings of PMCL and OTT.

Impairment tests for goodwill

Goodwill is allocated to the individual CGU which reflects the minimum level at which the units are monitored for management

control purposes.

The carrying amount as of December 31, 2009 was subject to an impairment test to compare the carrying amount with value in use and the recoverable amount. The goodwill of LinkDotNet Telecom was impaired during the year prior to performing this test. After having considered this previous impairment, no further evidence of impairment arose. Value in use was determined by discounting the expected cash flows, resulting from business plans approved by the respective Board of Directors, using the post-tax weighted average cost of capital (WACC) as the discount rate.

Deferred tax assets on tax losses carry forwards mainly refer to income tax loss carry forwards of the Group’s subsidiaries in Pakistan with no expiry date.

Licences Goodwill Others TotalCost As of January 1, 2008 9,465 6,475 1,115 17,055Additions 1,105 - 241 1,346Change in the scope of consolidation 101 393 210 704Assets held for sale (4) (93) (18) (115)Disposals - - (38) (38)Currency translation differences (365) (34) 8 (391)As of December 31, 2008 10,302 6,741 1,518 18,561Accumulated AmortizationAs of January 1, 2008 3,415 810 643 4,868Charge for the year 613 - 156 769Change in the scope of consolidation 17 - 5 22Impairment loss 169 5 2 176Assets held for sale - - (4) (4)Disposals - - (2) (2)Currency translation differences (208) ( 2) (54) (264)As of December 31, 2008 4,006 813 746 5,565Net book value as of December 31, 2007 6,050 5,665 472 12,187Net book value as of December 31, 2008 6,296 5,928 772 12,996

The following table provides an analysis of goodwill by segment2009

Algeria Pakistan Egypt Tunisia BangladeshCentral

and South Africa

North Korea Total

GSM 2,925 1,464 814 175 59 573 - 6,010 Telecom Services - 5 9 - - - - 14 Internet & Fixed Line - - 41 - - - - 41

2,925 1,469 864 175 59 573 - 6,065

74

Interest rate derivativesThe notional principal amounts of the outstanding interest rate swaps that qualify for hedge accounting amounts to US$ 1.5 billion, relating to the A1 and A2 term loan supplements of the Company. Under the derivative contract the Company pays fixed interest rate and receives 6 month Libor. Gains and losses are recognized in the cash flow hedge reserve in equity. As of December 31, 2009 the fair value of the derivative liability was EGP 529 million. The gain recognized in the cash flow hedge reserve, net of deferred tax during the year ended December 31, 2009, amounts to EGP 138 million.

Additionally, during 2009 the Company entered into a switchable interest rate swap for a notional amount of US$ 500 million to cover a portion of the syndication loan. Under the derivative contract the Company receives a 25 basis point reduction in the floating interest rate and at the end of the first year (September 23, 2010) the bank has the right to either switch to a fixed rate swap (whereby the Company will pay fixed rate interest and receive floating) or switch to a floating rate with a cap (whereby the Company will pay floating rates up to a cap strike of 4.15%). As of December 31, 2009 the fair value of the derivative liability was EGP 16 million. .The changes in the fair value of the derivative are recognized in financial income and expense in the income statement. The fair value of this derivative asset as of December 31, 2009 was EGP 6 million.

Foreign exchange derivativesforeign exchange derivatives primarily relate to the economic hedge of PMCL. The cross currency swap relates to certain borrowings of PMCL, which are swapped from US$ to PKr and from Euro to PKr, whilst the associated interest is swapped from LIBOr to KIBOr and from Euribor to KIBOr. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement. As of December 31, 2009 the fair value of this derivative asset was EGP 689 million

Telecel Globe entered into a currency forward to hedge exposures to movements in Namibian Dollars in relation to the purchase price to be paid for the investment in PowerCom Namibia. The final installment of the purchase price was due to be paid in January

2010. As of December 31, 2009 the fair value of this derivative asset was EGP 50 million. The changes in the fair value of the derivative are recognized in foreign exchange loss / gain in the income statement.

Other derivative instrumentsOther derivative instruments mainly include the warrants to purchase shares of My Screen Mobile Inc and Lingo Media Corporation amounting to EGP 11 million and EGP 2 million, respectively as of December 31, 2009. The details of these warrants are provided below in the section “financial assets available for sale”.

In february 2009 the Company issued equity indexed notes with a nominal amount of US$ 230 million which mature in 2013. The notes have a redemption price on maturity which is indexed to the Company’s GDr price. This feature of the debt is considered as an embedded derivative which is valued at fair value through profit and loss. As of December 31, 2009 the fair value of this embedded derivative asset was EGP 77 million.

CDC fennec Ltd, a lender to Moga has the option to convert all amounts payable under the loan agreement into shares of the Company until the debt is extinguished. As of December 31, 2009 the amount due, recorded as liabilities to banks, amounted to EGP 160 million. As of December 31, 2009 and 2008 the fair value of this option was zero.

DepositsDeposits primarily relate to letters of guarantee and other restricted cash held as security for the performance of Group obligations. The decrease in deposits in 2009 mainly relates to the liquidation of deposits in Algeria for the payments of the dividend and the tax appeal.

Deposits are partially pledged as security against related bank borrowings.

The following table shows the ageing analysis of financial receivables and long term deposits as of December 31, 2009 and 2008:

2009 2008

Deposits Financial receivables Deposits Financial

receivables Not past due 302 3,830 699 2,827

Past due 0-30 days - - - -Past due 31-120 days - - - 415

302 3,830 699 3,242

Financial assets available for saleCompany name ownership % December 31, 2009 December 31, 2008

Smart Village (ECDMIV) 10% 44 44 My Screen Mobile Inc 9% 12 22 Lingo Media Corporation 23% 15 17 Top Level Domain Co. 5% 6 6 Other investments 51 25

128 114

Financial assets held for trading

financial assets held for trading relate to government treasury bills and investment bonds purchased by PMCL.

21- Deferred taxesDeferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes due to the same tax authority. The following table provides a reconciliation of deferred tax assets and liabilities of the Group to the amounts included in the face of the balance sheet.

2009 2008Deferred tax liabilities, gross 2,370 2,337 Deferred tax assets offset (1,179) (913)Deferred tax liabilities 1,191 1,424 Deferred tax assets, gross 1,833 1,402 Deferred tax liabilities offset (1,179) (916)Deferred tax assets 654 486 of which recognized directly in equity 28 (121)

The gross movement in the deferred income tax account is as follows:

2009 2008As of January 1, 938 1,393 Exchange differences (68) (250)Change in scope (105) 47 Income statement charge (256) (131)Tax charged directly to equity 28 (121)As of December 31, 537 938

The movement of deferred tax assets and liabilities during the year, without taking into consideration any offsetting is provided in the tables below:

My Screen Mobile IncIn May 2008, the Company concluded a “restricted Stock Purchase Agreement” with My Screen Mobile Inc, an entity specializing in the delivery of advertising to mobile phones, to acquire 12.5 million shares which represents approximately 9% of the total share capital and existing voting rights. Additionally, the Company purchased share warrants to acquire up to 20 million shares at an exercise price of US$ 2 per share. The warrants can be exercised from the date of the agreement until May 23, 2012. The total purchase price of the shares and warrants was US$ 10 million. Upon exercise of the warrants, the Company would hold approximately 20% of the existing and potential voting rights. Based on an assessment of the potential ownership percentage and other contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009 the fair value of the investment amounted to US$ 2 million (equivalent to EGP 12 million) and the fair value of the warrant amounted to US$ 2 million (equivalent to EGP11 million).

Lingo Media CorporationIn August 2008, the Company entered into a subscription agreement to acquire 2,857,143 common shares of Lingo Media Corporation, a media entity focusing on online advertising. The investment represents approximately 23% of the total share capital and existing voting rights. The Company also purchased share warrants to acquire up to 2,142,857 shares of this entity. The warrants can be exercised from the date of the agreement for a period of two years, at an increasing price from US$4 up to US$8. The total purchase price of the shares and warrants was US$ 5 million. Assuming exercise of the warrants, the Company would have an interest of approximately 34% in this entity. Based on an assessment of the contractual rights, management does not consider that it has significant influence over the company. Therefore, the investment has been recorded as a financial asset available for sale and measured at fair value. As of December 31, 2009, the fair value of the investment amounted to US$ 3 million (equivalent to EGP15 million) and the fair value of the warrants, which is recorded in derivative financial assets, amounted to US$ 0.4 million ( equivalent to EGP2 million ).

Deferred tax liabilities Depreciation and amortization

Unremitted earnings Other Total

As of December 31, 2008 1,850 443 44 2,337 Charged / (credited) to the income statement 100 (95) 184 189 Exchange differences (167) (17) 33 (151)Change in scope (5) - - (5)As of December 31, 2009 1,778 331 261 2,370

Deferred tax assets Tax losses

Accrued expense

Depreciation and

amortization

Impairment of assets Provisions Fair

value Other Total

As of December 31, 2008 840 195 122 46 42 121 36 1,402 Charged / (credited) to the income statement

413

28 (33) 11 -

6

17

442 Charged directly to equity

-

- - - - (28)

-

(28)

Change in scope 100

- - - -

-

-

100 Exchange differences (25) (7) - (7) - - (44) (83)

As of December 31, 2009 1,328 216 89 50 42 99 9 1833

75

On October 22, 2009, the Extraordinary General Meeting approved a share capital reduction through the cancellation of 10,302,769 treasury shares (856,624 local shares and 1,889,229 GDr’s) amounting to EGP 424 million. The legal reserve connected with the cancelled shares including currency translation differences was reclassified from other reserves to retained earnings.Accordingly, as a result of the above transactions, as of December 31, 2009 the issued and paid up share capital amounted to EGP 889 million (comprising 889,100,105 shares) of a nominal value of EGP 1 per share.

25-2 DividendsThe shareholder’s meeting of the Company held on June 7, 2009 approved a dividend distribution of EGP 1 per share in the form of cash and/or shares. Based on the announced distribution ratio of 36:1; on August 27, 2009 the Company distributed 243,376 shares to local shareholders and 1,985,097 shares to the GDr holders (equivalent to 9,925,487 local shares). Consequently, the Company distributed in cash an amount of EGP 180 million for a total number of local shares of 180,111,604 (EGP 1/share) and an amount of US$ 60 million for a total number of 66,337,438 GDrs (equivalent to 331,687,192 local shares) (around US$ 0.9022/GDr).

The dividend distribution in 2008 amounted to EGP 1 per share (EGP 5 per GDr) and was paid in cash on June 5, 2008.

25-3 Treasury shares As of December 31, 2008 the Company had 17,681,700 shares which were held as treasury shares, during 2009 the following movements took place:• As previously explained, the Company cancelled 10,302,769

treasury shares on October 22, 2009 (comprising 856,624 local shares and 1,889,229 GDr’s) and distributed the equivalent of 10,168,861 local shares from treasury stock as payment of the dividend.

• During the year ended December 31, 2009 the Company also purchased the equivalent of 7,240,310 local shares from the market to be held as treasury shares and sold the equivalent of 4,450,380 local shares to the market.

As a result of the above transactions there were no treasury shares as of December 31, 2009.

25-4 Share based compensation planAs of December 31, 2008 the Company had 3,661,785 shares which were held for the purposes of the share based compensation plan. During the year ended December 31, 2009 the Group acquired 1,235,735 of its own shares for the purposes of the share based compensation. Share grants exercised during 2009 resulted in 950,220 shares.

As a result of the above transactions, as of December 31, 2009 the Company had 3,947,300 shares held as treasury shares for the purposes of the share based compensation plan. The fair market value of such shares was EGP 501 million.

Liabilities to banks

Appendix A includes a detailed analysis of liabilities to banks as of December 31, 2009.

In addition to the normal scheduled repayments of borrowing facilities, in accordance with the relevant agreements, various Group companies (mainly OTH, PMCL, ECMS and Bangladesh) entered into new borrowings during the year in order to finance license payments, ongoing operations and capital expenditure programs.

Pakistan Mobile Communication LimitedPMCL entered into a syndicate loan agreement with Pakistani banks for a facility amounting to PKr 5.1 billion equivalent to US$ 61 million ,equivalent to EGP 336 million to dealing with standard

chartered bank Pakistan as the agent, repayments of principal amount starts from November 9, 2010 and the financing period will last for 4 years.

In addition, during the 2009, OTH and some of its subsidiaries obtained new short term facilities. As in OTH obtained a nominal of US$ 140 million, equivalent to EGP 771 million.

Bonds

Appendix B includes a detailed analysis of Bonds as of December 31, 2009. Changes in bond liabilities during 2009 primarily relate to the repurchase by PMCL of a portion of its Senior Notes and the issuance of an equity indexed bond Orascom Telecom Oscar Luxembourg (the “Oscar Bond”).

within one year 1-2 years 2-3 years 3-4 years 4-5 years after 5

years Total

As of December 31, 2009As of December 31, 2008Liabilities to banks 4,616 4,573 5,352 9,117 880 114 24,652

2,390 2,588 4,130 5,231 8,966 1,162 24,467Bonds 417 70 1,088 1,267 4,072 - 6,914

196 282 75 346 1,398 4,080 6,377Derivative instruments 350 177 23 (5) - - 545

231 200 127 64 8 - 630Other borrowings 100 19 - - - - 119

113 30 39 32 36 - 250Total as of December 31, 2009 5,483 4,839 6,463 10,379 4,952 114 32,230Total as of December 31, 2008 2,930 3,100 4,371 5,673 10,408 5,242 31,724

26- Borrowings

No deferred tax assets were recognized on income tax loss carry forwards for some foreign subsidiaries, mainly Orascom Telecom Bangladesh Limited (“OTB”) and CAT, as it is currently not probable that taxable profit will be available in the near future against which such tax loss carry forwards might be utilized.

Generally the Group does not recognize deferred tax assets for temporary differences related to accruals for provisions, due to uncertainties in connection with the tax treatment of such expenses, as they might be challenged by local tax authorities.

No liability has been recognized in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

The following table provides a breakdown by estimated recoverability of recognized deferred tax assets and liabilities:

Deferred tax liabilities Deferred tax assets2009 2008 2009 2008

within 1 year 77 276 33 4within 1 - 5 years 1,339 1873 1,800 1391after 5 years 954 188 - 7

2,370 2,337 1,833 1402

22- Trade receivables2009 2008

receivables due from customers 975 916 receivables due from telephone operators 539 506 Accrued revenue (unbilled) 437 422 Receivables due from authorized dealers 64 92 Other trade receivables 277 250 Allowance for doubtful receivables (464) (373) Total 1,828 1,813

The following table shows the movement in the allowance for doubtful receivables

2009 2008At January 1 373 484 Exchange differences (15) (30)Additions (allowances recognized as an expense) 218 102Change in scope (27) (1)Use (59) (73)reversal (26) (11)Reclassifications - (98)At December 31, 464 373

The following table shows the ageing analysis of trade receivables as of December 31, 2009 and 2008, net of the relevant provision for doubtful receivables:

2009 2008 Not past due 677 852Past due 0-30 days 476 393Past due 31-120 days 449 353Past due 121 - 150 days 22 50Past due more than 150 days 204 165Trade receivables 1828 1,813

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable. The Group does not hold any collateral as security.

23- Other current assets2009 2008

Prepaid expenses 494 428Advances to suppliers 67 89receivables due from tax authority 1,018 84Deferred cost - 78Other receivables 777 953Allowance for doubtful current assets (272) (255)Total 2,084 1,377

The increase in receivables due from tax authority is mainly related to down payments against the tax claim received by OTA covering the years 2004-2007.

The following table shows the movement in the allowance for other current assets:

2009 2008At January 1 255 148 Exchange differences (3) (1)Additions (allowances recognized as an expense) 29 11Use (9) - Reclassifications 97 At December 31, 272 255

24. Cash and cash equivalents

2009 2008Bank accounts 2,277 2,929 Deposits 1,893 387 Treasury bills - 277Cash on hand 14 15 Total 4,184 3,608

Cash and cash equivalents as of December 31, 2009 were unusually high mainly due to undistributed dividends at Orascom telecom Algeria “OTA” and Mobinil amounted to EGP 1,339 million.

Deposits includes an amount of DZD 10,201M equivalent to EGP 772 million representing the remaining agreed amount not to be repatriated until the Algerian tax authority “DGE” issue a clearance certificate in relation to the tax position of OTA (see note 35).

25- Share Capital

25-1 Authorized and issued share capital and legal reservesAs of December 31, 2008 the issued and fully paid share capital amounted to L.E. 899 million (equivalent US$ 261 million) comprising 899,402,874 shares of a nominal value of L.E. 1 per

76

financial liabilities include secured liabilities of EGP 22,537 million as of December 31, 2009 and 21,566 million as of December 31, 2008. In general, the financial liabilities are secured on property

and equipment of the relevant subsidiary, pledged shares and receivables.

* On July 16, 2009 Middle East and North Africa Submarine Cable Systems – MENA Cable ( fully owned subsidiary ) signed an agreement with Gulf Bridge International –GBI to sell fiber pair and Indefeasible right of Use (IrU) with an amount of US$ 97 million equivalent to EGP 534 million. Under this agreement GBI should pay a milestone payments against a commitments from MENA Cable to fulfill certain conditions. As of the date of the financials the amounts received from GBI amounted to US$

29 million equivalent to EGP 160 million recorded as a deferred income.

29. Earnings per share(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Company and held as treasury shares or for the purposes of the share based compensation.

Pakistan Mobile Communication LimitedIn May 2009 PMCL completed a tender offer to repurchase a portion of its 8 5/8% Senior Notes amounting US $ 250 million, equivalent to EGP 1,377 million due 2013. PMCL repurchased the notes at a repurchase price of US$730 per US$1,000 of principal amount. As a result of the transaction PMCL cancelled debt of approximately US$ 138 million for cash consideration of US$ 101 million.

Orascom Telecom OscarIn february 2009 the Oscar Bond was issued with a nominal amount of US$ 230 million, equivalent to EGP 1,267 million maturing in 2013, through a fully subscribed private placement. The notes carry a coupon of US$ Libor plus a margin of 500bps and rank pari-passu to the existing US$2.5bn senior secured credit

facility with accession to the security pool under the Security Share Agreement. The notes have a redemption price at maturity

indexed to Orascom Telecoms’ GDr which may potentially allow the Group to further reduce financing costs of the notes.

DerivativesDetails of the derivative liabilities are provided in Note 20 “Other financial assets”.

Other BorrowingsOther borrowings mainly include promissory notes and loans from minority shareholders in subsidiaries.

Currency and Interest Rate Information of Borrowings

US$ Euro Egyptian Pound

Pakistan Rupee

Bangladeshi Taka

Algerian Dinar

Tunisian Dinar Others Total

As of December 31, 2009Total borrowings by currency of issue 23,314 1,989 2,543 3,168 562 148 204 302 32,230Notional amount of currency derivatives (975) (1,520) - 2,495 - - - - -Borrowings after derivative effect 22,339 469 2,543 5,663 562 148 204 302 32,230of which (after derivative effect):floating rate borrowings 9,165 455 2,215 5,663 562 148 198 - 18,406fixed rate borrowings 13,174 14 328 - - - 6 302 13,824As of December 31, 2008Total borrowings by currency of issue 22,266 2,332 2,963 3,187 336 287 304 49 31,724Notional amount of currency derivatives (1,746) (1,687) - 3,433 - - - - -Borrowings after derivative effect 20,520 645 2,963 6,620 336 287 304 49 31,724of which (after derivative effect):floating rate borrowings 6,141 601 2,537 6,616 335 287 295 - 16,812fixed rate borrowings 14,379 44 426 4 1 - 9 49 14,912

2009 2008Current Non-current Total Current Non-current Total

Telecommunication license payable 1,561 442 2,003 1,120 1,070 2,190Taxes (Other than income taxes) 1,257 - 1,257 1,051 - 1,051 Prepaid Traffic and deferred income 1,307 - 1,307 1,065 - 1,065Due to local authorities 716 - 716 346 - 346 Personnel payables 425 - 425 293 - 293 Other 740 220 960 862 147 1,009 Total 6,006 662 6,668 4,737 1,217 5,954

28- Trade payables 2009 2008

Capex payables 2,591 3,622 Trade payables due to suppliers 1,480 1,438 Trade payables to telephone operators 535 409 Other trade payables 1,139 1,098 Total 5,745 6,567

Trade payables are all due within one year.

2009 2008Profit Attributable to the equity holders of the Company (in million of EGP) 1,845 2,464

Weighted average number of shares (in millions of shares) 878 937

Earnings per share – basic (in EGP) 2.10 2.63

27- Other liabilities

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. During 2008 and 2009 the dilutive potential ordinary shares relate to the share based compensation plan.

2009 2008Profit Attributable to the equity holders of the Company (in million of EGP) 1,845 2,464

Weighted average number of shares in issue (in million of shares) 878 937

Adjustments for:- Shares granted (in millions of shares) 4 2Weighted average number of shares for diluted earnings per share (in millions of shares)

882 939

Earnings per share – diluted (in EGP) 2.10 2.63

30- Business combinationsDuring 2009 the Group acquired 100% of share capital of Power-COM (Cell One) in Namibia, a GSM telecommunications operator in Namibia through its subsidiary Telecel Globe, for a cash consideration of US$ 60 million. The acquired business contributed revenues of US$ 14 million and net loss of US$ 19 million to the Group in the period since acquisition.The purchase price for this acquisition was US$ 60 million of which US$ 30 million was paid during 2009 and the remaining portion will be paid in 2010. The purchase price allocation was finalized on December 2009. The following table provides details of this acquisition

The following table provides details of main acquisitions during 2009:

Cell One Cash and cash equivalents - Property and equipment 179Intangible assets 84Deferred tax assets 100Inventories 6Trade receivables 17Other current assets 6Non-current borrowings (179)Other non-current liabilities (33)Current borrowings -Other current liabilities -Trade payables (95)Current income tax liabilities -Net identifiable assets acquired 84Goodwill 251Purchase price 335Cash and cash equivalents in subsidiary acquired Cash outflow on acquisition 335

In the third quarter of 2009 the purchase price allocation was finalized for the acquisition of U-com Burundi SA and Telecel Afrique SA which were purchased in July 2008. The comparative amounts for 2008 were restated compared to those reported in the 2008 annual consolidated financial statements as follows:

December 31, 2008(as reported) PPA adjustment December 31, 2008

(adjusted)Property and equipment 27,930 (22) 27,908Intangible assets 12,927 69 12,996Deferred tax liabilities 1,377 47 1,424

share. The Company is listed on the Egyptian Stock Exchange and also has GDr’s (where one GDr is equivalent to 5 local shares) listed on the London Stock Exchange.

31- Interest in joint ventures

The Group has the following interest in its joint ventures:

Joint venture Shareholding Country ofdomiciliation

Egyptian Company for Mobile Services S.A.E. 34.67% Egypt

Orascom Telecom Tunisie S.A. 50.00% TunisiaConsortium Algerian Telecommunication S.P.A. 50.00% Algeria

77

2009 2008

Average exercise price in US$ per

GDR option granted


GDRs granted for

free (thousa nds)

Average exercise price in US$ per

GDR option granted


GDRs granted for

free (thousands)

At January 1 9.20 4 504 9.20 80 478Granted 467 - - 140forfeited (90) - - (6)Exercised 9.20 (158) 9.20 (76) (108)Expired - - - At December 31 - 4 723 9.20 4 504thereof exercisable - 4 198 4 20

The weighted average GDr price during 2009 amounted to US$ 25.14 (2008; US$ 48.65).

The following table details the range of exercise prices and the weighted average remaining contractual life of outstanding awards as of December 31, 2009 and 2008:

December 31, 2009 December 31, 2008

Range of exercise price in US$

Weighted average exercise

price in US$

Number of GDRs

(thousands)

Weighted average

remaining life in

months

Weighted average exercise price in

US$

Number of GDRs

(thousands)

Weighted average


9.20 9.20 4 - 9.20 4 12nil Nil 723 29 nil 504 36

The table below sets forth the awards outstanding as of December 31, 2009 and their expiry dates:

Expiry date - December 31 Exercise price in US$ per GDR

GDRs (thousands)2008 2007

2010 0 - 9.20 24 1792011 - 18 1802012 - 453 1002013 - 130 252014 - 79 -2015 - 23 -Total 727 484

Telecel Globe Limited established a share option program that entitles two key management personnel to purchase shares in the Company. In accordance with this program, the employees are being granted an option to purchase all of the “Option Shares” in consideration of the payment of USD1. The Option shares represent the number of shares, at a nominal value of USD1 each, in the capital of the Company which shall be equivalent to 3% of the capital of the Company calculated immediately upon its

capitalization by an amount of USD 50,000,000. Based on these terms, the value of both options amounts to USD 1,500,000 for each employee respectively. The fair value of the two options at grant date is, therefore, equivalent to USD 3,000,000, to be settled in shares.

During 2009, both employees have exercised their respective

Grant date Tranche GDRs

granted (thousands)

Vesting period

(months)

Contractual term

(months)

GDR price at grant date

in US$

GDR market price at

grant date in US $

Fair value of GDRs at

grant date in US$

July 1, 2004 3 4 42 66 9.20 9.29 4.79July 1, 2005 2 20 30 54 - 50.70 49.20July 1, 2005 3 2 42 66 - 50.70 48.71July 1, 2006 3 31 42 66 - 40.80 39.20January 1, 2007 2 7 24 48 - 66.00 62.98January 1, 2007 3 35 36 60 - 66.00 62.36July 1, 2007 1 9 18 42 - 64.90 63.61July 1, 2007 2 44 30 54 - 64.90 62.98July 1, 2007 3 36 42 66 - 64.90 62.36January 1, 2008 2 21 24 48 - 83.00 79.07January 1, 2008 3 22 36 60 - 83.00 78.19July 1, 2008 1 8 18 42 - 62.90 60.81July 1, 2008 2 18 30 54 - 62.90 59.84July 1, 2008 3 14 42 66 - 62.90 58.90January 1, 2009 1 314 12 36 - 27.29 26.39January 1, 2009 2 50 24 48 - 27.29 25.44January 1, 2009 3 50 36 60 - 27.29 24.53July 1, 2009 1 4 18 42 - 28.40 26.25July 1, 2009 2 15 30 54 - 28.40 25.18July 1, 2009 3 23 42 66 - 28.40 24.41

The ESOP was introduced in 2003 and the Company since then uses treasury shares bought from the market to cover the plan. The Board of Directors of the Company has appointed a Committee that can grant GDr options or GDrs to employees of the Company and its subsidiaries through Orascom Telecom ESOP Limited., Malta, a wholly owned subsidiary. Such GDrs of the Company are listed on the London Stock Exchange and denominated in US$. Awards under the ESOP are generally reserved for employees at a senior management level and above that have spent at least one full year of services in the Company and that have a satisfactory performance according to their appraisal reports. The Company has made annual grants on July 1 each year since 2003; from 2007 onwards additional GDrs were granted on January 1 to existing employees. The GDrs granted vest in three installments over the vesting periods that vary from 12 to 42 months. Starting from 2005

GDrs are granted for free and must be exercised within two years after the end of the vesting period. Exercise of an award is subject to employment in the Group at the exercise date. The Group has no legal obligation to repurchase or settle the awards in cash.GDrs were valued using the Black-Scholes option-pricing model. The assumptions for calculations of the fair value per GDr at the grant date include the GDr price at each grant date, nil exercise price, a GDr price volatility between 29.0% and 72.6%, a dividend yield of between 1% and 3.5% and an annual risk free rate between 1.7% and 6.4%.

The following table provides a breakdown of the movements of outstanding GDr options and GDrs granted and their weighted average exercise price:

Orascom Telecom Tunisia S.A. (“OTT”)

OTT operates a GSM network in Tunisia and provides a range of pre-paid and postpaid voice and data telecommunication services under the brand name “Tunisiana”. The Company has a 50% shareholding in OTT through two wholly-owned subsidiaries which own 35% and 15% of the shares in OTT. The remaining 50% interest is held by National Mobile Telecommunications Company KSC which is owned by Qatar Telecom.

Consortium Algerian Telecommunication S.P.A. “CAT)

CAT is a landline operator in Algeria. The current intention of the management of CAT is to liquidate this business. Therefore the Group has fully written down all assets relating to this business.

The following amounts represent the assets, liabilities, revenues and profit for the year of the joint ventures. They are included in the balance sheet and income statement of the Group’s consolidated financial statements according to its shareholding in each joint venture.

2009 2008revenues 14,793 13,979Profit for the year 2,793 1,352Current assets 3,104 2,635Non-current assets 16,414 15,869Current liabilities 9,039 7,328Non-current liabilities 5,457 7,400

32. Commitments

The commitments as of December 31, 2009 and 2008 are provided in the table below:

As of December31,

2009

As of December 31,

2008Intangible assets 750 766Property and equipment 1,129 1,870 Others - 604 Total 1,879 3,240

Commitments for the purchase of intangible assets mainly relate to commitments of Egyptian Company for Mobile and Service amounting to EGP 597 million primarily relating to costs connected with the 3G license .

Commitments for purchase of property and equipment mainly relate to commitments of Menacable amounting to EGP 463 million relating to the purchase of marine cables and related equipment and EGP 331 million for Egyptian Company for Mobile and Service relating to the purchase of equipment.

The following table provides the future aggregate minimum lease payments under non-cancellable operating leases:

2009 2008Within one year 215 152Between 1-5 years 832 650After 5 years 83 227

1,129 102933. Share based compensation

The following table provides a summary of the Company’s existing Executive Share Option Plans (ESOP), not expired as of December 31, 2009:

78

Egyptian Company for Mobile Services S.A.E. (“ECMS”)

ECMS is a mobile telecommunication operator in Egypt and provides a range of prepaid and postpaid voice and data telecommunication services under the brand name of Mobinil. The Company has an investment of 34.67% in ECMS and the france Telecom Group also has an investment of 36.34%. The remaining shareholding is publicly traded on the Cairo and Alexandria Stock Exchange.

Legal proceedings are currently in progress relating to a disagreement regarding the Shareholders Agreement entered into by the Company and france Telecom, further details are included in Note 32 “Commitments”.35- Contingent assets and liabilities

The Group is subject to various legal proceedings and claims which arise in the ordinary course of business due to the nature of the operations of the Group and the nature of the markets where the Group operates.

The Group recognizes a provision for losses and liabilities when the existence is certain or probable. As of December 31, 2009

share options. In order to satisfy these options, Telecel Globe Limited would buy 3,000,000 shares at a nominal value of USD1 each, currently held by Orascom Telecom Holding and deliver them to these employees in accordance with the share option plan. Accordingly, the percentage of ownership of Orascom Telecom Holding in Telecel Globe Limited diluted by 6%.”

34. Related party transactions

Transactions with subsidiaries, associates, with the Parent Company and its subsidiaries and other related parties are not considered atypical or unusual, as they fall within the Group’s normal course of business and are conducted under market conditions that would be performed by independent third parties.

The main related party transactions are summarized as follows:

Transactions with Weather Investments Group

The Group is directly controlled by Weather Investments. Transactions with Weather Investments and its subsidiaries mainly relate to management fees charged by the Company and interconnection traffic between the Group and the subsidiaries of Weather Investments, and particularly Wind Telecomunicazioni SpA.

In addition to the information presented above, in January 2009 the

transactions with OTT and ECMS relating to interconnection traffic and the sale of handsets.

Transactions with Associates of the Group

OTH provided financing to GWMC, an associate of the Group, in connection with the funding of the acquisition of the spectrum licenses. For further details see Note 20 “Other financial assets”.

Transactions with other related parties

The Group is indirectly controlled by the Sawiris family. Transactions with entities under the control of the Sawiris family mainly refer to transactions with Orascom Constructions Industries, Orascom Technology Solutions, Orascom Trading and Orascom Training & Technology.

Transactions with Orascom Technology Solutions mainly refer to maintenance activities of electronic hard- and software carried out for the Group. Orascom Constructions Industries and Orascom Trading mainly provide maintenance and construction services for the buildings the Group is working in, whereas transactions with Orascom Training & Technology mainly include management training programs.

A balance of EGP 33 million is outstanding due form on of the board members which will be settled against his esop plan when vested

Key management compensation

Key management includes executive and non executive directors of the Board of Directors of the Company, the Company’s chief financial officer, other managing directors considered key personnel and the chief executive officers of significant subsidiaries and joint ventures.

The compensation paid or payable to key management for employee services is shown below:

Key management compensation 2009 2008Salaries and other short-term employee benefits 61 60

Equity settled share based payments 11

Company sold its investment in M-Link to TLC SErVIZI S.p.A now (Wind International Services S.p.A.), a wholly owned subsidiary of Wind Telecomunicazioni S.p.A for a cash consideration of EGP 435 million. following the acquisition the name was changed to WIS sarl. Transactions with M-Link since the sale are disclosed in the line “WIS Sarl Transactions with Joint Ventures of the Group

Transactions with joint ventures of the Group mainly refer to

Sale of services and goods

Purchase of services and goods Interest income

2009 2008 2009 2008 2009 2008Weather Investments GroupWeather Investments 69 66 - 1 - -Wind Telecomunicazioni SpA 17 197 6 33 - -WIS sarl 437 - 364 - - -Joint venturesECMS 42 16 - - - -OTT 20 93 3 203 - -AssociateGWMC - - - - 179 49Other related partiesOrascom Construction Industries - - 11 16 - -Summit Technology (Orascom Technology Solution) - - 41 27 - -Orascom Trading - - 64 55 - -Orascom Training & Technology - - 1 66 - -Contrack facilities Management - - 4 - - -Total 585 372 494 401 179 49

Receivables Payables2009 2008 2009 2008

Weather Investments GroupWeather Investments 26 77 2 6Wind Telecomunicazioni SpA 4 33 20 22WIS sarl 147 - 90 -rain Srl 8 - 9 -Joint venturesECMS 6 28 1 6OTT 2 11 - 28AssociateGWMC 3,542 2,220 - -Other related partiesOrascom Construction Industries - - 2 6Summit Technology (Orascom Technology Solution) 5 5 5 6Orascom Trading 1 - 7 11Gemini 1 - - -Total 3,742 2,374 136 85

the Company is a party in a number of legal cases which resulted from carrying out its activities. Based on the legal advice obtained, the Company’s management believe that the outcome of these lawsuits, individually or in aggregate, would not be material to the Group’s results.

PMCL tax claims

PMCL is involved in proceedings regarding tax claims up to the year 2007 whereby the tax authorities conducted assessments by curtailing expenditure claimed by PMCL. PMCL has a tax claims up to the year 2007 that the tax authorities either framed or assessed. However, the company has field appeals to the appellate authorities against the re-assessment orders. The disputed demand against the assessments framed/aggregates to rs 1,921 million equivalent to US$ 22.8 million, equivalent to EGP 126 million .The company has provide a provision for such assessments with an amount of rs 163 million equivalent to US$ 1.82 million ,equivalent to EGP 10 million.

OTA tax claims

OTA has received a final tax assessment relating to 2004 tax year amounted to DZD 3,948 million equivalent to US$ 54.3 million ,equivalent to EGP 299 million .The Company field a claim against the tax authority after the payment of 20% of final tax assessment .

On January 2010 the company received a refusal on it’s objection dated June 2009 according to the Algerian tax laws and procedures the company has 4 months from date of receipt to re-object the refusal .A provision with an amount of DZD 709 million equivalent to US$ 9.8 million, equivalent to EGP 54 EGP was accounted for, considering that most of the tax assessment is excessive.

On November, 2009, OTA received a final tax assessment of the years 2005 until 2007, amounting to 43,910 M DZD equivalent to US$ 603.7 million, equivalent to EGP 3,325 million (Most of the amount (85%) is due to the reject of accountancy), The DGE (Tax Department for large scale companies ) reject the books and reconstituted the revenue on a unilateral basis .OTA has appealed the assessments after the payment of 20% of final tax assessment.

OTA accrued a provision of 2,957 M DZD equivalent to EGP 225 million, equivalent to US $ 41 million , according to an external expert report. The report assumes that the reject of accounting is arbitrary and the related tax assessment has been disregarded by the expert its own estimate. The assessed 2,957 MDZD amount refers to formal tax miscomputation made by OTA.

On March 7, 2010 OTA received a rejection on its submitted administrative appeal filed on December 2009 . In order to file its second appeal, Algerian law requires OTA to pay another 20% of the remaining balance of the taxes and penalties alleged to be owing in order to appeal the decision before the Commission Central, this shall amount to approximately $110 million, equivalent to EGP 606 million and shall be paid shortly by OTA from its own resources.

Pioneer Investment LtdFastlink Jordanian tax dispute: The Jordanian Tax Authority initiated court claims for JD 49.2 million (approximately EGP 353 million), equivalent to Euro 44 million, equivalent to USD 64 million in income tax against Pioneer Investment Ltd. In connection with the sale of fast link (Jordanian Mobile Telecommunication service) in 2002 to MTC, a wholly owned subsidiary of OTH.

79

US$ 7.3M for the financial year ended December 31, 2009.

Intouch tax claims

Intouch group received a tax claim amounting to DZD 204 million in addition to penalties and default interest amounting to DZD 51 million (equivalent to US$ 3.5 million ,equivalent to EGP 19 million). On January, 2009 the company paid 20% from total tax claim in order to be able to appeal against that claim. The Tax Disclosure in Mobizone Algeria Audited Financials for the period ended Dec. 31, 2009 mentioned that the company was granted a tax exemption amounting DZD205 Million and the remaining amount of DZD 51 million was recorded as Provision.

Letters of credit and guaranteesThe Group has provided guarantees and letters of credit in the ordinary course of business of the Group’s activities. Guarantees include the following:

- Letters of guarantee provided by ECMS to National Telecom regulatory Authority. The Company’s share in such letters of guarantee is equal to L.E 54.1 million equivalents to US$ 9.8 million.

- Letters of guarantee provided by ring Egypt to suppliers’ .The Company’s share in letters of guarantee is L.E 65.45 million equivalents to US$ 11.8 million.

- Letter of Guarantee amounting to US$ 1 million, equivalent to EGP 6 million in favor of NTRA to guarantee MENA Cable execution of its entire obligation related to constructing, operating and renting sea cables networks and its infrastructure for international communications.

- Letter of guarantee in a favor of Lebanon Ministry of Telecommunication (rOL) to guarantee OTH in the payment of any amount due by the selected Participant to rOL amount with US$ 30 million, equivalent to EGP 165 million.

- Guarantee provided by Orascom Telecom Bangladesh in favor of Ministry of Post & Telecommunication, the Chief Controller of Exports and Imports and Power development board existed of BDT 99 million equivalents to L.E 7.83million equivalent US$ 1.42 million.

36- Subsequent events

Share transactions

The Extra-ordinary General Assembly dated December 27,2009, delegated the Board of Directors members to proceed with all necessary legal procedures to increase the authorized capital from EGP. 2.5 to EGP. 7.5 Billion. The proposed rights Issue is intended to further strengthen the financial position and ensure OTH’s liquidity including financing needs for the Group in the case where there is no immediate resolution of the tax dispute in Algeria.

On January 13, 2010 in accordance with the Egyptian financial Supervisory Authority’s (“EfSA”) requirements, OTH published a Public Subscription Notice in connection with the proposed rights issue (the “rights Issue”). The Company currently issued up to 4,356,590,515 shares at the nominal price of EGP. 1 per share, to raise a total of EGP. 4,356,590,515 or approximately US$800 million (without issuing fees). Based on the above the issued and paid up share capital will reach 5,245,690.620EGP comprising 5,245,690,620 share.

Financing

Egyptian mobile telephone operator “Egyptian Company for Mobile Services (ECMS)” issued 1.5 billion Egyptian pounds ($273.3 million) in 5-year bonds with fixed annual yield hits 12.25 % payable once every six months starting mid-January. The bonds, which (ECMS) will use to finance the expansion of its network, Such bonds are divided into two tranches. The first one values L.E 1.4 billion and allocated for private offering and institutions while the other L.E 100 Million tranche will be allocated for public offering.

On february 17 2010, Orascom Telecom Holding received US$ 225 million from Weather Capital Special Purpose 1 S.A. as shareholders not bearing interest loan, , Where Weather Capital Special Purpose 1 S.A. has agreed that in the event the rights Issue is successful, the Loan under this Agreement will, automatically, be converted into new Shares (to be issued in the form of GDrs by the Depositary) at the share subscription price.

Other events

On January 21 2010,Orascom Telecom Holding announce that it has obtained Majority Senior Secured Lenders consent on the proposed permanent waiver related to the existence of a material tax claim under its US$2.5 billion credit agreement. The waiver obtained is specific to the Algerian tax claim against Orascom Telecom Algeria in respect of years 2004 to

2007. The waiver is conditional to the successful completion of a forthcoming capital increase of OTH.

On february 4, 2010, Orascom Telecom Holding (OTH) has been awarded an extension to the management contract of Alfa with the republic of Lebanon, for a period of 6 months ending on July, 31, 2010. Under this contract, OTH receives a monthly sum of US$ 2.5 million in addition to 8.5% of total revenues. Out of these amounts, OTH is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The republic of Lebanon is fully responsible for the CAPEX during the contract period.

37. Cash flow statements

Starting from the third quarter ended September 30, 2009 the company has reclassified the advances and loans made to associates and third parties from the “financing activities” to the “investing activities” caption. The reclassification was adopted in order to adhere to IAS7 par. 16 (e). Hence, the previous classification for the periods, March 2009 and June 2009 shall be reclassified accordingly.

Orascom Telecom Iraq Disposal Warranties

Orascom Telecom Iraq upon the disposal of its investment in (Iraqna for Mobile Services-subsidiary) the company provided warranty to the purchaser of the investment. This warranty, which in respect of tax covenant claims, of which no more than USD 60 million equivalent to EGP 331 million shall be payable in relation to tax covenant claim.

Mobinil

Dispute with france Telecom (and subsidiaries) regarding Mobinil: OTH’s position, relaying on the legal advice, is that the deadline for concluding the sale ordered by ICC award issued on March 10, 2009 (the ‘Award’) has time-expired as a matter of Egyptian law in light of the failure of france Telecom’s (or subsidiaries thereof) to conclude the sale during the 30 day period stipulated in the Award.Currently OTH Management cannot estimate the financial impact of this event on the financial statements of the Company.

Telecom Egypt Interconnection Prices

Telecom Egypt filed a complaint with the dispute resolution committee of the National Telecommunication Regulatory Authority (NTRA), with the purpose of changing its interconnect prices with the mobile operators, with which it has existing contracts. We responded to the complaint in front of the committee asking to honor the existing effective contract between the Company and Telecom Egypt. The NTRA issued a ruling on the dispute on September 3, 2008 in favor of Telecom Egypt by changing the interconnect prices between the fixed and mobile networks to be effective from that date.

The Company informed the NTRA of objection and rejection of the decision as it has no legal or contractual basis and that we intend to bring the matter to the courts in order to protect our interest.

On November 01, 2008 a law suit against the NTRA was filed in the Administrative Court at the State Counsel asking for staying and nullifying the NTRA decision.

On September 3, 2009 and based on the interconnect agreement (article (25) first paragraph) the Company filed an arbitration against Telecom Egypt according to the rules of The Cairo regional Center for International Commercial Arbitration in order to settle the existing dispute between the two parties. On October 9, 2009 Telecom Egypt sent an initial response and a counterparty claim related to the arbitration notification filed against it.

On January 5, 2010 a letter from NTRA was received with the purpose of making new changes in the interconnect prices between the different operators to be applied retroactively from September 1, 2009. The letter was based on the September 03, 2008 decision. On January 14, 2010 the company sent a letter to NTRA refusing this decision. The company and its external legal counsel believe that the Company has a strong legal position as the NTRA’s decision does not have legal or contractual ground, hence we continue to record interconnect revenue and costs based on the existing agreement with Telecom Egypt and other mobile operators.

The company applied these decisions would have recorded less interconnect revenue the group proportionate share amounts to EGP 49 equivalent to 9M US$ , less interconnect cost the group proportionate share amounts to EGP 17M equivalent to 3M US$, for the financial year ended December 31, 2008 and less interconnect revenue the group proportionate share amounts to EGP 168M equivalent to US$ 30.5 million and less interconnect cost the group proportionate share amounts to EGP 40M equivalents to

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Appendix A Appendix A

Current Non-current Total Currency Nominal Line of

credit Maturity Securities

Millions of EGP Millions of contract currency

Orascom Telecom Holding S.A.E.


Credit Agricole Indo Suez Ban 63 - 63 USD 11 22 30-6-2010 Unsecured

National Bank Of Abu Dhabi 54 - 54 USD 10 10 21-2-2010 Unsecured


fortis Banque 15 - 15 EUrO 2 20 14-6-2010 Unsecured

HSBC 80 - 80 USD 15 15 1/7/10 Unsecured

NSGB-Car Loan 2 9 11 EGP 11 15 2-2-2013 Unsecured

NSGB-Car Loan 1 4 5 EGP 5 6 8-3-2014 Unsecured

NSGB-Car Loan - 1 1 EGP 1 1 8/3/14 Unsecured

A1 Term Loan Supplemnt 571 4,758 5,329 USD 987 987 17-4-2013 Secured

A2 Term Loan Supplemnt 297 2,473 2,770 USD 513 513 17-4-2013 Secured

revolving Credit Supplemnt 7 5,509 5,516 USD 1,000 1,000 17-4-2013 Secured

Audi Bank 207 - 207 USD 38 50 28/3/10 Unsecured

Citi bank 53 - 53 USD 10 10 Within one Year Unsecured

Egyptian Gulf Bank 26 - 26 USD 5 5 31-5-2010 Unsecured

Pireaus 28 - 28 USD 5 5 Within one Year Unsecured

1,726 12,754 14,480


Citibank N.A - Islamabad - Pakistan 24 21 45 PKr 633 1,740 02/07/2011 SecuredRoyal Bank of Scotland (Formerly ABN AMRO Bank)- Islamabad- Pakistan 1 231 232 PKr 3,548 3,548 18/12/2012 Secured

Habib Bank Limited - Islamabad - Pakistan (2007) 1 196 197 PKr 3,000 3,000 18/12/2013 Securedroyal Bank of Scotland, London - Citibank London - ECGD - ECA 38 55 93 USD 17 48 28/02/2012 Secured

royal Bank of Scotland, London - Citibank London - COfACE Loan - ECA 163 142 305 EUr 39 125 30/12/2011 Secured

royal Bank of Scotland, London -AB Svensk ExportKredit - Sweeden - Hermes - ECA 61 29 90 EUr 12 46 29/03/2011 Securedroyal Bank of Scotland, London -The OPEC fund for international Development - ECA 20 19 39 EUr 5 10 15/12/2011 Secured

royal Bank of Scotland, London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - ECGD - ECA round II

64 202 266 USD 51 70 28/02/2014 Secured

royal Bank of Scotland London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Coface - ECA round II

116 267 383 EUr 51 85 31/12/2013 Secured

royal Bank of Scotland, London; Citibank International plc; Sumitomo Mitsui Banking Corporation Europe Limited - Hermes - ECA round II

140 246 386 EUr 50 110 3/16/12 Secured

DEG - Germany 42 117 159 EUr 20 20 15/08/2013 Secured

FMO - Netherlands 42 117 159 EUr 20 20 15/08/2013 Secured

MCB Bank Limited (PKr 22.060 Billion) - Islamabad - Pakistan 98 1,439 1,537 PKr 22,060 22,060 04/01/2014 Secured

SCB Bank Limited STfA (PKr 5.1 Billion) - Islamabad Pakistan 63 275 338 PKr 5,100 5,100 09/05/2013 Secured

Dubai Islamic Bank (Pakistan) Ltd Ijara facility PKr 700 Million 1 45 46 PKr 700 700 09/05/2012 Secured

PAK Kuwait Investment Company Limited - Karachi - Pakistan 21 - 21 PKr 300 300 08/07/2010 Secured

HSBC Bank Middle East Limited- Islamabad - Pakistan 7 - 7 PKr 101 600 Within one year Secured

902 3,401 4,303


Millions of EGP Millions of contract currency

Egyptian Company for Mobile Services

Misr/CIB/NBE (Syndicated loans) 169 396 565 EGP 558 878 30/04/2013 Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans) 23 533 556 EGP 541 1,121 14/08/2014 Unsecured

Misr/CIB/NSGB/HSBC (Syndicated loans) 66 1,027 1,093 EGP 1,073 1,073 26/02/2015 Unsecured

Misr 1 - 1 EGP - 12 14/10/2009 (Under renewal) Unsecured

BNP 27 - 27 EGP 42 59 30/4/2010 Unsecured

BB 24 - 24 EGP 24 27 under renewal Unsecured

H.S.B.C 12 - 12 EGP - 41 9/1/10 Unsecured

CAE 76 - 76 EGP 83 88 31/3/2010 Unsecured

NSGB 68 - 68 EGP 73 74 30/4/2010 Unsecured

Scotia 34 - 34 EGP 34 44 9/12/10 Unsecured

CIB 14 - 14 EGP 15 24 16/09/2010 Unsecured

AUB 17 - 17 EGP 17 17 12 months revolving Unsecured

531 1,956 2,487

Orascom Telecom Bangladesh Limited

Hermes facility 86 322 408 USD 79 79 1/7/14 Secured

USD Commercial faciilty 174 472 646 USD 122 122 1/8/13 Secured

DfI facility 18 138 156 USD 30 30 15/6/14 Secured

BDT A facility 48 73 121 BDT 1,575 1,575 30/6/12 Secured

BDT B facility 16 54 70 BDT 918 918 30/6/14 Secured

Standard Chartered Bank, London 27 82 109 USD 25 50 30/9/16 Secured

Commercial Bank of Ceylon 8 - 8 BDT 100 100 20/3/10 Unsecured

Citibank, N.A. 49 - 49 BDT 620 620 1/2/10 Unsecured




BrAC Bank Ltd. 32 - 32 BDT 400 570 28/3/10 Unsecured






National BankLtd 8 - 8 BDT 102 200 30/10/10 Unsecured

Standard Chartered Bank (Working Capital Syndication) 28 - 28 BDT 360 360 17/3/10 Unsecured

National Bank Ltd (Working Capital Syndication) 8 - 8 BDT 100 100 17/3/10 Unsecured

Pubali Bank Limted (Working Capital Syndication) 28 - 28 BDT 350 350 17/3/10 Unsecured

Standard Bank Limited (Working Capital Syndication) 8 - 8 BDT 100 100 17/3/10 Unsecured

Uttara Bank Ltd. (Working Capital Syndication) 12 - 12 BDT 150 150 17/3/10 Unsecured



731 1,141 1,872

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Appendix A Appendix B


Millions of EGP Millions of contract currency Orascom Telecom Algeria S.P.A. Hermes loan 2006 114 214 328 USD 62 86 15/11/12 SecuredCoface Loan 2006 145 - 145 DZD 1,904 9,724 15/11/10 SecuredBNP Parisbas Overdraft 2009 2 - 2 DZD - 2,200 15/12/09 Secured 261 214 475 Orascom Telecom Tunisie S.A. International refinancing 132 129 261 Euro 100 100 March-2011 SecuredLocal refinancing 99 97 196 TND 105 105 March-2011 Secured 231 226 457 Moga Holding Limited CDC Mezzanine shareholder loan 161 - 161 EUr 18 18 15/8/2010 Secured 161 - 161 Med Cable Limited Export Credit Calyon 16 16 32 EUr 6 12 13/9/11 Guaranteed 16 16 32 Intouch for Telecommunication Services NBAD 9 4 13 L.E 35 35 1/4/11 SecuredBarclays 10 - 10 L.E 35 35 1/10/10 SecuredBarclays 1 - 1 L.E 1 1 less than one year Unsecured 20 4 24 Telecel Globe Limited Banque de development des etats de l›afrique Central 2007 4 24 28 XAf 2,305 2,500 30/06/2014 Guaranteed

Commercial Bank Centrafrique 2008 3 2 5 XAf 398 750 30/06/2011 SecuredCommercial Bank Centrafrique 2007 1 3 4 XAf 327 500 31/07/2012 GuaranteedEcobank Centrafrique - Local Loans 6 29 35 XAf 2,929 3,000 8/10/14 SecuredCommercial Bank Centrafrique Overdraft 2009 1 - 1 XAf 72 250 12 months revolving UnsecuredIBB - Bank Overdrafts 14 - 14 USD 2 2 12 months revolving UnsecuredNedbank Limited and Investec Bank Limited - 228 228 NAD 311 311 12 months revolving Secured 29 286 315 Trans World Associates (Private) Limited Other - various banks 6 38 44 PKr 643 1,608 November 27, 2013 Secured 6 38 44 Ring for Distributions Loan from Arab African Bank - Egypt 2 - 2 EGP 2 3 17/12/10 Unsecured 2 - 2 Total - liabilities to banks 4,616 20,036 24,652

Current Non-current Total Nominal Maturity Securities

Millions of EGP Currency Millions

Pakistan Mobile Communications Limited royal Bank of Scotland and Deutsche Bank Securities Inc. (Euro Bond) 7 612 619 USD 112 13/11/2013 Unsecured

Pak Oman Investment Company Limited - Karachi - Pakistan (Trustee - Public Listed TfC) 38 176 214 PKr 3,257 31/05/2013 Secured

Allied Bank Limited - Islamabad - Pakistan (2007) 225 - 225 PKr 3,325 01/10/2010 Unsecured

Allied Bank Limited - Karachi - Pakistan (2007) 7 254 261 PKr 3,905 28/10/2013 Unsecured

Orascom Telecom Finance SCA

Senior Notes OTFSCA 128 4,072 4,200 USD 750 8/2/14 Unsecured


Indexed linked notes 12 1,383 1,395 USD 230 18/2/13 Secured

Total Bonds 417 6,497 6,914

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Appendix C – Scope of Consolidation Appendix C – Scope of Consolidation

Selected subsidiaries, joint ventures and associates Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom HoldingNorth Africa Algeria Orascom Telecom Algeria S.P.A. 96.81% Algeria Orascom Telecom Service Algeria 96.81% Algeria Data Base Management services Algeria 100.00% Algeria ring Algeria LLC 98.01% Algeria Caring Algeria 97.03% Algeria MobiZone Algeria 100.00% Algeria Algeria Win Call 100.00% Algeria Consortium Algerian Telecommunication S.P.A. 49.83% Morocco Kenza Telecom Morocco 100.00% Tunisia ring Tunisia 78.21% Tunisia ring Distribution Tunisia 77.43% Tunisia ring retail Tunisia 76.65% Tunisia R&D Tunisia 96.53% Tunisia Orascom Telecom Tunisie S.A. 50.00%Asia Bangladesh Orascom Telecom Bangladesh Limited 100.00% Bangladesh ring Bangladesh 98.98% Bangladesh MobiZone Bangladesh 100.00% North Korea CHEO Technology JV (DPKr) 75.00% Pakistan Pakistan Mobile Communications Limited 100.00% Pakistan Business & Communications 100.00% Pakistan Link Direct International Limited 100.00% Pakistan Mobitalk Limited 100.00% Pakistan MobiZone Pakistan (Pvt.) Limited 100.00% Pakistan PMDL Limited 16.70% Pakistan Trans World Assoicates (Private) Limited 51.00% Pakistan ring Pakistan 94.59% Pakistan ring Pakistan Service 94.59% Pakistan WOL Telecom Limited 100.00% Pakistan Call Pack Pakistan 100.00%Middle East Dubai Gloabl Entity for Telecom Trade 100.00% Dubai Global Entity for Telecom Trade -fZE 100.00% Dubai ring Dubai 96.53% Dubai LinkDotNet Dubai 100.00% Dubai MobiZone Dubai 100.00% Egypt Middle East and North Africa Submarine Cable System –Mena Cable 100.00% Egypt Cortex Egypt 94.00% Egypt ring for Distributions 99.00% Egypt Advanced Electronic Industries 96.53% Egypt Caring Egypt 97.02% Egypt Connect 50.49% Egypt MMMS 98.80% Egypt Intouch for Telecommunication Services 100.00% Egypt Link Egypt 99.96% Egypt Into Net 55.78% Egypt LINKdotNET 100.00% Egypt Arab finance Securities 100.00% Egypt Link Development 99.80% Egypt Link Online Egypt 100.00% Egypt Arpu for Telecommunication Services 100.00% Egypt Global Telecom 95.80% Egypt Egypt Call 99.98% Egypt Mobinil Services Egypt 35.86% Egypt Mobinil for Telecommunication S.A.E. 28.75% Egypt Egyptian Company for Mobile Services S.A.E. 34.67% Egypt Egyptian french Company for finance Lease 4.91% Iraq ring Iraq 96.53% Palestine Pal Call Palestine 99.90%

Selected subsidiaries, joint ventures and associates Country of domiciliation Shareholding (directly/indirectly) held by Orascom Telecom Holding Middle East Qatar LDN Qatar 49.00% Saudi Arabia LinkDotNet Saudi Arabia 100.00% Saudi Arabia MobiZone Saudi Arabia 100.00%Central Africa Burundi U-Com Burundi S.A. 100.00% Central Africa Telecel Centrafrique S.A. 100.00%

Namibia Power-com Cell one 100.00% Sudan Sudan Call 70.00%North America Canada Globablive Investment Holdings 47.60% Canada Globalive Canada Holdings 65.40% Canada Globalive Wireless Management 65.40% Canada Gloablive Wireless LP (GELP) 65.40% Canada Globalive Telecom Holdings 65.40% Canada Orascom Telecom Holding (Canada) Limited 100.00%Europe france Orascom Telecom Services Europe 100.00% france Orascom Telecom Wireless Europe 100.00% Italy MobiZone Italy 99.00% Luxembourg M Link Sarl 100.00% Luxembourg Orascom Luxrembourg Sarl 100.00% Luxembourg Orascom Luxembourg finance SCA 100.00% Luxembourg Orascom Telecom Sarl 100.00% Luxembourg Orascom Telecom finance SCA 100.00% Luxembourg M Link Teleport 100.00% Malta Sawyer Limited 100.00% Malta Orascom Telecom Eurasia Limited 100.00% Malta Oratel International Inc plc 100.00% Malta Moga Holding Limited 100.00% Malta International Wireless Communications Pakistan Limited 100.00% Malta TMGL 100.00% Malta Telecel International Limited 100.00% Malta Orascom Tunisia Holding 100.00% Malta Carthage Consortium Limited 100.00% Malta Orascom Iraq Holding 100.00% Malta Orascom Telecom Iraq Corporation 100.00% Malta Orascom Telecom Ventures Limited 100.00% Malta Telecel Globe Limited *94% Malta Orascom Telecom Holding (Malta) Canada Limited 100.00% Malta M Link Limited 100.00% Malta Minimax Ventures 100.00% Malta financial Powers Plan Limited 100.00% Malta Orascom Telecom ESOP Limited 100.00% Malta Orascom for International Investment Holding 99.90% Malta Data Base Management services Limited 100.00% Malta Orascom Telecom CS 100.00% Malta Mcube 51.00% Netherland Orascom Telecom Netherland 100.00% Switzerland Telecel International S.A. Switzerland 100.00% United Kingdom Med Cable Limited 100.00% United Kingdom Orascom Telecom WiMax 100.00% United Kingdom International Telecommunication Consortium Limited 50.00%

*see note (32)

Orascom Telecom Holding Annual Report 2009

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