JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM

Monday, June 07, 2010

Equity Research

Can Elephants Dance? BUY

Market Price (EGP/share) 5.8
Three out of OT’s top four mobile operations are in countries (Algeria,
Tunisia & Egypt) which are expected to reach an average mobile penetra- Target (EGP/share) 7.2
tion rate of 78% by the end of 2010. This will ultimately curb additional sub- Upside 23%
scribers uptake growth. Leaving revenue growth more dependant on airtime
GDR Market Price (US$/GDR) 5.2
consumption and restructuring product mix. Furthermore, although Pakistan has
a lesser mobile penetration rate of 57%, its income per capita disparity com- GDR Target (US$/GDR) 6.4
pared to the aforementioned markets and last two years mobile penetration Share : GDR Conversion Rate 5:1
growth levels, we expect the Pakistani mobile market penetration growth will
also be subdued over the coming couple of years. Reuters Codes ORTE.CA
ORTEq.L
Tunisiana duopoly market came to an end, in the beginning of May this year,
with Orange launching its fixed + Mobile operations. Orange is debuting with a Full Name: Orascom Telecom Holding
3G network, which imply that Tunisiana may need to expand its capex in order Short Name OT
to role out its own 3G network, once its permitted to do so by Q3 FY10.
Exchange Listing EGX
Furthermore, Tunisia with a population of 10.4 million, has over 5 million LSE
tourist arrivals per year, which imply that Orange with 189 million worldwide Index Inclusion EGX30
customer base under its umbrella, has great potential to capture a significant
portion of the Tunisian mobile market roaming revenues and harming Tunisi- Number of shares (mn) 5,246
ana’s ARPU without even initiating local price wars.
Market cap (EGP bn) 30.5
MTN Group has been for a while in talks with OT regarding acquiring
EV 2010 (EGP bn) 49.9
some of the latter’s assets. MTN had high hopes to include Djezzy, in the port-
folio of assets it acquires, but the Algerian government has since insisted on 52 Week Low-High (EGP) 4.7 - 7.9
being the sole buyer of Djezzy and recently started formal talks with OT regard- Average Daily Volume (52 weeks) 17.1 mn
ing Djezzy’s sale. MTN remain in talks regarding buying other of OT’s assets,
Stock Performance Absolute / Relative to index
with speculations that MTN will bid on Telecel Globe alone, or along with Tu-
nisiana, and even some speculations say the talks may include Banglalink too. Three month -2% / +3%

OT and France Telecom, conflict surrounding Mobinil has came to an end. Six month +8% / +7%
OT is to book US$300 million this year from the compensation received for
One year -17% / -19%
burying the hatchet. This lump sum will bump up OT’s FY10 bottom line by
an estimated net of tax amount of EGP1.35 billion.
Competition in the Bangladesh’s mobile market is expected to intensify in Shareholders Ownership stake
the coming period after Bharti Airtel acquired 70% of the country’s fourth Weather Investment 53.5%
operator, Warid Telecom, and has revealed its commitment to spend US$1
Free Float 46.5%
billion over the coming years to boost Warid’s position in the market.
Analyst: Mohamed Fahmy
Wind Mobile - Canada started operations in December 2009. The Cana- Email : mfahmy@jaziracapital.com
dian Mobile market is totally different from OT’s other playing fields. Can-
Mobile: +2012 2157312
ada currently has six mobile operators with a penetration of over 70%. Further-
more, the market top two operators had an average ARPU and OPEX per sub of O T P ric e C ha rt ( EGP )
US$59/month and US$37/month respectively in 2009. Ultimately, we don't 8
expect Wind Mobile to generate positive earnings before 2014, due to the 7
expected massive capex and consequent debt interest burden to put this
6
network on the map of Canada’s competitive mobile market.
5
We have valued OT based on Sum of the parts valuation method, while utilizing 4
DCF in attaining the valuation of each part. We also added the net of tax value M - A- M - J - J - A- S- O- N- D- J - F- M - A- M -
of Mobinil’s related US$300 million compensation fee and Linkdotnet sale 09 09 09 09 09 0 9 0 9 0 9 0 9 0 9 10 10 10 10 10

which is estimated to be at an EV of US$130 million, to come up with a con-

FY ending Dec. 2009a 2010e 2011f 2012f
solidated OT equity value of US$6.8 billion. (EGP7.2/OT share and US$6.4/
GDR). Revenues (EGP mn) 28,435 25,685 23,348 24,454
EBITDA Margin 43.1% 41.5% 40.7% 39.8%
We created an alternative valuation scenario, based on the speculations sur-
rounding the talks between OT and MTN. We see the maximum upside based EPS (EGP) 0.35 0.57 0.28 0.32
on EV/Sub. multiples for selling Djezzy, Telecel, Tunisiana and even Bangla- DPS (EGP) 0.00 0.35 0.14 0.18
link can pull OT’s value up to EGP11/share. However, we wish to highlight PER 16.5 10.2 20.5 18.3
that this is an extremely speculative scenario and buying should be capped at
DY 0.0% 6.0% 2.5% 3.1%
10% discount to the EGP7.2/share target price until those deals or part of
them is confirmed and adjust accordingly. EV/EBITDA 4.8 4.8 5.4 5.2
Net Debt (EGP mn) 27,440 21,295 20,849 19,537

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JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

Inside:
Djezzy stuck between a rock and a hard place Page 3
Tunisiana duopoly market comes to an end Page 4
OT to report Mobinil below EBITDA Page 5
OT’s Mobinil put option & future compensation inline with our Mobinil’s value Page 5
Vodafone Egypt controlling stake not for sale Page 5
OT moves to developed markets with Wind Mobile Page 6
A glance on the Canadian mobile market Page 6
Wind Mobile started operation in December 2009 Pages 6&7
Globalive Communications Page 7
Talks on consolidation in Pakistan’s mobile market Page 7
Competition to intensify in Bangladesh Page 8
Q1 results pulled down on the back of Wind Mobile’s Losses Page 9
Consolidated Assessment & Projections Page 10
Valuation Page 11
So, Can Elephants Dance? Page 12
OT in discussions to sell some of its assets to MTN Pages 12&13
The maximum upside behind MTN acquisition talks Page 13
KPIs and assumptions Pages 14, 15 & 16
Historical & forecasted financials Page 17

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 JAZIRA SECURITIES BROKERAGE
June 7, 2010
Djezzy represent a significant
portion of OT’s income and
value
Algeria has been trying to re-
cover the wasted income from
Djezzy’s historical lucrative
termination agreement through
taxing exempted years
Algerian’s are attempting to
keep the value of their compa-
nies locked inside the country
We lowered Djezzy’s value on
the back of specific political
risk by 25%
Algerian mobile market is
entering its ex-growth phase
Football matches are the latest
addition to our mosaic of vari-
ables with regards to valuing
Djezzy
ORASCOM TELECOM
Equity Research
Djezzy stuck between a rock and a hard place
Djezzy alone represented 37% and 49% of OT’s consolidated revenues and EBITDA in FY09,
along around over 60% of OT’s value based on our model. This makes OT value very sensitive
to any change in Djezzy’s operations and Value.
Djezzy is currently stuck between the Algerian government which from where we are looking,
seem harsh on OT and operationally in a market that is getting well penetrated accompanied
with the general economic slowdown.
Regarding the first issue, we believe it has traces that go back a decade in time. Djezzy started
in Algeria at the beginning of the millennium, while Algeria was still plagued with political
instability and a fragile economy with the country’s international reserves not surpassing US$20
billion. This has made Algeria grateful for any investor to come into the country, and thereby
gave some good incentives including tax exemptions and extended a lucrative termination
agreement with Djezzy, which made OT see its Algerian subsidiary reporting over 60%
EBITDA margins until recently.
Now, Algeria has over US$150 billion of international reserves and a stable political environ-
ment, making the country having an appealing business case and an obvious attractive proposi-
tion for investors with its proven oil and gas reserves putting it in the 16th and 9th position in the
ranks of the top oil and gas reserves countries respectively.
We believe that the tax backlash that Djezzy suffered regarding taxing on its tax exempted
years, which culminated with related penalties to around US$600 million, is mainly related to
Algeria settling the account for the gains the government wasted from signing the termination
agreement back in 2001.
Orascom Construction Industries (OCIC.CA), another of Orascom’s company, sale of its Alge-
rian cement operations as part of its sale of all its cement operations to Lafarge in a deal worth
US$12.4 billion, back in late 2007, may have something to do with why Algeria is focused on
buying Djezzy. Talks say this created issues because Lafarge is French and Algerians are not
comfortable with the French having holdings in their country, well maybe, but surely the deal
size has something to do with why Algeria is fixated on Djezzy also. Surely, the deal value
showed the Algerian decision makers how much money can be made from their companies.
There is much difference between research reports saying how much a company is worth and
having a real transaction happening, and the Algerians seem they don’t want to miss for a sec-
ond time on the row. Furthermore, Algeria has its own problems that need cash to solve with a
budget deficit of around 10% of GDP and an unemployment rate is over 12%.
But what does this mean in deals value? Will Algeria play fair with regards to what price to set
for the sale? and what kind of environment will it provide Djezzy?, if OT decides to remain in
the country. All those risks have resulted in us opting to add a 5% over the cost of equity used
in calculating Djezzy’s WACC, bringing the cost of equity up from 17.1% to 22.1% and drag-
ging Djezzy’s enterprise value from US$6.0 billion to US$4.5 billion, reflecting a 25% decrease
in our attained EV for the Algerian subsidiary.
On the operational level, we expect the Algerian mobile market penetration to grow at CAGR
of 5% over the next five years compared to 14% over the past four years, while Djezzy would
capture 40% of the annual net additions over the coming 5 years. Furthermore, we assumed that
Djezzy’s ARPU would fall 12% this year, bringing revenues and EBITDA down 7.6% and
9.5% respectively in 2010.
In an ironic as it is a shameful turn of events, Djezzy suffered the ramifications of Egypt vs.
Algeria football World Cup qualifying match, in November 2009. Djezzy had some of its assets
vandalized after the match, which resulted in operational interruptions and an estimated cost of
US$55 million between the loss of revenue opportunity and damaged to stocks of SIMs, scratch
cards and handsets.
Can this be a trend? Egypt national team has no scheduled matches with Algeria this year, but
both Ahly and Ismali, leading Egyptian clubs and old rivals of Algerian teams, have matches in
the CAF championship with J.S Kabylie of Algeria in July, August and September of this year.
We think Algerians will be more concerned with the World Cup and hopefully these misfortu-
nate event don’t repeat itself. It is worth noting, that we think that the government’s obvious
stance against Djezzy’s owner had an implicit factor toward encouraging this mob behavior.
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 JAZIRA SECURITIES BROKERAGE
June 7, 2010
Orange Tunisian network will
enjoy the group support in the
form of efficiency and global
customer appeal
We assumed that Tunisiana
ARPU would fall 32% in the
first two years of Orange’s
operations driven mainly by
the loss of roaming revenues
ORASCOM TELECOM
Equity Research
Tunisiana duopoly market comes to an end
Orange has introduced both its fixed and mobile telephony networks in early May this year.
This will create a whole different playing field for OT’s Tunisian subsidiary, Tunisiana.
Orange is the world’s fifth largest mobile operator, with 189 million worldwide mobile cus-
tomer, spread over 36 countries out of which 13 are in European countries, including UK,
France and Spain and 17 in Middle Eastern and African countries. This makes Orange a fierce
competitor with regards to experience, capex roll out and operational efficiency .
Tunisia has a population of 10.4 million but over 5 million tourist enter the country per year.
This will put Orange in a competitive position from day one, given its brand will relate more to
tourists and more importantly to those whom are Orange’s customers in their home countries.
We essentially factored for the loss of roaming revenues by reducing ARPU by 32% from
US$12.6 in 2009 to US$8.5 in 2011. On the other hand, we don’t see Orange as shaking the
Tunisian SIM market structure much, with our expectations of Tunisiana market share to fall
from 53.4% in 2009 to 50.5% in 2011, as we project that net of churn Tunisiana will capture
20% of Tunis’s new mobile subscribers in 2010 and 30% thereafter.
Furthermore, Orange announced its network will include both 2G and 3G technologies, which
will add to its network appeal to European roaming customers. We expect that Tunisiana will
match the upgrade and launch its own 3G network once the exclusivity for Orange’s 3G license
ends by Q3 2010. Thereby, we forecast a hike in Tunisiana’s capital expenditure to US$118
million in 2010 and US$148 in 2011 up from US$91 million in 2009.
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 JAZIRA SECURITIES BROKERAGE
June 7, 2010
OT and FT reach a new agree-
ment regarding their joint
ownership in Mobinil
OT to report Mobinil through
equity method from now
OT to receive US$300 million
as part of the new amended
agreement with FT
OT has been given a put op-
tion on its Mobinil shares at
EGP222/share to EGP249/
share...
…and to receive an additional
US$132 million for loss of
Mobinil’s management fees in
the case of using its put option
We think the put option will
expire without being used ex-
cept if OT finds an extremely
intriguing opportunity or con-
flict rises again between the
partners
Talks of Vodafone Group sell-
ing its Egyptian operation
emerged and faded again in no
time
In the mean time, OT showed
interest in the alleged sale
ORASCOM TELECOM
Equity Research
OT to report Mobinil below EBITDA
France Telecom and Orascom Telecom have in April 2010 settled the dispute related to Egyp-
tian Company for Mobile Services - Mobinil (EMOB.CA). The outcome have gave France tele-
com a relative upper hand on Mobinil’s management over OT, which led the latter to qualify its
investment in Mobinil more appropriate to be accounted for using the equity method. The new
agreement was finalized in Q2 2010. We assumed that OT will account for Mobinil using its
historical proportionate consolidation method for the whole of Q2 and start to report Mobinil in
the investment income line starting Q3 2010.
The impact of this change will amount in a drop in OT’s revenues by around US$450 million
and US$960 million in 2010 and 2011. Regarding bottom line the new accounting method will
result in the same outcome as proportionate consolidation.
However, Mobinil will generate for OT an extra US$300 million this year, as France Telecom
agreed to pay the amount as part of the resolutions of the agreed settlement between FT and OT.
We have booked the amount in as an non-recurring revenues net of tax in the extraordinary
items line. Furthermore, we assumed OT will remain to consolidate the management fees it
collects from its share in Mobinil’s management in the telecom services revenues line going
forward in our model until the company officially states were will it be booked.
OT’s Mobinil put option & future compensation inline with our Mobinil’s value
As part of the FT/OT agreement, OT was given a put option to sell its shares in Mobinil Tele-
communications and Mobinil exclusively to FT starting September 2012 with the selling price
increasing from EGP221.7/Mobinil share once the option becomes active and increasing to
EGP248.5/share in November 2013, when this put option expires.
Furthermore, if OT sells its stake to FT, in addition to the agreed price, it will receive €110 mil-
lion in compensation for its 0.75% stake of Mobinil’s revenues that it receives each year as fees
for its share in Mobinil’s management.
The sum of the shares value and compensation for loss of management fee imply that in the
case of OT sells its shares to FT, it will receive an amount of US$1.5 billion. We have then as-
sessed the difference between the September 2012 and November 2013 strike prices and de-
duced the agreement has an implied annual price increase of 9.2%. Using this rate to discount
the US$1.5 billion amount to present time, we got a deal discounted value of US$1.21 billion
compared to our attained DCF value of OT’s stake of US$1.20 billion.
What does this mean? That OT would be indifferent regarding selling or holding its stake in
Mobinil. However, it is understandable why it’s a put option, since even if its at value, it is still
cheap given its dual balance sheet leveraging. Once on Mobinil books and a second on FT or
OT books, as we believe discount factors for OT and FT are much less than the conventional
investor. Thereby, we don’t think OT will use this option unless it finds a very lucrative alterna-
tive opportunity or conflicts arise again between the partners.
Vodafone Egypt controlling stake not for sale
News have emerged in mid May, that as part of Vodafone Group restructuring its oversees in-
vestments, it may sell its 55% stake in Vodafone Egypt. Furthermore, Telecom Egypt which
owns the remaining 45% in VE said it would be interested to acquire VG’s stake.
Following this news, OT executive chairman, stated that his company would be interested in
buying VG’s stake. The NTRA on the other hand, said that OT can qualify to bid but must
forgo its management of Mobinil.
However, earlier this month, both VG and TE came out in a joint release to state they have
reached a decision of keeping each of their stakes in Vodafone Egypt as is, while revealed their
commitment toward joint cooperation to insure the success of VE. Thereby putting the lid on
the subject.
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 JAZIRA SECURITIES BROKERAGE
June 7, 2010
OT has a 65% economic stake
in Wind Mobile-Canada
Wind Mobile to spend over
US$1.4 billion over the com-
ing years
OT extended a US$695 mil-
lion shareholders loan to Wind
Canada has over 23 million
mobile subscriber with a pene-
tration of 70%
Rogers Mobile leads the mar-
ket with 37% market share
Average ARPU of the leading
two operators in Canada stood
at US$59 in 2009
Wind debuted with aggressive
roll out of cheap packages
We expect Wind to have lower
ARPU than incumbent opera-
tors and higher OPEX in the
first years…
… while capture 8.3% of the
market by 2015
ORASCOM TELECOM
Equity Research
OT moves to developed markets with Wind Mobile
OT’s newest mobile network is Wind Mobile which operates in all of Canada except Quebec.
OT has 65% stake in Globalive Investment Holding, which owns 100% of Globalive Wireless
Management Corp. (Wind Mobile) and Globalive Telecom Holding Corp. (A fixed line opera-
tor). However, due to Canadian ownership and control rules, OT only has 32% voting power in
Globalive Investment Holding and consequently in Wind Mobile, thereby will account for Wind
Mobile utilizing the equity method.
Although Canada is considered a different market compared to OT’s other operations which all
operate in developing markets, Canada can relate to OT’s leading operations with respect to
mobile market penetration levels.
OT has said that Wind Canada is set to spend over CAD1.5 billion (US$1.43 billion) over the
coming years, in order to set up the network, including the license fees of US$420 million
which has already been paid. Furthermore, in OT’s May 13th, quarterly results conference call
Aldo, OT’s CFO stated that Wind has already spent between US$600 million and US$700 mil-
lion including the license fees.
Furthermore, in order for Wind to jump start its operation, OT has extended a shareholders’
loan to Wind Mobile which amounted to US$695 million including compounding interest as of
end of December 2009.
A glance on the Canadian mobile market
Canada, prior to Wind Mobile’s entry had 5 mobile operators, with a total of 23 million sub-
scribers at the end of 2009, reflecting a penetration rate 70%. Mobile subscribers in Canada
increased by 7%, while net additions declined to 1.5 million in 2009 compared to 1.6 million in
2008. Furthermore, out of 2009 total Canada’s mobile subscribers 76% were post paid.
The top three mobile operators in Canada have over 95% of the market, with Rogers Wireless is
Canada’s largest mobile operator with respect to subscribers with 37% market share. Rogers is
followed by Bell Wireless and Talus Mobility with their market shares standing at 30% and
29% respectively at the end of 2009. The forth and fifth operators are localized mainly in Sas-
katchewan and Manitoba provinces.
In order to understand the dynamics of the market better we looked at Rogers’ and Bell’s 2009
annual reports. Rogers and bell average mobile segment ARPU came at US$59/month in 2009,
while we looked at OPEX per sub in order to understand what is the operating cost in Canada’s
established operators and gain insight on what will be Wind Mobile’s initial OPEX levels.
OPEX per subscriber averaged US$37/month for Rogers and Bell. It is worth noting that
Rogers ARPU is 19% higher than Bell’s.
We expect the Canadian mobile market to reach the 100% penetration by 2014, with average
EBITDA margin levels to fall from the 2009 levels of 46.5% to 45.9% by 2014.
Wind Mobile started operation in December 2009
Wind mobile started operation in December 2009, it started with aggressive roll out of packages
and has been dubbed as “Canada’s low cost mobile operator”. Furthermore, it entered into part-
nership with T-Mobile for USA roaming services at extremely competitive prices compared to
Canada’s established operators.
Some misfortunes may have met Wind’s launch as chief customer officer and the second high-
est-ranked, resigned from Wind Mobile on March 4, 2010. The early-on executive resignation
can be construed as to have something to do with disappointing initial market penetration.
Low cost or not, we expect Wind to start at 50% higher OPEX per sub than incumbent opera-
tors, while we expect the first year’s ARPU to be 30% less than market average or at US$41.7/
month.
With regards to market share, we expect Wind to capture 17% of new additions in 2010 and
18% thereafter, bringing Wind’s customers to 3.1 million with a market share of 8.3% by 2015.
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 JAZIRA SECURITIES BROKERAGE
June 7, 2010
Wind Mobile to turn profitable
by 2014
Globalive other operation in-
clude added value services
over pre-established telephone
networks
Pakistan’s mobile market
looks overcrowded
Zong is Pakistan’s smallest
mobile operator
Most probably a buyer will
make the first move
ORASCOM TELECOM
Equity Research
Wind Mobile started operation in December 2009 (continued)
We expect Wind Mobile to generate positive EBITDA levels by the third year of operation
(2012) and bottom line turning black by 2014, We expect Wind Mobile cumulative losses to
culminate to US$406 million prior to turning positive, thereby we expect OT may need to inject
further capital into the subsidiary to support Wind’s survival in its initial years and comfort
lenders.
Globalive Communications
Globalive Communications, the already established part of the Globalive venture offers services
over pre-established telephone networks, ranging from long-distance services, high-speed Inter-
net, VoIP and carrier clearinghouse solutions. Globalive has over one million clients in Canada
and is said to generate over US$100 million annually. However, we didn't have enough info
about this segment of Globalive to include in our valuation, but we estimate that it wouldn't
have an EBITDA margin of over 10%, so its net impact on OT would be minimal. Furthermore,
we still don’t have confirmation with regard that this is the fixed telephony part that OT re-
vealed is part of its investments.
Talks on consolidation in Pakistan’s mobile market
Pakistan penetration rate growth have became sluggish, since penetration levels crossed the
50% rate two years ago in a market that is distributed over 5 nationwide mobile operators.
Furthermore, Telenor’s, Pakistan’s second largest mobile operator after Mobilink, top official
revealed that he believes that the market is ready for consolidation. OT commented on this re-
mark, that if there is possibility for consolidation, it would be interested to investigate the po-
tential.
Both Mobilink and Telenor have a cumulative 54% of the Pakistani mobile market subscribers.
Whether consolidation will be between market leaders, or acquiring one of the smaller operators
is yet to be clear.
Zong (Formally Paktel) is a subsidiary of China Mobile and has the smallest one player market
share of 6.3%, may at the first glance, look as the most interesting M&A story in the market.
The other two operators are owned by Etisalat and Warid Telecom, with market shares of 21%
and 18% respectively.
Until now, no word have emerged about a seller on the market and we think it would rather be a
buyer making the first move. However, as we see the Pakistani market as relatively saturated,
there is little potential for organic growth, which puts growth through acquisition as the best
alternative for expansion in this market.
7
 JAZIRA SECURITIES BROKERAGE
June 7, 2010
Bharti is the newest big mobile
player to enter the Bangladeshi
mobile market
Although, Bharti thirst for
acquisitions continues its bal-
ance sheet shows it can still
finance its expansions and
committed capex of US$1
billion in Bangladesh
Telenor’s subsidiary,
Grameenphone floated on the
Dhaka Stock Exchange
We stabilized Banglalink mar-
ket share at around 26% going
forward
And expect EBITDA levels to
decline on the back of compe-
tition
ORASCOM TELECOM
Equity Research
Competition to intensify in Bangladesh
In January 2010, Bharti Airtel acquired of 70% of Bangladesh’s fourth biggest mobile operator,
Warid Telecom, at a price tag of US$300 million or US$110/sub. Warid was in a dire situation
for capital injection and the Bangladeshi government have revealed that it expects Bharti to
spend around US$1 billion over the coming years on Warid. This capex. commitment coming
from an aggressive new shopper in the global mobile market indicate that the Bangladeshi mo-
bile market competitive environment will heat-up in the coming period.
From its inception in 1995 to early 2009, Bharti Airtel sole telecommunications operation was
in India. However, in less than a year and a half, it expanded to Sri Lanka, Bangladesh, than it
acquired Zain’s Sub Saharan African assets in a deal worth US$10.7 billion in March 2010, at
an EV/revenues 3.7x and US$255/subscriber, with most of the transaction to be financed by
debt. Furthermore, Bharti seems keen on expanding further, as he is in talks about having an
interest in MTN Group.
Prior to Zain’s transaction, Bharti had a net debt of US$1.2 billion, EBIT of US$2.6 billion in
FY09 ending March 2010, US$9.1 billion shareholders equity while the company is trading
with a market capitalization of around US$22 billion. These figures imply that Bharti has the
capacity until now to fund its expansions.
Another factor that support our expectations of increased competition in Bangladesh is
Grameenphone, Bangladesh’s largest mobile operator, IPO late last year, with proceeds of
around US$150 million to be directed toward fortifying the network’s leading position.
All these factors have driven us to reduce Banglalink’s market share of new additional subscrib-
ers from an average of 36% over the past three years to 25% going forward, which will lead to
its market share of the market’s total mobile subscribers to stabilize at 26% over the coming
years, after years of growing its market share. Furthermore, we have accelerated ARPU decline
to reach US$1.9/month in 2011, compared to US$2.4 in 2009.
On the EBITDA level, we expect EBITDA margins to remain at the 34.0% range in FY10 close
to FY09 reported margins, but significantly lower than the 42% rate achieved in Q1 FY10, since
it will be very hard for Banglalink to maintain its market share, while not subsidizing the new
SIMs taxes, which amount to US$11/SIM, as it done in Q1 FY10. Furthermore, we expect
EBITDA margin to fall further to 32.5% in FY11.
8
 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

Q1 results pulled down on the back of Wind Mobile’s Losses

OT’s first quarter results showed subscrib-
Q1 Ending March KPIs Q1 2009 Q1 2010
Djezzy retention programs to ers increasing by 18.9% yoy, essentially
Subscribers (mn) 80.4 95.6
limit the impact of the Novem- driven by Mobinil and Mobilink 23% and
ARPU (US$) 5.8 5.0
ber 2009 match adverse affect 12% subscribers annual growth, along
Capex (US$ mn) 273 224
has resulted in its ARPU fal- with adding Namibia subscribers into
ling over 13% in Q1 Telecel Globe after Q1 09. Global ARPU Income Statement (EGP mn)
fell 13.8% yoy with the main driver for the Revenues 6,773 6,745
drop coming from Djezzy, Mobinil and EBITDA 2,974 2,925
Mobilink ARPUs declining at a yoy rate of EBITDA Margin 43.9% 43.4%
13.2%, 16.4% and 6.7% respectively. EBITDA Growth -8% -2%
Revenues and EBITDA witness a mild Depreciation & Amortization (1,328) (1,329)
drop of 1% and 2% respectively in EGP. EBIT 1,647 1,596
Net Financing Cost (573) (705)
However, bottom line dropped around Investment Income (17) (185)
Q1 2009 was inflated with the 25% yoy to EGP316 million, essentially as Other Non-Operating Items 184 (22)
realized gains from the sale of a result of OT’s Q1 FY09 included the FX Gains (Losses) (380) 68
M-link realized gains from the sale of M-Link. NPBT 861 751
Taxes (363) (364)
The other factors that resulted in the bot- Minority Interest (78) (71)
tom line decline in Q1 FY10, was the in- Net Income 420 316
Wind Mobile losses and inter- creased net financing cost and loss from Change -58% -25%
est related burdens from fi- investments expanding. Both can be ren-
nancing its capital and share- dered to a great extent to the newly estab-
holders loan drove OT’s bot- Net Debt (EGP mn) (34,883) (31,336)
lished Canadian operations. However, due
tom line down to Canadian dollar appreciating against Working Capital (EGP mn) (6,780) (5,649)
OT’s functional currency, the USD, OT Net Debt / Total Assets 63.3% 56.0%
was able to generate EGP68 million of FX Source: OT earning release & Jazira calculations
gain that mitigated the Canadian operations
obligations.

Total Subscribers (000) 1Q 09 1Q 10 % Change Consolidated Revenues (US$ mn) 1Q 09 1Q 10 % Change

Djezzy 14,143 14,790 4.6% Djezzy 463 413 -10.8%
Mobilink 28,240 31,572 11.8% Mobilink 261 272 4.2%
Mobinil 21,179 26,121 23.3% Mobinil 216 225 4.4%
Tunisiana 4,303 5,400 25.5% Tunisiana 76 89 16.4%
Banglalink 10,836 14,219 31.2% Banglalink 83 100 19.9%
Telecel Globe 991 2,280 130.1% Telecel Globe 16 24 49.5%
Korylink 19 126 554.2% Korylink 4 9 102.5%
Alfa 661 1,089 64.7% Total (GSM) 1,120 1,132 1.1%
Grand Total 80,373 95,598 18.9% Ring 42 35 -16.2%
Other 12 25 111.9%
ARPU (US$) 1Q 09 1Q 10 % Change Total Telecom Services 54 60 12.1%
Djezzy 10.6 9.2 -13.2% Internet Services 24 24 1.2%
Mobilink 3.0 2.8 -6.7% Consolidated Revenues 1,198 1,216 1.6%
Mobinil 6.7 5.6 -16.4%
Tunisiana 11.3 10.6 -6.2% Consolidated EBITDA (US$ mn) 1Q 09 1Q 10 % Change
Banglalink 2.5 2.3 -8.0% Djezzy 281 229 -18.3%
Korylink 24.7 21.3 -13.8% Mobilink 94 106 13.2%
Alfa 66.7 37.5 -43.8% Mobinil 106 85 -19.8%
Global ARPU 5.8 5.0 -13.8% Tunisiana 41 47 13.3%
Banglalink 21 42 103.3%
Capex (US$ mn) 1Q 09 1Q 10 % Change Telecel Globe -2 4 n/a
Djezzy 41 48 17.1% Korylink 0 6 n/a
Mobilink 27 25 -7.4% Total (GSM) 541 519 -4.1%
Mobinil 78 59 -24.4% Ring -1 5 n/a
Tunisiana 16 18 12.5% Other -3 6 n/a
Banglalink 26 58 123.1% Total Telecom Services -4 11 n/a
Others 85 55 -35.3% Internet Services 1 5 n/a
Total Capex 273 263 -3.7% OT Holding & Other -12 -13 14.2%
Consolidated Capex 225 224 -0.4% Consolidated Revenues 526 521 -1.0%

Source: OT earning release

9
 JAZIRA SECURITIES BROKERAGE
June 7, 2010
We expect the weakening of
OT’s operational KPI to ex-
tend through to 2011
We expect the global eco-
nomic recovery to start to have
a positive impact on OT’s op-
erations starting 2012
Along with Tunis mobile mar-
ket normalizing by 2012
The expected Egyptian pound
gradual depreciation will am-
plify US$ based growth rates
Investment income and decline
in financial expenses are ex-
pected to be the main drivers
for OT’s bottom line growth
starting 2012
The full year booking of OT’s
earnings from Mobinil in 2011
may lead to better investment
income level but at the account
of lesser EBITDA figures
We booked the US$300 mil-
lion compensation from Mo-
binil and an assumed amount
of Linkdotnet capital gain as a
non-recurring income in 2010
OT’s gearing ratios improve
significantly after the Q1
rights issuance
ORASCOM TELECOM
Equity Research
Consolidated Assessment & Projections
With OT’s main mobile operators have reached a phase of subscriber growth slowdown along
with each operator struggle with local competition, ARPUs are going down faster than sub-
scriber uptake growth. OT revenues started a downward trend in 2009 that we expect to con-
tinue through to 2011. Furthermore, the elimination of Mobinil out of revenues and EBITDA
will pull revenues downward by US$460 million in 2010 and by US$960 million in 2011. We
expect revenues and EBITDA to decline with an average of 9.7% and 13.1% in 2010.
By excluding Mobinil’s revenues from OT’s historical consolidated revenues, we expect OT’s
consolidated revenues and EBITDA to witness no growth neither in 2010 nor 2011, on a pro-
forma basis.
By the beginning of 2012, we expect both revenue and EBITDA to start to pick some positive
growth momentum, driven by our expectations that the global economic situation will have
started another expansionary cycle. This will result in a general relative improvement in sub-
scribers uptake and reducing the pace of ARPU decline.
Furthermore, Tunisian mobile market would have started to relatively stabilize after three years
of Orange entry to the market. In addition, we expect Pakistan’s subscriber uptake slowdown
will start to subside as the economy improves. With all these factors we project, revenue and
EBITDA to expand by 4.7% and 2.4% respectively in 2012. From 2013 to 2015, we expect
revenues and EBITDA to witness a CAGR of 5% and 3% respectively.
Furthermore, we have projected that the Egyptian pound would depreciate by 1.5% per annum
from 2011 to 2015, which resulted in our EGP projections to reflect a slight magnified change
compared to the USD percentage change levels.
Although we projected moderate growth levels up to the EBITDA levels over the forecasted
period, we have expectations of the bottom line to grow at a CAGR of 31% from 2011 levels to
2015. This will be driven by both investment income improvement and decline in financial bur-
dens. Off course the latter projection is due to the fact that we have no assumption in our model
of OT expanding outside its current operations.
We expect Wind Mobile to make US$118 million loss in 2010, only to increase in year two on
the back of higher interest expense, while losses would start to decline by 2012 and the com-
pany to turn profitable by 2014. Given its 65% stake in Wind Mobile, OT will book only
US$77.3 million or EGP433 million of Wind’s losses in 2010.
However, since we expect OT to book Mobinil’s 2H FY10 earnings also in the investment in-
come line, net investment income is expected to reach a loss of EGP217 million.
In 2011, although Wind Mobile losses will expand, the booking of a whole year of OT’s earn-
ings from Mobinil will result in the income from investments to report a positive EGP49 mil-
lion. From thereafter, based on our expectations of Mobinil’s earnings to start picking up from
2012, driven by operations improvement and decline in debt service levels, along with Wind
losses declining and then turning into a profit by 2014, we expect investment income to record a
CAGR of 149% from 2012 to 2015.
We booked the compensation OT will receive from FT amounting to US$300 million as per the
agreement signed between both parties in April 2010, as a non-recurring income net of tax in
2010. Furthermore, we booked EGP26 million as capital gain from the Linkdotnet sale. The
amount was totally arbitrary. All the information we have about the transaction is that it is at an
enterprise value of US$130 million. We assumed that half of EV is in debt due to the capital
intensive nature of internet operations and then assumed half of the remaining will be capital
gain, which we then netted tax on capital gains from it.
Between OT’s general debt repayments during 2010, which are estimated on a consolidated
level to be over EGP5.4 billion, along the with removal of OT’s proportionate stake of Mo-
binil’s debt burden, we expect net debt to fall to EGP21.3 billion at the end of 2010 compared
to EGP27.4 billion reported at the end of 2009.
The combined impact of the decline in net debt and the rights issuance issued at par in Q1 2010,
which increased paid in capital from EGP889.1 million to EGP5.25 billion, have resulted in net
debt to equity to decline from over 4x at the end of 2009 to 1.7x expected by the end of FY10.
10
 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

Utilized DCF to value opera-
tions using country specific
RFR and a market risk pre-
mium of 8.5%
The additional discount we
applied on Djezzy can work
for what price the Algerian
government will put on the
table or OT return after the
Algeria has its cut of Djezzy’s
sale if it agrees its sale to an
investor
We attained an SOP for OT of
US$6.8 billion
Valuation
In order to value OT, we have utilized sum of the parts valuation method, were we valued each
of OT’s key operations separately, using DCF valuation approach. We have utilized each opera-
tion’s RFR as it reflects the economic and political risk of each venture, furthermore, we have
added a market risk premium of 8.5% over the RFR and utilized a beta of 1x.
Furthermore, we have added a further 5% specific political risk premium over Djezzy’s cost of
Equity, given the pressures we believe are surrounding the operation and its sale from the Alge-
rian government. The additional market risk premium resulted in a 25% decline in enterprise
value for Djezzy. This also reflect our concern that OT won’t be able to get the best deal out of
the Algerian government if the latter continues to create hardships for Djezzy.
Furthermore, this week, an unconfirmed news came out that OT may pay the Algerian govern-
ment to forgo its preemptive right and sell Djezzy on the market. Again, this would yield a dis-
count to EV given the portion of the sales value the Algerian government will garner.
We have added Linkdotnet expected sale to Mobinil at an EVof US$130 million value to OT
valuation, net of our assumed taxes on capital gain. While we don’t have the exact impact the
venture has on OT’s internet services figures, we assumed it represents 85% of the internet ser-
vices revenues and reduced this representation from our FY11 internet services revenues.
We have also added the Mobinil’s related US$300 million compensation fee value net of tax
over the operations value since it will be booked below net operating profit, so the DCF models
won’t sense it.
We came with OT’s SOP value of US$6.8 billion (EGP37.5 billion). It is apparent from the
table below how OT is sensitive to Djezzy’s value as it represent over 64% of its value. How-
ever, selling Djezzy would create enough cash to settle the stand alone debt, while leaving
abundance of cash for future expansions.

Enterprise EV/ EV/ EV/ Shareholders % of Value Per

Net Debt OT OT Value OT Value % of GSM
OT Valuation Value EBITDA EBITDA EBITDA Equity Value total OT Share
(US$ mn) Stake (US$ mn) (EGP mn) Value
(US$ mn) 2009 2010 2011 (US$ mn) Value (EGP)
Djezzy 4,542 4.3x 4.7x 4.9x (108) 4,434 97% 4,293 24,124 64.3% 53.8% 4.60
Mobilink 2,086 5.4x 5.3x 5.3x (798) 1,288 100% 1,288 7,239 19.3% 16.1% 1.38
Mobinil 4,344 4.8x 5.8x 5.6x (889) 3,454 35% 1,197 6,729 17.9% 15.0% 1.28
Tunisiana 1,098 2.9x 3.6x 4.6x (75) 1,022 50% 511 2,873 7.7% 6.4% 0.55
Banglalink 526 4.5x 4.0x 3.9x (373) 153 100% 153 862 2.3% 1.9% 0.16
Telecel Globe 301 n/a 11.9x 8.8x (121) 180 100% 180 1,014 2.7% 2.3% 0.19
Korylink 237 13.8x 6.0x 4.7x (118) 119 75% 89 501 1.3% 1.1% 0.10
Wind Canada 1,017 n/a -17.8x -51.9x (602) 415 65% 271 1,525 4.1% 3.4% 0.29
Total Mobile
14,152 4.9x 5.5x 5.6x (3,085) 11,067 75% 7,984 44,868 119.5% 100.0% 8.55
Operations
OT Stand Alone / Tele-
155 -2.3x -696.1x -46.2x (1,758) (1,603) 100% (1,603) (9,009) -24.0% (1.72)
com & Internet Services
Mobinil Compensation 240 1,349 3.6% 0.26
Linkdotnet Sale Value 130 (65) 65 100% 59 329 0.9% 0.06
Total 14,437 5.1x 5.4x 5.7x (4,908) 9,529 73% 6,679 37,536 100.0% 7.16
GDR Value per Share (US$) 6.40

Source: Jazira Capital projections and valuation

11
 JAZIRA SECURITIES BROKERAGE
June 7, 2010
OT current upside is limited
OT can still leverage expen-
sive transactions to create
good IRRs from less intriguing
ROICs
Or maybe, cashing out some
of its mature investment can
prove a more rewarding option
MTN is interested in all of
OT’s African assets and
maybe more
OT’s chairman says MTN was
offering US$7.8 billion for
Djezzy
MTN had a net debt of US$1.6
billion and shareholders’ eq-
uity of US$9.4 billion at the
end of 2009
We used Bharti’s acquisition
of Zain’s African operations
EV/Sub as an indicator of
Telecel maximum deal value
Having its first market on the
relatively richer Northern
shores of Africa may lead
MTN to pay higher price for
Tunisiana
ORASCOM TELECOM
Equity Research
So, Can Elephants Dance?
What are the available opportunities for OT on the global telecom markets to create further
growth? Limited they are!
However, as Louis Gerstner showed in his book “Who Says Elephants Can’t Dance?” which
was talking about IBM’s turnaround in the 1990s, illustrating that big companies can go bigger
even after reaching some kind of a road block.
It is too early to discount OT as a company with mature key operations, little potential for
growth and threats of new entrants into its key markets. OT’s management has a good track
record of prevailing in the past, and as the company creates more cash and higher equity, it is
able to leverage even further its balance sheet, which can provide OT with relatively better
IRRs from ventures with less attractive return on invested capital (ROIC).
Stating the above, Wind Mobile is the only company in OT’s current ventures that we see can
demand relatively significant cash outlays over the coming period. Most of the other ventures
are doing well on their own, and even are expected to provide good dividends to the parent
company.
But there is another way to look at this argument, maybe OT’s shareholder are whom will dance
all the way to the bank to collect high cash dividends from the sale of some of OT’s operations,
with...
...OT in discussions to sell some of its assets to MTN
South Africa’s MTN Group has been in talks with OT and Weather Investments with respect to
acquiring some of the OT’s mobile operations or the whole of it. It is believed that, at first,
MTN was hoping to acquire all of OT’s African Subsidiaries, then OT reached an agreement
with France Telecom, in which OT was bind not to sell its stake in Mobinil to non but France
Telecom. Then, the Algerian government have put itself as Djezzy’s sole potential buyer. This
leaves Tunisiana and Telecel Globe operation as targets for MTN. Furthermore, some talks indi-
cated that MTN may be interested also in Banglalink.
In a first statement surrounding the negotiations value, Naguib, OT’s Chairman, was quoted on
Reuters last week that MTN was offering US$7.8 billion for Djezzy. Regarding why would he
come out with this figure at this time? It is most probably to put a benchmark to the Algerian
government on what price he sees agreeable for selling his Algerian venture.
MTN had an interest coverage ratio of 5.5x in FY09 and net debt to equity was at 17%. Further-
more, MTN’s South Africa’s subscribers declined on the back of fierce competition although
total subscribers grew by 31% to 116 million at the end of 2009, spread over 20 countries out of
which 14 are in Sub Saharan Africa, along with Sudan in the North.
Given MTN footprint and stronghold in Sub Saharan Africa, Telecel Globe would be a perfect
target for expanding its coverage since it doesn’t have any operations in Telecel’s four coun-
tries.
Using Bharti acquisition of Zain’s African operations at US$255/sub. as an indicator for the
price MTN would put on Telecel Globe, it yielded an EV of US$581 million for Telecel Globe
vs. our DCF valuation of US$301 million. So, we can consider the EV/sub. value as the high
end of pricing while our DCF value to be the low end and the transaction would happen any-
where in between.
We prefer to use EV/sub. in markets in its initial phases or were EBITDA growth is still in the
future. However, with regards to a mature market such as that of Tunisiana, DCF value would
be more appropriate.
However, given the global market limited opportunities and the fact that with adding Tunis to
MTN’s African portfolio, it would make MTN with operations in all four corners of the African
continent, and having its first operation on the Northern African coast. MTN may feel the need
to go more aggressive with regards to discount rates given its capability to leverage the transac-
tion to a great extent.
12
 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

OT in discussions to sell some of its assets to MTN (Continued)

MTN has been know as an
aggressive shopper
And we also assumed Bangla-
link can be part of the talks
Using OT’s chairman revealed deal value for Djezzy, which imply an EV/sub. of around
US$527 based on Q1 reported Djezzy subscribers. Tunisiana EV would soar to US$2.9 billion
up from US$1.1 billion in our model. This is expensive, but MTN has been know to be an ag-
gressive shopper, as in the hay days of 2006, MTN have bought Investcom’s 4.9 million sub-
scribers (mostly located in Sub Saharan Africa and Sudan) in a deal worth US$5.5 billion or an
EV/sub. of US$1,122.
Just in case, it happens and MTN bids also on Banglalink, we assumed the Bharti bid on Warid
as an indicator for the value of the deal, which imply an enterprise value of US$110/sub. to be
multiplied in Banglalink’s 14.2 million subscribers as reported in Q1 2010 earning release to
bring the operations enterprise value up to US$1.6 billion up from our DCF value of US$526
million.

The maximum upside behind MTN acquisition talks

A sale of Tunisiana, Telecel
We see these acquisition multiples are the high end of the potential said transactions. However,
and Banglalink would bring
given limited available opportunities in the global mobile market and MTN’s leveraging capac-
OT’s value to US$50 billion
ity, we have plugged them to adjust our model just to illustrate the maximum upside behind the
much talked about negotiations between OT and MTN. Ultimately, an announcement of such
acquisitions would increase our OT equity value to US$50 billion or EGP 9.5/share.
Enterprise EV/ EV/ EV/ Shareholders % of Value Per
Net Debt OT OT Value OT Value % of GSM
OT Valuation Value EBITDA EBITDA EBITDA Equity Value total OT Share
(US$ mn) Stake (US$ mn) (EGP mn) Value
(US$ mn) 2009 2010 2011 (US$ mn) Value (EGP)
Djezzy 4,542 4.3x 4.7x 4.9x (108) 4,434 97% 4,293 24,124 48.4% 42.2% 4.60
Mobilink 2,086 5.4x 5.3x 5.3x (798) 1,288 100% 1,288 7,239 14.5% 12.7% 1.38
Mobinil 4,344 4.8x 5.8x 5.6x (889) 3,454 35% 1,197 6,729 13.5% 11.8% 1.28
Tunisiana 2,8481 7.4x 9.4x 12.0x (75) 2,773 50% 1,386 7,791 15.6% 13.6% 1.49
Banglalink 1,5622 13.3x 11.8x 11.5x (373) 1,189 100% 1,189 6,683 13.4% 11.7% 1.27
Telecel Globe 5813 n/a 23.0x 17.0x (121) 461 100% 461 2,588 5.2% 4.5% 0.49
Korylink 237 13.8x 6.0x 4.7x (118) 119 75% 89 501 1.0% 0.9% 0.10
Wind Canada 1,017 n/a n/a n/a (602) 415 65% 271 1,525 3.1% 2.7% 0.29
Total Mobile
17,218 6.0x 6.7x 6.8x (3,085) 14,133 72% 10,174 57,180 114.7% 100.0% 10.90
Operations
OT Stand Alone / Tele-
155 n/a n/a n/a (1,758) (1,603) 100% (1,603) (9,009) -18.1% (1.72)
com & Internet Services
Mobinil Compensation 240 1,349 2.7% 0.26
Linkdotnet Sale Value 130 (65) 65 100% 59 329 0.7% 0.06
Total 17,503 6.2x 6.5x 6.9x (4,908) 12,595 0% 8,870 49,849 100.0% 9.50
GDR Value per Share (US$) 8.50

Source: Jazira Capital projections and valuation

1
Based on OT’s Chairman said acquisition value for Djezzy at an EV/sub. of US$527
2
Based on Bharti acquisition value for Warid Bangladeshi's operation at an EV/sub. of US$110
3
Based on Bharti acquisition value for Zain’s African operation at an EV/sub. of US$255

If OT manages to sell Djezzy
to MTN or an Arab investor as
mentioned in the media today,
we expect the Algerian gov-
ernment may take up to 25%
of the deal’s value
We recommend buying below
our SOP price of EGP7.2/
share and adjust further as any
part of those deals is con-
firmed.
If OT can fall through with selling Djezzy, at the said value by OT’s chairman. We assume that
OT will pay the Algerian government up to 25% of the deal’s enterprise value to let go of its
preemptive condition. A transaction at US$7.8 billion would yield, a net of the Algerian govern-
ment assumed cut from the deal, an EV of US$5.9 billion, still considerably higher than our
value of US$4.5 billion for Djezzy and closer to the value without the political specific risk
additional discount of US$6.0 billion. This would change OT’s valuation dramatically and the
value per share, assuming the sale of the other operations we mentioned above too, would jump
to over EGP11/share.
But stock buyers, beware! Buying on such an acquisition story and hopped targets is an
extremely speculative venture and accumulating your target positions should be at low
prices prior to the stock heating up once the market picks up the beat of a deal closing...
We recommend buying to be caped at a 10% margin below the original OT target price of
EGP7.2/share, since deals have this distinct characteristic of sometime failing!

13
 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

OT KPIs & JC Assumptions

Subscribers By Country (000) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Algeria 21,807 24,610 26,881 28,817 30,602 32,188 33,531 34,590
Pakistan 89,841 97,779 104,165 113,122 125,190 138,546 150,460 160,286
Egypt 40,589 52,697 60,157 66,810 72,837 77,923 81,777 84,988
Tunsia 8,330 9,758 10,337 10,846 11,271 11,598 11,818 12,042
Bangladesh 44,557 51,817 58,871 65,094 70,654 75,256 79,394 82,954
Telecel Globe Countries n/a 5,976 7,546 9,148 10,628 12,078 13,422 14,576
North Korea 2 92 138 173 209 246 284 328
Canada 21,500 23,000 24,930 27,021 29,289 31,746 34,409 37,296
Lebanon 1,436 2,381 2,904 3,394 3,882 4,340 4,632 4,944
Total Subscribers 228,060 268,109 295,928 324,427 354,561 383,921 409,727 432,005
Change 20% 18% 10% 10% 9% 8% 7% 5%

Penetration Rates 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Algeria 63% 71% 77% 82% 86% 89% 92% 94%
Pakistan 54% 56% 57% 60% 64% 69% 72% 74%
Egypt 50% 63% 71% 77% 83% 87% 90% 91%
Tunsia 81% 94% 99% 102% 106% 108% 109% 110%
Bangladesh 28% 32% 36% 39% 42% 44% 46% 47%
Telecel Globe Countries n/a 22% 28% 33% 38% 43% 47% 51%
North Korea 0% 0% 1% 1% 1% 1% 1% 1%
Canada 65% 70% 75% 81% 88% 95% 102% 111%
Lebanon 34% 55% 66% 76% 86% 95% 99% 104%
Average 42% 48% 52% 56% 60% 64% 67% 69%
Change 18% 15% 8% 7% 7% 6% 5% 3%

OT Subsidiaries Subscribers (000) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 14,109 14,618 15,527 16,301 17,015 17,650 18,187 18,610
Mobilink 28,480 30,800 32,397 34,636 37,653 40,992 43,971 46,427
Mobinil 19,190 24,137 27,554 0 0 0 0 0
Tunisiana 4,257 5,211 5,327 5,479 5,607 5,705 5,771 5,838
Banglalink 10,337 13,887 16,003 17,870 19,538 20,919 22,160 23,228
Telecel Globe 702 1,823 2,530 3,250 3,916 4,569 5,174 5,693
Korylink 2 92 138 173 209 237 256 278
Conslidated Subscribers 77,076 90,568 99,475 77,711 83,938 90,071 95,517 100,074
Mobinil - - - 30,678 33,529 35,960 37,833 39,417
Wind Canada - - 386 846 1,345 1,886 2,471 3,107
Alfa 600 1,068 1,329 1,574 1,818 2,047 2,193 2,349
Total Subscribers 77,676 91,636 101,190 110,809 120,630 129,964 138,015 144,947
Change 12% 18% 10% 10% 9% 8% 6% 5%

OT Subsidiaries Market Share 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 64.7% 59.4% 57.8% 56.6% 55.6% 54.8% 54.2% 53.8%
Mobilink 31.7% 31.5% 31.1% 30.6% 30.1% 29.6% 29.2% 29.0%
Mobinil 47.2% 42.0% 45.8% 45.9% 46.0% 46.1% 46.3% 46.4%
Tunisiana 51.1% 53.4% 51.5% 50.5% 49.7% 49.2% 48.8% 48.5%
Banglalink 23.2% 26.8% 27.2% 27.5% 27.7% 27.8% 27.9% 28.0%
Telecel Globe n/a 30.5% 33.5% 35.5% 36.8% 37.8% 38.5% 39.1%
Korylink 100.0% 100.0% 100.0% 100.0% 100.0% 96.2% 90.0% 84.7%
Wind Canada 0.0% 0.0% 1.5% 3.1% 4.6% 5.9% 7.2% 8.3%
Alfa Lebanon 41.8% 44.8% 45.8% 46.4% 46.8% 47.2% 47.4% 47.5%
Grand Market Share 34.1% 34.2% 34.2% 34.2% 34.0% 33.9% 33.7% 33.6%
Change -7% 0% 0% 0% 0% -1% 0% 0%

OT Subsidiaries ARPU (US$) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 12.4 10.8 9.5 9.1 8.6 8.4 8.4 8.3
Mobilink 3.4 3.0 2.7 2.5 2.4 2.3 2.3 2.3
Mobinil 9.4 7.7 6.3 0.0 0.0 0.0 0.0 0.0
Tunisiana 13.7 12.6 10.7 8.5 8.1 8.0 7.8 7.6
Banglalink 2.8 2.4 2.2 2.1 2.0 2.0 2.0 2.0
Telecel Globe 4.5 5.4 5.1 5.0 5.0 4.9 4.9 4.9
Korylink 0.0 46.3 44.0 43.1 42.7 42.3 41.8 41.8
Conslidated GSMs' ARPU 7.0 6.1 5.2 4.4 4.2 4.1 4.0 3.9
Mobinil 0.0 0.0 0.0 5.8 5.6 5.8 5.9 6.1
Wind Canada 0.0 0.0 41.3 40.3 39.3 38.5 38.1 37.7
Alfa 47.2 40.0 36.0 34.2 33.5 32.8 32.8 33.5
Global ARPU 7.3 6.4 5.7 5.4 5.3 5.4 5.5 5.6
Change -1% -12% -10% -6% -1% 2% 2% 2%
Source: OT earning releases & Jazira Capital estimates

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 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

OT KPIs & JC Assumptions (continued)

Revenues (US$ mn) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 2,041 1,868 1,725 1,730 1,720 1,754 1,795 1,825
Mobilink 1,208 1,058 1,016 1,002 1,037 1,106 1,171 1,221
Mobinil 891 944 458 0 0 0 0 0
Tunisiana 326 357 337 277 270 270 268 266
Banglalink 288 351 390 420 445 476 507 534
Telecel Globe 25 81 133 173 213 250 284 316
Korylink - 26 61 81 98 113 124 134
GSMs' Revenue 4,779 4,685 4,120 3,682 3,783 3,969 4,149 4,296
Telecom Services 472 291 349 383 412 433 456 479
Internet Services 76 89 91 18 19 20 21 22
Consolidated Revenues 5,327 5,065 4,560 4,084 4,214 4,422 4,626 4,797
Change 13% -5% -10% -10% 3% 5% 5% 4%
Proforma Consolidated Revenues (Excluding Mobinil) 4,436 4,121 4,102 4,084 4,214 4,422 4,626 4,797
Change 10% -7% 0% 0% 3% 5% 5% 4%

% of Consolidated Revenues 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 38% 37% 38% 42% 41% 40% 39% 38%
Mobilink 23% 21% 22% 25% 25% 25% 25% 25%
Mobinil 17% 19% 10% 0% 0% 0% 0% 0%
Tunisiana 6% 7% 7% 7% 6% 6% 6% 6%
Banglalink 5% 7% 9% 10% 11% 11% 11% 11%
Telecel Globe 0% 2% 3% 4% 5% 6% 6% 7%
Korylink 0% 1% 1% 2% 2% 3% 3% 3%
GSMs' Revenue 90% 93% 90% 90% 90% 90% 90% 90%
Telecom Services 9% 6% 8% 9% 10% 10% 10% 10%
Internet Services 2% 2% 0% 0% 0% 0% 0% 0%

EBITDA (US$ mn) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 1,290 1,067 966 934 910 910 913 909
Mobilink 492 385 391 391 399 420 433 452
Mobinil 430 460 185 0 0 0 0 0
Tunisiana 189 192 152 118 113 111 108 107
Banglalink 14 117 133 136 145 155 165 174
Telecel Globe 0 0 25 34 44 53 63 73
Korylink 17 39 51 60 66 68 70
GSMs' EBITDA 2,414 2,239 1,891 1,665 1,671 1,715 1,750 1,785
Telecom Services 33 -10 45 41 45 49 53 57
Internet Services 0 10 16 3 3 4 4 4
OT Holding & Others -63 -67 -60 -48 -43 -40 -37 -34
Consolidated EBITDA 2,384 2,172 1,891 1,661 1,676 1,727 1,770 1,812
Change 17% -9% -13% -12% 1% 3% 2% 2%
Proforma Consolidated EBITDA (Excluding Mobinil) 1,954 1,711 1,706 1,661 1,676 1,727 1,770 1,812
Change 13% -12% 0% -3% 1% 3% 2% 2%

EBITDA Margin 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 63% 57% 56% 54% 53% 52% 51% 50%
Mobilink 41% 36% 39% 39% 39% 38% 37% 37%
Mobinil 48% 49% 40% 39% 39% 42% 44% 47%
Tunisiana 58% 54% 45% 43% 42% 41% 40% 40%
Banglalink 5% 33% 34% 33% 33% 33% 33% 33%
Telecel Globe 2% 0% 19% 20% 21% 21% 22% 23%
Korylink 0% 66% 65% 63% 61% 58% 55% 52%
GSMs' EBITDA 51% 48% 46% 45% 44% 43% 42% 42%
Telecom Services 7% -4% 9% 7% 7% 7% 8% 8%
Internet Services 0% 12% 17% 17% 18% 18% 19% 19%
Consolidated EBITDA 45% 43% 41% 41% 40% 39% 38% 38%
Change 3% -4% -3% -2% -2% -2% -2% -1%
Proforma Consolidated EBITDA (Excluding Mobinil) 44% 42% 42% 41% 40% 39% 38% 38%
Change 2% -6% 0% -2% -2% -2% -2% -1%

% of Total EBITDA 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 54% 49% 51% 56% 54% 53% 52% 50%
Mobilink 21% 18% 21% 24% 24% 24% 24% 25%
Mobinil 18% 21% 10% 0% 0% 0% 0% 0%
Tunisiana 8% 9% 8% 7% 7% 6% 6% 6%
Banglalink 1% 5% 7% 8% 9% 9% 9% 10%
Telecel Globe 0% 0% 1% 2% 3% 3% 4% 4%
Korylink 1% 2% 3% 4% 4% 4% 4%
GSMs' EBITDA 101% 103% 100% 100% 100% 99% 99% 98%
Telecom Services 1% 0% 2% 2% 3% 3% 3% 3%
Internet Services 0% 0% 1% 0% 0% 0% 0% 0%
OT Holding & Others -3% -3% -3% -3% -3% -2% -2% -2%
Source: OT earning releases & Jazira Capital estimates

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 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

OT KPIs & JC Assumptions (continued)

Capex (US$ mn) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Djezzy 167 261 313 298 283 269 260 258
Mobilink 537 157 126 132 136 137 137 133
Mobinil 524 472 519 519 519 519 519 519
Tunisiana 99 91 118 148 137 127 120 114
Banglalink 407 122 183 156 140 133 126 120
Wind Canada 400 300 200 150 150 150
Others 160 221 141 146 150 155 159 164
Total Capex. 1,894 1,324 1,801 1,698 1,565 1,489 1,473 1,458
Consolidated Capex. 1,576 1,037 1,006 805 777 757 743 732
Change -1% -34% -3% -20% -3% -3% -2% -2%

Investment Income (EGP mn) 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Wind Canada (433) (481) (399) (201) 21 350
Mobinil 232 540 627 870 1,155 1,521
Others (16) (10) (5) (1) 10 25

Total Investment Income (16) (263) (217) 49 223 667 1,185 1,896

Source: OT earning releases & Jazira Capital estimates

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 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
June 7, 2010
Equity Research

Historical & forecasted financials

Figures are in EGP mn
Income Statement 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Revenues 29,379 28,435 25,685 23,348 24,454 26,047 27,655 29,112
Growth 8.5% -3.2% -9.7% -9.1% 4.7% 6.5% 6.2% 5.3%
EBITDA 13,123 12,256 10,651 9,499 9,727 10,174 10,583 10,999
Growth 10.6% -6.6% -13.1% -10.8% 2.4% 4.6% 4.0% 3.9%
EBITDA Margin 44.7% 43.1% 41.5% 40.7% 39.8% 39.1% 38.3% 37.8%
Depreciation & Amortization (4,981) (5,477) (4,929) (4,482) (4,611) (4,705) (4,771) (4,785)
Reported EBIT 8,143 6,779 5,722 5,017 5,116 5,470 5,812 6,215
Non-Operating Items 133 (263) (217) 49 223 667 1,185 1,896
Net Interest (2,271) (2,319) (1,865) (1,595) (1,605) (1,581) (1,361) (1,268)
Net Profit Before Tax 6,005 4,197 3,641 3,471 3,734 4,556 5,636 6,843
Income Tax (2,208) (2,013) (1,941) (1,880) (1,967) (2,142) (2,242) (2,297)
Net Profit After Tax 3,797 2,184 1,700 1,591 1,768 2,414 3,394 4,546
Extraordinary Items (954) 12 1,490 0 0 0 0 0
Minority Interest (378) (351) (135) (73) (71) (71) (71) (71)
Net Income 2,465 1,845 3,055 1,518 1,696 2,343 3,323 4,475
Non-Appropriation Items (48) 0 (60) (30) (33) (46) (65) (88)
Net Attributable Income 2,416 1,845 2,995 1,488 1,663 2,297 3,258 4,387
EPS (EGP) 0.46 0.35 0.57 0.28 0.32 0.44 0.62 0.84
Growth -79.0% -23.6% 62.3% -50.3% 11.8% 38.1% 41.8% 34.7%

Balance Sheet 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
Cash & Marketable Securities 4,053 4,790 4,742 4,060 4,425 4,644 4,126 3,929
Trade Receivables-Net 1,813 1,828 1,684 1,531 1,603 1,708 1,813 1,909
Inventory 584 304 275 250 261 278 296 311
Other Current Assets 3,328 3,266 2,950 2,682 2,809 2,992 3,176 3,344
Total Current Assets 9,778 10,188 9,651 8,522 9,098 9,622 9,412 9,493
Net Fixed Assets 27,908 27,526 24,832 25,679 26,309 26,792 27,190 27,526
Other LT Assets 17,023 17,573 19,363 18,239 17,225 16,458 15,950 15,916
Non-Current Assets 44,931 45,099 44,195 43,918 43,534 43,249 43,140 43,442
Total Assets 54,709 55,287 53,846 52,440 52,632 52,872 52,551 52,935

Short Term Bank Debt & CPLTD 2,930 5,483 4,462 6,948 12,277 7,294 7,560 6,359
Dividends Payable 925 0 1,892 788 966 1,451 2,224 3,220
Other Current Liabilities 13,327 13,083 12,104 10,971 11,312 11,852 12,357 12,642
Total Current Liabilities 17,182 18,566 18,459 18,707 24,555 20,598 22,141 22,221
Long-Term Debt & Bonds 28,794 26,747 19,682 17,191 10,750 14,009 11,000 10,000
Other LT Liabilities 3,866 3,168 3,380 3,489 3,543 3,590 3,637 3,686
Non-Current Liabilities 32,660 29,915 23,063 20,679 14,293 17,599 14,637 13,686
Paid in Capital 899 889 5,246 5,246 5,246 5,246 5,246 5,246
Total Shareholders' Equity 4,867 6,806 12,325 13,054 13,784 14,675 15,773 17,027

Net Debt (adjusted with Div. Payable & Cash) 28,596 27,440 21,295 20,868 19,569 18,110 16,658 15,650
Working Capital (7,404) (8,378) (8,808) (10,185) (15,457) (10,975) (12,730) (12,728)

Free Cash Flow 2008a 2009a 2010e 2011f 2012f 2013f 2014f 2015f
NOPLAT 5,102 4,065 4,106 2,752 2,854 3,186 3,684 4,175
Depreciation 4,212 4,596 4,129 3,725 3,852 3,946 4,019 4,078
Gross Cash Flow 9,314 8,661 8,234 6,477 6,706 7,133 7,702 8,253
Gross Investments (2,731) (4,086) (1,667) (5,154) (4,401) (4,265) (4,292) (4,474)
Operating Free Cash Flow Excluding Intangibles 6,583 4,574 6,567 1,323 2,305 2,868 3,410 3,779
Investment in Goodwill & Intangibles (1,578) (147) (147) (147) (147) (147) (147) (147)
Operating Free Cash Flow Including Intangibles 5,005 4,427 6,420 1,176 2,158 2,721 3,263 3,632
Non -Operating Cash Flow 8,180 (2,594) (1,642) 1,682 738 1,066 2,017 1,847
Free Cash Flow 13,185 1,833 4,778 2,858 2,896 3,787 5,280 5,480

Source: OT financials & Jazira Capital estimates and forecasts

17
 JAZIRA SECURITIES BROKERAGE ORASCOM TELECOM
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Equity Research

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