Contents...EBITDA - PKR million 228 -221 708 -1,366 Loss per share - PKR -0.86 -1.74 -2.78 -26.59 Wateen’s financial performance continued to show significant improvement in light

Contents

Corporate Information .......................................................................................03

Message from the CEO ....................................................................................04

Directors’ Report ..............................................................................................06

Condensed Financial InformationCondensed Interim Statement of Financial Position ..........................................08

Condensed Interim Income Statement ..............................................................10

Condensed Interim Statement of Comprehensive Income.................................11

Condensed Interim Statement of Cash Flows ...................................................12

Condensed Interim Statement of Changes in Equity .........................................14

Notes to and forming part of the Condensed Interim Financial Information ........15

Condensed Consolidated Financial InformationCondensed Interim Consolidated Statement of Financial Position .....................34

Condensed Interim Consolidated Income Statement ........................................36

Condensed Interim Consolidated Statement of Comprehensive Income ...........37

Condensed Interim Consolidated Statement of Cash Flows ..............................38

Condensed Interim Consolidated Statement of Changes in Equity ....................40

Notes to and forming part of the Condensed Interim Consolidated Financial

Information .......................................................................................................41

WATEEN TELECOM LTD 1

Corporate Information


Board of DirectorsH.H. Nahayan Mabarak Al NahayanZouhair Abdul KhaliqJinah HajaliAdeel Khalid BajwaNaeem Zamindar

Abid HasanIndependent Director

Khwaja Ahmad HosainIndependent Director

Management TeamNaeem ZamindarChief Executive Officer

Faisal Masood Ali KhanChief Financial Officer

Sajid Farooq HashmiCompany Secretary & Head of Legal

Faisal SattarChief Technology Officer

Asad RezzviChief Transformation Officer

Junaid SheikhGeneral Manager LDI Business Unit

Hamid Mohyuddin General Manager Enterprise Business Unit

Anwar KhanGeneral Manager Consumer Business Unit

Naila BhattiGeneral Manager Media

Saleem AkhtarGeneral Manager Business Development

Brig (Retd.) Mazhar Qayyum ButtGeneral Manager Corporate Affairs

Zafar IqbalGeneral Manager HR, Admin & Infrastructure

Sohaib SheikhHead of Marketing

Omar ZiaHead of Audit, Risk & Governance

AuditorsA.F. Ferguson & Co.Chartered AccountantsPIA Building, 3rd Floor,49 - Blue Area, P.O. Box 3021,Islamabad

Registered Office4th Floor, New Auriga Complex,Main Boulevard, Gulberg II, Lahore

Present Place of Business2-E-II, Oberoi House, Gulberg III, Lahore

Share RegistrarTHK Associates (Pvt.) Limited2nd Floor, State Life Building No. 3,Dr. Zia-ud-Din Ahmed Road, Karachi

BankersStandard Chartered Bank (Pakistan) LimitedBank Al Habib LimitedHabib Bank LimitedBank Alfalah LimitedNational Bank of PakistanPak Libya Holding Company (Pvt.) LimitedSummit Bank Limited (Formerly Arif Habib Bank Limited)Askari Bank LimitedSoneri Bank LimitedPak Brunei Investment Company LimitedThe Bank of KhyberHSBC Bank Middle East LimitedAllied Bank LimitedUnited Bank LimitedDubai Islamic Bank LimitedThe Bank of Punjab

Legal AdvisorsIjaz Ahmed & Associates (Advocates & Legal Consultants)Suite No. 425, 4th Floor, Siddique Trade Centre, 72 Main Boulevard, Gulberg, Lahore, PakistanPhone: 042-35817200

Email: [email protected]

Message from the CEO

We have worked very hard to stabilize Wateen over the last one year. The fire that destroyed our head office was a huge setback but we have bounced back and continued to make progress. Company has been able to rationalize the overall cost structures and thereby becoming EBITDA positive. Our LDI business has moved up to number two in the country and overall the Company is on its way to becoming more stable.

We have restructured the organization to make it more efficient, effective and focused on different market segments:

• Consumer Business Unit – focusing onconsumer WiMAX and the tripe play cable network in Lahore and Multan

• Enterprise Business Unit – focusing onproviding a one-stop shop for enterprise connectivity and solutions

• Carrier Business Unit – focusing onproviding other telecom carriers with world class connectivity and IP solutions

Culturally, we have developed a much more open and dynamic Company where people now speak up, ask questions and expect answers.

Every department has worked together to make progress! Some of the big highlights are:

• WiMAX business model and operationsoverhauled to reduce costs, improve service and bring it closer to breakeven. I would like to specially mention the engineering team that saved millions for the business by operating the network in-house and increasing the network performance and the commercial team who have introduced a new business model in which our franchises have become our partners.

• We have done well in the Enterprisebusiness in the last one year. Since the unfortunate fire incident we have added more connections than ever before.

• Cloudservices isan initiative thatwewill be offering to our clients soon.

• Redefining enterprise serviceparameters within Wateen by the successful setup of the Enterprise Network Operations Centre (ENOC), with a special focus on providing a better more positive response to enterprise customers.

• Major enterprise customer wins atorganizations like Telenor, CMPak, Warid, PTCL, Bank Islami, Allied Bank, Sind Bank, SECP and many more.

• Successful development anddeployment of Enterprise Billing System and Campaign Management System.

• We have also become the leading LDIbusiness for outgoing calls in Pakistan. All the mobile companies (GSM) route their international calling traffic through our network.

• Wateen carried over 300 millionminutes of traffic in September to set an all-time record for international traffic before setting up of ICH.

• Our cable network in DHA was losingmoney but by increasing revenues by approximately 80%, we have turned that business around and now making positive contributions to Wateen.

• Wenowhave800khouseholdswatchingour content through direct and indirect distribution channels. Approximately 5 million people in Pakistan watch Wateen TV.

• After a 3 years breakwe had our annualemployee appraisals implemented through the newly launched online Performance Elevation System.

4 Quarterly Report March 2013

• Created the Organizational Developmentfunction and began company-wide trainings for employees that had not happened for 3 years.

• Built out over 1000 km of fiber opticnetwork.

• CompletedUSFprojectsinBaluchistanandSind and HEC Metro project connecting some 43 universities nationwide.

• ConnectedwithAfghanistanfromTorkhamand Chaman – significant commercialopportunities have been developed and are being explored.

• In partnership with Inov8 Limited wesuccessfully rolled-out TimePey, a m -commerce and branchless banking initiative of Askari Bank and Zong (CMPak). Wateen and Inov8 through this partnership are positioned to become a leading technology enabler for mobile financial services.

• Outsourced inbound call center forsignificant cost reduction.

• Successfully rolled out WiFi hotspotscovering all major airports, restaurants & hospitals nationwide. Contract for WiFi service provisioning in major educational institutions awarded to Wateen by the Government of Punjab.

We are on the right path to achieve our targets and in some cases exceed them. We have worked very hard to bring about a culture shift in Wateen. Imagine where we were a year ago and where we are today: Culture is critical. Our successful Values launch is the cornerstone in building our culture which determines the quality of performance and therefore our success. We are building a culture that promotes accountability at EVERY stage within the Company and discourages any sort of negative behaviour. We want to move forward and build positive momentum.

Wateen has turned the corner in terms of EBITDA, improving from a negative PKR 1,366 million in March 2012 to a positive PKR 708 million in March 2013, for the nine months period under review. Even though the overall loss for Wateen decreased significantly from PKR 16,417 million in March 2012 to PKR 1,714 million in March 2013 for the nine month period, the Company continued to require cash support from sponsors who have injected PKR 957 million in FY13 to finance the capital expenditures and interest expenses.

The major contributor to the losses has been the WiMAX business, which due to a very lackluster economic landscape, lack of scale, aggressive competition and high operational costs has not been able to produce the expected results. Therefore, the management, among other options, is in discussion with other WiMAX operators to consolidate operations, with a view to reducing costs through sharing of network resources and synergizing technical and marketing operations to make this business profitable. The remaining Wateen businesses have the capacity to generate positive operating cash flow and Wateen, going forward, will focus its efforts on the Enterprise and Carrier marketplace, providing world class connectivity, services and solutions.

I would take this opportunity to thank Pakistan Telecommunication Authority in providing an environment of enablement, the Abu Dhabi Group for their continued support, and especially our customers for selecting Wateen as their preferred choice for their digital needs. A promising future awaits Pakistan and Wateen is ready to lead the digital enablement required for our economy.

Naeem Zamindar Chief Executive Officer Date: August 05, 2013


Directors’ Report

The Directors of the Company are pleased to present the un-audited financial results for the third quarter ended March 31, 2013. The financial highlights for the third quarter and nine months ended March 31, 2013 are summarized as below:

3 Months ended 9 Months ended

Period Mar-13 Mar-12 Mar-13 Mar-12

Revenue - PKR million 1,839 1,953 6,226 5,330

EBITDA - PKR million 228 -221 708 -1,366

Loss per share - PKR -0.86 -1.74 -2.78 -26.59

Wateen’s financial performance continued to show significant improvement in light of the measures taken by the management in the previous quarters. As per the financial highlights summarised in the table above, Wateen’s revenue for the nine months period, ending March 2013, increased to PKR 6.2 billion, which is 17% higher than the corresponding period last year, although the revenue for the quarter declined due to temporary variation in LDI traffic pattern.

EBITDA improved to PKR 708 million in March 2013 as compared to PKR -1,366 million in March 2012, for the nine months period under review. Significant efforts of the management to stabilize the business and curtail costs through organizational realignment led to an improvement in the overall operations of the Company.

The quarter saw Wateen securing business from all five Cellular Mobile Operators (CMOs) for its Long Distance and International (LDI) business. Overall international outbound traffic increased by 40% in the quarter. A new international transit switch was successfully deployed to take

in more volumes of transit traffic in the future. Furthermore. aggressive efforts were made on Universal Service Fund (USF) fiber projects by completing milestones in Sindh and Balochistan provinces.

Despite the dampened economic environment and price pressures, the Enterprise business unit successfully managed to add more optical fiber connections across the country during the period. Although there has been no new announcement on the much awaited auction of 3G licenses, there may be opportunities available since the CMOs are expected to upgrade their networks in anticipation of this step.

As part of its containment strategy Wateen initiated discontinuation of WiMAX services in seven cities to focus its efforts on more profitable cities; subsequent churn in the enterprise segment was averted by shifting key customers (including major banks) to fiber utilizing GPON technology. Wateen will also look into possible strategic collaborations with other market players to bring stability to the market. To build the culture of the organization based on unmatched passion towards customer service, ownership, teamwork and innovation, the Company launched its vision, mission and values in impressive ceremonies engaging all employees as well as key customers. The management is confident that measures such as these were necessary to develop Wateen as the best telecom service provider in the country.

Wateen also sponsored successful national events like the first Lahore Literary Festival, attended by thousands of delegates and literati where it showcased its WiFi hotspots and highlighted the importance of digital technology as the main driver for mass education and awareness.


During this period, on March 28, 2013, the majority shareholder of the Company, Warid Telecom International UAE, which holds 54% of the total ordinary share capital of the Company, conveyed its intention to acquire all of the outstanding issued ordinary shares held by other shareholders of the Company at a proposed purchase price of PKR 4.5 per ordinary share and to seek delisting of the shares of the Company from Karachi, Lahore and Islamabad stock exchanges in accordance with the relevant voluntary delisting regulations. The Board subsequently approved the delisting in their meeting held in April 2013, and a formal application for delisting was submitted to all stock exchanges where the Company is listed. The Company is currently in process of fulfilling the requirements of stock exchanges and regulatory authorities.

Future Outlook

The new government has clearly communicated that they will focus on developing the telecom sector of Pakistan, especially focusing on auctioning 3G licenses and building the fiber optic network infrastructure to enable a competitive economy. The demand for ICT services is expected to stay strong and Wateen is poised to cater for the business needs arising from it despite all challenges. Wateen plans to work with all stakeholders to develop the ICT space in Pakistan. Renewed government focus of IT and Telecom sector and early announcement of long-awaited cohesive telecom policy will help sustain the telecom businesses and ensure their future growth.

The anticipated launch of 3G services by mobile operators will drive a significant cycle of investment in their networks to build the backhaul capacity required to deliver such services. Wateen is already in discussions with mobile operators and is well positioned to benefit from such an opportunity. Wateen will continue executing on the containment strategy aimed at reducing its losses and securing profitability by rationalizing its cost structure,

maintaining and improving its current revenue streams, and improving corporate governance while working on possible upsides in parallel. While ARPUs continue to decline in the fiber domain, Wateen is confident of securing additional enterprise business from its existing customers to sustain its revenue levels. With more and more enterprises using bandwidth hungry applications, demand for fiber services is on the rise, specifically in the major cities, which may result in a significant demand for the fiber business in the long run. The existing fiber footprint in metropolitan cities will enable Wateen to get ahead of the competition as a key service provider for possible launch of 3G services by Mobile Operators. Wateen is already in discussions with mobile operators and is well positioned to benefit from such an opportunity. This will also set the stage for a consumer data, multimedia and cable TV play where small local loop operators are currently dominating.

Aggressive efforts will be made in parallel to mobilize resources on the Universal Service Fund (USF) fiber projects and realize outstanding subsidies. This will enhance Wateen’s fiber footprint to remote areas of Sindh and Balochistan, presenting new revenue opportunities in future.

On behalf of the Board,

Naeem Zamindar Chief Executive Officer Date: August 05, 2013


Condensed Interim Statement of Financial Position (Un-Audited)for the nine months’ period ended March 31, 2013

March 31, June 30, 2013 2012 Note (Rupees in thousand)

SHARE CAPITAL AND RESERVES

Authorised capital 1,000,000,000 (June 30, 2012: 1,000,000,000)

ordinary shares of Rs 10 each 10,000,000 10,000,000

Issued, subscribed and paid-up capital 6,174,746 6,174,746

617,474,620 (June 30, 2012: 617,474,620)

ordinary shares of Rs 10 each

General reserve 134,681 134,681

Accumulated loss (27,352,093) (25,638,154)

(21,042,666) (19,328,727)

NON-CURRENT LIABILITIES

Longtermfinance-secured 6 – –

Longtermportionofdeferredmarkup 7 – –

Long term finance from a shareholder - unsecured 8 10,765,472 9,376,247

Medium term finance from an associated company - unsecured 9 600,000 600,000

Obligationsunderfinanceleases – 2,144

Long term deposits 63,849 65,672

11,429,321 10,044,063

DEFERRED LIABILITIES

Deferred USF grant 10 1,694,678 1,748,500

CURRENT LIABILITIES

Current portion of long term finance - secured 6 15,662,528 15,318,243

Current potion of deferred markup 7 1,032,385 790,743

Current portion of obligations under finance leases 4,760 2,616

Finance from supplier - unsecured 40,542 40,542

Short term running finance - secured 11 1,616,313 1,503,656

Trade and other payables 12 6,457,320 6,548,324

Interest / markup accrued 1,091,678 892,862

25,905,526 25,096,986

CONTINGENCIES AND COMMITMENTS 13

17,986,859 17,560,822

The annexed notes 1-24 form an integral part of this condensed interim financial information.


Condensed Interim Statement of Financial Position (Un-Audited)for the nine months’ period ended March 31, 2013


NON-CURRENT ASSETS

Property, plant and equipment

Operating assets 14 9,294,391 9,084,897

Capital work in progress 15 1,945,370 2,190,030

Intangible assets 178,904 186,286

11,418,665 11,461,213

LONG TERM INVESTMENT IN SUBSIDIARY

COMPANIES 16 137,661 137,661

DEFERRED INCOME TAX ASSET 17 – –

LONG TERM DEPOSITS AND PREPAYMENTS


Long term prepayments 104,785 69,447

336,825 326,487

CURRENT ASSETS

Trade debts 18 1,934,750 1,892,362

Contract work in progress 15,876 15,876

Stores, spares and loose tools 19 461,436 503,221

Advances, deposits, prepayments and

other receivables 20 2,863,582 2,413,693

Income tax refundable 364,290 349,875

Cash and bank balances 453,774 460,434

6,093,708 5,635,461

17,986,859 17,560,822

Chief Executive Director


Condensed Interim Income Statement (Un-Audited) for the nine months’ period ended March 31, 2013

3 months to 9 months to

March 31, March 31, March 31, March 31, 2013 2012 2013 2012 Note (Rupees in Thousand)

Revenue 1,839,326 1,953,059 6,225,592 5,330,007

Cost of sales (excluding

depreciation and amortisation) 1,143,228 1,577,903 4,293,579 4,605,827

General and administration expenses 453,403 381,318 1,100,568 1,588,475

Advertisement and marketing expenses 18,946 53,144 44,897 249,180

Selling and distribution expenses 4,101 8,605 22,707 34,469

Provisions 11,285 169,535 113,955 284,519

Other income (19,879) (16,928) (57,822) (66,370)

1,611,084 2,173,578 5,517,884 6,696,100

Earning / (Loss) before interest, taxation,

depreciation, amortisation and impairment 228,242 (220,519) 707,708 (1,366,093)

Less: Depreciation and amortisation 204,616 528,114 567,781 1,590,597

Provision for impairment of Wimax assets 14.1 – – – 9,622,973

Finance cost 21 593,791 352,272 1,970,023 2,224,615

Finance income (41,966) (33,571) (116,157) (105,836)

Loss before taxation (528,199) (1,067,334) (1,713,939) (14,698,443)

Deferredincometaxexpense – (6,378) – (1,718,594)

Loss for the period (528,199) (1,073,712) (1,713,939) (16,417,036)

Loss per share - (Rs) (0.86) (1.74) (2.78) (26.59)





March 31, March 31, March 31, March 31, 2013 2012 2013 2012 (Rupees in Thousand)


Othercomprehensiveincome – – – –

Total comprehensive loss for the period (528,199) (1,073,712) (1,713,939) (16,417,036)


Condensed Interim Statement Of Comprehensive Income (Un-Audited)for the nine months’ period ended March 31, 2013



Condensed Interim Statement Of Cash Flow (Un-Audited) for the nine months’ period ended March 31, 2013

9 months to

March 31, March 31, 2013 2012 (Rupees in thousand)

CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (1,713,939) (14,698,443)

Adjustment of non cash items:

Depreciation and Amortisation 567,781 1,590,597

Finance cost 1,970,023 2,224,615

Deferred USF grant recognised during the period (53,822) (65,917)

Provisions 113,955 284,519

ProvisionforImpairmentofWimaxassets – 9,622,973

2,597,937 13,656,788

883,998 (1,041,655)

Changes in working capital:

(Increase) in trade debts (156,343) (691,581)

(Increase)incontractworkinprogress – (698)

Decrease/(Increase) in stores, spares and loose tools 41,785 (42,755)

(Increase) in advances, deposits, prepayments and other receivables (449,889) (1,255,684)

(Decrease)/ Increase in trade and other payables (91,005) 1,715,302

(655,452) (275,416)

Taxes paid (14,415) (85,203)

Cash flows from operating activities 214,131 (1,402,274)

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment additions (525,233) (1,609,212)

Intangibleassetsadditions – (9,498)

Long term deposits received - (paid) 25,000 (2,611)

Long term prepayments (35,338) (20,390)

Cash flows from investing activities (535,571) (1,641,711)


Condensed Interim Statement Of Cash Flow (Un-Audited) for the nine months’ period ended March 31, 2013


9 months to


CASH FLOW FROM FINANCING ACTIVITIES

Longtermfinanceconversionfromshorttermborrowing/received – 2,360,305

Longtermfinancerepaid – (27,000)

Long term finance received from sponsor 956,576 3,705,603

Longtermpayabletosupplier(repaid) – (18,570)

DeferredUSFgrantreceived – 454,934

Obligationsunderfinanceleases(repaid) – (1,174)

Long term deposits payable (repaid)/ received (1,823) 4,418

Shorttermborrowingsrepaid – (134,750)

Finance cost paid (752,630) (1,322,020)

Cash flows from financing activities 202,121 5,021,746

(DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (119,317) 1,977,761

Cash and cash equivalents at beginning of the period (1,043,222) (3,350,745)

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (1,162,539) (1,372,984)

CASH AND CASH EQUIVALENTS COMPRISE:


Short term running finance (1,616,313) (1,714,790)

(1,162,539) (1,372,984)



Condensed Interim Statement Of Changes In Equity (Un-Audited)for the nine months’ period ended March 31, 2013


Share General Accumulated capital reserve loss Total (Rupees in thousand)

Balance at July 1, 2011 6,174,746 134,681 (7,081,625) (772,198)

Total comprehensive loss for the period

Lossfortheperiod – –(16,417,036) (16,417,036)


– –(16,417,036) (16,417,036)

Balance at March 31, 2012 6,174,746 134,681 (23,498,661) (17,189,234)

Balance at April 1, 2012 6,174,746 134,681 (23,498,661) (17,189,234)


Lossfortheperiod – – (2,139,493) (2,139,493)


– – (2,139,493) (2,139,493)

Balance at Jun 30, 2012 6,174,746 134,681 (25,638,154) (19,328,727)

Balance at July 1, 2012 6,174,746 134,681 (25,638,154) (19,328,727)


Lossfortheperiod – – (1,713,939) (1,713,939)


– – (1,713,939) (1,713,939)

Balance at March 31, 2013 6,174,746 134,681 (27,352,093) (21,042,666) The annexed notes 1-24 form an integral part of this condensed interim financial information.


Notes to and Forming Part of the Condensed Interim Financial Information (Un-Audited) for the nine months’ period ended March 31, 2013

1. Legal status and operations

The Company was incorporated in Pakistan as a Private Limited Company under Companies Ordinance, 1984 on March 4, 2005 for providing Long Distance and International public voice telephone (LDI) services and Wireless Local Loop (WLL) service in Pakistan. The Company commenced its LDI business commercial operations from May 1, 2005. The legal status of the Company was changed from “Private Limited” to “Public Limited” with effect from October 19, 2009. The Company was listed on Karachi, Lahore and Islamabad Stock Exchanges with effect from May 27, 2010. The registered office of the Company is situated at Lahore. The Company is a subsidiary of Warid Telecom International LLC, U.A.E.

2. Delisting from all stock exchanges

On March 28, 2013, the majority shareholder of the Company, Warid Telecom International LLC, U.A.E, which presently holds 54% of the total ordinary share capital of the Company, has conveyed its intention to acquire all of the issued ordinary shares held by the other shareholders of the Company at a proposed purchase price of Rs 4.5 per ordinary share and to seek delisting of the shares of the Company from Karachi, Lahore and Islamabad Stock Exchanges in accordance with the voluntary de-listing provisions of their respective Listing Regulations. The Board approved the delisting in their meeting held on April 22, 2013, and formal application for delisting has been applied to all stock exchanges where the Company is listed. The Karachi Stock exchange has requested the Company to submit intrinsic value per share determined on the basis of revaluation of assets, copy of latest revaluation report of assets carried out by evaluator as required under listing regulation and some other information.

3. Statement of compliance

This condensed interim financial information of the Company for the nine months period ended March 31, 2013 has been prepared in accordance with the requirements of the International Accounting Standard 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.

4. Accounting policies

The accounting policies and methods of computation adopted for the preparation of this condensed interim financial information are the same as those applied in preparation of the financial statements for the year ended June 30, 2012.

5. Management’s assessment of going concern

In assessing the going concern status of the Company, management has carefully assessed a number of factors covering the trading performance of the business, the ability to implement a significant debt restructuring of the Company’s existing debt’s and the appetite of our majority shareholder to continue financial support. Based on the analysis of these, management is comfortable that the Company will be able to continue as a going concern in the foreseeable future. Set out below are the key areas of evidence that management has considered.


Operational performance

During the nine months period ended March 31, 2013, the Company incurred losses of Rs 1,714 million (corresponding period last year Rs. 16,417 million ) and had net current liabilities as at March 31, 2013 of Rs 19,812 million, of which Rs 15,663 million relates to loan installments classified as current liabilities as mentioned in note 6.5, and that is due for repayment after March 31, 2013. It is important to note that during this period of losses the Majority Shareholders of the Company have continued to provide financial support in the form of long term finance amounting to Rs 10,765 million to meet the requirements of the Company.

Following continuing losses during the financial year 2012, the Board directed management to implement a ‘Containment plan’ that would stem the losses of the Company and provide stability. This containment plan included a cost cutting exercise, assessment of options for the WiMAX business, and continued support of the other business lines. With regards to the WiMAX business there are discussions underway with third parties to consolidate the WiMAX business which if successful, would benefit the Company and it’s stakeholders.

The Company has incurred capital expenditures on different Universal Service Fund (USF) Projects awarded by USF Company, (total contract values Rs 4,848 million contracts awarded to date) of which Rs 1,643 million have been received by the Company to date. Furthermore milestones have been achieved and the Company is in the process of offering the project milestone notice(s) for audit to the USF Company during the ensuing year. Upon successful completion of audit the Company will be entitled to claim the balance from USF Company related to completed milestones, and collect further material receipts from the USF Company which will benefit the cash flow.

Debt restructuring

Discussions have commenced with the local Syndicate lenders, our foreign debt lenders and our Majority Shareholders, constructive discussions are taking place and there is a willingness on all sides to find a solution, including a willingness from our Majority Shareholder to provide further financial support. Given this management are of the view that based on these constructive discussions and information that is currently available there is a high likelihood of a successful outcome.

Ongoing Shareholder Support

Our majority shareholder Warid Telecom International LLC (WTI) continues to provide management with comfort with regards to it’s ongoing support, key requirements of which are the delisting of the Company from all stock exchanges of Pakistan where the Company is listed, and the successful restructuring of the debt. Both of these initiatives are progressing well.

This message was also reiterated in the letter WTI provided to the Board of Directors with regards to the buy-back and de-listing of shares, which was subsequently made available to the public by the stock exchanges. In this WTI stated ‘WTI’s buy-back of the shares reflects its strong commitment to Wateen and its local operations and enables a restructuring to take place that provides Wateen with the best possible chance to repay the current debts that are outstanding’.




In addition to this WTI guarantees the local Syndicate Finance Facility, and certain personal guarantees

are provided to the foreign debt holders. Based on the provision of these Guarantees WTI are providing

strong support to the management through the restructuring discussions.

March 31, June 30, 2013 2012 Note (Rupees in Thousand)

6. Long term finance - secured

Syndicate of banks 6.1 8,142,335 8,142,335

Export Credit Guarantee Department (ECGD) 6.2 2,516,489 2,411,528

Dubai Islamic Bank (DIB) 6.3 424,000 424,000

Deutsche Bank AG 6.4 4,717,177 4,520,428

Total 15,800,001 15,498,291

Unamortized transaction and other ancillary cost

Opening balance 180,048 217,355

Amortisation for the period/ year (42,575) (37,307)

(137,473) (180,048)

15,662,528 15,318,243

Less: Amount shown as current liability

Amountpayablewithinnexttwelvemonths – –

Amount due after March 31st, 2014 6.5 (15,662,528) (15,318,243)

(15,662,528) (15,318,243)

– –

6.1 The company has obtained syndicate term finance facility from a syndicate of banks with Standard

Chartered Bank Limited (SCB), Habib Bank Limited (HBL), Bank AI-Habib Limited (BAHL) and National Bank of Pakistan (NBP), being lead arrangers to finance the capital requirements of the Company. The Company and the Syndicate of Banks signed an agreement to restructure Syndicate term finance facility and the short term running finance from SCB of Rs 1,497 million, term finance facility from SCB of Rs 1,016 million, running finance facility of Rs 529 million from BAHL, running finance facility of Rs 200 million from Soneri Bank Limited and finance facility of Rs 135 million from Summit Bank Limited effective from January 1, 2011. All the finance facilities have been fully availed by the Company till March 31, 2013. The principal is repayable in ten unequal semi annual instalments . The first such instalment shall be due on July 1, 2014 and subsequently every six months thereafter until January 1, 2019. The rate of mark-up is 6 months KIBOR per annum till December 31, 2013 and 6 months KIBOR + 2.5% per annum for the remaining period. The Company shall pay the mark up at 8% per annum from January 1, 2011 to December 31, 2013 (deferment period). The remaining amount of all instalments falling due in the deferment period shall be paid in ten equal six-monthly instalments on each January 1 and July 1 commencing from July 1, 2014 and ending January 1, 2019.



Certain conditions precedent to the restructured agreements are not yet fulfilled, management of the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured agreements are fulfilled bank will formally issue letter to the Company which will complete the restructuring process.

The facility is secured by way of hypothecation over all present and future moveable assets (including all

current assets) and present and future current/ fixed assets (excluding assets under specific charge of CM Pak, CISCO, DIB, assets procured from WorldCall and USF), a mortgage by deposit of title deeds in respect of immoveable properties of the company, lien over collection accounts and Debt Service Reserve Account and a corporate guarantee from Warid Telecom International LLC.

6.2 The Company has obtained long term finance facility amounting to USD 42 million (June 30,2012: USD 42 million) from ECGD UK, of which USD 35 million (June 30,2012: USD 35 million) has been availed till March 31, 2013. The Company and ECGD UK signed an agreement to restructure the terms of loan agreement including repayment schedule. Amount outstanding at March 31, 2013 was USD 25.600 million. The principal is repayable in ten semi annual instalments. The first such instalment shall be due on July 1, 2014 and subsequently every six months thereafter until January 1, 2019. The rate of mark-up is six month LIBOR + 1.5% (interest rate) per annum till June 30, 2011 and six month LIBOR + 1.9% (interest rate) for the remaining period. If the amount of instalment payable and/or interest payable is not paid on the due date, the Company shall pay interest on such amount the interest rate + 2% per annum.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of

the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured

agreement are fulfilled ECGD will formally issue letter to the Company which will completes the

restructuring process.


current assets) and present and future current/ fixed assets (excluding assets under specific charge of

CM Pak, Motorola, CISCO, assets which are subject to lien in favour of USF), a mortgage by deposit of

title deeds in respect of immoveable properties of the company, lien over collection accounts and Debt

Service Reserve Account and personal guarantees by three Sponsors of the Company.

6.3 The Company has obtained Ijarah finance facility of Rs 530 million (June, 30,2012: Rs 530 million) from

DIB. The Company and DIB signed an agreement to restructure the terms of the Ijarah finance facility.

The principal is repayable in ten unequal semi annual instalments. The first such instalment shall be due

on July 1, 2014 and subsequently every six months thereafter until January 1, 2019. The rate of mark-up

is 6 months KIBOR per annum till December 31, 2013 and KIBOR + 2.5% per annum for the remaining

period. The Company shall pay the mark up at 8% per annum from January 1, 2011 to December 31,

2013 (deferment period). The remaining amount of all instalments falling due in the deferment period

shall be paid in ten equal six-monthly instalments on each January 1 and July 1 commencing from July

1, 2014 and ending January 1, 2019.



Certain conditions precedent to the restructured agreement are not yet fulfilled, management of

the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured

agreement are fulfilled bank will formally issue letter to the Company which will complete the restructuring

process.


current assets) and present and future current/ fixed assets (movable and immoveable) and a corporate

guarantee from Warid Telecom International LLC.

6.4 The Company has obtained term finance facility of USD 65 million (June 30,2012: USD 65 million) from

MCC of which USD 64 million (June 30,2012: USD 64 million) has been availed till March 31, 2013. On

August 19, 2011, MCC has transferred all of its rights, title benefits and interests in the original facility

agreement to Deutsche Bank AG as lender, effective August 19, 2011. The Company and Deutsche

Bank AG signed an agreement to restructure the terms of loan agreement. Amount outstanding at March

31, 2013 was USD 48 million. The principal is repayable in ten semi annual instalments commencing

from July 1, 2014 until and including the final maturity date which is December 31, 2019. The rate of

mark-up is six month LIBOR + 1% per annum provided that rate shall be capped at 2.5% per annum. If

the Company fails to pay any amount payable on its due date, interest shall accrue on the unpaid sum

from the due date up to the date of actual payment at a rate which is 2% higher than the rate of interest

in effect thereon at the time of such default until the end of the then current interest period. Thereafter,

for each successive interest period, 2% above the six-month LIBOR plus margin provided the Company

is in breach of its payment obligations hereof.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of the

Company has taken steps to fulfill those conditions. Once conditions precedent to restructured agreement

are fulfilled bank will formally issue letter to the Company which will completes the restructuring process.

The loan is secured through personal guarantee by one Sponsor of the Company and is ranked pari

passu with unsecured and unsubordinated creditors.

6.5 The Company has not complied with the requirements of the loan agreements to maintain Long Term

Debt to Equity Ratio of 80:20 at March 31, 2013. Further the restructured loan agreements have not yet

become effective as certain conditions precedent to the restructured arrangements are not yet fulfilled.

Accordingly, the lenders shall be entitled to declare all outstanding amount of the loans immediately due

and payable. In terms of provisions of International Accounting Standard on Presentation of financial

statements (IAS 1), since the Company does not have an unconditional right to defer settlement of

liabilities for at least twelve months after the statement of financial position date, all liabilities under these

loan agreements are required to be classified as current liabilities. Based on above, loan installments for

an amount of Rs 15,662 million due after March 31, 2013 have been shown as current liability.




7. Long term portion of deferred markup

Syndicate of banks 7.1 820,825 626,567

Dubai Islamic Bank 7.1 40,676 30,610

Bank Alfalah Limited 7.1 170,884 133,566

1,032,385 790,743

Less:Amount shown as current liability

Amountpayablewithinthenexttwelvemonths – –

Amount due after March 31, 2014 (1,032,385) (790,743)

(1,032,385) (790,743)

– –

7.1 These markup are payable in ten equal six monthly installments on each January 1st and July 1st,

commencing from July 1st, 2014 and ending on January 1st, 2019. As explained in note 6.5 these

amounts have been shown as current liability.


8. Long term finance from shareholders - unsecured

Facility 1 8.1 2,356,853 2,263,155

Facility 2 8.2 8,408,619 7,113,092

10,765,472 9,376,247

8.1 The Company has obtained long term finance from a shareholder amounting to USD 24 million (June

30,2012: USD 24 million). This loan is subordinated to all secured finance facilities availed by the Company. This loans is repayable within 30 days of the expiry of a period of five years from the last date the lender has disbursed the loans, which shall be on or about January 29, 2015. The rate of mark-up is 6 months LIBOR + 1.5% with 24 months payment grace period payable half yearly. Alternatively loans may be converted into equity by way of issuance of the Company’s ordinary shares at the option of the lender at any time prior to, at or after the repayment date on the best possible terms but subject to fulfillment of all legal requirements at the cost of the Company. The said conversion of loan shall be affected at such price per ordinary share of the Company as shall be calculated after taking into account the average share price of the last 30 calendar days, counted backwards from the conversion request date, provided that such conversion is permissible under the applicable laws of Pakistan.



This loan together with accrued interest will have at all times priority over all unsecured debts of the

Company except as provided under Law. In the event the Company defaults on its financial loans or

in case Warid Telecom International LLC, Abu Dhabi, UAE, no longer remains the holding company of

the Company and sells its 100 % shares to any other person or party or relinquishes the control of its

management then, unless otherwise agreed in writing by the lender, the entire loan together with the

accrued interest will become due and payable for with and shall be paid within 15 working days of the

event of default or decision of the Board of Directors of the Company accepting such a change in the

shareholding as the case may be, and until repaid in full, the loan shall immediately become part of

financial loans, ranking pari passu therewith subject to the consent of the Company’s existing financial

loan providers.

8.2 The Company has obtained long term finance from a shareholder amounting to USD 185 million (June 30,2012: USD 185 million) of which USD 86 million (June 30, 2012: USD 75 million) has been availed at March 31, 2013. The rate of mark-up is 6 months LIBOR + 1.5% payable half yearly. The Company shall repay the loan in full in five equal annual instalments beginning on June 30, 2014 with final maturity date of June 30, 2018. Alternatively the lender shall also have the option to instruct the Company any time during the term of this agreement to convert the remaining unpaid amount of the loan and the interest in part or in its entirety into equity by way of issuance of ordinary shares of the Company in favour of the lender in compliance with all applicable laws of Pakistan.

Upon the request of the Company for conversion of the loan and the interest into equity, the lender and the Company shall, with mutual consent, appoint an independent auditor to determine the fair market value per share of the borrower prevailing at the time of such request. lf the lender agrees to the price per share as determined by the independent auditor then the loan and the interest shall be converted into equity at the rate per share decided by the independent auditor. In case the lender, in its sole discretion, disagrees with the price per share as determined by the independent auditor then the request for conversion shall stand revoked and the loan shall subsist.

The loan together with the interest shall have priority over all other unsecured debts of the Company. Further, after the execution of this agreement, the Company shall not avail any other loan or funding facility from any other source without prior written consent of the lender. The Company undertakes that it shall not declare dividends, make any distributions or pay any other amount to its shareholders unless the repayment of the loan and the interest in full to the lender. The rights of the lender in respect of the loan are subordinated to any indebtedness of the Company to any secured lending by any financial institution in any way, both present and future notwithstanding whether such indebtedness is recoverable by process of law or is conditional or unconditional. Furthermore, in the event that insolvency proceedings are initiated against the Company or that it is unable to pay its Financial Loans as they fall due or if the Company has proposed any composition, assignment or arrangement with respect to its Financial Loans, the obligation to repay the outstanding amount of the loan shall be subordinated to the

Financial Loans but will have priority over all other unsecured debts of the Company.



9. Medium term finance from an associated company - unsecured

The Company has obtained an aggregate medium term finance facility of Rs 600 million from an

associated company Taavun (Pvt) Limited. As per the terms of loan agreement, this loan is subordinated

to all secured finance facilities availed by the Company. The principal is repayable within 30 days of

the expiry of twenty four months from the effective date i.e. September 30, 2010, which is further

extendable to twelve months. The rate of mark-up is six month KIBOR + 2.5% with 24 months grace

period payable quarterly. As the loan is subordinated to all secured finance facilities availed by the

Company, the entire amount of loan has been classified as non current liability.


10. Deferred Universal Service Fund (USF) grant

Balance at beginning of the period/year 1,523,604 1,136,310

Amountreceived/receivableduringtheperiod/year – 454,438

Amount receivable at period/year end 224,896 224,896

Amount recognised as income during the period/year (53,822) (67,144)

Closing balance 1,694,678 1,748,500

11. Short term running finance - secured

Facility - I 11.1 1,528,273 1,503,656

Facility-II 11.2 88,040 –

1,616,313 1,503,656

11.1 The Company has a running finance facility of Rs 1,800 million (June 30,2012: Rs 1,800 million), of

which Rs 272 million (June 30,2012: Rs 296 million) was unutilized as at March 31, 2013. The facility is available till December 31, 2019. The principal is payable on expiry/on demand. The rate of mark-up is 6 months KIBOR per annum till December 31, 2013 and KIBOR + 1.5% per annum for the remaining period. Mark up at 8% is payable on bi-annual basis and remaining amount is deferred which is payable in 10 bi-annual instalments with the first instalment becoming payable on July 1, 2014. Initially the facility

carried mark-up at three months KIBOR + 2.5 % per annum.

This facility is secured by hypothecation of first pari passu charge on all fixed assets(movable and

immoveable) plus current assets of the company with a margin of 25 %.

11.2 During the period Company has availed cash finance facility of Rs 940 million, of which Rs 573 million was unutilized as at December 31, 2012. Markup to be serviced on quarterly basis. The rate of mark-up

is 3 months KIBOR + 1%.



This facility is secured by lien mark on an amount of USD 10.571 million held under the name “Dhabi

One Investment Services LLC” maintained at Bank Alfalah.

March 31, June 30, 2013 2012 (Rupees in thousand)

12. Trade and other payables

These include payable to related parties as follows:

Wateen Solutions (Pvt) Limited 210,135 210,135

Wateen Satellite Services (Pvt) Limited 146,204 146,204

WaridTelecom(Pvt)Limited – 61,016

Advances from Warid Telecom (Pvt) Limited 48,893 48,983

Bank Alfalah Limited 3,950 3,950

Payable to gratuity fund 72,303 128,049

Payable to provident fund 26,211 22,856

507,696 621,193

13. Contingencies and commitments

13.1 Claims against the Company not acknowledged as debt 329,712 319,338

13.2 Performance guarantees issued by banks on behalf of

the Company 2,112,599 1,749,452

13.3 Under the Access Promotion Regulations, 2005, the Company is liable to make payments of Access

Promotion Charges (APC) for Universal Service Fund (USF) within 90 days of close of the month to

which such payment relates. The Company has disputed the APC Regulations, 2005 and the case is

currently pending with High Court. The Company has not recorded the penalty on delayed payment of

APC for USF amounting to Rs 276 million as required by the Access Promotion Regulations, 2005 as

the management and legal advisor of the Company are of the view, that the Company has a strong case

and chances of success are very high.

13.4 The Deputy Commissioner Inland Revenue (DCIR) had issued Order in Original based on the observations

that Company had not paid Federal Excise Duty (FED) on fee paid to WTI and created demand of Rs

31.830 million payable along with the penalty and default surcharge and had also issued recovery

notices. The Commissioner Inland Revenue – Appeals and the Appellate Tribunal Inland Revenue

upheld the order of the DCIR. The Company and its advisor are of the view that by considering judicial

precedence and the technical grounds encompassing Company’s case, the Company has a strong

chance of success and they intend to contest the case at superior appellate forum.



13.5 The Assistant Commissioner Inland Revenue (AC), had issued show cause notices based on the observation that Company has not furnished Sales Tax and Federal Excise returns for the period from August 2009 to March 2010, November 2010 and December 2011. In this respect, AC issued Order- in–OriginalandassesseddemandofRs249.471million(calculatedonthebasisofallegedminimumliability) payable along with penalty and default surcharge and also issued recovery note. The Company deposited principal amount of Rs 138.709 million and default surcharge of Rs 26.231 million based on the FED liability due as per own working of the Company. The Appellate Tribunal Inland Revenue, has remanded back the case to the assessing officer. The related proceedings are not yet finalized by the assessing officer. The management and the Company’s advisors believe that Company has high chances to amicably settle the issue of disputed amount.

13.6 The Assistant Commissioner Inland Revenue has alleged that Company has not withheld tax on payments made to foreign telecom operators during the tax years 2008, 2009, 2010 and 2011. Further the ACIR has ordered the Company to pay alleged demand of Rs 477.767 million representing principal amount and default surcharge for the aforesaid tax years. The Company and its advisors are of the view that Company has fair chance to succeed in appeal and accordingly Company intends to contest the related orders before appellate authorities.

TheAssistantcommissionerInlandRevenue,Enforcement–IVissuedshowcausenoticesundersection161/205 for the tax year 2008, 2009, 2010 and 2011 on account of non withholding tax of taxes on payment made to foreign telecom operators and has bifurcated Interconnect expenses of Rs 5,800 million in the ratio of 60:40 relating to local and foreign operators respectively for the aforesaid tax years.

No provision on account of contingencies disclosed in note 13.4-13.6 above has been made in these financial statements as the management and the tax advisors of the Company are of the view, that these matters will eventually be settled in favour of the Company.


13.7 Outstanding commitments for capital expenditure 1,256,908 891,566

13.8 Acquisition of 49% shares in subsidiary Wateen Solutions (Pvt) Limited

The Board of Directors of the Company in their meetings held on November 15, 2009 and November 19, 2009 approved the acquisition of 49% shareholding of Wateen Solutions (Private) Limited from Mr. Jahangir Ahmed for a total sale consideration of Rs 490 million. On the basis of the approval of the Board of Directors of the Company, the Company entered into a Share Purchase Agreement dated April 1, 2010 (SPA) with Mr. Jahangir Ahmed for the acquisition of the 49% shareholding of Wateen Solutions (Private) Limited.



However, in light of the dividend payment of Rs 149.94 million by Wateen Solutions (Private) Limited to Mr. Jahangir Ahmed, the Company entered into negotiations with Mr. Jahangir Ahmed for the purposes of negotiating a downward revision to the purchase price as agreed in the SPA from Rs 490 million to Rs 340 million. This reduction in the purchase price and the resultant change in utilization of the IPO proceeds was approved by the shareholders of the Company in the Extra Ordinary General Meeting dated August 13, 2010.

Under the terms of the SPA, the Company has paid an advance of Rs 85 million as partial payment of the purchase price and the balance of Rs 255 million is payable by the Company to Mr. Jahangir Ahmed. In light of change in the future assumptions of the business of WS, the current business dynamics and the resultant devaluation of its share price, the new management entered into negotiations as a result of which Mr. Jahangir Ahmed has agreed to transfer the shares of Wateen Solutions (Private) Limited to the Company without requiring payment of the balance of Rs 255 million, however the finalization of renegotiated agreement is in process.

Same have been approved by shareholders in Extra Ordinary General Meeting dated December 31, 2011.

9 months Year ended March 31, June 30, 2013 2012 (Rupees in thousand)

14. Operating assets

Opening net book value 9,084,897 18,750,491 Additions - owned 758,097 2,373,288 Disposalsatnetbookvalue – (294,160) Impairmentcharge(note14.1) – (9,622,973) Depreciation charge (548,603) (2,121,749)

9,294,391 9,084,897 14.1 Impairment

During the year ended June 30, 2012, management reviewed the business performance of WiMAX operations and an assessment was made in respect of triggering events as specified by IAS 36 applicable to the non-current assets relating to WiMAX operations. Based on the following indicators applicable to WiMAX, an impairment test was carried out by a consultant to determine the impairment of non-current assets relating to WiMAX operations:

– DeclineinthemarketvalueofWiMAXoperationsassets – Significantchangeinthetechnologicalandeconomicrequirements – DecreaseintheeconomicperformanceofWiMAXbusiness – IndicationssuggestthatWiMAXbusinesswouldbecomeidleandmanagementplanstorestructure

the Wimax operations



For the purpose of determining the value in use, the WiMAX operations has been considered as separate Cash Generating Unit (CGU), the value in use has been determined using discounted cash flow method. The financial projections of the CGU for five years have been derived from a latest business plan which is approved by the Board of Directors (BOD) of the Company based on containment strategy. The value in use of WiMAX assets determined by a consultant is negative Rs 1,036.391 million using discount rate of 20%.

The Board of Directors is currently considering other options for the WiMAX business and there are certain discussions taking place with third parties to merge the WiMAX business. Based on the information available the management estimates that in case of any possible business consolidation, the fair value of these assets, (positive net present value of future cash flows of consolidated business) using discount rate of 20% amounts to Rs 2,049 million. The fair value estimate has been used as recoverable amount to determine impairment. The management has recognized an impairment loss of Rs 9,623 million (difference between carrying value and fair value as determined above) during the year ended June 30, 2012. The carrying value of WiMAX assets amounts to Rs. 1,912 million as at March 31, 2013.The conclusive recoverable amount of these assets can only be determined on the possible merger of WiMAX business, if successful, and any consequential difference from recoverable amount

estimated above will be recognized in the financial statements of ensuing periods.

9 months Year ended March 31, June 30, 2013 2012 (Rupees in thousand)

15. Capital work in progress

Leasehold improvements 39,968 33,978

Line and wire 1,167,205 1,405,356

Network equipment (net of impairment of Rs 353.515 million) 738,197 750,696

1,945,370 2,190,030



9 months to Year ended March 31, 2013 June 30, 2012 %age (Rupees in %age (Rupees in Holding thousand) Holding thousand)

16. Long term investment in subsidiary companies - at cost Unquoted Wateen Solutions (Pvt) Limited 413,212 fully paid ordinary shares of Rs 100 each 51 52,656 51 52,656 Advance against purchase of shares 85,000 85,000

137,656 137,656 Wateen Satellite Services (Pvt) Limited 500 fully paid ordinary shares of Rs 10 each 100 5 100 5 Netsonline Services (Pvt) Limited 4,000 fully paid ordinary shares of Rs 100 each 100 4,400 100 4,400 Wateen Telecom UK Limited 10,000 fully paid ordinary shares of GBP 1 each (note 16.2) 100 1,390 100 1,390

143,451 143,451 Provision for impairment of investment in Netsonline Services (Pvt) Limited (4,400) (4,400) Wateen Telecom Limited - UK (1,390) (1,390)

(5,790) (5,790)

137,661 137,661 16.1 All the companies are incorporated in Pakistan except for Wateen Telecom UK Limited which is

incorporated in United Kingdom (UK). 16.2 Approval of State Bank of Pakistan for foreign equity abroad is in process and shares of Wateen Telecom

UK Limited will be issued to the Company after receipt of such approval.




17. Deferred income tax asset

Taxable temporary differences between accounting

and tax depreciation (864,642) (615,343)

Unused tax losses - recognised to extent of taxable

temporary differences 864,642 615,343

The gross movement in deferred tax liability during the period is

as follows:

BalanceatJuly1 – 1,718,574

Deferredtaxcredit/(expense)fortheyear – (1,718,574)

Balanceatperiod/yearend – – The aggregate tax losses available to the Company for set off against future taxable profits at March

31, 2013 amounted to Rs 23,750 million. Of these, losses aggregating Rs 2,470 million have been recognised in the financial statements against taxable temporary differences at March 31, 2013.

Deferred tax asset, the potential tax benefit of which amounts to Rs 11,522 million has not been recognized on balance representing business losses aggregating to Rs 6,364 million, tax depreciation losses aggregating Rs 14,915 million and deductible temporary differences on account of provisions and share issue cost aggregating Rs 11,642 million as at March 31, 2013. Business losses expire as follows:

Tax Year Rupees in million

2017 2,237

2018 3,729

2019 398 Management of the Company has prepared business plan based on containment strategy duly

approved by the Board of Directors of the Company as compared to previously approved business plan which was based on the growth model. Management of the Company has taken a conservative view regarding recognition of deferred tax asset amounting to Rs 11,522 million during the period, therefore deferred tax asset has been recognised only to the extent of taxable temporary differences.




18. Trade debts

Trade debts - related parties (note 18.1) 812,720 596,073

- other parties 1,991,532 2,051,836

2,804,252 2,647,909

Less: Provision for doubtful debts - other parties (note 18.2) (869,502) (755,547)

1,934,750 1,892,362

18.1 Trade debts include due from related parties as follows:

Warid Telecom (Pvt) Limited 600,460 469,671

Warid International LLC, UAE - Parent company 93,200 93,200


812,720 596,073

18.2 Provision for doubtful debts - other parties


Provision during the period / year 113,955 258,049

Writeoffagainstprovisionsduringtheperiod/year – (44,722)

Closing balance (note 18.3) 869,502 755,547

18.3 This includes Rs 797 million (June 30th, 2012 Rs 681 million)

based on age analysis of debts as follows:

Balances 181 - 360 days past due -50%

Balances over 360 days past due -100%

19. Stores, spares and loose tools

Cost 673,702 715,487

Less: Provision for obsolete stores 212,266 212,266

461,436 503,221




20. Advances, deposits, prepayments and other receivables

20.1 These include receivable from related parties as follows:

Wateen Solutions (Pvt) Limited 882,855 750,423

Wateen Telecom UK Limited 318,887 318,887

Wateen Multimedia (Pvt) Limited 159,190 144,660

Advance for construction of Warid Tower - Sash Construction 68,916 68,916


Amoon Media Group (Pvt) Limited 27,960 27,960

Raseen Technology (Pvt) Limited 18,482 18,482

Warid Telecom Georgia Limited 15,403 15,403

Netsonline Services (Pvt) Limited 8,311 8,311

Warid Telecom International - Bangladesh 5,587 5,587

Bank Alfalah Limited 117 117

1,547,727 1,400,765

Provision for doubtful receivables (note 20.2) 475,567 475,567

1,072,160 925,198

20.2 Provision for doubtful receivables is made-up of as follows:

Wateen Telecom UK Limited 288,889 288,889

Advance for construction of Warid Tower - Sash Construction 68,916 68,916

Warid International LLC, UAE 42,019 42,019

Amoon Media Group (Pvt) Limited 27,960 27,960

Raseen Technology (Pvt) Limited 18,482 18,482

Warid Telecom Georgia Limited 15,403 15,403

Netsonline Services (Pvt) Limited 8,311 8,311

Warid Telecom International - Bangladesh 5,587 5,587

475,567 475,567



20.3 Provision for doubtful advances and other receivables from other parties is Rs 60.764 million (June 30,

2012: Rs 60.764 million).

21. This includes exchange loss amounting to Rs 689.6 million (March 31, 2012: Rs 806.7 million) on

account of translation of foreign loan.


March 31, March 31, March 31, March 31, 2013 2012 2013 2012

(Rupees in Thousand)

22. Related party transactions

Aggregate transactions with related parties

during the period were as follows:

Subsidiary Companies

Cost and expenses charged by

subsidiarycompanies – – 47,926 24,670

Mark up charged to subsidiary companies 22,722 30,678 68,590 82,360

Associated Companies/shareholder

Revenue from associated companies 190,877 316,274 751,431 992,729


associated companies 111,246 230,044 588,008 641,369

Markup charged to associated companies 4,502 2,507 14,954 7,521

Markup on short term running finance

from an associated company 35,428 50,041 138,940 150,122

Markup on medium term finance from

an associated company 17,515 23,186 61,514 69,557

Markup on long term finance from a shareholder 53,629 42,158 168,585 126,475

Long term finance received from sponsor 446,645 844,966 956,576 3,705,603

Other related parties- Employee’s retirement funds

Contribution to the funds 17,571 18,096 52,673 52,313

Payment to the fund during the period 47,937 10,814 145,445 92,508




23. Corresponding figures

Corresponding figures have been reclassified where necessary. 24. Date of authorisation for issue

This condensed interim financial information has been authorised for circulation to the shareholders by

the Board Of Directors of the Company on August 05, 2013.


Condensed Consolidated Financial Information

Condensed Interim Consolidated Statement of Financial Position (Un-Audited) for the nine months’ period ended March 31, 2013


SHARE CAPITAL AND RESERVES

Authorised capital 1,000,000,000 (June 30, 2012: 1,000,000,000) ordinary shares of Rs 10 each 10,000,000 10,000,000 Issued, subscribed and paid-up capital 617,474,620 (June 30, 2012: 617,474,620) ordinary shares of Rs 10 each 6,174,746 6,174,746 General reserve 134,681 134,681 Accumulated loss (27,337,937) (25,591,114)Currency translation differences (32,748) (32,212)

(21,061,258) (19,313,899) Non - controlling interests (80,257) (51,901)

(21,141,515) (19,365,800)NON - CURRENT LIABILITIES Longtermfinance-secured 6 – –Longtermportionofdeferredmarkup 7 – –Long term finance from a shareholder - unsecured 8 10,765,472 9,376,247 Medium term finance from an associated company - unsecured 9 600,000 600,000 Obligationsunderfinanceleases – 2,144Long term deposits 63,849 65,672

11,429,321 10,044,063 DEFERRED LIABILITIES Employees’ retirement benefits 10,168 11,291 Deferred USF grant 10 1,694,678 1,748,500

1,704,846 1,759,791 CURRENT LIABILITIES Current portion of long term finance - secured 6 15,662,528 15,318,243 Current portion of deferred mark up 7 1,032,385 790,743 Current portion of obligations under finance leases 4,760 2,616 Finance from supplier - unsecured 40,542 40,542 Short term running finance - secured 11 1,616,313 1,503,656 Trade and other payables 12 6,743,102 6,440,558 Interest / markup accrued 1,091,678 892,862

26,191,308 24,989,220 CONTINGENCIES AND COMMITMENTS 13 18,183,961 17,427,274 The annexed notes 1-25 form an integral part of this condensed interim consolidated financial information.


Condensed Interim Consolidated Statement of Financial Position (Un-Audited) for the nine months’ period ended March 31, 2013


NON-CURRENT ASSETS

Property, plant and equipment

Operating assets 14 9,298,714 9,089,468

Capital work in progress 15 1,945,370 2,190,030

Intangible assets 273,255 280,637

11,517,339 11,560,135

ADVANCE AGAINST PURCHASE OF SHARES 16 85,000 85,000

DEFERRED INCOME TAX ASSET 17 – –

LONG TERM DEPOSITS AND PREPAYMENTS


Long term prepayments 104,785 69,447

336,825 326,487

CURRENT ASSETS

Trade debts 18 2,292,309 2,138,862

Contract work in progress 144,925 136,388

Stores, spares and loose tools 19 469,370 516,607

Advances, deposits, prepayments and

other receivables 20 2,405,543 1,811,196

Income tax refundable 384,542 359,761

Cash and bank balances 21 548,108 492,838

6,244,797 5,455,652

18,183,961 17,427,274



Condensed Interim Consolidated Income Statement (Un-Audited) for the nine months’ period ended March 31, 2013



March 31, March 31, March 31, March 31, 2013 2012 2013 2012 Note (Rupees in Thousand)

Revenue 1,961,916 1,842,626 6,462,556 5,472,290

Cost of sales (excluding

depreciation and amortisation) 1,243,205 1,436,021 4,470,958 4,637,976

General and administration expenses 464,570 383,686 1,137,577 1,637,262

Provisions 13,105 229,359 123,747 344,343

Advertisement and marketing expenses 18,946 53,144 44,897 249,180

Selling and distribution expenses 4,101 8,605 22,707 33,205

Other (income) (19,804) (16,952) (57,747) (67,389)

1,724,123 2,093,863 5,742,139 6,834,575

Earning / (Loss) before interest,

taxation, depreciation and amortisation and impairment 237,793 (251,237) 720,417 (1,362,285)

Less: Depreciation and amortization 204,709 528,556 568,064 1,600,407

ProvisionforimpairmentWimaxofassets 14.1 – – – 9,622,973

Finance cost 22 611,012 351,420 1,974,274 2,235,873

Finance income (18,300) (8,172) (46,742) (29,387)

Loss before taxation (559,628) (1,123,041) (1,775,179) (14,792,151)

Deferredincometaxexpense – – – (1,718,574)


Loss attributable to :

–OwnerofWateenTelecomLimited (552,906) (1,094,283) (1,746,823) (16,465,863)

–Noncontrollinginterest (6,722) (28,758) (28,356) (44,862)

(559,628) (1,123,041) (1,775,179) (16,510,725)

Loss per share - (Rs) (0.90) (1.77) (2.83) (26.67) The annexed notes 1-25 form an integral part of this condensed interim consolidated financial information.


Condensed Interim Consolidated Statement of Comprehensive Income (Un-Audited) for the nine months’ period ended March 31, 2013






Currency translation differences 19,831 (11,325) (536) (13,496)

Total comprehensive loss for the period (539,797) (1,134,366) (1,775,715) (16,524,221)

Total comprehensive loss attributable to:

- Owner of Wateen Telecom Limited (533,076) (1,105,608) (1,747,359) (16,479,359)

- Non controlling interest (6,721) (28,758) (28,356) (44,862)

(539,797) (1,134,366) (1,775,715) (16,524,221)

The annexed notes 1-25 form an integral part of this condensed interim consolidated financial information.


Condensed Interim Consolidated Statement of Cash Flow (Un-Audited) for the nine months’ period ended March 31, 2013

9 months to


CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (1,775,179) (14,792,151)

Adjustment of non cash items:

Depreciation and amortisation 568,064 1,600,407

Finance cost 1,974,274 2,235,873

Deferred USF grant recognised during the period (53,822) (65,917)

Provisions 123,747 344,343

ProvisionforimpairmentofWimaxassets – 9,622,973

2,612,263 13,737,679

837,084 (1,054,472)

Changes in working capital:

(Increase) in trade debts (277,194) (640,176)

(Increase) in contract work in progress (8,537) (118,516)

Decrease/(Increase) in stores, spares and loose tools 47,237 (50,502)

(Increase) in advances, deposits, prepayments and other receivables (594,347) (1,188,194)

Increase in trade and other payables 302,543 1,773,618

(530,298) (223,770)

Employees’ retirement benefits paid (1,123) (311)

Taxes paid (24,778) (91,245)

Cash flow from operating activities 280,885 (1,369,798)

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment additions (525,268) (1,622,839)

Long term deposits receivable- recovered/(paid) 25,000 (2,611)

Long term prepayments (35,338) (20,390)

Cash flow from investing activities (535,606) (1,645,840)


Condensed Interim Consolidated Statement of Cash Flow (Un-Audited) for the nine months’ period ended March 31, 2013


9 months to


CASH FLOW FROM FINANCING ACTIVITIES

Longtermfinancereceived – 2,768,839

Longtermfinancerepaid – (27,000)

Long term finance from a shareholder - unsecured 956,575 3,705,603

Longtermpayabletosupplier – (18,570)

DeferredUSFgrantreceived – 454,934

Obligationsunderfinanceleasesrepaid – (1,174)

Long term deposits payable - (repaid)/received (1,823) 4,418

Shorttermborrowing-repaid – (134,750)

Finance cost paid (757,418) (1,755,893)

Cash flow from financing activities 197,334 4,996,407

(DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (57,387) 1,980,769

Cash and cash equivalents at beginning of the period (1,010,818) (3,333,596)

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (1,068,205) (1,352,827)

CASH AND CASH EQUIVALENTS COMPRISE:


Short term running finance (1,616,313) (1,714,790)

(1,068,205) (1,352,827)



Condensed Interim Consolidated Statement of Change of in Equity (Un-Audited) for the nine months’ period ended March 31, 2013


Attributable to owners of Wateen Telecom Limited

Share General Accumulated Currency Non controlling capital reserve (loss) translation Total interest in equity Total differences of subsidiary (Rupees in thousand)

Balance at July 1, 2011 6,174,746 134,681 (7,004,834) (11,652) (707,059) (26,567) (733,626) Total comprehensive loss for the period Lossfortheperiod – –(16,465,863) –(16,465,863) (44,862) (16,510,725) Other comprehensive income -asrestated – – – (13,495) (13,495) – (13,495)

– –(16,465,863) (13,495)(16,479,358) (44,862) (16,524,220)

Balance at March 31, 2012 6,174,746 134,681 (23,470,697) (25,147) (17,186,417) (71,429) (17,257,846) Balance at April 1, 2012 6,174,746 134,681 (23,470,697) (25,147) (17,186,417) (71,429) (17,257,846) Total comprehensive loss for the period Lossfortheperiod – –(2,120,417) –(2,120,417) 19,528 (2,100,889) Othercomprehensiveincome – – – (7,065) (7,065) – (7,065)

– –(2,120,417) (7,065)(2,127,482) 19,528 (2,107,954)

Balance at June 30, 2012 6,174,746 134,681 (25,591,114) (32,212) (19,313,899) (51,901) (19,365,800) Balance at July 1, 2012 6,174,746 134,681 (25,591,114) (32,212) (19,313,899) (51,901) (19,365,800) Total comprehensive loss for the period Lossfortheperiod – –(1,746,823) –(1,746,823) (28,356) (1,775,179) Othercomprehensiveincome – – – (536) (536) – (536)

– –(1,746,823) (536)(1,747,359) (28,356) (1,775,715) Balance at March 31, 2013 6,174,746 134,681 (27,337,937) (32,748) (21,061,258) (80,257) (21,141,515)



Notes to and Forming Part of the Condensed Interim Consolidated Financial Information (Un-Audited) for the nine months’ period ended March 31, 2013

1. Legal status and operations

The condensed interim consolidated financial information includes the financial information of Wateen Telecom Limited and its subsidiary companies Wateen Solutions (Pvt) Limited (51% owned), Wateen Satellite Services (Pvt) Limited (100% owned), Wateen Telecom UK Limited (100% owned) and Netsonline Services (Pvt) Limited (100% owned). For the purpose of this financial information, Wateen and consolidated subsidiaries are referred to as the Company.

Wateen Telecom Limited was incorporated in Pakistan as a Private Limited Company under Companies Ordinance, 1984 on March 4, 2005 for providing Long Distance and International public voice telephone (LDI) services and Wireless Local Loop (WLL) service in Pakistan. The Company commenced its LDI business commercial operations from May 1, 2005. The legal status of the Company was changed from “Private Limited” to “Public Limited” with effect from October 19, 2009. The Company was listed on Karachi, Lahore and Islamabad Stock Exchanges with effect from May 27, 2010. The registered office of the Company is situated at Lahore. The Company is a subsidiary of Warid Telecom International LLC, U.A.E.

The subsidiary company, Wateen Solutions (Pvt) Limited, is incorporated under Companies Ordinance, 1984 as a Private Limited Company on May 17, 2004. The principal activities of the Company are to sell and deploy telecom equipment and provide related services. The registered office of the Company is situated at Lahore. Wateen acquired 100 % interest in Wateen Solutions (Pvt) Limited on August 2, 2006. Wateen sold 49% shares (397,027 fully paid ordinary shares of Rs 100 each) of Wateen Solutions (Pvt) Limited on July 1, 2008.

The subsidiary company, Wateen Satellite Services (Pvt) Limited (WSS), is incorporated as a Private Limited Company under the Companies Ordinance, 1984 and is engaged in providing back haul and satellite data connectivity services in Pakistan. On March 1, 2009, the Company transferred all contracts for providing back haul and satellite data connectivity services to Wateen Telecom Limited. Wateen acquired 100% shares of Wateen Satellite Services (Pvt) Limited on July 1, 2008.

The subsidiary company, Wateen Telecom UK Limited, is incorporated as a private Limited Company under the UK Companies Act, 2006 and is engaged in providing internet and other technology related services in United Kingdom. Wateen held 51% shares in Wateen Telecom UK Limited since its incorporation. Wateen acquired remaining shares of Wateen Telecom UK Limited on March 31, 2011.

The subsidiary company, Netsonline Services (Pvt) Limited, is incorporated as a Private Limited Company under the Companies Ordinance, 1984 and is engaged in providing internet and other technology related services in Pakistan. Wateen acquired 100% shares of Netsonline Services (Pvt) Limited on July 1, 2008.

All significant inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.



2. Delisting from all stock exchanges

On March 28, 2013, the majority shareholder of the Company, Warid Telecom International LLC, U.A.E, which presently holds 54% of the total ordinary share capital of the Company, has conveyed its intention to acquire all of the issued ordinary shares held by the other shareholders of the Company at a proposed purchase price of Rs 4.5 per ordinary share and to seek delisting of the shares of the Company from Karachi, Lahore and Islamabad Stock Exchanges in accordance with the voluntary de-listing provisions of their respective Listing Regulations. The Board approved the delisting in their meeting held on April 22, 2013, and formal application for delisting has been applied to all stock exchanges where the Company is listed. The Karachi Stock exchange has requested the Company to submit intrinsic value per share determined on the basis of revaluation of assets, copy of latest revaluation report of assets carried out by evaluator as required under listing regulation and some other information.

3. Statement of compliance

These condensed interim consolidated financial information of the Company for the nine months period ended March 31, 2013 has been prepared in accordance with the requirements of the International Accounting Standard 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed.

4. Accounting policies

The accounting policies and methods of computation adopted for the preparation of this condensed interim consolidated financial information are the same as those applied in preparation of the published financial statements for the year ended June 30, 2012.

5. Management’s assessment of going concern

In assessing the Going Concern status of the Company, Management has carefully assessed a number of factors covering the operational performance of the business, the ability to implement a significant debt restructuring of the Company’s existing debt’s, and the appetite of our majority shareholder to continue financial support. Based on the analysis of these, Management are comfortable that the Company will be able to continue as a going concern in the foreseeable future. Set out below are the key areas of evidence that management have considered.

Operational Performance

During the nine months period ended March 31, 2013, the Company incurred losses of Rs 1,775 million (corresponding period last year Rs. 16,467 million) and had net current liabilities as at March 31, 2013 of Rs 19,946 million, of which Rs 15,663 million relates to loan installments classified as current liabilities as mentioned in note 6.5, and that is due for repayment after March 31, 2013. It is important to note that during this period of losses the Majority Shareholders of the Company have continued to provide financial support in the form of long term finance amounting to Rs 10,765 million to meet the requirements of the Company.



Following continuing losses during the financial year 2012, the Board directed management to implement a ‘Containment plan’ that would stem the losses of the Company and provide stability. This containment plan included a cost cutting exercise, assessment of options for the WiMAX business, and continued support of the other business lines. With regards to the WiMAX business there are discussions underway with third parties to consolidate the WiMAX business which if successful, would benefit the Company and it’s stakeholders.

The Company has incurred capital expenditures on different Universal Service Fund (USF) Projects awarded by USF Company, (total contract values Rs 4,848 million contracts awarded to date) of which Rs 1,643 million have been received by the Company to date. Furthermore milestones have been achieved and the Company is in the process of offering the project milestone notice(s) for audit to the USF Company during the ensuing year. Upon successful completion of audit the Company will be entitled to claim the balance from USF Company related to completed milestones, and collect further material receipts from the USF Company which will benefit the cash flow.

Debt Restructuring

Discussions have commenced with the Local Syndicate Lenders, our Foreign Debt Lenders, and our Majority Shareholders. Constructive discussions are taking place and there is a willingness on all sides to find a solution, including a willingness from our Majority Shareholder to provide further financial support. Given this Management are of the view that based on these constructive discussions, and information that is currently available; there is a high likelihood of a successful outcome.

Ongoing Shareholder Support

Our majority shareholder WTI LLC continues to provide Management with comfort with regards to it’s ongoing support, key requirements of which are the delisting of the Company from all Stock Exchanges of Pakistan where the Company is listed, and the successful restructuring of the debt. Both of these initiatives are progressing well.

This message was also reiterated in the letter WTI LLC provided to The Board of Directors with regards to the Buy-Back and De-Listing of Shares, which was subsequently made available to the Public by the Exchanges. In this WTI LLC stated ‘WTI’s buy-back of the shares reflects its strong commitment to Wateen and its local operations and enables a restructuring to take place that provides Wateen with the best possible chance to repay the current debts that are outstanding’.

In addition to this WTI LLC guarantees the Local Syndicate Finance Facility, and certain Personal Guarantees are provided to the Foreign Debt Holders. Based on the provision of these Guarantees WTI LLC are providing strong support to the Management through the Restructuring discussions.




6. Long term finance - secured

Syndicate of banks 6.1 8,142,335 8,142,335 Export Credit Guarantee Department (ECGD) 6.2 2,516,489 2,411,528 Dubai Islamic Bank (DIB) 6.3 424,000 424,000 Deutsche Bank AG 6.4 4,717,177 4,520,428

Total 15,800,001 15,498,291

Unamortized transaction and other ancillary cost Opening balance 180,048 217,355 Amortisation for the period/year (42,575) (37,307)

(137,473) (180,048)

15,662,528 15,318,243 Less: Amount shown as current liability Amountpayablewithinnexttwelvemonths – – Amount due after March 31, 2014 6.5 (15,662,528) (15,318,243)

15,662,528) (15,318,243)

– – 6.1 The company has obtained syndicate term finance facility from a syndicate of banks with Standard

Chartered Bank Limited (SCB), Habib Bank Limited (HBL), Bank AI-Habib Limited (BAHL) and National Bank of Pakistan (NBP), being lead arrangers to finance the capital requirements of the Company. The Company and the Syndicate of Banks signed an agreement to restructure Syndicate term finance facility and the short term running finance from SCB of Rs 1,497 million, term finance facility from SCB of Rs 1,016 million, running finance facility of Rs 529 million from BAHL, running finance facility of Rs 200 million from Soneri Bank Limited and finance facility of Rs 135 million from Summit Bank Limited effective from January 1, 2011. All the finance facilities have been fully availed by the Company till March 31, 2013. The principal is repayable in ten unequal semi annual instalments . The first such instalment shall be due on July 1, 2014 and subsequently every six months thereafter until January 1, 2019. The rate of mark-up is 6 months KIBOR per annum till December 31, 2013 and 6 months KIBOR + 2.5% per annum for the remaining period. The Company shall pay the mark up at 8% per annum from January 1, 2011 to December 31, 2013 (deferment period). The remaining amount of all instalments falling due in the deferment period shall be paid in ten equal six-monthly instalments on each January 1 and July 1 commencing from July 1, 2014 and ending January 1, 2019.

Certain conditions precedent to the restructured agreements are not yet fulfilled, management of the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured agreements are fulfilled bank will formally issue letter to the Company which will complete the restructuring process.



The facility is secured by way of hypothecation over all present and future moveable assets (including all current assets) and present and future current/ fixed assets (excluding assets under specific charge of CM Pak, CISCO, DIB, assets procured from WorldCall and USF), a mortgage by deposit of title deeds in respect of immoveable properties of the company, lien over collection accounts and Debt Service Reserve Account and a corporate guarantee from Warid Telecom International LLC.

6.2 The Company has obtained long term finance facility amounting to USD 42 million (June 30,2012: USD 42 million) from ECGD UK, of which USD 35 million (June 30,2012: USD 35 million) has been availed till March 31, 2013. The Company and ECGD UK signed an agreement to restructure the terms of loan agreement including repayment schedule. Amount outstanding at March 31, 2013 was USD 25.600 million. The principal is repayable in ten semi annual instalments. The first such instalment shall be due on July 1, 2014 and subsequently every six months thereafter until January 1, 2019. The rate of mark-up is six month LIBOR + 1.5% (interest rate) per annum till June 30, 2011 and six month LIBOR + 1.9% (interest rate) for the remaining period. If the amount of instalment payable and/or interest payable is not paid on the due date, the Company shall pay interest on such amount the interest rate + 2% per annum.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured agreement are fulfilled ECGD will formally issue letter to the Company which will complete the restructuring process.

The facility is secured by way of hypothecation over all present and future moveable assets (including all current assets) and present and future current/ fixed assets (excluding assets under specific charge of CM Pak, Motorola, CISCO, assets which are subject to lien in favour of USF), a mortgage by deposit of title deeds in respect of immoveable properties of the company, lien over collection accounts and Debt Service Reserve Account and personal guarantees by three Sponsors of the Company.

6.3 The Company has obtained Ijarah finance facility of Rs 530 million (June, 30,2012: Rs 530 million) from DIB. The Company and DIB signed an agreement to restructure the terms of the Ijarah finance facility. The principal is repayable in ten unequal semi annual instalments. The first such instalment shall be due on July 1, 2014 and subsequently every six months thereafter until January 1, 2019. The rate of mark-up is 6 months KIBOR per annum till December 31, 2013 and KIBOR + 2.5% per annum for the remaining period. The Company shall pay the mark up at 8% per annum from January 1, 2011 to December 31, 2013 (deferment period). The remaining amount of all instalments falling due in the deferment period shall be paid in ten equal six-monthly instalments on each January 1 and July 1 commencing from July 1, 2014 and ending January 1, 2019.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured agreement are fulfilled bank will formally issue letter to the Company which will complete the restructuring process.

The facility is secured by way of hypothecation over all present and future moveable assets (including all current assets) and present and future current/ fixed assets (movable and immoveable) and a corporate guarantee from Warid Telecom International LLC.

6.4 The Company has obtained term finance facility of USD 65 million (June 30,2012: USD 65 million) from



MCC of which USD 64 million (June 30,2012: USD 64 million) has been availed till March 31, 2013. On August 19, 2011, MCC has transferred all of its rights, title benefits and interests in the original facility agreement to Deutsche Bank AG as lender, effective August 19, 2011. The Company and Deutsche Bank AG signed an agreement to restructure the terms of loan agreement. Amount outstanding at March 31, 2013 was USD 48 million. The principal is repayable in ten semi annual instalments commencing from July 1, 2014 until and including the final maturity date which is December 31, 2019. The rate of mark-up is six month LIBOR + 1% per annum provided that rate shall be capped at 2.5% per annum. If the Company fails to pay any amount payable on its due date, interest shall accrue on the unpaid sum from the due date up to the date of actual payment at a rate which is 2% higher than the rate of interest in effect thereon at the time of such default until the end of the then current interest period. Thereafter, for each successive interest period, 2% above the six-month LIBOR plus margin provided the Company is in breach of its payment obligations hereof.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of the Company has taken steps to fulfill those conditions. Once conditions precedent to restructured agreement are fulfilled bank will formally issue letter to the Company which will completes the restructuring process. The loan is secured through personal guarantee by one Sponsor of the Company and is ranked pari passu with unsecured and unsubordinated creditors.

6.5 The Company has not complied with the requirements of the loan agreements to maintain Long Term Debt to Equity Ratio of 80:20 at March 31, 2013. Further the restructured loan agreements have not yet become effective as certain conditions precedent to the restructured arrangements are not yet fulfilled. Accordingly, the lenders shall be entitled to declare all outstanding amount of the loans immediately due and payable. In terms of provisions of International Accounting Standard on Presentation of financial statements (IAS 1), since the Company does not have an unconditional right to defer settlement of liabilities for at least twelve months after the statement of financial position date, all liabilities under these loan agreements are required to be classified as current liabilities. Based on above, loan installments for an amount of Rs 15,662 million due after March 31, 2013 have been shown as current liability.


7. Long term portion of deferred markup

Syndicate of banks 7.1 820,825 626,567

Dubai Islamic Bank 7.1 40,676 30,610

Bank Alfalah Limited 7.1 170,884 133,566

1,032,385 790,743

Less:Amount shown as current liability

Amountpayablewithinthenexttwelvemonths – –

Amount due after March 31, 2014 (1,032,385) (790,743)

(1,032,385) (790,743)

– –



7.1 These markup are payable in ten equal six monthly installments on each January 1st and July 1st, commencing from July 1st, 2014 and ending on January 1st, 2019. As explained in note 6.5 these amounts have been shown as current liability.


8. Long term finance from a shareholder - unsecured

Facility 1 8.1 2,356,853 2,263,155

Facility 2 8.2 8,408,619 7,113,092

10,765,472 9,376,247 8.1 The Company has obtained long term finance from a shareholder amounting to USD 24 million (June

30,2012: USD 24 million). This loan is subordinated to all secured finance facilities availed by the Company. This loans is repayable within 30 days of the expiry of a period of five years from the last date the lender has disbursed the loans, which shall be on or about January 29, 2015. The rate of mark-up is 6 months LIBOR + 1.5% with 24 months payment grace period payable half yearly. Alternatively loans may be converted into equity by way of issuance of the Company’s ordinary shares at the option of the lender at any time prior to, at or after the repayment date on the best possible terms but subject to fulfillment of all legal requirements at the cost of the Company. The said conversion of loan shall be affected at such price per ordinary share of the Company as shall be calculated after taking into account the average share price of the last 30 calendar days, counted backwards from the conversion request date, provided that such conversion is permissible under the applicable laws of Pakistan.

This loan together with accrued interest will have at all times priority over all unsecured debts of the Company except as provided under Law. In the event the Company defaults on its financial loans or in case Warid Telecom International LLC, Abu Dhabi, UAE, no longer remains the holding company of the Company and sells its 100 % shares to any other person or party or relinquishes the control of its management then, unless otherwise agreed in writing by the lender, the entire loan together with the accrued interest will become due and payable for with and shall be paid within 15 working days of the event of default or decision of the Board of Directors of the Company accepting such a change in the shareholding as the case may be, and until repaid in full, the loan shall immediately become part of financial loans, ranking pari passu therewith subject to the consent of the Company’s existing financial loan providers.

8.2 The Company has obtained long term finance from a shareholder amounting to USD 185 million (June 30,2012: USD 185 million) of which USD 86 million (June 30, 2012: USD 75 million) has been availed at March 31, 2013. The rate of mark-up is 6 months LIBOR + 1.5% payable half yearly. The Company shall repay the loan in full in five equal annual instalments beginning on June 30, 2014 with final maturity date of June 30, 2018. Alternatively the lender shall also have the option to instruct the Company any time during the term of this agreement to convert the remaining unpaid amount of the loan and the interest in part or in its entirety into equity by way of issuance of ordinary shares of the Company in favour of the lender in compliance with all applicable laws of Pakistan.



Upon the request of the Company for conversion of the loan and the interest into equity, the lender and the Company shall, with mutual consent, appoint an independent auditor to determine the fair market value per share of the borrower prevailing at the time of such request. lf the lender agrees to the price per share as determined by the independent auditor then the loan and the interest shall be converted into equity at the rate per share decided by the independent auditor. In case the lender, in its sole discretion, disagrees with the price per share as determined by the independent auditor then the request for conversion shall stand revoked and the loan shall subsist.

The loan together with the interest shall have priority over all other unsecured debts of the Company. Further, after the execution of this agreement, the Company shall not avail any other loan or funding facility from any other source without prior written consent of the lender. The Company undertakes that it shall not declare dividends, make any distributions or pay any other amount to its shareholders unless the repayment of the loan and the interest in full to the lender. The rights of the lender in respect of the loan are subordinated to any indebtedness of the Company to any secured lending by any financial institution in any way, both present and future notwithstanding whether such indebtedness is recoverable by process of law or is conditional or unconditional. Furthermore, in the event that insolvency proceedings are initiated against the Company or that it is unable to pay its Financial Loans as they fall due or if the Company has proposed any composition, assignment or arrangement with respect to its Financial Loans, the obligation to repay the outstanding amount of the loan shall be subordinated to the Financial Loans but will have priority over all other unsecured debts of the Company.

9. Medium term finance from an associated company - unsecured

The Company has obtained an aggregate medium term finance facility of Rs 600 million from an associated company Taavun (Pvt) Limited. This loan is subordinated to all secured finance facilities availed by the Company as per the terms of the agreement. The principal is repayable within 30 days of the expiry of twenty four months from the effective date i.e. September 30, 2010, which is further extendable to twelve months. The rate of mark-up is six month KIBOR + 2.5% with 24 months grace period payable quarterly. As the loan is subordinated to all secured finance facilities availed by the Company, the entire amount of loan has been classified as non current liability. Subsequent to the period end the Company has not repaid the loan.


10. Deferred Universal Service Fund (USF) grant

Balance at beginning of the period/year 1,523,604 1,136,310 Amount received/receivable during the period/year - 454,438 Amount receivable at period/year end 224,896 224,896 Amount recognised as income during the period/year (53,822) (67,144)

Closing balance 1,694,678 1,748,500




11. Short term running finance - secured

Facility - I 11.1 1,528,273 1,503,656 Facility - II 11.2 88,040 -

1,616,313 1,503,656

11.1 The Company has a running finance facility of Rs 1,800 million (June 30,2012: Rs 1,800 million), of which Rs 272 million (June 30,2012: Rs 296 million) was unutilized as at March 31, 2013. The facility is available till December 31, 2019. The principal is payable on expiry/on demand. The rate of mark-up is 6 months KIBOR per annum till December 31, 2013 and KIBOR + 1.5% per annum for the remaining period. Mark up at 8% is payable on bi-annual basis and remaining amount is deferred which is payable in 10 bi-annual instalments with the first instalment becoming payable on July 1, 2014. Initially the facility carried mark-up at three months KIBOR + 2.5 % per annum.

This facility is secured by hypothecation of first pari passu charge on all fixed assets(movable and immoveable) plus current assets of the company with a margin of 25 %.

11.2 During the period Company has availed cash finance facility of Rs 940 million, of which Rs 573 million was unutilized as at December 31, 2012. Markup to be serviced on quarterly basis. The rate of mark-up is 3 months KIBOR + 1%.

This facility is secured by lien mark on an amount of USD 10.571 million held under the name “Dhabi One Investment Services LLC” maintained at Bank Alfalah.


12. Trade and other payables

These include payable to related parties as follows: Advances from Warid Telecom (Pvt) Limited 48,983 48,983 WaridTelecom(Pvt)Limited – 61,026 Bank Alfalah Limited 3,950 3,950 Payable to gratuity fund 84,900 128,049 Payable to provident fund 33,837 22,856

171,670 264,864




13. Contingencies and commitments

13.1 Claims against the Company not acknowledged as debt 329,712 319,338 13.2 Performance guarantees issued by banks in favour of the Company 1,828,911 1,753,952 13.3 Under the Access Promotion Regulations, 2005, the Company is liable to make payments of Access

Promotion Charges (APC) for Universal Service Fund (USF) within 90 days of close of the month to which such payment relates. The Company has disputed the APC Regulations, 2005 and the case is currently pending with High Court. The Company has not recorded the penalty on delayed payment of APC for USF amounting to Rs 209 million as required by the Access Promotion Regulations, 2005 as the management and legal advisor of the Company are of the view, that the Company has a strong case and chances of success are very high.

13.4 The Deputy Commissioner Inland Revenue (DCIR) had issued Order in Original based on the observations that Company had not paid Federal Excise Duty (FED) on fee paid to WTI and created demand of Rs 31.830 million payable along with the penalty and default surcharge and had also issued recovery notices. The Commissioner Inland Revenue – Appeals and the Appellate Tribunal Inland Revenueupheld the order of the DCIR. The Company and its advisor are of the view that by considering judicial precedence and the technical grounds encompassing Company’s case, the Company has a strong chance of success and they intend to contest the case at superior appellate forum.

13.5 The Assistant Commissioner Inland Revenue (AC), had issued show cause notices based on the observation that Company has not furnished Sales Tax and Federal Excise returns for the period from August 2009 to March 2010, November 2010 and December 2011. In this respect, AC issued Order- in–OriginalandassesseddemandofRs249.471million(calculatedonthebasisofallegedminimumliability) payable along with penalty and default surcharge and also issued recovery note. The Company deposited principal amount of Rs 138.709 million and default surcharge of Rs 26.231 million based on the FED liability due as per own working of the Company. The Appellate Tribunal Inland Revenue, has remanded back the case to the assessing officer. The related proceedings are not yet finalized by the assessing officer. The management and the Company’s advisors believe that Company has high chances to amicably settle the issue of disputed amount.

13.6 The Assistant Commissioner Inland Revenue has alleged that Company has not withheld tax on payments made to foreign telecom operators during the tax years 2008, 2009, 2010 and 2011. Further the ACIR has ordered the Company to pay alleged demand of Rs 477.767 million representing principal amount and default surcharge for the aforesaid tax years. The Company and its advisors are of the view that Company has fair chance to succeed in appeal and accordingly Company intends to contest the related orders before appellate authorities.

TheAssistantcommissionerInlandRevenue,Enforcement–IVissuedshowcausenoticesundersection161/205 for the tax year 2008, 2009, 2010 and 2011 on account of non withholding tax of taxes on payment made to foreign telecom operators and has bifurcated Interconnect expenses of Rs 5,800 million in the ratio of 60:40 relating to local and foreign operators respectively for the aforesaid tax years.



13.7 In relation to financial years 2008 and 2009 of Wateen Solutions (Pvt) Limited, FBR contended Sales tax and Federal excise duty of Rs 113.30 million. The company paid Rs 10.98 million under amnesty scheme against such order. An appeal had been filed before Commissioner Inland Revenue Appeals which upheld the demand raised by the Department. The company then preferred appeal before Appellate Tribunal Inland Revenue which is pending for adjudication.

13.8 The show cause notice has been issued to Wateen Solutions (Pvt) Limited by the Department raising demand of Rs 1.2 million by contending that same has been inadmissible as vendors have not deposited sales tax. The Company has filed an appeal before Commissioner Inland Revenue Appeals which is pending for adjudication.

No provision on account of contingencies disclosed in note 13.4-13.8 above has been made in these

financial statements as the management and the tax advisors of the Company are of the view, that these matters will eventually be settled in favour of the Company.

March 31, June 30, 2013 2012 (Rupees in thousand) 13.9 Outstanding commitments for capital expenditure 1,256,908 891,566 13.10 Acquisition of 49% shares in subsidiary Wateen Solutions (Pvt) Limited The Board of Directors of the Company in their meetings held on November 15, 2009 and November

19, 2009 approved the acquisition of 49% shareholding of Wateen Solutions (Private) Limited from Mr. Jahangir Ahmed for a total sale consideration of Rs 490 million. On the basis of the approval of the Board of Directors of the Company, the Company entered into a Share Purchase Agreement dated April 1, 2010 (SPA) with Mr. Jahangir Ahmed for the acquisition of the 49% shareholding of Wateen Solutions (Private) Limited.

However, in light of the dividend payment of Rs 149.94 million by Wateen Solutions (Private) Limited to Mr. Jahangir Ahmed, the Company entered into negotiations with Mr. Jahangir Ahmed for the purposes of negotiating a downward revision to the purchase price as agreed in the SPA from Rs 490 million to Rs 340 million. This reduction in the purchase price and the resultant change in utilization of the IPO proceeds was approved by the shareholders of the Company in the Extra Ordinary General Meeting dated August 13, 2010.

Under the terms of the SPA, the Company has paid an advance of Rs 85 million as partial payment of the purchase price and the balance of Rs 255 million is payable by the Company to Mr. Jahangir Ahmed. In light of change in the future assumptions of the business of WS, the current business dynamics and the resultant devaluation of its share price, the new management entered into negotiations as a result of which Mr. Jahangir Ahmed has agreed to transfer the shares of Wateen Solutions (Private) Limited to the Company without requiring payment of the balance of Rs 255 million, however the finalization of renegotiated agreement is in process.

Same have been approved by shareholders in EOGM dated December 31, 2011.



9 months to Year ended March 31, June 30, 2013 2012 (Rupees in thousand)

14. Operating assets

Opening net book value 9,089,468 18,766,578 Additions - owned 758,096 2,373,288 Currency translation differences 36 410 Disposalsatnetbookvalue – (298,052) Impairmentcharge(note14.1) – (9,622,973) Depreciation charge (548,886) (2,129,783)

Closing net book value 9,298,714 9,089,468

14.1 Impairment

During the year ended June 30, 2012, management reviewed the business performance of WiMAX operations and an assessment was made in respect of triggering events as specified by IAS 36 applicable to the non-current assets relating to WiMAX operations. Based on the following indicators applicable to WiMAX, an impairment test was carried out by a consultant to determine the impairment of non-current assets relating to WiMAX operations:

–DeclineinthemarketvalueofWiMAXoperationsassets –Significantchangeinthetechnologicalandeconomicconditions –DecreaseintheeconomicperformanceofWiMAXbusiness –IndicationssuggestthatWiMAXbusinessislikelytobecomeidleandmanagementplansto

restructure the WiMAX operations

For the purpose of determining the value in use, the WiMAX operations has been considered as separate Cash Generating Unit (CGU), the value in use has been determined using discounted cash flow method. The financial projections of the CGU for five years have been derived from a latest business plan which is approved by the Board of Directors (BOD) of the Company based on containment strategy. The value in use of WiMAX assets determined by a consultant is negative Rs 1,036 million using discount rate of 20%.

The Board of Directors is currently considering other options for the WiMAX business and there are certain discussions taking place with third parties to merge the WiMAX business. Based on the information available the management estimates that in case of any possible business consolidation, the fair value of these assets, (positive net present value of future cash flows of consolidated business) using discount rate of 20% amounts to Rs 2,049 million. The fair value estimate has been used as recoverable amount to determine impairment. The management has recognized an impairment loss of Rs 9,623 million (difference between carrying value and fair value as determined above) during the year ended June 30, 2012. The carrying value of WiMAX assets amounts to Rs. 1,912 million as at March 31, 2013.The conclusive recoverable amount of these assets can only be determined on the possible merger of WiMAX business, if successful, and any consequential difference from recoverable amount estimated above will be recognized in the financial statements of ensuing periods.



9 months to Year ended March 31, June 30, 2013 2012 (Rupees in Thousand)

15. Capital work in progress

Leasehold improvements 39,968 33,978 Line and wire 1,167,205 1,405,356 Network equipment (net of impairment of Rs 353.515 million) 738,197 750,696

1,945,370 2,190,030 16. Advance against purchase of shares

Advance paid against purchase of shares -Wateen Solutions (Pvt) Limited (note 13.10) 85,000 85,000 17. Deferred income tax asset

Taxable temporary differences between accounting and tax depreciation (864,642) (615,343) Unused tax losses- recognised to extent of taxable temporary differences 864,642 615,343

– – The gross movement in deferred tax liability during the period is as follows: BalanceatJuly1 – 1,718,574 Deferredtax(expense)/creditfortheperiod/year – (1,718,574)

Balanceatperiod/yearend – – The aggregate tax losses available to the Company for set off against future taxable profits at March

31, 2013 amounted to Rs 23,750 million. Of these, losses aggregating Rs 2,470 million have been recognised in the financial statements against taxable temporary differences at March 31, 2013.

Deferred tax asset, the potential tax benefit of which amounts to Rs 11,522 million has not been recognized on balance representing business losses aggregating to Rs 6,364 million, tax depreciation losses aggregating Rs 14,915 million and deductible temporary differences on account of provisions and share issue cost aggregating Rs 11,642 million as at March 31, 2013. Business losses expire as follows:

Tax Year Rs in million

2017 2,237

2018 3,729

2019 398



Management of the Company has prepared business plan based on containment strategy duly approved by the Board of Directors of the Company as compared to previously approved business plan which was based on the growth model. Management of the Company has taken a conservative view regarding recognition of deferred tax asset amounting to Rs 11,522 million during the period, therefore deferred tax asset has been recognised only to the extent of taxable temporary differences.


18. Trade debts

Trade debts - related parties (note 18.1) 816,220 640,698

- other parties 2,462,050 2,360,378

3,278,270 3,001,076

Less: Provision for doubtful debts - other parties (note 18.2) (985,961) (862,214)

2,292,309 2,138,862

18.1 Trade debts include due from related parties as follows:

Warid Telecom (Pvt) Limited 600,460 510,661



AlfalahInsuranceLimited – 192

816,220 640,698

18.2 Provision for doubtful debts - other parties


Provision during the period/year 123,747 293,288

Writeoffagainstprovisionduringtheperiod/year – (44,722)

Recoveryduringtheperiod/year – (4,822)

Closing balance (note 18.2.1) 985,961 862,214

18.2.1These include Rs 913 million (year ended June 30, 2012: Rs 789 million) based on age analysis of the

debts as follows:

Balances 181 - 360 days past due - 50 %

Balances over 360 days past due - 100 %




19. Stores, spares and loose tools

Cost 686,910 734,147 Less: Provision for obsolete stores 217,540 217,540

469,370 516,607 20. Advances, deposits, prepayments and other receivables

20.1 These include receivable from related parties as follows:

Wateen Multimedia (Pvt) Limited 159,190 144,660 Advance for construction of Warid Tower - Sash Construction 68,916 68,916 Warid International LLC, UAE - Parent company 42,019 42,019 Amoon Media Group (Pvt) Limited 27,960 27,960 Raseen Technology (Pvt) Limited 18,482 18,482 Warid Telecom Georgia Limited 15,403 15,403 Warid Telecom International - Bangladesh 5,587 5,587 Netsonline Services (Pvt) Limited 8,311 8,311 Bank Alfalah Limited 117 117

345,985 331,455 Less: Provision for doubtful receivables 178,367 178,367

167,618 153,088 20.2 Provision for doubtful receivables is made-up of as follows:

Advance for construction of Warid Tower - Sash Construction 68,916 68,916 Warid International LLC, UAE 42,019 42,019 Amoon Media Group (Pvt) Limited 27,960 27,960 Raseen Technology (Pvt) Limited 18,482 18,482 Warid Telecom Georgia Limited 15,403 15,403 Warid Telecom International - Bangladesh 5,587 5,587

178,367 178,367 Provision for doubtful receivables have been approved by shareholders of the Company in Extraordinary

General Meeting held on December 31, 2011.

20.3 Provision for doubtful advances and other receivables from other parties is Rs 71.543 million and (June 30, 2012: Rs 71.543 million).

21. Cash and bank balances

Bank balances amounting to Rs 191.578 million were under lien with banks (June 30, 2012: Rs 327.636 million).



22. Finance cost

These includes exchange loss amounting to Rs. 690.2 million(Nine months ended March 31, 2012: Rs 806.4 million)



23. Related party transactions

Aggregate transactions with related parties

during the period were as follows:

Associated Companies/shareholder

Revenue from associated companies 190,877 316,274 751,431 992,729


associated companies 111,246 230,044 588,008 641,369

Markup charged to associated companies 4,502 2,507 14,954 7,521

Markup on short term running finance

from an associated company 35,428 50,041 138,940 150,122

Markup on medium term finance from

an associated company 17,515 23,186 61,514 69,557

Markup on long term finance from a shareholder 53,629 42,158 168,585 126,475

Long term finance received from sponsor 446,645 844,966 956,576 3,705,603

Other related parties - Employee’s retirement funds

Contribution to the funds 17,571 18,096 52,673 52,313

Payment to the fund during the period 47,937 10,814 145,445 92,508 24. Corresponding figures Corresponding figures have been reclassified where necessary . 25. Date of authorisation This condensed interim financial information has been authorised for circulation to the shareholders by

the Board Of Directors of the Company on August 05, 2013.



Quarterly Report March 2013

Documents

Contents...EBITDA - PKR million 228 -221 708 -1,366 Loss per share - PKR -0.86 -1.74 -2.78 -26.59 Wateen’s financial performance continued to show significant improvement in light