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A N N U A L R E P O R T 2 0 0 3
we choose toCOMMUNICATE
as long as we live
”“
ContentsP A G E 0 5
P A G E 0 4Message from the Chairman
P A G E 3 1P A G E 0 6
P A G E 3 2P A G E 3 7
P A G E 3 8
Internet
P A G E 5 1GSM Operations Support
GSM Operations
C O N T E N T SP A G E 0 3A N N U A L R E P O R T 2 0 0 3
P A G E 0 2
P A G E 5 2P A G E 5 5
P A G E 5 62003 Financial ReviewP A G E 9 9
Highlights from 2003
Messagefrom the Chairman
Our strategy is regional growth by investing in thedevelopment of telecommunications.
Dear Shareholders,
In 2003, Orascom Telecom (OT) successfully completed its restructuring program. OT has significantly deleveraged its
balance sheet and restructured its short-term liabilities into long-term arrangements. It has divested most of its non-core
sub-Saharan operations. This strategy has enabled OT to fully focus on its core operations: Djezzy (Algeria), Mobilink
(Pakistan), MobiNil (Egypt), Tunisiana (Tunisia) and Iraqna (Iraq), the new license signed in Iraq last December. By focusing
our resources on these operations, OT has aggressively rolled out networks in these countries and achieved substantial
subscriber growth. Equal focus on improving both profitability and growth led to enhanced margins as well as superior
revenue growth.
Our portfolio of assets is more balanced with roughly equal contributions from our three large operations in Algeria, Egypt
and Pakistan; I expect this trend to continue with our two newer operations in Tunisia and Iraq taking more relative
importance in the coming years.
To solidify relations with our shareholders, we increased our transparency by delivering our year end results in less than
75 days, improved the quality of our communication with investors, and enhanced our corporate governance standards
by including three non-executive Board members.
In 2004, our strategy will remain the same: continue to focus on maintaining our leadership in our key markets by delivering
high subscriber growth, exceeding 50% and high profitability. As new opportunities in the GSM world become scarce, we
will focus on highly populated regions with low penetration and high return targets. We also aim to capture more of the
value chain by developing all our GSM support operations.
In five years of existence, OT has become a leading regional GSM operator with true international scale: a subscriber base
expected to break the 10 million mark this year in markets with around 400 million inhabitants. Our increasing scale and
recognized operating expertise gives us the appropriate leverage with our key partners: government bodies, equipment
suppliers and financial institutions. I am convinced OT is strategically, operationally and financially well positioned to
deliver superior growth and profitability in the future.
Sincerely,
Naguib Sawiris
Chairman & CEO
MESSAGE FROM THE CHAIRMAN
P A G E 0 5A N N U A L R E P O R T 2 0 0 3P A G E 0 4
YEMEN
ZAMBIA
IRAQ
EGYPTCHADALGERIA
DEMOCRATIC REPUBLICOF CONGO
BURUNDI
UGANDA
CENTRAL AFRICAN
REPUBLIC
GABON
BENINTOGO
ZIMBABWE
BURKINA FASO
IVORY COAST
TUNISIA
JORDAN
SYRIA
CONGO BRAZZIVILLE
PAKISTAN
Countries where OT has divested operations
Current OT operations
A N N U A L R E P O R T 2 0 0 3
GSMOPERATIONS
G S M O P E R A T I O N S
• MobiNil
• Mobilink
• Djezzy
• Tunisiana
• Iraqna
• Sub-Saharan Operations
Orascom Telecom’s first investment in the Middle East started on May 21, 1998 with MobiNil.
MobiNil’s success is the story of a constantly reaffirmed commitment towards the Egyptian society. It has had more than five years
of market leadership, outstanding achievements, and an unwavering pledge to its mission to create value by providing the best quality
service for the maximum number of customers, the best working environment for its employees, and top value for shareholders.
MobiNil has the strongest network in Egypt; 1836 sites, 15 Switches, EFR Voice Clarity Enhancement and state-of-the-art
infrastructure to support the MobiNil network.
MobiNil was the first GSM operator and remains market leader in terms of subscribers and a national coverage of 95% of the
total populated area. It has roaming agreements with 247 operators in 109 countries and includes GSM, non-GSM and satellite
partners. The company also has a broad retail base, with more than 3000 Points of Sale across the nation.
MobiNil-EGYPT
P A G E 0 9A N N U A L R E P O R T 2 0 0 3P A G E 0 8
Market SizeThe Egyptian GSM market is one of the largest markets in the region. With a total
population of 72 million and a penetration of only 8% (over 6 million subscribers),
Egypt still has strong growth potential.
MobiNil reported active subscribers on December 31, 2003 at 2.9 million compared to
2.282 million at year-end 2002, representing an increase of 31%. In 2003, MobiNil
added 709,214 new net active subscribers compared to 424,000 in 2002, and achieved
higher proportional growth in revenue represented by a 33% increase in MobiNil's top
line. With this it achieved a 52.7% of the GSM subscriber market share.
Customer SegmentationMobiNil's Postpaid base was 666,696 by the end of 2003, representing a 58% share in
the Postpaid market and a 44% increase over 2002. This has caused the Postpaid -
Prepaid mix to change to 22% - 78% from a 20% - 80% mix a year earlier. These results
demonstrate the success of MobiNil’s strategy to focus on high ARPU outcomes.
The Prepaid base was 2,324,518 by year end 2003, which represents a 28% increase
over 2002. The Prepaid segment represents the fuel for growth in the Egyptian GSM
market, targeting younger generations with growing needs for communication.
MobiNil continues its approach for providing the market with products and services
that address the different needs of the various segments. In its pursue to provide world-
class standard mobile experience to the market, MobiNil launched MobiNil Life (GPRS
Service) during the third quarter of 2003 to increase the non-voice revenues. This
service provides users with a friendly interface to easily access content including ring
tones and games. MobiNil Life also encompasses Multimedia Messaging Services (MMS).
G S M O P E R A T I O N S
Market IndicatorsIn 2003, MobiNil managed to improve its operational and financial figures and it
reported strong profit growth for the year. MobiNil also reported strong revenue and
EBITDA growth of 33% and 31% respectively. MobiNil managed to increase its blended
ARPU for 2003 to LE 104 million, from LE 100 million in 2002.
Mobile OperatorsCurrently, MobiNil competes with Vodafone Egypt. In late 2003, MobiNil and Vodafone
reached an agreement with Telecom Egypt in which the two operators are committed
to pay a total of EGP 1,240 million each, spread equally over four years to the National
Telecommunications Regulatory Authority (NTRA). In exchange, Telecom Egypt surrenders
its GSM license to the regulator, thus granting mobile operators access to the 1800
MHZ spectrum. As part of the agreement, the two mobile operators will also be granted
an extension of the duopoly market until 2007, as well as other benefits.
Network Coverage & RoamingMobiNil expanded network coverage to 95% of populated areas. As for roaming, several
new operators were signed in 2003. Continuous expansion will occur as MobiNil builds
on its leadership position.
Social ResponsibilityMobiNil has been and continues to be one of the most active and leading corporate
citizens in Egypt, with a firm belief that success is not merely measured in numbers,
but it is also measured by fulfilling significant responsibilities towards society. MobiNil
seeks to manage the environmental, ethical and social aspects of its business responsibly,
striving towards externally recognized standards.
MobiNil is an active player in the Egyptian community, lending support to a variety
of cultural, social and sports events in an ongoing effort to express gratitude to the
community in which it functions. MobiNil is paving the way in a number of areas,
including goodwill to the Egyptian economy, education, heritage, culture, the arts,
technology, community service, the environment, and national sports.
MobiNil is an environment friendly organization, and is accredited the ISO 14001
Certificate for the environment.
MobiNil at a Glance (as of 31 December 2003)
Date of Launch 21 May, 1998
Ownership Structure The Egyptian Company for Mobile Services (MobiNil)- MobiNil Telecommunications: 51.0%
• Orange Group SA: 71.25%• Orascom Telecom Holding SAE: 28.75%
- Orascom Telecom Holding SAE: 16.6%- Free Float: 32.4%
Listing Cairo and Alexandria Stock ExchangesRIC: EMOB. CA
Total Number of Subscribers 2,991,214
Total Number of Prepaid Subscribers 2,324,518
Total Number of Postpaid Subscribers 666,696
Total Market Share 52.7% market share
Geographical Coverage 95% of populated area
Retail Base 3000+ Points of Sale nationwide
Products and Services MobiNil Monthly Postpaid SubscriptionMobiNil Prepaid ALOMobiNil BusinessMobiNil Life (GPRS)
VAS
[ ]
P A G E 1 1A N N U A L R E P O R T 2 0 0 3P A G E 1 0 G S M O P E R A T I O N S
- Fixed Dialing Number- CLIP, CLIP +- Call Barring, Call Forwarding, Call Waiting / Call Hold- SMS, IS-SMS, SMS 2TV- E-Mail- Multimedia Messaging Service (MMS), MobiNil Chat- News Pull Service Description with Info2cell- Flight Information Service- SMS Ads Commercial, SMS Winning Stars Game, Win the
Ring Game- Voice Mail, Conference Calling, Voice Information Service
(Short Numbers), IVR Bill Advice, Cinema012 IVR- Fax Mail, Data Services, Fax Services, WAP- International Access, Easy Go Scratch Cards, Roaming, FREE
3 Minutes Roaming- Home Cash Collection, E-Bill, Direct Debit, Budget Master, Bill
Payment at POS, ATM Bill Payment- Twin Line, Fax & Data Only SIM cards, 1Line2SIM, 32K SIM
Card- MobiNil Visa Card, Portabank, SMS Mobile Banking, IVR
Banking Services- GPRS, Multimedia Messaging Services (MMS), WAP, WEB
(Internet and Intranet Browsing)
Mobilink-PAKISTAN
Mobilink started its operation in 1994 and until early 2001, it had a market share of 40%. It was in April 2001 that Orascom
Telecom took over management control of the company when it acquired a stake of 89% and changed the overall market dynamics
through its aggressive marketing strategy and expertise. In less than three years, Mobilink grew by almost seven times, achieving
a market share of 61% by the end of 2003. Moreover, while both existing operators employed AMPS technology, Mobilink was
the first cellular service provider in Pakistan to operate a 100% GSM technology.
During 2003, Mobilink aggressively grew the market. It started the year with 952,174 subscribers and a market share of 53%.
With a successful mix of strong brand image and sound financial results, Mobilink ended 2003 with a cumulative subscriber base
of 2,015,647, representing a 61% market share.
Market SizePakistan had 3.3 million subscribers at the end of 2003 out of a total population of144 million. This 2.3% market penetration clearly demonstrates the tremendous growthpotential in Pakistan.
Mobilink is the market leader with both its Postpaid product, Indigo, and its Prepaidproduct, Jazz, dominating their respective segments. Indigo, with a cumulative subscriberbase of 142,499, enjoys over 70% of the total Postpaid market, while Jazz hasapproximately 60% share to its credit in the Prepaid domain with 1,873,148 subscribers.
Customer SegmentationLike most emerging mobile markets, the Pakistani mobile industry is primarily drivenby Prepaid with an industry wide sales mix of more than 92% Prepaid.
In 2003, Mobilink set new standards and achieved many landmarks between the Postpaidand Prepaid brands and offered innovative Value Added Services (VAS). VAS werebranded as ‘Power Tools’ and given extensive media support to enhance usage andrevenues. New and innovative SMS based products were introduced during the year.Mobilink now offers international roaming with more than 170 operators, includingthe Thuraya Satellite system.
Mobilink plans to introduce GPRS during 2004 and will be offering services like MMSon this platform in order to strengthen its technology leadership.
Market IndicatorsMobilink provides umbrella branding to both of its major brands, Indigo and Jazz.Mobilink has the highest Total Spontaneous Awareness in the industry, reaching 90%.
Mobilink reported strong operating profit growth as it continued to realize benefitsfrom the acquisition and retention of high value customers and the continuing focuson cost efficiencies. This is reflected in a 88% increase in revenues, and a 98% increasein EBITDA over 2002.
Blended ARPU for the twelve months ending 31 December 2003 reached US$ 13.9compared to US$ 16.5 for the twelve months ending 31 December 2002.
Blended churn for the twelve months ending 31 December 2003 reached 5.6% downfrom 7.4% compared to 2002. This was the result of the ever increasing effort of Mobilinkto increase its subscriber base and its increased effort in emphasizing the brand recognitionof Mobilink, while at the same time retaining its existing customer base.
P A G E 1 3A N N U A L R E P O R T 2 0 0 3P A G E 1 2 G S M O P E R A T I O N S
Mobile OperatorsMobilink started its operation in 1994 as a third entrant in a market where Paktel and Instaphone were already operating since1991. Despite the re-launch of Ufone, the main GSM competitor, Mobilink has maintained its momentum of growth.
Network Coverage and RoamingIn 2003, more than US$ 200 million was invested in improving the network and services. Mobilink now has 7 switches, around820 cell sites and new IN platforms for better coverage and connectivity. In addition, Mobilink upgraded its existing call centersand introduced a new state-of-the-art call center in Karachi to better manage customer care.
Mobilink coverage stretches across 215 cities of the country through approximately 820 cell-sites. This wide network, that coversmore than 85% of the urban population, is supplemented by extensive international roaming with more than 170 operatorsworldwide.
Sales StrategyMobilink is the first cellular operator to introduce the “franchise” concept in the cellular industry in Pakistan and it currentlyoperates the largest franchise network in the country with over 140 franchisee/national distributors (dealers operated servicecenters). In order to extend its reach even further, Mobilink worked with its franchisees to develop a network of over 300 sub-dealers which operate as Points of Sale (POS) only and are branded “Mobilink Connect”. Each franchisee is adequately equippedto process sales, collect bills and offer other customer services. All franchisees have trained sales and service staff, fully capableof tackling sales challenges. Additionally, Jazz scratch cards are easily available across urban Pakistan through more than 10,000retail outlets.
Mobilink has recently launched Electronic Voucher Distribution (EVD) process for the first time in Pakistan’s telecommunicationshistory. This launch has enabled Mobilink to once again prove to its customers that it is indeed the largest cellular company inthe country ready to pace ahead with new technology.
EVD is a brand new recharge option for Prepaid subscribers. It will enable Mobilink to take care of scratch cards out of stocksituations and provide customers more convenience so that they can enjoy the benefits that come from being part of the everflourishing Mobilink community.
Social ResponsibilityMobilink reinforced its commitment to being a good corporate citizen throughout 2003. In its continuous efforts towards thegrowth of the social sector, special people and towards health care, Mobilink made a number of contributions throughout theyear including charities like the Shaukat Khanum Memorial Trust, Umeed–e–Noor, and blind cricket for special people in Pakistan.
Such programs will help Mobilink in associating with the consumer and build a long-term emotional relationship as a goodcorporate citizen of Pakistan.
P A G E 1 5A N N U A L R E P O R T 2 0 0 3P A G E 1 4
Mobilink at a Glance (as of 31 December 2003)
Date of Launch 1994
Ownership Structure OT 88.69%Rayshield Investment Ltd 11.31%
Total Number of Subscribers 2,015,647
Total Number of Prepaid Subscribers 1,873,148
Total Number of Postpaid Subscribers 142,449
Total Market Share 61%
Geographical Coverage 215 cities – more than 85% of the urban population
Retail Base 10,000
Products and Services PostpaidPrepaid
Service Centers 11
Connects/Sub Dealers 1000+(branded + non branded)
Franchises/National Distributors 142
VAS SMSWeb2SMSSMS2EmailSMS2TVBill Payments through ATMInfo Services (Power Tools)Ring-tones, Logos, Picture Messaging, MobileGreeting Cards, etc.International RoamingG-MailE-mail NotificationDataFaxVoice MailCall WaitingCall ForwardingSong Dedication ServiceIVR Chat-lineMobile Banking
G S M O P E R A T I O N S
Djezzy-ALGERIA
The name Djezzy is inspired by the country name for Algeria, Djazair and from Djazâa, meaning a reward or gift. Djazâa is also
an adjective used to describe a beautiful woman. With this authentic name, OT entered the Algerian market after winning the
second GSM license in July 2001. The network was officially launched on the 15th of February 2002. Djezzy GSM commenced
its operation by launching Postpaid services for individual and business customers. The Prepaid Service known as “Djezzy Carte”
was introduced in August 2002.
Market SizeDjezzy has become the dominant market leader with 88.9 % market share in less than
a year. Djezzy ended the year 2003 with 1,267,561 subscribers, with 106,383 Postpaid
and 1,161,178 Prepaid subscribers.
Customer SegmentationSince the introduction of Prepaid in August 2002, new subscribers overwhelmingly favored
Prepaid connections. However, due to the lack of proper payment infrastructure in Algeria,
the company initiated an effort to improve its Postpaid subscriber base, aiming to reduce
costs associated with bill collection and credit control.
With deep understanding of the Algerian culture and market, Djezzy seized the market
through introducing unprecedented promotional campaigns in the Algerian mobile market
such as “Le Club Fondateur”, “Souk du Mobile”, “Happy Birthday Djezzy”, “One Millionth
Subscriber” and more.
Market IndicatorsRevenues and EBITDA grew by 251% and 411% respectively. Blended ARPU for 2003 reached
US$ 29.6.
Mobile OperatorsAlgeria has two main players in the GSM market: Algeria Mobile Network (AMN), since
February 1999, and Orascom Telecom Algerie spa (Djezzy), which started its operation
in February 2002.
Network Coverage and RoamingIn 2003, Djezzy deployed a network of 680 radio base stations on air, totaling 890 BTS
by year end and covering 48 administrative districts (Wilayas). By year-end, civil works
and preparation of 57 additional sites were completed. Djezzy has signed roaming contracts
with 137 roaming partners, allowing Djezzy users to roam in 116 world countries.
Sales StrategyThe distribution network entails several owned Point of Sale and a retail network
comprising 7 exclusive distributors and about 2,760 retail outlets. To support its sales,
Djezzy launched an unprecedented advertising campaign in Algeria. Djezzy, the commercial
name of OTA, now enjoys one of the highest brand recognitions in the country, and
conveys an image of freedom, youth and choice.
P A G E 1 7A N N U A L R E P O R T 2 0 0 3P A G E 1 6 G S M O P E R A T I O N S
Djezzy at a Glance (as of 31 December 2003)
Date of Launch 15 February 2002
Ownership Structure Orascom Telecom Holding SAE 47.7%Oratel International Inc. 34.1 %Cevital 3.4%
MOGA Holding LTD (OTH) 9.0 % AIG African Infrastructure Fund 5.8 %
Total Number of Subscribers 1,267,561
Total Number of Prepaid Subscribers 1,161,178
Total Number of Postpaid Subscribers 106,383
Total Market Share 88.9%
Geographical Coverage 48 Wilayas
Retail Base 2,760
Products and Services Djezzy (Postpaid), launched 15 February 2002Djezzy Carte (Prepaid), launched in August 2002
Service Centers 22
Exclusive Distributors 7
VAS SMSInfo ServicesInternational RoamingData & FaxCLIP, CW & CFVoice MailIVR
Tunisiana-TUNISIA
In March 2002, Orascom Telecom won the award for the second GSM license in Tunisia for US$ 454 million, and entered into a
joint agreement with Wataniya Telecom of Kuwait in October of the same year. Tunisiana launched its network in December 2002,
with coverage in greater Tunis and has quickly expanded to cover over 65% of the population by the end of 2003.
The 15 year license has favorable terms; it grants Tunisiana the right to operate its own international gateway, starting from the
launch of its operation, while at the same time providing very favorable interconnect conditions. It also provides OT with thirty
months exclusivity period in offering GSM services, along with Tunisie Telecom, the incumbent.
Market SizeTunisia provides good prospects for growth with a population of 10 million, relatively
high GDP per capita and over 5 million tourists annually.
Both Prepaid and Postpaid services were launched at the very first day of operation.
In the first year, Tunisiana had over half a million subscribers with a 27% market share
of this rapidly growing market.
Mobile OperatorsState-owned Tunisie Telecom started the first GSM network in 1996. Faced with a
limited capacity and a long list of people awaiting services, Tunisiana has been able
to become a strong competitor.
Network Coverage and RoamingThe covered area represents more than 65% of the population, and more than 80% of
the economic power of the country. As for roaming, more than 65 agreements have
been signed covering nearly 50 countries.
Sales StrategyCommercial distribution is made through direct and indirect sales forces. The direct
sales forces are based on a team of large account sales representatives and two service
centers, located in Tunis and the north suburb. Another service center was opened later
in Sfax in June 2003. The indirect sales forces are based on 7 distribution networks,
representing a total of more than 554 POS at year end 2003.
Commercial activities include direct and indirect channels. Direct channels comprise
a dedicated corporate sales force as well as customer centers in key metropolitan areas.
The indirect sales forces are based on 10 distribution networks, representing a total of
more than 554 Points of Sale at year 2003. Further expansion is planned in 2004.
A N N U A L R E P O R T 2 0 0 3G S M O P E R A T I O N S
Tunisiana at a Glance (as of 31 December 2003)
Date of Launch 27 December 2002
Ownership Structure OTuH 35%Wataniya 50%Carthage Consortium 15%
Total Number of Subscribers 497,774
Geographical Coverage 65% of populated areas
Retail Base 554
Exclusive Distributors 9
VAS SMS International Roaming
Voice MailCall ForwardingCall WaitingCLIPData & FaxFax MailIVR
On the sixth of October 2003, the mobile network for Iraq’s Central Region was awarded to Orascom Telecom, affirming Orascom
Telecom’s position as the leading mobile network in the region. Such a position was attained due to Orascom Telecom’s ability to
provide technically sophisticated network and information, roaming and voice services at reasonable prices.
Orascom Telecom’s network in Iraq, under the commercial name Iraqna, operates under the same GSM operating systems of Orascom
Telecom’s operations in Egypt, Tunisia, Algeria, Pakistan and a large number of African countries.
Iraqna-IRAQ
Iraq’s Central Region includes Baghdad, the capital, and some of the neighboring
governorates, Diyala and Anbar. This area comprises 39.4% of Iraq’s roughly 26 million
population and contains some of Iraq’s wealthiest, most industrial, and most urbanized.
The terms of the License allow Orascom Telecom in Iraq to offer services to its customers
throughout Iraq through nationwide roaming. Orascom Telecom’s application for the
License was selected by the Coalition Provisional Authority (CPA) and the Iraqi government
based on OT’s high level of commitment to drive the proliferation of telecommunications
services in Iraq and its demonstrated strength in acquiring, developing and managing
fast growing GSM mobile services operations in the region.
It is expected that Orascom Telecom’s investment in the network will be over US$100
million for the basic equipment and services in order to provide mobile communication
services in Iraq during the two year license.
P A G E 2 5A N N U A L R E P O R T 2 0 0 3P A G E 2 4 G S M O P E R A T I O N S
IRAQ
Baghdad
Saudi Arabia
Syria Iran
Kuwait
ZakhuAqrah
SinjarRayat
Qal’at Dizah
Ba’ijiTikritAl Qa’im
Al HadithahMandali
Ar Rutbah
Nukhayb Sinjar
As Salman
Makhfar alBusayyah
Umm Qasr
Turkey
Sub-Saharan Operations
In May 2000, Libertis Telecom started its operation in Congo Brazzaville as a third mobile operator. The company grew its marketshare and became the second largest operator in the country with a 37% market share by the end of 2003.
Libertis SubscribersSince inception, subscribers have grown by more than 13-fold with subscribers more than doubling in each of the first two years andthen growing steadily since. The subscriber base has increased by approximately 44%, from 76,544 subscribers in 2002, to reach 109,995subscribers at the end of 2003.
Market IndicatorsWhile ARPU has dropped since the start of operation, it has performed exceptionally well. Despite the aggressive growth, the blendedARPU of US$ 28.8 in 2002 rose to a blended ARPU of US$ 30 in 2003.
Product OfferingLibertis Telecom is the first operator in Congo Brazzaville to introduce both Prepaid and Postpaid offers. Prepaid is an easy and affordablesolution to provide telephony to the mass market. A multi-tariff plan is used consisting of flat rates, peak-off peak rates or rates forthe high users (ALO CLASSIQUE, OPTIMA, GOLD and PREMIER). On the other side, Postpaid offers are targeting mostly the corporatemarket segment and customized plans are proposed according to the customer needs.
Mobile OperatorsLibertis started its operation in May 2000. Cyrus, a D-AMPS operator was already present since 1997. Celtel Congo SA, the second GSMoperator, started its operation in December 1999.
Libertis Telecom-CONGO
P A G E 2 7A N N U A L R E P O R T 2 0 0 3P A G E 2 6
NetworkWith a network expansion based on satellite transmission for international and national linksas well as for remote rural areas connections, 43 BTSs are installed in an environment with poorinfrastructure, and more than 8 cities are covered.
Libertis Telecom operates a dual band network GSM 900/1800, providing population coverageof about 64.8%, and the total investment reached US$ 27 million at the end of 2003.Libertis has its own international gateway connected to two hubs in Europe, providing cheaperinternational calling rates at a better quality of service.
G S M O P E R A T I O N S
Date of Launch May 2000
Ownership Structure Orascom Telecom 65%Baby Bell 35%
Total Number of Subscribers 109,995
Total Number of Prepaid Subscribers 108,996
Total Number of Postpaid Subscribers 999
Total Market Share 37%
Population Coverage 64.8%
Products and Services Prepaid (Alo Classique, Optima, Gold and Premier)Postpaid (Libertis Premier, Libertis Premier Plus)
Retail Base (owned POS) 2 (Brazzaville, Pointe Noire)
VAS SMSInbound and Outbound International RoamingData and FaxCLI Presentation and RestrictionCall WaitingCall Hold and Conference CallCall Forwarding (all types)Voice MailClosed User GroupItemized BillingPBX ConnectionsCall Control
Libertis at a Glance (as of 31 December 2003)
Tchad Mobile-CHADTchad Mobile, a wholly owned subsidiary of OT, commenced its operation in September 2000.
Tchad MobileTchad Mobile offers one service, ALO, for Prepaid customers.
Tchad Mobile SubscribersThroughout 2003, Tchad Mobile has expanded its network in 3 cities outside the capital of N`djamena, reaching approximately
25,000 subscribers by the end of the year.
Market IndicatorsThe ARPU for the twelve months to 31 December 2003 reached US$ 25.2.
Mobile OperatorsTchad Mobile started its operation in September 2000 and came as the first entrant into the Chad GSM market, followed 15 days
later by CelTel Tchad SA.
P A G E 2 9A N N U A L R E P O R T 2 0 0 3P A G E 2 8 G S M O P E R A T I O N S
Other ServicesIn order to get seamless coverage of the whole territory, Tchad Mobile has become the
authorized distributor of Thuraya satellite in Chad and will offer a combined Postpaid
service, allowing its subscribers to communicate outside its GSM coverage with the same
phone and number. Also, Tchad Mobile has the governmental approval to provide ISP
services in Chad.
Tchad Mobile at a Glance (as of 31 December 2003)
Date of Launch September 2000
Ownership Structure OT 100%
Total Number of Subscribers 24,580
Total Market Share 38.4%
Geographical Coverage N’Djamena, Moundou, Kome, Abeche
Retail Base 1
Products and Services Prepaid
Service Centers 1
VAS Barring All CallsBarring Incoming CallsCLIPCLIRCall Forward - On BusyCall Forward - On No ReplyCall Forward - On Not ReachableCall Forward - UnconditionalCall Forward - UnrestrictedCall HoldCall WaitingClosed User Group (CUG)DTMF SignalingMulti Party CallingOperator Controlled BarringOperator Determined BarringVoice Mail with Call-back
Telecel InternationalAmidst extremely difficult conditions in the telecommunications and financial markets globally, Telecel International (TIL) emerged
in 2002 from a severe crisis and is now stable and well positioned to deliver future growth and value creation for OT. In January
of 2002, OT made the decision to exercise its right over full management of TIL and, consistent with OT’s overall strategy, to divest
small and medium sized operations in sub-Saharan Africa and financially restructure the company to become self-sufficient in
the immediate term.
Telecel International (TIL) continued its restructuring efforts throughout 2003. Throughout the year, consistent with OT’s overall
strategy, TIL executed the planned divestiture of several small and medium sized operations in sub-Saharan Africa. This included
completion of the sales of ten GSM assets (Telecel Gabon, Telecel Benin, Telecel Burkina Faso, Telecel Niger, Telecel Togo, Telecel
Zambia, Telecel Burundi, Telecel Uganda, Telecel Central African Republic and more recently Telecel Loteny). TIL also entered into
agreements with major lenders in order to financially restructure the company and is now well positioned to deliver future growth
and value creation for OT.
OT now has 100% ownership over TIL and at the end of 2003 assets included 51.7% of Loteny Telecom in Ivory Coast (which was
divested in April 2004) 100% of SAIT in the Democratic Republic of Congo (DRC), 60% of Telecel Zimbabwe and 100% of M-Link,
an international carrier based in Belgium.
SAIT Telecom (Oasis) & Telecel ZimbabweTIL’s two remaining GSM operations are the Democratic Republic of Congo (SAIT Telecom
under the brand name Oasis) and Telecel Zimbabwe. While these two operations
admittedly are operating in very difficult political and economic circumstances, they
represent a real source of future growth for OT with nearly 70 million in total population.
TIL is restructuring all aspects of these assets and is implementing a focused investment
plan to capture the maximum potential value of these operations.
Market IndicatorsTaking into account the sale of the companies mentioned above in the 2003 accounts,
TIL had at the end of 2003 753,000 subscribers, an EBITDA Margin of 27.0%, and
US$ 82 million net debt (compared to US$ 198 million in debt at the end of 2002 and
US$ 290 million prior to the sale of assets). These figures reflect the deconsolidation
of Telecel Zimbabwe from OT’s results as a result of provisions under IAS due to foreign
currency restrictions. TIL will continue its restructuring and divestiture program
throughout 2004 while continuing to invest in its remaining assets to maximize
shareholder value.
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• LINKdotNET
P A G E 3 3A N N U A L R E P O R T 2 0 0 3P A G E 3 2
INTERNET
I N T E R N E T
LINKdotNET
Since its formation, LINKdotNET’s services have grown to offer a full range of Internet-related services and technologies.
LINKdotNET’s core competencies lie in data communications, hosting, e-solutions, online advertising and online content.
LINKdotNET’s experience in these areas allows it to provide fully integrated technology solutions.
Full Range of Internet ServicesLINKdotNET offers a wide range of turnkey services ranging from Internet access, hosting
and e-solutions, to online advertising and content. The company offers innovative
packages and services to the Internet community: businesses, governmental organizations,
mobile service providers, and the general public.
LINKdotNET is, in brief, the Arab World’s Internet powerhouse that provides, maintains,
develops and promotes Internet solutions and services.
LINKdotNET Quick Facts• 1992: First ISP in Egypt (Infonet and other online services).
• 1995: Provides Internet dial-up access to the Egyptian market.
• 1996: Link Development emerged as a subsidiary.
• 1998: Launch of Dubai operations.
• 2000: Merger of Link Egypt and InTouch Communications to form LINKdotNET.
• 2000: First online advertising agency in Egypt.
• 2002: Acquisition of 8 Internet companies.
What’s New at LINKdotNET?• 2003 saw the launch of a new high-speed network with DSL service capabilities. The
company’s investment, started at over EGP 60 million, took place in collaboration
with some of the leading companies worldwide in the field of network communications,
namely Juniper, Zhone and Siemens.
• LINKdotNET was the major player behind the development of Egypt’s E-Government
project. It designed and developed the Bawaba Gateway in cooperation with Microsoft,
under the auspices of the Ministry of Communications and Information Technology.
• LINKdotNET was acknowledged as an Infonet Certified Help Desk by Infonet Inc.
LINKdotNET 2003 Top Notches2003 proved to be an extremely successful year for LINKdotNET, as the following
accomplishments illustrate:
P A G E 3 5A N N U A L R E P O R T 2 0 0 3P A G E 3 4 I N T E R N E T
Products• Over 150 million page views/month.
• 2.5 million unique visitors/month.
• Top ranking for sites (locally and regionally).
• MSN Arabia – Number One Arab Portal.
• Masrawy – Number One Egyptian Portal.
• CareerMidEast – The pioneer online recruitment and career development portal
in the region catering to job seekers, employers, recruiters and training centers
in the Middle East and North Africa.
∑• Yallakora – The first Arabic football enthusiast's website housing fantasy football
and prediction games.
∑• Otlob – Egypt’s leading online delivery service provider.
∑• Yallabina – The region’s premier online entertainment guide.
∑• ArabFinance – The leading financial portal in Egypt.
∑• E-Dar – A leading residential and commercial real-estate destination on the
Internet. It provides a total solution to home/office buyers and sellers in Egypt.
• Ongoing process of product integration, including the revamping and launch of
Link 07770777’s free portal – www.link0777.com.
Sales and Marketing – Consumer Business• LINKdotNET’s free dial-up service (Link 07770777) doubled the numbers of users
since 2002.
• Leading market share of free dial up market.
Sales – Corporate Business• Enterprise sales: Breakthrough in the Governmental Sector with the National Post
Authority (NPO) and MCIT Technology Clubs projects.
• SME’s sales division achieved highest CAGR in LINKdotNET.
• Connect Ads (online ads) sales expansion in Lebanon, Jordan, and Saudi Arabia.
• New Channel Program targeting resellers.
• Best sales year for LINKdotNET UAE in LINKdotNET history. Major deals: renewal of
Microsoft ME website for the 5th consecutive year, in addition to Dubai Municipality
project, as well as expansion from UAE office to cover LINKdotNET presence throughout
the Gulf, including Kuwait, Bahrain and Qatar markets.
• Established a LINKdotNET sales presence in Saudi Arabia.
Link Development• LINKdotNET provided ‘MyTejari’ with a secure end-to-end solution based on Microsoft
technology. Tejari is the Middle East’s premier online business-to-business marketplace.
• Launched two exciting e-business products under its new ‘WebWize’ product family.
WebWizeShoP and WebWizeCataloG hit the regional business market with innovative,
flexible and customizable end-to-end solutions for companies.
• Approximately 50% of team certified on microsoft.net platform.
Infrastructure• Migrated all new online properties to the LDN Data Center.
• Introduction of security platforms, specialist engineers and project managers.
• Highest Data Center traffic in Egypt.
• Operated one of the largest existing Public Data Networks in Egypt.
• Implemented and operated “Whole Port selling” allowing LDN to sell connectivity to
other ISPs.
Achievements• In 2003, LINKdotNET was selected as the top provider of EAI in the ‘Eastern Europe,
Middle East, and Africa’ region in Microsoft’s Global 2003 Certified Partner Awards,
for ‘Integration Solution of the Year’. This was in recognition of LINKdotNET’s work
on Egypt’s E-government Bawaba Gateway.
• LINKdotNET won the E-Commerce Solution of the Year (2002/2003) award by Microsoft
Egypt for its work on www.speedsend.com. Chief Solutions Officer at LINKdotNET
was also awarded for Technical Excellence for her technical experience and foresight
on Microsoft technologies.
• Microsoft Certified Gold Partnership in 2002 and 2003: This certification is awarded
to companies “that focus on and have proven their commitment and expertise in
building or delivering e-Business solutions based on Microsoft technologies.”
LINKdotNET OfficesLINKdotNET is headquartered in Cairo, Egypt. The company has nine Points of Presence
in Cairo and Alexandria. In addition, LINKdotNET has a regional office in Dubai, UAE.
The company employs more than 400 consultants, web developers and support staff
in Egypt and UAE to deliver world class Internet and e-solutions to its users and clients.
P A G E 3 7A N N U A L R E P O R T 2 0 0 3P A G E 3 6 I N T E R N E T
• International GatewayM-Link
• Handsets and DistributionRing
• Value Added ServicesArpu+
• Infrastructure and ServicesOrasInvestContraPharaoh
P A G E 3 9A N N U A L R E P O R T 2 0 0 3P A G E 3 8
GSM OPERATIONS SUPPORT
G S M O P E R A T I O N S S U P P O R T
M-LINKM-Link, a 100%-owned subsidiary of Orascom Telecom, operates an international and national satellite network for voice and
data communications services, as well as other related support services.
M-Link provides a unique satellite network covering Africa and the Middle East. It collects international traffic from several
countries and delivers it to international carriers through its teleport in Belgium. Located in the heart of Europe, M-Link is ideally
situated to provide interconnection to worldwide networks. Likewise, M-Link collects traffic from those international carriers and
directs it through satellites to its African correspondents. M-Link thus provides an optimum platform for supporting multiple
operators from this "hard to reach" region in an efficient manner that accommodates the diverse and rapidly changing requirements
of the international long distance business.
International Gateway
In 2003, M-link widened its coverage to include mobile networks in Algeria, Tunisia
and Iraq in addition to previous connections to and from several sub-Saharan African
countries including Zimbabwe, Gabon, Nigeria, Tanzania, Rwanda, Uganda, DRC, Togo,
Benin, Burundi, Central African Republic and Congo, connecting operators within the
OT group as well as other operators. This network serves both mobile and fixed line
subscribers, and supports multiple transmission technologies from traditional voice
communications to Voice over internet Protocol and data transmission. It also supports
Internet and intranet applications for public and corporate use, as well as C7 signaling
used in many GSM applications for roaming or conveyance of SMS messages.
In 2003, M-Link improved its networking capabilities by major investments in switching
and transmission capabilities. A Point of Presence has been opened in Paris to provide
better access to the operators.
By connecting this large and growing community of fixed and mobile users to world
class wholesale and retail operators, M-Link is in the position to offer a wide range of
the highest quality services in a fast moving environment.
Historically, M-Link has served the international voice and data needs of several sub-
Saharan mobile and fixed network operators, consistent with OT's focus and evolving
opportunities throughout the Middle East and Africa. Resulting from the impending
introduction of competition in international long distance services, M-Link is being
positioned to capitalize on its core competence and strengths to serve these markets.
Continuous investments are made to cope with the increasing needs for traffic and
quality of traffic for M-Link's customers, not only from the Middle East and African
regions, but from the whole world through world class international operators.
P A G E 4 1A N N U A L R E P O R T 2 0 0 3P A G E 4 0 G S M O P E R A T I O N S S U P P O R T
Handsets and Distribution
Since 1986, Orascom has always been a market leader in hi-tech consumer product distribution. With the increased focus within
Orascom Telecom on the GSM retail and distribution business, Ring was established as a fully owned Orascom Telecom affiliate that
focuses on GSM products distribution and related services. Now Ring is the leading NOKIA wholesaler in Egypt and North Africa.
Ring has established five major logistics centers in Jordan, Tunis, Algeria, Iraq and Dubai in order to provide network operators
with in-country logistic services, local distribution and prepaid solutions.
Ring is also developing franchise retail business with OT Operators to increase its market penetration across the region. In Egypt,
it plans to open eight shops with MobiNil to provide the end user with MobiNil services and a wide mix of handset bundles.
Distribution and Logistics ServicesRing distribution focuses on GSM products distribution and related services. The company provides its customers with outsourced
distribution logistics through its authorized dealer channels and retail outlets. Ring’s logistics centers also undertake several
services on behalf of network operators or handset manufacturers such as SIM locking, handset software upgrades, custom
branding and special bundle packaging. E-commerce and B2B applications developed in cooperation with ISP’s are also offered
to further ease the business with the dealer’s channel of the network operator.
Ring
Number One in Quality ServiceRing has built state-of-the-art service centers for NOKIA Mobile phone sets. Supported by
top technology equipment and software from Nokia and a highly trained team, Ring Service
centers are categorized as the most advanced in the Middle East. Introducing the concept
of visible service centers for the first time in Egypt, Ring provides its clients with the comfort
and confidence which places Ring at number one in quality service and customer satisfaction.
Modern Lifestyle OutletsRing shops are not merely places to sell or repair mobile phones, yet are also modern lifestyle
outlets providing customers with the delights of today’s hi-tech world.
Services Ring Provides• Supply Chain Management • Logistics Services
• In-Country Distribution • Wireless Products Procurement
• Product Customization • Prepaid Total Solutions
• Business2Business • Customer Care and Service Centers
• Retail Franchise
Ring 2003 Performance Indicators• Setup of Ring Iraq (100% owned affiliate) that provides its partners with in-country Prepaid
solutions, distribution and data management.
• Ongoing Contract of Ring – MobiNil Shop in Shop Agreement and the setup of shops across
Egypt.
Ring OfficesRing’s headquarters are located in Cairo. The company also covers North African and Middle
Eastern markets through its subsidiaries in Algeria, Tunisia, Jordan, Dubai and Iraq.
P A G E 4 3A N N U A L R E P O R T 2 0 0 3P A G E 4 2 G S M O P E R A T I O N S S U P P O R T
Value Added Services
ARPU+ is a joint venture between Orascom Telecom Holding and LINKdotNET to combine GSM market knowledge and application
development capabilities. It is positioned as a regional service provider with affiliates in both Dubai and France. ARPU+ offers
unified VAS solutions focusing on product development, content aggregation and management as well as platform solutions.
ARPU+ is the regional pioneer introducing Multi Media Services, being the first SP to implement the Multi Media solutions on
2.5G for "The Egyptian company for Mobile Services" known as MobiNil Life.
To offer these unified VAS Solutions, ARPU+ works with an extensive array of the region’s best strategic partners that
include:
Application ProvidersOffering a wide range of ready-made mobile applications, as well as tailoring operator specific content and providing on demand support.
Arpu+
Technology ProvidersContributing full-fledged Multi Access Portal solutions, Gateways, Messaging Service Centers
and support for regional operators. Technology providers include Microsoft and Logica CMG.
Content ProvidersIncluding various areas such as music, sports, entertainment and many others. ARPU+
aggregates a huge number of content providers in order to provide its clients with an integrated
portfolio.
ARPU+ aims to empower the consumer to have a better user experience through extending
different applications into the mobile channel. These applications must be innovative and
creative to entice usage behaviours and reliance on the service. They must also be built on a
solid and reliable service layer and coupled with premium content that is of interest to the
consumer and hence well adapted and repurposed for the mobile channel. Having the heritage
of both GSM & Internet worlds, ARPU+ is well positioned to be a leading regional Data Service
Provider due to the huge synergies between web & mobile, especially with the introduction
of 2.5G and Multi Media enablement.
Services have been packaged to avail on as many mobile access channels as possible. Hence
APRU+ aims to give a unified personalized access to services for the user, whereby the user
can use IVR, SMS, MMS or Web. The services are well adapted to each channel to meet the
user's preferences.
P A G E 4 5A N N U A L R E P O R T 2 0 0 3P A G E 4 4 G S M O P E R A T I O N S S U P P O R T
Infrastructure and Services
OrasInvest Holding was totally acquired by Orascom Telecom in 2003. Consequently, major developments took place in different segmentsi.e. expansion in operating regions, workforce fortification & increase, service quality enhancement and business portfolios enrichments.OrasInvest Holding subsidiaries are MobiServe, First Service, Collect, ESC, OrasInvest Management Services and OrasInvet Trading, whichare operating in the Middle East, North Africa and Asia. OrasInvest Management Service is the management company for all the subsidiariesof OrasInvest Holding. It provides management consultancy services especially in the legal, financial, auditing, human resources, strategicconsultancy, and research & development fields. OrasInvest Trading provides its sister companies in the region with importing andexporting services, especially GSM equipments and site materials.
MobiServeServices:MobiServe provides telecom installation, construction services and network operations. The general scope of work covers the site survey,preparation, installation, commissioning and maintenance of various telecommunication systems. MobiServe operates in Egypt, Algeria,Pakistan and Iraq.
Operational Highlights:• As MobiServe is persistently growing and expanding its services and markets, two new companies were established to serve the GSM
sister-operators in Iraq and Pakistan.• MobiServe Egypt acquired Comtel and consequently this will strengthen MobiServe’s position in the Microwave installation, commissioning
and maintenance market.• MobiServe Algeria achieved a great increase in the production and revenue through 2003.
OrasInvest
P A G E 4 7A N N U A L R E P O R T 2 0 0 3P A G E 4 6
First ServiceServices:First Service offers a unique business portfolio. It provides full solutions for its integratedservices; printing (Highlight Color printing & Digital Full-Color printing), enveloping, delivery& cash collection. It also offers a high quality scratch cards production and has a well-equippedfactory that was prepared with regulations meeting international security standards andcomplying with the GSM norms. First Service uses state-of-the-art technologies in its printingand scratch cards production, using Xerox printing machines, and in the enveloping activities,by using Pitney Bowes equipments. It operates in Egypt, Algeria and Tunis.
Operational Highlights:• First Service was relocated to 6th of October City and the new building infrastructure was
developed using the highest technologies and the latest security systems. In addition, a well-equipped factory was prepared for the scratch cards production, meeting top securitystandards and complying with the GSM norms.
• In 2003 First Service succeeded to contract with several government banks such as BanqueMisr & Banque du Caire, for the first time since obtaining the post delivery license.
• First Service managed to widen its customer base of the delivery service and include newclients in the private banking sector such as NSGB.
• A successful launch of First Service scratch card production in year 2003, expected tofruitfully continue.
• Servitec Algeria managed to increase its business portfolio and offer a new customizeddelivery service to Djezzy in 2003.
CollectServices:Collect provides state-of-the-art solutions for bad debts collection with a wide geographicalcoverage for the collection activity. It operates in Egypt and Algeria.
Operational Highlights:• Collect broke the record of collection figures in September, October and December 2003,
showing a consistent increase in collection.• The collectors force was increased to expand the collection volume.• In 2003, the monthly collections were doubled in the governorates outside Cairo and
Alexandria, which was always a request from clients.• In addition to the banking sector Collect strengthened its position by winning the contract
of SADKO.
ESCServices:ESC, the Egyptian Space Communications company, provides design, installation, maintenanceand management of the satellite based communication services. It is a VSAT licensee and a hubstation owner. Its scope of work also covers the Inmarsat (R-BGAN) and the Internet via satelliteservices.
Operational Highlights:• The most important breakthrough in 2003 is the Distribution Partnership with Inmarsat.
Consequently, ESC can sell directly and indirectly the R-BGAN IP satellite modem inside andoutside Egypt.
G S M O P E R A T I O N S S U P P O R T
ContraContra is a general contracting company, 80% owned by OT, offering specialized
construction services combining various disciplines of engineering, namely; civil,
architecture, communications, electrical & mechanical. Their activities are covered under
two main divisions: the first division specializes in the fast rollout of GSM infrastructures,
telecommunication support, broadcasting and electronic industries. The second division
specializes in turn-key construction and quality finishing projects. In both fields, products
and services conform with the highest international standards.
Contra has expanded its operations and is now working in five countries, namely; Egypt,
Algeria, Tunisia, Pakistan and Iraq. Short-term plans include the addition of new activities
to the present GSM operations, such as the installation and commissioning of radio
equipment, turnkey - construction of switches as well as preventive & corrective
maintenance.
P A G E 4 9A N N U A L R E P O R T 2 0 0 3P A G E 4 8 G S M O P E R A T I O N S S U P P O R T
PharaohPharaoh Communication Network (PCN) is an Orascom Telecom company specialized in the
design, implementation, installation, and support of multi-services communication networks.
Founded late 1998, PCN was initiated to serve OT and its subsidiaries in their wide communication
needs and to help in the evolution of the technology in the markets where PCN exists. PCN
provides telecom & data network systems integration solutions as required for commercial
and civil works. The company also offers technical consulting for local, wide area, and
underground communication and control networking projects. End-user training and
maintenance services for all communications networks are provided. PCN’s strategy is to build
a direct business relationship with original manufacturers in order to get the most of their
support, then use PCN’s own staff to design, integrate and install the equipment.
Progress Outside EgyptPharaoh Algeria (PCA) was founded in 2002 and it specializes in GSM site construction,
fiber optics equipment supply and general telecom & data networks implementation
in Algeria. Targeting OTA and local government authorities, PCA’s goal is to be one of
the most reliable network integrator in Algeria and surrounding countries.
Activities• GSM Site Construction
• Data LAN/WAN/MAN system integrator
P A G E 5 1A N N U A L R E P O R T 2 0 0 3P A G E 5 0 G S M O P E R A T I O N S S U P P O R T
Highlights from 2003
ORASCOM TELECOM REACHED 7.6 MILLIONSUBSCRIBERS:At the end of 2003, Orascom Telecom reached 7.6 million
subscribers. In September 2003, Djezzy reached one million
subscribers. Mobilink reached two million by the end of
the year. MobiNil almost reached its three million mark
towards the end of the year.
ORASCOM TELECOM AWARDED IRAQNALICENSE:In October 2003, Orascom Telecom was awarded the mobile
network for Iraq’s Central Region, including, Baghdad
under the name Iraqna.
FINANCING OF DJEZZY:OTH finalized the financing of the second payment of the
license fee and fully funded the network rollout.
DIVESTITURE OF NON-CORE SUBSIDIARIES:OTH continued the divestiture of Telecel's subsidiaries,
Telecel Niger and Burkina Faso, which resulted in a net
gain of LE 12 million during the first quarter of 2003.
In July 2003, the settlement of dispute and disposal of Syriatel
was completed, generating a capital gain of LE 53 million.
During the fourth quarter of the year, Telecel finalized the
divestiture of Telcel Togo with a net gain of LE 63.7 million.
H I G H L I G H T S F R O M 2 0 0 3
P A G E 5 3A N N U A L R E P O R T 2 0 0 3P A G E 5 2
OTH
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2003Financial Review
F I N A N C I A L R E V I E WP A G E 5 7A N N U A L R E P O R T 2 0 0 3
P A G E 5 6
Management Report
Auditor’s Report
Consolidated Balance Sheet
Consolidated Income Statement
Consolidated Statement of Changes in Shareholders’ Equity
Consolidated Cash Flows
Notes to the Consolidated Financial Statement
Precision is our Priority
Cairo, March 14th 2004: Orascom Telecom Holding (OTH) (Ticker: ORTE.CA, ORTEq.L), announces its consolidated results for 2003.
HighlightsHighlights
Total subscribers exceeded 7.6 million, an increase of 76% over 2002, and an 18% increase over the previous quarter.
Proportionate subscribers exceeded 4 million an increase of 87% over 2002, and 23% over the last quarter.
Revenues grew to LE 6,476 million (US$ 1,119 million1), an increase of 59% and 88% over 2002, on actual and
proforma basis2 respectively and 10% over the last quarter.
EBITDA reached LE 2,864 million (US$ 495 million1), an increase of 89% and 108% over 2002, on actual and proforma
basis2 respectively and 5% over the last quarter.
Group EBITDA margin rose to 44.2% a 6.8 % increase over 2002. EBITDA margins of the major subsidiaries are:
Djezzy 50.9%, MobiNil 53.6%, Mobilink 58.4%, Tunisiana 33.3% and Telecel 27%.
Net income for the period has reached LE 712 million (US$ 123 million1) in comparison to LE 1,047 million in 2002.
Proforma Net income3 reached LE 672 million for 2003 a 75% increase over proforma 2002. Earnings per Share
reached LE 6.51 vs. LE 9.55 in 2002. On a proforma basis EPS is LE 6.11 in 2003 vs. LE 3.49 in 2002.
Net debt was LE 4.6 billion as of 31st December 2003 reducing OTH leverage from Net Debt/EBITDA of 2.8 in 2002
to 1.6 in 2003.
Orascom Telecom Holding
Full Year 2003 Results
1. Egyptian pound figures translated into US$ using the exchange rate 5.7875, being the average rate used over the year 2003.
2. Proforma figures include the four Telecel Subsidiaries that were deconsolidated: Niger, Burkina Faso, Zimbabwe and Togo.
3. Excluding exceptional items (capital gains, provisions and goodwill impairment).
F I N A N C I A L R E V I E WP A G E 5 9A N N U A L R E P O R T 2 0 0 3
P A G E 5 8
In 2003 OTH delivered strong operational growth across most of its subsidiaries, the total number of subscribers exceeded
7.6 million subscribers with net additions of over 3.3 million, a record number for OTH.
During 2003, OTH passed many major operational milestones:
Mobilink broke the one million subscriber mark in February, followed by the two million subscriber mark in December,
adding a total of 1,063,473 subscribers in one year.
Djezzy exceeded one million subscribers in September and added 952,521 subscribers in 2003.
MobiNil virtually reached the three million subscriber mark with 2,991,214 subscribers.
Tunisiana approached half a million subscribers in its first year of operations, adding 497,774 subscribers.
Table 1: Total Subscribers
Operational PerformanceOperational Performance
Subsidiary
Djezzy (Algeria)
MobiNil (Egypt)1
Mobilink (Pakistan)
Telecel (Africa)2
Tunisiana (Tunisia)
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
Grand Total
31 Dec2002
315,040
2,282,000
952,174
693,890
-
76,544
23,621
4,343,269
30 Sept2003
1,027,567
2,784,000
1,468,628
730,574
380,746
103,467
23,204
6,518,186
31 Dec31 Dec20032003
1,267,561,267,5611
2,992,991,21,21414
2,02,015,64715,647
753,452753,452
497,774497,774
1109,99509,995
24,58024,580
7,660,2237,660,223
Inc/(dec)YE 2003 vs.
YE 2002
302%
31%
112%
9%
na
44%
4%
76%
1. MobiNil uses the three month rule to calculate its subscriber base.
2. Subscribers of the Telecel operations are as follows: Loteny Telecom at 599,244, Zimbabwe at 116,941, and Oasis Telecom 37,267.
OTH added 1,893,391 proportionate subscribers in 2003, an 87% increase. This increase was slightly higher than total
subscribers because OTH increased its stake in OTA from 53.6% to 58.4% and in Tchad Mobile from 49% to 100%.
Table 2: Total Proportionate Subscribers
Subsidiary
Djezzy (Algeria)
MobiNil (Egypt)
Mobilink (Pakistan)
Telecel (Africa)
Tunisiana (Tunisia)
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
Grand Total
31 Dec2002
168,861
713,353
844,483
395,736
-
49,754
11,574
2,183,762
30 Sept2003
550,776
870,278
1,302,526
411,685
77,139
67,254
23,204
3,302,862
31 Dec31 Dec20032003
740,256740,256935,053935,053
1,787,6771,787,677417,241417,241100,849100,84971,49771,49724,58024,580
4,077,1534,077,153
Inc/(dec)YE 2003 vs.
YE 2002
338%
31%
112%
5%
na
44%
112%
87%
Subsidiary
Djezzy (Algeria)
MobiNil (Egypt)
Mobilink (Pakistan)
Tunisiana (Tunisia)
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
31 Dec 2002US$
44.0
19.0
16.5
-
28.8
35.4
30 Sept 2003US$
29.9
18.8
14.1
25.9
27.1
32.5
31 Dec 200331 Dec 2003US$US$
29.629.616.816.813.913.926.626.630.030.025.225.2
Inc/(dec)YE 2003 vs.
YE 2002
(32.7%)
(11.5%)
(15.8%)
na
4.2%
(28.8%)
During 2003 ARPU continued to decline as strong growth led to acquisition of subscribers in market segments with lower
mobile spending habits. However, ARPUs have stabilized in comparison to last quarter.
Djezzy’s ARPU has declined significantly as mobile penetration in Algeria roughly tripled from 1.5% to 4.4% and Djezzy
captured most of the subscriber growth.
Although MobiNil’s ARPU has declined in US$, it has increased in Egyptian Pounds from LE 100 to LE 104, as MobiNil focused
its strategy on managing ARPU.
ARPU levels at Mobilink, have declined slightly over the last quarter despite the tremendous growth of over 500,000 net
additions as Mobilink improved the capacity and quality of its network.
Table 3: Average Revenue Per User (ARPU)
F I N A N C I A L R E V I E WP A G E 6 1A N N U A L R E P O R T 2 0 0 3
P A G E 6 0
Table 4: Market Share & Competition
Country
Algeria
Egypt
Pakistan
Tunisia
Congo Brazzaville
Iraq
Chad
Brand name
Djezzy
MobiNil
Mobilink
Tunisiana
Libertis
Iraqna
Tchad Mobile
MarketShare
88.9%
52.7%
61.0%
27.0%
36.9%
100.0%1
38.0%
Number ofadditional network
operations
1
1
3
1
1
2
1
Names of additionalnetwork operations
AMN
Vodafone
U-Fone, Instaphone, Paktel
Tunisie Telecom
Celtel
Wataniya, MTC1
Celtel
1. At present Iraqna is exclusively licensed to provide GSM services in Iraq’s central region. The two other operators are exclusively licensed in
two other regions. Exclusivity is expected to be lifted in 2004.
Total CAPEX for the OTH subsidiaries was US$ 682 million in 2003, with heavy focus on startup operations with significantsubscriber growth: Algeria, Pakistan, and Tunisia.
Table 5: Capital Expenditure of OTH SubsidiariesCountry
Algeria
Egypt
Pakistan
Africa
Tunisia
Service name
Djezzy
MobiNil
Mobilink
Telecel / Libertis / Chad
Tunisiana
2003US$ million
223
89
211
42
117
The major developments that have taken place in 2003 are:
Divestitures & Deconsolidation
Sale of SyriatelOn July 16th OTH announced the settlement of all legal disputes with its partner in Syriatel, DREX Technologies, and the
sale of its 25% stake in Syriatel generating a capital gain of LE 53 million.
TelecelDuring the First Half of 2003 OTH continued the divestitures of Telecel’s subsidiaries, Telecel Niger & Burkina Faso. These
divestitures resulted in a net gain of LE 12 million.
Due to economic conditions and restrictions imposed by the Zimbabwean Authorities in the repatriation of profits, OTH
decided to deconsolidate Telecel Zimbabwe, in agreement with article number 27 section (b), under IAS. This deconsolidation
has generated a profit of LE 118 million. Telecel Zimbabwe will still remain as a subsidiary of Telecel and will be treated as
an Equity investment in Telecel’s accounts. A provision charge of LE 40.7 million was taken against the cost of investment
in Zimbabwe.
Telecel finalized the divestiture of Telecel Togo in the fourth quarter of 2003, with a net gain of LE 63.7 million.
ConsolidationIn the First Quarter of 2003, OTH fully consolidated Tchad Mobile after increasing its equity stake to 100%.
In the Fourth Quarter of 2003, OTH began to proportionally consolidate Tunisiana at 20.26%, to fully consolidate OTI, OTH’s
new GSM operation in Iraq (Iraqna), and OrasInvest, OTH’s GSM service operation.
Financing
Final License Payment for DjezzyIn the Fourth Quarter of 2003, Djezzy finalised Euro 545 million in debt and equity financing. The financing was used to
fully fund network rollout and to pay the second portion of the license fee.
Loan RestructuringOTH restructured its short term debt facilities into long term loans with Banque Misr and National Societe Generale Bank
(NSGB) for an amount of over LE 350 million.
Main Financial EventsMain Financial Events
F I N A N C I A L R E V I E WP A G E 6 3A N N U A L R E P O R T 2 0 0 3
P A G E 6 2
1. MobiNil is a holding company which controls 51% of ECMS, the Mobile operator. MobiNil is the brand used by ECMS.
2. IWCPL owns 88.69% of Mobilink.
3. Direct & Indirect stake through Moga Holding Ltd. and Oratel.
4. Orascom Telecom Tunisiana is proportionately consolidated through OTuH and Carthage Consortium.
Orascom Telecom applies both the Egyptian & International Accounting Standards in the consolidation of its Financial
statements.
Table 6: Ownership Structure & Consolidation Methods
Subsidiaries
GSM Operations
MobiNil (Egypt)1
Egyptian Co. for Mobile Services
IWCPL (Pakistan)2
Orascom Telecom Algeria3
Telecel (Africa)
Orascom Telecom Tunisia4
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
SyriaTel (Syria)
OTI (Iraq)
Internet Service
Intouch
Non GSM Operations
Pioneers
Ring
OrasInvest
Pharoah
Cortex
Egyptian Satellite Company
Comtel
OT ESOP
Contra Egypt
Contra Tunisia
Arpu +
Intelligent Village
Menatel Communications
2002
28.75%
16.60%
100.00%
53.60%
100.00%
-
65.00%
49.00%
25.00%
-
75.00%
100.00%
99.00%
50.00%
55.00%
95.00%
51.00%
94.00%
100.00%
-
-
-
10.25%
10.00%
2003
28.75%
16.60%
100.00%
58.35%
100.00%
20.26%
65.00%
100.00%
-
63.00%
75.00%
100.00%
99.00%
97.50%
55.00%
95.00%
51.00%
94.00%
100.00%
80.00%
80.00%
51%
10.25%
-
2002
Proportionate Consolidation
Proportionate Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
-
Full Consolidation
Equity Method
Equity Method
-
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
-
-
-
Cost Method
Cost Method
2003
Proportionate Consolidation
Proportionate Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Proportionate Consolidation
Full Consolidation
Full Consolidation
-
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Full Consolidation
Cost Method
-
Ownership December 31 Consolidation Method December 31
Financial ReviewFinancial Review
RevenuesRevenues increased by 60% for the 12 months to 31 December 2003. The increase in revenues was driven by strong growth
in the subscriber base.
Approximately 66% of OTH’s revenues are in foreign currency. Contributors to revenue were Djezzy with 29.9% of total
revenues, MobiNil with 23.9%, Mobilink with 16.4%, Telecel with 14.9%, and Tunisiana with 2.1%.
Table 7: Consolidated Revenues
Subsidiary
Djezzy (Algeria)
MobiNil (Egypt)
Mobilink (Pakistan)
Tunisiana (Tunisia)
Iraqna (Iraq)
Telecel (Africa)
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
Total GSM
Total Internet Services
Total Telecom Services
OT Holding
Total ConsolidatedTotal Proforma2
31 Dec 2002(12 months)
LE (000)
553,937
1,168,119
570,111
-
-
1,243,702
103,658
-
3,639,526
40,317
384,224
-
4,064,0673,396,125
31 Dec 200331 Dec 2003(12 months)(12 months)
LE (000)LE (000)
1,942,9311,942,9311,558,1071,558,1071,070,1671,070,167
135,599135,599225225
968,434968,434161,900161,90027,21727,217
5,864,5805,864,58071,33771,337
540,054540,054--
6,475,9716,475,9716,386,2026,386,202
Inc/(dec)
251%
33%
88%
na
na
(22%)
56%
na
61%
77%
41%
na
59%
88%
Q3 - 2003(3 months)
LE (000)
582,970
446,573
323,820
-
-
236,400
50,650
4,541
1,644,954
17,689
165,348
-
1,827,9911,806,965
Q4 - 2003(3 months)
LE (000)
658,431419,315
292,9811
135,599225
288,77236,4666,741
1,838,53022,982
149,222-
2,010,7342,009,140
Inc/(dec)
13%
(6%)
(10%)
na
na
22%
(28%)
48%
12%
30%
(10%)
na
10%11%
1. The impact of changing the exchange rate against the US$ from PR 55 to PR 59 resulted in decrease in revenues of US$ 4.4 million during the period.
2. The following subsidiaries have been omitted for comparative purposes: Telecel Zimbabwe, Telecel Burkina Faso, Telecel Togo.
Costs & ExpensesDirect costs represented 25% of revenues in 2003 in comparison to 28% in 2002, while operating expenses represented
26% of revenues in 2003 in comparison to 29% in 2002. The decrease in cost and expenses as a percentage of revenues
has come as a result of OTH’s management drive to control costs, and the divestiture of the Telecel assets.
F I N A N C I A L R E V I E WP A G E 6 5A N N U A L R E P O R T 2 0 0 3
P A G E 6 4
Subsidiary
Djezzy (Algeria)
MobiNil (Egypt)
Mobilink (Pakistan)
Tunisiana (Tunisia)
Iraqna (Iraq)
Telecel (Africa)
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
Total GSM
Total Internet Services
Total Telecom Services
Pioneers, Moga & OTuH2
OT Holding
Total ConsolidatedTotal Proforma3
31 Dec 2002(12 months)
LE (000)
193,469
634,767
374,503
-
-
355,944
32,735
-
1,591,418
780
34,687
(17,432)
(90,382)
1,519,0711,364,861
31 Dec 200331 Dec 2003(12 months)(12 months)
LE (000)LE (000)
989,586989,586834,616834,616739,897739,89745,13145,131
(14,594)(14,594)261,960261,96055,62055,620(5,643)(5,643)
2,906,5752,906,57515,32715,327
109,390109,390(37,994)(37,994)
(129,418)(129,418)
2,863,8802,863,8802,843,9292,843,929
Inc/(dec)
411%
31%
98%
na
na
(26%)
70%
na
83%
1,864%
215%
na
na
89%108%
Q3-2003(3 months)
LE (000)
297,592
241,217
213,910
-
-
18,8861
16,611
(2,606)
785,611
5,859
81,668
(895)
(45,296)
826,947
817,120
Q4-2003(3 months)
LE (000)
367,879226,101
194,7384
45,131(14,594)104,66416,808(7,487)
933,2403,428
16,991909
(82,620)
871,949869,987
Inc/(dec)
24%
(6%)
(9%)
na
na
454%
1%
na
19%
(41%)
(79%)
na
na
5%6%
1. EBITDA for Telecel was reduced in the 3rd quarter because of a provision of LE 40.7 million taken for the deconsolidation of Telecel Zimbabwe.
2. Pioneers is a holding company that owned 91.6% of Fastlink until this stake was sold in December 2002. Pioneers has become a non operating
company.
3. The following subsidiaries have been omitted for comparative purposes: Telecel Zimbabwe, Telecel Burkina Faso, Telecel Togo & Telecel Niger.
4. See note 1 in Table 7.
EBITDAEBITDA reached LE 2,864 million a 89% increase over Year End results 2002. EBITDA Margin reached 44%, a 6.8% increase
over 2002. This improvement was driven by the strong operating performance of Djezzy, MobiNil, and Mobilink, and the
divestures of Telecel’s subsidiaries which had lower EBITDA margins.
Table 8: Consolidated EBITDA
Table 9: Consolidated EBITDA Margin
Subsidiary
Djezzy (Algeria)
MobiNil (Egypt)
Mobilink (Pakistan)1
Tunisiana (Tunisia)
Telecel (Africa)
Libertis (Congo Brazzaville)
Tchad Mobile (Chad)
Total GSM
Total Internet Services
Total Telecom Services
EBITDA MarginProforma EBITDA Margin
31 Dec 2002(12 months)
LE (000)
34.9%
54.3%
60.0%
-
28.6%
31.6%
-
43.7%
1.9%
9.0%
37.4%40.2%
31 Dec 200331 Dec 2003(12 months)(12 months)
LE (000)LE (000)
50.9%50.9%53.6%53.6%58.4%58.4%33.3%33.3%27.0%27.0%34.4%34.4%
(20.7%)(20.7%)49.6%49.6%21.5%21.5%20.3%20.3%
44.0%44.0%44.5%44.5%
Change
16.0%
(0.8%)
(1.6%)
na
(1.6%)
2.8%
na
5.9%
19.6%
11.3%
6.8%4.3%
Q3-2003(3 months)
LE (000)
51.0%54.0%54.9% -
8.0%32.8%
(57.4%)47.8%33.1%49.4%
45.2%45.2%
Q4-2003(3 months)
LE (000)
55.9%53.9%51.7%33.3%36.2%46.1%
(111.1%)50.8%14.9%11.4%
43.4%43.3%
Change
4.9%
(0.1%)
(3.2%)
na
28.2%
13.3%
na
3.0%
(18.2%)
(38.0%)
(1.8%)(1.9%)
1. Margins as per local accounting policy in Pakistan are 65.7% in Year End 2002 and 69.1% in Year End 2003 commissions are excluded from
revenues.
Table 10: Foreign Exchange Rates used in the Income StatementCurrency
US Dollar / Egyptian Pound
FCFA / Egyptian Pound
Algerian Dinar / Egyptian Pound
Tunisian Dinar / Egyptian Pound
December 2002
4.6450
0.0062
0.0600
-
September 2003
5.7870
0.0079
0.0735
4.5260
December 2003
5.7875
0.0079
0.0735
5.1250
Source: Egyptian banks
F I N A N C I A L R E V I E WP A G E 6 7A N N U A L R E P O R T 2 0 0 3
P A G E 6 6
Net IncomeNet Income for the period reached LE 712 million in comparison to a gain of LE 1,047 million for 2002. Proforma net income
for 2003, after excluding exceptional items, (capital gain, provisions and goodwill impairment) reached LE 672 million
compared to LE 384 million in 2002.
Following the payment of the second portion of the Algerian license, a foreign exchange gain of LE 158 million was made
where the outstanding license cost was booked on Djezzy’s accounts at the exchange rate of the 78.5 Algerian Dinar to
the US dollar, however, at the date of settlement of the license payment the Algerian Dinar had appreciated by 10% against
the US dollar and reached 70.5. During 2003, gain from the sale of investments reached LE 487 million including LE 197
million from the divestiture and deconsolidation of Telecel assets, LE 170 million from the transfer of Oratel shares to
Pioneers, LE 61 million from the sale of Oratel shares, and LE 53 million from the disposal of Syriatel.
Table 11: Income Statement
EBITDA
Depreciation & Amortization
Impairment of Investment
Others
Earnings Before Interest & Tax
Interest Expense
Interest Income & other Revenues
Gain from the sale of Investment
Foreign Exchange Gain (Loss)
Differences from loans valuation
Others
Earnings Before Taxes
Income Tax Provision
Net Income (Loss) before Minority Interest
Minority Share
Net IncomeProforma Net Income1
Earnings Per ShareProforma Earnings Per Share
Inc/ (dec)
89%
395%
(32%)
75%
Q3-2003(3 months)
LE (000)
826,947
(335,137)
(97,290)
(114)
394,406
(133,633)
114,490
176,698
14,679
43,752
(2,847)
607,545
(84,963)
522,582
(105,546)
417,036
Q4-2003(3 months)
LE (000)
871,949
(417,729)-114
454,334
(187,450)(40,437)131,426161,985(31,333)(3,997)
484,528
(96,806)387,722
(230,000)
157,722
Inc/(dec)
5%
15%
(62%)
1. Proforma Net Income excludes exceptional items (capital gains, provisions and goodwill impairment). Provisions were LE 256 million in 2002and LE 355 million in 2003.
31-Dec 200331-Dec 2003(12 months)(12 months)
LE (000)LE (000)
2,863,8802,863,880
(1,373,886)(1,373,886)(97,290)(97,290)
--1,392,7041,392,704
(568,800)(568,800)146,567146,567486,989486,989182,628182,628
(179,006)(179,006)(14,485)(14,485)
1,446,5961,446,596
(293,535)(293,535)1,153,0611,153,061(441,211)(441,211)
711,848711,848671,565671,565
6.516.516.116.11
31-Dec 2002(12 months)
LE (000)
1,519,071
(1,049,448)
(188,000)
-
281,623
(521,850)
278,072
1,108,859
(96,720)
-
155,680
1,205,664
(119,603)
1,086,061
(38,577)
1,047,484
383,544
9.55
3.49
Assets
Cash
Accounts Receivables
Other Current Assets
Total Current Assets
Net Fixed Assets & Assets Under Construction
Goodwill (Net)
Other Long Term Assets
Total Long Term Assets
Total Assets
Liabilities
Bank over Draft & Short Term Debt
License Related Debt
Accounts Payable
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Other Long Term Liabilities
Total Long Term Liabilities
Total LiabilitiesTotal Shareholder's Equity
Minority Share
Total Liabilities & Shareholder's EquityNet Debt1
Net Debt/EBITDA
OTH dramatically restructured its Balance Sheet in 2003. First, it reduced its leverage, Net Debt/EBITDA from 2.8 in 2002
to 1.6 in 2003. Second, it restructured short term liabilities into long term agreements and reduced short term financial
liabilities (short term debt + license debt) from LE 4,490 million to LE 1,508 million.
Table 12: Balance Sheet31-Dec 2002
LE (000)
586,409
2,582,772
1,409,825
4,579,006
3,957,637
701,450
5,185,715
9,844,80214,423,808
2,622,844
1,866,919
730,660
2,764,597
7,985,020
1,871,903
162,573
2,034,476
3,150,741
1,253,571
14,423,8084,210,000
2.8
31-Dec 200331-Dec 2003LE (000)LE (000)
1,136,6961,136,696758,736758,736
1,571,7601,571,7603,467,1923,467,192
6,811,1756,811,175533,871533,871
6,622,9236,622,92313,967,96913,967,96917,435,16117,435,161
1,508,4631,508,463--
1,016,0821,016,0823,546,4393,546,4396,070,9836,070,983
4,227,5584,227,558528,566528,566
4,756,1244,756,124
4,515,8854,515,8852,092,1692,092,169
17,435,16117,435,1614,599,3254,599,325
1.61.6
1. Net Debt is calculated as a sum of Short Term Debt, License related debt, Long Term Debt in addition to Shareholders Loans less Cash. In
2002, LE 1,956 million of receivables from Pioneers was included in the calculation of cash.
Balance SheetBalance Sheet
F I N A N C I A L R E V I E WP A G E 6 9A N N U A L R E P O R T 2 0 0 3
P A G E 6 8
MobiNil's agreement with the Telecommunication Regulatory Authority for the 1800 MHZ bandwidth.
MobiNil launches MobiNil Life.
Mobilink has significantly increased the quality and capacity of its network.
Launch of postpaid service in Iraq.
Both Djezzy and Tunisiana launched the international gateway. M-Link, a 100% subsidiary, was selected to carry
the international traffic of these subsidiaries in addition to Telecel & Iraqna.
Country HighlightsCountry Highlights
Egypt
Despite the depressed state of the Egyptian economy in 2003, MobiNil managed to improve its operational
and financial figures and it reported strong profit growth for the year. MobiNil’s subscriber base reached
2,991,214, an increase of 31% over 2002. The strong operating results reflect MobiNil's focus on continued targeting of
the more lucrative postpaid subscriber base, which increased to 22.3% of total subscribers by end-2003, from 20% at end-
2002. MobiNil managed to increase its blended ARPU for 2003 to LE 104, from LE 99 in 2002, and to maintain its market
leadership of 52.6%. Capex for 2003 reached US$ 89 million with 1,836 BTS.
Data Revenue represented 4% of revenues and, cashing in on strong tourism, roaming represented 8% of revenues.
During 2003, MobiNil managed to change the tariff structure by increasing tariffs on postpaid subscribers by LE 0.05 and
decreasing the tariffs for prepaid by LE 0.25, while also decreasing the billing time from one minute to 30 seconds, thereby
giving the prepaid subscriber more value and more airtime.
Moreover, in November, MobiNil signed an agreement with Telecom Egypt and Vodafone Egypt, whereby the two mobile
operators committed themselves to make a total payment of LE 1,240 million each over four years in installments through
the National Telecommunication Regulatory Authority. Telecom Egypt, through this agreement, would surrender its licence
to the regulator and the mobile operators would be granted access through the 1800 Mhz spectrum, 7.5 Mhz each.
MobiNil also launched MobiNil Life, a new service based on GPRS technology expected to generate further growth in non-
voice service revenues through ringtones and game downloads. The launch of this service took place in conjunction with
ARPU+, OTH’s Value Added Services provider subsidiary.
Main Operational EventsMain Operational Events
Algeria
The results in Djezzy demonstrated a consistently strong operational performance and it continued to consolidate
its position as the leading operator in Algeria, with a market share of 88.9%, along with eight exclusive distributors
by end of 2003. Djezzy’s customer base stood at 1,267,561 subscribers, with net additions for the year reaching 952,521. Djezzy
has made the Algerian customer its priority having more than 2,900 points of sale, managing the largest call centre in Algeria
and making the Djezzy brand one of the most recognizable names in Algeria.
Djezzy has 91.6% of its total subscriber base as prepaid subscribers. ARPU levels continued to decline because of the rapid increase
in prepaid subscribers, however, still a very healthy ARPU reaching US$ 29.6.
In 2003 the main competitor was AMN (Mobillis), had a total subscriber base of 150,000 subscribers. In December, Wataniya
Telecom was awarded the third license for GSM in Algeria. However, the Algerian market is still under-penetrated, with a large
potential for growth. The Capex for 2003 was US$ 223 million and covering a 72% of the population and 48 wilayas with 889
BTS and 5 MSCs.
Pakistan
During the first half of 2003, Mobilink was in the process of upgrading its networks, and improving voice quality
issues and congestion problems. In the second half of the year, Mobilink aggressively targeted the Pakistani
market and added approximately one million subscribers in six months, achieving net adds of 1,063,473. In that period, Mobilink
also managed to stabilize ARPU levels at US$ 13.9 and to achieve a low churn rate of 5.6%.
At the end of 2003, Mobilink's subscriber base reached 2,015,647, with a market share of 61%. Mobilink has two brands, Jazz,
the prepaid brand where the number of prepaid subscribers reached 92.9%, and Mobilink postpaid, where the number of subscribers
reached 7.1% of total subscribers.
In 2004, the competitive environment in the mobile market in Pakistan will start changing. Paktel, one of the current D-AMPS
operators, will convert to GSM in the first quarter of 2004. In the second half, the Pakistan Telecoms Regulator will auction two
more GSM licenses, making the number of operators in the Pakistani market reach six mobile operators. Mobilink is also in the
process of finalizing the license renewal which would end in 2007. In 2003, Mobilink has significantly expanded the capacity
and the quality of its network, Capex in 2003 was US$ 211 million with 817 BTS sites covering 87% of the urban population.
Tunisia
Tunisiana reported significant subscriber growth during the first year of its operation to reach 497,774 subscribers,
since it started its operational launch in December 27, 2002.
Tunisiana managed to capture 27% of the market share, with 490,057 prepaid subscribers, and achieved approximately 70%
coverage during this period with 285 BTS. Capex for the year was US$ 117 million.
Tunisiana has leveraged ideas from other products and services launched within OTH, namely the Al Tashil product, previously
Taksit in MobiNil, which is a prepaid product with a connection fee paid over a five month installment.
F I N A N C I A L R E V I E WP A G E 7 1A N N U A L R E P O R T 2 0 0 3
P A G E 7 0
Iraq
Immediately after the award of the Mobile license in Central Iraq, and before the signing of the license, OTH, in
an unprecedented move started deploying its network rollout to cover the Baghdad area. On December 22nd,
and during the signing ceremony of the award, OTH launched on a limited scale its postpaid service. Full commercial launch
commenced on February 2004, together with distribution networks, points of sales.
Sub-Saharan Africa
The Ivory Coast operations Loteny Telecom, reached 599,244 number of subscribers (97% prepaid) with a market
share of 48%. OTH announced that it is selling Loteny with a closing of the transaction anticipated in May 2004.
In Congo Brazzaville, where the subscriber base increased by 44% over last year to reach 109,995, Libertis has managed to maintain
its foothold with 37% against its main competitor Celtel.
The Democratic Republic of Congo operation, Oasis Telecom, maintains a small market share of 4.5%. Since April 2003, OTH has
started the restructuring of this operation and managed to increase its subscriber base by 18% to 37,267 subscribers.
Managing the Zimbabwe operations has been extremely challenging, with hyperinflation, major devaluations. OTH deconsolidated
Zimbabwe in the third quarter of 2003 under the IAS guidelines, article 27, section (b), however, OTH managed to increase the
subscriber base to 116,941, a 30% increase. Telecel Zimbabwe has a 32% market share. TchadMobile, still remains the smallest
operation in OTH’s subsidiaries, with 24,580 subscribers. Tchad mobile has a market share of 38% and all subscribers are prepaid.
Outlook for 2004Outlook for 2004
During 2004 OTH intends to continue its current strategy to:
Focus on Core Assets with particular emphasis on maintaining strong leadership position in each of the markets and
accelerating the rollout of the networks to expand capacity and quality.
OTH management believes that the core of its existing operations will continue to generate substantial subscriber
growth exceeding 50% in 2004.
Continue the divestiture of non core Sub-Saharan operations.
Auditor’s ReportTo The Shareholders’ of Orascom Telecom Holding (S.A.E)
We have audited the accompanying Consolidated Balance Sheet of Orascom Telecom Holding "Egyptian Joint Stock
Company" as of December 31, 2003 and the related Consolidated Statements of Income, Changes in Shareholders’ Equity
and Cash Flows for the year then ended. These consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
Except for the matter discussed in (*) below , we conducted our audit in accordance with Egyptian Standards on Auditing
and in the light of provisions of applicable Egyptian laws and regulations. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes, examining on test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management as well
as evaluating the overall financial statements presentation. We have obtained the information and explanations, which
we deemed necessary for our audit. We believe that our audit provides a reasonable basis for our opinion.
* A number of subsidiary companies have been audited by other accounting firms. The assets and revenues of
the subsidiary companies not audited by us represent 46.43% & 34.63% respectively of the relevant total
figures for the assets and revenues in the consolidated financial statements.
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary if
the above scope limitations were absent, the Consolidated Financial Statements referred to above together with the
notes attached thereto present fairly, in all material respect, the consolidated financial position of the Company as of
December 31, 2003 and the results of its consolidated operations and its consolidated cash flows for the financial year
then ended, in accordance with Egyptian Accounting Standards in compliance with applicable Egyptian laws and
regulations.
Without considering the following additional qualifications:1- As explained in note (12) the Company amended the terms relating to the method of calculation of the
repayment amounts of one of the loans granted to the company assuming that one dollar of the loan equals
to one GDR. This has resulted in a charge to the income statement for the financial year ending
December 31, 2003 amounting to LE 179 006 073 after it has been reduced by the following :
F I N A N C I A L R E V I E WP A G E 7 3A N N U A L R E P O R T 2 0 0 3
P A G E 7 2
During September 2003, Orascom Telecom Holding settled US$ 7 500 000 of the loan principal. This was
affected by instructing Telecel International BVI (a wholly owned subsidiary) to transfer 7.5 million of the
company’s GDRs owned by Telecel, at a price of US$ 1 per GDR, to PCSC with a total value of US$ 7.5 million.
This resulted in a reduction of approximately LE 82 million in the charge to income statement relating to
that loan.
On December 31, 2003,Orascom Telecom Holding agreed with PCSC on a new settlement formula by which
the outstanding loan balance as of December 30, 2003 amounting to US$ 23 888 636 equivalent to
LE 146 915 111 was remeasured. This remeasurement resulted in a reduction in the outstanding loan balance
by an amount of US$ 5 013 463 equivalent to LE 30 832 797.
2 - We draw attention to note (19), there is a dispute between the Sales Tax Authority and the Egyptian Company
for Mobile Services on whether the interconnection charges between the Egyptian Company for Mobile Services
network and the other licensed telecommunication networks in Egypt is subject to sales tax . The Egyptian
Company for Mobile Services advisors believe that subjecting the interconnection charges to sales tax is not
legal, as the total cost of the call has already been taxed and that the interconnected charges is just a portion
of the calls. Based on the above, management is of the opinion that the above claim does not represent any
real liability on the company.
KPMG Hazem Hassan
Cairo, March 11, 2004
Orascom Telecom Holding S.A.E(Egyptian Joint Stock Company)
Consolidated Balance Sheet As of December 31, 2003
Current AssetsCurrent AssetsCash at banks & on handOther debit balances (net)Prepaid expensesReceivables from selling subsidiary companyAccounts receivable (net)Inventory (net)Total Current Assets
Long-Term AssetsLong-Term Assets
Due from subsidiaries & related partiesInvestmentsAssets under constructionFixed assets (net)Deferred expenses (net)Goodwill (net)Total long-term assetsTotal Assets
Current LiabilitiesCurrent Liabilities
Banks current accounts-credit and overdraftCreditors short-termAccounts payableInvestment payableAccrued expensesOther credit balancesShort-term loansTotal Current Liabilities
Long Term LiabilitiesLong Term Liabilities
Creditors long-termLong-term loansTotal Long-Term Laibilities
Minority Interest
Shareholders' EquityShareholders' Equity
Issued capitalTreasury stockOther reservesCumulative translation adjustmentsLegal reserveRetained earningsTotal Shareholders' EquityNet profit for the yearTotal Shareholders' Equity including net profit for the yearTotal Liabilities and Shareholders' Equity
The accompanying notes form an integral part of these financial statements and are to be read therewith.
Executive Officer Finance Chairman Auditor’s Report “attached” (KPMG Hazem Hassan)
31/12/2003LE
1 136 696 2781 406 562 567
72 084 116-
758 735 513 93 113 027
3 467 191 501
25 294 460 20 962 290
1 739 740 0235 071 434 5576 576 667 161 533 870 557
13 967 969 04817 435 160 549
116 620 310 786 907 703
1 016 081 582 1 200 000
1 053 867 4701 704 463 9771 391 843 0806 070 984 122
528 566 1174 227 557 5214 756 123 638
2 092 168 353
1 100 000 000(14 523 677 )
16 689 2391 210 524 366
383 073 9111 108 271 6033 804 035 442
711 848 9944 515 884 436
17 435 160 549
31/12/2002LE
586 409 6021 299 647 707
41 518 5021 959 317 884 623 454 033 68 658 290
4 579 006 018
317 676 227 54 197 268
432 660 9103 524 975 6474 813 842 550
701 449 8289 844 802 430
14 423 808 448
153 057 4371 945 807 255 730 659 969 430 626 763 565 509 791
1 689 571 2442 469 787 2577 985 019 716
162 572 6931 871 903 2152 034 475 908
1 253 570 500
1 100 000 000(21 666 398 )
- 569 264 169 383 073 911 72 586 696
2 103 258 3781 047 483 9463 150 742 324
14 423 808 448
Note No.
(9)(8)
(2-6/4)(3)
(2-4/6)(2-5/7)
(2-1-b/5)
(10)
(13)
(11)(12)
(14)(12)
(15)(16)(16)(2-3)
F I N A N C I A L R E V I E WP A G E 7 5A N N U A L R E P O R T 2 0 0 3
P A G E 7 4
Orascom Telecom Holding S.A.E(Egyptian Joint Stock Company)
Consolidated Income StatementFor the financial year from January 1, 2003 to December 31,2003
Cellular operations revenue
Internet service revenue
Telecommunication service revenue
Total revenues
Cellular operations cost of services
Internet service cost
Telecommunications service cost
Total operating costGross profit
Other revenues
Other operating expenses
Selling, general & administrative expenses
Provisions
Earnings before interest, tax, depreciation & amortizationDepreciation & amortization
Impairment in goodwill value
Earnings before interest, tax
Other Income (expenses)Other Income (expenses)
Interest expenseAdjustment relating to loan balance
Interest income & other revenues
Gains from sale & deconsolidation of investments
Foreign currency Gain (losses)
Equity share in subsidiaries income
Capital (losses)
Earnings Before TaxIncome tax
Net profit before minority interestMinority interest
Net profit for the year
Earning per share
NoteNo.
(12)
(2-1-c/24)
(17)
Financial yearended
31/12//2003LE
5 862 751 365
71 336 511
541 882 625
6 475 970 501
(1 185 305 934)
( 47 708 052)
( 369 950 597)
(1 602 964 583)4 873 005 918
18 689 986
( 537 952 352)
(1 154 980 079)
( 334 883 757)
2 863 879 716(1 373 886 024)
(97 290 128)
1 392 703 564
(568 800 071)
(179 006 073)
146 566 833
486 988 679
182 628 175
45 530
( 14 530 867)
1 446 595 770(293 535 299)
1 153 060 471(441 211 477)
711 848 994
6.51
Financial yearended
31/12//2002LE
3 639 526 164
40 317 394
384 223 728
4 064 067 286
(804 214 754)
(36 937 202)
(282 826 006)
(1 123 977 962)2 940 089 324
29 246 066
( 299 188 294)
( 895 440 607)
( 255 635 647)
1 519 070 842(1 049 447 743)
(188 000 000)
281 623 099
(521 849 783)
-
278 072 286
1 108 858 643
(96 720 418)
156 963 659
(1 283 596)
1 205 663 890(119 603 036)
1 086 060 854(38 576 908)
1 047 483 946
9.55
The accompanying notes form an integral part of these financial statements and are to be read therewith.
Ora
scom
Tel
ecom
Hol
ding
S.A
.E(E
gypt
ian
Join
t St
ock
Com
pany
)
Cons
olid
ated
Sta
tem
ent
of C
hang
es in
Sha
reho
lder
s' Eq
uity
For t
he fi
nanc
ial y
ear
from
Jan
uary
1, 2
003
to D
ecem
ber 3
1,20
03
* Cal
cula
tion
diff
eren
ces
mai
nly
in P
ione
er re
sulti
ng fr
om s
ale
of p
ella
sha
res
and
chan
ge in
the
ow
ners
hip
perc
enta
ge in
Alg
eria
dur
ing
the
year
200
3.
The
acco
mpa
nyin
g no
tes
form
an
inte
gral
par
t of t
hese
fina
ncia
l sta
tem
ents
and
are
to b
e re
ad th
erew
ith.
Bala
nce
as o
f 31
/12/
2001
Tran
sfer
to re
tain
ed e
arni
ngs
Tran
sfer
from
rese
rves
Adju
stm
ent o
n tre
asur
y st
ock
Cum
ulat
ive
trans
latio
n ad
just
men
ts
Empl
oyee
s' pr
ofit
dist
ribut
ion
(subs
idia
ries)
Adju
stm
ent o
n re
tain
ed e
arni
ngs
Trea
sury
stoc
k
Net p
rofit
for t
he y
ear
Bala
nce
as o
f 31
/12/
2002
Tran
sfer
to re
tain
ed e
arni
ngs
Adju
stm
ent o
n tre
asur
y st
ock
Cum
ulat
ive
trans
latio
n ad
just
men
t
Empl
oyee
s' pr
ofit
dist
ribut
ion
(subs
idia
ries)
Adju
stm
ent o
n re
tain
ed e
arni
ngs
Trea
sury
stoc
k
Sale
of t
reas
ury
stoc
k
Net p
rofit
for t
he y
ear
Bala
nce
as o
f 31/
12/2
003
Not
e N
o.
(16)
Capi
tal
LE
1 10
0 00
0 00
0- - - - - - - -
1 10
0 00
0 00
0
- - - - - - - -
1 10
0 00
0 00
0
Trea
sury
sto
ck
LE
(8 1
85 9
20)
- -(6
337
757
)- - -
(7 1
42 7
21)
-
(21
666
398)
- 4
406
967
- - -(9
889
781
) 1
2 62
5 53
5-
( 14
523
677
)
Spec
ial r
esev
e(P
aid
in c
apita
lin
exc
ess
of p
ar)
LE
361
968
653
-(3
61 9
68 6
53)
- - - - - - - - - - - - - - - -
Othe
rre
serv
e
LE - - - - - - - - - - - - - - - - 1
6 68
9 23
9-
16 6
89 2
39
Cum
mul
ativ
etr
ansl
atio
nad
just
men
tLE
320
976
437
- - 337
757
247
949
975
- - - -
569
264
169
-(4
406
967
) 6
45 6
67 1
64- - - - -
1 21
0 52
4 36
6
Lega
lre
serv
e
LE
550
000
000
-(1
66 9
26 0
89)
- - - - - -
383
073
911
- - - - - - - -
383
073
911
Reta
ined
earn
ings
LE
40
893
290
(435
322
049
) 5
28 8
94 7
42 6
000
000
-(1
2 10
8 77
4)(5
5 77
0 51
3)- -
72 5
86 6
96
1 04
7 48
3 94
6- -
(36
123
407)
24
324
368
- - -
1 10
8 27
1 60
3
Net
pro
fit fo
r th
e ye
ar
LE
(435
322
049
) 4
35 3
22 0
49- - - - - -
1 04
7 48
3 94
6
1 04
7 48
3 94
6
(1 0
47 4
83 9
46)
- - - - - - 7
11 8
48 9
94
711
848
994
Tota
l
LE
1 93
0 33
0 41
1- - -
247
949
975
(12
108
774)
(55
770
513)
(7 1
42 7
21)
1 04
7 48
3 94
6
3 15
0 74
2 32
4
- - 6
45 6
67 1
64(3
6 12
3 40
7) 2
4 32
4 36
8(9
889
781
) 2
9 31
4 77
4 7
11 8
48 9
94
4 51
5 88
4 43
6
*
F I N A N C I A L R E V I E WP A G E 7 7A N N U A L R E P O R T 2 0 0 3
P A G E 7 6
Orascom Telecom Holding(Egyptian Joint Stock Company)
Consolidated Cash FlowsFor the financial year from January 1, 2003 to December 31, 2003
The accompanying notes form an integral part of these financial statements and are to be read therewith.
Cash flows from operating activitiesCash flows from operating activities
Net profit for the year
Adjustment to reconcile net profit (Loss) to cash
flows from operating activities
Depreciation & amortization
Impairment in investment value
Loan remeasurement differences
Income tax provision
Other provisions
Adjustments on retained earnings
Gain from sale & deconsolidation of investments
Changes in minority interest
Increase (decrease) in goodwill
Capital losses
Increase in cummulative translation adjustment
Net profit before change in current assets and current liabilities
Changes in current assets
Changes in current liabilities
Net cash provided by operating activities
Cash flows from investing activitiesCash flows from investing activities
Payments for fixed assets & assets under construction
Payments for deferred expenses
Payments for long term investments
Proceeds from sale of fixed assets
Proceeds from sale of investments
Net cash (used in) investing activities
Cash flows from financing activitiesCash flows from financing activities
Proceeds from (Payments for) loans & overdraft banks
(Payments for) in investment payable
(Payments for) in long term creditors
(Proceeds from (payments for) treasury stock
(Payments for) employees' profit distribution (Subsidiaries)
Net cash provided by (used in) financing activitiesNet cash movementCash & cash equivalents as at January 1stCash & cash equivalents as at December 31st
Financial yearended
31/12/2003LE
711 848 994
1 373 886 024
97 290 128
88 608 221
293 535 299
334 883 757
24 324 368
(486 988 679)
871 832 831
70 289 143
14 530 867
582 441 434
3 976 482 387
(4 834 924)
(1 213 488 354)
2 758 159 109
(3 299 155 769)
(1 880 542 878)
( 429 426 763)
301 561 759
1 959 317 884
(3 348 245 767)
1 152 664 781
-
-
23 831 960
(36 123 407)
1 140 373 334 550 286 676 586 409 602
1 136 696 278
Financial yearended
31/12/2002LE
1 047 483 946
1 049 447 743
188 000 000
-
119 603 036
255 635 647
(55 770 513)
(1 265 822 302)
664 574 886
(62 455 772)
1 283 596
830 891 018
2 772 871 285
(1 233 058 027)
1 158 563 325
2 698 376 583
(1 130 618 265)
( 505 308 400)
-
366 253 532
91 340 581
(1 178 332 552)
(2 909 209)
(771 268 651)
(580 892 670)
(7 142 721)
(12 108 774)
(1 374 322 025) 145 722 006 440 687 596 586 409 602
NoteNo.
(2-8/9)
A- Legal statusOrascom Telecom Holding S.A.E (“the Company” or “ Orascom Telecom”) is an Egyptian Joint Stock Company established
in accordance with the provisions of law No. 159 of 1981 and its executive regulations and in accordance with the law
No. 95 and its executive regulations issued in 1992. The Company was registered in the Commercial register on July
29, 1997 under no. 114812.
The Company extraordinary general assembly in its meeting held on February 9,2000 approved the change of the
governing law from the Companies’ Law No. 159 for 1981 to Law No. 95 for 1992. Also, by virtue of a resolution of
the extraordinary general assembly meeting held on June 13, 2000, the Company’s name was changed from Orascom
Telecom to Orascom Telecom Holding. The Capital Market Authority’s approval for these changes had been obtained
on July 12, 2000. These changes were registered in the Commercial Registry under no. 134934.
B- Purpose of the companyThe Company’s purpose is to participate in companies issuing securities or to increase its share capital of these companies.
The Company may have interest or participate in any way whatsoever in companies and other enterprises practicing
works similar to those of the Company. It may also merge into those companies and enterprises, purchase them or
affiliate them, pursuant to the provisions of law at its executive regulations.
C- Subsidiary companiesAs of December 31, 2003 Orascom Telecom Holding, hereafter called the “Parent“ owns subsidiary companies, that have
been consolidated in the consolidated financial statements, as follows:
Orascom Telecom Holding S.A.E(Egyptian Joint Stock Company)
Notes To The Consolidated Financial StatementsFor The Financial Year Ended December 31, 2003
1- General1- General
F I N A N C I A L R E V I E WP A G E 7 9A N N U A L R E P O R T 2 0 0 3
P A G E 7 8
% of share
100%
75%
95%
100%
100%
65%
51%
55%
97.5%
99%
58.3%
100%
94%
80%
80%
100%
87.75%
100%
100%
Country
Jordan
Egypt
(B.V.I)
(B.V.I)
Mauritius
Congo –Brazzaville
Egypt
Egypt
(B.V.I)
Egypt
Algeria
(B.V.I)
Egypt
Egypt
Tunisia
Tchad
Egypt
Mauritius
(B.V.I)
1) Fully consolidated subsidiaries:
Pioneers Investment Company
InTouch Company
Cortex service Ltd. Company (BVI)
Telecel International Ltd. Company
International Wireless Communication
Pakistan Ltd (IWCPL).
Libertis Telecom Company
Egyptian Satellite Company (ESC)
Pharaoh Telecommunication Company
* OrasInvest Holding Inc. Company
Ring Distribution Company
* Orascom Telecom Algeria Company
Orascom Telecom ESOP Company
Comtel Network Solution Company
Contra for development project Company
Contra for development project Co. (Tunisia)
Tchad Mobile Company
* Arpu for Communication services
Moga Holding Limited company
Orascom Iraq Holding company
* Includes direct and indirect ownership stake.
2) Proportionally consolidated companies:The consolidated financial statements also include the Parent’s prorata interest in the assets, liabilities, revenues and
expenses of joint ventures through proportionate consolidation of these items in the Parent’s similar accounts item by
item in the financial statements.
Indicated hereunder are the joint ventures, the Parent’s prorata interest and the period for which the financial statements
have been prepared as a basis for proportionate consolidation in the Parent’s consolidated financial statements.
- An agreement concluded between the company and the other shareholders in the joint ventures provide that all the
parties have joint control over these companies.
The significant accounting policies adopted in the preparation of these consolidated financial statements are set out
below:
2-1 Basis of preparing the consolidated financial statementsThe consolidated financial statements are prepared according to the Egyptian Accounting Standards, which are not
materially different from the International Accounting Standards as they pertain to the company.
The consolidated financial statements include all subsidiaries that are controlled by the parent company and which
management intends to continue to control (Note 1-C). The basis of the consolidation are as follows:
- All material inter-group balances and transactions are eliminated.
- Minority interest, in the equity and results of the entities that are controlled by the parent company, is shown as a
separate item in the consolidated financial statements and calculated as the minority’s proportion of the pre-acquisition
carrying amounts of the assets and liabilities of the subsidiary.
Name of the Joint Venture
MobiNil for Telecommunications
Egyptian Company for Mobile Services
Orascom Tunisia Holding Ltd Co.
Carthage Consortium Co.
Prorata Interest as of
Dec. 31, 2003
28.75%
16.6%
55.95%
4.65%
The period for which
financial statements were prepared
1/1/2003- 31/12/2003
1/1/2003- 31/12/2003
2/6/2002- 31/12/2003
2/6/2002- 31/12/2003
Country
Egypt
Egypt
(B.V.I)
(B.V.I)
2- Significant accounting policies2- Significant accounting policies
F I N A N C I A L R E V I E WP A G E 8 1A N N U A L R E P O R T 2 0 0 3
P A G E 8 0
The cost of acquisition is allocated as follows:
a-The fair value of the assets and liabilities acquired as of the date of the acquisition to the extent of the parent’s
interest obtained in the acquisition.
b- The excess of the cost of acquisition over the parent’s interest in the fair value of the identifiable assets and liabilities
acquired as of the date of acquisition is recognized as goodwill and amortized over a period of 15 years, or the
remaining duration of the license granted to the operator which ever is less as the case may be.
c-Deconsolidation:
A subsidiary excluded from the consolidated financial statement when:
- Parent control is intended to be temporary because the subsidiary is acquired and held exclusively with a view to
its subsequent disposal in the near future.
- The subsidiary operated under severe long-term restrictions, which significantly impair its ability to transfer funds
to the parent.
Such deconsolidated subsidiaries accounted for in accordance with EAS No. 17 concerning investment.
2-2 Translation of the foreign currencies transactionsSome of Orascom Telecom Holding’s subsidiaries maintain their books of accounts in Egyptian Pounds. Transactions
denominated in foreign currencies are recorded at the prevailing exchange rate at the date of transactions. Monetary
assets and liabilities denominated in a foreign currency at the balance sheet date are retranslated at the prevailing
exchange rates, at that date. The exchange differences resulting from the settlement of transactions and the retranslation
at the balance sheet date are taken to income statement.
2-3 Translation of the foreign subsidiaries’ financialsAs of the Balance sheet date the assets and liabilities of these companies are translated to Egyptian Pounds at the
prevailing rate as of the year end, and the shareholders’ equity accounts are translated at historical rates, where as
the income and expenses accounts are translated at the average exchange rate prevailing during the period of the
consolidated financial statements. Currency translation differences are recorded in the shareholders equity section of
the balance sheet as cumulative translation adjustment.
2-4 Fixed assetsFixed assets are recorded at historical cost and presented in the balance sheet net of accumulated depreciation. Depreciable
assets are depreciated over the estimated useful- life of each asset by using the straight-line method. The following are
the estimated useful lives, for each class of assets, used for depreciation calculation purposes:
2-5 Deferred expenses- Organization costs and pre-operating expenses are amortized over one year - five years, using the straight-line method,
immediately upon the commencement of the companies operation. Most companies had fully amortized the organization
and pre-operating expenses in 2000.
- License fees to be amortized over the license life.
2-6 InvestmentsInvestments in associated companies are stated at equity method. At each balance sheet date, management assesses the
value of these investments and in case that the recoverable value from the investment is below the carrying value; the
carrying value of the investment is reduced by the value of the impairment. The value of the impairment is charged to the
income statement.
2-7 Taxation- A tax provision is formed to meet tax obligations based on a detailed schedule for each claim.
- Due to the nature of the Egyptian tax laws and legislation, applying the principles of the deferred taxes according to the
International Accounting Standard “taxes on income” will not usually result in material deferred tax liabilities. Further,
if the application results in deferred tax assets, it will be recognized in the financial statements whenever there is sufficient
assurance that these assets will be realized in the foreseeable future.
2-8 Cash and cash equivalentsFor the purpose of preparing the statement of cash flows, the Company considers all cash on hands, bank current accounts, letters
of guarantee and time deposits with banks as cash and cash equivalents. The cash flow statement prepared according to the
indirect method.
Assets
Buildings
Cell sites
Equipment & Tools
Computers equipments
Furniture & Fixtures
Vehicles
Leasehold improvements
Depreciation period
50 years
8 years
5-10 years
3-5 years
5-10 years
3-6 years
3-5 years
F I N A N C I A L R E V I E WP A G E 8 3A N N U A L R E P O R T 2 0 0 3
P A G E 8 2
2-9 Capitalization of borrowing cost- The Egyptian Company for Mobile Services capitalizes the borrowing costs related to the acquisition or establishment
of an asset, this is in accordance to paragraph 11 of Egyptian Accounting Standard No.14.
Accordingly, the company capitalized LE 22 415 574 in fixed assets and LE 13 343 451 in assets under construction.
(LE 21 595 485, LE 16 343 705 respectively during 2002).
The average borrowing rate for the Egyptian Company for Mobile Services which was used to capitalize interest on
the assets is 9.173 % for 2003 (9.46 % for 2002).
- Orascom Telecom Algeria capitalized some of the borrowing costs related to the acquisition of the GSM license.
Accordingly the company capitalized US$ 6 million during 2003 (US$ 16.6 million during 2002).
3- Assets under construction3- Assets under construction
* The assets under construction balance as at December 31, 2003 amounting to LE 33 111 679 , represents that value
of the new administrative premises purchased from Nile City Investments Company (an affiliated company) by virtue
of an agreement signed on 17/8/2000 as well as the value of additional related work.
MobiNil for Telecommunication Company
Egyptian Company for Mobile Services
Telecel International Company
Libertis Telecom Company
Orascom Telecom Algeria Company
* Orascom Telecom Holding Company
InTouch Company
Ring for Distribution Company
International Wireless Communication Pakistan
Ltd (IWCPL).
Tchad Mobile Company
Orascom Iraq Holding
Orascom Telecom Tunisia Holding
Carthage Consortium
Other companies
31/12/2003
LE
85 837 541
49 561 850
65 724 816
2 239 367
334 242 654
33 111 679
15 537 945
2 267 949
992 856 000
2 544 439
110 776 026
43 469 192
1 518 342
52 223
1 739 740 023
31/12/2002
LE
54 503 894
31 470 074
56 809 544
2 949 613
112 375 643
19 703 110
232 554
1 700
154 595 720
-
-
-
-
19 058
432 660 910
4-1 On June 30, 2003 the Company has increased its investment in Oratel International Ltd. By LE 180.9 million
equivalent to US$ 30 million, represented in 40 million share. The Company’s investment, following the aforementioned
increase, reached 27.96 % of Oratel International Ltd’s share capital. During December 2003, Orascom Telecom Holding
sold 38,200,000 share of Oratel International Ltd and realized a gain of LE 61 560 303, reported in the income statement
for the financial year ended December 31, 2003 within gains from sale of investments caption. Following this sale, the
Company’s investments in Oratel Interantional Ltd reached 4.74 % of the investee share capital.
4-2 Orascom Telecom Holding acquired an additional 51 % of the share capital of Tchad Mobile Company from Sotel
Company to become a fully owned subsidiary by Orascom Telecom Holding.
4-3 On July 16, 2003 Orascom Telecom Holding , Cylotel and Drex Technologies signed an agreement to settle all
legal disputes and litigations in the international and Syrian jurisdictions and cancelled the sale of Syriatel shares to
Cylotel. Based on this agreement Orascom Telecom Holding no longer owns any shares in Syriatel, Orascom Telecom
Holding received cash considerations to compensate the cost of its initial investment, loan made to Syriatel and other
expenses incurred. This settlement has resulted in a gain of LE 55 265 575, reported in the income statement for the
financial year ended December 31, 2003 within gains on sale of investment caption.
Positive goodwill represents the excess cost of the acquisition of the joint ventures and other investments over their
fair value at the date of acquisition. While the negative goodwill represents the excess of fair value at date of acquisition
over the cost of acquisition. As for Egyptian Company for Mobile Services goodwill and Telecel International goodwill
they relate to the mobile licenses owned by them and are amortized over the period of the licenses. As for the goodwill
of MobiNil for Telecommunication it’s amortized over the remaining period of the license.
Oratel International Co.
Mena Telecommunication Co.
(Menatel)
Intelligent village (ECDMIV)
Tchad Mobile Company
Syriatel Mobile Telecom Co.
Other investments (in subsidiaries)
(4-1)
(4-2)
(4-3)
Percentage of Ownership
4.74%
-
10.25%
-
2%
31/12/2003
LE
-
-
7 687 500
-
-
13 274 790
20 962 290
31/12/2002
LE
27 869 752
5 000
5 125 000
301 051
2 940 817
17 955 648
54 197 268
4- Investments4- Investments
5- Goodwill (net)5- Goodwill (net)
F I N A N C I A L R E V I E WP A G E 8 5A N N U A L R E P O R T 2 0 0 3
P A G E 8 4
As for the negative goodwill of International Wireless Communication Pakistan Ltd (IWCPL) (Mauritius), it is amortized
over the remaining period of the license. As for the positive goodwill of Pakistan Mobile Ltd (Pakistan), it’s amortized
over the remaining period of International Wireless Communication Pakistan Ltd (IWCPL) license.
Goodwill at the parentcompany’s level
MobiNil for Telecommunication
Egyptian Company for Mobile Services
*International Wireless Communication
Pakistan Ltd (IWCPL)
** Pakistan Mobile Ltd.
***Telecel International Limited
Pioneers Investment Co.
InTouch Company
Egyptian Satellite Co. (ESC)
Pharaoh Telecommunication Company
Libertis Telecom Company
Comtel network solutions (Egypt)
Contra Egypt Co.
Tchad Mobile Co.
Goodwill at the subsidiaries’ level
MobiNil for Telecommunication in the Egyptian
Company for Mobile Services
InTouch Goodwill in Link
OrasInvest in ESC.
Telecel in X-Com
Moga Holding Company in Orascom Telecom
Algeria
Cortex Company in OrasInvest Company
Total**** Telecel goodwill impairment
***** Pioneer goodwill impairment
Net
Goodwill at
date of acquisition
LE
332 321 441
178 746 470
(130 092 123)
111 183 049
682 676 807
142 347 261
9 686 993
46 000
28 934
398 829
(45 897)
3 814 000
6 322 178
1 077 322
7 609 466
459 132
4 004 706
(10 444 866)
(14 656 195)
1 325 483 507(392 134 354)(97 290 128)836 059 025
Amortization
as of 31/12/2003
LE
76 058 340
58 989 332
(51 914 876)
51 314 254
116 801 395
45 057 133
2 583 198
15 333
17 360
48 807
(6 111)
759 486
541 521
260 292
1 521 894
244 870
1 568 008
(206 149)
(1 465 619)
302 188 468--
302 188 468
Net
as of 31/12/2003
LE
256 263 101
119 757 138
(78 177 247)
59 868 795
565 875 412
97 290 128
7 103 795
30 667
11 574
350 022
(39 786)
3 054 514
5 780 657
817 030
6 087 572
214 262
2 436 698
(10 238 717)
(13 190 576)
1 023 295 039(392 134 354)(97 290 128)533 870 557
* International Wireless Communication Pakistan Ltd (IWCPL) negative goodwill was increased with an amount of
LE 102 632 741 due to the Orascom Telecom Holding acquisition of 34.08 % of International Wireless Communication
Pakistan Ltd (IWCPL) shares, that took place during 2001.
During 2002, International Wireless Communication Pakistan Ltd (IWCPL) reclassified an amount of US$ 3 million previously
paid by Orascom Telecom Holding to a current account due to Orascom Telecom Holding, the negative goodwill was increased
with an amount of LE 10 350 000.
** Pakistan Mobile Ltd reclassified an amount of US$ 1.8 million previously paid by Orascom Telecom Holding to a current
account due to Orascom Telecom Holding accordingly the goodwill was increased during 2002 with an amount of
LE 7 188 034.
- During the third quarter of year 2003, the company has sold its direct investments in Pakistan Mobile limited which
represent 30% of the shares to the International Wireless Communications Pakistan Ltd (IWCPL), a wholly owned subsidiary
to Orascom Telecom Holding, and as it is an intercompany transactions the effect has been eliminated from the consolidated
financial statements.
*** In December 2002 the sale agreement signed by Telecel of its operations in Zambia, Uganda, South Africa, Burundi, and
Centrafrique became binding; therefore Orascom Telecom received the remaining 20% of Telecel shares it did not own.
Accordingly Telecel goodwill was increased with an amount of LE 62 455 772 in 2002.
**** In 2001, and based on a valuation study prepared by an Investment Bank of Telecel International limited,
LE 204 134 354 was considered as an impairment of the investment value. That led to a decrease in the goodwill value by
the same amount. In 2002 the value of Telecel International was additionally reduced by LE 188 million, which was considered
as an impairment of the investment value based on a valuation study prepared by an Investment Bank. Accordingly the
value of impairment of Telecel International investment amounted to LE 392 134 354. Knowing that the difference between
the cost of the acquisition of Telecel International Ltd. (B.V.I) and Orascom Telecom Holding share in the net assets of Telecel
is amortized over fifteen years starting on January 2000.
***** During the third quarter of year 2003 the company has accelerated the amortization for the remaining carrying amount
of the goodwill in Pioneer investment company in Jordan, the accelerated portion from the goodwill amounted to
LE 97 290 128.
F I N A N C I A L R E V I E WP A G E 8 7A N N U A L R E P O R T 2 0 0 3
P A G E 8 6
Orascom Telecom Algeria fixed assets amounted to D.A 18 470 820 019 equivalent to LE 1 611 797 002 was pledged against loans and credit
facilities obtained from Moga Holding Ltd to group of banks and International Financial Organization.
6- Fixed Assets (Net)6- Fixed Assets (Net)
Cost
Balance 1/1/2003
Additions
Disposals
Balance 31/12/2003
Accumulated Depreciation
Accumulated depreciation 1/1/2003
Depreciation for the year
Accumulated depreciation of disposals
Accumulated depreciation 31/12/2003
Net book value 31/12/2003
Net book value 31/12/2002
Land
LE
2 164 948
59 393
-
2 224 341
-
-
-
-
2 224 341
2 164 951
Buildings
LE
49 577 759
4 753 950
(1 956 650 )
52 375 059
14 521 775
6 453 534
(1 442 453 )
19 532 856
32 842 203
30 060 083
Cell Sites
LE
5 067 418 325
1 894 419 738
(568 191 028 )
6 393 647 035
1 384 770 678
771 145 191
(254 644 269 )
1 901 271 600
4 492 375 435
3 204 474 564
Equipment
& Tools
LE
170 136 518
153 897 143
( 415 809 )
323 617 852
63 342 066
38 171 450
( 250 249 )
101 263 267
222 354 585
76 999 060
Computer
Equipment
LE
212 601 715
108 868 677
( 750 911 )
320 719 481
72 649 545
54 887 505
( 608 907 )
126 928 143
193 791 338
121 994 174
Furniture &
Fixtures
LE
84 827 699
26 116 720
( 655 842 )
110 288 577
32 461 352
13 545 322
( 287 355 )
45 719 319
64 569 258
45 275 789
Vehicles
LE
36 360 022
20 563 136
(3 163 423 )
53 759 735
15 504 856
8 885 729
(2 065 514 )
22 325 071
31 434 664
17 749 772
Leasehold
improvments
LE
58 771 450
19 035 031
( 412 633 )
77 393 848
27 825 076
17 880 962
( 154 923 )
45 551 115
31 842 733
26 257 254
Total
LE
5 681 858 436
2 227 713 788
(575 546 296 )
7 334 025 928
1 611 075 348
910 969 693
(259 453 670 )
2 262 591 371
5 071 434 557
3 524 975 647
Organization costs (net)
Deferred expenses (net)
Licenses fees (net)
Advance payments to suppliers
Accrued revenue
Deposit with others
Due from affiliated companies
Taxes
SWAP agreement receivables
Other debit balances (net)
Cash on hand
Banks- current accounts & checks under collection
Banks- Letters of Guarantee
Banks- Time deposits*
* Time deposits as of December 31, 2003 include an amount of LE 138 137 722 blocked as a collateral for loans and letters
of guarantee and letters of credit.
7- Deferred expenses (net)7- Deferred expenses (net)
31/12/2003
LE
-
406 310 853
6 170 356 308
6 576 667 161
31/12/2003
LE
235 705 732
352 736 083
6 324 270
-
49 504 342
264 591 973
497 700 167
1 406 562 567
31/12/2003
LE
12 180 335
928 595 469
9 424 622
186 495 852
1 136 696 278
31/12/2002
LE
22 049 850
44 695 159
4 747 097 541
4 813 842 550
31/12/2002
LE
130 621 659
158 386 667
13 722 479
350 737 417
10 037 335
473 773 647
162 368 503
1 299 647 707
31/12/2002
LE
3 231 804
337 990 629
11 194 359
233 992 810
586 409 602
8- Other debit balances (net)8- Other debit balances (net)
9- Cash at banks and on hand9- Cash at banks and on hand
F I N A N C I A L R E V I E WP A G E 8 9A N N U A L R E P O R T 2 0 0 3
P A G E 8 8
*Orascom Telecom Algeria
(Algerian government-license fees )
** Due to Tunisian government–License fees
Sundry creditors
* The Company has obtained the 2nd license to operate a GSM network in Algeria through investment in its subsidiary
" Orascom Telecom Algeria " for an amount of US$ 737 million for a period of 15 years starting from August 2001 and
can be extended for another 3 years without paying any extra fees. Orascom Telecom Algeria has paid the first 50%
of the license fees in August 2001 and the remaining 50% which is equivalent to US$ 368.5 million was paid on
December 27, 2003 in addition to an annual interest rate of 5.5 %.
** On May 11, 2002 the Company has obtained the 2nd license to operate GSM network in Tunisia through investment
in its subsidiary "Orascom Telecom Tunisia” for an amount of US$ 454 million for a period of 15 years starting from
December 2002 to be paid on two equal installments equivalent to US$ 227 million each. The company has paid the
first installment on May 21, 2002 where as the second and final installment in addition to an annual interest rate of
six month Libor + 2% is due on September 30, 2004. The amount represent Orascom Telecom Holding proportionate
share in Orascom Telecom Tunisia Holding Ltd. and Carthage Consortium Ltd. Company with an amount of
LE 333 547 533 and LE 11 650 530 respectively.
Taxes & Provisions
Deferred revenues
Deposit to others
Income tax provision
Due to affiliated companies
Contingent liabilities
SWAP agreement payables
Other credit balances
31/12/2003
LE
-
345 198 063
441 709 640
786 907 703
31/12/2003
LE
549 037 467
292 841 570
17 384 004
21 578 709
144 781 000
95 793 216
269 342 089
313 705 922
1 704 463 977
31/12/2002
LE
1 830 267 885
-
115 539 370
1 945 807 255
31/12/2002
LE
274 566 062
94 886 657
17 255 545
7 533 036
221 683 505
53 462 582
421 945 233
598 238 624
1 689 571 244
11- Other credit balances11- Other credit balances
10- Creditors short-term10- Creditors short-term
Bor
row
er
1-Th
e Eg
yptia
n Co
mpa
ny M
obile
Ser
vice
s
2-M
obiN
il fo
r Tel
ecom
mun
icat
ions
Co.
3-Or
asIn
vest
Co.
4-Te
lece
l Int
erna
tiona
l Ltd
.
5-Or
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m T
elec
om A
lger
ia
6-IW
CPL
7-Li
bert
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elec
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ompa
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8-M
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Hol
ding
Com
pany
9-Or
asco
m Ir
aq H
oldi
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ny
10-O
rasc
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elec
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unis
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oldi
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11-
Cart
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Con
sort
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Com
pany
12-O
rasc
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elec
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Lend
ing
Inst
itutio
n
Gro
up o
f ban
ks
Gro
up o
f ban
ks
Gro
up o
f ban
ks
Gro
up o
f ban
ks &
fina
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l org
aniz
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n
Gro
up o
f ban
ks
Gro
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f ban
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fina
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l org
aniz
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Loa
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Gro
up o
f ban
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Gro
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f ban
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Gro
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ks
Inte
rest
Rat
e
1.6%
- 0
.9%
(ove
r lib
or)
The
aver
age
time
depo
sit
rate
s +
a m
argi
n of
0.5
%12
.25%
1.6%
- 0
.9%
(ove
r lib
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The
aver
age
time
depo
sit
rate
s +
a m
argi
n of
0.5
%12
.25%
Trea
sury
Bill
rate
+ 1
%-6
%
4.25
%+
Eurib
or4.
25%
+ Eu
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4.25
%+
Eurib
or4.
25%
+ Eu
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4.25
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Eurib
or4.
25%
+ Eu
ribor
5%+
Eurib
or +
EPC
+ 5
%
3%+
Eurib
or3%
+ Li
bor
Libo
r +2%
14%
Acco
rdin
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con
trac
t8% Li
bor +
3%13
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Libo
r +2.
65%
14.0
0%
Outs
tand
ing
amou
nt31
/12/
2003
LE
314
352
852
544
436
415
506
120
465
218
190
1 25
8 63
2 89
5
685
349
850
30
098
010
1 18
3 86
7 68
1
184
232
204
118
737
358
4 1
47 3
95
829
821
631
5 61
9 40
0 60
1
Long
Ter
mPo
rtio
n31
/12/
2003
LE
232
282
648
402
296
754
-
380
747
422
1 14
8 10
3 82
7
555
886
200
30
098
010
921
686
933
184
232
204
940
666
32
857
371
250
000
4 22
7 55
7 52
1
Shor
t Ter
mPo
rtio
n31
/12/
2003
LE
82
070
204
142
139
661
506
120
84
470
768
110
529
068
129
463
650
-
262
180
748
-
117
796
692
4 1
14 5
38
458
571
631
1 39
1 84
3 08
0
US$ L
E L
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US$ L
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E
US$
US$
US$
US$
US$
US$
US$
US$ L.E
L.E
US$
US$ L.E
US$ L.E
Curr
ency
Deb
t
220,
000,
000
1,19
0,00
0,00
034
0,00
0,00
0 B
onds
220,
000,
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onds
189,
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322
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Colla
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* Th
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:
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ver O
rasc
om Te
lecom
Alg
eria
shar
es h
eld b
y Ora
scom
Telec
om H
oldi
ng,
Or
atel,
Mog
a Ho
ldin
g an
d AI
G to
secu
re O
rasc
om Te
lecom
Alg
eria
oblig
atio
ns.
* Pro
miss
ory n
otes
to se
cure
the p
rincip
le am
ount
of t
he lo
ans t
o th
e len
ders.
* Mog
a Ho
ldin
g wa
s gra
nted
the o
ptio
n to
conv
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he o
utsta
ndin
g am
ount
of i
ts lo
an
into
Ora
scom
Telec
om A
lger
ia or
dina
ry sh
ares
(by n
omin
al va
lue)
und
er ce
rtain
cond
ition
s.* A
ll af
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aintio
ned
are f
or ex
port
cred
it fa
ciliti
es a
gree
men
t .
* Sec
ured
by M
otor
ola
corp
orat
e gur
ante
e* S
ecur
ed b
y Mot
orol
a co
rpor
ate g
uran
tee
*Pled
ge o
f 102
080
279
shar
es o
f IW
CPL o
wned
by O
rasc
om Te
lecom
Hol
ding
. *P
ledge
of 1
395
572
shar
es o
f Ora
scom
Telec
om A
lger
ia ow
ned
by O
rasc
om Te
lecom
Hol
ding
. *P
ledge
of 5
0 00
0 00
1 sh
ares
of M
oga
Hold
ing
Ltd
owne
d by
Ora
scom
Telec
om H
oldi
ng.
*Pled
ge o
f 342
500
shar
es o
f Ora
scom
Telec
om A
lger
ia ow
ned
by M
oga
Hold
ing
Ltd.
*Pled
ge o
f 995
984
shar
es o
f Ora
scom
Telec
om A
lger
ia ow
ned
by O
rate
l Int
erna
tiona
l .
*pled
ge o
f Ora
scom
Telec
om Ir
aq a
sset
s inc
ludi
ng th
e lice
nse &
ban
k acc
ount
s tha
t inc
lude
s cas
h in
flows
* Cor
pora
te g
uran
tee f
rom
Ora
scom
Telec
om H
oldi
ng
*A p
ledge
of
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com
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om Tu
nisia
lice
nse a
nd fi
xed
asse
ts .
*A p
ledge
of
Oras
com
Telec
om Tu
nisia
lice
nse a
nd fi
xed
asse
ts .
*A p
ledge
of t
he sh
ares
own
ed in
ECM
S,*A
pled
ge o
f the
shar
es o
wned
in M
obiN
il Te
lecom
mun
icatio
n .
*A p
ledge
of t
he sh
ares
own
ed in
ECM
S.*P
CSC
(BVI
) loa
n*P
CSC
(BVI
) loa
n*A
pled
ge o
f the
shar
es o
wned
in E
CMS
*A p
ledge
of t
he sh
ares
own
ed in
ECM
S*A
pled
ge o
f the
shar
es o
wned
in E
CMS
12-
LO
ANS
12-
LO
ANS
F I N A N C I A L R E V I E WP A G E 9 1A N N U A L R E P O R T 2 0 0 3
P A G E 9 0
- In 2002 the company received several loans from PCSC. In the financial period ending June 30, 2003 the method ofrepayment and the interest rate relating to one of these Loans amounting to US$ 20 million were amended. By virtueof this amendment the loan principal is reduced by the repayment as adjusted in accordance with a formula wherebythe repayment is divided by the market price of Orascom Telecom GDR at the repayment date. This formula assumesthat one dollar of the loan is equal to one GDR.
During September 2003 the company settled US$ 7 500 000 of the loan principal. This was effected by instructing TelecelInternational BVI (a wholly owned subsidiary) to transfer 7.5 million of the company’s GDRs owned by Telecel, at a priceof US$ 1 per GDR, to PCSC with a total value of US$ 7.5 million. This resulted in a gain to Orascom Telecom ofapproximately LE 82 million reduced from adjustment relating to loan balance in the income statement.
On December 31, 2003, Orascom Telecom Holding and PCSC agreed to settle the outstanding loan balance as of December30, 2003 which amounted to US$ 23 888 636 which is equivalent to LE 146 915 111 ignoring the formula mentionedabove, this settlement reduced the adjustment relating to a loan balance reflected in the income statement with anamount of US$ 5 013 463 which is equivalent to LE 30 832 797. Accordingly the balance due to PCSC as of December31, 2003 amounted to US$ 7 120 066 which is equivalent to LE 43 788 406.
Based on the above, the total amount paid & settled from the principle loan as of December 31,2003 wasUS$ 39 022 816 which is equivalent to LE 239 990 318, and as for adjustment relating to a loan balance reflected inthe income statement as of December 31,2003 an amount of LE 179 006 073.
Subsequent to the financial statement date , the company fully paid the due balance to PCSC which is amounted toUS$ 7 120 066 and equivalent to LE 43 788 406.
- Banque du Caire loan is guaranteed by a pledge on 915,000 share of the Egyptian Company for Mobile Services (Interestrate 14%).
- The Arab Investment Company loan is guaranteed by a pledge on 1,907,000 share of the Egyptian Company for MobileServices shares (interest rate Libor + 2%).
- Misr Iran Loan is guaranteed by a pledge on 2,041,000 share of Egyptian Company for Mobile Services (Interest rate13.5%).
- On August 26, 2003 an agreement was signed between Orascom Telecom Holding and Misr Bank, whereby the Companywill settle its short-term facilities due to the bank and obtain a long-term loan amounting to LE 250 million payableover five years, after one year grace period during which only interest will be paid, while the principle will be paid in eight equal, semi-annual installments during the following four years. The loan is guaranteed by a pledge on6,900 shares of MobiNil Telecommunications Company (Interest rate 14%) .
- On September 30, 2003 Orascom Telecom Holding restructured the National Societe Generale Bank Loan into a long-term loan payable in eight equal, semi-annual installments the last of the which is to be settled on October 31, 2007,the loan is guaranteed by a pledge on 5,652,000 shares of the Egyptian Company for Mobile Services.
- The Arab Investment Company Loan is guaranteed by a pledge on 1,897,000 shares of Egyptian Company for Mobile Services Company (Interest rate Libor + 2.65%) .
- Moga Holding Company (SPV) obtained credit facilities amounted to 153.3 million from several Banks and InternationalFinancial Institution to Orascom Telecom Algeria, those credit facilities assist Orascom Telecom Algeria to finance its projects (roll out of a GSM cellular mobile telephone services network in Algeria) .
Motorola
Amounts due to the shareholders’ of Contra for
development projects-Egypt
14- Creditors long-term14- Creditors long-term
* Due to shareholders’
Sundry creditors
* Due to shareholders’ is as follows:
Mr. Naguib Sawiris
Mr. Nassef Sawiris
The Company concluded some transactions with some shareholders, the shareholder provided funds to the company to
finance the acquisition of 20 million share at a par value of US$ 1 each in Oratel International Ltd. as well as other related
acquisition costs. The total value of funds provided is US$ 21.5 million.
15- Share capital15- Share capital
The Company’s authorized capital is fixed at LE 2.5 Billion represented in 250 million shares of a nominal value of LE 10
each. The issued and paid up share capital is LE 1.1 Billion represented in 110 million shares of a nominal value LE 10 each
(1 Share = 2 GDRs).
16- Treasury stock16- Treasury stock
Employees Stock Option Plan – Treasury Stock
Orascom Telecom Holding sold 1,000,000 of its treasury stocks which had a cost of LE 12 625 535 for an amount of
LE 29 314 774, the difference between the selling price and the acquisition price was credited to other reserves.
31/12/2003
LE
-
1 200 000
1 200 000
31/12/2002
LE
430 626 763
-
430 626 763
31/12/2003
LE
181 415 970
347 150 147
528 566 117
49 190 970
132 225 000
181 415 970
31/12/2002
LE
135 845 695
26 726 998
162 572 693
23 185 695
112 660 000
135 845 695
No of shares
178,709
LE
14 523 677
13- Investment payable Company13- Investment payable Company
F I N A N C I A L R E V I E WP A G E 9 3A N N U A L R E P O R T 2 0 0 3
P A G E 9 2
17- Earning per share17- Earning per share
Earning per share is calculated using the weighted average number of shares outstanding through out the year.
Number of shares Year
109 337 261 1/1/2003-31/12/2003
Therefore the weighted average number of shares through out the year are 109,337,261 shares.
Financial year ended Financial year ended
31/12/2003 31/12/2002
Net profit for the year LE 711 848 994 1 047 483 946
Weighted average of shares through the year 109,337,261 109,733,874
Earning per share LE 6.51 9.55
The group concluded SWAP transactions during the financial year ended December 31, 2003 in order to hedge foreign currency
exposure relating to commitments dominated in foreign currencies. Unsettled transactions as at December 31, 2003 was as follows:
Egyptian Company for Mobile ServicesAmount Future Duration
US$ conversion price
10 000 000 6.3958 8 months10 000 000 6.3098 9 months5 000 000 6.4272 8 months5 000 000 6.4008 6 months
10 000 000 6.481 6 months10 000 000 6.3804 6 months5 000 000 6.4683 6 months
20 000 000 6.4684 8 months5 000 000 6.4714 8 months6 000 000 6.7055 12 months4 000 000 6.7055 12 months
Orascom Telecom HoldingAmount Future Duration
US$ conversion price
2 000 000 6.1856 20 days
These transactions are recorded at fair value under “other debit balances & other credit balances” according to International
Accounting Standard No. (39).
18- SWAP transactions18- SWAP transactions
The contingent liabilities as at December 31,2003 are represented in the followings:
- On December 23, 2002 Pioneers, a Jordanian subsidiary Company (“the seller”), sold its share in Pella a Jordanian
company. The execution of the contract was subject to fulfillment of certain conditions, which included but not limited
to procuring the approval of the Regulatory Authorities in Jordan. In January 2003 the said approval was obtained
and the contract became effective. Pursuant to this contract, Orascom Telecom Holding guaranteed the implementation
of the seller’s obligations at a maximum amount of US$ 50 million up till the date of issuing the financial statements
of Pella Company for the financial year ending as of December 31, 2003 considering that the seller has fulfilled his
obligations. However, the purchaser shall have the right to make recourse to the sellers up till December 31, 2007 in
case sellers representations in respect of the tax position of Pella Company are proved inaccurate and incorrect
without maximum limit for damages.
- X-Com Company (subsidiary of Telecel International Company – B.V.I) obtained a loan amounting to 24.4 million
equivalent to LE 188.75 million from Fortis Bank guaranteed by Orascom Telecom Holding.
- On October 19, 2003 Orascom Telecom Holding signed a Corporate guarantee to guarantee Orascom Telecom Iraq
liabilities towards the suppliers (Motorola & Alcatel) of cellular equipment for the GSM Network in Iraq without any
limitation on these liabilities.
Subsequent to the financial statements date the Company signed a corporate guarantee to guarantee Orascom Telecom
Iraq settlement of its obligations under the credit facilities agreement signed with Motorola (US$ 40 million) and
Alcatel ( 15 million).
- On December 5, 2003 Orascom Telecom Holding has signed as a guarantor for Orascom Telecom Algeria and Moga
Holding Ltd to guarantee their obligations under loans & credit facilities obtained from a few suppliers and International
financial organizations for a total amount of 461 million. To secure these loans Orascom Telecom Holding has
pledged its investments in IWCPL, Moga Holding Ltd and Orascom Telecom Algeria to the suppliers and the International
financial organizations until November 15, 2010 (the date on which these credit facilities & loans will be fully settled).
Orascom Telecom Holding maximum liabilities under these pledge agreements is up to 470 million, in addition to
any interest or costs may occur incase of default of payment.
- Orascom Telecom Holding signed a corporate guarantee in favour of LLC Italia for the amount of 12.5 million to
secure Orascom Telecom Algeria obligation toward LLC Italia in connection with purchase of equipment and the
construction of facility sites.
- Orascom Telecom Holding signed a corporate gurantee in favour of Sumitomo Corporation to secure Orascom Telecom
Algeria obligations toward Sumitomo in respect of a purchase order amounting to US$ 2.4 million.
19- Contingent liabilities19- Contingent liabilities
F I N A N C I A L R E V I E WP A G E 9 5A N N U A L R E P O R T 2 0 0 3
P A G E 9 4
- Societe General Bank-France has filed a lawsuit against Orascom Telecom Holding alleging that US$ 900 000 success
fees in connection with its efforts in securing investor participation in financing the cost of Algeria license. The
Company’s management is in opinion, that the company legal status is strong since Societe General Bank did not exert
any efforts to secure such investment participation in financing the license.
- Orascom Telecom Holding signed a corporate guarantee in favour of Siemens to secure the settlement by Atlantic
Company for Telecommunications for its obligations to Siemens in respect to the sale of West Africa countries group,
this corporate guarantee is effective until August 31, 2004.
- On February 12, 2004 Orascom Telecom Holding signed a corporate guarantee, whereby it became jointly and severally
obliged together with Telecel International (wholly owned subsidiary) to reimburse the down payment received for
selling its share in Loteny Telecommunication capital amounting to 9.5 million in case Telecel fails to finalize the
Sale/Purchase Agreement signed with Atlantic Telecommunications.
- The Company’s proportionate share in the Egyptian Company for Mobile Services contingent liabilities is
LE 3 941 761 which represents the uncovered portion of the letters of guarantee.
- Egyptian Satellite Company contingent liabilities amounted to LE 344 112 represent uncovered portion of letters of
guarantee.
- In Touch Company contingent liabilities amounted LE 39 600 represent the uncovered portion of the letters of guarantee.
- Ring Egypt for distribution and subsidiaries contingent liabilities amounts to :
• Letters of guarantee to other amounted to US$ 2 500 000 equivalent to LE 15 375 000 against blocked deposits
with the same amount (Egypt).
• Letters of guarantee to others amounted to JD 100 000 Jordanian Dinar equivalent to LE 868 644 (Jordan).
• Letters of credit with an amount of JD 1 166 076 Jordanian Dinar equivalent to LE 10 129 919 (Jordan).
- International Wireless Communications Pakistan Ltd (IWCPL) subsidiary has certain cases are pending in different
courts of law. The management of the company is confident that these cases will be decided in favor of the company
and no provisions have been made in the account.
- Pharaoh Communication Networks Company has a legal dispute with United Bank of Egypt – Cairo branch with respect
to computing the interest rate over foreign currency financing a matter that led to file litigation by the company
against the bank in October 2003. Accordingly the company has not received any statement of account from the bank
starting from that date, based on that the company couldn’t record any expenses and interests as well as the foreign
currency reevaluation related to that account, supported by the legal consuls opinion the company’s management is
in opinion, that the company legal status is strong therefore the company didn’t establish any provisions.
- On January 21, 2003 the Egyptian Company for Mobile Services received a claim from Telecom Egypt stating that it has
retroactively changed the method of calculating international call minutes resulting in a charge for international calls
due for them amounting to approximately LE 64 million for the years from 1998 to 2002 inclusive. The differences resulting
from the change in the calculation for the period from January 1, 2003 to August 31, 2003 amounted to LE 14.2 million
according to the last claims received.
The Egyptian Company for Mobile Services management has responded by a letter to Telecom Egypt rejecting this method
of treatment based on the following grounds:
1- The interconnect agreement signed between the two companies clearly states the method of calculating the minutes
in which Telecom Egypt has already issued its invoices for these periods in accordance with the signed contract.
2- The management of the Egyptian Company for Mobile Services has obtained a legal opinion from its legal advisor
confirming that in accordance with the signed contract it is applying the calculation correctly and that Telecom Egypt
does not have the right to change the method of calculation.
Based on the above, management is of the opinion that the above claim is without any basis and does not represent any
liability on the Egyptian Company for Mobile Services. The dispute is still outstanding.
- The sales tax authority has sent a letter to the Egyptian Company for Mobile Services dated May 10, 2003 notifying the
Company that the interconnection charges between the company’s network and the other licensed telecommunication
networks in Egypt is subject to sales tax based on the assumption that this charge is work performed on behalf of others
(Rental and use of equipment). The tax on this revenue, as included in the letter, amounted to approximately LE 115 million
for the period from inception to December 31, 2001 excluding additional sales tax. The tax on this revenue for 2002 is
LE 44.8 million excluding additional sales tax. Based on the same basis of calculation for 2003, the sales tax due would
amount to LE 44.5 million.
The Egyptian Company for Mobile Services advisors believe that subjecting the interconnect charge to tax is not legal, as
the total cost of the call has already been taxed and that the interconnect charges are just a portion of the call.
Based on the above, management is of the opinion that the above claim does not represent any real liability on the Egyptian
Company for Mobile Services. The Egyptian Company for Mobile Services has filed a legal case on December 6,2003 objecting
the changes that Sales Tax Authority made.
20- Capital commitments20- Capital commitments
- The Company’s proportionate share in the Egyptian Company for Mobile Services capital expenditure commitments is
LE 130 483 883 which represents contracts to purchase plants and equipments were not yet completed as of the consolidated
financial statement date.
- InTouch Company capital expenditures commitments amounted to LE 4 613 000 which represents the unpaid capital of
the company’s long-term investment.
F I N A N C I A L R E V I E WP A G E 9 7A N N U A L R E P O R T 2 0 0 3
P A G E 9 6
- Telecel has entered into a contract to purchase plants and equipments for 24.4 million equivalent to LE 188.75 million
was not yet completed as of the consolidated financial statements date.
- International Wireless Communication Pakistan Ltd (IWCPL) has commitments in respect of capital and other expenditure
amounted to US$ 28 821 338 equivalent to LE 177 251 229.
- Orascom Telecom Algeria capital expenditure commitment amounted to approximately D.A 21 billion, which equivalent to
LE 1 832.5 million represented in fixed assets contracted and ordered but not received.
- Orascom Iraq Holding capital commitments amounted to US$ 13 920 000 which represent the unpaid capital of Orascom
Telecom Iraq Corporation (subsidiary).
- A memorandum of understanding was signed between the Egyptian Company for Mobile Services, Vodafone Egypt (the
operators) and Telecom Egypt. The Egyptian Company for Mobile Services and Vodafone Egypt are obligated to pay
LE 1 240 million each to the National Telecommunication Regulatory Authority on installments, the maturity dates have
not yet been determined.
The operators shall be able to use 7.5 MHZ from the 1800 MHZ spectrum from Telecom Egypt against the irrevocable
cancellation of Telecom Egypt license to use this spectrum.
Additionally, the two operators and Telecom Egypt agreed to amend some of the commercial agreement, between them with
the aim to develop the telecommunication Mobile sector in Egypt.
21- Employee stock option plan21- Employee stock option plan
- The Company has approved a plan to grant some of its employees’ stock options in the Company’s shares through Orascom
Telecom Esop Ltd., (a wholly owned subsidiary). According to this plan the employees will have the right to receive the
appreciation between the stock option price and the exercise price of the shares when the option vests. Orascom Telecom
Holding shares held by Orascom Telecom Esop Ltd., are presented as treasury stock in the consolidated financial statements.
- During 2001,Orascom Telecom Holding provided funds amounting to US$ 3 752 888 to purchase 357,418 GDRs.
On June 10, 2003 the board of directors approved the allotment of 825,000 shares to senior management at a price 20%
less than the average share price during 30 days prior to the allotment date.
22- Tax status of the parent22- Tax status of the parent
22-1 Corporate tax and movable capital taxYears from 1997 till 1999:
The Company submitted its tax returns for these years, and received form No. 18 taxes in the name of Orascom Technology
concerning tax assessment for these years. However, the Company’s management filed an appeal, against the assessment
included in this form, on 16/1/2003.
Years from 2000 till 2002:
The Company submitted its returns for these years, and the Company’s records for these years have not yet been inspected
by the tax authority.
- As per the tax return, there is no corporate tax due on the current year net income. Management has applied, when
preparing the tax return, article # 111 of the Income Tax Law No. 157 for 1981. According to the aforementioned article
net profit derived from activities that are being undertaken abroad by independed entity is not subject to tax in Egypt.
22-2 Stamp duty & state resources development dutyStamp duty and state resources development duty were settled up to the financial year ended December 31, 2001.
22-3 Salary taxThe salary tax was settled up to the financial year ended December 31, 1999. With respect to 2000 and 2001, the tax authority
has carried out an inspection and an assessment for LE 2 946 694 was received by the Company. However, management
filed an appeal against this assessment and an internal committee at the tax authority shall consider the matter.
23- Sale of subsidiaries23- Sale of subsidiaries
On December 31, 2002, pursuant to the agreements and plans of de-Merger (the de-Merger Agreements) dated July 2002
and October 2002, the company completed the major legal and contractual requirements to finalize the sale agreements for:
A) The South & East African Subsidiaries (CAR, Burundi, Uganda, Zambia and PTY).
Under the terms of this agreement the Company acquired 7.5 million GDR’s of Orascom Telecom Holding’s outstanding
shares for US$ 1 per GDR. Also the company received the remaining 26.5% of it’s own capital for a value of approximately
US$ 24 million along with receiving a debt forgiveness of a US$ 27 million loan due to the buyer. From its part the
company paid the buyer US$ 9.5 million in cash along with giving a loan forgiveness on approximately US$ 77 million
representing the balances due on the sold subsidiaries.
In compliance with (EAS 17), the results of the disposed subsidiaries are included in the consolidated income statement
until December 31, 2002 (the date of disposal).
B) West Africa Deal: The Central and West African Subsidiaries (Benin, Gabon, Burkina- Faso, Togo).
The company has completed the sale of Benin , Gabon in 2002 and Niger, Burkina – Faso and Togo in 2003.
24- Gains from sale & deconsolidation of investment24- Gains from sale & deconsolidation of investment
As a result of severe hyper inflation that is effecting the Zimbabwe economy accompanied by the restricted foreign currency
laws which impairs Telecel Zimbabwe ability to transfer funds, Telecel management has elected to apply the accounting treatment
stated in EAS 17, paragraph (11-b) which is equivalent to IAS 27, paragraph (13-b) and therefore deconsolidated Telecel Zimbabwe.
F I N A N C I A L R E V I E WP A G E 9 9A N N U A L R E P O R T 2 0 0 3
P A G E 9 8
The standard allowed Telecel management to exclude Zimbabwe financials from the consolidated financial statements and
account for it using the equity method. The deconsolidation of Telecel Zimbabwe has resulted in a net gain of US$ 20.4
million that is reported in gain from sale and deconsolidation of investment in the consolidated income statement for the
period ended September 30, 2003 it should be noted that Telecel Zimbabwe losses which are recorded in the comparative
figures for the year ended December 31, 2002 amounted to US$ 11.6 million.
25- Subsequent events25- Subsequent events
- On February 26, 2004, OrasInvest Holding Inc. reversed the selling agreement with Cortex Service Ltd dated July 10, 2003,
which state the selling of 29,250 shares from Mobiserve, 47,500 share from First service and 47,500 share from Egyptian
company for Collection (Collect).
- On January 30, 2004, Telecel signed a term sheet “ Protocol d’accord “ with Atlantic Telecom to sell its equity stake in
Loteny Telecom (subsidiary to Telecel in Ivory Coast) for US$ 45 million . Telecel is currently in process to obtain the legal
and formal consents to finalize the deal. Once Telecel transfer the shares title to the buyer, Loteny Telecom will be
deconsolidated from Telecel consolidated financial statements.
26- Financial instruments & related risk management26- Financial instruments & related risk management
The financial instruments are represented in cash on hand & at banks, accounts receivables, debit balances, investments,
due to/from subsidiary and affiliated companies, loans, bank overdrafts and suppliers. The carrying value of these financial
instruments represent a reasonable estimate to their fair values with exception of loans whose present value represent a
reasonable estimate of their fair values.
27- Management of financial risk27- Management of financial risk
27-1 Exchange rate riskAs some transactions are executed in foreign currencies, the company may be subject to risk of exchange rate fluctuations.
28- Comparative figures28- Comparative figures
Some of the comparative figures have been reclassified to be consistent with existing classification of the consolidated
financial statements.
w w w . o r a s c o m t e l e c o m . c o m