2007 Registration Document

Transcription

1 2007 Registration Document This Registration Document was filed on April 28, 2008, pursuant to Article , of the Financial Market Authority s Regulation. It may not be used in support of a financial transaction unless it is accompanied by a transaction note endorsed by the Financial Market Authority.

2 TABLE OF CONTENTS

3 HIGHLIGHTS 4 KEY FIGURES 6 1 PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE AUDIT OF THE FINANCIAL STATEMENET PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT CERTIFICATION OF THE REGISTRATION DOCUMENT PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS INFORMATION POLICY 11 2 INFORMATION RELATING TO THE TRANSACTION 12 3 GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL GENERAL INFORMATION REGARDING THE COMPANY GENERAL INFORMATION RELATIING TO THE COMPANY S SHARE CAPITAL TRADING OF THE COMPANY S SHARES DIVIDENDS AND DIVIDEND POLICY BREAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS ASSET PLEDGES 51 4 INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES HISTORY GENERAL PRESENTATION MAROC TELECOM S BUSINESS STRATEGY BUSINESS ACTIVITIES IN MOROCCO SUBSIDIARIES BUSINESS ACTIVITIES RESEARCH AND DEVELOPMENT SEASONALITY REGULATORY FRAMEWORK AND POSSIBLE DEPENDENCIES HUMAN RESOURCES REAL PROPERTY INTELLECTUAL PROPERTY INSURANCE LEGAL AND ARBITRATION PROCEEDINGS RISK FACTORS FINANCIAL REPORT CONSOLIDATED FINANCIAL DATA FOR YEARS ENDED DECEMBER 31,2007, 2006 AND GENERAL OVERVIEW CONSOLIDATED INCOME STATEMENT CONSOLIDATED FINANCIAL STATEMENTS INDIVIDUAL FINANCIAL STATEMENTS MANAGEMENT REPORT CORPORATE GOVERNANCE MANAGEMENT AND SUPERVISORY BOARDS CORPORATE GOVERNANCE INTERESTS OF THE CORPORATE EXECUTIVES RELATED PARTY TRANSACTIONS RECENT DEVELOPMENTS AND OUTLOOK RECENT DEVELOPMENTS MARKET OUTLOOK OBJECTIVES 288 TABLE OF CONCORDANCE ANNUEL INFORMATION DOCUMENT 292 STATUTORY AUDITORS FEES 293 ORDINARY GENERAL MEETING, APRIL 17, GLOSSARY 296

4 HIGHLIGHTS January 2007 The ANRT approved Maroc Telecom s technical and pricing offers for interconnection tariffs to fixedline networks for February 2007 Maroc Telecom acquired 51% of Gabon Telecom, via an international invitation to tender. The Group launched a Blackberry offer. March 2007 Maroc Telecom launched Mobisud, a new prepaid mobile offer at very attractive tariffs (MAD2 including tax/mn) for calls to all national fixed-line and mobile operators as well as Mobisud France mobiles. Maroc Telecom cut prices at telestores and strengthened its partnerships with them. It also cut tariffs for calls made from public phones and lowered the price of national communications to all Maroc Telecom Fixed-lines and other operators for calls from fixed-lines for all categories of customers. Launch of MobileZone, the multi-media WAP portal, which offers prepaid and postpaid customers a variety of information and entertainment content intended for 2G and 3G mobiles. April 2007 Maroc Telecom started to lay the Atlas Offshore submarine cable which will connect Asilah in Morocco to Marseilles in France. The ANRT approved the technical and pricing offers for the termination of interconnection traffic on Maroc Telecom and Medi Telecom mobile networks. May 2007 Mobisud Belgium, a new mobile operator and a wholly-owned subsidiary of Maroc Telecom launched its offers in the Belgian market on May 2, Mobisud uses Proximus radio network. Proximus is a subsidiary of Belgacom. June 2007 The number portability is effective as of June 1, Maroc Telecom launched mobile broadband Internet with the unlimited offer Mobile, based on 3G technology. July 2007 The Government of Morocco sold a 4% stake in Maroc Telecom on the Casablanca stock exchange, on July 2, In the framework of the universal service, Maroc Telecom launched the CDMA Internet offer in the equipped rural areas. The TV via ADSL offer was enhanced further with the introduction of several national and international radios free of charge available for all TV via ADSL customers. 4 Maroc Telecom 2007 Registration Document

5 HIGHLIGHTS August 2007 As from August 1, 2007, Maroc Telecom cut prices significantly on international roaming for all mobile calls towards or coming from Morocco. As from on August 1, 2007, Maroc Telecom decreases appreciably the prices of the communications on the international roaming for all the mobile calls towards or coming from Morocco. September 2007 On September 24, 2007, Maroc Telecom launched A-Ghany, the first service enabling customers to personalize their ring back tone. A-Ghany is available to all its mobile customers. October 2007 Implementation of a share price stabilization contract in Casablanca and a liquidity contract in Paris. Maroc Telecom is the first company to join the national anti-smoking program "Smoke free Colleges, High Schools and Companies". November 2007 Maroc Telecom launched several new services: instant messaging service on mobiles (IAM Messenger), management of contacts on SIM/USIM cards (My address book), international MMS service, international rate plane (1h, 3h and 5h to all international Fixed-line numbers). Modification of international tariffs from Fixed-lines with fewer tariff zones and a price cut for calls from Fixed-line to international Fixed-line and Mobile numbers. Further price cuts for 128 Kbp/s to 2 Mbp/s ADSL, and former ADSL clients bandwidth is automatically doubled. Canal+ Essentiel was included in the Maroc Telecom TV offer. This new channel produced and broadcasted by the Canal+ group especially for Maghreb countries, is marketed as an option with all Maroc Telecom TV bouquets. December 2007 MobileZone WAP portal accessible on all 2G and 3G compatible handsets. January 2008 Maroc Telecom launched video-telephony in the main cities of the Kingdom for both postpaid and prepaid customers The monthly telephone subscription for residential customers and telestores was reviewed. February 2008 Launch of unlimited numbers for international calls. Maroc Telecom launched two new unlimited mobile broadband Internet offers Mobile 1.8 and Mobile 512. New price reductions for calls from fixed-lines to other international fixed-line and mobile numbers. Phony International was launched: unlimited rate plan for calls to international fixed-line numbers. This offer is available for Phony classiques and Phony Liberté customers (with an upper limit of 30 hours per month). Maroc Telecom Registration Document 5

6 KEY FIGURES Number of employees 12,360 11, ,154 in thousands Mobile customers 8,702 11,806 15,342 Morocco 8,237 10,707 13,327 Mauritania Burkina Faso Gabon France and Belgium Number of fixed-lines 1,381 1,425 1,471 Morocco 1,341 1,266 1,289 Mauritania Burkina Faso Gabon Internet customers Morocco Mauritania Burkina Faso Gabon in IFRS (in million of Moroccan dirhams) Consolidated revenues 20, ,615 27,532 Mobile* (gross) 13, ,894 19,296 Fixed-lines and Internet* (gross) 9, ,312 11,090 Consolidated earnings from operations before amortization 11, ,152 15,659 Mobile* 7, 229 8,763 11,399 Fixed-lines and Internet* 4, 435 4,389 4,260 Consolidated earnings from operations 8, ,043 12,234 Mobile* 5, 815 7,228 9,557 Fixed-lines and Internet* 2, 863 2,815 2,677 Consolidated net income (group share) 5, 809 6,739 8,033 Capital expenditure 3, 210 3,978 5,467 Mobile 1,771 2,445 3,279 Fixed-lines and Internet 1,439 1,533 2,188 6 Maroc Telecom 2007 Registration Document

7 KEY FIGURES Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 in thousands Fixed-line 1,335 1,349 1,345 1,341 1,465 1,442 1,402 1,424 1,411 1,445 1,451 1,471 Maroc Telecom 1,335 1,349 1,345 1,341 1,336 1,310 1,267 1,266 1,271 1,280 1,279 1,289 Mauritel Onatel Gabon Telecom Internet access Maroc Telecom Mauritel Onatel Gabon Telecom Mobile customers 6,709 7,188 8,041 8,237 9,067 9,442 11,054 11,320 12,491 13,247 14,516 15,342 Maroc Telecom 6,709 7,188 8,041 8,237 8,576 8,924 10,496 10,707 11,372 11,713 12,838 13,327 Mauritel Onatel Gabon Telecom Mobisud in IFRS (in million of Moroccan dirhams) Consolidated revenues 4,712 5,039 5,527 5,264 5,276 5,612 6,195 5,532 6,113 6,893 7,320 7,205 Mobile (gross) 2,902 3,211 3,616 3,315 3,342 3,736 4,221 3,595 4,162 4,726 5,259 5,148 Maroc Telecom 2,772 3,071 3,466 3,162 3,181 3,565 4,047 3,413 3,795 4,105 4,722 4,474 Mauritel Onatel Gabon Telecom Mobisud Fixed-line and Internet (gross) 2,387 2,427 2,532 2,546 2,563 2,514 2,634 2,601 2,618 2,913 2,769 2,789 Maroc Telecom 2,306 2,345 2,450 2,458 2,483 2,435 2,561 2,524 2,326 2,401 2,377 2,347 Mauritel Onatel Gabon Telecom Elimination of inter-segment transactions Consolidated earnings from operations (577) (598) (621) (597) (629) (638) (660) (664) (667) (746) (710) (731) 2,073 1,844 2,537 2,224 2,326 2,165 3,107 2,446 2,844 3,155 3,510 2,724 Mobile ,498 1,731 2,233 1,767 2,162 2,426 2,777 2,191 Fixed-line and Internet Maroc Telecom Registration Document 7

8 PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE AUDIT OF THE FINANCIAL STATEMENTS

9 1.1 PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT CERTIFICATION OF THE REGISTRATION DOCUMENT PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS STATUTORY AUDITORS INFORMATION POLICY PERSON RESPONSIBLE FOR INFORMATION FINANCIAL COMMUNICATION CALENDAR SHAREHOLDERS INFORMATION 11

10 1 In this Registration Document, "Maroc Telecom" or the Company refers to the company Itissalat Al-Maghrib, and the group refers to the group constituted by the Company and all direct and indirect subsidiaries, as described in Chapter PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT Mr. Abdeslam Ahizoune. Chairman of the Management Board 1.2 CERTIFICATION OF THE REGISTRATION DOCUMENT Having taken all reasonable care to ensure that such is the case, I certify that the information contained in this registration document accurately reflects, to the best of my knowledge, the facts and contains no omission that would be likely to affect its meaning. I attest, to my knowledge, that the accounts are established in accordance with the applicable accounting standards and give a faithful image of the financial statement and results of the company and all of the consolidated companies, and the management report (appearing in chapters 4 and 5 of this Registration Document) gives a faithful presentation of the evolution of the businesses, results and financial statements of the Company and all of the consolidated companies as well as a description of the principal risks and uncertainties with which they are confronted. I have obtained a letter from the statutory auditors Mr. Abdelaziz Almechatt and KPMG Maroc represented by Mr. Fouad Lahgazi, confirming that they have completed their work and indicating that they have verified the financial situation and the financial statements included in this Registration Document and that they have reviewed the document as a whole. Historical financial information presented in the Registration Document was the subject of Statutory Auditors reports: The statutory auditors report relating to the consolidated accounts for the fiscal year ended December 31, 2007, on page 137 of the present Registration Document, contains an observation on the estimated character of segment information (see Notes 1 ( 2.5) and 28). The statutory auditors report on the individual financial statements of the fiscal year ended December 31, 2007, on page 234 of this Registration Document, does not contain any observation. The statutory auditors report on the consolidated and individual financial statements of the fiscal years ended December 31, 2006 and 2005, appears on pages 175 and 198 of the Registration Document filed with the French Autorité des Marchés Financiers (AMF) on May 9, 2007 and on pages 167 and 189 of the Registration Document filed with the French Securities Regulator (AMF) on April 11, 2006, contains observations. The Statutory auditors drew up a report on the forward-looking financial information presented in chapter 7, section 7.3, of this Registration Document, which appears on page 289 of this Registration Document. Mr. Abdeslam Ahizoune Chairman of the Management Board 1.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS KPMG Maroc, represented by Mr. Fouad Lahgazi 11, avenue Bir Kacem, Souissi Rabat, Maroc First appointed in April 12, 2007 for a three year term by the general Shareholders Meeting. This mandate will expire at the end of the general Shareholders Meeting to approve the financial statements for the fiscal year ended December 31, Mr. Abdelaziz Almechatt 83 avenue Hassan II Casablanca, Maroc First appointed in 1998 by the bylaws, the current mandate, of a three year term, was renewed by the Shareholders Meeting held April 8, 2005 and will expire at the end of the Shareholders Meeting held to approve the financial statements for the fiscal year ended December 31, The renewal of his term of office was on the agenda for the Shareholders Meeting held on April 17, Maroc Telecom 2007 Registration Document

11 1. PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE AUDIT OF THE FINANCIAL STATEMENTS Information policy 1.4 INFORMATION POLICY Person responsible for information Mr. Arnaud Castille Chief Financial Officer Maroc Telecom Avenue Annakhil - Hay Riad Rabat, Maroc Telephone : (0) [email protected] Financial communications calendar All the financial information issued by Maroc Telecom (press releases, presentations, annual reports) is available on its website The following is an indicative calendar of Maroc Telecom s financial communications for 2008: Date* Event Format Monday January 21, 2008 Q4-07 and full year 2007 revenues Press releases Friday February 22, 2008 Q4-07 and full year 2007 results Press releases Press conference Analyst and shareholders conference Thursday April 17, 2008 Shareholders Meeting Friday May 9, 2008 Q revenues and results Press releases Thuesday July 22, 2008 Q2 and H revenues Press releases Friday August 1, 2008 Q2 and H results Press releases Press conference Analyst and shareholders conference Wednesday November 5, 2008 * Before market Q revenues and results Press releases Shareholders information The social, accounting and legal documents, whose communication is governed by the Moroccan and French laws and the bylaws in favor of the shareholders and third parties can be consulted at the Head Office of the Company. Registration Documents, updates of Registration Documents filed with the French Securities Regulator (AMF), presentations for investors and financial analysis made by the Company, as well as the various press releases are available on Maroc Telecom s website: In accordance with the provisions of the Transparency Directive, which has been applicable since January 20, 2007, all regulated information is available on Maroc Telecom s website: Maroc Telecom Registration Document 11

12 INFORMATION RELATING TO THE TRANSACTION

13 NOT APPLICABLE

14 GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL

15 3.1 GENERAL INFORMATION CORPORATE NAME HEAD OFFICE LEGAL FORM LEGISLATION COMMITMENTS OF THE COMPANY TO THE MARKET AUTHORITIES IN FRANCE REGISTRATION CORPORATE TERM CORPORATE PURPOSE LEGAL DOCUMENTS AVAILABLE FOR VIEWING FISCAL YEAR ALLOCATION OF PROFITS GENERAL SHAREHOLDERS MEETINGS MANAGEMENT OF THE COMPANY STATUTORY AUDITORS TRADING OF SHARES STATUTORY THRESHOLDS PUBLIC BIDS GENERAL INFORMATION RELATING TO THE COMPANY S SHARE CAPITAL SHARE CAPITAL FORM OF SHARES RIGHTS AND DUTIES ATTACHED TO SHARES ACQUISITION BY THE COMPANY OF ITS OWN SHARES CHANGES IN THE COMPANY S SHARE SINCE INCORPORATION TRADING OF THE COMPANY S SHARES STOCK EXCHANGE LISTINGS MAROC TELECOM SHARE PRICE DIVIDENDS AND DIVIDEND POLICY DIVIDEND PAID OUT OVER THE PAST FIVE FISCAL YEARS DIVIDEND POLICY TAX TREATMENT RELATING TO DIVIDENDS BRAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS OWNERSHIP OF SHARE CAPITAL AND VOTING RIGHTS IN THE COMPANY AUTHORIZED SHARE CAPITAL CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY OVER LAST THREE FISCAL YEARS EMPLOYEE STOCK OWNERSHIP SHAREHOLDERS AGREEMENT ASSET PLEDGES 51

16 3 3.1 GENERAL INFORMATION Corporate name The Company s corporate name is: Itissalat Al-Maghrib. It also operates under the trade names IAM and Maroc Telecom Head Office The Company s Head Office is located on Avenue Annakhil (Hay Riad), Rabat, Morocco. Telephone: Legal form Maroc Telecom is a Moroccan corporation with a Management board and Supervisory board, governed by Chapter II of Act relating to corporations Legislation The Company is governed by Moroccan law, including in particular Act relating to corporations, and by its Articles of Association. It is not subjecte to French law governing commercial companies. As the Company is listed on a regulated market in Morocco, the provisions of various Moroccan rules, regulations, orders, decrees and circulars will be applicable, including in particular: The Decree , dated September 21, 1993, relating to the Securities Exchange, as amended and extended by Acts 34-96, and 45-06; The General Regulation of the Stock Exchange approved by Order of the Minister of the Economy and Finance, dated July 27, 1998, amended and completed by Order of the Minister of the Economy, Finance, Privatization and Tourism dated October 30, 2001, by Order of the Minister of Finance and Privatization dated November 22, 2004 and by order of the Minister of Finance and Privatization dated June 13, 2007; The Decree , dated September 21, 1993, relating to the Ethics Council for Securities (CDVM) and the information required of legal entities issuing securities to the public, as amended and extended by Act 23-01; The Decree relating to the creation of the central depositary and establishment of a general accounting system for certain securities as amended and extended by Act 43-02; The General Regulation of the central depositary approved by Order of the Minister of the Economy and Finance, dated April 16, 1998, and amended by Order of the Minister of the Economy, Finance, Privatization and Tourism, dated October 30, 2001; The Decree relating to the Postal Service and Telecommunications, dated August 7, 1997, as amended by Act 79 99, dated June 22, 2001, and by Act 55-01, dated November 4, 2004; The Decree , dated April 17, 2007, enacting Act 46-06, amended and completed the Act relating to public offers on the Moroccan stock market; The circular of the Ethics Council for Securities (CDVM), dated May 23, 2003, relating to required information for listed companies at the time of acquiring its own shares in view of stabilizing the share price ; The Circular of the Ethics Council for Securities (CDVM), dated June 8, 2004, relating to the thresholds for ownership of shares or voting rights of listed companies; The Circular of the Ethics Council for Securities (CDVM), dated March 18, 2005, relating to the ethical framework for information within listed companies; The Circular of the Ethics Council for Securities (CDVM), dated October 3, 2005, relating to publication of important information by legal entities issuing securities to the public; and The Circular of the Ethics Council for Securities (CDVM), dated October 13, 2005, relating to publication and distribution of financial information by legal entities issuing securities to the public. 16 Maroc Telecom 2007 Registration Document

17 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company Commitments of the Company to the market authorities in France As it is also listed on the primary market of Euronext Paris, some provisions of French stock market law are applicable to the Company. Indeed, under the current legislation, rules concerning foreign issuers provided by the AMF General Regulation are applicable to the Company. In addition, organization and general rules of Euronext Paris are applicable to the Company. AMF rules may also apply to public bids for the shares of the Company, except provisions concerning Compulsory standing offer procedure, the mandatory submission of a public tender offer and compulsory buyout. Since the European Transparency Directive has been transposed, it is applicable as from March 30, 2008, and the rules relating to the crossing of thresholds are now applicable as regards the Company. Other rules of French stock exchange law do not apply to the Company. This is the case of threshold rules. With regards to French law, a foreign issuer has to take the necessary steps to allow the shareholders to manage their investments, and exercise their rights. Since Company securities are listed in the primary market of Euronext Paris, and pursuant to the AMF General Regulation and in compliance with provisions of the European Transparency Directive transposed by the Monetary and Financial Code and applicable since January 20, 2007, the Company is required to: inform the AMF of any changes in its share capital compared with previously disclosed information, particularly any declaration for the crossing of thresholds which Maroc Telecom would have received; publish interim financial reports including condensed financial statements, an interim management report, the Statutory Auditors reports on the limited review of the above mentioned financial statements and a statement from the persons responsible for the half-yearly financial report within two months of the end of the first half of the Company s fiscal year; publish an annual financial report including the accounts, a management report, the Statutory Auditors report and a statement from the persons responsible for the report within four months of the end of the fiscal year; publish quarterly statements including net revenues by business segment for the past quarter, a general description of the Company s results and financial position and that of companies it controls, and the significant transactions and events which occurred during the quarter and their impact on the Company s financial position, within 45 days from the end of the first and the third quarters; publish a press release specifying the fees paid to the Statutory Auditors, to be presented on the Maroc Telecom website within four months of the end of the fiscal year ; publish monthly statements on the total number of voting rights and shares comprising the Company s share capital; publish, as early as possible, any information on new facts that may significantly affect the share price and inform the AMF thereof; inform the French public about changes in the business of the Company or its management; make the necessary provisions to allow the persons who hold their securities through Euroclear France to exercise their rights, particularly by informing them about any annual ordinary shareholders meeting and by allowing them to exercise their voting rights; inform the persons who hold their securities through Euroclear France about dividend payments, new share issues, allocation, subscription, renunciation and conversion; update names and details of the person in charge of the issuer information in France; provide the AMF with any information it may require in accordance with its mission and the laws and regulations applicable to the Company; comply with the AMF General Regulation relating to the obligation to inform the public; Maroc Telecom Registration Document 17

18 3 comply with the provisions of the AMF General Regulation on disclosures; make all regulated information available on Maroc Telecom s website for at least five years; and inform the AMF and Euronext Paris about any draft amendment of its bylaws. The Company will have to inform the AMF about any general shareholders meeting resolution authorizing the Company to trade in its own shares and send the AMF periodic reports of purchases or sales of shares made by the Company by virtue of the authorization. The Company must provide the same information simultaneously in France and in foreign countries, particularly in Morocco. Any publication and information for the public referred to in this chapter will be published in a notice or press release in a national financial daily newspaper distributed in France. The information intended for the public in France is written in French. The Company establishes, like French issuers, a Registration Document, supplying legal and financial information relating to the issuer (shareholding structure, activities, management, financial information) however without containing any information relating to an issue of specific shares. In practice, the annual report of the Company can be used as the Registration Document, on condition that it contains all the required information. The Registration Document will then have to be filed with the AMF and distributed to the public once registered. The annual and interim reports in French will be available for the public in France at the office of the financial intermediary in charge of financial service in France (currently: CACEIS). In addition, the Company intends to lead an active policy towards all shareholders, including those holding their shares through Euroclear France, to allow them to participate in any public offer which would, if applicable, be made on the international markets. However, because of the constraints related to operations on international markets and in order to be able to benefit from the best existing conditions on these markets, in the interest of the Company and of all its shareholders, the Company cannot guarantee to the persons holding their shares through Euroclear France that such a participation in all operations which would, if applicable, be made Registration The Company was founded in Rabat by a deed dated February 3, The Company was registered with the Rabat Registry of Commerce on February 10, 1998, under number Corporate term The term of the Company is 99 years from the date of its registration with the Registry of Commerce, subject to early dissolution or extension as provided for by law or the Articles of Association Corporate purpose The Company s corporate purpose, in accordance with its contract specifications as an operator and pursuant to the statutory and regulatory rules in force, is: to provide universal service, in the manner provided for under the statutory and regulatory rules in force, and; to establish and/or operate telecommunication infrastructure, networks and services of any kind. 18 Maroc Telecom 2007 Registration Document

19 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company For the purposes of the activities so defined, it may: acquire, own and operate any real or personal property that is necessary or appropriate for its operations, particularly those whose transfer or availability in its favor is provided for by the applicable law; market and, on an accessory basis, assemble and manufacture, any telecommunications devices, products and items; create, acquire, license and make use of any patents, process or trade names; take part in any financial syndicate, concern or company, existing or currently being created, having a purpose similar or related to its own, by any lawful means; and more generally, carry out any transactions of a commercial, financial or, if necessary, industrial nature relating to real or personal property directly related to any part of the Company s corporate purpose and which could advance its growth and development Legal documents available for viewing The corporate, accounting and legal documents required to be disclosed by law or the bylaws to the shareholders and third parties may be viewed at the Company s Head Office on avenue Annakhil (Hay Riad), Rabat, Morocco Fiscal year The Company s fiscal year begins on January 1 and ends on December Allocation of profits At the end of each fiscal year, the Management Board draws up a statement of the various corporate assets and liabilities as at that date and prepares the annual financial statements and the annual report to be submitted to the shareholders meeting, in accordance with the applicable law. The net profit generated by the Company, after deduction of any earlier net loss, shall be subject to a withholding of 5% to fund the statutory reserve; such withholding shall no longer be required once the amount of the statutory reserve exceeds one tenth of the share capital. The distributable profit shall consist of the net profit for the fiscal year, after funding the statutory reserve and allocation of earlier net profit or loss carried forward. Against such profit, the shareholders meeting may charge such amounts as it shall see fit in order to fund any optional, ordinary or exceptional reserve funds, or to carry forward, to the extent of a maximum aggregate amount of half the distributable profit, subject to an exception granted by a 75 percent majority of the members of the Supervisory Board present or represented. The balance shall be paid out to the shareholders by way of a dividend, the aggregate amount of which shall not be less than half the distributable profit, subject to an exception granted by a 75 percent majority of the members of the Supervisory Board present or represented. Within the limits set forth by law, the shareholders meeting may resolve, on an exceptional basis, to pay out amounts charged against the optional reserves at its disposal (see also section 3.4 Dividends and dividend policy ). Dividend payments The terms of payment of dividends are voted by the ordinary shareholders meeting, or failing such, by the Management Board. Such payment shall be made within nine months after the end of the fiscal year, subject to extension of that period by an order of the President of the Court, acting in summary proceedings upon a petition from the Supervisory Board. Maroc Telecom Registration Document 19

20 3 If the Company holds its own stock, the related dividend entitlement shall be cancelled. Dividends not collected within five years after the date of payment thereof shall be forfeited to the Company. Amounts not collected and not forfeited shall constitute a claim of the owners against the Company, not bearing interest, unless they are converted into loans on mutually agreed terms. If the shares are subject to a life interest, the dividends shall be payable to the life tenant. The proceeds of the distribution of reserves, other than the carry-forward, shall, however, be allocated to the bare owner General shareholders meetings Shareholders meetings The shareholders collective resolutions shall be made at meetings, which shall be ordinary or extraordinary according to the nature of the decisions that they are called upon to make. A duly convened general meeting shall be deemed to represent all the shareholders; its decisions shall be binding on all, including those who are absent, not sui juris, dissenting or deprived of voting rights. Calling of meetings Meetings shall be called by the Supervisory Board. An ordinary shareholders meeting may also be called: by the Statutory Auditor or Auditors, who may do so only after failure by the Supervisory Board to call a meeting and the Supervisory Board fails to do so when requested by the auditor (s); by an agent appointed by a Court order, upon the application of any interested party in an emergency or of one or more shareholders holding at least one tenth of the share capital; or by the liquidator or liquidators in the event of the Company s dissolution, during the liquidation period. Shareholders meetings shall be called and carried out in the manner provided for by law. The Company shall, at least 30 days before the shareholders meeting is convened, publish in a newspaper chosen among those contained on the list determined by the Minister of Finance and in the Official Journal, a notice containing the information required by law and the draft resolutions to be submitted to the meeting by the Management Board. The Company shall be required to publish, in a newspaper authorized to carry legal advertisements and in the Official Journal, at the same time as the notice of the annual ordinary shareholders meeting, the summary financial statements relating to the previous fiscal year, drawn up in accordance with applicable law (which shall include the balance sheet, statement of income, statement of cash flows and statement of changes in financial position), and the report of the Statutory Auditor(s) on the financial statements. Any amendment to such documents shall be published by the Company in a newspaper authorized to carry legal advertisements within 20 days after the annual ordinary shareholders meeting. Meetings shall be held at the head office or at any other location specified in the notice. Agenda The agenda of a shareholders meeting shall be determined by the author of the notice. One or several shareholders holding at least 2% of the share capital may, however, call for one or several draft resolutions to be tabled on the agenda. Regardless of the number of shares held, all shareholders shall be entitled, upon providing evidence of identity, to take part in shareholders meetings subject: 20 Maroc Telecom 2007 Registration Document

21 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company for holders of registered shares, to an entry by name in the Company s records; for holders of bearer shares, to the deposit, at the locations mentioned in the notice, of the bearer shares or of a certificate of deposit issued by the establishment having custody of such shares; and if applicable, to provide the Company, in accordance with applicable law, with proof of his or her identification. Such formalities shall be completed no later than five days before the date of the meeting, subject to any shorter period provided for in the notice or mandatory statutory rules reducing such period. Participation in meetings The shareholders meeting concerns all shareholders, regardless of the number of shares they hold. Corporate shareholders shall be represented by a specially appointed agent, who need not be a shareholder. A shareholder may be represented by another shareholder, or by his or her guardian, spouse or an ascendant or descendant, who need not be a shareholder in his or her personal capacities. Multiple holders of undivided interests in shares shall be represented at shareholders meetings by one of the holders or by a single agent. A shareholder having pledged his or her shares shall retain the right to attend shareholders meetings. Officers - Attendance sheet Officers The shareholders meeting shall be chaired by the Chairman of the Supervisory Board or the Vice Chairman of the Supervisory Board. Failing this, the meeting shall appoint its own Chairman. The Chairman of the meeting shall be assisted by the holders of the two largest interests, either personally or as agents, present and accepting such office, who shall serve as scribes. The meeting shall appoint a Secretary who does not necessarily have to be one of its members. Attendance sheet An attendance sheet shall be kept at each meeting, specifying the names and addresses of the shareholders, and, if applicable, those of their proxies, and the number of shares and voting rights they hold. The attendance sheet shall be signed by all shareholders present and by the proxies of absent shareholders; it shall then be certified by the officers of the meeting. Voting rights Each member of the meeting shall have as many voting rights as he or she owns or represents, in particular as a result of voting proxies or other powers of attorney. The voting rights attached to a share shall belong to the life tenant at ordinary shareholders meetings and to the bare owner at extraordinary shareholders meetings. If the shares are pledged, the voting rights shall be exercised by the owner. The Company may not vote shares that it has acquired or accepted as security. Maroc Telecom Registration Document 21

22 3 Minutes The minutes of meetings shall be entered in a special register kept at the Head Office, the pages of which shall be numbered and initialed by the Registrar of the Court at the location of the Company s registered office. Copies of/or extracts from the minutes shall be certified by the Chairman of the Supervisory Board alone, or by the Vice Chairman of the Supervisory Board signed jointly with the Secretary. Ordinary shareholders meetings Powers The ordinary shareholders meeting shall act upon all matters of an administrative nature exceeding the powers of the Supervisory Board and Management Board, and which are not reserved for the extraordinary shareholders meeting. An ordinary shareholders meeting shall be held each year, within the six months after the end of the company s fiscal year. This meeting shall hear in particular the report from the Management Board and the report from the Statutory Auditor or Auditors; it shall consider, amend and approve or refuse the financial statements; and it shall apportion and allocate profit. It shall appoint members of the Supervisory Board and the Statutory Auditor(s). Quorum and majority The ordinary shareholders meeting shall be duly convened and may validly act only if the shareholders present or represented hold at least 25 percent of the voting rights, exclusive of shares acquired or accepted as security by the Company; if such quorum is not obtained, a further meeting shall be called, for which no quorum shall be required. At an ordinary shareholders meeting, resolutions shall be passed by a majority of votes of the shareholders present or represented. Extraordinary shareholders meetings Powers Extraordinary shareholders meetings shall have sole authority to amend any provisions of the bylaws. They may dismiss the members of the Supervisory Board. They may not, however, change the Company s nationality or increase the shareholders liabilities without the approval of the latter. They may decide upon the conversion of the Company into a company of any other form, subject to compliance with the applicable statutory rules. Quorum and majority Extraordinary shareholders meetings shall be duly convened and may act validly only if the shareholders present or represented hold at least, upon a first call, half, and upon a second call, 25 percent, of the voting rights, exclusive of shares acquired or accepted as security by the Company. 22 Maroc Telecom 2007 Registration Document

23 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company If the 25 percent quorum is not satisfied, the second meeting may be postponed to a date no later than two months after the date for which it had been called, and may be validly held with the presence or representation of shareholders holding at least 25 percent of the share capital. At an extraordinary shareholders meeting, resolutions shall be passed by a two-third majority of votes of the shareholders present or represented Management of the Company Management Board Membership The Management Board shall administer and manage the Company, under the supervision of a Supervisory Board. The Management Board shall consist of five members. The members of the Management Board must be individuals. All members of the Management Board shall be employees of the Company and/or present in Morocco more than 183 days per year, subject to exceptions granted by the Supervisory Board acting by a 75 percent majority of the members present or represented. In the event of termination of the office of a member of the Management Board during its term, the Board shall appoint his or her substitute in the manner provided for by law and the Company s bylaws. Appointment and dismissal of members of the Management Board The members of the Management Board are appointed by the Supervisory Board, acting by a majority of the members present or represented. The Supervisory Board shall appoint one of the members to act as Chairman. Members be dismissed only by the ordinary meeting of shareholders, upon the motion of the Supervisory Board acting by a 75 percent qualified majority. If the dismissal is decided upon without due cause, it may give rise to liability in damages. Termination of office on the Management Board shall not entail termination of the contract of employment between the person concerned and the Company. Term of office The members of the Management Board shall be appointed for two year terms, subject to renewal. In the event of termination of office of a member of the Management Board during its term, his or her substitute shall be appointed for the remaining duration of the term until the renewal of Management Board. All members of the Management Board shall be eligible for further office. Operation The Management Board shall manage the Company collectively. The members of the Management Board may, subject to the Supervisory Board s consent, allocate among themselves the management tasks. Such allocation may in no event, however, deprive the Management Board of its collegiate character as the Company s management Body. Meetings of the Management Board may be held outside the head office. Resolutions shall be passed by a majority of members present or represented in office, each of whom shall have one vote. Maroc Telecom Registration Document 23

24 3 Minutes of resolutions of the Management Board, if any are drawn up, shall be entered in a special register and signed by the Chairman of the Management Board and another member. Copies of, or extracts from such minutes shall be certified by the Chairman of the Management Board or by an Executive Officer. Powers The Management Board shall have full powers to act in all circumstances in the name of the Company, within the limitations of the corporate purpose and subject to those powers expressly conferred by law and the Company s bylaws on the Supervisory Board under Articles to of the bylaws. In relation to third parties, the Company shall be bound even by an action of the Management Board that is not consistent with the corporate purpose and bylaws, unless it proves that the third party was aware that the action exceeded such purpose and/or the bylaws, or could not be unaware thereof in the circumstances. The provisions of the bylaws restricting the Management Board s powers shall not be binding on third parties. The Chairman of the Management Board shall represent the Company in its dealings with third parties. The Management Board may, however, confer the same representation power on one or more members of the Management Board, who shall have the title of Executive Officer. The provisions of the bylaws restricting the Chairman s, or, if applicable, the Executive Officer s powers to represent the Company shall not be binding on third parties. The Chairman of the Management Board and the Executive Officer (s) may grant powers of attorney to third parties. The powers thereby concerned shall, however, be limited and relate to one or more specific purpose or purposes. In relation to third parties, any action binding the Company shall be validly taken by the Chairman of the Management Board or any other member appointed by the Management Board as an Executive Officer. Disclosure duties The Supervisory Board may require the Management Board to submit a report relating to its management and to current transactions at any time. Such a report may be supplemented, at the Supervisory Board s request, by a provisional accounting statement for the Company. To the extent necessary, the Management Board shall forward to the Supervisory Board a report detailing the application or implementation, if applicable, of the points to be adopted by the Supervisory Board in accordance with Articles to of the bylaws. At least once a quarter, the Management Board shall submit to the Supervisory Board a report on the Company s operations. Within three months after the end of each fiscal year, the Management Board shall draw up the Company s annual financial statements (balance sheet, statement of income and notes) and provide them to the Supervisory Board, in order to enable it to perform its supervisory function. The Management Board shall also provide the Supervisory Board with the report to be submitted to the ordinary meeting of shareholders called to act upon the financial statements for the previous fiscal year. Compensation The Supervisory Board shall determine, in the appointing resolution, the nature and amount of compensation paid to each member of the Management Board. Liability Without prejudice to any specific liability arising out of the Company s receivership or bankruptcy proceedings, the members of the Management Board shall be liable, personally or jointly as the case may be, to the 24 Maroc Telecom 2007 Registration Document

25 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company Company and to third parties, for offenses against the statutory or regulatory rules applicable to corporations, for breaches of the bylaws, or for misconduct in their management. Supervisory Board Membership The Supervisory Board shall consist of not less than eight and not more than 12 members, which may be increased to 15 members if the Company s shares are admitted to listing on the Casablanca stock exchange. Each member of the Supervisory Board shall hold at least one share of the Company throughout the term of office. The members of the Supervisory Board shall be appointed by the ordinary shareholders meeting. If, on the date of his or her appointment, a member of the Supervisory Board does not hold at least one share of the Company or, during his or her term of office, ceases to hold at least one share, he or she shall be deemed to have resigned if the situation is not fixed within three months. Shares shall be assigned in an undivided manner to the potential liability of members of the Supervisory Board, collectively or individually, in connection with management of the Company, or of their personal action. Qualifying shares must be registered shares; they may not be transferred. Such restriction shall be recorded in the Company s transfer register. A member of the Supervisory Board who no longer holds office, or his or her heirs or assigns, shall recover unrestricted disposal of the qualifying shares as a result only of approval by the ordinary shareholders meeting of the financial statements for the last fiscal year of his or her office. The statutory auditor(s) shall, under his/their sole responsibility, secure compliance with the provisions of Article 10.1 of the bylaws, and shall report any breach thereof in their report to the annual shareholders meeting. Term of office The members of the Supervisory board shall be appointed for a six-year term. The office of a member of the Supervisory Board shall terminate upon adjournment of the ordinary shareholders meeting convened to approve the financial statements for the past fiscal year and which net during the year in which the said term expires. They shall always be eligible for further office. They may be dismissed at any time by the extraordinary shareholders meeting. No member of the Supervisory Board may simultaneously be a member of the Management Board. If a member of the Supervisory Board is appointed to the Management Board, his or her term of office as member of the Supervisory Board shall terminate upon his or her assumption of office on the Management Board. A legal entity may be appointed to the Supervisory Board. At the time of appointment, it shall be required to appoint a permanent representative who shall be subject to the same conditions and obligations, and shall incur the same civil and criminal liability, as a member of the Supervisory Board in a personal capacity, without prejudice to the joint liability of the legal entity that he or she represents. When the legal entity dismisses its representative, it shall be required to appoint a substitute concomitantly. It shall immediately notify its decisions to the Company. It shall act likewise in the event of the permanent Maroc Telecom Registration Document 25

26 3 representative s death or resignation. Vacancy and appointment In the event of vacancy, as a result of death or resignation or any other inability to act, of the holder of one or several seats on the Supervisory Board, the Supervisory Board may, between two shareholders meetings, make temporary appointments. If the number of members of the Supervisory Board falls below eight, the Supervisory Board shall be bound to make temporary appointments to restore its membership within three months of the date of vacancy. Temporary appointments by the Supervisory Board shall be subject to ratification by the next subsequent ordinary shareholders meetings; the member appointed to replace another shall remain in office only for the remaining duration of his or her predecessor s term. Even if the temporary appointments are not approved, the resolutions made and actions taken previously by the Supervisory Board shall remain valid. If the number of members of the Supervisory Board falls below three, the Management Board shall be required to call, within 30 days after the date of the vacancy, an ordinary shareholders meeting to supplement the Supervisory Board s membership. Chairman and Vice Chairman The Supervisory Board shall appoint from among its members a Chairman and Vice Chairman who shall call meetings of the Supervisory Board and direct its proceedings, and who shall hold office during the term of office of the Supervisory Board. The Chairman and Vice Chairman must be individuals. The Supervisory Board may appoint a Secretary for each meeting, who may or may not be a member of the Board. Notice of meeting and proceedings The Supervisory Board shall meet, upon a notice given by its Chairman or Vice Chairman, as frequently as required by the Company s interests, at the Head Office or any other location specified in the notice. Such notice may be given by electronic message or by fax, in both cases followed by confirmation by ordinary mail, or by registered mail with return receipt, or by letter delivered personally against a receipt, 15 days before the date of the meeting, unless such period is reduced upon the consent of all the members of the Supervisory Board. The Supervisory Board shall act validly only if at least half the members of the Supervisory Board are present. Subject to the provisions of Articles to of the bylaws described below, resolutions of the Supervisory Board are passed in accordance with the Moroccan law relating to corporations (as amended or extended), by a majority. In addition to transactions subject by law to the Supervisory Board s consent pursuant to article of the bylaws, the following resolutions require prior consent from the Supervisory Board acting by a majority of members present or represented : Review, approval and revision of the business plan, drawn up according to the same strategic criteria and requirements in terms of productivity, profitability and competitiveness as the best international operators; Review and approval of the budget drawn up, according to the same criteria and strategic, productivity, profitability and competitive requirements as the best international operators; Policy with respect to compensation, training and management of human resources and creation of profit sharing schemes for the Company s managers or employees; Appointment of members of the Management Board; and 26 Maroc Telecom 2007 Registration Document

27 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company Approval of the draft resolutions to be submitted to the general meeting of the Company s shareholders with respect to the allocation of the earnings of the Company and its subsidiaries (pay-out of dividends, reserves, etc.) in the manner provided for under Articles 16 and (x) of the bylaws. However, by way of exception from the provisions of Article of the bylaws described above and in accordance with Article of the bylaws, the following resolutions shall be matters for the Supervisory Board and require approval by a majority of at least 75 percent of the members of the Supervisory Board present or represented: Any significant change in accounting methods; Repeal, abandon, transfer of licenses or concession of major operating facilities not provided for under the annual budget; Any decision related to the implementation or initiation of judicial, administrative or arbitration actions or proceedings involving the Company or its subsidiaries, for which the amount of the claim in principal against or at the initiative of the Company or its subsidiaries, whether this concerns an initial claim or a counter-claim, for each of these actions or proceedings, amounts to a unitary amount of more than MAD100 million or requires judicial enforcement by the Company or its subsidiaries, as well as any decisions with the aim of obliging the Company and/or its subsidiaries to reach a settlement for such actions or proceedings involving amounts owed or due to the Company for an amount of more than MAD25 million; Any decision concerning the conclusion, amendment and/or termination of any service provision agreement or any other agreement other than the agreements concerning day-to-day transactions entered into under normal conditions between the Company and (i) any shareholder holding more than 30% of the capital and/or voting rights of the Company and/or (ii) the subsidiaries whatsoever of such shareholder, for which the management and/or direction are effectively directly or indirectly controlled by the latter or by its parent company, whether through a holding in the share capital, through contractual agreements or in concert with a third party (hereinafter the Reference Shareholder ); Any decision related to a merger, under any form whatsoever, between the business of the Company and any businesses over which the Reference Shareholder has control which are in competition with the Company over the sectors of Fixed, Mobile, Internet and Data exchange telecommunications (and more generally all businesses connected to or arising from the Company s corporate purpose) ; Any decision related to the exemption of the obligation for a member of the Management Board to be an employee of the Company and/or to be present for more than 183 days a year in Morocco; Investments or divestments and borrowings and loans exceeding more than 30% of the corresponding amounts shown in the budget; Any creation of a subsidiary with an initial share capital or shareholders equity of more than MAD100 million, and any takeover(s) or assignment(s) of a holding or interest in any group or entity exceeding 20% of the Company s net assets; Any resolution relating to a proposed merger, spin-off, contribution of assets or management lease relating to all or part of the business of the Company or one of its subsidiaries, and any resolution relating to dissolution, liquidation or discontinuation of any substantial operation of the Company or one of its subsidiaries; Any exceptions from the obligation provided for under Article 16 of the bylaws to pay out dividends of at least half the distributable profit; and Amendment of the internal regulations of the Company s audit committee. In addition, in accordance with the provisions of Article of the bylaws described below, the Supervisory Board may not submit the following resolutions to the meeting of shareholders unless they have been made by at least 75 percent of the members of the Supervisory Board present of represented: A motion for amendment of the Company s bylaws (including in particular a reduction or increase in the Company s share capital or changes in the fiscal year); A motion for issuance of new securities of the Company or its subsidiaries; a motion for amendment of the corporate purpose and/or principal business of the Company or its subsidiaries; A motion for amendment of the rights and duties relating to shares of the Company or its subsidiaries; A motion for amendment of the first or last day of the fiscal year of the Company or its subsidiaries; Maroc Telecom Registration Document 27

28 3 A motion for the choice of the statutory auditors of the Company and its subsidiaries; A motion for the nomination of one or more members of the Supervisory Board; A motion for dismissal of the members of the Management Board; and A settlement of differences between the Management Board and the Supervisory Board. Assignment and powers of the Supervisory Board The Supervisory Board shall exercise permanent supervision over the Company s management by the Management Board. At any time, it shall perform such inspections as it shall see fit, and may obtain disclosure of such documents as it considers appropriate for the performance of its assignment. The members of the Supervisory Board may obtain disclosure of any information or data relating to the Company s operation. The Supervisory Board may, within the limits that it shall determine and subject to the provisions of Article 10.5 of the bylaws, allow the Management Board to sell real estate assets, sell all or part of investments, and issue warranties, endorsements or security in the name of the Company. It shall submit to the annual shareholders' meeting its observations on the report from the Management Board and on the financial statements for the fiscal year. The Supervisory Board may create from among its members, and if it so deems necessary, with the assistance of third parties who need not be shareholders, technical committees in charge of reviewing matters that it shall submit to them for an opinion. Such committees shall have advisory powers and act subject to the authority of the Supervisory Board, of which they are agencies and to which they shall report. The members of committees shall be appointed by the Supervisory Board. Unless otherwise resolved by the Supervisory Board, the duration of committee members terms of office shall be that of their terms as members of the Supervisory Board. Each committee shall draw up its own internal regulations, which shall require approval by the Supervisory Board. Compensation The shareholders meeting may allocate to the members of the Supervisory Board, as compensation for their duties, a fixed annual amount in attendance fees. The Supervisory Board may also allocate exceptional compensation with respect to assignments or duties entrusted to its members. Liability Members of the Supervisory Board shall be liable, personally or jointly as the case may be, to the Company and to third parties, for offences against the statutory or regulatory rules relating to corporations, for breaches of the bylaws or for misconduct in their management. If several members of the Supervisory Board have cooperated in the same action, the Court shall apportion liability among them in terms of payment of damages Statutory auditors The Company shall be audited by at least two statutory auditors, who shall be appointed and shall perform their duties in accordance with the law. Appointment, removal from office and incompatibility of offices During the term of the Company, the statutory auditors shall be appointed for three fiscal years by the ordinary shareholders meeting. The statutory auditors offices shall expire upon adjournment of the ordinary shareholders meeting acting 28 Maroc Telecom 2007 Registration Document

29 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company upon the financial statements for the third fiscal year. The statutory auditors shall be eligible for further office. A statutory auditor appointed by the shareholders meeting to replace another shall remain in office only for the remaining duration of his or her predecessor s term. If, upon expiry of a statutory auditor s term of office, a motion is submitted to the shareholders meeting against extension of his or her term, the statutory auditors may address the meeting, if he or she so requests. One or more shareholders holding at least one tenth of the share capital may apply to the president of the commercial court acting in summary proceedings for one or more statutory auditors appointed by the shareholders meeting to be barred from office, and apply for appointment of one or more auditors to perform their offices in their stead. Under penalty of inadmissibility, the referral to the president of the commercial court shall be entered by a reasoned application made within 30 days after the challenged appointment. If the application is granted, the statutory auditor or auditors appointed by the president of the commercial court shall remain in office until appointment of the new statutory auditor or auditors by the meeting of shareholders. If it becomes necessary to appoint one or more statutory auditors and the meeting of shareholders fails to do so, any shareholder may apply to the president of the commercial court, acting in summary proceedings, for appointment of a statutory auditor. The Statutory Auditor(s) appointed by the president of the court shall remain in office until appointment of the new statutory auditor or auditors by the shareholders meeting. The appointments of Statutory Auditors shall comply with the rules relating to incompatibility of offices laid down by law. Duties of the statutory auditors The Statutory Auditor(s) shall have a permanent assignment, exclusive of any interference in the management of the Company, of inspecting the Company s assets, books and accounting documents, and ascertaining the compliance of its financial statements with applicable rules. They shall also review the fairness and consistency relative to the summary statements of the information provided in the annual report from the Management Board and in the documents sent to the shareholders with respect to the Company s assets and liabilities, its financial position and its earnings. The Statutory Auditor(s) shall ensure that equal treatment among the shareholders has been observed. The Statutory Auditor(s) shall be invited to attend the meeting of the Management Board to approve the financial statements for the past fiscal year, and all shareholders meetings. At any time of the year, the statutory auditor(s) shall perform such inspections as they shall consider being desirable, and may obtain disclosure on the spot of any document they consider necessary for the performance of their assignment, including without limitation, any contracts, records, accounting documents and minute books. The Management Board s annual report and summary statements shall be made available to the statutory auditor( s) at least 60 days before notice of the annual shareholders meeting is given Trading of shares Sales of shares shall be carried out in the manner provided for by law. Maroc Telecom Registration Document 29

30 Statutory thresholds In Morocco Any individual or legal entity, acting alone or in concert with others, that becomes the owner, directly or indirectly, of a number of shares representing more than one twentieth (5%), one tenth (10%), one fifth (20%), one third (33.33%), half (50%) or two thirds (66.66%) of the Company s share capital or voting rights must notify the Company, the CDVM (Moroccan securities regulator) and the Casablanca Stock Exchange, within five working days of the date it crosses such threshold, of the total number of the Company s shares that he, she or it holds, and of the related number of voting rights. The date of crossing of the threshold shall be the date of execution of the reporting party s order on the exchange. In addition to the statutory obligation mentioned above to inform the Company of the crossing of thresholds, any individual or legal entity, acting alone or in concert with another, that becomes the owner directly or indirectly of a number of shares representing more than 3%, 5%, 8%, 10%, or any threshold that is a multiple of 5% in excess of 10%, of the share capital or voting rights of the Company, must notify the Company, by registered mail with return receipt of the total number of shares or voting rights that he, she or it holds, within five trading days after the date of acquisition. The notice above is also to be given if the interest in the capital falls below the thresholds provided for above. In each aforementioned report, the reporting party shall certify that the report includes all shares or voting rights held or owned. The reporting party shall also specify the date or dates of acquisition or sale of his, her or its shares. Any individual or legal entity, acting alone or in concert with another, that becomes the owner, directly or indirectly, of a number of shares representing more than one tenth (10%) or one fifth (20%) of the Company s share capital or voting rights must notify the Company, the CDVM and the Casablanca Stock Exchange, within five working days from the time when any such threshold is crossed, of his, her or its intended objectives within the 12 months after such threshold is crossed, specifying whether he, she or it is acting alone or in concert with another, whether he, she or it intends to discontinue or proceed with acquisition and his, her or its intention to submit the appointment of members of the corporate governing bodies and to acquire control over the Company or not. The date of crossing of the threshold referred in the previous paragraph shall be the date of execution of the reporting party s order on the exchange. Without prejudice to and within the limits of mandatory statutory rules, in the event of failure to comply with the reporting obligations above, the shares in excess of the portion that ought to have been reported shall be deprived of voting rights at any shareholders meeting for a two-year period after the date of the breach. Holders of shares may also be subject to the reporting obligations provided for under statutory Decree enacting Act relating to public bids on the stock market dated April 21, 2004, and Circular 01/04, dated June 8, 2004, relating to the crossing of thresholds of interest in the share capital or votes of listed companies. Holders of shares or other securities of the Company are advised to consult their legal counsel in order to ascertain whether the reporting obligations are applicable to them. In France The provisions of the AMF General Regulation, relating to the method for calculating threshold crossing, notice obligations and the declaration of intent, applicable to the Company are defined as follows: To calculate the shareholding thresholds, the person required to provide information, takes into account the shares and the voting rights that he/she holds as well as the shares and voting rights assimilated thereto and determines the portion of capital and voting rights that he/she holds based on the total number of 30 Maroc Telecom 2007 Registration Document

31 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company shares comprising the company s share capital and the total number of voting rights attached to these shares. As regards the notification obligations, the persons required to provide information must inform the AMF at the latest within five trading days of the date of threshold crossing. A calendar of trading days of the regulated markets established or operating in France, may be found on the AMF website. Threshold crossing declarations must be drawn up according to the standard model drafted by the AMF available on the website ( They may be transmitted to the AMF by . The declarations are then made available to the public by the AMF within a maximum of three trading days of the date the declarations are received. The applicable thresholds are: 5%, 10%, 15%, 20%, 25%, 33%, 50%, 66%, 90% and 95%. Declaration of intent: Any individual or legal entity, acting alone or in concert with another, that becomes the owner, directly or indirectly, of a number of shares representing more than one tenth (10%) or one fifth (20%) of the Company s share capital or voting rights must notify the Company, and the AMF, within ten trading days from the time when any such threshold is crossed, of his, her or its intended objectives for the 12 months following the threshold crossing, specifying whether he, she or it is acting alone or in concert with another, whether he, she or it intends to discontinue or proceed with acquisition of control of the Company and his, her or its intention to request his/her/its appointment or that of one or several persons as members of the corporate governing bodies. The declaration must be adressed to the company whose shares have been acquired, and to the AMF within 10 trading days. This information is made public pursuant to the conditions set out in the AMF General Regulation. In the event of failure to comply with the reporting and declaration of intent obligations above, the shares in excess of the portion that ought to have been reported shall be deprived of voting rights at any shareholders meeting for a two-year period after the date of the breach Public bids Under Moroccan law, public bids are governed by Act amended and completed by Act 26-03, of April 21, A public bid is defined as the procedure whereby an individual or legal entity, acting alone or in concert (the bidder ), publicly discloses an intention to acquire, exchange or sell all or part of the securities entailing access to the share capital or votes of a listed company. As in French law, public bids can be voluntary or obligatory when certain conditions are met. Voluntary public bids Any individual or legal entity, acting alone or in concerted fashion and wishing to report publicly that he, she or it wishes to acquire or sell shares listed on the securities exchange, may file a proposed public bid for acquisition or sale of the shares. Unlike the French law which provides for the involvement of presenting banks, under Moroccan law, a public bid is to be filed by the bidder with the Moroccan securities regulator (CDVM), and must include: the bidder s objectives and intentions; the number and nature of the company s securities; the date and terms on which the purchase thereof has been or may be made; the price or exchange ratio at which the bidder is offering to acquire or sell the securities, the information on which these are based and the terms of payment, settlement or exchange planned; the number of shares to which the proposed public bid relates; and if applicable, the percentage of votes below which the bidder reserves the option not to carry out the bid. Maroc Telecom Registration Document 31

32 3 The proposed public bid must be accompanied by an information document. The contents and performance of the offers contained in the proposed bid shall be warranted by the bidder, and if applicable, by any person acting as guarantor. The proposed public bid filed with the CDVM shall be accompanied by the prior permit or permits from the competent authorities. In the absence of this permit, the proposed bid is not admissible. Upon filing of the proposed public bid, the CDVM shall issue a notice of filing of the proposed public bid in a newspaper authorized to carry legal advertisements, which shall report the main provisions of the proposal. The publication shall be the starting point for the bid period. The CDVM shall forward the main features of the proposed public bid to the public authorities, which shall be allowed two working days from the date of transmission to rule upon the admissibility of the proposal with regard to national strategic interests. If no decision is taken within two working days, it shall be deemed that the authorities have no further comments. As soon as the proposed public bid has been filed, the CDVM shall request the company managing the stock market to suspend the listing of the shares of the company to which the public bid relates. The suspension notice shall be published. The CDVM shall be allowed a period of ten working days from the publication, of the suspension notice to review the admissibility of the proposed bid and may request that the bidder provides any evidence or information required for its evaluation. Under French legislation, it is a period of five trading days following the publication of the proposed bid. As in French law, the bidder is required to modify the proposal in order to comply with the CDVM s recommendations if the latter considers that the proposal is inconsistent with the principles of equal treatment among shareholders, full disclosure, integrity of the market or fairness of transactions and competition. In all cases, the CDVM also has authority to require from the bidder any additional warranties and to demand the deposit of a guarantee in cash or in securities. Grounds shall be stated for any ruling denying admissibility. If a public bid is ruled to be admissible, the CDVM shall notify its ruling to the bidder and publish a notice of admissibility in a newspaper authorized to carry legal advertisements. Concurrently, the CDVM requests the company managing the securities exchange to resume listing. Any proposed public bid shall be accompanied by the information documents which may be drafted jointly by the bidder and the target company if the latter concurs on the bidder s objectives and intentions. If not, the target company may draft separately and file with the CDVM its own information document within five trading days after approval of the bidder s information document. In this case, the bidder is bound to file a copy of his, her or its information document and proposed public bid with the target company on the day of filing of his, her or its bid proposal with the CDVM. The contents of the information document(s) shall be determined by the CDVM, which shall be allowed a maximum period of 25 working days to approve the information document(s) after the date of filing thereof. Such period may be extended by ten working days, if the CDVM considers that additional evidence or information is required. Upon expiry of such period, the CDVM shall grant or deny approval, and shall provide a justification for any denial. In French law, the AMF has a period of ten days following the opening date of the bid, to perform a compliance review, which entails verifying that the bidder s proposition complies with applicable regulations. The AMF reviews the bidder s targets, intentions and information appearing in the information notice. During this period, the AMF may require additional explanations or justifications needed to review the bid and the information notice. The period is then suspended until reception of the required elements. If the proposed bid meets the required conditions, the AMF publishes a compliance report which is deemed as approval of the information notice. In French law, the information notice made available carrying the AMF s approval visa must either be published in a national economic daily newspaper, or be notified free of charge to the public by the bidder or 32 Maroc Telecom 2007 Registration Document

33 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company the targeted company and published as a summary or a press release. The approval must be published before the offer opens and at the latest on the second day of trading following the AMF s approval. The managing company shall centralize the acquisition, sale or exchange orders and notify the results to the CDVM, which shall issue a notice on the outcome of the bid in a newspaper authorized to carry legal advertisements. Compulsory public bids Cash takeover bids Under Article 18 of Moroccan Act 26-03, amended and completed by Act relating to public bids, the filing of a cash takeover bid is compulsory when an individual or legal entity, acting alone or in concert, holds, directly or indirectly, a given percentage of voting rights in a company listed on the Securities Exchange. Pursuant to an order of the Minister of Finance and Privatization n dated Ramadan 11, 1425 (October 25, 2004) when an individual or legal entity holds 40% of the voting rights a cash takeover bid becomes compulsory. Any individual or legal entity is required, within three working days after the 40% voting rights threshold is crossed, to file with the CDVM a proposed take-over bid. Failing this, this person or legal entity and those acting in concert shall lose the voting and financial rights attached to their capacity as shareholders. Such rights shall be recovered only after a proposed cash takeover bid is filed. The CDVM may grant an exception from the filing of a compulsory cash takeover bid when: the crossing of the 40% threshold of does not affect control over the company concerned, in particular as a result of a capital reduction or transfer of shares among companies affiliated to the same group; the voting rights arise out of a direct transfer, an allocation assets by a legal entity in proportion to shareholders rights as a result of a merger or partial contribution of assets, or a subscription to a capital increase in a company in financial difficulties. The application for an exception shall be filed with the CDVM within three working days after the voting rights threshold of 40% is crossed. It shall include covenants by that party to the CDVM not to initiate any action intended to obtain control over such company during a specific period, or to implement a recovery plan for the company concerned if it is in financial difficulties. If the CDVM grants the exception requested, its ruling shall be published in a newspaper authorized to carry legal advertisements. Compulsory buy-out bids Pursuant to article 20 of Moroccan law 26-03, amended and completed by Art relating to public bids, the filing of a compulsory buy-out bid is mandatory when one or more individual or corporate shareholders of a listed company hold, alone or in concert, a specific percentage of voting rights in that company. Pursuant to an Order of the Minister of Finance and Privatization n dated Ramadan 11, 1425 (October 25, 2004) when an individual or legal entity holds 95% of the voting rights, he/she/it must proceed with a compulsory buy-out bid. These persons are required, within three working days after the percentage of 95% threshold is crossed, to file with the CDVM a proposed compulsory buyout bid. Failing this, they shall automatically forfeit all the voting rights. These voting rights shall be recovered only after the filing of a proposed compulsory buyout bid. Filing of a proposed compulsory buy-out bid may also be required by the CDVM of the individual or individuals, or legal entity or entities, holding, alone or in concert, a majority of the share capital listed on the Maroc Telecom Registration Document 33

34 3 securities exchange, when certain requirements are met, including the requirement of a 66% holding of the voting rights concurrently. (Order of the Minister of Finance and privatisation n dated Ramadan, 11, 1425). Filing of a proposed buy-out bid by individuals or legal entities, holding,alone or in concert, a majority of the share capital may also be compulsory if the listed shares are delisted from the securities exchange for any reason. Standing offer procedure Under French law, when an individual or legal entity, acting alone or in concert, acquires or has agreed to acquire a block of shares conferring on him, her or it, the majority, of shares or voting rights falling into account which he, she or it already holds, that party is required to file an offer for a compulsory buy-out and to agree to acquire on the market, during a minimum of ten trading days, all securities tendered for sale at the price at which the securities have been or are to be sold. Such a procedure does not exist under Moroccan law. Competing bids and improved public bids One or more competing public bids, or improved public bids, may be launched. A competing public bid is a procedure in which any individual or legal entity, acting alone or in concert, may, from the time of initiation of a public bid, and no later than five trading days before its closing date, files with the CDVM a competing bid for shares of the company to which the initial bid refers. Improved bidding is a procedure in which the bidder of the initial public bid improves the terms of the initial bid, either at his/her own initiative or after a competing public bid, by modifying the price or the nature or quantity of securities or the terms of payment. A bidder wishing to improve the bid files with the CDVM the changes made to the initial public bid no later than five trading days before the date closing of the initial bid. The CDVM shall determine whether the improved bid is admissible within five trading days after the filing of the proposal. The bidder shall draw up and submit to the CDVM a supplementary information document. When more than ten weeks have elapsed since the publication of an initiation of a public bid, the CDVM may, in order to expedite the competition between bids, set a deadline for the filing of successive improved bids or competing public bids. In the event of a competing bid, the initial or previous bidder must, within ten days before the close of the bid, inform the CDVM of his, her or its intentions. The bid may be maintained, withdrawn or modified by an improved bid. Under French law, the price of a competing bid or an improved public bid must be at least 2% above the price stipulated in the initial bid. It can also be declared compliant if it contains a significant improvement of the terms proposed to securities holders. It can also be declared compliant if, without modifying the terms stipulated in the previous bid, it withdraws the threshold below which the initiator would not have followed up with the bid. Rules relating to targeted companies and public bidders During the term of a public bid, the bidder and the parties with which he, she or it is acting in concert may not, in the case of a mixed public bid, trade in the securities of the targeted company or the shares of the company, tendered in exchange. In the event of a voluntary take over bid, the bidder may withdraw the bid within five trading days after publication of the notice of admissibility of a competing or improved bid. The bidder shall inform the CDVM of the decision to withdraw, which shall be published by the latter in a newspaper authorized to carry legal advertisements. This option is also permitted under French law. 34 Maroc Telecom 2007 Registration Document

35 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information regarding the company During the term of the public bid, the targeted company and parties acting in concert with it, if applicable, may not intervene directly or indirectly in the shares of the targeted company. If payment for the public bid is to be made solely in cash, the targeted company may, however, proceed with a share buy-back program if the resolution of the meeting of shareholders having permitted such program has expressly so provided. During the term of the public bid, the targeted company and the bidder, individuals or legal entities holding directly or indirectly at least 5% of the share capital or voting rights of the targeted company, and any other individuals or legal entities acting in concerted fashion with the foregoing, are required to report to the CDVM after each trading day the purchases and sales that they have carried out with respect to the shares concerned by the bid, and any transaction resulting in an immediate or future transfer of title to the shares or voting rights of the targeted company. Any delegation of authority to increase the share capital granted by the target company s extraordinary shareholders meeting shall be held in abeyance during the term of the cash or stock takeover bid of the company s shares, and the targeted company may not increase its holdings of its own stock. During the term of the bid, the appropriate agencies of the targeted company shall give the CDVM prior notice of any proposed resolution within their powers that would prevent performance of the public bid or of a competing bid. Under French law, the initiator of a public bid and parties acting in concert with him, her or it, can, subject to exceptions, purchase the securities of the targeted company, in accordance with certain price conditions. These rules are also applicable to any agent or advisor acting on its behalf or on behalf of the initiator or of the target company. The AMF General Regulation also imposes disclosure obligations as regards the purchase and sale of shares concerned by the bid. CDVM s supervision and penalties Public bidders, targeted companies and parties acting in concert with them are subject to the supervision of the CDVM, which shall ensure that the bids are carried out in orderly fashion in investors and the market s interests. The CDVM may impose civil and criminal penalties. Maroc Telecom Registration Document 35

36 3 3.2 GENERAL INFORMATION RELATING TO THE COMPANY S SHARE CAPITAL Share capital The share capital of Itissalat Al-Maghrib is MAD5,274,572,040 divided into 879,095,340 shares with a par value of MAD6 each, in a single class and fully paid in. The shares par value may be increased or decreased as provided by the applicable laws and regulations. The share capital may be increased, decreased or redeemed by a resolution of the appropriate shareholders meeting in the manner provided for by the applicable laws and regulations Form of shares The shares shall be in registered or bearer form at the shareholders option. The Company shall keep at the registered office a register known as the transfer register in which are recorded, in chronological order, subscriptions for and transfers of registered shares. The pages of this register are to be numbered and it shall be initialed by the President of the Court. Any holder of a registered share issued by the Company is entitled to obtain a copy thereof certified as true by the Chairman of the Management Board. If the register is lost, copies shall constitute conclusive evidence. The Company may decide not to issue shares in physical form. In accordance with the prevailing statutory rules relating to the book entries of securities, the Company s shares must be evidenced by book entries with the central depositary. Indivisibility of shares Shares shall be indivisible in the view of the Company, which shall recognize only one owner for each share. Joint holders of undivided interests shall be bound to appoint a joint representative in respect of their relations with the Company in order to exercise their rights as shareholders; failing an agreement, the agent shall be appointed by the President of the Court, acting in summary proceedings upon a petition from any of the holders of undivided interests. The right to obtain disclosure of the documents provided for by law shall nonetheless be held by each of the holders of interests in undivided shares, and by each life tenant and bare owner Rights and duties attached to shares Each share shall carry a right, proportional to the portion of the share capital that it represents, to the profits or corporate assets, at the time of distribution thereof during the term of the Company or upon its liquidation. Any shareholder shall be entitled to information relating to the Company s operation and to obtain disclosure of certain corporate documents at the times and in the manner provided for by law and the bylaws. Shareholders shall be liable for corporate debts only to the extent of the par value of the shares that they own; no additional assessment shall be permitted. The rights and duties attached to a share shall be transferred to any owner thereof. Title to a share shall entail, as of right, acceptance of the Company s bylaws and resolutions of shareholders meetings and of the Supervisory Board and Management Board acting upon delegations of authority from the shareholders meetings. 36 Maroc Telecom 2007 Registration Document

37 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information relating to the company s share capital Heirs, creditors, assigns or other representatives of a shareholder may not, on any grounds whatsoever, call for the affixing of seals on the assets and valuables of the Company or call for a division or sale by auction thereof or interfere in any manner whatsoever in the actions of its administration; for the exercise of their rights, they shall be bound by the statements of corporate assets and liabilities and resolutions of the shareholders meetings. Whenever it is necessary to hold a given number of shares in order to exercise any right, shareholders who do not hold the required number of shares must make their own arrangements to form a group or to purchase or sell the requisite number of shares Acquisition by the Company of its own shares Moroccan legislation In accordance with Moroccan legislation and its bylaws, the Company may acquire its own shares which are fully paid in, up to 10% of the total of its own shares and/or of a specific class. Pursuant to the CDVM s circular 02/03, dated May 23, 2003, implementing Decree , dated February 24, 2003, any corporation (société anonyme), the shares of which are listed on the Securities Exchange and wishing to acquire its own shares in order to adjust the share price, shall be required to issue an information notice, which shall require approval from the CDVM prior to the holding of the shareholders meeting called to consider the action. The Company s purchases of its own shares in order to adjust the price shall not interfere with the proper operation of the market. A Company trading its own shares shall inform the CDVM, no later than the fifth working day after the close of the relevant month, of the number of shares acquired, and shares sold if applicable. If the Company does not trade its own shares during a particular month, it shall so inform the CDVM within the same period. During the buy-back program, any change relating to the number of shares to be acquired, the maximum purchase price and minimum selling price, or the period during which the acquisition is to be performed shall be promptly notified to the public by means of a notice published in one of the newspapers authorized to carry legal advertisements. Such changes shall remain within the bounds of the authorization granted by the shareholders meeting. French legislation Since the listing of its shares on a regulated market in France, the Company is now subject to the legislation summarized below. Pursuant to the AMF General Regulation, when a company purchases its own shares it must file an information notice which does not require AMF approval. Pursuant to AMF Regulation and European Commission regulation n 2273/2003 of December 22, 2003, a company may not carry out transactions on its own shares in order to manipulate the market. After buying back its own shares, a company must publish the details of all of its transactions at the latest by the end of the seventh trading day after their date of execution, and file with the AMF monthly reports containing specific information relating to the transactions performed. Current program The Company obtained the approval of the CDVM on April 6, 2007 under reference VI/EM/011/2007 for the information notice relating to the share buyback program for view of stabilizing the market, and the agreement of the general shareholders meeting held on April 12, 2007 to decide on the related resolution. Maroc Telecom Registration Document 37

38 3 From October 16, 2007, and for a period of one year, tacitly renewable, Maroc Telecom has contracted Rothschild & Cie Banque to implement: in Casablanca a share stabilization contract for an amount of MAD55 million; in Paris, a liquidity contract in compliance with the Ethical Charter drafted by the French financial market association and approved by the AMF in a decision dated March 22, 2005, published in the Bulletin of Mandatory Legal Notices (BALO) dated April 1, For the purposes of this contract, 5 million was allocated to a liquidity account. The main features of this program are as follows: Duration: until October 16, 2008; Price range for share purchase or sale : MAD[ ]; Maximum capital share to be held : 3% (equivalent to 26,372,860 shares). At the Shareholders General Meeting of April 17, 2008 the renewal of the program for 18 months will be proposed, as well as a change in the price range. These elements will be the object of an information notice, and will be subject to the CDVM s approval. As at December 31, 2007, this share buyback program was as follows: Casablanca Paris Total Number of shares purchased 295, , ,416 Number of shares sold (240,019) (200,397) (440,416) Shares held as at December 31, , , Maroc Telecom 2007 Registration Document

39 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information relating to the company s share capital Changes in the Company s share capital since its incorporation The table below sets out the main changes in share capital since the Company s incorporation in 1998: Date Actions Amount Premium Number of shares issued Total number of shares Par value (in MAD) Share capital (in MAD) February 25, 1998 March 25,1999 Incorporation 100,000,000-1,000,000 1,000, ,000,000 Capital increase 8,765,953,400-87,659,534 88,659, ,865,953,400 June 4,1999 Capital reduction* 75,000,000 - (750,000) 87,909, ,790,953,400 October 28, 2004 Change in par value** ,185, ,095, ,790,953,400 June 12, 2006 Capital reduction by par value reduction *** 3,516,381, ,095, ,274,572,040 *: At the time of incorporation, only one quarter of the initial share capital was paid in. As a result of this capital reduction, the share capital was fully paid in. **: by compulsory exchange of 10 new shares with a MAD10 par value against one former share with a MAD100 par value. ***: The extraordinary and ordinary shareholders meeting on March 30, 2006 authorized Maroc Telecom s reduction in capital, which was not the result of losse, by reducing the par value of each share from MAD10 to MAD6. Maroc Telecom Registration Document 39

40 3 3.3 TRADING OF THE COMPANY S SHARES Stock exchange listings Since December 13, 2004, Maroc Telecom has been listed on both the Casablanca Stock Exchange and Euronext Maroc Telecom share price Casablanca Stock Exchange Main market, Code Average price* High Low Transactions** * The average price is calculated by dividing trade value by number of shares. ** Not including block market transactions. Source : Casablanca Stock Exchange. (in MAD) Changes in Maroc Telecom s share price on the Casablanca Stock Exchange since December 2004 In May 2007, 80% of free float was traded on the Casablanca Stock Exchange. number of shares (in thousands) trade value (in millions MAD) January , February , March , April , May , June , July , August , September , October , November , December , ,735.8 January , ,061.5 February , ,301.1 March , , IAM-Casablanca (dirham) VS MASI MASI IAM Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec Maroc Telecom 2007 Registration Document

41 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL Trading of the company s shares Euronext Paris Eurolist-Foreign securities, Code MA , Eligible for SRD Average price* High Lower Transactions** * The average price is calculated by dividing trade value by number of shares ** Not including off-system transactions Source : Euronext Paris (in euro) number of shares (in thousands) trade value (in millions euro) January , February , March , April , May , June , Jully , August , September October , November , December , January , February , March , Changes in Maroc Telecom s share price on Euronext Paris since December IAM-Paris (euro) VS Euronext IAM Euronext Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 In May 2007, 20% of free float was traded on Euronext Paris. Maroc Telecom Registration Document 41

42 3 3.4 Dividends and dividend policy Dividend paid out over the past five fiscal years The table below sets out the amount of dividends (in millions of Moroccan dirhams) paid by the Company for the fiscal years 2002 to Fiscal year Distribution date Dividends , ,750 Exceptional dividend , May 4, , May 2, ,119 Exceptional distribution June 12, , May 15, , ,088* * Amount proposed at the shareholders meeting of April 17, As at December 31, 2007, the Company s reserves amounted to MAD3,425 million (excluding income at the end of December 2007), out of which MAD2.8 million are distributable. (See section Significant accounting policies and estimates ) Dividend policy Maroc Telecom aims to demonstrate its concern for satisfactory compensation to its shareholders while securing the resources needed for the Company s development. Accordingly, Maroc Telecom intends to establish a policy of regular and significant dividend payment, according to the economic environment and the Company s profits and funding requirements. The total amount of dividends paid shall be determined taking into account the Company s capital requirements, return on capital and the Company s current and future profitability. The Company cannot guarantee shareholders an identical payment every year. This target is accordingly not a commitment of the Company. The bylaws (Article 16) contain an obligation to distribute annually, in the form of dividend, at least half of the Company s distributable profit, unless exempted by the Supervisory Board by a 75 percent majority. In addition, the final provisions of Article 331 of Act provide that a fixed dividend may not be set out in favor of the shareholders; any clause to the contrary shall be null and void, unless the State imposes a minimum dividend guarantee. Moroccan company law requires all corporations, including Maroc Telecom, to fund their statutory reserve with 5% of profits until the reserve reaches 10% of the share capital. In 2004, Maroc Telecom reached the statutory reserve limit, and may accordingly, since fiscal year 2005, pay out its entire distributable profit. 42 Maroc Telecom 2007 Registration Document

43 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL Dividends and dividend policy Tax treatment relating to dividends Moroccan tax treatment Investors should be aware that the summary of tax rules applicable in Morocco set out below is for illustrative purposes only and does not constitute a complete discussion of all potential tax situations applicable to each investor. Accordingly, investors should obtain advice from their usual tax advisors as to the tax treatment applicable to their specific situation and in particular the consequences of the acquisition, holding or transfer of company shares. The tax rules applicable in Morocco with respect to dividend pay-outs are governed by the General Income Tax Code: Income tax for companies (IS) and Income tax (IR) for individuals. The proceeds of shares (dividends) collected by individuals or companies resident in Morocco or not, are subject to a 10% withholding tax. Companies involved in the payment of such proceeds shall be responsible for payment of the withholding tax to the Treasury. Companies having their Head Offices in Morocco are exempt from this withholding tax, provided that they deliver to the paying agent attestations of title to the shares, including the reference of the tax applicable in Morocco. It should be noted that dividends paid to residents of countries with which Morocco has entered into tax treaties to avoid double taxation can benefit from a rate of less than 10% if these treaties provide for such a rate. Further such persons are usually entitled to credit the tax paid in Morocco with the tax authorities in their own countries according to the procedures eliminating double taxation. Moroccan exchange control legislation permits foreign shareholders to transfer dividends abroad. French tax treatment Investors should note that the French tax treatment presented below is provided for information only, and does not constitute a complete discussion of all the tax situations that may apply to each investor. Accordingly, investors should obtain advice from their usual tax advisers regarding the tax treatment applicable to their specific situation and in particular to the acquisition, holding or transfer of shares of the Company. Individuals holding shares as part of their personal assets and not performing stock exchange transactions on a regular basis. Shareholders are allowed a tax credit chargeable against the amount of French income tax relating to the same income, in accordance with Article 25-2 of the Convention signed on May 29, 1970 between the French Republic and the Kingdom of Morocco (the Convention ). The tax credit amount is set by Article 25-3 of the Convention at 25% of the amount of dividends paid out. According to information from the Director of Tax Legislation, the tax credit amounted to 33.33% of the net amount of dividends collected (after deduction of the withholding tax charged in Morocco). If the taxpayer so chooses, the net dividends collected, plus the attached tax credit, may be subject to 18% income tax plus the additional social security levy. Otherwise the net dividends collected, plus the attached tax credit are taken into account to determine the taxpayer s overall income in the class of proceeds from securities and shall be subject to income tax on a progressive scale. Maroc Telecom Registration Document 43

44 3 However, dividends paid out by the Company pursuant to a valid resolution of the Company are taken into account for the purposes of computation of income tax, after a 40% reduction on the gross amount of the payout, (i.e. 60% of the gross dividend is taxable). In addition, they shall be eligible for an annual allowance of 3,050 (for married couples taxed jointly and for partners taxed jointly under a PACS agreement defined under Article of the French Civil Code), and of 1,525 for taxpayers who are single, widowed, divorced or married and taxed separately. The 40% allowance shall apply before the allowance of 1,525 or 3,050. They also benefit from an annual general allowance of euros (married couples or partners of a pact of solidarity defined in article of the civil code subjected to a common imposition), or of euros (unmarried, widowed, divorced or married people separately imposed). The allowance of 40% applies before this general abatement of euros or euros. In addition, taxpayers resident in France for tax purposes, as defined under Article 4 B of the French Tax Code, may be eligible in respect of these dividends for a tax credit of 50% of the amount of taxable dividends before the allowance. This credit shall be allowed for up to 230 annually for married couples taxed jointly and for partners taxed jointly under a PACS agreement defined under Article of the French Civil Code, and for up to 115 for taxpayers who are single, widowed, divorced or married and taxed separately. Investors should note that dividends denominated in Moroccan dirhams shall be converted, for the purposes of taxation in France, into euros by applying the exchange rate in Paris on the date of collection of the dividends. If there is no listing on that day, the average trading price applied at a to the collection date is to be used. Companies liable to pay corporate income tax The dividend paid out by the Company shall be subject to corporate income tax in France. In accordance with Article 25-2 of the Convention, the shareholder is granted a tax credit chargeable against French corporate income tax. The tax credit amount is set by Article 25-3 of the Convention at 25% of the dividends paid out. According to information from the Director of Tax Legislation, the amount of such tax credit equals 33.33% of the net amount of dividends collected (after deduction of the withholding tax charged in Morocco). This tax credit may not, however, exceed the amount of French corporate income tax relating to these dividends. No surplus tax credit may be used against the French taxes payable in respect of other sources of income, or be refunded or carried forward. The dividends collected, plus the related tax credit, shall be included in the income subject to corporate income tax at a rate of 33.33%. An additional contribution of 3% of the gross amount of corporate income tax and a welfare contribution of 3.3% of the gross amount of corporate income tax in excess of 763,000 per 12-month period, shall be added thereto. However, for companies with revenues of less than 7,630,000 and the share capital of which, fully paid in, has been held uninterruptedly for the duration of the fiscal year concerned by at least 75% by individuals or by a company meeting all such requirements, the rate of corporate income tax is set, for up to 38,120 of taxable profit per 12-month period, at 15%. These companies are in addition exempt from the 3.3% welfare contribution mentioned above. 44 Maroc Telecom 2007 Registration Document

45 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL Dividends and dividend policy Companies eligible for parent company exemption regimes Companies meeting the requirements of Articles 145 and 216 of the French Tax Code may choose to benefit from an exemption on dividends collected pursuant to the parent company exemption regime. Article 216 I of the French Tax Code, however, provides for the taxation in the taxable income of the legal entity receiving the dividends, of a portion of costs and expenses set at a fixed rate of 5% of the amount of dividends collected, including the traditional tax credit granted under a tax treaty. For each taxable period, however, this portion may not exceed the total amount of costs and expenses of all kinds incurred by the company collecting the dividends during the same period. Pursuant to the parent company exemption regime, the traditional tax credit attached to the dividends collected may not be used against the amount of corporate income tax. Investors should note that dividends denominated in Moroccan dirhams shall be converted, for the purposes of taxation in France, into euros by applying the exchange rate in Paris on the date of collection of such dividends. If there is no listing on that day, the average trading price applied at a to the collection date is to be used. Maroc Telecom Registration Document 45

46 3 3.5 BREAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS Ownership of share capital and voting rights in the Company As at December 31, 2007, the share capital and voting rights of the Company were held as follows: Shareholders Number of shares % of capital / Voting rights Vivendi Group * 465,920, % Kingdom of Morocco 263,728, % Members of Supervisory and Management Board 155, % Employees 1,466, % Public 147,768, % Maroc Telecom 55, % Total 879,095, % * Through its 100% subsidiary (Société de Participation dans les Télécommunications) Authorized share capital As at the date of this Registration Document, the Company had not issued any securities other than the ordinary shares carrying direct or indirect rights, at present or in the future, to the Company s share capital. Likewise, no stock option or subscription plan has been established in favor of the employees. However the general shareholders meeting of March 30, 2006 authorized the Management Board to set up stock option and subscription plans in compliance with applicable laws. This authorization is valid for 36 months from the date of the abovementioned general shareholders meeting, and may be used once or several times. At present it has not yet been used Changes in the shareholding structure of the company over the last three fiscal years Since December 13, 2004, Maroc Telecom share has been listed simultaneously on the Casablanca Stock Exchange and Euronext Paris after transfer by public bid for sale of 14.9% of Maroc Telecom share capital by the Kingdom of Morocco. On November 18, 2004 the Kingdom of Morocco and Vivendi concluded an agreement regarding the acquisition by Vivendi of 16% of Maroc Telecom s share capital. On January 4, 2005, this agreement allowed Vivendi to increase its stake from 35% to 51% by the acquisition of 140,655,260 Maroc Telecom shares. During 2006, the Moroccan State disposed of 0.10% of Maroc Telecom s share capital, reducing its stake to 34%. On July 2, 2007, the Moroccan State sold 4% of Maroc Telecom s share capital on the Casablanca Stock Exchange at MAD130/share. This sale of shares was reserved to Moroccan and international institutional investors via a book order between June 26 and June 28, At the end of this transaction, the Moroccan State held 30% of share capital and voting rights of the company. The free float was increased from 15% to 19% of the share capital. Under the terms of an agreement between Vivendi and the group CDG, Vivendi acquired 2% of the capital of Morocco Telecom, thus increasing its stake from 51% to 53%. In addition, CDG group acquired 0.6% of Vivendi s share capital. 46 Maroc Telecom 2007 Registration Document

47 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL Breakdown of share capital and voting rights The breakdown of the capital and voting rights of the Company over the last three years is as follows: Shareholders Situation at December 31, 2007 December 31, 2006 December 31, 2005 % of Capital/ %Capital/ Number of shares voting rights voting rights Number of shares % of Capital/ Number of shares voting rights Vivendi Group* 53.00% 465,920, % 448,338, % 448,338,570 Kingdom of Morocco 30.00% 263,728, % 298,892, % 299,771,480 Members of Supervisory and Management Boards 0.02% 155, % 157, % 161,850 Employees 0.17% 1,466, % 1,590, % 2,084,200 Public 16.81% 147,768, % 130,115, % 128,739,240 Maroc Telecom - 55, Total 100% 879,095, % 879,095, % 879, 095,340 * Through its 100% subsidiary (Société de Participation dans les Télécommunications) Employee stock ownership Maroc Telecom allowed its employees to take part in the Initial Public Offering with privileged conditions namely a 15% discount on the subscription price, provided that they kept the shares acquired for 3 years, until December 16, On December 31, 2007, the shares held by employees amounted to 0.17% of the share capital and the voting rights Shareholders Agreement The amended Shareholders Agreement between the kingdom of Morocco and Vivendi By an amendment dated November 18, 2004 and April 6, 2007, Vivendi and the Government of the Kingdom of Morocco modified the shareholders agreement. In accordance with this amendment, principal provisions governing relations between the Kingdom of Morocco and Vivendi are as follows: Organization of powers within Maroc Telecom s management bodies Supervisory Board The amended Shareholders Agreement provides that the Supervisory Board, in theory, is to be composed of eight members, and that a change in the apportionment of seats on the Supervisory Board is contingent upon a change in the respective beneficial interests of Vivendi and the Government of the Kingdom of Morocco in the Company s share capital, as follows. If the share of the Government of the Kingdom of Morocco of the total voting rights held jointly with Vivendi becomes: Maroc Telecom Registration Document 47

48 3 greater than or equal to 50% but less than or equal to 65%, then five members will be appointed by the Government of the Kingdom of Morocco versus three members by Vivendi; greater than or equal to 40% but less than 50%, then three members will be appointed by the Government of the Kingdom of Morocco versus five members by Vivendi; greater than or equal to 30% but less than 40%, then two members will be appointed by the Government of the Kingdom of Morocco versus six members by Vivendi; greater than or equal to 20% but less than 30%, then one member will be appointed by the Government of the Kingdom of Morocco versus seven members by Vivendi; greater than or equal to 70% but less than 80%, then seven members will be appointed by the Government of the Kingdom of Morocco versus one member by Vivendi; and greater than 65% but less than 70%, then six members will be appointed by the Government of the Kingdom of Morocco versus two members by Vivendi. In addition, if the Kingdom of Morocco holds less than 5% of the capital and at least 2 shares of the Company, it will be entitled to appoint 2 stake representatives who will attend the Supervisory Board without being able to vote. In order to preserve the power to appoint the Chairman of Supervisory Board, the Kingdom of Morocco must have two seats. Pursuant to the Amended Shareholders Agreement, the following rules will apply to the extent that the application of such rules would result in the Kingdom of Morocco appointing a number of members of the Supervisory Board greater than the number resulting from the application of the rules described above: if the shareholding of the Government of the Kingdom of Morocco is more than or equal to 22% of the share capital and voting rights of the Company, three members of the Supervisory Board will be appointed by the Kingdom of Morocco and five members of the Supervisory Board by Vivendi; if the shareholding of the Kingdom of Morocco is less than 22% and more than or equal to 9% of the share capital and voting rights of the Company, two members of the Supervisory Board will be appointed by the Kingdom of Morocco and six members of the Supervisory Board by Vivendi ; and; if the shareholding of the Kingdom of Morocco is less than 9% or more than or equal to 5% of the share capital and voting rights of the Company, one of the members of the Supervisory Board will be appointed by the Kingdom of Morocco and seven members of the Supervisory Board will be appointed by Vivendi, and the Kingdom of Morocco shall be entitled to appoint one stake representative who shall have the right to attend the Supervisory Board without being able to vote. These rules governing the allocation of the seats on the Supervisory Board shall remain applicable as long as the Kingdom of Morocco holds at least 5% of the share capital and voting rights of the Company. The rules of majority applicable to the Supervisory Board are set out in the Shareholders Agreement and are reproduced identically and virtually in full in the bylaws. The only decisions subject to the approval of the Supervisory Board in the Amendment which are not reproduced in the bylaws are related to: (i) the parties agreement to submit to the Supervisory Board for approval by a majority, any exceptions made to the commitment of Vivendi to propose the appointment of at least one Moroccan member to the Management Board and; (ii) the parties agreement to submit to the Supervisory Board for approval by a majority, any decision con- 48 Maroc Telecom 2007 Registration Document

49 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL Ownership of share capital and voting rights in the Company cerning a project involving the non-competition clause in the MENA zone provided for by the Amended Shareholders Agreement. Management Board The Amended Shareholders Agreement provides that a change in the apportionment of seats on the Management Board is contingent upon a change in the respective beneficial interests of Vivendi and the Government of the Kingdom of Morocco in the Company s share capital, as described below. If the pro rata share of the Government of the Kingdom of Morocco of the total amount of voting rights held jointly by it with Vivendi becomes: greater than or equal to 20% but less than 40%, then one member will be appointed by the Government of the Kingdom of Morocco versus four members by Vivendi; greater than or equal to 40% but less than or equal to 65%, then two members will be appointed by the Government of the Kingdom of Morocco versus three members by Vivendi; greater than 65% but less than or equal to 70%, then three members will be appointed by the Government of the Kingdom of Morocco versus two members by Vivendi; greater than 70% but less than or equal to 80%, then four members will be appointed by the Government of the Kingdom of Morocco versus one member by Vivendi. In addition, as long as the Government of the Kingdom of Morocco holds at least 15% of the share capital and voting rights of the Company, two members of the Management Board will be appointed by the Government of the Kingdom of Morocco and three members of the Management Board will be nominated by Vivendi and as long as the Government of the Kingdom of Morocco holds at least 9% of the share capital and voting rights of the Company, one member of the Management Board will be appointed by the Government of the Kingdom of Morocco and four members of the Management Board will be appointed by Vivendi notwithstanding any less favorable stipulation of the Amended Shareholders Agreement. These provisions will become automatically null and void in the event that the Government of the Kingdom of Morocco holds less than 9% of the share capital and voting rights of the Company. Shareholders Meeting Vivendi holds the majority of votes at ordinary general meetings. Audit Committee As long as the Government of the Kingdom of Morocco holds at least 5% of the share capital and voting rights of the Company, at least two members of the Audit Committee of Maroc Telecom will be appointed by the Government of the Kingdom of Morocco and this committee s internal regulations shall provide for the possibility for any member of the Audit Committee to ask the Audit Committee to carry out an audit of the Company and the obligation for the Audit Committee to rule on any formal request submitted by at least two members of the Audit Committee to carry out such an audit. Specifics rights of the Moroccan Government The Government of the Kingdom of Morocco also holds the right to veto a plan of merger, divestment or partial contribution of assets that is likely to substantially modify the scope of the Company s business activities or substantially modify the Company s corporate purpose, unless Vivendi demonstrates to the Government of the Kingdom of Morocco, on objective and reasonable grounds, a strategic purpose for the Company for such a plan. This right is valid notwithstanding any discrepancy with the Initial Shareholders Agreement, until the earliest of the two following dates: (i) the date on which the Government of the Maroc Telecom Registration Document 49

50 3 Kingdom of Morocco ceases to hold at least 14% of the share capital and voting rights of the Company or (ii) February 20, Conditions for transfers of shares and rights of the parties Call option of the Government of the Kingdom of Morocco Vivendi would have to transfer to the Government of the Kingdom of Morocco its beneficial interest in the Company, held directly or through its subsidiaries, in the event of a change in the control of Vivendi having such a impact on competition on the Moroccan market, that it will incur an obligation for Vivendi, imposed by the Moroccan competition authorities, to transfer all or a portion of its beneficial interest in the Company and/or a transfer by the Company of one of its business activities representing at least 25% of its revenues. This provision will remain in force as long as the Government of the Kingdom of Morocco holds at least 20% of the total amount of voting rights held jointly with Vivendi. Standstill obligation of Vivendi In application of the amended Shareholders Agreement, the period during which Vivendi is forbidden to transfer Company shares without preliminary agreement of the Moroccan Minister of Finance and Privatization, is extended to February 20, Pro rata tag-along right of the Kingdom of Morocco In the event of a transfer of shares by Vivendi between February 21, 2008 and February 20, 2010 (inclusive) that does not trigger a mandatory public tender offer, the Government of the Kingdom of Morocco shall benefit from a pro rata tagalong right. However, this tag-along right shall not apply in the event of a transfer between companies within the Vivendi group (i.e., between Vivendi and/or any company/ companies in which Vivendi holds at least two thirds of the share capital and voting rights). Vivendi s right of pre-emption Vivendi shall benefit from a right of pre-emption in the event of an assignment by the Government of the Kingdom of Morocco of all or part of its shares until February 20, 2010 (inclusive). Mauritel SA Shareholders Agreement On April 12, 2001, Maroc Telecom acquired 54% of the share capital of the incumbent Mauritanian operator, Mauritel SA. At the time of this acquisition, the Islamic Republic of Mauritania and Maroc Telecom entered into a Shareholders Agreement, under the terms of which Maroc Telecom obtained the right to appoint members of the board of Directors of Mauritel SA in proportion to the beneficial interest that it holds (four members out of seven, as long as it holds more than 50% of the share capital). Until June 30, 2004, the Mauritanian State benefited from a right of veto with respect to significant operations (including, in particular, modification of the legal structure of Mauritel SA, approval of the budget and business plan, fixing the annual dividend, and the conclusion of any financing). The agreement provides for a payment of dividends at the level of 30% of the consolidated profits of the Mauritel SA group, as long as such a distribution is legally possible and would not compromise the fulfillment of objectives set out in the business plan or a healthy financial position. In addition, Maroc Telecom was not entitled to transfer shares of Mauritel SA before June 30, 2004, except for a transfer within the group or a transfer of 3% of the share capital to the employees of the Mauritanian operator. In 2006, CMC acquired 0.527% of Mauritel SA s share capital from Socipam, thereby increasing its stake to %. On June 6, 2002, Maroc Telecom transferred its beneficial interest of 54% in Mauritel SA to the controlling holding company Compagnie Mauritanienne de Communications (CMC), and then transferred 20% of the share capital of CMC to Mauritanian investors. At the time of this transfer, Maroc Telecom and the Mauritanian investors entered into a Shareholders Agreement under which each shareholder holds management rights with respect to CMC in proportion to the levels of its beneficial interest. In reference to this transfer, 50 Maroc Telecom 2007 Registration Document

51 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL Asset pledges CMC was substituted to Maroc Telecom in the Shareholders Agreement. Finally, under the terms of the Shareholders Agreement, CMC transferred 3% of the share capital of Mauritel SA to the employees of the Mauritanian operator, thus bringing its beneficial interest to 51% of the share capital of Mauritel SA. Each of the parties holds a right of pre-emption with respect to the beneficial interest of the other party. All transfers are subject to approval by the board of directors of Mauritel SA. The agreement also contains a tag along right (droit de suite) allowing the Government to sell to the acquirer of the beneficial interest in Mauritel SA the same percentage of shares acquired from Maroc Telecom. Medi-1-Sat Shareholders Agreement Pursuant to the Shareholders Agreement signed with the other shareholders (CDG, 28% via its subsidiary FIPAR Holding, RMI 14% and CIRT, 30%), Maroc Telecom, which owns 28% of the share capital, received and/or granted certain rights (right of first refusal etc.) enabling it to protect its shareholder rights. Mobisud France Shareholders Agreement Pursuant to the Shareholders Agreement signed with the other shareholders (SFR, 16% and Saham Group, 18%), Maroc Telecom, which owns 66% of the share capital, received and/or granted certain rights (right of first refusal etc.) enabling it to protect its shareholder rights. Gabon Telecom Shareholders Agreement According to the the Shareholders Agreement concluded with Gabon Telecom, Maroc Telecom which owns 51% of the share capital, received and/or granted certain rights (right of first refusal etc.) enabling it to protect its shareholder rights. 3.6 Asset pledges No pledge on assets of the Company has been granted. In addition, the shares in Maroc Telecom s subsidiaries are not pledged for the benefit of third parties. Maroc Telecom Registration Document 51

52 INFORMATION CONCERNING COMPANY BUSINESS ACTIVITES

53 4.1 HISTORY GENERAL PRESENTATION ORGANIZATION ISO CERTIFICATION MAROC TELECOM BUSINESS STRATEGY BUSINESS ACTIVITIIES IN MOROCCO MOBILE BUSINESS FIXED-LINE AND INTERNET BUSINESS DISTRIBUTION MARKETING, COMMUNICATION AND SPONSORSHIP COMPETITION DESCRIPTION OF SUBSIDIARIES ACTIVITIES MAURITEL ONATEL GABON TELECOM CASANET MEDI -1-SAT MOBISUD (FRANCE AND BELGIUM) RESEARCH AND DEVELOPMENT SEASONALITY REGULATORY ENVIRONMENT AND POSSIBLE DEPENDENCIES THE LEGAL FRAMEWORK WITH RESPECT TO THE TELECOMMUNICATIOSN IN MOROCCO REGULATORY FRAMEWORK OF SUBSIDIARIES HUMAN RESOURCES MODERNIZATION OF HUMAN RESOURCES MANAGEMENT STAFF STAFF TURNOVER RATE CHANGES IN THE NUMBER OF EMPLOYEES VIVENDI STAFF TRAINING CHANGE IN STAFF COMPENSATION LABOR RELATIONS AGREEMENTS AND NEGOTIATIONS EMPLOYEE BENEFITS REAL PROPERTY INTELLECTUAL PROPERTY INSURANCE LEGAL AND ARBITRATION PROCEEDINGS RISK FACTORS RISKS RELATING TO THE COMPANY S BUSINESS RISKS RELATING TO THE REGULATORY ENVIRONMENT TAX RISK RISKS RELATING TO THE INTERESTS HELD BY MAJOR SHAREHOLDERS IN MAROC TELECOM MARKET RISKS 145

54 4 4.1 HISTORY Maroc Telecom was created as a result of a split of the Office National des Postes et Télécommunications pursuant to the enactment of Act and the implementing decrees relating to telecommunications. Maroc Telecom, the incumbent telecommunications operator in the Kingdom of Morocco, has two business segments: the Mobile segment and the Fixed-line and Internet segment. A mobile telephone service was introduced in Morocco in 1987, using analog technology. As soon as the GSM digital standard was adopted, Maroc Telecom, as the incumbent operator, expanded its mobile telephone services and was the first operator in Africa and the second in the MENA (Middle East North Africa) region to operate a GSM network (since April 1, 1994). Maroc Telecom soon extended coverage to the country s main economic and political centers. In January 1995, Maroc Telecom signed its first international roaming agreement. In order to prepare for the arrival of a new competitor on the market and to increase market penetration, Maroc Telecom introduced prepaid schemes and GSM packages in 1999, and launched rate plans in There are now two 2G mobile operators, three 3G mobile operators in Morocco, including Maroc Telecom (see section 4.5 Competition ). There has been a fixed-line telephone service in Morocco since the first half of the twentieth century and Maroc Telecom was still the only operator with a fixed-line telecommunications license in Morocco in 2006 despite the fact that two licenses were attributed in 2005 (see section 4.5 Competition ). The Company extended the range of fixed-line telecommunications services it provides with the launch of narrowband Internet in 1995 and broadband ADSL in 2003 and TV via ADSL in 2006, together with dedicated data transmission services for business users using state-of-the-art technology. On February 20, 2001, Vivendi acquired a 35% interest in the Company pursuant to an invitation to tender organized by the Government of the Kingdom of Morocco for the selection of a strategic partner. Vivendi was granted certain rights relating to the Company s management and operations (see section Shareholders Agreement). Maroc Telecom, along with the SFR group, is now affiliated to the Telecommunications Division of the Vivendi group. Pursuant to an agreement dated November 18, 2004 between the Government of the Kingdom of Morocco and Vivendi, the Kingdom of Morocco transferred ordinary shares representing an additional 16% of Maroc Telecom s share capital. In 2006, the Government of the Kingdom of Morocco sold 0.1% of Maroc Telecom s share capital, reducing its stake to 34%. On July 2, 2007, the Moroccan State sold 4% of Maroc Telecom s share in the Casablanca Stock Exchange at MAD130/share. This transfer of shares was reserved to Moroccan and international institutional investors via a book order between June 26 and June 28, At the end of this operation, the Moroccan State held 30% of the share capital and voting rights of the Company. The free float was increased from 15% to 19% of share capital. In December 2007, following a share exchange with the deposit and management fund of Morocco, Vivendi acquired an additional 2%. As at December 31, 2007, the breakdown of Maroc Telecom s capital was as follows: Vivendi Group 53.0% Kingdom of Morocco 30.0% Free float 17.0% 54 Maroc Telecom 2007 Registration Document

55 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES General presentation 4.2 GENERAL PRESENTATION Organization The group s simplified legal structure as of February 12, 2007 was as follows: Vivendi Kingdom of Morocco Market 53.0%* 30.0%* 17.0* Maroc Telecom 80%* 51%* 51%* 66%* 100%* CMC Onatel Gabon Telecom Mobisud France Mobisud Belgium Others** 51,5%* 100%* 100%* Mauritel Telmob Libertis * The percentages represent voting right percentages ** for details of the equity holdings see Section 5.5 Individual financial statements B4 Since 2001, Maroc Telecom has been part of the Vivendi group, a leading player in entertainment, with activities in music, television, cinema, mobile telecommunications, Internet and games. All of Vivendi s businesses, like Maroc Telecom, hold leading positions on their markets: Universal music Group, a wholly-owned subsidiary of Vivendi, is the world leader in recorded music with more than one out of every four CDs sold worldwide, and a leading position on the digital music market; Canal+ Group, a wholly-owned subsidiary of Vivendi, is a key player in theme and premium TV channels, pay-tv, with more than 10.5 million subscriptions. Canal+ Group is also a leader in France and Europe in the funding, acquisition and distribution of movies; SFR, in which Vivendi owns a 56% stake, is France s number two mobile telecommunications operator, with 18.8 million customers. SFR also owns 40% of Neuf Cegetel, France s leading alternative fixedline telecommunications operator; Vivendi Games a wholly-owned subsidiary of Vivendi is a global developer, publisher and distributor of multi-platform interactive entertainment with more than 10 million subscriptions worldwide. In addition, Vivendi owns 20% of NBC Universal which is a major global player in media and communications with activities encompassing the production of films and television shows, the broadcasting of TV networks and the operation of theme parks. Maroc Telecom Registration Document 55

56 4 Mauritel SA, which was acquired on April 12, 2001 by Maroc Telecom, is the incumbent telecommunications operator in Mauritania (see section Mauritel). Recently Maroc Telecom intensified its international development with the acquisition of majority holdings following international invitations to tender: In Burkina Faso, Maroc Telecom acquired a 51% stake of Onatel, Burkina Faso s incumbent operator on December 29, In Gabon, Maroc Telecom acquired a 51% stake in Gabon Telecom, Gabon s incumbent operator, on February 9, In addition, Maroc Telecom launched an MVNO (Mobile Virtual Network Operator), named Mobisud. Launched as of December 1, 2006 in France and using SFR s network, Mobisud France is owned by Maroc Telecom (66%), by SFR (16%) and by the Moroccan group Saham (18%). Mobisud is specifically targeted towards individuals who live in France and have ties with Maghreb countries (Morocco, Algeria, Tunisia). Mobisud Belgium is wholly owned by Maroc Telecom and was launched on May 2, 2007 using Proximus network. Organized into General and Regional Divisions based on its businesses and services, Maroc Telecom combines Mobile, Fixed-line and Internet operations in its Services department, and Support, Networks and Administrative & Finance functions. Maroc Telecom is decentralized with eight Regional Divisions each one with their own operational structures and support allowing them to react quickly and to be more autonomous in the field. In 2006, Maroc Telecom modified its internal organization to be able to seize the opportunities made available by convergence and to be in a position to propose global offers at the best prices while maintaining a high quality service. Accordingly, the Fixed-line and Internet and Mobile segments were grouped together into a single department called Services. Regional sales teams have been set up to strengthen links with Maroc Telecom s clients and partners at both provincial and prefectoral levels. As at December 31, 2007, the functional organization chart of the Group was as follows: Abdeslam AHIZOUNE Chairman of the Management Board Larbi GUEDIRA Managing Director Services Janie LETROT Managing Director Regulation, Communication and International Development Mohammed HMADOU Managing Director Networks Arnaud CASTILLE Managing Director Administration & Finance 8 Regional Divisions 56 Maroc Telecom 2007 Registration Document

57 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES General presentation ISO certification Within the framework of its overall policy of improving the quality of its business activities, in 2003, Maroc Telecom obtained the ISO 9001 version 2000 certification for certain activities, such as the invoicing of Mobile services and the Mobile and fixed-line call centers, invoicing and collection of the fixed-line revenues. In December, 2004, Maroc Telecom was rewarded for the quality of its products and services with the ISO 9001 version 2000 certification for all of its activities within the framework of a total quality method. This certification was renewed following the renewal audit of December This certification covers the design and development of offers, sales & marketing, installation / deinstallation, activation / deactivation, invoicing and collection, after-sales service, information and assistance for all consumer and business customers in all Maroc Telecom sites. Within the framework of its overall policy of information security, Maroc Telecom obtained in January 2008 the ISO version 2005 certification for all its activities. This certification covers the design, planning, development, operation, maintenance, and after-sales fixedline, mobile and data services, added-value services and corresponding technological infrastructure. Maroc Telecom Registration Document 57

58 4 4.3 MAROC TELECOM S BUSINESS STRATEGY Against the background of a growing telecommunications market, boosted by favorable economic and demographic conditions, Maroc Telecom s goal is to retain leadership in all its market segments (mobile, fixed-line and Internet), and to maintain profitability levels. At the end of 2007, despite efforts made by competitors, Maroc Telecom succeeded in maintaining its leadership in each segment of the market, relying in particular on: a segmented and competitive offer, tailored to consumers expectations; an extensive distribution network, the densest in the country, with more than 44,000 direct and indirect retail outlets licensed by Maroc Telecom; modern network infrastructure, offering the country s best mobile coverage; and strong brands enjoying high customer recognition. Maroc Telecom s strategy accordingly consist of the following: Stimulating growth in the mobile market by increasing the use of mobile services and innovating Maroc Telecom stimulates the use of prepaid services, with promotional offers on voice services (offers on top-up cards and other regular promotions) and on data services (reducing SMS and MMS tariffs and promotions), while striving to expand its customer base and increase customer loyalty. Maroc Telecom has introduced new value-added services based on SMS, MMS and GPRS, to enhance its range and to increase ARPU (average revenue per user). Maroc Telecom has always been a forerunner in developing new technologies, and launched the new 3G services in Steady growth in the customer base buoyed by lower cost, while maintaining a firm grip on customer acquisition costs and customer loyalty, remains the Company s priority. The mobile penetration rate increased from 53.5% at December 31, 2006 to 65.7% as at December 31, 2007 (Source: ANRT), which confirms the market s strong growth potential. In the medium term, the penetration rate is likely to reach more than 80% (Maroc Telecom estimates). Reinforcing its competitiveness in the fixed-line network to deal with liberalization in this segment The fixed-line telecommunications market has been completely liberalized since 2005 when two new licenses were granted to Meditel and Morocco Connect, which became Wana in Both new entrants started marketing their new Fixed-line and Internet services in Morocco Telecom strategy is focused on making its offers more competitive, and in particular on providing excellent service, on its customer loyalty program and launching new innovative services. This strategy essentially aims to: Steadily increase unlimited fixed-to-fixed rate plans (Phony range with very competitive tariffs and Infinifix for business) granting unlimited calls and call time to all fixed-lines. Add content to telecommunications offers, with the launch in 2006 of TV via ADSL and Double and Triple Play Internet offers, VOIP and Video on demand in 2008, made possible by IP technologies and high bandwidth. The aim is to equip the Fixed-line segment with new growth drivers. Improve the quality of pre- and after-sales service, which has been rewarded by the quality certification obtained at the end of Strengthen customer loyalty programs, enabling customers to earn various gifts and benefits. Rapidly increase of ADSL penetration which at the end of 2007 had already reached 42% of fixed-lines (excluding public telephony). 58 Maroc Telecom 2007 Registration Document

59 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Maroc Telecom s business strategy Remaining the principal engine of Internet development in Morocco The great success of the new unlimited ADSL Internet access services, launched in early 2004, along with the rate reductions in March 2005 and May 2006 and promotional offers launched throughout the year, is a sign of the market s growth potential. Maroc Telecom focuses its efforts on broadband, with a commercial policy organized around gradual price cuts and high speed Internet access. Maroc Telecom also develops a number of initiatives designed to increase the penetration of Internet, in particular in schools, to develop specific plans for business users, and to assist in the development of content and use of the Internet. Capitalizing on its brands and making Maroc Telecom a reference in terms of customer service in Morocco Maroc Telecom enjoys strong public recognition and an excellent image with its brands, such as Jawal (prepaid mobile telephony), El Manzil (fixed-line telephony for residential and business users), Phony (unlimited fixed-to-fixed rate plans) and Menara (Internet access). The Company also proposes to make Maroc Telecom the reference in customer service in Morocco by continuing to improve presentation, and customer interface at the point of sale, customer services (technical start-up, after-sales service, commercial administration, call centers). Relying on network infrastructure complying with the most recent technological standards Maroc Telecom has the most extensive and technologically advanced network infrastructure in Morocco. With its modern high-performance network, based on a fully meshed and secured fiber optic backbone, Maroc Telecom offers a wide range of high-quality telecommunications services (Fixed-line, mobile, data and broadband Internet). In order to maintain a reliable leading-edge network, providing innovative new services to its customers, Maroc Telecom intends to proceed with its policy of investment in its network, aiming to develop capacity and coverage, introduce new mobile and fixed-line technologies, develop, build and strengthen domestic and international interconnections. Maintaining rigorous financial management and a sound financial structure Maroc Telecom has outstandingly shown over the past years that it is capable of maintaining its level of profitability by continuing dynamic development, while keeping a tight hold on costs. Its large cash-flow generating ability enables it to maintain a sound financial structure while paying out dividends to its shareholders on a regular basis. In addition, Maroc Telecom intends to seize acquisition opportunities that would create shareholder value, while observing strict investment criteria. Maroc Telecom Registration Document 59

60 4 4.4 BUSINESS ACTIVITIES IN MOROCCO Maroc Telecom is the leader in the Moroccan market, offering Mobile, Fixed-line and Internet services. The Mobile business provides mobile telecommunications services. It had 13.3 million customers as at December 31, 2007 and operates a GSM network covering almost the entire population through more than 5,026 base stations. The Fixed-line and Internet business provides fixed-line telephone services including public telephony, Internet services and data transmission services. It had 1.29 million Fixed-line and 476,000 Internet customers as at December 31, As at the same date, its network, entirely digitized for switching, consisted of 7,879 kilometers of intercity fiber optic cable and over 6,307 kilometers of urban fiber optic. Maroc Telecom s products and services are marketed through a distribution network consisting of its own branches covering the entire territory of Morocco and through independent distribution channels (see section Distribution ). The table below describes the development of Maroc Telecom s customer base over the past three fiscal years: As at December 31, in thousands Mobile customers* 8,237 10,707 13,327 Fixed-line customers 1,341 1,266 1,289 Internet customers** * Mobile customers figures include prepaid and postpaid ** Internet customers concerns IP accounts opened with Maroc Telecom (subscribers and pay-as-you-go customers) Mobile business General presentation Maroc Telecom is the leader in the Moroccan market for mobile communications. The Company s market share reached 66.50% as at December 31, 2007 (Source: ANRT). This market has expanded considerably since 2000, with the number of mobile customers (all operators) rising from million in 2000 to 20 million as at December 30, 2007 (Source : ANRT). Over the same period, the market penetration rate rose from 1.3% to 65.7% (Source: ANRT). The mobile market (all operators) is mainly a prepaid market. In 2007, the prepaid customer base in Morocco increased 25.6% from million customers to million customers at the end of On the postpaid segment, the total number of customers increased 15.9% between the end of 2006 and 2007, to 800,000 customers. Maroc Telecom offers prepaid services (the Jawal card and Mobisud) and a range of postpaid offers. Maroc Telecom provides extensive coverage both in terms of infrastructure and commercial presence. Its network covers almost the entire population of Morocco (Maroc Telecom estimate). Internationally, with over 417 roaming agreements, Maroc Telecom s customers have access to services in over 212 countries. This extensive commercial presence has been achieved through a direct and indirect distribution network of approximately 44,000 retail outlets licensed by Maroc Telecom (see section Distribution ). 60 Maroc Telecom 2007 Registration Document

61 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco The following table breaks down Maroc Telecom s mobile revenues for the past three years: In millions of Moroccan dirhams IFRS December Gross Mobile revenues* 12,470 14,206 17,096 Revenues for Mobile communications services* 11,556 13,237 16,138 Terminal equipment revenues Earnings from operations before amortization - 8,398 10,607 Earnings from operations 5,567 6,954 9,138 *Revenues relating to international traffic ingoing to Maroc Telecom s mobile and to outgoing international traffic from Maroc Telecom mobile have been directly accounted for in Mobile operations in 2007, whereas in 2006 and 2005, it was accounted for as transit revenue for fixed operations. Revenu figures for 2005 and 2006 have been adjusted accordingly. This adjustment has no impact on Maroc Telecom s net overall sales figures. Change in customer base The Moroccan mobile market has seen strong growth mainly due to the launch of prepaid plans in The prepayment system allows customers to keep a check on their expenditure and helps them to stay within their rate plan limits. This formula is particularly well tailored to the Moroccan market, which has a young population, with half of the population aged under 25. The following table sets out the main data relating to prepaid and postpaid services offered for the past three years. Maroc Telecom defines the churn rate as the ratio of cards disconnected or contracts terminated to the average customer base during a given period. For prepaid customers, Maroc Telecom defines the period of validity of a prepaid card as an initial six-month period for rechargeable cards costing from MAD50 and one month for rechargeable cards costing MAD10 to 20, corresponding to the duration of the card s credit, followed by a second six-month period during which the customer, while having the option of recharging the phone card, continues to receive calls. The ANRT defines a mobile subscriber as a person with a postpaid mobile subscription that is still activated, or a person with a prepaid card who has made or received at least one call (charged or free) within the past three months. As from January 1, 2006, Maroc Telecom uses the ANRT s definition in its communications with a restated comparison of Maroc Telecom Registration Document 61

62 Number of Mobile customers (1) (in thousands) 8,237 10,707 13,327 Prepaid 7,908 10,297 12,822 Postpaid*** Churn rate (%) (2) Prepaid 12.1% 20.5% 25.7% Postpaid (3) 13.9% 13.4% 14.3% Average churn rate 12.2% 20.3% 25.4% ARPU (MAD/customer/month) Prepaid Postpaid (3) Average ARPU Incoming usage (minutes/customer/month) Prepaid Postpaid (3) Average incoming usgae Outgoing usage (minutes/customer/month) Prepaid Postpaid (3) Average outgoing usage (1) Postpaid subscribers and prepaid cards (2) See Glossary (3) Including 'no commitment rate plans Prepaid services have seen sustained growth since their launch, due in particular to price cuts for SIM card only deals, subsidized packages including a GSM handset at fairly low prices, and Maroc Telecom s many promotions for top-up phone cards and calls, which stimulated growth and developed the loyalty of the expanded customer base. Postpaid covers mainly a high-consumption customer base generating substantially higher ARPU than prepaid customers. Despite tough competition in the market, Maroc Telecom has succeeded in maintaining its churn rate at a satisfactory level owing to its efforts to build customer loyalty while maintaining an acquisition policy in order to extend its base (see Offers section below). Accordingly, the loyalty program offered to prepaid customers since mid-2002 has been improved through the launch of a point-based Fidelio loyalty scheme. The customer can choose from a variety of loyalty bonuses: additional time, SMS, or GSM terminal. In 2007, with strong growth in the customer base and the reduction in access costs, the churn rate totaled 25.4%, up 5.1 points compared with Maroc Telecom 2007 Registration Document

63 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco In dirhams as at December Access cots Prepaid (1)(4) 400/ /100 20/50 400/ /100 20/50 10/30 50/100 20/50 10/30 10/20 5/10 Postpaid Subscription Postpaid (3) Mobile price per minute (2) : To Mobile Maroc Telecom Prepaid Postpaid (3) To Maroc Telecom Fixed-line Prepaid Postpaid (3) To other mobiles Prepaid Postpaidé (3) (1) Including initial call credit (2) Indivisible first minute; increments of one second for standard subscribers and 20 seconds for rate plan and prepaid subscribers, Standard subscription for postpaid and Jawal classique for prepaid at peak times (3) Standard subscription formula (4) Different costs according to credit including all taxes Pricing Since 2002, Maroc Telecom has charged calls by the second after the indivisible first minute for traditional subscribers and by 20-second increments for postpaid rate plans and prepaid calls. This pricing overhaul was accompanied by price cuts in order to: encourage the use of rate plans for postpaid subscribers, by offering them a wider range of rate plans and prices that decrease according to the rate plan s duration; provide prepaid customers with substantial cuts according to the amount of top-up phone cards bought; and develop usage by changing over to an indivisible minute. The table below sets out the change in average prices per minute, prepaid and postpaid, in Moroccan dirhams (including VAT) as at December 31 of each year. Maroc Telecom regularly grants price cuts for international calls and harmonizes tariffs. This new international tariff policy is in line with the general trend of new offers, where prices are attractive and competitive. Maroc Telecom Registration Document 63

64 4 Mobile communication services Maroc Telecom offers prepaid and postpaid services for consumer and business customers. These services comprise a wide range of offers with different levels of user commitment and different terms for making calls outside the contract rate plan. The table below shows the range of Maroc Telecom s Mobile offers: Service Customers Commitment Calls outside Product Prepaid Consumer and business No No Jawal Classique Jawal Jeunes Mobisud Postpaid Consumer, No No Liberté rate plan Business user Liberté rate plan SMS/MMS and business Yes No Controlled rate plans Yes Yes Standard subscription Individual rate plan Business Yes Yes Rate plane Business Class Intenso/Extenso/Extenso+ Prepaid As at December 31, 2007, the prepaid customer base consisted of million customers, which is almost 96% of the mobile customer base. Maroc Telecom aims to maintain ARPU by stimulating consumption (selling a wide range of top-ups) and by developing the use of value added data services (SMS and MMS). The group has launched several promotional offers on top-ups and calls to increase customer loyalty and to stimulate usage. The drop in ARPU in 2007 is mainly due to the strong increase in the customer base. Offers Maroc Telecom provides prepaid services under the Jawal and Mobisud brands. The prepaid services are aimed primarily at residential users, who demand a broad range of access and pricing offers. Maroc Telecom s prepaid plans are marketed as packages (handset and SIM card) and SIM card only deals, according to the following formulas: Jawal Classique, which offers an undifferentiated day/night tariff; Jawal Jeunes, with special rates in the evenings, on weekends and on public holidays; Mobisud which is proposed at MAD20 (including tax) with special and unique rates in the evenings and on public holidays towards all operators as well as Mobisud France. These three formulas are valid initially for six months, corresponding to the duration of the card s credit, and then a further six-month period during which the customer may recharge the phone card and receive calls. In 2007, Maroc Telecom introduced a new access fee of MAD10 (including tax). In addition, sales promotions on these deals are designed to stimulate sales. Promotional offers for new clients include free minutes and SMS. In order to develop the use of prepaid services, Maroc Telecom markets a range of top-up phone cards from MAD5 to MAD1200, with automatic bonuses linked to the purchase of a MAD50 top-up phone card. In 2007 the group introduced MAD5 and MAD30 top-up card in ticket form only. Promotions are implemented on voice and data services and on the range of top-up phone cards and are part of a policy to build customer loyalty, increase usage and develop the customer base. 64 Maroc Telecom 2007 Registration Document

65 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco The available recharging resources are also diversified, with a dual goal of reducing distribution costs and facilitating recharging for the customer. Thus, in addition to PVC scratch card recharging, Maroc Telecom offers electronic recharging and recharging through cash dispensers. Other similar solutions are also being considered. Pricing plans relating to prepaid services Maroc Telecom applies a differentiated pricing plan for prepaid customers according to the type of Jawal (Classique or Jeune) and Mobisud card, the call destination, as well as according to schedules for the Jawal Jeune card: For a customer of Jawal Classique, prices are MAD3.60 including tax, whatever the time of the call, for calls towards a fixed or mobile Maroc Telecom number or any other fixed-line Moroccan network, and MAD4.80 towards another Moroccan mobile network; For a customer of Jawal Jeune, the price at peak time (Monday to Friday, from 8 am to 8 pm) to fixed or mobile numbers for all operators is MAD6 including tax. In off-peak periods, the price drops from MAD2.40 (including tax) for the first minute to MAD1.07 (including tax) thereafter by 20 second increments for calls to Maroc Telecom numbers and other fixed-line operators and MAD2.40 (including tax) for calls to any other mobile network. For Mobisud customers, the unique tariff is MAD1 (including tax) every 30 seconds towards all national operators and MAD2 including tax towards Mobisud France from 10pm to 6pm and MAD4 (including tax) from 6pm to 10pm. SMSs are charged MAD0.96 (including tax) per message for Jawal customers and MAD0.72 per message for Mobisud customers and their price range is between MAD3.60 and MAD6 (including tax) for sending SMS to foreign countries, except for Mobisud customers for whose the tariff towards Europe and North America is MAD3.60 including tax. Pricing of international calls varies according to the call destination, and is the same for all three formulae. The destinations are classified in four zones and their rates vary from MAD11.52 to MAD28.80 (including tax) per minute, with the exception of the Mobisud formula, which proposes a tariff of MAD2 including tax towards the operator Mobisud France. In 2007, to boost consumption, Maroc Telecom continued its promotional offers for prepaid clients giving unlimited calls to a chosen telephone number at certain times at a special price and a rate plan of one hour of calls towards all fixed-line and mobile numbers for limited times. Migration of prepaid customers to pospaid In order to build customer loyalty and raise ARPU, Maroc Telecom is implementing a strategy intended to persuade high-usage prepaid customers to migrate to postpaid offers, a two-fold strategy. First, the Jawal services include an option for customers to migrate their prepaid accounts free of charge to a postpaid rate plan or subscription while retaining their telephone numbers. Second, Maroc Telecom offers capped postpaid rate plans, which are a basic product attractive to prepaid customers wishing to migrate to postpaid while retaining control over their communication costs. This strategy, which relies on frequent promotional campaigns to boost migration, aims at raising aggregate ARPU. In 2007, continuing this strategy, Maroc Telecom launched promotional Liberté 12 month rate plans which allow customers to migrate to postpaid with commitment of 12 months. Maroc Telecom Registration Document 65

66 4 Postpaid As at December 31, 2007, the postpaid customer base amounted to 505,000 subscribers, up 23.2% compared with The postpaid customers are mainly high usage customers. Maroc Telecom is seeking to increase ARPU by stimulating subscribers usage of its services and of new and existing voice and data services (SMS, MMS, GPRS, 3G and BlackBerry). In 2007, the postpaid ARPU fell slightly by 0.7%, due to strong increase of the customer base. Postpaid offers are marketed mainly via the branches of Maroc Telecom s distribution network, 25 of which are dedicated to mobile services. In addition, 18 branches are specifically dedicated to businesses and 4 branches to major accounts. Postpaid services are also distributed through the GSM Al-Maghrib and Lineatec networks (see section Distribution ). The postpaid offers are available to all consumer and business clients. The business market comprises SMEs, SMIs, local government, embassies and major private business public customers. Consumer market Maroc Telecom offers three plans to consumers: The traditional subscription, which is a monthly subscription offering invoicing for consumption according to peak and offpeak times (see section Pricing plans relating to postpaid services below); individual rate plans, which offer ten formulae based on communication time and a single charge for calls regardless of domestic destination and time of call (peak/ off peak). They encourage increased use by customers (see section Pricing plans relating to postpaid services below); controlled rate plans, which allow control of communication expenses by blocking outgoing calls when the rate plan has been used up. In order to make additional calls, the customer may recharge the account with Jawal top-up phone cards. This rate plan was introduced in order to build customer loyalty and encourage migration towards postpaid plans. The rate plan offers, with ten formulae ranging from 1 to 15 hours, provide for the charging of calls by 20- second increments after the first minute, and a single rate for any domestic call. These offers include a doubling of the call time for calls to Maroc Telecom numbers, automatic carry-over of unused time and free SMS, MMS and GPRS service. In order to boost recruitment of new postpaid subscribers and encourage prepaid clients to migrate to postpaid, Maroc Telecom launched no commitment offers which allow customers to return to their initial offer free of charge. There were two types of these offers: Liberté rate plan: Maroc Telecom has developed a range of 3 controlled rate plans with no commitment for 45 minutes, 90 minutes and 150 minutes for monthly subscriptions starting at MAD (including tax).the customer gets a main rate plan, free off-peak calls for the same amount of time and a top-up account. In 2007, a reduction was offered for customers taking out a 12-month minimum subscription. SMS/MMS Liberté rate plan: aimed at young people, Maroc Telecom offers a range of two data rate plans with 100 and 300 SMS/MMS, a voice bonus and a top-up account with no commitment starting at MAD89/month (including tax). Furthermore, to satisfy business needs, Maroc Telecom offers a new range of rate plans grouped together in the Business Class offer. This offer comprises six types of all-inclusive rate plans for domestic calls (from 5h to 30h in multiples of 5), certain international calls and free SMS, MMS and GPRS. Lastly, since the end of 2004, Maroc Telecom has been marketing two special products: an SMS rate plan for the speech and hearing impaired and a pack including special software for the visually impaired. Customers with 1 to 4 hour individual rate plans and all controlled rate plans and Liberté rate plans have been able to subscribe to an offer allowing them to make unlimited calls to two numbers of their choice for MAD including tax/month. Customers with 5 to 15 hour individual rate plans can subscribe to an offer allowing them to make unlimited calls to five numbers of their choice for MAD including tax/month and customers with 15 hour individual rate plans can subscribe to an offer allowing them to make unlimited calls to seven numbers of their choice for MAD including tax/month since May 1, Maroc Telecom 2007 Registration Document

67 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Business users Given the potential and strategic importance of business customers, Maroc Telecom has established a specific policy for this segment, centered around a range of offers and services and a dedicated distribution network. In addition, for major business customer, Maroc Telecom is implementing customized service solutions to meet its customers specific requirements, in particular in terms of control over staff calls and management of costs. In addition to the consumer rate plans detailed above, also open to businesses, Maroc Telecom launched the following Mobile Voice Solutions for business in 2002: Intenso: a suitable formula when GSM calls are made mainly internally, Intenso offers ten hours of free calls per month and per line for all communications within the business; Extenso: a suitable formula when GSM calls are made mainly to outside contacts, Extenso offers competitively priced subscription and outside call charges; and Extenso+: launched in May 2004, it combines the two previous offers and as such demonstrates the flexibility offered by Maroc Telecom to its business customers. Maroc Telecom enhanced its professional offers in the last quarter of 2006 with the launch of two new innovative services perfectly suited to companies seeking to increase productivity and responsiveness: «MobiMail» allows the user to receive and process s on his/her mobile in real time; and MobiTalkie, which enables colleagues to communicate via a voice message sent simultaneously to one or several other colleague (s) and to receive their reply in real time. In February 2007, Maroc Telecom launched the BlackBerry offer in response to the companies needs in productive mobility. In addition, Maroc Telecom has created various other services for business mobile voice services. These services meet companies needs in managing their mobile fleet and cost control, and include: Mouzdaouij offer (possibility of having two numbers on the same SIM card to differentiate between personal and professional calls); capped invoices; reduced call charges based on volumes; exemption from subscription fees subject to certain conditions; reductions for certain international calls; EasyFact (CD-based invoicing service) and E-Management. Loyalty building policy Building loyalty among customers has been a key strategy for Maroc Telecom since 2000 and has prepared Maroc Telecom for the arrival of competition. The loyalty offers set up as early as January 2000 offer handsets at preferential prices. The Gold project for high-volume users was launched in These customers are provided free of charge with a loyalty card, a top-of-the-range mobile phone, a dedicated call center (a toll-free 999 number) and a privileged welcome at commercial agencies. Since July 2003, the Gold club has been integrated into the Fidelio program and the selection is made on a points basis. New advantages are granted to customers: a VIP after-sales service and bonus points. Fidelio is the first point-based loyalty scheme introduced in Morocco. It is reserved for postpaid customers and was launched on June 1, This scheme allows points to be aggregated on the basis of invoicing, and provides advantages in the form of free or cut-price handsets, and free calls and SMS messages. Since April 2003, Maroc Telecom has set up the Fidelio 24-month offer. In 2007, almost 87,000 customers renewed their subscriptions thanks to Fidelio. Ways of reboosting the Fidelio program and of improving customer satisfaction are currently being looked at. Maroc Telecom Registration Document 67

68 4 Pricing plan relating to postpaid services Activation expenses for a SIM card are identical regardless of the type of subscription and are established at MAD120 including tax. The pricing for postpaid services differs depending on whether it concerns a classic subscription, rate plan or specific formula for businesses. For a classic subscription, the subscription charge is MAD150 (including tax) and the airtime price is MAD1.80 per minute for calls to Maroc Telecom fixed-line and mobile numbers and other fixed-line operators, or MAD2.40 (including tax) to other mobile networks at peak time. At off-peak times a single tariff of MAD1.20 including tax applies regardless of the domestic destination. There were price cuts in 2005 for the 10 individual or controlled rate plans. Tariffs now vary between MAD180 and MAD870 (including tax) for individual rate plans and between MAD and MAD942 for controlled rate plans. These rate plans include a predefined airtime of between 1h and 15h, free off-peak calls for the same amount of time, and free SMS, MMS and GPRS. For no commitment rate plans, charges range from MAD to MAD (including tax) for the Liberté rate plans, and from MAD89 to MAD199 (including tax) for the Liberté SMS/MMS rate plans. For business customers, Business Class rate plans range from MAD522 (including tax) for a 5h rate plan to MAD1,584 (including tax) for 30h. For businesses, subscription and call pricing varies depending on the number of lines and whether they choose the Intenso or Extenso formula. In 2005, Maroc Telecom overhauled its business tariffs. For the visually impaired, a handset and special software are offered at a competitive price, while an SMS rate plan for MAD150/month (including tax) is available for the speech-and hearing-impaired. SMS and MMS are charged MAD0.96 per message including taxes and their price ranges between MAD3.60 and MAD6 (including tax) for SMS to foreign countries. GPRS is charged between MAD48 and MAD636 per month (including tax) depending on the chosen volume of data. Pay-as-you-use is also available since September 2005 and is charged MAD0.29 including tax/ko. Since November 1, 2007, and in order to stimulate the traffic, the international tariffs were lowered and the number of zones was reduced. The pricing of international calls varies according to the destination country, whatever the subscription formula. The destination countries are classified in two zones and their rates vary from MAD5.50 to MAD10.00 (including tax) per minute. Supplementary services provided with prepaid and postpaid offers Prepaid supplementary services Many supplementary services are included in the Jawal plan, including caller ID, call waiting, dual call service and the Family & Friends service, all free of charge. Voic and all SMS and MMS related services are also included in all plans. In addition, since 2003, via the introduction of the Camel technology (see glossary), prepaid customers may use international roaming for their voice services. There are also supplementary services at an additional cost, such as the favorite number offer launched in 2005, which gives the client a reduction for calls made to the Maroc Telecom mobile number of their choice. Since October 1, 2007 and in order to boost calls to foreign countries, Maroc Telecom launched " Favorite Mobisud number". This free option allows Jawal customers to communicate with Mobisud France and Belgium based on the national tariff as of the 2nd minute. 68 Maroc Telecom 2007 Registration Document

69 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Postpaid supplementary services The postpaid offer includes the prepaid supplementary services mentioned above. It also includes detailed invoicing, conference calls, and CLIR and call transfer all offered free of charge. Postpaid clients may get reductions through the Family & Friends service and a reduction in call charges based on volume. In addition, the Mouzdaouij service allows users to have two numbers on the same SIM card. Services available at an additional cost are also marketed to satisfy the needs of customers who make calls outside their rate plan like "Offre Complice" and the SMS/MMS rate plans. Maroc Telecom has also introduced unlimited calls by offering optional extras for individual rate plans, which are charged at an additional cost. The recharging service Top-up for me or my friend, enables customers to top-up their own account if they have a controlled rate plan, Liberté rate plan or Liberté rate plan SMS/MMS or to top-up another person s account Top-up for my friend if the friend is a customer with a controlled rate plan, Liberté rate plan, Liberté rate plan SMS/MMS or Jawal account. In 2007, Maroc Telecom marketed " Favorite Mobisud Number " a free option which allows postpaid customers to communicate with Mobisud France and Belgium with the national tariff as of the 2nd minute, and on international rate plans MAD99 and MAD179 (including tax) for the consumer market and Businesses Class customers with a competitive international voice tariff, with prices between MAD2.98 and MAD6 (including tax) according to the zone. Moreover, Maroc Telecom s postpaid subscribers are provided with international roaming for voice and SMS services, as well as for data services (MMS and GPRS). Value added services As at December 31, 2007, value-added services contributed 5.4% excluding Voice Mail System (VMS) to total revenue. The contribution of the VMS to total revenue, as at the same date, was 5.2%. Maroc Telecom takes special care to develop value-added services, in particular with the introduction of the latest technological innovations to the Moroccan market on an exclusive basis (WAP as early as 2000, GPRS in 2002, MMS in 2003 and 3G in 2007). In addition these services are offered to roamers. VMS The VMS was introduced in 1998 for postpaid customers and extended to the prepaid customer base in It is included in all prepaid and postpaid plans. At the end of 2007, there were more than 12 million voic boxes in operation, representing almost 91% of the active mobile customer base. This service was extended in 2005 with the introduction of two new functions: Automatic call-back allows postpaid clients to call back the person who has left a message on their voic simply by pressing a key. This service is offered at the standard cost of a call from a Maroc Telecom mobile; Straight to voic enables all Maroc Telecom Mobile customers to leave a message on the other person's voic without making the telephone ring. This service reduces the intrusive nature of calls. In 2006, the panel of the functionalities offered by this service was extended by the introduction of two advanced options: Maroc Telecom s mobile customers can receive a free SMS notifying them of their missed calls, the time of call and the number of times their correspondent tried to contact them; Maroc Telecom is the only operator which allows the person leaving a message on an IAM voice mailbox to modify or delete the message that they have just left via a user-friendly voice menu. Maroc Telecom Registration Document 69

70 4 SMS The Short Message Service (SMS) has been available since April The service has been regularly enhanced with the launch of SMS Info in 2001 (SMS messages containing information of local interest such as TV programs, pharmacies on duty, train schedules, etc.) and SMS Chat in 2002 (a community service aimed mainly at young customers), and the first pilots of kiosk-type services in 2003 (SMS messages offering content or remote voting services suited to radio or TV programs), SMS International chat in 2005 (service enabling Maroc Telecom mobile customers to chat via SMS with French mobile customers). In 2007, almost 1.3 billion SMS messages were billed, representing 10% growth compared to GPRS The General Packet Radio Service (GPRS) was launched in October 2002 for business customers, and was extended to all postpaid customers starting on March 1, GPRS is offered in the form of three rate plans (from 1 to 20Mb) and charged by volume (Beyond his/her rate plan, the user pays only for the quantity of data actually exchanged, and not the duration of consultation). GPRS facilitates the use of data for those who are traveling, such as optimized Internet/intranet connections, sending and receiving s, WAP-mode browsing and file transfer. Maroc Telecom s GPRS offer has been enhanced by: GPRS ONLY, which enables mobile customers to have a SIM card specifically for GPRS use. The GPRS customer can obtain a second SIM card for free to be used with the GPRS rate plan. He/she can continue to use the first SIM card for making or receiving calls or SMS/MMS; A GPRS Free Access formula which grants access to all GPRS services, without a subscription or any commitment; unlimited GPRS formula allows customers to have unlimited access to all GPRS services with a monthly commitment. In 2007, almost 4% of customers activated this service. MMS The Multimedia Messaging System (MMS) was launched in June 2003 for postpaid customers and extended to prepaid customers in July It allows the exchange of text, images and sound. At the end of 2007, the number of MMS subscribers rose to almost 2 million. They exchanged 46 million MMS, compared to 23 million in The MMS service was enhanced at the end of 2004 with the launch of the Picture Postcard by MMS. With this novelty, offered only by Maroc Telecom, the sender addresses a text and a photograph from an MMS enabled mobile and the addressee receives the message in the form of a real picture postcard delivered by the Post Office. In March 2006, the maximum size of an MMS via the Maroc Telecom network was increased from 50 to 100 Ko to enable mobile customers to send MMS with high quality photos and pictures. In October 2006, MMS charges were changed. MMS Text is charged MAD0.96 including tax and MMS Photos are charged MAD1.92 including tax. In March 2007, to improve the ergonomics of MMS service, Maroc Telecom launched e-mms which enables customers to answer MMS received by directly from their box, free of charge. The answer is sent directly by MMS to their correspondent s mobile. 70 Maroc Telecom 2007 Registration Document

71 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco In Novembre 2007, the panel of MMS services was enriched with the international MMS offer. This service allows Maroc Telecom customers to communicate by sound and image with family and friends abroad. Thus it allows the continuity of the international MMS service, by guaranteeing the same functionalities offered currently to Maroc Telecom MMS customers. IAM Messenger In November 2007, Maroc Telecom launched IAM messenger, an instant messaging service on mobiles. IAM Messenger enables Maroc Telecom mobile customers to chat using the instant messaging service mode and to see if their correspondent is switched on and available. Users can chat in text and use images with all Maroc Telecom mobile customers and even with their Google Talk contacts. This service is available to all Maroc Telecom customers who have a compatible telephone. My Address Book In November 2007 Maroc Telecom launched the My Address Book service. This service allows customers to save the list of contacts on their SIM/USIM card onto a central server via the menu on the mobile. The customer can download this list of contacts on their SIM card at any time. Furthermore, the list of contacts saved on the central server will constantly be made more reliable as it is updated automatically or manually each time the address book is changed. In addition, customers may also manage their address book via a user-friendly Web interface on the portal. The customer may subscribe to the service with a monthly subscription of MAD12 including tax. Internet Mobile In June 2007, Maroc Telecom launched mobile broadband internet with the unlimited offer Internet Mobile, based on the 3G technology which gives mobile customers unlimited broadband internet access regardless of their location. This service gives postpaid customers a compatible 3G mobile, laptop fitted with a PCMCIA card, USB modem, PDA or Smartphone access to the Internet frame. Uninterrupted mobile access to the internet is ensured by Maroc Telecom s GPRS network which allow customers to access Internet even in areas which are not covered by the +3G network. Two options are available for this service: voice and data option, which enables customers to use a USIM card for data, voice, SMS and MMS; data only option, which allows mobile customers to use a USIM card dedicated to data only. Mobimail Push Mail service In February 2006, Maroc Telecom launched a mobile pilot project with a Push service for businesses. This new service enables mobile customers to receive push s on their mobile and to access their diary and the company s phonebook easily and immediately. Maroc Telecom Registration Document 71

72 4 This service has been available since September 2006 and is charged MAD360 (including tax) for unlimited access and MAD240 (including tax) for customers who already have a GPRS subscription. Mobitalkie Push To Talk service In September 2006, Maroc Telecom launched the Mobitalkie Push to Talk service for business clients. This service is similar to using a walkie-talkie except that it works on mobile phones which are equipped with this functionality, and have both nationwide and international (roaming) coverage. Mobitalkie uses the GPRS network giving the same cover as the GSM network. Maroc Telecom provides an unlimited Mobitalkie rate plan for MAD360 including tax/month to allow customers to monitor their total calls. Content services In addition to the SMS information service launched in 2001, the 500 service launched in 2002 (service for downloading ringtones and logos), and the SMS kiosk services launched in 2003, Maroc Telecom has offered a service for downloading content under its own Mobile Zone brand since May This service enables subscribers to download ringtones, screen savers, animated pictures, games and videos into compatible handsets. Customers are provided with local, regional and international value-added content. Exclusive content is available through partnerships with internationally renowned brands (Star Wars for cinema, the Spanish La Liga for football) and exclusive agreements with other international content suppliers. In December 2005, Maroc Telecom enhanced its content offer with the new Al Jazeera and Maghreb Arabe Presse (MAP) News bouquet for postpaid customers. With this service customers can receive news of their choice via SMS on their mobiles: politics, economics, sport from Maghreb Arabe Presse or Al Jazeera (the Arabic language news channel). The customer can subscribe to one or more sections from MAP and/or Al Jazeera for between MAD18 and 30 including tax per section. Since May 2006, all of Maroc Telecom s postpaid and prepaid customers have been able to customize their voic message. This entertaining and practical service extends the range of available content services. Customers can choose their very own welcome message for their voice mail box from a selection to suit all tastes: comical, imitations, classical music etc. All these messages are available on Maroc Telecom s portal This service is available by calling 309 (MAD8.40 including tax/minute plus the cost of call to a Maroc Telecom mobile) or by sending an SMS with the code corresponding to the chosen message to 309 (MAD18 including tax/message). Multimedia portal WAP Mobilezone In March 2007, to improve its Mobilezone offer, Maroc Telecom launched a multimedia wap portal allowing all customers with a compatible mobile to access WAP portals with a wide variety of content: logos, ring tones, Java games, current events, sports, cinema A-Ghany Service At the end of September 2007, to strengthen its innovative leadership, Maroc Telecom launched A-Ghany based on RBT technology (Ring Back Tones). This service enables mobile customers to customize their ring tones with songs, messages recorded by actors, fun messages etc.. A broad selection of ring tones to suit all tastes are available on This service is available by calling 409 or by sending an SMS to the same number. 72 Maroc Telecom 2007 Registration Document

73 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Sale of handsets Prepaid The range of Jawal prepaid packages is also diversified in terms of models and prices. In this respect, Maroc Telecom places particular emphasis on the renewal of handsets and the latest associated functionalities. In 2007, in line with its competitive pricing policy, Maroc Telecom offered Jawal mobiles starting from MAD249 including tax (with a credit of MAD10 including tax). Postpaid The actions taken to develop postpaid services focus on customer acquisition, loyalty and development of the services offered. For postpaid customers, the acquisition policy is based on providing an attractive offer, with a variety of associated products and services, and a large range of handsets. Cobranding offers attract customers and ensure the successful launch and renewal of the handsets range, that often coincides with international launches, and give local customers state-of-the-art design and technology. Maroc Telecom offers a wide range of packages with minimum commitment duration (12 or 24 months). Since 2003, Maroc Telecom has also focused on improving customer loyalty, as described above. Customer services In order to accompany the deployment of these offers, Maroc Telecom has set up a customer relations policy, with an approach built along several lines: information, recruitment and reminders (with a goal of customer retention). This customer service policy also responds to the needs of both consumers and businesses. Pursuant to its overall quality policy for its operations, Maroc Telecom was awarded ISO 9001 version 2000 certification in 2003 for the invoicing of mobile customers and its mobile call center. Mobile call centers In order to develop customer relationships and improve satisfaction rates, Maroc Telecom s call center is structured to respond, through six customer service numbers, to the various segments of the customer base: prepaid, postpaid, Gold customers, roamers, prospective customers and Fidelio members. Since March 2000, the call center has provided customers with information regarding Maroc Telecom products and services, requests for activation and parameterization of any given service, information regarding offer and pricing plan changes, a service for checking account balances and Fidelio program benefits, and a complaints service. Information of local interest in several languages (Arabic, French, English) is also offered to roamers. The Interactive Voice Service (IVS) set up in January 2005 handled more than 12 million calls for prepaid customers, offering them access, 24 hours a day and 7 days a week, to information on prepaid products and services. In addition, Maroc Telecom conducts customer satisfaction surveys monthly in order to measure the quality of the service provided by the commercial branches. Maroc Telecom monitors the quality of service offered through statistical indicators. Maroc Telecom Registration Document 73

74 4 Maroc Telecom makes the public aware of new offers through a special number and potential customers may call for information on such offers. Customer complaints service National complaint centers have been created to deal with complaints that have not been settled on line or in Maroc Telecom s branches. These centers are segmented by product which ensures that the complaint is handled in the best possible way. Agencies and call centers and complaint centers use powerful CRM tools to enable customer complaints to be dealt with and monitored carefully. They also act as performance and customer satisfaction indicators. Business call centers Maroc Telecom offers its business customers specific services on the ww.mobileiam.ma portal, which gives access to on-line services and describes the Company s offers. Business customers can therefore handle their fleets remotely via the Self Care service, by changing offers or activating supplementary services. In addition, business customers can monitor their mobile telecommunications budgets easily via the Easy- Fact service. This enables the customer to receive the invoices for GSM subscriptions on CD-ROM for a more detailed view of expenditure with easier access. After sales service The diversity of its handsets range has led Maroc Telecom to set up an after-sales service provided by its direct distribution network. This service is offered free of charge during the warranty period. In addition, the Gold after-sales service provides its dedicated customers with immediate replacement of a handset, by home delivery. Portals Maroc Telecom has set up three portals: describes the services and commercial deals offered and enables businesses to access the Self Care service; the WAP Maroc Telecom portal, in addition to theme based information, offers access to the yellow pages; the Mobile Zone portal, which allows customers to download content. International roaming Roaming is a service offered by telecommunications operators enabling mobile telephone users to call and be called in a foreign country. For this purpose, the operators in various countries enter into roaming agreements, allowing their customers telephones to be easily connectable to a foreign network if necessary. Maroc Telecom entered into its first roaming agreement with SFR in February This roaming arrangement is carried out in the ordinary course of business. As at December 31, 2007, Maroc Telecom had entered into 417 roaming agreements with associated operators in 212 countries, including in 6 countries through agreements with operators of the GMPCS systems (Thuraya and Globalstar). Morocco s tourism industry generates a large inflow of visitors, providing large potential for roaming reve- 74 Maroc Telecom 2007 Registration Document

75 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco nues. In order to catch most of this traffic, Maroc Telecom has developed a customer acquisition policy through associations with foreign operators, and has entered into preferential agreements with the largest among them. In 2007, to ensure constant roaming revenue growth and increase competitiveness, Maroc Telecom has entered into agreements with its main partners granting discounts. GPRS and MMS services have been offered in roaming services since the end of As at December 31, 2007, Maroc Telecom had signed agreements with 96 operators in 65 countries for GPRS/MMS roaming for postpaid customers (63 of which are for roaming out) and with 83 operators in 53 countries for prepaid customers (54 of which are for roaming out). Maroc Telecom also offers an international SMS services, the use of short access numbers (333 for voic and 777 for customer services) and international MMS service since November 1, As at December 31, 2007, Maroc Telecom had signed agreements with 137 operators in 84 countries for sending SMS abroad. Infrastructure Maroc Telecom s mobile network is based on GSM technology, deployed throughout almost the entire territory of Morocco. It is characterized by a well-developed infrastructure, high international connectivity and a quality of service comparable to that of international operators. This network is made of the NSS network and service platforms, and the BSS network. To maintain market leadership and reinforce its competitiveness, Maroc Telecom set up a 3G/UMTS network, which enables a gradual transition from second generation telephony to third generation telephony. In 2007 a UTRAN network, a BSS network, a CORE PS network and CS 3G network were integrated as well as a 3G services platforms to enable video conferencing/ vidiophone, streaming, downloading and online games. NSS network Core CS and service platforms The NSS-CS network combines switching equipment and service platforms. The switching network, which consists of 30 MSC centers, is built around 6 TMSC transit centers (including two with softswitch technology). To ensure that traffic is shared and supported, all MSCs are connected to at least two TMSCs. Signal traffic is separated from voice traffic through the use of an SS7 network with 4 STP systems. Maroc Telecom has several platforms enabling it to offer its customers high quality services: IN platforms which are used mainly for real-time management of the prepaid customers credits and also manage the implementation of value added services such as invoices or capped-rate plans. In 2007, Maroc telecom had 10 IN platforms for mobiles with a capacity of 12,073 KBHCA and a security platform (the dynamic capacity depends heavily on customer usage, in terms of traffic); SMS platforms, with two SMSC servers whith a capacity of 550 SMS/S, which store and deliver short messages (SMS); VMS platforms which allow the recording of voice messages in the event that the correspondent is busy or cannot be reached; GPRS platforms which are based on a packet-switched network architecture with roaming management and radio access; Maroc Telecom Registration Document 75

76 4 SMOLREV, for recharging prepaid accounts, managing retailer accounts (recharging, checking account balance, minimum, maximum level etc.), managing vouchers and transferring postpaid to prepaid accounts; SMS broadcast, which sends predefined SMS messages to one or more lists of GSM customers; Ring Back Tone, which allows the customer to change the standard return call ringtone for a personalized ringtone, which can be a musical tune or a voice message; Push to talk, enabling customers to communicate walkie talkie style with their friends and colleagues; Geographic localization, which provides information on the area where the customer is located such as emergency services, news, tracking etc.; Pay-as-you-use, which means postpaid and prepaid customers are charged based on different types of service and charge types. In 2007, Maroc Telecom expanded its offer of services with new platforms and functionalities: "Instant Messaging and Presence Service (IMPS)" an instant messaging service, which enables users to see a list of contacts who are switched on and available for messaging. Number portability BSS network - UTRAN Maroc Telecom s network covers virtually the entire population via 5,026 radio base stations and 400 node- B (3G equipment /UMTS) located throughout the Moroccan territory. In 2007, 420 GSM sites and 70 replacement BTS were set up. A redeployment and extension plan for TRXs (radio cells), initiated in 2002 and continued since, has optimized the use of radio access equipment (TRX). Network BSS was also the subject of software updating with the most recent versions. Quality and Capacity An ambitious plan for updating the NSS network was initiated in 2007 and will be continued in 2008, in order to offer evolutionary, upgradable architecture, which are secure and use cutting-edge technology with the support of IP and 2G/3G to optimize capacity. As regards radio capacity, the Half Rate functionality was introduced to absorb peaks of traffic in particular on special days (public holidays and promotions). Improving the quality of service of the mobile network is a priority for Maroc Telecom. Accordingly, the rate of successful dial-up in 2006 amounted to 97.75%, the cut-off rate remained below 1% and the rate of successful SMS delivery rised to 97% (excluding promotions for free SMS). 76 Maroc Telecom 2007 Registration Document

77 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Maroc Telecom commissioned a survey to measure the density of electromagnetic fields in the vicinity of GSM sites. The findings of the survey, conducted by bureau Veritas, confirmed that Maroc Telecom s GSM sites comply with European standards. Maroc Telecom Registration Document 77

78 Fixed-line and Internet business General presentation Maroc Telecom is the leading provider of Fixed-line telephony, Internet and data transmission services in Morocco and the only supplier of Television via ADSL service. These markets were all fully liberalized in 2005, with the granting of fixed-line telecommunications licenses to two new operators. The main fixed-line telecommunications services provided by Maroc Telecom are: telecommunications services; interconnection services with domestic and international operators; data transmission services for business users, Internet service providers, and other telecoms operators; Internet services, which include Internet service provision and Internet-related services, such as hosting; and TV via ADSL. The table below shows the breakdown of revenues from Fixed-line and Internet services for the fiscal years presented. In millions of Moroccan dirhams inifrs As at December Gross revenues* 9,563 10,003 9,451 Voice 6,583 6,618 6,233 Interconnection* Data 1,374 1,585 1,554 Internet ,009 Earnings from operations before amortization - 4,315 4,106 Earnings from operations 2,845 2,829 2,934 * Revenues linked to incoming international traffic towards Maroc Telecom mobile and to outgoing international traffic from Maroc Telecom mobile have been directly accounted for in mobile operations in 2007 whereas in 2006 and 2005, it was accounted for as transit revenue for fixed operations. Revenue figures for 2005 and 2006 have been adjusted accordingly. This adjustment has no impact on Maroc Telecom's net overall sales figures. Telecommunication services The penetration rate of fixed-line telephony in Morocco was 7.4% as at September 30, 2007, compared with 4.2% as at December 31, 2006 and 4.5% in 2005 (source ANRT). This increase is due particularly to the introduction by competitors of restricted mobility prepaid offers. Excluding these offers, the penetration rate is 4.2%. The penetration rate of fixed-line telephony in Morocco is defined as the ratio of the number of lines (including public telephony) to the total Moroccan population, which amounted to approximately 30 million (Source: Census 2004 Haut Commissariat au Plan). This relatively weak penetration rate must be considered in light of the large number of inhabitants per household which is 5.3 on average (Source: Census Haut Commissariat au Plan). The number of lines 78 Maroc Telecom 2007 Registration Document

79 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco (except public telephony, business users) divided by the number of households gives a penetration rate of almost 15% of households. Moreover, some 160,000 public telephony lines do not represent the real number of users of Maroc Telecom public call booths and telestores (See paragraph "Public telephony " below). The fixed-line penetration rate fell between 1999 and 2002 (loss of approximately 330,000 customers) due mainly to the migration of existing customers from fixed-line to mobile, as a result of competition from prepaid mobile offers for the residential segment. Since 2002 the Company has taken great steps to boost its fixed-line services and to address increasing competition from prepaid mobile offers, and since the beginning of 2007 from the 3rd largest operator s restricted mobility fixed-line offers. The measures used by Maroc Telecom include: developing an active marketing and commercial policy tailored to the customers expectations and requirements, in particular with the creation of the El Manzil brand for fixed-line offers for the residential segment; introducing offers which increase the use of fixed-lines, in particular Phony and Infinifix, which offers residential and professional consumers unlimited fixed-to-fixed calls; taking major steps to give the entire Moroccan population access to Internet. Frequent promotional offers and the move to ADSL have given a greater proportion of the population access to Internet; offering new services which drive the move to content offers for fixed-lines; Maroc Telecom has launched TV via ADSL with the aim of making this a mass market TV product in Morocco; proceeding with the development of its fleet of public call booths, initiated in 2001, and continuing its investments in this area; paying particular attention to the business market; Maroc Telecom has accordingly launched specific offers and prices targeting that customer base. These measures increased the fixed-line customer base by almost lines in As at December 31, 2007, the overall fixed-line customer base totaled million lines (excluding Maroc Telecom inhouse base). The table below describes the development of the fleet of telephone lines by segment: Numbers of lines as at December Residential 884, , ,514 Public telephony* 164, , ,692 Corporate 292, , ,533 Customer base** 1,341,156 1,266,119 1,288,739 * Combines the lines of Maroc Telecom telestores and public booths ** The customer base includes all subscriptions for a fixed-line telephone regardless of technology used (PSTN or ISDN). It does not include Maroc Telecom's inhouse base Maroc Telecom Registration Document 79

80 4 Consumer market The consumer market includes residential subscribers, small businesses consisting of craftsmen, tradesmen and self-employed professions, and public telephony. Consumer offers Maroc Telecom s consumer offers of fixed-line telecommunications have been marketed since March 2002 under the brand El Manzil. With the El Manzil range of products and services, the Company provides capped and unlimited access offers. Phony, a new fixed-line voice offer has extended the Group s consumer range and has been available since September Phony offers free and unlimited fixed-to-fixed calls in Morocco with various price plans available from MAD144 including tax/month (including subscription) while enabling customers to keep a check on their communication costs. These offers have been very successful and have boosted the consumer fixed-line segment in the 4 th quarter of The Phony range was launched on September 1, 2006 and includes 3 price plans: Classic Phony ; Capped Phony and Liberté Phony. Depending on the price plan the customer can choose to make unlimited calls outside peak time with Phony Evening and Week End (EW) or at any time with Phony Anytime (AT). The two EW or AT price plans are available with a standard subscription or with a capped subscription. If the customer chooses the latter option, which offers both unlimited calls and capped credit, he/she has a capped call credit which allows him/her to make calls outside the unlimited call destination (with the possibility of recharging the account). Liberté Phony gives the customer a time credit at a reduced rate for calls to all mobile numbers in Morocco as well as unlimited calls to all Maroc Telecom fixed numbers. Maroc Telecom also offers El Manzil packages which grant free installation of a fixed-line (for new customers) and a partially subsidized terminal. El Manzil packages, which have a wide choice of terminals, cordless handsets, DECT phones and fax machines for business customers which is constantly being extended, are available from MAD99 including tax. Maroc Telecom also regularly organizes promotional campaigns to boost sales and animate the market, in particular with the 0 dirham package and free bonuses. In June 2006, Maroc Telecom innovated on the fixed-line segment with its new TV via ADSL service, which is the first time this service has been made available in the African and Arab world. This service was launched in June 2006 and then enhanced in November 2006 and September It enables fixed-line customers to access 80 digital quality national and international TV channels and 20 radio stations via their telephone line using ADSL technology. The offer is available via 4 channel bouquets (Access, Discovery, Prestige and Evasion) from MAD48 (including tax) / month. There is a wide and varied choice of TV channels with programs for all the family: all the national broadcast channels, general interest French channels, news channels in three languages (Arabic, French, English), children s channels, cinema and entertainment channels, music, documentaries and cultural programs. To offer its TV via ADSL customers the best in television, Maroc Telecom launched Canal + Essentiel on September 13, Consumer value-added services Maroc Telecom offers valued-added services to consumers such as voice mail, detailed invoices in Arabic or French, caller ID display, call-waiting notification and line transfer, and three way calling. These services also include an option for subscribers using capped rate plans, and Phony capped rate plans to recharge their accounts remotely, by simply placing a telephone call to server Maroc Telecom 2007 Registration Document

81 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Loyalty-building programs Maroc Telecom has created a loyalty building program for its top tier customers, based on El Manzil loyalty points system. All standard Fixed-line and Phony customers (excluding capped rate plan customers) are automatically enrolled in the Fixed-line loyalty program. They gain points depending on the amount of their monthly invoice, which they can convert into gifts via their local Maroc Telecom agency by calling the Fixedline customer services department. Every quarter Maroc Telecom updates the catalogue of gifts which is sent to all the customers in the program. Gifts include handsets, fax machines, free calls via telephone cards, ADSL modems, mobile phones and TV packages (router + STB). Public telephony Maroc Telecom also provides a public telephony service with its own booths and call boxes operated by third parties, or telestores. As in other countries at a comparable stage of development, public telephony remains the preferred means of communication for the lower income part of the population. The public telephone lines managed by Maroc Telecom, directly or by telestore operators with whom the Company has entered into operation agreements, amounted to over 159,692 lines as at December 31, 2007, up 1.5% compared with December Public booths. Maroc Telecom emphasizes the development of its public call boxes, and for this purpose, has entirely renewed and extended its fleet in recent years in order to have secure boxes operated with smart cards. Telestores. During the past five years, the network of telestores has seen substantial growth. As at December 31, it included over 44,600 telestores throughout the country. Almost all telestore operators are bound to Maroc Telecom by exclusive agreements. Their margin is based on the difference between the retail price and the preferential price charged by Maroc Telecom. In October 2004, against a background of heightened competition (see section Competition Fixed-line telecommunications Public telephone market ), the chaining rule imposing a minimum distance of 200 meters between each phone shop was repealed allowing a denser network of telestores. This led to a significant increase in new telestores which opened over the last quarter of 2004 and the first quarter of In addition, during the two first quarters of 2007, Maroc Telecom made significant changes to its price list to remain competitive with the arrival of new competitors. Prepaid phone cards On January 27, 2006, Maroc Telecom launched New Phonecard, a new prepaid card. This new phonecard which combines the concepts of a chip card and a prepaid account card, can be used in Maroc Telecom call boxes and private residential fixed-lines. This card is sold free of any subscription or commitment. This new formula replaces two prepaid cards: Kalimat, for use on private fixed-line phones and Phonecard for use only in call boxes. This new concept makes it easier to use prepaid cards, grouping together different cards into a single card, and has boosted the use of this type of card for public telephony. Maroc Telecom Registration Document 81

82 4 Business market This market, which covers SMEs, SMIs, local government and public and private major business customers, is a key segment for Maroc Telecom, as it includes high-volume telecommunications users. Maroc Telecom is seeking to develop this segment and has adopted a dedicated organization and strategy (see Customer services-relations with businesses ). Business market offers In addition to the basic telephony offer, Maroc Telecom offers businesses all the functionalities of digital telecommunications through the ISDN offer marketed under the Marnis brand. This solution enables businesses to use an end-to-end digital network carrying the data flow for multimedia applications (voice, data and images) by means of either a basic access, with two communication channels, or a primary access with 30 communication channels. Maroc Telecom has set up, since October 2002, a range of pricing options for businesses that it markets under the name of Preferential Business Tariffs (see Pricing ) which was enriched in Since October 2003, Maroc Telecom has offered a Wellcom Pack PABX, a turnkey offer of a switchboard including installation, hardware maintenance and upgrading of the switchboard according to the customer s requirements. In April 2007, Maroc Telecom launched the offer "Wellcom Pack PABX at MAD0" to stimulate the creation of new fixed-lines and develop further loyalty of its customers. During 2005, Maroc Telecom launched its new Multi-line rate plan for corporate and major public sector customers. These rate plans, which include call time of 15h to 600h, cover calls to local and domestic fixedline numbers with a single price per minute within the rate plan ranging from MAD0.36 to MAD0.46 (including tax). Calls made outside the rate plan are charged extra at standard rates. Subscribers are granted the option of grouping several dial-up or ISDN lines together in the same rate plan. Business added-value services With a view to cost management, Maroc Telecom offers businesses an electronic invoicing system called Smart Fact. Maroc Telecom provides on a monthly basis a CD-ROM with details of the calls and an analysis of consumption by product. Maroc Telecom has set up a range of welcome numbers, toll-free number (0800xxxxx), Eco numbers (0810xxxxx) and Direct numbers (0820xxxxx), accessible throughout Morocco at a single rate, facilitating customers access to the company in question and allowing a suitable response. Maroc Telecom also has surcharged numbers such as audiotext with repayment to the service provider. In January 2007, Maroc Telecom set up Meeting Call, an audio conference service for companies. Since 2003, Maroc Telecom has offered a virtual call center solution, the smart call center, which means that the functionalities of call centers, (such as voice servers, and the routing of calls according to the availability of call center operators) are set up within Maroc Telecom s network. This solution enables businesses to set up customer service solutions at minimum costs. 82 Maroc Telecom 2007 Registration Document

83 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Pricing For several years, the ONPT, and later Maroc Telecom, implemented a price rebalancing policy characterized by cuts in call rates and gradual increases in subscription charges. The resulting pricing changes have been designed to develop the market while complying with regulatory requirements and preparing for the arrival of competition. In addition, since the second half of 2002, invoicing terms have been changed from a confusing unit-based billing to time-based billing, with the introduction of an indivisible first minute, and the price scale has been simplified with three charge levels: fixed-line, mobile and international. Access charges In 2006 subscription charges were not modified. Since September 1, 2005, standard subscription charges are MAD108 (including tax) for residential customers and MAD144 (including tax) for businesses. In order to boost the growth of the customer base, in 2002 Maroc Telecom introduced the El Manzil packages with a commitment of 24 months including free installation and a highly competitive pricing policy as well as regular promotional offers: several promotions of this type were proposed in 2006, both to the residential and business users. In addition, the costs of activation of a new fixed-line telephone (excluding the El Manzil pack) are on offer at MAD100 (including tax) for the residential and business users since the beginning of the year 2007 instead of a catalogue tariff of MAD600 (including tax) for residential users and of MAD1,200 (including tax) for business users. Call charges Domestic calls In 2006, call charges from fixed-lines remained unchanged complying with the rule of minimal setting at MAD1(including tax) and the passage of the unit charge towards all destinations from 1,50 to MAD1 (including tax) by charge level. Fixed-to-fixed call charges were reduced in March, 2007, to MAD1 for 2 minutes for local and national calls regardless of the time of day. In 2007, call charges from fixed-line to mobile remained unchanged. Fixed-line call charges were last changed on September 1, 2005, following the ANRT decision to reduce fixed-to-mobile interconnection charges by 5%. Maroc Telecom thus allowed its customers to benefit from this reduction in the costs of traffic termination on mobile networks. The table below sets out the change in the average price in Moroccan dirhams (including tax) per minute of a three minute domestic call at peak times from a fixed-line terminal: In Moroccan dirhams- including tax 2007 Fixed-line to Maroc Telecom fixed-line and other operators excluding restricted mobility 0.50 Fixed-line to fixed-line other operators with restricted mobility 1.92 Fixed-line to Mobile 2.28 Calls from telestores and Maroc Telecom public call boxes are still priced by charging units. The retail prices for public telephones are substantially higher than those from a private terminal. Maroc Telecom Registration Document 83

84 4 International calls In December 2005, to support the development of call centers in Morocco, Maroc Telecom launched a new offer with a single rate of MAD0.60/minute (including tax) for calls to France, Belgium, Spain and Italy, on condition that volumes exceed 200,000 minutes per quarter. On November 1, 2007, Maroc Telecom reorganized its international call prices offering customers special prices for calls to fixed-lines and mobiles abroad. The number of tariff zones was reduced from 8 to 2 and international prices were cut by up to 60% depending on the destination. Price to fixed-line and mobile in MAD including tax / minute as at November 1, 2007 Tariff peak times Tariff off-peak Zone 1 Southern Europe Northern Europe North Africa North America Zone 2 Middle East Eastern Europe Rest of Africa America Asia Pacific Rest of the world Rate plans and other pricing options Maroc Telecom has also implemented a targeted pricing policy involving specific rate plans or price options. Maroc Telecom offers a range of Preferential business Tariffs, which allow its business customers to benefit from lower rates on domestic calls based on three price options: Preferential Group Tariff, Preferential Volume Tariff and Preferential Mobile Tariff. The range of services also includes a Preferential International Tariff which includes lower rates on international calls. In 2007, two new options were introduced for companies: «Privileged Preferential Mobile Tariff» and «Privileged Preferential International Tariff» which allow companies to benefit from even better mobile and international tariffs. There are also targeted price offers for consumer customers. On the one hand, capped rate plan enable consumers to control spending, and on the other hand, the Phony offers (unlimited rate plans) which allow unlimited calls to Maroc Telecom fixed-line numbers subject to a rate plan fee starting at MAD144 including tax (line subscription included). Maroc Telecom regularly launches promotional offers on El Manzil top-up cards to stimulate use by capped rate plan clients. Since November 1, 2007, international rate plans have been launched to complete the range of the targeted tariff offers for consumers and to promote international calls. These rate plans offer a number of hours for calls to fixed-lines in the main international zones: Southern Europe, Northern Europe and North America. The three rate plans (1h, 3h and 5h) are available from MAD69 (including tax) and offer international calls from MAD1 including tax/minute. The fixed-line price list is available in the Grille tarifaire section of the website. 84 Maroc Telecom 2007 Registration Document

85 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Interconnection service Interconnection services include interconnection with domestic and international operators. Domestic interconnection Domestic interconnection is regulated by the ANRT. In this respect, Maroc Telecom is bound to comply with interconnection requests, taking account of the reasonable requirements and capacities of other operators. The interconnection charge serves as compensation for the actual use of the network and the related costs (see section 4.8 Regulatory environment & possible dependencies ). Interconnection with domestic mobile operators is a major cost item for fixed line telecommunications, as the costs of traffic termination on mobile networks are far higher than the interconnection income generated by traffic entering the fixed-line network. In 2006, with the arrival of two new operators on the fixed-line market, new interconnection charges were determined. Domestic interconnection pricing Domestic interconnection pricing for calls to Maroc Telecom s fixed-line network again dropped. The table below indicates the domestic interconnection pricing applicable in 2007 and 2008 (at peak time): Calls to fixed-line Tariffs (MAD excluding Tax /min, peak times)* Local (intra CAA) Simple Transit Double Transit * A reduction of 50% is applied on off-peak times Termination charges to mobiles are as follows: Calls to mobile Tariffs (MAD excluding Tax/min, peak times)* * A reduction of 50% is applied on off-peak times Mobile termination The ANRT approved Maroc Telecom s partial unbundling offer. The table below shows the main prices applicable as of January 8, 2007: Access costs In MAD excluding tax Costs for ordering access (per received order) 70 Costs for accessing the service (per provided access) 255 Cancellation costs (per removed access) 70 Monthly fees (use and maintenance / access) Partial unbundling offer 35 Total unbundling offer 100 The fixed-line interconnection for 2007 and the partial unbundling offer are available on Maroc Telecom s website ( in Actualités -> Offres aux opérateurs. Maroc Telecom Registration Document 85

86 4 International interconnection Maroc Telecom has very strong international connectivity, with 230 foreign destinations. The year 2007 was marked by the arrival of Wana on the international interconnection market. Incoming international traffic Incoming international traffic terminating in Morocco, whether on fixed-line or mobile networks, accounts for a volume in excess of 1.9 billion minutes per year, and is growing regularly. In 2007, the volume of incoming international traffic to Morocco was approximately 6 times greater than the volume of outgoing traffic (Maroc Telecom estimate). To adapt to international market conditions, Maroc Telecom has cut prices on incoming international traffic over the past few years. The Company also differentiates prices depending on whether the termination is fixed or mobile, fitting rates to costs. In 2007, incoming international traffic increased by 15.4% compared with Termination charges for incoming international traffic to operators present on the market vary depending on the operator and the termination network (see section 4.8 Regulatory environment & possible dependencies ). Outgoing international traffic For outgoing traffic, Maroc Telecom negotiates with most foreign operators in order to terminate its traffic abroad at the lowest possible cost and to offer the most attractive price to the end consumer. This policy enables Maroc Telecom to make regular cuts in retail prices in order to stimulate the market (see Telecommunication services Pricing ). Fighting fraud The international traffic carried by Maroc Telecom has seen slower growth than expected in recent years, due to the diversion of traffic by fraudulent means. A specific action plan to fight fraud on incoming international traffic has been set up. It included the creation of a dedicated department, provided with detection equipment, and awareness building among the technical and commercial teams. In 2007, 15 cases were referred to the ANRT and 2 cases are still before the courts. Maroc Telecom constantly reinforces and modifies its antifraud measures and considers that fraud concerning international incoming calls is currently under control. 86 Maroc Telecom 2007 Registration Document

87 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Data services Data services for Corporate clients Maroc Telecom offers its customers (mainly business customers) a complete range of data transmission services meeting the most recent technological standards. Historically, the first data services launched on the market were leased analog lines, then digital lines, then packet technology (X25 network in 1991), and more recently, Frame Relay (in 2001) and VPN IP solutions (launched at the end of 2003). The table below sets out the change in the breakdown of the data transmission base (excluding Maroc Telecom s inhouse base) (Source: Maroc Telecom): Number of lines Domestic leased lines* 5,980 5,497 5,534 International leased lines* Maghripac 1,470 1,271 1,081 Frame Relay 1,401 1,357 1,350 VPN IP 1,214 2,095 4,001 * Customer leased lines, except lines to customer operators The range of products and services dedicated to Maroc Telecom s network solutions consists of the following offers: Leased lines: Maroc Telecom offers domestic and international leased-line services, including the physical chain, modems and monitoring of leased lines. In order to meet the increasing demand for call centers in Morocco, Maroc Telecom offers special prices for call centers together with one-stop shopping for end-to-end leased lines with France, which simplifies operational management; Frame Relay: this service allows businesses to carry multimedia flows (voice, data and image) within their networks at flow rates of up to 34 Mbps. The Frame Relay offer provides a high level of performance with a warranted minimum flow rate associated with each permanent virtual circuit defined between the call s end points; and VPN IP MPLS: Maroc Telecom offers a virtual private network solution (interconnection of sites using a common infrastructure), developed on the IP/MPLS protocols and marketed as the IP Connexion range. This service is accessible through the leased lines, Marnis and ADSL. Maroc Telecom also offers secure roaming Internet access. In 2005, the range was rounded out with IP VPN ADSL access with guaranteed bandwidth. Maroc Telecom has adapted its ranges of products and services to the business market in particular in terms of a guaranteed quality of service. At present, Maroc Telecom is contractually bound to maintain a high quality of service. In particular, Maroc Telecom measures the rate of availability for the network and complies with international standards as regards that availability (see also Infrastructure ). Maroc Telecom has enhanced its international data offer with the introduction of wholesale minute offers which give call centers very competitive international tariffs. Together with the reduction in international leased line prices during the year, the number of orders for new installations and bandwidth upgrades rose in Maroc Telecom Registration Document 87

88 4 Data transmission services to Internet providers Data transmission services are regulated by the ANRT. In this respect, Maroc Telecom, as the incumbent operator, is bound to provide interested Internet service providers (ISPs) with non-discriminatory technical and pricing solutions enabling the ISPs to make competitive offers to their customers and allowing fair competition in relation to the same Internet services that Maroc Telecom provides to its own end customers under the Menara brand (see the Internet section below). Accordingly, the following offers, the contents and prices of which are approved by the ANRT, allow ISPs to market Internet access offers through various forms of access: transit IP offer, for Maroc Telecom international Internet bandwidth; offer of free PSTN collection for the caller, allowing ISPs to offer rate plans; offer of PSTN collection with repayment to ISPs, charged to the caller, enabling the ISPs to market Internet access offers without subscriptions; bulk ADSL offers allowing ISPs to market packaged ADSL offers, including the access and Internet components; and ISP special offer for the provision of Internet service over leased lines. Data pricing Maroc Telecom has regularly cut its prices for leased lines and for other related data services. These cuts reflect technological changes and the related reductions in costs. The current prices are in line with the prices applied by international operators. The table below sets out, as an illustration, the cuts in the price of a domestic 2 Mbps leased digital line which was reduced in April 2004 (retail price): Monthly subscription (MAD excluding tax) As from Apr-01 As from Feb-02 As from Nov-03 As from Apr-04 2 Mbps local 33,348 25,000 17,500 9,000 In 2004, Maroc Telecom revised its Operators leased lines offer, reserved for Operators of Public Communication Networks. The pricing is based on distance categories, for outputs of up to 155Mb/s. The following table shows the decrease in the tariff of international half-circuit leased lines to France (applicable rate for Call centers). Maroc Telecom is careful to remain competitive as the cost of international calls is decisive in setting up a delocalized call center. Each year Maroc Telecom carries out significant tariff reductions. Monthly subscription (MAD excluding tax) As from Sep-03 Apr-04 May-04 June-05 May-06 March Kbps 14,700 10,500 7,088 6,143 5,200 4,160 2 Mbps 110, ,261 99,235 86,004 71,500 57, Maroc Telecom 2007 Registration Document

89 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Internet The first Internet connection was established in Morocco by Maroc Telecom in Between 1997 and 2000, Morocco has seen the creation of many ISPs which have subsequently consolidated around two major players (Maroc Telecom and Maroc Connect). The Internet market nevertheless grew slowly until the end of The pace of development of that market has been increasing significantly since the first half of The slow development of the Internet market before 2004 was due to the combination of three factors: the low rate of computer ownership, with only 11% of urban households (Source: ANRT, 2005), the relatively high cost of Internet for users (access and call costs), analphabetism, lack of training and fairly limited local content. Maroc Telecom has a determined policy to increase Internet access in Morocco and provides solutions both for access and use. A clear example of this is the price cuts carried out in March 2005, May 2006 and November 2007 and frequent promotional offers (free modem, free months subscription, free bandwidth upgrade, promotion of broadband at the price of narrowband, etc...). As at December 31, 2007, Maroc Telecom had 475,549 Internet access contracts, which represents around 42% of fixed-lines (excluding public telephony). As at December 31, 2007, ADSL lines accounted for around 41.7% of the total number of fixed-lines (excluding public telephony). The table below sets out the number of Menara Internet customers (the Menara customer base represents customers of the Internet access plans marketed by Maroc Telecom, excluding access for Maroc Telecom s in-house use). Active customer as at December Narrowband: 9,436 5,568 4,473 Libr@cces * 1,622 1, 964 2,012 Subscription 7,814 3,604 2,461 Broadband 242, , ,076 ADSL 242, , ,342 Leased lines Total 252, , ,549 The customer base growth in 2005 is mainly due to ADSL, launched in November 2003 and commercialized in an unlimited formula since March As at December 31, 2007, ADSL represented more than 99% of all types of Internet access used by Menara customers. Maroc Telecom s market share on this segment is 98% (Source: ANRT, September 2007). Internet offers Maroc Telecom s Internet access offers are marketed under the Menara brand. The consumer market For narrowband, Maroc Telecom markets: Menara libr@cces: dial-up offers without subscription with time-based charging included in the telephone invoice for the line used; Menara Toucompri Internet rate plan: comprehensive offers including a subscription and a connection time based on the volume of use. These offers include services for the hosting of personal webpages, services and options such as time carryover, an evening and weekends package, or usage limits. Maroc Telecom Registration Document 89

90 4 Internet CDMA: Internet narrowband offer launched in 2007 for customers situated in localities covered by Maroc Telecom s CDMA. For broadband, Maroc Telecom offers ADSL contracts with bandwidth ranging from 128 Kbps to 20 Mbps (ADSL + at 8 and 20Mbps launched in November 2006), enabling users to use their fixed-line phone at the same time. These contracts have met with a great success since the launch of Unlimited ADSL in March 2004, and the price cuts in March 2005, May 2006 and November In 2007, there were several new products and promotional offers which stimulated the market. The Business market For businesses, broadband is provided via ADSL or via leased Internet lines (with bandwidth up to 155 Mbps). At present, the business customer base mainly uses ADSL. The success of ADSL is not only due to the fact that it is affordable but also because it meets a number of needs that were already satisfied by leased Internet lines (speed, unlimited and constant access). The ADSL Pro offer provides bandwidth ranging from 128Kbps to 20Mbps and includes a wide range of services, in particular secure s, a domain name, a web page for contacts etc. Internet leased lines meet with success in large companies due to excellent performance (symmetrical and guaranteed very high bandwidth) and the end-to-end security offered. Maroc Telecom also hosts businesses web sites, with two kinds of solutions: mutualized hosting (on a Maroc Telecom platform) or dedicated hosting (purchase or joint leasing of a server), providing businesses with visibility on the Internet while minimizing the cost. As well as Internet access and web hosting services for businesses, Maroc Telecom also offers a complete range of optional extras, including an IP address, domestic and international domain name and addresses. Internet pricing Over the past two years, Maroc Telecom has cut prices of all its ranges of products. The table below presents the main Internet prices currently applicable: Tariffs in MAD (incl. tax /month ADSL Unlimited kbps 129 ADSL Unlimited kbps 149 ADSL Unlimited kbps 199 ADSL Unlimited- 1 Mbps 299 ADSL Unlimited - 2 Mbps 399 ADSL Unlimited- 4 Mbps 699 ADSL Unlimited- 8 Mbps 899 ADSL Unlimited- 20 Mbps 999 Toucompri rate plan* 79 Libr@ccès 0.20 per minute * Evenings and week-ends, ten hours' connection The main promotional offers in 2006: Price cuts for all ADSL bandwidths 128 kps to 2 Mkps, in November 2007 and free bandwidth upgrading for existing customers. For example 128 Kbps was reduced from MAD149 to MAD129 including tax; Considerable price cut in ADSL modems and routers in January Maroc Telecom 2007 Registration Document

91 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Other products and services In accordance with its contract specifications, Maroc Telecom is bound to provide the following services (non exhaustive): a free maritime radio-communication service to broadcast maritime safety notices; a two-way telecommunications service for the exchange of messages between ships at sea and any termination point of the public networks; a telegraph and telex service (Maroc Telecom has applied to the ANRT for permission to discontinue the telex service since the terminal equipment is no longer being manufactured); a telephone enquiries service (call number 160), provided through dedicated information centers; the routing of calls to emergency numbers; and an Arabic-language telephone directory. Maroc Telecom also publishes a professional yellow pages directory. This business is not significant in terms of revenues. Customer services The customer relationship is at the core of Maroc Telecom s business. Accordingly, and to meet its customers expectations and requirements, Maroc Telecom has developed an active customer relations management policy. Invoicing and collection Since 2002, Maroc Telecom has upgraded its invoicing tools and processes for both fixed-line and the Internet, in particular through: establishment of a system of automated collection of charging data; changeover from per-unit to per-minute billing (except for public telephony, which remains charged per unit); detailed invoicing; clearer presentation of the Fixed-line and Internet invoices in order to improve their legibility; establishment of an interactive voice system enabling Fixed-line subscribers to be informed of the current bill in real time; establishment of a dedicated invoicing system for all the Internet offers; implementation of a new sales information system WIAM which improves the billing process; a bimonthly invoice for clients with low invoices, enabling them to pay their invoices every two months; the implementation of the Revenue/Insurance process along the invoicing chain, and the modernization of the invoice printing and posting centers to ensure efficiency and rapidity of the invoice process. As for collection procedures, Maroc Telecom set up in early 2003 a dedicated organization made up of 27 collection departments and seven customer management departments. Through these actions, Maroc Telecom obtained ISO 9001 certification in 2004 for all its fixed-line invoicing and collection services. Maroc Telecom Registration Document 91

92 4 Telephone directories and information Directory Enquiry Centers (Rabat, Casablanca, Marrakech and Meknes) in compliance with the universal service, reply 24h/24 and 7j/7 to customers who call the national access number "160", requesting Maroc Telecom s Fixed-line telephone numbers. Similarly, these centers ensure the first contact with Maroc Telecom s new fixed-line customers and update the directories database. In 2007 the Yellow Pages business was transferred to Casanet, whose target is to make the Yellow Pages the benchmark directory within the next three years. Call centers Maroc Telecom s call centers include the following centers: Casablanca fixed-line call center: handles incoming calls and makes outgoing calls. Incoming calls (several access numbers including the main number 108): dealing with general enquiries and assistance for Fixed-line customers, orders and activating certain services; Outgoing calls: debt collection from customers who have outstanding bills, telesales, telemarketing, checking customer data (billing addresses, direct debit, ); Sala Jadida Internet call center (a single access number: 115): dealing with general enquiries and assistance for Menara and TV via ADSL customers. Relations with businesses Over the past two years, Maroc Telecom has emphasized the reinforcement of its relationship with businesses. This is evidenced by the creation at the end of 2001 of a Business Sales Directorate, and, within the business Directorate, of a Major Accounts Directorate. The latter acts as a one-stop shop for the largest public or private customers: the major accounts sales engineers handle the entire commercial relationship with their customers for all of Maroc Telecom s products and services on a nationwide basis. Business branches within each regional directorate also act as relays for the business Sales Directorate as regards SME-SMI customers (see section Distribution ). To strengthen its sales presence with businesses, Maroc Telecom has recruited regional distributors. Subscribers portals Maroc Telecom has developed direct relationships with its fixed-line and Internet customers through its various portals ( for consumer fixed-line and Internet subscribers, for businesses, for TV via ADSL customers and for Internet subscribers). In addition to important information relating to the products and services marketed, functionalities such as on-line subscription for services or the consultation of bills are also accessible. Menara ( has outstanding exposure as it has the largest number of visitors for any content and services site in Morocco and Maghreb countries (excluding international search engines and portals) with a strong brand image (more than 5 million visits and more than 3 million visitors per day). 92 Maroc Telecom 2007 Registration Document

93 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Infrastructure Maroc Telecom has developed a fully digitalized modern network using cutting edge technology, offering a wide range of services. This network is made up of a transmission backbone, switching centers, service platforms and an access network. Domestic transmission network Maroc Telecom s transmission network is fully meshed and made up mainly of fiber optic systems using the SDH, NG SDH and WDM technologies with flow rates of up to 10 Gbps. With almost 14,186 kilometers of fiber optic cable, Maroc Telecom s transmission network is able to handle any kind of fixed-line voice, mobile voice, Internet and data traffic. It is comprised of: 7,879 kilometers of intercity fiber optic cable; 6,307 kilometers of urban fiber optic cable; and the related SDH, NG SDH and WDM at n x 2.5 Gbps and n x 10 Gbps equipment. Voice platforms The switching exchanges have a capacity of more than 1.87 million subscriber lines. The network is comprised of 14 transit centers with a capacity of 9,708 PCM, 64 CAA and 435 URAD. A smart network platform for value-added services allows Maroc Telecom to offer various services, such as prepaid cards, prepaid lines, toll-free numbers and kiosk service. A new generation network (NGN) is currently being deployed for gradual migration to IP. Wireline access network and businesses With almost 9.27 million kilometers of copper wire and 37,413 Km of cable conduits, Maroc Telecom s access networks cover almost the entire territory of Morocco and give access to Voice, Data, and ADSL services with a higher quality service. The rate of reported malfunctions is now 8%, and over 98.3% of malfunctions were fixed within less than 24 hours. In addition, 638 fiber optic local loops are being laid in Casablanca, Rabat, Fes, Marrakech, Settat, Oujda, Agadir and Tangier to connect key account customers with constantly improved service. The monthly rate of reported malfunctions for businesses (for all data products) is currently 1.84% (1.6% in 2006 and 2.3% in 2005) and the repair rate for malfunctions repaired in less than 4 hours (for all data products) is 71%. The ADSL network set up in 2003 gives Internet access with bandwidth of up to 20 Mbps to most Moroccan towns. International network With nearly 230 relationships with foreign operators, Maroc Telecom secures Morocco s connectivity to all countries worldwide through two international transit centers (Casablanca and Rabat) and three fiber optic submarine cables (SMW3, Tétouan-Estepona and Eurafrica), in addition to satellite connections via Intelsat, Arabsat and Eutelsat. A new fiber optic submarine cable became operational in July 2007, between Asilah in Morocco and Marseille in France, with a capacity of 40 Gbps, extendable to 320 Gbps. Maroc Telecom offers a wide range of data services through its Maghripac network, a Frame Relay network, an ATM routing network, a VPN IP network and an IP MPLS network for transporting fixed and mobile voice, data, 3G Mobile and Internet. Internet Maroc Telecom also has a domestic Internet network and a redundant international bandwidth which increased from 1.4 Gbps in 2004 to 7.1 Gbps in 2005, to 12.1 Gbps at December 31, 2006 and Gbps at the end of Maroc Telecom Registration Document 93

94 Distribution General organization and strategy of Maroc Telecom s distribution network Organization Maroc Telecom has an extensive direct and indirect distribution network, comprised of more than 44,000 retail outlets, including 20,000 licensed by Maroc Telecom subject to distribution agreements with local retailers or nationwide distributors. In 2007, the various distribution channels were as follows: a direct network comprising 300 branches; the local indirect network, made up of small independent tradesmen bound by exclusive agreements and each managed by the closest Maroc Telecom commercial branch. A large portion of these retailers also manage a telestore business approved by Maroc Telecom; an independent shop network comprised of national and regional distributors. In 2006, Maroc Telecom signed agreements with three new distributors; distributors structured on a nationwide basis, and for which telecommunications are not the major business, such as large-scale retailers, press distributors, the Régie des Tabacs (the tobacconist agency) or the post offices of Barid Al Maghrib; two new regional distributors operating in the telecoms sector for business covering the regions of Rabat Tangiers and Marrakech; the launch of five new business branches in 2007; a national distributor which will cover all customer segments and all ranges of Maroc Telecom s products and services. This partner, operating in more than 20 countries and with a strong distribution experience has been operational since February For the next two years this partner will cover 15 towns throughout the Kingdom (15 stores owned, 25 franchises, 175 specialized resellers and 600 convenience stores) and will cover virtually the entire country for prepaid offers. Distribution strategy The extent and organization of Maroc Telecom s distribution network are major strategic strengths for the Company. The Company s distribution strategy is organized mainly along the following lines: maintaining the central role of the direct network, in particular for high value-added services; developing the indirect networks local reach in order to increase proximity to customers; strengthening the role of telestores in the distribution of prepaid products and the marketing of fixedlines; taking advantage of synergies between the direct and indirect distribution channels; and diversifying the types of distribution (electronic recharges, GAB, express recharges, SMOLREV etc.). 94 Maroc Telecom 2007 Registration Document

95 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Direct distribution network Maroc Telecom s direct commercial network comprises 300 branches organized and structured to meet the local needs of the various customer segments. Consistent coverage With knowledge of regional and local specific features, Maroc Telecom s own commercial network provides coverage suited to the entire domestic territory. In addition, almost all the branches market the entire range of products and services (Mobile, fixed-line and Internet). Adapting to customers needs The branches are divided into four classes according to the type of customers. The network has four major accounts branches (with nationwide coverage); 18 business branches; 29 retailer branches and 249 consumer branches (located in most urban areas in order to provide optimal convenience for customers). Among the consumer branches, 25 are dedicated to mobile, located mainly in shopping malls and highpotential areas. Indirect distribution network Indirect regional network The network of telestores, the main business of which is the operation of a public telephony service approved by Maroc Telecom, also distributes prepaid fixed-line and mobile cards, and subscriptions for fixedline telecommunications. The network of retailers consists mainly of tobacconists, convenience stores, bookstores and other promoters of telecom and electronic products that have entered into agreements for the marketing of Maroc Telecom products and services. The indirect network reached more than 20,000 retail outlets licensed by Maroc Telecom in Agreements are made with each telestore, which permits a wide-reaching distribution network and allows distribution on a local level. Compensation to telestore owners consists of commissions on the products and services sold. Nationwide indirect network The diversification of distribution channels has been completed by association agreements on a nationwide basis with channels such as Sapress (the leading nationwide newsagent and books), Barid Al-Maghrib (Morocco s post office, which provides subscription, sale and invoice collection services), the Régie des Tabacs and the Marjane and Aswak Assalam, both large-scale retailers. Maroc Telecom accordingly has a licensed nationwide indirect distribution network accounting for more than 24,000 additional retail outlets. Maroc Telecom Registration Document 95

96 4 Independent network In 2006, Maroc Telecom signed agreements with three new distributors, in addition to GSM Al-Maghrib. In March 2006, Maroc Telecom sold its 35% stake in the distributor GSM Al-Maghrib, but is still linked to the company by distribution agreements. Distribution agrements As at December 31, 2007, Maroc Telecom had signed distribution agreements with the following companies: Company Nature of the business Date of the association agreement Maroc Telecom products distributed Mahatta (Total Maroc group) Gas stations July 2002 Prepaid mobile and fixed-line cards Cofarma Marjane hypermarkets and Acima supermarkets October 2002 Prepaid mobile and fixed-line cards fixed-line subscription ICA Data Systems Retailer of computer and telecoms products November 2002 Fixed-line and mobile electronic recharging Canal Market Monetics ; Retailer of electronic recharging November 2002 Fixed-line and mobile electronic recharging Promo Presse (Sapress group) Newsagent March 2003 Prepaid fixed-line and mobile cards Aswak Assalam Supermarkets May 2003 Mobile Packages, SIM card only deals and prepaid rechargeable phone cards Barid Al Maghrib Morocco s post office June 2003 Prepaid mobile and fixed-line cards Fixed-line subscription GSM Al-Maghrib Retailer of telecoms products November 2003 Prepaid mobile and fixed-line cards Subscription mobile, fixed-line and Internet; electronic phone card recharging. Régie des Tabacs Manufacturer and distributor of tobacco products in Morocco November 2003 Prepaid mobile and fixed-line cards Sicotel Retailer of telecoms products November 2006 Prepaid mobile and fixed-line cards mobile, fixed-line and Internet subscriptions Lineatec Retailer of telecoms products November 2006 Prepaid mobile and fixed-line cards mobile, fixed-line and Internet subscriptions 96 Maroc Telecom 2007 Registration Document

97 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Marketing, communication and sponsorship As the largest advertiser in Morocco, Maroc Telecom has a significant communication and marketing budget covering its Mobile, Fixed-line, Business and Internet services, and both internal and corporate communication. After the reorganization of Maroc Telecom in 2006, the communication activity is dealt with by the following entities: - Product Communication which reports to the Consumer Marketing Department and Business Communication which are responsible for marketing and communication for consumers and businesses respectively; - Corporate Communication which is responsible for communications linked to Maroc Telecom s corporate image, sponsorship events, while guaranteeing the consistency of group s communication strategy, the group logo and visual brand identity; - Financial Communication which is responsible for ensuring compliance with the group s financial communication policy as defined by Management, regulatory obligations in terms of financial disclosure in Morocco and France and to organize investor and financial analyst events. These entities work in close cooperation to ensure coherence for all communication in accordance with Maroc Telecom s global targets. Products communication Product communication involves advertising the launch of new offers by means of above- and below-theline media advertising campaigns. Maroc Telecom uses co-branding operations with handset suppliers to promote both the latter s brands and the Maroc Telecom brand. These campaigns convey an innovating image, ensure high sell-out of postpaid and prepaid packs and use creative and original advertising themes (Woman s day, music festivals, International Film Festival etc.). In 2007, mobile advertising campaigns launched a new concept The Two Men Show the humorous aspect of which was in line with the positioning of Jawal. This concept made the prepaid promotions immediately identifiable (Double recharge, unlimited evenings, unlimited days and Jawal Hour). In 2007, Maroc Telecom celebrated the attainment of a 12 million Mobile customer base by organizing a giant tombola to win 12 luxurious saloon cars, while its communication campaign used well known Moroccan actors. The launch of new services such as A-Ghany, IAM Messenger and Mobile Zone were advertised using campaigns targeted at young people. Another major event in 2007 was the launch of a new Mobisud offer with a campaign highly targeted at young people with a video clip featuring "Sma3ni" and several well known urban music artists. Fixed-line communication in 2007 was marked by the introduction of Canal+ Essentiel channel and improved TV via ADSL bouquets, offering great variety. There were also several promotional fixed-line (free packs, double credit etc.). The catchphrase used in Internet advertising in the first half of 2007 was "2007, je m Internet" to attract new customers. "La Grande Fête du Clic (The Great Click Festival) supported the promotional offers of the last quarter both for new customers (ADSL offer at MAD0) and to increase customer loyalty (bandwidth was doubled free of charge). To capitalize on the institutional signature of Maroc Telecom "we believe in talent", a contest "Slam dans l âme" was organized on the Net encouraging the creativity of young Moroccans and was a very original and innovative way of communicating. Maroc Telecom also uses direct marketing campaigns with its clients by multiplying direct marketing strategies via clubs (the El Manzil club), newsletters and magazines (Mobinews, Moustajadat, Hissati, la Niouz ), and target SMSs. The Internet portals were also improved in 2007 ( and ww.menara.ma). In addition, the Company launched e- Maroc Telecom Registration Document 97

98 4 communication via ing operations and set up event websites (Slam dans l âme, Mobisud etc.). In 2007 advertising aimed at businesses used press and billboard campaigns for the year s main offers but direct marketing was also a key communication tool (the Company s monthly newsletter) and other sales support material (brochures, animations, roadshows and customer seminars). Corporate communication On January 16, 2006, Maroc Telecom launched its new visual identity, with emphasis placed on simplicity and legibility and positioning the Maroc Telecom brand in its true place as an umbrella brand grouping together all the Group s activities while maintaining the specific universe for each product. The new visual identity was finalized in Increased competition was seen in 2007 on all fixed-line segments: local loop, national and international backbone; and the launch of the 3G mobile services by the three operators present on the market and opening up of the international market (Mobisud, Gabon, Mauritania, Burkina Faso). The over-all communication objective for 2007 was to consolidate Maroc Telecom s position as the leading global operator highlighting the Company s innovative response to customers needs via a major institutional campaign. Sponsoring Maroc Telecom is active in 4 domains: Sport Maroc Telecom s aim is to discover and train young Moroccan talent both locally and nationally. Official partner of the Fédération Royale Marocaine de Football and the Groupement National de Football and official partner of national athletics via the Fédération Royale Marocaine d Athlétisme, Maroc Telecom is also active in other sports (golf, horse riding, tennis, jet skiing ). Environment Maroc Telecom is also strongly involved in protecting the environment with projects like Clean beaches carried out under the auspices of the Mohamed VI Foundation for Environmental Protection. The Company helped clean 14 beaches in and around Tangiers, and was awarded the trophy for commitment for the actions carried out on the beach of Riffyinne at Fnideq. Thanks to Maroc Telecom, the Achakar beach maintained the Blue Flag. The efforts initiated in 2006 at the Arsat Moulay Abdeslam park continued throughout 2007 with the creation of a museum. Culture Maroc Telecom is very involved in cultural events supporting festivals (Mawazine, Casablanca, Marrakech, Rai ). It also supports the Mohammed VI National Theatre as well as national artists, particularly young artists, by organizing concerts during the summer. The 2007 beach festival was an innovating and original concept as Maroc Telecom built villages where various animations were organized day and night for two months (July, August) with more than 10 million visitors. The harmonization of these sites installed in nine cities throughout the Kingdom, showed our commitment to the community, and had a positive impact on visitors. The 2007 musical caravan SMA3NI visited 98 Maroc Telecom 2007 Registration Document

99 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco several cities throughout the Kingdom, organizing large concerts, involving many great national and international stars. The caravan attracted more than one million spectators. Corporate As regards community and humanitarian actions, Maroc Telecom is active via the Maroc Telecom Association for Entrepreneurship which awards grants to young entrepreneurs and to students from modest backgrounds. Maroc Telecom also supports foundations and charities such as the Mohamed V Foundation for Solidarity and the Lalla Salma association for the fight against cancer. Internal communication In 2006 internal communication was reorganized and transferred to the Human Resources Department. The Internal Communication Department organizes Maroc Telecom s management convention and regularly issues internal communication tools (Hot news, Itissal and Wissal). It also accompanies projects launched by other departments such as EAP, MassaRH, quality policy, information security. Financial communication In 2007, Maroc Telecom complied with all its financial disclosure obligations in Morocco and France, had several meetings with analysts and investors and organized roadshows in Europe and in the US to present its annual and interim results. Furthermore, in 2006 Maroc Telecom s financial communication was rewarded along with five other companies listed on the Casablanca Stock Exchange, by the SMAF trophy (Moroccan Society of Financial Analysts) for Financial Communication which is a tribute to the quality of Maroc Telecom s financial communication. Maroc Telecom Registration Document 99

100 Competition As at December 31, 2007, 18 licenses for telecommunications operators had been awarded in Morocco: three licenses for the operators of public fixed-line telecommunications network (Maroc Telecom, Meditel and Wana), two 2G mobile licenses (Maroc Telecom and Meditel), three 3G mobile licenses (Maroc Telecom, Meditel and Wana), five licenses for operators of GMPCS-type satellite telecommunications networks, three licenses for operators of VSAT-type satellite telecommunications networks, and two licenses for operators of shared radio-electronic networks (3RP). In 2005, the liberalization process for the fixed-line market continued, and two fixed-line telecommunications licenses were awarded: a fixed-line license including local loop (without restricted mobility) and national and international transmission was awarded to Meditel in July 2005; a fixed-line license including local loop (with restricted mobility) and national and international transmission was awarded to Wana in September In July 2006, three mobile licenses for 3G (UMTS) networks were awarded to Maroc Telecom, Wana and Meditel. The ANRT stated that this process represented the final stage in the liberalization of the telecommunications sector in Morocco as set out in by the Prime Minister in a note establishing general guidelines for the period Mobile telecommunications In the mobile sector, Maroc Telecom has a direct competitor in Medi Telecom ( Meditel ), the holder of a mobile license since August The majority of Meditel s stock is held by the Telefonica and Portugal Telecom groups (32.18% each). The minority interests are held by the BMCE bank group and the Holdco group (which is more than 75% owned by the Caisse des Dépôts et de Gestion), with 18.06% and 17.59% of the share capital, respectively (Source: Medi Telecom and CDG). The Moroccan market for mobile telecommunications had more than 20 million GSM customers as at September 30, This market is mainly prepaid, with more than 96% prepaid customers. In terms of market share, Maroc Telecom had at that date 66.5% of the overall market as compared to 33.5% for Meditel (or 6.7 million Meditel customers) (Source: ANRT) As at December 31, 2007 Status of the market Market share (as % of number of customers) Mobile prepaid Full competition Maroc Telecom : 66.7% Meditel : 33.3% Mobile postpaid Full competition Maroc Telecom : 63.1% Meditel : 36.9% Total Mobile Maroc Telecom : 66.5% Meditel : 33.5% (Source : ANRT) This market is characterized by very strong seasonality during the summer period, due mainly to the arrival of large numbers of Moroccans for vacation during the summer months, who live abroad the rest of the year. In the prepaid services market, mobile operators organize frequent promotions, which has caused prices to 100 Maroc Telecom 2007 Registration Document

101 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco drop. They have also granted large subsidies for handsets, which contribute to sustained market growth. In 2007, the two operators both launched a new brand of prepaid services: Maroc Telecom launched Mobisud: this new offer aims for simplicity with an attractive flat national tariff targeting young people via specific communication and content. This innovative offer enables Moroccans to call Mobisud France and Belgium mobiles, where the brand is already present, at the same price as that of the domestic calls. It will soon be available for the several other international destinations which will faster communication on a world-wide level. Meditel launched Forsa: this new "low-cost" brand is in response to Wana s fixed-line restricted mobility offer Bayn. It is completely independent from Meditel as it has its own positioning and its own distribution network. In the postpaid market, operators distinguish themselves via prices and the specific features of their offers. Maroc Telecom has a broad range of rate plans tailored to suit both individual or business customers needs. Maroc Telecom regularly offers price cuts, as was the case in 2007 with roaming and international calls. Maroc Telecom s brand enjoys a very high recognition, for postpaid as well as for prepaid services (Jawal). Maroc Telecom is also known for its expertise thanks to the performance and quality of its network (Source: survey conducted by Sofres). Maroc Telecom has the following competitive strengths: Maroc Telecom covers almost the entire Moroccan population (Maroc Telecom estimate); Maroc Telecom relies on a dense and localized distribution network of almost 44,000 licensed retail outlets; As early as January 2000, Maroc Telecom launched loyalty building offers. Starting in April 2002, Maroc Telecom innovated on the market with a points-based loyalty system, Fidelio ; The two operators are distinguished by their methods of compensating resellers: Maroc Telecom compensates resellers for sales, Meditel also compensates for calls (air time). Accordingly, in order to enable its customers to enjoy the most recent innovations, Maroc Telecom acts as a pioneer by regularly introducing the latest technologies, such as WAP in 2000 or GPRS in 2002 and 3G in The table below lists the years mobile technologies were launched on the market by the two operators: Maroc Telecom Meditel WAP SMS Info GPRS MMS Roaming MMS et GPRS Push mail Push to talk G Voice Meditel is becoming more competitive: the business market via its GSM gateways offer Lobox. This offer indirectly competes with Maroc Telecom not only on mobile but also on fixed-line services. The ANRT has approved the sale of Loboxes but has prohibited operators from subsidizing them or creating specific offers connected with their use (ruling ANRT/DG/N.01/04 dated January 22, 2004 relating to the use of GSM gateways). Maroc Telecom believes that this phenomenon affected 10% of the fixed-line-to-mobile traffic of its business customer base in Meditel is acting aggressively with respect to subsidies for new customers and spends heavily on marketing and communication. In addition, in 2006 Meditel launched Tilifoundialdar, a residential telephony offer operating on their GSM network. According to information published in the press, the customer base for this offer totaled 100,000 at the end of Maroc Telecom Registration Document 101

102 4 Fixed-line telecommunications Two new fixed-line telecommunications licenses were awarded in July and September Operations started at the beginning of Maroc Telecom faces competition in all segments: consumer, public telephony and business. The fixed-line penetration rate in Morocco was 7.85% as at December 31, 2007 compared with 4.2% as at December 31, 2006 (source ANRT). This increase is specially due to the introduction of prepaid restricted mobility offers. Excluding these offers, the penetration rate was 4.24%. As at the same date, Maroc Telecom held a market share of 99.7%, excluding restricted mobility. As at December 2007 Status Market share Maroc Telecom (as % of number of lines) Fixed-lines Liberalized market 99.7% Fixed- lines, including restricted mobility Liberalized market 53.9% Source : ANRT Fixed-line consumer market In February 2007, the third largest operator Wana launched a fixed-line offer with retsricted mobility (called Bayn).This prepaid offer which has no commitment, no subscription and no invoice, and uses restricted mobility, can be regarded as a prepaid mobile offer. Taking into consideration the price and the advertising campaigns, this offer competes directly with Maroc Telecom on the Telestores segment. As at December 31, 2007, Wana had not launched any postpaid fixed-line offers or any consumer offers without mobility. To our knowledge, Meditel has not yet launched any fixed-line voice or Internet offers for consumers. Since 2006, Maroc Telecom has launched 2 fixed-line offers which differentiate it from competitors, namely: voice: the Phony offer allows unlimited calls to all Maroc Telecom fixed-line numbers at an accessible rate plan price; content: TV via ADSL offers Maroc Telecom s fixed-line customers exclusive access to 80 national and international digital TV channels via their telephone line. In addition, the ADSL offer with varying bandwidths of up to 20Mbps and the quality of its technology, positions Maroc Telecom well as regards competition. Public telephone market The public telephone market is estimated by Maroc Telecom at over MAD3.9 billion annually (2004). Until 2003, Maroc Telecom was the monopolistic operator, and experienced the arrival of competition in 2004 mainly with Meditel, which, since spring of 2004, has set up telestores using GSM technology. In addition, in September 2004, other operators (Globalstar and Thuraya) announced their arrival on the market using satellite technology. Maroc Telecom currently has no information regarding the launch of public telephony services by these two operators. As at the end of December 2007, the global fleet of public telephone (all operators and all types of technology) was estimated at 175,645, up 1.4% compared with Maroc Telecom s share of the public telephony market was estimated at 90.9% lines compared to 9.1% for Meditel (Source ANRT). 102 Maroc Telecom 2007 Registration Document

103 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Business Fixed-line telephone market Meditel, by installing Lo-box GSM gateways, has entered the market for business fixed-line telecommunications. Installation of this hardware at the PABX outlet allows conversion of the fixed-line-to-mobile traffic into mobile-to-mobile traffic without going through Maroc Telecom s fixed-line network (also see the discussion of the ruling ANRT/DG/N.01/04 above). In 2006, Meditel launched several offers and services for businesses: NéoFixe offering attractive prices for calls to domestic fixed-line numbers and a flat price for calls to Meditel and Maroc Telecom mobile numbers; a range of pricing options offering preferential prices per minute depending on the destination and the company s usage profile (Shared rate plans, intra company Option Advantages and Intra company+, ); international minutes for off-shore call centers (various rate plans depending on the call centers monthly consumption of minutes). In 2007, new market entrants introduced specific offers tailored for businesses such as the Double Play Voice + Internet offer, proposed by Wana. At the end of 2007, Maroc Telecom considered that these offers only had a limited impact on its position on the market. At the end of December 2007, the total number of business customers in Morocco rose to 309,259, an increase of 4.6% compared with Maroc Telecom s share of the business fixed-line market was 98.5% compared to 1.5% for Meditel (source ANRT). Interconnection of incoming international traffic Since April 2006, when the decrees on the fixed-line licenses granted to Medi Telecom and Wana were published, the three operators who held a fixed-line license are entitled to offer international operators termination of their traffic to Morocco, regardless of the end destination of the calls. In 2007, the international incoming traffic on Maroc Telecom networks increased by 16% compared to Despite increased competition from new entrants, Maroc Telecom maintained the direct routing of more than 90% of international calls to its customers due to price cuts adapted to the new conditions of the international market. Maroc Telecom Registration Document 103

104 4 Data transmission As at December 31, 2007, competition for data transmission services remained fairly limited, despite the fact that the two new fixed-line operators had launched products and services for businesses. It consisted of the following four forms: competition from ISPs with VPN IP services, such as those offered by Maroc Connect, which became Wana in The service offered is VPN IP based on the ISP IP network for interconnection of sites on a domestic and international basis. At the end of 2006, Wana unveiled its data transmission services for businesses; operators of VSAT satellite telecommunications networks, such as Space Com S.A., Gulfsat Maghreb and Cimecom S.A. On the domestic market, the service is suited to remote locations where Maroc Telecom is not present. Maroc Telecom may, however, meet its customers requirements by means of customized offers such as wireless service. The VSAT operators provide the call centers with international leased lines; the international operator Equant, which provides international connectivity services to major customers. Maroc Telecom considers that Equant offers services to approximately 20 airlines formerly customers of the SITA network, and to approximately 25 businesses. This competition remains limited since the entire traffic of Equant s customers is carried through a leased line with a total capacity of 2 Mbps; Meditel s data transmission services, in particular the international connectivity service, including a specially designed service aimed at call center customers, and a VPN IP service of up to 2Mega; the independent networks deployed by certain major customers, which have opted to build their own data networks and use radio solutions in particular. This competition is not significant. The table below summarizes the market situation as at December 31, 2007: Domestic data transmission services International data transmission services Status of the market Competition from : VSAT Operators Private network (radio solutions) Meditel Wana Competition from : Equant VSAT operators Meditel Wana Market share of Maroc Telecom Not available Not available 104 Maroc Telecom 2007 Registration Document

105 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Business activities in Morocco Internet The main competitor on the market for Internet access services is Wana, present on the consumer and business markets. In 2007, Wana launched the prepaid Internet CDMA formula with no commitment, with tariffs in line with Maroc Telecom s 128kbps ADSL offer. At the end of December 2007, nearly 8.1% of the market used this wireless technology (source ANRT). Maroc Telecom has a very strong position on the ADSL market, a market segment which is growing rapidly, with a market share of more than 98% (Source: ANRT). The following table sets out the market situation as at December 31, 2007 (Source: ANRT): Status of the market Market share (as % of access number ) Total access Liberalized market Maroc Telecom: 90.4% Other ISP: 9.6% Broadband access (ADSL and leased lines) Liberalized market Maroc Telecom: 98% Other ISP: 2% Maroc Telecom Registration Document 105

106 4 4.5 DESCRIPTION OF SUBSIDIARIES ACTIVITIES Mauritel The Mauritel group includes Mauritel SA and Mauritel Mobiles. Mauritel SA is the incumbent Mauritanian operator and was created in 1999, following its spin-off from the Office National des Postes et Telecommunications, (the Mauritanian National Postal and Telecommunications Office). In 2000, Mauritel SA created Mauritel Mobiles, a wholly owned subsidiary, which obtained the second license to operate a GSM Mobile telecommunications network. On April 12, 2001, in response to an international invitation to tender launched by the Mauritanian government, Maroc Telecom acquired a 54% stake in Mauritel SA. In January 2002, Maroc Telecom created the Compagnie Mauritanienne de Communication (CMC), to which it transferred the shares it held in Mauritel SA. On June 6, 2002 Maroc Telecom sold a 20% stake in CMC to a group of Mauritanian investors. During 2003, CMC assigned 3% of the shares in Mauritel SA to the latter s employees for MAD17 million, in compliance with the commitments undertaken at the time of the privatization in As of July 1, 2004, the Mauritanian government s veto rights expired, giving Maroc Telecom exclusive control of this subsidiary which is fully consolidated in Maroc Telecom s financial statements. In 2006, the CMC Group acquired 0.527% of Mauritel SA s capital from Socipam, a non-trading company created by the staff of the Mauritanian subsidiaries. CMC now owns a % stake in Mauritel SA. Following the repeal of article 73 of Act on telecommunications in September 2007 (Act dated September 3, 2007), which obliged Mauritel SA to split up all activities where the company is subject to competition, namely its mobile activity, the Extraordinary General Shareholders Meeting of Mauritel SA and Mauritel Mobiles approved the merger of two companies on November 27, Fixed-line telecommunications, Data and Internet Mauritel provides both fixed-line telecommunications (voice and data) and Internet access services. Although since June 2004 Mauritel no longer has the monopoly of basic services (domestic fixed-line telecommunications, telex and telegraph), at the end of 2006, it was still the only fixed-line telecommunications operator in Mauritania. In November 2004, the Mauritanian Regulatory Authority ( ARE ) launched a call for interest to select consultants to assist it in granting licenses. In 2006, ARE granted fixed-line licenses to the new operator (Chinguitel). As at December 31, 2007, Mauritel s total number of fixed-lines amounted to almost 36,500, representing a 1.3% penetration rate and covering the main Mauritanian towns. Other than residential clients and companies, more than 10% of the customer base comprises phone shop lines, enabling a greater proportion of the population to have access to telephone services. Mauritel also offers Internet access via the standard dial-up telephone network, ISDN lines, leased lines and ADSL launched in The Internet customer base reached almost 5,100 accesses as at December 31, The Fixed-line and Internet market is split between 2 operators: Mauritel and Chinguitel (since August 2007). As at December 31, 2007, Mauritel had a 97% market share of the fixed-line market and Chinguitel 3%, and on the Internet market Mauritel had a 90% market share and Chinguitel 10% (source: Mauritel estimates). 106 Maroc Telecom 2007 Registration Document

107 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of subsidiaries activities Mobile telecommunications Mauritel Mobiles, a wholly-owned subsidiary of Mauritel SA, provides prepaid and postpaid services and offers roaming and SMS as well as specially adapted services for businesses, such as closed user-groups. To boost consumption, Mauritel Mobiles offers volume reductions on call charges and special offers on topups. It operates in a liberalized market alongside the Compagnie Mauritano-Tunisienne de Telecommunications (Mattel) and Chinguitel (since August 2007). In 2006, the ARE granted new licenses, including a 3G license for Mauritel and 2G and 3G licenses for Chinguitel. With a customer base of more than 904,500 as at December 31,2007, virtually all of which is prepaid, Mauritel Mobiles has an estimated market share of 65% (Source Mauritel). The mobile penetration rate in Mauritania is close to 43% (Maroc Telecom estimates). The market is shared between three operators : Mauritel Mobiles, Mattel and Chinguitel. According to Mauritel estimates, the market shares as at December 31, 2007 are 65% for Mauritel Mobiles, 27% for Mattel and 8% for Chinguitel. The following table summarizes Mauritel Group s main operating and financial data: in thousands as at December Mobile customer base Number of fixed-lines Internet customer base in millions of Moroccan dirhams - IFRS Consolidated revenues* ,063 Fixed-line (gross) Mobile (gross) Earnings from operations before amortization Fixed-line Mobile Earnings from operations Fixed-line 18 (14) (9) Mobile * Net revenues of the incomes between the Fixed-line and Mobile activities of each subsidiary company, but including the incomes generated between the subsidiaries companies (of which contracts of service commitments) which are eliminated in the consolidated revenues. Maroc Telecom s representatives have seats on the boards of CMC, Mauritel SA and Mauritel Mobiles and none of Maroc Telecom s directors have any operational functions in any of these companies. The consolidation method of the Mauritel sub-group, and its contribution to Maroc Telecom s results are summarized in Notes 1, 2, 23 and 28 of the Consolidated Financial Statements. In addition, chapter 6.4 Related Parties Transactions gives details of the financial flows and the nature of such flows between Maroc Telecom and the Mauritel sub-group. Maroc Telecom Registration Document 107

108 Onatel Onatel is the incumbent operator in Burkina Faso, arising out of split of the Office des Postes et Télécommunications and became a Government-owned company in In October 2002, the Government set up Telmob, wholly owned by Onatel, which was awarded the third GSM network mobile license in April On December 29, 2006, Maroc Telecom acquired a 51% stake in Onatel, Office National des Télécommunications, Burkina Faso s incumbent operator, by means of an international invitation to tender. Fixed-line telecommunications, Data and Internet Onatel provides Fixed-line telephony services (voice and data) as well as Internet access. Even though Onatel, lost its monopoly of fixed-line services (national fixed-line telephone, telex and telegraph) as of December 31, 2005, at the end of 2007, it was still the only fixed-line operator in Burkina Faso. However, on the Internet market other ISPs operate alongside Onatel. As at December 31, 2007, the number of fixed-lines amounted to nearly 121,771, representing a penetration rate of approximately 1% and covering the main towns of Burkina faso. Other than residential clients and companies, more than 14% of the customer base comprises tele-centers, and pay-phones, enabling a greater proportion of the population to have access to the telephone services. Onatel also offers Internet access via the PSTN telephone network, ISDN connections, leased line and ADSL, launched in September The Internet customer base reached nearly 11,756 as of December 31,2007. Mobile telecommunications Telmob, a wholly-owned subsidiary of Onatel, provides prepaid and postpaid services and offers roaming and SMS and specially adapted services for businesses, such as closed user-groups. To boost consumption and the client base Telmob offers volume reductions on call charges and special offers on top-ups and kits. It operates in a liberalized market alongside the companies Celtel Burkina and Telecel Faso. With a customer base of almost 564,400 as at December 31, 2007, virtually all of which is prepaid, Telmob has an estimated market share of 39%. The mobile penetration rate in Burkina Faso was close to 12% at the end of 2007 (Source Onatel), which offers significant growth potential. The market is shared between three operators : Telmob, Celtel and Telecel. Regarding the Onatel estimates, the market shares as at December 31, 2007 are 46% for Celtel, 40% for Telmob and 14% for Telecel. 108 Maroc Telecom 2007 Registration Document

109 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of subsidiaries activities The following table summarizes Onatel group s main operating and financial data: in thousands as at December Mobile customer base (active) Numbers of fixed-lines Internet customer base 7 12 in millions of Moroccan dirhams in IFRS Revenues* 1,239 1,371 Fixed-line (gross) Mobile (gross) Earnings from operations before amortization Fixed-line Mobile Earnings from operations Fixed-line (75) (35) Mobile * Net revenues of the incomes between the Fixed-line and Mobile activities of each subsidiary company, but including the incomes generated between the subsidiary companies (of which contracts of service commitments) which are eliminated in the consolidated revenues. Maroc Telecom s representatives have seats on the Board of Directors of Onatel, and none of Maroc Telecom s directors have any operational functions in any of these companies. The consolidation method of the Onatel sub-group, and its contribution to Maroc Telecom s results are summarized in Notes 1, 2, 23 and 28 of the Consolidated Financial Statements. In addition, section 6.4 Related Parties Transactions gives details of the financial flows and the nature of such flows between Maroc Telecom and the Onatel sub-group. Maroc Telecom Registration Document 109

110 Gabon Telecom Gabon Telecom S.A is the incumbent operator in Gabon arising out of the split of the Office des Postes et Telecommunications in 2001 in accordance with Act 004/2001 dated June 27, 2001 on the reorganization of the postal and telecommunications sectors. In March 1999, Gabon Telecom launched Libertis, its wholly owned mobile subsidiary, which was granted the GSM network mobile license in Until 2006, the Gabonese government held complete ownership of Gabon Telecom share capital. In February 2007, following an international invitation to tender, the Gabonese Government sold a 51% stake to Maroc Telecom. Fixed-line telecommunications, Data and Internet Gabon Telecom provides fixed-line telephony services (voice and data) aswell as Internet access. Even though Gabon Telecom has lost its monopoly since June 2001, of certain services such as Internet, it will be the only fixed-line operator in Gabon until As at December 31, 2007, the number of fixed-lines amounted to 23,539, representing a penetration rate of 1.6% and covering the main Gabonese towns. Other than residential clients and companies, more than 10% of the customer base comprises telestore lines. Gabon Telecom SA also offers Internet access via PSTN telephone network, ISDN connections, leased line, ADSL and fixed-line using CDMA technology (launched in December 2007). The Internet customer base reached nearly 9,505 as at December 31,2007. Mobile telecommunications Libertis, a wholly-owned subsidiary of Gabon Telecom SA, provides prepaid and postpaid services and offers roaming and SMS and specially adapted services for businesses, such as closed user-groups. Libertis offers volume reductions on call charges and special offers on top-ups. Developing in a competitive mobile market, the mobile customer base of Libertis reached approximately 386,253 customers at the end of December The penetration rate was about 71% at the end of 2007 (source Gabon Telecom). The market is shared between three operators: Libertis (34% market share), Celtel-Gabon (56% market share) and Moov (10% market share). (Source: Gabon Telecom estimates at December 31,2007) 110 Maroc Telecom 2007 Registration Document

111 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of subsidiaries activities The following table summarizes Gabon Telecom Group s main operating and financial data: in thousands as at December Mobile customer base Number of fixed-lines Internet customer base - 10 In millions of Moroccan dirhams in local standards Revenues 1,062 1,001 Fixed-line (gross) Mobile (gross) Earnings from operations before amortization Fixed-line 38 (79) Mobile Earnings from operations (175) (169) Fixed-line (114) (214) Mobile (60) 45 Maroc Telecom s representatives have seats on the Board of Directors of Gabon Telecom, and none of Maroc Telecom s directors have any operational functions in any of these companies. The consolidation method of the Gabon Telecom sub-group, and its contribution to Maroc Telecom s results are summarized in Notes 1, 2, 23 and 28 of the Consolidated Financial Statements. In addition, section 6.4 Related Parties Transactions gives details of the financial flows and the nature of such flows between Maroc Telecom and the Gabon Telecom sub-group. Maroc Telecom Registration Document 111

112 Casanet A wholly-owned subsidiary of Maroc Telecom, Casanet is one of the leading Internet service providers in Morocco. It is focused on offers to business clients and the management of portals, including the Menara portal. In 2007, revenues for Casanet amounted to MAD63 million, up 78% compared to 2006 and its earnings from operations reached MAD12 million, up 18%. The strong rise in Casanet s revenues is mainly due to increased sales in the Business Services segment, which includes the resale of equipment as well as integration and consultancy services. In addition, in 2007 Maroc Telecom transferred its Yellow Pages services to Casanet Medi-1-Sat In 2005, Maroc Telecom acquired a 24.7% stake in Medi-1-Sat which it increased to 26.8% in Medi- 1-Sat is preparing a television channel in Tangier offering continuous news in Arabic and in French. This project is financed by Moroccan and French investors. In the long term, Maroc Telecom will own 28% of this project with a maximum investment of 4.2 million, alongside the other investors: Caisse de Dépôt et de Gestion (28%), Radio Méditerranée Internationale (14%) and the French shareholder, Compagnie Internationale de Radio Television (30%). By participating in this project, Maroc Telecom intends to establish closer links with the media industry, and namely to accompany the development of the content of its ADSL triple play offer. In December 2006, Medi-1-Sat started broadcasting its programs from the Hotbird satellite and on TV via ADSL Mobisud (France and Belgium) On December 1, 2006, Maroc Telecom launched Mobisud in France, then in Belgium on May 2, 2007; two new MVNO in the European mobile market. It uses the radio network of the French mobile operator SFR in France and Proximus in Belguim. Mobisud France has 3 shareholders: Maroc Telecom (66% stake), SFR (16%) and the Moroccan group Saham (18%). Mobisud Belgium is wholly-owned by Maroc Telecom. Mobisud (France and Belgium) are specifically targeted towards individuals who live in France and Belgium and have ties with Maghreb countries (Maroc, Algeria, Tunisia), to make their calls to friends and family easier, whether they are in France, Belgium or in the Maghreb. Mobisud (France and Belgium) create their own offers and services, develop their own IT systems, manage their own brands, their communication, their sales activities and their customers. They offer prepaid formulas and no-commitment subscriptions. As at December 31, 2007, the active customer base of Mobisud France and Belgium reached 160,000 customers. Mobisud (France and Belgium) recorded total sales of MAD64 million and an opertaing loss of MAD-269 million. 112 Maroc Telecom 2007 Registration Document

113 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Research and development 4.6 RESEARCH AND DEVELOPMENT Maroc Telecom has a research and development department which works on the Company s products. This research usually leads to the launch of new products and/or services or transformations and/or improvements of existing products, even though such work may not be considered as patentable inventions or processes. Maroc Telecom research and development costs are not significant. 4.7 SEASONALITY The summer months, with the return of Moroccans living abroad, and the fortnight preceding the Id al-adha holiday (December 21 in 2007) traditionally see sustained business (primarily mobile and fixed-line public telephony), while the month of Ramadan (from September 14 to October 13 in 2007) is a low consumption season for both the fixed-line and mobile businesses. Maroc Telecom Registration Document 113

114 4 4.8 REGULATORY FRAMEWORK AND POSSIBLE DEPENDENCIES The legal framework with respect to telecommunications in Morocco This chapter summarizes the legal environment with respect to the telecommunications business in Morocco, and does not describe it in a comprehensive manner. General presentation The objective of the Moroccan Telecommunications Act is to: equip the telecommunications sector with an effective and transparent regulation framework supporting fair competition for the benefit of the consumers; pursue the development of telecommunications networks and services by supporting development of new information technologies; provide telecommunications service for the entire population throughout the country; offer the Moroccan economy communication media using cutting edge technologies, allowing it better integration into the global economy. The reform of the Moroccan telecommunications sector was initiated by Act 24-96, dated August 7, 1997 (Act 24-96), which dissolved the Office National des Postes et Télécommunications (ONPT) and laid down the conditions for the liberalization of the telecommunications sector. The dissolution of the ONPT led to the creation of three separate legal entities: Itissalat Al-Maghrib (Maroc Telecom), a corporation organized under private law (société anonyme); Barid Al Maghrib (the post office, or BAM), a public agency organized as a financially independent legal entity; and the Moroccan telecommunications regulator ( ANRT ), the principal mission of which is the regulation of the telecommunications sector. Most of the powers previously reserved for the minister in charge of telecommunications were accordingly transferred to the ANRT. The liberalization process continued with the adoption of a series of implementing decrees concerning mainly the operation of the ANRT, the general terms of operation of the public telephony networks and the terms applicable to an open telecommunications network. In 2004, Act amended and supplemented by Act completed the liberalization process initiated in 1997, in particular through the clarification of the existing statutory framework. The operators contribution to universal service and to local development was thereby reduced from 6% to 2% of revenues, excluding tax and net of interconnection costs. The access to alternative infrastructure (motorways, railroads, etc.) and the sharing of existing telecommunications infrastructure (see Universal Service and Rights of way ) are permitted. Finally, the ANRT s powers were reinforced (see Mission of ANRT ). In 2004, the ANRT published general guidelines on the liberalization of the telecommunications sector over the period The main aim of these guidelines was to specify the liberalization strategy to set up competition which is now effective between three operators (including those operators already in place) in all segments of the fixed-line and mobile markets. 114 Maroc Telecom 2007 Registration Document

115 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies In 2005, the decrees concerning interconnection and the general terms of operation of the public telephony networks were amended and supplemented, respectively by Decree no and Decree no dated July 13, A new Decree, no dated July 13, 2005, relating to ANRT s new powers of monitoring compliance with the law on the freedom of pricing and competition, was adopted. These three decrees were published in the Official Moroccan Gazette (bulletin Officiel) no.5336 dated July 21, On December 23, 2005 the ANRT s Board of Directors made the decision to launch an invitation to tender to grant 3G mobile licenses on May 2, 2006 and to implement regulatory controls according to the following timetable: Carrier pre-selection on July 8, 2006; Partial local loop unbundling on January 8, 2007; Full local loop unbundling: July 8, In 2006, the ANRT set the agenda for the portability of numbers as follows: Portability of mobile numbers by January 1, 2007 at the latest; Portability of fixed-line numbers by March 31, 2007 at the latest; Lastly, the legal framework has also been supplemented by a number of decisions made by ANRT, on both a general and an individual basis, both for the purposes of regulating the sector and for settling disputes between operators. Rules applicable to the establishment and operation of telecommunications networks and services in Morocco Act 24-96, as supplemented by Act 55-01, implements different rules according to the nature of the telecommunications networks and services provided. Networks and services subject to a license General description The establishment and operation of public telephony networks using the public domain or using the radio frequency spectrum requires a license. A license may be issued only in response to an invitation to tender. Invitations to tender are issued by the ANRT. Contract specifications defines, among other items: the conditions for the establishment of the network; the conditions for the provision of the service; the area of coverage of that service and the schedule for completion; the radioelectric frequencies and numbering blocks allocated; the duration of the license s validity and the conditions of its renewal; financial considerations and related terms of payment. The applicant whose bid is deemed to be the most favorable, as indicated by an opinion issued by the ANRT, is awarded the contract. The award is entered in a public report. Notice of the issuance of a license is by decree of the Prime Minister. The awarded licences are personal and may be assigned to a third party only pursuant to a decree. In addition to complying with the contract specifications, the holder of the license is also required to comply with all applicable statutory and regulatory rules in force, including in particular the general conditions of Maroc Telecom Registration Document 115

116 4 operation of public telecommunications networks, the conditions of provision of technical offers, interconnection tariffs, leased lines and rules relating to frequencies. The general conditions of operation of public telephony networks are defined by Decree , as amended and supplemented by Decree no dated July 13, 2005, which establishes certain obligations, in particular compliance with the principle of fair competition, advertising retail tariffs (with prior notification to the ANRT), equal treatment among users, confidentiality and neutrality of service. The above mentioned decree also enacts the rules related to the division of the infrastructure and the allocation of numbering resources. Finally, the operators are bound to contribute to certain general needs of the State. In particular, they are bound to contribute to the requirements and burdens of universal service, research and training in the area of telecommunications (see Universal service ). The conditions of interconnection and the supply of leased lines are defined by Decrees as amended and supplemented by Decree no dated July 13, 2005 and , dated February 25, 1998 (see Interconnection-General background ). As regards radioelectric frequencies, Decree , dated February 25, 1998, provides that the fees are to be set by an order of the minister in charge of telecommunications after obtaining an opinion from the Minister of Finance. Thus, under the terms of the Order , dated February 25, 1998, as amended by Order , dated February 4, 2004, three fees are payable: the charge for monitoring radiocommunication stations, the fee for the allocation of radioelectric frequencies and the duty for the inspection of operators of radio communication stations. Legal status of Maroc Telecom Pursuant to Act 24-96, the telecommunications networks and services previously operated by the ONPT, namely fixed-line telecommunications network and services, mobile telecommunications network and services and the right to use the radioelectric frequencies allocated or assigned to the ONPT, were transferred to Maroc Telecom. Because of its position as the incumbent operator, Maroc Telecom is subject to specific contract specifications approved by Decree n , dated October 9, 2000, amended by order n , dated April 21, 2006 which define the conditions for the operation of all the networks and services initially operated by the ONPT. These contract specifications specify the conditions in accordance with which Maroc Telecom is to establish and operate, for an unlimited duration: fixed landline telecommunications services (including data transmission services, leased lines and the integrated services digital network) on a local and nationwide basis; telegraph services; telex services; maritime radiocommunications services; mobile telecommunications services using the GSM standard; international telecommunications services. Since the promulgation of Act 55-01, Maroc Telecom s contract specifications have now been adapted accordingly. Thus, for instance, the provisions relating to periods of exclusivity have been removed, while those relating to universal service and local development have been modified, and those regarding the sharing of infrastructures have been added. 116 Maroc Telecom 2007 Registration Document

117 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies It should be noted that mobile telecommunications services using the NMT standard were discontinued after the grant of permission by the ANRT, and that Maroc Telecom has applied to the latter for permission to discontinue the provision of telegraph and telex services, for which the maintenance can no longer be ensured. Maroc Telecom s services are to be provided on a permanent and continuous basis, in an objective, transparent and nondiscriminatory manner. The Company is accordingly required to avoid any price discrimination based on geographical location. Maroc Telecom agrees to use its best efforts to achieve levels of quality of service in line with international standards. In this respect, the ANRT may perform inspections of Maroc Telecom, and the Company is required to provide an annual report relating to the quality of its services. Since the promulgation of Act no , the parameters of the universal service requirement will encompass the local development obligations and the amount of the overall contribution is set at a maximum of 2% of pre-tax revenues, and net of interconnection costs. Maroc Telecom s contract specifications have been revised accordingly (see Universal service section below). A special fund was created by the 2005 budget into which the universal service contributions are paid (see section Significant accounting policies and estimates Contribution to universal service). Maroc Telecom pays a fee to the ANRT for use of the spectrum of radioelectric frequencies, in an amount set by regulation. Other licenses awarded Maroc Telecom s contract specifications provided for a period of exclusivity until December 31, 2002 for the operation of a fixed-line network and a public network of international telecommunications. Likewise, they provided that no license for operation of the land-based cellular telecommunications network using the GSM network could be awarded before August 5, 2003 (other than the license already granted to Meditel). As regards mobile telecommunications, pursuant to an invitation to tender issued by the ANRT, a GSMtype license was awarded on August 2, 1999 to Meditel for a term of 15 years, subject to extension. In early 2005, the term of this license was extended to 25 years. In 1999 and late 2002, ten licenses for the establishment and operation of telecommunications networks were awarded in Morocco. Apart from the license awarded to Meditel, five licenses were issued to operators to operate GMPCS satellite telecommunications networks, three licenses were issued to operators to operate VSAT satellite telecommunications networks, and two licenses were issued to operators to operate trunked radioelectric networks (3RP) in Morocco. In 2005, two fixed-line telecommunications licenses were awarded: a fixed-line license including local loop (without restricted mobility) and domestic and international transmission was granted to Meditel in July 2005; a fixed-line license including local loop (with and without restricted mobility) and domestic and international transmission was granted to Maroc Connect (ex ISP which has become Wana, a global operator in September In 2006, three 3G mobile licenses were awarded to the three existing operators (Maroc Telecom, Meditel and Wana). Lastly, a regional licence for the setting up and operation of a 3RP network has just been allocated to the Cires Telecom company in the Tangier-Tetouan area. Maroc Telecom Registration Document 117

118 4 Networks and services requiring licenses The establishment and operation of any independent network, other than an internal network, requires a license from the ANRT. Independent networks are telecommunications networks without commercial purposes, reserved solely for private use (i.e., where use is reserved for the party establishing it) or shared use (i.e., where use is reserved for the exchange of internal communications among a single group of companies). Services subject to reporting The provision of value-added services is unrestricted, subject to the provision of prior notice to the ANRT and their compliance with applicable regulations. The list of value added services is determined by regulations adopted by the ANRT. Decree , dated February 25, 1998, defines the following as valueadded services: electronic messaging, voice mail, audiotext, electronic data interchange, enhanced fax, online information, access to data (including data processing and searches), file transfer, conversion of protocols and coding and the provision of Internet service. Providers of value-added services are required to obtain a license to use the connection capacities of one or more public telephony networks, unless the value-added service provider is itself the holder of a license. Act provides that such capacity is to be used solely to link customers to a point of presence and between the point of presence and the network of the public telephony network operator, when the ANRT grants special permission to a value-added service provider to use any other technical means. Unrestricted networks and facilities The ANRT permits the establishment of internal networks and radioelectric facilities consisting solely of lowpowered and short range devices without restriction. However, such networks and radioelectric facilities are subject to the same requirements as for the approval of devices (regarding the protection of the safety of users and operating staff, compatibility, etc.). The ANRT also determines the technical conditions of use of such networks and facilities. The use of the network is to be reserved for the company s own requirements, and the network s infrastructure must be entirely leased from one or more licensed operators of a public telephony network. Legislation with respect to pricing Telecom operators are free to set their own retail rates, subject to compliance with the principles of full competition and uniformity of national rates. Operators must notify the ANRT of their rates before they become applicable. Maroc Telecom as a powerful operator, is subject to reinforced preliminary notification obligations and justification of its rates compared to costs. If the operators fail to comply with the competition rules and the above mentioned principle of uniformity, the ANRT may require them to amend their tariffs. As an exception to the principle that operators are free to set their rates, Maroc Telecom s rates for maritime radiocommunication services must be linked to costs and safety messages must be free of charge, (i.e. emergency and distress calls). Interconnection charges and leased line tariffs provided to third party operators are controlled via the publication of an interconnection catalogue approved each year by the ANRT (see- Interconnection hereafter). 118 Maroc Telecom 2007 Registration Document

119 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies Interconnection General background Interconnection is governed by the telecommunications statute and more specifically by Decree , as amended and supplemented by decree no dated July 13, 2005, which defines the technical and pricing conditions that operators of public telephony networks are required to offer for interconnection to their own networks. Any operator of a public telephony network is required to satisfy reasonable interconnection requests made by the holder of a license to operate a public telephony network, taking into account the applicant s requirements and the operator s ability to satisfy them. The interconnection is subject to a contract between the operators, intended to determine the technical, administrative and financial terms of interconnection, in compliance with the principles of objectivity, full disclosure and non-discrimination. If a disagreement occurs between the parties during the negotiation of the agreement, either party may refer the matter to the ANRT. Dominant operators Specific interconnection obligations are imposed upon operators designated by ANRT as exercising a significant influence on a given market. An operator is considered to exercise a significant influence, if, either individually or in conjunction with another, it enjoys a dominant position enabling it to behave independently with respect to its competitors, clients and consumers. Under Decree no , as amended and supplemented by decree no dated July 13, 2005, operators exercising a significant influence on a given market are required to publish technical and pricing terms for interconnection, once they have been approved by the ANRT. The pricing terms must cover only the actual costs of use of the network and related costs. For such purpose, the presentation of pricing terms must be sufficiently detailed to enable the relevant costs to be determined accurately, and the ANRT is in charge of determining the appropriate accounting methods. Maroc Telecom is accordingly required to offer pricing terms that comply with the principles of objectivity, full disclosure and non-discrimination, and costs orientation. As of 2006, interconnection charges are to be calculated using the Long Run Average Incremental Costs method in compliance with an ANRT decision dated September 1, 2005, relating to the adoption of the Long Run Average Incremental Costs method to set interconnection charges to the fixed network. Since 2007, the interconnection charges to the Maroc Telecom and Medi Telecom Mobile network are subject to the ANRT multiannual framework, defined in its decision no. 05/07 dated April 24, Therefore, for 2008, the termination charge in respect of the Maroc Telecom and Medi Telecom network is MAD at peak time (-50% off peak), and MAD at peak time in Since 2007, Maroc Telecom has been designated as an operator exercising a significant influence on the following markets: Fixed-line termination; Mobile termination; Leased lines. Medi Telecom was designated as an operator exercising a significant influence on the mobile termination market. Maroc Telecom Registration Document 119

120 4 On January 3, 2008, the ANRT approved Maroc Telecom s technical and pricing terms for interconnection to fixed-line and mobile networks for These offers take account of the fact that Maroc Telecom was designated as exercising a significant influence on the above mentioned markets. The table below sets out the operators domestic interconnection charges to fixed-line networks as applicable on January 1, 2008 (at peak time, whilst a 50% reduction is applied off-peak): In Moroccan dirhams (excluding Tax/ minute) Maroc Telecom Meditel Maroc Connect Fixed-line termination Intra CAA: Single Tariff: Single Transit: Single tariff: Double Transit: Limited mobility termination In addition, the ANRT determined a multiannual framing of interconnection charges to the Maroc Telecom fixed-line network which involves a 15% reduction in termination charges between 2007 and Leased lines Decree , dated February 25, 1998, relating to the conditions for the provision of an open telecommunications network sets the pricing and technical conditions for the provision of leased lines as well as quality (i.e., the time frame for provision of service and time for repairing malfunctions once a failure has been reported). The ANRT regulates leased lines, which operators of public telecommunications networks are required to provide. This list may be supplemented, after consultation with the operator concerned, by a mandate that further services be provided. Each operator offering leased lines is required to publish the technical terms of provision in its price catalog, including in particular the principles and terms of indemnity. The price catalog is to be determined on the basis of an operator s costs. Universal Service Universal service obligations cover telecommunications services including: a telephone service of a specified quality at an affordable price; value-added services, the contents and performance standards of which are set in the contract specifications of operators of public telephony networks (including services allowing access to the Internet); the routing of emergency calls, and the provision of an enquiries service and a telephone directory, in printed or electronic form. Act no instituted the pay or play principle and set the contribution required from public telephony network operators with respect to their universal service obligations at 2% of pretax revenues and net of interconnection charges, handset sales and income from value added services. The operators may accordingly perform either the universal service duties themselves, or pay a contribution into a special allocation fund. Only the routing of emergency calls and the provision of an enquiries service and a telephone directory, in printed or electronic form, are services to be performed by the operators on a mandatory basis, the routing of the emergency calls and the telephone directory having to be provided free of charge. The terms of performance of the universal service duties are set, for each operator, in special specifications approved by decree. Installation, operation and maintenance of phone booths on the public highway must also be provided. Any removal of a phone booth requires consent from the ANRT. For , the ANRT launched a consultation paper for all national operators for a vast universal service program entitled "PACT", aiming to provide telephone services and Internet access to all white zones in Morocco; 9,263 localities which; to date; are not covered by the GSM network. The program proposed by 120 Maroc Telecom 2007 Registration Document

121 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies Maroc Telecom covered all localities. The Universal Service Management Board selected Maroc Telecom for 7,338 localities, for a total amount of MAD1.159 billion, to be deducted from its universal service contribution for Contribution to research, training and standardization in telecommunications Act sets the required contribution from operators of public telephony networks in respect of training and standardization at 0.75% of pretax revenues and net of interconnection charges, from the telecommunications activities covered by their licenses. This amount is paid to the ANRT. The contribution in respect of research is set at 0.25% of the same revenues.this amount is to be paid into a special fund allocated to research. Operators carrying out research programs pursuant to agreements made with research agencies listed by the regulation in an equivalent amount are exempt from payment. Rights of way Act introduces a provision whereby legal entities organized under public law, public contractors and the other operators of public telephony networks must make their property (e.g., easements, major roads, conduits, high points, etc.) available to operators so requesting for the purpose of the installation and operation of transmission equipment. Compliance is mandatory only if the installation does not interfere with the existing public use. It is to be provided on acceptable, objective and nondiscriminatory regulatory, technical and financial terms, securing an environment of fair competition. The purpose of this provision is to allow operators to make use of the infrastructure currently at the disposal of entities such as the Office National de l Electricité, the Office National des Chemins de Fer (railroads), Autoroutes du Maroc (highways) or other operators of public infrastructure networks. The contracts must be forwarded to the ANRT for its information and the latter may resolve any related disputes. In addition, the operators of alternative infrastructure networks (public or private entities) may lease or assign to an operator the excess capacity at their disposal and/or rights of way over the public domain. The leasing agreement must be forwarded to the ANRT for its information, and may not interfere with the rights of way that other operators are entitled to obtain. Numbering and number portability The ANRT allocates numbers, blocks of numbers and prefixes to the operators of public telephone networks on terms which must be objective, transparent and non-discriminatory. These numbers, blocks of numbers and prefixes may not be transferred without express prior consent from the ANRT. The conditions for number portability are to be set by the ANRT, within the framework of its decision n 10/06 of October 4, 2006, relating to the procedure and conditions of number portability, and decision 10/07 of July 18, 2007, fixing the pricing conditions for portability of Maroc Telecom fixed-line and mobile numbers and the portability of Medi Telecom mobile numbers. Preselection Pre-selection of the carrier (i.e., of the operator carrying the call on the domestic and international network, as opposed to the local loop network), is scheduled to be in operation 12 months after the award of licen- Maroc Telecom Registration Document 121

122 4 ses, according to the note setting out general guidelines for the liberalization of the telecommunications sector over the period , i.e. July 8, 2006). However, to date, no third party operator has decided to make use of MarocTelecom s offer. Unbundling of the local loop Act does not specify the terms of the unbundling of the local loop. Under the current schedule, partial unbundling is expected to be implemented within a period of 18 months, followed by complete unbundling three years after the licenses are awarded. On January 4, 2008, the ANRT approved the technical aspects and pricing of the total and shared access to Maroc Telecom s local loop, with the following monthly subscription: -partial unbundling : MAD35 excluding of tax - total unbundling : MAD100 excluding of tax Maroc Telecom s partial unbundling offer is available since January 1, 2007, but to date no third party operator has decided to make use of it. Accounting separation In accordance with Decree no as amended and supplemented by Decree no dated July 13, 2005, and with Decree no as amended and supplemented by Decree no dated July 13, 2005, operators are required to keep cost accounts which enable clear identification of the costs, income and earnings connected with each network they operate or service they offer. The annual financial statements are to be submitted for auditing to an entity designated by the ANRT. The Moroccan Telecommunications Regulatory Authority Autorité Nationale de Réglementation des Télécommunciations (ANRT) Act created the ANRT as a public agency subject to the authority of the Prime Minister. It is a separate legal entity that is financially independent and subject to the State s financial supervision and direction. Agencies of the ANRT Decrees and , dated February 25, 1998, set out the composition of the ANRT s Board of Directors and its powers. The governing bodies of the ANRT are the Board of Directors, the Executive Committee and the Director.The Board of Directors is comprised of the Chairman and seven State representatives of ministerial rank and five individuals appointed by decree for a term of five years. It is chaired by the Prime Minister and sets the ANRT s general policies and its annual agenda. An Executive Committee assists the Board of Directors, and is in charge of resolving interconnection disputes. The Director of the ANRT carries out the executive role. Challenges on the basis of misuse of power of the ANRT s rulings are referred to the Rabat Administrative Court. 122 Maroc Telecom 2007 Registration Document

123 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies ANRT s missions The mission of the ANRT is to develop the legal environment for the telecommunications sector, to monitor and secure compliance with the legislation relating to fair competition among the operators, and to resolve certain disputes. The ANRT drafts proposals for the development of legal, economic and safety rules relating to telecommunications activities. It prepares legislative bills, draft decrees and draft ministerial orders. The ANRT prepares and updates the contract specifications for operators of public telephony networks. The ANRT processes applications for licenses and establishes maximum charges for services relating to universal service needs. The ANRT sets the technical and administrative specifications for the approval of terminal equipment and radioelectric facilities, and the technical rules applicable to telecommunications networks and services generally. The ANRT manages and monitors the spectrum of radioelectric frequencies, and allocates these frequencies. Pursuant to its responsibility to monitor compliance with applicable legislation, the ANRT has expansive rights to obtain information, as well as disciplinary powers. If such information is not provided or is provided late, Act enables the ANRT s Director to impose fines (the scale of penalties ranges from MAD to MAD , according to the information withheld). Any operator failing to comply with the applicable regulation may be subject to sanctions. First, the ANRT s Director issues a warning. Second, the operator is subject to a fine which may not exceed 1% of its pretax revenues net of interconnection charges, as reported for the previous year. In such cases, the ANRT s Director refers the matter to the Crown Prosecution of the Rabat Court of First Instance to initiate criminal proceedings, and may join a civil action to the proceedings. The above fine is doubled if the operator is a repeat offender. Third, the ANRT may suspend all or part of the operator s license for a term not exceeding 30 days, temporarily suspend the license or reduce its duration by up to one year, or revoke the license. The license is suspended by the appropriate government body on proposal of the ANRT s Director, and the license is revoked by decree on proposal of the ANRT s Director. The ANRT s remit includes the resolution of disputes among operators, or between an operator and a user, and of problems connected with the general operating conditions of a license. The executive committee is authorized to resolve interconnection disputes and other matters for which it has been authorized by the Board of Directors. It should be noted that Act has extended the scope of the ANRT s powers to cover compliance with the provisions relating to competition contained in Act 6-99 on freedom of pricing and competition. The ANRT prepares the invitation to tender for the award of licenses, processes license applications and receives prior notifications for activities subject to the reporting system. It issues permits and prepares the related licenses and contract specifications. It also monitors the operators compliance with the terms of their licenses. Maroc Telecom Registration Document 123

124 4 Dispute settlement Decree n dated July 13, 2005 sets out the procedures before the ANRT as regards litigation, anti-competitive practices and economic concentration operations, including the ANRT s additional powers as regards enforcing the compliance of applicable regulations on freedom of pricing and competition. In 2007, the ANRT ruled on two disputes: the first one between Maroc Telecom and Medi Telecom and the second between Maroc Telecom and Wana. These decisions are summarized as follows: Decision n 02/07, dated February 23, 2007 concerning a referral made by Medi Telecom relating to Maroc Telecom s unlimited offer «Phony», completed by the decision dated April 9, 2007, relating to the same item (See the section on "Legal and arbitration proceedings"). Decision n 11/07, dated August 28, 2007 relating to a referral made by Wana concerning Maroc Telecom s practices (see the section on "legal and arbitration proceedings"). This decisions are available on the ANRT website ( Dependencies As a service provider, Maroc Telecom is not directly involved in any industrial process. The elements of its network infrastructure, and the handsets and SIM cards that it sells to its clients, are purchased from different suppliers so as not to create any form of dependency. 124 Maroc Telecom 2007 Registration Document

125 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies Regulatory environment of subsidiaries Mauritel General presentation Act dated July 11, 1999 relating to telecommunications in the Islamic Republic of Mauritania defines the legal environment for telecommunications in Mauritania. The Act stipulates that the Regulation Authority is responsible for regulating, controlling and monitoring the activities of telecommunications operators. This independent Regulation Authority has full financial and management autonomy, and is governed by the bylaws set out in the telecommunications Act and placed under the supervision of the Minister in charge of telecommunications. Decree , which defines the general conditions of interconnection networks and telecommunications services, constitutes the main legislative text governing the telecommunications sector. Main obligations of Mauritel s contract specifications In 2005, Mauritel and Mauritel Mobiles satisfied the obligations set out in their respective contract specifications as regards fixed-line and 2G mobile coverage. For 3G services, Mauritel is committed to covering 19 localities in 4 phases over a period of 4 years from the date the service is commercialized. Each operator s contract specifications set the universal access contribution at 3% of revenues net of interconnection charges, and the regulatory fee at 2% of pretax revenues net of interconnection charges. These rates are identical for all operators. Mauritel and Mauritel Mobiles are subjected to the payment of annual fees for the numbering plan and the use of the radioelectric frequencies. Competitors Since the reform of the sector was launched in 2000 and until July 2006, only the mobile sector was liberalized with two actors present on the market; Mauritel Mobiles and Mattel. The incumbent operator Mauritel SA, retained the monopoly on the fixed-line services (telephony, Internet and international traffic). In July 2006, with the completion of the liberalization process and the granting of new fixed-line and 2G and 3 G mobile licenses, a new operator is now present on the fixed-line and mobile market. Maroc Telecom Registration Document 125

126 4 Onatel General presentation The legal environment for telecommunications in Burkina Faso is governed by Act n 051/98/AN dated December 4, The Regulation Authority is an administrative publicly-owned body placed under the supervision of the Ministry of Post and Telecommunications. It is responsible for enforcing telecommunication regulations, ensuring that operators comply with their contract specifications, managing and controlling radioelectric frequencies, setting up and managing the national numbering plan, and managing conciliation and arbitration proceedings between operators and between the latter and consumers. The principal texts regulating the telecommunications sector: Decree /PRES/PM/MC/MCIA dated March 3, 2000 concerning the price fixing for telecommunications services; Decree /PRES/PM/MC/MCIA dated March 13, 2000 governing the general conditions of interconnection networks and telecommunications services. Main obligations of Onatel s and Telmob s contract specifications Pursuant to its contracts specifications, Onatel is under an obligation to cover 143 localities before 2010, 60 of which must be covered by June Telmob s contract specifications also set out its obligations in terms of coverage of localities and certain major roads throughout the country. Telmob s contract specifications, like those of other GSM mobile operators, allow coverage to be completed in five (5) phases. Decree /PRES/PM/MC dated September 13, 2000 fixes operators universal service contributions at 2% of collected revenues. Decree /PRES/PM/MC fixes the regulatory fee to be paid by operators to the Regulation Authority at 1% of collected revenues. Onatel and Telmob are subject to the payment of annual fees for the numbering plan and the use of the radioelectric frequencies. Competitors Onatel SA is the sole fixed-line operator in Burkina Faso although it lost the monopoly of the basic services as of December 31, 2005 (national fixed-line, telex and telegraph). In 2000 two GSM mobile licenses were awarded to Celtel and Telecel for a period of 10 years. 126 Maroc Telecom 2007 Registration Document

127 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Regulatory environment and possible dependencies Gabon Telecom General presentation The legal environment for telecommunications in Gabon is governed by Act n 005/2001 dated June 27,2001. The Regulation Authority is responsible for regulating, controlling and monitoring the telecommunications sector. It is placed under the supervision of the Ministry of Post and Telecommunications and the Ministry of Economy, Finance, Budget and Privatization. The principal texts regulating the telecommunications sector: Decree 0540/PR/MPT on interconnection and infrastructure sharing; Decree 0008/PR/MPT on the implementation and management of the numbering plan; Decree 1081/PR/MPT on the approval of the public service concession agreement; Decree 084/PR/MCPTNTI relating to fees, duties and contributions due by telecommunications operators holding a public service concession contract or a license ; Decree 0544/PR/MPT relating to the creation, financing and management of the universal service fund. Main obligations of Gabon Telecom s and Libertis contract specifications Pursuant to its contract specifications, Gabon Telecom is under an obligation to provide coverage for 54 localities before the end of 2011 at a minimal rate of 10 localities per year. In addition, Gabon Telecom benefits from a 5 year exclusive operation of fixed-line networks. Libertis contract specifications also set out its obligations in terms of coverage of localities and certain major roads throughout the country. Libertis contract specifications do not set out a specific agenda for coverage. This is also the case for all other GSM mobile operators. Decree 00544/PR/MPT dated July 15, 2005 relating to the financing and management of the universal service special fund, fixes the contribution due by operators at 2% of pretax revenues net of interconncetion charges. Gabon Telecom is exempt from payment during the 5 year period of exclusivity. Decree 0084/PR/MCPTNTI dated October 26, 2006 relating to fees, duties and contributions due by telecommunications operators holding a concession contract or license, sets their contribution for research, training and telecommunications standardization at 2% of pretax revenues net of interconnection charges. Gabon Telecom and Libertis are subject to the payment of annual fees for the numbering plan and the use of the radioelectric frequencies. Competitors Gabon Telecom is the sole fixed-line operator in Gabon. It also benefits from a 5 year exclusive operation of fixed-line networks as from February 9, Celtel and Telecel compete with Libertis on the mobile sector. In addition, in May 2007, the government renewed three mobile licenses for the three operators for 10 years. Maroc Telecom Registration Document 127

128 4 4.9 HUMAN RESOURCES Modernization of Human Resources management As the Group s success is based on the skills and commitment of its employees, Maroc Telecom launched a vast overhaul of its Human Resources policy in Maroc Telecom s Human Resources policy is based on recognition of employee performance and skill enhancement. The Human Resources department has created a set of innovative tools and programs which are adapted in line with Maroc Telecom s strategy, among which, the skill management program is based on a grid which indicates which skills are required to position the Group well for future performance and to improve productivity. Skill management is one of the requirements of ISO 9000 version 2000 certification which covers all of Maroc Telecom s activities. The main targets of this modernization plan are to: ensure skills are in line with the Company s strategic requirements; give managers a better understanding of Human Resources; make all employees aware of the skills that they require to perform their job successfully; identify the skills which employees need to develop to access a higher level job; improve the relevance of training programs (more specific); increase selectivity at the recruitment stage. The skill enhancement campaign launched in June 2007 was completed in October. It involved 3,860 employees in relation to 44 jobs in direct contact with customers. This campaign involved the training of 860 managers, bringing the total number of managers trained since 2006 to 2,176. The Human Resources department analyzed the data collected during the campaign and summarized the findings by job, field, pole and region. The findings were validated by a steering committee. The analysis of these results allowed the setting out of a development program for each employee or group of employees, to help him/her or them to impose performance and thus contribute to the creation of value for Maroc Telecom. This program will be finalized by the DRH in cooperation with managers, as the results of the campaign are returned to the employees concerned both at pole and regional level, in January and February Four types of actions are proposed: Training: to further develop skills in certain areas; Coaching: managers supervise their team on a day to day basis and provide them with feedback to help them achieve their goals; Review meetings: regular meetings are organized between employees and their managers to monitor achievement; Field accompaniment: employees are accompanied by a more experienced member of staff to help them develop skills where they encounter certain difficulties. Other projects: A training grid which matches up the skills that need to be developed with the training sessions available. This will help target training sessions more accurately to employee requirements and optimize the efficiency of in-house training; After a successful experience in e-learning for English and office automation skills, this new form of 128 Maroc Telecom 2007 Registration Document

129 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Human resources training is due to be used more as it increases flexibility and responsiveness and cuts down travel time. The developed modules will use initial tests to determine the level of training to be used, and tests to check the knowledge acquired by the trainee during the training session. In the long term the skills acquired and put into practice will enable the training grid to be updated; A career management program is currently being developed. Each employee will be monitored individually. An integration seminar will mark the starting point of the employee s career within the Group, which will be structured by key stages for each employee e.g. training sessions. The aim is to improve employee career development Staff 36% of Maroc Telecom s staff is under the age of 40. Maroc Telecom, which calls upon varied skills at a high level (engineers, sales staff, marketing staff, financiers, etc.), is one of the companies hiring the largest number of new graduates in Morocco Staff turnover rate The rate of staff turnover (i.e., the ratio of staff having left at year-end to the staff at the beginning of the fiscal year) was 5.2% in 2007 compared with 1.43% in 2006 and 8.4% in The increase of this rate in 2007 and 2005 was due to the implementation of a voluntary redundancy plan Changes in the number of employees The table below shows the changes in the number of employees at Maroc Telecom for the past three fiscal years ended December 31, 2005, 2006 and 2007: Number of employees at the end of period 11,178 11,212 10,949 * See Note 19 of consolidated financial statements relating to average employees of Maroc Telecom group. At the end of 2006, in an aim to constantly improve performance, Maroc Telecom launched a fourth incentive-based voluntary departure plan with improved conditions compared with previous plans Vivendi Staff The staff numbers mentioned in the table above also include Vivendi expatriate staff working with Maroc Telecom pursuant to a service contract and on fixed-term contracts. The number of expatriate staff was 26 in 2005, 17 in 2006 and 19 in Maroc Telecom Registration Document 129

130 Training Training is considered an essential investment in Maroc Telecom s future. It is part of an overall effort to develop and adapt the Company s human resources to its requirements. This is reflected in 42,766 days of training provided to 20,565 participants, representing an average of nearly 4 days per employee Change in staff compensation The gross compensation granted to Maroc Telecom s staff consists of both a fixed and a variable component. The amount of the variable component (performance bonus) is set individually according to each employee s achievement of targets. The change in payroll costs over the past three fiscal years is as follows: in millions of Moroccan dirhams Payroll costs Maroc Telecom 1,946 1,958 2,134 Payroll costs - Maroc Telecom group 2,056 2,060 2, Labor relations Employer-staff communication The telecommunications sector has been characterized by continuous communication between employers and labor unions. This dialogue has been enhanced by the presence of well-structured and representative labor unions. In order to comply with the new provisions of the Labor Code, since 2006 Maroc Telecom has held elections for employees representatives within the works council and regional health and safety committees. Elections were also held to set up the social welfare association. Labor unions The most representative labor unions are: Syndicat National des Postes et Télécommunications (SNPT), affiliated with the Confédération Démocratique de Travail (CDT); and Union Syndicale des Telecom (UST), affiliated to the Union Marocaine de Travail (UMT). Union representativeness The latest elections, organized in September 2003, in accordance with applicable labor laws and regulations, elected employees representatives. The elected candidates were divided as follows: SNPT (CDT) : 48.8% UST (UMT) : 38.1% Other labor union organizations: 13.1% 130 Maroc Telecom 2007 Registration Document

131 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Human resources These elections were characterized by a participation rate of 47% for the election of employees representatives. The results obtained indicate the predominance of the SNPT (affiliate to CDT), followed by the UST (affiliate to UMT). The labor constituencies within Maroc Telecom consist of eight representative establishments and three bodies of employees Agreements and negotiations Between 2004 and 2007, five company agreements were signed with the unions. The last agreement signed in December 2006 mainly covers the salary increases Employee benefits In addition to statutory welfare benefits (including in particular pension, mutual insurance, coverage for occupational hazards and occupational diseases), Maroc Telecom s staff enjoys a number of welfare benefits, including in particular the benefits listed below: Supplementary pension. In addition to the basic scheme provided by the various agencies (CMR, RCAR and CNSS), the employees may join a supplementary pension scheme, taken out with the Caisse Interprofessionnelle Marocaine de Retraite (CIMR). Contributions are set at 7.5% of the employee s salary. Maroc Telecom pays 50% of these contributions. 7,499 employees had taken advantage of these supplementary pension benefits as at December 31, 2007, which represents 68% of staff. Supplementary healthcare insurance. Employees may take out supplementary healthcare insurance providing 100% reimbursement of the medical expenses incurred for themselves and their dependents. The costs of membership of the supplementary healthcare insurance are assumed jointly by Maroc Telecom and the insured party, in equal shares. The premium rate amounts to 1.2%, excluding tax of the gross salary. 8,390 employees had applied for the supplementary insurance as at December 31, 2007, which represents 74% of employees. Life inssurance. Active employees and pensioners up to the age of 70 are provided with life inssurance for a total of MAD100,000. An optional additional bracket of up to MAD900,000 is also available. The cost of that bracket is paid entirely by the employee, and contribution is based on 0.35% of the insured capital. Property loans. An employee in a permanent position is eligible for loans for the acquisition or construction of housing from banks that have entered into agreements with Maroc Telecom, and this, within the framework of the procedure governing the lending. The amount of the loan is fixed at a maximum of MAD700,000 with a 2.5 point reduction in the interest rate. Maroc Telecom Registration Document 131

132 4 Transport allowance. To encourage employees to acquire their own vehicle, an allowance of between MAD2,000 and MAD5,000 is granted to employees who purchase a motorbike or a car. In 2007, nearly 1,373 employees benefited from this allowance. Summer vacation centers. For their leisure, employees are eligible, at prices negotiated and subsidized by Maroc Telecom, to use the firm s residential vacation centers. In order to strengthen the existing scheme and to expand the programs it can offer its employees while securing attractive value for money, Maroc Telecom enters into agreements with tourism promoters every year. Within this framework, 2,474 employees and their family profited from the summer vacation centers in 2007, which represents a satisfaction rate of 67%. Medical and activities. Employees and their families may obtain health care from a network of medical and community centers staffed by 18 contracted physicians, including three specialists. In 2007, 3,534 people benefited from the medical services provided by these centers. Occupational health. In addition to medical treatment, Maroc Telecom has also set up preventative health measures which aim to prevent any deterioration in its employees health due to their work. These measures include: ensuring general hygiene in the workplace; protecting employees from the risk of occupational hazards; improving working conditions (ergonomic work techniques, the elimination of hazardous products and the risk of contagion). Pensions. The pensions of the Company s employees are managed by three external pension funds, based on the origin of employees: CMR for the staff from the Ministry of Post and Telecommunication, RCAR for the staff from the ONPT, and CNSS for the staff hired by Maroc Telecom. These pension funds provide payment of the employees pensions, in consideration of the contributions withheld (employer and employee s share) and paid monthly by Maroc Telecom. 132 Maroc Telecom 2007 Registration Document

133 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Real property 4.10 REAL PROPERTY For the purposes of operating its networks and for its commercial, support and administrative functions, Maroc Telecom makes use of more than 5,300 sites (buildings, land, etc.), spread out over the entire territory of Morocco, including around 80% leased locations and 20% owned for accounting purposes by Maroc Telecom. The sites owned by Maroc Telecom were historically owned by the Kingdom of Morocco and were legally transferred to Maroc Telecom at the time of its incorporation in 1998, in compliance with Act via a contribution in kind. Maroc Telecom is currently in the process of obtaining formal legal title to these sites. Administrative proceedings are expected to be completed in This timetable is given as an indication, since the length of administrative procedures may vary. As at December 31, 2007, the sites owned by Maroc Telecom broke down as follows: 48% of the sites are legally owned by Maroc Telecom, which has legal title to them; 36% of sites are under requisition. Requisition is a claim to a property right. It is delivered by the land registrar once the application for land registration has been made. It becomes a title deed once regulatory administrative formalities have been completed, i.e. publication of application for land registration, boundary marking, notification of requisition and finally registration. This procedure is subject to regulatory time limits; 16% of sites are in the process of being formally registered, around 11 of which are owned by the ONPT and 82 are subject to legal disputes. These sites include buildings that belong to several presumed owners and where ownership is contentious, certain pieces of land for which there is lack of evidence of ownership, land owned by local authorities and subject to several oppositions, and land subject to compulsory purchase by Maroc Telecom. The estimated costs linked to these procedures (payment of land registration fees) and/or the potential financial risks likely to arise from any contentious issue over the legal title of ownership are deemed to be not significant. The Company s statutory auditors have noted this matter in their unqualified audit reports on the consolidated financial statements and in the notes thereto since 1998 reserving their opinion due to failure to inform shareholders mainly in the Additional Disclosures section. This reserve takes the form of an observation in the certified Consolidated Financial Statements of 2006 as the notes to the Consolidated Financial Statements mention the situation (see note 5 on Property, plant and equipment). In 2007, this observation was removed. In connection with any transfer of ownership of real or personal property allocated to charitable works falling within the private domain of the State to the Company which should be made in the form of a remunerated contribution through an increase in the share capital in favor of the Government of the Kingdom of Morocco, the latter has undertaken to reconvey to Vivendi, simultaneously with the increase in capital and at no cost, a percentage of the shares issued at the time of this increase in capital equal to the percentage of the capital of the Company held by Vivendi prior to the realization of these assets. Maroc Telecom Registration Document 133

134 INTELLECTUAL PROPERTY As at December 31, 2007, Maroc Telecom owned some 751 trademarks and trade names, 4 patents, one industrial model and one industrial design registered with the Moroccan Office for Industrial and Commercial Property (OMPIC). Itissalat Al-Maghrib, Maroc Telecom, Jawal, El Manzil, Kalimat, Menara, Fidelio, Les pages jaunes de Maroc Telecom, Maghribcom and Mouzdaouij Solutionentreprises and Phony are among the main trademarks and trade names owned by the group in Morocco. The first patent, registered in 1997, is related to the complete execution, with a prototype, of an NT2 device. This device is used to connect customers to Maroc Telecom s Marnis integrated service digital network, and is the method used to carry a digital connection to each customer. The second patent, registered in 1999, regards complete execution, with a prototype, of a remote display device through a radio paging network named Rakkas. This wireless device allows the display of banking, stock exchange or other information at any location covered by the Rakkas radio messaging network. The third patent, registered in 2006, covers an automatic cooling system which provides a back up system in the event of a failure in the air conditioning system in the areas which house the energy and telecommunications equipment. The fourth patent, registered in 2006, covers an automatic line identification system which automatically detects all the pair cables connected to telecommunications access network equipment. The design model registered in 2002 mentions the implementation of a new design for phone booths to be installed in public locations. This design model was developed for the Moroccan market and takes account of, among other factors, mechanical, electrical, electromagnetic (electric sparking, radiation, storms) and sound constraints in order to provide the user with comfortable and entirely safe use of the public phone booth. This type of phone booth has now been extensively deployed by Maroc Telecom. The industrial design registered in 2006 covers the drawing of the person on the cover of the Guidelines for the Security of Information manual. The brands and trade names currently owned by Maroc Telecom, of which there are 751, are protected over the entire national territory. For the 284 trade names registered before January 5, 2005, the protection period is 20 years renewable indefinitely from the date of their registration, in accordance with Act no which came into force on that date, concerning the protection of industrial and intellectual property rights. For the 467 registered subsequently, the protection period is 10 years. In 2006 and 2007, Maroc Telecom was awarded the national trophy by the OMPIC, for having registered the greatest number of national brands in brands in brands in 2006 Since 2006, in order to preserve its industrial and intellectual property rights, Maroc Telecom has extended the protection of 40 of its trademarks (France, Benelux, Germany, Spain, Portugal, Italy, Algeria, European Community), including the Mobisud brand. In addition, Maroc Telecom is careful to take any action either necessary or desirable in order to protect the trademarks, the patents and the design model that it has developed. 134 Maroc Telecom 2007 Registration Document

135 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Intellectual property Maroc Telecom has a research and development department which works on the Company s products. This research usually leads to the launch of new products and/or services or transformations or improvements of existing products, even though such work may not be considered as patentable inventions or processes. These improvements made to protected inventions may be registered for protection by means of an instrument known as an additional patent, the formalities for the registration of which are identical to those for the principal patent. Maroc Telecom has launched among its employees an innovation contest intended to reward the best ideas or projects, with possible benefits for the Company in terms of the registration of patents, trademarks or design models. The rights to use the trademarks and trade names granted to Maroc Telecom are described in the service agreements made with its contractors. Some contracts for the sale of services or products from Maroc Telecom s Mobile business and Fixed-line and Internet business confer on retailers a right to use Maroc Telecom s trademarks during the term of performance of the agreement, in accordance with the procedure agreed between the parties. As regards its intellectual property rights: On November 25, 2004, Maroc Telecom purchased the Maroc Telecom brand and domain names which had been filed in France by a third party; On May 28, 2007, Maroc Telecom entered into an agreement with Mobisud, to enable the coexistence of the Mobisud France brand and Maroc Telecom s Mobisud brand and a contract transferring the domain names relating to the Mobisud brand to Maroc Telecom; On November 8, 2007, Maroc Telecom transferred its "Yellow Pages " activity to its subsidiary Casanet. Maroc Telecom Registration Document 135

136 INSURANCE Over the past five years, Maroc Telecom has aimed to improve its risk management by: estimating and assessing potential risks; identifying those risks likely to affect the Company s employees, property or its performance; determining a more suitable property risk coverage plan, which has been assessed and updated by insurance experts; optimizing the cost of cover for such risks; covering the residual risks through insurance policies; setting up claims notification and claims management procedures; setting up prevention and protection measures against risks of fire and explosion for the largest sites; establishing an information security policy; setting up a back up center to ensure the continuity of the operations. In May 2003, Maroc Telecom took out an annual insurance policy, tacitly renewable to cover the Group s liability in the event of personal injury, property damage and economic loss caused to third parties in the course of its business. The Group is currently studying ways of optimizing this insurance cover in particular by increasing the level of cover, and extending the scope of cover. In June 2003, it also took out an insurance policy covering compensation for occupational accidents and diseases. On July 1, 2004, Maroc Telecom took out an insurance policy to cover property damage and business interruption. In addition to extending cover to business interruption, the policy has also increased the contractual insurance limits in order to secure continued operation and to avoid material loss. Maroc Telecom s insurance policies currently cover up to MAD850 million per loss for property damage and business interruption. 136 Maroc Telecom 2007 Registration Document

137 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Insurance For 2008, in line with its policy to improve insurance cover, Maroc Telecom intends to increase its insurance limit to MAD1,100 million and MAD550 million for natural disasters. Deductibles will also be increased to optimize costs. Maroc Telecom s insurance costs amounted to MAD39.9 million in Maroc Telecom s main insurance policies to date are as follows: Property damage and business interruption; Operating General liability and product liability; Directors and Officers liability; Occupational accident and occupational disease insurance; Complementary health insurance. In addition to these insurance policies, since 2005 Maroc Telecom has initiated a program to improve protection against fire, explosion and theft at those sites which are most at risk. This is carried out in close collaboration with the Group s insurance partners. As regards the security of data and uninterrupted data processing operations, Maroc Telecom currently has a backup center installed in Ain Aouda. Maroc Telecom s subsidiaries also benefit from its insurance experience and risk management expertise. Maroc Telecom Registration Document 137

138 LEGAL AND ARBITRATION PROCEEDINGS To the Company s knowledge, there are no pending or potential government, legal or arbitration proceedings, including proceedings of which the Company has knowledge, that may have or have had in the past 12 months, a significant effect on the Company and on the group s financial position, profits, business and property, with the exception of the following litigation: Telestore litigation In a ruling dated December 28, 2004, the Commercial Court of Rabat declared that the application of the National Federation of Phone Shop Associations was not within its jurisdiction. The Federation then brought a writ before the Commercial Court of Rabat, demanding the withdrawal of all authorizations delivered by Maroc Telecom to new phone shop operators that do not respect the chaining rule imposing a minimum distance of 200 meters between each phone shop. The Court of First Instance, in a ruling dated April 6, 2005, (non-enforceable) ordered Maroc Telecom to reverse its decision to abandon the 200 meter chaining principle and to withdraw the authorizations that had been granted that did not respect the chaining rule. This judgment was accompanied by a penalty of MAD500/day for non-execution. On June 27, 2005, Maroc Telecom appealed against this judgment before the Commercial Court of Appeal of Casablanca. In its ruling on May 9, 2006, the Court of Appeal partly accepted Maroc Telecom s applications, annulling the first instance judgment as regards the order to withdraw the authorizations but upheld the judgment as regards the requirement for Maroc Telecom to reverse its decision to abandon the 200 meter chaining principle and ordered the company not to grant any new authorizations that did not comply with the chaining rule subject to a penalty of MAD500 /day for non-execution. The Company considers that the claims made by the Federation are not legally founded, and appealed to the Maroc Telecom Supreme Court on July 21, 2006, seeking the annulment of the Court of Appeal s judgment. As the Federation had also appealed to the Supreme Court, Maroc Telecom applied for the two procedures to be joined together. This application was considered by the Court at a hearing on February 14, 2007 which referred the case to the Chief Court Clerk for further inquiry. This procedure is currently ongoing. To date Maroc Telecom has no further information regarding these proceedings. To date, Maroc Telecom has received 54 individual applications before the various commercial courts (Rabat, Fes, Oujda ) from phone shops who each claim between MAD5000 to MAD50,000 (one applicant claims MAD100,000) in interim damages and a legal appraisal to determine the final amount of damages. These applications are based on the above mentioned judgment and the Court of Appeal s decision. During 2007, 48 of these cases were dismissed and in one case the applicant withdrew the claim, and another case was dismissed as it was considered to be unfounded. The other cases are still before the court. The Company claims that the chaining rule is contrary to competition rules as other operators are not subject to this rule. The Company does not intend to revoke its decision to put an end to chaining, as it considers that the claims made by the Federation are not legally founded. 138 Maroc Telecom 2007 Registration Document

139 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Legal and arbitration proceedings Medi Telecom referral related to Maroc Telecom Phony offer On February 23, 2007, the ANRT published its decision which stated that: The Phony offer Evenings and Weekends ( Soirs et Weekend ) is not considered as an anticompetitive practice; The Phony offer Residential Anytime ( Tout Temps Résidentiels ) in its current form cannot be reproduced by another operator, and therefore Maroc Telecom must submit new conditions which will allow this offer to be replicated, to the ANRT within one month of this decision. Failure to disclose customer base and traffic data and the new conditions to the ANRT, will result in the Phony offer Residential Anytime being suspended, without retroactive effect; Medi Telecom s application for flat-rate interconnection was rejected. On April 9, 2007, the ANRT published a new decision, which completed the prior decision in which it granted its approval of the new phony tariff Residential Anytime proposed by Maroc Telecom. Wana referral related to Maroc Telecom practices On March 16, 2007, Wana made a referral to the ANRT for anti-competitive practices by Maroc Telecom on the following points: quality of wholesale ADSL services; IP VPN ADSL retail offers with guaranteed bandwidth cannot be reproduced by another operator; the leased lines contract includes anti-competitive clauses (loyalty-based price reductions, length of contractual commitment and termination costs). Wana s referral includes an application for interim measures and an application to refer the case to the public prosecutor to seek criminal sanctions. The ANRT published its decision 11/07 dated August 28, 2007, which dismissed Wana s claims of anticompetitive practices but requires Maroc Telecom to: take measures to improve quality of wholesale ADSL services provided to ISPs and review the ADSL access contracts between Maroc Telecom and the latter to include appropriate service level agreements; offer Wana wholesale ADSL with guaranteed bandwidth; review retail leased lines agreements so that when customers terminate the agreement before term, they will only be liable to refund the discount granted by the operator (this is applicable to all operators authorized to market leased line retail offers). Wana referral relating to its mobile network termination charges On December 21, 2007, Wana made a referral to the ANRT relating to the interconnection charges to its mobile network. Negotiations regarding the interconnection contract are currently underway between the Wana mobile network and the Maroc Telecom fixed-line and mobile networks but the parties have not come to an agreement on the interconnection charges to the Wana mobile network. Wana claims a tariff of MAD1.65 excluding tax over a three year period, whilst Maroc Telecom request that the same tariff be applied to Wana s mobile network as to its own network, which means Wana would be subject to the mobile Price Cap determined by the ANRT in its decision 05/07 dated April 24, 2007 (see "Interconnection"). Wana has made another referral to the ANRT on this point as regards Medi Telecom and the claims of the latter are the same as those of Maroc Telecom. The ANRT has four months to settle this dispute. Maroc Telecom Registration Document 139

140 RISK FACTORS In addition to the other information contained in this Registration Document, investors should carefully consider the risks described below before deciding to invest in the Company s shares. If one or more of such risks were to occur, the activities, financial position, earnings and development of the Company could be affected Risks relating to the company s business Maroc Telecom s revenues and earnings are dependent to a significant extent on the Moroccan economy Maroc Telecom s core business is the provision of telecommunications services in Morocco, including the provision of international telecommunications services to and from Morocco. Accordingly, Maroc Telecom s revenues and profitability depend to a significant extent on telecommunications spending by Moroccan customers and international telephone traffic to and from Morocco. The evolution of usage of telecommunications services in Morocco reflects, in part, the evolution of the country s economic position, and more specifically, the population s disposable income and its businesses economic activity. A contraction or slowerthan-expected growth of the Moroccan economy could have a negative impact on the development of the customer base and the usage rate of fixed-line and mobile telecommunications services in Morocco, which could have a material effect on the growth and profitability of Maroc Telecom s activities, and possibly entail a decline in its revenues and earnings. In this context, the perception of possible acts of terrorism, whether committed in Morocco or abroad, could significantly affect the Moroccan economy in general (in particular through a decrease in tourism business). As regards this risk, which is not specific to Morocco, Maroc Telecom cannot forecast the consequences of the perception, informed or otherwise, of such possible acts of terrorism. Maroc Telecom faces an intensification of competition on the Moroccan market for telecommunications, which could lead to a loss of market share and a reduction in Maroc Telecom s revenues Three licensed operators are currently present on the Moroccan market for mobile and fixed-line telecommunications: Maroc Telecom, Meditel and Wana (previously Maroc Connect). On the mobile segment Maroc Telecom s market share was on a downward trend until 2005, and stabilized at 66.5% as at December 31, 2007 (Source: ANRT). Over the same period, the Company cut its prices and set up promotional offers (including customer subsidies) to anticipate and respond to competition. In 2006, ANRT granted 3G Mobile licenses to the existing operators (Maroc Telecom, Meditel and Wana). In the future, Maroc Telecom may be required to implement further price cuts and promotions to maintain its position on the market and anticipate competition on the 3G segment. In addition, the granting of two new licenses on the fixed-line telecommunications market in 2005 could further increase competition on the market (see Risks relating to the regulatory environment below). The intensification of competition among the existing operators or with new entrants could result in a continued reduction in Maroc Telecom s market share, and in increased costs for customer acquisition and retention, which could lead to a reduction in Maroc Telecom s revenues and earnings (see Market trends and other factors affecting earnings ). 140 Maroc Telecom 2007 Registration Document

141 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Risk factors Maroc Telecom is dependent on the reliability of its information systems; damage to or loss of all or part of its systems could result in a loss of customers and reduced revenues Maroc Telecom can be paid for its services only insofar as it uses reliable information systems (including collection and invoicing systems), and succeeds in protecting and securing the continuity of such systems operation. Maroc Telecom has established a security policy for its information systems allowing it to deal with ordinary disturbances in computer operations (unauthorized access, power cuts, theft, hardware crash, etc.) and to secure uninterrupted service. Maroc Telecom now has a Recovery Plan for its critical information systems, which have a direct impact on its revenues, such as pricing data systems, and sales and billing information for its three business lines Fixed-line, Mobile and Internet. An event entailing a destruction of all or part of its systems (such as natural disasters, a fire or an act of vandalism) would automatically activate a backup system. As the data on the critical information systems is regularly saved from the production platforms onto the back-up system, the risk of losing data and being unable to bill customers and recover outstanding invoices is now very limited. Maroc Telecom is dependent on the reliability of its telecommunications networks. A disturbance to such networks could result in a loss of customers and reduced revenues Maroc Telecom is able to provide services only insofar as it is able to protect its telecommunications networks from damage caused by disturbances, power cuts, computer viruses, natural disaster and unauthorized access. Any disturbance to the system, accident or breach of security measures causing interruption in the Company s operations could affect its ability to provide services to its customers and have a material effect on its revenues and operating income. Such disturbances would also have a material effect in terms of image and reputation for the Company, which could lead to a loss of customers. In addition, the Company could be required to bear additional costs in order to repair the damage caused by such disturbances. Maroc Telecom s indirect distribution network could be weakened if Maroc Telecom does not succeed in maintaining it Maroc Telecom has an extensive distribution network, with a direct network of branches, an indirect network consisting of telestores, retailers and partners, and an independent network (see Distribution ). If Maroc Telecom were unable to maintain close relations or to renew its distribution agreements with the components of its indirect network or, if its indirect distribution network were to be jeopardized for other reasons, in particular the actions of competitors, or if the managers of telestores failed to comply with the exclusive agreements made with Maroc Telecom by distributing products competing with those of Maroc Telecom, the distribution network could be weakened and the Company s business and earnings could be significantly affected. Maroc Telecom Registration Document 141

142 4 Continued and rapid changes in technology could intensify competition or require Maroc Telecom to make significant additional investments Many services offered by Maroc Telecom involve intensive use of technology. The development of new technologies could cause some services of the Company to cease to be competitive. Maroc Telecom could fail to identify new opportunities in due time, and be required to make significant additional investments, in particular for the development of new products and services, or for the installation of infrastructure required to enable it to remain competitive. The new technologies in which the Company may choose to invest may affect its ability to achieve its strategic targets. Maroc Telecom could then lose customers, fail to succeed in attracting new customers, or be required to bear significant costs in order to maintain its customer base, which would have a negative effect on its business, revenues and earnings. Alternative means of communication could result in a reduction of the usefulness or even in the obsolescence of the fixed-line network, which could lead to the loss of a competitive advantage and reduce the Company s revenues significantly The Company has already had to deal with the substitution of fixed-line customers by mobile customers, which has been heightened by the use of alternative technologies. As an illustration, GSM gateway services are beginning to compete with Maroc Telecom s business fixed-line voice services and recently with the launch of limited mobility which tend to compete the telestores (see Competition ). The Company s fixed-line telecommunications activities could be affected by the development of such gateways or other alternative means of communication. Such alternative technologies could jeopardize the usefulness of Maroc Telecom s infrastructure and fixed-line network, by enabling competitors to use mobile telecommunications services to compete with Maroc Telecom without having a fixed-line network. Maroc Telecom s infrastructure and extensive network would then become less useful or even obsolete, which would lead to the loss of a competitive advantage and could significantly affect the Company s revenues and earnings. Health risks, whether real or perceived, or other problems connected with mobile devices or their base stations, could result in less intensive use of mobile communications Certain studies of mobile technology claim that the electromagnetic signals emitted by mobile devices and base stations involve health risks. Such risks, whether real or perceived, and the publicity they receive, together withn any resulting legislation or litigation, could reduce the Company s base of mobile customers, make the establishment of new base stations and the maintenance of existing base stations more difficult, or incite customers to reduce their use of mobile telephones. Fraudulent diversion of traffic could limit the Company s revenues and affect its earnings The Company first experienced a fraudulent diversion of its traffic in In response, Maroc Telecom has established a plan to combat that fraud. Maroc Telecom cannot forecast, however, whether new means of fraud will develop, the sectors that potential offenders will attack, nor the effects that any such fraud could have. If Maroc Telecom fails to prevent these fraudulent activities, it could see a reduction in its traffic in the sector affected by the fraud, and its revenues and earnings could thereby be affected. 142 Maroc Telecom 2007 Registration Document

143 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Risk factors Maroc Telecom may carry out acquisitions of telecommunications companies or licenses In order to extend its geographical presence, Maroc Telecom could acquire telecommunications companies or licenses in other countries. Such transactions necessarily involve risks. If Maroc Telecom does not achieve the results expected from such transactions, its business and earnings could be affected. In particular, Maroc Telecom could: carry out acquisitions on financial or commercial terms that could subsequently be found unfavorable; experience difficulties in integrating the companies acquired, or their networks, products or services; fail to retain the key employees of the companies acquired or to recruit skilled personnel as may be required; fail to achieve the expected synergies or economies of scale; make investments in countries where the political, economic or legal situation involves particular risks, such as civil or military unrest, the absence of effective or comprehensive protection of shareholders rights, or disagreements with other major shareholders, including public authorities, relating to the management of the companies acquired; and fail to adapt to the specific features of the countries in which any such companies would be acquired. Maroc Telecom could fail to retain its key employees or to hire highly skilled personnel, which could significantly affect the Company s activities and its ability to adapt to its environment Maroc Telecom s performance is dependent to a significant extent on the abilities and services provided by its management team. The management team has significant experience and knowledge of the telecommunications industry. The loss of key members of management could have a significant adverse impact on Maroc Telecom s ability to implement its strategy. Maroc Telecom and its performance are also dependent on skilled personnel having the experience and technical or commercial abilities required for the development of its business. Maroc Telecom s ability to adapt its services, products and commercial offers, whether in the area of fixed-line or mobile telecommunications, is highly dependent on the presence of competent and skilled teams in its various markets. Failure by Maroc Telecom to retain its key personnel, whether its management team or its commercial and technical executives, could affect the Company s business and its operating income could diminish substantially Risks relating to the regulatory environment The interpretation of existing legislation and the adoption of new statutory rules could affect Maroc Telecom s activities significantly Legislation relating to the telecommunications industry in Morocco is currently evolving. Act 55-01, dated November 2004, could be interpreted in a manner that could affect Maroc Telecom s business significantly, and result in a reduction in its revenue and earnings. In addition, the introduction of (i) carrier pre-selection, (ii) unbundling, and (iii) number portability will necessarily favor the competition to Maroc Telecom s detriment. Maroc Telecom Registration Document 143

144 4 The increase in the number of players could weaken Maroc Telecom s position on the market for mobile telecommunications services In 2005 and 2006, the ANRT granted a Fixed-line license with restricted mobility to Wana, and three 3G mobile licenses to Maroc Telecom, Meditel and Wana. Furthermore, the ANRT indicated that a third GSM license may be awarded in upcoming years. Nonetheless, after granting the 3G mobile licenses the ANRT stated that this process represented the final stage in the liberalization of the telecommunications sector in Morocco as set out by the Prime Minister in a note establishing the general guidelines for the period (see section 4.8 Regulatory Environment and Possible Dependencies ). It is possible, however, that the regulator s stance will change. The Company cannot forecast whether this process of liberalization of the mobile sector will evolve in a favorable manner. If such liberalization were to entail heightened competition on the market for mobile telecommunications in Morocco, Maroc Telecom could see its market share diminish and its customer acquisition and retention costs increase, which could result in a reduction in its revenues and earnings. Liberalization of the fixed-line market could restrict Maroc Telecom s market share and affect its profitability Maroc Telecom operates in a fixed-line telecommunication market that has just been liberalized. Two new fixed-line licenses were awarded in 2005 for national, international and local loop services. Liberalization of the fixed-line market could reduce the base of existing or potential customers for Maroc Telecom, who may be attracted by the competition. In addition, the entry of new operators through the award of international licenses will entail heightened competition, which could result in a decrease in international rates. Accordingly, the liberalization of these markets may affect Maroc Telecom s revenues and earnings. Maroc Telecom could be affected by regulatory decisions enabling other operators (i) to enter the telecommunications market on terms less onerous than those imposed on Maroc Telecom, and (ii) to have access to Maroc Telecom s network on favorable terms. An operator could provide telecommunications services without having to bear the same obligations as Maroc Telecom, while enjoying the benefit of the latter s infrastructure, thereby enabling it to target highly profitable markets, to the detriment of Maroc Telecom. As a dominant operator on the fixed-line, voice and data networks, the Company is bound under Act to permit access to its network, which will enable competitors to provide their own services through the use of Maroc Telecom s network. Such operators may thereby target markets with comparatively high profitabilities, such as the business market, urban areas or the international market, which could (i) restrict the opportunities for Maroc Telecom to extend the number of its high-volume users, or (ii) divert its existing customers towards such markets. Maroc Telecom could be affected by the ANRT s application of the legislation relating to competition Under Act 55-01, the ANRT s duties will henceforth also include monitoring and ensuring the observance of fair competition among operators with regard to Act 6-99 relating to freedom of pricing and competition. The ANRT could accordingly rule on matters relating to the competitive environment of the telecommunications market. Maroc Telecom cannot forecast to what extent the ANRT s rulings in this area might affect its operations. 144 Maroc Telecom 2007 Registration Document

145 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Risk factors Favorable interconnection costs for other operators could significantly affect the Company s future earnings In order to provide services to its customers, Maroc Telecom is required to connect its network to that of any other operator holding a domestic license, and vice versa. The interconnection charges are approved by the ANRT. The Company cannot forecast whether the ANRT s policy with respect to the fixed-line and mobile interconnection charges will be unfavorable to it Tax risk Maroc Telecom could be unable to deduct certain allowances for doubtful accounts The amount of doubtful accounts for which Maroc Telecom has made a provision is deductible from its taxable base, subject to the presentation of evidence of legal action taken against the debtors. Maroc Telecom has not initiated such legal action against all the debtors for whom it has made a provision. If the deductibility of such provisions for doubtful receivables in an amount below a certain threshold were to be challenged, the Company s earnings and profit could be adversely affected Risks relating to the interests held by major shareholders in Maroc Telecom The Company could be influenced by Vivendi, whose interests may not always be consistent with those of the Company s other shareholders Vivendi holds a majority stake in the Company s share and voting rights. Accordingly, Vivendi controls the decisions requiring adoption by the shareholders acting by a simple majority of votes. The interests of Vivendi with respect to these matters and the factors that it will take into account when exercising its voting rights may not be consistent with those of the Company s other shareholders Market risks In accordance with its cash management policy, Maroc Telecom does not invest in equities, in equity mutual funds or in derivatives. Maroc Telecom invests its cash with financial institutions either in sight deposits or term deposits. The counterparty exposure limits for each financial institution are approved by the Management Board. For market risks (foreign exchange risks, interest rate risks, stock valuation risks and liquidity risks), see Disclosure of qualitative and quantitative information about market risks. Maroc Telecom Registration Document 145

146 FINANCIAL REPORT

147 5.1 CONSOLIDATED FINANCIAL DATA FOR YEARS ENDED DECEMBER 31, 2007, 2006 AND FINANCIAL DATA IN MOROCCAN DIRHAMS FINANCIAL DATA IN EUROS CONSOLIDATED FINANCIAL STATEMENTS 186 REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS 187 CONSOLIDATED FINANCIAL STATEMENTS 188 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GENERAL OVERVIEW GENERAL PRESENTATION MARKET TRENDS AND OTHER FACTORS AFFECTING EARNINGS SCOPE OF CONSOLIDATION SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES INDIVIDUAL FINANCIAL STATEMENTS 232 REPORT OF THE STATUTORY AUDITORS ON THE FINANCIAL STATEMENTS 233 INDIVIDUAL FINANCIAL STATEMENTS 234 ADDITIONAL DISCLOSURES 239 SPECIAL REPORT OF THE STATUTORY AUDITORS CONSOLIDATED INCOME STATEMENT COMPARISON OF 2007, 2006 AND COMPARISON OF BUSINESS SEGMENT RESULTS CASH AND CASH EQUIVALENTS CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS DISCLOSURE OF QUALITATIVE AND QUANTITATIVE INFORMATION ABOUT MARKET RISKS TRANSITION FROM INDIVIDUAL FINANCIAL STATE MENTS TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF THE MANAGEMENT BOARD 254

148 5 5.1 CONSOLIDATED FINANCIAL DATA FOR YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 Maroc Telecom s consolidated financial data is summarized in the table below. The financial data for the years ended December 31, 2005, 2006 and 2007 has been taken from the Group s consolidated financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS), audited by the statutory auditors Abdelaziz Almechatt and Fouad Lahgazi from KPMG Morocco. IFRS-compliant 2004 financial statements and the transition document were published by Maroc Telecom when it reported its consolidated financial statements for the six months ended June 30, The transition to IFRS had a limited impact on the group s financial statements at December 31, 2004 (refer to 2005 Registration Document) Financial data in Moroccan dirhams Income statement data: (in millions of Moroccan dirhams) Revenues 27, ,615 20,542 Operating expenses 15,298 12,572 11,864 Earnings from operations 12,234 10,043 8,678 Earnings from continuing operations 12,201 10,029 8,695 Earnings 8,137 6,833 5,921 Attributable to equity holders of the parent 8,033 6,739 5,809 Earnings per share (in Moroccan dirham) Diluted earnings per share (in Moroccan dirhams) Balance sheet data: ASSETS (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Non-current assets 23,242 18,095 14,788 Current assets 14,507 10,129 15,090 TOTAL ASSETS 37,749 28,224 29,878 LIABILITIES AND EQUITY (in millions of Moroccan dirhams) Share capital 5,275 5,275 8,791 Equity attributable to equity holders of the parents 17,380 16,261 19,195 Minority interests 1, Total equity 18,634 16,853 19,724 Non-current liabilities 1, Current liabilities 17,679 11,147 9,890 TOTAL LIABILITIES AND EQUITY 37,749 28,224 29, Maroc Telecom 2007 Registration Document

149 5. FINANCIAL REPORT Consolidated financial data for years ended December 31, 2007, 2006 and Financial data in euros The company maintains its accounting records and prepares its financial statements in Moroccan dirhams. The aim of this section is to help investors make comparisons in euros. The table below sets out selected consolidated financial data for Maroc Telecom in euros, translated at the exchange rates used for Vivendi s consolidated financial position and earnings for the years 2005, 2006 and Income statement data: (euro millions) Revenues 2,456 2,053 1,860 Operating expenses 1,365 1,141 1,074 Earnings from operations 1, Earnings from continuing operations 1, Earnings Attributable to equity holders of the parents Earnings per share (in euros) Diluted earnings per share (in euros) Balance sheet data ASSETS (in millions of euros) December 31, 2007 December 31, 2006 December 31, 2005 Non-current assets 2,052 1,624 1,358 Current assets 1, ,385 TOTAL ASSETS 3,332 2,532 2,743 LIABILITIES AND EQUITY (in millions of euros) Share capital Equity attributable to equity holders of the parents 1,534 1,459 1,762 Minority interests Total equity 1,645 1,512 1,811 Non-current liabilities Current liabilities 1,560 1, TOTAL LIABILITIES AND EQUITY 3,332 2,532 2,743 The table below sets out the MAD/Euro exchange rates used for Vivendi s consolidated financial statements for the years 2005, 2006 and For 1 euro December 2007 December 2006 December 2005 Period-end rate used for Balance sheet Average rate used for Income statement (Source : Vivendi) The exchange rates above are provided for convenience only. The group does not claim that the amounts denominated in Moroccan dirhams were, could have been or could be converted into euros at such exchange rates or any other rate. For information relating to the impact of foreign exchange variations on the group s earnings, see section Disclosure of qualitative and quantitative information about market risks. Maroc Telecom Registration Document 149

150 5 5.2 GENERAL OVERVIEW The discussion and analysis below are to be read together with this Annual Report as a whole including, in particular, the audited consolidated financial statements of Maroc Telecom for the years ended December 31, 2005, 2006 and The operational data included in Chapter 5.2 refer only to business activities in Morocco and do not take into account data reflecting subsidiaries business: Mauritel, Mobisud, Gabon Telecom and Onatel see 4.5 Description of subsidiaries activities ) General presentation Maroc Telecom was created in 1998 as a result of a split of the Office National des Postes et Télécommunications and is Morocco s incumbent telecommunications operator. Maroc Telecom is the leading Moroccan operator and is present on the fixed-line, mobile telecommunications and Internet segments, a fast growing market. Maroc Telecom remains the domestic leader on these three segments. The Mobile business provides mobile telecommunication services (subscriptions, rate plans, prepaid phone cards and handsets) for individuals and businesses in Morocco (see Description of Operations Morocco Mobile business ). Mobile business has expanded rapidly and represents a growing share of Maroc Telecom s revenue, rising from almost 65% in 2005 (pro forma) to more than 70% in The Fixed-line and Internet business provides fixed-line telecommunications services, Internet services, TV via ADSL and data transmission services for residential and business customers in Morocco. It also provides public telephone services through its own network of public payphones, and through an independent network of phone shops. Its services also include interconnections with other domestic and international telecommunication operators (see Description of Operations Morocco Fixed-line and Internet business ). In addition, Maroc Telecom, together with a group of local investors, owns a 51.5% stake in the Mauritanian incumbent telecommunications operator, Mauritel. Through this shareholding, Maroc Telecom provides telecommunications services in Mauritania. On December 29, 2006 Maroc Telecom also acquired a 51% stake in the Burkinabe operator Onatel by means of an international invitation to tender, and a 51% stake in Gabon Telecom on February 9, Maroc Telecom launched Mobisud, an MVNO (Mobile Virtual Network Operator), on December 1, 2006 in France, in partnership with SFR and SAHAM. In May 2007, another MVNO Mobisud was launched in Belgium. 150 Maroc Telecom 2007 Registration Document

151 5. FINANCIAL REPORT General overview Market trends and other factors affecting earnings As Maroc Telecom provides telecommunications services in Morocco, including international telecommunications services to and from Morocco, the revenues and earnings of Maroc Telecom are dependent to a significant extent on Moroccan consumers average telecommunications spending and, to a lesser extent, on the volume of international telephone traffic to Morocco. Trends in the consumption of telecommunications services in Morocco need to be considered against a backdrop of changes in the country s economy and, more specifically, in the Moroccan population s disposable income. From this point of view, the firm growth in Morocco s gross domestic product should be noted, i.e. 5.2% in 2003, 4.2% in 2004, 1.8% in 2005, 8.1% in 2006 and 2.5% in 2007 (Source: Morocco s Treasury and External Finances Department). Main factors determining revenues Maroc Telecom generates revenue primarily from sales of telecommunications services by the Mobile business and by the Fixed-line and Internet business and, to a lesser extent, from sales of products associated with those services, consisting mainly of handsets used by customers and subscribers (mobile and fixed telephones and multimedia devices). Mobile business The Mobile business combines mobile telecommunications services (voice, data and roaming) and sales of mobile handsets. Prepaid and postpaid: The revenues generated by the mobile telecommunications sector vary according to changes in the number of customers and Average Revenue Per User (ARPU). Those two factors were affected to a significant extent by the introduction of prepaid plans in 1999 and the liberalization of the market in 2000, with the award of a second license in August There will be further changes after three 3G licenses were granted in July (see 4.8 Regulatory Environment and Possible Dependencies ). In terms of Mobile customers, Maroc Telecom has benefited from the expansion of the market, as shown by a significant increase in the penetration rate. The penetration rate measures the ratio of users of mobile telecommunications services to Morocco s total population. It grew rapidly over the past years, from 1.3% at December 31, 1999 to 65.7% at December 31, 2007 (Source: ANRT). The number of mobile users increased from 364,000 at the end of 1999 to 20 million at the end of December 2007 (Source: ANRT). The growth in the penetration rate was boosted by the launch of prepaid plans in 1999, allowing users to control their spending. At December 31, 2007, Maroc Telecom had a 66.5% share of the Moroccan mobile market compared with 66.9% at December 31, 2006 (Source: ANRT), with prepaid customers accounting for 96.2% of Maroc Telecom s mobile customers (Source: Maroc Telecom). Maroc Telecom Registration Document 151

152 5 Interconnection services Revenues generated by interconnection are mainly concern incoming international calls interconnection with international operators (Other than revenues generated by outgoing calls, which are included in the revenues from mobile telephony), and interconnection with Meditel and Wana. Offers Mobile offers are described in detail in Chapter IV of this Registration Document. Tariffs Tariffs include access charges (subscription, prepaid phone cards, installation charges and the price of handsets) and usage charges. The entry of a second mobile operator on the Moroccan mobile telecommunications market has put downward pressure on prices, and prompted operators to adapt their product range initiate frequent promotional offers on both handsets and usage charges. Maroc Telecom offsets the negative impact of these price cuts on ARPU by expanding its customer base and boosting usage. Traffic Incoming and outgoing mobile traffic grew rapidly, due to increases in the number of prepaid and postpaid customers. Average usage by postpaid subscribers (outgoing traffic) grew to 620 minutes per subscriber per month in 2007, and usage by prepaid customers amounted to 29 minutes per user per month for the same period. Morocco s tourism industry also plays a part in this development, generating a large flow of visitors (including Moroccans resident abroad), and providing a strong potential revenue stream from roaming services. In 2007, roaming accounted for more than 3.2% of mobile revenues, down compared with 2006 due to general price cuts in the sector. (See Business activities in Morocco Mobile International roaming ). ARPU Mobile ARPU corresponds to the revenue generated by incoming and outgoing calls and value-added services over a particular period (excluding roaming revenue), divided by the average number of customers over the same period and by the number of months in the period. The monthly average customer base is the average number of customers per month during the period. ARPU is influenced by several factors, including the price and volume of mobile telecommunications related traffic (incoming calls, outgoing calls and value-added services). ARPU fell by 4%, from MAD113 in 2006 to MAD108 in This decrease was mainly due to the strong increase in the customer base and the reduction in call charges. Prepaid ARPU amounted to MAD84 at December 31, 2007 compared to MAD89 at December 31, 2006, despite strong growth in the prepaid mobile customer base (+24.5% compared to 2006). Postpaid ARPU fell between 2006 and 2007, from MAD706 to MAD701 as a result of the acquisition of lower-use subscribers. Postpaid customers remain predominantly higher-use customers. 152 Maroc Telecom 2007 Registration Document

153 5. FINANCIAL REPORT General overview Fixed-line and Internet business Until the end of 2006 Maroc Telecom was the sole provider of fixed-line telecommunication services and the main provider of Internet services and data transmission services in Morocco. These markets were fully liberalized in 2005 when fixed-line licenses were granted to Meditel. In 2007, Wana arrived on the telecommunications market with a service of limited mobility and 1.1 million subscribers at the end of the year. The main Fixed-line services provided by Maroc Telecom are: telephony; interconnection with domestic and international operators; data transmission services for businesses and Internet service providers and other telecom operators; internet including Internet access services and related services such as hosting; TV via ADSL. As in the Mobile business, revenues in the Fixed-line business vary according to the subscriber base, the pricing policy and the usage level of each of the services. Revenues generated by international interconnection services are determined by the volumes of incoming traffic on the fixed-line network and by changes in interconnection charges, which are subject to renegotiation from time to time. Revenues generated by domestic interconnection services are determined by the requirement that Maroc Telecom offer interconnection services at prices compensating the actual cost of the use of the network and related costs. The consolidated revenues fell 5.5% in 2007, mainly due to 3.5% decrease in the average invoice per customer, due to the effect of competition on the telestore segment. In 2007, voice services accounted for 66% of fixed-line and Internet consolidated revenues whilst Internet services, growing strongly (25.1% in 2007), accounted for 10.7% of revenues compared to 8.0% in Fixed-line telecommunications services Historically, the penetration rate of fixed-line telecommunications services, which include public telephone lines, has been fairly low, owing in particular to the large number of people per household and the high usage rate of public telephones, which has hindered the development of residential fixed-line telecommunications. The fall in the penetration rate was primarily due to fixed-line customers switching to mobile services. Through a policy of developing new products and services, such as package deals and capped plans (El Manzil), prepaid cards, unlimited offers launched in September 2005 and the extension of public telephone coverage, the penetration rate in Morocco was still very low at 4.2% at December 31, 2007 (source: ANRT, excluding limited mobility). In 2007, the fixed-line customer base rose to million lines, +1.8% compared with December Fixed-line offers are described in detail in Chapter IV of this Registration Document. Data transmission services Maroc Telecom also provides data transmission services to businesses through a wide range of products and services (ISDN, Frame Relay, digital and analog leased lines, VPN IP), and a reliable, high quality network. This business is dependent on the development of the Moroccan economy and economic growth. Maroc Telecom Registration Document 153

154 5 Internet Services Maroc Telecom markets Internet services under its Menara brand. With the development of new offers (subscription-free dial-up, plans featuring inclusive hours, ADSL) and price cuts, the market has seen rapid growth since the beginning of 2004.The number of customers accessing the Internet through Maroc Telecom increased by almost 22% in Growth was boosted by price cuts in ADSL services together with frequent promotional offers. ADSL accounted for 99% of the total Internet customer base at December 31, The main competitor on the Internet services sector is Wana, which operates in the consumer and business segments. Maroc Telecom had a 90% market share at December 31, 2007 (source: ANRT). In 2006, Maroc Telecom launched TV via ADSL, making the service available for the first time in the African and Arab world. This offer is available via 4 bouquets of channels and enables customers to watch more than 70 national and international TV channels. Interconnection services Interconnection revenues arise mainly from incoming international traffic, in particular interconnection with international operators (excluding revenues generated by outgoing calls, which are included in fixed-line revenues), and interconnection with Meditel and Wana. Interconnection revenues generated by incoming international calls depends on call volume and the allocation of charges negotiated with international operators. Seasonality The summer months, with the return of Moroccans living abroad, and the two weeks preceding the Eid al- Adha holiday (December 21 in 2007) traditionally bring high business levels (primarily mobile and fixed-line public telephony), while the month of Ramadan (from September 14 to October 13 in 2007) represents a low point for both fixed-line and mobile businesses. Operating expenses Operating expenses include: purchases, mainly including the cost of handsets and interconnection costs; payroll and payroll-related costs; taxes and duties; other operating expenses, such as fees and network maintenance costs; depreciation, impairment and provisions. Operating expenses rose in 2007 due to an increase in maintenance costs resulting from the extension of the networks, a rise in payroll costs and higher provisions for trade receivables. 154 Maroc Telecom 2007 Registration Document

155 5. FINANCIAL REPORT General overview Scope of consolidation Mauritel group Maroc Telecom holds 51.5% of the voting rights of Mauritel S.A., the incumbent operator in Mauritania and operator of a fixed-line and mobile telecommunications network, following the merger of Mauritel SA (fixedline) and Mauritel Mobile. Mauritel SA is owned by the holding company Compagnie Mauritanienne de Communications (CMC), in which Maroc Telecom holds 80%, so that Maroc Telecom holds a 41.2% interest in the Mauritanian incumbent operator. Through, the Mauritel group has been consolidated by Maroc Telecom since July 1, Onatel On December 29, 2006, Maroc Telecom acquired 51% of the capital of the Burkinabe operator Onatel and 100% of its mobile subsidiary Telmob. Onatel has been fully consolidated by Maroc Telecom since January 1, Gabon Telecom On February 9, 2007, Maroc Telecom acquired 51% of the capital of the operator Gabon Telecom and 100% of its mobile subsidiary Libertis. Gabon Telecom has been fully consolidated by Maroc Telecom since March 1, Mobisud France On November 3, 2006, Maroc Telecom acquired a 66% stake in SFR6, renamed Mobisud, alongside the other shareholders SAHAM (18%) and SFR (16%). Mobisud has been operating as an MVNO (Mobile Virtual Network Operator) since December 1, in France. Mobisud has been consolidated since its acquisition (cf.notes to consolidated financial statements). Maroc Telecom Belgium In Belgium, Maroc Telecom launched an activity of MVNO via its wholly-owned subsidiary Maroc Telecom Belgium (trade name: Mobisud Belgium). This company has been operating since May 2007 and has been consolidated by Maroc Telecom since April 1, Medi-1-Sat Medi-1-Sat has been accounted for by the equity method since 2006, Maroc Telecom held 28% of the company s share capital at December 31, Medi-1-Sat produces and broadcasts news programs in French and Arabic in Maghreb countries. The company started broadcasting on December 1, GSM Al-Maghrib GSM Al-Maghrib (GAM) was accounted for by the equity method in 2005, but this is no longer the case since Maroc Telecom sold its 35% share to Air Time on March 27, Other non-consolidated investments Maroc Telecom s other non-consolidated investments include Casanet (in charge of maintaining Maroc Telecom s Menara Internet portal), an investment in Matelca (currently in liquidation), and other minority stakes. These companies are not consolidated as their results do not have a material impact on Maroc Telecom s financial statements. Maroc Telecom Registration Document 155

156 Significant accounting policies and estimates Context of the preparation of 2007 consolidated financial statements In application of the European regulation 1606/2002 dated July 19, 2002 concerning the adoption of international accounting standards, the consolidated financial statements of Maroc Telecom for the year ended December 31, 2007, were prepared in accordance with International Financial Reporting Standards (IFRS) as determined by the International Accounting Standards board (IASB) and adopted by the European Union at December 31, For the purpose of comparison 2007 financial statements include items from 2006 and All new standards, interpretations or amendments published by the IASB and compulsory in the European Union since January 1, 2006, have been applied. This has not resulted in a restatement of data for the fiscal years 2005 and 2004 as their impact was not significant. Statement of compliance Maroc Telecom s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). Maroc Telecom prepared its 2007 consolidated financial statements and its 2006 and 2005 comparative financial statements in accordance with: All mandatory IFRS and IFRIC (International Financial Reporting Interpretations Committee) standards and interpretations at December 31, All these standards and interpretations have been adopted by the EU; by anticipation from January 1, 2004: IAS 32 and IAS 39 on financial instruments. Maroc Telecom is not concerned by any sections of IAS 39 not adopted by the EU. Maroc Telecom has consequently applied IAS 39 (see note 15) in full to its 2004 financial statements and its 2005 consolidated financial statements; The following principle, pending publication of an IASB or IFRIC text on the matter: IFRIC interpretation of IAS 18 paraghraph 13 on Customer Loyalty Programmes, but not yet adopted by EU. Maroc Telecom does not accrue loyalty bonuses granted to customers that do not result in an additional cost. These bonuses are not considered to be a greater benefit than those benefits granted to new customers at the inception date of a contract. Loyalty bonuses convertible into free services are accrued. The accounting method used is compliant with the proposed IFRIC Interpretation D20 - IAS 18 on Customer Loyalty Programmes. Maroc Telecom has not opted for a prospective application of the following standards, amendments and interpretations: IFRS 7: Financial Instruments: Disclosures; this text is compulsory as from January 1, 2007; IAS 1 Amendment: Presentation of Financial Statements Capital Disclosures, this text is compulsory as from January 1, Nonetheless, Maroc Telecom is currently reviewing the practical implications of these new texts and of their impact on the presentation of its financial statements. 156 Maroc Telecom 2007 Registration Document

157 5. FINANCIAL REPORT General overview Use of estimates and judgements In connection with the preparation of its financial statements, Maroc Telecom must make estimates and judgements and use certain assumptions. Maroc Telecom s management bases its estimates and judgements on past experience and on various other assumptions that it deems reasonable under the circumstances. These estimates and judgements permit an evaluation of the appropriateness of book value. The figures derived from such estimates, judgements and assumptions could differ if other estimates, judgements or assumptions had been used. The main items calculated on the basis of estimates and judgements are provisions for litigation, provisions for restructuring, impairment of trade receivables and inventories, and deferred income. Management reviews its estimates, judgements and evaluations regularly based on past experience and various other assumptions that it deems reasonable, which constitute the basis of its evaluations of the book value of its assets and liabilities. The impact of the changes in accounting estimates is accounted for in the period of the change and thereafter. Contribution to universal service Maroc Telecom is required to set aside 2% of its annual pretax revenues net of interconnection charges for its universal service obligation although it is authorized to offset this contribution with its own costs of implementing the universal service, thereby establishing the pay or play" principle. Maroc Telecom was exonerated from these contributions in In November 2006, the ANRT universal service executive committee granted Maroc Telecom a subsidy of MAD197 million for the universal service program that it proposed for Given this amount, Maroc Telecom paid MAD226 million to the universal service fund for its contribution for Deferred income Deferred income mainly corresponds to prepaid subscriptions, prepaid top-up cards sold to distributors and not yet activated, unused prepaid minutes sold and to provisions related to customer loyalty programs. In 2007, Maroc Telecom decided to derecognize deferred income linked to sales of Mobile packages, SIM card only deals which are still non-activated after 9 months (as opposed to 6 months previously), with a MAD-107 million impact on revenues. In 2006, Maroc Telecom carried out a one-off revaluation of the nonactivated prepaid top-up cards sold to distributors for the sum of MAD109 million. Provisions Provisions are recorded when, at the end of the period, the Group has a legal, regulatory or contractual commitment to a third party resulting from past events, and it is probable that there will be an outflow of resources to the third party, without any consideration expected from the latter, and that the amount can be evaluated accurately. If the time value effect is significant, provisions are determined by discounting expected future cash flows at a pre-tax discount rate which reflects the market s current evaluation of the time value of money. If no reliable estimate can be made of the amount of the obligation, no provision is recorded and a disclosure is made in the notes to the consolidated financial statements. Restructuring provisions are recorded when the Group has approved a formal and detailed restructuring program and has either started to implement the program or has published the program publicly. No provision is recorded to cover future operating expenses. No provision for pensions and post-retirement benefits relating to the Group s affiliates incorporated in Morocco has been recorded in the consolidated financial statements as pension expenses are covered by statutory pension plans set up for employees in Morocco. Maroc Telecom Registration Document 157

158 5 Inventories Inventories comprise: Goods held for sale to customers upon line activation, which comprise fixed and mobile telephones and accessories. Inventories are accounted for using the first-in, first-out method. The handsets delivered to distributors and non activated at year-end are accounted for in inventories. The handsets which are still non-activated nine months after delivery are accounted for in revenues; Equipment and supplies unrelated to the telecoms network. These inventories are measured at their average acquisition cost. Inventories are valued at their lowest net realizable value. An impairment charge is recorded by comparing their fair value and their net realizable value. Trade accounts receivable and other receivables These comprise trade and other receivables and are initially recognized at fair value, and then at amortized cost less impairment. Accounts receivable include trade receivables and government receivables: Trade receivables: these are amounts receivable from individuals, distributors, businesses and international operators; Government receivables: these are amounts receivable from local authorities and the Moroccan government. An impairment charge is recorded if the carrying amount of the asset under consideration is greater than the present value of the estimated discounted future cash flows. Contractual obligations and contingent assets and liabilities Once a year, Maroc Telecom and its subsidiaries prepare detailed records on all contractual obligations, commercial and financial commitments and contingent obligations, for which they have liability. These detailed records are updated on a regular basis by the departments concerned and reviewed with senior management. The value of off-balance sheet commitments for suppliers of fixed assets is determined as follows: The difference between the minimum commitments and commitments actually fulfilled for the global agreements and any endorsements (exceeding MAD50 million); The difference between firm orders and actual orders for all other contracts. In addition, commitments arising from real estate rental contracts are estimated on the basis of one month s expense given that virtually all termination clauses require one month s notice. Segment data The group s business is organized by business segment: Fixed-line and Internet segment and Mobile segment. Revenues from each business segment include revenues from the provision of telephone services to customers and subscribers as well as inter-segment transactions. Inter-segment transactions are conducted at market price. Earnings from operations reflect the difference between operating income and expenses. Costs are allocated directly to the relevant segments or alternatively by using cost allocation ratios based on economic criteria. Capital expenditure is directly allocated to the relevant segments. Fixed assets used by several segments are allocated in proportion to dedicated assets. The main items not divided between the segments are tax, 158 Maroc Telecom 2007 Registration Document

159 5. FINANCIAL REPORT General overview cash, financial assets, borrowings and net equity. The classification of the balance sheet by business segment is based partly on estimates. The classification used is based on reasonable assumptions. The following balance sheet items are allocated on an apportionment basis between the two activities: For items comprising elements that can be allocated directly to a segment and elements shared by both segments: the shared part of these items is divided proportionally in respect of the amounts allocated directly to these items; For items comprising solely shared elements: these amounts are allocated in a way that takes into account the type of items involved (e.g. employee-related liabilities are divided proportionally based on the number of employees in each business segment). Geographic segment data Maroc Telecom operates in two geographic segments, i.e. Morocco and others. Definition of Maroc Telecom group financial statements Revenues Revenues from operations are reported when it is probable that future economic benefits will flow to the Group, and that these revenues can be reliably measured. Maroc Telecom group generates revenues from fixed and mobile telecommunications services, Internet services, and the sale of products, which essentially comprise mobile and fixed-line handsets and multimedia equipment. Revenues from telephone subscriptions are recognized on a straight-line basis over the subscription contract period. Revenues from incoming and outgoing call traffic are recognized when the service is rendered. For prepaid services, revenues are recognized as calls are made. Revenues from Fixed-line and Internet and Mobile services comprise: income from domestic and international outgoing and incoming calls under postpaid plans, which is recorded when generated; income from subscriptions; income from prepaid services, which is recognized as calls are made; income from advertising in printed and electronic directories, which is recognized when the directories are published. Revenues from the sale of handsets, net of point-of-sale discounts and connection charges, are recognized on activation of the line. Customer acquisition and loyalty costs for mobile and fixed-line services, principally consisting of rebates on the sale of equipment to customers through distributors, are recognized as a deduction from revenues. Sales of services provided to subscribers managed by Maroc Telecom on behalf of content providers (mainly special-rate numbers), are accounted for net of related expenses. When the sale is made via a third party distributor supplied by Maroc Telecom and involves a discount compared with the public sale price, revenues are recorded as gross revenues and commissions granted are recognized as operating expenses. Maroc Telecom Registration Document 159

160 5 Operating expenses Operating expenses include purchases, payroll costs, taxes and duties, other operating expenses and net depreciation, impairment and provisions. Purchases Purchases include the cost of handsets, interconnection charges with domestic and international operators, and other purchases (fuel and electricity, top-up cards, supplies and consumables). Payroll and payroll-related costs Payroll and payroll-related costs include wages, salaries, payroll taxes and training costs. Taxes, duties and fees This item includes taxes and duties (urban taxes, patents, taxes for occupying public land etc.). They also include fees paid to ANRT: fees relating to radioelectric frequency assignment in compliance with Act and Order of February 25, 1998; costs related to universal service in compliance with Act and Order of October 9, 2000 (IAM specifications); and contributions to research, training and standardization in telecommunications in compliance with Act and Order of October 9, 2000 (IAM specifications). Other operating income and expenses Other operating income and expenses comprise commissions, communication expenses and other expenses (network maintenance costs, audit and advisory fees, postage and the costs of leasing transportation equipment, land and buildings). They also include foreign currency translation adjustments arising from operations and expenses linked to voluntary redundancy plans. Communication expenses comprise advertising, marketing and other promotional and multimedia public relation costs incurred to enhance Maroc Telecom s market reach and profile. Net depreciation, impairment and provisions Net depreciation, impairment and provisions include: Depreciation calculated on a straight-line basis over the useful life of the relevant assets. Depreciation begins when the asset is effectively placed in service; Net provisions and impairment relating to trade accounts receivable and related accounts, inventories and litigation. 160 Maroc Telecom 2007 Registration Document

161 5. FINANCIAL REPORT General overview Income from equity affiliates At December 31, 2007 and December 31, 2006, Medi-1-Sat was the only company accounted for using the equity method. A capital loss was recorded on the sale of the shareholding in GSM Al-Maghrib in At December 31, 2005, GSM Al-Maghrib was the only company accounted for using the equity method. Net financial items Net financial items include income from cash and cash equivalents (investments). Maroc Telecom s cash assets generate income from banks or the Treasury, either as interest-bearing sight deposits, or as term deposits not exceeding three months. Generally, Maroc Telecom does not make high-risk investments (investment funds, shares, bonds or derivatives); Cost of debt: mainly interest expense and expenses incurred for early repayment. Net financial items are affected by foreign exchange gains and losses as the group receives income, pays expenses and has borrowings denominated in foreign currencies (See section Disclosure of qualitative and quantitative information about market risks ). Income tax Maroc Telecom pays income tax like any other Moroccan corporation. The income tax rate is 35% in Morocco, 25% in Mauritania, 35% in Burkina Faso and 35% in Gabon. Tax consists of tax due and deferred taxes. Deferred taxes reflect temporary differences between the book value and taxable value of assets or liabilities. Deferred taxes are calculated based on a reduced 30% income tax rate in Morocco from Cash flows Net cash from operating activities corresponds to cash earnings plus or minus the change in the Group s working capital requirement. Net cash used in investing activities corresponds to the difference between purchases and sales of property, plant and equipment, changes in the scope of consolidation, proceeds from the sales of investments, and net cash flows relating to long-term loans. Net cash used in financing activities mainly comprises repayment of long-term debt, increases in borrowings and the payment of dividends. Comparability of Maroc Telecom financial statements The consolidated financial statements are used by the Company as a means of communication with financial markets since its shares were listed on the Casablanca stock exchange and Euronext, Paris. In this context, Maroc Telecom s consolidated financial statements for the years ended December 31, 2007, 2006 and 2005 are prepared in compliance with applicable International Financial Reporting Standards (IFRS). Maroc Telecom Registration Document 161

162 5 5.3 CONSOLIDATED INCOME STATEMENT The table below sets out data regarding Maroc Telecom s consolidated income statement for the years ended December 31,2005, 2006 and (in millions of Moroccan dirhams) Consolidated revenues 27,532 22,615 20,542 Cost of purchases (4,215) (3,692) (3,879) Payroll costs (2,695) (2,060) (2,056) Sundry taxes and duties (788) (771) (680) Other operating income and expenses (3,562) (2,686) (2,610) Net depreciation, amortization and provisions (4,038) (3,363) (2,639) Earnings from operations 12,234 10,043 8,678 Other income (charges) from ordinary activities Income from equity affiliates (34) (21) 14 Earnings from continuing operations 12,201 10,029 8,695 Income from cash and cash equivalents Finance expense (131) (7) (13) Net finance costs Other financial income and expenses 31 1 (18) Net financial items Tax expense (4,095) (3,339) (2,886) Earnings 8,137 6,833 5,921 Attributable to the equity holders of the parent 8,033 6,739 5,809 Minority interests Earnings per share (in millions of Moroccan dirhams) Net income - group share 8,033 6,739 5,809 Number of shares as of December ,095, ,095, ,095,340 Earnings per share Diluted earnings per share The various items of Maroc Telecom s consolidated income statement and their changes during the periods under consideration are discussed below. 162 Maroc Telecom 2007 Registration Document

163 5. FINANCIAL REPORT Consolidated income statement Comparison of 2007, 2006 and 2005 Revenues The table below shows the breakdown of revenues for the years ended December 31, 2005, 2006 and (in millions of Moroccan dirhams) Mobile gross revenues 19,296 14,895 13,044 Fixed-line and internet gross revenues 11,090 10,312 9,895 Total consolidated gross revenues 30,386 25,207 22,939 Elimination of intra-segment transactions (2,854) (2,592) (2,397) Total net consolidated revenues 27,532 22,615 20,542 Between 2006 and 2007, Maroc Telecom s consolidated revenues rose significantly as a result of growth in mobile activity, in the ADSL business, in data services for businesses and operators, and in incoming international traffic. The consolidation of Gabon Telecom, Onatel and Mobisud in 2007 also contributed significantly (for MAD2.4 billion) to the increase in revenues. In 2007, consolidated revenues amounted to MAD27,532 million, up 21.7%, compared with 2006 (10.5% on a like-for-like basis). In 2006, consolidated revenues amounted to MAD22,615 million, up 10%, compared with In 2006 revenue growth was already a result of growth in mobile activity, in the ADSL business and in incoming international traffic. N.B.: Revenues linked to incoming international traffic towards Maroc Telecom mobile and to outgoing international traffic from Maroc Telecom mobile have been directly accounted for in mobile operations since January 1st, 2007 whereas it was previously accounted for as transit revenue for fixed and Internet operations. All figures presented in this document have been adjusted accordingly for the years ended December 31, 2007, 2006 and Operating expenses The table below shows operating expenses for the years ended December 31, 2005, 2006 and (in millions of Moroccan dirhams) Consolidated revenues 27,532 22,615 20,542 Cost of purchases 4,215 3,693 3,879 % 15% 16% 19% Payroll costs 2,695 2,060 2,056 % 10% 9% 10% Sundry taxes and duties % 3% 3% 3% Other operating income and expenses 3,562 2,686 2,610 % 13% 12% 13% Net depreciation, amortization and provisions 4,038 3,363 2,639 % 15% 15% 13% Total operating expenses 15,298 12,572 11,864 Due to the new subsidiaries' consolidation, operating expenses increased by 21.7% to MAD billion. On a like-for-like basis, expenses increased by only 2%, reflecting tight cost control by Maroc Telecom in Morocco as well as in the subsidiaries recently acquired in Africa. Maroc Telecom Registration Document 163

164 5 Purchases (in millions of Moroccan dirhams) Cost of handsets 1,509 1,466 1,771 Domestic and international interconnection charges 2,023 1,892 1,784 Other purchases Total 4,215 3,693 3,879 Other purchases include the purchases of energy (fuel and electricity), phone cards and other consumables. Between 2006 and 2007, purchases increased by 14% to MAD4,215 million in 2007 from MAD3,693 million in 2006, mainly due to changes in the scope of consolidation. In Morocco, the cost of handsets has fallen due mainly to a continued reduction in unit purchase prices. The rise in other purchases is namely linked to a wider customer base, increased usage and the extension of the network. Between 2005 and 2006, purchases had fallen by 5% to MAD3,693 million in 2006 from MAD3,879 million in This drop is mainly due to purchases of handsets impacted by a slight decrease in the volume of handsets purchased and an 11% reduction in the unit purchase price. Payroll and payroll-related costs (in millions of Moroccan dirhams) Wages 2,314 1,709 1,819 Payroll taxes Wages and taxes 2,672 1,982 2,046 Share based compensation Payroll costs 2,695 2,060 2,056 Average headcount 14,154 11,764 12,360 This item includes the payroll costs for the period, excluding redundancy costs, which were recognized as other operating expenses. In 2007, the rise of more than 30% in payroll costs is due mainly to the consolidation of Onatel and Gabon Telecom, which increased average headcount by 2,390. In addition, payroll costs increased by 9% in Morocco due to salary increases. On December 12, 2006, the Group allocated 15 Vivendi shares to each active employee of Maroc Telecom and who at that date had been with the company for a minimum of six months. This plan was not subject to any performance related or presence conditions. The 15 shares allocated per beneficiary will be issued at the end of a two-year period from December 12, These shares are allocated without any conditions on employee presence between when the shares are granted and when they are issued. The charge for Maroc Telecom, which represents the cost of services rendered charged by Vivendi, was fully provisioned at December 31, A matching entry is recognized directly in equity, which will be revalued at fair value at the end of the next two fiscal years, when the shares are issued. This charge is calculated by multiplying the number of employees present on the company payroll on June 30, 2006 (11,252) by the number of shares allocated per employee (15), by the reference share price on the allocation date ( as at December 12, 2006) and by a discount reflecting the absence of dividends over the first two years (91.75%). This discount will be reviewed at the end of each of the next two fiscal years. 164 Maroc Telecom 2007 Registration Document

165 5. FINANCIAL REPORT Consolidated income statement Taxes, duties and fees (in millions of Moroccan dirhams) Taxes and duties Fees Total Taxes, duties and fees include local taxes (trading licenses, urban taxes), taxes for occupying public land and other taxes (stamp duty, vehicle tax). The fees include amounts paid to the ANRT for universal service and training. The increase in fees is mainly due to increased revenues which are the basis for calculating these fees. Despite strong revenue growth, fees remained stable between 2006 and 2007 as a result of two opposing trends: lower fees in Morocco due to reduced fees provisioned in 2007; and the consolidation of fees paid by the newly consolidated subsidiaries in Other operating income and expenses (in millions of Moroccan dirhams) Communication Commissions 1, Other o/w : 1,917 1,504 1,495 Rental expenses Maintenance and repair and rents Audit and advisory fees Postage costs and banking services Voluntary redundancy plan Other Total 3,562 2,686 2,610 Between 2006 and 2007, operating income and expenses rose by 32.6% to MAD3,562 million due to increased communication and reseller compensation efforts to deal with competition in Morocco, as well as higher operating expenses and network maintenance costs as a result of increased customer base and usage, and the consolidation of new subsidiaries. In addition, in 2007: the recognition of MAD193 million, representing the total cost of the voluntary redundancy plan initiated in Morocco in 2006; higher fees and compensation for intermediaries due to the consolidation of the new subsidiaries (impact of MAD147 million), the reclassification for MAD148 million of expenses linked to site security, armored transport and commissions that were previously classed under Other, and despite a MAD47 million reduction in audit and advisory fees at Maroc Telecom; and the decrease in the line item Other mainly due to the above-mentioned reclassification, as well as the foreign exchange impact. Between 2005 and 2006, other operating income and expenses rose slightly by 3% to MAD2,686 million compared with MAD2,610 million in This increase is mainly due to mobile commissions linked to prepaid top-up card sales and stepped-up sales efforts to increase the customer base and to maintenance and repair costs linked to network development. The increase is also due to operations-related foreign exchange losses (line item Other ). Maroc Telecom Registration Document 165

166 5 Net depreciation, impairment and provisions The table below sets out Maroc Telecom s net depreciation, amortization and provisions for the years ended December 31, 2005, 2006 and (in millions of Moroccan dirhams) Depreciation and impairment of fixed assets 3,623 2,752 2,673 Impairment of accounts receivable Impairment of inventories Impairment of other receivables Provisions (274) 290 (184) Total 4,038 3,363 2,639 The increase in impairment losses is linked to the growth of the customer base and a stricter policy for recording impairment of trade receivables. Depreciation and impairment of fixed assets The table below sets out Maroc Telecom s depreciation and impairment of fixed assets for the years ended December 31, 2005, 2006 and (in millions of Moroccan dirhams)- year ended December Other intangible assets Building and civil engineering Technical plant and pylon 2,337 1,662 1,645 Other property, plant and equipment Total 3,623 2,752 2,673 Net depreciation and impairment on fixed assets totaled MAD3,623 million in 2007 compared with MAD2,752 million in This increase results from changes in the scope of consolidation. Net provisions and impairment The table below sets out Maroc Telecom s net provisions and impairment for the years ended December 31, 2005, 2006 and 2007 (in millions of Moroccan dirhams) -year ended December Impairment of accounts receivable Impairment of inventories Impairment of other receivables Provisions (274) 290 (184) Total (35) Net provisions and impairment totaled MAD416 million at December 31, 2007, compared with MAD611 million in This is due to: the increase of the impairment loss linked to the growth of the customer base and a stricter policy for recording impairment of trade receivables; and the release of a MAD293 million restructuring provision related to the voluntary redundancy plan initiated by Maroc Telecom in 2006, and which had been provisioned for the sum of MAD300 million in Maroc Telecom 2007 Registration Document

167 5. FINANCIAL REPORT Consolidated income statement At December 31, 2006, net provisions and impairment reached MAD611 million, as opposed to MAD-35 million in This is due to: the increase of the impairment loss linked to the growth of the customer base and a stricter policy for recording impairment of trade receivables. the recording of a provision linked to the voluntary redundancy plan for MAD300 million in 2006 compared with a reversal of MAD161 million in 2005 (related to a provision in 2004). Earnings from operations The table blow shows Maroc Telecom s earnings from operations for the years ended December 31, 2005, 2006 and 2007 (in millions of Moroccan dirhams) Earnings from operations 12,234 10,043 8,678 Earnings from operations rose by 22% to MAD12,234 million in 2007 and by 16% to MAD10,043 million in Excluding charges in 2006 and reversals in 2007 of provisions charged through exceptional items at Maroc Telecom, consolidated earnings from operations grew by 17.2% on a like-for-like basis. This increase reflected substantial growth in revenues and tight control of customer acquisition costs despite intensive efforts to win over new customers. Income from equity affiliates (in millions of Moroccan dirhams) - year ended December Medi-1-Sat (34) (12) - GAM - (9) 14 Total (34) (21) 14 Income from equity affiliates amounted to MAD-34 million at December 31, 2007 compared with MAD-21 million in 2006 and MAD14 million in Medi-1-Sat has been accounted for using the equity method since fiscal year 2006 with an impact of MAD- 12 million at December 31, 2006 and of MAD-34 million at December 31, Maroc Telecom sold its 35% stake in GSM Al-Maghrib in 2006 for MAD13 million generating a capital loss of MAD12 million offset by positive earnings over the first quarter of MAD3 million. Maroc Telecom Registration Document 167

168 5 Net financial items (in millions of Moroccan dirhams) Income from cash and cash equivalents Interest expenses on loans (131) (7) (13) Net finance costs (in millions of Moroccan dirhams) Foreign exchange gains and losses 11 (3) (65) Other financial income (+) Other financial expense (1) - - Other financial income and expense 32 1 (18) Other financial income includes revenues from non-consolidated equity investments and proceeds from their disposal. Between 2006 and 2007, net financial income fell from MAD143 million to MAD32 million. This decline is mainly due to: i) a rise in interest expenses on loans with the consolidation in 2007 of subsidiaries with a negative net cash position at December 31, 2007 (MAD-547 million for Onatel and MAD-626 million for Gabon Telecom) and ii) a reduction in investment income resulting from the negative impact of foreign exchange on interest-bearing and sight deposits. Between 2005 and 2006, net financial items grew from MAD112 million to MAD143 million. This increase arose in particular from a rise in investment income and the positive foreign exchange impact on earnings. Foreign exchange gains and losses are linked to the impact of movements in the exchange rate between the Moroccan dirham and the US dollar, the euro, the Mauritanian ouguiya and the CFA Franc for Gabon and Burkina Faso. Income tax The table below shows the breakdown of tax into income tax due by Maroc Telecom and deferred taxes for the years ended December 31, 2005, 2006 and 2007: (in millions of Moroccan dirhams) Income tax 4,062 3,249 2,871 Deferred taxes Current tax 4,095 3,339 2,886 Consolidated effective tax rate (*) 33% 33% 33% (*) Income tax / earnings before taxes Income tax increased over the period in line with the rise in net income from consolidated companies after deduction of non-recurring items. Tax consists of tax due and deferred taxes. Deferred taxes reflect temporary differences between the book value and taxable value of assets or liabilities. Deferred taxes are calculated based on a reduced 30% income tax rate in Morocco from Maroc Telecom 2007 Registration Document

169 5. FINANCIAL REPORT Consolidated income statement Earnings before minority interests Earnings before minority interests rose from MAD5,921 million in 2005 to MAD6,833 million in 2006, and to MAD8,137 million in 2007, representing a 15% increase in 2006 and a 19% increase in Minority interests Minority interests amounted to MAD104 million in 2007, MAD94 million in 2006 and MAD112 million in 2005, reflecting the interests of shareholders other than Maroc Telecom in the earnings of the group s consolidated entities. The table below shows breakdown of minority interests: (in millions of Moroccan dirhams)- year ended December Mauritel Mobisud France (51) (8) - Onatel Gabon Telecom (99) - - Total Minority interests Earnings after minority interests Consolidated earnings after minority interests amounted to MAD8,033 million in 2007, compared with MAD 6,739 million in 2006 and MAD5,809 million for the year ended December 31, Earnings per share Based on 879,095,340 shares in issue, earnings per share amounted to MAD9.1 for the year ended December 31, 2007, versus MAD7.7 in 2006 and MAD6.6 in Maroc Telecom Registration Document 169

170 Comparison of business segment results Preliminary remarks: In Morocco, revenues linked to incoming international traffic towards Maroc Telecom mobile and to outgoing international traffic from Maroc Telecom mobile have been directly accounted for in mobile operations in 2007 whereas in 2006 and 2005, they were accounted for as transit revenue for fixed operations. Revenue figures for 2005 and 2006 have been adjusted accordingly. This adjustment has no impact on Maroc Telecom's net overall sales figures. In addition, like-for-like figures reflect the consolidation of Onatel and Gabon Telecom as if it had actually taken place on January 1, 2006 for Onatel and March 1, 2006 for Gabon Telecom, and as if the MAD/Mauritanian ouguiya/cfa Franc/Euro exchange rates had remained constant. Finally, like-for-like 2006 figures for Onatel and Gabon Telecom were adjusted to exclude exceptional items and were prepared using accounting policies comparable to those used in Revenues and earnings from operations for the Mobile segment in millions of Moroccan dirhams Gross revenues Mobile 19,296 14,894 13,043 Maroc Telecom 17,096 14,206 12,470 Revenues from sale of handsets Revenues from sale of services 16,138 13,237 11,556 Mauritel Onatel Gabon Telecom Mobisud* Elimination of inter-segment transactions (1,646) (1,529) (1,463) Earnings from operations- Mobile 9, ,815 Maroc Telecom 9, ,567 Mauritel Onatel Gabon Telecom Mobisud* (269) (35) - Contribution to consolidated earnings from operations 78% 72% 67% Depreciation and impairment of fixed assets- Mobile (1,902) (1,428) (1,318) * Includies Mobisud France and Maroc Telecom Belgium Comparison of 2007 and 2006 data Mobile gross revenues rose sharply between 2006 and 2007, up by 29.6% (+21.4% on a like-for-like basis). Consolidated earnings from operations in the Mobile business totaled MAD9,556 million in 2007, up 32.2% (+31.1% on a like-for-like basis). This strong performance is due to the higher revenues and tight cost control for acquisition costs despite continued strong customer base growth. Maroc Telecom : In 2007, Mobile gross revenues grew by 20.3% in Morocco to MAD17,096 million, driven by a strong increase in customer base and a contained decline in ARPU. Despite strong competition, the customer base continued to grow to million customers at December 31, 2007, up 24.5% compared with 2006, representing a net increase of more than 2.6 million customers over the period. With the increase in the customer base and the reduction in access costs, the churn rate is now 25.4% (+5.1 percentage points compared with 2006). 170 Maroc Telecom 2007 Registration Document

171 5. FINANCIAL REPORT Consolidated income statement Aggregate ARPU was MAD108.3, a slight 4.1% decline compared with 2006, due mainly to a strong increase in the customer base. Outgoing usage continued to grow (+29%) driven by promotional and unlimited offers. Mauritel: In 2007, Mauritel Mobile revenues grew by 21.2%, due to a 50.4% increase in the customer base to 904,500 customers, and despite increased competition due to the offers launched by the 3rd Mauritanian operator. Earnings from operations totaled MAD397 million, up 28.5% compared with Onatel: In 2007, Onatel Mobile revenues were up by 22.1% on a like-for-like basis to MAD719 million. Thanks to various promotional offers and extended coverage, the Mobile customer base reached close to 564,400 customers at December 31, 2007, up 131% compared with December 31, Onatel's Mobile business reported MAD246 million earnings from operations, up 70.2% compared with 2006 on a like-for-like basis. Gabon Telecom: In 2007, Gabon Telecom Mobile revenues were up 31.4% on a like-for-like basis to MAD583 million, due mainly to a 60.3% increase in the customer base to 386,300 customers, driven both by promotional offers and extended coverage. Earnings from operations reached MAD45 million. Comparison of 2005 and 2006 data Mobile gross revenues rose sharply between 2005 and 2006 up 14% mainly due to a 15% growth in services. Consolidated earnings from operations in the mobile business reached MAD7,228 million in 2006 up 24%. This strong performance is due to higher revenues and tight cost control of acquisition costs despite continued strong customer base growth. Maroc Telecom: Strong revenue growth was mainly due to a 30% increase in the customer base, along with the resilience of prepaid ARPU, which was MAD89 despite the significant increase in its customer base. Postpaid ARPU dropped slightly (MAD706, down 1% compared with 2005) due to Maroc Telecom s strategy of encouraging prepaid customers to migrate to postpaid plans, which generate greater revenues per subscriber. Revenues from sales of handsets were up 6%, from MAD914 million to MAD969 million, driven by the launch of new prepaid and postpaid packages. Mauritel : In 2006, Mauritel mobiles financial data showed: 20% growth in Mobile revenues compared with 2005, to MAD688 million at December 31, 2006, driven mainly by a 29% increase in the customer base to more than 601,221 customers. Earnings from operations of MAD309 million at December 31, 2006, up 25% compared with Maroc Telecom Registration Document 171

172 5 Revenues and earnings from operations for the Fixed-line and Internet segment The Fixed-line and Internet data are summarized as follows: in millions of Moroccan dirhams Gross revenues Fixed-line and Internet 11,090 10,312 9,895 Maroc Telecom 9,451 10,003 9,563 Voice 6,225 6,618 6,583 Interconnection ,091 Data 1,552 1,585 1,374 Internet 1, Mauritel Onatel Gabon Telecom Elimination of inter-segment transactions (1,208) (1,062) (934) Earnings from operations Fixed-line and Internet 2,676 2,815 2,863 Maroc Telecom 2,934 2,829 2,845 Mauritel (9) (14) 18 Onatel (35) - - Gabon Telecom (214) - - Contribution to consolidated earnings from operations 22% 28% 33% Depreciation, amortization and impairment of fixed assets Fixedline and Internet (1,716) (1,324) (1,356) Comparison of 2006 and 2007 data In 2007, gross revenues in the Fixed-line and Internet segment amounted to MAD11,090 million, up 7.5% compared with This rise is linked primarily to the first-time consolidation of Onatel and Gabon Telecom's Fixed-line and Internet revenues in On a like-for-like basis, gross revenues in the Fixed-line and Internet segment were down 6%. In 2007, the Fixed-line segment's consolidated earnings from operations totaled MAD2,676 million, down 4.9% compared with Except for Maroc Telecom, the Fixed-line and Internet business recorded an operating loss across all subsidiaries. Maroc Telecom: The Fixed-line and Internet business in Morocco recorded gross revenues of MAD9,451 million over 2007, down by 5.5%. The number of fixed lines totaled 1,289 million, up 1.8% compared with 2006, representing a net increase of 23,000 lines over the year driven by the success of unlimited offers. On the voice segment the average invoice per customer decreased by 3.5%, due primarily to tough competition on the phone shop segment. This was main reason for the drop in Fixed-line revenues. The ADSL customer base reached 470,000 lines as at December 31, 2007, up by 22.4% compared with December 31, 2006 and accounting for almost 42% of fixed lines (excluding public telephony). Due to a healthy Internet market this segment's revenues grew by more than 25% to more than MAD1 billion. 172 Maroc Telecom 2007 Registration Document

173 5. FINANCIAL REPORT Consolidated income statement Mauritel: In 2007, Mauritel SA revenues from Fixed-line business were up 3.2% to MAD319 million compared with Mauritel SA s Fixed-line customer base, mainly concentrated in Nouakchott and Nouadhibou, decreased by 2.6% to 36,467 lines. The company recorded an operating loss of MAD9 million at December 31, Onatel: In 2007, Onatel revenues from Fixed-line business totaled MAD799 million, up 0.2% compared with 2006 on a like-for-like basis. The company recorded an operating loss of MAD35 million at December 31, 2007, as opposed to a loss of MAD75 million at December 31, 2006 on a like-for-like basis. Gabon Telecom: In 2007, Gabon Telecom revenues from Fixed-line business totaled MAD521 million, down 25.7% like-forlike compared with The company recorded an operating loss of MAD214 million at December 31, 2007, as opposed to a loss of MAD114 million at December 31, 2006 on a like-for-like basis. Comparison of 2005 and 2006 data In 2006, gross revenues in the Fixed-line and Internet segment amounted to MAD10,312 million, up 4% compared with Fixed-line consolidated earnings from operations came out at MAD2,815 million in 2006, down 2%. Maroc Telecom: Revenues rose 4.6% to MAD10,003 million. This performance was mainly a result of strong momentum on the public telephony segment (revenues up almost 15%), the confirmed success of ADSL, and the strong performance of data services to businesses and operators for which revenues continue to grow significantly (+15% including leased lines for the mobile business). On the voice segment, the average invoice per customer increased by almost 3%. The Fixed-line customer base dropped to million lines, i.e. -5.6% compared with December 31, The ADSL customer base continues to expand rapidly and at December 31, 2006, totaled 384,000 lines (+59% compared with December 2005). To build customer loyalty and attract new customers, in September 2006 Maroc Telecom launched Phony, new unlimited fixed-line telecommunications offers enabling customers to make unlimited calls to all Maroc Telecom fixed-line domestic and local numbers. The success met by these offers stabilized the customer base over the fourth quarter. Mauritel: In 2006, Mauritel SA's revenues from Fixed-line business were down 7% to MAD309 million compared with Mauritel SA s Fixed-line customer base, mainly concentrated in Nouakchott and Nouadhibou, decreased by 6.4% to 37,447 lines. The company recorded an operating loss of MAD14 million at December 31, This includes MAD29 million in restructuring costs. Excluding these costs, the company would have recorded an earnings from operations of MAD15 million compared with MAD18 million in Maroc Telecom Registration Document 173

174 Cash and cash equivalents The group s main source of liquidity is net cash from operating activities. Maroc Telecom group funds all its capital expenditure with its operating cash flow. Statement of cash flows The table below contains information relating to Maroc Telecom s consolidated cash flows for the specified periods: (in millions of Moroccan dirhams)- year ended December Cash flow from operating activities 13,069 11,233 8,426 Cash flows used in investing activities (5,656) (6,435) (3,119) Cash flows used in financing activities (6,432) (9,615) (5,098) Foreign currency translation adjustments 3 (27) 11 Change in cash and cash equivalents 984 (4,844) 219 Cash and cash equivalents at the beginning of the period 2,741 7,585 7,366 Cash and cash equivalents at the end of the period 3,725 2,741 7,585 NB: cash flows from operating activities comprise changes in working capital requirements (including suppliers of fixed assets). Cash flows used in investing activities therefore do not include changes in working capital requirements relating to suppliers of fixed assets. Cash flows from operating activities At December 31, 2007, cash flows from operating activities totaled MAD13,069 million, a MAD1,836 million increase compared with December 31, This increase is primarily the result of an improvement in net cash from operating activities after net financial items and taxes (for MAD1,439 million). At December 31, 2006, cash flows from operating activities totaled MAD11,233 million, a MAD2,807 million increase compared with December 31, This was mainly due to improved earnings, partly offset by higher working capital requirements caused primarily by an increase in trade receivables. Cash flows used in investing activities At December 31, 2007, cash flows used in investing activities totaled MAD5,656 million as opposed to MAD6,435 million in This decrease mainly reflects the fact that the MAD2,476 million paid for the acquisition of a 51% stake in Onatel in 2006 concealed a nearly MAD1,500 million rise in investments. At December 31, 2006, cash flows used in investing activities amounted to MAD6,435 million compared with MAD3,119 million in This was mainly due to a greater capital expenditure program in 2006 than in 2005 (+23%) and to the acquisition of a 51% stake in Onatel for MAD2,476 million. Cash flows used in financing activities At December 31, 2007, cash flows used in financing activities totaled MAD6,432 million as opposed to MAD9,615 million in This decrease resulted mainly from the extraordinary dividends paid within the context of the MAD3,516 million capital reduction carried out by Maroc Telecom in In addition, ordinary dividends were significantly higher in 2007 at MAD6,953 million compared with MAD6,142 million in Maroc Telecom 2007 Registration Document

175 5. FINANCIAL REPORT Consolidated income statement At December 31, 2006, cash flows used in financing activities amounted to MAD9,615 million compared with MAD5,098 million in This increase resulted mainly from the extraordinary dividends paid within the context of the MAD3,516 million capital reduction carried out by Maroc Telecom in In addition, ordinary dividends were significantly higher in 2006 at MAD6,142 million compared with MAD4,424 million in Capital expenditure The table below sets out Maroc Telecom s capital expenditure by segment for the periods specified: (in millions of Moroccan dirhams)- year ended December Fixed-line and Internet 2,188 1,533 1,439 Mobile 3,279 2,445 1,771 Total 5,467 3,978 3,210 Preliminary remarks: The difference between tangible and intangible capital expenditure and net cash used in investing activities is due to the latter taking into account financial investments, sales of fixed assets and the repayment of long-term loans. In 2007, the difference between net cash used in investing activities and tangible and intangible investments was mainly due to the acquisition of equity investments in Gabon Telecom for MAD343 million. In 2007, investments amounted to MAD5,467 million, of which close to 24% at subsidiary level. In 2006, the difference between net cash used in investing activities and tangible and intangible investments was mainly due to the acquisition of Onatel shares for MAD2,476 million. In 2006, investments amounted to MAD3,978 million. In 2005, the difference between net cash used in investing activities and tangible and intangible investments was mainly the result of sales of property and securities (MAD88 million), purchases of equity investments (MAD13 million) and the repayment of housing loans by employees (MAD16 million). In 2005, capital expenditure amounted to MAD3,210 million. Investments in Morocco Mobile: In 2007, Maroc Telecom continued to invest in enhancing the mobile network s local reach and capacity. The Group deployed 420 new base transceiver stations (BTS), increasing the number of BTS in service to more than 5,000. Base station controller (BSC) and network switching subsystem (NSS) capacity was reinforced following an increase in traffic and in the number of clients in 2007 (+2.3 million). In addition to investments in 2G equipment, 400 3G base stations (NodeB) were deployed to provide coverage of the Kingdom's main metropolitan areas. The group also invested in service platforms (including IN and SMS, MMS, VMS systems etc.), and started up new platforms (see chapter 4). In 2006 and 2005, Maroc Telecom continued to invest in enhancing the mobile network s local reach and capacity. 424 new base transceiver stations (BTS) and 70 replacement BTS were deployed in 2006, and 430 in Base station controller (BSC) and network switching subsystem (NSS) capacity was reinforced following an increase in traffic and in the number of clients in 2006 (up 2.5 million) and in 2005 (up 1.9 million). A redeployment and extension program of the TRX started in 2002 has optimized the use of the radio access equipment (TRX). The group also invested in service platforms (including IN and SMS, MMS, VMS systems etc.), and started up new platforms (see chapter 4). Maroc Telecom Registration Document 175

176 5 In 2008, investments in Morocco will concentrate on developing the network s local reach and capacity, on the deployment of the 3G network and on extending the service platforms. In addition, the ANRT s universal service executive committee selected Maroc Telecom to provide telephone services and internet access to 7,338 localities (over a total of 9,263) for an overall amount of close to MAD1.2 billion, to be deducted from its universal service contribution for Fixed-line and Internet : In 2007, faced with ever increasing capacity requirements, the Group carried out significant investments, namely in urban and intercity fiber optic cable capacity, with the domestic transmission capacity increasing from 201,000 to 308,000 E1. International transmission also involved significant investments, namely via the deployment of the "Atlas Offshore" submarine cable between Assilah and Marseilles aimed at increasing international bandwidth, with total capacity reaching 25 Gbits/s at December 31, Nearly 276,000 customers will be connected for 96,000 ADSL users. In 2006, continued ADSL growth and the introduction of TV via ADSL required significant investments in access, core network and transmission equipment. These investments enabled the Group to deal with the growth in the ADSL customer base. The capacity of the transmission network has been increased by almost 90% and a cable submarine between Assilah and Marseilles was deployed. In 2005, the increase in ADSL users required capital expenditure in access lines, active equipment and transmission capacity. These investments led to a near doubling in backbone network capacity, a four-fold increase in DSL connection capacity (+350,000 accesses deployed), and increased reliability of wireline access. In 2008, Maroc Telecom will continue to invest in increasing capacity, with the deployment of an NGN core network and an IP/MPLS backbone. Capital expenditure on information systems Maroc Telecom s expenditure on information systems is intended to: industrialize network planning, administration and management; optimize, integrate and increase the reliability of the Company s technical, commercial, human resource, administrative and financial processes. In the period from 2005 to 2007, the principal investments on information systems were: 2005: introduction of the Fixed-line system, changes to the Finances, Purchasing and HR systems and installation of cross back-up sites for Rabat-Casablanca; 2006: changes to the Fixed-line system (Fixed-line and Internet invoicing, set up and activation), continued installation of back-up sites and further changes to the Finances systems. 2007: Continued industrialization via upgraded activation/sales systems. Investments made by the subsidiaries Investments made by the subsidiaries accounted for nearly a quarter of the Group's investments and mainly involved increasing Mobile network coverage and capacity, improving existing fixed-line network performance and deploying CDMA and ADSL networks. 176 Maroc Telecom 2007 Registration Document

177 5. FINANCIAL REPORT Consolidated income statement Other non-current financial assets The Group s various financial investments and divestments over the past three years can be summarized as follows: In 2007, Maroc Telecom acquired a 51% stake in Gabon Telecom, Gabon's incumbent operator. The reference price was set at EUR61 million. In addition, the contractual documentation allows for a purchase price adjustment mechanism relating to assets and liabilities as derived from the audited financial statements for the year ended December 31, To date, Maroc Telecom has paid EUR26.3 million in total, which forms the basis of valuation for this equity investment. As provided in the shareholders agreement, Maroc Telecom participated in Medi-1-Sat's capital increase for MAD25 million, thus increasing its stake in the latter to 28%. Maroc Telecom Belgium, wholly-owned by Maroc Telecom, increased its share capital to MAD53 million via a MAD36 million recapitalization carried out in In 2006, Maroc Telecom sold its stake in GSM Al-Maghrib for MAD13 million, pursuant to the decision of the shareholders meeting, participated for MAD10 million in Medi-1-Sat s rights issue increasing its share to 27% in the company, created Maroc Telecom Belgium with a contribution of MAD17 million and acquired a 51% shareholding in Onatel, the Burkinabe operator, for MAD2,476 million. In 2005, Maroc Telecom sold its stake in Intelsat for MAD62 million, pursuant to the decision of the extraordinary general meeting of shareholders, acquired a minority stake in the Medi-1-Sat fund for around MAD12 million and participated in the Sindibad fund capital increase (MAD1.4 million). Capital resources To date, Maroc Telecom has funded its activities mainly through its surplus cash. Accordingly, Maroc Telecom has not taken out any loans since 1996 and adopted a policy of repaying outstanding debt ahead of schedule. In May 2007, however, Maroc Telecom entered into two overdraft facilities worth MAD3 billion and MAD1 billion, and bearing a 3.96% and a 3.90% interest rate respectively, to cover dividend payouts. At December 31, 2007, Maroc Telecom's net cash position amounted to MAD1,451 million. At December 31, 2007, the outstanding balance of unpaid loans totaled MAD2,392 million, due mainly to the consolidation of Gabon Telecom and Onatel. Maroc Telecom Registration Document 177

178 5 The table below shows the breakdown of outstanding debt (excluding accrued interest) by currency for the periods specified: (in millions of Moroccan dirhams)- year ended December Euro US Dollar - Other currencies (mainly CFA Franc) 1, Moroccan Dirham Outstanding debt 2, Accrued interest Total borrowing 2, Due to its cash flow from operating activities and despite the payments relating to the dividend and the equity investments, the Group has a positive cash position as follows: (in millions of Moroccan dirhams)- year ended December Outstanding debt and accrued interests (a) 2, Cash* (b) 3,725 2,741 7,585 Cash held for repayment of bank loans (c) Net cash position (b) + (c) - (a) 1, ,466 * marketable securities are considered as quasi cash when they are held for no more than three months. In its reports to the market authorities, Vivendi states that certain of its bank loans and/or bond issues contain standard provisions under which Vivendi undertakes to ensure that its subsidiaries, including the Company, comply with certain commitments such as not providing security for assets in excess of certain defined amounts. The thresholds below which these transactions are permitted are often determined on an overall basis for all subsidiaries of the Vivendi group, and the Company may not be able to take full advantage of these exclusions in the event that other subsidiaries of Vivendi have already taken advantage of them. In addition, Vivendi loans contain financial covenants that it has undertaken to comply with, such as the maximum ratio of proportional share of net debt to proportionally consolidated EBITDA and dividends received from unconsolidated companies. These ratios are determined on a consolidated basis and take into account the indebtedness, the financial position and the results of Vivendi subsidiaries, including the Company, proportionally to Vivendi's share in their capital. In addition, Vivendi loans contain financial covenants that it has undertaken to comply with, such as the maximum ratio of proportional share of net debt to proportionally consolidated EBITDA and dividends received from unconsolidated companies. These ratios are determined on a consolidated basis and take into account the indebtedness, the financial position and the results of Vivendi subsidiaries, including the Company, proportionally to Vivendi's share in their capital. Consequently, Vivendi may exercise its power of control over the Company to prevent it from undertaking certain operations to the extent that financing of such operations would not comply with the commitments made by Vivendi with regard to its loans or would result in Vivendi breaching its financial ratio covenants. Not being a party to these loans or commitments, the Company is not capable of estimating the nature or the exact extent of their restrictions or terms contained within the documents, other than those documents that are publicly available. Maroc Telecom cannot guarantee that the Vivendi group has made other commitments that may have an impact on the activities of the Company and its financial resources (see 4.14 Risk factors"). 178 Maroc Telecom 2007 Registration Document

179 5. FINANCIAL REPORT Consolidated income statement Commitments Maroc Telecom s commitments include the balance of contracts made with suppliers and pledges and security deposits relating to equipment supply contracts. The table below sets out these commitments: Commitments given (in millions of Moroccan dirhams)- year ended December Contract guarantees Securities receivables (Dailly receivables ) Pledges, mortgages and security interests Guarantees, security and warranties Other commitments* 1,753 1, Total 1,835 1, * balances of contracts with suppliers and others Commitments received (in millions of Moroccan dirhams)- year ended December Government guarantees on loans Guarantees, security and warranties 2,109 1, Total 2,109 1, The increase in commitments received in 2007 mainly relates to an equipment swap contract with Nokia Siemens Network whereby the latter is committed to purchase old mobile network equipment (HLR, MSC, TMSC and GPRS) from Maroc Telecom for a total amount of MAD615.5 million. Maroc Telecom Registration Document 179

180 Contractual obligations and commercial commitments The table below sets out the contractual obligations borne by Maroc Telecom at December 31, 2007, by maturity): in millions of Moroccan dirhams Total <1 year 1-5 years >5 years Long-term debts 1, , Finance lease obligations Operating leases* Irrevocable purchase obligations Other long-term commitments Total 1, , * long-term vehicle leases (excluding tax). Long term liabilities relate to the newly acquired subsidiaries. Maroc Telecom entered into an investment agreement with the public authorities of the Kingdom of Morocco in 2006, applicable since April 30, 2006, whereby Maroc Telecom agreed to (i) implement a capital expenditure program over three years in an amount of MAD7,410 million and (ii) create 150 new jobs during the period In return, the public authorities agreed to exonerate Maroc Telecom from customs duties on all imported capital goods. By December 31, 2007 Maroc Telecom s capital expenditure under this program totaled MAD7,019 million. 180 Maroc Telecom 2007 Registration Document

181 5. FINANCIAL REPORT Consolidated income statement Disclosure of qualitative and quantitative information about market risks The groups is exposed to various market risks connected with its business. Foreign exchange risk Maroc Telecom is exposed to changes in exchange rates as the breakdown of its foreign- currency receipts differs from the breakdown of its foreign- currency disbursements. Foreign currency receipts and disbursements represent a significant portion of the company s activity. Maroc Telecom s foreign- currency receipts relate to revenues from international operations and its foreigncurrency disbursements relate to payments to suppliers (in particular concerning investments and purchases of handsets) and payment for interconnection with foreign operators. These disbursements are mainly denominated in euros. The portion of foreign-currency disbursements denominated in euros, excluding the subsidiaries, was 59% at December 31, 2007, out of an aggregate of MAD5,253 million. These foreign-currency disbursements exceed the amount of foreign-currency receipts (MAD2,925 million in 2007). In addition, Maroc Telecom had debt of MAD2,392 million at December 31, 2007, denominated mainly in CFA Franc and Moroccan dirhams (see above paragraph "Capital resources"). Maroc Telecom cannot net its foreign- currency disbursements and receipts, as Moroccan law allows it to retain only 50% of its telecom receipts in a foreign- currency account; The remaining 50% are converted into Moroccan dirhams. Consequently, Maroc Telecom s earnings may be affected by fluctuations in exchange rates, and in particular by fluctuations in the Moroccan dirham against the US dollar or the euro. In 2007, the euro rose 2.0% in relation to the Moroccan dirham (from MAD at December 31, 2006 to MAD at December 31, 2007). Over the same period, the US dollar fell 9.6%, from MAD in 2006 to MAD in The consolidation, from 2007, of Gabon Telecom and Onatel, whose functional currency is the CFA Franc, increased the Group's exposure to exchange rate risks, particularly to exchange rate fluctuations between the euro and the Moroccan dirham. However, based on the Group's consolidated financial statements at December 31, 2007, a 1% fall of the Moroccan dirham / euro exchange rate would have the following impacts: Revenues: + MAD54 million Earnings from operations: +MAD14 million Earnings after minority interests: +MAD9 million. The table below sets out the Company s net foreign- currency positions at December 31, 2007: in millions of Moroccan dirhams CFA Franc Euro USD Other currencies* Total Foreign currencies The group does not use foreign- currency hedging instruments. At Maroc Telecom level, assets denominated in foreign currencies are mainly receivables from foreign operators. Liabilities denominated in foreign currencies are mainly debts to foreign operators and suppliers. MAD Total Maroc Telecom group Total assets 7,148 2, ,789 11,695 26,054 37,749 Total liabilities 7,148 1, ,789 10,803 26,946 37,749 * mainly Mauritanian ouguiyas Maroc Telecom Registration Document 181

182 5 The table below sets out the Company s net foreign-currency positions (excluding subsidiaries) at December 31, in millions of Moroccan Dirhams EURO USD Other currencies (euro equivalent)* Assets Liabilities (99) (59) (4) Net assets (liabilities) 74 7 (4) Commitments (68) (29) (3) Total net assets (liabilities) denominated in foreign currencies 6 (22) (7) * : Assuming euro1 = MAD NB: (1) the other main currencies are the Japanese Yen (JPY), the Swiss franc (CHF) and the Pound sterling (GBP); (2) Exchange rate in euro and US dollar are calculated by applying the currency-specific proportion of receipts and disbursements made during 2007 to the receivables and payables of foreign operators in Special Drawing Rights (SDR) at December 31, 2007; (3) As regards the balance of commitments relating to current agreements, the breakdown by currency is based on the balance observed for such contracts. A 1% rise in the euro and US dollar against the Moroccan dirham would have an impact at December 31, 2007 of: +MAD24 million on assets denominated in foreign currencies; -MAD16 million on liabilities denominated in foreign currencies; +MAD8 million on the net position; -MAD10 million on commitments; and -MAD2 million on total net assets and liabilities denominated in foreign currencies. Conversely, a 1% decrease in the euro and US dollar against the Moroccan dirham would have an impact at December 31, 2007 of: -MAD24 million on assets denominated in foreign currencies; +MAD16 million on liabilities denominated in foreign currencies; -MAD8 million on the net position; +MAD10 million on commitments; and +MAD2 million on total net assets and liabilities denominated in foreign currencies 182 Maroc Telecom 2007 Registration Document

183 5. FINANCIAL REPORT Consolidated income statement Interest rate risk The table below sets out outstanding debt by creditor at December 31, 2007: in millions of Moroccan Dirhams Interest rate % Maturity Companies December 31, 2007 December 31, 2006 December 31, 2005 Loan for a Mobile License (October 2000) 8.0% January 2008 Mauritel ABCI 7,2 MEUR 09/96 03/07 7.4% March 2007 Mauritel KFWF 18,7 MEUR 01/97 04/06 8.1% April 2006 Mauritel SBIF % June 2011 Onatel CONS.BIB-ECOBANK-BICIA 7.7% July 2012 Onatel Domestic loan retroceded by the Moroccan government 7.5% December 2008 Onatel BOAD % July 2011 Onatel BEI 2.0% December 2010 Onatel AFD % October 2009 Onatel AFD % October 2018 Onatel SGBB % November 2013 Onatel BOA % December 2014 Onatel BOAD % July 2010 Onatel BEI 3.0% March 2012 Gabon Telecom BID 8.0% December 2012 Gabon Telecom AFD 5.0% October 2009 Gabon Telecom Commerz bank Euribor +0.75% December 2013 Gabon Telecom Alcatel phase I Euribor +3.5% November 2009 Libertis Alcatel phase II Euribor +0.75% March 2011 Libertis Borrowing Mobisud fr - - Mobisud France BGFI leasing liabilities - - Gabon Telecom Saudi fund for development 2.5% - Mauritel Banks, IAM overdrafts 3.9% June 2008 IAM Banks, Onatel overdrafts l 8.5% - Onatel Bank, GT bank accounts in credit 0.0% - Gabon Telecom Other 8.0% Bank loans and other financial liabilities 2, Maroc Telecom Registration Document 183

184 5 The table below sets out the net cash position by maturity: Year 2007: in millions of Moroccan dirhams < 1 year 1-5 years > 5 years Total Bank loans ,565 Bank overdrafts Financial liabilities 1,159 1, ,392 Cash at bank and in hand 3, Cash held for repayment of bank loans Total (1,125) (108) 1,451 The table below sets out the net cash position by consolidated entity as at December 31, 2007: Maroc Telecom : MAD2,073 million Mauritel : MAD564 million Onatel : -MAD547 million Gabon Telecom : -MAD626 million Mobisud France and Maroc Telecom Belgium : -MAD14 million. Year 2006: in millions of Moroccan dirhams < 1 year 1-5 years > 5 years Total Bank loans Bank overdrafts Financial liabilities Cash at bank and in hand 2, ,741 Total 2,697 (11) - 2,686 Year 2005: in millions of Moroccan dirhams < 1 an 1-5 years > 5 years Total Bank loans Bank overdrafts Financial liabilities Cash at bank and in hand 7, ,585 Total 7,523 (57) - 7,466 Surplus cash is invested at market rates. Changes in interest rates on credit balances therefore have a significant impact on investment income: Based on the average cash position at December 31, 2007, a 1% increase in the interest rate would lead to additional income of MAD15 million over a one-year investment period; Conversely, based on the average cash position at December 31, 2007, a 1% decrease in the interest rate would lead to a loss of income of MAD-15 million over a one-year investment period. Equity risk Maroc Telecom does not have a significant portfolio of listed equities. As a result, there is no risk relating to changes in the value of such securities. 184 Maroc Telecom 2007 Registration Document

185 5. FINANCIAL REPORT Consolidated income statement Transition from individual financial statements to consolidated financial statements The consolidated financial statements are derived from the individual financial statements of Maroc Telecom and its subsidiaries, as prepared under Moroccan and Mauritanian generally accepted accounting principles. A number of adjustments are made to comply with consolidation rules and to bring the individual financial statements into compliance with the format required by IFRS. For the details of the transition to IFRS, please refer to part II of the financial statements below. For Gabon Telecom, however, the transition to IFRS is still not yet finalized. The main adjustments to the income statement items are: The cancellation of revenues related to cancelled subscriptions between the date of cancellation and the end of subscription period; The recognition as consolidated operating expenses of retailers commissions. These costs were initially netted against revenues in the individual financial statements; The reclassification of non-current items to earnings from operations, with the exception of variations in the value of fixed assets; The reclassification of the Fidelio provision, which is instead netted against revenues; The reclassification under financial income of non-current financial items. The main adjustments to the balance sheet relate to current assets: SIM cards: reclassification of inventories under fixed assets; Non-activated handsets: handsets sold but not activated are restated to take into account the recognition of revenues upon activation. Regarding trade payables, the main restatement entails recording certain operating payables as provisions for liabilities and charges. The changes in presentation do not affect group earnings. Other consolidation adjustments include the elimination of statutory provisions, the determination of deferred taxes, and all consolidation-related operations (such as the elimination of investment securities etc.). Maroc Telecom Registration Document 185

186 5 5.4 CONSOLIDATED FINANCIAL STATEMENTS Pursuant to regulation n 1606/2009 of July 19, 2002, the consolidated financial statements of Maroc Telecom group have been presented in accordance with the International Financial Reporting Standards (IFRS) approved by European Union at the closing date. Table of contents Report of the statutory auditors on the consolidated financial statements Consolidated balance sheets as at December 31, 2007, 2006 and 2005 Consolidated income statements for the years ended December 31, 2007, 2006 and 2005 Consolidated statement of cash flows for the years ended December 31, 2007, 2006 and 2005 Consolidated statements of changes in equity for financial years 2007, 2006 and 2005 Notes to consolidated financial statements Note 1. Accounting principles and valuation methods Note 2. Scope of consolidation as at December 31, 2007, 2006 and 2005 Note 3. Goodwill as at December 31,2007, 2006 and 2005 Note 4. Other intangible assets as at December 31, 2007, 2006 and 2005 Note 5. Property, plant and equipment as at December 31, 2007, 2006 and 2005 Note 6. Investment in equity affiliates as at December 31,2007, 2006 and 2005 Note 7. Non-current financial assets as at December 31, 2007, 2006 and 2005 Note 8. Change in deferred taxes as at December 31, 2007, 2006 and 2005 Note 9. Inventories as at December 31, 2007, 2006 and 2005 Note 10. Receivables and other as at December 2007, 2006 et 2005 Note 11. Short term financial assets as at December 31,2007, 2006 and 2005 Note 12. Cash and cash equivalents as at December 31, 2007, 2006 and 2005 Note 13. Dividends Note 14. Provisions as at December 31, 2007, 2006 and 2005 Note 15. Borrowings and other financial liabilities as at December 31, 2007, 2006 and 2005 Note 16. Accounts payable as at December 31, 2007, 2006 and 2005 Note 17. Revenues for the years ended December 31, 2007, 2006 and 2005 Note 18. Purchases for the years ended December 31, 2007, 2006 and 2005 Note 19. Payroll and payroll-related costs for the years ended December 31, 2007, 2006 and 2005 Note 20. Taxes, duties and fees for the yeras ended December 31, 2007, 2006 and 2005 Note 21. Other operating income and expenses for the years ended December 31, 2007, 2006 and 2005 Note 22. Net depreciation, impairment and provisions for the years ended December 31, 2007, 2006 and 2005 Note 23. Income from equity affiliates for the years ended December 31, 2007, 2006 and 2005 Note 24. Net finance costs and other financial income and expenses for 2007, 2006 and 2005 Note 25. Tax expenses for 2007, 2006 and 2005 Note 26. Minority interests for 2007, 2006 and 2005 Note 27. Earnings per share for 2007, 2006 and 2005 Note 28. Segment data for 2007, 2006 and 2005 Note 29. Restructuring provisions for the years ended December 31, 2007, 2006 and 2005 Note 30. Transactions with related parties Note 31. Contractual obligations and contingent assets and liabilities Note 32. Risk management Note 33. Post-balance sheet events 186 Maroc Telecom 2007 Registration Document

187 5. FINANCIAL REPORT Consolidated financial statements Report of the statutory auditors on the consolidated financial statements Year ended December 31, 2007 In compliance with the assignment entrusted to us, we have audited the accompanying financial statements of Itissalat Al-Maghrib SA (IAM) for the fiscal year ended December 31, The consilidated financial statements have been approved by the Managment Board. It is our responsibility, based on our audit, to express an opinion on these financial statements. I. Opinion on the financial statements We conducted our audit in accordance with international auditing standards. Those standards require us to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes an examination, on a test basis, of evidence relevant to the amount and disclosures in the financial statements. It also includes assessment of the accounting principles used and significant estimates made by Management in the preparation of the financial statements and an evaluation of the overall adequacy of the presentation of these statements. We believe that our audit provides a reasonable basis for the opinion expressed below. In our opinion, the consolidated financial statements have been prepared, in accordance with IFRSs as adopted by the European Union, and give a true and fair view of the assets, liabilities and the financial position of the Company as well as the results for overall consolidated entities Without prejudice to the opinion above, we draw your attention to the estimated character of segment data (expressed in the notes 1 ( 2.5) et 28). II. Specific controls and information In addition, we also performed the verifications of information contained in the Management Board s report. We ensured that it was consistent with the Company s financial statements. February 22, 2008 Statutory Auditors KPMG Fouad LAHGAZI Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner Maroc Telecom Registration Document 187

188 5 Consolidated balance sheets as at December 31, 2007, 2006 and 2005 ASSETS (in millions of Moroccan dirhams) Note December 31, 2007 December 31, 2006 December 31, 2005 Goodwill 3 2, Other intangible assets 4 3,644 2,415 1,392 Property, plant and equipment 5 16,870 12,460 12,584 Investments in equity affiliates Non-current financial assets , Deferred tax assets Non-current assets 23,242 18,095 14,788 Inventories Trade accounts receivable and other 10 9,897 6,928 7,115 Current financial assets Cash and cash equivalents 12 3,725 2,741 7,585 Assets available for sale 32 Current assets 14,507 10,129 15,090 TOTAL ASSETS 37,749 28,224 29,878 LIABILITIES (in millions of Moroccan dirhams) Share capital 5,275 5,275 8,791 Retained earnings 4,071 4,247 4,595 Earnings for the fiscal year 8,033 6,739 5,809 Equity attributable to equity holders of the parent ,195 Minority interest 1, Total equity 18,634 16,853 19,724 Non-current provisions Borrowings and other non-current financial liabilities 15 1, Deferred tax liabilities Non-current liabilities 1, Trade accounts payable 16 15,385 10,278 9,380 Current income tax liabilities Current provisions Borrowings and other current financial liabilities 15 1, Current liabilities 17,679 11,147 9,890 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 37,749 28,224 29, Maroc Telecom 2007 Registration Document

189 5. FINANCIAL REPORT Consolidated financial statements Consolidated income statement for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Note Revenues 17 27,532 22,615 20,542 Cost of purchases 18 (4,215) (3,692) (3,879) Payroll costs 19 (2,695) (2,060) (2,056) Sundry taxes and duties 20 (788) (771) (680) Other operating income and expenses 21 (3,562) (2,686) (2,610) Net depreciation, amortization and provisions 22 (4,038) (3,363) (2,639) Earnings from operations 12,234 10,043 8,678 Other income and charges from ordinary activities Income from equity affiliates 23 (34) (21) 14 Earnings from continuing operations 12,201 10,029 8,695 Income from cash and cash equivalents Financial costs (131) (7) (13) Net finance costs Other financial income and expenses 31 1 (18) Net financial items Income tax expense 25 (4,095) (3,339) (2,886) Earnings 8,137 6,833 5,921 Attributable to equity holders of the parent 8,033 6,739 5,809 Minority interests EARNINGS PER SHARE (in MAD) Net income - group share 8,033 6,739 5,809 Number of shares as at December ,095, ,095, ,095,340 Earnings per share Diluted earnings per share Maroc Telecom Registration Document 189

190 5 Consolidated statement of cash flows for the years ended December 31, 2007, 2006 and 2005 December December December (in millions of Moroccan dirhams ) Note 31, , , 2005 Consolidated net earnings (including minority interests) 8,137 6,833 5,921 Net depreciation, impairment and provisions 3,317 3,043 2,503 Non-cash expenses/income (14) Capital gains and losses (106) (6) (33) Net earnings after net finance costs and income tax expense 11,383 9,944 8,377 Net finance costs 24 0 (142) (130) Income tax expense (including deferred tax) 4,095 3,339 2,886 Net earnings before net finance costs and income tax expense (A) 15,477 13,141 11,133 Tax paid (B) (3,572) (3,152) (3,084) Change in WCR relating to operating activities (C) 1,164 1, Cash flow from operating activities (D) = (A+B+C) 13,069 11,233 8,426 Purchase of PP&E and intangible assets (5,466) (3,978) (3,210) Proceeds from disposals of PP&E and intangible assets Purchase of non-consolidated investments (413) (2,481) (13) Proceeds from disposals of non-consolidated investments Change in long-term debt (5) (3) 16 Effects of changes in scope of consolidation (*) Cash flow used in investing activities (E) (5,656) (6,435) (3,119) Dividends paid during the year 13 (6,953) (6,142) (4,424) Principal payments on borrowings 714 (79) (757) Net interests Changes in blocked Cash (185) - - Changes in share capital (share capital reduction) (3,516) - Other (8) - - Cash flow used in financing activities (F) (6,432) (9,615) (5,098) Foreign currency translation adjustments (G) 3 (27) 11 Change in cash and cash equivalents (D+E+F+G) (4,844) 219 Cash and cash equivalents at beginning of period 2,741 7,585 7,366 Cash and cash equivalents at end of period 3,725 2,741 7,585 Dividends paid: MAD6,927 million dividends paid by Maroc Telecom MAD26 million paid by subsidiaries to minority shareholders (*) Onatel has been fully consolidated since January 1, 2007 (*) Mobisud Belgium has been fully consolidated since May 1, (*) Gabon Telecom has been fully consolidated since March 1, ( C) The change of working capital requirement from activities has also included the change of working capital requirement relating to fixed assets. 190 Maroc Telecom 2007 Registration Document

191 5. FINANCIAL REPORT Consolidated financial statements Consolidated statements of changes in equity for financial years 2007, 2006 and 2005 (in millions of Moroccan dirhams) Note Capital Other adjustments Cumulative translation differences Earnings and retained earnings Attributable to equity holders of the parents Minority interests Total Balance at January 1, ,791 (12) (18) 8,982 17, ,201 Dividends 13 (4,396) (4,396) (28) (4,424) Earnings for the year 5,809 5, ,921 Income and charges recorded directly in equity Current charges and income 16 5,825 5, ,959 Changes in scope of consolidation (*) (8) (8) (4) (12) Balance at December 31, ,791 (12) (2) 10,404 19, ,724 Dividends 13 (6,121) (6,121) (31) (6,152) Earnings for the year 6,739 6, ,833 Income and charges recorded directly in equity (36) (36) (36) (34) (70) Current charges and income (36) 6,703 6, ,763 Share capital reduction (3,516) 0 (3,516) (3,516) Changes in scope of consolidation (*) Balance at December 31, ,276 (12) (37) 10,986 16, ,853 Dividends (6,927) (6,927) (26) (6,953) Earnings for the year 8,033 8, ,137 Income and charges recorded directly in equity Current charges and income Treasury stock (8) (8) (8) (8) Cumulative translation differences Other adjustments (9) 0 Changes in scope of consolidation (*) Balance at December 31, (11) (25) As at December 31, 2007, Maroc Telecom s share capital comprises 879, 095, 340 ordinary shares. Ownership of these shares was as follows: Kingdom of Morocco: 30%; Vivendi: 53% % via its wholly-owned subsidiary Société de Participation dans les Télécommunications; Other: 17%. (*) Change of scope of consolidation: Onatel has been fully consolidated since January 1, Gabon Telecom has been fully consolidated since March 1, Retained earnings mainly comprise undistributed earnings of which MAD3,424 million from December 31,2006 and current earnings attributable to the equity holders of the parent. It should be noted that the nominal value of shares decreased from MAD10 to MAD6 in The shares were fully paid at December 31,2006.There is no privilege, restriction or particular interest attached to the shares. In addition, the shares are not held by Maroc Telecom or by one or several of its subsidiaries. Maroc Telecom Registration Document 191

192 5 Note 1. Accounting principles and valuation methods 1. Significants events On February 9, 2007, Maroc Telecom group acquired a 51% stake in Gabon Telecom, the incumbent operator in Gabon. Onatel which was acquired in December 28, 2006, but not consolidated in 2006 due to insufficient information (ref Registration Document) was consolidated for the first time. On May 2, 2007, launch of Mobisud Belgium s activity. Continuation of the voluntary redundancy plan launched in 2006, involving Maroc Telecom s employees until July 2007 Launch of the Atlas offshore investment project for a cost of MAD300. In Jully 2007, 3G technology services offered to data customers. Launch by Maroc Telecom of a program to sell 5 pieces of land. Two were sold in 2007 for MAD58 million. Maroc Telecom increased its stake in Medi-1-Sat in 2007 by 1%. The main details concerning the acquisitions of Onatel and Gabon Telecom are as follows: Acquisition price and goodwill: Onatel Gabon Telecom (in millions of Moroccan dirhams) (**) Acquisition price 2, Cost of purchase Total cost of acquisition 2, Net consolidated equity- group share (*) Goodwill 1, (*) Net equity at March 1, 2007 for Gabon Telecom and at January 1, 2007 for Onatel (**) The allocation of the acquisition price of Gabon Telecom will be finalized within 12 months in compliance with accounting standards and will be recorded in the consolidated statements of the quarter ended March 31, Earnings at December 31, 2007 and 2006: (in millions of Moroccan dirhams) Onatel Gabon Telecom (1) Revenues 1,371 1,239 1,001 1,062 Earnings from operations (169) (175) Earnings- group share (103) (82) (1) Gabon Telecom data concern the period from March 1, to December 31. The earnings group share of Gabon Telecom for 2006 amounted to a net loss of MAD98 million. (in millions of Moroccan dirhams) Onatel Gabon Telecom Total assets 2,539 3,849 2 Accounting principles and valuation methods The group companies are consolidated on the basis of the financial statements at and for the year ended December 31, 2007, with the exception of CMC whose financial statements were prepared at June 30, The financial statements and notes were approved by the Management Board on February 20, Maroc Telecom 2007 Registration Document

193 5. FINANCIAL REPORT Consolidated financial statements 2.1 Basis of preparation In accordance with European Regulation 1606/2002 of July 19, 2002 concerning the adoption of international accounting standards, the consolidated financial statements of Maroc Telecom as at and for the year ended December 31, 2007 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and effective from December 31, 2007, as approved by the European Union (EU). For comparison purposes, the 2007 financial statements also include financial information for financial years 2006 and The group has applied all of the new standards, interpretations and amendments issued by the IASB and mandatory in the European Union from January 1, Statement of compliance The consolidated financial statements of Maroc Telecom group at December 31, 2007, have been prepared in accordance with all the mandatory International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations adopted by the EU as at December 31,2007 and which have presented with no difference with the accounting standards published by the IASB. Maroc Telecom has applied the following new standards and interpretations: IFRS 7 Financial Instruments: Disclosures» and the Amendment to IAS 1 Presentation of Financial Statements Capital Disclosures. On August 18, 2005, the IASB issued IFRS 7 Financial Instruments: Disclosures and the Amendment to IAS 1 Presentation of Financial Statements - Capital Disclosures, which were adopted by the European Union on January 11, 2006, published in the Official Journal of the European Union on January 27, 2006 and have been mandatory since January 1, The objective of IFRS 7 is to combine in a new standard, the redefined rules governing the presentation of financial information relating to financial instruments, as set forth in IAS 32 Financial Instruments: Disclosures and Presentation and IAS39 Financial Instruments: Recognition and Measurement. The amendment to IAS 1 concerns the presentation of qualitative information related to the objectives, the prinicipales and the processes of operations which impact the capital share and presentation of quantitative information about elements constituting share capital. IFRIC 10 Interpretation Interim Financial Information and Impairment adopted by the EU on June 1, 2007 and published in the Official Journal of the European Union on June 2, IFRIC 10 specifes that impairment recognised for goodwill or for certain financial assets (an investment in an equity instrument classified as available-for-sale and investments in unquoted equity instruments carried at cost) recognised in the interim financial statements should not be reversed in a subsequent interim financial statements nor in the annual intermediary financial statements. IFRIC 13 relating to Customer Loyalty Programmes, which has not been adopted by the European Union. As the accounting treatment previously applied by Maroc Telecom was in conformity with this text, the implementation of the interpretation did not have any effect on Maroc Telecom s financial statements. This interpretation addresses the accounting of award credits relating to customer loyalty programmes that are provided to Maroc Telecom s customers as part of a sales transaction and may be redeemed subsequently for free or discounted goods or services. The interpretation requires the recognition of deferred revenue measured by reference to the fair value of the award credits to the customer. When accounting for the sale of goods or services that confer award credits to customers some of the consideration received in respect of the sale should be allocated to the award credits. Maroc Telecom does not recognise deferred revenue for loyalty premiums that do not represent any additional cost, i.e. premiums that do not represent an advantage over those granted to new subscribers. Deferred revenue is recognised for loyalty points that are convertible into free services.the revenue is actually recorded when the points are used. Of the other IFRS and IFRIC interpretations issued by the IASB/IFRIC at the approval date of these consolidated financial statements that were not yet mandatory and which Maroc Telecom had not opted to implement early, the following may concern Maroc Telecom: IFRS 8 Operating Segments, which will be mandatory from January 1, 2009; The amendment to IAS 23 Borrowing Costs, requiring the capitalization of borrowing costs relating to assets that take a substantial period of time to get ready for use or sale will be mandatory from January 1, 2009; Relate to capitalization of preliminary interests in the cost of fixed assets, mandatory since Janauary 1, 2009: The amendments to IAS 1 Presentation of Financial Statements ; A Revised Presentation, requiring capital disclosures, will be mandatory from January 1, 2009; The revised versions of IFRS 3 - Business Combinations and IAS 27 Consolidated and Separate Financial Statements on applying purchase accounting for business combinations and on accounting for non-controlling interests will be mandatory from January 1, 2010, The amendment to IFRS 2 Share-based Payment on vesting conditions and cancellations will be mandatory from January 1, The potential impact of the implementation of these standards and interpretations on the income statement, balance sheet, statement of cash flows and notes to consolidated financial statements is currently being determined. Maroc Telecom Registration Document 193

194 5 2.3 Basis of presentation The consolidated financial statements have been prepared in accordance with the historical cost principle, with the exception of certain asset and liability categories detailed below, in accordance with IFRS. The consolidated financial statements are presented in Moroccan dirhams and all figures are rounded up or down to the closest million unless otherwise stated. The consolidated financial statements include Maroc Telecom s financial statements as well as its subsidiaries financial statements after the elimination of intra-group items and transactions Income statements Maroc Telecom prepares its consolidated income statement according to a format that provides details of revenue and expenses based on their nature Earnings from operations and earnings from continuing operations Earnings from operations comprises revenues, cost of purchases, payroll costs, sundry taxes and duties, other operating income and expenses as well as amortization, depreciation, impairment and net provisions. Earnings from continuing operations includes operating income from continuing operations, other income and expenses from continuing operations (including impairment of goodwill and other intangible assets) as well as income (loss) from equity affiliates Financial costs and other financial expenses and income Net finance cost includes: Financial cost, which includes interest expenses relating to borrowings calculated at the effective interest rate; Income from cash and cash equivalents. Other financial expenses and income primarily include foreign exchange gains and losses (other than relating to operating activities classified in earnings from operations), dividends received from non-consolidated interests, and the results of consolidated operations or companies that do not qualify as discontinued operations Balance sheet Assets and liabilities expected to be realized in, or intended for sale or consumption in the entity s normal operating cycle, usually less than 12 months, are recorded as current assets or liabilities. If their maturity exceeds this period, they are recorded as non-current assets and liabilities Consolidated statements of cash flows Maroc Telecom prepares its consolidated statement of cash flows using the indirect method. Working capital requirements correspond to items in the statement of financial position, which include trade accounts receivable, inventories, provisions and accounts payable Use of estimates In connection with the preparation of its financial statements, Maroc Telecom must make estimates and certain assumptions. Maroc Telecom s management bases its estimates on past experience and on various other assumptions that it deems reasonable under the circumstances. These estimates permit an evaluation of the appropriateness of carrying value. The figures derived from such estimates and assumptions may differ if other estimates or assumptions are used. The main items calculated on the basis of estimates are provisions for litigation, restructuring provisions, write-downs of accounts receivable, impairment of inventories and deferred income. Management reviews its estimates and valuations regularly based on past experience and various other assumptions that it deems reasonable, which constitute the basis of its evaluations of the carrying value of its assets and liabilities. The impact of the change in estimates is booked in the current period and all subsequent periods Principles of consolidation The generic name Maroc Telecom refers to the group of companies of which Itissalat Al-Maghrib SA is the parent. A list of Maroc Telecom s major subsidiaries and affiliates is presented in note 2 Scope of consolidation at December 31, 2007, 2006 and The accounting methods described below were applied consistently to all of the periods presented in the consolidated financial statements, as well as in the preparation of the opening balance sheet at January 1, 2004 for the purpose of the IFRS transition. The accounting methods were applied consistently by all group entities. Full consolidation All companies in which Maroc Telecom has a controlling interest, specifically when it has the power to direct the financial and operating policies of these companies to obtain benefits from their operations have been fully consolidated A controlling position is presumed to exist where Maroc Telecom holds, directly or indirectly, a voting interest exceeding 50%, and where no other shareholder or group of shareholders exercises a significant right that would enable it to veto or to block ordinary decisions taken by Maroc Telecom. The subsidiaries financial statements are included in the consolidated financial statements from the date control is obtained to the date control ceases. 194 Maroc Telecom 2007 Registration Document

195 5. FINANCIAL REPORT Consolidated financial statements A controlling position also exists when Maroc Telecom holds an interest of 50% or less in an entity, but controls more than 50% of the voting rights by virtue of an agreement with other investors, has the power to direct the financial and operating policies of the entity by virtue of a statute or contract, has the power to appoint or remove from office the majority of the members of the Board of Directors or an equivalent management body, or has the power to assemble the majority of voting rights at meetings of the Board of Directors or equivalent management body. Proportionate consolidation Maroc Telecom uses proportionate consolidation for companies that are controlled jointly by the Group and a limited number of other shareholders under the terms of a contractual arrangement. Equity accounting Maroc Telecom accounts for affiliates over which it exercises significant influence using the equity method. Significant influence is assumed to exist when Maroc Telecom holds, directly or indirectly, at least a 20% voting interest in an entity, unless it can be clearly demonstrated that this is not the case. The existence of significant influence can be proven on the basis of other criteria, such as representation on the Board of Directors or equivalent management body of the entity, participation in the process of policy definition, the existence of material transactions with the entity or exchange of management personnel. Transactions eliminated when preparing the consolidated financial statements Revenues, expenses and balance sheet items resulting from intra-group transactions are eliminated when preparing the consolidated financial statements Goodwill and business combinations In accordance with the provisions of IFRS 1 First time adoption of IFRS, Maroc Telecom decided not to restate the business combinations entered into prior to January 1, Business combinations are recorded using the purchase method. Under this method, the assets acquired and the liabilities and contingent liabilities assumed are recognized at their fair value. At the acquisition date, goodwill is initially measured at cost, being the excess of the cost of the business combination over Maroc Telecom s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is measured at cost less accumulated impairment. Goodwill is allocated to each cash-generating unit, and is then subject to impairment tests each year, or more frequently when events indicate a risk of impairment. In the event of a loss in value, impairment is recorded under Other charges from ordinary activities. In the event of the acquisition of an additional interest in a subsidiary, the excess of the acquisition cost over the carrying amount of minority interests acquired is recognized as goodwill. In accordance with IFRS 3, goodwill is no longer amortized Foreign currency translation Foreign currency transactions are initially recorded in the functional currency at the transaction date exchange rate. At period end, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency at the period-end exchange rate. All foreign currency adjustments are expensed for the period Translation of financial statements of foreign activities Assets and liabilities relating to foreign activities, including goodwill and fair value adjustments arising from consolidation, are translated into Moroccan dirhams at the period-end rate. Income and expense items are translated into Moroccan dirhams using rates that approximate the exchange rates at the dates of the transactions. Foreign currency translation adjustments resulting from the application of these different rates are recorded as a separate line item of shareholders equity Assets Other intangible assets Intangible assets acquired separately are recorded at cost, and intangible assets acquired in connection with a business combination are recorded at their fair value at the acquisition date. The historical cost model is applied to intangible assets subsequent to their initial recognition. Assets with a finite useful life are amortized. Useful life is reviewed at the end of each reporting period. Useful life is estimated at between 2 and 5 years. Trade names, subscriber bases and market shares generated internally are not recognized as intangible assets. Licenses to operate telecom networks are recorded at historical cost and amortized on a straight line basis from the effective starting date of the service until maturity. Maroc Telecom has chosen not to apply the option provided in IFRS 1 to remeasure certain intangible assets at their fair value at January 1, The 3G license of Maroc Telecom is recorded under intangible assets for a total cost of MAD372 million, which includes the licence fee (MAD300 million) and the cost of the contribution to frequency spectrum planning (MAD72 million). It is amortized over 25 years from the launch of the service. Maroc Telecom Registration Document 195

196 5 The 3 G license of Mauritel is recorded under intangible assets for a total cost of MAD10 million and is amortized over 15 years. Subsequent expenditure on intangible assets is only added to these assets if the probable future economic benefits specific to the asset to which they relate increase. All other expenditure is expensed in the period in which it is incurred Research and development costs Research costs are expensed when incurred. Development expenses are capitalized when the feasibility and profitability of the project can reasonably be considered certain. In compliance with IAS 38 Intangible assets, development costs are capitalized only after the technical and financial feasibility of the asset for sale or use have been established, where it is probable that the future economic benefits attributable to the asset will flow to the company and where the cost of the asset can be measured reliably. Research and development costs incurred by Maroc Telecom are not significant Property, plant and equipment Property, plant and equipment are carried at historical cost less any accumulated depreciation and impairment. Historical cost includes the acquisition cost or production cost as well as the costs directly attributable to bringing the asset to the location and condition necessary for its use in operations. Borrowing costs are recorded as expenses for the period in which they are incurred. When property, plant and equipment include significant components with different useful lives, they are recorded and depreciated separately. Property comprising land and buildings is derived in part from the contribution in kind granted in 1998 by the Moroccan government in connection with the transfer from ONPT to Maroc Telecom, when the latter was established. When these assets were transferred, the property titles could not be registered with the property registry. This situation was still unresolved at the end of December While the uncertainty over the title of property remains, the risk is limited as the Moroccan government has guaranteed that Maroc Telecom can use the transferred property and there have been no significant incidents to date. The assets transferred by the Moroccan government on February 26, 1998 to set up Maroc Telecom as a public operator were recorded as a net amount in the opening balance sheet, as approved by: the Postal Services and Information Technology Act no , and the joint Order no of the Telecommunications Minister and Minister of Finance, Commerce and Industry, approving the inventory of assets transferred to the Maroc Telecom group. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives are reviewed at the end of each reporting period and are determined as follows: Buildings 20 years Civil engineering 15 years Network equipment Transmission (mobile) 8 years Switching 8 years Transmission (fixed-line) 10 years Furniture and fittings 10 years Computer equipment 5 years Office equipment 10 years Transportation equipment 5 years Assets which have not yet been placed into service are recorded as work-in-progress. Assets financed by finance leases are capitalized at the lower of the value of future minimum lease payments and fair value, and the related debt is recorded in borrowings and other financial liabilities. These assets are depreciated on a straight-line basis over their estimated useful lives, with depreciation included as a general depreciation expense. Maroc Telecom has chosen not to apply the option provided by IFRS 1 to remeasure property, plant and equipment at fair value at January 1, The carrying value of an item of property, plant, and equipment includes the replacement cost of a component of such an item if this cost is incurred, if it is probable that the future economic benefits associated with the asset will flow to Maroc Telecom and if the cost can be measured reliably. All maintenance costs are expensed when incurred Impairment of fixed assets Goodwill and intangible assets with an indefinite useful life are subject to an annual impairment test and are also tested whenever there is an indication that they may be impaired. The carrying value of other fixed assets is also subject to an impairment test whenever there is an indication that the carrying value may not be recoverable. The impairment test compares the carrying amount with its recoverable amount, which is the greater of its fair value less selling costs and its value in use. The recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely inde- 196 Maroc Telecom 2007 Registration Document

197 5. FINANCIAL REPORT Consolidated financial statements pendent from those of other assets or groups of assets. If this is the case, as for goodwill, the recoverable amount is determined for the cash-generating unit. Maroc Telecom has determined its fixed- line and mobile businesses as cash-generating units Financial assets Financial assets with a maturity of more than 3 months are classified in one of the following four categories: Assets recognized at fair value through profit and loss; Held-to-maturity financial assets; Loans and receivables; Available for sale assets. Financial assets recognized at fair value through profit and loss This category comprises financial assets bought in order to be resold in the very near term, which are held for trading purposes. Profit and loss arising from changes in the fair value of assets in this category is recorded in the period during which they arise. The principal financial assets recognized at fair value through profit and loss are term deposits. Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets, other than loans and receivables, with fixed or determinable payments that the group intends and is able to hold to maturity. These assets are initially recognized at their fair value including attributable transaction costs. After initial recognition they are measured at amortized cost using the effective interest rate method. They are subject to impairment tests in the event of objective evidence of impairment. Impairment is booked if the asset's carrying amount is greater than the present value of estimated future cash flows. As at December 31, 2007, Maroc Telecom had no held-to maturity financial assets. Loans and receivables This category comprises non-derivative assets where payment is fixed or determinable and which are not listed on any active market. These assets are recognized at amortized cost using the effective interest rate method. These assets are subject to an impairment test in the event that a loss in value is indicated. Impairment is booked if the carrying amount is greater than the estimated recoverable amount. This item does not include the loans to employees. Available-for-sale financial assets These assets include non-derivative assets that are classified as being either available for sale or that are not allocated to any other category of financial assets. Available-for-sale assets are recognized at fair value. Profit and loss resulting from available-for-sale assets is taken to equity until the financial asset is sold, redeemed or removed from the balance sheet in another way, or until it can be demonstrated that the investment is impaired indefinitely, at which time the accumulated gain or loss previously recorded in equity is expensed. For financial assets actively traded in organized public markets, fair value is determined by reference to the published market price at period end. If the fair value cannot be determined accurately, available-for-sale assets are stated at cost. In the event of objective evidence that the investment is impaired indefinitely, irreversible impairment is expensed. When an available-for-sale financial asset generates interest, the interest is calculated in accordance with the effective interest method and is charged against income. The main available-for-sale assets are non-consolidated investments in unlisted companies Inventories Inventories comprise: Goods held for sale to customers upon line activation, comprising fixed and mobile handsets and accessories. Inventories are accounted for using the first-in, first-out method from January 1, 2007 to Jully 31, 2007 and average acquisition cost from August 1, 2007 to December 31, The impact of change of method is not material. Handsets delivered to distributors and not activated at year-end are recorded as inventories; Handsets not activated within nine months from the delivery date are recorded as revenue. Equipment and supplies corresponding to general network equipment. These inventories are measured at their average acquisition cost. Inventories are measured at the lower of cost and their net realizable value. An impairment loss is recognized if the carrying value of an asset is higher of its net realizable value Trade accounts receivable and other This item comprises accounts receivable and other receivables, which are initially recognized at their fair value, and then at amortized cost less impairment. Maroc Telecom Registration Document 197

198 5 Accounts receivable include trade receivables and government receivables: Trade receivables: held against individuals, distributors, businesses and international operators. Government receivables: held against local authorities and the Moroccan government. Impairment is recorded if the carrying amount of the asset under consideration exceeds the present value of its estimated future cash flows Cash and cash equivalents Cash and cash equivalents include cash on hand, sight deposits, current accounts and short-term, highly liquid investments with a maturity of three months or less Stock options granted to employees On December 12, 2006, all employees of Maroc Telecom with more than 6 months service at December 31, 2006, were given 15 Vivendi shares. These shares will be recorded in an individual share account on December 13, As these shares have been granted regardless of whether the employees will remain in post between the allocation period and the registration period in the individual account. The expense for Maroc Telecom was fully provisioned at December 31, 2006 and remeasured in The expense is calculated by multiplying the number of employees by the number of shares given, based on the share price at the date of attribution and a discount reflecting the absence of dividends for the first two years. The corresponding payroll cost is recorded as a financial liability, which is measured at fair value at maturity on the basis of changes in the data used to calculate the payroll cost Assets held for sale and discontinued operations A non-current asset or a group of assets and liabilities qualify as held for sale when their carrying amount is recovered principally through their divestiture and not through continuing utilization. To meet this definition, the asset must be available for immediate sale, and divestiture must be highly probable. These assets and liabilities are recognized as assets held for sale and liabilities associated with assets held for sale, and are not netted. The related assets recorded as assets held for sale are stated at the lower of fair value, net of divestiture fees, and cost less accumulated depreciation and impairment, and are no longer depreciated. An operation is considered as discontinued when the criteria for classification as an asset held for sale have been met, or when Maroc Telecom has sold the operation. Discontinued operations are presented as a separate line on the income statement, comprising the earnings after tax of discontinued operations until divestiture and the gain or loss after tax on sale or fair value measurement less costs to sell the assets and liabilities making up the discontinued operations. In addition, the cash flows generated by the discontinued operations are presented on a separate line of the consolidated statement of cash flows Financial liabilities Financial liabilities comprise borrowings, accounts payable and bank overdrafts. Borrowings All borrowings are initially accounted for at cost, corresponding to the fair value of the amount received, net of costs directly relating to the borrowing. The allocation of borrowings to current liabilities or non-current liabilities is based on contractual maturity. Derivative financial instruments Maroc Telecom currently does not use any derivative financial instruments or currency hedging instruments Provisions Provisions are recognized when, at the end of the reporting period, the Group has a legal, regulatory or contractual obligation as a result of past events, when it is probable that an outflow of resources (without any expected related inflow) will be required to settle the obligation, and when the obligation can be reliably estimated. Where the effect of the time value of money is material, provisions are determined by discounting expected future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money. If no reliable estimate can be made of the amount of the obligation, no provision is recorded and a disclosure is made in the Notes to the consolidated financial statements. Restructuring provisions are recorded when the Group has approved a formal and detailed restructuring program and has either started to implement the program or has announced the program publicly. Future operating expenses are not provisioned. No provision for pensions and post-retirement benefits have been recorded for the Group s Moroccan companies in the consolidated financial statements as pension expenses are covered by statutory employee pension plans in Morocco. For Mauritel, Onatel and Gabon Telecom a provision of retirement benefits has been estimated using the actuarial method. 198 Maroc Telecom 2007 Registration Document

199 5. FINANCIAL REPORT Consolidated financial statements Deferred taxes Deferred taxes result from temporary differences arising at period end between the tax basis of assets and liabilities and their carrying amount. They are accounted for using the liability method. Deferred tax liabilities are recognized for all temporary taxable differences: except for temporary differences generated by the initial recognition of goodwill, and for taxable temporary differences arising from investments in subsidiaries, affiliates and joint ventures, deferred tax assets are recorded to the extent that it is probable that the temporary difference will reverse in the foreseeable future, and that taxable profit will be available against which the temporary difference can be utilized. Deferred tax assets are recognized for all deductible temporary differences and for carry-forwards of tax losses and unused tax credits, if it is probable that a taxable profit will be available, or when a current tax liability exists, to make use of those deductible temporary differences, tax loss carry forwards and unused tax credits: except where the deferred tax asset associated with the deductible temporary difference is generated by initial recognition of an asset or liability in a transaction which is not a business combination, and which, at the transaction date, does not impact either accounting earnings, taxable earnings or taxable losses; for deductible temporary differences arising from investments in subsidiaries, affiliates and joint ventures, deferred tax assets are recorded to the extent that it is probable that the temporary difference will reverse in the foreseeable future, and that taxable profit will be available against which the temporary difference can be utilized. The carrying amount of deferred tax assets is reviewed at each period end, and reduced to the extent that it is no longer probable that a taxable profit will be available to allow the deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the expected tax rates for the year during which the asset will be realized or the liability settled, based on tax rates (and tax regulations) in force or substantially in force at the period end. Current tax and deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged directly to equity Trade accounts payable Trade accounts payable include other accounts payable. They are initially measured at fair value and subsequently at amortized cost Share-based compensation In accordance with IFRS 2, share-based compensation is recorded as a payroll cost at the value of the equity instruments granted, measured using a binomial model. However, the calculation of the share-based payment expensed depends upon whether the obligation is settled in Maroc Telecom s shares or in cash: If the instrument is settled in shares, the fair value of the instrument granted is measured and fixed at the grant date, then spread over the vesting period, according to the characteristics of equity-settled instruments. The obligation is recorded as a corresponding increase in equity. If the share-based payment transaction is settled in cash, the fair value is measured and fixed at the initial grant date, then remeasured at each year-end and adjusted for subsequent changes in the value of the vested rights. The expense is spread over the vesting period in accordance with the characteristics of the instruments. The corresponding obligation is booked as a non-current provision. Maroc Telecom chose the retrospective application of IFRS 2 from January 1, Revenues Revenues from operations are reported when it is probable that future economic benefits will flow to the Group, and the revenues can be measured reliably. Maroc Telecom group generates revenues from fixed and mobile telecommunications services, internet services, and the sale of products, which essentially comprise mobile and fixed-line handsets and multimedia equipment. Revenues from telephone subscriptions are recognized on a straight-line basis over the subscription contract period. Revenues from incoming and outgoing call traffic are recognized when the service is rendered. For prepaid services, revenues are recognized when calls are made. Revenues from fixed-line and internet and mobile services comprise: income from domestic and international outgoing and incoming calls under postpaid plans, which is recorded when generated; income from subscriptions; income from prepaid services, which is recognized as calls are made; income from data transmission services provided to professionals and internet service providers as well as to other telecommunications operators; income from advertising in printed and electronic directories, which is recognized when the directories are published. Maroc Telecom Registration Document 199

200 5 Revenues from the sale of handsets, net of point of-sale discounts and connection charges, are recognized on activation of the line. Customer acquisition and loyalty costs for mobile and fixed-line services, principally consisting of rebates on the sale of equipment to customers through distributors, are recognized as a deduction from revenues. Sales of services provided to subscribers managed by Maroc Telecom on behalf of content providers (mainly special-rate numbers), are accounted for net of related expenses. When the sale is made via a third party distributor supplied by Maroc Telecom and involves a discount compared with the public sale price, revenues are recorded as gross revenues and commissions granted are recognized as operating expenses Cost of purchases Cost of purchases comprises the purchase of Mobile and Fixed-line handsets and interconnection costs Other income (expenses) from operations This item comprises commissions to distributors, network maintenance expenses, advertising, marketing and promotion costs and expenses linked to the voluntary redundancy plan Net finance costs Net finance costs include interest payable on loans calculated using the effective interest rate method and interest on investments. Investments are recognized in the consolidated income statement when they are acquired Income tax expenses Income tax expenses include income tax payable and deferred tax expense (or income). Tax is expensed unless it applies to items recognized as equity Contractual obligations and contingent assets and liabilities Maroc Telecom and its subsidiaries prepare detailed records on all contractual obligations, commercial and financial commitments and contingent obligations, to which they are party or exposed, on a yearly basis. These detailed records are updated by the departments concerned on a regular basis and are reviewed by senior management. The assessment of off-balance sheet commitments relating to suppliers of fixed assets is carried out in the following way: Variation of minimum commitments and settlements relating to the principal framework contracts and their endorsements (higher than MAD50 million); Variation between firm orders and delivery for all the other contracts Commitments arising from fixed asset contracts are based solely on the contracts included in the reporting system. In addition, commitments arising from real estate rental contracts are estimated on the basis of one month s expense given that virtually all termination clauses require one month s notice Segment data A segment is a distinguishable component of the group that is engaged in providing a product or service or a group of related products or services (business segment), or in providing a product or service in a specific economic environment (geographical segment) that generates significant revenue from external customers, and that is subject to risks and rewards that are different from those of other business segments Business segment data The group s business is divided into Fixed-line, Internet and Mobile segments. Revenues from each business segment include revenues from the provision of telephone services to customers and subscribers as well as inter-segment transactions. Intersegment transactions are conducted at market price. Earnings from operations reflects the difference between operating income and expenses. Costs are allocated directly to the relevant segments or alternatively by using cost allocation ratios based on economic criteria. Capital expenditure is directly allocated to the relevant segments. Fixed assets used by several segments are allocated in proportion to dedicated assets. The components that are not allocated mainly comprise taxes, cash financial assets, borrowings and equity. The classification of the balance sheet by business segment was in part based on estimates. The breakdown into the components used is based on reasonable assumptions. 200 Maroc Telecom 2007 Registration Document

201 5. FINANCIAL REPORT Consolidated financial statements The following balance sheet items have been allocated proportionately between the two activities: For items comprising components that can be allocated directly to a segment and components shared by both segments: the shared part of these items is divided proportionately in respect of the amounts allocated directly to these items; For items comprising solely shared elements: these amounts are allocated in a way that takes into account the type of items involved (e.g. employee-related liabilities are divided proportionally based on the number of employees in each business segment) Geographical segment data Information by geographical area is the second level of segment data and comprises the two geographical areas in which Maroc Telecom is present: Morocco and other. 2.6 Net cash This item includes cash and cash equivalents less borrowings, and excludes short-term financial assets (term deposits) with a maturity exceeding three months. 2.7 Earnings per share Earnings per share, as presented in the consolidated income statement, are calculated by dividing earnings for the period by the average number of shares outstanding over the period. Diluted earnings per share are calculated by dividing: the earnings attributable to the equity holders of the parent ;and the average number of shares outstanding over the period, plus the average number of shares that would have been issued upon conversion of all instruments that can potentially be converted into ordinary shares. At December 31, 2007, there were no instruments that could potentially be converted into ordinary shares. Maroc Telecom Registration Document 201

202 5 Note 2. Scope of consolidation as at December 31, 2007, 2006 and 2005 Company name Legal form % group interest % capital held Consolidation method Maroc Telecom SA 100% 100% FC Avenue Annakhil Hay Riad Rabat - Morocco Compagnie Mauritanienne de Communication (CMC) SA % 80% FC December 31, % 80% FC December 31, % 80% FC Avenue Roi Fayçal Nouakchott - Mauritania Mauritel SA SA % 52% FC December 31, % 52% FC December 31, % 51% FC Avenue Roi Fayçal 7000 Nouakchott - Mauritania Mauritel mobiles (*) SA 2007 December 31, % 52% FC December 31, % 51% FC Av Charles De gaulle ilot Nouakchott -Mauritania Onatel SA % 51% FC 705, AV. de la nation 01 BP Ouagadougou Telmob SA % 51% FC 705, AV. de la nation 01 BP Ouagadougou Gabon Telecom SA % 51% FC B.P Libreville Gabon Libertis SA % 51% FC BP8900 building 9 floor Libreville- Gabon Medi-1-Sat SA % 28% EM December 31, % 27% EM Zone franche, lot n 31 BP Tangier - Morocco Mobisud France SA % 66% FC December 31, % 66% FC 86, avenue de saint ouen Paris - France Mobisud Belgium SA % 100% FC Avenue Louise 283 Bte Bruxelles (*) Mauritel mobiles was taken over by Mauritel SA in Maroc Telecom is a Moroccan corporation, its main activity being the sale of telecommunications goods and services. Its registered office is located at Avenue Annakhil Hay Riad Rabat, Morocco. Maroc Telecom is fully consolidated by Vivendi Universal. Onatel has been fully consolidated by Maroc Telecom since January 1, Gabon Telecom has been fully consolidated by Maroc Telecom since March 1, Mobisud Belgium has been fully consolidated Maroc Telecom since April 1, At the end of December 2007, Maroc Telecom held 28% of Medi-1-Sat up from 26.8% at the end of December Maroc Telecom 2007 Registration Document

203 5. FINANCIAL REPORT Consolidated financial statements Note 3. Goodwill as at December 31, 2007, 2006 and 2005 (in millions of Moroccan dirrhams) December 31, 2007 Goodwill is subject to impairment tests at least once a year when events indicate a risk of impairment. Each identifiable cash generating unit (CGU) of goodwill is tested for impairment. The impairment of goodwill test compares the carrying amount of each CGU with discounted expected future cash flows. CGUs correspond to businesses within each business segment (fixed-line and mobile). Valuations are based on the following main assumptions: The impairment of goodwill test is based on a 3 year business plan. The growth rate of cash flows from the CGUs corresponding to the goodwill of Mauritel, Onatel, Gabon Telecom is estimated at: 2.5% for Mauritel; 4.5% for Onatel; 5.5% for Telmob ; 2.0% for Gabon Telecom ; 3.0% for Libertis This assumption takes into account the level of inflation in the country, and the growth potential of the telecommunications market and Moroccan economy due to the oil industry. The discount rate, which is calculated using the weighted average cost of capital, is estimated at: 14% for Mauritel; 16% for Onatel; 14% for Telmob; 15.7% for Gabon Telecom and Libertis December 31, 2006 December 31, 2005 Mauritel Mobisud France 9 9 Onatel 1,838 Gabon Telecom 213 Net total (in MAD million) Beginning of period Impairment Translation adjustments Change in scope of consolidation End of period (8) 129 Mauritel 137 (8) Mauritel Mobisud France ,051 2,197 Mauritel Mobisud France 9 9 Onatel 1,838 1,838 Gabon Telecom Maroc Telecom Registration Document 203

204 5 Note 4. Other intangible assets as at December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) December 31, December 31, December 31, Patents, trademarks and similar rights 1, Mobile license Other intangible assets 1,649 1, Net total 3,644 2,415 1,392 The item Mobile license includes the 2G license of Mauritel, Onatel and Gabon Telecom, and two 3G licenses acquired respectively by Morocco Telecom and Mauritel. "Other intangible assets" includes primarily telecommunications network equipment software and work in progress. Intangible assets increased considerably in 2007 due to a large volume of investments in intangibles relating to: mobile network (IN platform; new value added services; network software upgrades...); fixed-line network (ADSL; optical fibres; corporate networks); and information systems (GISR Lot2 and WIAM). The reclassification column concerns transfers of intangible assets between line items and the restatement of retired assets that were not adjusted in the individual financial statements (in millions of Moroccan dirhams) 2006 Acquisitions and additions Disposals and withdrawls Translation adjustment Change in scope of consolidation Reclassification Gross 4,625 1, ,776 Patents, trademarks and similar rights ,300 2,424 Mobile license Other intangible assets 3, (832) 3,459 Amortization and impairment (2,210) (746) 0 (3) (182) 10 (3,131) Patents, trademarks and similar rights (396) (645) 0 (2) (123) 10 (1,156) Mobile license (88) (44) 0 (1) (33) 0 (166) Other intangible assets (1,726) (57) 0 (1) (26) 0 (1,810) Net total 2, , (in millions of Moroccan dirhams) 2005 Acquisitions and additions Disposals and withdrawls Translation adjustment Change in scope of consolidation Reclassification Gross 3,128 1,149 (7) (26) ,625 Patents, trademarks and similar rights (1) Mobile license (17) Goodwill 0 Other intangible assets 2, (7) (8) ,222 Amortization and impairment (1,737) (564) (2,210) Patents, trademarks and similar rights (262) (135) (396) Mobile license (79) (15) (88) Other intangible assets (1,396) (414) 5 79 (1,726) Net total 1, (7) (14) , (in millions of Moroccan dirhams) Jan.1, 2005 Acquisitions and additions Disposals and withdrawls Translation adjustment Change in scope of consolidation Reclassification Gross 2, (15) ,128 Patents, trademarks and similar rights Mobile license Other intangible assets 1, (15) 305 2,330 Amortization and impairment (1,201) (519) 15 (3) 0 (29) (1,737) Patents, trademarks and similar rights (176) (85) (261) Mobile license (61) (15) (3) (79) Other intangible assets (963) (419) 15 (29) (1,396) Net total 1,307 (377) ,392 The reclassification column concerns transfers of tangible assets between line items and the restatement of retired assets that were not adjusted in the individual financial state Maroc Telecom 2007 Registration Document

205 5. FINANCIAL REPORT Consolidated financial statements Note 5. Property, plant and equipment as at December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005 Land 1, Buildings 2,010 1,544 1,500 Technical plant,machinery and equipment 10,358 6,810 6,336 Transportation equipment Office equipment, furniture and fittings Other property, plant and equipment 2,410 2,425 3,078 Net total 16,870 12,460 12,584 The majority of other property, plant and equipment includes technical installations in progress relating to the telecommunications network (in millions of Moroccan dirhams) 2006 Acquisitions additions Translation adjustments Change in scope of consolidation Disposals and withdrawls Reclassification Assets held for sale 2007 Gross 31, 858 4, 164 (40) 133 8,353 (833) (40) 43, 595 Land (17) (32) 1,311 Buildings 4, (2) (8) 5, 557 Technical plant, machinery and equipment 22, (19) 104 6,502 1, , 398 Transportation equipment (2) Office equipment, furniture and fittings 2, ,517 Other property, plant and equipment 2,578 3, (3,366) 0 2, 547 Amortization and impairment (19, 398) (2, 875) 6 (76) (4, 705) (26, 724) Land 0 (1) 0 0 (6) 0 0 (6) Buildings (2,503) (310) 1 (11) (731) 1 7 (3, 546) Technical plant, machinery and equipment (15,205) (2,337) 4 (61) (3,753) (21, 040) Transportation equipment (60) (19) 2 (2) (126) 1 0 (204) Office equipment, furniture and fittings (1,476) (227) 0 (2) (85) 0 0 (1, 790) Other property, plant and equipment (153) (3) 0 0 (137) Net total 12,460 1, 289 (33) 58 3, 648 (518) (32) 16, (in millions of Moroccan dirhams) 2005 Acquisitions additions Translation adjustments Change in scope of consolidation Disposals and withdrawls Reclassification Assets held for sale 2006 Gross 30,140 2,829 (276) (91) 1 (745) 0 31,858 Land (1) (1) Buildings 3, (2) (5) 311 4,048 Technical plant, machinery and equipment 20, (71) 1,962 22, 015 Transportation equipment (22) (2) Office equipment, furniture and fittings 1,900 7 (3) ,127 Other property, plant and equipment 3,396 2, 700 (252) (9) (3,258) 2,578 Amortization and impairment (17, 557) (2, 188) (19, 398) Land 0 0 Buildings (2,232) (273) 1 2 (2, 503) Technical plant,machinery and equipment (13,678) (1,827) (15, 205) Transportation equipment (74) (10) 21 2 (60) Office equipment, furniture and fittings (1, 254) (243) 2 19 (1, 476) Other property, plant and equipment (318) (153) Net total 12, (254) (52) 1 (461) 0 12, (in millions of Moroccan dirhams) 1er janv.2005 Acquisitions additions Translation adjustments Change in scope of consolidation Disposals and withdrawls Reclassification Assets held for sale 2005 Gross 27,432 3,067 (48) 55 0 (365) 0 30,140 Land Buildings 3, ,733 Technical plant, machinery and equipment 18, (17) 45 1, ,014 Transportation equipment (5) Office equipment, furniture and fittings 1, (22) ,900 Other property, plant and equipment 2,316 2, 946 (4) 3 (1, 865) 3,396 Amortization and impairment (15, 510) (2,161) 29 (21) (17, 557) Land 0 Buildings (1, 975) (256) (1) (2,232) Technical plant, machinery and equipment (12, 209) (1,567) 17 (18) 98 (13,678) Transportation equipment (63) (14) 4 (1) (74) Office equipment, furniture and fittings (1, 023) (245) 8 (1) 7 (1,254) Other property, plant and equipment (240) (78) (318) Net total 11, (19) 34 0 (260) 0 12,584 Maroc Telecom Registration Document 205

206 5 Note 6: Investments in equity affiliates as at December 31, 2007, 2006 and Principal investments in equity affiliates as at December 31,2007, 2006 and 2005 (in MAD millions ) % of interest Value of equity affiliates December 31, 2007 December 31, 2006 December 31, 2005 December 31, 2007 December 31, 2006 December 31, 2005 Medi-1-Sat 28.00% 26.80% 1 9 GSM Al -Maghrib 35% 22 Net total Sale of Maroc Telecom s stake in GSM Al-Maghrib during the first quarter of In 2005, Maroc Telecom invested in Medi-1-Sat Financial information relating to equity affiliates as at December 31,2007, 2006 and 2005 (in MAD millions) Medi 1 - sat GSM Al-Maghrib December 31, 2007 December 31, 2006 December 31, 2005 December 31, 2007 December 31, 2006 December 31, 2005 Revenues Earnings from operations (113) (44) (1) 56 Net earnings (116) (46) 0 28 Total assets and liabilities The information relating to equity affiliates is derived from the individual financial statements prepared in accordance with Moroccan generally accepted accounting principles (GAAP). Note 7. Non-current financial assets as at December 31, 2007, 2006 and 2005 (in MAD millions) Note December 31, 2007 December 31, 2006 December 31, 2005 Non-consolidated investments , Other financial assets (a) Net total 326 2, (a) Other financial assets mainly include the cash at bank in escrow against borrowings to Onatel and Gabon Telecom which amounted to MAD118 million, loans granted to employees for an amount of MAD55 million and a loan to Medi-1-Sat for MAD33 million, which is to be reimbursed from As at December 31, 2007 the other financial assets had the following maturities: (in MAD millions) December 31, 2007 December 31, 2006 December 31, 2005 Due within one year Due between 1and 5 years Due after 5 years Net total Maroc Telecom 2007 Registration Document

207 5. FINANCIAL REPORT Consolidated financial statements 7.1 Non-consolidated investments: 2007 (in MAD millions) % of interest Gross Impairment Net carrying amount Earnings Total equity Casanet (1) 100% Matelca (2) 50% NS NS NS ND ND Arabsat NS ND ND Autoroute du Maroc NS ND ND Thuraya NS ND ND Sindbad investment fund 10% ND ND Rascom NS ND ND Sonatel NS 5 5 ND ND CMTL NS ND ND INMASAT NS 4 4 ND ND Other NS ND ND Total (in MAD millions) % of interest Gross Impairment Net carrying amount Earnings Total equity Casanet (1) 100% Matelca (2) 50% NS NS NS ND ND Arabsat NS ND ND Autoroute du Maroc NS Thuraya NS ND ND Sindbad investment fund 10% (1.3) 18.2 Onatel (3) 51% 2,476 2,476 ND ND MVNO Belgium 100% ND ND Other NS 0 0 ND ND Total 2, , (in MAD millions) % of interest Gross Impairment Net carrying amount Earnings Total equity Casanet (1) 100% Matelca (2) 50% NS NS NS ND ND Arabsat 1% ,548 Autoroute du Maroc NS (20) 2 Thuraya NS ND ND Sindbad investment fund 10% (2) 14 Medi-1-Sat 25% ND ND Other NS ND ND Total (1) Casanet s main business activity is the maintenance of Maroc Telecom s internet portal (Menara). Casanet invoices the related costs incurred to Maroc Telecom. (2) Matelca was not included in the scope of consolidation, as it is in liquidation. (3) Onatel has been fully consolidated since January 1, In 2007 the share of listed non-consolidated companies was not material (low exposure of share price to market risk). Maroc Telecom Registration Document 207

208 5 Note 8. Change in deferred taxes as at December 31, 2007, 2006 and 2005 (in MAD millions) December 31, 2007 December 31, 2006 December 31, 2005 Assets Liabilities Net asset position The deferred tax assets and liabilities have been netted since Change in deferred taxes 2007 (in MAD millions) December 31, 2005 December 31, 2006 Statement of income impact Equity impact Change in scope of consolidation Reclassification Translation adjustments December 31, 2007 Assets (32) (32) (177) Liabilities (177) 0 Net asset position (32) 0 (32) The change in scope in 2007 concerns the consolidation of the net equity of Onatel and Gabon Telecom. The deferred tax assets and liabilities have been netted since (in MAD millions) January 1, 2005 December 31, 2005 Statement of income impact Equity impact Change in scope of consolidation Reclassification Translation adjustments December 31, 2006 Assets (85) 6 (1) 445 Liabilities Net asset position (90) (1) Components of deferred tax, assets and liabilities (in MAD millions) December 31, 2007 December 31, 2006 December 31, 2005 Deferred taxes assets Impairment deductible in later period Restatements of revenues (68) - Other (69) 22 5 Deferred taxes liabilities Restatements of revenues Other Net asset position Maroc Telecom 2007 Registration Document

209 5. FINANCIAL REPORT Consolidated financial statements Note 9. Inventories as at December 31, 2007, 2006 and 2005 (in MAD millions) December 31, 2007 Inventories at December 31, 2007 essentially comprised inventories of Maroc Telecom of which: MAD-347 million of mobile handsets; MAD-48 million of multimedia handsets; MAD-73 million of fixed-line handsets; MAD-113 million of goods solds. Changes in current asset inventories are recorded as cost of goods sold. The impairment of inventories is recorded in Amortization, depreciation and provisions. December 31, 2006 December 31, 2005 Inventories Impairment (-) (221) (87) (72) Net total Note 10. Trade accounts receivable and other as at December 31, 2007, 2006 and 2005 (in MAD millions) December December December 31, , , 2005 Accounts receivable 8,062 5,901 6,167 Other receivables and accruals 1,835 1, Net total 9,897 6,928 7, Accounts receivable (in MAD millions) December December December 31, , , 2005 Trade receivables 14,200 8,415 8,498 Government receivables 1,998 1,473 1,363 Impairment of receivables (-) (8,136) (3,987) (3,694) Net total 8,062 5,901 6,167 Trade receivables include receivables collected from SFR and Casanet. The details of these transactions are set out in Note 30 on related parties Other receivables and accruals (in MAD millions) December December December 31, , , 2005 Trade payables, advances and downpayments Employee accounts Tax receivables 1, Other receivables Accruals Net total 1,835 1, Advances, downpayments, trade payables, receivables from employees, government receivables and other receivables are due in less than one year. Employee accounts comprise advances granted to employees, net of write-downs. As these loans are granted to many employees, under particular conditions; and do not represent material amounts, Maroc Telecom judged that it was not relevant to provide specific details (repayment date, early repayment options, conditions of the instruments, interest rates ). Tax receivables mainly comprise VAT items. Accruals essentially relate to prepaid expenses for transport operating leases and insurance policies. Maroc Telecom Registration Document 209

210 5 Note 11. Short term financial assets as at December 31, 2007, 2006 and 2005 (in MAD millions) December December December 31, , , 2005 Term deposit > 90 days Blocked cash (1) 104 Short term investments TOTAL In 2006 and 2005, short term financial assets comprised term deposits with a maturity exceeding three months and which did not meet the Group s definition of highly liquid investments. (1) In 2007, Maroc Telecom mandated Rotschild & Cie to set up of a liquidity contract with the Paris stock exchange and a share price stabilization contract on the Casablanca stock exchange. Note 12. Cash and cash equivalents as at December 31, 2007, 2006 and 2005 (in MAD millions) December December December 31, , , 2005 Cash 633 1,123 5,112 Cash equivalents 3,092 1,618 2,473 Cash and cash equivalents 3,725 2,741 7,585 Change in cash and cash equivalents (in MAD millions) December 31, 2007 December 31, 2006 December 31, 2005 Cash flow from operating activities 13,069 11,233 8,426 Cash flow used in investing activities (5,656) (6,435) (3,119) Cash flow used in financial activities (6,432) (9,615) (5,098) Foreign currency translation adjustments 3 (27) 11 Change in cash and cash equivalents 984 (4,844) 219 Cash and cash equivalent at beginning of period 2,741 7,585 7,366 Cash and cash equivalent at end of period 3,725 2,741 7, (4,844) 219 Cash flow from operating activities The increase in cash flow from operating activities in 2007 compared to 2006 was mainly related to an improvement in net income and capital working requirements. The increase in cash flow from operating activities in 2006 compared to 2005 was mainly related to an improvement in net income and a decrease in working capital requirements due to the increase in debt items. Cash flow used in investing activities The decrease of cash flow used in investing in 2007 compared to 2006 was mainly due to the acquisition of subsidiaries despite the increase of capital expenditure on tangible and intangible assets +37%. The increase in cash flow from investing activities in 2006 compared to 2005 arose mainly on one hand due to the investment plan for 2006 which was 23% higher than in 2005 and on the other hand due to the acquisition of a 51% stake in Onatel for MAD2,476 million. 210 Maroc Telecom 2007 Registration Document

211 5. FINANCIAL REPORT Consolidated financial statements Cash flow used in financing activities The decrease of cash flow used in financing activities in 2007 compared to 2006 was mainly due the payment of dividends related to Maroc Telecom s share capital reduction for MAD3,516 million. In addition, the ordinary dividend payout increased considerably in 2007 to MAD6,953 million compared with MAD6,142 million in The increase in cash flow used in financing activities in 2006 compared to 2005 was due primarily to the dividend payout related to Maroc Telecom s capital reduction for an amount of MAD3,516 million. In addition, the ordinary dividend payout increased considerably in 2006 to MAD6,142 million compared with MAD4,424 million in Note 13. Dividends 13.1 Dividends Year ended at (in MAD millions) December December December 31, , , 2005 Dividends received from equity affiliates - Medi-1-Sat Dividends paid by consolidated companies to minority shareholders (a) - Mauritel Onatel - Gabon Telecom - Other Dividends paid by Maroc Telecom to shareholders (b) - Moroccan government 2,078 2,080 1,499 - Vivendi 3,533 3,121 2,242 - Other 1, ,927 6,119 4,396 Total dividends payout (a) + (b) 6,953 6,142 4,424 The dividend payment period for Mauritel is long because of Mauritanian taxation Dividend proposed for the year 2008 At the meeting of February 21, 2008 convened to approve the financial statements for 2007 and appropriate net income, the Supervisory Board decided to propose to shareholders a dividend payment of MAD9.2 per share, or an aggregate dividend payment of MAD8,087 million. Maroc Telecom Registration Document 211

212 5 Note 14. Provisions as at December 31, 2007, 2006 and 2005 Provisions for liabilities mainly relate to disputes with employees and third parties. They are evaluated on a case-by-case basis. Provisions for contingent liabilities are analyzed as follows: (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Non-current provisions Provisions for life annuities Provisions for retirement gratuity Other provisions 3 10 Current provisions Provisions for voluntary redundancy plan Provisions for employees Provisions for disputes with third parties Other provisions 23 9 Total (in millions of Moroccan dirhams) 2006 Charges Utilized Releases Change in scope of consolidation Translation adjustment Reclassification Non-current provisions (10) (3) Provisions for life annuities 28 (1) 27 Provisions for retirement gratuity (3) 172 Other provisions (9) 11 3 Current provisions (223) 28 1 (101) Provisions for voluntary redundancy plan 304 (193) (100) 11 Provisions for employees (17) 1 (1) 23 Provisions for disputes with third parties (13) Other provisions 23 (23) 0 Total (233) (104) The provision for employee-related expenses corresponds to Maroc Telecom s commitment to pay life annuities to its current and former employees for work-related accidents, and other related expenses. The provision for retirement benefits mainly concerned Onatel and Gabon Telecom. The reversal of MAD293 million relating to restructuring provisions corresponds to the voluntary redundancy plan launched by Maroc Telecom in The other current provisions correspond mainly to litigation with third parties, the tax authorities and the telecommunications regulatory authority Maroc Telecom 2007 Registration Document

213 5. FINANCIAL REPORT Consolidated financial statements 2006 (in millions of Moroccan dirhams) 2005 Charges Utilized Change in scope of Translation consolidation adjustment Releases 2006 Non-current provisions 35 4 (2) 0 (1) 0 36 Provisions for life annuities Other provisions 10 1 (2) (1) 8 Current provisions (24) 0 (2) (9) 388 Provisions for retirement gratuity (2) 304 Provisions for employees 53 2 (15) (14) 26 Provisions for disputes with third parties (3) Other provisions 29 9 (3) (2) (10) 23 Total (26) 0 (2) (9) 424 The provision for employee-related expenses corresponds to Maroc Telecom s commitment to pay life annuities to its current and former employees for work-related accidents, and other related expenses. The allowance of MAD300 million of restructuring provisions corresponds to the voluntary redundancy plan launched by Maroc Telecom in The other current provisions correspond mainly to the Mauritel group, and relate to litigation with the tax authorities and the telecommunications regulatory authority (in millions of Moroccan dirhams) 2004 Charges Utilized Change in scope of consolidation Translation adjustment Releases 2005 Non-current provisions (1) 35 Provisions for life annuities 26 (1) 25 Other provisions Current provisions (201) 0 0 (19) 101 Provisions for retirement gratuity (161) 6 Provisions for employees 57 7 (1) (10) 54 Provisions for disputes with third parties 52 4 (37) (6) 13 Other provisions (2) 0 (3) 29 Total (201) 0 1 (20) 136 The provisions for litigation with third parties were reduced by MAD37 million, primarily due the the settlement of litigation with Continental. The provision for employees-related expenses corresponds to Maroc Telecom s commitment to pay life annuities to its current and former employees for work-related accidents, and other related expenses. The MAD161 million reversal of restructuring provisions corresponds to the voluntary plan launched by Maroc Telecom in A change to provisions of MAD6 million is recorded in the 2005 financial statements. Maroc Telecom Registration Document 213

214 5 Note 15. Borrowings and other financial liabilities as at December 31, 2007, 2006 and Net cash position (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Borrowings due less than one year Borrowings due more than one year 1, Facilities and overdrafts 828 Borrowings and other financial liabilities 2, Cash and cash equivalents 3,725 2,741 7,585 Blocked cash 118 Net cash position 1,451 2,686 7, Net cash by maturity The breakdown by maturity is based on the repayment terms and conditions of the borrowings (in millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings 331 1, ,565 Facilities and overdrafts Borrowings and other financial liabilities 1,159 1, ,392 Cash and cash equivalents 3,725 3,725 Blocked cash Net cash position 2,684 (1,125) (108) 1, (in millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings Facilities and overdrafts - Borrowings and other financial liabilities Cash and cash equivalents 2,741 2,741 Net cash position 2,697 (11) - 2, (in millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings Facilities and overdrafts - Borrowings and other financial liabilities Cash and cash equivalents 7,585 7,585 Net cash position 7,523 (57 ) - 7, Maroc Telecom 2007 Registration Document

215 5. FINANCIAL REPORT Consolidated financial statements (in millions of Moroccan dirhams) Interest rate Maturity Companies December 31, 2007 December 31, 2006 December 31, 2005 Mobile license borrowings (October 2000) 8.0% January 08 Mauritel ABCI 7.2 MEUR 09/96 03/07 7.4% March 07 Mauritel KFWF 18.7 MEUR 01/97 04/06 8.1% April 06 Mauritel Borrowing SBIF % June 11 Onatel CONS.BIB-ECOBANK-BICIA 7.7% July 12 Onatel Interior borrowing reassigned by government 7.5% December 08 Onatel Borrowing BOAD % July 11 Onatel Borrowing BEI 2.0% December 10 Onatel Borrowing AFD % October 09 Onatel Borrowing AFD % October 18 Onatel Borrowing SGBB % November 13 Onatel Borrowing BOA % December 14 Onatel Borrowing BOAD % July 10 Onatel Borrowing BEI 3.0% March 12 Gabon Telecom Borrowing BID 8.0% December 12 Gabon Telecom Borrowing AFD 5.0% October 09 Gabon Telecom BorrowingCOMMERZBANK Euribor+ 0.75% December 13 Gabon Telecom Alcatel phase I Euribor+ 3.5% November 09 Libertis Alcatel phase II Euribor+ 0.75% March 11 Libertis Borrowing Mobisud fr - - Mobisud France Leasing debts BGFI - - Gabon Telecom Borrowing Saoudien fund of development 2.5% - Mauritel Banks, overdrafts IAM 3.9% June 08 IAM Banks, overdrafts Onatel 8.5% - Onatel Banks, GT credit balance 0.0% - Gabon Telecom Other 8.0% Borrowings and other financial liabilities 2, Note 16. Accounts payable as at December 31, 2007, 2006 and 2005 (in millions MAD) December December December 31, , , 2005 Trade accounts payable 7,209 5,318 5,126 Employees related liabilities Tax liabilities and other payables 5,685 3,002 2,658 Accruals 1,734 1,403 1,041 Total 15,386 10,278 9,380 Trade accounts payable and related accounts include debt due from GAM, SFR, Vivendi Universal, Vivendi Telecom International, Canal+ Group and Casanet. Details of these transactions are presented in note 30 concerning related parties. Tax liabilities and other payables includes mainly tax and VAT payables. It also includes payables relating to obligations arising from Maroc Telecom s corporate mission. Accruals mainly includes prepaid income, corresponding to subscriptions invoiced in advance, SIM cards sold but not used (whether activated or not), handsets sold but not activated and provisions relating to loyalty programs of MAD1,734 million. Maroc Telecom Registration Document 215

216 5 Note 17. Revenues for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Mobile gross revenues 19,296 14,895 13,044 Sales of goods Sales of services 18,307 13,926 12,130 Fixed-line and Internet gross revenues 11,090 10,312 9,895 Sales of goods Sales of services 11,014 10,211 9,822 Total consolidated gross revenues 30,386 25,207 22,939 Elimination of inter-segment transactions (2,854) (2,592) (2,397) Total consolidated net revenues 27,532 22,615 20,542 Revenues from Maroc Telecom s incoming and outgoing international mobile traffic were recorded directly as Mobile business for 2007, whereas they were recognised as transit revenues via the Fixed business in The change in revenues between 2006 and 2007 has been recorded according to this new presentation. This intercompany adjustment did not have any impact on Maroc Telecom s aggregate net revenues (in millions of Moroccan dirhams) Gross revenues 30,386 25,207 22,939 Maroc Telecom 26,547 24,210 22,033 Mauritel 1, Onatel 1,517 Mobisud France 50 Mobisud Belgium 14 Gabon Telecom 1,104 Total consolidated gross revenues 30,386 25,207 22,939 Elimination of inter-segment transactions (2,854) (2,592 ) (2,397) Total consolidated net revenues 27,532 22,615 20,542 Revenues correspond to services provided to customers and subscribers, based on the calls made and the effective call rates. This item also includes reciprocal fixed/mobile services which are treated as intercompany transactions that are eliminated for consolidation purposes. 216 Maroc Telecom 2007 Registration Document

217 5. FINANCIAL REPORT Consolidated financial statements Note 18. Purchases for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Cost of handsets 1,509 1,466 1,771 Domestic and international interconnection charges 2,023 1,892 1,784 Other Total 4,215 3,693 3,879 The item Other mainly includes fuel and electricity, phone cards and other consumables. Note 19. Payroll and payroll-related costs for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Wages 2,314 1,709 1,819 Payroll taxes Wages and taxes 2,672 1,982 2,046 Share-based compensation Payroll costs 2,695 2,060 2,056 Average headcount 14,154 11,764 12,360 This item includes payroll costs for the period, excluding redundancy costs, which are recognized as other operating expenses. Note 20. Taxes, duties and fees for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Taxes and duties Fees Total Taxes, duties and fees include local taxes (patents, urban taxes), the tax for occupation of public land and other taxes (registration fees, motor tax). Fees include amounts paid to the telecommunications regulatory authority with respect to universal service and training. Maroc Telecom Registration Document 217

218 5 Note 21. Other operating income and expenses for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Communication Commissions 1, Other including : 1,917 1,504 1,495 Rental expenses Maintenance, repair and rental expenses Audit and advisory fees Postage and banking services Voluntary redundancy plan Other Total 3,562 2,686 2,610 The change in the line item Other under other operating expenses between 2007 and 2006 was mainly due to the consolidation of the new subsidiaries which contributed the following: MAD+146 million for Onatel ; MAD+153 million for Gabon Telecom ; MAD+22 million for Mobisud Belgium ; and to increases in Maroc Telecom s expenses relating to: MAD+58 million : maintenance and repairs; MAD+20 million : buildings rentals. Note 22. Net depreciation, impairment and provisions for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Depreciation and impairment of fixed assets 3,623 2,752 2,673 Impairment of accounts receivable Impairment of inventories Impairment of other receivables Provisions (274) 290 (184) Total 4,038 3,363 2,639 The increase in the impairment of accounts receivable was due to growth in the customer base and a more restrictive policy of provisioning for accounts receivable. The other provisions mainly comprise the provision relating to voluntary redundancy which is presented in detail in note Maroc Telecom 2007 Registration Document

219 5. FINANCIAL REPORT Consolidated financial statements Note 23. Income from equity affiliates for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Medi-1-Sat (34) (12) GAM (9) 14 Total (34) (21) 14 Medi-1-Sat has been accounted by using the equity method since January 1, GSM Al-Maghrib was sold in the first quarter of 2006 for MAD13 million, generating a loss of MAD12 million, which was partly offset by net income of MAD3 million in the first quarter of Note 24. Net finance costs and other financial income and expenses for 2007, 2006 and Financial costs (in millions of Moroccan dirhams) Income from cash and cash equivalents Interests expense on loans (131) (7) (13) Net finance costs The decrease in income from investments between 2007 and 2006 was due to the reduced interest rate on term deposits and sight deposits. Interest expense increased due to the consolidation of Onatel and Gabon Telecom Other financial income and expenses (in millions of Moroccan dirhams) Earnings from exchange translation 11 (3) (65) Other financial income (+) Other financial expenses (-) (1) Other financial income and expenses 31 1 (18) The line item Other financial income mainly comprises income from non-consolidated investments and proceeds from the sale of non-consolidated investments. Maroc Telecom Registration Document 219

220 5 Note 25. Tax expense for 2007, 2006 and 2005 (in millions of Moroccan dirhams) Income tax expense 4,062 3,249 2,871 Deferred tax Current tax 4,095 3,339 2,886 Consolidated effective tax rate * 33% 33% 33% * Tax expense/earnings before taxes (in millions of Moroccan dirhams) Earnings 8,137 6,833 5,921 Income tax expense 4,095 3,339 2,886 Earnings before tax 12,232 10,172 8,807 Moroccan statutory tax rate 35% 35% 35% Theoretical income tax expense ,082 Impact of changes in tax rates (28) 63 (27) Other differences (*) (158) (284) (170) Effective income tax expense 4,095 3,339 2,886 (*) The line item Other differences primarily includes the 50% tax exemption on revenues from international activities, which changed between 2007 and The deferred tax rate of Maroc Telecom was lowered to 30% in 2007 compared with 35% in The deferred tax rate of Onatel was 35% and Gabon Telecom is 35%. The deferred tax rate of Mobisud France is 33,33%. Note 26. Minority interests for 2007, 2006 and 2005 (in millions of Moroccan dirhams) Mauritel Mobisud fr (51) (8) Onatel 79 Gabon Telecom (99) Total minority interests Minority interests reflect the interests of shareholders other than Maroc Telecom in Mauritel, Mobisud France, Onatel and Gabon Telecom s earnings. Note 27. Earnings per share for 2007, 2006 and Earnings per share December 31, 2007 December 31, 2006 December 31, 2005 (in millions of Moroccan dirhams) Basic Diluted Basic Diluted Basic Diluted Earnings attributable to equity holders of the parent 8,033 8,033 6,739 6,739 5,809 5,809 Adjusted earnings attributable to equity holders of the parent 8,033 8,033 6,739 6,739 5,809 5,809 Number of shares (in millions) Earnings per share (in MAD) Change in the number of shares Weighted average number of shares outstanding over the period 879,095, ,095, ,095,340 Adjusted weighted average number of shares outstanding over the period 879,095, ,095, ,095,340 Potential dilutive effect of financial instruments outstanding Weighted average number of shares after potential dilutive effect 879,095, ,095, ,095, Maroc Telecom 2007 Registration Document

221 5. FINANCIAL REPORT Consolidated financial statements Note 28. Segment data for 2007, 2006 and Breakdown of balance sheet items by business segment December 31, 2007 (in millions of Moroccan dirhams) Fixedline (A) Mobile (B) ted (C) Telecom group Unalloca- Total Maroc Non-current assets 10,669 9,846 2,727 23,242 Current assets 7,285 3,530 3,692 14,507 Total assets 17,954 13,376 6,419 37,749 Total equity 18,634 18,634 Non-current liabilities ,233 1,436 Current liabilities 7,573 7,984 2,121 17,679 Total liabilities and equity 7,759 8,002 21,989 37,749 Acquisitions of tangible and intangible assets 2,188 3,279 5,467 December 31, 2006 (in millions of Moroccan dirhams) Fixed-line Unallocated (c) Telecom group Total Maroc (a) Mobile (B) Non-current assets 7,468 7,408 3,220 18,095 Current assets 4,525 2,823 2,780 10,129 Total assets 11,993 10,231 6,000 28,224 Total equity 16,853 16,853 Non-current liabilities Current liabilities 4,667 5, ,147 Total liabilities and equity 4,694 5,999 17,531 28,224 Acquisitions of tangible and intangible assets 1,533 2,445 3,978 December 31, 2005 (in millions of Moroccan dirhams) Fixed-line Unallocated (c) Telecom group Total Maroc (a) Mobile (B) Non-current assets 8,020 6, ,788 Current assets 5,064 2,397 7,629 15,090 Total assets 13,084 8,481 8,313 29,879 Total equity 19,724 19,724 Non-current liabilities Current liabilities 4,770 4, ,891 Total liabilities and equity 4,778 4,704 20,397 29,879 Acquisitions of tangible and intangible assets 1,439 1,771 3,210 (c) Includes mainly taxes, cash, financial assets, borrowings and net equity Breakdown of balance sheet by geographical area (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Morocco 23,280 21,008 20,192 Other 8,050 1,216 1,375 Total segment assets 31,330 22,224 21,567 Maroc Telecom Registration Document 221

222 Segment earnings by business Segment earnings by geographical area (in millions of Moroccan dirhams) Fixed-line Mobile Eliminations Total Revenues 11,090 19,296 (2,854) 27,532 Earnings from operations 2,676 9,556 12,232 Net depreciation and impairment 1,716 1,907 3,623 Voluntary redundancy plan (in millions of Moroccan dirhams) Fixed-line Mobile Eliminations Total Revenues 10,312 14,895 (2,592) 22,615 Earnings from operations 2,815 7,228 10,043 Net depreciation and impairment 1,324 1,428 2,752 Voluntary redundancy plan (in millions of Moroccan dirhams) Fixed-line Mobile Eliminations Total Revenues 9,895 13,044 (2,397) 20,542 Earnings from operations 2,863 5,815 8,678 Net depreciation and impairment 1,356 1,317 2,673 Voluntary redundancy plan (in millions of Moroccan dirhams) Morocco Other Eliminations Total Revenues 24,136 3,499 (103) 27,532 Earnings from operations 12, ,234 Net depreciation and impairment 2, ,623 Voluntary redundancy plan Excercie 2006 (in millions of Moroccan dirhams) Morocco Other Eliminations Total Revenues 21, (50) 22,615 Earnings from operations 9, ,043 Net depreciation and impairment 2, ,752 Voluntary redundancy plan (in millions of Moroccan dirhams) Morocco Other Eliminations Total Revenues 19, (31) 20,542 Earnings from operations 8, ,678 Net depreciation and impairment 2, ,674 Voluntary redundancy plan Maroc Telecom 2007 Registration Document

223 5. FINANCIAL REPORT Consolidated financial statements Note 29. Restructuring provisions for the years ended December 31, 2007, 2006 and 2005 (in millions of Moroccan dirhams) Maroc Telecom Other Total Maroc Telecom group Balance at January 1, Changes in scope of consolidation and adjustments of allocation of acquisitions price 0 Addition 6 6 Utilization 0 Release (161) (161) Balance at December 31, Changes in scope of consolidation and adjustments of allocation of acquisitions price 0 Addition Utilization (2) (2) Release 0 Balance at December 31, Changes in scope of consolidation and adjustments of allocation of acquisitions price 0 Addition 0 Utilization (193) (193) Release (100) (100) Balance at December 31, Maroc Telecom launched a voluntary redundancy plan in The initial provision totalled MAD161 million. In 2005, the total cost amounted to MAD474 million, MAD468 million of which was used for 912 people and MAD6 million in additional provisions recorded in the financial statements at December 31, In 2006, another voluntary redundancy plan was launched, and the related provisions were increased to MAD300 million. In 2007, MAD193 million of the provisioned amount were used and MAD100 million were reversed. Note 30. Transactions with related parties Compensation of executive officers, group management and directors in 2007, 2006 and 2005 For the year ended December 31, 2007, members of the Management Board received MAD23 million. For the year ended December 31, 2006, members of the Management Board received MAD22 million. For the year ended December 31, 2005, members of the Management Board received MAD20 million. (in millions of Moroccan dirhams) Short term benefits (1) Post-employement benefits (2) Other long-term benefits (3) Redundancy benefits (4) Share-based compensation (5) Total (1) Salaries, compensation, performance based compensation and incentive plans, social security contributions, holiday pay, Directors fees and non-monetary benefits (2) Pension and post-retirement benefits, life insurance and medical care (3) Long-service leave, sabbatical leave, long service benefits, jubilees, deferred compensation, peformance based compensation and incentive plans and bonuses (if payable 12 months or more after year end) (4) Redundancy pay (5) Stock options and other share-based compensation Maroc Telecom Registration Document 223

224 Equity affiliates Medi-1-Sat: Medi-1-Sat was created in Its business activity includes: satellite transmission and broadcasting of news, educational programs, sports and entertainment programs; broadcasting of advertising; all cable and satellite TV activity; all operations relating to satellite image broadcasting, notably setting up and broadcasting TV programs. During fiscal year 2006, Maroc Telecom entered into an agreement with Medi-1-Sat under the terms of which Maroc Telecom agreed to grant Medi-1-Sat an advance of 2,800,000. The amount was recorded under current account advances. In 2006, Maroc Telecom paid the first tranche of this advance for an amount of 1,200,000 (MAD13 million). In 2007, Maroc Telecom paid the second tranche of this advance for an amount of 1,600,000 (MAD18 million). The balance of the advances as at December 31, 2007, including accrued interest due amounted to MAD33 million. The main transactions with Medi-1-Sat amounts owed by Medi-1-Sat or Maroc Telecom are detailed as follows: (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Revenues 1 Expenses - Receivables Payables - GSM Al-Maghrib: During 2002 and 2003, Itissalat Al-Maghrib concluded agreements with GSM Al-Maghrib (GAM) relating to the marketing IAM s mobile, fixed, internet and multimedia services. During 2004, several amendments were made to the framework agreement in particular with regard to the fees commissions paid by Maroc Telecom to GSM Al-Maghrib. During 2006, 2005 and 2004, Maroc Telecom s main related party transactions were conducted with GSM Al- Maghrib (GAM), which has been equity-accounted since July 1, In March 2006, Maroc Telecom sold its stake in GSM Al-Maghrib. The main transactions with GAM and amounts owned by the latter or by Maroc Telecom are detailed as follows: (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Revenues 1,283 Expenses 21 Receivables 74 Payables Other related parties Casanet During 2003, Maroc Telecom concluded several agreements with Casanet relating to: the maintenance of IAM s Menara internet portal; the provision of development services and hosting of IAM s mobile portal; the hosting of IAM s El Manzil website; the maintenance of new WAP applications on the Menara portal and the production of content relating to these applications; the marketing of internet access over leased lines. The amounts invoiced in 2007 by Casanet to Maroc Telecom according to agreements noted below, totalled MAD48 million. The balance of payables amounted to MAD12 million as at December 31, (in millions of Moroccan dirhams) December 31, 2007 December 31, 2006 December 31, 2005 Revenues Expenses Receivables Payables Maroc Telecom 2007 Registration Document

225 5. FINANCIAL REPORT Consolidated financial statements Vivendi SFR Vivendi Telecom International Canal+ group In 2001, Maroc Telecom entered into a management services agreement with Vivendi Telecom International (VTI) for provision of technical assistance in the following fields: strategy and organization; development; sales and marketing; finance; purchasing; human resources; information systems; regulation and interconnection; infrastructure and networks. In addition, with a view to further strategic cooperation, Maroc Telecom entered into transactions with SFR (the leading French private mobile operator), Canal + group and the Vivendi Universal group. These transactions are summarized as follows: 2007 (in millions of Moroccan dirhams) Vivendi SFR Canal+ group VTI Revenues 84 Expenses Receivables 128 Payables (in millions of Moroccan dirhams) Vivendi SFR Canal+ group VTI Revenues 114 Expenses Receivables 31 Payables (in millions of Moroccan dirhams) Vivendi SFR Canal+ group VTI Revenues 413 Expenses Receivables 35 Payables Media Overseas On February 24, 2006, the Maroc Telecom s Supervisory Board approved the agreement concluded during the fiscal year with Media Overseas, Canal+ group s subsidiary, which has as mission to launch TV ADSL services. Operations under this agreement have been entered into with Multitiv Afrique, Media Overseas s subsidiary. For fiscal year 2007, under this agreement, Maroc Telecom recorded an expense of MAD4,532, for this agreement and an outstanding payable as at December 31, 2007 of MAD24,855. Maroc Telecom Registration Document 225

226 5 Note 31. Contractual obligations and contingent assets and liabilities Contractual obligations and commercial commitments recorded in the balance sheet (in millions of Moroccan dirhams) Total Due less than Due more than 5 Due 1-5 years one year years Long-term debts 1, , Capital lease obligations - Operating leases* Irrevocable purchase obligations - Other long-term commitments - Total 1, , * Long-term vehicle leases (excluding tax) Other commitments given and received relating to ordinary operations Commitments given Commitments given comprise: In 2007 Guarantees on equipment sale contracts. As at December 31, 2007, these commitments amounted to MAD67.1 million, compared with MAD205 million at year-end 2006, and they were mostly current. Supplier orders, which amounted to MAD1,753 million at year-end 2007, compared with MAD910 million at December 31,2006, and were mostly current. These orders mainly relate to investments in property, plant and equipment. Committments relating to operating leases with terms of between 3 and 10 years totalled MAD10.8 million at December 31, The amount recorded corresponds to one month s expense reflecting the termination clause, which provides for a one-month notice period. Long-term contracts for the lease of space segments for MAD254.2 million. Sindibad investment fund amounting to MAD2 million in 2007 compared with MAD2 million in CMC group has agreed to retrocede to Socipam, a civil company comprising the employees of the Mauritanian subsidiaries, its 0.527% interest in Mauritel SA, which it bought in February The terms and conditions governing this commitment are the following: possible buyback for 5 years by Socipam of 5,592 shares sold to CMC for MAD7.8 million; by tranche of 100 shares; at a unit price which will increase every year from Mauritel s commitment to the government to invest MAD160 million in the third generation license, of which MAD32 million within one year and the remaining amount subsequently. Gabon Telecom contribution to health insurance: 10% of annual revenue from mobile business (excluding tax and less commissions to retailers) from January 1, Commitment by Maroc Telecom to increase the quasi-equity of Casanet by MAD6.1 million. Maroc Telecom is exempt from customs duty for all capital goods imported pursuant to an investment agreement entered with the public authorities of the Kingdom of Morocco. Under the terms of the agreement Maroc Telecom is required to carry out a three year capital expenditure program over three years from 2006 to 2009 for MAD7.4 billion and to create 150 new jobs. As at December 31, 2007, outstanding expenditure required under the program amounted to approximately MAD391 million. If Maroc Telecom does not make these investments, it will have to pay the customs duty outstanding on all the goods imported, plus penalties for late payment. 226 Maroc Telecom 2007 Registration Document

227 5. FINANCIAL REPORT Consolidated financial statements In 2006 Guarantees on equipment sale contracts. At year-end 2006, these commitments amounted to MAD205 million, compared with MAD236 million as at December 31, 2005, and were mostly current. A guarantee given relating to the participation of IAM in the bid for Gabon Telecom s privatization for MAD11 million. Supplier orders, which amounted to MAD910 million at December 31, 2006, compared with MAD613 million at year-end 2005, and were mostly current. These orders mainly relate to investments in property, plant and equipment. Operating leases with terms of between 3 and 10 years for MAD10 million at December 31, The amount recorded corresponds to one month s expense reflecting the termination clause, which includes a one-month notice period. Long-term contracts for the lease of space segments for MAD117 million. Sindibad investment fund for MAD2 million in 2006 compared with MAD2 million in Stake acquired in Medi-1-Sat for MAD42 million. CMC group has agreed to retrocede to Socipam, a civil company comprising the employees of the Mauritanian subsidiaries, its 0.527% interest in Mauritel SA bought in February The terms and conditions governing this commitment are the following: possible buyback for 5 years, required by Socipam, of 5,592 shares sold to CMC for MAD7.8 million; by tranche of 100 shares; at a unit price which will increase every year from The agreement concluded between Mobisud and SFR whereby Mobisud is committed to paying an advance of MAD84 million in January 2007 for its interest in the Enhanced Service Provider (ESP). (SFR provides transmission and other services to Mobisud over its GSM and UMTS networks throughout mainland France). SFR will repay MAD72 million of the advance when Mobisud signs up 75,000 customers. Mauritel s commitment to the government to invest MAD160 million in the third generation license, MAD32 million of which within one year and the remaining amount subsequently. Maroc Telecom is exempt from customs duty on all capital goods imported, pursuant to an investment agreement with the public authorities of the Kingdom of Morocco. Under the terms of the agreement Maroc Telecom is required to carry out a three year capital expenditure program from 2006 to 2009 for MAD7.4 billion and to create 150 new jobs. As at December 31, 2006,outstanding expenditure required under the program amounted to approximately MAD4.6 billion. If Maroc Telecom does not make these investments, it will have to pay the customs duty outstanding on all the goods imported, plus penalties for late payment. In 2005 Guarantees on equipment sale contracts. At the end of 2005, these commitments amounted to MAD236 million compared to MAD226 million in 2004, and were mostly current. Suppliers orders, which amounted to MAD613 million at the end of 2005, compared with MAD903 million at the end of 2004, and were mostly current. These orders mainly relate to investments in property, plants and equipment. Operating leases with terms of between 3 and 10 years amounted to MAD9 million at the end of December The amount recorded corresponds to one month s expense, given the termination clause, which includes a one-month notice period. Sindibad investment fund amounted to MAD2 million in 2005 compared with MAD4 million in Stake acquired in Medi-1-Sat for MAD65 million. Maroc Telecom is exempt from customs duty on all capital goods imported, due to an investment agreement with the public authorities of the Kingdom of Morocco, whereby Maroc Telecom agrees to carry out a capital expenditure program over three years from 2003 to 2005 for MAD7 billion and to create 300 new jobs. At December 31, 2005, this capital expenditure program had been completed. Maroc Telecom Registration Document 227

228 5 Commitments received Commitments received include: In 2007 Guarantees for MAD1,455 million at December 31, 2007 compared with MAD1,152 million at year-end 2006 In 2007, Maroc Telecom concluded a mobile network equipment swap agreement with Nokia Siemens Network whereby the latter agreed to purchase the Maroc Telcom s used equipment (HLR, MSC, TMSC and GPRS) for MAD615.5 million. In 2007, Maroc Telecom signed two agreements to sell land for an aggregate MAD39 million. In 2006 Guarantees of MAD1,152 million as at December 31, 2006, compared with MAD705 million for year-end Moroccan government guarantee on Maroc Telecom loans for MAD1 million as at December 31,2006 compared to MAD11 million at year-end This guarantee matures at the same time as the loans. The agreement concluded between Mobisud and SFR by which Mobisud is committed to pay an advance of MAD84 million in January 2007 for its interest in the Enhanced Service Provider (ESP). SFR provides transmission and other services to Mobisud over its GSM and UMTS networks throughout mainland France. SFR will repay MAD72 million when Mobisud signs up 75,000 customers. In July 2006, Maroc Telecom was awarded a third generation mobile telecommunications license by the regulator (ANRT) for 25 years (from July 2006 to July 2031) for a fixed fee of MAD300 million (approximately 27 million) paid in the fourth quarter of In July 2006, Mauritel SA was awarded a third generation license by the regulator (ART) for 15 years (from July 2006 to July 2021) for MAD10 million. Maroc Telecom is exempt from customs duty on all capital goods imported, pursuant to an investment agreement with the public authorities of the Kingdom of Morocco. Under the terms of the agreement Maroc Telecom is required to carry out a three year capital expenditure program from 2006 to 2009 for MAD7.4 billion and to create 150 new jobs. As at December 31, 2006, outstanding expenditure required under the agreement amounted to approximately MAD4.6 billion. If Maroc Telecom does not carry out these investments, it will have to pay the customs duty outstanding on all the goods imported, plus penalties for late payment. In 2005 Guarantees of MAD705 million in 2005, compared with MAD598 million in Moroccan government guarantee on group loans for MAD11 million at the end of 2005, compared with MAD694 million at the end of This guarantee matures at the same time as the loans. Maroc Telecom is exempt from customs duty for all capital goods imported, due to an investment agreement with the public authorities of the Kingdom of Morocco, whereby Maroc Telecom agrees to carry out a capital expenditure program over three years from 2003 to 2005 for MAD7 billion and to create 300 new jobs. At December 31, 2005, this capital expenditure program had been completed Collateral and pledges In 2007 Pledges totalling MAD55 million as at December 31, 2007 compared with MAD66 million as at December 31,2006. In 2006 In the event of the disposal, within a two year period of over 65% of GSM Al-Maghrib s share capital for a price above MAD293 per share, Air Time shall repay the capital gain exceeding 65% to Maroc Telecom. Pledge totalling MAD66 million as at December 31, 2006 compared with MAD80 million at December 31, In the event of the disposal, within a two year period of over 65% of GSM Al-Maghrib s share capital for a price above MAD293 per share, AirTime shall repay the capital gain exceeding 65% to Maroc Telecom. Committment of Air Time to pay penalities on GSM Al-Maghrib s receivables for a total MAD22 million within one year. In 2005 Collateral and pledges include mortgages amounting to MAD80 million at December 31, 2005 compared with MAD96 million at December 31, Maroc Telecom 2007 Registration Document

229 5. FINANCIAL REPORT Consolidated financial statements Note 32. Risk management Credit risk: Maroc Telecom minimizes its credit risk by only engaging in credit operations with commercial banks and financial institutions which have high credit ratings and by spreading the transactions among the selected institutions. Maroc Telecom s receivables do not have high credit risk, due to their high dilution rate. Currency risk: Maroc Telecom is exposed to variations in exchange rates as the breakdown of its receipts in foreign currencies differs from the breakdown of its disbursements in foreign currencies. Receipts and disbursements in foreign currencies represent a significant portion of company s activity. Maroc Telecom s foreign currency receipts relate to revenues from international operations and its foreign currency disbursements relate to the servicing of debt, payments to suppliers (in particular concerning investments and purchases of handsets) and payment for interconnection with foreign operators. These disbursements are mainly denominated in euros. The portion of foreign currency disbursements denominated in euros, excluding subsidiaries, was 59% at December 31, 2007, of an aggregate MAD5,253 million. These foreign currency disbursements exceed the amount of foreign currency receipts (MAD2,925 million in 2007). In addition, Maroc Telecom group had debt totalling MAD2,392 million as at December 31,2007, denominated mainly in FCFA and Moroccan dirham: (in millions of Moroccan dirhams ) Euro Dollar US Moroccan dirhams 779 Other (mainly FCFA) 1, Current debt 2, Accrued interest Total financial debts 2, Maroc Telecom cannot net its foreign currency disbursements and receipts as Moroccan law only allows it to retain 50% of its telecoms receipts in a foreign currency account ; the 50% remaining are converted into Moroccan dirham. Maroc Telecom s earnings may be affected by fluctuations in exchange rates, and in particular by fluctuations in the Moroccan dirham against the US Dollar or the euro. In 2007, the euro gained 2% in relation to the Moroccan dirham (from MAD11,1410 at December 31, 2006 to MAD11,3590 for 1 at December 31, 2007). Over the same period, the US dollar fell 9.6% from MAD8,4566 in 2006 to MAD7,7132 for USD1 in The consolidation of the new Africain subsidiaries in 2007 (Onatel and Gabon Telecom), whose functional currency is the CFA Franc, increased the group s exposure to currency risk, in particular with respect to the variations of euro against the Moroccan dirham. However, a 1% depreciation in the Moroccan dirham against the euro, would have the following limited impacts on the basis of the group s financial statements for fiscal year 2007: Revenues = Earnings from operations = Net income, group share = MAD+54 million MAD+14 million MAD+9 million Maroc Telecom Registration Document 229

230 5 The following table sets out the group s foreign currency positions as at December 31, (in millions of Moroccan Total foreign Total Maroc Telecom FCFA Euro USD Other * MAD dirhams) currency group Subsidiaries assets 7,148,2 288,9 1,788,9 9,226 9,226 MarocTelecom s assets 1, ,1 2,469 26,054 28,523 Total Assets 7,148 2, ,789 11,695 26,054 37,749 Subsidiaries liabilities 7, ,789 9,226 9,226 Maroc Telecom s liabilities 1, ,577 26,946 28,523 Total liabilities and equity (7,148) (1,410) (455) (1,789) (10,803) (26,946) (37,749) Net position * mainly Ouguiyas The group does not use foreign currency hedging instruments. Maroc Telecom s assets denominated in foreign currencies are mainly receivables from foreign operators. Liabilities denominated in foreign currencies are mainly payables to foreign operators and suppliers At Maroc Telecom would be affected by a 1% increase of the euro and US dollar against the Moroccan dirham at December 31, 2007 as follows: MAD+24 million on assets denominated in foreign currencies; MAD-16 million on liabilities denominated in foreign currencies; MAD+8 million on net liabilities; MAD-10 million on commitments; and MAD-2 million on total net liabilities. Conversely, a 1% decrease in the euro and US dollar against the Moroccan dirham would have an impact at December 31, 2007 of: MAD-24 million on assets denominated in foreign currencies; MAD+16 million on liabilities denominated in foreign currencies; MAD-8 million on net liabilities; MAD+10 million on commitments; and MAD+2 million on global net liabilities Liquidity risk: Maroc Telecom believes that its cash flow from operations, net cash and funds available through credit lines will be sufficient to cover the expenses and investments necessary for its operations, to service its debt, to pay dividends and to complete external growth operations underway as at December 31, Interest rate risk: The majority of loans taken out by Maroc Telecom are fixed-rate loans. As the portion of floating rate interest loans is relatively low, Maroc Telecom group is not highly exposed to favorable or unfavorable changes in interest rates. 230 Maroc Telecom 2007 Registration Document

231 5. FINANCIAL REPORT Consolidated financial statements Note 33. Post-balance sheet events NONE Maroc Telecom Registration Document 231

232 5 5.5 INDIVIDUAL FINANCIAL STATEMENTS Table of contents Report of the statutory auditors on the financial statements for the year ended December 31,2007 Balance sheet assets Balance sheet shareholders equity and liabilities Income statement Statement of operating data Statement of cash flows Additional disclosures A1 : Additional disclosures A2 : Exceptions A3 : Changes in methods B1 : Capitalized costs B2 : Non-financial assets B2 Cont : Depreciation schedule B3 : Gains or losses on disposals or withdrawls of fixed assets B4 : Equity investments B5 : Provisions B6 : Receivables B7 : Liabilities B8 : Guarantees given or received B9 : Financial commitments received or given excluding leasing transactions B10 : Assets leased B11 : Income statement items B12: Reconciliation of net income and tax income B13 : Determination of ordinary income after tax B14 : Value added tax C1 : Shareholding structure C2 : Appropriation of year-end income C3 : Income and other significant characteristics of company over the last three years C4 : Transactions in foreign currencies during the period C5 : Date of financial statements and subsequent events Special report of the Statutory Auditors 232 Maroc Telecom 2007 Registration Document

233 5. FINANCIAL REPORT Individual financial statements Report of the statutory auditors on the financial statements for the year ended December 31, 2007 In accordance with the terms of our appointment by your AGM, we have audited the accompanying financial statements of Itissalat Al-Maghrib (IAM) for the fiscal year ended December 31, 2007, which include the balance sheet, the income statement, the management accounts, the cash flow statement and the additional disclosures for the year. These financial statements, which show capital and reserves of MAD 16,793,541 thousand, including a net profit of MAD8,091,922 thousand, are the responsibility of the Management of the company. It is our responsibility, based on our audit, to express an opinion on these financial statements. We conducted our audit in accordance with the auditing standards generally accepted in Morocco. Those standards require that we plan and perform such tests and procedures so as to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes an examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the accounting policies used and significant estimates made by Management in the preparation of the financial statements, and an evaluation of the overall adequacy of the presentation of these statements. We believe that our audit provides a reasonable basis for the opinion expressed below. Opinion on the financial statements In our opinion, the financial statements referred to in the first paragraph above give a true and fair view of Itissalat Al-Maghrib s assets, liabilities and financial position as of December 31, 2007, as well as of its results and cash flows for the year then ended, in accordance with the accounting principles generally accepted in Morocco. Specific controls and information We also performed the specific verifications required by law. In particular, we ensured that the information contained in the Management Board s Report to the Supervisory Board was consistent with the Company s financial statements. We draw your attention to the fact that during 2007, Itissalat Al-Maghrib (IAM) carried out: the acquisition of 51% of Gabon Telecom, Gabon's incumbent telecommunications operator for a total amount of MAD323.9 million; the capital increase of Maroc Telecom Belgium SA, a Belgium-based company wholly-owned by Maroc Telecom, for an amount of MAD35.9 million increasing its share capital by MAD16.7 million to MAD52.6 million; the participation in Medi-1-Sat's share capital increase from MAD80 million to MAD166.7 million; IAM's stake in Medi-1-Sat thus rose from 27% at December 31, 2006, to 28% at December 31, 2007, i.e. from MAD21.6 million to MAD46.7 million. February 22, 2008 The Statutory Auditors KPMG Fouad LAHGAZI Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner Maroc Telecom Registration Document 233

234 5 Balance sheet ASSETS Gross Amortization, depreciation Net (in thousands of Moroccan dirhams) and provisions CAPITALIZED COSTS (A) Start up costs Deferred costs Bond redemption premiums INTANGIBLE ASSETS (B) 5,674,606 2,665,840 3,008,766 2,169,999 1,147,997. Research and development costs Patents, tardemarks, rights and similar rights 5,100,082 2,645,836 2,454,246 1,700,482 1,035,081. Goodwill 24,264 20,003 4,260 2,198 4,628. Other intangible assets 550, , , ,288 PROPERTY, PLANT AND EQUIPMENT (C) 34,471,308 22,196,841 12,274,467 11,755,431 11,841,635. Land 969, , , ,277. Buildings 4,085,423 2,717,323 1,368,100 1,502,464 1,460,823. Technical plant, machinery and equipment 24,360,427 17,346,819 7,013,607 6,302,103 5,805,749. Vehicles 75,318 71,040 4,279 4,393 7,207. Office equipment, furniture and fittings 2,626,216 1,899, , , ,019. Other property, plant and equipment 11, ,048 11,048 11,048. Work in progress 2,343, ,854 2,181,492 2,282,181 2,922,512 FINANCIAL ASSETS (D) 3,564,199 53,588 3,510,610 3,071, ,370. Long term loans 149, ,052 83,399 80,101. Other financial receivables 1, ,966 1,989 1,967. Equity investments 3,413,180 53,588 3,359,592 2,986, ,303. Other investments and securities Unrealized foreign exchange losses (E) ,802. Decrease in long term receivables ,462. Increase in long term debt TOTAL I (A+B+C+D+E) 43,710,112 24,916,269 18,793,843 16,997,225 13,511,804 INVENTORIES (F) 580, , , , ,152. Merchandise 467, , , , ,640. Raw materials and supplies 113,022 26,066 86,955 68,476 69,512. Work in progress Intermediary and residual goods Finished goods CURRENT RECEIVABLES (G) 12,333,276 5,091,263 7,242,014 6,630,232 6,796,268. Trade payables, advances and downpayments 130, , ,288 49,676. Accounts receivable and related accounts 11,507,723 5,047,745 6,459,978 5,695,162 5,920,324. Employees 14,424 4,120 10,304 21,087 9,514. Tax receivable 529, , , ,004. Shareholders current accounts Other receivables 68,546 39,397 29,149 25,580 34,422. Accruals 81, , , ,329 MARKETABLE SECURITIES (H) 2,810, ,810,321 1,400,000 5,041,341 UNREALIZED FOREIGN EXCHANGE LOSSES (I) (Current items) 88, ,978 63,166 97,936 TOTAL II (F+G+H+I) 15,812,959 5,289,743 10,523,216 8,427,844 12,199,697 CASH AND CASH EQUIVALENTS 120, , ,254 2,232,865. Checks 47, ,600 9, ,599. Bank deposits 67, , ,851 1,996,828. Petty cash 5, ,466 5,028 10,439 TOTAL III 120, , ,254 2,232,865 GRAND TOTAL I+II+III 59,643,602 30,206,012 29,437,589 26,279,322 27,944, Maroc Telecom 2007 Registration Document

235 5. FINANCIAL REPORT Individual financial statements SHAREHOLDERS EQUITY AND LIABILITIES Net (in thousands of Moroccan dirhams) SHAREHOLDERS EQUITY (A) 16,793,541 15,628,890 18,334,674. Share capital (1) 5,274,572 5,274,572 8,790,953. Less : capital subscribed and not paid-in Paid-in capital Merger and premium Revaluation difference Statutory reserve 879, , , 095. Other reserves 2,546,122 2,546,122 2,792,726. Retained earnings (2) 1, Unllocated income (2) Net income of the year (2) 8,091,922 6,929,101 5,871,900 QUASI EQUITY (B) Investment subsidies Regulated provisions LONG TERM DEBT (C) 1,451 2,029 11,371. Debenture bonds Other long term debt 1,451 2,029 11,371 PROVISIONS (D) 27,407 28,400 27,485. Provisions for contingencies ,802. Provisions for losses 27,407 28,355 24,682 UNREALIZED FOREIGN EXCHANGE GAINS (E) Increase in long term receivables Decrease in long term debt TOTAL I (A+B+C+D+E) 16,822,399 15,659,319 18,373,598 CURRENT LIABILITIES (F) 11,328,952 9,890,079 8,955,490. Accounts payable and related accounts 5,382,077 5,025,705 4,891,925. Trade receivables, advances and downpayments 380, ,829 89,697. Payroll costs 572, , ,067. Social security contribution 76,771 78,525 53,920. Tax payable 3,129,379 2,506,014 2,324,953. Shareholders current accounts Other payables 424, , ,564. Accruals 1,363,345 1,095, ,363 OTHER PROVISIONS FOR CONTINGENCIES AND LOSSES (G) 433, , ,207 Unrealized foreign exchange gains (current items) (H) 82,788 40, ,072 Total II (F+G+H) 11,845,717 10,620,003 9,570,768 BANK-OVERDRAFTS 769, Discounted bills Treasury loans Bank loans and overdrafts 769, Total III 769, GRAND TOTAL I+II+III 29,437,589 26,279,322 27,944,366 Maroc Telecom Registration Document 235

236 5 Income statement (excluding VAT) (in thousands of Moroccan dirhams) I- OPERATING INCOME 24,198,296 21,733,218 19,882,077 Sales of goods 977, , ,215 Sales of manufactured goods and services rendered 22,684,747 20,407,427 18,355,382 Operating revenues 23,662,511 21,236,468 19,309,597 Change in inventories Self-constructed assets 0 0 9,710 Operating subsidies Other operating income 55,474 19,751 24,138 Operating write-backs, expense transfers 480, , ,631 TOTAL I 24,198,296 21,733,218 19,882,077 II OPERATING EXPENSES 12,293,097 11,564,577 11,108,858 Cost of goods sold 1,616,308 1,343,139 1,817,714 Raw materials and supplies 2,223,534 2,299,185 2,063,516 Other external expenses 2,550,059 2,559,357 2,245,697 Taxes (except corporate income tax) 265, , ,785 Payroll costs 2,133,965 1,958,220 1,946,026 Other operating expenses 2,000 4,000 0 Operating allowances for amortization 2,591,979 2,483,137 2,336,352 Operating allowances for provisions 909, , ,768 TOTAL II 12,293,097 11,564,577 11,108,858 III OPERATING INCOME I-II 11,905,199 10,168,641 8,773,218 IV- FINANCIAL INCOME 299, , ,659 Income from equity investments 14,008 23,667 9,553 Foreign exchange gains 81,188 63, ,681 Interest and other financial income 105, , ,852 Financial write-backs, expense transfers 98, , ,573 TOTAL IV 299, , ,659 V- FINANCIAL EXPENSES 217, , ,218 Interest on loans 44, ,293 Foreign exchange losses 37,365 66,905 75,780 Other financial expenses Financial allowances 135,733 63, ,144 TOTAL V 217, , ,218 VI FINANCIAL INCOME IV - V 81, , ,441 VII ORDINARY INCOME III + VI 11,986,645 10,364,160 8,967,660 VIII- EXTRAORDINARY INCOME 640, , ,500 Proceeds from disposal of fixed assets 64,829 20,244 61,849 Subsidies received Write-backs of investment subsidies Other extraordinary income 68,558 74,258 94,362 Extraordinary write-backs, expense transfers 507, , ,289 TOTAL VIII 640, , ,500 IX- EXTRAORDINARY EXPENSES 610, ,245 1,121,089 Net book value of disposed assets 20,488 12,606 43,577 Subsidies Other extraordinary expenses 240,497 45, ,061 Regulated provisions Extraordinary allowance for depreciation and provisions 349, , ,451 TOTAL IX 610, ,245 1,121,089 X EXTRAORDINARY INCOME VIII - IX 30,473 (327,933) (314,588) XI INCOME BEFORE TAX VII + X 12,017,117 10,036,227 8,653,071 XII CORPORATE INCOME TAX 3,925,195 3,107,127 2,781,171 XIII- NET INCOME XI - XII 8,091,922 6,929,101 5,871,900 XIV- TOTAL INCOME ( I+IV+VIII) 25,138,177 22,525,531 21,063,236 XV- TOTAL EXPENSES ( II+V+IX+XII) 17,046,255 15,596,431 15,191,336 XVI- NET INCOME (total income-total expenses) 8,091,922 6,929,101 5,871, Maroc Telecom 2007 Registration Document

237 5. FINANCIAL REPORT Individual financial statements Statement of operating data Operating statements (in thousands of Moroccan dirhams) Sales of goods 977, , , Cost of goods sold 1,616,308 1,343,139 1,817,714 I = GROSS MARGIN ON SALES (638,544) (514,097) (863,498) II + PRODUCTION FOR THE YEAR : (3+4+5) 22,684,747 20,407,427 18,365,092 3 Sales of manufactured goods and services rendered 22,684,747 20,407,427 18,355,382 4 Change in inventories Self-constructed assets 0 0 9,710 III - COST OF CURRENT YEAR PRODUCTION 4,773,593 4,858,542 4,309,214 6 Raw materials and supplies 2,223,534 2,299,185 2,063,516 7 Other external expenses 2,550,059 2,559,357 2,245,697 IV = ADDED VALUE (I+II-III) 17,272,610 15,034,787 13,192, Operating subsidies Taxes 265, , , Payroll costs 2,133,965 1,958,220 1,946,026 V = GROSS OPERATING SURPLUS 14,873,045 12,772,910 10,978,569 = NET LOSS FROM OPERATIONS Other operating income 55,474 19,751 24, Other operating expenses 2,000 4, Operating write-backs, expense transfers 480, , , Operating allowances 3,501,630 3,097,019 2,768,120 VI = OPERATING INCOME (+ ou -) 11,905,199 10,168,641 8,773,218 VII + / - FINANCIAL INCOME 81, , ,441 VIII = ORDINARY INCOME (+ ou -) 11,986,645 10,364,160 8,967,660 IX + / - EXTRAORDINARY INCOME 30,473 (327,933) (314,588) 15 - CORPORATE INCOME TAX 3,925,195 3,107,127 2,781,171 X = NET INCOME (+ ou -) 8,091,922 6,929,101 5,871,900 CASH EARNINGS (in thousands of Moroccan dirhams) Net income + Profit 8,091,922 6,929,101 5,871,900 - Loss Operating allowances (1) 2,591,979 2,486,809 2,336, Financial allowances (1) 46, , Extraordinary allowances (1) 349, , , Operating write-backs (2) Financial write-backs (2) 35,046 2,802 21, Extraordinary write-backs (2), (3) 214, , , Proceeds on disposal of fixed assets 64,829 20,244 61, Net book value of disposed assets 20,488 12,606 43,577 I CASH EARNINGS 10,784,721 9,471,463 8,269, Dividends 6,927,271 6,118,504 4,395,477 II NET CASH EARNINGS 3,857,450 3,352,959 3,873,604 (1) Excluding allowances related to current assets and liabilities and cash (2) Excluding write-backs relating to current assets and liabilities and cash (3) Including write-backs of investments subsidies Maroc Telecom Registration Document 237

238 5 Statement of cash flows Selected balance sheet data Year Year Change (a-b) LINE ITEMS Uses Sources (in thousands of Moroccan dirhams) (a) (b) (c) (d) 1 Equity and long term liabilities 16,822,399 15,659,319 1,163,080 2 Less long term assets 18,793,843 16,997, Working capital (1-2) (A) (1,971,444) (1,337,906) Current assets 7,823,216 7,027, Less current liabilities 11,845,717 10,620,003 1,225,714 6 Working capital requirement (4-5) (B) (4,022,500) (3,592,160) 430,341 7 Net cash (A-B) 2,051,056 2,254, ,198 Uses and sources I - LONG TERM FINANCING SOURCES (in thousands of Moroccan dirhams) Uses Sources Uses Sources Uses Sources NET CASH EARNINGS (A) 3,857,450 3,352,959 3,873,604 Cash earnings 10,784,721 9,471,463 8,269,080 Dividends 6,927,271 6,118,504 4,395,477 DISPOSALS AND REDUCTIONS OF FIXED ASSETS (B) 157, ,172 82,238 Reduction of intangible assets 0 7,424 0 Reduction of property, plant and equipment 78, ,138 4,330 Disposal of property, plant and equipment 64,829 7,149 1,834 Disposal of financial assets 0 13,095 60,016 Write-backs of long term receivables 14,398 10,367 16,059 INCREASE IN SHAREHOLDERS EQUITY AND QUASI EQUITY (C) Increase in equity, capital contribution Investments subsidies INCREASE IN LONG TERM DEBT (D) 0 1,111 0 (Net of redemption premiums) TOTAL (I) LONG TERM RESOURCES (A+B+C+D) 4,014,888 3,646,242 3,955,842 II - LONG TERM USES FOR THE YEAR ADDITIONS & INCREASE IN FIXED ASSETS (E) 4,647,895 6,319,402 3,465,343 Acquisitions of intangible assets 918,218 1,071,497 83,304 Acquisitions of property, plant and equipment 3,264,716 2,674,391 2,902,907 Acquisitions of financial assets 384,933 2,559,827 12,971 Increase in long term receivables 80,028 13,687 0 Increase in property, plant and equipment (*) ,161 REIMBURSEMENT OF EQUITY (F) 0 3,516,381 0 REIMBURSEMENT OF LONG TERM DEBT (G) , ,502 CAPITALIZED COSTS (H) TOTAL (II) STABLES USES(E+F+G+H) 4,648,427 9,845,941 4,266,845 III - CHANGE IN WORKING CAPITAL REQUIREMENT 0 430, ,179, ,949 IV - CHANGE IN CASH AND CASH EQUIVALENTS 0 203, ,019, ,946 0 GRAND TOTAL 4,648,427 4,648,427 9,845,941 9,845,941 4,390,791 4,390,791 (*) reclassification of advances and prepaids from account 3411 to 2397 and reclassification of cables and spare parts 238 Maroc Telecom 2007 Registration Document

239 5. FINANCIAL REPORT Individual financial statements A1 : Additional disclosures Accounting policies The company s financial statements have been prepared in accordance with generally accepted accounting principles, and in particular with principles related to historical cost, independence, conservatism, consistency of methods and no offsetting. Property, plant and equipment and intangible assets The assets transferred by the Moroccan government on February 26, 1998, to set up Maroc Telecom as a public operator, were recorded as a net amount in the opening balance sheet, in compliance with: the Postal Services and Information Technology Act N and; the joint order no of the Telecommunications Minister and Minister of Finance, Commerce and Industry, approving the inventory of assets transferred to Itissalat Al-Maghrib. Assets acquired subsequently are recorded at their acquisition or production cost, which for networks essentially comprises design and planning costs, construction costs, site development cost, network rollout costs, customs duties and internal costs related to network development. Financial expenses corresponding to interest payments on loans to finance the production of property, plant and equipment are not included in production costs during the construction period. Network maintenance charges are expensed. Assets are depreciated in a consistent way according to their nature (intangible vs. tangible) and their use (e.g. transmission, network equipment). Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which are as follows: Intangible assets: 4 to 5 years except 3G license (25 years) Property, plant and equipment: Buildings 20 years Civil engineering 15 years Network equipment: Trasmission (mobile) 10 years Switching 8 years Transmission (fixed-line) 10 years Other property, plant and equipment Furniture and fittings 10 years Computer equipment 5 years Office equipment 10 years Transportation equipment 5 years Whenever necessary, an additional provision is recorded for technical obsolescence, reduction in the estimated useful life or impairment of the asset. Assets which have not yet been brought into service are recorded as work-in-progress. Financial assets Non-consolidated investments are reported at their acquisition value. A provision for impairment is recorded whenever the carrying value is higher than the value in use. The provision is determined based on the Group s proportionate share in the equity of the non-consolidated investment, which is adjusted, where appropriate, to account for the company s growth and earnings outlook. Other financial assets, which include receivables, loans and deposits, are recorded on the basis of their nominal value, with provisions recorded, where appropriate, for collection risk. Maroc Telecom Registration Document 239

240 5 Inventories Inventories consist of: mobile and accessories held for sale to customers upon line activation; technical equipment required for network rollout and maintenance other than cable and spare parts. Inventories of mobile and accessories are accounted for using the first-in, first-out method and a provision for impairment is recorded for both the risk of obsolescence and excess inventory. Technical equipment inventories are measured at their average acquisition cost (including customs duties and other costs) and are written down based on their value in use or obsolescence. Accounts receivable Accounts receivable are reported at nominal value. Trade receivables: Impairment provisions are recorded to cover collection risk, which is estimated based on the age of the receivable. Government receivables: Provisions are recorded to cover the risk of the Moroccan government not recognizing these receivables. These provisions are evaluated statistically. Other receivables: Where appropriate, other receivables are provisioned in line with the estimated collection risk. Accruals (assets) This caption mainly includes prepaid expenses. Cash and investment securities Cash and investment securities are made up of immediately available liquid assets and short-term investments, and are recognized at cost. Regulated provisions Regulated provisions comprise: provisions for employee housing; provision for investments in capital goods and machinery, in accordance with the fiscal regulations at the end of the year. Provisions for contingent liabilities These include long term provisions for contingent liabilities and other provisions for contingent liabilities. Long term provisions for liabilities and charges correspond to provisions related to translation adjustments and life annuities. Other provisions for contingent liabilities include provisions for reorganization and loyalty programs, and provisions to cover liabilities or litigation outstanding at period end. These provisions are evaluated on the basis of the state of procedures underway and estimated risks at period end. No provision for pension and post-retirement benefits has been recorded in the consolidated financial statements as pension expenses are covered by statutory pension plans set up for employees in Morocco. Accruals (liabilities) This item mainly contains deferred income concerning prepaid subscriptions and unused prepaid minutes sold. Receivables and payables in foreign currencies Receivables in foreign currencies are translated into the reporting currency using the exchange rate at the transaction date. At period end, receivables and payables in foreign currencies are translated using the exchange rate at the closing date, and the unrealized gain or loss is recorded on the balance sheet under Accruals (assets or liabilities). Unrealized losses are accrued in full. 240 Maroc Telecom 2007 Registration Document

241 5. FINANCIAL REPORT Individual financial statements Revenues Revenues are recorded on the basis of consumption by subscribers and customers at the end of the period, net of customer acquisition and loyalty costs. Sales of goods and services are related to outgoing and ingoing communications at the time they take place (communication and access charges). Subscription fees are recognized every month in advance under deferred income on the balance sheet, then reported in revenues for the period. For prepaid services, revenues are recognized as and when consumption takes place. They also include revenues from advertisements in paper and electronic telephone directories, which are recognized when the advertisements are published. Sales of merchandise relate to revenues from handset sales, which are recognized at the time of delivery or line activation. Customer acquisition and loyalty costs include discounts to new customers and promotions (free airtime granted to new customers). Discounts on mobile phones are deducted from revenues at the time the mobiles are delivered to the customer or the distributor. Discounts granted to distributors as remuneration for services rendered are mainly recognized in revenues at the time of delivery. Other income Other income from operations include: Expenses transferred (mainly telecommunication costs specific to IAM, recognized under Other operating expenses); Reversal of operating provisions (provisions for impairment of inventories and provisions for liabilities and charges). Other expenses Aside from rental expenses, maintenance charges, advertising expenses and general expenses, other expenses include: ANRT fees related to frequency assignment in compliance with Act Order of February 25, 1998; costs related to the universal service obligation in accordance with Act and Order of October 9, 2000;and costs related to research, training and telecommunication standardization in accordance with Act and Order of October 9, 2000 (contract specifications of IAM). Financial instruments Maroc Telecom does not use financial instruments or currency hedges. A2 : Exceptions NONE A3 : Changes in methods Description of changes Changes affecting valuation methods Change of valuation method of inventories WAC instead of FIFO Changes affecting presentation rules Justification of changes Effect of exceptions on assets and liabilities financial position and net income Ending inventory WAC = MAD580 million Ending inventory FIFO = MAD585 million Impact of MAD5 million NONE B1 : Capitalized costs NONE Maroc Telecom Registration Document 241

242 5 B2: Non-financial assets (in thousands of Moroccan dirhams) DESCRIPTION Gross balance Carried forward year ended December 31, 2007 INCREASE DECREASE Gross balance Acquisition Self- Transfer Disposal Withdrawl Transfer Year end construc- ted assets CAPITALIZED COSTS Start up costs Deferred costs Bond redemption premiums INTANGIBLE ASSETS 4,228, , ,363, ,277 5,674,606 Research and development costs Patents, trademarks, rights and similar rights 3,739, ,360, ,100,082 Goodwill 21, , ,264 Other intangible assets 467, , , ,260 PROPERTY, PLANT AND EQUIPMENT 31,839,824 3,264, ,759,621 26, ,287,715 34,471,308 Land 971, ,439 16, ,530 Buildings 3,984, ,091 1, ,085,423 Technical plant, machinery and equipment 21,977, ,388,912 6, ,360,427 Vehicles 75, ,632 1, ,318 Office equipment 2,374, , ,626,216 Other property, plant and equipment 11, ,048 Work in progress 2,444,556 3,264, ,211 3,287,715 2,343,346 B2 Cont: Depreciation schedule (in thousands of Moroccan dirhams) year ended December 31, 2007 Accumulated Allowances of Amortization of Amount DESCRIPTION opening period year (*) Disposed assets year end CAPITALIZED COSTS * Start up costs * Deferred costs * Bond redemption premiums INTANGIBLE ASSETS 2,057, , ,665,840 * Research and development costs * Patents, bonds, rights and related rights 2,038, , ,645,836 * Goodwill 18,895 1, ,003 * Other intangible assets PROPERTY, PLANT AND EQUIPMENT 19,787,452 2,044,657 6,439 21,825,670 * Land * Buildings 2,414, , ,650,323 * Technical plant, machinery and equipment 15,609,203 1,598,846 3,546 17,204,503 * Vehicles 71,194 1,746 1,901 71,040 * Office equipment 1,692, , ,899,805 * Other property, plant and equipment * Work in progress Of which extraordinary allowances: - Asset retirement MAD10 m - Delayed placing in service MAD51 m Total of extraordinary allowances MAD61 m 242 Maroc Telecom 2007 Registration Document

243 5. FINANCIAL REPORT Individual financial statements B3: Gains or losses on disposals or withdrawls of fixed assets (in thousands of Moroccan dirhams) year ended December 31, 2007 Disposal or Main amount Gross amount Accumulated Net book Proceeds Gains Losses Withdrawl date depreciation value from disposal of assets &232 18, ,821 62,947 45, ,214 3,546 2,668 1,350 1, ,901 1, Total 26,927 6,439 20,488 64,829 45,658 1,318 B4: Equity investments (in thousands of Moroccan dirhams) year ended December 31, 2007 Business segment Share capital % of interest Overall acquisition price Net book value Derived from latest selected financial data of issuer company Income recorded in income statement Matelca Study and realization of submarines cables Dec.31, Arabsat Operation and commercialization of telecommunications 5,094, ,454 6,454 Dec.31, systems - - ADM Building and operation of Moroccan road network 6,507, ,000 16,000 Dec.31, Thuraya Regional satellite operator 5,312, , 872 9,872 Dec.31, Casanet Internet service provider 14, ,174 18,174 Dec.31, CMC Financial holding 396, , ,469 Dec.31, 07 13, Fonds Amorçage Capital amorçage fund 27, ,836 0 Dec.31, 07 - Sindbad - - Medi-1- Sat Media (Satellite television) 166, ,702 0 Dec.31, Mobisud SA Telecommunication 112, ,685 73,685 Dec.31, Maroc Telecommunication 52, ,633 52,633 Dec.31, 07 - Telecom Belgium - - Onatel Telecommunication 204, ,459,380 2,459,380 Dec.31, Gabon Telecommunication 1,280, , ,925 Dec.31, 07 - Telecom - - Total 3,413,180 3,359, ,008 B5: Provisions (in thousands of Moroccan dirhams) year ended December 31, 2007 DESCRIPTION Opening ALLOWANCES WRITE-BACKS Closing balance balance Operating Financial Extraordinary (*) Operating Financial Extraordinary (*) 1- Provisions for depreciation of fixed assets 339, , , , , ,759 2 Regulated provisions Provisions for contingences and losses 28, ,407 Sub total (A) 367, , , , , ,167 4-Provisions for depreciation of current assets (excluding cash and cash equivalent ) 4,540, , , ,289,743 5-Other provisions for contingencies 689,555 71,184 88, ,051 63, , ,977 6-Provisions for depreciation of cash and cash equivalents Sub-total (B) 5,230, ,651 89, ,275 63, ,523 5,723,720 Total (A+B) 5,597, , , , ,223 98, ,090 6,175,886 Closing date Net equity Net income ( * ) Of which: ( * ) Of which: Provision of asset retirements MAD23 M Amortization MAD10 M Depreciation of inventories class 2 MAD100 M Spare parts MAD134 M Depreciation of cable MAD104 M Delayed placing in service of work in progress MAD71 M Delayed placing in service of work in progress MAD61 M Total MAD288 M MAD215 M Maroc Telecom Registration Document 243

244 5 B6: Receivables (in thousands of Moroccan dirhams) year ended December 31, 2007 RECEIVABLES TOTAL BREAKDOWN BY MATURITY OTHER BREAKDOWN Due in more Due in less Matured Amount in Amounts due: than one than one but not foreign Government Amounts due: Amounts in year year recovered currency and security related parties notes FIXED ASSETS 151, ,706 14,312 93,693 93,693 Long term loans 149, ,740 14,312 93,693 93,693 Other financial receivables 1,966 1,966 0 CURRENT ASSETS 12,333,276 4,077 6,228,387 6,100,812 1,999, ,165 4,077. Trade payables, advances and downpayments 130, ,818. Accounts receivable and related accounts 11,507,723 5,450,429 6,057,294 1,978, ,488. Employees 14,424 10,304 4,120. Tax receivable 529, , Shareholders current accounts 0 0. Other receivables 68,546 29,149 39,397 20,225 11,676. Accruals 81,802 4,077 77,725 4,077 B7: Liabilities (in thousands of Moroccan dirhams) year ended December 31, 2007 LIABILITIES TOTAL BREAKDOWN BY MATURITY OTHER BREAKDOWN Due in more Matured but Amount in Amounts due: than one Due in less not recoverecy foreign curren- Government Amounts due: Amounts in year than one year and security related parties notes LONG TERM DEBT 1, , Debenture bonds Other long term debt 1, , CURRENT LIABILITIES 11,328,952 47,444 9,909,699 1,371,808 2,460,798 3,486, ,205 25,265. Accounts payable and related accounts 5,382,077 47,444 4,027,731 1,306,901 2,080, ,205 25,265. Trade receivables, advances and downpayment 380, , , Employee 572, , Social security 76, , Tax payable 3,129, ,129, ,129, Shareholders current accounts Other payables 424, ,776 64, , Accruals 1,363, ,363, B8: Guarantees given or received (in thousands of Moroccan dirhams) Year ended December 31, 2007 Third parties. Guarantees given Amount covered by garantee Description (1) Date and place of registration Purpose (2) (3) Net book value of the garantee given at closing date. Guarantees received Guarantees received are Long term loans 55,359 (1) from employees ( 1) Collateral : 1-Mortgage :2-Pledge: 3-Warrant : 4 Others : 5- (to specify) ( 2 ) State if the guarantee is given to a company or to a person (guarantees given) (related parties, associates, employees) ( 3 ) State if the guarantee is received from a person other than the debtor (guarantees received) 244 Maroc Telecom 2007 Registration Document

245 5. FINANCIAL REPORT Individual financial statements B9: Financial commitments received or given excluding leasing transactions (in thousands of Moroccan dirhams) year ended December 31, 2007 Amounts Amounts COMMITMENTS GIVEN Year end Previous year - Investments not yet realized * Property, plant and equipment 1,533,298 1,022,047 * Investment commitment 390,742 4,573,675 1,533,298 4,573,675 - Guarantees from banks * Documentary credit 14, ,426 * Endorsements 63,709 73,699 78, ,124 - Equity investments * Fonds Amorçage SINDIBAD 2,164 2,164 * Medi-1-Sat (capital increase) 0 24,456 * Medi-1-Sat (quasi capital) 0 17,352 * Mobisud (capital increase) 74,773 73,781 * Casanet (quasi capital) 6, , ,753 - Partenership commitment with ASSOCIATION FORUM DE CASABLANCA 10,500 10,500 10,500 10,500 - Operating lease obligations (*) 10,340 9,459 10,340 9,459 - Purchase commitment of land in Casa technopôle Total 1,716,056 4,927,512 (*) 2 to 15 year rent contract with tacit renewal. The amount indicated is related to one month s notice Amounts Amounts COMMITMENTS RECEIVED Year end previous year. Endorsements and guarantees 1,383,607 1,079,493. Other commitments received. Commitment by the Moroccan government to social welfare. Commitment on acquisition of land 39, Commitment on acquistion of material from NOKIA (SWAP) 615, Commitment by AIR TIME/ GAM on payment of GAM arrears 0 22,259. Commitment by AIR TIME/GAM to transfer the gain from disposal on MAD293 per share on portion above 65 % of capital. Commitment on loans by Moroccan government Investment commitment Exemption of the customs duties and the VAT on the imports relating to the investments. 0 0 Total 2,038,121 1,102,669 B10: Assets leased NONE Maroc Telecom Registration Document 245

246 5 B11: Income statement items (in thousands of Moroccan dirhams) ITEM Current year 2007 year ended December 31, 2007 Previous year OPERATING INCOME 24,198,296 21,733, Sales of goods 0 0. Sales of goods in Morocco 977, ,042. Sales of goods abroad 0 0. Other sales of goods Total 977, , Sales of manufactured goods and services rendered. Sales of manufactured goods in Morocco. Sales of manufactured goods in abroad. Sales of rendered services in Morocco 22,684,747 20,407,427. Sales of rendered services abroad. Royalties for patents, brands, rights.... Other sales of manufactured goods and services rendered 0 0 Total 22,684,747 20,407, CHANGE IN INVENTORIES 0 0. Change in manufactured goods inventory 0 0. Change in rendered services inventory 0 0. Change in product inventory WIP 0 0 Total /718 OTHER OPERATING INCOME 0 0. Directories fees received 0 0. Other revenues 55,474 19,751 Total 55,474 19, OPERATING WRITE-BACKS, EXPENSE TRANSFERS. Write-backs 150, ,503. Expense transfers 330, ,496 Total 480, ,999 FINANCIAL INCOME 738. Interest and other financial income. Interest and similar income 17,194 49,845. Revenues from receivables from controlled entities 0 0. Net revenues from disposal of marketable securities 86,847 87,010. Other interest and financial income 1,955 1,175 Total 105, , Maroc Telecom 2007 Registration Document

247 5. FINANCIAL REPORT Individual financial statements (in thousands of Moroccan dirhams) year ended December 31, 2007 ITEM Current year 2007 Previous year OPERATING EXPENSES 611 Cost of goods sold. Cost of goods 1,761,223 1,422,480. Change in inventory (+,-) (144,915) (79,341) Total 1,616,308 1,343, Raw material and supplies. Raw materials 0 0. Change in raw material inventory. Supplies and packaging 346, ,393. Change in supplies and packaging inventory (11,747) (6,646). Cost of materials and supplies not stocked 204, ,345. Cost of works, studies and services 1,684,989 1,859,093 Total 2,223,534 2,299, /614 OTHER EXTERNAL EXPENSES. Rent and rental expenses 314, ,434. Leasing installments 0 0. Maintenance and repair 529, ,023. Insurance premiums 22,774 21,941. Payments of external staff 60,234 53,783. Payments for intermediaires and fees 247, ,408. Fees for patents, brand, rights , ,803. Transportation 11,629 10,447. Travel and entertainment expenses 94,999 81,957. Other external expenses 924, ,561 Total 2,550,059 2,559, PAYROLL COSTS. Payroll 1,844,778 1,695,081. Social security 289, ,139. Other payroll costs 0 0 Total 2,133,965 1,958, OTHER OPERATING EXPENSES. Directors fees 2,000 4,000. Losses on uncollectible receivables 0 0. Other operating expenses 0 0 Total 2,000 4, FINANCIAL EXPENSES. Other financial expenses 0 0. Net losses on disposal of marketable securities 0 0. Other financial expenses 0 0 Total EXTRAORDINARY EXPENSES. Other extraordinary expenses 199,094 9,947. Contract cancallation payments and forfeiture of deposit 0 0. Paid back tax (other than income tax) 0 0. Penalities and tax fines 1,659 1,543. Uncollectible receivables 0 0. Other extraordinary expenses 39,745 34,261 Total 240,497 45,752 Maroc Telecom Registration Document 247

248 5 B12: Reconciliation of net income and tax income (in thousands of Moroccan dirhams) year ended December 31, 2007 I DETERMINATION OF INCOME AMOUNT AMOUNT I NET INCOME. Net profit 8,091,922. Net loss II TAX ADJUSTMENTS TO ADD 4,269, Ordinary 4,012,224 - Income tax ,925,195 - Amortization exceeding MAD300, POP Paris expenses (IAM branch) 1,556 - Unrealized foreign exchange gains ,788 - Gifts exceeding MAD100 per unit 2,214 - Grants in cash or kind 36 - Expenses for the previous years 0 2. Extraordinary 256,873 - Provisions & amortization 215,470 - Penalties and fiscal fines 1,659 - Expenses for the previous years 39,745 III TAX DEDUCTIONS 239, Ordinary 53,083 - Unrealized foreign exchange gains ,369 - POP Paris income (IAM branch) 1,037 - Revenues from equity investments 11, Extraordinary 186,680 - Allowance on net capital gains from disposal 1,257 - Provisions & amortization 185,423 - Reversal of provision for restructuring 0 TOTAL 4,269, ,763 IV- GROSS TAXABLE INCOME - Gross profit 12,121,257 - Gross taxable loss V- LOSS CARRIED OVER 0 VI TAXABLE INCOME - Net taxable profit 12,121,257 - Net taxable loss EXEMPTION OF 50% OF EXPORT REVENUES 317,245 * CORPORATE INCOME TAX 3,925, Maroc Telecom 2007 Registration Document

249 5. FINANCIAL REPORT Individual financial statements B13: Determination of ordinary income after tax (in thousands of Moroccan dirhams) year ended December 31, 2007 I DETERMINATION OF INCOME AMOUNT Ordinary income from income statement (+) 11,986,645 Add-backs on ordinary operations 87,029 Deduction of ordinary operations 53,083 Ordinary income theoretically taxable (=) 12,020,591 Theoretical tax on ordinary income ( - ) 4,207,207 Exemption of 50% on export revenues (314,610) Ordinary income after tax (=) 8,094,048 II - INDICATION OF THE TAX STATUS AND ADVANTAGES GRANTED IAM has an income tax exemption on 50% of its international revenues BY THE INVESTMENT CODES OR BY SPECIFIC LEGAL REGULATIONS B14: Value added tax (in thousands of Moroccan dirhams) year ended December 31, 2007 Opening Operations VAT Closing DECSRIPTION balance returns balance (1+2-3) A / Invoiced VAT 2,064,177 4,055,306 3,902,351 2,217,132 B / Recoverable VAT 475,040 1,253,193 1,231, ,383 * On expenses 293, , , ,977 * On assets 181, , , ,406 C / VAT payable (VAT credit) 1,589,137 2,802,112 2,670,501 1,720,749 VAT = (A-B) Maroc Telecom Registration Document 249

250 5 C1: Shareholding structure (in Moroccan dirhams) year ended December 31, 2007 Surname, first name, business name of main shareholders (1) Adress STOCKS HELD Previous year Current year Nominal value of each stock or share CAPITAL AMOUNT Subscribed Called Fully paid / Kingdom of Morocco represented by Mr Fathallah 298,892, ,728,575 6,00 1,582,371,450 1,582,371,450 1,582,371,450 Oualalou, Minister of the Economy, Finance and Privatization 2 / Société de Participation dans les Télécommunications 448,339, ,920, ,795,522,862 2,795,522,862 2,795,522,862 represented by M. Jean Bernard Levy 3 / Mr Fathallah Oualalou / Mr Jean Bernard levy / Mr Philip Capron 0 1, ,060 6,060 6,060 6 / Mr Jacques Paul Espinasse / Mr Robert de Metz / Mrs Françoise Colloc'H / Mr Franck Esser / Mr Jean-Rene Fourtou / Mr Abdelaziz Talbi / Mr Chakib Benmoussa / Other shareholders 131,864, ,445, ,671, ,671, ,671,188 (1) If the number of shareholders is less than or equal to 10, the company should list all the shareholders. Otherwise, the company may list only the 10 major shareholders. C2: Appropriation of year-end income (in thousands of Moroccan dirhams) AMOUNT year ended December 31, 2007 AMOUNT A. SOURCE OF INCOME (Decision of April 12, 2007 ). Retained earnings at December 31, B. INCOME APPROPRIATION. Other reserves 0. Net income to be allocated 0. Directors profit sharing 0. Net income of the year 6,929,101. Dividends 6,927,271. Retained reserves 0. Other allocations 0. Other reserves 0. Retained earnings 1,829 Total A 6,929,101 Total B 6,929,101 C3: Income and other significant characteristics of company over the last three years (in thousands of Moroccan dirhams) DESCRIPTION Year 2005 Year 2006 Year 2007 NET EQUITY OF THE COMPANY Shareholders equity and quasi equity less capitalized costs 18,334,674 15,628,890 16,793,541 OPERATIONS AND INCOME FROM PERIOD Revenues excluding tax 19,309,597 21,236,468 23,662,511 Income before tax 8,653,071 10,036,227 12,017,117 Corporate income tax 2,781,171 3,107,127 3,925,195 Dividends 4,395,477 6,118,504 6,927,271 Unappropriated income (reserves or to be allocated) 1,332, ,303 1,829 EARNINGS PER SHARE Earnings per share for period (in dirhams) Dividends per share (*) in dirhams (*) The nominal value decreased from MAD100 in 2003 to MAD10 in 2004 and MAD6 in Maroc Telecom 2007 Registration Document

251 5. FINANCIAL REPORT Individual financial statements C4: Transactions in foreign currencies during the period (in thousands of Moroccan dirhams) year ended December 31, 2007 DESCRIPTION Entry Outgoing Exchange value Exchange value. Permanent financing. Gross assets 2,954,773. In-flow assets 24,611. Repayment of long term debt 955. Dividends paid. Income 2,899,981. Expenses 2,297,684 TOTAL IN-FLOWS 2,924,592 TOTAL OUT-FLOWS 5,253,412 FOREIGN CURRENCY BALANCE 2,328,821 TOTAL 5,253,412 5,253,412 C5: Date of financial statements and subsequent events I. DATES. Closing date (1) : December 31, Date of the financial statements (2) January 16, Date of rectifying declaration (1) Proof in case of change of closing date (2) Proof in case regulated delay of three months is extended for the preparation of the financial statements II. EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS RELATED TO THIS PERIOD AND KNOWN BEFORE THE FIRST RELEASE OF THE FINANCIAL STATEMENTS Dates Indication of events NONE Maroc Telecom Registration Document 251

252 5 Special report of the statutory auditors Year ended December 31, 2007 As statutory auditors of the company, we present our report on related-party transactions. In compliance with Article 58 of Moroccan law 17-95, we have been informed of all the related party transactions that are subject to the prior approval of the Supervisory Board. 1. Related-party transactions concluded during 2007 fiscal year 1.1 Agreement of current account advance with Mobisud (France) On March 1, 2007, the Supervisory Board approved rhe current account advance between IAM and Mobisud (France) for amount 5,280,000. During 2007, this advance was paid in totality, representing an amount of MAD59,628 thousand and the amount of the financial income recorded by IAM related to this agreement amounted to MAD1,235 thousand. As of December 31, 2007, the balance of current account advance including interest receivable amounted to MAD60,863 thousand. 1.2 Contract with Onatel In 2007, Onatel concluded an agreement with IAM under which the latter provides services in the following fields: Strategy and development; Organization; Networks ; Marketing; Finance; Purchasing; Human resources; Information systems; Regulation. These services can be carried out by expatriate employees. The amount charged by IAM to Mauritel was MAD11,476 thousand exclusive of tax for As of December 31,2007, the balance of Mauritel s receivable in Itissalat Al-Maghrib s books amounted to MAD11,505 thousand. This convention has not yet been approved by your Supervisory Board. 1.3 Contract with Gabon Telecom In September 2007, Gabon Telecom concluded an agreement with IAM under which this latter provides services in the following fields: Strategy and development; Organization; Networks; Marketing; Finance; Purchasing; Human resources; Information systems; Regulation. These services can be carried out by expatriate employees. Under this agreement, the amount charged by Itissalat Al-Maghrib to Gabon Telecom was MAD12, 830 thousand exclusive of tax. Moreover, during 2007, IAM sold to Gabon Telecom an equipment for a value of MAD1,350 thousand. As of December 2007, the Gabon Telecom s account in Itissalat Al-Maghrib s books amounted to a liability of MAD9,503 thousand. This convention has not yet been approved by your Supervisory Board. 1.4 Agreement of current account advance with Casanet Maroc Telecom decided to entrust its activity of professional directories to its subsidiary Casanet. Within this framework, the Supervisory Board authorized on December 4, 2007, the capital expenditure necessary to be financed by advances in a non-interest bearing current account, the advance should amount to MAD6,100 thousand. On December 31, 2007, no payment had yet been made under this agreement. 2. Related-party transactions concluded in previous years that were still effective during Management services agreement with Vivendi Telecom international (VTI) During 2001, Itissalat Al-Maghrib entered into a management services agreement with Vivendi Telecom International (VTI), under which the latter and its subsidiaries provide Itissalat Al-Maghrib with technical assistance in the following fields: 252 Maroc Telecom 2007 Registration Document

253 5. FINANCIAL REPORT Special report of the statutory auditors Strategy and organization; Development; Sales and marketing; Finance; Purchasing; Human resources; Information system; Regulation; Interconnection ; Infrastructure and networks. In accordance with the terms of this agreement, the fees agreed to be paid by IAM, in 2007, amounted to MAD18,886 thousand (exclusive of tax). As of December 31, 2007, the balance payable amounted to MAD4,303 thousand Invoicing of costs related to stock options and free shares Vivendi invoiced its subsidiaries for costs concerning the agreed advantages linked to the stock options and the allocation of free shares to employees. Pursuant to the stock options and free shares, the amount was MAD21,970 thousand. As of December 31, 2007, the balance of debts amounted to MAD84,775 thousand Agreement with Mauritel SA During 2001, Mauritel SA concluded an agreement with Itissalat Al-Maghrib under which the latter provides services, technical assistance and transfer of equipment to Mauritel SA. The amount charged by IAM to Mauritel SA was MAD10,619 thousand (exclusive of tax) for As of December 31, 2007, Mauritel s account in Itissalat Al-Maghrib books amounted to a liability of MAD11,521 thousand Agreement with Casanet During 2003, IAM concluded a several agreements with Casanet that related to: the maintenance of Maroc Telecom s internet portal Menara ; the hosting of Itissalat Al-Maghrib s website El-Manzil ; the maintenance of new WAP applications on the Menara portal; the production of the IPTV web site; the commercialisation of leased line internet access; the acquisition of several equipments; the production and marketing of Itissalat Al-Maghrib s yellow pages; The regularization and the setting on line of the advertising banners on the Menara portal; sending of the SMS for the account of IAM; Etc. As of December 31, 2007, the amount of expenses recorded by IAM under this agreement amounted to MAD49,426 thousand exclusive of tax. As of December 31, 2007, the amount of incomes recorded by IAM under this agreement amounted to MAD6,633 thousand exclusive of tax. The Casanet s account in Itissalat Al-Maghrib s books amounted to a credit of MAD13,847 thousand and a debit of MAD13,079 thousand Agreement with Media Overseas On February 24, 2006, IAM s Supervisory Board approved the agreement entered into over the period with Media Overseas, a subsidiary of Canal+ Group, concerning the launch of TV via ADSL. Pursuant to this agreement, operations are performed with Multitv Afrique, a subsidiary of Media Overseas. During 2007, Itissalat Al-Maghrib recorded an expense of MAD4,532 thousand exclusive of tax. As of December 31, 2007, the balance of Multitv Afrique in Itissalat Al-Maghrib s books amounted to a credit of MAD0.25 thousand Agreement of current account with Medi-1-Sat During 2006, for financial needs, Itissalat Al-Maghrib concluded an agreement with Medi-1-Sat under which it committed to grant Medi- 1-Sat an advance of 2,800,000, recorded under current account advances. In 2006, Maroc Telecom paid the first tranche of this advance for amount of 1,200,000 (MAD13,283 thousand). In 2007, IAM paid the second tranche of this advance for amount of 1,600,000 (MAD18,198 thousand). As of December 31, 2007, interest receivable recorded by Itissalat Al-Maghrib related to this agreement amounted to MAD967 thousand. As of December 31,2007, the balance of these advances including interest receivable, amounted to MAD32,830 thousand. February 21, 2008 Statutory Auditors KPMG Fouad LAHGAZI Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner Maroc Telecom Registration Document 253

254 5 5.6 REPORT OF THE MANAGEMENT BOARD In accordance with Article 141 of Act of August 30, 1996 and with the agenda that has been communicated to you, we are honored to present the report of the Management Board of Itissalat Al-Maghrib ( Maroc Telecom ), with the aim of presenting the company s business activity and financial results for 2007, submitting for your approval the financial statements for the period ended December 31, 2007, and submitting for your approval a share buyback program in a view to stabilizing the share price highlights Despite adverse weather conditions in 2007, Morocco's GDP should improve by some 2.5%, driven by a strong contribution from non-farm activities, which grew by almost 6% (source: Morocco s Treasury and External Finances Department). Despite increased competition, Maroc Telecom has strengthened its leadership position by developing innovative solutions that meet customer expectations and by using state-of-the-art technology with the following results: the Mobile customer base grew by 24.5%, totaling 13.3 million clients. By gaining more than 65% of new clients on the market, Maroc Telecom managed to maintain its market share at 66.5% (1) ; the Fixed-line customer base showed growth across all segments, with a slight 2% improvement to million lines; the Internet customer base, with ADSL representing 98% of customers, recorded a +22% improvement to 476,000 lines, representing a market share of more than 90%. In 2007, Maroc Telecom continued the deployment of various projects concerning its corporate image and structure such as: the completion of the voluntary redundancy plan started in 2006, for a total cost of MAD200 million, whereas a MAD300 million provision had been recorded in the 2006 financial statements; on October 16, 2007, the Group concluded a liquidity contract in Paris and a share price stabilization contract in Casablanca; the achievement in January 2008 of the ISO/IEC 27001: 2005 standard for its overall information security policy covering all activities; internationally, Maroc Telecom launched Mobisud, an MVNO, in Belgium in May 2007, and concentrated on the integration of new subsidiaries Onatel and Gabon Telecom acquired in December 2006 and February 2007 respectively. On the regulatory side, 2007 was marked by the following events: start-up of Wana's fixed-line activities in February 2007; approval of partial unbundling by the ANRT as from January However, no unbundling application has been submitted to date; full unbundling approved by the ANRT as from July 8, 2008; portability of mobile and fixed-line numbers implemented as from May 31, 2007; a reduction in Mobile termination rates decided by the ANRT, with tariff symmetry maintained between Maroc Telecom and Meditel and a price cap applied until 2009, with annual reductions ranging between 3 and 6%; and the appointment of Maroc Telecom by ANRT s universal service executive committee for the coverage of 7,338 rural localities between 2008 and 2011, for MAD1.159 billion, within the framework of its universal service contribution. 254 Maroc Telecom 2007 Registration Document

255 5. FINANCIAL REPORT Report of the Management Board Business activity Customer base 2007 was marked by a slight rise in the Fixed-line customer base and a strong increase in the Mobile and Internet customer bases. The table below shows the development of Maroc Telecom s various customer bases: At December 31- in thousands Change 06/07 Number of mobile customers* 8,237 10,707 13, % Prepaid 7,908 10,297 12, % Postpaid** % Number of fixed-line subscribers*** 1,341 1,266 1, % Number of internet customers**** % o/w ADSL % * Mobile customers include customers with prepaid cards and postpaid subscribers according to the ANRT definition data are restated in line with this definition. ** Including no commitment rate plans. *** Not including Maroc Telecom in-house lines. **** Internet customers are IP accounts opened with Maroc Telecom (subscribers and pay-as-you-go customers). Mobile 2007 was a year of strong growth for the mobile business: the active customer base gained 6.9 million customers gross (2.6 million net) to reach 13.3 million, representing a market share of 66.5% (1), compared with 66.9% at December 31, 2006; Gross revenues (2)(3) for the Mobile business in Morocco reached more than MAD17,1 billion, an increase of 20% compared to After interconnection charges and cost of sales, gross margin totaled MAD13.8 billion, up 23% compared with Average mobile ARPU fell 4.1% to MAD108 compared with 2006, due to a strong increase in the customer base and to lower call charges. This decrease is however lower than that of recorded between 2005 and 2006 (-9.3%). With the increase in the customer base and the reduction in access costs, the churn rate is now 25.4% (+5.1 points compared with 2006). Maroc Telecom confirmed its market share in 2007 by developing new innovative offers, namely unlimited offers (unlimited calls to predefined numbers, the "heure Jawal" package offering one-hour of free calls to fixed-line and mobile numbers, etc.), a reduction in the SIM card price to MAD10 and new offers to businesses (pushmail, push to talk, Blackberry ), as well as many original promotional offers. In addition, Maroc Telecom launched a new prepaid card, named Mobisud, aimed at leveraging the links with the Mobisud MVNOs in France and in Belgium. (1) Source : ANRT (at December 31, 2007). (2) Gross revenues include intersegment transactions between Maroc Telecom s Fixed-line and Mobile businesses. These transactions include interconnection and operator leased lines. (3) Revenues linked to incoming international traffic towards Maroc Telecom mobile and to outgoing international traffic from Maroc Telecom mobile have been directly accounted for in mobile operations in 2007 whereas in 2006 and 2005, they were accounted for as transit revenue for fixed operations Revenue figures for 2007 and 2006 have been adjusted accordingly. This adjustment has no impact on Maroc Telecom's net overall revenues figures. Maroc Telecom Registration Document 255

256 5 Meanwhile, Maroc Telecom continued to improve its Mobile network's coverage and capacity, and deployed a new 3G network, which went live with the launch of mobile Internet packages during 2007 and video telephony services at the beginning of Fixed-line and Internet As of December 31, 2007, the Fixed-line customer base was up 1.8% compared with 2006 to million lines, driven by an improvement across all segments, and particularly by the success of the Phony unlimited Fixed-line telecommunications offers launched in September 2006, now account for more than 64% of residential lines. In 2007, the company continued its actions to promote Internet use in Morocco, with further price cuts and regular promotional offers. The number of Internet users reached 476,000 at December 31, 470,000 of which were ADSL subscribers. At December 31, 2007 the number of ADSL lines accounted for almost 42% of fixed lines (excluding public telephony). In 2007, the Fixed-line and Internet business in Morocco recorded MAD9.5 billion in gross revenues (2), down 5.5% compared with On the voice segment the average invoice per customer decreased by 3.5%, due primarily to tough competition on the phone shop segment. This was the main cause of the drop in Fixed-line revenues. Due to a healthy Internet market this segment's revenues grew by more than 25% to more than MAD1 billion. Human Resources Maroc Telecom s headcount dropped slightly to 10,949 at December 31, 2007, compared with 11,212 at the end of This was primarily due to a new voluntary redundancy plan implemented in The Company continued its training efforts and, in 2007, organized 42,766 training days, which benefited 20,565 employees, representing an average of 4 training days per employee. Maroc Telecom continued to modernize its human resource management with, in particular, the "skill management" project, setting a benchmark for identifying the skills needed by the Company to meet the challenges it is faced with and improve its performance. Within that framework, a skill enhancement campaign was launched in June 2007 involving mainly 3,860 employees in relation to 44 jobs in direct contact with customers. The analysis of these results enabled the Human Resources department to define a development program for each employee (or group of employees) enabling the latter to perform their tasks more efficiently and develop their skills thereby contributing to the creation of value for Maroc Telecom. This analysis will be presented to the employees concerned at the beginning of Subsidiaries and investments Since December 2006, Maroc Telecom has accelerated its international development with: On December 1, 2006, in France, the launch of Mobisud, an MVNO in which the Group owns a 66% stake, using SFR s network. Pursuing its strategy to capture traffic between Europe and Maghreb countries, Maroc Telecom also created Mobisud Belgium, which commenced operations in May 2007; Maroc Telecom acquired a 51% stake in the incumbent operators of Burkina Faso, Onatel on 28 December 2006 and of Gabon, Gabon Telecom on 9 February 2007 via an international invitation to tender. 256 Maroc Telecom 2007 Registration Document

257 5. FINANCIAL REPORT Report of the Management Board In addition, following the repeal of article 73 of Act on telecommunications in September 2007 (Act dated September 3, 2007), which obliged Mauritel SA to split up all activities where the company is subject to competition, namely its mobile activity, the Extraordinary General Shareholders Meeting of Mauritel SA and Mauritel Mobiles approved the merger of the two companies on November 27, Maroc Telecom s investments at December 31, 2007 can be summarized as follows: Companies Gross investment (in thousands of MAD) Share in capital (in %) Onatel 2,459, Compagnie Mauritanienne de Communications 399, Gabon Telecom 323, Mobisud SA 73, Maroc Telecom Belgium SA 52, Medi-1-Sat 46, Casanet 18, Autoroutes du Maroc (ADM) 20, Thuraya 9, Arabsat 6, Sindbad investment fund 2, Matelca Earnings from operations from the main subsidiaries and invetsments: Mauritel: In 2007, the group s Mauritanian activities generated a net revenues (4) of MAD1,063 million, up 14.5% (+19.5% on a like-for-like basis (5) ). The Mauritel s Fixed-line business generated MAD319 million in gross revenues (2) in 2007, up 3.2% compared with 2006 (+7.8% on a like-for-like basis (2) ). At December 31, 2007, Mauritel's Fixed-line customer base (9) was down 2.6% compared with 2006 to 36,500 lines. Mauritel's Mobile Business generated MAD834 million in gross revenues (2) in 2007, up 21.2% (+26.4% on a like-for-like basis (5) ). This performance was a result of a 50.4% increase in the customer base to more than 904,500, despite increased competition due to the offers launched by the 3rd Mauritanian operator. In 2007, Mauritanian activities generated overall earnings from operations of MAD389 million, up 31.5% (+37.2% on a like-for-like basis (5) ), due to the strong performance of the Mobile Business whose earnings from operations grew by 34.2% (5). Onatel: In 2007, the Group's activities in Burkina Faso generated overall net revenue (4) of MAD1,371 million, up 8.7% on a like-for-like basis (5). Onatel's Fixed-line activities generated MAD799 million in gross revenues (2) in 2007, a slight 0.2% rise on a like-for-like basis (5). At December 31, 2007, Onatel's Fixed-line customer base reached close to 121,800 lines, up 22.9% compared with December 31, 2006, due namely to the launch of prepaid plans using the CDMA technology. Onatel's Mobile Business (Telmob) reported gross revenues (2) of MAD719 million in 2007, up 22.1% on a like-for-like basis (5). Driven by various promotional offers and extended coverage, the Mobile customer base soared 131% between 2006 and December 31, 2007 to close to 564,400 customers. (4) Net of revenues between each subsidiary's Fixed-line and Mobile businesses, but including revenues generated between them (including SLAs) which are eliminated from consolidated revenues. (5) In addition, like-for-like figures reflect the consolidation of Onatel and Gabon Telecom as if it had actually taken place on January 1, 2006 for Onatel and March 1, 2006 for Gabon Telecom, and as if the MAD/Mauritanian ouguiya/cfa Franc/Euro exchange rates had remained constant. Finally, like-forlike 2006 figures for Onatel and Gabon Telecom were adjusted to exclude exceptional items and were prepared using accounting policies comparable to those used in Maroc Telecom Registration Document 257

258 5 In 2007, the Group's activities in Burkina Faso generated earnings from operations of MAD211 million, representing a 209% (5) rise, resulting mainly from the strong momentum in the Mobile Business with an earnings from operations up 70.2% (2). Gabon Telecom: Between March and December 2007, the Group's activities in Gabon generated overall net revenue (4) of MAD1,001 million, down 7.4% on a like-for-like basis (5). During the period, the Group's Fixed-line business in Gabon generated gross revenues (2) of MAD521 million, down 25.7% on a like-for-like basis (5), reflecting the impact of substantial price cuts needed to reconquer the market. At December 31, 2007, Gabon Telecom's Fixed-line customer base was up 5.2% compared with 2006 to 23,500 lines. Over the same period, Libertis, Gabon Telecom's Mobile Business, reported MAD583 million in gross revenues (2), up 31.4% on a like-for-like basis (5). The Mobile customer base grew 60.3% to 386,300 at December 31, 2007, driven both by promotional offers and extended coverage. Between March and December 2007, the Group's activities in Gabon generated an operating loss of MAD- 169 million, as opposed to MAD-912 million in This improvement is mainly due to recovery of the Mobile Business, from healthier management processes and the tight cost control policy implemented by the new management team Mobisud (France and Belgium) The Mobisud MVNOs generated overall revenues of MAD64 million in 2007, for a 159,800 strong customer base at December 31, Mobisud's strong performance during the 4 th quarter was driven by the success of the Ramadan offers and by new partnerships developed with retailers. In France and Belgium, Mobisud posted an operating loss of MAD-269 million, due to the customer acquisition and communication efforts deployed to gain market share. Casanet: In 2007, Casanet's revenues grew 78% to MAD63 million compared with 2006, while earnings from operations was up 18% to MAD12 million. This significant growth is mainly linked to stronger revenues generated by the Business Services segment, which includes resale of equipment as well as integration and consultancy services. In addition, Maroc Telecom transferred its "Yellow Pages" activity to Casanet in Changes in the individual company financial statements and earnings The presentation rules and valuation methods used to prepare these documents comply with current regulations and generally accepted accounting principles. The table below presents a summary of changes in Maroc Telecom s main financial indicators: in millions of Moroccan dirhams Change 07/06 Revenues 19,310 21,236 23, % Earnings from operations 8,773 10,169 11, % Corporate income tax 2,781 3,107 3, % Earnings 5,872 6,929 8, % Capex 2,986 3,745 4, % 258 Maroc Telecom 2007 Registration Document

259 5. FINANCIAL REPORT Report of the Management Board Statements of earnings data Once again, Maroc Telecom posted excellent results. Revenues amounted to MAD23.7 billion, whilst earnings from operations reached MAD11.9 billion and earnings totaled MAD8.1 billion. Revenues Maroc Telecom's revenues at December 31, 2007 totaled MAD billion, representing an 11.4% improvement compared with Earnings from operations and earnings With operating expenses rising by only 6.3% to MAD billion, earnings from operations grew from MAD billion to MAD billion, up 17.1% compared with This performance was a result of: a contained increase in the cost of goods sold due to lower handset costs; a stricter provisioning policy for trade receivables; in addition, payroll costs increased by 9% in Morocco due to salary increases. Net financial income came out at MAD81 million in 2007, as opposed to MAD196 million in This drop is due mainly to a rise in financial expenses linked to the use of a MAD4 billion overdraft to cover dividend payouts. Net non-recurring income reached MAD30 million in 2007, compared with a MAD328 million net nonrecurring loss in 2006 linked to a MAD300 million provision to cover a voluntary redundancy plan. Income before corporate income tax amounted to MAD billion, resulting in earnings of MAD8.092 billion. Balance sheet data At December 31, 2007, total assets were MAD billion, compared with MAD billion a year earlier. Assets At December 31, 2007, net fixed assets amounted to MAD billion compared with MAD billion a year earlier, representing 64% of total assets. Intangible assets totaled MAD3.009 billion in 2007, compared with MAD2.170 billion in 2006, i.e. a 39% increase due mainly to investments in software relating to the IN platforms, in other high value-added network equipments and in software for 3G network. Gross property, plant and equipment increased by 8% resulting primarily from the investments made in the "Atlas Offshore" submarine cable and in the mobile transmission and switching network. Investments totaled MAD4.183 billion, up 12% compared with Net property, plant and equipment rose 4.4% from MAD billion in 2006 to MAD billion in Maroc Telecom Registration Document 259

260 5 Financial assets totaled MAD3.511 billion in 2007 compared with MAD3.072 billion in 2006 mainly due to the acquisition of Gabon Telecom. Current assets increased to MAD7.823 billion in 2007, from MAD7.028 billion in 2006, up by close to 11%. This is due mainly to a rise in accounts receivable to MAD6.460 billion from MAD5.695 billion in Cash, including short-term investments, totaled MAD2.051 billion at December 31, 2007, compared with MAD2.254 billion a year earlier, despite the payout of a MAD6.9 billion ordinary dividend, a substantial investment program and the acquisition of Gabon Telecom. Liabilities and shareholders equity Taking into account 2007 earnings of MAD8.092 billion, Maroc Telecom s net equity was MAD billion at 31 December Long-term debt was reduced to MAD1.5 million at December 31, 2007 from MAD2 million at the end of At December 31, 2007, current liabilities totaled MAD billion, representing 40% of total liabilities, up 11.5% compared with 2006 due mainly to an appreciation of the tax and trade payables line items. Changes in the consolidated financial statements and earnings Scope of consolidation The scope of consolidation for the Maroc Telecom group s financial statements includes Maroc Telecom and the following companies: Mauritel SA and Mauritel Mobiles, in which Maroc Telecom holds a 51.5% stake via the holding company Compagnie Mauritanienne de Communications ( CMC ). Since July 1, 2004 on which the Mauritanian government s veto rights expired Mauritel has been fully consolidated in Maroc Telecom s financial statements; Onatel, 51%-held and fully consolidated by Maroc Telecom as from January 1, 2007; Gabon Telecom, 51%-held and fully consolidated by Maroc Telecom as from March ; Mobisud SA, a company governed by French law, in which Maroc Telecom holds a majority stake of 66%, has been fully consolidated since November 1, 2006; Maroc Telecom Belgium SA, 100%-held and fully consolidated by Maroc Telecom as from April 1, 2007; Medi-1-Sat, in which Maroc Telecom owns 28%, is accounted for using the equity method. Casanet, which is wholly owned by Maroc Telecom is not consolidated, as the main part of Casanet s activity, which concerns the maintenance of Maroc Telecom s Menara Internet portal, is carried out together with Maroc Telecom. Comparability of financial statements The consolidated financial statements are used by the Company as a means of communication with financial markets since its shares are listed on the Casablanca stock exchange and Euronext Paris. In this context, Maroc Telecom s consolidated financial statements for the years ended December 31, 2007, 2006 and 2005 are prepared in compliance with applicable International Financial Reporting Standards (IFRS). 260 Maroc Telecom 2007 Registration Document

261 5. FINANCIAL REPORT Report of the Management Board Maroc Telecom prepared its 2007 consolidated financial statements in accordance with: 1. All mandatory IFRS and IFRIC (International Financial Reporting Interpretations Committee) standards and interpretations at December 31, 2007; all these standards and interpretations have been adopted by the EU. 2. By anticipation from January 2004: IAS 32 and IAS 39 on financial instruments. Maroc Telecom is not concerned by any sections of IAS 39 not adopted by the EU. Maroc Telecom has consequently applied IAS 39 in full to its 2006 financial statements and its 2007 consolidated financial statements. 3. The following principle, pending publication of an IASB or IFRIC text on the matter: Pending a final IFRIC interpretation, Maroc Telecom does not accrue loyalty bonuses granted to customers that do not result in an additional cost. These bonuses are not considered to be a greater benefit than those benefits granted to new customers at the inception date of a contract. Loyalty bonuses convertible into free services are accrued. The accounting method used is compliant with the proposed IFRIC Interpretation D13- IAS 18 on Customer Loyalty Programmes. Summary of the consolidated income statement The table below sets out Maroc Telecom s main consolidated indicators: in millions of Moroccan dirhams in IFRS Change 2006/2007 Consolidated revenues 20,542 22,615 27, % Earnings from operations 8,678 10,043 12, % Financial income (78.3%) Earnings 5,921 6,833 8, % Earnings attributable to equity holders of the parents 5,809 6,739 8, % Net cash position 7,466 2,686 1,451 (46.0%) At December 31, 2007, the Maroc Telecom group's consolidated revenues (6) totaled MAD27,532 million, up 21.7%, driven primarily by continued growth of the Mobile business in Morocco as well as in the subsidiaries. On a like-for-like basis (5), consolidated revenues grew by 10.5%. Due to consolidation of the new subsidiaries, operating expenses increased by 21.7% to MAD billion. On a like-for-like basis, expenses were up by only 2%, reflecting tight cost control by Maroc Telecom in Morocco as well as in the subsidiaries recently acquired in Africa. Maroc Telecom's consolidated earnings from operations totaled MAD billion in 2007, a 21.8% improvement compared with 2006 (+23.3% on a like-for-like basis (5) ), reflecting a stable operating margin at 44.4%. Excluding charges in 2006 and reversals in 2007 of provisions charged through exceptional items, consolidated earnings from operations grew by 17.3%. Earnings attributable to the equity holders of the parent totaled MAD8.033 billion in 2007, a 19% improvement compared with The Group s net cash position totaled MAD1.451 billion. (6) In 2007, Mauritel, Onatel, Gabon Telecom, Mobisud France and Mobisud Belgium were consolidated in Maroc Telecom's financial statements. Onatel is fully consolidated with an opening balance sheet at January 1, Gabon Telecom, acquired on February 9, 2007, is fully consolidated with an opening balance sheet at March 1, 2007; In 2006 and 2007, Maroc Telecom's 2 nd quarter revenue figures incorporate 4 months' activity for Gabon Telecom as financial information for March was still unavailable for consolidation purposes at the 1 st quarter closing date. Gabon Telecom's financial statements were not restated in accordance with IFRS. Such restatement will be made as from the first quarter of Maroc Telecom Registration Document 261

262 5 Outlook for 2008 Based on current market conditions and insofar as no major event of an extraordinary nature disrupts Maroc Telecom s business, consolidated revenues growth should exceed 7% and consolidated operating income should grow by more than 9% in 2007 supported by continued growth and leadership in the Moroccan market, and growth and improved results from subsidiaries. Proposal of allocation of earnings We put forward for your approval the following allocation of earnings: Allocation of 2007 earnings (in thousands of Moroccan dirhams) Net income for the year 8,091,922 Retained earnings and earnings available for distribution at December 31, ,801 Distributable income 8,094,723 Statutory reserve - Regulated reserve - Optional reserve - Ordinary dividend* 8,087,677 Optional reserve 7,046 * This amount will be adjusted based on the number of treasury shares held as of the dividend payment date. The total dividend payment is MAD9.20 for each share with dividend rights. Ordinary dividends paid out with respect to the previous three years were as follows: Number of shares 879,095, ,095, ,095,340 Dividend/share (dirhams) Total payment (thousands of Moroccan dirhams) 4,395,477 6,118,504 6,927,271 The nominal share value was reduced in 2004 from MAD100 to MAD10 and from MAD10 to MAD6 in Related-party transactions We also ask you to approve transactions carried out during the year ended December 31, 2007 in view of fulfilling regulated related-party agreements provided for in article 95 of the Moroccan Act on corporations, properly authorized by your Supervisory Board and that continued over the past year. The Statutory Auditors have been informed that these agreements continued over the past year, and they state so in their special report. The Statutory Auditors state, in their general report, that they have conducted the assignment entrusted to them. 262 Maroc Telecom 2007 Registration Document

263 5. FINANCIAL REPORT Report of the Management Board Appraisal of the share buyback program carried out in 2007 with a view to stabilize the share price The Company obtained the approval of the CDVM on April 6, 2007 under reference VI/EM/011/2007 for the information notice relating to the share buyback program with a view to stabilizing the share price, and the agreement of the General Shareholders Meeting held on April 12, 2007 upon the related resolution. From October 16, 2007, for a period of one year, tacitly renewable, Maroc Telecom has contracted Rothschild & Cie Banque to implement: in Casablanca a share stabilization contract for an amount of MAD55 million. in Paris, a liquidity contract in compliance with the Ethical Charter drafted by the French Association of Investment Companies and approved by the AMF in a decision dated March 22, 2005, published in the Bulletin of Mandatory Legal Notices (BALO) dated April 1, For the purposes of this contract 5 million was allocated to a liquidity account. The main features of this program are as follows: Duration: until October 16, 2008; Price range for share purchase or sale: MAD [ ]; Maximum share capital to be held: 3% (equivalent to 26,372,860 shares). Appraisal of the share buyback program at December 31, 2007: Casablanca Paris Total Number of shares acquired 295, , ,416 Average purchase price (Moroccan dirhams) 146,526 13,007 - Number of shares sold (240,019) (200,397) (440,416) Average sale price (Moroccan dirhams) 147,176 13,036 - Shares held at December 31, , ,000 Due to the share price exceeding the purchase and sale price limit, no transactions involving the Company s shares have been conducted since January Therefore, we submit for your approval a new share buyback program with a view to stabilize the share price, incorporating a new price range. The main features of this program are as follows: Duration: until October 17, 2009; Price range for share purchase or sale: [ ] Moroccan dirhams; Maximum share capital to be held: 1.8%, equivalent to 16,000,000 shares. The Management Board Maroc Telecom Registration Document 263

264 CORPORATE GOVERNANCE

265 6.1 MANAGEMENT AND SUPERVISORY BOARDS COMPOSITION AND ROLES OF THE MANAGEMENT BOARD COMPOSITION AND ROLES OF THE SUPERVISORY BOARD CORPORATE GOVERNANCE AUDIT COMMITEE CODE OF ETHICS INTERESTS OF THE CORPORATE EXECUTIVES COMPENSATION OF THE MANAGEMENT AND SUPERVISORY BOARDS MANAGEMENT BOARD AND SUPERVISORY BOARD SHARE OWNERSHIP CONFLICTS OF INTERESTS INTERESTS OF CORPORATE EXECUTIVE IN SIGNIFICANT CUSTOMERS AND SUPPLIERS OF THE COMPANY SERVICE CONTRACTS STOCK OPTIONS LOANS AND GUARANTEES GRANTED TO CORPORATE EXECUTIVES RELATED PARTY TRANSACTIONS MANAGEMENT SERVICES AGREEMENTS CONCLUDED BY MAROC TELECOM DURING AGREEMENTS CONCLUDED IN PREVIOUS YEARS AND TO BE CARRIED OUT IN

266 6 6.1 MANAGEMENT AND SUPERVISORY BOARDS Composition and roles of the Management Board Name (age) Current office and main duties Date of appointment Expiry of term of office Abdeslam AHIZOUNE (52) Chairman First appointed February 20, 2001 Renewed on March 1, Arnaud CASTILLE (35) Managing Director Administration and Finance First appointed February 24, 2006 with effect on April 1, 2006 Renewed on March 1, Larbi GUEDIRA (53) Managing Director Services First appointed February 20, 2001 Renewed on March 1, Mohammed HMADOU (55) Managing Director Networks First appointed February 20, 2001 Renewed on March 1, Janie LETROT (53) Managing Director Regulation, Communication and International Development First appointed June 29, 2006 Renewed on March 1, Biographies and duties of the members of the Management Board Abdeslam AHIZOUNE Abdeslam Ahizoune was appointed Chairman of the Management Board of Maroc Telecom in February He is also a member of the Management Board of Vivendi (since April 2005). Ahizoune is a member of the Board of Directors of Axa Assurances, Holcim Maroc, Mohammed V Foundation for Solidarity, Mohammed VI Foundation for the Environment, the Lalla Salma Association Against Cancer and Al Akhawayne University. He is also a Chairman and member of the Board of Directors of CMC (Mauritania), and a Director of Onatel (Burkina Faso). Abdeslam Ahizoune has been president of the Royal Moroccan Federation of Athletics (FRMA), since In addition, Ahizoune has a part time employment contract with Vivendi, and takes part in determining Vivendi s international development strategy. Ahizoune served as Chairman and Chief Executive Officer of Maroc Telecom (between February 1998 and 2001). He held the position of Minister of Telecommunications (between August 1997 and 1998), Managing Director of the Office National des Postes et Télécommunications (ONPT) (between February 1995 and August 1997), Minister of Postal and Telecommunications Services and Managing Director of the ONPT (between August 1992 and February 1995) and Director of Telecommunications in the Ministry of Postal and Telecommunications Services (between 1983 and 1992). From 1982, Ahizoune held a number of senior positions in the Postal and Telecommunications Services department and then in the ONPT. Ahizoune holds an engineering degree from the École Nationale Supérieure des Télécommunications in Paris, France (1977). 266 Maroc Telecom 2007 Registration Document

267 6. CORPORATE GOVERNANCE Management and Supervisory Boards Larbi GUEDIRA Larbi Guedira is Managing Director of the Services department of Maroc Telecom, and served previously as Executive Director of the Commercial Segment, Executive Director of Telecommunications and Chief Financial Officer and Regional Director for Casablanca. In addition, Guedira serves as Director of CMC, Mauritel SA, Mauritel Mobiles, Matelca, Onatel Telmob, Gabon Telecom, Libertis, Mobisud France, Mobisud Belgium and Casanet. He also served as President of the National Association of Telecommunications Engineers (Association Nationale des Ingénieurs des Télécommunications) between 2000 and Larbi Guedira holds a Diplôme d Etudes Supérieures Spécialisées (DESS) in Management from the University of Lille, and he is a Fellow of the Ecole Nationale Supérieure des Télécommunications in Paris, having received his Master s Degree in Mathematics from Paris XI University (Orsay). Mohammed HMADOU Mohammed Hmadou is Managing Director of the Networks department. He previously served as Director of Subsidiaries and Interests, Director of Operations and Executive Director of Infrastructure segment until In addition, he serves as a Director at CMC, Mauritel SA, Mauritel Mobiles, Casanet, Matelca, Gabon Telecom and Libertis. Previously, Hmadou served as Managing Director of the National Company of Telecommunications (Société Nationale des Télécommunications). Hmadou holds an engineering degree from the Ecole Nationale Supérieure des Télécommunications in Paris. Janie LETROT Janie Letrot is the Managing Director of Regulation, Communication and International Development of Maroc Telecom. She is also Director of Onatel, Telmob and Mobisud Belgium. From January 1999 to July 2001 Letrot was Vivendi Group s General Delegate in Morocco, and joined Maroc Telecom as Director of Regulation and Public Relations before being promoted to chief Director of Regulation and Communication. Previously, Letrot had been Civil Administrator in the French Ministry of Finance, Commercial Advisor and Financial Advisor to the Economic Mission of the French Embassy in Rabat and then Economic and Financial Advisor to the Permanent Mission of France to the United Nations in New York. Janie Letrot holds a degree in History and Geography from the Paris-Sorbonne University, She is a graduate of the Ecole Nationale d Administration in Paris. Janie Letrot has been nominated Knight of the National Order of Merit. Arnaud CASTILLE Arnaud Castille is Managing Director of Administration & Finance of Maroc Telecom. Since September 2001 he had been Director of Management Control at Maroc Telecom. He is also administrator of Onatel, Telmob, Mobisud France and Mobisud Belgium. Previously he held positions as Head of Administration and Finance of Bouygues, then Accounts Manager in the consultancy firm CSC Peat Marwick. He started his career as an auditor with Ernst & Young. Arnaud Castille is 35 years old. Castille holds a Masters degree in Management and a Diplôme d Etudes Supérieures Spécialisées (DESS) in Company Finance from the Paris Dauphine University and is a graduate of INSEAD s International Executive Programme. Maroc Telecom Registration Document 267

268 6 Duties and responsibilities of the Management Board The Management Board is responsible for managing and conducting the operations of the Company, under the supervision of the Supervisory Board. The Board is composed of five members who collectively manage the Company s operations. The Board members may allocate management tasks among them, subject to the approval of the Supervisory Board. Its decisions are taken by a majority of the votes of its members that are present or represented. Messrs. Larbi Guedira and Mohammed Hmadou represent the interests of the Government of the Kingdom of Morocco, while Messrs. Abdeslam Ahizoune, Arnaud Castille and Mrs. Janie Letrot represent the interests of Vivendi. Within a period of three months following the fiscal year end, the Management Board must prepare the financial statements and deliver them to the Supervisory Board, so that the latter may conduct its audit procedure. Likewise, the Management Board must provide a management report to the Supervisory Board before presenting the same to the ordinary general shareholders meeting, so that the Supervisory Board may provide its comments, if any, on the report. The information relating to the composition of the Supervisory Board, term of the office of its members and its decision-making process are presented in chapter 3 (see section "Management of the Company"). Rights and obligations of the members of the Management Board In accordance with Moroccan law, the Management Board is vested with the most comprehensive powers to act in all circumstances on behalf of the Company; the Board exercises these powers within the limits of the Company s corporate purpose and subject to those powers that legally belong to the Supervisory Board and to the shareholders. With respect to relationships with third parties, the Company remains bound by the actions of the Management Board that do not diverge from the Company s corporate purpose, unless the Company can prove that the third party knew that such action was outside such purpose or, given the circumstances that it must have been aware of such. Publication of the bylaws is sufficient proof of this. The provisions of the Company s bylaws limiting the powers of its Management Board are not enforceable against third parties. Unless otherwise voted by a 75% qualified majority of the Supervisory Board, members of the Management Board are required to be employees of the Company and present in Morocco for more than 183 days each year. 268 Maroc Telecom 2007 Registration Document

269 6. CORPORATE GOVERNANCE Management and Supervisory Boards Composition and roles of the Supervisory Board Composition of the Supervisory Board as at April 1, 2008 Name (age) Current office Date of appointment Expiry of Term of office Principal post or occupation Salaheddine MEZOUAR (55) Jean Bernard LEVY (52) Chakib BENMOUSSA (49) Abdelaziz TALBI (58) Chairman Vice-Chairman Member Member Supervisory Board Meeting of December 4, 2007 Supervisory Board Meeting of December 17, 2002 Supervisory Board Meeting of February 24, 2006 Supervisory Board Meeting of March 4, 2005 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2013 Minister of Economy and Finance Chairman of the Management Board of Vivendi Minister of the Interior Director of State-Owned Entreprises at the Ministry of Economy and Finance President of the permanent Board of the National Accounting Council Jean-Rene FOURTOU (68) Jacques ESPINASSE (64) Frank ESSER (49) Régis TURRINI* (48) Philippe CAPRON (49) Member Member Member Member Member Supervisory Board Meeting of January 4, 2005 Supervisory Board Meeting of December 17, 2002 Supervisory Board Meeting of March 4, 2005 Supervisory Board Meeting of February 21, 2008 Supervisory Board Meeting of March 01, 2007 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2013 OGA called to approve the financial statements for 2009 Chairman of the Supervisory Board of Vivendi Company Director Chairman and CEO of SFR group Member of the Management Board of Vivendi Executive Vice President of Strategy and development of Vivendi Financial Director of Vivendi Member of the Management Board of Vivendi * Mr. Robert de Metz resigned on December 19, The Ordinary Shareholders meeting dated April 17, 2008, was asked to approve the appointment of Mr. Régis Turrini as a member of the Supervisory Board, to replace Mr. Robert de Metz for the remaining term of his office. Maroc Telecom Registration Document 269

270 6 Biographies and duties of the members of the Supervisory Board Salaheddine MEZOUAR - Chairman Salaheddine Mezouar holds a Management Diploma from INSEAD Fontainebleau (France), a Masters in Economics from the higher Institut of administration and commerce in Casablanca (ISCAE), a Masters in Advanced Studies (DEA) in Social Sciences and a Master s in Economic Science from Grenoble University (France). Salaheddine Mezouar has been Minister of Finance and Economy since October 15, Between 1986 and 1991, he served as Head of Division and Project Manager at the Ports Office. Then as Chief Executive Officer of a private textile company. He also served as Chairman of the Moroccan Association of the Textile & Clothing Industry and the Textile & Leather Federation within the General Confederation of Moroccan Companies. In 2004, he was appointed Minister of Trade, Industry and Economic Upgrading. Salaheddine Mezouar is a member of the Central Committee of the Rassemblement National des Indépendants (RNI) and the former Vice-President of the Raja Athletic Club. He has led a career as a basketball player, and was captain of the national team. Jean-Bernard LEVY Vice President Jean Bernard Lévy is Chairman of the Management Board of the Vivendi group. He previously served as Chief Operating Officer of the Vivendi Universal group, Chairman and Managing Partner in charge of Corporate Finance at Oddo and Cie from 1998 to 2002, and Chairman and Chief Executive Officer of Matra Communication from 1995 to He was chief of staff to Gerard Longuet, the French Minister for Industry, Postal Services, Telecommunications and Foreign Trade in 1993 and From 1988 to 1993, he was Director of Telecommunications Satellites at Matra Marconi Space. From 1986 to 1988 he was the technical advisor to Gerard Longuet the French Deputy Minister for Postal Services and Telecommunications. From 1978 to 1986 he was an engineer at France Telecom. Jean-Bernard Levy is a Member of the Supervisory Board of the Canal+ Group, Director of SFR, Vivendi Games, Inc (US), NBC Universal, Inc (US), Vinci and the Pasteur institute. He was also chairman of the Supervisory Board of Viroxis. Levy is a graduate of the École Polytechnique and the École Nationale Supérieure des Télécommunications. Chakib BENMOUSSA Chakib Benmoussa has been Minister of the Interior since February 15, Previously, he served as Director of Planning, Director of Roads in the Infrastructure Ministry, Secretary General to the Prime Minister and Chairman Delegate of SONASID and of Tangier Free Zone. Benmoussa has also served as Director and Chief Operating Officer of the Brasseries du Maroc Group, as member of the General Confederation of Moroccan Companies (CGEM) and of COSEF (Special Commission for Education and Training), and as Secretary General to the Minister of the Interior. Chakib Benmoussa graduated from Ecole Polytechnique in 1979 and from Ecole Nationale des Ponts and Chaussées in He graduated with a Master of Science degree in Civil Engineering from the Massachusetts Institute of Technology in 1983 and holds a post-graduate diploma (DESS) in Project Management (I.A.E, Lille). 270 Maroc Telecom 2007 Registration Document

271 6. CORPORATE GOVERNANCE Management and Supervisory Boards Abdelaziz TALBI Abdelaziz Talbi was appointed Director of State Owned Entreprises and Privatization (DEPP) at the Ministry of Finances and Privatization in He had previously assumed various responsibilities within the DEPP, overseeing the accounting revision service and the division of audit and accounting normalization. He then held a position as Deputy Director. Before joining the public Administration, he was CFO of a company in Rabat and regional manager for an accounting firm in Paris. In parallel to his activities within the DEPP, Abdelaziz Talbi is also Chairman of the National Accounting Council. Abdelaziz Talbi graduated as a chartered accountant in France and holds a Masters in administration of companies and regional and local authorities from Nancy University. Abdelaziz Talbi, as a representative of the Moroccan government, is a member of the Supervisory Boards of the Regie des Tabacs, Atlas Blue and Credit Agricole du Maroc. He also serves on the Board of Directors of Royal Air Maroc, of the Moroccan Navigation Company (COMANAV), of the National Radio and Television Company (SNRT) and of the National Local Planning Company (SONADAC). Jean-Rene FOURTOU Jean-Rene Fourtou is a former student of the Ecole Polytechnique. In 1963, Jean-Rene Fourtou was a management consultant at Bossard & Michel. In 1972, he became Chief Operating Officer of Bossard Consultants and Chairman-CEO in In 1986, he was appointed Chairman and Chief Operating Officer of the Rhône-Poulenc Group. From December 1999 to May 2002, he served as Vice- Chairman and Chief Operating Officer of Aventis. Jean-Rene Fourtou is the Honorary Chairman of the International Chamber of Commerce. He is the Cochairman of the Franco-Moroccan impetus group created in September The aim of this working group is to propose measures likely to improve economic relations between the two countries. Fourtou is Chairman of the Supervisory Board of the Canal+ group, Vice Chairman of the Supervisory Board of AXA, member of the Executive Committee of AXA Millesimes SAS, and Director at Cap Gemini, Sanofi Aventis, NBC Universal (US) and Nestlé (Switzerland). Jacques ESPINASSE Jacques Espinasse holds an MBA from the University of Michigan. He retired in May 2007, and continues to serve on various Boards of Directors. He was appointed Member and Chairman of the Audit Committee of Axa Belguim and Axa Holdings Belguim (Bruxelles). He is a member of the Supervisory Board, the Audit Committee and the Remuneration Committee for La Banque Postale Asset Mngt LBPAM (Paris). He is also a Director and Member of the Audit Committee of Hammerson Plc (London), Director and Member of the Audit Committee and the Appointments and Remuneration Committee of SES (Luxembourg). Jacques Espinasse held a variety of senior management positions in major French companies, including CEP Communication and Larousse Nathan Group, where he was appointed Senior Executive Vice President in In 1985, he became Chief Financial Officer of the Havas group. He was appointed Senior Executive Vice President of the Havas group when it was privatized in May 1987 and held this position until January In 1999, he was appointed Chief Executive Officer of satellite bouquet TPS, then Director, Chief Executive Officer in Finally, he was appointed Chief Financial Director of Vivendi Group in Jully 2002, then member of the Management Board in April Maroc Telecom Registration Document 271

272 6 Frank ESSER Frank Esser holds a doctorate in economics from the University of Economic Science of Fribourg. He was appointed member of the Management Board of Vivendi in April Esser was appointed Chairman of SFR in December 2002 and has been with the group since September 2000, when he was appointed Chief Executive Officer. Esser has been a member of the Board of Directors of the GSM Association since February 2003 and became Chairman of its Public Policy Committee in Prior to joining SFR, Esser was Executive Vice President at Mannesmann, in charge of international business and business development. Frank Esser is also Chairman and Chief Operating Officer of SFR, SHD and Director of Neuf Cegetel, Vivendi Telecom International, Jet Multimedia, Faurecia and GSM association. He is also Chairman of the Board of Directors of Vizzavi France, Permanent Representative of SFR to the Board of Directors of LTB-R and member of the Supervisory Board of Vodafone D2 and president of the French federation of Telecommunications. Philippe CAPRON Philippe Capron is a graduate of the Institut d études politiques of Paris (IEP) and the Ecole des hautes études commerciales (HEC). Capron was assistant to the Chairman and Secretary to the Board of Directors of Sacilor from 1979 to On graduating from the Ecole Nationale d Administration (ENA) in 1985, he joined the Inspectorate General of the Ministry of Finance. Advisor to the Chairman-Chief Executive Officer of Duménil Leblé from 1989 to 1990, then Managing Director and member of the Management Board of Duménil Leblé Bank (Cérus group) from 1990 to 1992, he was then appointed Vice President and Partner of the consultancy firm Bain and Company from 1992 to After serving as Director of International Development and member of Euler Group s Executive Committee from 1994 to 1997, he served as Chairman-Chief Executive Officer of Euler- SFAC from 1998 to Capron joined the Usinor group in November 2000 as Director of Financial Services, and member of the Executive Committee until 2002, when he was appointed Executive Vice-president of Arcelor, in charge of the steel packaging division, then of International Trading and Distribution. At the beginning of 2006, he became Chief financial Officer and a member of the Management Board of the Arcelor Group. Since January 2007, Philippe Capron is Chief Executive Officer, Administration for Vivendi. He was a member of the Supervisory Board and Chairman of the audit committee of the Canal+ group, Canal+ France and Vibrac Groupe. He is also Director of SFR, Vivendi Games Inc (US), Activision Blizzard (US) and member of Club de Verzy, club 40 and the Society of Political Economy. Regis Turrini Régis Turrini has been Executive Vice President of Strategy and Development of Vivendi since January He joined Vivendi in January 2003, as Executive Vice President in charge of mergers & acquisitions. Turrini is an attorney admitted to the Paris bar. He is a graduate of the faculties of literature and law and the Paris Institute of Political Sciences, and an alumnus of the Ecole Nationale d'administration (postgraduate public policy college). He began his career as a judge in the French administration courts. He then joined law firms Cleary Gottlieb Steen & Hamilton ( ), followed by Jeantet & Associés ( ), as a corporate lawyer. In 1995, Mr. Turrini joined the investment bank Arjil & Associés (Lagardère group) as Executive Director. He was then appointed Managing Director and, from 2000, Managing Partner. He is Chairman and Chief Executive of Vivendi Telecom International, of Vivendi Net the USA Group (The United States), Member of the Supervisory Board of Canal+ France, Administrator of Scoot Europe NV (Belgium) and of Vivendinet U.K. Limited (England - Wales) and Permanent representative of Vivendi to the Board of directors of SAIGE. 272 Maroc Telecom 2007 Registration Document

273 6. CORPORATE GOVERNANCE Management and Supervisory Boards Duties and responsibilities of the Supervisory Board Pursuant to the bylaws, the Supervisory Board may be composed of a minimum of eight members and a maximum of 15 members since the listing of shares of the Company. Among its members, the Board elects a Chairman and a Vice Chairman, who are in charge of convening the Board and leading its discussions. The Supervisory Board appoints the members of the Management Board for a renewable term of two years and appoints the Chairman among the members of the Management Board. Depending on the matters and in accordance with the terms of the bylaws, decisions of the Supervisory Board are voted by a simple majority or a qualified 75% majority of its members. The Supervisory Board supervises the executive management of the Company by the Management Board. For information on the composition of the Supervisory Board, terms of office, duties, and the decisionmaking process, see section 3.1 General information regarding the Company Management of the Company Supervisory Board. In 2007, the Supervisory Board met three times to approve the Company s performance as well as its perspectives on medium and long-term grouth, with an average attendance rate of 73%. Three members of the Supervisory Board Messrs. Salaheddine Mezouar, Chakib Benmoussa, and Abdelaziz Talbi were appointed upon proposal of the Government of the Kingdom of Morocco and 5 members Messrs. Jean Bernard Levy, Jean-Rene Fourtou, Frank Esser, Philippe Capron and Regis Turrini were appointed upon proposal of Vivendi. Jacques Espinasse who was initially appointed by Vivendi and retired in 2007, is still a member of the Supervisory Board. Each member of the Supervisory Board must hold at least one share, which must be in registered form. Rights and obligations of the members of the Supervisory Board In accordance with Moroccan law, the Supervisory Board supervises the executive management of the Company by the Management Board. The Company s bylaws may require certain matters to be subject to the prior approval of the Supervisory Board. When an operation requires approval from the Supervisory Board and the Board refuses to grant such approval, the Management Board may submit the dispute to the shareholders meeting for the latter to decide. The disposal of property, the full or partial disposal of shareholdings and the pledging of collateral, guarantees, security and warranties are subject to authorization by the Supervisory Board. The Board determines the amount for each transaction. Nevertheless, the Management Board may be entitled to grant endorsements and guarantees to customs and tax authorities, without any limit on the amount. Whenever a transaction exceeds the amount determined as mentioned above, the approval of the Supervisory Board is required. The Management Board may delegate the power that it has received pursuant to the previous paragraphs. The absence of approval is unenforceable against third parties, unless the Company proves that such parties knew or could not have ignored such requirement. Throughout the year, the Supervisory Board carries out the verifications and monitoring that it deems appropriate, and it may require documents which it deems useful in accomplishing its mission. The members of the Supervisory Board may have access to all information relating to the Company s activities. At least once every quarter, the Management Board provides a report to the Supervisory Board. Within three months following each fiscal year end, the Management Board provides the documents set out in Act concerning corporations to the Supervisory Board, to be verified and reviewed. The Supervisory Board may provide the shareholders meeting with comments on the report from the Management Board, as well as comments on the financial statements for the fiscal year. The members of the Supervisory Board are not employees of the Company. Maroc Telecom Registration Document 273

274 6 6.2 CORPORATE GOVERNANCE Audit committee Maroc Telecom s Audit Committee is responsible for making recommendations and/or giving advice on accounting procedures governing the operations of the Group. Composition The Audit Committee is composed of the following members: Name (age) Philippe Capron (49) Jacques ESPINASSE (64) Noureddine BOUTAYEB (50) Abdelaziz TALBI (58) Monkid MESTASSI (55) Pierre TROTOT (53) *Mr. Robert de Metz retired on December 19, 2007 Current office appoint- Date of Principal post or occupation ment Chariman 2007 Chief financial officer of Vivendi Member of Vivendi s Management Board Member 2003 Director Member 2003 Director of Rural Affairs of the Ministry of Interior Member 2004 Director of State Owned Entreprises at the Ministry of Economy and Finance Chairman of the National Accounting Council Member 2007 Secretary general of Ministry for Economic and General Affairs Member 2003 Senior Executive Vice President, Administration and Finance Director of SFR * Biographies and duties of the members of the Audit Committee Noureddine Boutayeb Noureddine Boutayeb was appointed Director of Rural Affairs at the Ministry of the Interior in Boutayeb is also a member of the Supervisory Board of Crédit Agricole. Previously, Boutayeb served as Deputy Managing Director of Maghrebine Consulting Engineers (Société Maghrébine d Ingénierie (INGEMA SA)), after he served as an Engineer at the Ministry of Equipment (Ministère de l Equipement) and in a consulting firm in Paris. Boutayeb holds a degree from the Ecole Centrale in Paris. In addition, he holds a Master s of Business Administration and an engineering degree from the Ecole Nationale des Ponts et Chaussées. Finally, Boutayeb also has a Master s in Advanced Studies (DEA) in Soil Mechanics. Pierre Trotot Pierre Trotot is the Senior Executive Vice President, Administration and Finance Director of SFR. Previously, Trotot served as Project Manager then Director of Financial Management at Compagnie Générale des Eaux, after having been Project Manager reporting to the Chairman of the Compagnie de Navigation Mixte ( ). Before then, Trotot was Project Manager at Arthur Andersen Audit ( ). Trotot is a graduate of Hautes Etudes Commerciales (HEC) in Paris. Monkid Mestassi Monkid Mestassi has been Secretary General of the Delegated Ministry of State for Economic and General Affairs since September He was previously Deputy Director with the Ministry for Foreign Affairs (bilateral economic cooperation), Deputy Director of the Bank Al the Maghreb (Central Bank), Head of Department in the O.C.E (Marketing and Export) and Project Manager with the Prime Minister s Office. 274 Maroc Telecom 2007 Registration Document

275 6. CORPORATE GOVERNANCE Corporate governance In 1987 he was appointed Project Manager with the Prime Minister s Office responsible for economic cooperation with USAID and the coordination of relationships with the World Bank. In 2000, he was responsible for raising public moral standards and fighting corruption. He also acted as Project Manager with the Prime Minister s Office, in charge of reorganizing the Public Administration. Monkid Mestassi is an Engineer specialized in statistics and economics and he holds a Masters in Economic Science. Operations of the Audit Committee Created by the Supervisory Board in 2003, the Audit Committee seeks to ensure compliance with international standards for corporate governance and Maroc Telecom s internal controls. The Audit Committee is composed of a Chairman and five permanent members, with three representatives of the Government of the Kingdom of Morocco and three of Vivendi, including the Chairman. The Audit Committee convened for the first time in May 2004, and held three meetings in The Committee s role is to give recommendations and opinions to the Supervisory Board on matters such as: the individual financial statements and consolidated financial statements, before they are presented to the Supervisory Board; the consistency and efficiency of the Company s internal audit process; review of the work programs of internal and external auditors and the examination of the results of their audits; accounting principles and methods, and consolidation scope; the Company s off-balance sheet risks and commitments; insurance policy; establishing procedures for selecting statutory auditors, reviewing the amounts of the fees solicited for the performance of their audit duties, and monitoring compliance with the rules guaranteeing auditor independence; and considering all issues that, in its judgment, present risks for the Company or could result in the malfunction of auditing procedures. Internal Control Maroc Telecom s internal control procedures seek to: ensure that the operational management, transactions and employees conduct, comply with the framework of corporate purpose as defined by management guidelines and by applicable laws and regulations; check that the accounting, financial and management information provided to the management bodies accurately reflect the Company s operations and financial position. The aim of the internal control process is to prevent and control risks arising from corporate undertakings, error and fraud, in particular in the financial and accounting areas. As is the case for all audit systems, however, they cannot provide an absolute guarantee that these risks will be completely eliminated. In order to carry out its task of assessing and validating Company internal audits, the Audit Committee relies on the Internal Audit and Inspection departments. The Audit Committee defines the Internal Audit and Inspection departments mandates and analyzes their findings. In 2007, the average attendance rate at the Audit Committee s meetings was 75%. Maroc Telecom Registration Document 275

276 6 Internal Audit and Inspection Internal Audit The Internal Audit department of Maroc Telecom is an independent function that has direct access to the Audit Committee. Its functions are governed by a charter approved by the Audit Committee. The Internal Audit department s role is to ensure that the Company has control over its operations and to monitor the quality of internal control at each level of the Company s organization. The Internal Audit department assists the Management in achieving its objectives by assessing its risk management and control procedures and corporate governance. The efficiency of the internal audit process is assessed by the Internal Audit department, according to an annual audit plan approved by the Audit Committee. Synopses of the comments and recommendations formulated by the Internal Audit department are provided to the Audit Committee so that the latter can assure its compliance and guarantee its execution. The audit plan is defined according to an analysis of company risks, which covers both financial and information systems risks, and risks relating to the operational units of the Company. For the purpose of meeting this double target, the Internal Audit department is composed of two segments which have the following complementary missions: financial audit (18 auditors, as at December 31, 2007) which reports to the Administration and Finance Department for matters having an accounting and financial impact; and operational audit (18 auditors, as at December 31, 2007) which reports to the General Control Department (Presidency) that focuses on the operational units (Sale Agencies and Regional headquarters). This audit proceeds with a review of the procedures for managing resources, networks and customer services. The annual audit plan is comprised of a program of missions, the implementation of which is entrusted to the Internal Audit department. The missions have the following main objectives: ascertain the existence and adequacy of controls in the areas of finance, data processing and operations, to ensure that the main risks are identified and suitably covered; review the integrity of the financial information, including the controls relating to security of communications, saving and backing up information; review the operational units and systems for ensuring adequacy with respect to policies, procedures and legal and regulatory requirements; review the means of safeguarding assets and advising management as to the efficiency and effectiveness of its use of resources; and assure that recommendations are carried out within the framework of follow-up tasks. Finally, the Internal Audit department communicates and coordinates with the Company s external auditors, to maximize the effectiveness of the scope of the audit s coverage. Internal audits performed in 2007 involved the main balance sheet and consolidated income statement, i.e. revenues, fixed assets, inventories and cash flow. 276 Maroc Telecom 2007 Registration Document

277 6. CORPORATE GOVERNANCE Corporate governance Inspection Together with the Internal Audit department, the Inspection department (15 inspectors, as at December 31, 2006) also takes part in the assessment and approval of Company internal controls. The department reports to the General Control Department (Presidency) and to the Audit Committee. At their request or its own initiative, the Inspection department conducts regular audits, specific and unannounced, for the following purposes: to protect the assets, property, resources and means used; to check that management procedures, instructions, policies and rules are observed; to ensure the quality, sufficiency and reliability of data and optimization of the allocation of resources; and to demonstrate and determine the possible liabilities in the event the Company became aware of malfunctions, irregularities or fraud. The Inspection department may assist the Internal Audit department in the implementation of specific missions, to determine a program of study and analysis, and to provide proposals on the Company s operations. Sarbanes-Oxley On October 31, 2006, Vivendi filed a form 15 with the Securities and Exchange Commission (SEC) to terminate its obligations under the Securities Exchange Act of Vivendi had already terminated the deposit agreement with the Bank of New York relating to its American Depositary Receipts (ADR). For the needs of Vivendi, since the parent company is listed on the New York Stock Exchange, in 2003, Maroc Telecom, as a subsidiary of the group, initiated compliance with Sarbanes-Oxley Act, by assessing the quality of processes that might effect the reliability of its financial information. Once Vivendi is no longer bound by regulatory obligations to the US market authorities, Maroc Telecom will remain committed to maintaining the highest standards of corporate governance and financial information Code of Ethics Maroc Telecom has drawn up a Code of Ethics in order to maintain a high level of fairness, transparency, market integrity, and primacy of the client s interests. This Code is not intended to replace existing rules, but outlines the ethical principles and rules that are generally applicable and the need to comply with them scrupulously. It aims to make each member of the Company accountable, setting out the principal rules governing the use of privileged information, in order to increase awareness of best practices among company employees, and to assist them in adjusting their professional behavior to those best practices. This Code of Ethics includes rules for dealing with real or apparent conflicts of interest in order to avoid situations such as insider trading or the suspicion of such. Employees may also consult the person responsible for ethical standards, who is in charge of ensuring complianc with the rules of the Code of Ethics, and with all rules and regulations as defined by law. Maroc Telecom Registration Document 277

278 6 6.3 INTERESTS OF THE CORPORATE EXECUTIVES Compensation of the Management and Supervisory Boards The Supervisory Board sets, as part of its appointment decisions, the form and the amount of compensation paid to each member of the Management Board. That information is then stated in the employment contract of the respective member. A Remuneration Committee comprised of the Chairman and the Vice Chairman of the Supervisory Board meets each year to examine the total compensation of the members of the Management Board, including any variable portion, and submits its proposal to the Supervisory Board. The total gross compensation paid by the Company, its subsidiaries and all controlling companies to members of the Management Board for fiscal year 2006 amounted to approximately MAD22.2 million, of which 30% represented variable compensation. Variable compensation for the members of the Management Board for 2007 was determined on the basis of: (a) Vivendi group and/or Maroc Telecom s financial targets and (b) priority developments in their business areas. The following table sets out the compensation for the past three fiscal years: in millions of Moroccan dirhams Gross compensation Variable compensation 33% 30% 28% Minimum amount in the event of termination of contract Some companies in the Vivendi group cover part of these payments to certain members of the Management Board. In addition, certain members of the Management Board are eligible for Vivendi s stock option plans. Based on compensation for 2006, the minimum amount to be paid by the Company in the event of termination of the employment contract of the members of the Management Board would amount to around MAD25.3 million in total, except for dismissal for serious misconduct or gross negligence. Furthermore representation and travel expenses incurred by the members of the Management Board in the performance of their functions are borne by the company. The Shareholders meeting on October 28, 2004 decided to allocate the total annual sum of two million dirhams (MAD2,000,000) for the payment of directors fees for the members of the Supervisory Board. This decision is valid until a new decision is made by the Shareholders meeting. The conditions and means of payment are to be determined each year by the Supervisory Board. At the Supervisory Board meeting held on August 1, 2007, the members of the Board decided, as in the previous year, to waive the payment of Directors fees that were due in respect of 2006 and chose for these fees to be awarded by Maroc Telecom to the Maroc Telecom Association for Entrepreneurship which distributes these sums in the form of grants to Moroccan students of merit studying at university with limited financial means. 278 Maroc Telecom 2007 Registration Document

279 6. CORPORATE GOVERNANCE Interests of the corporate executives Management Board and Supervisory Board share ownership As at December 31, 2007, the members of the Supervisory Board and the Management Board held respectively, directly or indirectly, 8,070 and 147,910 Maroc Telecom shares Conflicts of interests Over the past five years, no conviction in relation to fraudulent offences has been delivered against any member of Maroc Telecom s Management Board or Supervisory Board, none of the members of the Management Board or the Supervisory Board have been associated with a bankruptcy, receivership or liquidation while serving on an administrative, management or supervisory body, and no official public incrimination and/or sanction has been delivered against any members of the Management Board or the Supervisory Board by statutory or regulatory authorities. Furthermore, there are no family relations between the members of the Management Board and those of the Supervisory Board. Finally, members of the Management Board and of the Supervisory Board are appointed by the Shareholders Agreement according to the conditions set out in paragraph Shareholders Agreement Interests of corporate executives in significant customers and suppliers of the company None Service contracts To date, with the exception of employment contracts between members of the Management Board and Maroc Telecom, there are no contracts between members of the Management Board or the Supervisory Board and the Company and/or any of its subsidiaries, which bestow any individual benefits Stock options As at the date of this annual report, no director and/or employee owns any stock options. Nonetheless, the Extraordinary and Ordinary Shareholders Meeting of March 30, 2006, in the eighth resolution, authorized the Management Board to grant stock options, under the conditions provided for by law, on one or more occasions, for a period of three years from the date of authorization, to members of the Board, directors, senior executives, or in exceptional cases to non-executive Group employees Loans and guarantees granted to corporate executives None Maroc Telecom Registration Document 279

280 6 6.4 RELATED PARTY TRANSACTIONS As Maroc Telecom is incorporated under Moroccan law, the French commercial code is not applicable to it. However, under Article 95 of Moroccan Act relating to Corporations, any agreement entered into, directly or indirectly, between the Company and one of the Management or Supervisory Board members, is subject to prior approval by the Supervisory Board. The same applies for agreements entered into between the Company and another company, if one of the members of the Management or Supervisory Board, is an owner, a partner, a manager, a director, an executive officer or a member of the Management or Supervisory Board of the said company Management services agreements concluded by Maroc Telecom during 2007 Mobisud (France)-Current account advance On March 1, 2007, the Supervisory Board approved the current account advance agreement between Maroc Telecom and Mobisud (France) for an amount of 5,280,000. On December 31, 2007, no payment had yet been made under this agreement. Agreement with Onatel In september 2007, Onatel concluded an agreement with Maroc Telecom under which the latter provides services in the following fields: Strategy and development ; Organization ; Networks ; Marketing ; Finance ; Purchasing ; Human resources ; Information systems ; Regulation. These services can be carried out by expatriate employees. In accordance with the terms of this agreement, the amount (including tax) related to services provided for 2007, charged by Onatel totaled 1,015, Casanet- current account advance Maroc Telecom has transferred its Yellow Pages activity to its subsidiary Casanet. On December 4, 2007, the Management Board authorized the Company to make the necessary capital expenditure which will be financed via non-interest bearing current account advances. The amount authorized totaled MAD6.1 million. As at December 31, 2007, no payment had yet been made under this agreement. 280 Maroc Telecom 2007 Registration Document

281 6. CORPORATE GOVERNANCE Related party transactions Agreement with Gabon Telecom In September 2007, Gabon Telecom concluded an agreement with Maroc Telecom under which the latter provides services in the following fields: Strategy and development; Organization; Networks; Marketing; Finance; Purchasing; Human resources; Information systems; Regulation. These services can be carried out by expatriate employees. In accordance with the terms of this agreement, the amount (including tax) related to services provided for 2007, charged by Gabon Telecom increased to 1,275, Agreements concluded in previous years and to be carried out in 2007 Management services agreement with Vivendi Telecom International In June 2001, Maroc Telecom entered into a Management Services Agreement with Vivendi, by virtue of which, Vivendi provides Maroc Telecom directly or via its subsidiaries, subsidiaries, and in particular Vivendi Telecom International (VTI), technical assistance in the following fields: Strategy and organization; Development; Sales and marketing; Finance; Purchasing; Human resources; Information systems; Regulation; Interconnection; Infrastructures and networks. These services can be carried out by expatriate employees. In accordance with the terms of this agreement, the fees (excluding tax) paid by Maroc Telecom to Vivendi amounted to MAD18.9 million in 2007, MAD95 million in 2006 and MAD69 million in Maroc Telecom Registration Document 281

282 6 Agreement with Mauritel During 2001, Mauritel SA entered into an agreement with Maroc Telecom under which the latter provides services, technical assistance and equipment to Mauritel SA. The amount charged by Maroc Telecom to Mauritel SA was MAD10.6 million (excluding tax) in 2007 and MAD12.5 and MAD13.9 million (excluding tax) in 2006 and 2005 respectively. Agreement with Casanet In 2003, Maroc Telecom concluded several agreements with Casanet related to the maintenance of the Maroc Telecom internet portal Menara, the supply of development services and the hosting of Maroc Telecom s Mobile portal, hosting of Maroc Telecom s website El Manzil, the maintenance of new WAP modules on the Menara portal and the production of the content relative to these modules, as well as the marketing of internet access over leased lines. The amounts charged by Casanet to Maroc Telecom by virtue of these agreements for the fiscal years 2007, 2006 and 2005 were MAD47.7 million, MAD27.5 million and MAD17.1 million respectively. Agreement with Al Akhawayn University During 2004, Maroc Telecom signed an agreement with Al Akhawayn University to set up a global framework of cooperation to carry out joint actions in areas of common interest concerning scientific and technical research, in particular Research and Development and Consulting. In accordance with this agreement, two study grants will be awarded each year, to two students selected from amongst Maroc Telecom s employees children. As at December 31, 2007, Maroc Telecom recorded an expense of MAD1.3 million in relation to this agreement. Costs relating to stock options and bonus shares In accordance with IFRS standards, Vivendi invoices its subsidiaries for costs related to benefits granted to employees in the form of stock options and bonus shares. The following amounts were charged to Maroc Telecom: For stock options: MAD21.9 million in 2007, MAD21.5 million in 2006 and MAD9.8 million in For bonus shares: MAD53 million. 282 Maroc Telecom 2007 Registration Document

283 6. CORPORATE GOVERNANCE Related party transactions Contract with Media Overseas On February 24, 2006, Maroc Telecom s Supervisory Board approved the agreement entered into over the period with Media Overseas, a subsidiary of the Canal + Group, concerning the launch of a TV via ADSL offer. Pursuant to this agreement, operations are performed with Multitv Afrique, a subsidiary of Media Overseas. Maroc Telecom recorded an expense of MAD4.5 million in relation to this agreement. Medi-1-Sat current account advance During 2006, Maroc Telecom entered into an agreement with Medi-1-Sat, in which it grants the latter 2.8 million in current account advances, to meet the latter s financial needs. In 2006, Maroc Telecom paid 1.2 million for the first tranche of this advance (MAD13.3 million). In 2007, Maroc Telecom paid 1.6 million (MAD18 million). Maroc Telecom Registration Document 283

284 RECENT DEVELOPMENT AND OUTLOOK

285 7.1 RECENT DEVELOPMENTS MARKET OUTLOOK OBJECTIVES 288 REPORT OF THE STATUTORY AUDITORS ON THE PROFIT FORECASTS 289

286 7 7.1 RECENT DEVELOPMENTS Formal notice served by ANRT related to the identification of mobile customers According to article 10.3 of Maroc Telecom s contract specifications, the Company must identify all its customers, subscribers and holders of prepaid cards. In 2007, ANRT performed an operational audit of the management systems of Maroc Telecom s mobile subscribers namely to ascertain the identification of mobile subscribers. The audit report communicated to Maroc Telecom on January 3, 2008, notes that the identification of prepaid clients is totally managed by Maroc Telecom s agencies, but that the identification of prepaid customers is unsatisfactory as 98% of prepaid cards are delivered via Maroc Telecom s indirect sales network. A formal notice was served on Maroc Telecom by the ANRT on January 9, 2008, requiring the former to implement an action plan to rectify this situation with a clear agenda. This action plan has already been put into place. In 2008, Maroc Telecom will launch a vast campaign to identify Jawal subscribers. Shareholders Meeting held April 17, 2008: The shareholders of Itissalat Al-Maghrib, a Moroccan corporation with a Management and Supervisory Board and a share capital of MAD5,274,572,040 whose head office is located in Rabat, Annakhil, Hay Riyadh registered with the trade register of Rabat under number , are convened on April 17, 2008 at 3pm at the Head Office, to the Ordinary General Meeting for the purposes of deliberating on: the approval of the individual financial statements for the year ended December 31, 2007; the approval of the consolidated financial statements for the year ended December 31, 2007; the approval of related party transactions; the allocation of net income-dividend pay out; approval of the appointment of M. Salaheddine MEZOUAR as a member of the Supervisory Board; approval of the appointment of M. Regis TURRINI as member of the Supervisory Board; renewal of M. Abdelaziz ALMECHATT s term of office as statutory auditor; authorization granted to the Management Board to trade in the Company s own shares; powers for formalities. 286 Maroc Telecom 2007 Registration Document

287 7. RECENT DEVELOPMENT AND OUTLOOK Market outlook 7.2 MARKET OUTLOOK The discussion herein relating to market outlook contains forward-looking statements, and information relating to the Company s expectations. These forward-looking statements involve risks and uncertainties inherent to forecasts, and are based solely on evaluations made as at the date on which the statements are made. The Company warns investors that a significant number of factors could result in the actual results differing materially from those expected, including the factors listed in section The telecommunications market in Morocco offers significant growth, owing to the following economic and social factors, which favor greater penetration of new information and telecommunications technologies: young population (51% aged under 25) (*); Growth population of 1.4% per year; the fact that the population is increasingly concentrated in urban areas (with the rate of urbanization rising from 43% in 1982 to 55% in 2004)(*); sustained GDP growth (5.3% annual average growth between 2001 and 2006), and in the medium term, completion of road and tourism infrastructure programs, and electricity brought to rural areas; the National Initiative for Human Development (INDH) was launched in 2005 and aims to set up programs to combat poverty and exclusion; the establishment of free-trade agreements with the European Union, the United States and Arab countries. In the Mobile segment, revenue growth is expected to derive mainly from the high penetration rate of mobile telecommunications in Morocco. On the basis of research conducted for Maroc Telecom by independent analysts in 2002, the rate of mobile penetration in Morocco could reach approximately 40% of the Moroccan population in the medium term. Given the growth recorded in 2005 and 2006, the penetration rate could exceed 85% in the medium term. In addition, the Company hopes to benefit from the growth in usage, owing mainly to a migration of prepaid customers to postpaid subscriptions and the increased use of data services in the medium term. Regarding its competitive position in this market, Maroc Telecom considers that is possible that a new operator, holding a new license as a Mobile Virtual Network Operator (MVNO) or through other means, may enter the market in the near future. In the Fixed-line and Internet segments, Maroc Telecom intends to pursue its efforts, initiated in 2002, in order to expand its Fixed-line business, and expects moderate growth in the number of fixed lines in Morocco. Regarding the Internet, the strong growth posted since the beginning of 2004 is expected to continue in the coming years, in particular due to the development of broadband. The Company also considers that the liberalization of the market in the near future could result in the Company losing market share in the short term. However, the fixed-line market might benefit from this liberalization and from the competition incurred by new entrants, as has been the case in other countries that liberalized their telecommunications sector. (*) Census 2004 Maroc Telecom Registration Document 287

288 7 7.3 OBJECTIVES This section contains information regarding the Company s objectives for the fiscal year The Company warns potential investors that these forward-looking statements are dependent on circumstances and events which are expected to occur in the future. These statements do not reflect historical data and are not to be interpreted as guarantees that the facts and data mentioned will occur or that the targets will be achieved. By their nature, these are targets and it is therefore possible that they may not be achieved, and the assumptions on which they are based may be found to be incorrect. Investors are invited to take into consideration the fact that some of the risks described in section 4.14 Risk factors herein may affect the Company s operations and its ability to achieve its targets (see also section 7.2 Market Outlook ). Given continuing growth in the mobile and ADSL markets both in Morocco and at its subsidiaries, the Company s growth targets for 2008 are as follows: Consolidated revenues should grow by more than 7%; Consolidated earnings from operations should grow by more than 9%. 288 Maroc Telecom 2007 Registration Document

289 7. RECENT DEVELOPMENTS AND OUTLOOK Objectives Report of the statutory auditors on the profit forecasts In our capacity as statutory auditors and in accordance with the European Regulation (EC) no. 809/2004, we have prepared this report on Maroc Telecom s profit forecasts in part 7, section 7.3 of this Registration Document. These forecasts and underlying significant assumptions were prepared under the responsibility of the Management Board of Maroc Telecom, in accordance with the provisions of the European Regulation (EC) no.809/2004 and the CESR recommendations on profit forecasts. It is our responsibility to express, in accordance with the terms required by annex I, item 13.3 of the European Regulation (EC) n o 809/2004, our conclusions on the appropriateness of the preparation of such forecasts. We conducted our work in accordance with International Auditing Standards. Our work included an assessment of the procedures implemented by management to prepare the forecasts, as well as the performance of procedures to obtain assurance about whether the accounting methods used are consistent with those used for the preparation of historical data of Maroc Telecom. They also involved collecting data and explanations we deemed necessary in order to obtain reasonable assurance about whether the forecasts are appropriately prepared on the basis of the specified assumptions. We remind you that, as this concerns forecasts, which are uncertain by nature, actual results may differ significantly from the forecasts presented and so, we do not express any conclusion as to the potential realization of such forecasts. In our opinion: The forecasts have been appropriately prepared in accordance with the basis indicated; The accounting basis used for the purposes of these forecasts is consistent with the accounting methods used by Maroc Telecom. This report is issued for the sole purpose of publication of these forecasts in the Registration Document and may not be used in any other context. Casablanca, April 28, 2008 Statutory Auditors KPMG Fouad LAHGAZI Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner Maroc Telecom Registration Document 289

290 TABLE OF CONCORDANCE Items in Annex I of the European regulation 809/2004 Page number of the Registration Document 1. PERSONS RESPONSIBLE STATUTORY AUDITORS SELECTED FINANCIAL INFORMATION 3.1. Selected historical financial information 6 / Selected financial information for interim periods 7 4. RISK FACTORS 140 to INFORMATION ABOUT THE ISSUER 52 to History and development of the Issuer Investments 174 to BUSINESS OVERVIEW 60 to Principal activities 60 to Principal markets 60 to Information given pursuant to items 6.1. and 6.2. that has been influenced by exceptional events NA 6.4. Extent to which the issuer is dependent on patents or licenses, industrial commercial or financial contracts or new manufacturing processes The basis for any statements made by the issuer regarding its competitive position 100 to to ORGANIZATIONAL STRUCTURE 7.1. Description of the group 55 to Significant subsidiaries 106 to PROPERTY, PLANT AND EQUIPMENT Existing or planned material tangible fixed assets Environmental issues that may affect the issuer s utilization of tangible fixed assets NA 9 OPERATING AND FINANCIAL REVIEW 146 to Financial condition 148 to Earnings from operations 162 to CASH AND CAPITAL RESOURCES 174 to Information concerning the issuer s capital resources (both short and long term) 178 to Cash flows Information on the borrowing requirements and funding structure of the issuer 177 to Information regarding any restrictions on the use of capital resources NA Information regarding the anticipated sources of funds needed to fulfill commitments referred to NA in items and RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES TREND INFORMATION PROFIT FORECASTS OR ESTIMATES ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIES AND SENIOR MANAGEMENT Administrative, management or supervisory bodies 264 to Administrative, management, and supervisory bodies and senior management conflicts of interests Maroc Telecom 2007 Registration Document

291 TABLE OF CONCORDANCE Items in Annex I of the European regulation 809/2004 Page number of the Registration Document 15. REMUNERATION AND BENEFITS Remuneration paid and benefits in kind Pension, retirement and similar benefits BOARD PRACTICES Date of expiration of the current term of office Information about members of the administrative, management or supervisory bodies service contracts Audit committee and others Statement as to whether or not the issuer complies with the incorporation corporate governance regime NA of its country Report of the Chairman of the Supervisory Board on internal control NA Statutory Auditors report on the Chairman s report NA 17. EMPLOYEES Human resources 128 to Shareholdings and stock options Description of any arrangements for involving the employees in the capital of the issuer MAJOR SHAREHOLDERS 46 to Breakdown of capital and voting rights 46 to Different voting rights NA Control of the issuer 47 to Description of any arrangements, known to the issuer, the operation of which may at a subsequent date result in a change of control of the issuer 47 to RELATED PARTY TRANSACTIONS FINANCIAL INFORMATION CONCERNING THE ISSUER S ASSETS AND LIABILITIES, FINANCIAL 146 to 263 POSITION AND PROFITS AND LOSSES Historical financial information 146 to Pro forma financial information Financial statements 186 to Auditing of financial information 187 / 233 / Age of latest financial information Interim and other financial information NA Dividend policy Legal and arbitration proceedings Significant change in the issuer s financial or trading position ADDITIONAL INFORMATION Share capital 36 to Memorandum and bylaws 16 to ADDITIONAL INFORMATION NA 23. THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATION OF ANY INTE- NA REST 24. DOCUMENTS ON DISPLAY INFORMATION ON HOLDINGS 55 / 106 to 112 In compliance with article 28 of European Commission regulation (EC) no. 809/2004 dated April , the following information is included for reference in the present Registration Document: the consolidated financial statements for the year ended December 31, 2006, the relevant Statutory Auditors report and the Group financial report on pages 135, 175 and 106 of the Registration Document filed with the AMF on April 11, 2006 (R ) ; the consolidated financial statements for the year ended December 31, 2005, the relevant Statutory Auditors report and the Group financial report on pages 124, 167 and 98 of the Registration Document filed with the AMF on April 11, 2006 (R ) ; the consolidated financial statements for the year ended December 31, 2004, the relevant Statutory Auditors report and the Group financial report on pages 157, 131 and 100 of the Registration Document filed with the AMF on April 8, 2005 (R ) ; the consolidated financial statements for the year ended December 31, 2003, the relevant Statutory Auditors report and the Group financial report on pages 160, 122 and 208 of the Registration Document recorded with the AMF on November 8, 2004 (I ). the chapters of the Registration Document no. R and of the draft prospectus no. I that are not referred to above are either not relevant for the investor, or are covered elsewhere in this Registration Document. Maroc Telecom Registration Document 291

292 2007 ANNUAL INFORMATION DOCUMENT The following table shows a list of the information published or made public by Maroc Telecom over the past twelve months (from January 26, 2006 to January 22, 2007), in accordance with article L of the Monetary and Financial Code and article of the AMF General Regulation: Date January 22, 2007 Title Press release: fourth quarter 2006 and full year 2006 revenues March 2, 2007 Press release: 2006 results Xxx 2007 Shareholders Meeting Notice for General Meeting on April 12, 2007 May 9, 2007 Registration Document 2006 filed with the AMF under no. R May 11, 2007 Press release: first quarter 2007 revenues and results July 22, 2007 Press release: second quarter 2007 revenues and first half 2007 revenues August 2, 2007 Press release: first half 2007 results and interim report November 5, 2007 Press release: third quarter 2007 revenues and results January 21, 2008 Press release: fourth quarter 2007 revenues February 22, 2008 Press release: full year 2007 revenues March Xx, 2008 Shareholders Meeting Notice for General Meeting on April 17, 2008 All press releases are available on: The AMF website: Maroc Telecom s website under Information réglementée : Maroc Telecom 2007 Registration Document

293 ANNUAL INFORMATION DOCUMENT Statutory auditors fees STATUTORY AUDITORS FEES 2007 In accordance with the provisions of article of the AMF General Regulation, the table below shows the amount of fees paid by the Maroc Telecom Group, to each of its statutory auditors for the fiscal year 2007: in millions of Moroccan dirhams KPMG Maroc Telecom group Abdelaziz Almechatt Other TOTAL 2007 TOTAL 2006 Statutory auditors fees Other audit missions TOTAL Maroc Telecom Registration Document 293

294 ORDINARY GENERAL MEETING, APRIL 17, 2008 Proposed resolutions First resolution: Approval of the individual financial statements for the year ended December 31, 2007 The General Shareholders Meeting, having satisfied the quorum and majority requirements for Ordinary Shareholders Meetings, after reviewing: the Management Board s report and the comments of the Supervisory Board on the said report; and the Auditors Report on the financial statements for the year ended December 31, approve the financial statements for the said fiscal year and the operations translated in these statements or summarized in these reports. Consequently, the Shareholders Meeting decides to give final discharge to the members of the Supervisory and Management Board for the performance of their term of office for the fiscal year Second resolution: Approval of the consolidated financial statements for the year ended December 31, 2007 The Shareholders Meeting, having satisfied the quorum and majority requirements for Ordinary Shareholders Meetings, approves where necessary the consolidated financial statements for the year ended December 31, 2007, such as they have been presented. Third resolution: Approval of related-party agreements The Shareholders Meeting, having satisfied the quorum and majority requirements for Ordinary Shareholders Meetings, after having heard a reading of the Statutory Auditors Report on the agreements referred to in Article 95 of Act no , approves all the transactions and regulated related-party agreements described in this report. Fourth resolution: Allocation of net income and payment of dividend The Shareholders Meeting, having satisfied the quorum and majority requirements for Ordinary Shareholders Meetings, decides to allocate the net income of MAD8,091,922, for the year ended December 31, 2007 as follows: Allocation of 2007 income (in thousands of Moroccan dirhams) Net income 8,091,922 Retained earnings and earnings available for distribution at December 31, ,801 Distributable income 8,094,723 Statutory reserve - - Optional reserve - Ordinary dividend* 8,087,677 Optional reserve 7,046 The Shareholders Meeting sets the total dividend at MAD9.20 per share for each of the shares making up the share capital held on the record date. This dividend will be paid on May 19, The ordinary dividends paid over each of the past three fiscal years were as follows: Number of shares 879,095, ,095, ,095,340 Dividend/share (in MAD) Total dividend (in thousands of MAD) 4,395,477 6,118,504 6,927, Maroc Telecom 2007 Registration Document

295 ORDINARY GENERAL MEETING Fifth resolution: Approval of the appointment of Mr. Salaheddine MEZOUAR as member of the Supervisory Board The Shareholders Meeting, acting on a proposal of the Supervisory Board, decides to approve the appointment of Mr. Salaheddine MEZOUAR as member of the Supervisory Board, to replace Mr. Fathallah OUA- LALOU for the remaining term of his office, namely until the end of the Shareholders Meeting to be held in Sixth resolution: Approval of the appointment of Mr. Regis TURRINI as member of the Supervisory Board The Shareholders Meeting, acting on a proposal of the Supervisory Board, decides to approve the appointment of Mr. Regis TURRINI as member of the Supervisory Board, to replace Mr. Robert de METZ for the remaining term of his office, namely until the end of the Shareholders Meeting to be held in Seventh resolution: Renewed of Mr. Abdelaziz ALMECHATT s term of office as Auditor The Shareholders Meeting, acting on a proposal of the Supervisory Board, decides to renew Mr. Abdelaziz ALMECHATT s term of office as auditor, for a period of 3 years, namely until the end of the Shareholders Meeting to be held in Eighth resolution: Authorization granted to the Management Board to trade in Company s own shares The Shareholders' Meeting, having satisfied the quorum and majorities required for Ordinary Shareholders' Meeting and having reviewed the Management Board's report, authorizes the Management Board, with effect from this meeting, in compliance with the provisions of articles 281 of the Act n for a period of eighteen months, to implement a share buyback program to acquire its own shares, on one or more occasions, on the stock exchange, in Morocco or abroad, by purchasing company shares with a view to stabilizing the share price. The Ordinary Shareholders Meeting decides that the volume of shares to be purchased in respect of the share buyback program with a view to stabilizing the share price, must not exceed 1.8% of the total shares comprising the share capital and that the unit purchase price must not exceed MAD250, or the equivalent value in euros, and that the unit sale price must not be lower than MAD150, or the equivalent value in euros, excluding disposal expenses. The Shareholders Meeting decides that the maximum amount of the authorized share buyback program must not exceed MAD4 billion and confers on the Management Board all powers to place orders on the stock market, sign any contracts of sale or transfer, enter into any other agreements or contracts, perform any disclosures and any necessary formalities, with the option of subdelegating such powers. The Shareholders Meeting decides that the present authorization cancels and supersedes the authority granted to the Management Board under the sixteenth resolution adopted at the Shareholders Meeting of April 12, 2007 for the remainder of its term. Ninth resolution: Powers for formalities The Shareholders Meeting, having satisfied the quorum and majority requirements for Ordinary Shareholders Meetings, gives full powers to the bearer of an original, copy or extract of the minutes of this meeting for the purposes of carrying out any formalities required by law. Maroc Telecom Registration Document 295

296 GLOSSARY 3RP (Réseau Radioélectrique à Ressources Partagées). (Trunked private mobile radio networks) Mobile radio networks where frequencies are shared by the users of several companies or organizations for internal communications. The sharing of frequencies is limited to the duration of each call. ADSL (Asymetrical Data Subscriber Line). Technology enabling users to receive high bandwidth services through their existing phone lines while being able to make a phone call at the same time. The transmission capacity going from the network to the customer is greater than that from the customer to the network, hence Asymmetric. ANRT. The Moroccan Telecommunications Regulator ARPU (average revenue per user). ARPU corresponds to the revenues generated (prepaid and postpaid) for a given period, excluding roaming in revenues (incoming and outgoing calls, revenues from value added services) divided by the average number of customers (prepaid and postpaid) over the same period, on a monthly basis. The average number of customers is the average of average monthly customer base (prepaid and postpaid) figures. The monthly average customer base corresponds to the mean number of customers per month (prepaid and postpaid) taken at the beginning and at the end of each month ATM (Asynchronous Transfer Mode). Network technology that accommodates the simultaneous transmission of data, voice, and video. It is based on asynchronous transmission of short packets of fixed length. Optical local loop. Optical Fiber Cable-based access network used for connecting broadband customers. BTS (Base Transeiver Station). Component of the mobile radio network comprising antennas and radio transmitters/receivers (TRX). It provides GSM network coverage within a given range. Self-Routing Switch. A switch is a piece of equipment used to establish a temporary link or connection between an incoming path and an outgoing path on a line or circuit. CAIR. Virtual call center solution offered by Maroc Telecom, aimed at companies for which customer relationship management is strategically crucial. This solution enables businesses to set up customer-response solutions with minimum investment. All call center functions can be managed within Maroc Telecom s network. SIM (Subscriber Identity Module). Without a SIM card, calls cannot bemade from a mobile phone. In particular, the SIM card stores the user s personal profile and a PIN code protecting access to the card. Mobile Switching Center (MSC). A central Switching point that controls the routing of calls. International Transit Center. A switch that carries international calls to foreign operators networks. Unbundling. An incumbent operator, owner of the local loop, has an obligation to provide pairs of copper wires to a third-party operator, in exchange for compensation. This third-party operator installs their own transmission equipment in order to connect their network to their customers premises. Partial unbundling allows the third party operator to take over the Internet connection while the incumbent operator still provides telephony subscription and services. Full unbundling allows the third party operator to connect the entire customer line to their own network, and thus to offer both telephony and ADSL services. DSLAM (Digital Subscriber Line Access). ADSL device located at a telephone exchange. It is an electronic assembly holding several cards that are equivalent to the client filter and modem. The filter separates incoming phone and data signals and the modem translates back the ATM cells (small packets transported over ATM connections). ISP (Internet Service Provider). A company or an organization offering internet access to household, professional and business users. Radio-relay link. Technology used for radio signal transmission (voice, data or video). Relays are installed on pylons or highpoints, which are deployed to carry signals from one point to the next, creating the link. Fidelio. Fidelio is the first point-based loyalty program introduced in Morocco. It is reserved for postpaid customers and was launched on June 1, The program allows points to be collected based on expenditure, and provides advantages in the form of free or cut-price handsets, and free calls and SMS messages. Inter-segment revenues. Inter-segment revenues are mainly generated from interconnection services relating to traffic between the fixed-line and mobile networks and the provision to the Mobile segment of leased lines by the Fixed-line and Internet segment. Since July 1, 2004, they also include revenues from the provision of services to Mauritel. Frame Relay. Technology used to send high bandwidth data over long distances enabling the transmission of large amounts of information, the handling of fluctuations in data flows and voice transmission. GMPCS (Global Mobile Personal Communications by Satellite). Personal communications system providing cross-border, regional or worldwide coverage via a network of satellites accessible using small easily transportable handsets. GPRS (General Packet Radio Service). Packet switching system enabling enhanced data rates over GSM networks. Maroc Telecom Group. All the companies fully consolidated within the scope of consolidation. GSM (Global Systems for Mobile communications). European digital radio transmission standard for mobile telephony, known as 2G (2nd generation), adopted in 1987 and devised by the ETSI (European Telecommunications Standard Institute). It is the most widely used standard in the world. In operation since 1992, this technology uses two band frequencies: 900 and 1,800 MHz, and can transmit voice as well as data. Interconnection. Reciprocal service offered by the operators of two different telecommunications networks enabling all subscribers within the two groups to communicate freely with each other. IP (Internet Protocol). Telecommunications protocol used on networks used to carry internet traffic and based on the technique of transmission of data packets. Kbits/s (Kilo bits per second). Unit of measurement used to express the speed at which data can be transmitted along a line. Leased line. Every part of the network, including an access line to the network, that is supplied as a dedicated channel with all of its capacity available exclusively to the user and on which there are no controls or signaling. LO BOX (GSM Gateways). Terminal equipment, compatible with the GSM standard, that has been designed to act as an interface between the GSM network and terminal equipment that is normally meant to be connected to the fixed public telecommunications network (such as private switching systems (PABX) or ordinary telephones). MENA (The Middle East and North Africa). Region including the following countries: Algeria, Bahrain, Egypt, Gaza and the West Bank, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, Turkey, UEA, Yemen. PCM (Pulse Code Modulation). Process used to transmit the spoken word involving the sampling and digital coding of the signal. The PCM circuit is the circuit at the heart of the 2 Mbps telephone network. MMS (Multimedia Messaging Service). Multimedia version of SMS enabling real multimedia files to be attached to text messages: videos, audio, high-resolution images. Multiplexeur. A piece of telecom network equipment enabling the insertion or extraction of data packages. Standard NMT (Nordic Mobile Telephone). Mobile network launched by Maroc Telecom, based on analogue technology operating in the 450 Mhz frequency band. PABX (Private Automatic Branch exchange). Equipment able to stablish temporary connections between inbound and outbound lines in order to route communications. IN platform (Intelligent Network).Platform allowing value-added services to be made available (prepaid card, prepaid line, kiosk, capped rate plan, etc.). Segments. Refers to the Mobile segment or the Fixed-line and Internet segment of Maroc Telecom. Postpaid (services). Method of paying for services after they have been used (free services can also be included in this method). 296 Maroc Telecom 2007 Registration Document

297 GLOSSARY Power CP. New more powerful processor for MSC mobile switches based on Siemens technology. PPT. Intelligent Network service allowing the marketing of capped-rate plans, not with a line number (CLI) but any virtual phone number. Prepaid (services). Formula whereby services are paid for prior to being used (free services can also be included in this formula). Radio paging. Transmission of numeric or alphanumeric messages to a mobile handset or a group of mobile handsets. NSS (Network Sub-System). All elements/equipment, notably switchgear required to make up a GSM network. SS7 (Signaling System 7). American name for the CCITT 7 network signaling protocol. ISDN (Integrated Services Digital Network). Entirely digital telecom network enabling the simultaneous transmission of voice and data (fax, internet etc.). Roaming. When a user is abroad, this function enables a user to make and receive calls via an operator other than the one to which he/she is a subscriber PSTN (Public Switched Telephone Network). This is the traditional two wire network. This network is switched in so far as the connection with the person being called is temporary as opposed to cable where the connection is permanent. SDH (Synchronous Digital Hierarchy). Digital method of transmission used to optimize transmissions over optic fiber and radio systems. SMSC (Short Message Service Center) servers. Service allowing the sending and reception of written messages containing a maximum of 160 characters. Messages can be sent via an operator, via the internet or directly using the keyboard on a mobile phone. If the recipient s phone is turned off the messages are still saved at the operator s message center. The length of time these messages are stored for varies depending on the operator. Nonetheless, in order for messages to be received, the maximum storage capacity of the handset must not have been attained. SMS (Short Message Service). Written message, limited to 160 characters, exchanged between mobile telephones. SMW3 (SEA-ME-WE3 / South East Asia Middle East Western Europe). Fiber optic sub-sea cable linking 4 continents. SSNC (Signalling System Network Control). A new component developed by Siemens for controlling signaling traffic for MSCs (mobile switching centers), enabling handling capacity to be increased. Signaling Transfer Point (STP). Signaling transfer point for S7 signaling systems. The STP allows for the routing and transfer of signaling messages using the SS7 protocol. Churn rate. An indicator that is calculated by dividing the number of contracts terminated over a given period by the average customer base over the same period, expressed on an annualized basis. The average customer base corresponds to the mean number of clients taken at the beginning and at the end of each month. Average churn rate. An indicator that is calculated by dividing the number of contracts terminated (by clients subscribing to prepaid and postpaid offers) over a given period by the average total customer base (prepaid and postpaid) over the same period, expressed on an annualized basis. The average customer base is based on the average monthly figures (prepaid and postpaid) for the period. The average monthly customer base corresponds to the mean number of clients (prepaid and postpaid) at the beginning and at the end of the month. Dropped call rate. A quality indicator that measures, across the whole of the existing mobile subscriber base, the number of disconnected calls in proportion to all the calls made on the network. Successful connections rate. A quality indicator that measures, during peak periods on the network, the number of calls successfully established emanating from the existing mobile subscriber base (on the BSS radio part), in relation to all calls made on the network. Fault report rate. Generic term, applicable to different services, illustrating the number of faults reported on lines or for services over a certain period in proportion to the total number of lines or services on offer over the same period. Success rate. A quality indicator that measures the number of SMS successfully sent by the existing mobile subscriber base in relation to the total number of SMS sent over the network. Technologie CAMEL (Customised Applications for Mobile networks Enhanced Logic). A technology that enables a user to call his home country without needing an area code. The technology works for short messages (SMS) as well as voice calls. SDH Technology (Synchronous Digital Hierarchy). High throughput technology based on a ring. This type of structure allows for a different geographical trace to be made available, providing a back-up path when the primary route becomes unavailable. Phone shops. Commercial outlet managed by a third party not employed by Maroc Telecom, open to the public and containing a certain number of payphones, providing telecom services to consumers. Digital network termination. Device used to connect ISDN clients. TRX (Transceiver Receiver). The part of the BTS that emits and receives the GSM signal. UMTS (Universal Mobile Telecommunications System). 3G (3rd generation) standard used for the transfer of voice and data. This technology, based on the WCDMA-CDMA standards, allows for throughput in excess of 2Mbps. Billing unit (BU). Unit used for billing calls, the duration of which varies according to the type of call made (local, national, international, fixed tomobile). VMS (Voice Mail System). Name given to the voice messaging system. VPN (Virtual Private Network). A VPN is a private communications network used for the internal needs of a closed group of users to communicate over one or a number of public networks. This product fulfils both the internal and external communication requirements of businesses. VSAT (Very Small Aperture Terminal). System of satellite transmission using small antennas. A VSAT base equates to a micro-station made up of antennae with a diameter of 0.9 to 3.5 m. A VSAT network is a satellite network enabling communications, via a hub, with a group of sites equipped with micro-stations (VSAT) linked to a central system by a star topology. WAP (Wireless Application Protocol). Standard adapting the internet to the constraints of mobile telephony, notably through the use of an appropriate content format. WiFi (Wireless Fidelity). Commercial brand name for a data transmission system based on the IEEE standard that allows wireless access to an Ethernet network from up to a few hundred meters away at a speed of 11 Mbits/s. X 25. Protocol used to manage packet switched networks. Used by Maroc Telecom through Maghripac. Maroc Telecom Registration Document 297